Strong track record –and new ideas Munich Re equity story

Transcription

plainpicture/fStop/Ralf Hiemisch
Strong track record – and new ideas
Munich Re equity story
October 2016
Agenda
Equity story
3
Backup
Group
21
Reinsurance
48
ERGO
62
Munich Health
76
Investments
79
Munich Re – October 2016
2
Equity story
Munich Re – Key metrics
Key financial data1
€bn
2015
Shareholders’ equity
Operating result
Net result
Debt leverage (%)
RoE (%)
RoRaC (%)
31.0
4.8
3.1
13.4
10.0
11.5
2014
30.3
4.0
3.2
13.6
11.3
13.2
Key share data1
2013
26.2
4.4
3.3
15.3
12.5
12.1
2015
Earnings per share (€)
Dividend per share (€)
Book value per share (€)
Share price (€)
Beta4
P/E
P/B
Geographic breakdown –
Premiums2 2015
€bn
26.3 (52%)
2.5 (5%)
Asia-Pacific
Total
4.7 (9%)
€50.4bn
Market capitalisation (€bn)
Dividend yield (%)
Europe
Other
Avg. daily trading volume (’000)
18.7
8.25
188.4
184.6
0.6
9.9
1.0
30.8
4.5
813
2014
2013
18.3
7.75
178.2
165.8
0.8
9.1
0.9
28.7
4.7
700
18.5
7.25
146.2
160.2
1.0
8.7
1.1
28.7
4.5
667
Type of
share
No-par-value registered shares
Votes
Each share entitles the holder
to one vote
Dividend
Paid out once per year in cash
Trading
venues
All German stock exchanges
plus Xetra
Shares o/s
166,843,961
North America
16.7 (33%)
Compound annual growth rate1: 2005 – 2015
1 End of year. 2 Gross written premiums. 3 Per share. 4 Beta 250 relative to DAX (daily, raw).
Premiums2
Earnings3
Dividend3
Book value3
2.8%
4.8%
10.3%
6.1%
Key company data
Sector
Country
Insurance
Germany
Euro
Accounting principles IFRS
Currency
Rating
Stable AA rating from all agencies since 2006
Securities codes
Reuters
Bloomberg
MUVGn
MUV2
WKN
ISIN
843002
DE0008430026
3
Equity story
Munich Re covers the full insurance value chain
Segmental breakdown – Gross written premium 2015
Reinsurance
Property-casualty
€bn
ERGO
Life and Health Germany
17.7 (35%)
9.4 (19%)
Reinsurance – Solid profitability
P-C: Efficiently running the traditional book while continuously
exploring new products/markets, strong reserving position
Life: Producing steady results above market average
Reinsurance
Life
10.5 (21%)
TOTAL
€50.4bn
ERGO
P-C Germany
3.2 (6%)
ERGO –Strengthening the groundwork while
paving the way for future set-up
L/H Germany: Continuously improving risk/return profile
P-C Germany: Attractive business mix
Munich Health
5.6 (11%)
ERGO
International
3.9 (8%)
International: Profitability in p-c affected by local challenges,
promoting capital-light products in life
Munich Health – Consolidation
Intensified attention on forward-looking strategies and increased
future-oriented initiatives
Realising synergies and economies of scope by combining primary and reinsurance under one roof
4
Equity story
Global environment becoming increasingly challenging
while changing risks provide opportunities
Cumulative
uncertainties
Macroeconomic/political risks
 Low interest rates
 High capital-market volatility
 Sovereign debt crisis
 Exit of EU countries
 Refugees
 Military conflicts
Changing/evolving risks
 Digitalisation/Cyber
 Reputation
 Epidemics
 Climate change
GOAL
Dampening volatility
GOAL
Providing solutions
Growth
2015
2020
Proactive risk management builds up resilience in an unpredictable and unstable environment –
Exploring attractive mid to long-term growth opportunities to overcome soft reinsurance markets
5
Equity story
Macroeconomic/political risks –
Proactively limiting the economic impact
Structural risks –
Coping with negative government bond yields1
Maturity
2 3 4 5 6 7 8 9 10 15 20 30
Yield
≤ 0%
Yield
> 0%
Switzerland
Japan
Germany
Netherlands
Finland
France
Austria
Sweden
Belgium
Spain
Italy
Norway
UK
US
Event-driven risks –
Increasing capital-market volatility, e.g. after Brexit vote
Impact
Strong FX moves
Impact
Ongoing decline of
reinvestment yield putting
pressure on running yield
Equity markets
Volatile investment
and FX result
Munich Re strategy
Adhere to strict ALM
Financial sector
Precious metals
Munich Re strategy
Diversification
Munich Re investment portfolio
Well diversified –
Group-wide trigger and limit system
Hedging of macroeconomic risks –
affecting both, assets and liabilities
Reasonable credit exposure –
with high quality of counterparties
Munich Re well-positioned to prevail through challenging times
1 Source: Bloomberg, UBS. July 2016.
6
Equity story
Strong balance sheet mitigates the impact of low
interest rates and competitive p-c reinsurance markets
Low
interest
rates
Attrition of running yield – Munich Re (Group)
3.6
3.5
3.2
3.1
3.0
Ongoing disposal gains – Munich Re (Group)
Result
impact1
approx.
–€0.7bn
%
2012
2013
2014
2015
H1 2016
Increasing normalised combined ratio
P-C
reinsurance
100.3
98.8
94.0
98.7
94.1
2012
2013
2014
2015
1.2
1.1
1.0
0.8
0.5
2012
2013
2014
2015
H1 2016
Ongoing reserve releases
Result
impact1
approx.
–€0.7bn
%
Compensating
for attrition
without
aggressive
harvesting
H1 2016
Mitigating
margin
decline without
weakening
reserve strength
7.2
5.8
5.6
5.3
4.4
2012
2013
2014
2015
H1 2016
Strong balance sheet continues to translate into sustainable earnings
1 Impact on IFRS net result from 2012 until H1 2016.
7
Equity story
Under-promise/over-deliver – Strong balance sheet
continues to support sound earnings
Delivering on promised net result
Guidance
2.4
€bn
Outlook 2016
Actual
3.2
3.0
3.3
3.0
3.2
2.5
2.4
3.1
2.5–3.0
Net result
Return on investment
Gross premiums written
€2.3bn
~3%
€47–49bn
2.0
Combined ratio
0.7
2010
1
2011
2012
2013
2014
2015
Reinsurance
~95%
ERGO Germany
~98%
Munich Health
~99%
ERGO International
~99%
Munich Re’s balance sheet2
Sound capitalisation
according to all metrics
High level of unrealised
investment gains2
Rock-solid
reserving position
€34.5bn
Low goodwill in relation to
shareholders’ equity3
9%
Munich Re once again delivering strong results, despite persistent challenges
of declining reinsurance margins and low interest rates
1 Assuming normal nat cat claims based on 8.5% budget, net result would have exceeded guidance.
2 As at 30.6.2016.
3 As at 31.12.2015.
8
Equity story
Sound capital position according to all metrics facilitates
financial flexibility, including high shareholder distribution
Attractive shareholder participation1
Sound
capitalisation
according to
all metrics
€bn
2.7
2.4
Share
buy-back
175%
Medium
2.3
1.6
1.5
1.1
Low
High
Quality
of capital
140%
Suboptimal
220%
Internal
model
Above
target
Dividend
Medium
AA
A
AAA
Rating
agencies
Low
2010
2011
2012
2013
2014
11.2%
7.8%
5.4%
6.0%
9.6%
2015
High
HGB
flexibility
Cash yield2
7.7%
Munich Re continues to provide high cash returns to shareholders – Further increase of dividend per share to €8.25 in 2016
1 Cash-flow view.
2 Total payout (dividend and buy-back) divided by average market capitalisation.
9
Equity story
Return on equity
16
14
12
10
8
Average cost of capital
6
%
Risk/return profile1
Value generation
Convincing track record in value generation
Total shareholder return (p.a.)
16
%
Peer 3
12
8
Peer 2
4
Peer 6
Peer 4
Index
Peer 5
4
0
2
0
2005
2007
2009
2011
11-year average ROE: ~11.0% –
Clearly exceeds average cost of capital: ~8%
2013
2015
Peer 1
Volatility of total shareholder return (p.a.)
–4
20
25
30
35
40
45
Annualised TSR: ~10.0% –
Outperforming major peers and insurance index
Balanced business portfolio paves the way for sustainable profitability
1 Annualised total shareholder return defined as price performance plus dividend yield over the period from 1.1.2005 until 30.9.2016; based on Datastream total return indices in
local currency; volatility calculation with 250 trading days per year. Peers: Allianz, Axa, Generali, Hannover Re, Swiss Re, ZIG, Stoxx Europe 600 Insurance (“index”).
10
Equity story
New
Munich Re is well positioned to manage the current
market environment and drive industry innovation
ILLUSTRATIVE
Solutions for
emerging risks
Emerging
markets
Markets
Risk
Solutions
New
products/
risk-related
services1
Risk Solutions
Continuous growth in
expertise-driven specialty
and niche business
Tailor-made
solutions
Established
Underinsurance
in developed
markets2
Established
Innovation
Active development of
business opportunities,
tapping new profit pools
Incremental
innovations3
Traditional
p-c
reinsurance
Products
Traditional p-c reinsurance
Munich Re in excellent
position to successfully
manage the soft cycle
TOTAL4
€13bn
TOTAL4
€5bn
TOTAL4,5
~€500m
New
Efficiently running the traditional book while continuously exploring new products/markets
1 e.g. Cyber insurance, performance guarantees for renewable energies. 2 e.g. Liability risks of oil platforms. 3 e.g. Satellite life-time insurance.
