Munchener Ruckversicherungs-Gesellschaft AG · XETR:MUV2
Munchener Ruckversicherungs-Gesellschaft — Munich Re — Investor Presentation (August 2015)
95 slides from Munchener Ruckversicherungs-Gesellschaft's investor presentation, August 2015
Slide 1: Delivering strong capital returns – Munich Re equity story
plainpicture/fStop/Ralf Hiemisch Delivering strong capital returns Munich Re equity story August 2015 Munich Re – August 2015 1
Slide 2: Agenda
Agenda Equity story 3 Backup Group 20 Reinsurance 45 ERGO 62 Munich Health 75 Investments 78 Munich Re – August 2015 2
Slide 3: Munich Re – Key metrics
Equity story Munich Re – Key metrics Key financial data1 €bn Key share data1 2014 2013 2012 2014 2013 2012 Shareholders’ equity 30.3 26.2 27.4 Earnings per share (€) 18.3 18.5 18.0 Operating result 4.0 4.4 5.3 Dividend per share (€) 7.75 7.25 7.00 Net result 3.2 3.3 3.2 Book value per share (€) 178.
Slide 4: Realising synergies and economies of scope by combining primary and reinsurance
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 ERGO Life/Health Germany 16.7 (34%) 9.8 (20%) ERGO Property-casualty Germany 3.1 (6%) Total €48.9bn ERGO Inte
Slide 5: Munich Re remains an under-promise/over-deliver investment case
Equity story Munich Re remains an under-promise/over-deliver investment case Actual net result vs. guidance €bn 3.2 3.3 Actual 3.0 3.0 3.2 2.4 2.4 2.5 2.0 Guidance 0.7 2010 20111 2012 2013 2014 Outlook 2015 – Munich Re (Group) Segment result Combined ratio GROSS PREMIUMS WRITTEN €49–51bn Reinsurance
Slide 6: Delivering strong capital returns
Equity story Delivering strong capital returns Attractive shareholder participation1 €bn Dividend per share € Cash yield2 11.2% 7.8% 5.4% 6.0% 9.6% 8.1% 7.75 CAGR: 7% Share 2.7 17.4 buy-back 2.4 1.5 1.6 1.1 4.50 Dividend 2010 2011 2012 2013 2014 2006–2014 2006 ... 2010 2011 2012 2013 2014 Excellent
Slide 7: Convincing track record in value generation
Equity story Convincing track record in value generation Return on equity % Risk/return profile1 % Total shareholder return (p.a.) Average cost of capital 20 15.3 14.1 Peer 3 12.5 12.5 12.5 15 11.8 11.3 10.4 10 Peer 2 Peer 4 7.0 Index Peer 5 5 Peer 6 3.3 0 Peer 1 –5 20 25 30 35 40 45 2005 2008 2011
Slide 8: Low interest rates impacting investment result
Equity story Low interest rates impacting investment result … Return on investment % Total investments €bn Investment result €bn Valuation reserves Disposal gains 4.5 3.9 236 8.6 3.6 225 8.4 8.0 3.4 3.4 210 187 196 7.2 6.8 2.9 31 1.6 1.2 1.8 7 11 22 15 0.7 2010 2011 2012 2013 2014 2010 2011 2012 201
Slide 9: Investing in low-interest-rate environment
Equity story Investing in low-interest-rate environment Running and reinvestment yield % Composition of reinvestment yield 20141 2011 2012 2013 2014 Reinvestment yield (%) 4 Corporate 4.0 bonds 3.6 3.5 3 Bank bonds 3.2 3.0 Government Structured 2 bonds 2.2 2.3 2.4 products Pfandbriefe/ 1 covered bon
Slide 10: Resilient earnings in a softening reinsurance market
Equity story Resilient earnings in a softening reinsurance market Constantly positive net run-off results in … support high earnings contribution property-casualty reinsurance1 … from underwriting at Group level2 83% 81% 5.8% 72% 5.3% 4.4% 49% ~4% 2.8% 3.7% 16% 2010 2011 2012 2013 2014 2010 2011 201
Slide 11: Reinsurance – Leveraging on leading market position
Equity story Reinsurance – Leveraging on leading market position Property-casualty – GWP1 €bn Life – Technical result €m Risk Adjusted Solutions 16.6 16.7 420 1.9 4.2 354 359 Traditional 280 p-c reinsurance 14.7 12.5 79 2008 2014 2010 2011 2012 2013 2014 Continued growth in attractive specialty bu
Slide 12: Traditional p-c reinsurance – Shift towards proportional casualty
