munich re equity story good progress towards 2020 ambition ...€¦ · ecosystem startups, e.g....
TRANSCRIPT
Munich Re Equity Story
Exploiting opportunities in an improving
market environment
November 2020
Image: Klaus Ohlenschläger / dpa Picture Alliance
2Munich Re – Equity Story
Why invest in Munich Re
Equity story
Digital transformation opportunities
Attractive dividends
Strong capital position
Diversified business model
Leading global reinsurer
21
3
Good sustainability ratings
✓
November 2020
3November 2020Munich Re – Equity Story
Well above target capitalisation, high quality of eligible own funds
Solvency IIratio
244% 245% 237%
2017 2018 2019
Tier 2:10%
Tier 12: 90%
Tier 3: 0.2%
EOF1
€41.5bn
Strong reserves, debt leverage one of the lowest in the industry
28.226.5
€30.6bn
2017 2018 2019
12.0%DEBT
1 As at 31.12.2019. 2 99.97% unrestricted, 0.03% hybrid capital. 3 As at 31.12.2019. Strategic debt (senior, subordinated and other debt) divided by total capital (strategic debt + equity).
Strong capital position and financial stability
Equity story
Top positions assessed by leading rating agencies
FitchAA
S&P AA–
A.M. Best A+
Moody’sAa3
Financial strength ratings
Shareholders’ equity
4Munich Re – Equity Story
Operating performance in 2019 supported
by strong balance sheet
Reserving Investments Taxes
Valuation reserves increased to €33bn
Ongoing prudent setting of reserves
Resilience to adverse development, e.g. US casualty –unchanged reserve strength
ALM and ZZR-driven realisations overcompensate derivate losses from equity-and interest-rate hedging
Some tax releases –tax rate of 15.1%
Ongoing high reserve releases for basic losses –2019: 5.6%
Strong balance sheet
Earnings supportin 2019
November 2020
Equity story
5Munich Re – Equity Story
Strong performance in 2019
Figures as at 31.12.2019 (31.12.2018).
€2.7bn (€2.3bn)
Exceeds initial guidance of €2.5bn
9.2% (8.4%)
Above cost of capital
€9.80 (€9.25)
High pay-out to shareholders
237% (245%)
Well above target capitalisation
Solvency II ratio
Dividend per share
IFRS net income
Return on Equity
Equity story
November 2020
2.32.5
2.8
2.3
2.7
2018 2019 2020
Guidance Actual
6
Ongoing business and earnings growth supports
underlying 2020 ambition
Digital transformation
Reduce complexity
Increaseearnings1
Munich Re – Equity Story
€bn
November 2020
Equity story
Ambition 2020 no longer achievable due to COVID-19 –underlying performance remains strong
H1 2020
Net income normalised for
▪ 12% large losses in
P-C Reinsurance
▪ COVID-19 claims in
L&H Reinsurance
supporting former FY 2020 target
1 IFRS net income.
7
Reinsurance – Strategic growth initiatives well on track
▪ Consolidate top position in mature markets
▪ Smart growth in select emerging markets
▪ Launch of voluntary programme –reduction of ~350 FTEs
▪ Cost savings of ~€200m by 2020
▪ Disposal of MSP Underwriting and Ellipse
Continue profitable growth path
Streamline processes towards business and execution
Scale up successful initiatives, push new business models
▪ Push new business models – relayracquisition to strengthen IoT offering
▪ Data-driven solutions, e.g. Realytix
▪ InsurTech platform via Digital Partners
▪ Growth initiatives in P-C paying off (esp. in the US and Asia) – GWP +8%1
▪ Strong new business generation in Life and Health continues
▪ MR Specialty Insurance established
▪ Voluntary programme successfully completed, cost savings on track
▪ Re-engineering and automation of accounting processes (~100 FTEs)
▪ Global single-risk unit established, pooling together ~560 employees
▪ Create new income streams in the Canadian group insurance market
▪ Cyber insurance premiums up 27%1
▪ Digital Partners premiums doubled
Munich Re – Equity Story
2018 2019
2020
1 Compared to previous year. November 2020
Equity story
8
ERGO – Sustainably increasing profitability
▪ ESP2 ahead of financial targets
▪ Tied agent productivity significantly increased by 20%1
▪ Cost savings of €174m achieved
▪ Simplification of products, e.g. full modular product design
▪ Fully separated traditional life book
Successful completion of ESP2
Further simplify product offering and processes
Scale up and internationalisedigital solutions
▪ Strategic investments in mobility ecosystem startups, e.g. ridecell
▪ Transformation of customer interaction –30%1 user increase of customer self-service portal
▪ Nexible doubles number of policies
▪ ESP2 ahead of financial targets
▪ Tied agent productivity further improved by 18%1
▪ Cost savings of €234m achieved
▪ International portfolio streamlining finalised – 18 entities sold in total
▪ New life offerings through unified risk carrier – double-digit APE growth
▪ B2B2C mobility cooperation strategy expanded
▪ Digital process automation scaled up –first relevant AI applications, 70+ bots
▪ Minority stake in Next Insurance3
Munich Re – Equity Story
2018 2019
2020
1 Compared to previous year. 2 ERGO Strategy Programme. 3 Closing expected in March 2020. November 2020
Equity story
Munich Re – Equity Story
Munich Re showing resilience against COVID-19 impact
November 2020 9
Significant short-term claims impact, but good medium- and long-term business opportunities
Insurance risk well manageableStrong IT facilitating work from home for tens of thousands of employees without any friction
Business activities running smoothly
Solid investment resultProven stress resilience allows
for dividend payment
Reliable shareholder return
Financial impact of COVID-19 on Munich Re well bearable
Navigating capital market volatility with well-diversified investment portfolio and effective hedging
Image: MathieuRivrin / Getty Images
Equity story
10Munich Re – Equity Story
Despite COVID-19, business operations well on track –
Strong capitalisation safeguards financial flexibility
November 2020
… increases uncertainty, driving reinsurance
demand
COVID-19 …
… requires risk-bearing capacity and
high capital flexibility
… accelerates digitalisation
Our strong capitalisation enables us to …
… seize profitable business opportunities
▪ Reinsurance market hardening – 7.6% premium growth (July:
8.3%) and 1.8% price increase (July: 2.8%) in 2020 renewals
▪ Flight to quality – we remain reliable and provide ample capacity
▪ COVID-19 crisis to further crystalise the value proposition of
(re)insurance
… substantially invest in digital transformation
▪ Employees: Digital infrastructure facilitated instant mobile working
▪ Customers: Digital sales channels safeguarded premium service
levels during lockdown
▪ Operations: New business models gaining momentum
… grow GWP and deliver on capital repatriation
▪ Increase in dividend per share from 2017 to 2019: 14% –
ambition for further growing dividends
▪ Total volume of share buy-back between 2017 and 2019: €3bn
▪ Expansion in attractive lines of business and geographies
Image: CROCOTHERY / stock.adobe.com
Equity story
11Munich Re – Equity Story
Shareholders participate in our earnings growth
1 As at end of February 2020. 2 Total shareholder return 1.1. – 31.12.2019. Peers: Allianz, Axa, Generali, Hannover Re, Scor, Swiss Re, Zurich. Source: Datastream.
Sustainable dividend-per-share growth …
3.10
€9.80
2005 2019
€1bn
2006 2019
Ongoing share buy-backs
… supports attractive shareholder returns2
Peer 2
Munich Re
Peer 7
Peer 6
Peer 5
Peer 3
Peer 4
Peer 1 52.5%
43.6%
44.0%
41.0%
32.9%
30.3%
27.5%
–0.5%
Total pay-out 2005–2019
~€30bn~80% of current
market cap1
November 2020
Equity story
12November 2020Munich Re – Equity Story
ESG framework – Systematically integrating sustainability
criteria into our insurance and investment activities
Equity story
1 Approximation as at 31.07.2020. 2 As at 2019
Investments
Systematic integration of ESG criteria: Sustainability ratio >80% in 2019
Focus topics
▪ Invested capital (equity and debt) in
renewable energies of €1.6bn2
▪ Investment in green bonds of
€1.3bn2
▪ Investments in renewable energies
goal of €2.8bn
Commitment to achieve a green-house-gas neutral investment portfolio by 2050, Munich Re joined UN-convened “Net-Zero Asset Owner Alliance”
Insurance Sensitive issues
ESG criteria integrated into insurance processes and products: Risk-based management established and ESG framework applied Group-wide
Enabling and solutions
▪ Nat cat premiums of ~€4bn
in P-C Reinsurance portfolio2
▪ Risk-transfer solutions for
renewables and smart energy,
e.g. solar/PV, windfarms, battery
storage
▪ Sovereign and public-private nat
cat risk transfer schemes as a
way of closing the protection gap
13Munich Re – Equity Story
Digital transformation opportunities – Innovative and more
disruptive offerings are gaining traction
Munich Re strategic advantages …
Domain expertise in underwriting, claims, risk management
Strong brand and reputation
No IT legacy
Global presence
Financial strength
Efficient access to new solutions
… foster creation of new strategic options
Reshuffling the value chain
▪ Digital cooperation models (e.g. Digital Partners)
▪ IoT1 applications and services (e.g. MHP/ Porsche cooperation)
▪ Munich Re New Ventures –Parachute platform
Expanding the boundaries of insurability
▪ Cyber (re)insurance: GWP 2019 US$ 604m, good profitability, accumulation control
▪ Cyber embedded service solutions and growing cooperation network (e.g. DXC Technology)
▪ Insurance of AI technology
Data-driven solutions
▪ Newly developed risk scores (e.g. climate risk)
▪ Digitally augmented underwriting/claims solutions for our cedants(e.g. Munich Engine, Realytix, Improvex)
Investments in
technology and people
Strategic investments
in partnerships
Levers
November 20201 Internet of Things.
