Wüstenrot & Württembergische : Solvency-II-Report Wüstenrot & Württembergische AG 2024

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Solvency and Financial Condition Report (SFCR) 2024 Wüstenrot & Württembergische AG Contents Summary 5 A Business activities and results of operations 7 A.1 Business activities 7 A.2 Underwriting result 12 A.5 Investment result 15 A.4 Development of other activities 15 A.5 Other disclosures 16 B Governance system 17 B.1 General information on the governance system 17 B.2 Requirements for professional qualifications and personal reliability 24 B.5 Risk management system, including the company's own risk and solvency assessment 26 B.4 Internal control system 55 B.5 Function of the internal audit 55 B.6 Actuarial function 56 B.7 Outsourcing 57 B.8 Other disclosures 57 C Risk profile 38 C.1 Insurance risk 59 C.2 Market price risk 42 C.5 Counterparty risk 45 C.4 Liquidity risk 48 C.5 Operational risk 49 C.6 Other significant risks 50 C.7 Other disclosures 51 D Valuation for solvency purposes 53 D.1 Assets 55 D.2 Technical provisions 68 D.5 Other liabilities 77 D.4 Alternative valuation methods 79 D.5 Other disclosures 79 E Capital management 80 E.1 Own funds 80 E.2 Solvency capital requirement and minimum capital requirement 82 E.5 Use of the duration-based sub-module for equity risk in the calculation of the solvency capital requirement 84 E.4 Differences between the standard formula and any internal models used 84 E.5 Non-compliance with the minimum capital requirement and non-compliance with the solvency capital requirement 84 E.6 Other disclosures 84 Appendix 85 Summary Wüstenrot & Württembergische AG (W&W AG) prepares and publishes an annual report on its solvency and financial position in accordance with legal requirements. This report is intended to increase transparency regarding the economic situation and provide insight into the net assets and solvency of the insurance company. Business activities and results W&W AG, based in Nornwestheim, is the strategic management holding company of the W&W Group. It sets standards and manages capital. W&W AG operates as a single company almost exclusively in the reinsurance business for the Group's insurance companies. It also provides services for the entire Group. W&W AG is listed on the stock exchange. In the 2024 financial year, net income of €154,759 thousand (previous year: €151,757 thousand) was achieved. Governance system The important bodies of W&W AG are the Executive Board and the Supervisory Board. The Executive Board of W&W AG manages the company on its own responsibility and represents it in transactions with third parties. The Supervisory Board of W&W AG advises the Executive Board on the management of W&W AG and monitors its management. Since the end of the Annual General Meeting on May 14, 2024, the Supervisory Board has consisted of only twelve members. Jürgen Steffan stepped down from the Executive Board at the end of June 50, 2024. Since then, the Executive Board has consisted of only three members. The Executive Board's schedule of responsibilities has been adjusted accordingly. There have been no significant changes in the shareholder structure of W&W AG. The company has established the four key functions of compliance, independent risk control, actuarial function, and internal audit. These individuals are subject to certain regulatory requirements regarding professional qualifications and personal reliability. Risk profile The risk profile of W&W AG comprises the risk areas of market price risks, counterparty risks, insurance risks, operational risks, business risks, and liquidity risks. According to the approach used for the company's own risk and solvency assessment, market price risks account for the largest share of risk capital requirements at 81.6% due to the investments in operating subsidiaries. These are followed in the risk profile by underwriting risks at 9.7%, counterparty risks at 6.8% and operational risks at 1.9%. Risks were consistently in line with the risk strategy throughout the financial year and risk limits were adhered to at all times. Valuation for solvency purposes At the reporting date, the financial position of W&W AG in accordance with Solvency II valuation rules compared with commercial law provisions was as follows: Summary solvency overview Solvency II HGB (book value) in € thousand 51.12.2024 51.12.2024 Total assets 8,742,057 4,715,459 Total liabilities 2,154,414 2,451,027 Excess of assets over liabilities 6,607,625 2,282,412 Shares in affiliated companies, including investments, account for the largest share of assets at around 64%. The differences between Solvency II and HGB are mainly due to the fact that Solvency II requires an economic valuation. Under Solvency II, the valuations of affiliated companies also include the Solvency II-specific adjustments applied by the respective companies, e.g. with regard to long-term guarantees (volatility adjustment). Capital management The solvency position of W&W AG is represented by the solvency ratio. At the reporting date, this stood at 588.5% (previous year: 411.4%). W&W AG therefore has sufficient eligible own funds to cover the solvency capital requirement: Solvency ratio Solvency II In € thousand 51.12.2024 Eligible own funds 6,804,895 Solvency capital requirement (SCR) 1,751,557 Solvency ratio in % 588,5 Other In view of the existing uncertainties, particularly regarding future geopolitical and economic developments, adverse effects on the financial position, net assets, and risk exposure cannot be ruled out. The Management Board of W&W AG has approved this report and its publication. A Business activities and business results Business activities Overview of the Group and W&W AG Formed in 1999 from the merger of the two long-established companies Wüstenrot and Württembergische, the W&W Group now develops and brokers the four building blocks of modern provision: insurance, home ownership, risk protection, and asset accumulation. It combines the business areas of housing and insurance with the Group's digital initiatives and brands such as Adam Riese, thereby offering customers the pension solution that suits them best. The W&W Group relies on omnichannel distribution, which ranges from its own sales force to cooperation and partner sales channels and brokerage activities to digital initiatives. The W&W Group, headquartered in Nornwestheim, operates almost exclusively in Germany. The listed company W&W AG is the strategic management holding company of the group. It coordinates all activities, sets standards, and manages capital. As a single company, it operates almost exclusively in the reinsurance business for the group's insurance companies. It also provides services for the entire group. The Management Board is the central governing body of the W&W Group. Its responsibilities include group management and the definition and development of the business strategy. Operational and company-specific issues relating to the individual companies are dealt with at the business unit level. In the Housing segment, the focus is on building society business and construction financing through Wüstenrot Bausparkasse AG. Wüstenrot Bausparkasse AG. In addition, Wüstenrot Haus- und Städtebau GmbH is active in property development and Wüstenrot Immobilien GmbH acts as a real estate broker. In the Insurance segment, the W&W Group offers its customers a wide range of personal and property / casualty insurance products. The main companies are Württembergische Versicherung AG, Württembergische Lebensversicherung AG, and Württembergische Nrankenversicherung AG. Holders of qualifying interests in W&W AG The shareholder structure of W&W AG remained stable during the year under review. The non-profit Wüstenrot Foundation, Gemeinschaft der Freunde Deutscher Eigenheimverein e. V., Ludwigsburg, holds an indirect stake in W&W AG totaling 67.58% via two holding companies. Attributable to this, WS Holding AG, Stuttgart, holds 27.47% and Wüstenrot Holding AG, Ludwigsburg, 59.91%. Another major shareholder of W&W AG is FS BW Holding GmbH, Munich, with more than 10% of the shares. 0.11% of the issued shares are non-voting treasury shares. General information about the company Name Wüstenrot & Württembergische AG Legal Aktiengesellschaft Auditor EY GmbH & Co. NG Wirtschaftsprüfungsgesellschaft Flughafenstraße 61 70629 Stuttgart Shareholder Wüstenrot Holding AG Wüstenrotstraße 1 71658 Ludwigsburg Shareholding of the shareholder 59.91% Supervisory authority Federal Financial Supervisory Authority (BaFin) Address Graurheindorfer Str. 108 55117 Bonn Contact Phone: 0228 / 4108-0 Fax: 0228 / 4108-1550 Email: [email protected] De-Mail: [email protected] Significant business transactions or other events With effect from June 50, 2024, Jürgen Steffan, Chief Risk Officer and Director of Human Resources, has stepped down from the Executive Board of W&W AG. This has resulted in changes to the distribution of responsibilities within the Executive Board with effect from July 1, 2024. In addition to his previous responsibilities, W&W CEO Jürgen A. Junker took over responsibility for human resources from Jürgen Steffan and is now also Director of Labor Relations. W&W CFO Alexander Mayer took over the Risk, Compliance, Group Controlling / Cost Controlling and Group Board Risk units from Jürgen Steffan. Jens Wieland, Chief Operations / IT Officer, has been assigned responsibility for Financial Controlling/Asset Allocation and Reinsurance from Alexander Mayer's previous area of responsibility. Jürgen A. Junker has also been responsible for setting up the AI Competence Center since July 1, 2024. In addition to the weak economic development, the financial year was marked by the sometimes massive damage caused by storms in the W&W Group's regional core insurance area. In particular, the so-called "Orinoco" natural disaster and various regional storms led to a significant decline in the W&W Group's consolidated result in accordance with IFRS accounting. In addition, the inverted interest rate structure throughout 2024 weighed on earnings in the Housing segment. It amounted to €56 million (previous year: €141 million). "W&W Better!" - New beginnings are bearing fruit! The W&W Group clusters its strategic goals into four strategic dimensions: Finance - Expanding earnings, actively managing costs at market level Market & Customers - Growth through the market in profitable products, winning and retaining customers, Processes & Technology - increasing productivity and efficiency, convincing users, Employees - Attracting, developing, and inspiring employees. With "W&W Better!", strategic projects were continued in 2024 and further implementation successes were achieved in both the Housing and Insurance segments. The focus was on developing new customer groups, providing intensive support to our existing customers, and digital transformation and sustainability. A new structure and integrated financial and risk management system were created at group level in the finance department. In future, this will enable us to respond even more efficiently to challenges in the financial sector, such as constantly changing supervisory and regulatory requirements. The digital transformation of the W&W Group is laying the foundation for its future and focusing in particular on the digitalization of products and processes. The focus is on renewing existing systems, which will enable us to create the conditions for largely automated product processing, flexible integration of