4 Gross premium written as at 31.12.2015. 5 Munich Re (Group); indirect effects on traditional business not included.
11
Equity story
Traditional p-c reinsurance – Portfolio profitability protected
by disciplined underwriting and consistent cycle management
Profitable core business
Preferential
client
access
 ~50% private placements1
 ~2/3 direct client business
Leading
risk
know-how
 ~30% tailor-made solutions1
 Comprehensive service offering
Superior
diversification
 As regards perils, forms of cover, regions,
short/long-tail
%
Renewals – Nominal price changes
TOTAL2
€13bn
2.4
1.0
0.2
–0.1
–0.9
Stringent
cycle
management
 Strong u/w discipline and conservatism in reserving
 Deliberate portfolio shifts to less commoditised
business
–1.6
–2.4
2010
2011
2012
2013
2014
2015
2016
Traditional portfolio relatively resilient to pressure on rates – Diversification provides flexibility in managing the portfolio
1 Related to premium volume in 2016. . 2 Gross premium written as at 31.12.2015.
12
Equity story
Emerging markets –
Underinsurance provides business opportunities
Young and growing population1
bn
Insurance penetration still low2
Insurance penetration (%)
6
%
Insured share of nat cat losses3
North
America
43
38
Australia
4
South
America
Asia
2015
Asia/Oceania
Europe
2030
Africa
North America
2050
Latin America
Demographic changes –
Rise of affluent middle class and significant
population growth …
Africa
0
28
Europe
2
%
10
8
5
Gross national income per capita
… drive economic growth –
Higher wealth and better education further
increases insurance spending/penetration
Emerging markets often highly exposed to nat
cat risks – Higher risk awareness reduces
underinsurance
Future growth driven by demographic/economic changes –
Munich Re is tapping the potential with know-how, client proximity and a strong capital position
1 Source: United Nations, Department of Economic and Social Affairs, Population Division (2015).
3 Source: Munich Re, Geo Risks Research, NatCatSERVICE. 1980–2014.
2 Source: Munich Re, Economic Research. Non-life, 2014.
13
Equity story
Risk Solutions – Highly valuable business segment
with strong top and bottom-line contribution
Gross earned premiums1
€bn Combined ratio1
Share in % of
total p-c book
3.4
3.4
€5bn
3.8
4.0
94.1
89.6
4.2
€bn
Share in % of
total p-c book
TOTAL
90.8
2.9
21
% Underwriting result1
42
90.3
32
88.6
26
25
0.7
87.9
24
22
23
24
25
0.5
28
2009 2010 2011 2012 2013 2014 2015
83.8
0.3
0.5
0.5
0.3
0.2
2009 2010 2011 2012 2013 2014 2015
2009 2010 2011 2012 2013 2014 2015
Business largely detached from reinsurance cycle
1 Management view, not comparable with IFRS reporting.
14
Equity story
Innovation – Major innovation trends impact the industry,
creating opportunities and challenges for (re)insurers
Major innovation trends – Impact on industry
Digitalisation and
new technologies
Improved data
availability and
sophisticated
analysis methods
Changing customer
expectations and
behaviour1
New exposures and
risks (e.g. cyber)
Bundled products
Corporate partnering
Cost reduction
Improved risk
selection/pricing
Competitive
advantage for
data owners
Efficient customer
acquisition and
improved retention
Reduced risks/loss
frequency
Risk of disruption/
disintermediation
Danger of antiselection
New capabilities
required to compete
with current set-up
Munich Re – Active development of business opportunities
 Innovation-related business
already sizeable
 Risk carrier for established
and new (digital) companies
 Provider of integrated risk
services
TOTAL2
~€500m
 Automation support for
cedants
 Tailored solutions and
white-label products
Munich Re fosters innovation throughout the global organisation –
Tapping new profit pools by expanding market boundaries with innovative products and services
1 Consumer and commercials. 2 Gross premium written as at 31.12.2015. Munich Re (Group); indirect effects on traditional business not included.
9
Equity story
Reinsurance – Portfolio mix on the move
Property-casualty – GWP1
Risk
Solutions
CAGR
18.0
+15%
5.0
16.6
1.9
Traditional
book
%
14.7
2008
–2%
13.0
Life – GWP1
%
CAGR
Strategic initiatives
Traditional
business model
2015
5.3
+57%
5.1
+2%
2008
10.5
4.7
5.8
2015
As a leading Tier-1 reinsurer, successfully managing cyclical and
structural market changes
Strong existing book complemented with well-established initiatives and
innovative capacity
 Active cycle and portfolio management in traditional business …
 Traditional mortality risk remains core …
 … while continuously expanding attractive growth areas, e.g. Risk
Solutions, as well as tailor-made and innovative products
 … while strategic initiatives have become a substantial part of the
portfolio, mainly driven by organic growth in Asia and financially
motivated reinsurance business
Traditional business remains an important earnings generator, while
investment in new products/solutions safeguards future profitability
1 Gross premiums written.
16
Equity story
Reinsurance Life – Core business supplemented by
well-established initiatives
Higher
Risk-return profile
Traditional business model
ILLUSTRATIVE
FinMoRe
Asia
Morbidity
Return
Longevity
Asset
protection
 Portfolio dominated by mortality risk – focus on improving riskassessment process for insurer and reinsurer
 Growing exposure to morbidity risk – need to secure alignment
of interest of policyholders, insurers and reinsurers
 Confidence that US old-issue-age mortality and Australian
disability are fixed
Initiative portfolio
Mortality
1 FinMoRe
2 Asia
3 Longevity
4 Asset protection
Lower
Compared to competitors
Higher
Risk
Overweight
Underweight
Neutral
Unique
Lower
Mortality risk dominates, while contribution from initiatives is increasing
17
Equity story
ERGO – Strategy Programme
strengthens sustainable competitiveness
ERGO Strategy Programme – Ambition
 Strengthen role of leading primary insurer with
strong domestic market
Fit …
Establish leaner
and more effective
structures
Digital …
Successful!
Lay the foundations
for transforming the
business model
 Convince all
stakeholders
€m
ERGO: Increasing IFRS net profit
Offer convincing
solutions in all
customer segments
~450
~500+
130
Investments impacting
net profit by ~€1bn until 2020
Annual cost savings from 2020
~€540m/~€280m (gross/net)
2016
2017
2020
…
2021
ERGO's profitability will cover its cost of capital from 2020 and create incremental added value thereafter
18
Equity story
Munich Health – Business measures
show first signs of stabilisation
Organisation
Markets/clients
Innovation/digitalisation
 Enhanced organisational structures
implemented
 Growth initiatives for South-East Asia and
Middle East
 Digital health target picture
 Improvements in underwriting and client
management
 Repositioning in the US
 Development and implementation of
innovative and digital health solutions
 Enhanced customer experience across
Munich Health
 Embedding of business analytics into
processes, decisions and value proposition
 Further specified
strategic focus
 Intensified Group-wide business synergies
 Strengthened value proposition for
reinsurance clients
Agenda 2016 – Intensified attention on forward-looking strategies and increased future-oriented initiatives
19
Equity story
Strong track record – and new ideas
Strong
track record
Successfully dealing with challenging economic conditions –
We remain a strong partner for clients and reliable for shareholders, delivering on our promises
Business
strategy
Focus on insurance risks safeguarding sustainable value creation –
Complementary business profiles limiting correlation to capital market development
Rigorous risk
management
Based on a high level of diversification, actively managing the low-yield environment and strictly
budgeting all our insurance risks
Strong capital
position
Continuously built up over years – Continuing the long-term track record of attractive capital repatriation
while keeping the flexibility to seize opportunities for profitable growth
20
Backup
21
Backup: Group – Key financials
Key financials –
Our aim is sustained profitable growth
Munich Re
Gross written premiums
Operating result
Taxes on income
Consolidated result
Thereof attributable to minority interests
Investments
Return on equity
Equity
Off-balance-sheet reserves1
Net technical provisions
Staff at 31 December
Our shares
Earnings per share
Dividend per share
Amount distributed
Share price at 31 December
Market capitalisation at 31 December2
No. of shares at year-end (ex own shares)
1 Including amounts attributable to minority interests and policyholders.
2 This includes own shares earmarked for retirement.
2015
2014
2013
2012
2011
€bn
€m
€m
€m
€m
€bn
%
€bn
€bn
€bn
50.4
4,819
–476
3,122
15
215.1
10.0
31.0
16.0
198.5
43,554
48.8
4,028
312
3,171
18
218.9
11.3
30.3
17.4
198.4
43,316
51.1
4,398
–108
3,333
29
202.2
12.5
26.2
8.7
187.7
44,665
52.0
5,349
–878
3,204
16
213.8
12.5
27.4
11.0
186.1
45,437
49.5
1,180
552
712
10
201.7
3.3
23.3
5.7
181.2
47,206
€
€
€m
€
€bn
m
18.73
8.25
1,335
184.55
30.8
166.8
18.31
7.75
1,298
165.75
28.7
172.9
18.45
7.25
1,254
160.15
28.7
179.3
17.94
7.00
1,255
136.00
24.4
179.3
3.94
6.25
1,110
94.78
17.0
177.6
22
Sound capital position according to all metrics
Solvency II
%
277
242
2013
1
2014
302
2013
2015
7.7
2014
2015
Strong shareholders’ equity
despite capital repatriation
8%
9.1
9.8
2014
2015
AA
13.6
13.4%
A
Tier 3
2%
2013
€bn
Strengthened equalisation provision largely
protects HGB earnings
€40.7bn
1 According to internal model.
2013
15.3
TOTAL
High-quality eligible own funds
German GAAP/ Rating
31.0
26.2
Tier 2
90%
€bn
30.3
Solvency II ratio well above
target capitalisation
Tier 1
IFRS
2014
2015
Debt leverage2 among the
lowest in the insurance industry
2 Strategic debt (senior, subordinated and other debt) divided by total capital (strategic debt + equity).
3 S&P capital.
AAA
Rating
agencies
Substantial capital buffer3
supports AA rating
23
IFRS capital position
€m
Equity
Equity 31.12.2015
Consolidated result
30,966
436
Unrealised gains/losses
Exchange rates
Share buy-backs
Other
Equity 31.3.2016
€bn
0.3
0.4
0.4
4.4
4.4
4.3
13.6%
13.4%
12.6%
0.3
Changes
Dividend
Capitalisation
0.3
0
1,395
–660
–235
–111
31,794
5.5
4.4
17.5%
15.3%
Unrealised gains/losses
Exchange rates
Fixed-interest securities
FX effect mainly driven by US$
+€1,473m
27.4
26.2
30.3
31.0
32.0
2012
2013
2014
2015
Q2 2016
Debt leverage1 (%)
Non-fixed-interest securities
Senior and other debt2
–€73m
Subordinated debt
Equity
1 Strategic debt (senior, subordinated and other debt) divided by total capital (strategic debt + equity).
2 Other debt includes bank borrowings of Munich Re and other strategic debt.
24
Backup: Group – German GAAP (HGB)
Distributable earnings of parent company –
Main drivers
HGB result financing capital repatriation
2.9
2.6
–1.3
€bn
0.2
HGB result – Main drivers 2015 vs. 2014
1.3
3.3
€bn
–0.9
0.2
2.6
Taxes
HGB result
2015
2.0
–1.0
Distributable
earnings
31.12.2014
Dividend
Share
buy-back
HGB result
2015
Average 2009–2015
–1.2
–0.7
1.9
Others 1
Distributable
earnings
31.12.2015
HGB result
2014
Underwriting
result
Underwriting result
 Benign large losses
 Higher reserve releases
 Reduced allocation to
equalisation provision
Investment
result
Investment result
 Higher regular income
(mainly dividends)
 Write-down of ERGO:
–€1.1bn
Underwriting result protected by strong reserves, replenishment largely completed –
