plainpicture/fStop/Ralf Hiemisch
Delivering strong capital returns
Munich Re equity story
August 2015
Munich Re – August 2015
1
Agenda
Equity story
3
Backup
Group
20
Reinsurance
45
ERGO
62
Munich Health
75
Investments
78
Munich Re – August 2015
2
Equity story
Munich Re – Key metrics
€bn
Key financial data1
Shareholders’ equity
Operating result
Net result
Debt leverage (%)
RoE (%)
RoRaC (%)
2014
30.3
4.0
3.2
13.6
11.3
13.2
2013
26.2
4.4
3.3
15.3
12.5
12.1
2012
27.4
5.3
3.2
17.5
12.5
13.2
Compound annual growth rate1: 2004 – 2014
Premiums2
Earnings3
Dividend3
Book value3
2.5%
5.6%
14.5%
4.1%
Geographic breakdown – Premiums2 2014
Other
2.4 (5%)
Asia-Pacific
4.7 (9%)
€bn
Europe
26.8 (55%)
Total
€48.9bn
North America
15.0 (31%)
1
End of year. 2 Gross written premiums. 3 Per share. 4 Beta 250 relative to DAX (daily, raw).
Key share data1
Earnings per share (€)
Dividend per share (€)
Book value per share (€)
Share price (€)
Beta4
P/E
P/B
Market capitalisation (€bn)
Dividend yield (%)
Avg. daily trading volume (’000)
Type of share
Votes
Dividend
Trading venues
Shares o/s
2014
18.3
7.75
178.2
165.8
0.8
9.1
0.9
28.7
4.7
700
2013
18.5
7.25
146.2
160.2
1.0
8.7
1.1
28.7
4.5
667
2012
18.0
7.00
152.3
136.0
0.9
7.6
0.9
24.4
5.2
796
No-par-value registered shares
Each share entitles the holder to one vote
Paid out once per year in cash
All German stock exchanges plus Xetra
166,843,961
Key company data
Sector
Country
Insurance
Germany
Currency
Accounting principles
Euro
IFRS
Rating
Stable AA rating from all agencies since 2006
Securities codes
Reuters
Bloomberg
MUVGn
MUV2
WKN
ISIN
843002
DE0008430026
Munich Re – August 2015
3
Equity story
Realising synergies and economies of scope by
combining primary and reinsurance under one roof
Segmental breakdown – Gross written premium 2014
€bn
Reinsurance Property-casualty
16.7 (34%)
ERGO Life/Health Germany
9.8 (20%)
Total
ERGO Property-casualty Germany
3.1 (6%)
€48.9bn
Reinsurance Life
10.0 (21%)
ERGO International
3.8 (8%)
Munich Health
5.3 (11%)
Reinsurance –
Solid profitability
ERGO –
Delivering on plan
Munich Health –
Consolidation
P-C: Expansion of know-howintensive business, active portfolio
and cycle management, strong
reserving position
L/H Germany: Continuously improving
risk/return profile
Life: Producing steady results
above market average
International: Turnaround successfully
completed in p-c, growth in life
Focus on excellence,
execution and expansion to
strengthen profitability and
participate in growth of
selected health markets
P-C Germany: Attractive business mix
generating solid earnings
Munich Re – August 2015
4
Equity story
Munich Re remains an under-promise/over-deliver
investment case
€bn
Actual net result vs. guidance
3.2
Actual
2.0
2.4
3.0
3.3
3.0 3.2
2.5
2.4
Guidance
0.7
2010
20111
Outlook 2015 – Munich Re (Group)
GROSS PREMIUMS WRITTEN
€49–51bn
RETURN ON INVESTMENT
~3.3%
NET RESULT
at least €3bn
Reinsurance
2012
2013
Segment result
Combined ratio
at least €2.5bn
~96%
~€500m
Germany: ~95%
International: ~99%
€50–100m
~99%
ERGO
Munich Health
2014
High level of diversification and disciplined bottom-line focus facilitating reliable
earnings generation
1
Assuming normal nat cat claims based on 8.5% budget, net result would have exceeded guidance.
Munich Re – August 2015
5
Equity story
Delivering strong capital returns
€bn
Attractive shareholder participation1
Cash yield2 11.2%
Share
buy-back
7.8%
5.4%
6.0%
2.4
1.5
Dividend
2010
2011
1.1
2012
Excellent economic solvency ratio
Internal
model
9.6%
8.1%
2.7
17.4
1.6
2013
€
Dividend per share
CAGR: 7%
7.75
4.50
2014
2006–2014
Substantial rating capital buffer
Rating
agencies
2006
...
2010 2011 2012 2013 2014
Solid German statutory accounts
HGB3
flexibility
Strong balance sheet mitigates pressure from low interest rates and declining
reinsurance margins – High distribution in spite of temporary earnings pressure
1
3
Cash-flow view. 2 Total payout (dividend and buy-back) divided by average market capitalisation.
German statutory accounting standards.
Munich Re – August 2015
6
Equity story
Convincing track record in value generation
Return on equity
%
Average cost of capital
Risk/return profile1
%
Total shareholder return (p.a.)
20
15.3
Peer 3
14.1
12.5
15
12.5 12.5
11.8
11.3
10.4
Peer 2
10
7.0
Peer 4
Index
5
0
3.3
Peer 5
Peer 6
Peer 1
–5
20
2005
2008
2011
10-year average ROE: ~11.1% –
Clearly exceeds cost of capital: ~8%
2014
25
30
35
40
45
Volatility of total shareholder return (p.a.)
Annualised TSR: ~10.9% –
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 31.7.2015;
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, Zurich, Stoxx Europe 600 Insurance (“index”).
Munich Re – August 2015
7
Equity story
Low interest rates impacting investment result …
Return on investment
%
€bn
Total investments
Valuation reserves
4.5
3.9
3.4
3.4
225
3.6
187
7
196
11
Disposal gains
236
8.6
8.4
210
15
31
1.6
1.2
8.0
7.2
6.8
22
€bn
Investment result
0.7
1.8
2.9
2010 2011 2012 2013 2014
2010 2011 2012 2013 2014
2010 2011 2012 2013 2014
Resilient RoI given ongoing
decline of interest rates …
… which significantly pushes up
valuation reserves – …
… leading to disposal gains due
to usual portfolio turnover
… mitigated by increasing amount of unrealised gains
Munich Re – August 2015
8
Equity story
Investing in low-interest-rate environment
Running and reinvestment yield
2011
4.0
3.6 3.5
2012
3.2
%
2013
2014
Composition of reinvestment yield 20141
Reinvestment yield (%)
4
3
3.0
2.2 2.3 2.4
Corporate
bonds
Bank bonds
Structured
products
Pfandbriefe/
covered bonds
2
1
Government
bonds
0
Yield curve German sovereigns
–1
Running yield
Reinvestment yield
 Long duration has been stabilising investment
returns in recent years
 At current interest-rate levels, expected annual
attrition of running yield ~20bps in 2015
0
Average
maturity (years)
5
10
15
 Solid reinvestment yields without taking high risks
 In addition to long duration, ongoing geographic
diversification and cautious expansion of credit
exposure mitigating attrition of running yield
Well-balanced portfolio provides resilience against adverse capital
market scenarios – No “hunt for yield”
1
Bubble size reflects reinvestment volume. Yield curve as at 31.12.2014.
Munich Re – August 2015
9
Equity story
Resilient earnings in a softening reinsurance market
… support high earnings contribution
from underwriting at Group level2
Constantly positive net run-off results in
property-casualty reinsurance1 …
5.8%
81%
2013
2014
72%
5.3%
4.4%
83%
49%
~4%
2.8%
3.7%
16%
2010
2011
2012
2013
2014
Actual losses consistently below actuarial
expectations – at least 4% reserve releases also
expected going forward
2010
2011
2012
Sound technical results (including technical
interest) mitigate declining contribution from
investment income
Profitability in property-casualty reinsurance supported by strong reserving position
1
2
In % of net earned premiums, adjusted for commission effects.
Contribution of technical result as a percentage of operating result.
Munich Re – August 2015
10
Equity story
Reinsurance – Leveraging on leading market position
€bn
Property-casualty – GWP1
Risk
Solutions
Traditional
p-c
reinsurance
€m
Life – Technical result
Adjusted
16.6
16.7
1.9
4.2
14.7
2008
12.5
2014
420
359
354
280
79
2010
2011
2012
2013
2014
 Continued growth in attractive specialty business
(Risk Solutions) …
 Thorough review of critical portfolios results in
earnings volatility …
 … mitigates competitive pressure and decline of
traditional book – rigorous cycle management
 … while majority of the business performs in line
with expectations or better
 Expansion of tailor-made solutions and
innovative concepts for new and emerging risks
 Confirmed technical result target of ~€400m p.a.
Actively shaping our business model – Seizing opportunities for profitable growth,
taking advantage of underinsured markets/risks and demographic challenges
1
Gross premiums written.
Munich Re – August 2015
11
Equity story
Traditional p-c reinsurance – Shift towards proportional
casualty increases resilience
Traditional p-c portfolio 2014
Aviation
1 (2)
Casualty motor
26 (24)
%
Proportional
70 (68)
Facultative
10 (10)
Agro
7 (8)
TOTAL1
TOTAL1
€13bn
€13bn
Marine
5 (5)
Credit
5 (5)
Casualty
non-motor 19 (16)
XL
20 (22)
Active portfolio shifts
Share increases
 Profitable casualty lines
(motor and non-motor)
 Less volatile proportional
book (with rates broadly
flat to slightly increasing)
Share reductions
 Deliberate cancellations
and reductions in property
 Property nat cat XL share
further reduced to 10%
Property, excl.
Property
nat cat XL 27 (28) nat cat XL 10 (12)
Traditional portfolio continues to be well diversified – Disciplined underwriting
and active portfolio management secure technical profitability
1
Traditional reinsurance incl. tailor-made solutions premium. Allocation based on management view,
not comparable with IFRS reporting. Gross premiums written 2014 (2013), FY view.
Munich Re – August 2015
12
Equity story
Risk Solutions – Sound results provide additional
stability to total p-c book
Gross earned premiums1
Share of Risk Solutions
in % of total p-c book
3.4
3.4
3.8
4.0
€bn
Combined ratio1
%
Share of Risk Solutions
42
in % of total p-c book
94.1
4.2
89.6
32
90.8
26
88.6
2.9
0.7
87.9
21
24
22
23
24
0.5
25
2009 2010 2011 2012 2013 2014
€bn
Underwriting result1
83.8
2009 2010 2011 2012 2013 2014
0.3
0.3
0.5
0.2
2009 2010 2011 2012 2013 2014
Drivers in 2014
 Successful expansion through acquisition of Australian MGA Calliden
 Strong bottom-line driven by low major losses and reserve releases –
highest result contribution from US Special entities
Continuous investments
to reap further organic
growth potential
Increasingly valuable business segment with strong premium growth
and bottom-line contribution
1
Management view, not comparable with IFRS reporting.
