Wüstenrot & Württembergische : Annual Report Württembergische Versicherung 2024

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Annual report 2024 Württembergische Versicherung AG 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 Bader 1 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 Bäurle 1 Pension and Assets Representative Württembergische Versicherung AG Chairman of the Works Council Württembergische Versicherung AG, Horb location Katja Bronner 1 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 Sadowski 1 Trade union secretary Vereinte Dienstleistungsgewerkschaft ver.di Stuttgart district Peter Stübing 1 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. Technical provisions for own account 2024 2023 Change in % Claims provisions 2,302.6 114.7 184.1 386.1 19.2 2,888.2 143.9 -0.1 10.6 1.8 in € millions 2,300.2 in % of premiums written 105.9 in % of claims payments 156.6 claims equalisation reserve in € millions 427.1 in % of premiums written 19.6 Technical provisions Total in € millions 2,939.9 in % of premiums written 135.3 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 Motor 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. Retail customers 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. Corporate customers 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. Direct 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). Assumed reinsurance business 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 Capital investment challenges 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. Investments in investment certificates 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. Equities 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. Participations 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. Real estate 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. Valuation reserves 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". Derivative financial instruments 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 Opportunities related to changed customer needs and changed values 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. Opportunities related to the climate, energy, environment and sustainability 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. Opportunities related to reputation 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 Opportunities related to the capital market, including interest rate trends 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. Opportunities related to inflation and price trends Our customers will continue to face high levels of uncertainty in 2025, especially due to issues relating to inflation and overall economic development. 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. Opportunities related to the economic environment According to the Deutsche Bundesbank, the German economy will remain weak. The insurance industry is also in a difficult situation, and cost pressure is increasing. In these challenging times of recession, there are opportunities for insurers to scrutinise their business models and sales structures and, above all, to position themselves on the market with new and innovative products. 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 Opportunities related to increasing regulation and consumer protection 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 Opportunities related to digitalisation and technical progress 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. Opportunities in the data age 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. Opportunities related to artificial intelligence 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. Opportunities related to the growing use of cloud services 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: 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%. 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 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 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 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 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 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 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. Counterparty credit risk in capital investments Counterparty credit risk in capital investments means the risk that full or partial default or payment irregularities with respect to securities may result in assets losses, as well as that the creditworthiness of counterparties (issuers/contractual partners) may change. 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 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. Premium risk 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: Loss and run-off ratios Loss ratios Run-off ratios in % 2014 68.5 4.9 2015 65.8 6.8 2016 63.8 6.7 2017 63.6 6.6 2018 61.8 7.1 2019 63.3 6.3 2020 64.1 2.8 2021 62.6 7.8 2022 61.1 7.8 2023 76.3 3.9 2024 68.4 9.3 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 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 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...

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