Equity story
Portfolio
share1
Running
yield1
Fixedincome ~80% ~2.5%
Non-fixed income ~20% ~4.0%
14Munich Re – Equity Story
Investment return – Resilience to low interest rates
expected to persist
1 Munich Re, as at 31.12.2019. 2 Write-ups/write-downs, derivatives, other income/expenses.
Disposal gains
Running yield
Other items2
ZZR financing, prudent ALM
and usual portfolio turnover –
valuation reserves partly realised
Well-balanced, high-quality investment portfolio reduces impairment risk –
ALM-based equity and interest-rate hedges protect against adverse development
RoI
Regular
attrition
Negative
impact on
running yield
Expected attrition
~10 bps
Delta reinvestmentand running yield1
Asset duration1
2.8 2.7 2.8 2.8
1.1 1.1 0.71.1
–0.7 –0.6 –0.7 –0.7
3.2% 3.2%2.8%
3.2%
2016 2017 2018 2019
~5bps
~5bps
~60bps 8.4
November 2020
Equity story
15Munich Re – Equity Story
Outlook 2020
November 2020
Equity story
ReinsuranceGross premiums written
~€36bn(before: ~€34bn)
Net result
withdrawn
Combined ratioProperty-casualty
withdrawn
Technical result, incl. fee incomeLife and Health
withdrawn(before: ~€550m)
ERGOGross premiums written1
~17.5bn
Combined ratioP-C Germany1
~92%
International1
~94%
Net result1
~€530m
Gross premiums written
~€54bn(before: ~€52bn)
Net result
withdrawn
GroupReturn on investment1
~3%
1 Substantial risk of falling short of this guidance, subject to the further development of the COVID-19 pandemic.
Group
2Image: Klaus Ohlenschläger / dpa Picture Alliance
17Munich Re – Equity Story
Munich Re at a glance –
Key financials
2019 2018 2017 2016 2015
Gross written premiums €bn 51.5 49.1 49.1 48.9 50.4Operating result €m 4,004 3,725 1,241 4,025 4,819Taxes on income €m –483 –576 298 –760 –476Consolidated result €m 2,707 2,275 392 2,581 3,122Investments €bn 228.8 216.9 217.6 219.4 215.1Return on equity % 9.2 8.4 1.3 8.1 10.0Equity €bn 30.6 26.5 28.2 31.8 31.0Off-balance-sheet reserves1 €bn 19.9 16.1 15.0 17.3 16.0Net technical provisions €bn 217.9 208.3 205.8 202.2 198.5Staff at 31 December 39,662 41,410 42,410 43,428 43,554
Book value per share € 211.1 180.9 185.2 200.9 188.4Earnings per share € 19.0 15.5 2.4 16.0 18.7Dividend per share € 9.80 9.25 8.60 8.60 8.25Amount distributed €m 1,386 1,342 1,290 1,338 1,329Share price at 31 December € 263.0 190.6 180.8 179.7 184.6Market capitalisation at 31 December €bn 38.0 28.5 28.0 28.9 30.8No. of shares at year-end m 144.3 149.5 155.0 161.1 166.8
1 Including amounts attributable to minority interests and policyholders.
Backup: Group
November 2020
November 2020Munich Re – Equity Story
L&H reinsurance – Increase in COVID-19-related claims
consistent with pandemic development in different regions
18
Backup: Group
Outlook/Projection 2020
COVID-19 related losses
in L&H reinsurance
▪ Losses dominated by far by the US
▪ Q3: ~€100m / 9M: ~€200m
▪ 9M includes COVID-19 related claims expected
to be incurred by 30 September – no specific
provisions for COVID-19-related deaths after
30 September established
▪ Limited loss activity on disability lines so far
▪ Claims development depends on further mortality experience, esp. in North America
▪ As expected, portfolio mortality rates are well below that of the general population
▪ Each 5% of extra mortality claims in our book leads to excess annual claims cost of ~€200m1
▪ Still far away from 200-year event scenario2
of ~€1.4bn
▪ Risk of disability claims depends on economic development
▪ UK longevity is expected to offset UK mortality claims
1 Estimate based on a stress test with simplistic assumptions, e.g. no differentiation between markets, no specific age distributions of our exposure and lethality of the pandemic.; only refers to mortality business. 2 Scenario based on the assumption of 10m incremental global deaths.
November 2020Munich Re – Equity Story
P-C reinsurance – Continuous worsening
of the pandemic leaving its mark in Q3
19
Backup: Group
▪ Losses across various lines of business,
contingency losses making up the largest share
▪ Q3: ~€700m / 9M: ~€2.1bn
▪ Material reserve increase in Q3 due to the
continuous worsening of the pandemic and recent
reintroduction of restrictions in many countries
▪ 9M figures include COVID-19-related claims incurred
through 30 September, reserved cautiously across
affected lines of business
▪ 9M: ~€300m in paid claims and client-reported case
reserves in reinsurance, ~€1.8bn IBNR1
▪ Risk of further contingency claims continues, depending on development of the pandemic
▪ Claims in other lines of business are also expected to increase
▪ BI: focus on non-damage BI policies – contract wording is crucial (e.g. FCA ruling provides a differentiated view)
▪ Less exposure to further deterioration expected in credit given government interventions and exposure management of our cedants
▪ Less exposed in workers’ comp. and D&O
Outlook/Projection 2020
1 Including €540m claims (direct business) for which we gave confirmation of coverage in 9M 2020.
COVID-19 related losses
in P-C Reinsurance
Prudent reserving protecting balance sheet against negative
surprises while continuously contributing to earnings strength
20Munich Re – Equity Story1 Reinsurance Property-casualty, in % of net earned premium, basic losses after sliding scale commissions.
AsbestosComplex litigation,
changes in legal and
regulatory environment
US workers’ comp.High losses for reinsurers
in business underwritten
during late 90s; significant
late-loss emergence
US liability
High litigation risk and
increasing social-inflation
trends
Managing industry hot spots Munich Re impact
De-risking with large
claims settlements
in the past and very
strong survival ratio
Prudent reserving
situation allowed for
reserve releases
again in 2019
Worsening loss trends
in selected portfolios,
continuous and pro-active
strengthening of reserves
to ensure prudence level
7.2
5.55.2
4.6
5.6%
2015 2016 2017 2018 2019
Ongoing reserve releases1
Positive claims experience by far
exceeding adverse development in
selected hot-spot areas
November 2020
Backup: Group
Continuous and strong reaction to adverse US casualty loss
trends over the last years to maintain prudence level for our
reserve position
21Munich Re – Equity Story
US casualty – Closely monitoring adverse trends, reserving
risks manageable
TOTAL
€16.5bn
Risk Solutions US casualty
17
Traditional US casualty
83
US casualty provisions for
outstanding claims
TOTAL
€13.7bn
Fair values (net) as at 31.12.2019
Traditional US casualty by
underwriting years
UY 2015+
48 (88% IBNR)
UY 2003-2014
33 (79% IBNR)
UY 2002 and prior
19 (62% IBNR)
Immediate response to early signs
of adverse development
%
%Decisive action on
our US primary book
by changing strategy,
but also by strength-
ening reserves in
motor and general
liability lines
2018 20192017
Action on individual
portfolios in our
reinsurance liability
book where we saw
elevated loss
reporting from
our cedants
Further reserve
strengthening in
reinsurance motor
liability, general
liability and financial
lines to respond to
ongoing loss trends
November 2020
Backup: Group
22Munich Re – Equity Story
Very strong reserve position – Actual basic losses continue
to be consistently below actuarial expectations
1 Reinsurance group losses as at Q4 2019, not including parts of Risk Solutions, special liabilities and major losses (i.e. events of over €10m for Munich Re's share).
Reinsurance group – Comparison of incremental expected losses with actual reported losses1 €m
Legend: Green Actuals below expectation Red Actuals above expectation Solid line Actuals equal expectation Dotted line Actuals 50% above/below expectations
By exposure year By line of business
2018
2017
2016
20152014
2013
2012&prior
10
100
1,000
10,000
10 100 1,000 10,000
Expected reported loss
Actual reported loss
Aviation
Credit
Engineering
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 below expectation for all contract years –
overall picture consistent with previous years
Also on a line-of-business view all actuals are
below expectations
November 2020
Backup: Group
23Munich Re – Equity Story
Positive run-off result despite reserve strengthening in selected
portfolios without weakening resilience against future volatility
Ultimate losses1 – Favourable actual vs. expected comparison facilitates ultimate reductions for prior years
€mAccident year (AY)
≤2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total
31.12.2009 53,838
31.12.2010 53,118 13,517
31.12.2011 52,226 13,707 17,594
31.12.2012 51,079 13,585 17,745 14,520
31.12.2013 50,588 13,669 17,459 14,301 14,409
31.12.2014 49,641 13,698 17,043 14,096 14,630 14,324
31.12.2015 48,728 13,496 16,918 13,883 14,586 14,351 13,587
31.12.2016 48,380 13,270 16,446 13,848 14,291 14,328 13,640 14,486
31.12.2017 48,210 13,140 16,418 13,748 14,190 14,117 13,429 14,324 17,667
31.12.2018 47,495 12,971 16,124 13,488 13,917 13,851 13,219 14,366 17,693 17,907
31.12.2019 46,377 12,915 15,855 13,254 13,765 13,668 13,068 14,196 17,563 18,773 18,928
CY 2018 run-
off change 1,118 56 269 234 151 183 151 170 130 -866 – 1,597CY 2018 run-
off change (%) 2.4 0.4 1.7 1.7 1.1 1.3 1.1 1.2 0.7 -4.8 – 0.9
▪ Ultimate reductions in
particular for basic losses
▪ Negative run-off in AY 2018
largely driven by adverse
outlier development (e.g.
Typhoon Jebi), and to a
much smaller extent also
impacted by prudent
reserving for US casualty
loss trend
▪ Reserve position remains
strong
Reinsurance2 €1,531m
ERGO €66m
1 Basic and major losses; accident-year split partly based on approximations. Adjusted to exchange rates as at 31.12.2019. 2 Basic losses: €1,494m, major losses: €37m.
November 2020
Backup: Group
24Munich Re – Equity Story
Capital position
November 2020
Backup: Group
Equity €m
Subordinated debt
Senior and other debt
Equity
Capitalisation €bn
1 Strategic debt (senior, subordinated and other debt) divided by total capital (strategic debt + equity).
Debt leverage1 (%)
26.5 30.6 29.1 29.8 29.6
3.7
3.83.9 3.7 5.00.3
0.30.3 0.3 0.3
13.212.0 12.6 11.9
15.1
2018 2019 31.3.2020 30.6.2020 30.9.2020
Equity 31.12.2019 30,576 Change in Q3
Consolidated result 999 199
Changes
Dividend –1,373 0
Unrealised gains/losses 1,158 372
Exchange rates –931 –651
Share buy-backs –359 0
Other –429 –45
Equity 30.9.2020 29,641 –125
Unrealised gains/losses Exchange rates
Fixed-interest securities
9M: €1,885m Q3: €306m
Non-fixed-interest securities
9M: –€743m Q3: €62m
Devaluation of various currencies,
mainly USD
25Munich Re – Equity Story
Outstanding senior and subordinated bonds
Nominal volume Coupon rate p. a. Emission/Issue Maturity
€1,250m Until 2031 1.25%, thereafter variable 2020 2041
€1,250m Until 2029 3.25%, thereafter variable 2018 2049
€900m Until 2022 6.25%, thereafter variable 2012 2042
£450m Until 2022 6.625%, thereafter variable 2012 2042
€1,000m Until 2021 6.00%, thereafter variable 2011 2041
US$342m 7.45% 1996 2026
Maturity pattern €bn Currency pattern
0.4
3.6
1.3
0.0
0-5 5-10 10-15 15-20 20-25 25-30 30-35 undated
USD
7%
GBP
9%
EUR
84%
TOTAL
€5.3bn
As at 30 September 2020. Bonds with a nominal value below €100m not considered. In addition, Munich Re has placed some natural catastrophe bonds.
