shaping change in insurance munich re equity story · 2 contract year view. munich re –march 2018...

Shaping change in insurance

Munich Re equity story

March 2018

Image: Getty Images/fStop

Shaping change in insurance –

Why invest in Munich Re

2Munich Re – March 2018

Strong track record

Successfully dealing with challenging economic

conditions – We remain a strong partner for

clients and reliable for shareholders, delivering

on our promises

Business strategy

Focus on insurance risks safeguarding

sustainable value creation –

Complementary business profiles limiting

correlation to capital market development

Rigorous risk management

Based on a high level of diversification, actively

managing the low-yield environment and strictly

budgeting all our insurance risks

Strong capital position

Continuously built up over years – Continuing

the long-term track record of attractive capital

repatriation while keeping the flexibility to seize

opportunities for profitable growth

Equity story

Munich Re at a glance –

Key financials


Munich Re 2016 2015 2014 2013 2012

Gross written premiums €bn 48.9 50.4 48.8 51.1 52.0Operating result €m 4,025 4,819 4,028 4,398 5,349Taxes on income €m –760 –476 312 –108 –878Consolidated result €m 2,581 3,122 3,171 3,333 3,204Investments €bn 219.4 215.1 218.9 202.2 213.8Return on equity % 8.1 10.0 11.3 12.5 12.5Equity €bn 31.8 31.0 30.3 26.2 27.4Off-balance-sheet reserves1 €bn 17.3 16.0 17.4 8.7 11.0Net technical provisions €bn 202.2 198.5 198.4 187.7 186.1Staff at 31 December 43,428 43,554 43,316 44,665 45,437

Our shares

Earnings per share € 16.0 18.7 18.3 18.5 17.9Dividend per share € 8.60 8.25 7.75 7.25 7.00Amount distributed €m 1,338 1,329 1,293 1,254 1,255Share price at 31 December € 179.65 184.55 165.75 160.15 136.00Market capitalisation at 31 December €bn 28.9 30.8 28.7 28.7 24.4No. of shares at year-end m 161.1 166.8 172.9 179.3 179.3

1 Including amounts attributable to minority interests and policyholders.

Equity story

Business strategy – Realising synergies and economies of

scope by combining primary and reinsurance under one roof

Equity story

Munich Re – March 2018 4

€bn

ERGO

Life and Health Germany

9.2 (19%)

Reinsurance

Property-casualty

17.8 (36%)

ERGO

P-C Germany

3.2 (7%)

ERGO

International

5.0 (10%)

Reinsurance – Well positioned to manage the

current market environment and drive innovation

P-C: Efficiently running the traditional book, steady

expansion of innovative products/solutions – strong

reserving position

Life and Health: Strong position in all major markets –

increasing contribution from initiatives portfolio

ERGO – Strategy Programme well on track,

increasing earnings contribution

Life and Health Germany: Continuously improving risk/

return profile, comprehensive management of back book

P-C Germany: Attractive business mix

International: Strong presence in selected developed

markets, capture opportunities in growth markets

Reinsurance

Life and Health

13.6 (28%)

TOTAL

€48.9bn

1 Gross written premium as at 31.12.2016.

Agile business model – Segmental breakdown

Reinsurance – Well positioned to manage the

current market environment and drive innovative solutions


Mark

ets

Products

New

Esta

blis

hed

Established New

Emerging

markets

Solutions

for emerging

risksNew

products/

risk-related

servicesRisk

Solutions

Incremental

innovations

Tailor-made

solutions

Under-

insurance

in developed

markets

Traditional

reinsurance

ILLUSTRATIVE

Traditional reinsurance

Successfully managing

the soft cycle

Risk Solutions

Continuous growth in

specialty and niche business

Innovation

Steady expansion of

innovative products/solutions

TOTAL1

€4.8bn

TOTAL1,3

~€650m

1 Premiums as at 31.12.2016. 2 Life (traditional and strategic initiatives): €10bn, traditional P-C: €13bn. Both without health business.3 Munich Re (Group); indirect effects on traditional business not included.

TOTAL1,2

€23bn

Equity story

Traditional p-c reinsurance –

Portfolio profitability protected by disciplined underwriting …

6Munich Re – March 20181 Related to premium volume in 2016. 2 Gross premium written as at 31.12.2016. 3 January renewals.

Equity story

Profitable core business

Preferential client access

Leading risk know-how

Superior diversification

Stringent cycle management

~50% private placements1

~2/3 direct client business

~30% tailor-made solutions1

Comprehensive service offering

As regards perils, forms of cover, regions, short/long-tail

Strong u/w discipline and conservatism in reserving

Deliberate portfolio shifts to less commoditised business

Traditional portfolio relatively resilient to pressure on rates – Diversification provides flexibility in managing the portfolio

TOTAL2

€13bn

–0.1

1.0

2.4

0.2

–2.4

–1.6

–0.9–0.5

0.8

2010 2011 2012 2013 2014 2015 2016 2017 2018

Renewals – Nominal price changes %

3

… and rigorous portfolio/cycle management –

Ensures portfolio profitability above cost of capital

7Munich Re – March 20181 Bubble size reflects gross premiums written in 2013 (grey) – 2016 (blue). 2 Economic profit.

2013 2016

Other

Casualty

Property

Property

Continuous reduction

as economic profitability

declined

Casualty

Less pricing pressure –

increased relative

contribution to value

generation

CAGR: ~–6%

CAGR: ~+11%

CAGR: ~–3%

0% Share in value generation2 100%

Low

P

ricin

g p

ressure

Hig

h

Other

ILLUSTRATIVE

Casualty

Property

Premium development

Equity story

Portfolio management based on economic management principles1

Tailor-made solutions – Preferred partner for large

transactions, strong deal pipeline in all markets

8Munich Re – March 20181 Economic profitability (RORAC). 2 Contract year view.

2013 2016

Cost of capital

Tailor-made

Traditional RI

Profitability1 %

2013 2016 ILLUSTRATIVE

Highly structured treaties with

lower risk-capital consumption –

competitive advantage due to

diversification benefits in our

internal model

Mid double-digit number of active,

customised deals

Deep risk expertise and capital

management know-how represent

perfect fit for insurers seeking

capital-triggered solutions – high

consulting quality and capacity

2013 2016 2013 2016

Traditional RI

Tailor-made

Premium €bn2 5.7 5.24.5

6.3

4% 17%42%

51%

Property Casualty

Equity story

Risk Solutions – Active portfolio management and

investments to secure strong earnings contribution


Equity story

94.1

87.9

83.8

88.6

90.3

95.4

2011 2012 2013 2014 2015 2016

3.43.8 4.0 4.2

5.0

22 23 24 2528 27

2011 2012 2013 2014 2015 2016

Share in % of totalP-C book

0.2

0.5

0.70.5 0.5

0.2

26

42

32

25 23

2011 2012 2013 2014 2015 2016

Share in% of totalP-C book

Gross earned premiums1 Combined ratio1 Underwriting result1% €bn

Drivers in 2016

Gross earned premiumsConsolidation following strong growth in past years –

Exit from financial institutions business at American Modern

Combined ratioHartford Steam Boiler with highest result contribution – Burdening

effect from run-off business, IT investments and outlier losses

TOTAL

€4.8bn

1 Management view, not comparable with IFRS reporting.

Significant focus on innovation … … with significant impact on business already today

Munich Re fosters innovation throughout the global

organisation – Strong focus on tangible business impact

10Munich Re – March 20181 Munich Re (Group); indirect effects on traditional business not included.

Innovation

infrastructureInnovation scouting

Innovation labs

Ideation

Corporate partnering

Innovation

enablerData analytics

Agile IT

Collaboration

Innovation-related

business already sizeable

Risk carrier for established

and new (digital) insurance

and non-insurance companies

Provider of integrated risk

services (e.g. sensor-based)

Tailored risk solutions

and white-label products

Data analytics-based services

Innovation

areas New (re)insurance products

New business models

New clients and demands

New risk-related services

1

2

3

4

Equity story

TOTAL1

~€650m

Strong long-term growth in cyber (re)insurance expected –

Munich Re with leading-edge expertise and market presence


GWP global cyber insurance market1

1 Estimates based on different external sources (Marsh & McLennan, Barbican Insurance, Allianz).

GWP Munich Re cyber portfolio US$ mUS$ bn

Reinsurance: First mover and global market leader

Dynamic growth through joint projects with cedents

Steady growth in the US

Strong accumulation models

Primary insurance: Specialised single-risk taker

Hartford Steam Boiler: Established player in US

for SMEs and individuals

Corporate Insurance Partner: Focus on larger corporate

clients – Cooperation with IT providers and Beazley

New (re)insurance products1

0

5

10

2015 2016 2019 2020

RoWUS

126 135

191

263

2013 2014 2015 2016

Reinsurance

Primary insurance

Equity story

Reinsurance Life – Core business supplemented by

well established initiatives


Equity story

Retu

rnLow

er Overweight

Neutral

Underweight

Unique

Compared to competitors

Mortality

Asset protection

Asia

Longevity

FinMoRe

Morbidity

Hig

her

ILLUSTRATIVE

RiskHigher Lower

IFRS technical result

420

359

279335

€487m

2012 2013 2014 2015 2016

Adjusted Target €400m

ERGO – Well on track to become

a significant earnings contributor


41

273

530~600+

2016 2017 … 2020 2021

€m

Leaner and

more efficient

structures

Transforming

the business

model

Convincing solutions,

committed to

profitable growth

Fit Digital Successful!