Equity story Traditional p-c reinsurance – Shift towards proportional casualty increases resilience Traditional p-c portfolio 2014 % Active portfolio shifts Aviation Casualty motor Proportional Facultative Share increases 1 (2) 26 (24) 70 (68) 10 (10) Profitable casualty lines (motor and non-motor
Slide 13: Risk Solutions – Sound results provide additional stability
Equity story Risk Solutions – Sound results provide additional stability to total p-c book Gross earned premiums1 €bn Combined ratio1 % Underwriting result1 €bn Share of Risk Solutions Share of Risk Solutions in % of total p-c book 42 in % of total p-c book 94.1 4.0 4.2 3.8 90.8 32 3.4 3.4 89.6 26 8
Slide 14: Reinsurance Life – Strategic focus and areas of attention
Equity story Reinsurance Life – Strategic focus and areas of attention Risk-return profile of selected sub-portfolios Initiatives relative to core business portfolio Higher ILLUSTRATIVE FinMoRe Asia FinMoRe Business performing well – Pleasing contribution to VNB strong demand prevails underpins busi
Slide 15: ERGO – Management measures bearing fruit
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) 107.8 Traditional portfolio 104.5 98.0 96.7 30 41 95.5 95.3 54 99.8 98.7 84 97.3 89.8 70 59 46 16 2010 2011 20
Slide 16: Munich Health – Focus on stabilising business
Equity story Munich Health – Focus on stabilising business E XCELLENCE Strengthen core capabilities E XECUTION Improve effectiveness E XPANSION Seize growth opportunities Continuously improve Stronger business-unit-level focus Expansion in Middle East processes in underwriting, Turnaround
Slide 17: Looking ahead – World of opportunities
Equity story Looking ahead – World of opportunities Short-term priorities Managing downside Preserving profitability Business expansion ERGO traditional ERGO P-C Germany ERGO International German Life ERGO Health Germany Risk Solutions Reinsurance Life Traditional P-C reinsurance Mid-term outlook Mu
Slide 18: Delivering strong capital returns
Equity story Delivering strong capital returns Good track Successfully dealing with challenging economic conditions – We remain a strong partner record for clients and reliable for shareholders, delivering on our promises Business Focus on insurance risks safeguarding sustainable value creation – st
Slide 19: Backup
Backup Munich Re – August 2015 19
Slide 20: Key financials – Our aim is sustained profitable growth
Backup: Group – Key financials Key financials – Our aim is sustained profitable growth Munich Re1,2 2014 2013 2012 2011 2010 Gross written premiums €bn 48.8 51.1 52.0 49.5 45.5 Operating result €m 4,028 4,398 5,349 1,180 3,978 Taxes on income €m 312 –108 –878 552 –692 Consolidated result €m 3,171 3,
Slide 21: IFRS capital position
Backup: Group – Key financials IFRS capital position Equity €m UNREALISED GAINS/LOSSES Equity 31.12.2014 30,289 Change Q2 Fixed-interest securities H1: –€1,247m Consolidated result 1,866 1,076 Q2: –€2,324m Changes Non-fixed-interest securities Dividend –1,293 –1,293 H1: €39m Unrealised gains/losses
Slide 22: Distributable earnings of parent company – Safeguarding capital repatriation
Backup: Group – Key financials Distributable earnings of parent company – Safeguarding capital repatriation HGB earnings financing capital repatriation €bn Reconciliation IFRS to HGB result in 2014 €bn 3.7 –1.3 0.5 –1.4 2.0 –0.2 3.2 –0.5 0.3 3.0 2.9 –1.4 2.0 Distributable Dividend Share buy- HGB res
Slide 23: Distributable earnings of parent company – Main drivers of HGB result
Backup: Group – Key financials Distributable earnings of parent company – Main drivers of HGB result Dividends from Equalisation reserve €bn subsidiaries ILLUSTRATIVE Max. requirement 9.1 Munich Re AG 7.7 6.6 HGB earnings HGB Majority of Group result earnings, including before equali- investment H