Distributable earnings sensitive to adverse capital market development
1 Changes in restrictions on distribution.
25
Backup: Group – German GAAP (HGB)
Solid German GAAP (HGB) earnings
Reconciliation of IFRS (Group) to HGB result (MR AG)
€bn
Equalisation provision
€bn
Maximum requirement
3.1
IFRS
result
0.3
Difference between
IFRS results of subsidiaries
and their dividend
payments to MR AG
–0.4
Other
accounting
differences
9.1
–0.4
Change of equalisation
provision net of taxes
ILLUSTRATIVE
9.8
7.7
2.6
6.6
HGB
result
2012
2013
2014
2015
2016e
2017e
 2012–2015: Strengthening of reserve – ~85% of
max. requirement now achieved
 2016e: No significant replenishment
 2017e: Relief due to drop-out of extreme outliers
Underwriting result protected by strong reserves, replenishment largely completed –
Distributable earnings sensitive to adverse capital market development
26
Backup: Group – Economic key financials
Strong Solvency II capital generation supports
financial flexibility
SII capital generation 2015 (including change in SCR)
€bn
EOF/SCR
change
5.3
normalised
2.6
–
–
2.6
Economic
earnings
Change in
capital requirements
Other1
SII capital
generation
0.3
–0.3
5.3
3.0
–2.3
0.3
Capital repatriation
SII capital generation
(net)
SII capital generation exceeds capital repatriation
1 Changes in other own funds items (–€0.1bn) and changes in consolidation group included in capital measures (–€0.2bn).
27
Change in eligible own funds
Change in SII eligible own funds
€bn
EOF
31.12.2014
38.2
Opening
adjustments
–0.3
Retrospective adjustments of own funds not qualifying as
changes of reporting period
EOF
01.01.2015
38.0
Opening balance for determination of overall change in
reporting period
Economic
earnings
5.3
Economic performance of the period resulting in OF change
Capital
measures
–2.5
Dividend: €1.3bn
Share buy-back: €1.0bn and other1
Change in other
own funds items
–0.1
Development of non-available own funds items and own
funds for FCIIF and IORP2
EOF
31.12.2015
40.7
Closing balance subject to SII Day-1 reporting
1 Changes in consolidation group. 2 Own funds for other financial sectors (financial, credit institutions and investment firms and institutions for occupational retirement provision).
28
Profit and loss attribution provides consistent reporting of
economic performance across business units
RI
Life
ERGO
RI Life and health
P-C
Germany
ERGO
P-C
Germany
ERGO
Intl.
Munich
Health
Munich Re
(Group)
1.5
1.7
–0.3
0.1
0.0
0.0
3.0
Expected return existing business
0.2
0.2
0.2
0.0
0.1
0.0
0.7
New business value
0.9
0.2
0.3
0.3
0.0
0.0
1.7
Operating variances existing business
0.2
1.3
–0.7
–0.2
0.0
0.0
0.6
Other operating variances
0.1
0.0
0.0
0.0
0.0
0.0
0.0
Economic effects
0.3
0.7
0.8
0.0
0.1
0.0
2.0
Other non-operating earnings
0.1
–0.1
0.5
–0.1
–0.1
0.0
0.3
Total economic earnings
1.8
2.3
1.1
0.1
0.1
0.0
5.3
Munich Re (Group) 2015
€bn
Operating economic earnings
Capital measures
–2.5
Changes in other own funds items
–0.1
2.7
Change in SII EOF
Positive economic earnings contribution from all business units – But with differing underlying drivers
29
Backup: Group – Risk management
Proactive risk management builds up resilience
in an unpredictable and unstable environment
Current environment
Political
risks
Risk management measures stabilise SII ratio
 Diversified investment portfolio
High volatility
 Group-wide trigger system for ALM risks
Dampening
of volatility
 Hedging strategy
 Limits for sovereigns
Economic
risks
Insurance
risks
 High quality of counterparties
 Forward-looking scenario analysis
 Limits and budgets
 Management of accumulations
 Strict underwriting guidelines
 Retrocession for peak nat cat scenarios
No major movement in SCR reflects unchanged risk profile of Munich Re (Group)
30
Breakdown of Solvency Capital Requirement (SCR)
by risk category according to Munich Re internal model
1
Solvency capital requirement – Breakdown by risk category and segment
Risk category
Group
2
2015
2014
Delta
RI
2015
ERGO
2015
€bn
MH
2015
P-C: Increase driven by reinsurance –
FX and growth in special risks
Prop.-Casualty
5.7
6.3
0.6
6.2
0.4
Life/Health
4.8
4.7
–0.1
3.8
1.3
Market
8.8
8.7
–0.1
5.8
4.3
Credit
4.6
4.2
–0.5
2.7
1.6
Operational risk
1.0
1.0
–
0.8
0.4
0.1
Other3
0.2
0.1
–0.1
Simple sum
25.1
25.1
–
19.3
8.0
0.4
Diversification
–9.1
–9.3
–0.1
–7.4
–2.1
Tax
–2.2
–2.3
–0.2
–2.0
–0.7
Total SCR
13.8
13.5
–0.3
9.9
5.2
1 Munich Re uses a full internal model, which was approved by BaFin and core college in 2015.
e.g. institutions for occupational retirement provisions.
2 After reconciliation into SII metric.
Remarks
0.3
Credit: De-risking of investment portfolio
and full implementation of SII methodology
0.0 Diversification benefit: 37%
–0.1 Loss-absorbing capacity of deferred taxes
0.3
3 Capital requirements for other financial sectors,
31
Risk-bearing capacity allows high exposure
for peak scenarios, but only at adequate price levels
Nat cat exposure (net of retrocession) – AggVaR1
4
3
€bn
SCR property-casualty
%
Top 5 exposures
1
2
3
4
5
2014
Major losses
2015
3.6
Basic losses
2
6.3
5.7
Atlantic Hurricane
Storm Europe
Earthquake Los Angeles
Earthquake Japan
Cyclone Australia
2
5.7
–3.0
Diversification
Total
1
6.3
 Appreciation of major currencies (USD, AUD, GBP) against EUR,
impact on basic/major losses
1 2 3 4 5
Top nat cat exposures
 Exposure increase in special risks (e.g. weather risks) impacts basic
losses
High diversification between natural catastrophe risks, both by region and perils, adequately reflected in internal model
1 Munich Re (Group). Return period 200 years, pre-tax.
2 Natural catastrophes, man-made (including terrorism and casualty accumulation) and major single losses.
32
Further improvement in Munich Re’s Solvency II ratio
SII ratio
€bn
277%
2014
302%
1
2015
38.2 40.7
Remarks
 Fully consolidated approach appropriately covers
risk situation of Munich Re (Group)
 No application of optional transitionals, LTG or
other measures in solo entities and at Group
level by end of 2015 …
 … which remains an option for selected life
entities subject to assessment of further
development of interest rates
13.8 13.5
2014
2015
Eligible
own funds
2014
2015
Solvency capital
requirement
Capitalisation in the SII regime remains very comfortable
1 Ratio after dividend of ~€1.3bn for 2015 to be paid in April 2016: 292%.
33
Further improvement of Solvency II ratio
Munich Re actions
SII ratio
%
>220%
Above target capitalisation
 Capital repatriation
 Increased risk-taking
 Holding excess capital to meet external
constraints
175% – 220%
Target capitalisation
 Optimum level of capitalisation
140% – 175%
Below target capitalisation
 Tolerate (management decision) or
 If necessary, take management action (e.g. risk
transfer, scaling-down of activities; raising of
hybrid capital)
<140%: Sub-optimum capitalisation
 Take risk-management action (e.g. risk transfer,
scaling-down of activities; raising of hybrid capital) or
 in exceptional cases, tolerate situation
(management decision)
302%
Transition into
SII metric
220%
175%
140%
100%
2009
2010
2011
2012
2013
2014
2015
34
Sensitivities of SII ratio
SII ratio – Sensitivity
%
302
313
290
Ratio as at 31.12.15
Interest rate +50bps1
Interest rate –50bps1
272
Spread +100bps
Assumptions
 Use of full consolidated accounts for Munich Re
(Group)
 No consideration of optional long-term-guarantee
measures, e.g.
 Transitionals
317
Equity markets +30%
 (Dynamic) volatility adjustment
286
299
298
282
298
Equity markets –30%
FX –20%
Inflation +100bps
Atlantic Hurricane2
UFR –100bps
 Matching adjustment
 Credit risk considered for all fixed-income
securities, including government bonds
(e.g. in EEA)
319
Volatility adjustment
175
220
All relevant stress scenarios leave Munich Re’s SII ratio in a comfortable range
1 Parallel shift until last liquid point, extrapolation to unchanged UFR.
2 Based on 200-year event.
35
Backup: Group – Solvency II
Solvency II ratio – Munich Re’s sensitivities reflect full
economic impact
Application of optional SII measures – Impact on SII ratio and sensitivities
Reduction of …
… spread sensitivity
Use of dynamic volatility
adjustment
~1/2
No credit risk for EEA
government bonds
Application of D&A method for
US subsidiaries
~1/3
… equity sensitivity
SII ratio
~1/5
~1/3
~339%
~329%
~285%
Combined spread sensitivity would go down to ~10% pts. –
Spread +100bps: SII ratio 302% → 292% (instead of 272%)
For comparability of published SII numbers, a detailed view on applied measures is necessary
36
Backup: Group – Reserves
Actual versus expected comparison –
Loss-monitoring yields consistent picture across years
Reinsurance group – Comparison of incremental expected losses with actual reported losses1
€m
By line of business
By exposure year
10,000
10,000
Actual reported loss
Actual reported loss
2014
2013
1,000
2012
2011
2005 and prior
2010
2008 2009
2006
2007
100
1,000
Fire
Marine
Engineering
Risks/Other Property
Credit
Personal Accident
Aviation
10
1
Expected reported loss
1
10
Legend:
Green
Red
100
1,000
Actuals below expectation
Actuals above expectation
10,000
100
100
Solid line
Dotted line
Motor
Third-Party Liability
Expected reported loss
1,000
10,000
Actuals equal expectation
Actuals are 50% above/below expectations
Actual losses consistently below actuarial expectations – Very strong reserve position
1 Reinsurance group losses as at Q4 2015, not including parts of Risk Solutions, special liabilities and major losses (i.e. events of over €10m or
US$ 15m for Munich Re's share).
