37 slides from Munchener Ruckversicherungs-gesellschaft's earnings presentation, Feb 28, 2020
Slide 1: Balance sheet media conference for 2019 financial statements
Balance sheet media conference for 2019 financial statements Good progress towards 2020 ambition – Exploiting opportunities in an improving market environment 28 February 2020 Please note: Presentation based on 2019 preliminary figures Image: Klaus Ohlenschläger / dpa Picture Alliance
Slide 2: Balance sheet media conference for 2019 financial statements
Balance sheet media conference for 2019 financial statements Good progress Group finance 1 towards 2020 ambition Joachim Wenning 2 and risk Christoph Jurecka 3 ERGO Markus Rieß 4 Reinsurance Torsten Jeworrek Balance sheet media conference for 2019 financial statements 28 February 2020 2
Slide 3: Good progress towards 2020 ambition
Good progress towards 2020 ambition Strong performance in 2019 IFRS net income Solvency II ratio €2.7bn (€2.3bn) 237% (245%) Exceeds initial guidance of €2.5bn Well above target capitalisation Return on Equity Dividend per share €9.80 (€9.25) 1 9.2% (8.4%) Above cost of capital High pay-out to share
Slide 4: Ongoing business and earnings growth supports 2020 ambition
Good progress towards 2020 ambition Ongoing business and earnings growth supports 2020 ambition Reinsurance 1 Increase 2.3 €2.3bn 2.1 earnings1 €bn 2.7 2.8 2.5 2.3 2.3 Guidance Actual Plan Reduce 2019 2019 2020 complexity ERGO 1 €530m 400 440 2018 2019 2020 2020 Digital Guidance Actual transformatio
Slide 5: Reinsurance – Strategic growth initiatives well on track
Good progress towards 2020 ambition Reinsurance – Strategic growth initiatives well on track 2020 2018 2019 Continue ▪ Growth initiatives in P-C paying off ▪ Consolidate top position in mature (esp. in the US and Asia) – GWP +8%1 profitable markets ▪ Strong new business generation in Life growth pat
Slide 6: ERGO – Sustainably increasing profitability
Good progress towards 2020 ambition ERGO – Sustainably increasing profitability 2020 2018 2019 Successful ▪ ESP ahead of financial targets ▪ Tied agent productivity further completion ▪ ESP1 ahead of financial targets improved by 18%1 of ESP ▪ Tied agent productivity significantly increased by 20%2
Slide 7: Business and earnings focus – Gradually increasing risk appetite
Good progress towards 2020 ambition Business and earnings focus – Gradually increasing risk appetite in underwriting where opportunities are good Balancing growth and risk in property-casualty1 31% ▪ Disciplined growth in P-C Re in select mature/emerging 26%28% markets and business lines with unchan
Slide 8: New organisational set-up in investments aims to generate higher returns
Good progress towards 2020 ambition New organisational set-up in investments aims to generate higher returns Streamlining the organisation Improving risk-return profile Group approach Strategic level One consistent investment Further expand asset classes that still have strategy across the Group att
Slide 9: Systematically integrating sustainability criteria when creating value
Good progress towards 2020 ambition Systematically integrating sustainability criteria when creating value – Key achievements in 2019 Climate Sustainability Top positions in strategy risk management major SRI ratings Enabling new technologies Consequently improving risk DVFA Scorecard for Corporate
Slide 10: Shareholders participate in our earnings growth
Good progress towards 2020 ambition Shareholders participate in our earnings growth Sustainable dividend-per-share growth … … supports attractive shareholder returns2 €9.80 Peer 1 52.5% 3.10 Munich Re 44.0% Total pay-out Peer 2 43.6% 2005–2019 2005 20191 ~€ 30 bn 41.0% Peer 3 Ongoing share buy-backs
Slide 11: Outlook 2020
Good progress towards 2020 ambition Outlook 2020 Group Gross premiums written Net result Return on investment ~€52bn ~€2.8bn ~3% ERGO Combined ratio Gross premiums written Net result P-C Germany International ~>€17.5bn ~€530m ~92% ~94% Reinsurance Combined ratio Technical result, incl. fee income Gr
Slide 12: Presentation of business ambition beyond 2020
Munich Re Media Briefing Presentation of business ambition beyond 2020 8 December 2020 Balance sheet media conference for 2019 financial statements 12 Image: ipopba / Getty Images
Slide 13: Group finance and risk
Group finance and risk 2 Image: Vertigo3d / Getty ImagesiStockphoto
Slide 14: Financial results 2019 – Strong earnings despite high large losses and low/negative interest rates
Group finance and risk Financial results 2019 – Strong earnings despite high large losses and low/negative interest rates IFRS net income ▪ Earnings growth in Reinsurance despite challenging Q4 – improved underlying C/R of ~98-99% €2.7bn (€2.3bn) ▪ ERGO contributing €440m – ahead of its ESP targets
Slide 15: IFRS result Q4 2019
Group finance and risk – IFRS IFRS result Q4 2019 – Major drivers Reinsurance: €116m ERGO: €101m FX losses: Net income High large losses in P-C and Fully in line with run-rate –€241m €217m strengthening of disability of FY guidance assumptions in Australian life Tax income: (€238m) business (approx.