Slide 24: Insurance financial strength ratings
Backup: Group – Rating Insurance financial strength ratings1 providing for strong competitive position A.M. Best Fitch Moody's Standard & Poor's A++ Berkshire2 AAA Aaa AAA Berkshire/Gen Re AA+ Berkshire/Gen Re Aa1 Berkshire/Gen Re AA+ Berkshire/Gen Re A+ AA Aa2 Allianz Germany AA Allianz Allianz Ber
Slide 25: Munich Re Group bonds
Backup: Group – Outstanding bonds Munich Re Group bonds Subordinated bonds1 Nominal Coupon rate Emission/ Maturity First possible volume p. a. Issue 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
Slide 26: Munich Re's enterprise risk management (ERM)
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 Right balance betwe
Slide 27: Group economic risk capital (ERC) – Breakdown by risk category
Backup: Group – Risk management Group economic risk capital (ERC) – Breakdown by risk category Economic risk capital – Breakdown by risk category €bn Development of Group ERC €bn Risk category Group RI ERGO MH Div. ERC 31.12.2013 23.7 2013 2014 2014 2014 2014 2014 Property- Prop.-casualty1 9.0 10.0
Slide 28: Summary of economic capital disclosure
Backup: Group – Risk management Summary of economic capital disclosure Position as at 31 December 2014 €bn Capital with Solvency II Additional 31.12. 31.12. calibration 75% buffer 2014 2013 Available financial 38.8 38.2 resources (AFR) Economic risk capital1 15.4 11.5 26.9 23.7 Economic capital buff
Slide 29: Property-casualty risks: Natural catastrophe exposure
Backup: Group – Risk management Property-casualty risks: Natural catastrophe exposure Munich Re (Group) – Nat cat exposure (net of retrocession)1 €bn ERC property-casualty €bn AggVaR (return period 200 years) 10.0 (pre-tax) 9.0 4 Atlantic Hurricane 3 Storm Europe 2013 2014 Earthquake Los Angeles Bas
Slide 30: Composition of available financial resources (AFR) and economic earnings
Backup: Group – Risk management Composition of available financial resources (AFR) and economic earnings AFR development in 2014 €bn Dividend –1.3 AFR 38.2 Share buy-back –1.4 31.12.2013 Other1 +0.1 Capital –2.6 Economic effects 1.4 management Equity 0.8 Positive FX effects and other and gains in eq
Slide 31: Strong increase in AFR in recent years despite capital repatriation
Backup: Group – Risk management Strong increase in AFR in recent years despite capital repatriation AFR development 2007–2014 €bn Economic earnings €bn 30.9 +4.2 –17.1 +20.8 38.8 4.2 –6.3 6.0 3.6 –1.2 7.1 4.2 3.2 Confidence2 ~30 ~99 ~10 ~50 ~90 ~10 ~40 ~50 2007 2008 2009 2010 2011 2012 2013 2014 Mun
Slide 32: Strong capitalisation allowing for attractive capital repatriation
Backup: Group – Risk management Strong capitalisation allowing for attractive capital repatriation Munich Re actions1 Munich Re solvency ratio (ESR) ESR1 – Sensitivity % % >120% MRCM Solvency II Ratio as at Excellent capitalisation 138 31.12.14 Solvency I ratio Capital repatriation Increased ris
Slide 33: Munich Re well positioned for the introduction of Solvency II
Backup: Group – Solvency II Munich Re well positioned for the introduction of Solvency II Impact on insurance industry New Uniform regulatory framework Risk management already effective standards in enhances comparability and integrated in decision-making risk-based process supervision Capitalisat
Slide 34: Actual versus expected comparison – Loss monitoring
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 exposure year By line of business 10,000 10,000 Actual reported Actual reported loss lo
Slide 35: Positive run-off result without weakening resilience