37
Backup: Group – Reserves
Positive run-off result without weakening
resilience against future volatility
Ultimate losses1 (adjusted to exchange rates as at 31.12.2015)
Date
≤2005
2006
2007
Accident year (AY)
2008
2009
2010
€m Ultimate reduction
Prior-year releases of €1.5bn
2011
2012
2013
2014
2015
31.12.2005
50,061
31.12.2006
50,702 11,387
31.12.2007
50,767 11,444 12,708
31.12.2008
50,303 11,332 12,911 14,127
31.12.2009
49,857 11,104 12,811 14,381 13,878
31.12.2010
49,546 10,819 12,736 14,331 13,819 14,287
31.12.2011
49,401 10,730 12,694 14,033 13,364 14,521 18,455
31.12.2012
49,092 10,544 12,316 13,880 13,238 14,400 18,596 15,209
31.12.2013
48,997 10,570 12,079 13,711 13,238 14,469 18,278 15,032 15,124
31.12.2014
48,917 10,455 11,998 13,430 12,925 14,453 17,892 14,830 15,336 15,092
31.12.2015
48,637 10,373 11,762 13,296 12,693 14,289 17,731 14,591 15,301 15,115 14,369
CY 2015 runoff change
CY 2015 runoff change (%)
1 Basic and major losses.
Total driven by reinsurance portfolio
280
82
236
133
232
163
160
239
36
–23
–
1,538
0.6
0.8
2.0
1.0
1.8
1.1
0.9
1.6
0.2
–0.2
–
0.9
2 Thereof €1,402m basic and €133m major losses.

Favourable actual vs.
expected comparison
facilitates ultimate reductions
for prior years

Reserve position remains
strong

AY 2015: Prudent initial
assessment
Reinsurance2
€1,535m
ERGO
€3m
38
Backup: Group – Rating
Insurance financial strength ratings1
providing for strong competitive position
A.M. Best
A++
Berkshire2
Berkshire/Gen Re
A+
Moody's
Standard & Poor's
AAA
Aaa
AAA
AA+
Berkshire/Gen Re
AA
Allianz
Everest Re
Hannover Re
Renaissance Re
Swiss Re
Zurich
A
Fitch
AIG
Generali
Lloyd's pos
Partner Re
SCOR pos
Transatlantic Re
XL Re
A–
A+
Allianz
Allianz2
Axa
Berkshire2
Everest Re
Hannover Re3
Lloyd's
SCOR
Swiss Re3
AIG2 pos
Generali
3 Based on public information.
AA+
Berkshire/Gen Re
Aa2
Allianz Germany
Berkshire2
AA
Allianz
Berkshire2
Aa3
AA–
Allianz SE
Axa
Swiss Re
Zurich
A1
Everest Re
Partner Re
Renaissance Re
SCOR
Transatlantic
A2
XL Re
Hannover Re
Renaissance Re
SCOR
Swiss Re
Zurich
Axa pos
AIG
Everest Re
Lloyd's
Partner Re
Transatlantic Re
XL Re
A+
A
A3
Baa1 Generali
BBB+
2 Issuer rating of holding.
Berkshire/Gen Re
Partner Re
Renaissance Re
XL Re
A
A–
B++
1 As at 6 June 2016.
AA–
Aa1
neg Outlook or watch negative
pos Outlook or watch positive
AIG2
A–
BBB+
39
Backup: Group – Outstanding bonds
Munich Re (Group) – Outstanding bonds
Subordinated bonds1
Nominal volume
Coupon rate p. a.
Emission/Issue
Maturity
First possible redemption date
€900m
Until 2022 6.25%, thereafter variable
2012
2042
26 May 2022
£450m
2012
2042
26 May 2022
€1,000m
2011
2041
26 May 2021
€1,349m
2007
Undated
12 June 2017
£300m
2003
2028
21 June 2018
Maturity pattern of Munich Re Group bonds
€m
Currency pattern of Munich Re Group bonds
USD
2,441
EUR
8
1,374
%
72
TOTAL
€4.6bn
737
GBP
20
0-5
5-10
10-15
15-20
20-25
25-30
30-35 undated
1 Bonds with a nominal value below €100m not considered. All specified bonds issued by Münchener Rückversicherungsgesellschaft AG, Munich.
In addition, Munich Re has placed some natural catastrophe bonds. As at 30.6.2016.
40
Backup: Group – Risk trading
ILS market platform complements our core business with
alternative capacity and earnings potential
Strategic scope of our ILS market activity
Munich Re's view on ILS market benefits
Munich Re's ILS related competencies





 Dedicated ILS team covering the whole ILS value chain from analytics
to structuring and placement
 Deployment of our actuarial and geoscientific expertise to offer ILS
structuring and advisory services – we act as neutral advisors
 Ability for opportunistic allocation of reinsurance capacity to ILS
investments
Multi-year price stability
Diversification of capacity channels
Collateralised capacity
Complement of product range as regards earnings potential
Profitable investment opportunities in insurance risks which fits Munich
Re’s portfolio
Integrated ILS approach
Management of our own risks
Management of our clients’ risks
Propriety ILS investment portfolio
 Portfolio optimisation and balance sheet
protection (e.g. selling of peak risk
overhangs)
 Complement to traditional reinsurance
 ILS consulting and project management
 Growing investor in the ILS primary and
secondary market
 Structuring and placement support
 "Buy and hold"-strategy
 Risk fronting and transformation
 Opportunistic allocation of reinsurance
capacity to profitable ILS investment
opportunities
 Management of P&L-volatility through cat
bonds (cycle management)
 Diversification of capacity
41
Outstanding cat bonds
Transaction
For
clients
For
Munich
Re’s
book
Closing
Maturity
Volume Perils covered
Bosphorus 2 Re Ltd.
8/2015
8/2018
US$ 100m Earthquake Turkey
Azzurro Re I Ltd.
6/2015
1/2019
€200m Italy Earthquake
World Bank CCRIF
6/2014
6/2017
Lion Re
4/2014
4/2017
VenTerra Re Ltd.
1/2014
1/2017
US$ 250m Tropical Cyclones Australia & Earthquake USA
Queen Street XII Re DAC
5/2016
4/2020
US$ 190m Hurricane US & Windstorm Europe
12/2015
4/2019
US$ 360m Various perils
Queen Street XI Re Ltd.
1/2016
6/2019
US$ 100m Hurricane US & Cyclone Australia
Queen Street X Re Ltd.
3/2015
6/2018
Queen Street IX Re Ltd.
2/2014
6/2017
12/2013
12/2016
Eden Re II Ltd. (Series 2016)
Queen City Re Ltd.
US$ 30m Caribbean Wind & Earthquake
€190m Windstorm Europe
 Generation of fee income
 Active investor in the
primary and secondary
market
 Improvement of own
risk/return profile and
cost efficiency
 Utilisation of
unexhausted risk budgets
 Offering one-stop
shopping to clients as
sponsors
US$ 75m US named storms
Munich Re's Risk Trading Unit is a recognised player in the ILS market
42
Munich Re's maximum in-force nat cat protection
Munich Re's maximum in-force nat cat protection as at January 2016
1,400
€m
Cat bonds
Risk swaps
Sidecars
Indemnity retro
2016 protection (total)
1,200
1,000
800
600
400
200
0
US windstorm
northeast
US windstorm
southeast
US earthquake
Utilisation of opportunities in alternativecapital retro markets
EU windstorm
EU other perils
Japan earthquake
Australia cyclone
Expansion of nat cat protection via indemnity
retro, cat bonds and sidecar
Retrocession use reflects favourable market terms
As at January 2016. Protection before reinstatement premiums.
1 Earthquake Europe, including Turkey.
43
Backup: Group – Corporate responsibility
Broad external recognition for Munich Re’s
corporate responsibility performance
Permanently listed since 2001
Permanently listed since 2001
The STOXX® Global ESG Leaders Index represents
leading companies from an ESG point of view
Munich Re has been included in the Bronze
Class of the best and most sustainable
companies by Robeco SAM
Munich Re has constantly achieved high
rating results (AAA) in the MSCI ESG rating
Ranked 3rd place in the insurance industry
Rated "Prime" in Corporate Responsibility
Rating 2015; Munich Re counts to the
best-in-class insurers
Munich Re is represented in the
ESI Excellence Europe and ESI Excellence
Global (based on ratings results from Vigeo)
Munich Re represented in Vigeo indexes
44
Backup: Group – Corporate responsibility
Munich Re’s international cooperation –
A strong commitment towards corporate responsibility
Examples
UNEP FI (since 1999)
Principles for Responsible Investment (PRI) (since 2006)
Munich Re has signed the UNEP FI’s climate declaration and is an
active member of the UNEP FI Climate Change Working Group.
Munich Re has actively developed the UN Principles for Responsible
Investment (PRI), which it signed as first German company in April 2006.
UN Global Compact (since 2007)
Principles for Sustainable Insurance (PSI) (since 2012)
Munich Re has been a member of the UN Global Compact since August
2007. The ten principles of the UN Global Compact provide guidance for
action in our business and set the basis for our corporate responsibility
activities.
Munich Re played an active part in developing the Principles for
Sustainable Insurance (PSI) since 2007 and was a founding signatory in
June 2012. The PSI aim at anchoring ESG criteria in the core business
along the value chain.
45
Backup: Group – Financial highlights H1 2016
High Q2 result – Prudent positioning and
strong balance sheet offset earnings pressure
Q2 2016 (H1 2016)
Munich Re (Group)
Net result
Technical result
€974m (H1: €1,411m)
High investment and currency result
compensates for lower technical result
and ERGO restructuring expenses
€m
€m
Net result
1,866
1,474
1,411
2,750
945
974
1,572
436
investment1
4.7% (H1: 3.7%)
Portfolio de-risking prior to Brexit vote
proves beneficial
Shareholders' equity
€32.0bn (+0.7% vs. 31.3.)
Increase despite capital repatriation of
€1.5bn in Q2 – ESR reduction mainly
driven by declining interest rates
1 Annualised.
€m
4,341 4,322
1,780
529
Return on
Investment result
Q1
Q2
2016 2016
H1
H1
2015 2016
Reinsurance
Life: Technical result €103m
(H1: €172m) – In line with
expectations
P-C: Combined ratio 99.8%
(H1: 94.3%) – Major-loss ratio of
12.3% (H1: 7.5%)
Q1
Q2
2016 2016
H1
H1
2015 2016
ERGO
Q1
Q2
2016 2016
H1
H1
2015 2016
Munich Health
L/H Germany:
High investment result
Reinsurance:
Combined ratio 103.0% (H1: 102.1%)
P-C:
Primary insurance:
International:
46
Backup: Group – Financial highlights H1 2016
Reconciliation of operating result with net result
Reconciliation of operating result with net result
€m
H1 2016
Q2 2016
2,188
1,463
–201
–120
–9
–9
Net finance costs
–108
–58
Taxes
–459
–302
Net result
1,411
974
Operating result
Other non-operating result
Goodwill impairments
Other non-operating result
Foreign exchange
€m
H1 2016
Q2 2016
320
340
–400
–397
–120
–63
Tax rates
Group
Reinsurance
Restructuring expenses
Other
ERGO
Munich Health
%
H1 2016
Q2 2016
24.5
23.7
19.3
24.5
199.7
31.6
–8.4
–37.6
47
Backup: Reinsurance
Munich Re – The leading global reinsurer
Rank
Company
Country
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Swiss Re
Munich Re
Berkshire Hathaway Re
Hannover Re
SCOR SE
Lloyd’s
Reinsurance Group of America
China Re
Partner Re
Everest Re
Korean Re
Transatlantic Holdings Inc.
MS&AD Holdings
Sompo
Mapfre Re
Tokio Marine
Maiden Re
General Ins. Corp. of India
Axis
R+V Versicherung
Total top 40
Switzerland
Germany
USA
Germany
France
UK
USA
China
Bermuda
Bermuda
Korea
USA
Japan
Japan
Spain
Japan
Bermuda
India
Bermuda
Germany
Source: Standard & Poor's Global Reinsurance Highlights, 2015 Edition, page 58.
