Munchener Ruckversicherungs-gesellschaft Ag · XETR:MUV2
Munchener Ruckversicherungs-gesellschaft — Munich Re — Investor Presentation (May 2014)
103 slides from Munchener Ruckversicherungs-gesellschaft's investor presentation, May 2014
Slide 1: Strong balance sheet – Strong returns
Strong balance sheet – Strong returns Munich Re equity story May 2014 Munich Re – May 2014 1
Slide 2: Agenda
Agenda Equity story 3 Backup Group 21 Reinsurance 47 Primary insurance 67 Munich Health 83 Investments 87 Munich Re – May 2014 2
Slide 3: Combination of primary and reinsurance under one roof
Combination of primary and reinsurance under one roof – realising synergies and economies of scope Segmental breakdown – Gross written premiums €m Reinsurance property-casualty Primary insurance property-casualty 17,013 (33%) 5,507 (11%) Primary insurance life 5,489 (11%) Total €51.1bn Primary insur
Slide 4: Delivering on our promise, reliable for shareholders
Delivering on our promise, reliable for shareholders Delivering on promised net result … €bn Outlook 2014 Actual 3.2 3.0 3.3 Expected net result: €3bn 2.4 2.4 2.5 Technical profitability becoming 2.0 even more relevant … Guidance … in an environment of low interest 0.7 rates and competitive re
Slide 5: Good financial results contributing to attractive long-term shareholder return
Good financial results contributing to attractive long-term shareholder return Return on equity % Attractive risk/return profile1 % Total shareholder return (p.a.) Average RoE: 11.1% 15 15.3 Peer 3 14.1 12.5 12.6 12.6 10 11.8 Peer 2 10.4 Peer 4 5 Peer 5 7.0 Peer 6 0 3.3 Peer 1 –5 20 30 40 50 2005 20
Slide 6: Stability reflected in solid financial position
Stability reflected in solid financial position Excellent economic solvency ratio Substantial capital buffer Strengthened German GAAP further improved supporting AA rating capital position Internal Rating HGB1 model agencies flexibility Economic solvency ratio Agency Rating Distributable earnings €b
Slide 7: Active capital management based on profitable growth
Active capital management based on profitable growth Strong capitalisation facilitating enabling enabling profitable business expansion capital repatriation Gross written premiums €bn Sustainable dividend growth € CAGR: 3.7% CAGR: 11.2% 7.25 51.1 3.10 38.2 2005 2013 2005 2012 Financial solidity allo
Slide 8: Investment portfolio
Investment portfolio Investment portfolio1 % Portfolio management Land and buildings Fixed-interest At Group level, duration gap between assets 2.5 (2.5) securities and liabilities remains very low 53.2 (52.9) Shares, equity funds and Expansion of US, Spanish and Italian at the participating interes
Slide 9: Well-balanced investment management in low-interest-rate environment
Well-balanced investment management in low-interest-rate environment Running and reinvestment yield % Composition of reinvestment yield 20131 2011 2012 2013 4 Reinvestment yield (%) Bank bonds Corporate 4.0 bonds 3.6 3.4 3 Structured Government 3.0 products bonds 2.2 2.3 2 Pfandbriefe/ covered bonds
Slide 10: Low interest rates – Technical profitability becoming even more relevant
Low interest rates – Technical profitability becoming even more relevant Increasing earnings contribution from Run-off result2: Profitability in p-c reinsurance underwriting1 supported by strong reserving position 100% 84% 6% 4.7% 75% 4% 50% 2% 25% 0% 0% 2008 2009 2010 2011 2012 2013 2008 2009 2010
Slide 11: Reinsurance – Competitive environment in property-casualty
Reinsurance – Competitive environment in property- casualty following increasing supply of capacity Structural increase of business diversification1 €bn Munich Re well prepared 27.8 CAGR Diversification Risk Solutions 21.9 4.0 +16% Risk Solutions – Profitable specialty business 1.9 largely detache
Slide 12: Reinsurance life – Another year of very strong new business generation
Reinsurance life – Another year of very strong new business generation Premiums and value generation per year €m Gross premiums written (GWP) Technical result and fee income1 MCEV value of new business (VNB) Fee income 11,130 10,829 643 Technical result 478 562 573 577 9,481 421 380 58 475 7,901 51
Slide 13: Primary insurance property-casualty – Combined ratio target ~95%
Primary insurance property-casualty – Overall combined ratio target ~95% Germany – Strong performance … … based on attractive business mix2 €m Combined ratio1 Other Personal accident 100% 360 (11%) 724 (22%) Market 95% Legal TOTAL Motor ERGO protection €3.3bn 411 (12%) 667 (20%) 90% Liability Fire/P