Backup: Group – Reserves Positive run-off result without weakening resilience against future volatility Ultimate losses1 (adjusted to exchange rates as at 31.12.2014) €m Ultimate reduction Accident year (AY) Prior-year releases of €1.2bn Date ≤2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 T
Slide 36: ILS market platform complements our core business
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 Multi-year price stability Dedicated ILS team co
Slide 37: Outstanding cat bonds
Backup: Group – Risk trading Outstanding cat bonds Transaction Closing Maturity Volume Perils covered For Lion I Re 04/2014 04/2017 €190m Windstorm Europe Generation of fee clients income VenTerra Re Ltd. 01/2014 01/2017 US$ 250m Tropical Cyclones Australia & Earthquake USA Active investor in th
Slide 38: Munich Re's maximum in-force nat cat protection
Backup: Group – Risk trading Munich Re's maximum in-force nat cat protection Munich Re's maximum in-force nat cat protection €m 1,200 Cat bonds Risk swaps 1,000 Sidecars Indemnity retro 800 2015 protection (total) 600 400 200 0 US windstorm US windstorm US earthquake EU windstorm EU other perils1 Ja
Slide 39: Five action fields in one group-wide corporate responsibility programme
Backup: Group – Corporate responsibility Five action fields in one group-wide corporate responsibility programme Enabling framework Core activities Enabling framework 1 2 3 4 5 Strategy and Corporate Environmental Corporate Reporting and governance responsibility in management citizenship (CC) commu
Slide 40: Broad external recognition for corporate responsibility performance
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
Slide 41: Munich Re's international cooperation
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 Munich Re has actively develope
Slide 42: Annual net result guidance increased to at least €3bn
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 Sound capitalisatio
Slide 43: Net result
Backup: Group – Financial highlights Q2 2015 Net result Net result €m H1 H1 2015 2014 1,194 1,076 941 Total 1,866 1,703 762 736 731 790 630 Reinsurance 1,510 1,397 ERGO 318 264 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2014 2015 Munich Health 38 42 Technical result €m Investment result €m Other1 €m 1,673 1,780 4
Slide 44: Reconciliation of operating to net result
Backup: Group – Financial highlights Q2 2015 Reconciliation of operating to net result Reconciliation of operating to net result €m H1 Q2 Operating result 2,813 1,818 Other non-operating result –426 –432 Goodwill impairments – – Net finance costs –120 –60 Taxes –401 –250 Net result 1,866 1,076 Other
Slide 45: Munich Re – The leading global reinsurer
Backup: Reinsurance Munich Re – The leading global reinsurer Rank Company Country Net reinsurance premiums written 2013 (US$ m) 1 Munich Re Germany 36,758 2 Swiss Re Switzerland 30,478 3 Hannover Re Germany 17,101 4 Berkshire Hathaway Re USA 14,368 5 SCOR SE France 12,571 6 Lloyd’s UK 11,329 7 Reins
Slide 46: Reinsurance – Overview
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 Thereof natural catastrophes €m 53
Slide 47: Reinsurance Property-casualty – Key figures
Backup: Reinsurance Property-casualty Reinsurance Property-casualty – Key figures Net result €m 1,387 1,151 895 835 790 646 597 524 505 497 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 H1 H1 2013 2014 2015 2014 2015 Technical result €m Investment result €m Other1 €m 1,297 1,330 1,060 1,121 –377 –534 H1 2014 H1 2015 H1 2
Slide 48: Reinsurance Property-casualty – Combined ratio
Backup: Reinsurance Property-casualty Reinsurance Property-casualty – Combined ratio Combined ratio % Basic losses Major losses Expense ratio Normalised 2013 92.1 51.3 10.4 30.4 2014 92.7 53.0 7.2 32.5 H1 2015 92.8 56.3 5.4 31.1 ~99.1 Q2 2015 93.3 57.6 4.8 30.9 ~99.9 Combined ratio % Major losses %