Net reinsurance premiums written 2014 (US$ m)
31,640
31,181
16,568
15,294
12,324
10,416
8,670
7,772
5,720
5,257
3,582
3,410
3,320
2,853
2,679
2,496
2,458
2,216
2,128
2,073
194,863
48
Backup: Reinsurance
Reinsurance – Overview
2015
2014
2013
2012
2011
€bn
28.2
26.8
27.8
28.2
26.0
Investments
€bn
89.2
88.0
79.2
83.8
79.5
€bn
65.4
63.5
60.5
61.1
62.7
Major losses (net)
€m
1,046
1,162
1,689
1,799
5,048
€m
149
538
764
1,284
4,538
Thereof natural catastrophes
Combined ratio
%
Combined ratio
Basic losses
Premium split by region – 2015
Africa, Middle East
%
North America
3
113.8
91.0
92.1
92.7
49
89.7
Latin America
4
50.7
50.2
51.3
53.0
50.8
2011
2012
2013
2014
2015
Asia and Australasia
TOTAL
€28.2bn
Europe
16
29
49
Backup: Reinsurance Property-casualty
Reinsurance Property-casualty
H1 2016 vs. H1 2015
H1 2015
Foreign exchange
€m
9,002
–231
0
Divestments/investments
346
Organic change
H1 2016
9,117
Net result
€m
H1 2015
1,387  Technical result
Technical result
–253
Non-technical result1
–363
Other
H1 2016
433
1,203
 Negative FX effects mainly driven by GBP
 Organic growth in motor, liability and fire
Q1 2016
Technical result
425
–466
737
82
Other
Q2 2016
778
1 Non-technical result including investment result, insurance-related investment result, other operating result and deduction of income from technical interest.
 Major losses in Q2 slightly above expectation
of 12.0%, while H1 ratio is clearly below –
nat cat ratio benefits from run-off profits
 Higher basic losses in Q2 largely driven by
various larger claims just below the outlier
threshold and business mix effects
 Investment result (–€475m)
 Lower regular income, seasonal dividend
payments in Q2
 High investment return of 4.7% in Q2
supported by realised gains and improved
derivative result
 Other
 FX result +€268m vs. –€198m, high
contribution from GBP and USD in Q2
 Tax rate: 20.1% in H1 2016
50
Reinsurance Property-casualty – Combined ratio
Combined ratio
%
 Basic losses
99.8
94.5
92.3
91.3
 Major losses
2014
92.7
53.0
2015
89.7
50.8
H1 2016
94.3
55.1
Q2 2016
99.8
56.2
 Expense ratio
7.2
32.5
6.2
32.6
7.5
31.6
12.3
31.3
93.3
91.2
88.4
Major
losses
Nat cat Man-made
Reserve
releases1
Normalised
combined ratio2
H1 2016
7.5
3.8
3.7
5.6
100.3
Q2 2016
12.3
7.6
4.7
5.1
100.6
~12.0
~8.0
~4.0
78.6
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2014 2014 2015 2015 2015 2015 2016 2016
Ø Annual
expectation
1 Basic losses; in Q2 mainly fire, engineering, marine and motor, contrary reserve increase in credit; no corresponding sliding-scale effects.
2 Based on 4%-pts. reserve releases.
51
July renewals – Regional focus on Australia,
North and Latin America
Total property-casualty book1
Remaining business
%
Business up for January renewal
29
52
Regional allocation of July renewal
%
Rest2
North America
5
39
Worldwide
Australia
TOTAL
26
15
€2.1bn
Europe
TOTAL
€18bn
Latin America
4
11
Nat cat shares of renewable portfolio3
%
Nat cat
January
11
Business up for July renewal
Business up for April renewal
12
1 Gross premiums written. Economic view – not fully comparable with IFRS figures.
7
2 Asia, Pacific and Africa.
Total
89
33
April
July
Other perils
21
13
3 Total refers to total p-c book, incl. remaining business.
67
79
87
52
July renewals – Further slowdown of price softening
July renewals 2016
%
€m
100
2,103
–23.5
–494
76.5
1,609
–3.0
–62
Change in premium
Thereof price movement1
Thereof change in exposure for our share
26.0
546
99.5
2,093
–0.5%
~ –0.4%
–0.1%
 While current market trends
continue, the price reduction
is slowing further
 Top line remains stable with
a clear shift from property to
casualty business
 Price change of –0.4% is
less pronounced compared
with previous renewals,
with continued pressure on
XL business, but resilient
proportional business
Total renewable
from 1 July
Cancelled
Renewed
Decrease
on renewable
New
business
Estimated
outcome
Overall portfolio profitability could be maintained and remains clearly above cost of capital
1 Price movement is risk-adjusted, i.e. includes claims inflation/loss trend and is adjusted for portfolio mix effects. Furthermore, price movement is calculated on a wing-to-wing basis
(including cancelled and new business).
53
Backup: Reinsurance Life
Reinsurance Life
H1 2016 vs. H1 2015
€m
Net result
€m
123  Technical result
H1 2015
5,116
H1 2015
Foreign exchange
–228
Technical result
0
Organic change
H1 2016
–312
4,576
39
 … partly offset by growth in Asia, Canada,
UK and USA
 On track to achieve annual target of ~€400m
–92
Other
164  Investment result (–€219m)
H1 2016
234
 Negative FX effects driven by Can$
 Negative organic change due to cancellation/
modification of large capital-relief deals, …
 Q2 result of €103m in line with expectations
(Q1 affected by two large single claims)
 Lower interest income from deposits retained
on assumed reinsurance due to cancellation/
modification of large capital-relief deals
 High contribution from disposal gains in Q2
Q1 2016
20
Technical result
33
Non-technical
result1
191
Other
–30
Q2 2016
214
 Other
 FX result +€74m vs. –€75m, high contribution
from GBP and USD in Q2
 Tax rate of 14.9% in H1 2016
54
Solid IFRS performance notwithstanding
random large claims
9,481
11,130
2011
2012
€m
10,829
2013
10,040
10,536
2014
2015
Technical result
420
2011
2012
359
2013
280
335
2014
2015
Fee income
 Largely flat development of traditional business
 Adjusted for two single large outlier claims in North America, …
 … performance in line with or slightly better than expectations
€m
58
51
63
70
26
2011
 Positive currency effects
€m
354
Mortality
Main effects 2015
 Parts of financially-motivated reinsurance recognised outside the
technical result
 Performance fully in line with expectations
2012
Morbidity
2013
2014
2015
Other
55
Benefit from growth opportunities
and closing open issues
Canada
UK
Asia
 Pressure on volumes and
margins increased significantly in
2015 – new business generation
has dropped
 IFRS profits continue to be strong
 Continued pressure on volumes/margins in protection business
 Successful proposition for financially motivated reinsurance and longevity
 Results from in-force portfolio continue to be healthy
 Very satisfactory development
of new business and in-force
portfolio
 Product drift trend to become
challenging
USA
Australia
 High new business
value with attractive
risk-return profile
 Legacy block will continue
to affect IFRS profits
 Disability business performing
in line with expectations
 Transfer into new business
proposition underway
Continental Europe
 Challenging market environment limits value generation
 Pleasing IFRS profit from healthy portfolio
Strong new business generation against pressure
from competition and challenging economic environment
56
Financially Motivated Reinsurance –
Well-established value proposition, strong demand prevails
Financially Motivated Reinsurance
€m
Fee income
Technical result
% of total
% of total
4,536
3,638
119
4,109
3,356
3,313
92
75
25
38
2011
41
2012
38
2013
VNB1
Technical result and fee income
33
2014
31
50
2015
20
2011
49
49
% of total
127
62
136
129
70
82
70
65
66
73
29
23
22
43
19
2012
214
185
28
37
41
2013
2014
2015
16
14
2011
2012
2013
2014
2015
Portfolio development
Expectations going forward
 Increasing result contribution an indicator of overall success
 Demand will remain high
 Geographically well-diversified
 Number, size and type of transactions are difficult to predict and will
vary on an annual basis
 2015 new business, particularly from Asia and Europe
 First Solvency II solutions executed
1 2011–14 MCEV, 2015 Solvency II.
57
Asia –
Sustained growth across all major markets
Asia
€m
Fee income
Technical result
% of total
% of total
1,178
959
872
871
910
55
35
10
11
2011
2012
VNB1
0
35
8
9
9
2013
2014
2015
9
2011
1
54
12
2012
62
4
58
% of total
198
86
59
9
77
5
54
81
97
93
56
15
19
26
2013
2014
2015
9
2011
14
17
2012
2013
21
21
2014
2015
 Sustained growth path
 Premium volatility from financially-motivated deals
 Insurance and reinsurance markets will continue their growth path –
flattening growth rates to be expected
 Tailor-made market and client strategies
 Demand for solvency relief and financing solutions remains high
 Growth supported by broad range of services
 Increase in competition and pressure on prices, but underwriting
discipline remains high
 2015 exceptional year in terms of IFRS profit and new business
generation
1 2011–14 MCEV, 2015 Solvency II.
58
Longevity –
Book developed carefully in line with risk appetite
Longevity
€m
Strategic proposition
% of total
 Longevity considered to be primarily a risk
management tool to balance mortality
portfolio and to stabilise earnings
2,788
381
312
1,040
120
21
2011
53
2012
2013
3
4
2014
2015
2011
1,366
887
982
2012
2013
2014
 Uncertainty around future mortality trend
requires prudent approach in pricing and
valuation
2015
 Portfolio comprises longevity swaps in UK
 No significant VNB expectation
 Evolutionary development of portfolio within clearly defined risk
tolerance
 2014: Participation in the large AVIVA scheme
 Careful investigation of expansion into other markets
 2015: One further transaction concluded with a leading specialist
life insurer
 High market potential but also significant pressure on prices
 Continuation of highly selective approach in choosing transactions on
which to quote
59
Asset protection –
Comprehensive solutions to complex financial risks
Asset protection
€m
IFRS contribution margin1
37
30
30
26
Product portfolio
 Solutions to Basel III and Solvency II needs
 Legal, regulatory and structuring expertise
 Resolution of accounting asymmetry
 Fully functional hedging platform
 ALM solutions for smaller players
 Development of modern savings products
7
2011
2012
2013
2014
2015
 Portfolio continues to gain significance
 Existing book dominated by Asia/Japan
 Growing contribution to new business value
 Current opportunities mainly in Europe and Asia/Japan
 Previous years positively affected by terminations in the
portfolio that caused an earlier-than-expected margin release
 Exploration of business potential in North America
1 Part of non-technical-result, incl. insurance-related investment result.
60
New business profitability
IFRS contribution margin1
%
Product portfolio
%
20%
20%
20
15%
15%
15
10%
10%
10
5%
5%
5
0%
0%
2011
2012
2013
2014
2015
 Very good new business profitability relative
to economic risk capital (RoRaC spread)
 Relatively higher profitability drives the
increased RoRaC spread (level of economic
risk capital comparable to 2014)
years
0
2011
2012
2013
2014
2015
 New business profitability relative to total
investment in new business (IRR spread)
influenced by increased level of supervisory
capital (impact of Solvency II) and tailormade re-insurance solutions (FinMoRe)
1 Spread in addition to reference rate (weighted-average swap yield curves), after tax. 2 Number of years it takes to amortise the total investment in new business through
future (undiscounted) earnings distributable to shareholders.
