Annual Report Württembergische Versicherung 2024

This is a translation of the German Annual Report. In case of any divergences, the German original is legally binding.

I hereby certify this is a correct translation, however as per the above disclaimer the German original is legally binding.

Juergen Dittmar

Head of Overseas UK Branch Württembergische Versicherung Aktiengesellschaft

Nicole Enders CO Controlling

Württembergische Versicherung Aktiengesellschaft

Württembergische Versicherung AG Table of contents

Executive Board 2

Supervisory Board 3

Management report 4

Fundamentals 4

Business report 7

Business performance and position of the company 7

Opportunity and risk report 14

Outlook 28

Other disclosures 30

Report on equality and equal remuneration pursuant to the German 31

Transparency in Wage Structures Act (EntgTranspG)

Annual financial statements 32

Balance sheet as at 31 December 2024 32

Income statement for the period 1 January to 31 December 2024 36

Notes 38

Notes to the annual financial statements 38

Notes concerning assets 45

Notes concerning equity and liabilities 51

Notes concerning the income statement 53

Other mandatory disclosures 57

Individual disclosures concerning assets 65

Individual disclosures concerning equity and liabilities 67

Individual disclosures concerning the income statement 68

Annex to the notes 71

Auditor's report 72

Report of the Supervisory Board 78

Württembergische Versicherung AG Executive Board and Supervisory Board

Our Executive Board

Zeliha Hanning, Chairwoman of the Executive Board

Sales

Human resources Audit

Customer data Central tasks Communication Legal

Dr. Per-Johan Horgby

Retail customers Motor operations Customer and broker service

Actuarial services Reinsurance

Alexander Mayer

Controlling/risk management Accounting Compliance

Anti-money laundering

Jens Wieland

Capital investments IT

Business IT integration Issue/complaint management

Jürgen Wörner

Corporate customers Claims

Our Supervisory Board

Jürgen A. Junker

Chairman

Chairman of the Executive Board of Wüstenrot & Württembergische AG

Richard Peters

Deputy Chairman

Head of the regional office in Düsseldorf Württembergische Versicherung AG Chairman of the Works Council

Württembergische Versicherung AG, Cologne and Düsseldorf locations

Deputy Chairman of the Central Works Council Württembergische Versicherung AG/ Württembergische Lebensversicherung AG

Hartmut Bader1

Chairman of the Works Council

Württembergische Versicherung AG/ Württembergische Lebensversicherung AG, Kornwestheim head office Chairman of the Central Works Council Württembergische Versicherung AG/

Württembergische Lebensversicherung AG

Thomas Bäurle1

Pension and Assets Representative Württembergische Versicherung AG Chairman of the Works Council

Württembergische Versicherung AG, Horb location

Katja Bronner1

Trade union secretary

Vereinte Dienstleistungsgewerkschaft ver.di Central Baden/North Black Forest District

Claudia Diem

Attorney

Former member of the Executive Board Baden-Württembergische Bank

Ulrich Kraft

Managing Partner

Kraft Holding GmbH + Co. KG (ARTA Group)

Fränzi Kühne

Chief Digital Officer (CDO) and member of the Management Board of edding AG

Hans Peter Lang

Independent corporate consultant Former member of the management of W&W Asset Management GmbH

Holger Mardfeldt

Partner

Martens & Prahl Versicherungskontor GmbH & Co. KG (Holding)

Petra Sadowski1

Trade union secretary

Vereinte Dienstleistungsgewerkschaft ver.di Stuttgart district

Peter Stübing1

Head of the regional office in Freiburg Württembergische Versicherung AG

Chairman of the representative committee for executive staff of the Württembergische

insurance companies (joint operation)

1 Employee representatives

Württembergische Versicherung AG Management report

Fundamentals

Business model

Overview of Württembergische Versicherung AG

Württembergische Versicherung AG, based in Kornwestheim, Germany, is one of Germany's most venerable insurance companies. The company's core market is Germany, and it specialises in property and casualty insurance.

Wüstenrot & Württembergische AG (W&W AG) holds 100% of the share capital of Württembergische Versicherung AG. Since the merger of the long-standing companies Wüstenrot and Württembergische in 1999, Württembergische Versicherung AG has been a part of the W&W Group in the Insurance division. By combining the Housing and Insurance divisions, the W&W Group is in the position to offer customers tailored financial planning solutions.

In 2023, Württembergische Versicherung AG, together with R+V Service Holding GmbH and Provinzial Beteili-gungsgesellschaft mbH, concluded a purchase agreement under which each acquired 25% of the interests in the claims service provider riparo GmbH. The transaction was completed in the first quarter of 2024. This investment secures the provision of claims management services for motor vehicle repairs over the long term.

In the reporting year, there were no changes on the Executive Board of Württembergische Versicherung AG.

"W&W Besser!"

As part of the W&W financial planning group, Württembergische Versicherung AG strives for sustainable growth of its enterprise value.

Four new strategic dimensions have strengthened corporate management since 2024:

• Finances - increase earnings, actively manage costs at market levels

• Market & customers - growth in profitable lines of business above market level, attract and retain customers

• Processes & technology - increase productivity and efficiency, win over users

• Employees - attract, develop and inspire employees

  Focus areas included tapping into new customer groups and providing outstanding service to existing customers, as well as sustainability, digital transformation and cyber protection measures.

  With "W&W Besser!", the company achieved further implementation milestones in the financial year, e.g.

• The long-standing mobile sales force workplace (AAP) was replaced by the sales workplace (VAP). The new VAP offers a more flexible, more powerful platform that is tailored to the needs of sales in the digital age.

• The further development of the customer portal enables customer communication that is more digitally oriented and more sustainable.

• Since the 2024 financial year, an AI assistant has been helping Württembergische's customer service team filter calls and direct them to the right point of contact.

The W&W Besser! initiative will also be continued in 2025 in order to ensure that products, services and processes throughout the W&W Group will remain focused on customer benefits.

Product mix

To offer its customers high-quality products that are tailored to their individual needs, Württembergische Versicherung AG has a broad product portfolio covering virtually all property and casualty insurance business lines.

These include:

• Personal accident insurance

• Liability insurance

• Motor insurance

• Fire insurance

• Household insurance

• Residential building insurance

• Other property insurance (including technical insurance)

• Transport and aviation insurance

• Cyber insurance

• Suretyship insurance

• Legal expenses insurance

• Travel assistance insurance

In the 2024 financial year, the Motor business segment again had a high proportion of premium car policies. Both car policy product lines - Premium and Compact - were further developed in 2024. The premiums were adjusted to market conditions.

A new policy for personal liability insurance was introduced in the Retail Customers business segment in 2024.

In the Corporate Customers business segment, the number of contracts concluded for the core commercial product "Firmen-Police" increased further, as was also the case in the industrial business lines. For the ninth time in a row, the magazine FOCUS-MONEY recognised Württembergische Versicherung AG as the fairest corporate insurer. We were able to consolidate and further expand our position in the market as a partner to SMEs.

Sales channel mix

In selling its products, Württembergische Versicherung AG places great emphasis on its expertise and the reliability of its personal advice. In this context, the tied agents organisation of Württembergische with its mobile sales partners throughout Germany plays a key role. This sales force is supported by the advisers from Wüstenrot Bausparkasse AG. In addition, the company sells products under the online brand Adam Riese. Moreover, broker sales and numerous collaborations with the banking and insurance sector are making a key contribution to our success.

Employees

As at 31 December 2024, Württembergische Versicherung AG had 3,231 (previous year: 3,189) permanent employees, calculated based on the number of employment agreements, excluding trainees. It is a service provider within the W&W Group and receives compensation in exchange, which is specified in contracts governing the outsourcing of services and functions. In addition, it procures services from other Group companies.

Commitment to sustainability

Responsible action and social commitment have a long tradition in the W&W Group and represent the core element of its strategic direction. It is based on an understanding of long-term, stability-focused corporate governance that has its roots in the foundation ideals of W&W AG's main shareholder.

To underpin our position on sustainability, we have followed a sustainability strategy since 2021 with the following six fields of action: customer and product, capital investments and refinancing, own operations, employees, company and organisation. Targets and measures have been defined for all fields of action.

The sustainability strategy is based on ESG (environment, social and governance) criteria and is reviewed and adjusted each year as part of the strategy process. The ESG rating agency ISS has given the W&W Group's sustainability activities a "Prime" rating for sustainability. This rating underscores our level of ambition and is an external confirmation of the consistent implementation of our sustainability strategy. We have voluntarily joined initiatives, such as the Principles for Sustainable Insurance (PSI) and the Principles for Responsible Investment (PRI), and we are committed to implementing sustainable principles more strongly in our business activities and to continually enhancing them. The W&W Group has further supplemented the measures it takes to promote diversity by signing the "Charta der Vielfalt" (Diversity Charter). At the European level, there are various regulatory initiatives promoting transparency and disclosure of sustainabili-

ty-related information.

The resulting requirements are incorporated into sustainability projects across the W&W Group. Since the 2023 financial year, we have been reporting for the W&W Group on how and to what extent our activities are linked to economic activities that are classified as environmentally sustainable (taxonomy alignment). In addition, the W&W Group will apply the European Sustainability Reporting Standards (ESRS) from the 2024 financial year onwards, which were implemented for the W&W Group in a Group project.

Under the German Act Transposing the CSR Directive (CSR-Richtlinie-Umsetzungsgesetz), Württembergische Versicherung AG is obliged to publish a non-financial statement. However, due to its inclusion in the Group sustainability report contained in the combined management report of W&W AG and the W&W Group, Württembergische Versicherung AG is not required to prepare its own non-financial report in accordance with Section 289b (2) of the German Commercial Code (HGB).

Regulatory requirements

As a company of the W&W Group, Württembergische Versicherung AG is included in the regulatory scope of consolidation both as part of the financial conglomerate and the Solvency II group.

The annual Solvency II report of Württembergische Versicherung AG for 2023 was submitted to the German Federal Financial Supervisory Authority (BaFin) on time. The Solvency II coverage ratio as at 31 December 2024 is expected to be considerably higher than 100%.

The review of the reporting requirements under Solvency II (Solvency II review) has led to adjustments in the quantitative and qualitative requirements for insurance companies and the insurance group. Among other things, this will extend the reporting obligations for sustainability-re-lated aspects. Amendments to the Solvency II Directive were published in the Official Journal of the EU on 8 January 2025. Application is scheduled to begin on 30 January 2027. Transposition into national law is currently under way. At the same time, the European Commission will draw up a proposal to amend the Delegated Regulation. In addition, the European Insurance and Occupational Pensions Authority (EIOPA) is preparing technical implementation standards and guidelines.

For the quantitative reports in the financial conglomerate, in which Württembergische Versicherung AG is integrated as a supplier unit, the new requirements of Implementing Regulation (EU) 2022/2454 regarding risk concentrations and intra-group transactions were implemented in the financial year.

