Munchener Ruckversicherungs-gesellschaft Ag · XETR:MUV2
Munchener Ruckversicherungs-gesellschaft — Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München — H1 2022 Earnings Presentation
56 slides from Munchener Ruckversicherungs-gesellschaft's earnings presentation, Aug 9, 2022
Slide 1: Half-Year Financial Report as at 30 June 2022
Munich Re Group Half-Year Financial Report as at 30 June 2022 9 August 2022 Joachim Wenning Christoph Jurecka Half-Year Financial Report as at 30 June 2022 9 August 2022 1
Slide 2: Agenda
Half-Year Financial Report as at 30 June 2022 Agenda 01 Munich Re 02 Group finance 03 ERGO 04 Reinsurance 05 Additional information Half-Year Financial Report as at 30 June 2022 9 August 2022 2
Slide 3: Munich Re
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Slide 4: Results in H1 2022 pave the way to delivering on Ambition 2025
Munich Re Results in H1 2022 pave the way to delivering on Ambition 2025 Ambition 2025 ▪ Sound underlying profitability and ▪ Profit outlook for 2022 confirmed – healthy business expansion supporting despite challenging environment earnings trajectory ▪ Strong underlying earnings in P-C re- ▪ Pricin
Slide 5: Strong business expansion and resilient result despite headwinds from capital markets
Munich Re Strong business expansion and resilient result – despite headwinds from capital markets Gross written Combined RoI, Reinvestment Consolidated Return on premium ratio including FX yield result equity €bn % % % €bn % 16.0 94.3 2.8 2.8 15.0 13.5 1.7 90.5 2.0 1.7 1.4 11.2 H1 2021 H1 2022 H1 20
Slide 6: Insurance industry facing macroeconomic challenges, Munich Re is well prepared
Munich Re Insurance industry facing macroeconomic challenges, Munich Re is well prepared Inflation spike Recession/credit risks Partially hedged via inflation- Prolongs Positive and negative Past economic downturns sensitive assets and largely hardening market business effects largely provided busin
Slide 7: Inflation surge manageable
Munich Re Inflation surge manageable – Considering inflation is an integral 1 part of Munich Re’s ALM, underwriting and reserving process Claims reserves P-C reinsurance Maturity ≤ 4 years Managing short-tail business ▪ Prudent setting of claims reserves ▪ Incorporating individual inflation factors
Slide 8: Higher claims inflation compensated for in July renewals
Munich Re Higher claims inflation compensated for in July renewals 1 Risk- and inflation-adjusted price increase ~ 0.1%, volume change +6.4% Volume change Market drivers % 30 ▪ Continued positive price momentum, supported by high loss experience, inflation and uncertainty, further fueling flight to
Slide 9: Rising interest rates economically positive
Munich Re Rising interest rates economically positive 2 Rising interest rates Fixed income reduced on-balance-sheet reserves Reinvestment yield exceeds running yield €bn 3% 17.4 Non-fixed interest 13.2 Fixed-interest 2% 3.7 –6.7 1% Reinvestment yield Running yield 0% 31.12.2020 31.12.2021 31.3.2022
Slide 10: Munich Re is experienced in swiftly managing business that is highly vulnerable to recession
Munich Re Munich Re is experienced in swiftly managing business 3 that is highly vulnerable to recession … on insurance industry … on Munich Re Economy ▪ Decreasing economic ▪ Less demand from cyclical ▪ Exposure and cycle management prosperity industries, higher lapse rates decisive for recession-p
Slide 11: Managing nat-cat-driven short-term accounting volatility
Munich Re Managing nat-cat-driven short-term accounting volatility 4 Dampening IFRS P&L volatility through earnings diversification ▪ >100 internal nat cat models capture peak and non-peak risk scenarios Risk ▪ Permanently incorporating new data and forward-looking findings State-of-the-art models ▪