cooperation partners, and further professionalization of product development. Since July 2024, we have stepped up our commitment to artificial intelligence (AI) and established a new "Data, Processes, and AI" department. The W&W Group responded to the constantly growing and changing threat posed by viruses, hackers, and malware with the Cybershield program, which bundles important cyber protection measures. In 2024, optimized virus protection was introduced across the Group, which automatically isolates affected devices. The Housing segment, with its brand identity "Wohnen heißt Wüstenrot" (Living means Wüstenrot), represents building society savings, construction financing, residential construction, and real estate brokerage. It is therefore the point of contact for customers on all matters relating to housing. The major project bausparen@wüstenrot (b@w), the introduction of a modern SAP-based core banking system, is in its second and final phase. In addition to numerous business processes, the portfolios of Aachener Bausparkasse AG and start:Bausparkasse AG are also being transferred to b@w. The aim of the new building society platform is to respond more quickly and flexibly to changing market requirements. Wüstenrot Bausparkasse AG strengthened its position as a "cooperative building society." With the acquisition of the German start: Bausparkasse AG, which took effect on July 1, 2024, it gained a new regionally significant sales cooperation with SÜDWESTBANN - BAWAG AG Niederlassung Deutschland. In addition, a new strategic cooperation agreement was concluded with ING Germany. In the Housing segment, the range of services in the field of energy-efficient renovation was expanded with Wüstenrot Energieberatung GmbH, a subsidiary of Wüstenrot Haus- und Städtebau GmbH. With its expertise in energy assessment and development of real estate, it will make an important contribution to energy-efficient modernization and sustainable living. Further implementation successes were also achieved in the Insurance segment: The long-standing field sales workstation (AAP) is being replaced by the sales workstation (VAP). The new VAP offers a more flexible, powerful platform that is tailored to the needs of sales in the digital age. The further development of the customer portal enables more digital and sustainable customer communication. Since financial year 2024, an AI assistant has been helping Württembergische's customer service team filter calls -over 600,000 per year - and direct them to the right place. It recognizes whether customer service or another department is the best point of contact based on the customer's request and forwards the request accordingly. As part of its IT transformation, Württembergische Lebensversicherung AG is consolidating its two remaining portfolio management systems into the modern msg.Life Factory portfolio management system. In November 2024, around 500,000 insurance policies were successfully transferred from the old portfolio management system in a first step. The consolidation into a modern standard application, msg.Life Factory, will enable significantly leaner and more cost-efficient business operations in the future. The "W&W Besser!" initiative will continue in 2025 in order to further align products, services, and processes throughout the W&W Group with customer benefits. List of affiliated companies The company holds interests in the following companies: List of shareholdings Share in capital direct in % Share in capital indirect in % 5 Currency Balance sheet date Equity 1 Net after taxes 1 Germany 5B Boden-Bauten-Beteiligungs-GmbH, Ludwigsburg 100.00 € 51.12.2025 69,171,701 1,827,599 Adam Riese GmbH, Stuttgart 2 100.00 € 51.12.2025 25,000 - Adveq Europe II GmbH, Frankfurt am Main 16.77 € 51.12.2025 855,065 -41,857 Adveq Opportunity II Zweite GmbH, Frankfurt am Main 29.51 € 51.12.2025 195,626 -664,257 Adveq Technology V GmbH, Frankfurt am Main 16.50 € 51.12.2025 1,244,958 -141,717 Allgemeine Rentenanstalt Pensionskasse AG, Stuttgart 100.00 € 51.12.2025 92,890,555 0 Altmark Versicherungsmakler GmbH, Stuttgart 100.00 € 51.12.2025 1,555,514 505,514 Altmark Insurance Brokerage GmbH, Stuttgart 100.00 € 51.12.2025 240,575 215,575 Asendorfer Nippe ASN GmbH & Co. NG, Nornwestheim 100.00 € 51.12.2025 1,780,000 451,995 Bausparkasse Wüstenrot Immo GmbH, Ludwigsburg 100.00 € 51.12.2025 108,561 622 Beteiligungs-GmbH der Württembergischen, Stuttgart 100.00 € 51.12.2025 5,716,190 62,291 BF.capital GmbH, Stuttgart 2 55.00 € 50.9.2025 649,542 - BWN GmbH Unternehmensbeteiligungsgesellschaft, Stuttgart 55.00 € 51.12.2025 205,852,267 -4,890,057 BWN Holding GmbH Corporate Investment Company, Stuttgart 55.00 € 51.12.2025 14,905,805 680,767 Deutscher Solarfonds "Stabilität 2010" GmbH & Co. NG, Frankfurt am Main 17.77 € 51.12.2025 70,454,159 15,524,442 Domus Beteiligungsgesellschaft der Privaten Bausparkassen mbH, Berlin 28.75 € 51.12.2025 4,719 -6,021,150 European Sustainable Power Fund No. 2 GmbH & Co. NG, Grünwald 1.00 11.10 € 50.9.2025 591,999,158 24,556,501 Feuersee Entwicklungsgesellschaft mbH & Co. NG, Nornwestheim 100.00 € 51.12.2025 66,554,182 -50,158,090 Ganzer GmbH & Co. NG, Nornwestheim 100.00 € 51.12.2025 2,000,000 1,278,796 Gerber GmbH & Co. NG, Nornwestheim 100.00 € 51.12.2025 288,095,647 1,515,197 GMA Gesellschaft für Markt- und Absatzforschung mbH, Ludwigsburg 100.00 € 51.12.2025 1,517,490 244,455 Immomio GmbH, Hamburg 15.55 € 51.12.2025 5,069,490 -5,861,451 IVB - Institute for Pension Advice, Risk and Financing Analysis GmbH, Narlsruhe 100.00 € 51.12.2025 150,425 5,455 Neleya Digital-Health Solutions GmbH, Berlin 9.97 € 51.12.2025 -166,545 -1,577,810 NLV BANO Dienstleistungs-GmbH, Narlsruhe 95.80 € 51.12.2025 264,197 7,957 NLV BANO Vermittlungs-GmbH, Narlsruhe 79.80 € 51.12.2025 276,428 8,251 Onshore Wind Portfolio 2012 GmbH & Co. NG, Frankfurt 4.41 16.51 € 51.8.2025 76,940,765 5,567,500 riparo gmbh, Holzgerlingen 25.00 € 51.12.2025 5,046,625 2,004,204 V-Bank AG, Munich 15.00 € 51.12.2025 125,257,512 24,495,159 ver.di Service GmbH, Berlin 40.10 € 51.12.2025 105,880 5,742 List of shareholdings (continued) Share in Share in capital capital Net direct indirect Cur- Balance after Name and registered office of the company in % in % 5 rency sheet date Equity 1 taxes 1 W&W Asset Management GmbH, Ludwigsburg 2 100.00 € 51.12.2025 11,261,185 - W&W brandpool GmbH, Stuttgart 2 100.00 € 51.12.2025 5,275,000 - W&W Informatik GmbH, Ludwigsburg 2 100.00 € 51.12.2025 475,025 - W&W Interaction Solutions GmbH, Munich 2 100.00 € 51.12.2025 1,492,050 109,470 W&W Service GmbH, Stuttgart 2 100.00 € 51.12.2025 100,155 - WHS Entwicklungs-GmbH, Nornwestheim 2 100.00 € 51.12.2025 25,000 - Windpark Golzow GmbH & Co. NG, Rheine 100.00 € 51.12.2025 0 -25,148 WL Renewable Energies Verwaltungs GmbH, Stuttgart 100.00 € 51.12.2025 82,895 2,171 WL Renewable Energy GmbH & Co. NG, Nornwestheim 100.00 € 51.12.2025 100,028,267 59,522 WL Sustainable Energy GmbH & Co. NG, Nornwestheim 100.00 € 51.12.2025 95,480,622 1,422,102 Württembergische Akademie GmbH, Stuttgart 100.00 € 51.12.2025 111,761 15,979 Württembergische Immobilien GmbH, Nornwestheim 100.00 € 51.12.2025 121,412,846 4,111,469 Württembergische Nö 45 GmbH, Stuttgart 89.90 € 51.12.2025 25,100,087 826,871 Württembergische Nrankenversicherung AG, Nornwestheim 100.00 € 51.12.2025 59,948,122 6,700,000 Württembergische Lebensversicherung AG, Nornwestheim 94.89 € 51.12.2025 616,404,050 20,000,000 Württembergische Logistik I GmbH & Co. NG, Nornwestheim 100.00 € 51.12.2025 18,554,755 1,946,496 Württembergische Rechtsschutz Schaden-Service-GmbH, 100.00 € 51.12.2025 75,660 -65 Stuttgart Württembergische Versicherung AG, Nornwestheim 2 100.00 € 51.12.2025 592,565,107 - Württembergische Vertriebspartner GmbH, Stuttgart 2 100.00 € 51.12.2025 74,481 - Württembergische Verwaltungsgesellschaft mbH, Stuttgart 100.00 € 51.12.2025 57,062 694 Württfeuer Beteiligungs-GmbH, Stuttgart 100.00 € 51.12.2025 61,486,809 1,559,241 WürttLeben Alternative Investments GmbH, Stuttgart 2 100.00 € 51.12.2025 266,025,000 - WürttVers Alternative Investments GmbH, Stuttgart 2 100.00 € 51.12.2025 82,025,000 - Wüstenrot Bausparkasse AG, Nornwestheim 100.00 € 51.12.2025 905,729,627 40,279,041 Wüstenrot Energy Consulting GmbH, Nornwestheim 100.00 € 51.12.2025 1,725,295 -299,705 Wüstenrot Grundstücksverwertungs-GmbH, Ludwigsburg 100.00 € 51.12.2025 2,094,828 57,244 Wüstenrot Haus- und Städtebau GmbH, Ludwigsburg 100.00 € 51.12.2025 106,254,870 4,504,250 Wüstenrot Immobilien GmbH, Ludwigsburg 100.00 € 51.12.2025 5,165,455 1,101,755 Zweite Wohnimmobilien GmbH & Co. NG der Württembergischen, Nornwestheim 100.00 Newly established in 2024 France Württembergische France Immobiliere SARL, Strasbourg 100.00 € 50.9.2024 55,221,628 1,999,815 Württembergische France Strasbourg SARL, Strasbourg 100.00 € 50.9.2024 55,974,202 2,504,470 Ireland W&W Asset Management Ireland DAC 100.00 € 51.12.2025 20,918,298 8,920,600 W&W Investment Managers DAC, Dublin 100.00 € 51.12.2025 2,772,821 721,574 List of shareholdings (continued) Share in Share in capital capital Net Name and registered office of the company direct in % indirect in % 5 Currency Balance sheet date Equity 1 after taxes 1 Austria G6 Zeta Errichtungs- und VerwertungsGmbH & Co OG, Vienna 99.90 € 51.12.2025 20,188,650 1,674,225 Nellerwirt Holding GmbH, Brixlegg 100.00 € 51.12.2025 18,557,481 -12,772 Nellerwirt Mountain Health Resort GmbH, Brixlegg 100.00 € 51.12.2025 16,984,825 -748,597 Mount Med Resort Betriebs GmbH, Oberau Wildschönau 80.05 € 50.6.2025 0 -47,794 SAMARIUM drei GmbH & Co OG, Vienna 100.00 € 51.12.2025 9,448,075 420,220 United Kingdom of Great Britain and Northern Ireland Partners Group Emerging Markets 2007, L.P., Edinburgh 9.58 US$ 51.12.2025 5,156,000 -14,092,000 1 The figures refer to the last available annual financial statements as of the balance sheet date. 2 Profit transfer agreement exists. 