Slide 49: Reinsurance Property-casualty – Competitive landscape
Backup: Reinsurance Property-casualty Reinsurance Property-casualty – Competitive landscape Cyclical challenges Availability of alternative capital1 US$ bn Low 50 Largely driven interest rates by scarcity of investment + 22 opportunities in Low inflation the low-interest- + 2009 2010 2011 2012 2013
Slide 50: July renewals – Regional focus on USA, Australia and Latin America
Backup: Reinsurance Property-casualty – July renewals 2015 July renewals – Regional focus on USA, Australia and Latin America Total property-casualty book1 % Regional allocation of July renewals % Remaining Business up for Rest2 North business January renewal 6 America 23 57 36 Europe TOTAL Worldwid
Slide 51: Price decreases slowing down
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 –1.2% Business opportunities Thereof price movement1
Slide 52: Renewal results
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 0.5 0.3 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
Slide 53: Reinsurance Life – Well-diversified global portfolio
Backup: Reinsurance Life Reinsurance Life – Well-diversified global portfolio Continental Europe ILLUSTRATIVE 40% United Kingdom 5% Canada 40% 45% 50% 15% 60% 50% Asia 40% 10% USA 60% 85% Australia 20% South Africa Latin America 10% 10% Mortality 80% 90% Morbidity 90% Longevity Geographical weight o
Slide 54: Reinsurance Life – Key figures
Backup: Reinsurance Life Reinsurance Life – Key figures Net result €m 246 189 122 124 129 123 71 52 34 –14 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 H1 H1 2013 2014 2015 2014 2015 Technical result €m Investment result €m Other1 €m 524 442 219 –87 –149 133 H1 2014 H1 2015 H1 2014 H1 2015 H1 2014 H1 2015 1 Other non-op
Slide 55: Financially Motivated Reinsurance remains a key strategic pillar
Reinsurance Life – Strategic pillars 1 Financially Motivated Reinsurance remains a key strategic pillar Financially Motivated Reinsurance €m Gross premiums written Technical result and fee income VNB Fee income 127 % of total 4,536 % of total Technical result 119 4,109 % of total 3,638 185 3,356 92
Slide 56: Asia – Sustained growth across all major markets
Reinsurance Life – Strategic pillars 2 Asia – Sustained growth across all major markets Reinsurance Life Asia €m Gross premiums written Technical result and fee income VNB Fee income % of total % of total 97 Technical result 93 1,178 % of total 81 957 959 872 871 62 59 55 4 59 56 1 5 35 29 12 11 10
Slide 57: Longevity – Prudent development of portfolio
Reinsurance Life – Strategic pillars 3 Longevity – Prudent development of portfolio Longevity €m Gross premiums written Liabilities by deals Portfolio composition % of total 2,788 Portfolio comprises longevity swaps 312 in the UK market 1–2 transactions concluded per annum No significant VNB e
Slide 58: Financial Solutions / asset protection
Reinsurance Life – Strategic pillars 4 Financial Solutions / asset protection – Efficient solutions in changing market environments Financial Solutions / asset protection IFRS contribution margin1 €m Strategic proposition Legal, regulatory and structuring expertise 37 combined with fully functiona
Slide 59: New business profitability on a pure economic and regulatory basis
Backup: Reinsurance Life New business profitability on a pure economic and regulatory basis RoRaC spread1 % IRR spread1 % Payback period2 years 20% 20% 20 15% 15% 15 10% 10% 10 5% 5% 5 0% 0% 0 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Satisfactory new business Eq
Slide 60: Reinsurance Life – MCEV 2014