Slide 12: ESG highlights
Munich Re ESG highlights Insurance Investments Green tech solutions Rating coverage of ESG-focus liquid asset classes investments2 Projects in the Countries with Gigawatts “green tech” space rated capacity in total >96% €7,301m (2020: €6,278m) >8501 ~801 >501 Emissions 20213 Net promoter score (NPS)
Slide 13: Outlook 2022
Munich Re Outlook 2022 On the way to achieving our Group Ambition 2025 Group Gross premiums written Net result Return on investment ~ €64bn ~ €3.3bn >2.0% (prev. >2.5%) Combined ratio ERGO Gross premiums written Net result P-C Germany International ~ €18.5bn ~ €0.6bn1 ~ 91% ~ 92% Combined ratio Tech
Slide 14: Higher interest rates and hardening market support achievement of Ambition 2025 targets
Munich Re Higher interest rates and hardening market support achievement of Ambition 2025 targets Higher interest rates Ambition 2025 Clearly positive for Solvency II ratio and sustainable investment result ROE 12–14% EPS Growth growth ≥5%1 Prolonged cycle supports profitable business expansion DPS
Slide 15: Group finance
Group finance
Slide 16: Resilient result despite challenging macroeconomics
Group finance – Financial highlights Q2 2022 Resilient result despite challenging macroeconomics – Strong technical performance offsets lower investment result Munich Re Q2 2022 (H1 2022) Consolidated result Technical result Investment result Consolidated result €m €m €m €768m (€1,376m) 3,624 Reinsu
Slide 17: Capital position
Group finance – Capitalisation Capital position Equity Capitalisation €m €bn 17.7 Equity 31.12.2021 30,945 Change in Q2 16.3 15.1 14.7 Consolidated result 1,376 768 12.0 Changes 0.3 Dividend –1,541 –1,541 0.3 0.3 0.3 3.8 5.0 5.1 Unrealised gains/losses –9,082 –4,657 5.1 0.3 Exchange rates 1,257 820
Slide 18: Investment portfolio
Group finance – Investments Investment portfolio Investment portfolio1 Portfolio management % ▪ Further increase in infrastructure investments Fixed-interest securities 54.6 (54.3) ▪ Reduction in equity ratio driven by market Loans 21.0 (22.8) development and disposals Total ▪ Decrease in duration d
Slide 19: Investment result
Group finance – Investments Investment result €m Q2 2022 Return1 H1 2022 Return1 H1 2021 Return1 Regular income 1,800 3.0% 3,258 2.7% 3,073 2.5% Write-ups/write-downs –908 –1.5% –2,030 –1.7% –248 –0.2% Disposal gains/losses 727 1.2% 1,686 1.4% 1,610 1.3% Derivatives2 –446 –0.7% –562 –0.5% –458 –0.4%
Slide 20: IFRS 17
Group finance – IFRS 17 IFRS 17 Market-consistent valuation will increase transparency Assumptions Reserving approach ▪ Set as closely as possible to Solvency II ▪ Will remain unchanged to safeguard high level of consistency ▪ Cautious reserving assumptions may lead to a ▪ Munich Re plans to apply t
Slide 21: ERGO
ERGO
Slide 22: ERGO Life and Health Germany
ERGO ERGO Life and Health Germany Key ▪ Significant growth driven by new Life book Technical result messages and travel €m ▪ Q2: Intra-year volatility with positive effect in Health … ▪ Improved technical result in Q2 ▪ … mitigated by normalisation of ▪ Higher investment result in Q2 due to disposal
Slide 23: ERGO Property-casualty Germany
ERGO ERGO Property-casualty Germany Key ▪ Growth above market estimate Technical result messages €m ▪ Combined ratio in H1 of 91.9% ▪ Significant improvement in technical result (93.4%) ▪ Low investment result 166 ▪ CR in Q2 of 86.9% (92.6%) with a 144 121 significant improvement driven by: 70 ▪ Goo
Slide 24: ERGO Property-casualty Germany
ERGO ERGO Property-casualty Germany Combined ratio Gross premiums written in H1 2022 (H1 2021) % €m ◼ Loss ratio ◼ Expense ratio 2020 92.4 61.9 30.5 2021 92.4 62.6 29.8 Total € 2,515 m Q2 2022 86.9 57.8 29.0 (€2,341m) H1 2022 91.9 61.6 30.3 Fire/property 531 (486) Legal protection 225 (221) 95.6 97.