5 The indirect share (or: shareholding; or: share ratio) comprises shares that are owned by a dependent company or another company on behalf of the company or a company dependent on it, in accordance with Section 16 (4) of the German Stock Corporation Act (AktG). Insurance business Result The insurance business of W&W AG is largely characterized by the contributions of the Group subsidiary Württembergische Versicherung AG. Almost 100% of net premiums earned are attributable to this group reinsurance and thus mainly to the Federal Republic of Germany. In addition, the company holds a share in a German market pool (pharmaceutical pool) and handles the old business of companies not belonging to the group, which was mainly written up to and including 2002. The underwriting result before equalization reserve amounted to €1,717 thousand (previous year: -€27,060 thousand) and was thus significantly above the previous year's level. The improvement in the underwriting result is due to the better performance of an internal proportional reinsurance agreement. The loss under this agreement amounted to €1,506 thousand (previous year: €50,455 thousand), representing a reduction of €29,129 thousand compared with the previous year. Gross premiums written increased by 5.5% to €601,082 thousand, as premium income at Württembergische Versicherung AG and thus the volume of retrocession ceded rose. Net premiums written grew disproportionately by 8.9% to €584,401 thousand due to lower retrocession payments. Growth was achieved in all major business areas. In particular, the fire and other property insurance segment achieved a high growth rate of 11.5%, as did the other motor insurance segment with 8.9%. In the less significant other business segment (life and non-life), premium income rose disproportionately by 20.9%. Net claims incurred, which are mainly driven by benefits paid to the German Group company Württembergische Versicherung AG via quota reinsurance, were €252,157 thousand (previous year: €252,844 thousand), below the previous year's level. In motor vehicle liability insurance, claims expenses fell by 12.7% to €54,749 thousand (previous year: €62,692 thousand) and in other motor insurance by 4.4% to €60,094 thousand (previous year: €62,858 thousand). This was due to higher settlement gains from the claims provision for prior-year claims at the Group subsidiary Württembergische Versicherung AG. By contrast, the claims experience was worse due to a series of major storms at Württembergische Versicherung AG in the fire and other property insurance segment. Claims expenses there rose by 14.4% to €82,282 thousand (previous year: €71,945 thousand). In the general liability insurance segment, claims expenses rose by 20.5% to €15,297 thousand (previous year: €11,056 thousand), and in the other (life and non-life) segment by 50.0% to €5,272 thousand (previous year: €4,054 thousand). Claims expenses in income replacement insurance fell by 18.5% to €7,275 thousand (previous year: €8,920 thousand). Claims expenses also declined in legal expenses insurance, where claims expenses fell to €9,170 thousand (previous year: €11,541 thousand). The net loss ratio was 67.1% (previous year: 75.2%). Expenses for insurance operations for own account rose by €9,295 thousand to €120,662 thousand compared with the previous year. The net cost ratio decreased from 51.9% to 51.5%. The combined ratio improved to 98.6% (previous year: 107.1%). In accordance with the terms and conditions, €1,889 thousand was withdrawn from the fluctuation reserve (previous year: €27,929 thousand). The total fluctuation reserve amounts to €74,901 thousand (previous year: €76,790 thousand). This corresponds to 19.6% (previous year: 22.0%) of net earned premiums. After withdrawal from the provision for fluctuations, the underwriting profit amounted to €5,607 thousand (previous year: €868 thousand). The main business segments account for the following proportions of underwriting income and expenses: Underwriting income and expenses Premium income recognized Expenses for insurance claims in € thousand 2024 2025 2024 2025 Income replacement insurance 24,245 25,790 7,275 8,920 Motor vehicle liability insurance 84,867 79,285 54,749 62,692 Other motor vehicle insurance 69,241 65,584 60,094 62,858 Fire and other property insurance 125,060 112,201 82,282 71,945 General liability insurance 45,716 40,776 15,297 11,056 Legal expenses insurance 25,854 22,256 9,170 11,541 Other (life and non-life) 15,418 11,102 5,272 4,054 T o t a l 584,401 552,994 252,157 252,844 Expenses for insurance claims exclude claims settlement expenses. The complete breakdown of underwriting income and expenses by business segment is presented in the notes to this report in the S.05.01.02 reporting form. A.5 Investment result Capital markets The economic environment for investments in 2024 was primarily characterized by declining inflation rates, the resulting monetary policy expectations, and geopolitical tensions. After interest rates stabilized at the end of the previous year, yields initially rose moderately. As the year progressed, falling inflation rates and disappointing economic data, which reinforced expectations of interest rate cuts, led to a predominantly downward trend in yields. Investment result Presentation of the investment result Net result Share 51.12.2024 51.12.2025 51.12.2024 51.12.2025 in € thousand in € thousand in % in % Property, plant, and equipment for own use 709 -5,878 0.5 -1.6 Fixed assets 255,605 246,958 101.6 105.5 Real estate (except for own use) -22 744 0.0 0.5 Shares in affiliated companies, including investments 141,269 180,256 60.9 75.5 Shares 25,651 828 10.2 0.5 Shares - listed 119 86 0.1 0.0 Shares - unlisted 25,552 742 10.1 0.5 Bonds 55,512 27,078 14.5 11.4 Government bonds 5,512 5,541 1.4 2.5 Corporate bonds 50,200 21,557 15.0 9.0 Structured debt instruments 0 0 0.0 0.0 Secured securities 0 0 0.0 0.0 Organisms for collective investment 51,760 54,570 15.7 14.4 Derivatives -984 -146 -0.4 -0.1 Deposits other than cash equivalents 6,417 5,828 2.8 1.6 Other investments 0 0 0.0 0.0 Loans and mortgages 0 0 0.0 0.0 Policy loans 0 0 0.0 0.0 Loans and mortgages to private individuals 0 0 0.0 0.0 Other loans and mortgages 0 0 0.0 0.0 Deposit receivables 0 0 0.0 0.0 Cash and cash equivalents 0 0 0.0 0.0 Other income/expenses -4,410 -4,488 -1.9 -1.9 T o t a l 251,902 258,572 100.0 100.0 The total net income from investments (HGB) of W&W AG fell from €258,572 thousand to €251,902 thousand in the reporting period. It comprises current income, including income from profit transfer agreements, of €207,594 thousand (previous year: €225,588 thousand), current expenses, including expenses from loss transfers of -€8,262 thousand (previous year: -€9,000 thousand), the net gain on disposals of €44,505 thousand (previous year: €1,686 thousand) and the net gain on depreciation / amortization of -€11,755 thousand (previous year: €2,299 thousand). The net income from investments is dominated by the income from shares in affiliated companies, including investments. Due to lower current income and, in line with the previous year, no write-ups, net income for this asset class decreased. The net income from collective investment schemes decreased compared to the previous year. This is primarily attributable to lower write-ups and lower current income in these asset classes. Net income from bonds and deposits other than cash equivalents rose significantly. The increase is due to significantly higher current income resulting from the positive development of the interest rate environment. Other expenses for investments mainly included property and personnel expenses for the management of investments. The company did not recognize any gains or losses directly in equity. The investment result presented corresponds to the investment result published in the 2024 annual report of W&W AG. Securitizations In a securitization, the seller transfers certain assets (receivables) to a special purpose entity, which refinances itself by issuing securities on the capital market. W&W AG had no securitizations in its direct portfolio as of the reporting date. A.4 Development of other activities The following overview shows the other results of the company. Other results HGB (book value) HGB (book value) in € thousand 51.12.2024 51.12.2025 Other income 67,546 68,950 Other expenses 129,776 155,662 Income and earnings taxes 58,505 41,684 Other taxes 14 -692 The individual items are explained below. Other income In addition to income from services rendered to affiliated companies of €62,841 thousand (previous year: €61,525 thousand), this item includes income from the reversal of provisions recognized in previous years of €571 thousand (previous year: €546 thousand), exchange rate gains of €760 thousand (previous year: €710 thousand), and interest income pursuant to Section 255a of the German Fiscal Code (AO) and tax audits of €59 thousand (previous year: €721 thousand). Other expenses Administrative expenses represent the largest item at €104,456 thousand (previous year: €112,152 thousand), which expenses for services rendered to affiliated companies of €62,841 thousand (previous year: €61,525 thousand). Other significant items include interest expenses of €25,599 thousand (previous year: €21,206 thousand). Interest expenses relating to €9 959 thousand (previous year: €8 876 thousand) relate to interest on credit accounts from debt assumptions for pension obligations, as well as interest expense from pension provisions relating to €1,845 thousand (previous year: €2,425 thousand). The item €576 thousand (previous year: €569 thousand) also includes currency expenses. With regard to partial retirement agreements, expenses from the discounting of €20 thousand (previous year: €11 thousand) and income from the discounting of the assets to be offset in the amount of €78 thousand (previous year: €57 thousand) were offset against each other in accordance with Section 246 (2) sentence 2 HGB. Similarly, expenses from the discounting of pension provisions of €1,845 thousand (previous year: €2,425 thousand) and income from the discounting of the asset values from reinsurance policies in the amount of €122 thousand (previous year: €101 thousand) were offset against each other in accordance with Section 246 (2) sentence 2 HGB. Income taxes Income taxes amounted to €58,505 thousand (previous year: €41,684 thousand) in the financial year. The slight reduction in tax expense is attributable to slightly higher tax relief effects. Deferred tax assets and liabilities arise from differences between the values of land, rights equivalent to land and buildings, shares or units in investment funds and other non-fixed-income securities, the provision for insurance claims not yet settled and provisions for pensions under commercial and tax law. A tax rate of 29.86% was applied to deferred taxes. When determining the tax amounts to be deferred, the expected future tax burdens and tax relief are offset. In exercising the option under Section 274 (1) sentence 2 HGB, the excess of deferred tax assets over deferred tax liabilities is not recognized in the balance sheet. The income taxes reported in the annual financial statements include €0 thousand (previous year: €0 thousand) in taxes related to the Minimum Tax Act or foreign minimum tax laws. Significant leasing agreements W&W AG has no significant lease agreements. A.5 Other disclosures Apart from the matters described in the preceding sections, there is no other material information to disclose. B Governance system General information on the governance-system Executive Board As of December 51, 2024, the Executive Board consists of three members. This number of Executive Board members was determined by the Supervisory Board. The minimum number of Executive Board members is fulfilled. As of December 51, 2024, the responsibilities within the Executive Board are distributed as follows: Composition of the Executive Board Name Function Responsibilities Representation Group Legal Affairs, Group Audit, Communications, Group Development (Strategy, M&A, Strategic Brand Management & Corporate Identity, Customer Data) and Jürgen A. Junker Business Organization, Group Human Resources, Data Alexander Mayer, (Chairman of the Executive Chief Executive Officer (CEO) / Processes and AI, Group Board Sales, Group Board Human except for Data, Processes Board) Labor Director Resources and AI: Jens Wieland Group Accounting, Financial Services, Risk, Compliance (Money Laundering / Securities Compliance), Group Chief Finance Officer (CFO) / Controlling / Cost Controlling, Retained Organization, Alexander Mayer Chief Risk Officer (CRO) Group Board Risk Jürgen A. Junker Alexander Mayer, Financial Management / Asset Allocation except for Financial Enterprise IT management, customer data protection and Controlling / Asset: Jürgen Jens Wieland Chief Information Officer (CIO) operational security, production and services, reinsurance* A. Junker * Including investment management for reinsurance; the reinsurance business is outsourced to Württembergische Versicherung AG The Executive Board is responsible for managing the