Backup: Reinsurance Life Reinsurance Life – MCEV 2014 MCEV – Reinsurance Life €m MCEV 31.12.2013 9,382 Value of 453 new business Opening adjustments 2 Expected Adjusted MCEV 31.12.2013 9,384 297 return Operating MCEV earnings 322 Experience 63 Economic variances 121 variances Other non-operating var
Slide 61: IFRS uplift
Backup: MCEV 2014 IFRS uplift Reinsurance Life €m ERGO €m 31.12.2013 31.12.2013 Value not recognised in IFRS equity (IFRS uplift) Value not recognised in IFRS equity (IFRS uplift) IFRS IFRS 5,527 3,947 equity equity 3,855 2,002 MCEV 9,382 MCEV 5,949 31.12.2014 31.12.2014 IFRS IFRS 7,066 5,101 equity
Slide 62: ERGO – Overview
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 Interna
Slide 63: ERGO Life/Health Germany – Key figures
Backup: ERGO Life/Health Germany– Key figures ERGO Life/Health Germany – Key figures Net result €m 130 105 68 73 66 51 54 31 27 39 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 H1 H1 2013 2014 2015 2014 2015 Technical result €m Investment result €m Other1 €m 211 2,281 173 1,979 –139 –126 H1 2014 H1 2015 H1 2014 H1 2015 H
Slide 64: New business: Shift to less interest-rate sensitive products
Backup: ERGO Life Germany New business: Shift to less interest-rate sensitive products Target portfolio – New business APE – Plan 2016+ Shift new business to target portfolio Target portfolio (incl. new life product) % Target portfolio Thereof new life product Unit-linked insurance (with/without g
Slide 65: ERGO Life – New business
Backup: ERGO Life – New business ERGO Life – New business (statutory premiums) Life total H1 H1 2015 2014 Δ abs. Δ% New business 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 Germany (including direct business) New business 515 627
Slide 66: Declined reinvestment yield still with low impact on average yield
Backup: ERGO Life Germany Declined reinvestment yield still with low impact on average yield … Key figures1 (German business) Average yield above average guarantee Reinvestment Average Average Long duration of fixed-income portfolio keeps yield yield guarantee average yield at relatively high leve
Slide 67: Measures to support guarantees have financial impact in 2014
Backup: ERGO Life Germany … while measures to support guarantees have financial impact in 2014 ZZR reference rate – Projection1 ZZR – Low interest rate reserve Guarantee level ILLUSTRATIVE Local GAAP reserve against low interest rates % 4.25 4.10 Expected accumulated ZZR in 2015: ~€2.4bn 4.00 4.
Slide 68: ERGO – MCEV 2014
Backup: ERGO – Market Consistent Embedded Value 2014 ERGO – MCEV 2014 MCEV – ERGO €m MCEV 31.12.2013 5,949 Value of 135 new business Opening adjustments –153 Adjusted MCEV 31.12.2013 5,796 Expected 135 return Operating MCEV earnings –520 –1,177 Experience Economic variances –172 variances Other non-
Slide 69: ERGO Property-casualty Germany – Key figures
Backup: ERGO Property-casualty Germany – Key figures ERGO Property-casualty Germany – Key figures Net result €m 187 150 126 68 58 31 37 18 11 19 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 H1 H1 2013 2014 2015 2014 2015 Technical result €m Investment result €m Other1 €m 201 150 –67 –68 103 96 H1 2014 H1 2015 H1 2014 H1
Slide 70: ERGO Property-casualty Germany
Backup: ERGO Property-casualty Germany ERGO Property-casualty Germany Combined ratio % Gross premiums written €m 101.3 Other Motor 181 431 98.1 Legal protection 97.1 95.4 208 TOTAL €1,831m Personal accident 95.7 95.4 95.3 332 94.0 93.5 93.4 Fire/property Liability 333 346 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Slide 71: ERGO International – Key figures