Backup: Group
November 2020
€3.8bn –1.3
–1.0
1.5 –0.1 €3.0bn
Distributableearnings
31.12.2018
Dividend Sharebuy-back
HGB result2019
Other Distributableearnings
31.12.2019
8.5
€9.3bn
2018 2019
26Munich Re – Equity Story
German GAAP (HGB) – Capital repatriation well
funded despite decline of distributable earnings
Equalisation provision
HGB result 2018 €bn
2.2
Underwriting result –0.9
Investment result +0.6
Other –0.4
HGB result 2019 1.5
HGB result below capital repatriation
1
1 Changes in restrictions on distribution.
+€0.8bn
November 2020
Backup: Group
220%
175%
140%
100%
302%
267%
244% 245% 237%
27Munich Re – Equity Story
Sound economic capitalisation continues to support our capital-
management strategy – First-time application of VA for four ERGO entities
Optimal range
2015 2016 2017 2018 2019
EOF 40.7 40.7 35.1 36.0 €41.5bn
SCR 13.5 15.3 14.4 14.7 €17.5bn
247 253
224 219226 232
213
Interest rates
+/-50bps
Equity markets+/-30%
Spread GOV
+50bps
Spread CORP +50bps
Atlantic Hurricane
SII sensitivities
1 1 2
2015 – 2019: Economic earnings cover capital
repatriation, while business growth and low interest
rates have driven the increase of required capital
1 Parallel shift until last liquid point, extrapolation to unchanged UFR. 2 Based on 200-year event. 3 SII ratio includes volatility adjustment for ERGO Leben, Victoria Leben, ERGO Belgium and DKV Belgium. VA impact in 2019 ~6%-pts.
Development of Solvency II ratio
3
%
November 2020
Backup: Group
28Munich Re – Equity Story
High economic earnings overcompensating SCR increase
620 –18
–3 – –13
31.12.2018after capital
management
Openingadjustments
Operatingimpact
Marketvariances
Otherincl. tax
Changein eligibilityrestrictions
31.12.2019before capitalmanagement
Capitalmanagement
31.12.2019after capital
management
237%
Economic earnings €7.4bn
1 Opening adjustments incl. volatility adjustment at selected entities, M&A, model changes. 2 Operating impact and market variances pre-tax. 3 Change in non-available own fund items. 4 Foreseeable dividend for 2019 (€1.4bn), foreseeable share buy-back in 2020/21 (€1.0bn).
EOF €36.0bn 0.5 5.9 2.8 –1.3 – €43.9bn –2.4 €41.5bn
SCR €14.7bn –0.1 1.1 2.2 –0.3 – €17.5bn – €17.5bn
SII capital generation 0.7 4.8 0.6 –1.0 – €5.1bn –2.4 €2.7bn
1 4
245% 250%
2
3
Backup: Group
November 2020
29Munich Re – Equity Story
Increase of SCR driven by substantial business growth
and lower interest rates
November 2020
Backup: Group
1 Capital requirements for associated insurance undertakings and other financial sectors, e.g. institutions for occupational retirement provisions.2 99.97% unrestricted, 0.03% hybrid capital.
Group
Delta
RI ERGO Div.
€bn 2018 2019 2019 2019 2019
Property-casualty 7.6 8.8 +1.2 8.8 0.4 –0.4
Life and Health 5.3 6.4 +1.1 5.5 1.2 –0.4
Market 9.2 10.1 +0.9 6.3 6.0 –2.2
Credit 3.2 4.2 +1.0 2.5 1.9 –0.2
Operational risk 1.1 1.1 +0.0 0.7 0.6 –0.2
Other1 0.7 0.7 +0.0 0.4 0.2
Simple sum 27.0 31.2 +4.2 24.2 10.3 –3.3
Diversification –9.9 –10.7 -0.8 –8.8 –1.2
Tax –2.4 –3.0 -0.5 –2.8 –0.8
Total SCR 14.7 17.5 +2.9 12.6 8.3 –3.4
SCR by risk category EOF by tiering
€36.0bn
2018 2019
€41.5bn
88%
11%
90%
10%
Tier 3
Tier 2
Tier 12
0.2%
1%
1
2
3
4
5
6
30November 2020Munich Re – Equity Story
Property-casualty risk – Increase mainly driven by
business growth in P-C Reinsurance
Top scenario exposures (net of retrocession) – AggVaR1
▪ Exploiting opportunities in an improving market
environment – exposure growth in all major scenarios in
accordance with higher risk-bearing capacity (strongly
increased EOF)
▪ Additional exposure expansion due to depreciation of euro
▪ Well-diversified cat portfolio across perils and regions
1 Munich Re. Return period 200 years, pre-tax. 2 Natural catastrophes, man-made (including terrorism and casualty accumulations) and major single losses.
€bn €bn 2019 2018
Basic losses 4.0
Major losses2 7.1
Diversification –3.5
Total 7.6
Top exposures
1 Atlantic Hurricane
2 Earthquake North America
3 Earthquake Japan
4 Storm Europe
5 IT-Virus
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
2019 2018
4.0
8.3
–3.5
8.8
Backup: Group
31Munich Re – Equity Story
Life and Health risk
1 Munich Re (Group). Return period 200 years, pre-tax
Life and Health – VaR1 €bn
Longevity
Mortality
Morbidity
Health
Other
Total
Overall increase driven by
ReinsuranceLower interest rates and increase in exposure, esp. US mortality business
1.61.5
4.33.6
3.42.7
0.90.8
0.50.3
6.45.3
2019
2018
ERGOLower Euro interest rates
November 2020
Backup: Group
32November 2020Munich Re – Equity Story
Sensitivities of SII ratio
237%
247
224
226
232
253
219
233
234
213
235
220175
1 Parallel shift until last liquid point, extrapolation to unchanged UFR. 2 Based on CPI inflation. 3 Based on 200-year event.
Target capitalisation
Ratio as at 31.12.2019
Interest rate +50bps1
Interest rate –50bps1
Spread +50bps GOV
Spread +50bps CORP
Equity markets +30%
Equity markets –30%
FX –20%
Inflation +100bps2
Atlantic Hurricane3
UFR –50bps
Backup: Group
33November 2020Munich Re – Equity Story
Backup: Group
ESG – Strong commitments and high market recognition
Standards
▪ Global Reporting Initiatives (GRI) disclosure
Commitments
Voluntary commitments
▪ UN Global Compact (UNGC)
▪ UN Principles for Sustainable Insurance (PSI)
▪ UN Principles for Responsible Investment (PRI)
▪ UN-convened Net-Zero Asset Owner Alliance (AOA)
Top positions in major SRI ratings
Overview on SRI ratings and indices can be found in our Corporate Responsibility Report
Committed to ESG reporting
34Munich Re – Equity Story
ESG – Key performance indicators
Backup: Group
34Munich Re – Equity Story
Selected targets for 2020
▪ Achieve permanent carbon neutrality
by taking compensation projects into
account – achieved since 2015
▪ Convert all electricity procurement to
renewable energy sources –
already 90% achieved
▪ Reduce carbon emissions by 35%2 –
achieved since 2019
Environment
Diversity – share of women in …
▪ Supervisory Board: 45%
▪ Board of Management: 11%
▪ Executive/management: 35%
▪ Company overall: 53%
Health and training
▪ 5% sick leave
▪ 84% employees with access to
health service
▪ 92% employees with at least
one training
▪ 4.8 training days per staff
member
Governance
November 2020
Carbon emissions per employeereduced by 44%
4409
2485
2009 2019
kg CO2
Declined
40%
Conditions
attached
33%
Accepted
27%
ESG criteria in Board of
Management remuneration
Annual and multi-year bonus:
ESG criteria relevant for the
evaluation of the overall
performance (amongst other factors)
Reputational risk committees (RRC)
for escalation of controversial
underwriting and investment cases
Cases
submitted
to the RRC
in 2019
Social1
1 As at 31.12.2019. 2 Compared to the base year of 2009 and measured in kg of carbon emissions per employee.
35Munich Re – Equity Story
Governance – Remuneration system for the Board of
Management meets shareholder requirements
Backup: Group
Basic remuneration
plus remuneration in
kind/fringe benefits
Variable
remuneration1
50%
50%
70%
30%
Bonus scheme
spanning
Corridor Assessment basis
1 calendar year 0 – 200% IFRS consolidated
result
5 calendar years 0 – 200% Total shareholder
return compared to a
defined peer group2
1 For 100% achievement of objectives/performance evaluation. Evaluation of overall performance: Adjustment of achievement figures by the Supervisory Board of up to 20 percentage points (loading/reduction). 2 Peer group: Allianz, Axa, Generali, Hannover Re, SCOR, Swiss Re, Zurich.
November 2020
Munich Re – Equity Story
In times of COVID-19, Munich Re fulfils the economic
and social role of (re)insurance
Economy
November 2020 36Image: CROCOTHERY / stock.adobe.com
▪ Gradual relaxation of lockdowns,
partially reversed again
▪ Fiscal and monetary stimuli
▪ V-, U-, W- or L-shaped development?
Capital markets▪ Quick and strong rebound of equity
and credit markets after severe losses
▪ Increasing decoupling from economic
fundamentals
▪ Risk of setbacks remains
Population▪ Social and economic life strongly limited
▪ Still rising infections and fatalities
▪ Increasing unemployment
▪ Risk of a second wave
Munich Re
▪ Fulfilling our mission as an insurer by
covering claims of €1.5bn in H1 2020 –
immediately supporting our business
partners
▪ Engaging in public-private-partner-
ship discussions to tackle future
pandemic challenge
▪ Protecting our employees as a
socially responsible employer –
strict measures ensuring infection
risk is kept as low as possible
▪ Extending into voluntary activities –
engaged in supporting communities
in need
Fully committed
to protecting
stakeholder value
Backup: Group
Reinsurance
3Image: John Lund / Getty Images
38Munich Re – Equity Story
Munich Re – Leading global reinsurer
Backup: Reinsurance
Source: Standard & Poor's, September 2020
Rank Company Country Net reinsurance premiums written 2019 (US$ bn)
1 Swiss Re Switzerland 39.6
2 Munich Re Germany 35.4
3 Hannover Re Germany 22.8
4 Berkshire Hathaway Re USA 17.0
5 SCOR France 16.2
6 China Re China 12.2
7 Reinsurance Group of America USA 11.3
8 Lloyd’s UK 10.5
9 Everest Re Bermuda 7.8
10 Partner Re Bermuda 6.9
Total top 40 247.3
November 2020
39Munich Re – Equity Story
Reinsurance – Overview
Backup: Reinsurance
2019 2018 2017 2016 2015
Gross written premiums €bn 33.8 31.3 31.6 31.5 28.2
Investments €bn 92.4 85.6 85.8 91.9 89.2
Net technical provisions €bn 77.2 72.4 68.1 67.1 65.4
Major losses (net) €m 3,124 2,152 4,314 1,542 1,046
Thereof natural catastrophes €m 2,053 1,256 3,678 929 149
Property-casualty – GWP by region 2019 % Life and Health – GWP by region 2019 %
North America
39
TOTAL
€11.7bn
Europe & LatAm
26Asia Pacific
26
Africa & Middle East
8North America
45
TOTAL
€22.1bn
Europe & LatAm
38Asia Pacific
13
Africa & Middle East
4
November 2020
40Munich Re – Equity Story
Munich Re is well positioned to profitably grow its
core business fields and drive innovation in the industry
Sustainable new business proposition and active portfolio management
1 Effectively serving our clients and strengthening the business model
2 Reinforcing underlying profitability and growth
3 Building a diversified profit base –shaping and seizing opportunities in the digital transformation of the (re)insurance industry
4
Data-drivensolutions
Expanding theboundaries of insurabilityReshuffling
the valuechain
Trends
Risk Solutions
Reinsurance P-CReinsurance
Life and Health
November 2020
Backup: Reinsurance
41Munich Re – Equity Story
1 L&H Re: Strong new business generation continues –
Portfolio composition fosters steady earnings growth
Growth
Portfolio management
Australian disability portfolio
US pre-2009 mortality block
Leading digital services
New (re-) insurance products
Established growth areas1
Risk-related services
Ambition2
Technical result, incl. fee income
450475
500
2017 2018 2019 2020e
~€550m
1 FinMoRe, Asia, USA, longevity and financial markets. 2 Ambition for 2020 withdrawn due to uncertainty related to COVID-19.