Increasing IFRS net profit1ERGO Strategy Programme/International Strategy

1 From 2017, figures include primary insurance business of Munich Health.

Equity story

2005 2008 2011 2014 2017

Strong balance sheet supports sound profitability, …

14Munich Re – March 20181 As at 30.9.2017.

Strong capitalisation according to all metrics

Medium

Low High

€25bnunrealised investment gains1

Rock-solid reserving position

RoE exceeds cost of capital

~10% > ~8%

16

12

8

4

0

Average cost of capital

Value creation

13-year average RoE Average cost of capital

%

Equity story

… facilitating attractive shareholder returns


TSR vs. major peers and insurance index2 %

1 Subject to approval of Supervisory Board and AGM. 2 Annualised total shareholder return defined as price performance plus dividend yield over the period from 1.1.2005 until 28.2.2018; based on Bloomberg data in local currency; volatility calculation with 250 trading days per year. Peers: Allianz, Axa, Generali, Hannover Re, Swiss Re, ZIG, Stoxx Europe 600 Insurance (“index”).

Sustainable growth of dividend per shareCAGR: 8.9%

Total pay-out since 2005

(dividend and share buy-back)

>€24bn

3.10

€8.60

2.7

3.64.1

5.0 5.3 5.5

6.6

5.24.5 4.7 4.5 4.8 4.8

2005 2017

Equity story

Dividend yield (%)

1

Peer 5

Peer 3

Peer 2

Peer 4 Peer 6Peer 1

Index

–5

0

5

10

15

20

20 25 30 35 40

Total shareholder return (p.a.)

Volatility of total shareholder return (p.a.)


Group

Dividend stable at €8.60 per share1, despite nat cat losses –

Price and volume increase in January renewals

Backup: Group – Preliminary financial highlights 2017

17

Munich Re (Group) – 2017 (Q4 2017)

Investment result

RoI: 3.2% (3.4%)

Solid investment return, attrition of

running yield decelerating –

Reinvestment yield at 1.9% in Q4

Shareholders' equity

€28.2bn(+1.5% vs. 30.9., –11.3% vs. 31.12.16)

Strong capitalisation is basis for high

pay-outs – SII ratio almost stable2 at

~240%3

HGB result (German GAAP)

€2.2bnRelease of equalisation reserve in

fire and aviation – Distributable

earnings largely unchanged

January Renewals

Premium increase: 19.0%

Price increase: ~0.8%

1 Subject to approval of Supervisory Board and AGM. 2 Based on comparable calculation method vs. 31.12.2016 (242%). 3 Indication, after deduction of potential capital measures of €2.7bn in line with previous years’ capital management practices.

Net result

€392m (€538m)

Reinsurance result of €120m affected

by heavy nat cat claims, pleasing

ERGO result of €273m –

Tax income offsets FX losses

Operating result

€1,241m (€864m)

Technical result including fee income

in Reinsurance Life and Health of

€428m close to original guidance –

Good technical profitability at ERGO

Munich Re – March 2018

Short-term earnings pressure

mitigated by strong balance sheet

Part of the valuation reserves realised as a result of usual

portfolio turnover

Ongoing releases of loss reserves without weakening

resilience against future volatility

1 Basic losses, in % of net earned premiums, adjusted for corresponding commission effects.

Investment result

Lower reinvestment yieldsOngoing disposal gains

P-C reinsurance – Release of loss reserves1

Reinsurance cycleStrong reserving position

2.83.7

5.8

4.4

5.9

7.2

5.5

2010 2011 2012 2013 2014 2015 2016

1.6 1.2 0.7 1.8 2.6 2.7 2.6

711

22

15

31

2628

2010 2011 2012 2013 2014 2015 2016

Net disposal gains Unrealised gains

€bn %

Conservative accounting translates into earnings as a result of ordinary business activity


Backup: Group – Strong balance sheet

Strong capital position according to all metrics facilitates

financial flexibility, including high shareholder distribution

Solvency II IFRS German GAAP/Rating

277302

267%

2014 2015 2016

30.3 31.0 €31.8bn

2014 2015 2016

9.1

9.8€10.1bn

2014 2015 2016

High-quality eligible own funds

Tier 2

8%Tier 1

90%

Tier 3

2%

TOTAL

€40.7bn

SII ratio well above target capitalisation Sound shareholders’ equity

Debt leverage1 among the

lowest in the insurance industry

13.613.4

12.6%

2014 2015 2016

Strengthened equalisation provision largely

protects HGB earnings

Substantial capital buffer2 supports AA rating

AA

A AAA

Ratingagencies

1 Strategic debt (senior, subordinated and other debt) divided by total capital (strategic debt + equity). 2 S&P capital. Munich Re – March 2018 19

Backup: Group – Capital position

IFRS capital position9M 2017


Backup: Group – IFRS capital position

Equity €m

Subordinated debt

Senior and other debt2

Equity

Capitalisation €bn

1 Strategic debt (senior, subordinated and other debt) divided by total capital (strategic debt + equity). 2 Other debt includes Munich Re bank borrowings and other strategic debt.

Debt leverage1 (%)

Equity 31.12.2016 31,785 Change Q3

Consolidated result –146 –1,436

Changes

Dividend –1,333 0

Unrealised gains/losses –92 –94

Exchange rates –1,570 –501

Share buy-backs –743 –272

Other –131 –65

Equity 30.9.2017 27,770 –2,369

Unrealised gains/losses Exchange rates

FX effect mainly driven by US$Fixed-interest securities

9M: –€120m Q3: –€103m

Non-fixed-interest securities

9M: €36m Q3: €8m

31.0 31.8 32.2 30.1 27.8

4.4 4.2 4.22.8

2.8

0.4 0.4 0.4

0.40.3

13.4 12.6 12.49.5 10.1

2015 2016 31.3.2017 30.6.2017 30.9.2017

10.1%

Significant increase in local result of parent company

safeguards financing of capital repatriation

21Munich Re – March 20181 Changes in restrictions on distribution.

Backup: Group – German GAAP capital position

3.3 –2.3

3.4 –0.3 €4.2bn

Distributable earnings31.12.2015

HGB result2016

Distributable earnings31.12.2016

2.6 –0.3

1.6 –0.5€3.4bn

HGB result2015

Underwritingresult

Investmentresult

Other HGB result2016

Average 2009–2016

–1.9 2.1

Dividend/

buy-back

Other1

Higher major losses, lower reserve releases

Intragroup disposal gains (2016) vs.

write-down on ERGO (2015)

Relief in equalisation provision expected in 2017

Economic earnings 2016 – Munich Re (Group)

Outlook 2017: In the range of IFRS result target


€bn Actual Normalised

Operating economic earnings 1.4 2.0

Expected return existing business 0.6

New business value 1.0

Operating variances existing business –0.2

Economic effects 2.5 1.6

Interest rate 0.0

Equity 0.3

Credit 0.9

Currency 0.8

Other1 0.5

Other non-operating earnings –1.6 –1.1

Total economic earnings 2016 2.3 2.5

Total economic earnings 2015 5.3 2.6

Operating economic earnings

High operating economic earnings in reinsurance compensate

for negative ERGO contribution; normalised for reinsurance

P-C prudency margin of €0.7bn, new business value amounts

to €1.7bn

Normalisation: Operating economic earnings adjusted for

variances in new and existing business

Economic effects

Effects from development of capital market parameters very

pleasing overall, however diverse across segments:

Reinsurance with high economic gains on risk-free interest

rates, credit spreads, FX and equities; economic losses at

ERGO driven by further interest-rate decline over the year

Normalisation: Adjusted to lower expectation in reinsurance

and higher at ERGO

Other non-operating earnings

Normalisation: Other non-operating earnings adjusted to

expected tax rate (all other line items pre-tax) and other items

1 Primarily related to illiquid investments: Property, infrastructure, forestry, hedge funds, private equity.

Backup: Group – Economic earnings

P&L attribution – Pleasing economic earnings overall

Reinsurance compensates for adverse development at ERGO


Backup: Group – Economic earnings

Munich Re (Group) 2016

€bnReinsurance

LifeReinsurance

P-CERGO

L/H GermanyERGO

P-C GermanyERGO

InternationalMunichHealth

Munich Re(Group)