Slide 25: ERGO International
ERGO ERGO International Key ▪ Continued portfolio growth despite divestments Technical result messages €m ▪ Combined ratio in H1 of 93.5% (93.0%) ▪ Slight decrease in technical result in Q2 ▪ CR in Q2 of 94.5% (92.2%) due to: ▪ Lower investment result 157 ▪ higher claims in Poland and in health 129
Slide 26: ERGO International
ERGO ERGO International Combined ratio Gross written premiums in H1 2022 (H1 2021) % €m 93.8 94.5 92.5 93.0 92.3 93.1 92.6 1,520 (1,472) 92.2 Property-casualty Total 90.1 €2,625 m Life 292 (307) (€2,596m) Health 813 (818) Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2020 2020 2020 2021 2021 2021 2021 2022 2022 H1 202
Slide 27: Reinsurance
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Slide 28: Life and health reinsurance
Reinsurance Life and health reinsurance Key ▪ Strong technical result including fee income of €240m in Q2 Technical result (H1: €259m) €m ▪ Q2: Positive impact from higher messages interest rates on claims reserves, ▪ Favourable claims experience, positive effects from interest rates mostly in the U
Slide 29: Property-casualty reinsurance
Reinsurance Property-casualty reinsurance Key ▪ Strong premium growth of 18.6% Technical result €m ▪ Q2/H1: Below-average major messages ▪ Pleasing technical performance losses – remaining major-loss ▪ Expense ratio benefits from cost reductions and premium growth budget for H2 2022: ~€2.7bn ▪ Negat
Slide 30: Property-casualty reinsurance
Reinsurance Property-casualty reinsurance Combined ratio % ◼ Basic losses ◼ Major losses ◼ Expenses 2020 105.6 53.9 20.8 30.9 2021 99.6 52.2 16.5 30.9 112.2 112.8 Q2 2022 89.7 53.4 7.5 28.8 104.2 98.9 H1 2022 90.5 53.1 8.3 29.1 99.9 89.7 96.4 90.1 91.3 Major Reserve Normalised losses1 Nat cat1 Man-m
Slide 31: July renewals 2022
Reinsurance July renewals 2022 Total property-casualty book1 Regional allocation of July renewals % % Europe 3 Latin America 11 Total Worldwide 25 North America 28 Total €4.2bn Asia/Pacific/Africa 33 €29bn Nat cat shares of renewable portfolio2 % Nat cat Other perils January renewals 45 January 11 8
Slide 32: July renewals 2022
Reinsurance July renewals 2022 % 100 –11.0 89.0 +9.0 +8.4 106.4 €m 4,163 –460 3,703 +373 +351 4,427 Change in premium +6.4% Thereof price movement1 ~ +0.1% Thereof change in exposure for our share +6.3% Total renewable Cancelled Renewed Increase New Estimated from 1 July on renewable business outcom
Slide 33: Additional information
Additional information
Slide 34: Segment income statement Q2 2022
Additional information: Group finance Segment income statement Q2 2022 €m L/H1 P-C ERGO ERGO ERGO Total reinsurance reinsurance L/H Germany P-C Germany International Q2 2022 Gross premiums written 3,287 8,052 2,435 836 1,240 15,850 Net earned premiums 3,057 7,705 2,417 1,006 1,204 15,389 Income from
Slide 35: Segment income statement H1 2022
Additional information: Group finance Segment income statement H1 2022 €m L/H1 P-C ERGO ERGO ERGO Total reinsurance reinsurance L/H Germany P-C Germany International H1 2022 Gross premiums written 6,656 15,990 4,896 2,515 2,625 32,683 Net earned premiums 6,058 14,984 4,802 1,936 2,396 30,176 Income
Slide 36: Actual vs. analysts' consensus