Improves earnings stability
Fundament of earnings generation
Safeguards earnings progress
CoreStrong footprint in
traditional reinsurance
In-depth expertise in risk
assessment and management
November 2020
Backup: Reinsurance
France: Successful re-entry and
already ahead of plan, further
strengthened as at 1.1.2020,
now >€300m premiums
Global Clients: Growth in long-
standing relationships, focus on
balanced portfolios and adequate
reflection of client strength
US: Selective expansion in local or
regional business, when pricing and
risk relation deemed good, cautious
on casualty
Japan: Expansion of nat cat
business reacting to increasing
rates in wake of recent typhoons
42Munich Re – Equity Story
2 P-C Re: Growth initiatives gaining traction –
Profitable business expansion
~99% ~98–99%
Underlying combined ratio
20.422.1
2018 2019
+8%
Gross premiums written1
€bn
F&C: Direct Property and
Energy business seizing
market opportunities to write
more business at hardening
terms and better rates
AMIG: Transformation
efforts bearing fruit and
permitting growth of 17%,
well above market average
Risk Solutions business2
Mature markets2
India: Executing growth strategy
and broadening offer successful,
leading to diversified portfolio
now >€300m premiums
Latin America: Growing in
line with our ambition and
market position with existing
partners and new business
Emerging markets2
1 Compared to previous year. 2 Examples. F&C = Facultative & Corporate.
Expansion of nat cat business
+4% +21% +14%
November 2020
Backup: Reinsurance
43Munich Re – Equity Story
100.7% (103.4%)
Normalised for large losses (aerospace)
C/R in line with mid-nineties ambition (elevated
prior to 2019 due to attritional losses)
€5.0bn (€4.3bn)
Capturing profitable growth opportunities
Gross premiums written Combined ratio
American Modern
▪ Transformation investments bearing fruit with growth of 17%1, showing attractiveness of new product suite
▪ One-off IT costs and business run-off partly impact the result
▪ Combined ratio of 88% confirms earnings potential of the unit
Facultative & Corporate
▪ Good and profitable market position confirmed by a 93% C/R in 2019 – following a period affected by severe outlier events
▪ Premiums with strong growth above expectation, particularly in property, leading to an increase of 35%1
Aerospace
▪ Unusual accumulation of large-loss events for Space and Aviation business leading to a C/R of 166%. Market materially reshaped after these events allowing for positive outlook
▪ Growing premium due to better market conditions and an improving competitive landscape by 20% in 2019 already. Further improvement expected for 2020
3 Risk Solutions –
2019 with another step back to target profitability
1 Compared to previous year. Gross premiums written. Economic view – not fully comparable with IFRS figures. November 2020
Backup: Reinsurance
44Munich Re – Equity Story
Increased top line – Well-balanced diversified portfolio
Backup: Reinsurance Property-casualty – Portfolio
Rounded figures. 1 Gross premiums written. Economic view – not fully comparable with IFRS figures, as at 31.12.2019 (31.12.2018).2 Aviation, marine and credit. 3 Incl. MSP, sold in 2018.
▪ Strong proportion of US business,
spread across all lines of business
▪ Stable portfolio composition
Total P-C book % %2 Risk Solutions
Tailor-made
solutions
25 (25)
Other
traditional business
52 (53)
Risk
Solutions
23 (21)
TOTAL1
€22bn
MR Specialty
Insurance
22 (24)
American Modern
21 (21)
Facultative &
Corporate Direct
15 (12)
Hartford
Steam Boiler
22 (22)
Aerospace
8 (11³)
TOTAL
€5bn
Munich Re
Syndicate
12 (10)
▪ Well-balanced traditional portfolio
▪ Slight move towards specialty
1 Traditional
TOTAL
€17bn
Casualty
49 (51)
Specialty2
8 (7)
Other property
34 (34)
Nat cat XL
9 (7)
%
November 2020
45Munich Re – Equity Story
Portfolio management and high share of proportional
business support earnings resilience
Traditional1
Backup: Reinsurance Property-casualty – Portfolio traditional
1 Gross premiums written. Economic view – not fully comparable with IFRS figures, as at 31.12.2019 (31.12.2018).
Casualty motor
30 (32)
Aviation
1 (1)
Property ex nat cat XL
29 (30)
TOTAL
€17bn
Facultative
9 (8)
XL
16 (15)
Proportional
75 (77)
TOTAL
€17bn
Marine
2 (2)
Credit
4 (4)
Agro
5 (4)
Casualty ex motor
20 (19)
Property nat cat XL
9 (7)
%
November 2020
▪ Nat cat XL
▪ Accordingly, ongoing slight shift towards
non-proportional business
▪ Agro business
▪ Proportional property
▪ Casualty
Share
increases
Share
decreases
46Munich Re – Equity Story
US casualty – Sustaining a robust portfolio
TOTAL
€6.8bn
Workers’ comp.2
6
Financiallines
18
General liability
26
Motor liability
50
Global traditional casualty book1
1 Expected yearly premiums without motor-own damage; business incepting 2.1.2019 – 1.1.2020, i.e. incl. 2020 January renewals. 2 Includes personal accident.
▪ Additional casualty premium via
Risk Solutions business of ~€900m
(thereof ~€750m US) …
▪ … providing balance for the overall
US casualty book with very high
share of smaller commercial and
personal lines business
US traditional casualty book1
approx. 40% of global traditional casualty book
TOTAL
€2.7bn
▪ Munich Re with early response in portfolio management and pricing
▪ Loss drivers (social inflation) identified and being addressed, risk
appetite clearly defined and coverage-specific restrictions for critical
exposures stated in underwriting best practices
▪ Personal lines business minimally exposed to social inflation
▪ Proportional business >90%
Workers’ comp.
6
Motor liability
27
Financiallines
29
Generalliability
38
TOTAL
€2.7bn
Workers’comp.
6
Personallines
18
Comm. liab. XL
6
Commercial liability
prop.
70
% %
November 2020
Backup: Reinsurance Property-casualty – Portfolio traditional
47Munich Re – Equity Story
US casualty market highly differentiated – Still allows us to
seize opportunities while active risk management remains key
▪ Long-term track record in managing and early responding to risk of
change, e.g. social inflation
▪ Active portfolio management
▪ Selective opportunities in some proportional business lines –
benefitting from increasing original rates, credible alignment of
interest and high transparency
▪ Expansion of personal lines business from 7% to 18%1
▪ Reduction of portfolio parts with imbalanced premium/risk reward,
e.g. US commercial liability XL business from 10% to 6%1
▪ Proactive adjustment of pricing parameters to reflect dynamic market/
claims environment and avoid anti-selection
▪ Reduction of ceding commissions
▪ Risk management – strict limit management, accumulation control and
feedback loops between underwriting, claims and reserving
▪ Social inflation reflects the changing values of society
and particularly materialises as a frequency of severity
▪ Mainly exposed are bodily-injury related classes of
business, e.g. commercial auto, general and product
liability and healthcare/medical malpractice
▪ Limit reductions on original policies
▪ Accelerating rate increases on original policies,
primarily in the non-admitted market, e.g. E&S and
D&O
▪ Further firming in primary admitted market to be
expected after adjusted rate filings
▪ Accelerated rate increases expected throughout 2020
renewals, especially for high excess Bermuda and
financial lines renewals
Munich Re approach
1 Share in % of total US traditional casualty book, 2017 to 2020.
Market observations
Ongoing qualitative improvement of our proportional US commercial liability portfolio
November 2020
Backup: Reinsurance Property-casualty – Portfolio traditional
48Munich Re – Equity Story
GWP global cyber insurance market1 US$ bn
4.7
11.2
2018 2019 2020 2021 2022
Rest of WorldNorth America
GWP Munich Re cyber portfolio US$ m
191263
354
473
604
2015 2016 2017 2018 2019
ReinsurancePrimary insurance
Cyber insurance market with strong expected growth
▪ North America will remain the biggest region. Europe and Asia
to expand their share in the world market significantly
▪ Regulatory changes in more than 100 countries and further
increased awareness drives demand for cyber solutions
▪ Growth of digital business models. IoT developments will further
increase the demand for cyber policies
Serving all client segments via RI and PI carriers
▪ Dedicated cyber teams ensure client proximity through a global
set up supported by a central cyber unit
▪ Steady growth in the US, accelerated growth in Europe and Asia
▪ HSB as a well-established player in the US conforming strong
growth and detecting new distribution channels
▪ Sustainable growth of corporate single risks through centralised
and strengthened expertise (MR F&C)
Strong long-term growth in cyber (re)insurance expected –
Munich Re with leading-edge expertise and market presence
Backup: Reinsurance Property-casualty – Cyber (re)insurance
1 Munich Re estimates. November 2020
▪ Sustained favourable reserve development
– releases exceed last year’s level in
absolute and relative terms
▪ Confidence level preserved – showing
resilience as positive claims experience
exceeds adverse development in selected
hot-spot areas
49Munich Re – Equity Story
Property-casualty – Earnings growth
fully supports the 2020 ambition
Figures as at 31.12.2019 (31.12.2018). 1 Basic losses from prior years, already adjusted for directly corresponding sliding-scale and profit-commission effects.
▪ Strong volume increase by almost €2bn –
earnings trajectory supported by growth
from renewals and strategic initiatives
▪ Overall sound underlying profitability of
portfolio – comfortably exceeding cost
of capital
▪ High nat cat (esp. typhoons in Japan)
and man-made claims, particularly in Q4
▪ Strong investment result, incl. disposal gains
▪ Normalised for single large events
(e.g. aerospace) positive development
of profitability in Risk Solutions business
▪ Support from low tax expenses
€1,562m (€1,135m)Net result 101.0% (99.4%)
Combined ratio
5.6% (4.6%)Reserve releases1
▪ Major losses (15.2%) above average
▪ Underlying combined ratio ~98–99%,
slightly elevated due to non-outlier losses,
higher admin expenses and cautious
loss picks
November 2020
Backup: Reinsurance Property-casualty
50Munich Re – Equity Story
Renewal results – Price changes since 2011
Backup: Reinsurance Property-casualty – Renewals
1.0
2.4
0.2
–2.4
–1.6
–0.9
–0.5
0.8
0.3
1.8
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
November 2020
51Munich Re – Equity Story
July renewals 2020 –
Positive price dynamic continues and broadens
Backup: Reinsurance Property-casualty – July renewals 2020
November 20201 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).