Business management system

The integrated business management system of Württembergische Versicherung AG is aligned with the strategy of the W&W Group. A three-year plan is drawn up on the basis of the business strategy and presented to the Supervisory Board for approval. The plan approved by the Supervisory Board for the following financial year is then used to establish the main management parameters in the form of quantitative targets. These are then used to derive the key performance indicators.

We review our operational plan with several extrapolations during the financial year. Management activities are performed throughout the year using a "management cockpit" that tracks targets on a monthly basis. Counter-measures are taken as necessary whenever actual performance departs from the targets.

The most important key performance indicators at Württembergische Versicherung AG are earnings before taxes and the combined ratio (net). The combined ratio describes the ratio of expenses for insurance business and claims expenses to premiums earned, in each case for own account.

As a further performance indicator, we report new and replacement business in terms of annual contribution to the portfolio in the section "Business performance" and in the outlook. Recognised under replacement business are higher or lower premiums resulting from contract amendments (excluding adjustments due to the terms and conditions).

Ratings

In the year under review, Standard & Poor's (S&P) reaffirmed the stable outlook rating of the core companies in the W&W Group. Württembergische Versicherung AG has thus retained its "A-" rating.

Business report Business environment Macroeconomic environment

Economic output in Germany fell slightly in 2024 again. According to preliminary calculations, real gross domestic product (GDP) was 0.2% lower than in the previous year. Several factors weighed on the economy: the German industrial sector recorded a marked decline in production, while the trend in corporate investment was also negative.

Inflation continued to fall in 2024. The main reason for this decline was a favourable base effect in energy prices. The core inflation rate fell further from 3.5% to 3.1% but remained above the ECB's target of 2%.

Capital markets Bond markets

The German bond market experienced two phases in 2024. Yields rose in the first months of the year, from January to the end of May.

For example, the interest rate on ten-year German government bonds, which stood at 2.02% at the end of 2023, had risen to around 2.7% by the end of May. The yield on two-year German government bonds rose from 2.4% at the beginning of the year to around 3.1% by the end of May. The trend in short-term yields reversed over the remainder of the year. Increasingly disappointing economic data, a steady decline in the (overall) inflation rate and the first key interest rate cut in June then caused yields to fall for the most part. At the end of the year, the two-year yield was 2.08%, 32 basis points lower than at the end of the previous year. The yield on ten-year German government bonds showed somewhat greater volatility in this second phase. It closed at 2.37%, 34 basis points higher than at the end of the previous year.

Equity markets

After a strong 2023, which saw double-digit gains for the leading global stock indices, 2024 turned out to be another strong year for equities. Stock prices rose because inflation rates fell faster than expected, central banks held out the prospect of key interest rate cuts and then implemented them, and economic growth in the USA surprised on the upside. The hype surrounding technology stocks also helped drive major indices such as the S&P 500, the Dow Jones Industrial Average, the Nasdaq-100, the STOXX 600 and the DAX to new all-time highs. Even the persistently strained geopolitical situation and fears of recession were unable to halt the upward trend in

stock prices. Overall, the Euro STOXX 50 rose by 8.3% in the reporting period, while the German benchmark index DAX rose by as much as 18.9%.

Industry trends

The macroeconomic environment and developments on the capital markets were also reflected in industry trends. In addition, the financial services sector was affected by tightening regulation.

According to preliminary calculations by the German Insurance Association (GDV), premium income in accordance with the German Commercial Code (HGB) increased by around 7.9% to €92.3 billion (previous year: €85.5 billion) for property/casualty insurance. Claims expenses increased by 4.6%, following an increase of 13.1% in the same period of the previous year. This led to an underwriting profit of around €3.3 billion (previous year: €1.0 billion). Both the overall loss ratio for the financial year of approximately 77% (previous year: 79.0%) and the combined ratio of claims and expenses for the sector at around 96% (previous year: 98.8%) were lower than in the previous year. At 7.1%, Württembergische Versicherung AG posted solid growth in gross premiums written, just under the overall market growth rate. At the same time, growth in its profitable lines of general liability, household contents, accident and legal expenses insurance significantly outpaced the market.

Württembergische Versicherung AG is currently ranked ninth among property and casualty insurers based on gross premiums written in domestic direct business reported by the GDV.

Business performance and position of the company

Business performance

The 2024 financial year was marked in particular by an increase in claims expenses due to adverse weather events. Owing to our forward-looking reserving policy - including a substantial increase in initial reserves in the previous year, an adjustment to the actuarial interest rate for major personal injury claims, and higher run-off gains in the motor insurance segment - Württembergische Versicherung AG achieved a significantly higher run-off result overall. Gross expenses for major claims, which were very high in the previous year, declined significantly. The impact of severe weather events was largely retained by the company.

Despite continued challenging developments and an allocation to the claims equalisation reserve, Württembergische Versicherung AG reported pre-tax earnings (before profit transfer) of €51.1 million (previous year:

€84.0 million).

Net underwriting income affected by adverse weather events

Natural disaster-related losses increased significantly again in the 2024 financial year to €282.2 million, gross (previous year: €176.6 million). This means that they were well above the historical average, which was attributable to a cluster of several major unrelated adverse weather events. The gross result nevertheless increased significantly to €132.8 million (previous year: -€122.8 million), driven by the strong run-off result. Net underwriting income before allocation to the claims equalisation reserve was also highly positive, reaching €71.5 million (previous year: -€93.9 million). Following a major withdrawal in the previous year, €41.0 million (previous year: withdrawal of

€115.5 million) was once again allocated to the claims equalisation reserve. Net underwriting income increased to €30.4 million (previous year: €21.5 million).

Capital investment income

At €88.1 million (previous year: €104.2 million), net capital investment income was below the previous year's figure. The balance of write-ups and write-downs amounted to -€34.8 million (previous year: -€13.2 million). At

€106.7 million (previous year: €116.4 million), current income from capital investments came in below the previous year's level. Net gains on disposals increased from

€19.3 million to €31.4 million. The net return on capital investments was 2.6% (previous year: 3.3%).

Profit transfer to W&W AG

Despite the strong run-off result, the result from normal business operations remained well below the previous year's level at €51.1 million (previous year: €84.0 million), due to an increase in natural disaster-related extraordinary expenses, a high allocation to the claims equalisation reserve, and a slight decline in net capital investment income. The profit transfer to the sole shareholder, W&W AG, amounted to €48.4 million (previous year: €81.8 million). Under the profit and loss transfer agreement, this results in a net profit of €0.0 million.

Financial performance

New business and premium income

In terms of annual contribution to the portfolio, new and replacement business in the 2024 financial year was slightly above the previous year's level at €436.0 million (previous year: €423.5 million). Cancellations in the portfolio of Württembergische Versicherung AG increased significantly from €265.9 million to €332.0 million.

Württembergische Versicherung AG's gross premiums written increased in 2024 by 7.1% to €2,773.1 million (previous year: €2,588.6 million). Premium growth in our domestic core market was therefore slightly below the 7.8% growth expected by the GDV at the end of the year, due to our profitability-oriented growth strategy. The growth in

Württembergische Versicherung AG's profitable lines of general liability, household contents, accident and legal expenses insurance significantly outpaced the market. Our digital brand Adam Riese continued to post strong growth, increasing its gross premiums written to €39.2 million (previous year: €30.5 million). In the past financial year, the focus continued to be on retail business. In just a few years, Adam Riese has established itself as a full-fledged market player. A further expansion of the product range is currently being implemented.

Württembergische Versicherung AG's premiums written for own account increased by 8.3% to €2,173.6 million (previous year: €2,007.5 million).

The net share after accounting for the reinsurers' portion increased to 78.4% (previous year: 77.6%).

Claims development in the financial year

The gross loss ratio in the 2024 financial year saw an improvement from 79.8% in the previous year to 75.9%. This was due, on the one hand, to successful efforts to improve the profitability of premiums and, on the other hand, to a drop in claims frequency and lower major claims expenses. The number of claims in the financial year fell by 0.9% compared with the previous year, while the number of contracts remained nearly unchanged.

Despite a significant increase in premium volume, claims expenses for own account decreased from €1,521.8 million to €1,478.7 million. As a result, the net loss ratio dropped significantly to 68.4% (previous year: 76.3%).

The company allocated €41.0 million to the claims equalisation reserve (previous year: withdrawal of €115.5 million).

Continued robust reserves

In 2024, net technical provisions increased from

€2,888.2 million to €2,939.9 million. The main reason for this was the increase in the claims equalisation reserve.

2024 2023 Change in %

Expense ratio

The expense ratio is calculated as the ratio of expenses for insurance business to earned premiums. At 27.2% (previous year: 27.3%), the expense ratio (gross) remained at the previous year's level. This was adversely affected by higher intra-group IT costs. In determining the value in use of an ongoing software project, costs of €34.5 million were written down in full due to delays and cost increases. However, the resulting higher costs incurred by Württembergische Versicherung AG were offset by the growth in premiums. Total expenses for insurance business increased by 6.8% from €702.5 million to €750.0 million in line with premium growth.

Combined ratio

Owing to the strong run-off result and a sharp decline in major claims, which had significantly affected the gross result in the previous year, the combined ratio (gross) of Württembergische Versicherung AG improved significantly to 94.4% (previous year: 103.9%). The combined ratio (net) also improved to 96.0% (previous year: 103.9%).

The business segments of Württembergische Versicherung AG

The business segment motor comprises the business lines motor liability, motor comprehensive insurance, motor personal accident insurance and roadside assistance insurance of Württembergische Versicherung AG. In 2024, gross premiums written increased by 8.2% to

€1,067.6 million (previous year: €986.3 million).

Following strong growth in the previous year, new and replacement business in motor insurance, measured in terms of annual premium income, increased by a further 10.7% to €263.7 million (previous year: €238.3 million).

The loss ratio (gross) for the financial year improved to 92.2% (previous year: 97.5%), primarily due to a drop in claims frequency, despite continued claims inflation and high natural disaster-related losses during the summer months. Motor liability insurance in particular recorded a drop in the number of claims in the financial year (-2.3%). The company had already increased initial reserves in the previous year in response to higher inflation-driven claims expenses. In this context, an additional increase in provisions was also recognised for claims incurred during the previous year. In addition, the actuarial interest rate for major personal injury claims was adjusted in the current financial year, resulting in an additional run-off gain of €33.6 million. The result from the previous year's claims (gross) thus improved significantly to €123.1 million (previous year: €4.5 million). Net underwriting income in the motor insurance segment also improved significantly, from a loss of -€129.6 million in the previous year to -€1.9 million.

This business segment mainly comprises the business lines residential buildings, household, general accident insurance, personal legal expenses and liability business involving private households. Gross premiums written increased by 4.8% to €898.5 million (previous year: €857.6 million).