Slide 16: IFRS result FY 2019 – Operating performance supported by strong balance sheet
Group finance and risk – IFRS IFRS result FY 2019 – Operating performance supported by strong balance sheet Reserving Investments Taxes Strong Resilience to adverse Valuation reserves Ongoing prudent balance development, e.g. US casualty – increased to €33bn setting of reserves sheet unchanged reser
Slide 17: Prudent reserving protecting balance sheet against negative surprises
Group finance and risk – IFRS – Reserving Prudent reserving protecting balance sheet against negative surprises while continuously contributing to earnings strength Managing industry hot spots Munich Re impact Ongoing reserve releases 1 Asbestos De-risking with large Complex litigation, claims settl
Slide 18: Investment return – Resilience to low interest rates expected to persist
Group finance and risk – IFRS – Investments Investment return – Resilience to low interest rates expected to persist 3.2% 3.2% 3.2% RoI 2.8% Disposal ZZR financing, prudent ALM Negative 1.1 1.1 1.1 gains and usual portfolio turnover – impact on ~5bps 0.7 valuation reserves partly realised running yi
Slide 19: Sound economic capitalisation continues to support our capital-management strategy
Group finance and risk – Solvency II Sound economic capitalisation continues to support our capital- management strategy – First-time application of VA for four ERGO entities Development of Solvency II ratio SII sensitivities % 302% 267% 245% 247 253 244% 237%2 220% 226 232 224 219 Optimal range 213
Slide 20: ERGO
ERGO 3 Image: dem10 / iStockphoto Getty Images
Slide 21: ERGO Strategy Programme (ESP) – On track to deliver targets 2020
ERGO ERGO Strategy Programme (ESP) – On track to deliver targets 2020 Actual Guidance Actual ESP guidance 2018 2019 2019 20202 Total premiums €18.7bn ~€18.5bn1 €18.9bn ~€18.5bn Net profit €412m ~€400m1 €440m ~€530m Investments (net, accumulated) €597m €908m2 €770m €1,008m Total cost savings (net, ac
Slide 22: ERGO Strategy Programme – Progress in focus areas
ERGO ERGO Strategy Programme – Progress in focus areas Germany Digital Ventures International ▪ Product portfolio optimisation continued, ▪ nexible ▪ High earnings contribution and profitability in simplified product approach shows first results ▪ Growth continued (~62k policies; +23%1; core markets
Slide 23: ERGO Group – Key financials 2019
ERGO ERGO Group – Key financials 2019 Group L&H Germany P-C Germany International GWP €17.5bn €9.2bn (€9.3bn) €3.5bn (€3.4bn) €4.7bn (€4.6bn)1 (€17.4bn)1 Growth in Life new book partially Strong growth – increase in Premiums increased in core markets compensates for back-book attrition; commercial a
Slide 24: Life and Health Germany – Addressing low-interest-rate environment in Life
ERGO Life and Health Germany – Addressing low-interest-rate environment in Life New book Back book ▪ ERGO Vorsorge as unified risk carrier for ▪ Progress in portfolio migration onto new GWP new product offering through merger1 IT platform €9.2bn ▪ Profitable new business concentrating on ▪ Foundatio
Slide 25: Life and Health Germany – Maintaining leading positions in Health
ERGO Life and Health Germany – Maintaining leading positions in Health Life Business development on track Extension of market leading position in Germany supplementary insurance GWP ▪ Strong and sustainable earnings contribution ▪ Market leader with >20% market share2; strong new business developmen
Slide 26: Property-casualty Germany – Ongoing profitable premium growth