July renewals 2020
% 100 –11,9 88.1 +8.0 +12.2 108.3€m 3,475 –412 3,063 +279 +423 3,765
Total renewablefrom 1 July
Cancelled Renewed Increase on renewable
Newbusiness
Estimatedoutcome
▪ Positive pricing dynamics
continue – particularly in
regions and lines of
business with high loss
experience
▪ In addition, COVID-19
supports flight to quality
and market hardening
▪ Premium growth driven
by business opportunities,
especially in North
America and with global
clients
Change in premium +8.3%
Thereof price movement1 ~ 2.8%Thereof change in exposure for our share +5.5%
52Munich Re – Equity Story
Retrocession – Stable programme structure despite a
tightened market
Backup: Reinsurance Property-casualty – Risk trading
1 Including indemnity retrocession, ILW/derivatives, risk swaps, cat bonds and the sidecars including Eden Re. Selection of main scenarios. 2 Munich Re structured and arranged transactions.
Retrocession – Maximum in-force
protection per nat cat scenario1
▪ Protection against peak risks via multiple instruments –
mainly traditional retrocession (CXL) and sidecars
▪ Well-balanced buying strategy reflecting
▪ strong Munich Re capital base and risk-bearing capacity,
▪ expected IFRS result stabilisation,
▪ market terms
0
500
1,000
1,500
2015 2016 2017 2018 2019 2020
Australia Cyclone US Windstorm NE US Windstorm SETraditional retrocession
▪ Munich Re has one of the largest retrocession
programmes globally
▪ Capacity constraints in the broader market, some
locked-in capital
▪ Reliable Munich Re approach – placements well
received
Sidecar program2
▪ One of the largest sidecar programmes in the market
(US$ 685m); QS cessions of certain lines of business
▪ Placed with a broad range of investors and targeting
long-term partnerships with large institutional accounts
▪ Two products: (1) placed with broad investor group,
(2) bilateral (single counterparty)
Munich Re key channels€m
November 2020
53Munich Re – Equity Story
Munich Re's maximum in-force nat cat protection
€m
500
1,000
AustraliaCyclone
US WindstormNortheast
US WindstormSoutheast
USEarthquake
EUWindstorm
EUOther perils
JapanEarthquake
Risk swaps
Sidecars
Indemnity retro
0
Nat cat protection before reinstatement premiums, as at January 2020
Backup: Reinsurance Property-casualty – Risk trading
November 2020
▪ Again high level
▪ Strong traditional business development
in North America and Asia
▪ FinMoRe with ongoing strong demand
54Munich Re – Equity Story
Life and Health – Result below guidance on strain
from Australia, favourable experience in other markets
Figures as at 31.12.2019 (31.12.2018). 1 Incl. Fee income.
▪ On aggregate positive claims experience
▪ Strong contribution from new business and
positive impact from restructuring of certain
large treaties
▪ Negative impact from reserve review in
Australia; overall global reserve position
considered strong
▪ Strain on technical result from restructuring
of asset portfolio in Canada
▪ Positive 2020 outlook: vital new business
proposition and earnings stabilisation from
2019 inforce management and reserve review
€456m (€584m)Technical result1 €706m (€729m)
Netresult
~€1.3bn (€1.1bn)New business contribution
▪ Decline of technical result
▪ High investment result driven by
restructuring of assets in Canada,
overcompensating strain on technical
result
November 2020
Backup: Reinsurance Life and Health
55Munich Re – Equity Story
Strong footprint in all major markets
Gross premiums written 2019 / share of total (core regions).
Asia / MENA (€3.0bn / 26%)
▪ Pleasing development of new business, including vital pipeline of FinMoRe solutions
▪ Substantial share of health reinsurance
▪ Product trends to be monitored closely, particularly in critical illness
Canada (€1.7bn / 14%)
▪ Attractive margins despite competitive environment
▪ Maintain leadership position in traditional business
▪ Develop footprint in Group business
Continental Europe (€1.0bn / 9%)
▪ Sound but stagnating traditional business overall
▪ Demand for tailor-made FinMoRe solutions
Australia (€0.8bn / 7%)
▪ State of disability market remains an area of concern
▪ Strengthening of assumptions reflecting recent experience – in Q4 technical result impact of ~–€200m
▪ Rehabilitation of in-force top priority
▪ Highly selective new business proposition
USA (€2.9bn / 25%)
▪ Solid position among market leaders
▪ Further develop FinMoRebusiness and predictive analytics to foster growth
▪ Attractive risk-return profile of new business
▪ Successful inforcemanagement execution
UK / Ireland (€1.8bn / 15%)
▪ Successful FinMoRe and longevity proposition
▪ Margins in protection business remain unattractive
▪ Organisational set-up ready for Brexit
November 2020
Backup: Reinsurance Life and Health
56Munich Re – Equity Story
Overweight in North America and traditional mortality risk
Backup: Reinsurance Life and Health
Size of bubbles indicative of present value of future claims.
Mortality ~65%
Morbidity ~25%
Longevity ~10%
NA ~50%
Europe ~30%
Asia/MENA ~15%
Australia <5%
Africa/LA <5%
90%
10%
USA
90%
10%
Latin America
70%
30%
Africa
70%30%
Canada
45%55%
Continental Europe25%
10%
65%
UK/Ireland
35%
65%
Asia / MENA
25%
75%
Australia
November 2020
57Munich Re – Equity Story
Financially Motivated Reinsurance – Strong demand
prevails
Backup: Reinsurance Life and Health
€mGross premiums written1 Technical result1
▪ Demand expected to remain high
▪ Transaction types tailored to client needs
▪ Number and size of transactions will vary on an annual basis
▪ New business dominated by US and Asia
▪ 2018’s drop in top line due to scheduled termination and
restructuring of two particularly premium-intensive
transactions
Portfolio development
1 From 2016 including Health; technical result incl. fee income. 2 From 2017 including Health; 2019 still preliminary.
3,313
4,3064,793
1,264 1,20131 3235
12 10
2015 2016 2017 2018 2019
% of total
136
88
127
68
154
3417
34
13
47
2015 2016 2017 2018 2019
% of total
214
257
205178
231
23 2219 17 18
2015 2016 2017 2018 2019
% of total
€m€m
Expectations going forward
New business contribution2
November 2020
58Munich Re – Equity Story
Asia – Success through tailor-made market and client
strategies
€mGross premiums written1 Technical result1 New business contribution2
▪ Growth path in the region prevails
▪ High demand for solvency relief and financing solutions
▪ Competition expected to increase
▪ Closely watch product trends, particularly in critical illness
Expectations going forward
▪ Strong organisational set-up throughout the region
▪ Sustained growth path
▪ Growing fee income
▪ New business contribution volatile on amount of FinMoRe
written in a particular year
Portfolio development
1 From 2016 including Health; technical result incl. fee income. 2 From 2017 including Health; 2019 still preliminary.
Backup: Reinsurance Life and Health
910
1,9092,182
2,338
3,045
914 16
2226
2015 2016 2017 2018 2019
% of total
86
108100
162149
21 1923
2833
2015 2016 2017 2018 2019
% of total
198180
244
190
315
2115
2318
24
2015 2016 2017 2018 2019
% of total
€m€m
November 2020
59Munich Re – Equity Story
Longevity – Hold on to prudent underwriting approach
Gross premiums written Liability p.a. Strategic proposition
▪ No change to prudent underwriting approach
▪ Carefully consider expansion beyond UK and extension of product
offering
Expectations going forward
▪ Book carefully developed in line with risk appetite
▪ Claims emerge better than expected in pricing
▪ Positive contribution to IFRS and SII earnings
▪ 2019: one large transaction executed late in the year
Portfolio development
▪ Portfolio comprises longevity
transactions in the UK
▪ Market entry in 2011 after in-depth
research
▪ Prudent approach in pricing and
valuation
Backup: Reinsurance Life and Health
€m€m
381
484417
614685
4 4 36 6
2015 2016 2017 2018 2019
% of total
1,366
1,884
697
3,292
2,020
2015 2016 2017 2018 2019
November 2020
60Munich Re – Equity Story
Financial Markets1 – Comprehensive market risk solutions
for the financial services industry
€mIFRS earnings contribution2 Strategic proposition
▪ Intensify coverage of existing markets and expand into further markets
▪ Support growth by further scaling up the organisation
▪ Broaden product, service and regulatory scope
▪ Grow contribution to IFRS earnings and new business contribution
Expectations going forward
▪ Initial focus on Europe and Asia (mainly Japan)
▪ Expansion across Europe, Asia, and North America
▪ Market exploration in Latin America and Australia
▪ Portfolio has gained stand-alone significance
Portfolio development
▪ Offer comprehensive solutions to manage market risks and returns globally
▪ Innovate new business, optimise inforce business, and boost asset returns
of insurers, pension providers and other institutional and private investors
▪ Capitalise on growth and consolidation opportunities in the global savings,
retirement and investment industry
▪ Leverage capital market, structuring, accounting, legal, and regulatory
expertise on the basis of technical and quantitative capabilities
▪ Transfer and transform financial risks to markets via state-of-the-art platform
1 Formerly “asset protection”. 2 Recognised in non-technical result.
Backup: Reinsurance Life and Health
26
4437
59
103
2015 2016 2017 2018 2019
November 2020
ERGO
4Image: dem10 / iStockphoto Getty Images
62Munich Re – Equity Story
ERGO – Overview
Backup: ERGO
2019 2018 2017 2016 2015
Gross written premiums €bn 17.7 17.8 17.5 17.4 16.5
Investments €bn 145.5 139.7 141.1 139.4 131.0
Net technical provisions €bn 140.8 135.9 137.6 135.2 130.3
Combined ratio p-c Germany % 92.3 96.0 97.5 97.0 97.9
Combined ratio p-c International % 94.3 94.6 95.3 98.0 104.7
Premium split by region – 2019 % Distribution channels Germany – New business 2019 %
Banks/other
2Tied agents
59
Broker
21
Direct
18
Rest of World
12Germany
69
Spain
5
Belgium
5
Poland
9
Figures from 2016 including international primary insurance business of Munich Health.