Backup: ERGO International – Key figures ERGO International – Key figures Net result €m 58 72 48 12 14 11 15 26 8 –396 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 H1 H1 2013 2014 2015 2014 2015 Technical result €m Investment result €m Other1 €m 323 240 –73 –64 80 45 H1 2014 H1 2015 H1 2014 H1 2015 H1 2014 H1 2015 1 Oth
Slide 72: ERGO International property-casualty
Backup: ERGO International property-casualty ERGO International property-casualty Combined ratio % Gross premiums written €m Other Poland 198 433 100.4 100.0 100.4 99.2 98.7 97.5 Legal TOTAL protection €1,183m 98.0 364 97.2 96.8 94.9 Greece Turkey 77 111 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Expense r
Slide 73: ERGO International property-casualty
Backup: ERGO International property-casualty ERGO International property-casualty Poland Turkey GWP1 €m Combined ratio % GWP1 €m Combined ratio % Non-motor % Non-motor % Motor % Motor % 873 95.2 96.0 97.7 122.3 820 816 293 225 232 108.5 108.4 42 47 43 42 43 42 58 53 57 58 57 58 2012 2013 2014 2012 2
Slide 74: International life – Premium growth driven by single-premium business in Poland
Backup: ERGO International life International life – Premium growth driven by single- premium business in Poland Total premium €m Organic development 2,029 Poland: Strong increase in bancassurance, positive 1,832 one-offs in new business 1,678 475 Austria: Increased single-premium business 520 O
Slide 75: Munich Health – Overview
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 % Segm
Slide 76: Munich Health – Key figures
Backup: Munich Health Munich Health – Key figures Net result €m 56 53 42 38 26 22 23 20 15 14 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 H1 H1 2013 2014 2015 2014 2015 Technical result €m Investment result €m Other1 €m 67 –6 43 –18 38 –2 H1 2014 H1 2015 H1 2014 H1 2015 H1 2014 H1 2015 1 Other non-operating result, goo
Slide 77: Private health insurance growing worldwide above GDP
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 Europe Middle East Health specialist insurers +3% +4% +10% +1% +1% +3% +10% Multi-line insurers 152 849 957 129 732 108
Slide 78: Investment result – Seasonal impact from dividends and equity derivatives
Backup: Investments Investment result – Seasonal impact from dividends and positive contribution from equity derivatives in Q2 Investment result €m 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
Slide 79: Return on investment by asset class and segment
Backup: Investments Return on investment by asset class and segment Actual H1 2015 %1 Regular Write-ups/ Disposal Extraord. Other ᴓ Market value income write-downs result derivative result inc./exp. RoI (€m) Afs fixed-income 2.7 – 1.4 – – 4.1 133,685 Afs non-fixed-income 5.5 –1.0 10.2 – – 14.7 15,08
Slide 80: Investment portfolio
Backup: Investments Investment portfolio Investment portfolio1 % Portfolio management in Q2 Land and buildings Fixed-interest Decline in market values due to increasing 2.5 (2.4) securities interest rates 56.3 (55.5) Shares, equity funds and Purchase of US government bonds, participating interests2
Slide 81: Investment portfolio – Fixed-interest securities and miscellaneous
Backup: Investments Investment portfolio Fixed-interest securities and miscellaneous Investment portfolio % Fixed-interest securities1 % Miscellaneous Fixed-interest securities Structured products Governments/ 7.7 (7.7) 56.3 (55.5) 4 (5) semi-government 61 (59) Corporates 16 (15) TOTAL Banks TOTAL €
Slide 82: Fixed-income portfolio – Total
Backup: Investments Fixed-income portfolio Total Rating structure % Regional breakdown % <BB and NR AAA Without With Total 7 (6) 41 (42) policyholder 30.6. 31.12. participation 2015 2014 BB 2 (2) Germany 5.3 24.0 29.3 30.3 TOTAL US 13.8 1.5 15.3 14.0 BBB €206.9bn France 2.2 5.3 7.5 7.6 12 (12) UK 3.