Following an increase in the previous year, new and replacement business, measured in terms of annual contribution to the portfolio, fell by 2.6% to €66.1 million (previous year: €67.9 million).

Net income in the retail customer segment came in at

€57.5 million (previous year: €55.0 million), which is comparable to the previous year. Except for residential building insurance, which was impacted by high volumes of natural disaster-related claims, all lines in the retail insurance segment ended the 2024 financial year with a positive result.

This business segment includes the commercial and industrial property and liability insurance business lines. Gross premiums written increased by 8.3% to €800.7 million (previous year: €739.6 million).

After strong growth in previous years, new business decreased by 9.5% to €106.2 million (previous year: €117.3 million) in line with our profitability-oriented growth strategy.

At 69.4% (previous year: 81.7%), the gross loss ratio for the 2024 financial year came in below the previous year's level. Following a net loss of -€58.9 million in the previous year due to the impact of exceptional major losses,

gross underwriting income improved significantly to

€39.1 million. Net income also increased sharply to €7.8 million (previous year: -€27.2 million).

Business line reports

This report presents the results described in the segment report in a different way. Depending on the individual business line, the results are consolidated across all business segments within Germany (motor, retail customers, corporate customers) and non-German business.

• Personal accident insurance

  Personal accident insurance comprises the business lines general personal accident insurance, aviation personal accident insurance and motor personal accident insurance. In the reporting year, gross premiums written increased by 1.9%, from €158.9 million to €161.9 million.

  While the number of reported claims increased to 15,240 (previous year: 15,054), claims expenses for the financial year decreased by 9.3% to €66.1 million. Despite a lower run-off result compared with the previous year, the loss ratio fell to 39.6% (previous year: 41.3%). In the technical account, personal accident insurance generated net income of €40.1 million (previous year: €37.2 million).

• Liability insurance

  This business line consists of general liability business involving retail and corporate customers, as well as the aviation liability business. Gross premiums written increased by 3.6% from €283.3 million to €293.6 million. The loss ratio (gross) for the financial year improved from 42.0% to 40.2%. The loss ratio (gross) in relation to earned premiums deteriorated from 30.2% to 32.0%. Net underwriting income decreased to €72.9 million (previous year:

  €77.3 million).

• Motor insurance

  In the year under review, gross premiums written increased by 8.2% to €1,040.9 million (previous year:

  €962.1 million). Motor insurance was particularly impacted by continued high claims inflation and significant natural disaster-related losses during the summer months. By contrast, the motor insurance business line benefited both from a significantly higher run-off result - due to more cautious reserving practices since the 2023 financial year in response to inflation - and from a slight drop in claims frequency. Net underwriting income before the claims equalisation reserve improved to -€6.6 million (previous year: -€136.4 million). An amount of €55.2 million was allocated to the claims equalisation reserve (previous year: withdrawal of €106.7 million).

• Motor liability insurance

Due to a drop in claims frequency, reported claims in motor liability insurance were below the previous year's level at 80,841 (previous year: 81,798). In 2024, gross premiums written increased by 7.0% from €530.3 million to

€567.6 million. The loss ratio (gross) for the financial year decreased to 88.3% (previous year: 91.2%).

The run-off result in motor liability insurance amounted to €98.2 million (previous year: €7.9 million) on a gross basis and was significantly above the previous year's level, primarily due to the adjustment of the actuarial interest rate for major personal injury claims. Net underwriting income before the claims equalisation reserve amounted to €49.5 million (previous year: -€30.6 million). The company allocated €55.2 million (previous year: withdrawal of €30.5 million) to the claims equalisation reserve.

• Other motor insurance

  Other motor insurance includes comprehensive and partial cover insurance. In this segment, gross premiums written increased by 9.6% from €431.8 million to €473.3 million. The performance of the other motor insurance business line was shaped by continued high natural disaster losses, but also by a significantly improved run-off result and a better expense ratio. The loss ratio for the financial year fell to 100.4% (previous year 108.5%) (gross). The loss ratio for own account for the financial year reached 101.8% (previous year: 109.7%). At €24.6 million (previous year -€3.1 million) (gross), the run-off result was significantly above the previous year's level. In other motor insurance, Württembergische Versicherung AG posted a net loss before the claims equalisation reserve of -€56.0 million (previous year: -€105.8 million). In the 2024 financial year, there were no additions to or withdrawals from the claims equalisation reserve (previous year: withdrawal of €14.3 million).

• Fire insurance

  This insurance business line comprises industrial fire insurance, general fire insurance and agricultural fire insurance. Gross premiums written increased by 10.8% from

  €131.7 million to €146.0 million. The gross loss ratio for the financial year improved compared with the previous year, which was characterised by extraordinary major losses, to 69.7% (previous year: 146.9%).

  The gross run-off result of €18.1 million (previous year:

  €11.7 million) also contributed to a significant improvement in the loss ratio (gross) in relation to earned premiums at 57.3% (previous year: 137.9%). Net underwriting income after the claims equalisation reserve increased to

  -€13.0 million (previous year: -€21.6 million).

• Household insurance

  In 2024, gross premiums written increased by 5.6% to

  €121.1 million (previous year: €114.6 million). The loss ratio (gross) for the financial year deteriorated to 50.2% (previous year: 43.8%) due to higher natural disaster-re-lated losses combined with higher inflation. The loss ratio for own account for the financial year was 51.4% (previous year: 45.4%). Net underwriting income reached €14.0 million (previous year: €15.7 million).

• Residential building insurance

  Due to high natural disaster-related losses, a net loss before the claims equalisation reserve of -€51.9 million was again recorded in the financial year (previous year: -€23.9 million). At 115.0% (previous year: 106.3%), the combined

  ratio (net) was significantly higher than the previous year. The gross run-off result of €0.5 million (previous year

  -€13.3 million) was significantly higher than in the previous year. In 2024, gross premiums written increased by 5.3% to €370.4 million (previous year: €351.6 million), although the number of contracts was only slightly above the previous year's level, increasing by 1.1% to 502,660. The increase in average amounts led to this rise in premiums. The company withdrew €22.9 million from the claims equalisation reserve (previous year: allocation of

  €9.0 million). As a result, residential building insurance posted a net underwriting loss after the claims equalisation reserve of -€29.0 million (previous year: -€32.9 million).

  • Other property insurance

    This business line comprises property insurance for burglary, damage from water mains, glass breakage, storms and natural disasters, as well as technical insurance, extended coverage and products that span multiple business lines in the commercial and industrial area. The business line posted a gross premium increase of 10.6% to €366.9 million (previous year: €331.7 million). The loss ratio (net) for the financial year deteriorated slightly to 80.0% (previous year: 77.3%). Due to an increase in the run-off result, net underwriting income before the claims equalisation reserve improved slightly year-on-year to

    -€22.3 million (previous year: -€24.7 million). The company withdrew €10.1 million from the claims equalisation reserve (previous year: allocation of €4.7 million).

  • Transport and aviation insurance

    Gross premiums written in transport and aviation insurance increased by 0.9% to €36.2 million (previous year:

    €35.9 million). The gross loss ratio in relation to earned premiums improved from 67.5% to 49.6%. Net underwriting income before the claims equalisation reserve increased significantly from €0.6 million in the previous year to €5.3 million in 2024. The company allocated €5.1 million to the claims equalisation reserve (previous year: withdrawal of €0.5 million).

  • Credit and suretyship insurance

    In credit and suretyship insurance, premiums rose to

    €13.2 million (previous year: €12.9 million). The gross loss ratio for the financial year was 207.6% (previous year: 159.7%). The net underwriting loss after the claims equalisation reserve increased from -€15.0 million to -€16.8 million. Due to the continued negative claims situation, the provision for anticipated losses created in 2023 for credit and suretyship insurance was increased by €1.7 million to €4.2 million (previous year: €2.5 million).

  • Legal expenses insurance

    Gross premiums written in legal expenses insurance increased by 7.2% to €159.4 million (previous year: €148.7 million). The number of reported claims increased by 0.4% from 135,317 to 135,858. The loss ratio (gross) in relation to earned premiums improved from 61.6% to 45.6%. Underwriting income (net) increased to €29.6

    million (previous year: €7.7 million). Due to the stable claims development in the past, the conditions for creating claims equalisation reserves were no longer satisfied in the 2019 financial year for the first time. In accordance with the statutory provisions, €4.3 million per year was released over five years, most recently in 2023.

• Travel assistance insurance

  This business line consists solely of roadside assistance insurance. Gross premiums written increased by 11.2% from €23.7 million to €26.3 million. The gross loss ratio for the financial year improved to 29.8% (previous year: 35.1%). Net underwriting income before the claims equalisation reserve deteriorated to €4.5 million (previous year: €6.6 million). The company allocated €2.4 million (previous year: €3.5 million) to the claims equalisation reserve.

• Other insurance

This business line comprises business interruption insurance and other products that span multiple business lines. In the 2024 financial year, gross premiums written in other insurance increased by 9.2% to €31.0 million (previous year: €28.4 million). The gross loss ratio for the financial year improved significantly year-on-year to 105.2% (previous year: 162.0%), despite above-average losses from major claims in the previous year. For other insurance, the net underwriting loss after the claims equalisation reserve was -€0.5 million (previous year: net loss of -€1.1 million).

Until the end of 2007, the company's reinsurance business had been underwritten almost exclusively by the London branch of Württembergische Versicherung AG. It mainly comprises the processing of policies from the business lines technical insurance, transport insurance, liability insurance, fire insurance and other insurance.

To offer an attractive range of products in the industrial segment, we have expanded our business to include international insurance solutions. The retrocession of locally underwritten policies allows us to offer international customers a broader range of insurance products. This increases the volume of our reinsurance business.

In the 2024 financial year, net underwriting income was

€4.9 million (previous year: €4.8 million), with gross premiums written increasing to €6.4 million (previous year:

€5.2 million). The growth in income was mainly attributable to run-off gains.

Net assets

Capital investments

In 2024, the economic environment for capital investments was mainly shaped by falling inflation rates and the attendant monetary policy expectations, as well as ongoing geopolitical tensions. After interest rates had stabilised at the end of the previous year, yields saw a moderate increase at first. As the year progressed, falling inflation and disappointing economic data - which reinforced expectations of interest rate cuts - led to a predominantly downward trend in yields.

The total carrying amount of Württembergische Versicherung AG capital investments increased by 2.7% year-on-year to €3.4 billion.

In 2024, the majority of investments were units/shares in investment funds. The investments totalling €232.8 million were mainly spread across bond funds, alternative investment funds, and a mortgage fund. Taking into account repayments, disposals, and write-ups and

write-downs, the carrying amount of these securities increased to €1,232.7 million (previous year: €1,124.4 million). The portfolio ratio increased to 36.4% (previous year: 34.1%).