Operating economic earnings 1.1 0.7 –0.4 –0.1 –0.1 0.1 1.4

Expected return existing business 0.1 0.2 0.1 0.0 0.1 0.0 0.6

New business value 1.2 –0.5 0.2 0.0 0.1 0.1 1.0

Operating variances existing business –0.2 1.0 –0.7 –0.1 –0.2 0.0 –0.2

Economic effects 0.8 2.0 –0.1 –0.1 –0.2 0.1 2.5

Other non-operating earnings –0.3 –0.6 –0.5 0.0 –0.2 0.0 –1.6

Total economic earnings 1.7 2.1 –1.0 –0.2 –0.5 0.2 2.3

Capital measures –2.3

Changes in other own funds items 0.0

Change in SII eligible own funds 0.0


Strong SII ratio

1 Expected EOF change refers to normalised economic earnings; all figures including tax effect.

Backup: Group – Risk disclosure

SII ratio development1

302% –19–16 18 –16

–1

SII ratio31.12.2015

Opening adjustmentsincl. model changes

Capitalmeasures

Expectation Operating andnon-op. variances

Capitalmarket variances

SII ratio31.12.2016

EOF €40.7bn 0.0 –2.3 2.5 –1.1 0.8 €40.7bn

SCR €13.5bn 0.9 – – 0.5 0.4 €15.3bn

267%

Given high levels of uncertainty,

risk profile remains relatively stable


Breakdown of solvency capital requirement (SCR)

302% 267%2

38.240.7 €40.7bn

13.8 13.5 €15.3bn

2014 2015 2016

EOF SCR

Munich Re’s SII ratio1

SII ratio in a very comfortable range, with flexibility for

additional risk taking

Increase largely driven by FX, low interest rates, business

growth in Life Reinsurance and model refinements


277%€6.8bn

5.2

9.9

4.0

1.4

0.6

Property-casualty

Life and Health

Market

Credit

Operational risk

Other

2016

2015

2014

1 All figures do not include effects of transitionals or long-term-guarantee (LTG) measures, e.g. volatility adjustment. 2 Ratio after dividend of ~€1.3bn for 2016 to be paid in April 2017: 258%. SII ratio considering transitionals for ERGO Leben and Victoria Leben: 316%.

Breakdown of solvency capital requirement (SCR)

by risk category and segment



1 Capital requirements for associated insurance undertakings and other financial sectors, e.g. institutions for occupational retirement provisions.

Group

Delta

RI ERGO MH Div.

2016 RemarksRisk category (€bn) 2015 2016 2016 2016 2016

Property-casualty 6.3 6.8 +0.4 6.7 0.4 – –0.3 Appreciation of US$

Life and Health 4.7 5.2 +0.5 4.3 1.2 0.3 –0.6

Market 8.7 9.9 +1.2 5.9 6.5 – –2.5 Low-interest-rate environmentModel reflects negative interest rates

Credit 4.2 4.0 –0.1 2.6 1.6 – –0.2

Operational risk 1.0 1.4 +0.4 0.9 0.8 0.1 –0.4 Reassessment of cyber scenarios

Other1 0.1 0.6 +0.5 0.4 0.2 0.0 0.0 Change in disclosure

Simple sum 25.1 27.9 +2.8 20.8 10.7 0.4 –4.0

Diversification –9.3 –10.0 –0.7 –7.7 –2.4 0.0 Diversification benefit: 36%

Tax –2.3 –2.6 –0.3 –2.2 –1.0 –0.1

Total SCR 13.5 15.3 +1.8 10.9 7.3 0.3 –3.2

Low interest-rate environment largest determinant of SCR changes

Property-casualty risk – High global diversification, both

within nat cat risks and between major and basic losses



1 Munich Re (Group). Return period 200 years, pre-tax. 2 Natural catastrophes, man-made (including terrorism and casualty accumulation) and major single losses.

Nat cat exposure (net of retrocession) – AggVaR1 €bn SCR property-casualty €bn

1

2

3

4

5

Top nat cat exposures

1 Atlantic Hurricane

2 Earthquake Los Angeles

3 Storm Europe

4 Cyclone Australia

5 Earthquake Japan

Top 5 exposures

1 2 3 4 5

6.36.8

2015 2016

Basic losses

Major losses2

Diversification

Total

3.7

6.2

–3.1

6.8

Overall, portfolio remained stable vs. last year

SCR increase mainly due to FX, esp. strong US$,

affecting major and basic losses

Development of Munich Re’s Solvency II ratio



SII ratio %Munich Re actions

>220%: Above target capitalisation

Capital repatriation

Increased risk-taking

Holding excess capital to meet external constraints

140% – 175%: Below target capitalisation

Tolerate (management decision) or

If necessary, take management action (e.g. risk transfer, scaling-down of activities; raising of hybrid capital)

<140%: Sub-optimal capitalisation

Take risk-management action (e.g. risk transfer, scaling-down of activities; raising of hybrid capital) or

In exceptional cases, tolerate situation (management decision)

175% – 220%: Target capitalisation

Optimum level of capitalisation

220%

175%

140%

100%

2010 2011 2012 2013 20141 2015 2016

267%

1 Transition into SII metric.

267

284

248

246

240

282

251

266

265

247

263

279

Sensitivities of SII ratio


SII ratio – Sensitivity %

Ratio as at 31.12.2016

Interest rate +50bps1

Interest rate –50bps1

Spread +100bps GOV2

Spread +100bps CORP2

Equity markets +30%

Equity markets –30%

FX –20%

Inflation +100bps3

Atlantic Hurricane4

UFR –50bps

Volatility adjustment

220175

1 Parallel shift until last liquid point, extrapolation to unchanged UFR. 2 Due to diversification, spread sensitivity simultaneously stressing GOV and CORP spreads (226%) is lower than the sum of shown separate sensitivities. 3 Based on CPI inflation. 4 Based on 200-year event.


Actual versus expected comparison –

Loss-monitoring yields consistent picture across years

Reinsurance group – Comparison of incremental expected losses with actual reported losses1 €m

Legend: Green Actuals below expectation Solid line Actuals equal expectation

Red Actuals above expectation Dotted line Actuals are 50% above/below expectations

By exposure year By line of business

1 Reinsurance group losses as at Q4 2016, 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 – March 2018 30

Actual losses consistently below actuarial expectations – Very strong reserve position

Backup: Group – Reserving position

2015

2014

20132012

2011

20102009

2008

2007

2006 and prior

10

100

1,000

10,000

10 100 1,000 10,000

Expected reported loss

Actual reported loss

Aviation

CreditEngineering

Fire

Marine

Motor

Personal accident

Risks other Property

Third-party-liability

100

1,000

10,000

100 1,000 10,000

Expected reported loss

Actual reported loss

Actuals for first run-off year

(2015) are 10% below

expectations – consistent

with picture in previous years

Very stable actual versus

expected development

per line of business

Positive run-off result without weakening

resilience against future volatility

Backup: Group – Reserving position

Ultimate losses1 (adjusted to exchange rates as at 31.12.2016) €m

Accident year (AY)

Date ≤2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total

31.12.2006 51,505

31.12.2007 51,659 12,711

31.12.2008 51,145 12,928 14,191

31.12.2009 50,478 12,824 14,440 13,936

31.12.2010 49,900 12,742 14,383 13,891 14,335

31.12.2011 49,694 12,704 14,083 13,385 14,522 18,544

31.12.2012 49,193 12,320 13,924 13,243 14,388 18,646 15,168

31.12.2013 49,125 12,064 13,751 13,216 14,475 18,307 14,972 15,076

31.12.2014 48,894 11,978 13,471 12,890 14,512 17,901 14,742 15,325 15,089

31.12.2015 48,588 11,744 13,330 12,663 14,318 17,771 14,519 15,270 15,128 14,361

31.12.2016 48,339 11,771 13,241 12,618 14,081 17,298 14,482 14,953 15,089 14,408 15,336

CY 2016 run-

off change248 –27 89 45 237 473 37 317 39 –48 – 1,412

CY 2016 run-

off change (%) 0.5 –0.2 0.7 0.4 1.7 2.7 0.3 2.1 0.3 –0.3 – 0.8

Prior-year releases of €1.4bn

driven by reinsurance portfolio

Favourable actual vs.

expected comparison

facilitates ultimate

reductions for prior years

Reserve position remains

strong

Reinsurance2 €1,268m

ERGO €144m

Ultimate reduction

1 Basic and major losses; accident year split partly based on approximations. 2 Thereof €1,148m basic and €120m major losses. Munich Re – March 2018 31

Munich Re (Group) – Outstanding bonds


Backup: Group – Outstanding bonds

Senior and 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

£300m Until 2018 7.625%, thereafter variable 2003 2028 21 June 2018

US$342m 7.45% 1996 2026

Maturity pattern €m Currency pattern %

694

2,411

25

0-5 5-10 10-15 15-20 20-25 25-30 30-35 undated

1 As at 30 September 2017. Bonds with a nominal value below €100m not considered. In addition, Munich Re has placed some natural catastrophe bonds.

