Executing business opportunities Good start to the 2020 ambition - PowerPoint PPT Presentation

BALANCE SHEET PRESS CONFERENCE 2019 Executing business opportunities – Good start to the 2020 ambition Munich, 20 March 2019 Image: AdobeStock/LuckyStep

Agenda Executing business opportunities 2 Joachim Wenning 1 Group finance and risk 13 2 Christoph Jurecka 3 ERGO 20 Markus Rieß 4 Reinsurance 27 Torsten Jeworrek 2 Balance sheet press conference 2019

Executing business opportunities Strategic priorities and rigorous execution pave the way for profitable growth Deliver on Focus on profitability in capital repatriation INCREASE underwriting, investments EARNINGS and new business Secure long-term earnings power Business focus, REDUCE divest from sub- COMPLEXITY critical operations Create value added DIGITAL Efficiency, excellence TRANSFORMATION and new business models 3 Balance sheet press conference 2019

Executing business opportunities Reduce complexity – Making the organisation more focused and efficient REINSURANCE ERGO Cost savings well on track, more efficiency Cost savings well on track, more efficiency  Achieve admin. cost savings of ~ € 200m by 2020 1  Cost savings of € 174m out of € 279m achieved 2  Voluntary programme in Munich very successful –  Reduction of ~1,240 FTEs out of ~2,100 FTEs reduction of ~350 FTEs; savings targets in the completed 2, 3 international organisation well underway  Simplification of processes in sales, operations  Leaner operations following automation of and claims global processes (e.g. accounting, claims) Re-focusing  Portfolio optimisation in International almost Re-focusing concluded – 13 entities sold  Disposal of MSP Underwriting (Lloyds’ market)  Focused life strategy and Ellipse (UK life)  Dedicated management responsibility for  Integration of Special and Financial Risks fully separated back book division in market segments to benefit from  Bundling of new life offerings in one risk carrier business synergies Growing business Business transformation as in a leaner organisation foundation for future competitiveness 4 1 Pre-tax. 2 in Germany. 3 Not including 292 FTEs that have already signed exit agreement with future exit dates. Balance sheet press conference 2019

Executing business opportunities Successfully mastering the digital transformation – Good progress in 2018 REINSURANCE ERGO Internet of Things Actively addressing industry trends Build and scale up loss prevention and finance-related Pilot and introduce new solutions throughout the entire products and risk-management-service models for ERGO Group in the areas of AI, robotics and voice commercial and industrial partners worldwide Improving existing business models Realytix Invest in digital front-ends (Portal/CRM/OneWebsite) Cloud-based digital transaction platform for primary insurance companies, brokers and MGAs Disrupting existing business models SaveUp Successful establishment of our purely digital player Enhance our partners’ direct distribution channel for nexible with 50,000 policies, ready to scale up life products via a digital white-label platform Digital Partners Digital culture Offer InsurTech start-ups a platform to gain access to We increasingly work in digital factories and support clients, data and insurance functionalities and expertise our staff in digital transformation Embracing innovation to Progress towards actively drive the evolution of digitally-enabled business models worldwide customer solutions 5 Balance sheet press conference 2019

Executing business opportunities Progress in interlocking business models between primary insurance and reinsurance Product Sales and Underwriting/ Strategy Innovation development distribution policy administration  Group-wide solution to  Common initiatives for  Joint life product develop-  MGA set-up for DAS  Leveraging existing ment , e.g. “ERGO ensure business collaboration with start- Canada optimising capital underwriting automation, Betriebsrente Index” continuity after Brexit ups, e.g. Ridecell and requirements e.g. life fair.com  Collaboration on mobility  Close cooperation bet-  Mutual sharing of existing  Scaling existing  Integrated global scouting strategy, e.g. concerning ween MEAG and ERGO market accesses, e.g. administration auto- “CASE” 1 approach leveraging PI concerning capital market Travel (USA) mation, e.g. Health and RI scouting networks products, e.g. sales  Regional market boards  Joint analysis of PI sales  Establishing common  Joint data analytics to facilitate joint strategic support via RI expert groups per initiatives, e.g. UK methodologies business line, e.g. life and industrial Interlocking HR and development programmes International Group trainee Management development programme Joint training initiatives to foster common programme “EXPLORE” (“Group Management Platform”) skill sets, e.g. data analytics 6 1 “CASE” = Connectivity, Autonomous driving, Shared mobility and Electric mobility. Balance sheet press conference 2019