ERGO Property-casualty Germany – Ongoing profitable premium growth Other Transport/ Marine Motor Business development on track 2020 level already almost achieved in 2019 ▪ Strong premium growth in 2019 – increases in ▪ Sustainable improvement in 2019 driven by Legal protection GWP commercial and ret
Slide 27: International – Sustainable increase of profitability
ERGO International – Sustainable increase of profitability Consolidated portfolio with leading positions Successful expansion in selected growth in core markets markets GWP1 ▪ Premium increase1 in both core and growth ▪ India (P-C, Health): HDFC ERGO with substantial (without JVs) markets premium gr
Slide 28: Reinsurance
Reinsurance 4 Image: John Lund Getty Images
Slide 29: Property-casualty – Earnings growth fully supports the 2020 ambition
Reinsurance – Financials 2019 Property-casualty – Earnings growth fully supports the 2020 ambition Net Combined result €1,562m (€1,135m) ratio 101.0% (99.4%) ▪ Strong volume increase by almost €2bn – ▪ Major losses (15.2%) above average earnings trajectory supported by growth ▪ Underlying combined r
Slide 30: Life and Health – Result below guidance on strain from Australia
Reinsurance – Financials 2019 Life and Health – Result below guidance on strain from Australia – Favourable experience in other markets Technical Net result1 €456m (€584m) result €706m (€729m) ▪ On aggregate positive claims experience ▪ Decline of technical result ▪ Strong contribution from new busi
Slide 31: Strong new business generation continues
Reinsurance Life and Health – New business Strong new business generation continues – Portfolio composition fosters steady earnings growth Core Ambition2 Strong footprint in Fundament of Technical result, incl. fee income traditional reinsurance earnings generation In-depth expertise in risk assessm
Slide 32: Select growth in firming market environment – January renewals 2020
Reinsurance Property-casualty – January renewals 2020 Select growth in firming market environment January renewals 2020 % 100 –10.3 89.7 +5.3 +9.3 104.4 €m 10,205 –1,046 9,159 +545 +950 10,655 Change in premium +4.4% Thereof price movement1 ~ 1.2% Thereof change in exposure for our share +3.2% Total
Slide 33: Growth initiatives gaining traction – Profitable business expansion
Reinsurance Property-casualty – Strategic initiatives Growth initiatives gaining traction – Profitable business expansion Gross premiums written1 €bn Mature Emerging Risk Solutions 22.1 markets2 +4% markets2 +21% business2 +14% 20.4 France: Successful re-entry and India: Executing growth strategy +8
Slide 34: Risk Solutions – 2019 with another step back to target profitability
Reinsurance Property-casualty – Risk Solutions Risk Solutions – 2019 with another step back to target profitability Gross premiums written Combined ratio €5.0bn (€4.3bn) 100.7% (103.4%) Capturing profitable growth opportunities Normalised for large losses (aerospace) C/R in line with mid-nineties am
Slide 35: We focus on tangible business impact – Innovative and more disruptive offerings
Reinsurance – Creating new strategic options We focus on tangible business impact – Innovative and more disruptive offerings are gaining traction Munich Re Domain expertise in Efficient Global Financial Strong brand No IT strategic underwriting, claims, access to presence strength and reputation leg
Slide 36: Cyber insurance – Continuously one of Munich Re's main strategic growth areas
Reinsurance – Cyber (re)insurance Cyber insurance – Continuously one of Munich Re’s main strategic growth areas Gross premiums written cyber portfolio1 US$ m 604 ▪ Early and full commitment to cyber allows us to shape the market and results in a lead position 473 ▪ Good profitability of the cyber in
Slide 37: 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