Annual guidance raised after strong half-year performance Quarterly - PDF document

plainpicture/fStop/Ralf Hiemisch Annual guidance raised after strong half-year performance Quarterly financial statements as at 30 June 2015 Munich, 6 August 2015

Munich Re Agenda Introduction Nikolaus von Bomhard 2 Munich Re (Group) Jörg Schneider 6 Business field ERGO Torsten Oletzky 14 Reinsurance Torsten Jeworrek 20 Outlook Nikolaus von Bomhard 28 Quarterly financial statements as at 30 June 2015 2 Overview Difficult conditions for industry – Comparatively good starting position for Munich Re In a challenging environment ... ... Munich Re is well positioned  Considerable political and economic uncertainty  Strong capitalisation  Low interest rates and risk of price bubbles  Balanced investment portfolio  Regulation  Well prepared for Solvency II; tried-and-tested internal risk model  Fierce competition in many reinsurance markets  Diversified business – Rigorous cycle  Changing risk landscape (cyber and reputational management and pricing discipline risks, new technologies)  Primary insurance and reinsurance under one  Digitalisation roof, global presence, excellent access to clients  Innovative thanks to comprehensive risk expertise Munich Re is able to master challenges and seize opportunities from a position of strength Quarterly financial statements as at 30 June 2015 3

Munich Re Munich Re (Group) Innovation Munich Re present in innovation hubs around the world Innovation in business  Munich Re with high innovative Princeton Berlin  Internal incubator  Partnership with Axel Springer Plug potential, due to know-how- & Play, focus on digital start-ups  Cooperation with MIT  ERGO Digital Lab driven business approach and Tel Aviv close customer contact  Innoscouts Madrid / São Paulo  Mundi Lab –  Innovations are a solution Accelerator for RI and Munich Health to structural underinsurance in certain areas (e.g. approx. Silicon Valley London Munich  Innoscouts  Partnership with  Cooperation with only 1‰ of cyber crime losses  Partnership with Plug & StartupBootCamp Munich universities Play Accelerator, emphasis  First FinTech accelerator in 2014 have been insured) on Internet of Things worldwide with insurance focus  Strategic investment in start-ups  ~ € 400m 1 premium generated by innovative products Access via Access via primary insurance reinsurance Digitalisation and highly competitive reinsurance markets speed up innovation process 1 Approximation – not fully comparable with IFRS figures. Quarterly financial statements as at 30 June 2015 4 Overview Q2 2015 Annual net result guidance increased to at least € 3bn Munich Re (Group) – Q2 2015 (H1 2015) NET RESULT SHAREHOLDERS' EQUITY INVESTMENT RESULT € 1,076m ( € 1,866m) € 30.7bn ( – 11.7% vs. 31.3.) RoI of 4.1% (3.6%) Strong Q2 supported by benign Sound capitalisation according Pleasing return given low interest major losses and investments – rates – resilient regular income to all metrics, facilitating high sound operating performance flexibility while usual portfolio turnover given industry headwinds leading to disposal gains Reinsurance ERGO Munich Health NET RESULT NET RESULT NET RESULT € 842m ( € 1,510m) € 219m ( € 318m) € 15m ( € 38m) 790 52 150 54 15 15 P-C LIFE P-C GERMANY REINSURANCE Combined ratio 93.4% – Combined ratio Technical result Combined ratio 100.4% of € 30m in Q2 93.3% higher investment result due to non- Major-loss ratio L/H GERMANY INTERNATIONAL PRIMARY INSURANCE recurring effects 4.8% Pleasing result Combined ratio Combined ratio 96.3% 100.4% Quarterly financial statements as at 30 June 2015 5

Munich Re Agenda Introduction Nikolaus von Bomhard Munich Re (Group) Jörg Schneider Business field ERGO Torsten Oletzky Reinsurance Torsten Jeworrek Outlook Nikolaus von Bomhard Quarterly financial statements as at 30 June 2015 6 Munich Re (Group) – Financial highlights Q2 2015 Net result € m Net result H1 2015 H1 2014 1,194 1,076 Total 1,866 1,703 941 762 790 736 731 630 Reinsurance 1,510 1,397 318 264 ERGO Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Munich Health 38 42 2013 2014 2015 € m € m Other 1 € m Technical result Investment result 1,780 4,360 4,341 1,673 – 205 2,521 912 868 – 761 – 742 1,820 – 947 H1 2014 H1 2015 Q1 2015 Q2 2015 H1 2014 H1 2015 Q1 2015 Q2 2015 H1 2014 H1 2015 Q1 2015 Q2 2015 Q2: Negative FX result of € 362m Benign major losses in Q2: Higher dividend income and property-casualty reinsurance gains from equity derivatives 1 Other non-operating result, goodwill impairments, net finance costs, taxes. Quarterly financial statements as at 30 June 2015 7