company with the aim of creating sustainable value in the interests of W&W AG, and defines the corporate policy and the principles of business policy. Its main tasks are the strategic orientation and management of the company, including compliance with and monitoring of an efficient risk management system. The Executive Board also ensures that an appropriate and effective internal audit and control system. It defines the business strategy and a consistent and appropriate risk strategy and ensures that W&W AG has a suitable and transparent organizational and operational structure. The Executive Board of W&W AG represents the company in transactions with third parties. The Executive Board is accountable as a whole. A resolution of the Executive Board is required in all matters in which a resolution by the Executive Board is required by law, the Articles of Association, or the rules of procedure for the Executive Board adopted by the Supervisory Board for the Executive Board, for determining and, if necessary, adjusting the business and risk strategy and other fundamental issues of Group planning, as well as the annual and multi-year planning of the company and the W&W Group, in matters that are not assigned to a specific member of the Executive Board in the schedule of responsibilities, and in all other matters submitted to the Executive Board for resolution by the Chairman of the Executive Board or a member of the Executive Board. The central management bodies of the W&W Group are the Management Board, the Division Boards or Executive Committee meetings, and the Group Boards. The Executive Board of W&W AG, together with the heads of the Housing and Insurance segments, forms the Management Board. The Management Board is the central management body of the W&W Group, which is responsible, among other things, for group management and for defining and developing the business strategy for the W&W Group. It also serves as a forum for professional exchange between the Executive Board and the heads of the business segments in the integration of the business segments into the Group strategy. The Management Board meets regularly, at least once a month. These meetings also serve as Executive Board meetings of W&W AG. Business area-specific issues are coordinated and decided at the BSW Executive Board meeting and the Insurance Division Board meeting. These meetings take place at least once a month and also count as Executive Board meetings of the individual companies. The Group Boards coordinate cross-business area initiatives in the areas of sales, risk, and capital investments. The CEO is responsible for coordinating cooperation between the Executive Board and the Supervisory Board. He maintains regular contact with the Chairman of the Supervisory Board and consults with him on the company's strategy, business development and risk management. He informs the Chairman of the Supervisory Board without delay of any important events that are of significant importance for the assessment of the situation and development of the company and for its management. The Executive Board coordinates the strategic direction of W&W AG and the W&W Group with the Supervisory Board. In addition, the Executive Board reports to the Supervisory Board regularly, promptly, and comprehensively on all issues relevant to W&W AG and the W&W Group in terms of strategy, planning, business development, risk situation, risk management, and compliance. Further details are set out in the rules of procedure for the Executive Board. Supervisory Board The Supervisory Board of W&W AG, the parent company of the W&W Group, advises the Executive Board on the management of W&W AG and the W&W Group and monitors its management. This also applies with regard to compliance with the relevant insurance and banking supervisory regulations. The Supervisory Board performs its duties in accordance with the law, the Articles of Association, the Rules of Procedure of the Supervisory Board, and any resolutions of the Supervisory Board. It devotes sufficient time to discussing strategies, risks, and remuneration systems for the Management Board and employees. In accordance with the Articles of Association, the Supervisory Board of W&W AG comprises 12 members, six of whom are shareholder representatives and six employee representatives. W&W AG is subject to a statutory quota of at least 50% women on the Supervisory Board. The Supervisory Board currently consists of seven men and five women. Women account for 42% of the total number of members. With regard to the business areas of housing and insurance and the joint Group perspective, the candidates proposed by the Supervisory Board for election to the Supervisory Board are selected on the basis of their experience and expertise, particularly in the insurance, banking, and building society sectors, as well as their individual skills. Further criteria for the Supervisory Board's nominations to the Annual General Meeting are the independence and availability of the candidates and compliance with the the age limit of 70 at the time of their election. In the opinion of the Supervisory Board, all shareholder representatives on the Supervisory Board are independent. The Supervisory Board will continue to have an appropriate number of independent members in the future. The Supervisory Board considers a minimum of four independent Supervisory Board members to be appropriate for the shareholder representatives. Due to the company-specific situation, the Supervisory Board does not consider it necessary to strive for a specific minimum number of Supervisory Board members who represent internationality in particular, as the main focus of the W&W Group's business activities lies in the national insurance and building society sector. However, beyond the characteristic of internationality, the involvement and cooperation of Supervisory Board members with different backgrounds and ways of thinking enriches the board as a whole and promotes a culture of discussion. This ultimately leads to more efficient and effective control and advisory activities. Except for measures requiring approval by law or the Articles of Association, the Executive Board requires the approval of the Supervisory Board for measures defined in the rules of procedure. The Supervisory Board has adopted rules of procedure for itself, which regulate the details of the Supervisory Board's organization that are necessary for the course of business. The appropriate interaction of the Supervisory Board with committees, executives, and key functions is ensured by the existing reporting requirements, so that there is a regular and sufficient exchange of information. If a conflict arises with supervisory, corporate, or group law requirements, compliance with the governance requirements at group level is ensured and enforced by the Supervisory Board of W&W AG. At the end of the reporting period, the Supervisory Board of W&W AG had established the following four permanent committees: Risk and Audit Committee C o m p o s i t i o n K e y r e s p o n s i b i l i t i e s Preliminary review of the annual and consolidated financial statements, the management reports and the proposal for the appropriation of profits, the corporate governance statement with the corporate governance report, including the remuneration report and the separate non-financial consolidated report. Accounting issues and monitoring of the accounting process, the effectiveness of the internal control system, the risk management system, and the internal audit system, as well as compliance issues. Issues relating to current and future overall risk appetite and business and risk strategies at company and group level, and support in monitoring their implementation. Recommendations on the election of the auditor by the Annual General Meeting. Resolving on the agreement with the auditor (in particular the audit mandate, the determination of audit priorities, and the fee agreement) as well as on the termination and continuation of the audit mandate. Taking appropriate measures to determine and monitor the independence of the auditor and the additional services provided by the auditor for W&W AG. Supporting the Supervisory Board in monitoring the Executive Board's prompt rectification of any deficiencies identified by the auditor. 6 members Chair: Dr. Frank Ellenbürger (financial expert for the audit) Two additional shareholder representatives: Prof. Dr. Nadine Gatzert, Dr. Wolfgang Salzberger (financial expert in accounting) Three additional employee representatives: Hartmut Bader, Jutta Eberle, Bernd Mader, Nomination Committee C o m p o s i t i o n K e y r e s p o n s i b i l i t i e s Supporting the Supervisory Board in preparing nominations to the Annual General Meeting for the election of members of the Supervisory Board (support in preparing nominations to the Annual General Meeting for the election of members of the Supervisory Board is the sole responsibility of the shareholder representatives). Supporting the Supervisory Board in setting targets for the underrepresented gender on the Executive Board and Supervisory Board and deadlines for achieving these targets. Supporting the Supervisory Board in the annual review in accordance with the internal "fit & proper" guideline for executives and members of the supervisory bodies in its currently valid version. 5 members Chair: Chairman of the Supervisory Board (Dr. Michael Gutjahr) Two additional shareholder representatives: Dr. Wolfgang Salzberger, Jutta Stöcker Personnel Committee C o m p o s i t i o n K e y r e s p o n s i b i l i t i e s Preparation of personnel decisions by the Supervisory Board, in particular the appointment and dismissal of members of the Executive Board and the appointment of the Chairman of the Executive Board. Preparing the determination of the remuneration of the members of the Management Board, the decisions pursuant to Section 87 (2) sentences 1 and 2 of the German Stock Corporation Act (AktG) and the remuneration report pursuant to Section 162 AktG for resolution by the Supervisory Board. Resolution on the conclusion, amendment, and termination of the employment and pension agreements of the members of the Executive Board, insofar as required by law. Regular consultation on long-term succession planning for the Management Board, taking into account the company's management planning. 4 members Chair: Chair of the Supervisory Board (Dr. Michael Gutjahr) Another shareholder representative: Dr. Frank Ellenbürger Two additional employee representatives: Andreas Rothbauer, Deputy Chairwoman of the Supervisory Board (Frank Weber) Mediation Committee C o m p o s i t i o n K e y r e s p o n s i b i l i t i e s Submission of personnel proposals to the Supervisory Board if the majority required for the appointment and dismissal of members of the Executive Board has not been reached. 