Slide 14: Primary insurance life – Comprehensive management of back book, launch of new products
Primary insurance life – Comprehensive management of back book, launch of new products Back book – Implemented measures New business – Less interest-rate sensitive Interest-rate hedging programme – protection ERGO first German life insurer to present new against reinvestment risk via receiver sw
Slide 15: Primary insurance health – ERGO market leader in supplementary insurance
Primary insurance health – ERGO continues to be market leader in supplementary insurance Comprehensive insurance1 €bn ERGO business mix2 % 4.6 ERGO €4.7bn €5.2bn 13.1% 3.8 2.7 MARKET 2.3 2.2 VOLUME 74.1 71.1 1.8 Comprehensive 1.5 1.3 €29bn Supplementary 25.9 28.9 ERGO 2009 2013 Supplementary insuran
Slide 16: Munich Health – Strong earnings 2013 after fixing problems in US primary business
Munich Health – Strong earnings 2013 after fixing problems in the US primary business Recent key findings Management measures Excellence Reinsurance Strengthen underwriting and client management Strengthen Underwriting results too volatile capabilities in Europe and the US core Portfolio highl
Slide 17: Good start to 2014
Good start to 2014 Munich Re (Group) – Q1 2014 NET RESULT SHAREHOLDERS' EQUITY INVESTMENT RESULT €924m €27.4bn (+4.4% vs. 31.12.) RoI of 3.8% Good operating performance Strong capitalisation according to Solid return given low-yield across all segments – sound all metrics providing high degree envir
Slide 18: Outlook 2014
Outlook 2014 Munich Re (Group) GROSS PREMIUMS WRITTEN RETURN ON INVESTMENT NET RESULT ~€48bn Target 20141 Target 2014 ~3.3% Target 2014 €3bn (prev. ~€50bn) Focus on bottom-line prevails; Solid return given ongoing low RoRaC target of 15% after tax reduction due to FX interest-rate environment over t
Slide 19: Strong balance sheet – Strong returns
Strong balance sheet – Strong returns Good track Successfully dealing with challenging economic conditions – We remain a strong partner record for clients and reliable for shareholders, delivering on our promises Business Focus on insurance risks safeguarding sustainable value creation – strategy Co
Slide 20: Backup
Backup Munich RE = Munich Re — May 2014 20
Slide 21: Key financials – Our aim is sustained profitable growth
Backup: Group – Key financials Key financials – Our aim is sustained profitable growth Munich Re1,2 2013 2012 2011 2010 2009 Gross written premiums €bn 51.1 52.0 49.5 45.5 41.4 Operating result €m 4,409 5,349 1,180 3,978 4,721 Taxes on income €m 108 878 –552 692 1,264 Consolidated result €m 3,342 3,
Slide 22: IFRS capital position
Backup: Group – Key financials IFRS capital position Equity €m UNREALISED GAINS/LOSSES Equity 31.12.2013 26,226 Fixed-interest securities: Consolidated result 924 +€737m Changes Non-fixed-interest Dividend – securities: +€31m Unrealised gains/losses 769 Exchange rates 2 Share buy-backs –579 Other 51
Slide 23: Distributable earnings of parent company very solid
Backup: Group – Key financials Distributable earnings of parent company very solid even after strengthening of equalisation reserves HGB earnings financing capital repatriation €bn Reconciliation IFRS to HGB result in 2013 €bn 0.3 3.7 3.4 –1.3 1.6 3.3 –0.7 –0.2 0.3 –1.1 2.4 –0.3 1.6 Distributable Di
Slide 24: Insurance financial strength ratings providing strong competitive position
Backup: Group – Rating Insurance financial strength ratings providing for strong competitive position A.M. Best Fitch Moody's Standard & Poor's A++ Berkshire2 AAA Aaa AAA Berkshire/Gen Re AA+ Berkshire/Gen Re Aa1 Berkshire/Gen Re AA+ Berkshire/Gen Re neg A+ AA Allianz Aa2 Allianz Germany AA Allianz
Slide 25: Munich Re Group bonds
Backup: Group – Outstanding bonds Munich Re Group bonds Subordinated bonds1 Nominal Coupon rate Emission/ Maturity First possible volume p. a. Issue redemption date €900m Until 2022 6.25%, thereafter variable 2012 2042 26 May 2022 £450m Until 2022 6.625%, thereafter variable 2012 2042 26 May 2022 €1
Slide 26: Munich Re's enterprise risk management (ERM)
Backup: Group – Risk management Munich Re’s enterprise risk management (ERM) safeguards investors’ interests and clients’ protection Clear limits defining framework for operational actions Risk identification, early warning Risk modelling Risk steering Comprehensive overview with Right balance betwe
Slide 27: Set-up of Munich Re's risk strategy
Backup: Group – Risk management Set-up of Munich Re's risk strategy Category Risk criteria Measure Criteria's objective ERM objective addressed Whole Financial strength ERC Safeguarding sufficient portfolio Rating excess capital and Solvency limiting frequency of Maintaining criteria Munich Re