Munich Re Munich Re (Group) – Capitalisation IFRS capital position € m Equity UNREALISED GAINS/LOSSES Fixed-interest securities Equity 31.12.2014 30,289 Change Q2 H1: –€ 1,247m Consolidated result 1,866 1,076 Q2: –€ 2,324m Changes Non-fixed-interest securities – 1,293 – 1,293 Dividend H1: € 39m Unrealised gains/losses – 1,201 – 3,236 Q2: –€ 906m – 498 Exchange rates 1,359 – 401 – 122 Share buy-backs EXCHANGE RATES Other 80 19 FX contribution mainly – 4,054 driven by US$ Equity 30.6.2015 30,699 € bn Capitalisation 0.4 1 Senior and other debt 0.3 0.4 0.3 4.5 0.3 0.5 4.4 4.5 Subordinated debt 5.5 4.4 4.7 Equity 13.6% 13.6% 12.3% 18.3% 17.5% Debt leverage 2 (%) 15.3% 23.3 27.4 26.2 30.3 34.8 30.7 2011 2012 2013 2014 Q1 2015 Q2 2015 1 Other debt includes bank borrowings of Munich Re and other strategic debt. Quarterly financial statements as at 30 June 2015 8 2 Strategic debt (senior, subordinated and other debt) divided by total capital (strategic debt + equity). Munich Re (Group) – Investment portfolio Investment portfolio Investment portfolio 1 % Portfolio management in Q2 Land and buildings Fixed-interest Decline in market values due to increasing 2.5 (2.4) securities interest rates 56.3 (55.5) Shares, equity funds and participating interests 2 Purchase of US government bonds, 5.4 (5.2) esp. inflation-linkers Miscellaneous 3 7.7 (7.7) Reinsurance: Slight reduction of credit exposure, esp. corporates and ABS/MBS TOTAL € 236bn ERGO: Shift from covered to government bonds Investments in higher maturities further Loans aligning the duration of assets and liabilities 28.1 (29.2) 1 Fair values as at 30.6.2015 (31.12.2014). 2 Net of hedges: 4.0% (4.3%). 3 Deposits retained on assumed reinsurance, deposits with banks, investment funds (excl. equities), derivatives Quarterly financial statements as at 30 June 2015 9 and investments in renewable energies and gold.

Munich Re Munich Re (Group) – Investment result Investment result – Seasonal impact from dividends and positive contribution from equity derivatives in Q2 € m Investment result H1 2015 Return 1 H1 2014 Return 1 Q2 2015 Return 1 Q1 2015 Return 1 Regular income 3,863 3.2% 3,604 3.3% 2,062 3.4% 1,801 3.0% – 240 – 0.2% – 15 – 89 – 0.2% – 151 – 0.2% Write-ups/write-downs 0.0% Disposal gains/losses 1,807 1.5% 1,204 1.1% 810 1.3% 997 1.6% – 839 – 0.7% – 199 – 0.2% – 133 – 0.2% – 706 – 1.2% Derivatives 2 Other income/expenses – 250 – 0.2% – 234 – 0.2% – 129 – 0.2% – 121 – 0.2% Investment result 4,341 3.6% 4,360 4.0% 2,521 4.1% 1,820 3.0% – 0.4% – 17.0% Total return in % 11.5% 16.2% 3-month Write-ups/ H1 Q2 Disposal H1 Q2 Derivatives H1 Q2 reinvestment yield gains/losses write-downs 2015 2015 2015 2015 2015 2015 Fixed – 321 – 456 Fixed income 3 – 95 Q2 2015 2.1% 3 Fixed income 1,026 407 income – 530 Equities 230 – 75 – 44 Equities Q1 2015 2.0% Equities 769 400 – 19 Commodities 50 – 37 – 18 Real estate 2.1% Q4 2014 Other 12 3 – 33 – 30 Other 31 Other 65 1 Annualised return on quarterly weighted investments (market values) in %. 2 Result from derivatives without regular Quarterly financial statements as at 30 June 2015 10 income and other income/expenses. 3 Thereof interest-rate hedging ERGO H1: –€ 168m/ –€ 24m (gross/net). Munich Health – Premium development Munich Health – Premium development € m € m Gross premiums written Segmental breakdown Reinsurance Primary insurance H1 2014 2,740 2,197 (77%) 670 (23%) ( ▲ 6.0%) ( ▲ 0.4%) Foreign-exchange effects 218 Divestments/investments 1 – 18 – 73 Organic change H1 2015 2,867 Gross premiums written € m Regional breakdown % Asia and North H1 2014 2,740 Australasia America 4 (3) 54 (55) Reinsurance 124 Primary insurance 3 Middle East/ Africa Europe H1 2015 2,867 10 (7) 32 (35) 1 DKV Luxembourg. Quarterly financial statements as at 30 June 2015 11