34 slides from Munchener Ruckversicherungs-gesellschaft's earnings presentation, Mar 15, 2018
Slide 1: Balance sheet press conference 2018: Executing business opportunities
Image: Getty Images/Oaltindag Balance sheet press conference 2018 Executing business opportunities Munich, 15 March 2018
Slide 2: Agenda
Agenda 1 Executing business opportunities Joachim Wenning 2 3 ERGO Markus Rieß 15 2 Group Finance Jörg Schneider 9 4 Reinsurance Torsten Jeworrek 24 5 Outlook Joachim Wenning 31 Analysts' and Investors' Call 2018 2
Slide 3: A year of record-high insured natural catastrophe losses
Executing business opportunities A year of record-high insured natural catastrophe losses Record-high insured Munich Re delivers nat cat losses of US$ 135bn good underlying results IFRS NORMALISED Overall nat cat losses NET INCOME NET RESULT Insured nat cat losses €0.4bn ~€2.2bn Diversification Adju
Slide 4: Despite loss volatility, Munich Re proves a superior risk/return profile
Executing business opportunities Despite loss volatility, Munich Re proves a superior risk/return profile RoE exceeds % Performance vs. major peers % cost of capital and insurance index1 Total shareholder return (p.a.) 16 Value creation 20 12 15 Peer 4 Peer 3 8 Average cost of capital 10 Peer 7 Peer
Slide 5: Executing strategic priorities of the Group (1/2)
Executing business opportunities Executing strategic priorities of the Group (1/2) STRATEGIC PRIORITIES Earnings stabilisation and Digital Leanness, increase of earnings power transformation complexity reduction Focus on Focus on leveraging Focus on business and Profitability all our strengths
Slide 6: Executing strategic priorities of the Group (2/2)
Executing business opportunities Executing strategic priorities of the Group (2/2) GROUP $ Corporate venture-capital activities $ Munich Health integration into ERGO and Reinsurance $ Interlocked business model Improve and grow German life back-book: New platform ERGO $ $ Portfolio streamlining of i
Slide 7: Transformation Programme in the Reinsurance Group
Executing business opportunities Transformation Programme in the Reinsurance Group RESHUFFLING THE VALUE CHAIN RESTRUCTURING ACCORDING TO Digital cooperation models Munich Re Transformation Programme CLIENTS NEEDS IoT applications and services Munich Health integration EXPANDING THE BOUNDARIES
Slide 8: Leverage traditional value creation and transform businesses to reduce distance to end customer
Executing business opportunities Leverage traditional value creation and transform businesses to reduce distance to end customer – ILLUSTRATIVE – Data companies PI incumbents RI incumbents Capital market Underwriting- driven Reinsurance Digital services Reinsurance UW & capacity Partnerships Digital
Slide 9: Group Finance
Group Finance Analysts' and Investors' Call 2018 9
Slide 10: Nat cats dominating 2017
Group Finance Nat cats dominating 2017 REINSURANCE NET INCOME ERGO NET INCOME €120m (€2,540m) €273m (€41m) High nat cat claims, strong life and Above guidance – health result, tax income, FX losses Strategy Programme well on track HGB RESULT ECONOMIC EARNINGS €2.2bn (€3.4bn) €0.5bn (€2.3bn) Release
Slide 11: Prudent approach allows for reserve releases without weakening resilience
Group Finance Prudent approach allows for reserve releases without weakening resilience against future volatility Run-off change of ultimate basic and major losses1 Prudent reserving approach €1.1bn For example Ogden rate fully anticipated – Reserve release no adverse P&L impact in 2016/17 P-C r
Slide 12: Trough of running yield attrition reached
Group Finance Trough of running yield attrition reached – Diversification and real investments improve return Running yield % Reinsurance portfolio – Enhancement of running yield Reinsurance ERGO Fixed-income1 Share of real investments1 3.2 3.0 53% (54 %) 18% (15 %) North America 2.9 2.8 ~2.8% 2.7 2
Slide 13: HGB result in 2017 meets capital repatriation of ~€2.3bn
Group Finance HGB result in 2017 meets capital repatriation of ~€2.3bn ILLUSTRATIVE HGB result Equalisation provision 3.4 0.2 –0.9 Maximum requirement –0.5 9.1 9.8 10.1 €2.2bn 7.7 €7.7bn 6.6 HGB result Underwriting Investment Other HGB result 2012 2013 2014 2015 2016 2017 2016 result result 2017 U
Slide 14: Strong balance sheet allows us to execute business opportunities
Group Finance Strong balance sheet allows us to execute business opportunities CAPITAL SOLVENCY DEBT II STRONG BALANCE SHEET facilitating earnings growth enabling CAPITAL DEPLOYMENT HIGH CAPITAL RETURN Sustainable dividend per share growth Organic growth €8.60 ~€25bn M&A 3.10 Total pay-out 2005–
Slide 15: ERGO
ERGO Analysts' and Investors' Call 2018 15
Slide 16: ERGO Strategy Programme (ESP) on track
ERGO ERGO Strategy Programme (ESP) on track – Groundwork for growth laid – first success visible Guidance Actual ESP GROUNDWORK FOR GROWTH 2017 2017 Plan 2020 Sales: Overheads reduced by 36% New products launched – revamping of portfolio Total premiums P-C, Life and investment funds moving ahead
Slide 17: ESP – Timeline
ERGO ESP – Timeline Implementation of Fit Sales: New organisational new structures in Go-live of separate organisational entity admin and central set-up implemented “Traditional Life” operations functions Agents sales Sales: ERGO First cost reductions Go-live IISS1 system (EASY) competence centre fr