Slide 28: Economic capital requirements significantly reduced
Backup: Group – Risk management Economic capital requirements significantly reduced Economic risk capital – Breakdown by risk category €bn Development of Group ERC 20133 €bn Risk category Group RI PI MH Div. ERC 27.3 31.12.2012 2012 2013 2013 2013 2013 2013 Property- –0.7 Prop.-casualty1 9.7 9.0 8.9
Slide 29: Summary of economic capital disclosure
Backup: Group – Risk management Summary of economic capital disclosure Position as at 31 December 2013 €bn Capital with Solvency II Additional 31.12. 31.12. calibration 75% buffer 2013 2012 Available financial 38.2 36.5 resources (AFR) Economic risk capital1 13.5 10.2 23.7 27.3 Economic capital buff
Slide 30: Property-casualty risks: Natural catastrophe exposure
Backup: Group – Risk management Property-casualty risks: Natural catastrophe exposure Munich Re Group's nat cat exposures (net of retrocession)1 €bn ERC property-casualty €bn AggVaR (return period 200 years) AggVaR (return period 200 years) (pre-tax) (pre-tax) 9.7 9.0 4 Atlantic Hurricane Storm Euro
Slide 31: Economic earnings
Backup: Group – Risk management Available financial resources (AFR) Change and relation to economic earnings AFR development in 2013 €bn Probability distribution of economic earnings €bn +4.2 38.2 36.5 –2.5 10 5 Expected economic earnings 2014 (–0.5) (+7.2) Economic earnings 0 Previous year –5 –10 M
Slide 32: Strong capitalisation allowing attractive capital repatriation
Backup: Group – Risk management Strong capitalisation allowing us for attractive capital repatriation Munich Re actions1 Munich Re solvency ratio (ESR) ESR1 – Sensitivity % % >120% MRCM Solvency II Ratio as at Excellent capitalisation 153 31.12.13 Capital repatriation Solvency ratio adjusted Inc
Slide 33: Strong increase in AFR over the last seven years
Backup: Group – Risk management Strong increase in AFR over the last seven years despite capital repatriation and difficult economic environment AFR development 2007–2013 €bn Economic earnings €bn 30.9 +4.2 –14.5 +17.6 38.2 4.2 –6.3 6.0 3.6 –1.2 7.1 4.2 Confidence2 ~30 ~99 ~10 ~50 ~90 ~10 ~40 % % %
Slide 34: Well defined ALM process basis for success
Backup: Group – Risk management Well defined ALM process basis for success ALM process Insurance Replicating Economic Benchmark Active asset liabilities portfolio neutral position portfolio management Determining the Calculation of risk- Risk-minimal Well-diversified Internal asset expected technica
Slide 35: Solvency II motivates risk-based economic steering
Backup: Group – Solvency II Solvency II motivates the insurance industry to fully adopt stringent risk-based economic steering 3 pillars of Solvency II Changes compared to Solvency I 1 Quantitative 2 Qualitative 3 Transparency Principle-based (in contrast to Solvency I rules) Economic and market
Slide 36: Solvency II – Impact on the European insurance industry
Backup: Group – Solvency II Solvency II – Impact on the European insurance industry Main implications of Solvency II Impact on the insurance industry Catalyst for the introduction of risk/value- Fostering a paradigm change towards economic based steering steering concepts Stimulus for product
Slide 37: Actual versus expected comparison – Loss monitoring
Backup: Group – Reserves Actual versus expected comparison – Loss monitoring yields consistent picture across years Reinsurance group – Comparison of incremental expected losses with actual reported losses1 €m By exposure year By line of business 10,000 10,000 Actual reported Actual reported loss lo
Slide 38: Positive run-off result without weakening ability to absorb volatility
Backup: Group – Reserves Positive run-off result without weakening our ability to absorb potential future volatility Ultimate losses (adjusted to exchange rates as at 31.12.2013) €m Ultimate reduction Accident year Reinsurance basic losses: Date ≤2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 201
Slide 39: Our ILS market platform complements our core business
Backup: Group – Risk trading Our ILS market platform complements our core business with alternative capacity and earnings potential Strategic scope of our ILS market activity Munich Re's view on ILS market benefits Munich Re's ILS related competencies Multi-year price stability Dedicated ILS tea
Slide 40: Outstanding cat bonds
Backup: Group – Risk trading Outstanding cat bonds Transaction Closing Maturity Volume Perils covered Generation of For Lion I Re 04/2014 04/2017 US$ 190m Windstorm Europe risk-based and clients VenTerra Re Ltd. 01/2014 01/2017 US$ 250m Tropical Cyclones Australia & Earthquake USA fee income Mun