There was a decrease in the portfolio of bearer bonds, registered bonds, promissory notes and loans, as well as miscellaneous loans. The carrying amount fell from

€1,565.4 million to €1,415.1 million due to repayments and disposals. At 41.7% (previous year: 47.4%), these investments continue to represent the largest share of total capital investments.

Positive trends on the stock markets led to an increase in the equity exposure of Württembergische Versicherung AG in 2024. Taking into account the futures entered into and the market value of the option positions, the calculated equity allocation was 1.4% (previous year: 1.2%). As at the end of the year, 84.1% of the equity exposure was hedged.

The carrying amount of participations and interests in affiliated companies increased year-on-year to €400.0 million (previous year: €390.2 million). This increase is mainly attributable to the establishment of a real estate company, investments in alternative investments, and a strategic equity interest.

Investments in the private equity, private debt and infrastructure sectors are included in the balance sheet items "Units/shares in investment funds" and "Participations". On a market value basis, these alternative investments account for 14.9% of total capital investments.

In the 2024 financial year, the carrying amount of directly held properties decreased from €17.9 million to €12.9 million. This decrease is primarily attributable to the sale of a residential property for €4.6 million. Depreciation amounted to €0.5 million.

The carrying amount of the indirectly held real estate investments fell to €240.1 million (previous year €257.6 million). One participation was written down in the amount of €26.5 million. Several smaller real estate participations/funds were written down in the amount of

€0.7 million. This was offset by the purchase of a residential property in Stuttgart.

Net reserves - the balance of reserves and charges - decreased in 2024 to -€39.4 million (previous year: -€22.2 million). The continued negative reserve balance is mainly due to losses in fixed-income investments and bond funds that resulted from the rise in interest rates in the past.

The unrealised losses of the capital investments recognised in accordance with Section 341 b (2) of the German Commercial Code (HGB) amounted to €133.5 million (previous year: €153.3 million). As the capital investment strategy assumes an intention to hold the securities over the long term, these are only interest rate-related, temporary impairments.

A detailed overview of the reserve situation is provided in the notes under "Notes concerning assets".

As in previous years, Württembergische Versicherung AG used derivative financial instruments to hedge foreign currency positions and equity and interest rate risks. In doing so, it complied with regulatory provisions and internal regulations. The required organisational structures, especially the strict separation of trading and settlement, were in place at all times.

To diversify and generate additional income opportunities, Württembergische Versicherung AG also invested in currencies outside the eurozone. The largest foreign currency exposures of Württembergische Versicherung AG in the 2024 financial year were positions in US dollars and Danish kroner. The exposure is accompanied by appropriate risk management and is largely hedged in line with our strategic orientation.

Financial position Capital structure

Due to the business model of property and casualty insurance, the liabilities side is dominated by the technical provisions.

These amounted to €2,939.9 million (previous year:

€2,888.2 million) and thus represented 73.0% (previous

year: 75.0%) of liabilities. Of these, €2,300.2 million (previous year: €2,302.6 million) was allocated to the provision for outstanding insurance claims, €427.1 million (previous year: €386.1 million) to the claims equalisation reserve and similar provisions, €171.4 million (previous year: €161.0 million) to the provision for unearned premiums, and €41.2 million (previous year: €38.5 million) to the provision for future policy benefits and other technical provisions.

Equity increased from €392.6 million to €522.6 million following an addition of €130 million to the capital reserve. Apart from this, due to the profit and loss transfer agreement with the parent company, Wüstenrot & Württembergische AG, equity remained unchanged. There is also a subordinated registered bond of €100 million, which was subscribed to by the parent company, Wüstenrot & Württembergische AG, on 18 December 2023.

Liquidity

Württembergische Versicherung AG always had sufficient liquidity in the year under review, which it mainly derived from its operational insurance business and capital investments. Cash pooling has been implemented as part of liquidity management to optimise cash flows in the W&W Group. For more information on liquidity management, please see the risk report.

Overall view

The net assets, financial position and financial performance of Württembergische Versicherung AG are stable and orderly. The challenging year 2024 was marked in particular by exceptional natural disasters. Württembergische Versicherung AG performed well in this situation. The claims equalisation reserve was strengthened despite the losses. Underwriting income was mainly driven by a strong run-off result, attributable to our for-

ward-looking reserving policy over the past few years. Net capital investment income was slightly below the previous year. Taking into account the exceptional underwriting losses, we are satisfied with the results achieved.

Comparison of business performance with forecasts

The following comparison of current business performance with the estimates made in last year's annual report shows that Württembergische Versicherung AG performed well despite the difficult macroeconomic and geopolitical situation and challenging claims development in 2024.

New and replacement business (based on annual contribution to the portfolio) increased by 2.9%, significantly exceeding the previous year's level, driven by strong growth in the motor insurance business line. In our forecast, we assumed a drop in new and replacement business. The combined ratio (net) reached 96.0% and was,

as expected, below the high level of the previous year, due to the strong run-off result and despite the significant natural disaster-related losses.

Earnings before taxes amounted to €51.1 million (previous year: €84.0 million), falling short of the previous year's figure due to the challenging claims situation with high natural disaster-related losses. As forecast, we were also able to significantly strengthen our claims equalisation reserve again in 2024. The result was also negatively impacted by higher intra-group IT costs and a write-down on an indirectly held property. We had expected earnings before taxes to increase in our forecast.

‌Opportunity and risk report

Opportunity report

Recognising and exploiting opportunities is a fundamental requirement for the successful development of Württembergische Versicherung AG. We therefore aim to systematically identify, analyse and evaluate opportunities and to initiate appropriate measures to seize them.

We start with firmly established strategy, planning and control processes. For this purpose, we assess market and environment scenarios and examine the orientation of our product portfolio, cost drivers and other factors that are critical to success. The opportunities derived from this are discussed in the management's strategy meetings and then incorporated into strategic planning.

We also have suitable governance and control structures in place in order to evaluate and pursue opportunities on the basis of their potential, the required investments and the risk profile.

In the following, we focus on the main opportunities and distinguish between opportunities arising from developments outside the company's control and opportunities resulting from our specific strengths as a company within the W&W Group.

External factors Company and customers

Changes are emerging in the behaviour of retail and commercial customers. Values such as sustainability, digitisation and security are becoming increasingly important.

At Württembergische Versicherung AG, our aim is to provide people with financial planning from a single source. For us, this also includes offering our customers simple, transparent, individualised and flexible products and integrated services across all interaction channels.

The need for financial security offers far-reaching business opportunities. Comprehensive customer journeys are expected, with consistent messaging and communication across many channels. We adapt strategically to this changed financial planning market with our sustainable, integrated advisory approach and our target group concepts and solutions.

Hybrid working, video conferencing and digital offerings have become the "new normal". Communication between customers, sales teams and companies is increasingly taking place using digital technology. At the same time, customers increasingly expect tailored offers and communications. The spread and use of digital media enables more targeted, closer customer contact, along with the sales opportunities that come with it. We act on these opportunities by combining our personalised advisory approach with the new digital resources. In the age of the internet, social media and the prevalent use of smartphones, speed is vital to achieving customer satisfaction and is thus increasingly becoming a critical factor in success. Customers want to be able to contact us regardless of office hours or distance via their preferred medium and manage their affairs independently via self-service.

Self-service options offer opportunities for improved efficiency through automation.

The consequences of climate change are now being felt in Germany and, in view of the intensity and increasing number of natural disasters, are becoming more noticeable every year. As a member of the German Insurance Association (GDV), we support the sustainability positioning of German insurers. Climate neutrality, sustainability and environmental protection are important decision-making criteria both for us as a company and for our current and future customers. By focusing on sustainability, we want to reach this steadily growing target group.

Corporate social responsibility (a company's responsibility towards society in the sense of doing business sustain-ably) is becoming increasingly important in the eyes of society. The positioning and communication of a company as an attractive employer is also becoming increasingly important. At the same time, a socio-cultural shift is becoming apparent in the world of work. Against this background, it is important for Württembergische Versicherung AG to focus on new factors such as work-life balance or forms of work and the working environment in addition to monetary remuneration.

Both the W&W Group and Württembergische Versicherung AG also promote themselves as attractive employers as part of their public image. The campus in Kornwestheim offers a modern office environment that permits flexible and hybrid working. In addition, the energy efficiency of the buildings meets today's high standards. The company sees sustainability as a particular opportunity, both in its role as an employer and in relation to competitors.

Moreover, a company's position with regard to sustainable corporate governance, its treatment of the environment, its social commitment and its ethics will have an increasing impact on its reputation. Accordingly, we are

expanding and further developing our standards and guidelines for responsible corporate governance. This positioning is also important in view of the increasing challenges on the labour market known as the "war for tal-ent". Furthermore, it should be emphasized that our products are regularly recognised with top ratings.

Economy & market

The European Central Bank (ECB) responded to easing inflationary pressures in the eurozone by cutting the key interest rate for the third time since the summer of 2024.

This opens up opportunities for an improved business environment for Württembergische Versicherung AG, as falling inflation and a more accommodative monetary policy favour stable prices and help reduce cost pressure in the field of claims.

With increasing investments in real estate and businesses, the need for insurance is growing, which opens up new market potential. In addition, optimised capital management enables the company to take advantage of attractive investment opportunities and remain competitive over the long term.

Falling interest rates can stabilise claims costs by easing inflation-related price increases for repairs, spare parts and services. This enables costs to be calculated more accurately and helps keep insurance premiums competitive in the long term.

Even though Germany's leading economic institutes generally expect prices to ease further, the issue of financial security remains at the centre of society's attention. Lack of insurance cover can be a considerable financial burden, especially in times of economic volatility. For Württembergische Versicherung AG, this means that there are special opportunities in the area of loss prevention and mitigation. In this way, we as an insurance company can manage the risk of inflation and offer customers financial security.

In this process, it is especially important for companies to be aware of the market situation and the competition, and to keep an eye on them. Market- and competi-

tor-specific analyses help to identify trends and strategic fields of action at an early stage, allowing the company to respond to such changes in a targeted manner. We identify our internal strengths and external opportunities on the market through analyses conducted as part of our strategy and planning process, enabling us to exploit the potential we have identified in a targeted manner.

Policy-related aspects

Compliance with growing regulation in connection with the quality of advice and support can be used to strengthen customer relationships and engage in deeper dialogue with customers. Increasing consumer protection and data protection regulations build trust in the industry as a whole and therefore in us as a provider. These trends afford us the opportunity to position ourselves as a reliable partner in an increasingly demanding market and to secure long-term competitive advantages.

Technology

The spread and use of digital technologies is progressing. IT is one of the key factors for success in the digital age and plays an essential role in how business models change and develop. Technical advances facilitate, among other things, the increasing automation of processes. The resultant productivity advances - and therefore cost-cut-ting potential - can be used to increase earnings, but also to free up capital for investments in areas of key importance for the future.

Remote working, including working from home, became established after the coronavirus pandemic and continues to accelerate the digital transformation of how people work.