TOTAL
€17.7bn
November 2020
Actual
2018
Guidance
2019
Actual
2019
ESP guidance
20202
Total premiums €18.7bn ~€18.5bn1 €18.9bn ~€18.5bn
Net profit €412m ~€400m1 €440m ~€530m
Investments(net, accumulated)
€597m €908m2 €770m €1,008m
Total cost savings(net, accumulated)
€174m €227m2 €234m €279m
Combined ratio
P-C Germany96.0% ~93%1 92.3% 92%
63Munich Re – Equity Story
ERGO Strategy Programme (ESP) –
On track to deliver targets 2020
1 From Annual Report 2018. 2 ESP guidance (total premiums adjusted for Munich Health integration and portfolio streamlining). November 2020
Backup: ERGO
Group
64Munich Re – Equity Story
ERGO – Ahead of Strategy-Programme targets
L&H Germany P-C Germany International
Figures as at 31.12.2019 (31.12.2018). 1 Adjusted for portfolio optimisation: non-adjusted Group: €17.7bn (€17.8bn), International: €4.9bn (€5.1bn)
GWP
Net result
412440
2018 2019
+7%
€17.5bn
(€17.4bn)1
€440m
(€412m)
€9.2bn (€9.3bn)Growth in Life new book partially
compensates for back-book attrition;
positive development in Health
€187m (€264m)Adjusted for one-off in 2018,
net profit in Life increased;
ongoing high Health contribution
€3.5bn (€3.4bn)Strong growth – increase in
commercial and retail business
€148m (€45m)Significant improvement of
technical result
€4.7bn (€4.6bn)1
Premiums increased in core markets
€105m (€103m)Good operating performance offsets
divestment effects
2.9 3.1
2018 2019
+20bp
96.0 92.3
2018 2019
–3.7%-p
94.6 94.3
2018 2019
–0.3%-p
Return on investment%
Combined ratio%
Combined ratio%
November 2020
Backup: ERGO
65Munich Re – Equity Story
Life and Health Germany –
Addressing low-interest-rate environment in Life
Life
Germany
€2.9bn(32%)
Back book
▪ Progress in portfolio migration onto new IT platform
▪ Foundation for TPA business model set through additional sales joint venture with IBM
▪ Resilient investment yields exceeding guarantee obligations (incl. ZZR), total yield even higher
▪ Measures to mitigate interest-rate risks continued,e.g. hedging and interest-rate reinsurance
Investment margins %
Digital Ventures
HealthGermany
1 Merger of ERGO Vorsorge Lebensversicherung AG with ERGO Direkt Lebensversicherung AG (EDL) in 01 2019. 2 Index- and unit-linked products.
GWP
€9.2bn
New business (APE)€m
New book
▪ ERGO Vorsorge as unified risk carrier fornew product offering through merger1
▪ Profitable new business concentrating on biometric offers and products with significantly reduced market risk
▪ Double-digit APE growth, mainly drivenby capital-market related2 products
▪ Already substantial share of Life Germany premiums (~20%)
November 2020
New book 2018
EDL2018
2018 2019
Biometric
Capital-market related3.4
3.0 2.9 3.0
2.52.2 2.1 1.9
2016 2017 2018 2019
Avg. yield
Avg. guarantee (incl. ZZR)
134
7529 104
71% 56%59%
41%44%
29%
83%
17%
+29%
Backup: ERGO
66Munich Re – Equity Story
Life and Health Germany –
Maintaining leading positions in Health
Business development on track
▪ Strong and sustainable earnings contribution
▪ Focus on profitable and low-risk supplementary insurance without ageing reserves
▪ Launch of integrated mobile application “Meine DKV”
Health
Germany
€5.6bn1
(60%)
1 Travel included. 2 GWP. 3 Local GAAP for DKV and ERGO Krankenversicherung AG.
Digital Ventures
(thereof Health €0.6bn)
Life Germany
Extension of market leading position in supplementary insurance
▪ Market leader with >20% market share2; strong new business development
▪ Expansion in long-term care and dental insurance
▪ Further integration of on- and offline sales channels with positive impact on new business
GWP
€9.2bn
Insured persons (supplementary insurance) 1,000
Business mix (GWP)€bn3
70.2% 69.6% 68.7% 68.0%
29.8% 30.4% 31.3% 32.0%
5.2 5.3 5.4 5.5
2016 2017 2018 2019
Supplementary insuranceComprehensive insurance
November 2020
5,084 5,116 5,171 5,231
2016 2017 2018 2019
+3%
Backup: ERGO
67Munich Re – Equity Story
Key figures1 % 2017 2018 2019
Reinvestment yield 1.5 1.6 1.8
Average yield 3.0 2.9 2.8
Average guarantee2 2.1 2.0 1.9
Key financials1 €bn 2017 2018 2019
Free RfB 1.4 1.3 1.6
Terminal bonus fund 0.9 0.9 0.8
Unrealised gains 10.4 9.4 13.3
Accumulated ZZR 5.0 5.4 6.2
5.5
3.72.8 2.8
2.3
Peer 1 ERGO Peer 2 Peer 3 Peer 4
€bn
1.7
0.90.7 0.6 0.5
ERGO Peer 1 Peer 2 Peer 3 Peer 4
Life Germany Health Germany GWP – Market view3
Comprehensive insurance – ERGO number 2 in German market
Supplementary insurance – ERGO clear market leader
1 German GAAP figures. 2 Actuarial interest rate incl. effect from ZZR. 3 Market data as at 2018. November 2020
Life and Health Germany –
Additional information
Backup: ERGO
3.23.3
3.43.5
2016 2017 2018 2019
68Munich Re – Equity Story
Property-casualty Germany –
Ongoing profitable premium growth
2020 level already almost achieved in 2019
▪ Sustainable improvement in 2019 driven by
▪ Reduction of claims ratio: favourable claims development in basic losses driven by improved underwriting (esp. commercial lines) and claims management (esp. motor) as well as lower nat-cat and man-made losses
▪ Improvement of cost ratio: stable cost development despite strong growth and supported by reduced fixed cost level
▪ Lowest combined ratio since 2011
Motor Business development on track
▪ Strong premium growth in 2019 – increases in commercial and retail
▪ Simplified product approach and process optimisation with first successes:
▪ Successful renewal of new motor insurance – simplified product approach continued with legal protection and business content insurance
▪ Digitalisation of claims processes with focus on speed and improved efficiency in motor completed; customer satisfaction increased
Gross premiums written€bn
9899
96
9392
97.0 97.5
96.0
92.3
2016 2017 2018 2019 2020
ESP guidance
Actual
Combined ratio %
Personal accident
Fire/Property
Liability
OtherMarine
Legal protection
+3.6%
GWP
€3.5bn
November 2020
CAGR +3.1%
Backup: ERGO
Consolidated portfolio with leading positions in core markets
▪ Premium increase1 in both core and growth markets
▪ Strong earnings level continued despite of disposal effects
▪ Continuous improvement of combined ratio supported by already achieved sustainable cost savings of €35m (net, accumulated)
69Munich Re – Equity Story
International –
Sustainable increase of profitability
Core
markets
€3.9bn(82%)
Other
98.0
95.394.6 94.3
2016 2017 2018 2019
Successful expansion in selected growth markets
▪ India (P-C, Health): HDFC ERGO with substantial premium growth (+8%3); announced merger with Apollo Munich Health will create second-largest private accident/health insurer
▪ China (Life): Significant premium increase (+48%3); regional presence expanded to Hebei in 2019, third province after Shandong and Jiangsu
GWP1
(without JVs)
€4.7bn
1 Adjusted for portfolio streamlining. 2 Non-adjusted International: €4.9bn. 3 2019 vs. 2018. 4 ERGO share in ERGO China Life, HDFC ERGO, ThaiSri ERGO.
in addition (JVs):
Growth markets
€0.7bn
Combined ratio%
Gross premiums written in growth markets4
€m
November 2020
316
567 592696
2016 2017 2018 2019
CAGR +30%
Backup: ERGO
Financial highlights
5Image: Vertigo3d / Getty ImagesiStockphoto
71Munich Re – Equity Story
Munich Re posts a decent Q3 result
considering high major losses
November 2020
Backup: Financial highlights 9M 2020 – Group
Munich Re Q3 2020 (9M 2020)
Technical result€m
Investment result€m
Net result€m€199m (€999m)
Net result
Reinsurance result of €63m
impacted by COVID-19 related
claims and other major losses –
strong ERGO result of €136m
Return on investment1
2.7% (2.8%)
Reinsurance: 3.7% – benefited from
disposal gains
ERGO: 2.1% – impacted by equity
impairments and derivative losses
Shareholders' equity€29.6bn (–3.1% vs. 31.12.)
Return on equity1: 3.6% (5.9%)
Solvency II ratio: 216%
1 Annualised. 2 For prior-year basic losses.
Property-casualty: 112.2% (106.1%) – Major-loss ratio: 26.7% (21.0%); Reserve releases2: –4.0% (–4.0%) –net result of –€23m (€446m)
Property-casualty Germany: C/R: 90.9% (92.2%) – net result of €48m (€120m)
International: C/R: 92.5% (92.6%) – net result of €57m (€162m)
2,150 1,691
5,826 5,308
Q32019
Q32020
9M2019
9M2020
865
199
2,490
999
Q32019
Q32020
9M2019
9M2020
538
87
2,431
606
Q32019
Q32020
9M2019
9M2020
Life and Health: Technical result incl. fee income: €56m (€160m) – Negative COVID-19 impact of ~€100m in Q3 – net result of €86m (€153m)
L&H Germany: RoI: 2.2% (2.6%) – net result of €31m (€99m)
Reinsurance ERGO
72Munich Re – Equity Story
Reinsurance – Property-casualty
Backup: Financial highlights 9M 2020 – Reinsurance
November 2020
Gross premiums written €m Major result drivers €m
9M 2019 16,920
Foreign exchange –17
Divestments/investments 0
Organic change 1,576
9M 2020 18,479
▪ Organic growth across almost all lines driven
by business expansion and rate increases in
traditional reinsurance …
▪ … as well as in our Risk Solutions portfolio
Investment result
▪ 9M: Gains on fixed-income/ real estate disposals
and derivatives clearly exceed write-downs on
equities
▪ Q3: Disposal gains on fixed income and strategic
equity investments
▪ Q3: Return on investment: 3.9%
Other
▪ FX result of €170m in 9M (9M 2019: €251m),
thereof –€20m in Q3 (Q3 2019: €137m)
Technical result
▪ COVID-19-related claims of ~€2.1bn in
9M (thereof ~€0.7bn in Q3), contingency
business accounts for the largest share
▪ Expense ratio improved due to cost
reductions and premium growth
▪ Underlying performance remains very
strong – normalised combined ratio at
~97% in Q3 and 9M
9M 2020 9M 2019 Q3 2020 Q3 2019
Technical result –182 1,453 –1,635 –399 87 –486
Non-technical result 762 341 421 334 306 28
thereof investment result 1,834 1,572 261 646 715 –69
Other –115 –259 144 42 71 –29
Net result 466 1,535 –1,069 –23 464 –486
73Munich Re – Equity Story
Reinsurance – Property-casualty
Combined ratio
Backup: Financial highlights 9M 2020 – Reinsurance
November 2020
2018 99.4
2019 100.2
9M 2020 106.1
Q3 2020 112.2
◼ Expense ratio◼ Basic losses ◼ Major losses
Major losses Nat cat Man-made
Reservereleases1
Normalised combined ratio2
9M 2020 21.0 5.1 15.9 –4.0 97.0
Q3 2020 26.7 8.3 18.4 –4.0 97.0
Ø Annual
expectation ~12.0 ~8.0 ~4.0 ~–4.0
1 Basic losses prior years, already adjusted for directly corresponding sliding-scale and profit-commission effects. 2 Based on reserve releases of 4%-pts. Normalised combined ratio reflects a one-off shift between commissions and non-technical result of €29m in Q3 2020 (corresponding to –0.5%-pts. in Q3 and –0.2%-pts. in 9M).