Slide 41: Munich Re's maximum in-force nat cat protection
Backup: Group – Risk trading Munich Re's maximum in-force nat cat protection Munich Re's maximum in-force nat cat protection €m 1,400 Cat bonds Risk swaps 1,200 ILW/Derivative 1,000 Indemnity retro 800 2014 protection (total) 600 400 200 0 US windstorm US windstorm US earthquake EU windstorm EU othe
Slide 42: Five action fields in one group-wide corporate responsibility programme
Backup: Group – Corporate responsibility Five action fields in one group-wide corporate responsibility programme Enabling framework Core activities Enabling framework 1 2 3 4 5 Strategy and Corporate Environmental Corporate Reporting and governance responsibility in management citizenship (CC) commu
Slide 43: Broad external recognition for corporate responsibility performance
Backup: Group – Corporate responsibility Broad external recognition for Munich Re’s corporate responsibility performance Permanently listed since 2001 Permanently listed since 2001 The STOXX® Global ESG Leaders Index represents leading companies from an ESG point of view Rated "Prime" in Corporate R
Slide 44: Munich Re's international cooperation
Backup: Group – Corporate responsibility Munich Re’s international cooperation – A strong commitment towards corporate responsibility Examples UNEP FI Munich Re has signed the climate declaration of the UNEP FI and is active member of the UNEP FI Climate Change Working Group. since 1999 Principles f
Slide 45: Financial highlights Q1 2014
Backup: Group – Financial highlights Q1 2014 Financial highlights Q1 2014 Net result €m Q1 Q1 1,134 1,198 2014 2013 970 924 812 542 632 Total1 924 970 477 Reinsurance 750 828 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Primary insurance 154 117 2012 2013 2014 Munich Health 20 37 Technical result €m Investment result €m
Slide 46: Reconciliation of operating to net result
Backup: Group – Financial highlights Q1 2014 Reconciliation of operating to net result Reconciliation of operating to net result €m Q1 2014 Q1 2013 Operating result 1,307 1,370 Other non-operating result –114 110 Goodwill impairments – – Net finance costs –56 –68 Taxes –213 –442 Net result 924 970 O
Slide 47: Munich Re – The leading global reinsurer
Backup: Reinsurance Munich Re – The leading global reinsurer Rank Company Country Net reinsurance premiums written 2012 (US$ m) 1 Munich Re Germany 35,797 2 Swiss Re Switzerland 25,344 3 Hannover Re Germany 16,346 4 Berkshire Hathaway Re USA 16,145 5 Lloyd’s1 UK 11,373 6 SCOR SE France 11,286 7 Rein
Slide 48: Reinsurance – Overview
Backup: Reinsurance Overview Reinsurance1 2013 2012 2011 2010 2009 Gross written premiums €bn 27.8 28.2 26.0 23.6 21.8 Investments €bn 78.5 83.8 79.5 83.7 76.8 Net technical provisions €bn 60.5 61.1 62.7 56.6 53.4 Large and very large losses (net) €m 1,689 1,799 5,048 2,228 1,157 Thereof natural cat
Slide 49: Reinsurance property-casualty – Key figures
Backup: Reinsurance property-casualty Reinsurance property-casualty – Key figures Net result €m 913 896 619 655 647 655 647 522 527 306 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q1 2012 2013 2014 2013 2014 Technical result €m Investment result €m Other1 €m 882 822 –243 –222 337 367 Q1 2013 Q1 2014 Q1 2013 Q1 2014
Slide 50: Combined ratio – Benign large losses and reserve releases
Backup: Reinsurance property-casualty Combined ratio – Benign large losses and reserve releases Combined ratio % Basic losses Nat cat losses Man-made losses Expense ratio 2012 91.0 50.2 7.7 3.1 30.0 2013 92.1 51.3 4.7 5.7 30.4 Q1 2014 86.9 55.9 0.9 0.1 30.0 Combined ratio % Large losses Q1 2014 % 99
Slide 51: Normalised combined ratio
Backup: Reinsurance property-casualty Normalised combined ratio Normalised combined ratio % Changes Modelled Reported Reported Expectation Reported sliding- assumption Normalised combined major major reserve scale on reserve combined ratio losses losses1 releases2 provisions releases ratio Q1 85.7 –
Slide 52: Munich Re set-up supports sustainable earnings level
Backup: Reinsurance property-casualty Munich Re set-up supports sustainable earnings level Munich Re portfolio based on total P-C book 2013 % Portfolio Risk Solutions Tailor-made Aviation Casualty motor Well-diversified portfolio 24 solutions 18 2 24 with growing share of highly profitable Risk So
Slide 53: Risk Solutions – Continued business expansion