Slide 83: Fixed-income portfolio – Government/Semi-government
Backup: Investments Fixed-income portfolio Government/Semi-government Rating structure % Regional breakdown % BB AAA Without With Total 1 (1) 45 (46) policyholder 30.6. 31.12. participation 2015 2014 BBB 11 (11) Germany 5.1 22.9 28.0 29.6 TOTAL US 16.3 1.1 17.4 15.6 A €106.5bn Supra- 1.4 5.4 6.8 7.3
Slide 84: Fixed-income portfolio – Corporate bonds
Backup: Investments Fixed-income portfolio Corporate bonds (excluding bank bonds) Rating structure % Sector breakdown % <BB and NR AAA 30.6. 31.12. 4 (2) 1 (1) 2015 2014 Utilities 22.0 22.3 BB TOTAL AA Industrial goods and services 12.1 12.1 12 (11) 6 (6) €21.2bn Oil and gas 11.9 12.2 Telecommunicat
Slide 85: Fixed-income portfolio – Bank bonds
Backup: Investments Fixed-income portfolio Bank bonds Rating structure % Regional breakdown % <BB and NR AAA Total 4 (5) 1 (1) Senior Sub- Loss- 30.6. 31.12. bonds ordinated bearing 2015 2014 US 27.2 4.4 0.4 32.0 29.0 Germany 20.0 3.2 3.0 26.2 29.2 BB TOTAL AA UK 8.3 2.4 0.2 10.9 12.0 9 (5) 8 (8) Ir
Slide 86: Fixed-income portfolio – Structured products
Backup: Investments Fixed-income portfolio Structured products Structured products portfolio (at market values): Breakdown by rating and region €m Rating Region USA + Market- AAA AA A BBB <BBB NR RoW Europe Total to-par ABS Consumer-related ABS1 353 292 72 5 – – 328 394 722 101% Corporate-related AB
Slide 87: On- and off-balance-sheet reserves (gross)
Backup: Investments On- and off-balance-sheet reserves (gross) €m 31.12. 31.12. 31.12. 31.3. 30.6. 2012 2013 2014 2015 2015 Market value of investments 218,047 210,431 235,849 251,283 236,220 Total reserves 22,478 15,192 31,470 39,499 26,647 On-balance-sheet reserves Fixed-interest securities 9,980
Slide 88: On-balance-sheet reserves
Backup: Investments On-balance-sheet reserves On-balance-sheet reserves €m 30.6. Change 2015 Q2 Investments afs 11,317 –7,617 Valuation at equity 99 –23 Unconsolidated affiliated enterprises 174 –9 Cash flow hedging 28 –6 Total on-balance-sheet reserves (gross) 11,618 –7,655 Provision for deferred p
Slide 89: Off-balance-sheet reserves
Backup: Investments Off-balance-sheet reserves Off-balance-sheet reserves €m 30.6. Change 2015 Q2 Real estate1 2,078 23 Loans and investments (held to maturity) 12,526 –5,190 Associates 425 –30 Total off-balance-sheet reserves (gross) 15,029 –5,197 as if Provision for deferred premium refunds –11,04
Slide 90: Sensitivities to interest rates, spreads and equity markets
Backup: Investments Sensitivities to interest rates, spreads and equity markets Sensitivity to risk-free interest rates – Basis points –50 –25 +50 +100 Change in gross market value (€bn) +8.4 +4.1 –7.7 –14.6 Change in on-balance-sheet reserves, net (€bn)1 +2.0 +1.0 –1.9 –3.6 Change in off-balance-sh
Slide 91: Sensitivities of MCEV
Backup: Additional information Sensitivities of MCEV €m Reinsurance Life ERGO Change Change Change Change MCEV in €m in % MCEV in €m in % Base case 10,469 4,166 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%
Slide 92: Mission of Investor & Rating Agency Relations
Backup: Additional information Mission of Investor & Rating Agency Relations Responsibility Main objective Munich Re’s communication with the capital Active communication to support a fair capital- market / financial community market valuation of Munich Re shares and outstanding bonds External commu
Slide 93: Financial calendar
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 Balance sheet press conference for 2015 financial statements 16 March Analysts' conference in
Slide 94: For information, please contact
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) 3891-8030 Tel.: +49 (89) 3891-3875 Tel.: +49 (89) 3891-3910 E-mail: [email protected] E-mail:
Slide 95: Disclaimer
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