Munchener Ruckversicherungs-gesellschaft Ag · XETR:MUV2

Munchener Ruckversicherungs-gesellschaft — Munich Re — H1 2016 Earnings Presentation

55 slides from Munchener Ruckversicherungs-gesellschaft's earnings presentation, Aug 9, 2016

1. Slide 1: Half-year financial report as at 30 June 2016

   Source: Shutterstock [M] Half-year financial report as at 30 June 2016 9 August 2016 Nikolaus von Bomhard Jörg Schneider

2. Slide 2: Agenda

   Agenda 1 Introduction 2 2 Munich Re (Group) 5 3 ERGO 10 4 Munich Health 16 5 Reinsurance 18 6 Outlook 24 7 Backup 26 Half-year financial report as at 30 June 2016 2

3. Slide 3: Munich Re well-positioned to prevail through challenging times

   Introduction Munich Re well-positioned to prevail through challenging times After Brexit vote – Quick recovery Many countries now have negative government bond yields1 following nervous capital markets … Maturity 2 3 4 5 6 7 8 9 10 15 20 30  Ongoing decline of reinvestment yield Yield Switzerland ≤

4. Slide 4: Short-term earnings pressure mitigated by strong balance sheet – Attractive mid to long-term growth perspectives

   Introduction Short-term earnings pressure mitigated by strong balance sheet – Attractive mid to long-term growth perspectives Strong balance sheet % Promoting innovative products2 €m ERGO: Increasing earnings €m 16 Investment reserve ratio (lhs) 1 8 P-C reinsurance reserve releases (rhs) ~500+ ~450

5. Slide 5: Munich Re (Group)

   Munich Re (Group) Half-year financial report as at 30 June 2016 5

6. Slide 6: High Q2 result – Prudent positioning and strong balance sheet offset earnings pressure

   Munich Re (Group) – Financial highlights H1 2016 High Q2 result – Prudent positioning and strong balance sheet offset earnings pressure Munich Re (Group) Q2 2016 (H1 2016) Net result Technical result €m Investment result €m Net result €m €974m (H1: €1,411m) 1,780 4,341 4,322 1,866 High investment an

7. Slide 7: IFRS capital position

   Munich Re (Group) – Capitalisation IFRS capital position Equity €m Capitalisation €bn Equity 31.12.2015 30,966 Change Q2 0.3 0.4 0.4 0.4 Consolidated result 1,411 974 4.4 4.3 4.3 0.3 4.4 Changes Dividend –1,329 –1,329 4.4 Unrealised gains/losses 2,011 616 Exchange rates –388 272 Share buy-backs –393

8. Slide 8: Investment portfolio

   Munich Re (Group) – Investment portfolio Investment portfolio Investment portfolio1 % Portfolio management in Q2 Land and buildings Fixed-interest securities  Government bonds: Shift from Germany, UK 2.7 (2.9) 56.7 (55.7) and Portugal to France, USA and Canada Shares, equity funds and  Covered bon

9. Slide 9: Investment result

   Munich Re (Group) – Investment result Investment result Investment result €m Q1 2016 Return1 Q2 2016 Return1 H1 2016 Return1 H1 2015 Return1 Regular income 1,628 2.8% 1,823 3.1% 3,451 3.0% 3,863 3.2% Write-ups/write-downs –219 –0.4% –22 –0.0% –242 –0.2% –239 –0.2% Disposal gains/losses 218 0.4% 910

10. Slide 10: ERGO

    ERGO Half-year financial report as at 30 June 2016 10

11. Slide 11: ERGO Life and health Germany

    ERGO ERGO Life and health Germany H1 2016 vs. H1 2015 Gross premiums written €m Net result €m H1 2015 4,727 H1 2015 105  Technical result  Decrease in Health, partly compensated for Foreign exchange –1 Technical result –9 by Life and Direct business Divestments/investments 0 Non-technical result1

12. Slide 12: ERGO Property-casualty Germany (1)

    ERGO ERGO Property-casualty Germany (1) H1 2016 vs. H1 2015 Gross premiums written €m Net result €m H1 2015 1,831 H1 2015 186  Technical result Combined ratio slightly increased to 95.9% Foreign exchange 0 Technical result –11  Expansion of title insurance caused higher Divestments/investments 0 N

13. Slide 13: ERGO Property-casualty Germany (2)

    ERGO ERGO Property-casualty Germany (2) Combined ratio % Gross premiums written €m  Loss ratio  Expense ratio Other 199 443 Motor 2014 95.3 63.1 32.2 Legal protection 211 TOTAL 2015 97.9 64.7 33.2 Personal accident 325 €1,865m H1 2016 95.9 60.5 35.4 Fire/property 338 349 Liability Q2 2016 93.3 58.