Munich Re – August 2015
13
Equity story
Reinsurance Life – Strategic focus and areas of attention
Higher
Risk-return profile of selected sub-portfolios
relative to core business
ILLUSTRATIVE
FinMoRe
Canada
mortality
GROW
Asset
protection
Return
REPAIR
Lower
Traditional
mortality
US new
business
Higher
Compared to competitors
Asset protection
Opportunities
Overweight
 Traditional mortality risk will remain our core business –
both in terms of new business value and bottom line
 FinMoRe and Asia: high strategic relevance and strong
contributions to bottom line …
 … complemented by asset protection and a prudent
expansion into longevity risk
Lower  Underperforming business approached with rigorous
portfolio management
Underweight
Neutral
Unique
Longevity
Australian
disability
US
LTC
FinMoRe
Asia
Business performing well – Pleasing contribution to VNB
strong demand prevails
underpins business potential
Longevity
Book developed carefully
in line with risk appetite
Asia
Traditional
morbidity
Initiatives
portfolio
US
back-book
Risk
High weight on core mortality business, complemented by initiatives portfolio
Munich Re – August 2015
14
Equity story
ERGO – Management measures bearing fruit
International – Combined ratio %
P-C Germany – Combined ratio %
Life Germany – New business %
Target portfolio (incl. new life product)
Traditional portfolio
107.8
104.5
98.0
99.8
95.5
98.7
96.7
95.3
30
41
54
84
97.3
89.8
70
59
46
16
2016e
2010 2011 2012 2013 2014
2010 2011 2012 2013 2014
 Back to normal –
Turnaround successfully
completed
 Sound profitability – Based on
favourable business mix
Continuously improving risk/
return profile
 Combined ratio target: ~93%
 Expansion of new life product
 Combined ratio better than
initial target of ~98%
2010
2012
2014
 Interest-rate hedging
 Duration management
 Restrictive bonus policy
Low interest rates reign – ERGO on the move, addressing the challenges
Munich Re – August 2015
15
Equity story
Munich Health – Focus on stabilising business
E
XCELLENCE
Strengthen core capabilities

 Continuously improve
processes in underwriting,
client management and
product development
 Set up expertise and best
practice
 Enhance new focus areas,
e.g. data analytics
Continuous approach
E
XECUTION
Improve effectiveness
 Stronger business-unit-level focus
E
XPANSION
Seize growth opportunities
 Expansion in Middle East
 Turnaround of underperforming
business
 Seize opportunities of digitalisation
 Further recalibrate local strategies
 Implement new ventures
to market conditions and client
 Tap emerging markets
needs
 Explore digitalisation developments and their application to health
Current focus
Stronger focus in future
Private health insurance growing worldwide above GDP – Munich Health
paving the way for sustainable growth
Munich Re – August 2015
16
Equity story
Looking ahead – World of opportunities
Short-term priorities
Managing downside
Preserving profitability
Business expansion
ERGO traditional
German Life
ERGO P-C Germany
ERGO International
ERGO Health Germany
Risk Solutions
Reinsurance Life
Mid-term outlook
Traditional P-C reinsurance
Munich Health
Remain disciplined
with strict bottomline focus
Maintain focus on
technical excellence
and underwriting rigour
Foster strong capital
base and financial
flexibility
Continue to increase
dividend with longterm earnings growth
Temporary earnings pressure outweighed by mid- and long-term growth
perspectives – Innovative power key to success
Munich Re – August 2015
17
Equity story
Delivering strong capital returns
Good 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
Munich Re – August 2015
18
Backup
Munich Re – August 2015
19
Backup: Group – Key financials
Key financials – Our aim is sustained profitable growth
Munich Re1,2
Gross written premiums
Operating result
Taxes on income
Consolidated result
Thereof attributable to minority interests
Investments
Return on equity
Equity
Off-balance-sheet reserves3
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 December4
No. of shares at year-end (ex own shares)
1
2
3
€bn
€m
€m
€m
€m
€bn
%
€bn
€bn
€bn
€
€
€m
€
€bn
m
2014
48.8
4,028
312
3,171
18
218.9
11.3
30.3
17.4
198.4
43,316
2013
51.1
4,398
–108
3,333
29
202.2
12.5
26.2
8.7
187.7
44,665
2012
52.0
5,349
–878
3,204
16
213.8
12.5
27.4
11.0
186.1
45,437
2011
49.5
1,180
552
712
10
201.7
3.3
23.3
5.7
181.2
47,206
2010
45.5
3,978
–692
2,430
8
193.1
10.4
23.0
3.6
171.1
46,915
2014
18.31
7.75
1,298
165.75
28.7
172.9
2013
18.45
7.25
1,254
160.15
28.7
179.3
2012
17.94
7.00
1,255
136.00
24.4
179.3
2011
3.94
6.25
1,110
94.78
17.0
177.6
2010
13.06
6.25
1,110
113.45
21.4
180.4
Previous years’ figures adjusted owing to IAS 8; see “Changes in accounting policies and other adjustments”.
In 2012, our segment reporting was modified and no longer has a consolidation column. The figures for the previous year have been
adjusted accordingly. Comparability with the years 2009 and 2010 is thus limited.
Including amounts attributable to minority interests and policyholders. 4 This includes own shares earmarked for retirement.
Munich Re – August 2015
20
Backup: Group – Key financials
IFRS capital position
€m
Equity
Equity 31.12.2014
Consolidated result
Changes
Dividend
Unrealised gains/losses
Exchange rates
Share buy-backs
Other
Equity 30.6.2015
30,289
1,866
Change Q2
–1,293
–1,201
1,359
–401
80
30,699
–1,293
–3,236
–498
–122
19
–4,054
1,076
UNREALISED GAINS/LOSSES
Fixed-interest securities
H1: –€1,247m
Q2: –€2,324m
Non-fixed-interest securities
H1: €39m
Q2: –€906m
EXCHANGE RATES
FX contribution mainly
driven by US$
€bn
Capitalisation
0.5
4.7
1
2
0.3
5.5
0.3
4.4
0.3
4.4
13.6%
0.4
4.5
0.4
4.5
13.6%
12.3%
18.3%
17.5%
15.3%
23.3
27.4
26.2
30.3
34.8
30.7
2011
2012
2013
2014
Q1 2015
Q2 2015
Senior and other debt1
Subordinated debt
Equity
Debt leverage2 (%)
Other debt includes bank borrowings of Munich Re and other strategic debt.
Strategic debt (senior, subordinated and other debt) divided by total capital (strategic debt + equity).
Munich Re – August 2015
21
Backup: Group – Key financials
Distributable earnings of parent company –
Safeguarding capital repatriation
HGB earnings financing capital repatriation
3.7
€bn
–1.3
2.0
–0.2
–1.4
2.9
€bn
Reconciliation IFRS to HGB result in 2014
3.2
–0.5
0.5
0.3
–1.4
3.0
2.0
Distributable
earnings
31.12.2013
Dividend
Share buyback
HGB result
2014
Average 2009–2014
–1.1
–0.6
Others 1
Distributable
earnings
31.12.2014
IFRS result Difference
Other
HGB result
31.12.2014 between
accounting
before
IFRS results differences equaliof subsidiaries
sation
and their
reserves
dividend
payments to
Munich Re AG
Tax
Change of HGB result
reducing equalisation
2014
effect2 of
reserves
equalisation
reserves
Average 2009–2014
1.8
2.6
–0.9
0.2
1.9
0.0
–0.1
1.8
Solid cash at Group level – HGB earnings financing capital repatriation
1
2
Changes in restrictions on distribution.
Assuming a tax rate of 33% for Munich Re AG.
Munich Re – August 2015
22
Backup: Group – Key financials
Distributable earnings of parent company –
Main drivers of HGB result
Dividends from
subsidiaries
€bn
Equalisation reserve
ILLUSTRATIVE
Max. requirement
9.1
Munich Re AG
HGB earnings
Majority of Group
earnings, including
 investment
disposal gains,
 reserve releases
(partly absorbed
by the equalisation
reserve)
6.6
HGB
result
before
equalisation
reserve
2012
7.7
2013
2014
Strengthening
2015e
2016e
Transition period
2017e
Relief
2012–2014
2014
2015–2016
2017
Strengthening of
equalisation reserve
adversely affects
HGB results
~75% of
maximum
requirement
achieved
Lower replenishments, hardly
impacting HGB
results anymore
Relief due
to drop-out
of extreme
outliers
HGB
result
Distributable earnings protected by strong reserves – Capital structure less
dependent on dividends
Munich Re – August 2015
23
Backup: Group – Rating
Insurance financial strength ratings1 providing for strong
competitive position
A.M. Best
A++
Berkshire2
Berkshire/Gen Re
Fitch
Moody's
Standard & Poor's
AAA
Aaa
AAA
AA+
A+
Allianz
Everest Re
Hannover Re
Partner Re neg
Renaissance Re
Swiss Re
Zurich
A
AIG
Generali
Lloyd‘s pos
SCOR
Transatlantic Re
XL Re neg
A–
AA
AA–
2
AA+
Berkshire/Gen Re
Aa2
Allianz Germany
Berkshire2
AA
Allianz
Berkshire2
A+
Aa3
Renaissance Re
XL Re
A1
Everest Re
Partner Re
Renaissance Re
SCOR
Transatlantic
A2
XL Re
AIG2 pos
Generali
BBB+
neg Outlook or watch negative
Berkshire/Gen Re
Allianz2
Axa
Berkshire2
Everest Re
Hannover Re3
Lloyd‘s
Partner Re neg
SCOR
Swiss Re3
A
B++
Aa1
Allianz
A–
1
Berkshire/Gen Re
AA–
Allianz SE
Axa
Swiss Re
Zurich
Axa pos
AIG
Everest Re
Lloyd‘s
Partner Re neg
SCOR pos
Transatlantic Re
XL Re
A+
A
A–
A3
Baa1
Hannover Re
Renaissance Re
Swiss Re
Zurich pos
Generali
AIG2
BBB+
pos Outlook or watch positive
As at 23 July 2015. Issuer rating of holding.3 Based on public information.
Munich Re – August 2015
24
Backup: Group – Outstanding bonds
Munich Re Group 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
Until 2022 6.625%, thereafter variable
2012
2042
26 May 2022
€1,000m
Until 2021 6.00%, thereafter variable
2011
2041
26 May 2021
€1,349m
Until 2017 5.767%, thereafter variable
2007
undated
12 June 2017
£300m
Until 2018 7.625%, thereafter variable
2003
2028
21 June 2018
Maturity pattern of Munich Re Group bonds
€m
Currency pattern of Munich Re Group bonds
USD
8
2,535
%
EUR
70
1,374
TOTAL
799
0-5
1
5-10 10-15 15-20 20-25 25-30 30-35undated
€4.7bn
GBP
22
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 June 2015.