Collaborative networks make it possible to better serve the needs of our customers. Digital networking can also dramatically reduce response times, which in the event of a claim, for instance, makes it possible to limit consequential damages or even to avoid them altogether. The digitisation of interaction with customers, such as via smartphone apps, is changing the access channels available to customers. Proprietary platforms - such as the W&W customer portal as a private smartphone app -provide extensive customer support and assistance in addressing concerns and settling services in many areas. These kinds of digital tools aim to help Württembergische Versicherung AG increase its customer focus and

customer satisfaction and facilitate day-to-day processes and workflows.

Increasing cyber attacks make it more necessary than ever for financial enterprises to prepare for incidents and introduce appropriate measures to strengthen cyber resilience. With the Digital Operational Resilience Act (DORA), the European Union has created a financial sector-wide regulation for the effective and comprehensive management of cyber security and ICT risks in the financial markets.

Cyber security insurance also offers significant sales opportunities in the context of increasing digitisation and associated cyber crime.

Effective data management is an essential requirement for companies in the financial services industry to ensure that they remain competitive in the age of digitalisation and can address customers individually. Professional data analysis in the form of predictive analytics and data analytics offers major opportunities for companies. We, too, make use of this potential and implement intelligent solutions for customer interaction and data analytics. The responsible use of customer data for specific purposes enables us to create ever more personalised products so that we can approach our customers in a more targeted way. For example, specific evaluations and analyses allow us to identify patterns and make forecasts. With additional information, we can better assess risks and avoid claims. Moreover, additional sales opportunities arise through the legally permitted use of data.

In addition, there is strong demand for digital products, services and consulting across all industries and across nearly all divisions. The expansion of broadband and the associated possibilities for digital data transmission will facilitate and accelerate the spread of digital services. This saves our employees time that they would have spent travelling, enabling them to arrange more appointments.

The use of digital services based on artificial intelligence (AI) in the form of chatbots, for example, enables financial service providers to intensify customer contact. By providing immediate responses to enquiries, the routine tasks of our employees are reduced, which allows them to focus on dealing with customer concerns.

Württembergische Versicherung AG is stepping up its efforts in this area and, together with the W&W Group, has established a new "Data, Processes and AI" department. The main task of the new department is the strategic development of competencies in the areas of AI, data and

processes, the implementation of AI applications with the divisions and IT as well as the central development of training programmes and competence profiles for employees with regard to new technologies.

Our assisting AI solution can, for example, recognise customer enquiries over the phone and direct them to the right place. Reports are sent directly to the responsible department without having to go through customer service. Converting the call into a self-service solution is even more efficient: the caller then receives a link by text message, e.g. to the digital claims report, and can process the request directly online. Furthermore, innovative AI-based systems can be used to better assess individual risks and effectively detect fraud. Through the targeted use of AI, robotics and APIs (application programming interfaces) at an early stage in its service areas, Württembergische Versicherung AG has the opportunity to leverage efficiency potentials and automate more of its processes.

The growing use of cloud services and software-as-a-service applications can be observed across all industries. The innovation cycles for such cloud services are becoming shorter and shorter. Issues such as cloud security and cloud compliance require particular attention.

Opportunities for Württembergische Versicherung AG with regard to cloud services are particularly evident in the opportunity to save costs, security in the use of the application, the availability of data and the fact that programs are always up-to-date.

Internal factors

Opportunities related to market position

Through our various sales channels with their different strengths, and owing to our good brand awareness, we are able to address a large, broad customer pool of millions of people in our core market of Germany.

We are able to sell our financial planning products in a targeted manner through a wide range of sales channels. Our strategic aim is to meet the needs of our customers. When designing our products, we always focus on what they want. We also see opportunities in further optimising our sales channels. These consist, in particular, of systematically digitising customer contact points and relieving employees of routine administrative tasks.

Our digital brand Adam Riese is an online insurer that can tap into a further customer base in addition to our business at Württembergische Versicherung AG.

Because we have expanded digital processes in the broker market, our digital brand Adam Riese is more connected and can offer more efficient and effective processes. Other important factors in gaining new customers are stepping up partnership business and ensuring high customer satisfaction.

Opportunities related to our employees

For Württembergische Versicherung AG as a service company, recruiting and retaining employees is a key component in ensuring its future viability and competitiveness.

The comprehensive employer benefits of the W&W Group, and thus those of Württembergische Versicherung AG, strengthen our attractiveness as an employer. For example, the "Beruf+" employer benefit offers a variety of programmes and services relating to health management, mobility, family, qualification and agile, networked and flexible working, particularly digitally and at the new W&W campus. In addition, an internal employee referral program was introduced. Likewise, the W&W Group offers various retention and networking programmes for vocational trainees and students from the Cooperative State University (Duale Hochschule).

At Württembergische Versicherung AG, responsible conduct and social commitment have a long tradition and are firmly embedded in the company's culture.

In the area of social responsibility, we focus on promoting flexible working conditions and, as a signatory to the Diversity Charter, are committed to greater diversity and appreciation in the workplace. In addition, Württembergische Versicherung AG remains a strong supporter of the region and continues to advocate for climate protection and promote social and cultural initiatives.

Risk report

Risk management system of Württembergische Versicherung AG

The systematic and controlled assumption of risk for the purpose of achieving defined return targets is an integral part of our corporate governance. As an insurance company, the management of risks is one of our core competencies. Thus, our risk management system is an element of our business organisation.

It comprises all internal and external regulations to ensure the structured handling of risks. In accordance with

the principle of proportionality, we determine the scope and intensity of our risk management activities according to the risk level of the business engaged in. As part of the W&W Group, we consistently derive our risk management system from the Group requirements and are integrated in the risk management system of the W&W Group. There were no material changes to the risk management system compared with the previous year.

Goals and strategies

The risk management of Württembergische Versicherung AG pursues the following overarching objectives:

• Creation of transparency with respect to risks,

• Use of appropriate tools for risk governance,

• Assurance and monitoring of capital adequacy,

• Creation of a basis for risk- and value-oriented corporate governance,

• Promotion and establishment of a Group-wide risk culture.

  In addition, risk management pursues the aim of protecting the reputation of Württembergische Versicherung AG and the digital brand Adam Riese, whose risks are borne by Württembergische Versicherung AG, as part of the W&W Group.

  The principles and configuration elements of our risk management system as well as our general handling of material risks are described below.

  The risk strategy establishes minimum requirements for the direction and framework of the risk policy. It is derived from the business strategy, the risk strategy and business segment strategy of the W&W Group and describes the type and scope of the material risks at Württembergische Versicherung AG. It defines goals, risk tolerance, limits, measures and instruments to handle assumed or future risks. The risk strategy is adopted by the Executive Board and is discussed and affirmed by the Supervisory Board at least once a year.

  As a matter of principle, we aim to strike an appropriate balance between business opportunities and the associated risks. The main focus here is to ensure the compa-ny's continued existence as a going concern. The objective is to avoid taking risks that jeopardise continued existence or that are incalculable.

  In our Group Risk Policy, we translate the risk strategy requirements into an organisational framework of the risk management system that considers both the specific needs of Württembergische Versicherung AG and those of the W&W Group. In this way, we establish the preconditions for effective, holistic risk governance.

  Capital management

  Württembergische Versicherung AG maintains risk capital to cover losses in the event that assumed risks should materialise. Risk management is responsible for managing and monitoring the ratio of risk capital to risk capital requirements (risk-bearing capacity). Risk is managed from two parallel perspectives:

  1. Regulatory risk-bearing capacity

     Regulatory risk-bearing capacity has to do with examining the ratio of eligible own funds to the solvency capital requirements. For this, we use the standard model of the European Insurance and Occupational Pensions Authority (EIOPA). Based on this indicator, we also present our risk position to the public. The regulatory capital requirements for the 2024 financial year were met on the basis of the quarterly calculations. The final ratios for the year ended 31 December 2024 will be published in the second quarter of 2025. The figure published as at 31 December 2023 was 188.1%.

  2. Economic risk-bearing capacity

  Within the scope of the company's internal risk and solvency assessment, the economic risk capital requirement is determined on the basis of an economic risk-bearing capacity model and compared with the available economic capital. The available risk capital is allocated and limits are derived on the basis of these calculations. We use the economic model for our risk governance.

  As in the previous year, the company had sufficient economic and regulatory risk-bearing capacity in the year under review.

  Risk governance/risk bodies

  The tasks and responsibilities of all persons and committees involved in risk management issues are defined.

  In its role as the control body overseeing the Executive Board, the Supervisory Board of Württembergische Versicherung AG also monitors the appropriateness and effectiveness of the risk management system, as well as implementation of the risk strategy, including risk appetite. Certain types of transactions require the Supervisory Board's approval.

  The Audit Committee regularly makes sure that the organisation of risk management in each area of responsibility is appropriate and effective. It reports to the Supervisory Board on this.

  The Executive Board bears overall responsibility for the proper organisation of the business of Württembergische Versicherung AG and thus also for an appropriate, effective risk management system. Accordingly, the Executive Board ensures that the risk management system is effectively implemented, maintained and enhanced. This also includes developing, promoting and integrating an appropriate risk culture. The Chief Risk Officer (CRO), who is a member of the Executive Board of Württembergische Versicherung AG, is responsible for risk management.

  The CRO chairs the Insurance Risk Board, the central body for coordinating risk management within the Insurance division. It meets once a month and, where necessary, on an ad-hoc basis. The responsibilities of the Insurance Risk Board include advising and supporting the Executive Board on risk-related matters, monitoring the risk profile and recommending risk governance measures.

  The Risk Management departments of Württembergische Versicherung AG advise and support the Insurance Risk Board. They carry out operational risk management and, in collaboration with Group Risk Management, develop risk management standards, methods and processes for identifying, assessing, managing, monitoring and reporting risks. Moreover, the departments prepare both qualitative and quantitative risk analyses.

  Württembergische Versicherung AG is integrated into the W&W Group's committee structure for risk management matters through the Group Board Risk. This central body coordinates risk management and monitors the risk profile in the W&W Group. It also advises on Group-wide risk organisation standards and the use of risk management methods and instruments that are uniform throughout the Group. Other central bodies are the Group Liquidity Committee, the Group Compliance Committee, the Group Credit Committee and the Group ICT Risk & Security Committee.

  In addition to these bodies, there are designated key functions within our organisational structure for specific topics. These are structured according to the three lines of defence model.

• The first line consists of the operational business units (e.g. sales, underwriting and capital investments). These units are responsible for individual risks and are permitted to assume risks in line with their competencies. In this context, they observe centrally determined standards, risk limits and risk lines. Compliance with these competencies and standards is monitored by means of internal controls.