Backup: Reinsurance property-casualty Risk Solutions – Continued business expansion Growing strategic importance Growing portfolio Leadership position in Differentiating pillar Upward performance trend profitable specialty markets Additional competitive edge detached from reinsurance Less large loss
Slide 54: Increased capacity of traditional reinsurance and influx of alternative capital
Backup: Reinsurance property-casualty Increased capacity of traditional reinsurance and influx of alternative capital … Worldwide nat cat XL capacity US$ bn Reinsurance market dynamics Sufficient reinsurance capacity available in the 300 CAGR market for quite some years now 260 270 75 +14% Alter
Slide 55: Hardly jeopardizing Munich Re's overall profitability
Backup: Reinsurance property-casualty ... hardly jeopardizing Munich Re’s overall profitability Munich Re total property-casualty book1 … % … quite resilient to market dynamics Rest of p-c book Nat cat XL Diversified risk book providing a competitive >90% <10% advantage – less risk capital intensi
Slide 56: April renewals – Regional focus on Japan and USA
Backup: Reinsurance property-casualty April renewals – Regional focus on Japan and USA, high nat cat share Total property-casualty book1 % Regional allocation of April renewal % Remaining Business up for Rest2 Worldwide business January renewal 5 32 31 51 Europe TOTAL Japan 3 €0.8bn 26 Latin North A
Slide 57: Despite rate decline, prices remain at an attractive level
Backup: Reinsurance property-casualty Despite rate decline, prices remain at an attractive level April renewals 2014 % 100 –21.9 78.1 –0.1 20.8 98.8 €m 824 –180 643 –1 172 814 Change in premium –1.2% Thereof price movement1 ~ –8.4% Thereof change in exposure for our share +7.2% Total renewable Cance
Slide 58: January 2014 renewals – Disciplined underwriting prevails
Backup: Reinsurance property-casualty January 2014 renewals – Disciplined underwriting prevails Year-to-date price change 2010–2014 % Nominal Adjusted for interest-rate changes 2.4 1.4 1.0 0.5 0.3 0.2 0.0 –0.1 –0.7 –1.5 2010 2011 2012 2013 2014 Minor economic price decline and largely stable terms a
Slide 59: Strong market shares in all regions add up to global leading position
Backup: Reinsurance life Strong market shares in all regions add up to global leading position Global life market share1 % Munich Re's regional footprint1 % 27% Munich Re 21% 2011 Global market 2007 share 16% Swiss Re 23% 2 15% Europe Americas APAC RGA 13% Historically strong position of Munich Re
Slide 60: Reinsurance life – Key figures
Backup: Reinsurance life Reinsurance life – Key figures Net result €m 173 193 173 139 122 106 103 103 61 –14 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q1 2012 2013 2014 2013 2014 Technical result €m Investment result €m Other1 €m 209 –19 184 173 –49 104 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Back to norma
Slide 61: Bulk of top and bottom line from North America
Backup: Reinsurance life Bulk of top and bottom line from North America – Largest growth rates in Asian markets Portfolio split by region 2013 (2008) – Gross premiums written vs. technical result vs. VNB GWP Technical result VNB Other North America Other North America Other North America 19 (34) 59
Slide 62: Favourable financial performance overall – despite two slips
Backup: Reinsurance life Favourable financial performance overall – despite two slips Premiums and value generation by product €m Gross premiums written (GWP) Technical result1 VNB 2013 5,992 4,517 320 10,829 378 –12 4 370 404 124 49 577 2012 6,030 4,555 545 11,130 410 40 –30 420 404 129 40 573 3% 1
Slide 63: Financially Motivated Reinsurance remains a key strategic pillar
Backup: Reinsurance life Financially Motivated Reinsurance remains a key strategic pillar Financially Motivated Reinsurance €m Gross premiums written Technical result and fee income1 VNB % of total 4,536 Fee income 119 % of total 4,109 Technical result 3,638 92 185 % of total 49 75 49 119 1,998 25 7
Slide 64: Asia – Sustained growth across all major markets
Backup: Reinsurance life Asia – Sustained growth across all major markets Reinsurance life Asia – Business development €m Gross premiums written Technical result VNB % of total Fee income % of total 97 1,178 Technical result 81 957 959 % of total 70 872 55 12 59 56 1 35 12 32 54 58 17 11 14 10 29 13
Slide 65: Very satisfactory new business profitability
Backup: Reinsurance life Very satisfactory new business profitability on a pure economic and a regulatory basis RoRaC spread1 % IRR spread1 % Payback period2 years 20% 20% 10 19% 15% 8 18% 10% 6 17% 5% 4 16% 0% 2 2010 2011 2012 2013 2010 2011 2012 2013 2010 2011 2012 2013 Very good new business