14. Slide 14: ERGO International

    ERGO ERGO International H1 2016 vs. H1 2015 Gross premiums written €m Net result €m H1 2015 1,961 H1 2015 25  Technical result Life: –€62m Foreign exchange –73 Technical result –54 Q1: Adverse impact of Austrian entities and additional expenses following the sale of ERGO Divestments/investments 0 N

15. Slide 15: ERGO International – Property-casualty

    ERGO ERGO International – Property-casualty Combined ratio % Gross premiums written – Property-casualty €m  Loss ratio  Expense ratio Other 195 460 Poland 2014 97.3 58.5 38.8 TOTAL Greece 79 2015 104.7 65.3 39.4 €1,229m H1 2016 98.5 59.2 39.3 Turkey 125 372 Legal protection Q2 2016 103.6 62.7 40.9

16. Slide 16: Munich Health

    Munich Health Half-year financial report as at 30 June 2016 16

17. Slide 17: Munich Health

    Munich Health Munich Health H1 2016 vs. H1 2015 Gross premiums written €m Net result €m H1 2015 2,867 H1 2015 39  Technical result Overall combined ratio increased to 100.8% Foreign exchange –94 Technical result –18  Reinsurance: 102.1% (+1.4%) Divestments/investments 0 Non-technical result1 1 Bur

18. Slide 18: Reinsurance

    Reinsurance Half-year financial report as at 30 June 2016 18

19. Slide 19: Reinsurance Life

    Reinsurance Reinsurance Life H1 2016 vs. H1 2015 Gross premiums written €m Net result €m H1 2015 5,116 H1 2015 123  Technical result  Q2 result of €103m in line with expectations Foreign exchange –228 Technical result 39 (Q1 affected by two large single claims) Divestments/investments 0 Non-techni

20. Slide 20: Reinsurance Property-casualty

    Reinsurance Reinsurance Property-casualty H1 2016 vs. H1 2015 Gross premiums written €m Net result €m H1 2015 9,002 H1 2015 1,387  Technical result  Major losses in Q2 slightly above expectation Foreign exchange –231 Technical result –253 of 12.0%, while H1 ratio is clearly below – nat cat ratio b

21. Slide 21: Combined ratio

    Reinsurance Combined ratio Combined ratio %  Basic losses  Major losses  Expense ratio 2014 92.7 53.0 7.2 32.5 99.8 2015 89.7 50.8 6.2 32.6 94.5 H1 2016 94.3 55.1 7.5 31.6 91.3 92.3 Q2 2016 99.8 56.2 12.3 31.3 93.3 91.2 88.4 Major Reserve Normalised losses Nat cat Man-made releases1 combined rati

22. Slide 22: July renewals – Regional focus on Australia, North and Latin America

    Reinsurance July renewals – Regional focus on Australia, North and Latin America Total property-casualty book1 % Regional allocation of July renewal % Remaining business Business up for January renewal Rest2 North America 29 52 5 39 Worldwide TOTAL Australia 26 €2.1bn 15 Europe Latin America 4 11 TO

23. Slide 23: July renewals – Further slowdown of price softening

    Reinsurance July renewals – Further slowdown of price softening July renewals 2016 % 100 –23.5 76.5 –3.0 26.0 99.5  While current market trends €m 2,103 –494 1,609 –62 546 2,093 continue, the price reduction is slowing further Change in premium –0.5%  Top line remains stable with Thereof price mov

24. Slide 24: Outlook

    Outlook Half-year financial report as at 30 June 2016 24

25. Slide 25: Outlook 2016

    Outlook 2016 Munich Re (Group) Net result Gross premiums written €2.3bn €47–49bn Focus on bottom-line growth prevails Return on investment Combined ratio ~3% ~95% ~98% (prev. 95%) Solid return given ongoing Reinsurance ERGO Germany low-interest-rate environment ~99% ~99% Munich Health ERGO Internati