2011
2012
2013
2014
2015
 Increased share of FinMoRe business
(usually of shorter duration) decreases
payback period of 2015 new business
61
Backup: ERGO
ERGO – Overview
2015
2014
2013
2012
2011
€bn
16.5
16.7
16.7
17.1
17.4
Investments
€bn
131.0
135.5
126.7
124.9
117.0
€bn
130.3
132.4
125.1
122.8
116.1
Combined ratio p-c Germany
%
97.9
95.3
96.7
98.0
95.5
Combined ratio p-c International
%
104.7
97.3
98.7
99.8
104.5
Premium split by region – 2015
Rest of World
Germany
14
Belgium
2
UK
3
%
73
Distribution channels – New business 2015
Banks/other
%
Tied agents
6
56
Direct
TOTAL
18
€16.5bn
Poland
8
Broker
20
62
Backup: ERGO
ERGO Strategy Programme – Financial impact
ERGO Group – Net profit
€m
~450
~500+
ERGO Group – Annual cost savings
Gross
Net
€m
1
536
443
316
130
182
59
2016
2017
…
2020
2021
P-C Germany
250
90
96
30
2016
2017
2018
2019
2020
P-C Germany – Combined ratio
Net profit 2020 by segment
L/H Germany
167
279
227
98
%
99
96
Total
93
~€450m
92
International
110
2016
1 After policyholder participation and taxes.
2017
2018
2019
2020
63
Backup: ERGO Life and Health
ERGO Life and health Germany
H1 2016 vs. H1 2015
H1 2015
€m
4,727
–1
Foreign exchange
0
–205
Organic change
H1 2016
4,520
 Life: –€190m
Decline of regular premiums due to ordinary
attrition while single premiums suffered from
lower product sales
 Health: –€14m
Positive development in supplementary
insurance but overcompensated by
discontinuation of a large contract;
comprehensive cover flat
Net result
H1 2015
€m
–9
Technical result
Other
301
–329
69
H1 2016
 Decrease in Health, partly compensated for
by Life and Direct business
 Q2 vs. Q1: Main improvement in Life, Health
slightly positive
 Investment result (+€824m)
 Significant increase of derivative result –
Swaption impact +€574m/+€55m (gross/net)
 Release of unrealised gains for ZZR
 Lower regular income
Q1 2016
14
Technical result
35  Other
Other
132
–126
Q2 2016
55
 Restructuring expenses in Q2
€215m/€41m (gross/net)
 Negative one-off effect from accounting
difference between IFRS and local GAAP
regarding pension liabilities in Q1
 Health: Extraordinary tax charges in Q1
64
Backup: ERGO Life Germany
ERGO Life Germany – Separation of traditional back book
and new business strengthens focus
Life insurance legal entities – back book
ERGO Leben
Victoria Leben
New business
ERGO Pensionskasse
Traditional back book
ERGO VORSORGE
New business promoting
capital-light products
New business from portfolio only (legal, contractual obligation)
Special case of underwriting
agreements
Separation of traditional life back book
 Risk carrier for new business
 Approx. €3.7bn in premium volume and more than five million policies
 Concentration on capital-marketrelated and biometric products
 Focus on administration
 Realisation of significant management advantages, such as
 Reduced resource conflicts
 Optimised prioritisation
 More efficient set-up and bundling
of competencies in capital-marketrelated products
 Faster decision-making
 Improved transparency
65
Declined reinvestment yield still with low impact
on average yield …
Key figures1 – Life Germany
Average yield vs. average guarantee
4%
2%
Average yield
Average
guarantee
2015
~1.8
~3.4
~2.7
2014
~2.6
~3.6
~3.0
2013
~2.7
~3.6
~3.2
avg. yield
avg. guarantee
1%
Reinvestment
yield
ILLUSTRATIVE
3%
%
2013
2019
 Long duration of fixed-income portfolio keeps average yield at relatively high level
 Asset and liability duration difference far below one year
 Non-interest-bearing ZZR reduces average guarantee 2015 by ~50bp
 Low bonus rates: 2.7% vs. market average 2.85% (3.16% in previous year)
1 German GAAP figures for ERGO Leben, Victoria Leben and ERGO Direkt Leben.
66
… while measures to support guarantees have financial
impact in 2015
%
Guarantee level
4.25
ILLUSTRATIVE
4.10
4.00
4.00
Reference rate
Increase
Stable
Decrease
3.75
3.50
3.25
3.25
ZZR – Low interest-rate reserve
 Local GAAP reserve against low interest rates
 Expected accumulated ZZR in 2016: ~€3.5bn
 Partly financed through unrealised gains – positive impact on IFRS
earnings when realised
 Effect on IFRS net income in 2015: €71m
3.00
2.88
2.75
2.75
Interest-rate hedging programme
2.50
2.25
2.25
 Started in 2005 – Protection against reinvestment risk via receiver
swaptions
2.00
1.75
1.75
 Continuously buys additional slices, depending on capital market and
portfolio development
1.50
1.25
1.25
1.00
2010
2012
2014
Key financials2 – €bn
2015
2014
2013
1 Based on interest-rate scenarios.
2 German GAAP figures.
2016
2018
2020
 Effect on IFRS net income in 2015: –€11m
Free RfB
Terminal bonus fund
Unrealised gains
Accumulate ZZR
0.9
0.9
0.8
1.6
1.7
2.0
12.2
14.6
5.9
2.5
1.5
0.8
67
Backup: ERGO Life – New business
ERGO Life
New business (statutory premiums)
Germany (including direct business)
H1 2016
H1 2015
 abs.
%
New business
408
515
–107
–20.7
Regular premiums
104
108
–5
–4.4
Single premiums
305
407
–102
–25.1
Annual premium equivalent (APE)1
134
149
–15
–10.1
365
494
–128
–26.0
69
65
5
7.1
296
429
–133
–31.0
99
108
–9
–8.1
International
New business
Regular premiums
Single premiums
Annual premium equivalent (APE)1
1 Regular premiums +10% single premiums.
68
Backup: ERGO
ERGO Property-casualty Germany (1)
H1 2016 vs. H1 2015
H1 2015
€m
1,831
Net result
€m
H1 2015
Technical result
–11
Combined ratio slightly increased to 95.9%
Foreign exchange
0
0
Organic change
H1 2016
34
1,865
 Organic growth mainly driven by expansion
of title insurance in the UK branch, motor
and homeowners’ insurance
Non-technical
result1
–205
Other
–62
H1 2016
–92
 Expansion of title insurance caused higher
expense ratio (+2.4%-pts.) as well as lower
loss ratio (–2.2%-pts.)
 Large losses slightly higher compared to
H1 2015 – Nat cat (several storms) in Q2
with comparably low impact
Q1 2016
–25
 High disposal gains in H1 2015 €164m
vs. H1 2016 –€8m
 Higher equity impairments
Technical result
55
50  Other
Other
Q2 2016
–148
–68
 Negative one-off effect from accounting
difference between IFRS and local GAAP
regarding pension liabilities in Q1
69
Backup: ERGO Property-casualty Germany
Combined ratio
%
 Loss ratio
95.3
63.1
2015
97.9
64.7
H1 2016
95.9
60.5
Q2 2016
93.3
58.4
32.2
443 Motor
Legal protection 211
33.2
35.4
TOTAL
€1,865m
Personal accident 325
Fire/property 338
349 Liability
34.9
108.3
98.6
98.1
%
Combined ratio H1 2016
103.9
97.1
€m
Other 199
 Expense ratio
2014
93.5
97.3
92.2
101.7
99.2
95.9
Legal
prot.
Other
Total
79.8
93.3
96.1
93.4
Q3
2014
Q4
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Motor
Liability
Fire/
prop.
Personal
acc.
70
Backup: ERGO Property-casualty Germany
Personal accident
GWP
687
€m
672
€m
Motor
654
Combined ratio
%
81.2
GWP
649
77.2
€m
666
Combined ratio
663
106.3
%
110.1
109.4
2014
2015
75.3
2013
2014
2015
2013
2014
2013
2015
Fire/Property
GWP
571
2013
2014
2015
2013
%
Liability
€m
532
577
2014
2015
%
Combined ratio
€m
Combined ratio
113.4
108.6
101.0
2013
GWP
2014
2015
%
94.4
523
534
536
2013
2014
2015
85.6
2013
89.0
2014
2015
71
Backup: ERGO
ERGO International (1)
H1 2016 vs. H1 2015
H1 2015
Foreign exchange
€m
1,961
–73
0
12
Organic change
H1 2016
1,901
Net result
€m
H1 2015
Technical result
–54
40
Life: –€62m
Q1: Adverse impact of Austrian entities and
additional expenses following the sale of ERGO
Italia in 2015
Other
–46
P-C: +€7m
H1 2016
–35
 Turkey: Better loss development and higher
technical interest in motor TPL
 Poland: Reserve increase for MTPL in Q2
Negative FX effects driven by PLN and TRY
 Greece: Run-off result diminished in Q2
Life: –€107m
Q1 2016
–14
 Poland: Lower sales of bancassurance
products
Technical result
–61
 Belgium: Decrease mainly due to
reclassification of premiums
42
Other
12  Other
P-C: +€47m
 Increase mainly driven by motor business
in Poland and Baltic states
Q2 2016
–21
 Investment result (+€53m)
 Improved derivative result partly offset by
disposal losses
 Payments for an exclusivity agreement in Q1
72
Backup: ERGO International
Combined ratio
%
 Loss ratio
2014
97.3
2015
104.7
H1 2016
98.5
Q2 2016
103.6
Other 195
 Expense ratio
58.5
65.3
460 Poland
39.3
62.7
TOTAL
Greece 79
39.4
59.2
98.7
€m
38.8
€1,229m
372 Legal protection
Turkey 125
40.9
%
Combined ratio H1 2016
115.3
100.0
Gross premiums written – Property-casualty
101.9
95.3
102.0
Poland
Legal
prot.