Slide 66: MCEV – Reinsurance life
Backup: Reinsurance life MCEV – Reinsurance life MCEV – Reinsurance life 2013 €m MCEV 31.12.2012 10,616 3 Value of 577 new business 1 Opening adjustments –265 Expected Adjusted MCEV 31.12.2012 10,352 317 return Operating MCEV earnings 369 4 Experience –113 2 Economic variances –168 variances Other n
Slide 67: Primary insurance – Overview
Backup: Primary insurance Overview Primary insurance1, 2 2013 2012 2011 2010 2009 Gross written premiums €bn 16.7 17.1 17.4 17.5 16.6 Investments €bn 126.1 124.9 117.0 121.8 118.4 Net technical provisions €bn 125.1 122.8 116.1 111.2 107.7 Combined ratio property-casualty % 97.2 98.7 99.1 96.8 93.2 P
Slide 68: Primary insurance life – Key figures
Backup: Primary insurance life Primary insurance life – Key figures Net result €m 91 41 42 44 44 23 28 23 –4 –17 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q1 2012 2013 2014 2013 2014 Technical result €m Investment result €m Other1 €m 1,000 1,062 31 –3 –34 –45 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Last ye
Slide 69: Primary insurance life – New business
Backup: Primary insurance life Primary insurance life – New business (statutory premiums) Total €m Comments Regular Single Germany Total premiums premiums APE1 Lower single premiums from short-term investment product "MaxiZins"– difficult environment for regular Q1 399 123 276 151 premium business;
Slide 70: Comprehensive management of back book
Backup: Primary insurance life Comprehensive management of back book Implemented measures Interest-rate hedging programme – protection against reinvestment risk via receiver swaptions Duration gap in German life noticeably reduced to below one year for large life companies Comparatively low bo
Slide 71: Life insurance – profit sharing
Backup: Primary insurance life Life insurance – profit sharing Profit sharing Investment income Expense result Underwriting result Minimum 90%1 Maximum 10%1 50:502 75:252 Tax Policyholders Shareholders Guaranteed Allocation to Direct crediting interest RfB RfB (bonus reserve) Actuarial reserves Term
Slide 72: New product generation in German primary life
Backup: Primary insurance life New product generation in German primary life as an important step in the right direction Adverse interest-rate environment … ... requires action to meet stakeholder expectations 6% Shareholder Significant reduction of risk capital allows higher RoRAC Hedgeable gua
Slide 73: Launch of less interest-rate-prone new products
Backup: Primary insurance life Launch of less interest-rate-prone new products – Concept for Germany well advanced In an environment of political discussion … Share of new products – 2nd half 2013 (3rd layer only)1 "We need changes in the products" ERGO Annuity Classic annuities (Gabriel Bernardin
Slide 74: Primary insurance – MCEV
Backup: Primary insurance Primary insurance – MCEV MCEV – Primary insurance €m MCEV 31.12.2012 2,728 Value of 213 new business Opening adjustments –247 Expected Adjusted MCEV 31.12.2012 2,482 95 return Operating MCEV earnings 2,175 Experience 200 Economic variances 1,132 variances Other non-operatin
Slide 75: Primary insurance health – Key figures
Backup: Primary insurance health Primary insurance health – Key figures Net result €m 48 50 38 33 33 25 25 14 17 11 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q1 2012 2013 2014 2013 2014 Technical result €m Investment result €m Other1 €m 329 344 125 101 –26 –33 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Better
Slide 76: Primary insurance property-casualty – Key figures
Backup: Primary insurance property-casualty Primary insurance property-casualty – Key figures Net result €m 69 70 77 69 77 43 16 14 –7 –83 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q1 2012 2013 2014 2013 2014 Technical result €m Investment result €m Other1 €m –59 –50 95 101 110 100 Q1 2013 Q1 2014 Q1 2013 Q1 2014
Slide 77: Combined ratio
Backup: Primary insurance property-casualty Combined ratio Combined ratio % Germany % 104.0 98.0 96.3 95.1 100.3 99.2 97.5 95.3 95.1 95.9 96.1 95.0 2012 2013 Q1 2014 Some random negative fluctuations; improvements in legal expenses Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Expense ratio Loss ratio Interna
Slide 78: Property-casualty – Attractive business mix focusing on personal lines
Backup: Primary insurance property-casualty Property-casualty – Attractive business mix focusing on personal lines ERGO 2013 – Gross premiums p-c Germany % German market 2012 – GWP % Other Personal accident Other Motor 10.9 21.9 11.6% 35.3% Legal TOTAL Legal protection Personal accident protection M