  • The following functions are assigned to the second line:

    The risk management function coordinates all risk management activities. A Risk Management department head serves as the key risk management function holder. The risk management function is involved in all risk-relevant decisions. To fulfil its tasks, it has a right to complete, unlimited information at all levels of Württembergische Versicherung AG, which is ensured by means of appropriate information and reporting routes as well as escalation and deci-

    sion-making processes. The actuarial function ensures the correct calculation of technical provisions and supports the risk management function in risk assessment. The compliance function monitors adherence to external regulations. Accordingly, it assists the risk management function in matters relating to compliance risks.

  • Internal Audit represents the third line. It independently reviews the appropriateness and effectiveness of the internal control system and the effectiveness of corporate processes, including the first two lines mentioned above.

    Persons or divisions that exercise this function must be able to perform their duties objectively and independently. For this reason, they are set up as strictly separate from risk-taking units (functional separation to avoid conflicts of interest). This principle is observed even at the Executive Board level through stringent rules of procedure and allocation of responsibilities.

    In our structural and procedural organisation, the individual duties of all aforementioned bodies, committees and key functions as well as their connections and reporting lines among each other are defined. This guarantees the regular, timely flow of information both within Württembergische Versicherung AG and across all levels of the W&W Group.

    Risk management process

    The risk management process takes the form of an iterative control loop with five process steps.

    Risk identification

    Within the scope of the risk inventory, we regularly record, update and document assumed or potential risks. Sustainability-related risks are likewise included in the risk inventory. On the basis of an initial assessment by the responsible business units, we use threshold values to classify our risks as material or immaterial risks. If risks are related to sustainability, they are marked accordingly

    and their relevance is assessed. In this assessment, we also evaluate the extent to which individual risks can take on a material character through interaction or accumulation (risk concentrations). Risks that we classify as material are actively managed in the next four steps of the risk management process. By contrast, risks that are classified as immaterial are reviewed at least once a year by the individual business units. We reflect the results of the risk identification in our risk inventory.

    Emerging risks can arise because of changing general conditions, such as those of an economic, geopolitical, social, technological or environmental nature. They represent new risks relating to the future, the impact of which is still subject to a high degree of uncertainty. Württembergische Versicherung AG faces risk strategy-related challenges to its risk profile arising from external factors (e.g. changing customer needs and digitalisation). In the risk management process, emerging risks are observed with the aim of identifying the strategic risks that result from them in a timely manner (early risk warning) and of taking them into consideration in setting the company's business strategy. As part of the risk identification process, emerging risks are assessed using external sources of information and internal expert estimates for their relevance to Württembergische Versicherung AG.

    Risk assessment

    To assess material risks, we use various risk measurement procedures. Economic risk-bearing capacity is generally determined using stochastic methods and sensitivity and scenario analyses, and by applying the risk measure value at risk with a confidence level of 99.5% and a one-year time horizon. Where this procedure cannot be applied to certain risk areas, we use analytical computing procedures and qualitative instruments (e.g. expert estimates). Additionally, we regularly run stress scenarios and conduct sensitivity and scenario analyses for material risks.

    Risk-taking and risk governance

    In our risk strategy, we define how to handle assumed and future risks, as well risks arising from sustainability aspects. On this basis, the operational business units decide whether a risk conforms to these requirements and should be assumed (risk taking). During the year, we manage the risk positions we assume with the help of the methods specified in the risk strategy. They include thresholds, signal systems and limit and line systems

    (risk governance). Regulatory and economic risk-bearing capacity as well as division-specific indicators are used as key management parameters. These perspectives examine our ability to comply with our obligations towards all claimants.

    Risk monitoring

    We constantly monitor compliance with the basic requirements of the risk strategy and risk organisation, and whether risk governance exhibits the appropriate quality and fitness-for-purpose. Compliance with the limits and lines determined within the scope of risk governance forms the main basis for monitoring the risk profile and the capitalisation.

    Risk reporting

    We regularly report to the Risk Board Insurance and the Group Board Risk of the W&W Group, the Executive Board, the Audit Committee and the Supervisory Board in a timely manner about the risk position of Württembergische Versicherung AG. These reports include information on the amount of available own funds, the risk capital requirements, compliance with limits and lines, the material risk types, as well as the risk governance measures already taken and those still to be implemented. Ad-hoc risk communication takes place when material events occur.

    Risk profile and material risks

    To present our risks transparently, we use a standardised method to combine similar risks throughout the Group into risk areas. The following risk areas are relevant:

  • Market price risks

  • Counterparty credit risks

  • Underwriting risks

  • Operational risks

  • Business risks

  • Liquidity risks

Rather than constituting a separate risk type, sustainability risks are considered in each of the relevant risk types. Sustainability aspects are addressed in the combined management report included in the annual annual financial statements of W&W AG and the W&W Group. The annual report is made available to the public on the W&W AG website at https://www.ww-ag.com/en/inves-tor-relations/reports/reports-annual-reports.

The risk areas are quantified according to our economic model. Of the total risk capital requirement of €1,092.2 million (previous year: €1,066.5 million), 33.4% (previous year: 37.4%) relates to market price risks, 9.7% (previous year: 6.5%) to counterparty credit risks, 51.7% (previous year: 51.0%) to underwriting risks, and 5.2% (previous year: 5.1%) to operational risks. We take business risks into consideration

In our calculation of risk-bearing capacity by applying a discount when determining the risk capital. For Württembergische Versicherung AG, the main liquidity risk is illi-quidity as a result of settling claims after unusually high losses. As these are already shown as part of underwriting risk, no separate risk capital requirement is presented.

The individual risk areas and - where relevant to the overall assessment - the individual risk types are described in the following sections.

Market price risks

We define market price risks as potential losses resulting from the uncertainty concerning the future development (size, volatility and structure) of market risk factors. Such market risk factors include interest rates, stock prices, commodity prices, real estate prices and enterprise values, as well as risk premiums (credit spreads) for a given credit risk and foreign currency risks.

Strategic asset allocation forms the basis of our capital investment policy and thus is one of the most significant factors that influence our risk situation in the market price risk area. In this context, we place emphasis on an appropriate mix and spread of asset classes, as well as on broad diversification by industry, region and investment style. With our capital investments, we pursue a security-oriented investment policy.

The principle of business prudence, which is codified in the German Act on the Supervision of Insurance Undertakings (VAG) and constitutes a principles-based approach, forms the regulatory framework for our investment policy. In addition, various capital investment-related interpretation decisions of the German Federal Financial Supervisory Authority (BaFin) are taken into consideration. When making capital investments, the security, quality, liquidity and profitability of the portfolio as a whole must be ensured. This principle of business prudence is at the heart of our internal capital investment guidelines, which contain precise rules concerning compliance with investment policies and a company-specific schedule of investments with respect to both quality and quantity.

Apart from the general internal policy, there are special policies for the use of items such as forward purchases, forward sales, derivative financial instruments, structured products and asset-backed securities.

The foregoing internal policies, which govern operational capital investment activities, are supplemented by an internal capital investment risk management policy. This policy describes the strategic, organisational and operational framework for capital investment risk management.

The risk profile of capital investments is increasingly being influenced by ESG (environment, social, governance)

risks. As part of the sustainable orientation of its investment business, Württembergische Versicherung AG endeavours to consider sustainability criteria in its capital investments. To underscore this, it signed on to the Principles for Responsible Investment (PRI), among other initiatives. We are thus committed to the PRI and publicly undertake to introduce and implement them. With regard to our new and existing commitments in the area of alternative investments, compliance with ESG criteria is extensively analysed and evaluated by the back office. We also place great emphasis on ensuring that our selected external managers for equity, bond or real estate funds act in accordance with these principles. The PRI can also be replaced by appropriate ESG guidelines in individual cases. We work with an outside service provider to analyse our capital investment portfolios (specifically for companies and countries). As part of this, specific environmental, social and governance (ESG) risks are also taken into account with respect to the capital investment, insofar as these risks are associated with the investment portfolio and its management, e.g. through exclusion criteria (negative screening) or requirements for the energy efficiency of properties. Furthermore, we have long pursued an active sustainability approach in that renewable energy has been an integral part of our strategic capital investment process for many years. We also strive to consider green bonds for new investments and reinvest-ments, with the aim of making a further contribution toward the financing of climate-friendly projects.

Interest rate risk means the risk that the value of assets and/or liabilities held in interest-bearing securities may change as a result of a shift and/or rotation of market yield curves. The risk arises from different maturity structures and interest rate sensitivities on the assets and liabilities side (ALM mismatch).

As a general rule, higher interest rates will, over the medium to long term, boost current investment income and strengthen risk-bearing capacity. A very rapid, steep rise in interest rates harbours the risk of rising unrealised losses. This can create a need for write-downs and influence the ability to control results. Württembergische Versicherung AG therefore uses the provisions of Section 341b HGB to avoid write-downs, when these are not considered to be permanent.

Given the high proportion of interest rate-sensitive assets in our capital investment portfolio, interest rate risk plays a significant role within market price risks. This also includes interest rate risks arising from alternative investments.

To assess market price risks, we regularly conduct simulations for our fixed-income investments (including interest rate derivatives), which show us how the value of our portfolio changes depending on market fluctuations. A change of ±100 basis points in the respective yield curve would result in the following market value changes for all fixed-income securities:

• Increase by 100 basis points -€137.5 million

• Decrease by 100 basis points +€145.4 million

  Equity risk

  Equity risk means the risk that the value of assets held in equities, equity funds and equity-like securities (including equity securities within alternative investments) may change.

  Sudden and steep price declines on the equity markets can impair risk-bearing capacity.

  Stock price risks can be reduced by means of suitable hedging strategies using derivatives (e.g. put options, short futures). We continued to use hedges extensively in our equity portfolio in 2024. Further disclosures concerning hedging transactions are presented in the notes under "Notes concerning assets". To assess market price risks, we regularly conduct simulations for our equity portfolios (including equity-based derivatives). The market values of all equities would change as follows in the event of price volatility of ±10%:

• Increase by 10% + €3.0 million

• Decrease by 10% - €2.6 million

Real estate risk means the risk that the value of assets held in properties and property funds may change.

Sudden and steep declines in real estate prices can impair value and risk-bearing capacity. Until the move to the new W&W campus in Kornwestheim, a significant part of our real estate portfolio was used by units of the W&W Group. Planning for the redevelopment of the Feuersee site in Stuttgart is currently under way. In addition, properties in third-party use are an integral part of our capital investment portfolio. We consider the risk to be low due to our predominant investment activity in prime locations and the broad diversification of our portfolio. However, with regard to external factors - such as another rapid rise in interest rates or a widespread property market crisis - negative effects on the performance of our real estate portfolio cannot be ruled out. Increasing requirements with regard to ESG aspects may also adversely affect property values in the future. The market environment for office properties in particular remains challenging. Trends in remote working, rising interest rates and ESG requirements are resulting in higher vacancy and impairment risks.