Turkey
103.6
100.4
88.7
98.4
98.5
Other
Total
104.1
96.8
Q3
2014
Q4
2014
93.2
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
Greece
73
Backup: ERGO International
Poland
GWP1
873
€m
816
Combined ratio
Non-motor %
Motor %
%
96.0
43
47
53
57
53
2013
2014
2015
97.7
2013
2014
2015
Legal protection
GWP
2013
2014
1 Excluding legal protection.
€m
Combined ratio
%
154.9
Non-motor %
Motor %
296
225
232
43
58
42
58
64
2013
2014
2015
36
108.5
108.4
2013
2014
2015
%
Greece
€m
652
GWP1
102.4
884
47
649
€m
Turkey
706
97.7
2015
%
Combined ratio
2013
100.1
94.0
2014
2015
GWP1
€m
Non-motor %
Motor %
133
137
140
43
57
48
52
2014
49
51
2015
2013
Combined ratio
%
81.3
2013
68.7
69.7
2014
2015
74
Backup: ERGO International life
International life – Focus on new product strategies and
in-force management
Total premiums
1,678
453
%
2,028
1,991
474
457
392
130
564
 Belgium
New product strategy with focus on capital-light products under
development
Other
366
613
594
New business – Promoting capital-light products
Poland
Austria
Belgium
 Austria
Introduction of new hybrid product in Q1 2016
 Poland
Already strong footprint with unit-linked products sold via
bancassurance channel
Back-book – Stringent portfolio management
531
575
548
 Sale of ERGO Italy
Exposure reduction to traditional life business
in non-core region
2013
2014
2015
 In-force management
Ongoing efforts to reduce risk and enhance shareholder returns
Green-/brownfields, M&A and joint ventures (JV)
 China (50% participation) – Business development in line with plan
 India (49% participation) – First step of regulatory approval (R1) of JV granted in Q4 2015
75
Backup: Munich Health
Munich Health – Overview
2015
2014
2013
2012
2011
€bn
5.6
5.3
6.6
6.7
6.0
Investments
€bn
4.1
3.9
3.6
4.2
4.6
€bn
2.8
2.5
2.2
2.2
2.4
%
99.9
98.8
98.3
100.2
99.5
Combined ratio
Regional premium breakdown – 2015
Asia and Australasia
North America
4
Middle East/Africa
10
%
54
Segmental premium breakdown – 2015
Reinsurance
%
Primary insurance
77
23
TOTAL
TOTAL
€5.6bn
€5.6bn
Europe
32
76
Munich Health
H1 2016 vs. H1 2015
H1 2015
€m
2,867
–94
Foreign exchange
0
Organic change
H1 2016
–315
2,459
Net result
€m
H1 2015
Technical result
Non-technical
–18
result1
1
Other
10
H1 2016
32
 … partly offset by growth in Middle East
and China
 Reinsurance: 102.1% (+1.4%)
Burden from US business
 Primary insurance: 95.6% (–1.6%)
Bottom-line increase driven by Spain
 Stable regular income
 Negative FX effects mainly driven by Can$
 Organic decrease mainly driven by reduced
share and restructuring of one large treaty, …
Overall combined ratio increased to 100.8%
16
Q1 2016
Technical result
 Lower disposal gains due to one-off effect
in prior year
–12
0
Other
12
Q2 2016
16
 Other
 Tax income and positive FX effect
77
Private health insurance growing worldwide above GDP,
with digitalisation becoming an increasing driver
Growth drivers
Demographic
development
Medical
progress
Life style
changes
Economic
development
Digitalisation/
innovation
+
Image: used under license from Shutterstock.com
Private health insurance – Volume per region (GWP)
North America
Latin America
+3%
+1%
732
849
86
957
2011
2015E
Market composition
Health specialist insurers
Multi-line insurers
Source: WHO, Global Insight, MH Research
2006
48
2011
2015E
108
2006
APAC
Africa
+10%
+7%
+4%
+3%
+15%
+11%
25
2006
Europe
129
2011
152
9
2015E
2006
15
+10%
+10%
+13%
+11%
22
39
2011
Middle East
2015E
2006
69
2011
117
10
7
4
2015E
2006
2011
2015E
Growth (CAGR)
PHI GWP
Nominal GDP
78
Backup: Investments
Investment result
Investment result
€m
Regular income
Write-ups/write-downs
Disposal gains/losses
Derivatives2
Other income/expenses
Investment result
Q1 2016
Return1
Q2 2016
Return1
H1 2016
Return1
H1 2015
Return1
1,628
–219
218
74
–128
1,572
2.8%
–0.4%
0.4%
0.1%
–0.2%
2.7%
13.2%
1,823
–22
910
176
–137
2,750
3.1%
–0.0%
1.5%
0.3%
–0.2%
4.7%
8.9%
3,451
–242
1,128
251
–266
4,322
3.0%
–0.2%
1.0%
0.2%
–0.2%
3.7%
11.0%
3,863
–239
1,806
–841
–250
4,341
3.2%
–0.2%
1.5%
–0.7%
–0.2%
3.6%
–0.4%
Derivatives
H1 2016
Total return
3-month
reinvestment yield
Q2 2016
Q2 2016
1.6%
Fixed
income3
Equities
Q1 2016
1.9%
Q4 2015
1.8%
Commodities
Write-ups/
Disposal
write-downs gains/losses
47
–105
894
147
26
Inflation
Other
10
–131
177
19
40
–52
–7
Fixed
income3
Equities
Commodities
Write-ups/
Disposal
write-downs gains/losses
–40
–255
Derivatives
1,114
144
78
Inflation
Other
1 Annualised return on quarterly weighted investments (market values) in %. Impact from dividends on regular income 0.4%-pts in Q2 and 0.2%-pts in Q1.
2 Result from derivatives without regular income and other income/expenses. 3 Thereof interest-rate hedging ERGO: Q2 €179m/€19m (gross/net); H1 €446m/€53m (gross/net).
–25
–130
406
–117
10
–32
–16
79
Backup: Investments
Return on investment by asset class and segment
H1 2016
%1
Regular income
Write-ups/-downs
2.5
5.3
4.5
3.0
6.2
2.4
3.0
2.7
3.1
2.0
0.0
–3.7
0.0
–0.1
–1.1
1.4
–0.2
–0.1
–0.3
0.0
Afs fixed-income
Afs non-fixed-income
Derivatives
Loans
Real estate
Other2
Total
Reinsurance
ERGO
Munich Health
Disposal result Extraord. derivative result
1.0
2.1
0.0
1.4
0.3
–2.3
1.0
1.0
1.0
0.8
Return on investment
3.4%
1 Annualised.
Q4 2013
3.7%
Q1 2014
2 Including management expenses.
ᴓ Market value (€m)
3.5
3.7
22.7
4.3
5.5
–2.8
3.7
2.6
4.4
2.7
130,439
13,649
2,733
68,053
6,540
12,249
233,663
88,164
141,146
4,353
4.7%
4.1%
3.4%
3.0%
Q3 2013
RoI
0.0
0.0
–0.2
0.0
0.0
–4.3
–0.2
–0.3
–0.2
–0.1
Average 3.4%
4.3%
3.5%
Other inc./exp.
0.0
0.0
18.3
0.0
0.0
0.0
0.2
–0.7
0.8
–0.1
Q2 2014
Q3 2014
3.0%
Q4 2014
Q1 2015
2.6%
Q2 2015
Q3 2015
2.9%
2.7%
Q4 2015
Q1 2016
Q2 2016
80
Backup: Investments
Investment portfolio
Investment portfolio1
%
Land and buildings
2.7 (2.9)
56.7 (55.7)
Shares, equity funds and
participating interests2
4.6 (5.2)
Portfolio management in Q2
 Government bonds: Shift from Germany, UK
and Portugal to France, USA and Canada
 Covered bonds: Overall reduction, esp.
in Germany and Ireland
TOTAL
 Decrease of inflation exposure
€238bn
Miscellaneous3
6.7 (7.5)
 Shift from ABS/MBS to cash
Loans
 Further decline of interest rates leads to
increase of duration and market values
 Reduction of net equity exposure to 3.6%
29.3 (28.7)
Portfolio duration4
DV011,4
Assets
Reinsurance
ERGO
Munich Re (Group)
5.7 (5.4)
9.4 (8.4)
8.0 (7.3)
€m
Liabilities
Assets
5.1 (4.8)
10.7 (9.1)
8.4 (7.4)
45 (41)
126 (111)
171 (151)
1 Fair values as at 30.6.2016 (31.12.2015). 2 Net of hedges: 3.6% (4.8%). 3 Deposits retained on assumed reinsurance, deposits with banks, investment funds (excl. equities), derivatives
and investments in renewable energies and gold. 4 Market value change due to a parallel downward shift in yield curve by one basis point considering the portfolio size of assets and
liabilities (pre-tax). Negative net DV01 means rising interest rates are beneficial.
Liabilities
Net
–2
47 (44)
148 (126)
195 (170)
–22
–24
81
Backup: Investments
Fixed-interest securities and miscellaneous
%
Miscellaneous
6.7 (7.5)
56.7 (55.7)
€238bn
Banks
3 (3)
Loans
Governments/
semi-government
62 (62)
TOTAL
€135bn
Pfandbriefe/covered bonds
15 (15)
29.3 (28.7)
Miscellaneous
%
Deposits on
reinsurance
32 (42)
Other
18 (16)
Investment funds
14 (11)
%
Structured products
3 (4)
Corporates
16 (16)
TOTAL
Derivatives
14 (9)
Fixed-interest securities1
TOTAL
€16bn
Bank deposits
22 (22)
1 Approximation – not fully comparable with IFRS figures. Fair values as at 30.6.2016 (31.12.2015).
Loans1
%
Loans to policyholders/
mortgage loans
10 (10)
Corporates
1 (1)
Banks
4 (4)
Governments/
semi-government
41 (39)
TOTAL
€70bn
Pfandbriefe/
covered bonds
44 (46)
82
Backup: Investments
Fixed-income portfolio
Total
Rating structure
%
<BB and NR
6 (6)
BB
2 (2)
BBB
12 (12)
Regional breakdown
AAA
42 (42)
Germany
US
TOTAL
France
€214.1bn
UK
A
10 (10)
27
AA
(27)
Canada
Netherlands
Supranationals
Maturity structure
%
n.a.
2 (2)
0–1 years
10 (9)
Spain
Italy
Australia
Belgium
>10 years
36 (35)
AVERAGE
MATURITY
9.1 years
7–10 years
16 (16)
Approximation – not fully comparable with IFRS figures. Fair values as at 30.6.2016 (31.12.2015).