26. Slide 26: Backup

    Backup Half-year financial report as at 30 June 2016 26

27. Slide 27: Premium development

    Backup: Munich Re (Group) Premium development Gross premiums written €m Segmental breakdown €m Reinsurance ERGO H1 2015 25,505 Property-casualty Life and health Germany 9,117 (37%) ( 1.3%) 4,520 (18%) ( –4.4%) Foreign exchange –627 ERGO Property-casualty Germany 1,865 (8%) ( 1.9%) Divestments/ in

28. Slide 28: Reconciliation of operating result with net result

    Backup: Munich Re (Group) Reconciliation of operating result with net result Reconciliation of operating result with net result €m H1 2016 Q2 2016 Operating result 2,188 1,463 Other non-operating result –201 –120 Goodwill impairments –9 –9 Net finance costs –108 –58 Taxes –459 –302 Net result 1,411

29. Slide 29: Actual vs. analysts' consensus

    Backup: Munich Re (Group) Actual vs. analysts’ consensus Operating result – Actual vs. analysts’ consensus1 €m Major developments in Q2 2016 Q2 2016 Consensus Delta Reinsurance Property-casualty Combined ratio: 99.8% (consensus: 99.6%), major loss ratio: 12.3%, Reinsurance P-C 788 530 258 reserve re

30. Slide 30: ERGO Life

    Backup: ERGO ERGO Life New business (statutory premiums) Germany (including direct business) H1 2016 H1 2015  abs. % New business 408 515 –107 –20.7 Regular premiums 104 108 –5 –4.4 Single premiums 305 407 –102 –25.1 Annual premium equivalent (APE)1 134 149 –15 –10.1 International New business 365

31. Slide 31: Development of combined ratio

    Backup: Reinsurance Development of combined ratio Combined ratio vs. basic losses % Combined ratio Basic loss ratio 94.3 101.4 91.3 91.2 92.3 93.3 94.5 99.8 89.3 86.9 88.4 78.6 49.3 47.8 55.9 54.6 55.3 54.9 57.6 54.1 54.0 56.2 46.4 36.8 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015

32. Slide 32: Renewal results

    Backup: Reinsurance Renewal results Year-to-date price change 2010–2016 % Nominal Adjusted for interest-rate changes 2.4 1.4 1.0 0.5 0.3 0.2 0.0 –0.1 –0.9 –1.0 –1.7 –1.6 –1.9 –2.4 2010 2011 2012 2013 2014 2015 2016 1 1 January, April and July renewals. Half-year financial report as at 30 June 2016 3

33. Slide 33: Breakdown of regular income

    Backup: Investments Breakdown of regular income Investment result – Regular income (€m) Q2 2016 H1 2016 H1 2015 Change Afs fixed-interest 834 1,662 1,805 –142 Afs non-fixed-interest 254 362 412 –51 Derivatives 30 62 71 –10 Loans 505 1,016 1,051 –35 Real estate 103 202 177 24 Deposits retained on ass

34. Slide 34: Breakdown of write-ups/write-downs

    Backup: Investments Breakdown of write-ups/write-downs Investment result – Write-ups/write-downs (€m) Q2 2016 H1 2016 H1 2015 Change Afs fixed-interest 35 –12 –30 17 Afs non-fixed-interest –105 –255 –75 –180 Loans 12 –28 –65 37 Real estate –14 –35 –37 2 Deposits retained on assumed reinsurance and o

35. Slide 35: Breakdown of net result from disposals

    Backup: Investments Breakdown of net result from disposals Investment result – Net result from disposal of investments (€m) Q2 2016 H1 2016 H1 2015 Change Afs fixed-interest 585 633 957 –323 Afs non-fixed-interest 147 144 769 –625 Loans 308 480 70 411 Real estate 2 11 5 6 Deposits retained on assume