USD

11

GBP

27

EUR

62

TOTAL

€3.1bn

Turning risk into sustainable value –

Company success through responsibility

33

… implementation … … external recognitionCommitments…

Environmental, Social, Governance (ESG)

Group-wide carbon-neutrality since 2015; shared-

value projects closely related to our core business;

high corporate governance standards

Corporate responsibility in insurance

Integration of ESG aspects into core business

(process, guidelines, tools); prudent Group-wide

control, support and training

Corporate responsibility in investment

Sustainability one criterion for investment decision;

incorporated in our Group-wide investment guideline

We actively embrace ESG factors along the value chain in our insurance business operations and asset management


Backup: Group – Corporate responsibility

http://www.msci.com/products/indices/esg/

http://www.msci.com/products/indices/esg/

http://www.unpri.org/

http://www.unpri.org/


Reinsurance

Munich Re – Leading global reinsurer


Backup: Reinsurance

Rank Company Country Net reinsurance premiums written 2016 (US$ m)

1 Swiss Re Switzerland 33,570

2 Munich Re Germany 31,8393 Hannover Re Germany 15,363

4 Berkshire Hathaway Re USA 13,917

5 SCOR France 13,231

6 Reinsurance Group of America USA 9,249

7 Lloyd’s UK 8,959

8 China Re China 7,514

9 Everest Re Bermuda 5,271

10 MS&AD Holdings Japan 5,181

11 Partner Re Bermuda 4,954

12 General Ins. Corp. of India India 4,675

13 Transatlantic Holdings Inc. USA 3,969

14 Korean Re South Korea 3,891

15 XL Catlin Bermuda 3,527

16 Mapfre Re Spain 2,946

17 Sompo Japan 2,874

18 Tokio Marine Japan 2,685

19 Maiden Re Bermuda 2,655

20 R+V Versicherung Germany 2,302

Total top 40 200,973

Source: Standard & Poor's, September 2017.

Reinsurance – Overview31.12.2016


Backup: Reinsurance

2016 2015 2014 2013 2012

Gross written premiums €bn 27.8 28.2 26.8 27.8 28.2

Investments €bn 88.9 89.2 88.0 79.2 83.8

Net technical provisions €bn 65.5 65.4 63.5 60.5 61.1

Major losses (net) €m 1,542 1,046 1,162 1,689 1,799

Thereof natural catastrophes €m 929 149 538 764 1,284

Combined ratio % Premium split by region – 2016 %

91.0 92.1 92.7 89.7 95.7

50.2 51.3 53.0 50.8 54.22012 2013 2014 2015 2016

Combined ratio Basic losses Africa, Middle East

3North America

47

Asia and Australasia

16

Latin America

5TOTAL

€27.8bn

Europe

29

Reinsurance Property-casualty9M 2017


Backup: Reinsurance

Gross premiums written €m Major result drivers €m

9M 2016 13,733

Foreign exchange 27

Divestments/investments 0

Organic change –236

9M 2017 13,524

9M

2017

9M

2016

Technical result –1,381 1,642 –3,022

Non-technical result 462 368 94thereof investment result 1,436 1,266 170

Other 252 –248 501

Net result –667 1,761 –2,428

Q3

2017

Q3

2016

Technical result –2,306 597 –2,903

Non-technical result 176 108 67thereof investment result 479 411 68

Other 605 –147 752

Net result –1,525 558 –2,083

Slightly positive FX effects from US$

Cancellation/modification of large treaties

especially in agro, fire and liability

Technical result

Q3: High nat cat loss ratio of 70.3%,

thereof impact from hurricanes Harvey,

Irma and Maria, of €2.7bn/64.1%

Investment result

9M: Stable regular income also

compared with previous year

9M: Less disposal gains, improved

derivative result

Q3: Return on investment: 3.1%

Other

9M: FX result of –€168m vs. €299m

9M: Tax income of €494m, thereof

€671m in Q3

Backup: Reinsurance


Combined ratio9M 2017

%Combined ratio

2015 89.7

2016 95.7

9M 2017 117.3

Q3 2017 160.9

Expense ratio Basic losses Major losses

50.8

54.2

54.5

54.1

6.2

9.1

30.3

75.0

32.6

32.4

32.6

31.8

Major losses Nat cat Man-made

Reservereleases1

Normalised combined ratio2

9M 2017 30.3 25.2 5.0 –5.9 100.4

Q3 2017 75.0 70.3 4.7 –6.0 99.9

Ø Annual

expectation ~12.0 ~8.0 ~4.0 ~–4.078.6

88.4

99.8

92.5

101.997.1

93.9

160.9

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

1 Basic losses prior years, already adjusted for directly corresponding sliding-scale and profit commission effects. 2 Based on 4%-pts. reserve releases. 9M 2017 adjusted for several larger prior-year commission effects of 0.6%-pts.

Traditional book and Risk Solutions complement

each other and provide diversification


Total P-C book % Traditional Risk Solutions

1 Gross premiums written property-casualty reinsurance as at 31.12.2016 (31.12.2015). 2 Aviation, marine and credit. 3 Part of Special and Financial Risks providing solutions for large corporate clients.

%

Tailor-made

solutions

23 (18)

Other

traditional business

50 (54)

Risk

Solutions

27 (28)

TOTAL1

€18bn

TOTAL

€13bn

Casualty

47 (47)

Specialty2

9 (10)

Other property

34 (33)

Nat cat XL

10 (10)

Watkins

8 (9)

Specialty

markets

13 (13)

American Modern

22 (23)

Corporate

Insurance Partner3

12 (13)

Hartford

Steam Boiler

21 (19)

Other

24 (23)

TOTAL

€5bn

Well balanced portfolio from a regional and line-of-business perspective

Well balanced traditional portfolio

Slight shift from specialty lines to other

property

Dominated by US business – More than 50%

HSB top-line growth driven by new innovative

products

Demand for tailor-made solutions

compensates for the reduction in other

traditional business

Risk Solutions an important pillar for

top-line contribution

%

Backup: Reinsurance

Well balanced portfolio as basis

for sustainable earnings generation


Traditional Portfolio developments

1 Traditional reinsurance, incl. tailor-made solutions. Allocation based on management view, not comparable with IFRS reporting.

%

Casualty motor

28 (27)

Aviation

1 (1)

Property ex

nat cat XL

27 (26)

TOTAL

€13bn

Facultative

9 (9)

XL

17 (19)

Proportional

74 (72)

Increase in proportional business supports earnings resilience

Share increases

Proportional casualty motor and

property – following the realisation

of profitable business opportunities

during the year

Accordingly, ongoing shift towards

proportional business

Share decreases

Deliberate reductions in marine

(offshore energy)

Growth in casualty ex motor below

portfolio average

Continued reduction of more volatile

XL portfolio

TOTAL

€13bn

Marine

3 (4)

Credit

5 (5)

Agro

7 (7)

Casualty ex motor

19 (20)

Property

nat cat XL

10 (10)

Backup: Reinsurance

%

1 Gross premiums written. Economic view – not fully comparable with IFRS figures. 2 Total refers to total p-c book, incl. remaining business.

January renewals – Roughly half of total P-C book

up for renewal, regional focus on Europe

Total property-casualty book1

41

%

Remaining business

29

July renewals

15

January renewals

47

April renewals

9

Regional allocation of January renewals

TOTAL

€8bn

%Nat cat shares of renewable portfolio2

TOTAL

€18bn

10

25

19

13

90

75

81

87

January

April

July

Total

Nat cat Other perils

Worldwide

24

Asia/Pacific/Africa

12North America

27

Europe

33

Latin America

3


Backup: Reinsurance – January renewals

Substantial rate increases in loss-affected business –

attractive business opportunities lead to top-line growth

42

January renewals 2018

% 100 –14.3 85.7 5.4 27.9 119.0

€m 8,327 –1,190 7,138 446 2,327 9,909

Change in premium +19.0%

Thereof price movement1 ~ +0.8%Thereof change in exposure for our share +18.2%

Overall portfolio profitability clearly improved

Total renewablefrom 1 January

Cancelled Renewed Increase on renewable

Newbusiness

Estimatedoutcome

Positive price change for the

first time in four years

Nat cat losses in 2017 stop

downward trend –

substantial rate increases in

loss-affected business,

stabilisation elsewhere

Significant top-line growth,

seizing various opportunities

in proportional casualty and

property business, …

… including a few very large

transactions

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).


Backup: Reinsurance – January renewals

Munich Re utilising all ART channels as instrument for risk

management and expanded product range


Munich Re channels to tap alternative capacity sources

1 Munich Re structured and arranged transactions. 2 Including indemnity retrocession, ILW/derivatives, risk swaps, cat bonds and the sidecars including Eden Re. Selection of main scenarios.