Additional information: Group finance Actual vs. analysts’ consensus Operating result – Actual vs. analysts’ consensus1 KPIs – Actual vs. analysts’ consensus1 €m €m Q2 2022 Consensus Delta Q2 2022 Consensus Impact2 Property-casualty reinsurance 444 623 –179 Combined ratio 89.7 93.8 316 Life and heal
Slide 37: Premium development
Additional information: Group finance Premium development Gross premiums written Segmental breakdown €m €m H2 2021 29,193 Foreign Total 1,305 exchange €32.7bn Divestments/ –84 investments Property-casualty reinsurance 15,990 (49%) (p 18.6%) Organic change 2,269 Life reinsurance 6,656 (20%) (p 7.3%)
Slide 38: Return on investment by asset class and segment
Additional information: Investments Return on investment by asset class and segment H1 2022 %1 Regular Write-ups/ Disposal Extraord. Other ᴓ Market income -downs result derivatives result inc./exp. RoI value (€m) Afs fixed-income 2.0 –1.1 0.3 0.0 0.0 1.2 131,008 Afs non-fixed-income 5.5 –9.0 8.9 0.0
Slide 39: Investment result – Reinsurance
Additional information: Investments Investment result – Reinsurance Life and health reinsurance €m Q2 2022 Return1 H1 2022 Return1 H1 2021 Return1 Regular income 191 2.7% 372 2.6% 340 2.3% Write-ups/write-downs –17 –0.2% –73 –0.5% –5 0.0% Disposal gains/losses 10 0.1% 38 0.3% 107 0.7% Derivatives2 –
Slide 40: Investment result – ERGO
Additional information: Investments Investment result – ERGO Life and Health Germany €m Q2 2022 Return1 H1 2022 Return1 H1 2021 Return1 Regular income 1,009 3.6% 1,780 3.1% 1,745 2.8% Write-ups/write-downs –583 –2.1% –1,073 –1.8% –112 –0.2% Disposal gains/losses 666 2.4% 1,075 1.8% 881 1.4% Derivati
Slide 41: Investment result – ERGO International
Additional information: Investments Investment result – ERGO International €m Q2 2022 Return1 H1 2022 Return1 H1 2021 Return1 Regular income 68 1.5% 127 1.3% 147 1.4% Write-ups/write-downs –17 –0.4% –23 –0.2% 17 0.2% Disposal gains/losses 5 0.1% 44 0.5% 51 0.5% Derivatives2 –6 –0.1% –16 –0.2% –38 –0
Slide 42: Investment portfolio
Additional information: Investments Investment portfolio Investment portfolio Fixed-interest securities1 % 30.6.2022 31.12.2021 % Governments/Semi-governments 64 65 Pfandbriefe/Covered bonds 9 9 Cash/Other 0 0 Corporates 18 19 Total Banks 4 3 €231bn Structured products 5 4 Loans1 Governments/Semi-go
Slide 43: Fixed-income portfolio
Additional information: Investments Fixed-income portfolio Total Fixed-income portfolio % Total €184bn Governments/Semi-governments 53 (55) Loans to policyholders/Mortgage loans 4 (4) Pfandbriefe/Covered bonds 16 (16) Structured products 3 (3) Corporates 15 (14) Bank bonds 3 (2) Cash/Other 6 (6) App
Slide 44: Fixed-income portfolio
Additional information: Investments Fixed-income portfolio Total Rating structure Regional breakdown % % Without With Total policyholder 30.6.2022 31.12.2021 AAA 42 (42) BB 4 (4) participation Germany 4.8 18.1 22.8 23.5 Total AA 23 (23) <BB 1 (1) US 16.7 2.7 19.4 18.0 €184.1bn A 13 (13) NR1 6 (5) Fr
Slide 45: Fixed-income portfolio: Governments/Semi-governments
Additional information: Investments Fixed-income portfolio Governments/Semi-governments Rating structure Regional breakdown % % Without With Total policyholder 30.6.2022 31.12.2021 AAA 50 (48) BB 2 (2) participation US 18.9 2.4 21.3 19.8 Total AA 29 (29) <BB 0 (0) Germany 4.0 16.3 20.4 21.9 €97.9bn
Slide 46: Fixed-income portfolio: Pfandbriefe/Covered bonds