Slide 79: German business affected by nat cats
Backup: Primary insurance property-casualty German business affected by nat cats Normalised combined ratio 2013 % Severe nat cat events in 2013 Combined ratio 2013 96.3 Flood in June most expensive catas- trophe in terms of economic losses Nat cat adjustment1 –3.3 Hailstorms that hit some region
Slide 80: International business
Backup: Primary insurance property-casualty International business International: Gross premiums written €m International: Combined ratio % Other Poland Cost ratio 317 873 Loss ratio 107.8 107.9 96.0 97.9 98.7 Legal TOTAL 25.9 81.3 45.8 protection €2.2bn 32.8 45.6 37.9 29.7 651 81.9 63.2 51.6 52.3 6
Slide 81: Geographic focus on CEE and Asia
Backup: ERGO International Geographic focus on CEE and Asia – Regions with the highest expected primary insurance premium growth Strategic focus regions – Why CEE and Asia? CEE Asia Markets with high growth Underdeveloped path and low insurance insurance markets and penetration high growth expec
Slide 82: International life – affected by low-yield environment
Backup: ERGO International life International life – affected by low-yield environment but still solid economic financials Total premiums €m MCEV €m VNB €m CAGR 5.4% 85 1,832 Others 1,483 1,551 1,365 323 Italy 1,229 63 59 1,326 58 Belgium 51 281 297 Austria 761 440 531 279 571 326 2008 2013 2009 201
Slide 83: Munich Health – Overview
Backup: Munich Health Munich Health – Overview Munich Health1, 2 2013 2012 2011 Gross written premiums €bn 6.6 6.7 6.0 Investments €bn 3.6 4.2 4.6 Net technical provisions €bn 2.2 2.2 2.4 Combined ratio3 % 98.3 100.2 99.5 Regional premium breakdown4 % Segmental premium breakdown4 €m Other North Amer
Slide 84: Munich Health – Key figures
Backup: Munich Health Munich Health – Key figures Net result €m 58 56 37 31 26 37 20 20 1 –155 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q1 2012 2013 2014 2013 2014 Technical result €m Investment result €m Other1 €m –11 –5 54 13 14 20 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Improvements in primary Previous
Slide 85: Private health insurance growing worldwide above GDP
Backup: Munich Health Private health insurance growing worldwide above GDP Private health insurance volume per region – Gross written premiums €bn Market dominated by North America Europe Middle East Health specialist insurers +3% +4% +10% +1% +1% +3% +10% Multi-line insurers 957 10 732 849 108 129
Slide 86: Munich Health has a global presence and over 3,000 health experts
Backup: Munich Health Munich Health has a global presence and can leverage the health know-how of over 3,000 health experts Presence of Munich Health – Over 3,000 health experts at 26 international locations Additional health Worldwide health Specialized private health coverage and BestCare, reinsur
Slide 87: Investment result
Backup: Investments Investment result Investment result €m Q1 2014 Return1 Q1 2013 Return1 Regular income 1,712 3.1% 1,806 3.2% Write-ups/write-downs –127 –0.2% –103 –0.2% Disposal gains/losses 512 0.9% 324 0.6% Other income/expenses2 –27 0.0% –20 0.0% Investment result 2,070 3.8% 2,007 3.6% Q1 Q1 Q
Slide 88: Return on investment by asset class and segment
Backup: Investments Return on investment by asset class and segment %1 Regular income Write-ups/downs Disposal result Other inc./exp. RoI ᴓ Market value3 Afs fixed-interest 3.0 – 0.8 – 3.8 115,905 Afs non-fixed-interest 2.4 –0.7 4.8 – 6.5 12,181 Derivatives 6.4 –21.5 –2.8 –3.2 –21.1 2,006 Loans 3.5
Slide 89: Investment portfolio Fixed-interest securities and miscellaneous
Backup: Investments Investment portfolio Fixed-interest securities and miscellaneous Fixed-income portfolio % Fixed-interest securities1 % Loans to policyholders/ Governments/ Structured products Governments/ Mortgage loans Semi-government 6 (6) Semi-government 3 (3) 47(46) 55 (53) Corporates Bank b
Slide 90: Fixed-income portfolio Total
Backup: Investments Fixed-income portfolio Total Rating structure % Regional breakdown % <BB and NR AAA Without With Total 6 (6) 42 (42) policyholder 31.3. 31.12. BB participation 2014 2013 2 (2) Germany 5.1 26.4 31.5 32.2 TOTAL BBB €189.7bn US 12.7 1.1 13.8 13.7 13 (12) France 2.3 5.6 7.9 7.9 A AA
Slide 91: Fixed-income portfolio Government/Semi-government
Backup: Investments Fixed-income portfolio Government/Semi-government Rating structure % Regional breakdown % BB AAA Without With Total 1 (1) 48 (47) policyholder 31.3. 31.12. participation 2014 2013 BBB 12 (10) Germany 5.0 25.9 30.9 33.0 TOTAL A €89.5bn US 14.4 0.5 14.9 13.9 5 (6) Supra- 1.5 5.4 6.