Munich Re – August 2015
25
Backup: Group – Risk management
Munich Re’s enterprise risk management (ERM)
safeguards investors’ interests and clients’ protection
Clear limits defining framework for operational actions
Risk identification, early warning
Risk modelling
Risk steering
Comprehensive overview with
special focus on main issues
Right balance between flexibility
and stability
System of triggers, limits and
measures in conjunction with
responsible management actions
Objectives
Implementation
 Protect and generate
sustainable shareholder value
 Risk steering
 Ensure high degree of
confidence in meeting claims
 Liability-driven investment
strategy
 Protect Munich Re’s
reputation
 Performance measurement
and management
compensation
 Pricing/underwriting
Well-structured business and
investment portfolio meeting
all defined risk criteria
Risk management is a key part of our corporate management
Munich Re – August 2015
26
Backup: Group – Risk management
Group economic risk capital (ERC) –
Breakdown by risk category
Economic risk capital – Breakdown by risk category
Risk category
Prop.-casualty1
Life and health
Market
Credit2
Operational risk
Simple sum
Diversification
Total ERC
Group
2013 2014
9.0 10.0
5.8
9.0
11.6 12.5
6.3
6.7
1.4
1.7
34.1 39.9 29.6
–10.4 –13.0 –10.1
23.7
26.9
Methodology
Probability
RI ERGO
2014 2014
9.8
0.6
6.2
4.8
7.5
6.7
4.8
2.0
1.3
0.6
19.5
MH
2014
0.0
0.5
0.0
0.0
0.1
Div.
2014
–0.4
–2.5
–1.7
–0.1
–0.3
14.7
–4.0
0.6
–0.0
–5.0
–
10.7
0.6
–3.9
ERC = 175% • VaR 99.5%
(re)insurance included . 2 Default and migration risk.
€bn
Development of Group ERC
ERC
31.12.2013
Propertycasualty risk
Life and
health risk
Market
Risk
Credit
Risk
Operational
risk
Diversification
ERC
31.12.2014
Diversification benefits
VaR 99.5%
Loss
1 Credit
€bn
Between different risk
categories
Between business segments,
esp. ERGO and reinsurance
23.7
+1.0
+3.2
+0.9
+0.4
+0.3
–2.6
26.9
Risk management
Limiting losses from individual
risks or accumulation exposure
and liquidity risk that could
endanger survival capability
Munich Re – August 2015
27
Backup: Group – Risk management
Summary of economic capital disclosure
€bn
Position as at 31 December 2014
Capital with Solvency II
calibration
Additional
75% buffer
Available financial
resources (AFR)
Economic risk capital1
15.4
11.5
Economic capital buffer
Capital buffer
under Solvency II calibration
Economic capital buffer
after share buy-back and dividends2
Capital buffer after share buy-back and
dividends2 under Solvency II calibration
1
Solvency II capital based on VaR 99.5%, Munich Re internal risk model based on 175% of Solvency II capital. 2 After announced
dividend payout of ~€1.3bn for 2014 to be paid in April 2015 and outstanding share buy-backs of ~€0.3bn.
31.12.
2014
31.12.
2013
38.8
38.2
26.9
23.7
11.9
14.5
23.4
24.7
10.3
12.5
21.8
22.7
Munich Re – August 2015
28
Backup: Group – Risk management
Property-casualty risks: Natural catastrophe exposure
Munich Re (Group) – Nat cat exposure (net of retrocession)1
€bn
€bn
ERC property-casualty
AggVaR (return period 200 years)
10.0
(pre-tax)
9.0
4
Atlantic Hurricane
Storm Europe
3
2013
2014
Earthquake Los Angeles
Basic losses
2
Major losses2
9.0
Diversification
–4.6
Total
1
5.6
10.0
Main drivers for ERC increase
0
2014 2015 2014 2015 2014 2015
Atlantic
Storm
Earthquake
Hurricane
Europe
Los Angeles
Top nat cat exposures
 Weaker euro
 Premium reduction spent for
retrocession
Munich Re benefits from strong diversification between natural catastrophe risks
1
2
Exposures relate to the full year, e.g. 2015 relates to the period from 1.1.2015 to 31.12.2015.
Natural catastrophes, man made (including terror and casualty accumulation) and major single losses.
Munich Re – August 2015
29
Backup: Group – Risk management
Composition of available financial resources (AFR)
and economic earnings
€bn
AFR development in 2014
AFR
31.12.2013
Capital
management
and other
Economic
earnings
AFR
31.12.2014
38.2
–2.6
3.2
–1.3
–1.4
+0.1
Dividend
Share buy-back
Other1
Economic effects
Equity
1.4
Credit
0.2
Currency
1.4
Interest rate
Technical result
and new business2
Positive FX effects
and gains in equities
partly compensated
for by decreased
interest rates
0.8
–1.0
1.8 P-C
Other3
~0
Economic earnings
3.2
38.8
Good technical result
Life reinsurance
Pleasing VNB: €0.5bn
Tax relief from prior
years largely offset by
model enhancements
Sound economic earnings supported by good technical result
1
Hybrid capital replacement and other.
Includes unwinding of market value margin, p-c result, life VNB, experience variances, assumption changes.
3 Investment return on AFR, MCEV model changes and tax effects.
2
Munich Re – August 2015
30
Backup: Group – Risk management
Strong increase in AFR in recent years
despite capital repatriation
AFR development 2007–2014
30.9
+4.2
–17.1
+20.8
€bn
38.8
€bn
Economic earnings
Confidence2
4.2
~30
–6.3
~99
6.0
~10
3.6
~50
–1.2
~90
7.1
~10
4.2
~40
3.2
~50
2007
2008
2009
2010
2011
2012
2013
2014
€bn
Munich Re market capitalisation
AFR
31.12.
2006
AFR
Capital Economic
restate- mgmt. and earnings
ments
other1
AFR
31.12.
2014
29.9
–16.4
+15.2
28.7
Market cap.
31.12.2006
Capital
management3
Share price
variation
Market cap.
31.12.2014
Strong economic performance in difficult environment – Economic earnings
not matched by share-price performance
1
2
Dividends, share buy-back, hybrid capital replacement and other.
Probability of achieving at least corresponding economic earnings.
3
Dividends, share buy-back.
Munich Re – August 2015
31
Backup: Group – Risk management
Strong capitalisation allowing for attractive capital
repatriation
Munich Re actions1
ESR1 – Sensitivity
Munich Re solvency ratio (ESR)
%
%
>120%
Excellent capitalisation
MRCM
Solvency II
Solvency I ratio
 Capital repatriation
 Increased risk-taking
 Holding excess capital to
meet external constraints
80%–100%
Adequate capitalisation
Actual
solvency ratio
120%
210%
100%
175%
80%
140%
<80%
Below target capitalisation
 Risk transfer
 Scaling down of activities
 Raising of (hybrid) capital
1
2
3
138
Interest rate
+100bps
100%–120%
Comfortable capitalisation
 Tolerate and monitor
 (Partial) suspension of
capital repatriation
Ratio as at
31.12.14
Interest rate
–100bps
117
Spread
+100bps
119
Equity
markets +30%
Equity
markets –30%
100%
MCR3
2008 2009 2010 2011 2012 2013 2014
Based on Munich Re capital model (MRCM): 175% of VaR 99.5%.
Based on 200-year event.
MCR = minimum capital requirement, typically between 25% and 45%; for groups, called "Group SCR floor".
155
FX –10%
Atlantic
Hurricane2
145
131
138
130
Munich Re – August 2015
32
Backup: Group – Solvency II
Munich Re well positioned
for the introduction of Solvency II
Impact on insurance industry
New
standards in
risk-based
supervision
Uniform regulatory framework
enhances comparability
Risk management already effective
and integrated in decision-making
process

Changing
capital
requirements
Depending on company size,
level of diversification and
product specifics
Capitalisation remains very strong –
No major changes expected in capital
allocation and distribution

Market
dynamics
Driver for consolidation,
increasing reinsurance demand
and product innovation
Market-leader position in structuring
complex tailor-made solutions –
launch of new life products in 2013

Ready for regulatory requirements while providing clients with capital
management solutions
Munich Re – August 2015
33
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
By exposure year
By line of business
10,000
10,000
Actual reported
loss
€m
Actual reported
loss
2013
2012
1,000
Motor
1,000
2011
2008
2009
100
2004 & prior
2010
Fire
Risks other property
2007
General liability
Marine
Engineering
Credit
2006
10
10
Legend:
100
Expected reported
loss
1,000
Green Actuals below expectation
Red
Actuals above expectation
10,000
Personal accident
Aviation
100
100
1,000
Expected reported
loss
10,000
Solid line Actuals equal expectation
Dotted line Actuals are 50% above/below expectations
Actual losses consistently below actuarial expectations –
Very strong reserve position
1
Reinsurance group losses as at Q4 2014, 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).
Munich Re – August 2015
34
Backup: Group – Reserves
Positive run-off result without weakening resilience
against future volatility
€m
Ultimate losses1 (adjusted to exchange rates as at 31.12.2014)
Accident year (AY)
1
Date
≤2004
31.12.2004
47,574
31.12.2005
45,334 12,845
31.12.2006
45,505 13,085 11,034
31.12.2007
45,696 13,074 10,975 12,191
31.12.2008
45,649 12,648 10,855 12,386 13,394
31.12.2009
45,255 12,607 10,652 12,296 13,639 13,192
31.12.2010
45,416 12,172 10,379 12,221 13,610 13,184 13,638
31.12.2011
45,394 11,991 10,285 12,175 13,328 12,736 13,873 17,631
31.12.2012
45,291 11,786 10,119 11,816 13,204 12,634 13,754 17,718 14,496
31.12.2013
45,246 11,710 10,156 11,599 13,024 12,637 13,845 17,400 14,348 14,479
31.12.2014
45,188 11,644 10,039 11,524 12,769 12,332 13,856 17,067 14,142 14,670 14,391
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Total
Ultimate reduction
Prior-year releases of €1.2bn
driven by reinsurance portfolio
 Favourable actual vs.
expected comparison
facilitates ultimate
reductions for prior years
 Reserve position remains
strong
 AY 2014: Prudent initial
assessment
 AY 2013: Increase as
immediate reaction to
a few signs of adverse
development (agriculture,
some motor segments) to
maintain level of prudency
CY 2014 runoff change
58
66
117
75
255
305
–11
333
206
–191
–
1,213
CY 2014 runoff change (%)
0.1
0.6
1.2
0.7
2.0
2.5
–0.1
2.0
1.5
–1.3
–
0.7
Basic and major losses. 2 Thereof €1,144m basic losses (including planned unwinding of discount in workers'
compensation of –€48m) and €34m major losses.
Ultimate reduction
Reinsurance2
€1,178m
ERGO
€35m
Munich Re – August 2015
35
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)
 Management of P&L-volatility
through cat bonds (cycle
management)
 Diversification of capacity
 Complement to traditional
reinsurance
 ILS consulting and project
management
 Growing investor in the ILS
primary and secondary market
 "Buy and hold"-strategy
 Opportunistic allocation of
reinsurance capacity to profitable
ILS investment opportunities
 Structuring and placement
support
 Risk fronting and transformation
Munich Re – August 2015
36
Backup: Group – Risk trading
Outstanding cat bonds
For
clients
For
Munich
Re’s
book
Transaction
Closing Maturity Volume
Lion I Re
04/2014
04/2017
€190m
VenTerra Re Ltd.