Broadened distribution channels to ART markets to increase flexibility of Munich Re balance sheet –

relationship-based approach allows for scaling-up

Additional cat bond of

US$ 190m issued

(Queen Street XII)

Broadened investor base

for fully collateralised

cover of Munich Re peak-

zone risk

Eden Re II renewed with

2017 series at previous

year’s level (US$ 360m)

Broader investor base

and cession with four

lines of business

Queen Street programmeSidecar programme1 Retrocession – Protection per nat cat scenario2 €m

Retrocession use reflects favourable market terms and strong Munich Re capital base

0

500

1,000

1,500

2014 2015 2016 2017

Australia Cyclone US Windstorm NE US Windstorm SE

Combining Munich Re’s unique value proposition in managing peak risk with client access to institutional investor capacity

Taking advantage of new sources of capital for clients and Munich Re’s own book

Munich Re ILS service for third parties completes offer as customised stand-alone service or integrated into traditional solutions

Enhanced risk management and client offerings on basis of ART channels

Backup: Reinsurance

Munich Re's maximum in-force nat cat protection


Munich Re's maximum in-force nat cat protection as at January 2017 €m

As at January 2017. Protection before reinstatement premiums.EU other perils including Earthquake Turkey.

500

1,000

1,500

US windstormnortheast

US windstormsoutheast

US earthquake EU windstorm EU other perils Japan earthquake Australia cyclone

Cat bonds

Risk swaps

Sidecars

Indemnity retro

0

Benefiting from favourable market environment Broadening of relationship to end-investors

Backup: Reinsurance

Outstanding insurance-linked securities (ILS) –Munich Re's Capital Partners unit is a recognised player in the ILS market


Transaction Closing Maturity Volume Perils covered

For

clientsPandemic Emergency

Financing Facility

7/2017 7/2020 US$ 225m

US$ 95m

Class A – Pandemic influenza, Coronavirus

Class B – Filovirus, Coronavirus, Lassa Fever, Rift

Valley Fever, and Crimean Congo Hemorrhagic Fever

Lion Re II DAC 6/2017 7/2021 €200m Europe Windstorm, Italy Earthquake, Europe Flood

Vitality Re VIII Re Ltd. 1/2017 1/2021 US$ 200m US health risks

Vitality Re VII Re Ltd. 1/2016 1/2020 US$ 200m US health risks

Bosphorus 2 Re Ltd. 8/2015 8/2018 US$ 100m Earthquake Turkey

Azzurro Re I DAC 6/2015 1/2019 €200m Italy Earthquake

Fonden 8/2017 8/2020 US$ 150m Class A – Mexico Earthquake

8/2017 12/2019 US$ 100m Class B – Atlantic Hurricane

8/2017 12/2019 US$ 110m Class C – Pacific Earthquake

For

Munich

Re’s

book1

Eden Re II Ltd. (Series 2018-1) 12/2017 3/2022 US$ 300m Various perils

Eden Re II Ltd. (Series 2017-1) 12/2016 3/2021 US$ 360m Various perils

Queen Street XII Re DAC 5/2016 4/2020 US$ 190m Hurricane US & Windstorm Europe

Queen Street XI Re DAC 12/2015 6/2019 US$ 100m Hurricane US & Cyclone Australia

Queen Street X Re DAC 3/2015 6/2018 US$ 100m Hurricane US & Cyclone Australia

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

1 Excluding private transactions.

Backup: Reinsurance

Reinsurance Life and Health9M 2017


Backup: Reinsurance Life and Health

Gross premiums written Major result drivers €m

9M 2016 9,892

Foreign exchange 7


Organic change 347

9M 2017 10,246

9M

2017

9M

2016

Technical result 232 304 –72


Other –173 –15 –158

Net result 297 383 –86

Q3

2017

Q3

2016



Other –42 –38 –4


Business growth in Australia, Asia and

Middle East

Technical result, incl. fee income of €271m

9M: Good underlying business

development

9M: Technical result below expectations

due to negative impact from recaptures

in the US (Q3: >€100m, 9M: €170m)

Q3: Largely offsetting effects, e.g. better

claims development in North America,

adverse claims experience in Australia

Investment result

9M: High regular income supported by

deposits retained on assumed

reinsurance

9M: Disposal gains on equities and

fixed income


Other

9M: FX result of –€37m vs. €88m

€m

Well diversified global portfolio


North American overweight reflective of size of reinsurance markets – Biometric risk exposure dominated by mortality

90%

10%

Latin America

30%70%

Australia

90%

10% South Africa

40%

60%

Asia

30%

10%

60%

United Kingdom

65%35%

Canada

85%

15%

USA

25%

65%

10%

Continental Europe

Size of bubbles indicative of present value of future claims.

Mortality 65 %

Morbidity 25 %

Longevity 10 %

NA 60 %

Europe 20 %

Asia 10 %

Australia 5 %

Africa / LA 5 %

Backup: Reinsurance Life

Financially Motivated Reinsurance –

Well established value proposition, strong demand prevails


Backup: Reinsurance Life – Initiative portfolio

€mGross premiums written Technical result and fee income NBV1

Demand will remain high

Transaction types will vary by geographical region

Number, size and type of transactions are difficult to predict and will

vary on an annual basis

Expectations going forward

Geographically well diversified portfolio

Lower result from scheduled termination of some large treaties

2016 new business again exceptional; approx. 25 new transactions,

including large portfolio transaction in Australia

New business value dominated by APAC and Europe,

including 8 SII-related treaties

Portfolio development

1 2012–14 MCEV, from 2015 Solvency II.

4,5364,109

3,356 3,313

2,232

41 3833 31

22

2012 2013 2014 2015 2016

% of total

43

70 65 66

36

49

49 62 70

41

92

119 127136

77

19 2837 34 15

2012 2013 2014 2015 2016

Technical result Fee income

% of total

82

129

73

214

257

14

2216

23 22

2012 2013 2014 2015 2016

% of total

Asia –

Vital new business production secures growth across the region


€mGross premiums written Technical result and fee income NBV1

Reinsurance markets will continue their growth path

Demand for solvency relief and financing solutions remains high

Underwriting discipline remains high although competition and

pressure on prices are expected to increase

We are watching product trends in critical illness closely


Sustained growth path – volume of recurring business steadily increasing

Tailor-made market and client strategies

Growth supported by broad range of services

New business production second only to the exceptionally strong

year 2015


1 2012–14 MCEV, from 2015 Solvency II.

Backup: Reinsurance Life – Strategic focus

1,178

872 871 9101,008

118 9 9 10

2012 2013 2014 2015 2016

% of total

54 58 54

77

6614 5

919

5562 59

86 85

1215

19

26

16

2012 2013 2014 2015 2016

Technical result Fee income

% of total

8197 93

198180

1417

21 2115

2012 2013 2014 2015 2016

% of total

€m€m

Longevity –

Book developed carefully in line with risk appetite


Gross premiums written Liability assumed p.a. Strategic proposition

Evolutionary development of portfolio within clearly defined risk

tolerance

Careful investigation of expansion into other markets

High market potential but also significant pressure on prices

Continuation of highly selective approach and prudent valuation (no

significant recognition of NBV)


Portfolio comprises longevity swaps in UK

First transaction concluded in 2011 after in-depth research

Executed 1-2 transactions per year to build portfolio carefully and to

allow for selective underwriting approach

2014: Participation in one particularly large transaction


Longevity considered to be primarily a risk

management tool to balance mortality

portfolio and to stabilise earnings

Prudent approach in pricing and valuation

because of uncertainty around future

mortality trend


€m€m

53120

312381

484

3 4 5

2012 2013 2014 2015 2016

% of total

887 982

2,788

1,366

1,884

2012 2013 2014 2015 2016

Asset protection –

Comprehensive solutions to non-biometric financial risks


€mIFRS contribution margin1 Product portfolio Strategic proposition

Existing book dominated by Asia/Japan

Current opportunities mainly in Europe and Asia/Japan

Active exploration of business potential in North America


Portfolio continues to gain significance

Growing contribution to NBV


Wide range of tailor-made solutions

Legal, regulatory and structuring expertise

State-of-the-art in-house hedging platform

Solutions to Basel III and Solvency II needs

Resolution of accounting asymmetry

ALM solutions for smaller players, i.e.

reinsurance solutions for business with

significant market risk

Development of modern savings products

1 Part of non-technical-result, incl. insurance-related investment result.


30 30

37

26

44

2012 2013 2014 2015 2016

New business profitability31.12.2016


Backup: Reinsurance Life

yearsRORAC spread1 IRR spread1 Payback period2

1 Spread in addition to reference rate (weighted-average swap yield curves), after tax. 2 Number of years it takes to amortise the total investment in new business through future (undiscounted) earnings distributable to shareholders.

%%

0

5

10

15

20

2012 2013 2014 2015 2016

0%

5%

10%

15%

20%

2012 2013 2014 2015 2016

0%

5%

10%

15%

20%

2012 2013 2014 2015 2016

Lower share of business with shorter durations

(as typically the case for FinMoRe) slightly

increased payback period compared with 2015

Very good new business profitability relative to

economic risk capital (RORAC spread)

New business profitability relative to total

investment in new business (IRR spread)

influenced composition of new business portfolio


ERGO

ERGO – Overview31.12.2016


Backup: ERGO

2016 2015 2014 2013 2012

Gross written premiums €bn 16.0 16.5 16.7 16.7 17.1

Investments €bn 135.4 131.0 135.5 126.7 124.9

Net technical provisions €bn 133.6 130.3 132.4 125.1 122.8

Combined ratio p-c Germany % 97.0 97.9 95.3 96.7 98.0

Combined ratio p-c International % 98.0 104.7 97.3 98.7 99.8

Premium split by region – 2016 % Distribution channels Germany – New business 2016 %

Banks/other

5Tied agents

55

Broker

22

Direct

18

Rest of World

14Germany

74

UK

3

Belgium

2

Poland

7

TOTAL

€16.0bn

ERGO Strategy Programme (ESP) – Financial impact


Backup: ERGO

59

182

316

443

536

3096

167227

279

2016 2017 2018 2019 2020

Gross Net2

Annual cost savings €m

1 After policyholder participation and taxes, including impact of investments, savings, premium growth and other cost effects on net income. 2 After policyholder participation and taxes.