Slide 18: Life and Health Germany – Status 2017
ERGO Life and Health Germany – Status 2017 GROSS PREMIUMS WRITTEN NET RESULT RETURN ON INVESTMENT €9.2bn (€9.2bn) €175m (€114m) 3.5% 3.6 ( %) Four new life and pension products Enhanced profitability in Life, Significantly lower derivatives result – for individual coverage Health and Direct business
Slide 19: Life Germany – New setup for traditional book, revised product portfolio
ERGO Life Germany – New setup for traditional book, revised product portfolio Strategic Management rationale traditional life book Decision to keep and manage traditional life Separate organisational unit for traditional life business back book – make most of value potential established – fully
Slide 20: Property-casualty Germany – Status 2017
ERGO Property-casualty Germany – Status 2017 GROSS PREMIUMS WRITTEN NET RESULT COMBINED RATIO €3.3bn (€3.2bn) €57m (–€72m) 97.5% 97.0 ( %) Growth mainly driven by Non-recurring restructuring Better than ERGO Strategy fire/property and marine expenses and higher investment Programme guidance (–1.5%-p
Slide 21: Property-casualty Germany – Shaping and strengthening a balanced portfolio
ERGO Property-casualty Germany – Shaping and strengthening a balanced portfolio P-C Germany – Combined ratio Product innovations Private clients 2017 ESP guidance New modular product concept and consistent look 99 Actual 98 and feel fully implemented in 2017 Personal accident, homeowners’, house
Slide 22: International – Status 2017
ERGO International – Status 2017 PROPERTY-CASUALTY LIFE HEALTH GROSS PREMIUMS WRITTEN GROSS PREMIUMS WRITTEN GROSS PREMIUMS WRITTEN €2.8bn (€2.5bn) €0.9bn (€1.2bn) €1.4bn (€1.4bn) Strong new business growth – De-risking of traditional life Successful further driven by motor business in Poland, busin
Slide 23: International portfolio management
ERGO International portfolio management STRATEGY ONGOING PORTFOLIO ACHIEVING MEDIUM- WELL ON TRACK OPTIMISATION TERM TARGETS Fostering strong market positions, Analysing further divestment Completing portfolio optimisation e.g. in Poland (P-C result of +€50m opportunities Identifying and sec
Slide 24: Reinsurance
Reinsurance Analysts' and Investors' Call 2018 24
Slide 25: Reinsurance – Financials 2017
Reinsurance – Financials 2017 Substantial impact of large nat cat losses in P-C – Favourable claims experience in Life and Health PROPERTY-CASUALTY NET RESULT COMBINED RATIO RESERVE RELEASES –€476m (€2,025m) 114.1% (95.7%) 5.2% (5.5%) Accumulation of Substantial impact from Confidence level large na
Slide 26: January renewals driven by recent hurricane events
Reinsurance Property-casualty – January renewals 2018 January renewals driven by recent hurricane events – Munich Re able to capitalise on value proposition MARKET DEVELOPMENTS PRICE EXPOSURE Substantial price increases CHANGE CHANGE in cat-loss-affected Munich Re business lines and regions JANUAR
Slide 27: Munich Re is well positioned to profitably grow its core business fields
Reinsurance Property-casualty – Strategy Munich Re is well positioned to profitably grow its core business fields and drive innovation in the industry TRADITIONAL REINSURANCE RISK SOLUTIONS NEW STRATEGIC OPTIONS Effectively serving our clients and Reinforcing underlying Building a diversified streng
Slide 28: Strategic initiatives – Significant additional result contribution expected
Reinsurance Property-casualty – Strategic initiatives Strategic initiatives – Significant additional result contribution expected Top position in Smart growth in Capital management core mature markets core emerging markets solutions BUSINESS GROWTH Expansion in currently under- Focus on Asia, La
Slide 29: We invest in data and technology as enablers for innovation
Reinsurance Property-casualty We invest in data and technology as enablers for innovation and focus on tangible business impact MUNICH RE STRATEGIC ADVANTAGES Domain expertise in underwriting, claims, risk management Efficient access to new solutions Global presence Financial strength Strong brand a
Slide 30: Life and Health: Tapping growth opportunities in North America and Asia
Reinsurance Life and Health – Overview of major markets Life and Health: Tapping growth opportunities in North America and Asia Canada UK (€1.9bn / 14%) Continental Europe Successful FinMoRe and longevity proposition (€5.1bn / 37%) (€0.6bn / 5%) Strong results from in-force portfolio Competiti
Slide 31: Outlook
Outlook Analysts' and Investors' Call 2018 31
Slide 32: Medium-term ambition – Pushing IFRS earnings beyond current level
Executing business opportunities Medium-term ambition – Pushing IFRS earnings beyond current level ~€2.8bn ERGO >€0.5bn by 2020 ~€250m Strategy Programme well on track MIDPOINT ~€250m Substantial investments to strengthen ~€2.3bn position as leading primary insurer Cost savings to improve compet
Slide 33: Outlook 2018
Outlook 2018 GROUP REINSURANCE ERGO Gross premiums written Gross premiums written Gross premiums written €46–49bn €29–31bn €17–18bn Net result Net result Net result €2.1–2.5bn €1.8–2.2bn €250–300m Return P-C L/H technical result P-C combined ratio on investment combined ratio1 incl. fee income Germa
Slide 34: 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