01/2014
01/2017
US$ 250m Tropical Cyclones Australia & Earthquake USA
Bosphorus 1 Re Ltd.
04/2013
05/2016
US$ 400m Earthquake Turkey
Tar Heel Re Ltd.
04/2013
05/2016
US$ 500m Named storms (Tropical Cyclones)
Lakeside Re III Ltd.
12/2012
01/2016
US$ 270m Earthquake North America
Queen Street X Re Ltd.
03/2015
06/2018
US$ 100m Hurricane US & Cyclone Australia
Queen Street IX Re Ltd.
02/2014
06/2017
US$ 100m Hurricane US & Cyclone Australia
Queen City Re Ltd.
12/2013
12/2016
US$ 75m
US named storms
Queen Street VIII Re Ltd. 06/2013
06/2016
US$ 75m
Hurricane US & Cyclone Australia
Queen Street VII Re Ltd.
03/2016
US$ 75m
Hurricane US & Windstorm Europe
10/2012
Perils covered
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
Munich Re's Risk Trading Unit is a recognised player in the ILS market
Munich Re – August 2015
37
Backup: Group – Risk trading
Munich Re's maximum in-force nat cat protection
€m
Munich Re's maximum in-force nat cat protection
1,200
Cat bonds
Risk swaps
Sidecars
Indemnity retro
2015 protection (total)
1,000
800
600
400
200
0
US windstorm
northeast
US windstorm
southeast
Slight reduction of retro limit
reflecting increased AFR
US earthquake
EU windstorm
Broadening of territorial
scope for indemnity retro
protection to worldwide
EU other perils1
Japan
earthquake
Australia
cyclone
Establishment of strategic
partnership with investors via
sidecars Eden Re I + II
Reduced spending for retro due to strong Munich Re capital base
As at July 2015. Protection before reinstatement premiums.
1 Earthquake Europe, including Turkey.
Munich Re – August 2015
38
Backup: Group – Corporate responsibility
Five action fields in one group-wide corporate
responsibility programme
Core activities
Enabling framework
1
Strategy and
governance
 Corporate
responsibility
objectives and
fields of action
 Compliance with
UN Global
Compact1
Principles
1
2
3
2
Corporate
responsibility in
business
 Integration of
corporate
responsibility
issues into
 (re-)insurance
business
(PSI2)
3
Enabling framework
4
5
Environmental
management
system (EMS)
Corporate
citizenship (CC)
Reporting and
communication
 Group-wide
CO2 neutrality
 Active
governance of
social
responsibility
and community
involvement
 Group-wide
corporate
responsibility
portal
 Global
Environmental
Management
Strategy
 asset
management
(PRI3)
UNGC = United Nations Global Compact (adopted by Munich Re in 2007).
PSI = UN Principles for Sustainable Insurance (signed by Munich Re in 2012).
PRI = UN Principles for Responsible Investment (signed by Munich Re in 2006).
 Group-wide
corporate
responsibility
reporting
 Position in major
SRI ratings
Munich Re – August 2015
39
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 2015 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 1st place in insurance,
industry leader (as of January 2015)
Rated "Prime" in Corporate
Responsibility Rating 2014;
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 (Euronext Vigeo World 120,
Euronext Vigeo Europe 120, and
Euronext Vigeo Eurozone 120)
Munich Re – August 2015
40
Backup: Group – Corporate responsibility
Munich Re’s international cooperation –
A strong commitment towards corporate responsibility
Examples
UNEP FI
Principles for Responsible Investment (PRI)
(since 1999)
(since 2006)
Munich Re has signed the climate declaration of
the UNEP FI and is active member of the UNEP FI
Climate Change Working Group.
Munich Re has actively developed and signed the
UN Principles for Responsible Investment (PRI) as
first German company in April 2006.
UN Global Compact
Principles for Sustainable Insurance (PSI)
(since 2007)
(since 2012)
Munich Re is member of the UN Global Compact
since August 2007. The ten principles of Global
Compact are a guidance for action in our business
and set the basis for our Corporate Responsibility
activities.
Involvement since 2007, first holding the chair in
the UNEP FI – PSI Team, now active as member
of the PSI Board, as well as founding signatory
since June 2012. Aim: to anchor ESG criteria into
core business along the value chain.
Munich Re – August 2015
41
Backup: Group – Financial highlights Q2 2015
Annual net result guidance increased to at least €3bn
Munich Re (Group) – Q2 2015 (H1 2015)
NET RESULT
SHAREHOLDERS' EQUITY
INVESTMENT RESULT
€1,076m (€1,866m)
€30.7bn (–11.7% vs. 31.3.)
RoI of 4.1% (3.6%)
Strong Q2 supported by benign
major losses and investments –
sound operating performance
given industry headwinds
Sound capitalisation according
to all metrics, facilitating high
flexibility – Fitch upgrade to “AA”,
€1.4bn capital repatriation in Q2
Pleasing return given low interest
rates – resilient regular income
while usual portfolio turnover
leading to disposal gains
Reinsurance
ERGO
Munich Health
NET RESULT
NET RESULT
NET RESULT
€842m (€1,510m)
790
€219m (€318m)
150
€15m (€38m)
52
54
15
15
P-C
LIFE
P-C GERMANY
REINSURANCE
Combined ratio
93.3%
Technical result
of €30m in Q2
due to nonrecurring effects
Combined ratio 93.4% –
higher investment result
Combined ratio 100.4%
L/H GERMANY
INTERNATIONAL
PRIMARY INSURANCE
Pleasing result
Combined ratio
100.4%
Combined ratio 96.3%
Major-loss ratio
4.8%
Munich Re – August 2015
42
Backup: Group – Financial highlights Q2 2015
Net result
€m
Net result
1,194
941
630
1,076
762
736
731
790
Total
Reinsurance
ERGO
Q3
Q4
2013
Q1
Q2
Q3
2014
€m
Technical result
1,673
1,780
Q4
Q1
Q2
2015
Munich Health
€m
Investment result
4,360
H1
2015
H1
2014
1,866
1,703
1,510
1,397
318
264
38
42
€m
Other1
4,341
–205
912
H1 2014 H1 2015
868
Q1 2015 Q2 2015
Benign major losses in
property-casualty reinsurance
1
1,820
H1 2014 H1 2015
2,521
Q1 2015 Q2 2015
Q2: Higher dividend income and
gains from equity derivatives
Other non-operating result, goodwill impairments, net finance costs, taxes.
–761
–742
–947
H1 2014 H1 2015
Q1 2015 Q2 2015
Q2: Negative FX result of €362m
Munich Re – August 2015
43
Backup: Group – Financial highlights Q2 2015
Reconciliation of operating to net result
Reconciliation of operating to net result
€m
H1
Q2
2,813
1,818
–426
–432
–
–
Net finance costs
–120
–60
Taxes
–401
–250
Net result
1,866
1,076
Operating result
Other non-operating result
Goodwill impairments
€m
Other non-operating result
Foreign exchange
Restructuring charges
Other
H1
Q2
–296
–362
–12
–6
–118
–64
Tax rates
%
H1
Q2
17.7
18.9
Reinsurance
17.0
18.1
Primary insurance
21.5
21.5
Munich Health
11.6
21.1
Group
Munich Re – August 2015
44
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
Munich Re
Swiss Re
Hannover Re
Berkshire Hathaway Re
SCOR SE
Lloyd’s
Reinsurance Group of America
China Re
Partner Re
Everest Re
MS&AD Holdings
Korean Re
Transatlantic Holdings Inc.
NKSJ Holdings
Mapfre Re
Tokio Marine
General Ins. Corp. of India
Allied World
Axis
Maiden Re
Germany
Switzerland
Germany
USA
France
UK
USA
China
Bermuda
Bermuda
Japan
Korea
USA
Japan
Spain
Japan
India
Bermuda
Bermuda
Bermuda
Total top 40
Source: Standard & Poor's Global Reinsurance Highlights, 2014 Edition, page 76.
Net reinsurance premiums written 2013 (US$ m)
36,758
30,478
17,101
14,368
12,571
11,329
8,254
7,196
5,397
5,005
3,656
3,575
3,248
3,037
2,958
2,758
2,211
2,121
2,115
2,096
201,874
Munich Re – August 2015
45
Backup: Reinsurance
Overview
Reinsurance1
2014
2013
2012
2011
2010
Gross written premiums
€bn
26.8
27.8
28.2
26.0
23.6
Investments
€bn
88.0
79.2
83.8
79.5
83.7
Net technical provisions
€bn
63.5
60.5
61.1
62.7
56.6
Major losses (net)
€m
1,162
1,689
1,799
5,048
2,228
€m
538
764
1,284
4,538
1,564
Thereof natural catastrophes
%
Combined ratio
Combined ratio
Basic losses
113.8
100.5
91.0
92.1
92.7
Africa,
Middle East
3
Latin America
5
53.6
2010
1
50.7
50.2
51.3
53.0
2011
2012
2013
2014
%
Premium split by region
Asia and
Australasia
17
Previous years’ figures adjusted owing to IAS 8; see “Changes in accounting policies and other adjustments”. In 2012, our
segment reporting was modified and no longer has a consolidation column. The figures for the previous year have been
adjusted accordingly. Comparability with the years 2009 and 2010 is thus limited.
North
America
45
TOTAL
€26.8bn
Europe
30
Munich Re – August 2015
46
Backup: Reinsurance Property-casualty
Reinsurance Property-casualty – Key figures
€m
Net result
1,387
1,151
895
835
646
524
Q3
Q4
Q1
505
497
Q2
Q3
2013
597
Q4
2014
€m
Technical result
Q2
H1
2014
€m
Investment result
H1
2015
€m
Other1
1,330
1,121
1,060
1
Q1
2015
1,297
H1 2014
790
–377
H1 2015
H1 2014
Other non-operating result, goodwill impairments, net finance costs, taxes.
H1 2015
H1 2014
–534
H1 2015
Munich Re – August 2015
47
Backup: Reinsurance Property-casualty
Reinsurance Property-casualty – Combined ratio
Combined ratio
%
Basic losses
Major losses
Expense ratio
2013
92.1
51.3
10.4
30.4
2014
92.7
53.0
7.2
32.5
H1 2015
92.8
56.3
Q2 2015
93.3
57.6
5.4
4.8
%
Combined ratio
92.3
91.3
93.3
30.9
~99.9
%
H1 2015
5.4
1.0
4.4
Q2 2015
4.8
0.5
4.3
Ø-Annual expectation ~12.0
~8.5
~3.5
91.2
89.3
Reserve releases1
86.9
1
~99.1
Total Nat cat Man-made
94.3
Q1
31.1
Major losses
101.4
Q3
Q4
2013
Normalised
Q2
Q3
2014
Q4
Q1
Q2
2015
Basic losses: Mainly fire, marine and motor; no corresponding sliding-scale effects.