%
53.6
51.4
54.8
55.6
11.6
15.2
21.0
26.7
34.2
33.6
30.3
29.9
105.1
97.3
86.9
103.9
111.6106.0
99.9
112.2
Q42018
Q12019
Q22019
Q32019
Q42019
Q12020
Q22020
Q32020
74Munich Re – Equity Story
Reinsurance Life and Health
Backup: Financial highlights 9M 2020 – Reinsurance
November 2020
Gross premiums written Major result drivers €m
9M 2019 8,625
Foreign exchange –33
Divestments/investments 0
Organic change 946
9M 2020 9,538
€m
Investment result
▪ 9M/Q3: Disposal gains on fixed income
investments from ordinary portfolio turnover
clearly exceed write-downs on equities from H1
▪ Q3: Positive one-off effect from disposal of
strategic equity investments
▪ Q3: Return on investment: 3.2%
Other
▪ FX result of –€5m in 9M (9M 2019: €83m),
thereof –€19m in Q3 (Q3 2019: €41m)
▪ Organic growth mainly in Asia and Europe,
but also some growth across North America
▪ Asia: Several new transactions and increases
of shares/volumes under existing treaties
▪ Europe: Positive impact from longevity
transactions concluded in Q2
Technical result incl. fee income
of €56m (€160m)
▪ COVID-19-related claims of ~€100m in Q2
and again inQ3, dominated by US mortality
▪ In North America: non-COVID-19-related
claims higher than expected and some
impact from lower interest rates on claims
reserves …
▪ … largely offset by strong results in
Europe and Asia as well as better-than-
expected performance in Australia
▪ Ongoing pleasing fee income
9M 2020 9M 2019 Q3 2020 Q3 2019
Technical result 31 322 –291 10 194 –184
Non-technical result 207 369 –162 110 103 7
thereof investment result 639 866 –227 239 279 –40
Other –85 –75 –10 –34 –15 –19
Net result 153 617 –464 86 282 –196
75Munich Re – Equity Story
ERGO Life and Health Germany
Backup: Financial highlights 9M 2020 – ERGO
November 2020
9M 2019 6,912
Foreign exchange –1
Divestments/investments 0
Organic change –193
9M 2020 6,718
Gross premiums written €m Major result drivers €m
▪ Life (–€80m): Growth through new products
only partially compensating for ordinary
attrition of back book
▪ Health (–€141m): Increase in comprehensive
and supplementary insurance, negative
COVID-19 effect in Travel
▪ Digital Ventures (+€27m): Growth in health
insurance (esp. dental products)
Investment result
▪ 9M: Higher impairments of equities during
volatile capital market environment due to
COVID-19, partly offset by disposal gains
and hedging
▪ Q3: Decrease driven by higher impairments
and lower derivatives result; Return on
investment of 2.2%
Other
▪ FX result of –€91m in 9M (9M 2019: €54m),
thereof –€65m in Q3 (Q3 2019: €94m)
Technical result
▪ Q3: Interdependency between investment
and technical result – COVID-19 leading
to high intra-year volatility with positive
impact in Q3
▪ 9M: Decrease in Travel due to COVID-19;
improved result in Health
9M 2020 9M 2019 Q3 2020 Q3 2019
Technical result 331 234 96 306 81 225
Non-technical result –56 –28 –28 –166 –128 –38
thereof investment result 2,454 2,985 –531 697 985 –288
Other –175 –63 –112 –110 54 –164
Net result 99 143 –43 31 8 23
76Munich Re – Equity Story
ERGO Property-casualty Germany
Backup: Financial highlights 9M 2020 – ERGO
November 2020
9M 2019 2,804
Foreign exchange 5
Divestments/investments 0
Organic change 134
9M 2020 2,943
▪ Organic growth in almost all lines of business;
mainly driven by fire/property (+€43m),
liability (+€29m), motor (+€24m) and other
insurance (+€35m)
Investment result
▪ 9M: Disposal gains and hedging more than
offset impairments on equities
▪ Q3: Disposal gains partly offset impairments
on equities and lower derivatives result
▪ Q3: Return on investment of 1.5%
Technical result
Combined ratio of 92.2% in 9M at guidance
level, 90.9% in Q3 due to
▪ Strong premium development
▪ Nat-cat losses significantly below
expectations
▪ Minor COVID-19 effects from business
closure and event cancellation; lower costs
Gross premiums written €m Major result drivers €m
9M 2020 9M 2019 Q3 2020 Q3 2019
Technical result 237 231 6 92 81 11
Non-technical result –34 –80 47 –14 –20 6
thereof investment result 122 105 17 29 34 –5
Other –84 –46 –38 –30 –26 –4
Net result 120 105 15 48 36 13
77Munich Re – Equity Story
ERGO Property-casualty Germany
Backup: Financial highlights 9M 2020 – ERGO
November 2020
Combined ratio %
◼ Expense ratio◼ Loss ratio
2018 96.0
2019 92.3
9M 2020 92.2
Q3 2020 90.9
97.9 98.1
86.2
92.1 93.2 93.4 92.5 90.9
Q42018
Q12019
Q22019
Q32019
Q42019
Q12020
Q22020
Q32020
62.5
60.3
61.6
61.9
33.4
32.0
30.6
29.0
€mGross premiums written in 9M 2020 (9M 2019)
TOTAL
€2,943m(€2,804m)
Personal accident
449 (458)
Fire/property
585 (542)
Other
259 (224)
Motor
617 (593)
Liability
534 (505)
Legal protection
316 (318)
Marine
182 (165)
78Munich Re – Equity Story
ERGO International
Backup: Financial highlights 9M 2020 – ERGO
November 2020
Gross premiums written €m Major result drivers €m
9M 2019 3,657
Foreign exchange –32
Divestments/investments –103
Organic change 63
9M 2020 3,584
▪ Life (–€37m): Lower level due to run-down in
Belgium and reduced new business in Austria
related to COVID-19
▪ Health (+€66m): Positive business
development in Spain and Belgium
▪ P-C (–€102m): Decrease mainly driven by
portfolio streamlining in 2019, lower growth in
Poland due to COVID-19
Investment result
▪ 9M/Q3: Previous year impacted by
disposal gains due to portfolio
streamlining
▪ Q3: Return on investment of 1.6%
Other
▪ FX result of €0m in 9M (9M 2019: –€57m),
thereof €1m in Q3 (Q3 2019: –€38m)
Technical result
Highlights in Q3:
▪ Life: Decrease driven by Belgium
▪ Health: Good quarter due to seasonal
effects, tariff increases and favourable claims
development
▪ P-C: Ongoing good operational performance
(esp. Poland, Baltics), reduced attritional
claims and lower large losses
9M 2020 9M 2019 Q3 2020 Q3 2019
Technical result 189 191 –2 78 96 –18
Non-technical result 20 1 19 1 44 –42
thereof investment result 260 298 –38 81 138 –57
Other –47 –100 53 –22 –64 42
Net result 162 92 70 57 76 –19
79Munich Re – Equity Story
ERGO International
Backup: Financial highlights 9M 2020 – ERGO
November 2020
Combined ratio €mGross premiums written in 9M 2020 (9M 2019)
9M 2020
%
94.5 95.4 95.091.8
94.8 95.2
90.192.5
Q42018
Q12019
Q22019
Q32019
Q42019
Q12020
Q22020
Q32020
TOTAL
€3,584m(€3,657m)
Health
1,129 (1,062)
Property-casualty
1,985 (2,087)
Life
470 (507)
Lifethereof:
9M
2020
9M
2019
Austria 247 266Belgium 106 114
Healththereof:
9M
2020
9M
2019
Spain 660 615Belgium 469 448
P-Cthereof:
9M
2020
9M
2019
Poland 1,056 1,080
Legal protection 497 476
Greece 180 173
Baltics 145 144
Austria 79 74
91.7 89.6 89.7 89.4 85.5101.4 92.6
Poland Spain Austria Baltics Greece Legalprotection
Total
Investments
6Image: Nikada / Getty Images
81Munich Re – Equity Story
Investment result9M 2020
Backup: Investments
November 2020
3-month reinvestment yield
Q3 2020 1.3%
Q2 2020 1.6%
Q1 2020 1.9%
Q3 2020Write-ups/
write-downsDisposal
gains/losses Derivatives
Fixed income –7 321 26
Equities –207 318 –103
Commodities/Inflation –2 0 22
Other –50 5 –10
9M 2020Write-ups/
write-downsDisposal
gains/losses Derivatives
Fixed income –22 1,358 605
Equities –1,671 551 78
Commodities/Inflation 39 0 38
Other –178 301 –91
€m Q3 2020 Return1 9M 2020 Return1 9M 2019 Return1
Regular income 1,536 2.4% 4,801 2.6% 5,133 2.8%
Write-ups/write-downs –265 –0.4% –1,832 –1.0% –285 –0.2%
Disposal gains/losses 644 1.0% 2,210 1.2% 1,671 0.9%
Derivatives2 –65 –0.1% 629 0.3% –208 –0.1%
Other income/expenses –159 –0.3% –500 –0.3% –485 –0.3%
Investment result 1,691 2.7% 5,308 2.8% 5,826 3.2%
Total return 3.8% 4.4% 12.1%
1 Annualised return on quarterly weighted investments (market values) in %. 2 Result from derivatives without regular income and other income/expenses.
82Munich Re – Equity Story
Return on investment by asset class and segment9M 2020
Backup: Investments
November 20201 Annualised. 2 Including management expenses.
%1Regular income
Write-ups/-downs
Disposal result
Extraord. derivatives result
Other inc./exp. RoI
ᴓ Market value (€m)
Afs fixed-income 2.0 0.0 1.0 – – 3.0 134,700
Afs non-fixed-income 4.8 –13.4 4.4 – – –4.2 16,599
Derivatives 4.0 – – 27.5 –1.1 30.4 3,048
Loans 2.7 0.0 0.7 – – 3.4 64,917
Real estate 4.6 –1.2 3.2 – – 6.6 12,173
Other2 2.6 –0.3 0.1 – –3.6 –1.1 17,637
Total 2.6 –1.0 1.2 0.3 –0.3 2.8 249,073Reinsurance 2.6 –0.4 1.1 0.5 –0.3 3.5 95,282
ERGO 2.6 –1.3 1.2 0.2 –0.2 2.5 153,791
3.4%3.1% 3.1%
2.3%
2.9% 3.0% 3.2%3.4%
3.2% 3.1%2.7% 2.7%
3.0%
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020
Return on investment Average
Investment portfolio9M 2020
Munich Re – Equity Story
Backup: Investments
83June 2020
Portfolio management in Q3Investment portfolio1
▪ Investments in longer term US and Australian
government bonds as well as short-term
bank bonds and ABS at the expense of
covered bonds
▪ Slight expansion of equity exposure despite
disposal of strategic equity investments
▪ Ongoing increase of infrastructure and private
equity investments
▪ Drop in reinvestment yield to 1.3%
1 Fair values as at 30.9.2020 (31.12.2019). 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: 4.8% (6.4%). 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.