4 members Chair: Chair of the Supervisory Board (Dr. Michael Gutjahr) Another shareholder representative: Edith Weymayr Two additional employee representatives: Petra Sadowski, Deputy Chairwoman of the Supervisory Board (Frank Weber) Ney functions The company has established the following four key functions: Risk management function, Compliance function, Internal audit, Actuarial function. The individual members of the Board of Management ensure regular communication with the key function holders. Detailed descriptions of how the functions are implemented within the company can be found in sections B.5 to B.6. Significant changes to the governance system The Annual General Meeting of W&W AG on May 25, 2025, resolved to amend the Articles of Association so that the Supervisory Board will be reduced from sixteen to twelve members for the period beginning at the end of the Annual General Meeting that approves the actions of the Supervisory Board for the 2025 financial year. This took place on May 14, 2024. Since its expiry, the Supervisory Board has consisted of only twelve members. There was a change in the composition of the Vorstand Board during the 2024 financial year. Jürgen Steffan left the Executive Board at the end of June 50, 2024. Since then, the Executive Board has consisted of only three members. The associated changes to the Executive Board's allocation of responsibilities are presented in section B.1. The declaration of conformity with the German Corporate Governance Code was updated with effect from December 2024 and is published in the 2024 Annual Report of W&W AG. Significant transactions in the reporting period There were no significant changes in the shareholder structure of W&W AG. Furthermore, there were no significant transactions with shareholders, persons exercising significant influence over the company and members of the Executive Board or Supervisory Board during the reporting period. Remuneration guidelines and practice Remuneration guidelines The remuneration guidelines of insurance companies subject to Solvency II are in line with the business and risk strategy of the W&W Group. The Group business strategy is the central document of the strategic orientation of the W&W Group. It contains the objectives and plans for the main business activities and forms the framework for the Group risk strategy. The strategy process pays particular attention to consistency between the Group business strategy and the business strategies of the individual companies of the W&W Group. Consistency between the business strategy of the Group and W&W AG is ensured by a strategy process that is coordinated in terms of timing and content. The compensation guidelines and compensation practices pursue the same objectives as the business and risk strategies and are also geared toward the sustainable development of the respective companies. The company's remuneration guidelines are based on the following principles: The remuneration systems comply with the respective legal requirements, in particular Art. 275 Delegated Regulation (EU) 2015/55 (DVO) and the English Corporate Governance Code. The remuneration systems at W&W AG are consistent with the business strategy and risk strategy. They are designed to prioritize securing the existence, long-term success, and prosperity of W&W AG. The remuneration systems support the achievement of strategic goals and are aligned with them. This means that target agreements are derived from the strategic goals. The target cascade Supervisory Board Executive Board Employees should ensure this at all times. The total remuneration of the members of the Executive Board and the employees is competitive, i.e., it is designed in such a way as to attract, retain, and motivate the members of the Executive Board and the employees in the best possible way. The remuneration systems are modern, up-to-date, fair, non-discriminatory, and gender-neutral. The structure of the total remuneration of the members of the Executive Board and employees ensures appropriate incentive structures in line with a group-wide risk culture. The ratio between fixed and variable remuneration is set in such a way that the variable component represents a human resources incentive on the one hand and does not encourage the members of the Executive Board and employees to take disproportionately high risks on the other. The remuneration systems support the strategic goals of the W&W Group's business and risk strategies by taking into account sustainable aspects in the areas of the environment, social affairs, and governance. The remuneration systems and the respective corporate goals are known within W&W AG, documented, and available for viewing in the personnel portal. The appropriateness of the remuneration systems is reviewed annually as part of a defined process and adjusted if necessary. Remuneration practice The members of the Supervisory Board receive only fixed remuneration for their work on the Supervisory Board and its committees, as well as attendance fees. The amount is determined by the Annual General Meeting. The remuneration of the Executive Board consists of a performance-related component (80%) and a non-performance-related component (20%). The conservative structure of the total remuneration of the members of the Executive Board in a ratio of 4 to 1 between fixed and variable remuneration components was chosen because this avoids incentives to take disproportionately high risks by individuals. The proportion of fixed remuneration is high enough to allow the company to pursue a flexible remuneration policy when determining variable remuneration, up to and including the complete elimination of variable remuneration in the event of negative contributions to earnings. Due to the remaining fixed remuneration, those affected are always in a position to maintain an appropriate standard of living. The non-perfor-mance-related component is a fixed remuneration consisting of a fixed salary (pensionable) and an allowance. The performance-related component is granted in the form of a target bonus. The performance-related remuneration is paid out in installments as follows: 40% is paid out immediately in the year following the determination of the degree to which the targets have been achieved, while the remaining 60% of the performance-related remuneration component is retained for a period of three years and subject to forfeiture clauses (sustainability criterion). The retained amount is only paid out if the W&W Group reports an average IFRS result after taxes of at least €140 million in the three years in question and does not report a loss in any of the three years. If the average consolidated result falls below the threshold of €140 million or if the Group reports a loss in one or more years, the amount retained for the relevant financial year is forfeited in full and permanently. When determining the remuneration of members of the Executive Board, the Supervisory Board ensures that the total remuneration is appropriate to the situation of the company and to the tasks and expected performance of a member of the Executive Board. Remuneration comparisons are carried out to determine the appropriate remuneration for a member of the Executive Board. A comparison with domestic companies in the same industry and of similar size and complexity shows that the total remuneration is in line with market conditions. The remuneration of senior executives in the first management level below the Executive Board is composed of a fixed salary and a variable remuneration component in a ratio of 82.5% fixed to 17.5% variable. The remuneration of senior executives below the first management level generally consists of a fixed salary and a variable remuneration component in a ratio of 87.5% fixed to 12.5% variable. The structure of the total remuneration between fixed and variable remuneration components was chosen to avoid incentives to take disproportionate risks. At the same time, the ratio ensures that employees are not significantly dependent on variable remuneration. The proportion of variable remuneration increases to 17.5% with increasing responsibility. Fixed remuneration is determined taking into account the position, tasks, and performance of the individual, as well as market compariso ly and the situation of the company. The total remuneration is therefore competitive and offers sufficient incentive in terms of human resources management. The remuneration of employees of insurance companies is based on the collective agreement for the private insurance industry. Employees covered by the collective agreement do not generally receive individual variable remuneration. However, in addition to the fixed remuneration regulated by collective agreements, employees are generally entitled to a variable company-wide component in accordance with a Group works agreement, provided they belong to the group of eligible persons. The variable component for employees without individual contractual agreements results exclusively from this Group works agreement. The bonus is calculated based on the degree to which the Group's target results are achieved. This applies uniformly to employees of all Group companies. The target value for the Group's results as derived from the medium-term planning is therefore also the target value for the employee bonus, thus harmonizing the goals of the employees with the company's planning. The entitlement to payment is excluded if and to the extent that mandatory regulatory reasons at Wüstenrot & Württembergische AG, Württembergische Versicherung AG, Württembergische Lebensversicherung AG, or Wüstenrot Bausparkasse AG prevent payment in a financial year. Some of the employees who are not covered by collective agreements (AT) receive additional individual variable remuneration based on target agreements in addition to the aforementioned collective remuneration components. This is regulated by the works agreement on the "Introduction and structuring of variable remuneration based on target agreements". The total proportion of variable remuneration is generally less than 20%. The fixed and variable remuneration components are determined and allocated as described for senior executives. Variable remuneration below the Executive Board is paid in full after the degree of target achievement in the second quarter of the following year. The remuneration practice for key function holders does not differ from the remuneration practice described above. Individual and collective performance criteria The performance-related bonus for members of the Executive Board is linked to a target agreement system. The amount of the bonus allocated to a member of the Executive Board for a past financial year depends on the achievement of the relevant corporate and individual targets. The corporate targets correspond to the annual plan approved by the Supervisory Board of W&W AG. They consist of key figures such as consolidated and individual company results, administrative expenses, consolidated customers, and employee satisfaction. The individual targets, which are derived in particular from strategic programs, relate to the organizational unit and to individual contributions to success and are agreed between the individual member of the Executive Board and the Supervisory Board. The targets are increasingly focused on sustainability. On the one hand, the targets are based on sustainable business indicators and, on the other hand, they relate to the areas of environment, social affairs, and governance. The corporate goals derived from the business strategy, such as achieving a sustainable return (annual result for the Group in accordance with IFRS, annual result for the company in accordance with HGB), a competitive cost level and cost ratios (cost efficiency / administrative expenses), and increasing employee satisfaction and customer loyalty (market performance), ensure the continuation of the company. Profitable growth combined with the creation of leaner and more efficient structures and processes enable us to secure sustainable earnings power. By setting a target for the annual result per company / business segment after taxes (HGB), the current and future equity requirements from profits (internal financing) are to be generated on a sustainable basis. The sustainability of the targets is additionally supported by assessment bases that are predominantly multi-year. The entitlement to payment of the portion of the variable remuneration that depends on the company's performance (company targets) is excluded if and to the extent that mandatory regulatory reasons at W&W AG, Württembergische Versicherung AG, Württembergische Lebensversicherung AG or Wüstenrot Bausparkasse AG in a financial year prevent payment. The overall concept allows for performance-related remuneration based on operational and sustainable targets, and thus remuneration that is appropriately performance-oriented. The variable remuneration of senior executives is also linked to a target agreement system. At least 50% of the total variable remuneration is determined on the basis of sustainable criteria. These criteria are composed of economic, environmental, and social criteria, taking into account the tasks and functions of the respective board members, and are derived from the targets of the respective executive boards. For senior executives, 40% of the variable remuneration is determined on the basis of the achievement of annually specified corporate targets. With regard to the corporate targets, the statements on the Executive Board apply. 