Slide 92: Fixed-income portfolio Corporate bonds
Backup: Investments Fixed-income portfolio Corporate bonds (excluding bank bonds) Rating structure % Sector breakdown % <BB and NR AAA 31.3. 31.12. 1 (1) 1 (1) 2014 2013 Utilities 21.2 19.7 BB TOTAL AA Oil and gas 12.9 12.2 9 (9) 6 (7) €18.8bn Industrial goods and services 12.7 13.2 Telecommunicatio
Slide 93: Fixed-income portfolio Structured products
Backup: Investments Fixed-income portfolio Structured products Structured products portfolio (at market values): Split by rating and region €m Rating Region USA + Market- AAA AA A BBB <BBB NR RoW Europe Total to-par ABS Consumer-related ABS1 305 251 275 45 4 – 268 612 880 101% Corporate-related ABS2
Slide 94: Fixed-income portfolio Bank bonds
Backup: Investments Fixed-income portfolio Bank bonds Rating structure % Regional breakdown % <BB and NR AAA Total 5 (4) 0 (1) Senior Sub- Loss- 31.3. 31.12. bonds ordinated bearing 2014 2013 AA Germany 24.1 4.4 4.0 32.5 34.7 BB 8 (8) US 25.0 4.1 0.3 29.5 29.6 4 (3) UK 9.2 1.4 0.2 10.7 10.2 TOTAL Ir
Slide 95: On- and off-balance-sheet reserves (gross)
Backup: Investments On- and off-balance-sheet reserves (gross) €m 31.12. 31.12. 31.12. 31.12. 31.3. 2010 2011 2012 2013 2014 Market value of investments 196,398 207,108 224,537 217,738 223,463 Total reserves 7,374 11,236 22,478 15,192 18,931 On-balance-sheet reserves Fixed-interest securities 2,201
Slide 96: On-balance-sheet reserves
Backup: Investments On-balance-sheet reserves On-balance-sheet reserves €m Q1 2014 Investments afs 8,600 Valuation at equity 109 Unconsolidated affiliated enterprises 159 Cash flow hedging 38 Total on-balance-sheet reserves (gross) 8,906 Provision for deferred premium refunds –3,659 Deferred tax –1,
Slide 97: Off-balance-sheet reserves
Backup: Investments Off-balance-sheet reserves Off-balance-sheet reserves €m Q1 2014 Real estate1 1,772 Loans and investments (held to maturity) 7,887 Associates 366 Total off-balance-sheet reserves (gross) 10,025 as if Provision for deferred premium refunds –7,140 Deferred tax –861 Minority interes
Slide 98: 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) +6.8 +3.3 –6.2 –11.7 Change in on-balance-sheet reserves, net (€bn)1 +1.6 +0.8 –1.5 –2.9 Change in off-balance-sh
Slide 99: Sensitivities of MCEV
Backup: Additional information Sensitivities of MCEV €m Reinsurance Primary insurance Change Change Change Change MCEV in €m in % MCEV in €m in % Base case 9,382 5,949 Interest rates –100bp 9,817 435 4.6 4,223 –1,727 –29.0 Interest rates +100bp 8,961 –421 –4.5 7,178 1,229 20.7 Equity/property values
Slide 100: Mission of Investor & Rating Agency Relations
Backup: Additional information Mission of Investor & Rating Agency Relations Responsibility Main objective Munich Re’s communication with the capital Active communication to support a fair capital- market / financial community market valuation of Munich Re shares and outstanding bonds External commu
Slide 101: Financial calendar
Backup: Additional information Financial calendar Financial calendar 27 May 2014 Deutsche Bank "Global Financial Services Investor Conference", New York 4 June 2014 Commerzbank "European Corporate Day 2014", London 10-11 June 2014 Goldman Sachs "18th Annual European Financial Conference", Madrid 21
Slide 102: For information, please contact
Backup: Additional 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:
Slide 103: Disclaimer
Backup: Additional information 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