Land and buildings
4.9 (4.7)
Fixed-interest securities
55.4 (53.9)
Shares, equity funds and participating interests3
5.9 (7.1)
Loans
25.8 (26.1)
TOTAL
€252bnMiscellaneous2
8.1 (8.1)
Reinsurance
ERGO
Munich Re
Assets Liabilities Assets
10
–13
–3
NetLiabilitiesPortfolio duration1 DV011,4 €m
%
6.9 (6.5)
9.9 (9.4)
8.9 (8.4)
7.4 (6.3)
10.6 (10.1)
9.7 (9.0)
51 (46)
138 (126)
189 (172)
41 (34)
151 (139)
192 (173)
84Munich Re – Equity Story
Investment portfolioH1 2020
Backup: Investments
November 20201 Approximation – not fully comparable with IFRS figures. Fair values as at 30.6.2020 (31.12.2019). 2 Net of hedges: 4.5 (6.4%). 3 Deposits retained on assumed reinsurance, deposits with banks, investment funds (excl. equities), derivatives and investments in renewable energies and gold. 4 Non-fixed derivatives. 5 Non-fixed property funds and non-fixed bond funds
Investment portfolio
TOTAL
€250bn
Miscellaneous3
8.2 (8.1)
Land and buildings
4.9 (4.7)
Shares, equity funds and participating interests2
5.6 (7.1)
%
Miscellaneous %
Fixed-interest securities1
Loans1
Pfandbriefe/Covered bonds
11 (13)
Corporates
19 (18)
Banks
2 (2)
Governments/Semi-government
63 (63)
Structured products
3 (4)
TOTAL
€21bn
%
Fixed-interest securities
55.1 (53.9)
Loans
26.1 (26.1)
%
Deposits on reinsurance
39 (40)
Bank deposits
18 (19)
Investment funds5
11 (11)
Derivatives4
8 (6)
Other
24 (25)
Loans to policyholders/
mortgage loans
13 (13)
Pfandbriefe/Covered bonds
40 (41 )
Banks
1 (1)
Governments/Semi-governments
42 (41)
TOTAL
€138bn
TOTAL
€65bnCorporates
4 (4)
Cash/Other
1 (1)
Fixed-income portfolio
85Munich Re – Equity Story
Fixed-income portfolioAllocation and regional structure – H1 2020
%
Structured products
2 (2)
Loans to policyholders/mortgage loans
4 (4)
Governments/
semi-government
54 (53)
Pfandbriefe/covered bonds
19 (21)
Corporate bonds
13 (13)
Cash/other
6 (5)
Bank bonds
2 (1)
TOTAL
€208bn
Backup: Investments
Approximation – not fully comparable with IFRS figures. Fair values as at 30.6.2020 (31.12.2019). November 2020
%Regional breakdownWithout With Total
policyholder participation 30.6.2020 31.12.2019
Germany 4.8 21.9 26.7 26.8
US 14.4 1.7 16.2 15.6
France 2.2 5.0 7.2 7.3
UK 2.8 2.0 4.8 5.1
Canada 4.0 0.7 4.7 4.7
Netherlands 1.5 2.9 4.5 4.3
Supranationals 0.7 3.0 3.7 3.6
Spain 0.9 2.1 3.0 3.1
Australia 2.6 0.4 3.0 3.1
Austria 0.5 2.1 2.6 2.6
Belgium 0.7 1.6 2.3 2.4
Ireland 0.7 1.6 2.3 2.2
Poland 1.3 0.5 1.8 1.8
Italy 0.7 0.8 1.5 1.3
Sweden 0.2 1.2 1.3 1.4
Other 6.6 7.9 14.5 14.6
Total 44.7 55.3 100.0 100.0
86Munich Re – Equity Story
Fixed-income portfolioRating and maturity structure – H1 2020
Rating structure Market value
(€bn)
AAA
(%)
AA A BBB BB <BB NR
Total 213.3 42 24 13 12 3 1 51
Governments/semi-government 114.6 44 31 15 7 2 0 0
Pfandbriefe/covered bonds 41.2 76 21 2 0 – – 1
Corporate bonds (excluding bank bonds) 28.8 2 5 19 57 15 3 0
Bank bonds 3.4 1 19 40 34 3 1 1
Structured products 4.8 54 34 10 1 0 0 0
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 9.5 10 13 14 13 14 34 3
Governments/semi-government 11.5 8 11 11 10 14 45 –
Pfandbriefe/covered bonds 6.5 7 14 18 21 20 20 –
Corporate bonds (excluding bank bonds) 7.5 9 17 22 15 12 25 –
Bank bonds 3.3 16 44 24 8 6 2 –
Backup: Investments
Approximation – not fully comparable with IFRS figures. Fair values as at 30.6.2020 (31.12.2019).1 Mainly loans to policyholders, mortgage loans and bank deposits.
November 2020
87Munich Re – Equity Story
Fixed-income portfolioCorporate bonds and bank bonds – H1 2020
Backup: Investments
%Corporate bonds – Sector breakdown
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 30.6.2020 (31.12.2019).
30.6.2020 31.12.2019
Industrial goods and services 14.1 14.2
Utilities 13.2 13.6
Oil and gas 11.2 10.9
Financial services 10.2 9.6
Telecommunications 8.2 8.0
Healthcare 7.5 7.5
Technology 6.0 6.0
Automobiles 4.5 3.9
Food and beverages 4.0 4.0
Personal and household goods 3.2 3.1
Media 3.1 3.6
Basic resources 2.9 3.5
Retail 2.8 2.7
Other 9.2 9.3
%Bank bonds – Regional breakdown
November 2020
%Cover pools
Total
Senior bonds Subordinated Loss-bearing 30.6.2020 31.12.2019
US 24.4 7.6 0.4 32.3 35.4Canada 11.2 0.0 0.0 11.2 11.4UK 7.7 1.3 0.2 9.1 7.2Germany 6.5 0.2 1.8 8.6 10.2Ireland 7.9 0.0 0.0 7.9 8.8France 5.2 0.7 0.0 6.0 5.0Netherlands 3.4 0.1 0.0 3.4 2.6Guernsey island 2.5 0.0 0.0 2.5 2.3Switzerland 1.9 0.0 0.0 1.9 1.3Other 16.0 1.2 0.0 17.2 15.8
TOTAL
€3.4bn
Senior
87 (82)
Subordinated2
11 (12)
Loss-bearing1
2 (6)
88Munich Re – Equity Story
On- and off-balance-sheet reserves9M 2020
Backup: Investments
November 20201 Unrealised gains/losses from unconsolidated affiliated companies, valuation at equity and cash-flow hedging. 2 Excluding reserves from owner-occupied property. 3 Excluding insurance-related loans.
€m 31.12.
2018
31.12.
2019
30.6.
2020
30.9.
2020
in Q3
Market value of investments 231,876 247,310 249,858 251,928 2,070
Total reserves 22,002 33,120 35,321 36,040 719
On-balance-sheet reserves
Fixed-interest securities 4,953 10,738 13,058 13,867 809
Non-fixed-interest securities 1,817 3,632 2,355 2,366 11
Other on-balance-sheet reserves1 207 203 130 130 0
Subtotal 6,977 14,574 15,544 16,364 820
Off-balance-sheet reserves
Real estate2 4,769 5,600 5,631 5,668 37
Loans3 9,453 12,147 13,292 13,079 –213
Associates 803 799 855 930 75
Subtotal 15,024 18,546 19,778 19,676 –101
Reserve ratio 9.5% 13.4% 14.1% 14.3% 0.2 pp
89Munich Re – Equity Story
Sensitivities to interest rates, spreads and equity marketsH1 2020
Backup: Investments
November 2020
1 Rough calculation with limited reliability assuming unchanged portfolio as at 30.6.2020. 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 income portfolio, except government securities with AAA ratings. 3 Sensitivities to change in share prices are calculated for listed shares only; assumptions: equity impairments as soon as market value drops below acquisition cost and best-estimate calculation of hedging impact.
Sensitivity to risk-free interest in €bn (change in basis points) –50bps –25bps +50bps +100bps
Change in market value, gross +9.9 +4.8 –8.9 –16.9Change in on-balance-sheet reserves, net +2.5 +1.2 –2.3 –4.4Change in off-balance-sheet reserves, net +0.5 +0.2 –0.4 –0.8P&L (investment result), gross +0.6 +0.3 –0.5 –1.1P&L, net +0.3 +0.2 –0.3 –0.6
Sensitivity to spreads2 in €bn (change in basis points) +50bps +100bps
Change in market value, gross –6.3 –11.8Change in on-balance-sheet reserves, net –1.5 –2.8Change in off-balance-sheet reserves, net –0.3 –0.6P&L (investment result), gross –0.3 –0.6P&L, net –0.1 –0.3
Sensitivity to share prices3 in €bn (change in %) –30% –10% +10% +30%
Change in market value, gross –1.5 –0.7 +0.7 +2.0Change in on-balance-sheet reserves, net –0.6 –0.2 +0.3 +1.0P&L (investment result), gross –0.5 –0.2 –0.2 –0.7P&L, net –0.3 –0.1 –0.0 –0.1
Shareholder information
7Image: imaginima / Getty Images
91Munich Re – Equity Story
Share information
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
November 2020
Shares
(millions)
31.12.
2019
Acquisition of own shares in
9M 2020
Retirement of own shares in
9M 2020
30.9.
2020
Shares in
circulation141.5 –1.4 – 140.1
Treasury
shares2.9 1.4 –4.2 –
Total 144.3 – –4.2 140.1
Weighted average number of shares in circulation
(millions)
148.7 143.6 140.3 140.1
2018 2019 9M 2020 Q3 2020
92Munich Re – Equity Story
Mission of Investor & Rating Agency Relations
Backup: Shareholder information
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
November 2020
93Munich Re – Equity Story
Financial calendar
Backup: Shareholder information
November 2020
2020
8 December Investor Day
2021
25 FEBRUARYBalance sheet media conference for 2020 financial statementsAnalysts' and Investors' call
17 MARCH Annual report (Group), Annual report (Company)
28 APRIL Annual General Meeting 2021
6 MAY Quarterly statement as at 31 March 2021
10 AUGUST Half-year financial report as at 30 June 2021
9 NOVEMBER Quarterly statement as at 30 September 2021
94Munich Re – Equity Story
For information, please contact
Backup: Shareholder information
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
E-mail: [email protected]
Christine Franziszi
Tel.: +49 (89) 3891-3875
E-mail: [email protected]
Ralf Kleinschroth
Tel.: +49 (89) 3891-4559
E-mail: [email protected]
Andreas Silberhorn (Rating agencies)
Tel.: +49 (89) 3891-3366
E-mail: [email protected]
Ingrid Grunwald (ESG)
Tel.: +49 (89) 3891-3517
E-mail: [email protected]
Maximiliane Gerstner (ERGO)
Tel.: +49 (211) 477-7483
E-mail: [email protected]
Münchener Rückversicherungs-Gesellschaft | Investor & Rating Agency Relations | Königinstraße 107 | 80802 München, Germany
Fax: +49 (89) 3891-9888 | E-mail: [email protected] | Internet: www.munichre.com
November 2020
95Munich Re – Equity Story
Disclaimer
November 2020
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. Obvious fluctuations in
the incidence of major losses as well as pronounced volatility of the capital markets and exchange rates –
as well as the special features of IFRS accounting make an accurate forecast of results impossible.
Moreover, there is considerable uncertainty regarding the further development of the coronavirus pandemic.
The Company assumes no liability to update these forward-looking statements or to make them conform
to future events or developments. Figures from Q1 2019 onwards are restated reflecting the new cost-
allocation method.