1–3 years
12 (13)
Ireland
Austria
3–5 years
13 (14)
Norway
5–7 years
11 (11)
Other
Sweden
Total
%
Without
Participation
With
participation
4.3
14.6
2.2
3.3
3.8
1.1
0.7
1.2
1.2
1.9
0.8
0.6
0.3
0.3
0.2
7.1
43.6
24.8
1.5
5.3
2.3
0.4
3.0
3.2
1.7
1.4
0.6
1.5
1.5
1.7
1.2
1.3
5.0
56.4
Total
30.6.2016
31.12.2015
29.1
16.2
7.5
5.6
4.2
4.1
4.0
2.9
2.6
2.4
2.3
2.0
2.0
1.5
1.5
12.1
100.0
29.2
16.4
7.3
6.1
3.8
4.0
3.4
3.3
2.4
2.5
1.8
2.5
2.1
1.6
1.6
11.9
100.0
83
Backup: Investments
Governments/semi-government
Rating structure
%
BB
2 (2)
BBB
10 (10)
A
Regional breakdown
AAA
45 (46)
Germany
US
TOTAL
Supranationals
€113.3bn
Canada
7 (8)
France
AA
Belgium
36 (35)
UK
Maturity structure
%
0–1 years
9 (9)
>10 years
46 (44)
Italy
Spain
Australia
Austria
AVERAGE
MATURITY
11.0 years
7–10 years
14 (14)
1–3 years
11 (12)
Poland
Netherlands
3–5 years
11 (13)
Finland
5–7 years
9 (8)
Other
Ireland
Total
%
Without
Participation
With
participation
3.1
17.0
1.3
5.4
1.6
1.2
3.7
1.5
1.2
2.7
0.4
1.4
0.7
0.2
0.3
7.6
49.4
24.1
1.1
6.1
0.2
2.2
2.7
0.0
1.9
1.9
0.0
2.2
0.6
1.3
1.6
1.5
3.0
50.6
Total
30.6.2016
31.12.2015
27.3
18.1
7.5
5.7
3.8
3.8
3.7
3.4
3.1
2.7
2.7
2.0
2.0
1.8
1.8
10.6
100.0
27.4
18.9
6.6
5.2
3.5
3.1
4.9
3.1
3.5
2.9
2.6
1.9
1.7
1.7
1.9
11.0
100.0
84
Backup: Investments
Corporate bonds (excluding bank bonds)
Rating structure
%
NR
1 (1)
<BB
2 (2)
BB
AAA
1 (1)
TOTAL
€22.2bn
AA
6 (7)
10 (11)
A
BBB
48 (48)
33 (30)
Maturity structure
%
0–1 years
7 (6)
>10 years
18 (16)
7–10 years
15 (15)
Regional breakdown
AVERAGE
MATURITY
6.7 years
5–7 years
17 (18)
1–3 years
21 (23)
3–5 years
23 (22)
%
30.6.2016
31.12.2015
Utilities
19.2
21.1
Industrial goods and services
12.5
12.7
Oil and gas
11.8
10.9
Telecommunications
8.4
8.5
Financial services
7.3
7.9
Healthcare
6.1
6.7
Technology
5.5
3.5
Food and beverages
5.0
4.1
Retail
4.4
3.9
Media
4.3
4.5
Automobiles
3.4
2.8
Basic resources
3.3
3.5
Personal and household goods
3.0
2.7
Other
5.7
7.2
85
Backup: Investments
Bank bonds
Rating structure
%
NR
2 (2)
<BB
1 (2)
BB
7 (7)
TOTAL
AA
€6.8bn
9 (8)
A
41 (41)
%
Maturity structure
0–1 years
19 (11)
>10 years
4 (5)
5–7 years
12 (13)
%
AAA
0 (0)
BBB
41 (40)
7–10 years
7 (10)
Regional breakdown
AVERAGE
MATURITY
3.6 years
US
Germany
UK
Ireland
France
Canada
Australia
Jersey
Netherlands
Other
Total
30.6.2016
31.12.2015
36.8
36.7
24.7
24.3
8.0
8.7
5.7
6.0
3.2
3.9
3.2
2.6
2.9
2.8
2.0
1.7
2.0
1.4
11.5
11.7
%
Investment category of bank bonds
Loss-bearing1
5 (6)
Senior
81 (79)
TOTAL
1–3 years
31 (36)
3–5 years
27 (25)
Senior bonds Subordinated Loss-bearing
30.1
6.5
0.2
18.8
2.5
3.4
6.7
1.1
0.2
5.6
0.1
0.0
1.5
0.8
1.0
2.4
0.7
0.0
2.9
0.0
0.0
2.0
0.0
0.0
1.9
0.1
0.0
9.2
1.7
0.6
€6.8bn
Subordinated2
13 (15)
1 Classified as Tier 1 and upper Tier 2 capital for solvency purposes. 2 Classified as lower Tier 2 and Tier 3 capital for solvency purposes.
86
Backup: Investments
On- and off-balance-sheet reserves (gross)
€m
31.12.2013
31.12.2014
31.12.2015
31.3.2016
30.6.2016
210,431
235,849
230,529
232,941
237,519
15,192
31,470
25,969
32,025
34,530
4,661
11,967
7,886
11,494
13,685
1,975
2,270
2,446
2,239
1,966
292
311
201
179
164
6,928
14,548
10,533
13,911
15,816
Real estate2
1,763
2,006
2,273
2,184
2,176
Loans and investments (held to maturity)
6,071
14,400
12,610
15,350
15,926
430
516
553
579
613
8,264
16,922
15,436
18,114
18,714
7.2%
13.3%
11.3%
13.7%
14.5%
Market value of investments
Total reserves
On-balance-sheet reserves
Non-fixed-interest securities
Other on-balance-sheet
reserves1
Subtotal
Off-balance-sheet reserves
Associates
Subtotal
Reserve ratio
1 Unrealised gains/losses from unconsolidated affiliated companies, valuation at equity and cash-flow hedging.
2 Excluding reserves from owner-occupied property.
87
Backup: Investments
€m
30.6.2016
Change Q2
15,651
1,919
Valuation at equity
67
–7
Unconsolidated affiliated enterprises
74
–1
Cash flow hedging
23
–6
15,816
1,905
Provision for deferred premium refunds
–7,110
–807
Deferred tax
–2,305
–279
–16
1
–217
–216
6,167
604
Investments afs
Total on-balance-sheet reserves (gross)
Minority interests
Consolidation and currency effects
Shareholders' stake
88
Backup: Investments
Real estate1
Loans
Associates
Total off-balance-sheet reserves (gross)
Provision for deferred premium refunds
Deferred tax
Minority interests
Shareholders' stake
1 Excluding reserves for owner-occupied property.
€m
30.6.2016
Change Q2
2,176
–9
15,926
575
613
34
18,714
600
–13,971
–463
–1,443
–37
–1
0
3,299
100
89
Backup: Investments
Sensitivities to interest rates, spreads and equity markets
Sensitivity to risk-free interest rates – Basis points
Change in gross market value (€bn)
Change in on-balance-sheet reserves, net
(€bn)1
Change in off-balance-sheet reserves, net (€bn)1
P&L impact (€bn)1
–50
–25
+50
+100
+9.4
+2.0
+0.4
+0.0
+4.6
+1.0
+0.2
+0.0
–8.6
–1.9
–0.4
–0.0
–16.3
–3.6
–0.7
–0.0
+50
+100
–6.2
–1.2
–0.3
–0.0
–11.8
–2.2
–0.6
–0.1
Sensitivity to spreads2 (change in basis points)
Change in on-balance-sheet reserves, net
(€bn)1
P&L impact (€bn)1
Sensitivity to equity and commodity markets3
EURO STOXX 50 (2,865 as at 30.6.2016)
Change in on-balance-sheet reserves, net (€bn)1
P&L impact (€bn)1
–30%
–10%
+10%
+30%
2,006
–3.7
–0.7
–0.8
–1.4
2,579
–1.2
–0.2
–0.3
–0.5
3,152
+1.2
+0.7
+0.3
+0.0
3,725
+3.8
+2.0
+0.8
+0.2
1 Rough calculation with limited reliability assuming unchanged portfolio as at 30.6.2016. After rough estimation of policyholder participation and deferred tax; linearity of relations cannot be
assumed. Approximation – not fully comparable with IFRS figures. 2 Sensitivities to changes of spreads are calculated for every category of fixed-interest securities, except government
securities with AAA ratings. 3 Worst-case scenario assumed including commodities: impairment as soon as market value is below acquisition cost. Approximation – not fully comparable
with IFRS figures.
90
Backup: Additional information
Mission of Investor & Rating Agency Relations
Responsibility
Main objective
Munich Re’s communication with the capital market / financial
community
Active communication to support a fair capital-market
valuation of Munich Re shares and outstanding bonds
External communication
Internal communication
Increase transparency
on financial performance, strategy and expectations about
future perspectives within the principles of a credible,
accurate, complete and timely provision of relevant
information
Transmission
of investors’ and creditors’ demands, and the capital markets’
perception of Munich Re, to management and staff
Target
Achieving a fair valuation and optimising the cost of capital by
increasing information efficiency between Munich Re and the
financial community while developing a relationship of trust
with our investor base
Target
Support management in the setting of ambitious targets as
well as in the execution of a value-based and shareholderoriented strategy
We aim to enhancing Munich Re’s visibility and attractiveness in the international financial community
91
Backup: Shareholder information
Financial calendar
2016
9 November
Quarterly statement as at 30 September 20161
2017
7 February
Preliminary key figures 2016 and renewals
15 March
Balance sheet press conference for 2016 financial statements
Analysts' conference in Munich with videocast
26 April
Annual General Meeting 2017, ICM – International Congress Centre Munich
9 May
Quarterly statement as at 31 March 20171
9 August
Half-year financial report as at 30 June 2017
9 November
Quarterly statement as at 30 September 20171
1 Munich Re is adjusting its financial reporting format following an amendment to the regulations of the Frankfurt stock exchange. The half-year financial reports and annual
reports will remain unchanged. However, instead of issuing quarterly reports for the first and third quarters, we will release reports in the new form of quarterly statements from
2016 onwards. We will continue to present and explain the figures for each quarter in telephone conferences for analysts and journalists, and in press releases.
92
Backup: Shareholder information
For information, please contact
Investor Relations Team
Christian Becker-Hussong
Thorsten Dzuba
Christine Franziszi
Head of Investor & Rating Agency Relations
Tel.: +49 (89) 3891-3910
E-mail: [email protected]
Tel.: +49 (89) 3891-8030
Tel.: +49 (89) 3891-3875
Britta Hamberger
Ralf Kleinschroth
Andreas Silberhorn
Tel.: +49 (89) 3891-3504
Tel.: +49 (89) 3891-4559
Tel.: +49 (89) 3891-3366
Angelika Rings
Andreas Hoffmann
Ingrid Grunwald
Tel.: +49 (211) 4937-7483
Tel.: +49 (211) 4937-1573
Tel.: +49 (89) 3891-3517
Münchener Rückversicherungs-Gesellschaft | Investor & Rating Agency Relations | Königinstraße 107 | 80802 München, Germany
Fax: +49 (89) 3891-9888 | E-mail: [email protected] | Internet: www.munichre.com
93
Disclaimer
This presentation contains forward-looking statements that are based on current assumptions and forecasts of the
management of Munich Re. Known and unknown risks, uncertainties and other factors could lead to material differences
between the forward-looking statements given here and the actual development, in particular the results, financial situation and
performance of our Company. The Company assumes no liability to update these forward-looking statements or to make them
conform to future events or developments.
94

Strong track record –and new ideas Munich Re equity story

Transcription

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