€m %-points
H1 2015
~300
~3.6
Q2 2015
~135
~3.1
Munich Re – August 2015
48
Backup: Reinsurance Property-casualty
Reinsurance Property-casualty – Competitive landscape
Cyclical challenges
Availability of alternative capital1
US$ bn
Low
interest rates
+
50
22
Low inflation
+
2009
2010
2011
2012
2013
Largely driven
by scarcity of
investment
opportunities in
the low-interestrate environment
Benign claims
experience
Direct impact
Indirect impact
Abundant excess capital
in primary and reinsurance
for quite some years now
Most notable in US nat cat
XL business
Higher retentions, also driven
by global players centralising
their buying programmes
 External models are
available – know-how
without infrastructure
Accelerator for price competition
among some traditional reinsurers
 Fight for market share
 Softening terms and conditions
 Spill-over effects as less diversified
players expand business to other
areas and perils
 Short tail – predictable
capital deployment
Renewals revealed continuing margin compressions due to abundant supply,
especially in the nat cat area
1 Source:
AonBenfield.
Munich Re – August 2015
49
Backup: Reinsurance Property-casualty – July renewals 2015
July renewals – Regional focus on USA, Australia
and Latin America
Total property-casualty book1
Remaining
business
23
%
Business up for
January renewal
57
Regional allocation of July renewals
%
Rest2
6
North
America
36
Europe
6
Worldwide
26
TOTAL
€2.3bn
Latin America
11
Australia
15
TOTAL
€17bn
Nat cat shares of renewable portfolio
Nat cat
Other perils
January
11
April
Business up for
July renewal
14
1
2
Business up for
April renewal
6
Gross premiums written. Economic view – not fully comparable with IFRS figures.
Asia, Pacific and Africa.
July
Total
89
35
21
14
%
65
79
86
Munich Re – August 2015
50
Backup: Reinsurance Property-casualty – July renewals 2015
Price decreases slowing down
July renewals 2015
%
100
–14.3
85.7
0.8
12.3
98.8
Top line
€m
2,344
–336
2,008
20
289
2,317
 Slightly down, due to lower
nat cat premiums
Change in premium
Thereof price movement1
Thereof change in exposure for our share
–1.2%
~ –2.1%
+0.9%
 Business opportunities
compensating for cyclemanagement measures
Price change
 Decrease mainly driven by
nat cat XL, while proportional
business remains stable
Total
Cancelled Renewed Increase on
New
renewable
renewable business
from 1 July
Estimated
outcome
 First signs of some
stabilisation – lower price
decline vs. July 2014
renewals (–3.6%)
Portfolio profitability continues to comfortably meet 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).
Munich Re – August 2015
51
Backup: Reinsurance Property-casualty
Renewal results
Year-to-date price change 2010–2015
Nominal
%
Adjusted for interest-rate changes
2.4
1.4
1.0
0.3
0.5
0.2
0.0
–0.1
–1.7
–1.6
–1.9
–2.4
2010
2011
2012
2013
2014
2015
Munich Re – August 2015
52
Backup: Reinsurance Life
Reinsurance Life – Well-diversified global portfolio
Continental Europe
Canada
15%
45%
40%
60%
ILLUSTRATIVE
5%
United Kingdom
40%
50%
Asia
50%
40%
10%
60%
USA
85%
Australia
20%
Latin America
Mortality
Morbidity
South Africa
10%
10%
90%
80%
90%
Longevity
Geographical weight on North America – High concentration on mortality risk
Size of bubbles indicative of present value of future claims.
Munich Re – August 2015
53
Backup: Reinsurance Life
Reinsurance Life – Key figures
€m
Net result
246
189
122
129
124
34
–14
Q3
Q4
2013
Q1
Q2
Q3
Q4
2014
€m
Technical result
123
71
52
Q1
Q2
H1
2014
2015
€m
Investment result
H1
2015
€m
Other1
524
442
–87
219
–149
133
H1 2014
1
H1 2015
H1 2014
Other non-operating result, goodwill impairments, net finance costs, taxes.
H1 2015
H1 2014
H1 2015
Munich Re – August 2015
54
Reinsurance Life – Strategic pillars
1
Financially Motivated Reinsurance remains a key
strategic pillar
€m
Financially Motivated Reinsurance
Gross premiums written
% of total
Technical result and fee income
Fee income
Technical result
% of total
4,536
4,109
3,638
92
3,356
75
1,998
25
38
41
25
38
35
33
2010 2011 2012 2013 2014
7
50
38
119
127
% of total
185
49
62
129
49
70
82
65
45
43
37
28
19
20
2010 2011 2012 2013 2014
28
VNB
73
29
22
16
14
9
2010 2011 2012 2013 2014
Portfolio development
Expectations going forward
 Development of result contribution is a clear indicator
of the overall success
 Premium development and VNB display that number
and size of transactions vary
 Geographically well-diversified portfolio
 Largest contribution to 2014 VNB from North America
 Demand for solutions will remain high
 Solvency II will impact the product design
 Number, size and type of transactions are difficult to
predict and will vary on an annual basis
Munich Re – August 2015
55
Reinsurance Life – Strategic pillars
2
Asia – Sustained growth across all major markets
€m
Reinsurance Life Asia
Gross premiums written
Technical result and fee income
Fee income
Technical result
% of total
% of total
1,178
957
959
872
871
55
1
12
29
10
VNB
11
8
9
2010 2011 2012 2013 2014
% of total
97
93
81
62
4
59
5
59
56
35
32
19
15
9
12
2010 2011 2012 2013 2014
17
21
14
9
2010 2011 2012 2013 2014
13
Portfolio development
Expectations going forward
 Sustained growth path
 Premium reduction from planned termination of
solvency relief deals
 Customised market and client strategies
 Growth supported by our state-of-the-art automated
underwriting solution (MRAS1)
 Traditional reinsurance mainly driven by CI2 products
 Demand for solvency relief and financing solutions
remains high
 Increase in competition and pressure on prices
 Overall growth path is expected to flatten
 Underwriting discipline remains high
1
Munich Re Automation Solutions Ltd. 2 Critical illness.
Munich Re – August 2015
56
Reinsurance Life – Strategic pillars
3
Longevity – Prudent development of portfolio
€m
Longevity
Gross premiums written
% of total
Liabilities by deals
2,788
312
1,040
120
53
0
Portfolio composition
21
1
887
982
3
2010 2011 2012 2013 2014
 Portfolio comprises longevity swaps
in the UK market
 1–2 transactions concluded per
annum
 No significant VNB expectation
 Steep increase in 2014 reflects
participation in the large AVIVA
scheme
0
2010 2011 2012 2013 2014
Strategic proposition
Expectations going forward
 Uncertainty around future mortality trend requires
prudent approach in pricing and valuation
 Evolutionary development of portfolio within clearly
defined risk tolerance
 Longevity considered to be primarily a risk
management tool to balance mortality portfolio
and to stabilise earnings
 Carefully investigate expansion into other markets
 High market potential but also significant pressure
on prices
Munich Re – August 2015
57
Reinsurance Life – Strategic pillars
4
Financial Solutions / asset protection –
Efficient solutions in changing market environments
Financial Solutions / asset protection
€m
IFRS contribution margin1
37
30
30
2012
2013
Strategic proposition
 Legal, regulatory and structuring expertise
combined with fully functional hedging platform
 Increasing contribution to Reinsurance Life value
creation
7
–3
2010
2011
2014
Product portfolio
Regional focus





 In-force: So far dominated by Asia/Japan
 Current opportunities: mainly in Europe
 Exploration of opportunities in North America
1
Solutions to Basel III needs
Solutions to Solvency II needs
Resolve accounting asymmetry
ALM solutions for smaller players
Develop modern savings products
Part of non-technical-result, before platform investment expenses of ~€50m.
Munich Re – August 2015
58
Backup: Reinsurance Life
New business profitability
on a pure economic and regulatory basis
RoRaC spread1
%
IRR spread1
%
Payback period2
20%
20%
20
15%
15%
15
10%
10%
10
5%
5%
5
0%
0%
2010 2011 2012 2013 2014
 Satisfactory new business
profitability relative to economic
risk capital (RoRaC spread)
 Low interest rates cause
disproportionate increase in
economic risk capital
1
years
0
2010 2011 2012 2013 2014
 Equally good new business
profitability relative to total
investment in new business
(IRR spread)
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) shareholder cash flows.
2010 2011 2012 2013 2014
 Reduced share of FinMoRe
business (usually of shorter
duration) increases payback
period of 2014 new business
Munich Re – August 2015
59
Backup: Reinsurance Life
Reinsurance Life – MCEV 2014
€m
MCEV – Reinsurance Life
MCEV 31.12.2013
Opening adjustments
Adjusted MCEV 31.12.2013
Operating MCEV earnings
Economic variances
Other non-operating variance
Total MCEV earnings
MCEV before closing adjustments
Closing adjustments
MCEV 31.12.2014
9,382
Value of
new business
453
Expected
return
297
2
9,384
322
121
–205
Experience
variances
63
Assumption
changes
–131
Other operating
variance
–361
Operating
MCEV earnings
322
237
9,621
847
10,469
Munich Re – August 2015
60
Backup: MCEV 2014
IFRS uplift
€m
Reinsurance Life
31.12.2013
31.12.2013
Value not recognised in IFRS equity (IFRS uplift)
IFRS
equity
€m
ERGO
Value not recognised in IFRS equity (IFRS uplift)
IFRS
equity
5,527
3,947
3,855
9,382
MCEV
MCEV
31.12.2014
IFRS
equity
2,002
5,949
31.12.2014
IFRS
equity
7,066
5,101
– 935
3,403
MCEV
10,469
MCEV
4,166
Munich Re – August 2015
61
Backup: ERGO
ERGO – Overview
ERGO1, 2
2014
2013
2012
2011
2010
Gross written premiums
€bn
16.7
16.7
17.1
17.4
17.5
Investments
€bn
135.5
126.7
124.9
117.0
121.8
Net technical provisions
€bn
132.4
125.1
122.8
116.1
111.2
Combined ratio p-c Germany
%
95.3
96.7
98.0
95.5
89.8
Combined ratio p-c International
%
97.3
98.7
99.8
104.5
107.8
Premium split by region – 2014
%
Rest of World
7
Turkey
2
Italy
2
Belgium
3
1
2
Germany
77
TOTAL
€16.7bn
Distribution channels – New business 2013
Banks/other
7
Poland
6
Direct
15
Austria
3
Broker
20
Previous years’ figures adjusted owing to IAS 8; see “Changes in accounting policies and other adjustments”.
In 2012, our segment reporting was modified and no longer has a consolidation column. The figures for the previous year
have been adjusted accordingly. Comparability with the years 2009 and 2010 is thus limited.