36. Slide 36: Return on investment by asset class and segment

    Backup: Investments Return on investment by asset class and segment H1 2016 %1 Regular income Write-ups/-downs Disposal result Extraord. derivative result Other inc./exp. RoI ᴓ Market value (€m) Afs fixed-income 2.5 0.0 1.0 0.0 0.0 3.5 130,439 Afs non-fixed-income 5.3 –3.7 2.1 0.0 0.0 3.7 13,649 Der

37. Slide 37: Investment result by segment

    Backup: Investments Investment result by segment Investment result – Reinsurance Life % Q2 2016 Return1 H1 2016 Return1 H1 2015 Return1 Regular income 176 3.0% 339 2.8% 453 3.4% Write-ups/write-downs 3 0.1% –11 –0.1% –15 –0.1% Disposal gains/losses 89 1.5% 60 0.5% 190 1.4% Derivatives2 –16 –0.3% –59

38. Slide 38: Investment result by segment

    Backup: Investments Investment result by segment Investment result – ERGO Life/Health Germany % Q2 2016 Return1 H1 2016 Return1 H1 2015 Return1 Regular income 975 3.2% 1,865 3.1% 2,017 3.4% Write-ups/write-downs –51 –0.2% –147 –0.2% –79 –0.1% Disposal gains/losses 431 1.4% 658 1.1% 498 0.8% Derivati

39. Slide 39: Investment result by segment

    Backup: Investments Investment result by segment Investment result – ERGO International % Q2 2016 Return1 H1 2016 Return1 H1 2015 Return1 Regular income 122 3.6% 244 3.7% 257 2.8% Write-ups/write-downs –3 –0.1% –21 –0.3% –43 –0.5% Disposal gains/losses 37 1.1% 35 0.5% 93 1.0% Derivatives2 17 0.5% 48

40. Slide 40: Investment portfolio

    Backup: Investments Investment portfolio Fixed-interest securities and miscellaneous Investment portfolio % Fixed-interest securities1 % Miscellaneous Fixed-interest securities Structured products Governments/ 6.7 (7.5) 56.7 (55.7) 3 (4) semi-government Corporates 62 (62) TOTAL 16 (16) TOTAL €238bn

41. Slide 41: Fixed-income portfolio

    Backup: Investments Fixed-income portfolio Total Fixed-income portfolio % Loans to policyholders/ Governments/ mortgage loans semi-government 3 (3) 53 (52) Structured products 2 (2) Bank bonds TOTAL 3 (3) €214bn Cash/other 5 (4) Corporate bonds 10 (10) Pfandbriefe/covered bonds 23 (24) Approximation

42. Slide 42: Fixed-income portfolio

    Backup: Investments Fixed-income portfolio Total Rating structure % Regional breakdown % <BB and NR AAA Without With Total 6 (6) 42 (42) Participation participation 30.6.2016 31.12.2015 BB Germany 4.3 24.8 29.1 29.2 2 (2) TOTAL US 14.6 1.5 16.2 16.4 €214.1bn France 2.2 5.3 7.5 7.3 BBB 12 (12) UK 3.3

43. Slide 43: Fixed-income portfolio – Governments/semi-government

    Backup: Investments Fixed-income portfolio Governments/semi-government Rating structure % Regional breakdown % BB AAA Without With Total 2 (2) 45 (46) Participation participation 30.6.2016 31.12.2015 BBB Germany 3.1 24.1 27.3 27.4 10 (10) TOTAL US 17.0 1.1 18.1 18.9 €113.3bn Supranationals 1.3 6.1 7

44. Slide 44: Fixed-income portfolio – Pfandbriefe/covered bonds

    Backup: Investments Fixed-income portfolio Pfandbriefe/covered bonds Rating structure % Regional breakdown % NR AAA 30.6.2016 31.12.2015 2 (0) 69 (66) Germany 35.4 34.2 France 19.4 18.5 BBB UK 8.7 8.5 1 (3) TOTAL Netherlands 7.3 7.1 Sweden 5.9 5.9 A €50.3bn Norway 5.8 5.7 4 (5) Spain 3.8 4.8 Italy 1

45. Slide 45: Fixed-income portfolio – Corporate bonds

    Backup: Investments Fixed-income portfolio Corporate bonds (excluding bank bonds) Rating structure % Regional breakdown % NR AAA 30.6.2016 31.12.2015 1 (1) 1 (1) Utilities 19.2 21.1 <BB Industrial goods and services 12.5 12.7 2 (2) TOTAL AA Oil and gas 11.8 10.9 BB €22.2bn 6 (7) 10 (11) Telecommunic