60% of the variable remuneration depends on the achievement of annually agreed quantitative and qualitative individual or organizational unit targets agreed upon annually. Care is taken to ensure that individual targets are set that support sustainable success, taking into account the tasks and functions involved. In contrast to the remuneration of the members of the Executive Board / managing directors, there is currently no deferred payment. This also applies to the remuneration of key function holders. In this context, the interpretation decision of the Federal Financial Supervisory Authority (BaFin) of December 20, 2016, on "Aspects of remuneration within the framework of the requirements of Article 275 DVO (EU) 2015/55" is taken into account. No shares or share options are issued as variable remuneration for the Executive Board or for senior executives. The structure of the individual and collective performance-related contributions of key function holders does not deviate from the model described. Supplementary pension or early retirement schemes No supplementary pension or early retirement arrangements have been agreed with the members of the Executive Board or the members of the Supervisory Board. The pension plan for members of the Executive Board consists of a defined contribution plan in the form of retirement and survivor's pensions and a defined benefit plan in the event of disability. The defined contribution plan is linked to a reinsurance policy. The annual contribution amounts to 25% of the pensionable fixed salary. Due to a change in the reinsurance system, the characteristics of the pension benefits for members of the Executive Board in office on December 51, 2019 differ from those of members of the Executive Board appointed to office on January 1, 2020: bAV until December 51, 2019 Occupational pension plan as of January 1, 2020 Retirement benefits from age 65: Lifetime pension Lump-sum payment with option to choose a pension Survivor's pension: In the event of death after retirement: 60% of the retirement pension as a widow's pension, 15% or 20% of the retirement pension as an orphan's pension. In the event of death during active service: 60% of the old-age pension as a widow's pension based on the notional old-age pension at age 60, 15% or 20% of the retirement pension as an orphan's pension based on the notional retirement pension at age 60. In the event of death after retirement: Continued payment of the old-age pension for 20 years (calculated from the date on which the old-age pension was first received). Alternatively: Upon transfer of the pension, it is possible to include a survivor's pension at the expense of the retirement pension. In the event of death during active service: In principle, 500% of the pensionable fixed salary as a minimum death benefit in the form of a lump sum payment. At the request of the surviving dependents, this benefit can also be converted into a pension. Disability benefit: Lifetime pension equal to the notional retirement pension at age 60. Pension until age 65 amounting to 50% of the fixed salary. Benefit from age 65: Retirement capital based on the reinsurance policy financed up to the date of occupational disability or corresponding retirement pension No additional pension or early retirement arrangements have been agreed with key function holders. Employees receive a company pension if they accept the offer to join the pension scheme. The employer-financed company pension consists of defined contribution pension plans, with contributions calculated as a percentage of the current pensionable income. Survivors' benefits and disability pensions differ historically due to different insurance rates and different commitments regarding benefits in the event of disability. Retirement pensions are generally granted upon retirement at the age of 65 or 67, or earlier if the statutory pension is claimed at the same time. For reasons of grandfathering, there are also benefit commitments for old-age, survivors' and disability benefits. Old-age pensions are granted upon retirement at the age of 65 or earlier if the statutory pension is drawn at the same time. Survivors' benefits generally comprise a widow's / widower's pension of 60% of the retirement pension and orphan's pensions ranging from 15% to 50% of the retirement pension. Requirements for professional qualifications and personal reliability In order to meet the requirements for professional qualifications and personal reliability of persons who actually manage the company or hold other key positions, W&W AG differentiates between the following groups of persons: Managing directors, Supervisory Board, and Responsible holders of key functions. Requirements for skills, knowledge, and expertise Executive Board The Executive Board must have sufficient theoretical and practical knowledge of insurance business and management experience. These requirements are generally assumed to be met if the member has three years of management experience at an insurer of comparable size and type of business. The composition of the Executive Board of W&W AG shall ensure that its members as a whole can demonstrate at least professional qualifications in the following areas: Insurance and financial markets, business strategy and business model, governance system, financial analysis and actuarial analysis, regulatory framework and regulatory requirements. Insurance-specific knowledge of risk management is also important. Given the opportunities and threats involved, this also applies to the field of information technology. Supervisory Board The members of the Supervisory Board must be professionally capable of adequately controlling and monitoring the management and actively supporting the development of the company. To this end, Supervisory Board members must understand the transactions carried out by the company and be able to assess the risks involved. Supervisory board members must be familiar with the legal regulations that are relevant to the company. In order to perform their supervisory function effectively, basic insurance-specific knowledge of risk management is also required. Although specialist knowledge is not generally required, supervisory board members must be able to recognize when they need advice. Holders of key functions The responsible persons must be able to perform their key functions at all times on the basis of their professional qualifications, knowledge, and experience. The requirements for the professional competence of the responsible holders of key functions are derived from the descriptions of their respective responsibilities within the governance system based on national and European legal requirements. Depending on the key function to be filled (risk management function, compliance function, internal audit or actuarial function), appropriate specialist knowledge required to perform the respective function must be demonstrated. Assessment of professional qualifications and personal reliability Executive Board The Supervisory Board is responsible for ensuring that the Executive Board meets the requirements for professional qualifications and personal integrity. There is a job profile for each position on the Executive Board that defines the requirements for that position. The Chairman of the Supervisory Board uses this profile to search for candidates. The candidate is then reviewed internally to determine whether they meet the regulatory requirements (in particular with regard to professional qualifications and reliability). To this end the Group Legal Department first asks the candidate to submit a resume and a form provided by the supervisory authority specifically for the purpose of assessing personal reliability, availability, and other mandates. Based on these documents, supplemented by the job profile, the Group Legal Department checks whether the candi- date is professionally qualified for the intended Executive Board position, has the necessary reliability and time availability, complies with the maximum number of mandates permitted by supervisory law, and has no conflicts of interest. The candidate must also declare that any subsequent changes must be reported to the supervisory authority in writing without delay. If the Group Legal Department considers that the regulatory requirements are met, a positive response is sent to the Chairman of the Supervisory Board, who then initiates the necessary committee proceedings. After preliminary consultation with the relevant committees, the Supervisory Board reviews the candidate's suitability for the Executive Board position to be filled on the basis of the job profile and the documents submitted. In addition, the candidate also introduces himself or herself in person to the relevant committees and the Supervisory Board so that the committees have the opportunity to make a comprehensive assessment of his or her professional qualifications and reliability. Once the relevant committees and the Supervisory Board have determined the professional qualifications and reliability of the candidate and the necessary regulatory notification procedures have been completed, the Supervisory Board appoints the member of the Executive Board. The Supervisory Board reviews the professional qualifications of the members of the Executive Board and the entire board on an ongoing basis, after preliminary consultation with the Personnel Committee. Once a year, the members of the Executive Board are also asked whether there have been any significant changes in their reliability compared to the documents submitted at the time of their appointment or reappointment. Any circumstances that could influence the assessment of personal reliability are considered significant. The existence of professional qualifications and reliability of the members of the Executive Board is reviewed by the Supervisory Board, after prior consultation with the Personnel Committee. The Executive Board is kept up to date by the staff departments and, where necessary, by external consultants on current legal developments and changing requirements relating to their duties within the company