–244

–110

–4

106203

2016 2017 2018 2019 2020

Net profit impact of ESP overall1 €m

–302–259

–199–148

–99

2016 2017 2018 2019 2020

Net profit impact of investments2 €m

P-C Germany – Combined ratio %

9899

96

9392

97

2016 2017 2018 2019 2020

ESP GuidanceActual

ERGO Life and Health Germany9M 2017


Backup: ERGO

9M 2016 6,823

Foreign exchange –9


Organic change 51

9M 2017 6,865


Life: –€80m

Decline in regular premium driven by

ordinary attrition, while single premium

decreased mainly due to lower product sales

Health: +€115m

Positive development in comprehensive and

supplementary insurance; travel increased

by €17m

Technical result

9M: Enhanced profitability in life, health and

direct business

9M: Improvements in life driven by one-offs

in 2016

Investment result

9M: Significantly lower derivatives result

(mainly interest-rate hedging)

Q3: Low disposal gains (financing of ZZR

mainly in Q1 2017)


Other

9M: Restructuring expenses in 2016

Q3: Impacted by strategic investments

9M

2017

9M

2016

Technical result 316 207 109

Non-technical result 146 331 –185thereof investment result 3,130 3,698 –568

Other –353 –519 166

Net result 109 19 90

Q3

2017

Q3

2016


Non-technical result 28 10 18thereof investment result 774 895 –121

Other –137 –64 –73

Net result –3 –49 46

ERGO Life Germany – Separation of traditional back book

and new business strengthens focus


ERGO VORSORGE

Life insurance legal entities – back book

ERGO Leben Victoria Leben ERGO Pensionskasse

Traditional back book

New business from portfolio only (legal, contractual obligation)New business promoting

capital-light products

Organisational changes

Separation of traditional life back book

(~€3.7bn in premium volume and >5m policies)

Establishment of an effective, separate

organisational entity with optimised processes

(from 2018)

Focus on administration

Realisation of significant management

advantages, e.g. reduced resource conflicts or

faster decision-making and improved transparency

New business

Special case of underwriting

agreements

Risk carrier for new business

Concentration on capital-market-

related and biometric products

More efficient set-up and bundling

of competencies in capital-market-

related products

Comprehensive management

Long duration of fixed-income portfolio keeps

average yield at relatively high level

Asset and liability duration difference <1 year

Low bonus rates:

2.25% vs. market average 2.59%

Interest-rate hedging programme: protection

against reinvestment risk via receiver swaptions

since 2005

Cash flow matched for 40 years

Backup: ERGO

3.92

2.54

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

2.50

2.75

3.00

3.25

3.50

3.75

4.00

2011 2013 2015 2017 2019 2021

Reference rate

Increase

Stable

Decrease

1.00

3.00

4.00

2.00

Guarantee level

ERGO Life Germany –

Key figures and ZZR

1 German GAAP figures for ERGO Leben, Victoria Leben and ERGO Direkt Leben. 2 Based on interest-rate scenarios. 3 German GAAP figures.

Key figures1

0%

2%

4%

2016 2020

Average yield vs. average guarantee

Reinvestment

yield

Average

yield

Average

guarantee

2016 ~1.3 ~3.4 ~2.4

2015 ~1.8 ~3.4 ~2.7

2014 ~2.6 ~3.6 ~3.0

%

ILLUSTRATIVE

ZZR reference rate – Projection2 %

Key financials3 – €bn Free RfB Terminal bonus fund Unrealised gains Accumulate ZZR

2016 1.2 1.1 13.7 3.6

2015 0.9 1.6 12.2 2.5

2014 1.0 1.7 14.6 1.5

ZZR – Low interest-rate reserve

Local GAAP reserve against

low interest rates

Expected accumulated ZZR

in 2017: ~€5bn

Partly financed through

unrealised gains – positive

impact on IFRS earnings when

realised

Effect on IFRS net income

in 2016: +€22m

avg. yield

avg. guarantee


ILLUSTRATIVE

Backup: ERGO

4.9

3.6

2.6 2.52.2

Peer 1 ERGO Peer 2 Peer 3 Peer 4

ERGO Health Germany – Stabilise comprehensive insurance,

strengthen supplementary insurance


1.6

0.8 0.6 0.60.5

ERGO Peer 1 Peer 2 Peer 3 Peer 4

MARKET

VOLUME

€7bn

ERGO

21.0%

Comprehensive insurance

ERGO number 2 in German market –

stable results and stable political

environment

Market view on comprehensive insurance1

1 Gross premiums written as at 31.12.2015. Source: PKV Verband.

Market view on supplementary insurance1

ERGO business mix – Gross premiums written

MARKET

VOLUME

€29bn

ERGO

12.4%

€bn

€bn

2530

75

70

2006 2016

%

€5.2bn

€4.4bn

Supplementary insurance

ERGO clear market leader –

expansion in long-term care and

direct insurance

Backup: ERGO

ERGO Property-casualty Germany9M 2017


Backup: ERGO

9M 2016 2,566



Organic change 59

9M 2017 2,619


Positive premium development in almost

all lines of business

Organic growth mainly driven by fire/property

and marine

9M

2017

9M

2016


Non-technical result 73 –37 111thereof investment result 137 31 105

Other –132 –169 37

Net result 63 –83 146

Q3

2017

Q3

2016



Other –49 –39 –11


Technical result

Q3: Combined ratio of 98.1% at level of

annual guidance

Loss ratio negatively impacted by nat cat

while claims experience in 9M was within

expectations

Expense ratio reduced by 1.7%-pts.

Investment result

9M: Disposal losses and equity

impairments in 9M 2016


Other

9M: Restructuring expenses and one-offs

in 2016

Q3: Impacted by strategic investments

ERGO Property-casualty Germany9M 2017


Backup: ERGO

2015 97.9

2016 97.0

9M 2017 96.6

Q3 2017 98.1

€mCombined ratio % Gross premiums written

TOTAL

€2,619m

Expense ratio Loss ratio

Personal accident

473

Liability

465

Other

304Motor

586

Fire/property

477

Legal protection

313

64.7

61.9

63.3

66.5

33.2

35.1

33.2

31.6

103.9

98.6

93.3

96.1

100.0 99.1

92.7

98.1

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

ERGO International9M 2017


Backup: ERGO


9M 2016 3,768


Divestments/investments –84

Organic change 71

9M 2017 3,750

9M

2017

9M

2016


Non-technical result 48 156 –108thereof investment result 264 438 –174

Other –117 –155 39

Net result 52 15 37

Q3

2017

Q3

2016


Non-technical result 14 49 –35thereof investment result 89 118 –29

Other –81 –42 –40

Net result 30 20 10

Life: –€271m

Italy: Sale of entity in Q2 2016

Less new business in Poland and Austria

P-C: +€215m

Increase mainly driven by motor business

in Poland and Baltics, as well as ATE

acquisition

Health: +€38m

Growth driven by Belgium and Spain

Technical result

Q3: Good combined ratio of 91.5%,

pleasing technical improvements overall in

claims as well as costs (e.g. Poland with

higher motor profitability) – annual

guidance improved from ~98% to ~97%

Investment result

9M: Lower result from derivatives and

regular income (lower asset base due to

disposal of Italian entity in 2016)

Q3: Lower impact from disposals and

derivatives compared with 2016


Other

9M: Several one-offs and restructuring

expenses in 2016

Q3: Negative tax effects

ERGO International – Property-casualty, including Health9M 2017


Backup: ERGO

2015 104.7

2016 98.0

9M 2017 95.5

Q3 2017 91.5

115.3

94.3

101.5

95.8

100.2

96.3

98.7

91.5

Q42015

Q12016

Q22016

Q32016

Q42016

Q12017

Q22017

Q32017

€mCombined ratio1 % Gross premiums written

TOTAL

€3,123m

%Combined ratio 9M 20171

Expense ratio Loss ratio

Legal protection

504Greece

185

Other

788Poland

920

Turkey

141Spain

585

94.4 92.7 98.082.7

113.395.5

Poland Spain Legalprotection

Greece Turkey Total

1 Only short-term health business.

65.3

64.9

64.5

60.7

39.4

33.1

31.0

30.8

International strategy embedded in ERGO Strategy

Programme (ESP) to achieve ambitious goals


Establishing leaner and more effective

structures to ensure swift execution

Laying the foundations for

transforming the business model

Committing to profitable growth

Best practice exchange Interregional transfer of capabilities,

e.g. implementation of adapted

“iMonitor” from Poland in Turkey

Regional cooperation Integration of back offices, e.g. in

Baltics and Poland

Accelerated innovation Digital delivery, e.g. via omni-channel

communication to customers in India

Fit Digital Successful!