%
Tied agents
58
Munich Re – August 2015
62
Backup: ERGO Life/Health Germany– Key figures
ERGO Life/Health Germany – Key figures
€m
Net result
130
73
68
Q3
31
27
39
Q4
Q1
Q2
2013
Q3
Q4
2014
€m
Technical result
211
1
51
54
66
Q1
Q2
H1
2014
2015
€m
Investment result
H1
2015
€m
Other1
2,281
1,979
173
H1 2014
105
H1 2015
H1 2014
Other non-operating result, goodwill impairments, net finance costs, taxes.
H1 2015
–139
–126
H1 2014
H1 2015
Munich Re – August 2015
63
Backup: ERGO Life Germany
New business: Shift to less interest-rate sensitive
products
Target portfolio – New business APE – Plan 2016+
%
Target portfolio (incl. new life product)
Thereof new life product
Traditional portfolio
Shift new business to target portfolio
Target portfolio
 Unit-linked insurance (with/without guarantee),
term insurance, occupational disability
insurance, death benefit, immediate annuities
 To represent >80% of new business from 2016
30
41
New life products
 Share in non-subsidised private pensions1:
67% in 2014
 Extension to corporate pensions since
January 2015
54
84
70
59
46
16
2010
1
2012
2014
Traditional portfolio
 Guarantee in new business down to 1.25%
since January 2015
 Demand expected to decline in low-interestrate environment
2016e
3rd layer in German pension system: non-subsidised private pensions
Munich Re – August 2015
64
Backup: ERGO Life – New business
ERGO Life –
New business (statutory premiums)
Life total
H1
2015
H1
2014
Δ abs.
Δ%
1,009
1,125
–116
–10.3
Regular premiums
174
212
–38
–17.9
Single premiums
835
913
–78
–8.5
APE1
258
303
–45
–14.9
New business
515
627
–112
–17.9
Regular premiums
108
113
–5
–4.4
Single premiums
407
514
–107
–20.8
APE1
149
164
–15
–9.1
494
498
–4
–0.8
66
99
–33
–33.3
Single premiums
428
399
29
+7.3
APE1
109
139
–30
–21.6
New business
Germany (including direct business)
International
New business
Regular premiums
1
Annual premium equivalent (APE = regular premiums +10% single premiums).
Munich Re – August 2015
65
Backup: ERGO Life Germany
Declined reinvestment yield still with low impact on
average yield …
Key figures1 (German business)
Average yield above average guarantee
 Long duration of fixed-income portfolio keeps
average yield at relatively high level
Reinvestment
yield
Average
yield
Average
guarantee
2014
~2.6%
~3.6%
~3.0%
 Duration gap below one year
2013
~2.7%
~3.6%
~3.2%
2012
~3.1%
~3.8%
~3.2%
 Non-interest-bearing additional interest reserve
(ZZR) reduces average guarantee
 Life reform in Germany as a net positive –
limitation of unjustified policyholder participation
in unrealised gains
 Disciplined lowering of bonus rates:
2.7% vs. market average 3.2%
Average yield vs. average guarantee
4%
ILLUSTRATIVE
3%
2%
1%
1
avg. yield
avg. guarantee
2013
2018
German GAAP figures for ERGO Leben, Victoria Leben and ERGO Direkt Leben.
Munich Re – August 2015
66
Backup: ERGO Life Germany
… while measures to support guarantees have
financial impact in 2014
ZZR reference rate – Projection1
Guarantee level
4.25
4.00
4.00
ZZR – Low interest rate reserve
ILLUSTRATIVE
4.10
%
Reference rate
Increase
Stable
Decrease
3.75
3.50
3.25
3.25
3.15
3.00
Interest-rate hedging programme
2.75
2.75
2.50
2.25
2.25
2.00
1.75
1.75
1.50
1.25
1.25
1.00
2010
2012
Key financials2
2014
 Local GAAP reserve against low interest rates
 Expected accumulated ZZR in 2015: ~€2.4bn
 Partly financed from unrealised gains –
positive impact on IFRS earnings when realised
 Effect on IFRS net income in 2014: €36m
2016
2018
 Started in 2005 – Protection against
reinvestment risk via receiver swaptions
 Continuous buying of additional slices depends
on capital market and portfolio development
 Annual performance costs: ~10bps
 Current annual additional yield: ~22bps
 Effect on IFRS net income in 2014: €88m
Free RfB Terminal bonus fund
Unrealised gains
Accumulated ZZR
2014
€0.9bn
€1.6bn
€13.9bn
€1,541m
2013
€0.8bn
€1.9bn
€5.6bn
€816m
2012
€0.9bn
€2.0bn
€8.1bn
€415m
1
2
Based on interest-rate scenarios.
German GAAP figures for ERGO Leben, Victoria Leben and ERGO Direkt Leben.
Munich Re – August 2015
67
Backup: ERGO – Market Consistent Embedded Value 2014
ERGO – MCEV 2014
€m
MCEV – ERGO
MCEV 31.12.2013
Opening adjustments
Adjusted MCEV 31.12.2013
Operating MCEV earnings
Economic variances
Other non-operating variance
Total MCEV earnings
MCEV before closing adjustments
Closing adjustments
5,949
–153
5,796
–520
–1,177
Value of
new business
135
Expected
return
135
Experience
variances
–172
Assumption
changes
–122
Other operating
variance
–496
Operating
MCEV earnings
–520
0
–1,697
4,099
67
MCEV 31.12.2014
4,166
Life Germany
–677
International
1,249
Health
3,595
Munich Re – August 2015
68
Backup: ERGO Property-casualty Germany – Key figures
ERGO Property-casualty Germany – Key figures
€m
Net result
187
150
126
68
18
11
Q3
Q4
58
Q1
Q2
2013
31
19
Q3
Q4
2014
€m
Technical result
37
Q1
Q2
H1
2014
2015
€m
Investment result
H1
2015
€m
Other1
201
150
1
103
96
H1 2014
H1 2015
H1 2014
Other non-operating result, goodwill impairments, net finance costs, taxes.
H1 2015
–67
–68
H1 2014
H1 2015
Munich Re – August 2015
69
Backup: ERGO Property-casualty Germany
ERGO Property-casualty Germany
%
Combined ratio
Other
181
101.3
97.1
98.1
95.4
95.3
93.5
Motor
431
Legal protection
208
95.4
95.7
94.0
€m
Gross premiums written
TOTAL
€1,831m
Personal accident
332
93.4
Fire/property
333
Liability
346
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Combined ratio H1 2015
Expense ratio
Loss ratio
96.7
95.3
95.7
32.7
32.2
32.9
64.0
63.1
62.8
2013
2014
H1 2015
109.3
103.8
88.0
Motor Liability
%
101.2 105.2 95.7
76.1
Fire/ Personal Legal
prop.
acc.
prot.
Other
Total
Munich Re – August 2015
70
Backup: ERGO International – Key figures
ERGO International – Key figures
€m
Net result
58
14
12
8
Q3
Q4
72
48
Q1
Q2
2013
Q3
–396
Q4
2014
€m
Technical result
11
15
Q1
Q2
26
H1
2014
2015
€m
Investment result
H1
2015
€m
Other1
323
240
–73
–64
H1 2015
H1 2014
H1 2015
80
45
H1 2014
1
H1 2015
H1 2014
Other non-operating result, goodwill impairments, net finance costs, taxes.
Munich Re – August 2015
71
Backup: ERGO International property-casualty
ERGO International property-casualty
%
Combined ratio
100.4
99.2
100.0
97.5
98.0
97.2
100.4
98.7
96.8
94.9
€m
Gross premiums written
Other
198
Poland
433
Legal
protection
364
TOTAL
€1,183m
Turkey
111
Greece
77
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Expense ratio
Loss ratio
Combined ratio H1 2015
97.3
99.6
37.9
38.8
40.2
60.8
58.5
59.4
2013
2014
H1 2015
98.7
%
118.2
99.1
Poland
89.3
Turkey
Greece
103.4
99.6
Legal
Other
protection
Total
95.3
Munich Re – August 2015
72
Backup: ERGO International property-casualty
ERGO International property-casualty
Poland
Turkey
€m
GWP1
Combined ratio
Non-motor %
Motor %
820
873
816
42
47
43
58
53
57
2012
2013
2014
95.2
96.0
%
97.7
2013
2014
Legal protection
%
122.3
293
225
232
43
42
58
57
58
2012
2013
2014
2012
108.5
108.4
2013
2014
Greece
€m
GWP
Combined ratio
Non-motor %
Motor %
42
2012
€m
GWP1
Combined ratio
%
€m
GWP1
Combined ratio
%
Non-motor %
Motor %
626
649
652
94.6
2012
1
2013
Excl. legal protection.
2014
2012
97.7
2013
94.0
2014
136
133
137
40
43
48
60
57
52
2012
2013
2014
83.5
81.3
68.7
2012
2013
2014
Munich Re – August 2015
73
Backup: ERGO International life
International life – Premium growth driven by singlepremium business in Poland
€m
Total premium
1,832
2,029
1,678
475
177
453
130
365
607
564
614
528
531
575
2012
2013
2014
520
Other
Poland
Austria
Belgium
€m
New business value and margins1
85
59
43
2.8%
2012
1
2013
 Poland: Strong increase in bancassurance, positive
one-offs in new business
 Austria: Increased single-premium business
 Belgium: Introduction of an innovative alternative
guarantee product in 2015
 New business
 Active management of new business profitability
 Drive initiatives towards alternative guarantee
concepts and biometric products
 In-force
 Low interest rates challenging back-book
 Active portfolio management, e.g. interest-rate
hedging, low bonus rates
Green-/brownfields, M&A and joint ventures (JV)
6.9%
4.8%
Organic development
2014
Value of New Business (VNB)/Present Value of New Business Premium (PVNBP).
 China (50% participation): Further develops the
successfully started JV, focus on expanding agency
channel – total premiums after 11 months of
operation: ~€4.5m, ambition: ~€600m in 2024
 India (26% participation): Regulatory approval of JV
expected in Q2 2015 – premium ambition: ~€800m
in year 10
Munich Re – August 2015
74
Backup: Munich Health
Munich Health – Overview
Munich Health1, 2
2014
2013
2012
2011
2010
Gross written premiums
€bn
5.3
6.6
6.7
6.0
5.1
Investments
€bn
3.9
3.6
4.2
4.6
4.1
Net technical provisions
€bn
2.5
2.2
2.2
2.4
3.3
Combined ratio3
%
98.8
98.3
100.2
99.5
99.7
Regional premium breakdown4
%
Segmental premium breakdown4
Asia and
Australasia
2
Africa,
Near and
Middle East
7
North America
55
TOTAL
€5.3bn
Reinsurance
4,059 (76%)
(▲ –12.1%)
€m
Primary insurance
1,283 (24%)
(▲ –33.6%)
TOTAL
€5.3bn
Europe
36
1
2
3
4
Previous years’ figures adjusted owing to IAS 8; see “Changes in accounting policies and other adjustments”.