Measurement losses/gains on investment properties measured at fair value amounted to -€0.43 million in the 2024 financial year (previous year: -€0.48 million), of which -€0.48 million (previous year: -€0.51 million) was attributable to scheduled depreciation of buildings and

€0.05 million (previous year: €0.03 million) to write-ups. No unscheduled write-downs were recorded.

Foreign currency risk means the risk that the value of assets or liabilities held in foreign currencies (non-euro currencies) may change.

Foreign currency risks may result from open net foreign exchange positions in globally aligned investment funds, as well as from foreign currency bonds or equity instruments. We hedge most currency positions and essentially concentrate on US dollars and Danish kroner in our foreign currency exposure, in keeping with our strategic direction. In addition, our foreign business results in liabilities denominated in foreign currency, which we cover congruently with capital investments.

Credit spread risk means the risk that the value of receivables may change because of a change to the applicable credit spread for the respective issuer or counterparty -despite an unchanged credit rating over time. Credit spread refers to the risk premium in the form of a higher rate of interest for a security exposed to credit risk in relation to a comparable risk-free security. Accordingly, only credit spread changes that do not result from a change (migration, including default) of the rating are monitored. Due to the structure of our investment portfolio - with a high proportion of fixed-income securities -credit spread risk is one of the most significant market risks.

Participation risk means the risk that the value of assets held in affiliated companies and participations may change.

The key elements of our risk management methods in the area of market price risk mainly comprise: economic

risk-bearing capacity model, asset liability management (ALM), including congruent coverage, limit and risk line system, participation controlling, new product process and market monitoring.

Counterparty credit risks mean potential losses that may result from the default or deterioration of the credit rating of borrowers, capital investments or other debtors (e.g. reinsurers, brokers).

We limit counterparty credit risk through the careful selection of issuers and reinsurance partners, as well as through broadly diversified investments. In this context, we observe the regulations for handling counterparty credit risks applicable to insurance companies. This includes making our own assessments of credit risk as required. Counterparties and securities are primarily limited to top credit ratings in the investment grade range. Counterparty credit risks are strategically and structurally managed by the risk bodies at Württembergische Versicherung AG on the basis of the specifications adopted in the risk strategy.

We not only assess counterparty credit risks at the individual level but also evaluate the counterparty credit risks of our capital investments at portfolio level using our Group-wide credit portfolio model, which measures fixed-income securities using an industry-standard credit value-at-risk model. The loss distribution is generated with Monte Carlo simulations. The stochastic model is based on market data and takes default probabilities as well as the probability of migrations between different credit rating classes into consideration. As a governance toolkit, our continually enhanced credit portfolio model enables us to dynamically adapt credit lines to rating changes.

Pursuant to our strategic direction, our bond portfolio has a conservative credit rating structure, with 91.0% (previous year: 90.8%) of investments being in the investment grade area. Our bond exposure generally has a sound collateral structure. Most of the capital investments with financial institutions are secured by government guarantees or by cover assets.

Current inflation trends, higher market interest rates since 2022 and the overall economic environment may have an adverse impact on the creditworthiness and refinancing capacity of borrowers in the medium term. The credit rating structure of our interest-bearing investments was largely stable during the financial year.

Through various securities investment funds, we hold bonds issued in the field of emerging markets. This market segment is particularly affected by global economic and political risks, as well as by country-specific challenges and economic difficulties attributable to a range of causes. Under the current circumstances, market activity is expected to remain volatile, and exposure is being closely monitored. A (re-)investment ban exists for debtors that are especially problematic. Currently, no specific

defaults are evident in our fund mandates. As at 31 December 2024, the volume of emerging market bonds totalled €181.6 million (previous year: €240.6 million) based on market values, representing a share of 5.4% (previous year: 7.3%) of our investment portfolio.

Other counterparty credit risk primarily comprises the risk of potential asset losses or the full or partial default or payment disruption of existing receivables from, for example, reinsurance partners, agents, brokers or other contractual partners.

The risks of credit default in reinsurance business have consistently remained at a low level. Currently, no material risks are foreseeable, and our retrocessionaires have good credit ratings. As at the end of the reporting period, recognised receivables from reinsurance business amounted to €21.0 million (previous year: €7.1 million). Of these, 17.9% (previous year: 46.5%) were owed by companies with an "A" or better rating and 83.7% (previous year: 56.1%), by companies with a "BBB" rating as classified by Standard & Poor's. Disclosures concerning receivables from policyholders, insurance brokers and others are presented in the notes under "Notes concerning assets".

Underwriting risks

In property and casualty insurance, underwriting risks arise from premium and reserve risks. We define these as potential losses that may result from uncertain future developments with regard to claims, benefits and costs under concluded insurance contracts in connection with premiums calculated in advance.

Württembergische Versicherung AG conducts primary insurance business in property and casualty insurance for retail and commercial customers in its core market Germany. In doing so, it also relies on digital sales channels (e.g. the digital brand Adam Riese). In accordance with internal provisions, we only enter into insurance transactions whose risks do not pose a threat to the company as a going concern. Incidental risks that cannot be influenced are limited with suitable and adequate hedging instruments (e.g. reinsurance).

Industrial risks are underwritten to only a limited and clearly defined extent and are furthermore extensively reinsured, meaning that our portfolio is not jeopardised by large individual risks. For the purpose of expanding corporate customer business through integrated insurance programmes for German policyholders with primary domicile or primary risk in Germany, Württembergische Versicherung AG also underwrites facultative indirect business and foreign insurance market pools to a minor extent. Württembergische Versicherung AG does not conduct other active reinsurance business.

The principles and objectives of the underwriting policy and the definition of permissible transactions and the associated responsibilities are documented in strategies and underwriting guidelines and are reviewed at least once a year. Our pricing and underwriting policy is risk-based and income-oriented. Risks are underwritten according to defined guidelines and under consideration of business line-specific maximum underwriting amounts. For example, natural disaster risk is addressed through risk-adjusted premiums based on the latest risk assessments, amended contract terms for critical natural hazard zones and risk exclusions.

Adequate reinsurance protection for individual risks and for accumulation risks significantly reduces the underwriting risks in property and casualty insurance. The reinsurance programme is adjusted on a yearly basis under consideration of risk-bearing capacity.

Apart from risk balancing through our mix of business lines and products, efficient claims management and a cautious loss reserving policy put limits on the gross underwriting risk. Once claims occur, Württembergische Versicherung AG promptly creates specific and general provisions, which are checked by our actuaries. The risk limit was consistently complied with.

To measure underwriting risks in the economic model, we use a stochastic model. We collaborate with specialised reinsurance companies and brokers for the purpose of simulating natural disaster events. The underwriting risk is limited by predefined risk limits. The limit utilisation is monitored continually.

In recent years, high inflation rates and other factors have led to higher claims expenses at Württembergische Versicherung AG. The company is maintaining its cautious premium calculation and defensive reserving policy. Nevertheless, a further rise in inflation may continue to have a negative impact on underwriting income.

If premiums fall or are not calculated in line with needs, underwriting losses may result if costs and claims remain stable or increase. Premium risks mainly result from large individual claims as well as accumulation and catastrophic events (e.g. natural disasters).

The long-term development of the net loss ratios (ratio of net claims expenses to earned net premiums) and the net run-off ratios (ratio of net run-off results for provisions

for outstanding insurance claims to initial loss provisions) is as follows:

In the 2024 financial year, which was heavily impacted by exceptional natural disaster losses, the net loss ratio was 68.4% (previous year: 76.3%). Claims expenses for natural disasters (gross) increased significantly compared to the previous year to €282.2 million (previous year: €176.6 million). At €250.2 million (previous year: €162.2 million), claims expenses for natural disasters (net) were also significantly higher than in the previous year. Following a decline in run-off activity in the previous year due to high claims inflation, the run-off ratio increased again sharply to 9.3% (previous year: 3.9%).

Reserve risk refers to the risk of inadequate claims reserving for incurred losses. The settlement of claims can fluctuate in terms of timing and amount; thus, the reserves set up may not be sufficient in the event of a significant increase in claims payments for past claims.

Thanks to our forward-looking settlement and reserving policy in recent years, sufficient loss reserves have been created in accordance with the German Commercial Code (HGB) - also to cover inflation-related increases in claims.

The key elements of our risk management methods in the area of underwriting risk mainly include: economic

risk-bearing capacity model, risk limit system, monitoring of underwriting performance, intra-year projections, and market monitoring.

Operational risks

We define operational risks as potential losses that could arise from the inappropriateness or the

failure of internal processes, people and systems or as a result of externally driven events.

This also covers legal and tax risks. To capture operational risks, experts estimate them regularly within the scope of the risk inventory. In the economic model, these risks are evaluated by means of a factor approach.

Operational risks are inevitable when companies do business.

Legal risk means the risk of loss due to legally unenforceable claims (either as plaintiff or defendant). This includes the risk of suffering losses due to a change in the legal situation (changed case law or statutes) for transactions concluded in the past.

In terms of legal and supervisory requirements, we are seeing an increase in regulatory density, including in supervisory law, in terms of creditor and consumer rights and with respect to disclosure obligations. Legal proceedings pending in the financial sector may also lead to subsequent financial recovery claims affecting Württembergische Versicherung AG. In particular, where authorities and courts reinterpret laws, this may entail material risks and significantly impair future financial performance. Württembergische Versicherung AG has classified legal risk as immaterial overall.

Process risk means the risk of loss resulting from the partial or complete failure or inadequacy of internal procedures or processes (e.g. process errors). It also includes human error (e.g. processing errors) and risks from departmental and IT projects. This could result in tangible and intangible losses.

We address risks from projects, especially infrastructure projects with high investment budgets and complex project content, through appropriate project management.

Process risks can also arise at the interfaces to external partners (sales partners, etc.). These are addressed through regular review processes, among other things.

Nevertheless, risks arising from the issues mentioned -in the form of cost risks and write-downs - cannot be entirely ruled out or may materialise.

Uniform methods and standards are used to manage process risks. The W&W process management system, including process-integrated controls (ICS), project

management procedures, information security risk management, ICT risk management, and business continuity management, all play a central role in managing operational risks. In addition, the Digital Operational Resilience (DOR) strategy, as an annex to the IT strategy, establishes the strategic foundation for countering digital threats through specific goals and measures.

Information risks arise from the threat to the availability, confidentiality and/or integrity of data. They essentially arise from processes, information technology (IT) systems, physical information storage media, technical facilities or buildings that are relevant to the storage and processing of data.

As a financial services provider, Württembergische Versicherung AG greatly depends on IT systems. However, this is associated with information security risks with respect to the goals of protecting the availability of applications, confidentiality and integrity of data, as well as with cyber threats. Württembergische Versicherung AG is also pursuing numerous measures as it presses ahead with its digitalisation (e.g. digital business models and sales channels, internal process optimisations and increased use of cloud services), which may result in other information security risks. Measures to proactively manage latent threats from cyber attacks were further optimised to strengthen information security. The cyber resilience centre within the W&W Group, which constantly adapts to the cyber threat situation, plays an important role in ensuring a balanced suite of preventive and reactive measures to detect and defend against cyber attacks. It also takes into account the latest information from the German Federal Office for Information Security (BSI).