46. Slide 46: Fixed-income portfolio – Bank bonds

    Backup: Investments Fixed-income portfolio Bank bonds Rating structure % Regional breakdown % NR AAA Total 2 (2) 0 (0) Senior bonds Subordinated Loss-bearing 30.6.2016 31.12.2015 US 30.1 6.5 0.2 36.8 36.7 <BB Germany 18.8 2.5 3.4 24.7 24.3 1 (2) UK 6.7 1.1 0.2 8.0 8.7 TOTAL AA Ireland 5.6 0.1 0.0 5.

47. Slide 47: Fixed-income portfolio – Structured products

    Backup: Investments Fixed-income portfolio Structured products Structured products portfolio (at market values): Breakdown by rating and region % Rating Region AAA AA A BBB <BBB NR USA + RoW Europe Total Market-to-par ABS Consumer-related ABS1 296 313 26 6 0 60 279 421 701 101% Corporate-related ABS

48. Slide 48: Sensitivities to interest rates, spreads and equity markets

    Backup: Investments Sensitivities to interest rates, spreads and equity markets Sensitivity to risk-free interest rates – Basis points –50 –25 +50 +100 Change in gross market value (€bn) +9.4 +4.6 –8.6 –16.3 Change in on-balance-sheet reserves, net (€bn)1 +2.0 +1.0 –1.9 –3.6 Change in off-balance-sh

49. Slide 49: On- and off-balance-sheet reserves (gross)

    Backup: Investments On- and off-balance-sheet reserves (gross) €m 31.12.2013 31.12.2014 31.12.2015 31.3.2016 30.6.2016 Market value of investments 210,431 235,849 230,529 232,941 237,519 Total reserves 15,192 31,470 25,969 32,025 34,530 On-balance-sheet reserves Fixed-interest securities 4,661 11,96

50. Slide 50: On-balance-sheet reserves

    Backup: Investments On-balance-sheet reserves On-balance-sheet reserves €m 30.6.2016 Change Q2 Investments afs 15,651 1,919 Valuation at equity 67 –7 Unconsolidated affiliated enterprises 74 –1 Cash flow hedging 23 –6 Total on-balance-sheet reserves (gross) 15,816 1,905 Provision for deferred premiu

51. Slide 51: Off-balance-sheet reserves

    Backup: Investments Off-balance-sheet reserves Off-balance-sheet reserves €m 30.6.2016 Change Q2 Real estate1 2,176 –9 Loans 15,926 575 Associates 613 34 Total off-balance-sheet reserves (gross) 18,714 600 Provision for deferred premium refunds –13,971 –463 Deferred tax –1,443 –37 Minority interests

52. Slide 52: Development of shares in circulation

    Backup: Shareholder information Development of shares in circulation Acquisition of Retirement of Weighted average number of shares in circulation Shares 31.12. own shares in own shares in 30.6. (millions) (millions) 2015 H1 2016 H1 2016 2016 Shares in 162.8 –2.3 – 160.5 179.1 172.2 circulation 165.

53. Slide 53: Financial calendar

    Backup: Shareholder information Financial calendar 2016 9 November Quarterly statement as at 30 September 20161 2017 7 February Preliminary key figures 2016 and renewals Balance sheet press conference for 2016 financial statements 15 March Analysts' conference in Munich with videocast 26 April Annua

54. Slide 54: For information, please contact

    Backup: Shareholder information For information, please contact Investor Relations Team Christian Becker-Hussong Thorsten Dzuba Christine Franziszi Head of Investor & Rating Agency Relations Tel.: +49 (89) 3891-8030 Tel.: +49 (89) 3891-3875 Tel.: +49 (89) 3891-3910 E-mail: tdzuba@munichre.com E-mail

55. Slide 55: Disclaimer

    Disclaimer This presentation contains forward-looking statements that are based on current assumptions and forecasts of the management of Munich Re. Known and unknown risks, uncertainties and other factors could lead to material differences between the forward-looking statements given here and the a

Munich Re — H1 2016 Earnings Presentation on 6ix