In 2012, our segment reporting was modified and no longer has a consolidation column. The figures for the previous year have
been adjusted accordingly. Comparability with the years 2009 and 2010 is thus limited.
Excluding health insurance conducted like life insurance.
Gross written premiums as at 31.12.2014.
Munich Re – August 2015
75
Backup: Munich Health
Munich Health – Key figures
€m
Net result
56
26
Q3
Q4
53
20
22
Q1
Q2
2013
14
Q3
Q4
2014
€m
Technical result
23
42
38
H1
2014
H1
2015
15
Q1
Q2
2015
€m
Investment result
€m
Other1
67
H1 2014
1
–18
43
38
–2
H1 2015
H1 2014
Other non-operating result, goodwill impairments, net finance costs, taxes.
–6
H1 2015
H1 2014
H1 2015
Munich Re – August 2015
76
Backup: Munich Health
Private health insurance growing worldwide above GDP
Private health insurance volume per region – Gross written premiums
€bn
Market dominated by
North America
+3%
+1%
+1%
732
849
957
108
Health specialist
insurers
Middle East
Europe
+4%
+3%
129
+10%
+10%
152
4
7
Multi-line insurers
10
Growth (CAGR, 06-15)
2006
2011 2015e
2006
2011 2015e
2006
2011 2015e
Private health
insurance GWP1
Nominal GDP1
Latin America
+10%
+7%
+15%
+11% 86
48
25
2006
1
9
2011 2015e
Euro-based. Source: WHO, Global Insight
APAC
Africa
2006
15
+13%
+11%
117
22
2011 2015e
39
2006
69
2011 2015e
Munich Re – August 2015
77
Backup: Investments
Investment result – Seasonal impact from dividends and
positive contribution from equity derivatives in Q2
€m
Investment result
H1 2015
Return1
H1 2014
Return1
Q2 2015
Return1
Q1 2015
Return1
Regular income
3,863
3.2%
3,604
3.3%
2,062
3.4%
1,801
3.0%
Write-ups/write-downs
–240
–0.2%
–15
0.0%
–89
–0.2%
–151
–0.2%
Disposal gains/losses
1,807
1.5%
1,204
1.1%
810
1.3%
997
1.6%
Derivatives2
–839
–0.7%
–199
–0.2%
–133
–0.2%
–706
–1.2%
Other income/expenses
–250
–0.2%
–234
–0.2%
–129
–0.2%
–121
–0.2%
Investment result
4,341
3.6%
4,360
4.0%
2,521
4.1%
1,820
3.0%
Total return in %
–0.4%
3-month
reinvestment yield
Write-ups/
H1
Q2
write-downs 2015 2015
Fixed
–95
3
income
–75 –44
Equities
Q2 2015
Q1 2015
Q4 2014
2.1%
2.0%
2.1%
Real estate
–37
–18
Other
–33
–30
–17.0%
11.5%
Disposal
gains/losses
H1
Q2
2015 2015
Fixed income 1,026
Equities
Other
407
769
400
12
3
Annualised return on quarterly weighted investments (market values) in %. 2 Result from derivatives without regular
income and other income/expenses. 3 Thereof interest-rate hedging ERGO H1: –€168m/–€24m (gross/net).
16.2%
Derivatives
H1
Q2
2015 2015
Fixed income3 –321 –456
Equities
Commodities
Other
–530
230
–19
50
31
65
1
Munich Re – August 2015
78
Backup: Investments
Return on investment by asset class and segment
Actual H1 2015
Regular
income
Write-ups/
write-downs
Disposal
result
Extraord.
derivative result
Other
inc./exp.
RoI
ᴓ Market value
(€m)
Afs fixed-income
2.7
–
1.4
–
–
4.1
133,685
Afs non-fixed-income
5.5
–1.0
10.2
–
–
14.7
15,089
Derivatives
7.0
–
–
–83.0
–0.4
–76.4
2,026
Loans
3.0
–0.2
0.3
–
–
3.1
68,977
Real estate
6.1
–1.3
0.2
–
–
5.0
5,781
Other2
4.5
–0.4
0.1
–
–3.2
1.0
15,559
Total
3.2
–0.2
1.5
–0.7
–0.2
3.6
241,117
Reinsurance
3.1
–0.2
2.2
–0.9
–0.2
4.0
92,044
ERGO
3.3
–0.2
1.0
–0.6
–0.2
3.3
145,026
Munich Health
2.1
–0.1
1.4
0.0
–0.1
3.3
4,047
%1
%
Return on investment
4.0%
Average 3.6%
4.3%
3.9%
3.5%
3.4%
Q4
Q1
Q2
2012
1
Annualised. 2 Including management expenses.
3.0%
Q3
2013
3.4%
3.4%
3.1%
Q3
4.1%
3.7%
Q4
Q1
Q2
Q3
2014
3.0%
Q4
Q1
Q2
2015
Munich Re – August 2015
79
Backup: Investments
Investment portfolio
Investment portfolio1
Land and buildings
2.5 (2.4)
Fixed-interest
securities
56.3 (55.5)
Shares, equity funds and
participating interests2
5.4 (5.2)
Miscellaneous3
7.7 (7.7)
Portfolio management in Q2
%
Decline in market values due to increasing
interest rates
Purchase of US government bonds,
esp. inflation-linkers
Reinsurance: Slight reduction of credit
exposure, esp. corporates and ABS/MBS
TOTAL
€236bn
ERGO: Shift from covered to
government bonds
Loans
28.1 (29.2)
Investments in higher maturities further
aligning the duration of assets and liabilities
Portfolio duration4
Assets Liabilities
Reinsurance
ERGO
Munich Re (Group)
1
6.1 (5.6)
8.3 (8.3)
7.5 (7.4)
Net DV01 (€m)
4.7 (4.6)
8.6 (9.2)
7.1 (7.4)
Fair values as at 30.6.2015 (31.12.2014). 2 Net of hedges: 4.0% (4.3%). 3 Deposits retained on assumed
reinsurance, deposits with banks, investment funds (excl. equities), derivatives and investments in renewable
energies and gold. 4 As at 30.6.2015 (31.12.2014). Net DV01: Sensitivity to parallel upward shift of yield curve by
one basis point reflecting portfolio size.
–3.3
9.8
6.5
Munich Re – August 2015
80
Backup: Investments
Investment portfolio
Fixed-interest securities and miscellaneous
Investment portfolio
Miscellaneous
7.7 (7.7)
%
Fixed-interest securities
56.3 (55.5)
Fixed-interest securities1
Structured products
4 (5)
Governments/
semi-government
61 (59)
Corporates
16 (15)
TOTAL
Banks
3 (3)
€236bn
Miscellaneous
%
Other
15 (14)
Deposits on
reinsurance
47 (49)
Derivatives
7 (6)
Bank deposits
18 (19)
1
TOTAL
€133bn
Pfandbriefe/
covered bonds
16 (18)
Loans
28.1 (29.2)
Investment
funds
13 (12)
%
TOTAL
€18bn
Loans1
%
Loans to policyholders/
mortgage loans
9 (9)
Corporates
1 (1)
Banks
4 (4)
Approximation – not fully comparable with IFRS figures. Fair values as at 30.6.2015 (31.12.2014).
Governments/
semi-government
39 (39)
TOTAL
€66bn
Pfandbriefe/
covered bonds
47 (47)
Munich Re – August 2015
81
Backup: Investments
Fixed-income portfolio
Total
Rating structure
<BB and NR
7 (6)
%
Regional breakdown
AAA
41 (42)
Without
BB
2 (2)
>10 years
34 (35)
AVERAGE
MATURITY
9.3 years
7–10 years
16 (15)
31.12.
2014
29.3
30.3
13.8
1.5
15.3
14.0
France
2.2
5.3
7.5
7.6
UK
3.4
2.6
6.0
6.1
Netherlands
1.6
2.7
4.3
4.4
Canada
Supranationals
Spain
3.6
0.1
3.7
3.6
0.7
2.8
3.5
3.7
1.5
2.0
3.5
3.5
0–1 years
8 (8)
Italy
1.0
1.9
2.9
3.3
Ireland
0.7
1.9
2.6
2.4
1–3 years
14 (14)
Austria
0.4
1.8
2.2
2.5
Australia
1.7
0.5
2.2
2.2
Belgium
0.6
1.1
1.7
1.6
Sweden
0.3
1.4
1.7
1.8
Norway
0.5
1.2
1.7
1.7
Other
7.8
4.1
11.9
Total
45.1
54.9
100.0
11.3
100.0
US
%
n.a.
3 (2)
30.6.
2015
24.0
AA
27 (26)
Maturity structure
Total
5.3
€206.9bn
A
11 (12)
With
policyholder
participation
Germany
TOTAL
BBB
12 (12)
%
3–5 years
14 (14)
5–7 years
11 (12)
Approximation – not fully comparable with IFRS figures. Fair values as at 30.6.2015 (31.12.2014).
Munich Re – August 2015
82
Backup: Investments
Fixed-income portfolio
Government/Semi-government
Rating structure
BB
1 (1)
%
Regional breakdown
AAA
45 (46)
Without
BBB
11 (11)
TOTAL
A
7 (7)
€106.5bn
AA
36 (35)
Maturity structure
%
>10 years
43 (44)
AVERAGE
MATURITY
11.0 years
7–10 years
15 (13)
%
With
policyholder
participation
Total
30.6.
2015
31.12.
2014
Germany
5.1
22.9
28.0
29.6
US
Supranationals
Canada
16.3
1.1
17.4
15.6
1.4
5.4
6.8
7.3
5.3
0.2
5.5
5.5
UK
4.6
0.2
4.8
4.7
Italy
1.1
2.6
3.7
4.3
France
1.6
2.1
3.7
3.2
Spain
1.4
1.9
3.3
3.2
0–1 years
7 (7)
Belgium
1.0
2.0
3.0
2.9
Austria
0.5
2.5
3.0
3.3
1–3 years
12 (13)
Australia
2.8
0.0
2.8
3.0
Netherlands
1.2
0.7
1.9
2.0
Finland
0.4
1.5
1.9
1.9
Ireland
0.3
1.5
1.8
1.7
Portugal
0.2
0.0
0.2
0.1
Other
9.6
2.6
12.2
Total
52.8
47.2
100.0
11.7
100.0
3–5 years
14 (13)
5–7 years
9 (10)
Approximation – not fully comparable with IFRS figures. Fair values as at 30.6.2015 (31.12.2014).
Munich Re – August 2015
83
Backup: Investments
Fixed-income portfolio
Corporate bonds (excluding bank bonds)
Rating structure
%
<BB and NR
4 (2)
BB
12 (11)
AAA
1 (1)
TOTAL
€21.2bn
BBB
48 (46)
>10 years
15 (16)
AVERAGE
MATURITY
31.12.