Model risk means the potential loss a company may incur due to decisions based on model results that are flawed in their development or application (input and use risk), or that arise from the use of incorrect parameter estimates or inadequate model specifications (estimation and specification risk).

The individual components of the model risk are subject to an annual review. Identified weaknesses are promptly eliminated or backed with risk capital.

Service provider risk mainly refers to risks resulting from contractual relationships with third parties. In particular,

this covers outsourcing risks, e.g. with regard to loss of quality, management, control or expertise.

The requirements for the management of third parties are regulated in a binding manner, taking into account legal and regulatory requirements. Württembergische Versicherung AG has both intra-group and external outsourcing arrangements, the performance of which is appropriately managed and monitored. Appropriate measures have been implemented in the event of service disruptions. Württembergische Versicherung AG has outsourced its IT to W&W Informatik GmbH. The latter company uses other service providers, referred to as sub-ser-vice providers, to provide its services. As the number and importance of sub-service providers increases, so do the risks associated with service providers.

The key elements of our risk management methods in the area of operational risks mainly include: risk assessments, claim database, information security management, business continuity management, internal control system, personnel management, compliance management system and limit system in the economic risk-bear-ing capacity model.

Business risks

We define business risk as potential losses incurred as a result of management decisions concerning the business strategy and its execution or the failure to achieve strategic targets. This also includes risks on sales and procurement markets as well as cost and income risks. Apart from these strategic risks, we consider the risks that could arise from a changed legal, political or social environment and from reputation.

Business risks are unavoidable when engaging in general business activities or in the event of changes in the industry environment. We regularly analyse all business risks in connection with the risk inventory. If the compa-ny's reputation or brand were to suffer damage, there is a risk of losing business volume immediately or in the future, which could lower the enterprise value. We continuously monitor the public image of Württembergische Versicherung AG; when critical events occur, we strive to maintain our reputation through transparent communication policies.

Strategic risk means the risk of loss resulting from an incorrect or insufficient strategic orientation of the company, failure to achieve strategic objectives, or inadequate implementation of strategic guidelines. This also includes falling short of the planned net income for the year.

Risk drivers for Württembergische Versicherung AG include not only losses in the area of major and natural hazards, but also increased costs in the area of motor vehicle insurance and increased costs in general. To help ensure that planned net income for the year is achieved, monthly cost and action reporting is carried out, among other measures.

The consistent implementation of initiatives and programmes aimed at achieving the objectives of the business and IT strategy is of great importance in connection with strategic risks. Delays in these initiatives and programmes can lead to increased expenses, for example if the desired profitability is not achieved or if IT infrastructure upgrades can only be carried out with a delay. The strategic goals of Württembergische Versicherung AG are operationalised, advanced and rigorously managed within the framework of projects and strategic measures.

External risk means the risk of loss through, for example, failure to achieve planned new business targets due to possible changes in general external conditions (political, legal, economic, socio-cultural, technological and structural).

Significant potential for risks can emanate, in particular, from the political and social environment (geopolitical factors, global trends, e.g. from military conflicts, trade disputes, terrorism, social unrest, migration/refugee movements).

Measures to manage external risk include increased vigilance with regard to current crisis hotspots, continuous monitoring of the capital markets and consistent capital investment risk management.

The principles and objectives of business policies and the sales and revenue goals derived from them are contained in the business strategy and the sales forecasts. The Executive Board is responsible for managing business risks. Depending on the scope of a decision, coordination with the W&W Group and with the Supervisory Board may be necessary.

Liquidity risks

Liquidity risk means the risk that liquidity is not sufficiently available or that it can be realised only with discounts (market liquidity risk) to satisfy payment obligations at maturity (avoidance of insolvency risk).

Market liquidity risks mainly result from inadequate market depth or market disruptions in crisis situations. In crises, capital investments may become impossible to sell or can be sold only in limited quantities or at a discount.

The current situation on the capital markets does not indicate any acute material market liquidity risks for the capital investments as at the reporting date.

Our liquidity management is geared towards being able to meet our financial commitments at all times and on a sustained basis. Our investment policy focuses, among other things, on ensuring liquidity at all times. In this context, we observe applicable statutory, supervisory and internal regulations. Capital investments are categorised into liquidity classes in order to monitor their ability to be liquidated. To manage liquidity fluctuations, a lower limit has been set for the working liquidity, so that planned investments can be suspended or liquidity can be generated by liquidating corresponding capital investments if the lower limit is reached. Through forward-looking planning and operational cash management, the established systems are designed to identify liquidity shortages early on and to respond quickly to any expected liquidity shortages with suitable measures.

Stress scenarios are regularly considered for Württembergische Versicherung AG; among other things, the effects of changed cash flows and the available liquid capital investments are analysed.

The planned liquidity flows were regularly reviewed in order to identify the potential impact of geopolitical upheavals and the effects of volatile capital market interest rates and exchange rates. Existing processes to manage liquidity risks have ensured that there was no adverse impact on the liquidity situation of Württembergische Versicherung AG.

Assessment of the overall risk profile

Interest rate risk continues to be of prime importance to Württembergische Versicherung AG, and the company has adopted risk-mitigating measures to manage it.

Among underwriting risks, natural disaster risks, which are influenced by climate change, are of particular relevance. With regard to underwriting risk, large or frequent natural disaster events can lead to higher claims expenses, but these can be reduced by reinsurance or by adjusting insurance premiums. Higher deductibles lead to greater earnings volatility. In the long term, climate change will have an impact on the frequency and extent of damage from natural events and increase natural disaster risks. Württembergische Versicherung AG will maintain its cautious premium calculation and defensive reserving policy.

To strengthen information security, the company has continued and optimised its proactive approach to managing potentially increasing threats due to cyber attacks. Nevertheless, Württembergische Versicherung AG cannot completely avoid potential cyber risks.

As a result of the increasing uncertainties in the current economic and geopolitical environment, there are risks for the entire financial sector that may also have an impact on Württembergische Versicherung AG.

Württembergische Versicherung AG has a risk management system in place that, within the limits examined, enables existing and foreseeable future risks to be identified, assessed, managed and communicated in a timely manner.

With respect to the defined risk horizon and the chosen confidence level, no risks were discernible as at the reporting date that could threaten the continued existence of Württembergische Versicherung AG.

Enhancements and planned measures

We account for changes in the general internal and external conditions and their effects on the risk position of our company by constantly enhancing and improving our systems, procedures and processes. Sustainability continues to be a key topic.

Systematic advancement of the risk management system is intended to ensure the stable, sustained development of Württembergische Versicherung AG in future as well. In the 2025 financial year, we intend to continually and systematically raise the standards attained in our risk management system. For this purpose, we have defined an ambitious development programme with a number of measures in connection with our risk management process. In addition, the W&W Group is making targeted preparations for future regulatory requirements through extensive Group-wide projects.

Overall, the Executive Board of Württembergische Versicherung AG believes that the company is well equipped to continue successfully implementing the internal and external risk management requirements.

Outlook

Macroeconomic developments and relevant general conditions are based on estimates of the company, which are derived from relevant analyses and publications of various well-respected business research institutes, Germany's federal government, the Deutsche Bundesbank, Bloomberg consensus and industry and business associations.

Macroeconomic outlook

The economic outlook for the German economy remains subdued for 2025. The most important driver of growth is likely to be private consumer demand in view of real wage growth. However, due to the clouding of the labour market and ongoing geopolitical tensions, consumption is expected to be weak. Government demand is also likely to make a moderate contribution to economic growth, particularly if a reform of the debt brake expands the govern-ment's financial room for manoeuvre. Although the general financial conditions for corporate investment have improved due to the easing of the ECB's interest rate policy, a subdued economic outlook and low capacity utilisation mean a noticeable increase in investment is unlikely. Foreign trade is also not expected to provide any significant impetus for growth due to the poorer competitive position of many German companies and in view of possible tariff increases by the new US government. To summarise, the Deutsche Bundesbank, for example, forecasts a very modest increase in gross domestic product of 0.2% for 2025.

Following the massive rise in inflation rates at the turn of the year 2022/23, overall inflation in 2024 has returned to the ECB's target figure of 2%. Inflation at this rate is anticipated for 2025. While the price-dampening effects of the past quarters, in particular the favourable base effects in energy prices, will become less significant, the core inflation rate is showing signs of easing. The recovery in real wages that has already taken place and a moderate weakening of the German labour market suggest increasing wage moderation in 2025.

Short-term interest rates track key interest rates very closely. The ECB initiated a turnaround in monetary policy by lowering the key interest rate in June 2024. Further key interest rate cuts are expected in 2025. In the short-term maturity range, this indicates that interest rates will fall even further over the course of the year. In the longterm maturity range, the most likely scenario is that yields will change little. However, in the event of an unex-

pectedly pronounced economic downturn, e.g. as a result of geopolitical developments or renewed tensions in the eurozone, a significant

fall in interest rates would be possible. In the event of an unexpectedly dynamic economic upturn, e.g. due to an end to the war in Ukraine, higher yields would be conceivable again.

An upward trend on the European stock markets in 2025 could be fuelled by the ECB's pending interest rate cuts and the business-friendly economic policy of the new US administration, which could also lead to rising stock prices. In previous years, the major European companies have also proven that they can increase their profits in a subdued economic environment. On the other hand, important stock market indices, such as the DAX, are close to record highs. This is likely to increase the tendency of investors to take profits and sell shares at the first unfavourable news. The political environment could also be a burden for the European stock markets in view of possible tariff increases in the USA and ongoing military conflicts. Overall, limited price gains on the equities market are the most likely scenario for 2025. However, a significant drop in stock prices triggered by adverse economic or geopolitical developments cannot be ruled out. Surprisingly significant price gains would be conceivable in the event of an end to the war in Ukraine or an unexpectedly dynamic economic upturn.

Industry outlook

In property and casualty insurance, GDV expects premium volume to continue to increase strongly by 7.5% in 2025, mainly due to inflation-related catch-up effects. In the current environment, the forecast is still characterised by considerable uncertainty.

Future business performance

The 2024 financial year was characterised by extraordinary loss events, weak economic development and inflation-related catch-up effects.

Our forecasts are based on the estimates set out in the section "Macroeconomic outlook" and on our Group-wide planning process (see section "Business management system").

We assume that macroeconomic development will be subdued and that inflation will remain largely constant compared to 2024.

For the year 2025, we expect interest rates to change only slightly, particularly in the long-term maturity range. At the same time, we are assuming limited price gains on the European equity markets and an improved but still burdened claims development compared with 2024. This will not yet return to the level of previous years.