and receive further training. Supervisory Board The company's Annual General Meeting decides on the election of shareholder representatives to the Supervisory Board in accordance with supervisory and stock corporation law requirements. In the event of a new election or the appointment of a shareholder representative to the Supervisory Board by a court, the Group Legal Department shall, at the suggestion of the Chairman of the Supervisory Board, examine whether the candidate meets the regulatory requirements (in particular with regard to professional qualifications and reliability). The review is based on the candidate's resume, the job profile for Supervisory Board members, and the form on reliability and other mandates held by the candidate. In addition, the candidate's self-assessment on the topics of capital investment, insurance technology, auditing, and accounting is also used for the review to ensure that the Supervisory Board has an appropriate diversity of qualifications, knowledge, and relevant experience. This ensures that the company is professionally supervised. After preliminary consideration by the Nomination Committee, the Supervisory Board then reviews the submitted documents (resume, self-assessment, personal statement on reliability and other mandates, and information from the Central Trade Register) and the job profile to assess the candidate's professional qualifications and reliability. If these criteria are met, the Supervisory Board will, on the recommendation of the Nomination Committee, submit a corresponding nomination to the Annual General Meeting or submit an application for appointment by the court. The employees elect the employee representatives on the Supervisory Board in accordance with the provisions of co-determination law. After appointment, new Supervisory Board members (shareholder representatives and employee representatives on the Supervisory Board) are reported to the Supervisory Board, together with the necessary documents (curriculum vitae, information on reliability, self-assessment, official certificate of good conduct, information from the Central Trade Register). The Supervisory Board shall, after consultation with the Personnel Committee, continuously review the professional qualifications of the members of the Supervisory Board and of the entire body. Among other things, the members of the Supervisory Board shall assess their strengths in the areas of capital investment, insurance technology, auditing, and accounting by means of a self-assessment. This forms the basis of a development plan to be drawn up annually by the Supervisory Board after consultation with the Personnel Committee, which defines the areas in which the entire Supervisory Board or individual members wish to develop further. The self-assessment and the development plan are forwarded to the supervisory body. If there is a need for development, training measures are carried out in the relevant areas. Once a year, the members of the Supervisory Board are also asked whether there have been any significant changes in their reliability compared to the documents provided at the time of their appointment or reappointment. Any circumstances that could influence the assessment of personal reliability are considered significant. The existence of the professional qualifications and reliability of the members of the Supervisory Board is reviewed by the Supervisory Board once a year, following preliminary consultation with the Personnel Committee. In a regular efficiency review of the Supervisory Board, the Supervisory Board reviews the efficiency of its activities. Holders of key functions The Executive Board is responsible for ensuring that the persons responsible for key functions meet the requirements for professional qualifications and personal reliability. To ensure that these requirements are met both at the time of initial appointment and during the ongoing performance of the key function, appropriate processes have been established at W&W AG. The relevant department must notify the Group Human Resources department and the Group Legal department as soon as possible of any key positions that need to be filled (e.g. if someone responsible for a key position leaves the company). Group Legal Department. They shall immediately agree with the Executive Board on a proposal for a suitable replacement. In order to verify the professional qualifications and personal reliability of the candidate, the Group Legal Department requests the necessary documents (resume, reliability form, and other mandates, an extract from the Central Trade Register and, if applicable, evidence of participation in further training that is relevant for assessing professional suitability). The Group Legal Department uses the documents submitted to check whether the candidate is professionally suitable for the key function in question and whether they are personally reliable. If the Group Legal Department considers that the regulatory requirements have been met, positive feedback is provided to the CEO and notification is sent to BaFin. Once the Executive Board has determined that the professional qualifications and personal reliability of the candidate are satisfactory and the necessary regulatory notification procedure has been completed, the Executive Board appoints the person responsible for the respective key function. The Group Legal Department initiates an annual review of the personal qualifications and reliability of the persons responsible for key functions. They confirm in writing that the requirements with regard to their professional qualifications and personal reliability remain unchanged. The Executive Board is informed by the Group Legal Department of the results of the annual review and confirms that the professional qualifications and personal reliability continue to be met by means of a corresponding resolution. If all requirements are no longer met, the Group Legal Department works with the person holding the position to determine whether and, if so, what measures (e.g. training measures) can be taken to restore the requirements in a timely manner and informs the Executive Board accordingly. The Executive Board decides whether the requirements are (again) met. If a short-term remedy is not possible, BaFin is notified. In addition, the person entrusted with the key position is replaced promptly in consultation with BaFin. If there are special indications during the year that a person responsible for a key function no longer meets the requirements for professional qualification and reliability, an extraordinary review shall be carried out by the Group Legal Department on behalf of the Executive Board. This may be the case, for example, if there are reasons to believe that the persons concerned are not performing their duties properly. B.5 Risk management system including the company's own risk and solvency assessment Risk management system The risk management and control system comprises all organizational regulations and measures for the (early) identification and management of risks associated with business activities. Risk control is an integral part of risk management and includes the assessment, evaluation, monitoring, and reporting of risks incurred by risk-taking units. It also monitors risk control measures. The scope and intensity of risk management activities vary in accordance with the principle of proportionality based on the risk content of the business activities. The adequacy and effectiveness of the risk management system is reviewed internally by W&W. In particular, the internal audit department also reviews the adequacy and effectiveness of the internal control system and processes in all areas. As part of the annual audit, the risk early warning system at the individual company level and the adequacy and effectiveness of risk management at the financial conglomerate level are audited at W&W. The integrated risk strategy provides the strategic framework for the risk management system of W&W AG. Within this framework, the risk appetite resulting from the risk profile, the overarching risk objectives and the use of consistent standards, methods, procedures and instruments are defined in line with the business strategy. The integrated risk strategy is based on the principles of long-term business continuity and takes into account the nature, scope, complexity, and risk content of the business conducted by W&W AG and its subsidiaries. The guidelines formulated in the integrated risk strategy are intended to help secure the company's long-term ability to act and promote a group-wide risk culture. The risk strategy is reviewed at least once a year, approved by the Executive Board, and discussed by the Supervisory Board. The Group Risk Policy contains the organizational framework for risk management and is a prerequisite for an effective risk management system at W&W AG and its operating subsidiaries. This framework is intended to ensure a comprehensively comparable quality standard and a high level of consistency. As an essential component of the common risk culture, the Group Risk Policy and the processes and systems defined therein promote the necessary risk awareness at the level of W&W AG and its subsidiaries. Ney components of the group-wide risk culture are a management culture that sets an example, open communication and critical dialogue, employee responsibility, and appropriate incentive structures. The Executive Board and senior management have a significant influence on the risk culture at W&W AG through their management style and approach to risk. In addition, W&W AG has topic-specific guidelines for risk management covering investment risk, asset liability management, liquidity risk, operational risk, and insurance risk, as well as other topic-specific regulations. The guidelines and other regulations in risk management are subject to a standardized review and update process. Responsibilities in the risk management system/risk governance Our risk governance is designed to manage our group-wide and individual company risks. At the same time, it is intended to ensure that our overall risk profile is consistent with our risk strategy objectives. Within the organizational and operational structure, the individual areas of responsibility of all the following bodies, committees, and functions, as well as their interfaces and reporting lines, are defined, ensuring a regular and timely flow of information across all levels of W&W AG and its subsidiaries. In its function as the supervisory body of the Executive Board, the Supervisory Board also monitors the adequacy and effectiveness of the risk management system and the implementation of the risk strategy, including the risk appetite. It meets at least four times a year and is regularly informed about the current risk situation at its regular meetings and through ad hoc risk reporting. Certain types of transactions require the approval of the Supervisory Board or its Risk and Audit Committee. The Risk and Audit Committee is regularly provided with the information required by the rules of procedure, in particular the risk reports describing the current risk situation and the control measures initiated. It meets at least twice a year, with additional conference calls or meetings held as required. The Executive Board of W&W AG is jointly responsible for the proper organization of business and is also the highest decision-making body in risk matters. This also includes ensuring that the group-wide risk management system is