2014
Utilities
22.0
22.3
Industrial goods and services
12.1
12.1
Oil and gas
11.9
12.2
Telecommunications
9.2
9.5
Healthcare
6.4
5.9
Financial services
6.1
5.4
%
Media
4.4
4.4
0–1 years
6 (6)
Retail
4.1
3.7
Food and beverages
4.0
4.7
Basic resources
3.8
3.6
Technology
3.5
3.6
Automobiles
2.7
2.7
Construction
2.3
2.1
Other
7.5
7.8
AA
6 (6)
1–3 years
22 (19)
7.5 years
5–7 years
19 (19)
%
30.6.
2015
A
29 (34)
Maturity structure
7–10 years
18 (18)
Sector breakdown
3–5 years
20 (22)
Approximation – not fully comparable with IFRS figures. Fair values as at 30.6.2015 (31.12.2014).
Munich Re – August 2015
84
Backup: Investments
Fixed-income portfolio
Bank bonds
Rating structure
%
<BB and NR
4 (5)
BB
9 (5)
TOTAL
€7.1bn
AA
8 (8)
A
49 (56)
Maturity structure
%
0–1 years
6 (8)
>10 years
4 (5)
AVERAGE
MATURITY
1–3 years
36 (23)
Total
30.6.
31.12.
2015
2014
32.0
29.0
26.2
29.2
10.9
12.0
5.9
5.0
3.2
3.0
3.1
2.8
3.0
3.1
1.8
2.3
1.7
2.0
12.2
11.6
Investment category of bank bonds
%
US
Germany
UK
Ireland
Canada
France
Australia
Netherlands
Jersey
Other
Senior
Subbonds ordinated
27.2
4.4
20.0
3.2
8.3
2.4
5.9
0.0
2.0
1.1
1.7
0.9
2.9
0.1
1.7
0.1
1.7
0.0
9.5
2.4
Loss-bearing1
4 (5)
Subordinated2
15 (14)
4.2 years
5–7 years
12 (14)
%
Lossbearing
0.4
3.0
0.2
0.0
0.1
0.5
0.0
0.0
0.0
0.3
AAA
1 (1)
BBB
29 (25)
7–10 years
11 (11)
Regional breakdown
Senior
81 (81)
TOTAL
€7.1bn
3–5 years
31 (39)
1
Classified as Tier 1 and upper Tier 2 capital for solvency purposes.
Classified as lower Tier 2 and Tier 3 capital for solvency purposes.
Approximation – not fully comparable with IFRS figures. Fair values as at 30.6.2015 (31.12.2014).
2
Munich Re – August 2015
85
Backup: Investments
Fixed-income portfolio
Structured products
€m
Structured products portfolio (at market values): Breakdown by rating and region
Rating
ABS
CDO/
CLN
Total
Marketto-par
394
722
101%
1
382
383
100%
–
1
–
1
97%
–
–
–
–
–
0%
10
–
21
360
1,011
1,371
98%
–
–
–
–
1,277
–
1,277
105%
223
69
9
–
–
32
584
616
101%
163
66
33
22
1
–
15
270
285
100%
463
47
129
75
1
3
434
284
718
101%
3,103
1,455
594
155
5
61
2,448
2,925
5,373
100%
58%
27%
11%
3%
0%
1%
46%
54%
100%
3,374
1,313
974
255
29
47
2,710
3,282
5,992
AAA
AA
A
BBB
<BBB
NR
USA +
RoW
Consumer-related ABS1
353
292
72
5
–
–
328
Corporate-related ABS2
1
136
172
34
3
37
Subprime HEL
–
–
1
–
–
Subprime-related
–
–
–
–
607
615
118
1,201
76
Non-agency prime
315
Non-agency other
(not subprime)
Commercial MBS
Non-subprime-related
MBS
Region
Agency
Total 30.6.2015
In %
Total 31.12.2014
Europe
101%
1
Consumer loans, auto, credit cards, student loans.
Asset-backed CPs, business and corporate loans, commercial equipment.
Approximation – not fully comparable with IFRS figures. Fair values as at 30.6.2015.
2
Munich Re – August 2015
86
Backup: Investments
On- and off-balance-sheet reserves (gross)
€m
31.12.
2012
31.12.
2013
31.12.
2014
31.3.
2015
30.6.
2015
218,047
210,431
235,849
251,283
236,220
22,478
15,192
31,470
39,499
26,647
Fixed-interest securities
9,980
4,661
11,967
15,322
8,821
Non-fixed-interest securities
1,503
1,975
2,270
3,612
2,496
291
292
311
339
301
11,774
6,928
14,548
19,273
11,618
Real estate2
1,519
1,763
2,006
2,055
2,078
Loans and investments (held to maturity)
8,831
6,071
14,400
17,716
12,526
354
430
516
455
425
10,704
8,264
16,922
20,226
15,029
10.3%
7.2%
13.3%
15.7%
11.3%
Market value of investments
Total reserves
On-balance-sheet reserves
Other on-balance-sheet reserves1
Subtotal
Off-balance-sheet reserves
Associates
Subtotal
Reserve ratio
1
2
Unrealised gains/losses from unconsolidated affiliated companies, valuation at equity and cash-flow hedging.
Excluding reserves from owner-occupied property.
Munich Re – August 2015
87
Backup: Investments
On-balance-sheet reserves
€m
On-balance-sheet reserves
30.6.
2015
Change
Q2
11,317
–7,617
99
–23
174
–9
28
–6
Total on-balance-sheet reserves (gross)
11,618
–7,655
Provision for deferred premium refunds
–5,069
3,273
Deferred tax
–1,527
1,075
–20
6
Consolidation and currency effects
–189
47
Shareholders' stake
4,813
–3,254
Investments afs
Valuation at equity
Unconsolidated affiliated enterprises
Cash flow hedging
Minority interests
Munich Re – August 2015
88
Backup: Investments
Off-balance-sheet reserves
€m
Off-balance-sheet reserves
Real estate1
Loans and investments (held to maturity)
Associates
Total off-balance-sheet reserves (gross)
30.6.
2015
Change
Q2
2,078
23
12,526
–5,190
425
–30
15,029
–5,197
–11,040
4,309
–1,207
299
–1
0
2,781
–589
as if
Provision for deferred premium refunds
Deferred tax
Minority interests
Shareholders' stake
1
Excluding reserves for owner-occupied property.
Munich Re – August 2015
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
+8.4
+2.0
+0.4
+0.1
–25
+4.1
+1.0
+0.2
+0.0
Sensitivity to spreads2 (change in 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
Sensitivity to equity and commodity markets3
EURO STOXX 50 (3,424 as at 30.6.2015)
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
1
2
3
–30%
2,397
–3.8
–1.0
–0.6
–1.6
Rough calculation with limited reliability assuming unchanged portfolio as at 30.6.2015. After rough estimation of
policyholder participation and deferred tax; linearity of relations cannot be assumed. Approximation – not fully
comparable with IFRS figures.
Sensitivities to changes of spreads are calculated for every category of fixed-interest securities,
except government securities with AAA ratings.
Worst-case scenario assumed including commodities: impairment as soon as market value is below acquisition
cost. Approximation – not fully comparable with IFRS figures.
–10%
3,082
–1.3
–0.4
–0.2
–0.5
+50
–7.7
–1.9
–0.4
–0.1
+100
–14.6
–3.6
–0.7
–0.1
+50
–5.4
–1.1
–0.3
–0.0
+100
–10.3
–2.2
–0.5
–0.0
+10%
3,766
+1.3
+0.9
+0.2
–0.0
+30%
4,451
+4.1
+2.7
+0.6
–0.0
Munich Re – August 2015
90
Backup: Additional information
Sensitivities of MCEV
€m
Reinsurance Life
MCEV
Change
in €m
ERGO
Change
in %
MCEV
Change
in €m
Change
in %
Base case
10,469
Interest rates –100bp
10,750
282
2.7
1,599
–2,567
–61.6
Interest rates +100bp
10,075
–394
–3.8
5,414
1,248
29.9
Equity/property values –10%
10,465
–3
–
3,974
–192
–4.6
Equity/property-implied volatilities +25%
10,467
–2
–
4,032
–134
–3.2
Swaption-implied volatilities +25%
10,467
–1
–
3,902
–264
–6.3
Illiquidity premium 10bp
10,517
48
0.5
4,609
443
10.6
Maintenance expenses –10%
10,593
124
1.2
4,247
81
1.9
Lapse rates –10%
10,810
341
3.3
4,077
–89
–2.1
Lapse rates +10%
10,174
–294
–2.8
4,251
85
2.0
Mortality/morbidity (life business) –5%
12,552
2,083
19.9
4,241
75
1.8
Mortality (annuity business) –5%
10,312
–156
–1.5
4,070
–96
–2.3
4,112
–6,357
–60.7
4,124
–42
–1.0
10,527
59
0.6
5,062
896
21.5
No mortality improvements (life business)
Solvency II yield curve
4,166
Munich Re – August 2015
91
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 capitalmarket 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 valuebased and shareholder-oriented strategy
We aim to enhancing Munich Re’s visibility and attractiveness in the international
financial community
Munich Re – August 2015
92
Backup: Additional information
Financial calendar
2015
5 November
Interim report as at 30 September 2015
30 November
Briefing on Solvency II, London
2016
4 February
Preliminary key figures 2015 and renewals
16 March
Balance sheet press conference for 2015 financial statements
Analysts' conference in Munich with videocast
27 April
Annual General Meeting 2016, ICM – International Congress Centre Munich
10 May
Interim report as at 31 March 2016
9 August
Interim report as at 30 June 2016
9 November
Interim report as at 30 September 2016
Munich Re – August 2015
93
Backup: Additional 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
E-mail: [email protected]
Tel.: +49 (89) 3891-3875
E-mail: [email protected]
Britta Hamberger
Ralf Kleinschroth
Andreas Silberhorn
Tel.: +49 (89) 3891-3504
E-mail: [email protected]
Tel.: +49 (89) 3891-4559
E-mail: [email protected]
Tel.: +49 (89) 3891-3366
E-mail: [email protected]
Angelika Rings
Andreas Hoffmann
Ingrid Grunwald (SRI)
Tel.: +49 (211) 4937-7483
E-mail: [email protected]
Tel.: +49 (211) 4937-1573
E-mail: [email protected]
Tel.: +49 (89) 3891-3517
E-mail: [email protected]
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
Feedback – Anything missing?
The purpose of this presentation is to provide you with comprehensive, transparent, and user-friendly
information. In case that you have any proposals to improve this presentation with respect to content and
illustration, we would very much appreciate your feedback. Thank you very much for your kind support.
Munich Re – August 2015
94
Backup: Additional information
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 make them conform with future events or
developments.
Figures up to 2010 are shown on a partly consolidated basis.
"Partly consolidated" means before elimination of intra-Group transactions across segments.
ERGO new segmentation: 2009–2010 before elimination of business with Munich Re, 2011–2014
consolidated, after elimination of all intra-Group business, 2013–2014 new segmentation, earnings include
share of holding costs.
Munich Re – August 2015
95

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