Additional information: Investments Fixed-income portfolio Pfandbriefe/Covered bonds Rating structure Regional breakdown % % 30.6.2022 31.12.2021 Germany 28.5 30.0 AAA 74 (75) BBB 1 (0) France 22.3 22.4 UK 10.0 10.5 Total AA 23 (23) NR 0 (1) Netherlands 9.8 8.7 €29.0bn A 1 (1) Sweden 5.0 5.3 Norway
Slide 47: Fixed-income portfolio: Corporate bonds
Accounting view – Investments Fixed-income portfolio Corporate bonds (excluding bank bonds) Rating structure Sector breakdown % % 30.6.2022 31.12.2021 AAA 2 (2) BB 16 (18) Industrial goods and services 14.6 14.1 Total AA 5 (5) <BB 5 (5) Utilities 13.8 13.9 €27.0bn A 20 (19) NR 1 (0) Financial servic
Slide 48: Fixed-income portfolio: Structured products
Additional information: Investments Fixed-income portfolio Structured products Structured products portfolio (at market values): Breakdown by rating and region €m Rating Region Market- AAA AA A BBB <BBB NR USA + RoW Europe Total to-par ABS Consumer-related ABS1 429 239 19 0 0 0 557 130 686 96% Corpo
Slide 49: Fixed-income portfolio: Bank bonds
Additional information: Investments Fixed-income portfolio Bank bonds Rating structure Regional breakdown Total % % Senior Sub- Loss- 30.6. 31.12. bonds ordinated bearing 2022 2021 US 34.9 3.9 0.8 39.6 37.5 AAA 0 (0) BB 2 (3) Canada 14.6 0.0 0.0 14.6 11.9 Total AA 8 (9) <BB 0 (1) UK 8.1 0.6 0.1 8.8
Slide 50: Sensitivities to interest rates, spreads and equities
Additional information: Investments Sensitivities to interest rates, spreads and equities1 Sensitivity to risk-free interest in €bn (change in basis points) –50bps –25bps +50bps +100bps Change in market value, gross +6.7 +3.3 –6.2 –11.8 Change in on-balance-sheet reserves, net +2.0 +1.0 –1.9 –3.6 Ch
Slide 51: On- and off-balance-sheet reserves
Additional information: Investments On- and off-balance-sheet reserves €m 31.12. 31.12. 31.3. 30.6. p 2020 2021 2022 2022 in Q2 Market value of investments 252,789 257,485 245,860 230,951 –14,909 Total reserves 37,269 30,357 16,209 935 –15,274 On-balance-sheet reserves Fixed-interest securities 14,4
Slide 52: On- and off-balance-sheet reserves
Additional information: Investments On- and off-balance-sheet reserves €m On-balance-sheet reserves Off-balance-sheet reserves1 30.6. 31.12. 30.6. 31.12. 2022 2021 2022 2021 Total reserves (gross) –6,742 13,172 7,677 17,185 Provision for deferred premium refunds 2,626 –5,409 –1,042 –8,115 Deferred t
Slide 53: Changes to shares in circulation
Additional information: Shareholder information Changes to shares in circulation Acquisition of Retirement of Weighted average number of shares in circulation 31.12. own shares in own shares in 30.6. (millions) Shares (millions) 2021 H1 2022 H1 2022 2022 Shares in 140.1 –0.3 – 139.8 140.3 140.1 140.
Slide 54: Financial calendar
Financial calendar 2022/2023 Annual Report (Group), Annual Report (Company) Investor Day Quarterly Statement Quarterly Statement IFRS 17 as at 31 March 2023 as at 30 September 2023 15 DECEMBER 16 March 17 MAY 8 NOVEMBER 8 NOVEMBER 23 FEBRUARY 5 MAY 10 AUGUST Quarterly Statement Annual General Meetin
Slide 55: For more information, please contact
For more 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 Email: tdzuba@munichre.com Email: cfranziszi@munichre.com Ema
Slide 56: 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