implemented, maintained, and developed in an effective and appropriate manner. It also includes the development, promotion, and integration of an appropriate risk culture. Within the Executive Board of W&W AG, the Chief Risk Officer (CRO) is responsible for risk management. The Group Board Risk, as the central body for coordinating risk management, supports the Executive Board of W&W AG and the Executive Board in risk-related matters. The committee meets once a month, with ad hoc special meetings convened as required. The Group Board Risk monitors the risk profile of W&W AG and the W&W Group, their adequate capitalization, and their liquidity position. In addition, it advises on group-wide standards for risk organization and the use of uniform methods and instruments in risk management, and submits these to the Group's executive boards for decision or decides on them within the scope of its authority. In accordance with W&W's internal guidelines, the tasks assigned to the administrative, management or supervisory body (VMAO) under Solvency II are performed by the Supervisory Board with the Risk and Audit Committee, the Executive Board and the Group Risk Board in accordance with their respective responsibilities. Overall responsibility for the proper implementation of the requirements lies with the Executive Board of W&W AG. Cross-group committees have been set up to deal with specific risk issues in detail: A Group Liquidity Committee has been established for group-wide liquidity management. It is responsible for group-wide liquidity management and monitoring. The Group Compliance Committee is responsible for the group-wide consolidation, analysis, discussion, and evaluation of compliance-related issues. A Group Credit Committee has been set up to efficiently develop proposals for credit decisions in the institutional sector. Group Credit Committee has been set up to develop proposals for credit decisions in the institutional sector efficiently. The Group ICT Risk & Security Committee is responsible for group-wide control of information security and information and communication technology risk management. Ney and control functions have been implemented within the business organization and are structured according to the three lines concept: The first line consists of the business units responsible for decentralized operational risk management. They make conscious decisions within the scope of their authority on whether to take or avoid risks. In doing so, they must observe centrally defined standards, risk limits, and risk lines as well as the established risk strategies. Compliance with these authorities and standards is monitored by appropriate internal controls. The second line comprises the risk management function (RMF), the compliance function (see B.4) and the actuarial function (see B.6). Internal audit (see B.5) forms the third line. Risk management function The Risk Management department at W&W AG is responsible for risk management at group level and at the level of W&W AG. A division manager in the Risk Management department acts as the responsible key function holder in accordance with Section 26 of the Insurance Supervision Act (VAG). The holder of the risk management function has full and unrestricted access to information and a reporting line to the responsible member of the Executive Board in order to perform his or her duties. The Risk Management department has adequate working capacity. The Executive Board ensures that the risk management function is adequately equipped with personnel and material resources in terms of the nature and scope of its tasks. To avoid conflicts of interest, the risk management function is strictly separated from risk-taking units. The risk management function is involved in decision-making both at the organizational level, through its inclusion in the committee structure, and at the procedural level, within the framework of the operational implementation of the risk management system, risk reporting, and the implementation and further development of the risk management system. The Executive Board of W&W AG is advised by the Group Board Risk on decision-making on risk-related issues. The key function holder is a member of the Group Board Risk and is therefore structurally involved in decision-making on risk-related issues. The regular flow of information on the risk situation is ensured in particular by the annual update of the risk strategy and further guidelines, the setting of limits, internal risk reporting, risk-bearing capacity calculations, the report on the company's own risk and solvency assessment, and the results of the risk inventory. The Supervisory Board and the Risk and Audit Committee are informed by the Executive Board, in particular through the presentation of the risk strategy, the internal risk report, the report on the company's own risk and solvency assessment, and ad hoc reports on the risk situation. The risk management function has the following main tasks: developing the risk strategy and guidelines for risk management, participating in strategic asset allocation, implementing risk limit planning, carrying out risk inventory, calculating solvency, including further developing the risk-bearing capacity model, carrying out and documenting the Own Risk and Solvency Assessment (ORSA), preparing internal and external risk reports (regular and ad hoc), implementing measures to promote risk culture, carrying out special projects on risk topics. Risk management process The risk management process at W&W AG and its operating subsidiaries is based on the integrated risk strategy and the control cycle described below. Risk identification Risks are systematically identified as part of the annual risk inventory and during ad hoc reviews of the risk situation during the year. Risks are classified as insignificant or significant using defined thresholds. In addition, an assessment is made of the extent to which individual risks can become significant through their interaction or accumulation (risk concentrations). By involving various business units, the risk inventory contributes significantly to promoting an appropriate risk culture. The systematic recording of claims provides information about new or changing risks in the area of operational risk and thus also contributes to risk identification. Risk assessment This process step includes all methods, processes, and systems used to assess identified risks in a manner appropriate to the risk. The assessment is largely carried out using stochastic methods applying the value-at-risk measure. If this method cannot be used for certain risk areas, analytical calculation or regulatory standard methods and expert estimates are used. The main risks are assessed on a quarterly basis. Depending on the type of risk, various risk measurement methods are used to evaluate them quantitatively: The standard formula is used to determine the regulatory capital requirement for market risk, counterparty default risk, actuarial risk, and operational risk. In addition, the risk capital requirement for market price, counterparty, actuarial, and operational risk is quantified using a proprietary economic model, which is largely based on a stochastic risk simulation. The risk measure Value at Risk (VaR) with a confidence level of 99.5% and a one-year time horizon is used for this purpose. In addition, risk area-specific and cross-risk area sensitivity and scenario analyses are carried out. Ney figure analyses supplement the risk assessment tools. Risk assumption and risk management We understand risk management to mean the operational implementation of risk strategies in the risk-bearing business units. Decisions on risk-taking are made within the framework of business and risk strategy guidelines by the decision-makers responsible in the individual companies. The respective departments in our individual operating companies manage their risk positions on the basis of the risk strategy. Threshold values, traffic light systems, and limit and line systems are used to support risk management. If defined thresholds are exceeded, predefined actions or escalation processes are initiated. The risk-taking unit is primarily responsible for managing and controlling the risks incurred there. It decides on products, transactions, and first-line risk control measures. In doing so, it must be ensured that the risks incurred fit the risk profile specified in the risk strategy of W&W AG or one of its subsidiaries and that the viability and specified risk limits and risk lines are complied with. Ney performance indicators are the net income for the year in accordance with the German Commercial Code (HGB) and business area-specific key figures. In order to link earnings and risk management, we carry out scenario analyses for the key performance indicators as part of the planning and projection process. In addition to W&W AG's net income for the year in accordance with the German Commercial Code (HGB), the IFRS consolidated net income and the HGB results of the subsidiaries are also relevant for control purposes. The adequacy of risk capitalisation is controlled and assessed in several dimensions, which are fundamentally equal but highlight different objectives and aspects: The economic perspective assesses the ability to cover risks, i.e., the sustainable safeguarding of the company's assets to protect customers and senior creditors from losses from an economic perspective. The regulatory perspective considers compliance with the minimum regulatory requirements for risk capitalization in order to be able to continue business operations as planned. In accordance with the requirements of balance sheet/income statement management, a specific balance sheet/in-come statement-oriented risk model is also applied. While the economic risk-bearing capacity concept and the balance sheet risk model are developed and parameterized internally, the regulatory procedure follows externally specified systems. Risk monitoring Risk indicators are used for early risk detection to identify changes in the risk situation. These indicators include financial and risk indicators (e.g. risk-bearing capacity ratios, limit utilizations), regulatory ratios (e.g. capital ratios) and market indicators (e.g. share prices, credit spreads). The main quantifiable risks are limited by limits and lines. Limits are set at a maximum level that ensures that the respective minimum economic risk-bearing capacity ratios are maintained even if the limits are fully utilized. The establishment of an appropriate limit and line system limits risk concentrations in particular. Risks are monitored independently of risk-taking primarily at the individual company level. If the risks are also significant at group level or if significant risks arise across companies, these are additionally monitored at group level. Recommendations for action are derived from the monitoring activities, which lead to early corrective intervention with a view to the objectives formulated in the business and risk strategy and are subject to corresponding measure controlling. Risk reporting As part of the written rules, the Executive Board specifies in particular the content to be reported, the recipients of the reports, and the reporting frequency for internal risk reporting, as well as rules for ad hoc reporting, in order to ensure timely and regular reporting on the risk situation of W&W AG, its subsidiaries, and the various groups.

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