Foster strong market positions

Establish efficient global business

models

Exploit growth market exposure

Portfolio

Central steering with dedicated

responsibilities

Governance

Commercial business Strengthen commercial business

internationally

Pure digital player Roll-out of nexible in attractive markets

Identify value drivers in an

interlocked business model between

ERGO entities and Munich Re

Interlocked business model reinsurance/primary insurance

Munich Health primary insurance business to be managed by ERGO in 2017

Backup: ERGO

ERGO International portfolio focuses on three pillars

65Munich Re – March 20181 ATE acquisition effective 1 June 2016; hence, only half year of ATE premium included. 2 Respective German and international business; D.A.S. including Italian JV. 3 ERGO share.

4 Step-up during 2016; premiums based on average share during the year. 5 In focus segment 6 Thereof German LPI business: €401m. 7 Thereof German travel business: €182m.

Strong presence in

selected developed markets

GWP, 2016 €m

Market position5

Focus segment

1,17814%

2Non-lifePoland

Leverage existing scale to

strengthen organic growth

Country

Legal protection

Market

presence in

18 countries

Travel

Market

presence in

24 countries

Pure Digital Player

Mobility Solutions

ShareRank

627 LifeAustria9%

4

206 Non-lifeBaltics5%

3

194 Non-lifeGreece1

8%

1

Specialised global

business expertise

GWP, 2016 €m

1,1466

Efficient management and

expansion of global businesses

Existing global businesses2

4527

Promising exposure in

prioritised growth markets

GWP3, 2016 €m Segment

China 25 Life

Capture opportunities

in growth markets

JVs

India4 270 Non-life

Vietnam 11 Non-life

Thailand 21 Non-life

Launch new global businesses

Expected CAGR, 2016–20, %

70

21

16

8

Turkey 249 Non-life

Subsidiaries

10

Backup: ERGO


Investments

Investment result9M 2017


Backup: Investments

67

3-month reinvestment yield

Q3 2017 2.0%

Q2 2017 1.8%

Q1 2017 2.0%

Q3 2017Write-ups/

write-downsDisposal

gains/losses Derivatives

Fixed income3 –2 115 116

Equities –37 142 –95

Commodities/inflation 10 6

Other –55 2 10

9M 2017Write-ups/

write-downsDisposal

gains/losses Derivatives

Fixed income3 –4 1,028 –16

Equities –72 702 –373

Commodities/inflation 39 –19

Other –122 10 –3

Investment result (€m) Q2 2017 Return1 Q3 2017 Return1 9M 2017 Return1 9M 2016 Return1

Regular income 1,720 3.0% 1,527 2.7% 4,881 2.8% 5,001 2.8%

Write-ups/write-downs –49 –0.1% –84 –0.1% –160 –0.1% –284 –0.2%

Disposal gains/losses 432 0.7% 259 0.5% 1,739 1.0% 1,823 1.0%

Derivatives2 –87 –0.1% 37 0.1% –412 –0.2% –196 –0.1%

Other income/expenses –127 –0.2% –151 –0.3% –421 –0.2% –402 –0.2%

Investment result 1,889 3.2% 1,589 2.8% 5,629 3.2% 5,942 3.4%

Total return 0.8% 2.5% 1.0% 9.3%

1 Annualised return on quarterly weighted investments (market values) in %. Impact from dividends on regular income 0.2%-pts in Q3 and 0.5%-pts in Q2.2 Result from derivatives without regular income and other income/expenses. 3 Thereof interest-rate hedging ERGO: Q3 –€6m/–€1m (gross/net); 9M –€144m/–€19m (gross/net).

Return on investment by asset class and segment9M 2017


Backup: Investments

1 Annualised. 2 Including management expenses.

%1 Regular income Write-ups/-downs Disposal result Extraord. derivative result Other inc./exp. RoI ᴓ Market value (€m)

Afs fixed-income 2.3 0.0 0.3 0.0 0.0 2.6 129,047

Afs non-fixed-income 4.1 –0.6 5.7 0.0 0.0 9.2 16,432

Derivatives 6.3 0.0 0.0 –31.1 –0.4 –25.2 1,763

Loans 3.0 0.0 1.5 0.0 0.0 4.5 65,016

Real estate 5.8 –1.8 0.1 0.0 0.0 4.0 7,216

Other2 3.2 0.2 0.0 0.0 –4.2 –0.8 13,135

Total 2.8 –0.1 1.0 –0.2 –0.2 3.2 232,610Reinsurance 2.7 –0.1 0.7 0.1 –0.3 3.1 89,471

ERGO 2.9 –0.1 1.2 –0.4 –0.2 3.3 143,139

3.4%

3.0%

4.1%

2.6%2.9% 2.7%

4.7%

2.7% 2.7%

3.6%3.2%

2.8%

3.2%

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

Return on investment Average

Investment portfolio9M 2017


Backup: Investments

69

Portfolio management in Q3

Ongoing geographic diversification

Increase in corporate bond exposure

Slight decrease in structured products,

covered bonds and bank bonds

Further increase in equity exposure

Investments in infrastructure (wind park)

1 Fair values as at 30.9.2017 (31.12.2016). 2 Deposits retained on assumed reinsurance, deposits with banks, investment funds (excl. equities), derivatives and investments in renewable energies and gold. 3 Net of hedges: 6.5% (5.0%). 4 Market value change due to a parallel downward shift in yield curve by one basis point-considering the portfolio size of assets and liabilities (pre-tax). Negative net DV01 means rising interest rates are beneficial.

Investment portfolio1 %

Land and buildings

3.3 (2.9)

Fixed-interest securities

55.3 (56.3)

Shares, equity funds andparticipating interests3

7.1 (6.1)

Loans

27.9 (28.5)

TOTAL

€229bn

Miscellaneous2

6.4 (6.2)

Reinsurance

ERGO

Munich Re (Group)

Assets Liabilities

5.9 (5.9)

8.8 (9.3)

7.8 (8.0)

4.9 (4.6)

9.5 (10.6)

7.6 (8.1)

Assets

–1

–11

–12

NetLiabilities

41 (45)

112 (121)

153 (166)

42 (43)

123 (143)

165 (185)

Portfolio duration1 DV011,4 €m


Backup: Investments

Investment portfolioH1 2017 – Fixed-interest securities and miscellaneous

Approximation – not fully comparable with IFRS figures. Fair values as at 30.6.2017 (31.12.2016). 2 Non-fixed derivatives. 3 Non-fixed property funds and non-fixed bond funds.

Investment portfolio %

Miscellaneous %

% Fixed-interest securities1

% Loans1

Fixed-interest securities

55.8 (56.3)

Loans

27.6 (28.5)

TOTAL

€230bn

Miscellaneous

6.5 (6.2)

Pfandbriefe/Covered bonds

14 (15)

Corporates

16 (16)

Banks

2 (3)

Governments/Semi-government

63 (62)

TOTAL

€128bn

Structured products

3 (4)

TOTAL

€15bn

Deposits on reinsurance

36 (36)

Bank deposits

27 (20)

Investment funds3

11 (15)

Derivatives2

7 (11)

Other

19 (19)

Loans to policyholders/

mortgage loans

11 (10)

Pfandbriefe/Covered bonds

45 (44)

Banks

3 (4)

Governments/Semi-government

40 (41)

TOTAL

€63bnCorporates

1 (1)

Cash/Other

1 (0)

Fixed-income portfolio


%

Structured products

2 (2)

Loans to policyholders/mortgage loans

3 (3)

Governments/

semi-government

54 (53)

Pfandbriefe/covered bonds

23 (24)

Corporate bonds

11 (11)

Cash/other

4 (4)

Bank bonds

2 (3)

TOTAL

€199bn

%Regional structure

Fixed-income portfolioH1 2017 – Allocation and regional structure

Backup: Investments

Without With Total

policyholder participation 30.6.2017 31.12.2016

Germany 4.7 24.0 28.8 28.2

US 14.0 1.3 15.3 16.0

France 2.3 5.7 8.0 8.0

UK 2.9 2.3 5.2 5.3

Canada 4.0 0.4 4.4 4.5

Netherlands 1.3 3.1 4.4 4.3

Supranationals 0.7 3.3 4.0 4.0

Spain 1.0 1.5 2.5 2.8

Australia 2.0 0.5 2.5 2.4

Italy 0.8 1.5 2.3 2.4

Belgium 0.7 1.7 2.3 2.3

Austria 0.4 1.8 2.1 2.0

Ireland 0.6 1.4 1.9 2.0

Norway 0.3 1.3 1.6 1.5

Sweden 0.2 1.3 1.5 1.6

Other 7.7 5.3 13.1 12.6

Total 43.5 56.5 100.0 100.0

Approximation – not fully comparable with IFRS figures. Fair values as at 30.6.2017 (31.12.2016).


Fixed-income portfolioH1 2017 – Rating and maturity structure

Rating structure Market value

(€bn)

AAA

(%)

AA A BBB BB <BB NR

Total 199.1 46 23 12 12 2 – 5

Governments/semi-government 106.7 46 32 12 9 2 – –

Pfandbriefe/covered bonds 46.1 75 19 4 1 – – 1

Corporate bonds (excluding bank bonds) 21.7 1 7 26 53 11 1 1

Bank bonds 5.0 0 7 41 45 6 0 2

Structured products 4.1 57 30 8 2 – 0 3

Maturity structure Average maturity

(years)

0-1 years

(%)

1-3 years 3-5 years 5-7 years 7-10 years >10 years n.a.

Total 9.7 9 13 12 12 16 35 2

Governments/semi-government 11.3 8 13 9 11 14 46 –

Pfandbriefe/covered bonds 8.0 5 10 15 17 25 28 –

Corporate bonds (excluding bank bonds) 6.9 9 20 23 15 14 20 –

Bank bonds 3.4 21 36 19 13 6 5 –

Backup: Investments

Fixed-income portfolioH1 2017 – Corporate bonds and bank bonds


Backup: Investments

%Corporate bonds – Sector breakdown

30.6.2017 31.12.2016

Utilities 17.6 18.5

Industrial goods and services 12.8 12.5

Oil and gas 11.7 11.8

Telecommunications 8.6 8.8

Financial services 7.4 7.1

Healthcare 6.7 6.4

Technology 5.8 5.0

Food and beverages 4.5 4.9

Basic resources 3.8 3.9

Automobiles 3.8 3.8

Media 3.6 3.8

Retail 3.4 3.9

Personal and household goods 3.2 2.9

Other 7.1 6.7

1 Classified as Tier 1 and upper Tier 2 capital for solvency purposes. 2 Classified as lower Tier 2 and Tier 3 capital for solvency purposes. Approximation – not fully comparable with IFRS figures. Fair values as at 30.6.2017 (31.12.2016).

%Regional breakdown of bank bonds

%Investment category of bank bonds

TOTAL

€5.0bn

Senior

82 (82)

Subordinated2

11 (12)

Loss-bearing1

7 (6)

Total

Senior bonds Subordinated Loss-bearing 30.6.2017 31.12.2016US 32.6 5.1 0.6 38.3 38.6

Germany 15.0 1.6 4.3 20.9 23.3UK 7.8 0.6 0.3 8.7 7.6Ireland 7.2 0.1 0.0 7.3 6.8France 2.6 0.9 1.8 5.3 4.3Canada 2.1 0.6 0.0 2.7 2.8Jersey 2.3 0.0 0.0 2.3 2.4Austria 0.8 0.5 0.0 1.3 1.2Belgium 1.3 0.0 0.0 1.3 1.1Other 10.4 1.3 0.1 11.8 11.8

On and off-balance-sheet reserves (gross)9M 2017


Backup: Investments

1 Unrealised gains/losses from unconsolidated affiliated companies, valuation at equity and cash-flow hedging. 2 Excluding reserves from owner-occupied property.

€m 31.12.2015 31.12.2016 31.3.2017 30.6.2017 30.9.2017

Market value of investments 230,529 236,153 235,399 229,737 229,149

Total reserves 25,969 28,496 26,180 24,743 24,565

On-balance-sheet reserves

Fixed-interest securities 7,886 8,649 7,815 7,658 7,496

Non-fixed-interest securities 2,446 2,924 3,311 2,917 3,011

Other on-balance-sheet reserves1 201 186 201 191 196

Subtotal 10,533 11,759 11,327 10,766 10,702

Off-balance-sheet reserves

Real estate2 2,273 2,413 2,450 2,450 2,516

Loans and investments (held to maturity) 12,610 13,591 11,692 10,761 10,589

Associates 553 733 711 767 758

Subtotal 15,436 16,738 14,853 13,977 13,863

Reserve ratio 11.3% 12.1% 11.1% 10.8% 10.7%

Sensitivities to interest rates, spreads and equity markets9M 2017


Backup: Investments

1 Rough calculation with limited reliability assuming unchanged portfolio as at 30.9.2017. After rough estimation of policyholder participation and deferred tax; linearity of relations cannot be assumed. Approximation – not fully comparable with IFRS figures. 2 Sensitivities to changes of spreads are calculated for every category of fixed-interest securities, except government securities with AAA ratings. 3 Worst-case scenario assumed, including commodities: impairment as soon as market value is below acquisition cost. Approximation – not fully comparable with IFRS figures.

Sensitivity to risk-free interest rates – Basis points –50 –25 +50 +100

Change in gross market value (€bn) +8.1 +4.0 –7.5 –14.6

Change in on-balance-sheet reserves, net (€bn)1 +1.9 +0.9 –1.8 –3.4

Change in off-balance-sheet reserves, net (€bn)1 +0.4 +0.2 –0.4 –0.7

P&L impact (€bn)1 –0.0 –0.0 +0.0 –0.0

Sensitivity to spreads2 (change in basis points) +50 +100

Change in gross market value (€bn) –5.3 –10.3

Change in on-balance-sheet reserves, net (€bn)1 –1.1 –2.1

Change in off-balance-sheet reserves, net (€bn)1 –0.3 –0.5

P&L impact (€bn)1 –0.0 –0.1

Sensitivity to equity and commodity markets3 –30% –10% +10% +30%

EURO STOXX 50 (3,595 as at 30.9.2017) 2,516 3,235 3,954 4,673Change in gross market value (€bn) –5.3 –1.8 +1.8 +5.4

Change in on-balance-sheet reserves, net (€bn)1 –1.4 –0.6 +1.0 +3.0

Change in off-balance-sheet reserves, net (€bn)1 –0.8 –0.3 +0.3 +0.8

P&L impact (€bn)1 –1.8 –0.4 +0.0 +0.2


Shareholder

information

Share information9M 2017

77

Backup: Shareholder information


Key company data

Sector Insurance

Country Germany

Currency Euro

Accounting principles IFRS

Securities codes

Reuters MUVGn

Bloomberg MUV2

WKN 843002

ISIN DE0008430026

Type of share No-par-value registered shares

Votes Each share entitles the holder to one vote

Dividend Paid out once per year in cash

Trading venues All German stock exchanges plus Xetra

Shares

(millions)

31.12.

2016

Acquisition of own shares in

9M 2017

Retirement of own shares in

9M 2017

30.9.

2017

Shares in

circulation156.9 –4.2 – 152.7

Own

shares held4.2 4.2 –6.0 2.3

Total 161.1 – –6.0 155.0

Weighted average number

of shares in circulation (millions)

172.2 165.9 160.0 154.8 153.5

2014 2015 2016 9M 2017 Q3 2017

Mission of Investor & Rating Agency Relations


Responsibility

Munich Re’s communication with the capital market /

financial community

Main objective

Active communication to support a fair capital-market valuation of

Munich Re shares and outstanding bonds

External 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

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

Internal communication

Transmission

of investors’ and creditors’ demands, and the capital markets’

perception of Munich Re, to management and staff

Target

Support management in the setting of ambitious targets as well as

in the execution of a value-based and shareholder-oriented

strategy

We aim to enhancing Munich Re’s visibility and attractiveness in the international financial community


Financial calendar



2018

15 MarchBalance sheet press conference for 2017 financial statements

Analysts' call

25 April Annual General Meeting 2018, ICM – International Congress Centre Munich

8 May Quarterly statement as at 31 March 2018

8 August Half-year financial report as at 30 June 2018

7 November Quarterly statement as at 30 September 2018

For information, please contact



Investor Relations Team

Christian Becker-Hussong

Head of Investor & Rating Agency Relations

Tel.: +49 (89) 3891-3910

E-mail: [email protected]

Thorsten Dzuba

Tel.: +49 (89) 3891-8030


Christine Franziszi

Tel.: +49 (89) 3891-3875


Britta Hamberger

Tel.: +49 (89) 3891-3504


Ralf Kleinschroth

Tel.: +49 (89) 3891-4559


Andreas Silberhorn

Tel.: +49 (89) 3891-3366


Ingrid Grunwald

Tel.: +49 (89) 3891-3517


Angelika Rings

Tel.: +49 (211) 4937-7483


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

Disclaimer


This presentation contains forward-looking statements that are based on current assumptions and forecasts of the

management of Munich Re. Known and unknown risks, uncertainties and other factors could lead to material differences

between the forward-looking statements given here and the actual development, in particular the results, financial situation and

performance of our Company. The Company assumes no liability to update these forward-looking statements or to make them

conform to future events or developments.

The primary insurance units of the disbanded Munich Health field of business are now recognised in the ERGO International

segment, units with reinsurance business in the Reinsurance Life and Health segment. Previous year’s figures were adjusted

to ensure comparability.

shaping change in insurance munich re equity story · 2 contract year view. munich re –march 2018...

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