Executing business opportunities Delivering on targets – Profitable earnings growth in 2018 REINSURANCE ERGO GROUP NET RESULT NET RESULT NET RESULT € 2.1 – 2.5 bn € 412 m € 2.3 bn € 1.8 – 2.2 bn € 1.9 bn € 250 – 300 m Guidance 2018 2018 Guidance 2018 2018 Guidance 2018 2018 Return on equity 8.4% – Profitable growth in P-C, Strong earnings contribution, technical performance at even when adjusted for one-offs Good start to the 2020 ambition L&H above expectations 7 Balance sheet press conference 2019

Executing business opportunities ERGO Strategy Programme and growth in reinsurance are the major drivers to deliver on our 2020 ambition OUTLOOK 2019 1 ~ € 2.8 bn REINSURANCE ~ € 2.5 bn Net P-C L/H technical result € 2.3 bn result combined ratio 2 incl. fee income ~ € 2.1 bn ~ € 500 m ~ 98 % ERGO Net P-C combined ratio result Germany International ~ € 0.4 bn ~ 93 % ~ 95 % 2018 2019 2020 Actual Outlook Ambition 8 1 Gross premiums written: ~ € 49bn Munich Re (Group), ~ € 31bn Reinsurance, ~ € 17.5bn ERGO. Munich Re (Group) return on investment: ~3%, tax ratio ~25%. Balance sheet press conference 2019 2 Expectation of reserve releases (basic losses) in 2019 of at least 4%-pts.

Executing business opportunities Consistent business and earnings focus – Rigorously using leeway of largely unchanged risk appetite UNDERWRITING INVESTMENTS Selective business growth in P-C Reinsurance Generate higher investment result under new CIO while not compromising on earning requirements responsibility by further optimising the risk-return profile RETURN ILLUSTRATIVE GWP 38% 35% 37% SCR Tactical decisions 20.4 (MEAG) 17.8 17.8 Strategic asset allocation 7.6 6.7 6.2 Replication of liabilities RISK 2016 2017 2018 Risk Current Aggressive Gross premium written Solvency capital requirements neutral portfolio position Leveraging our underwriting excellence Generating alpha 9 Balance sheet press conference 2019

Executing business opportunities Systematically integrating sustainability criteria when creating value – Key achievements in 2018 Climate ESG in core Governance strategy business Enabling new technologies for a Sustainability criteria deeply New remuneration system for the low-carbon economy entrenched in our underwriting and Board of Management, aligned with long- term shareholders’ interests investment decisions  Innovative insurance solutions for  Investment process established to new technologies, e.g. battery Responsible employer storage fully integrate ESG criteria for all  Establishment of Munich Re asset classes  € 1.6bn invested in renewable Digital School to enhance digital energies, € 0.9bn in green bonds  New approach to coal sector – qualifications of employees divestment (30% revenue  Voluntary programme to support Driving industry standards for climate threshold) and strict underwriting risk management via UNEP FI PSI 1 reduced complexity and digital exclusions for new coal projects Working Group on TCFD 2 transformation recommendations Top positions in major external ratings: MSCI AA rating, top 10 in DJSI, #1 Union Investment for governance 10 1 United Nations Environment Programme – Finance Initiative on Principles for Sustainable Insurance. 2 Task force on climate-related financial disclosures. Balance sheet press conference 2019

Executing business opportunities Strong balance sheet, dividend increase and $ € continuation of € 1bn share buy-back in 2019 Sustainable dividend-per-share growth 245 % € 9.25 SOLVENCY II Well above target capitalisation 3.10 Total pay-out 2005 – 2018 € 3.8 bn ~ € 27 bn 2018 1 2005 DISTRIBUTABLE Safeguards capital repatriation Ongoing share buy-backs ~85% of current market cap € 1bn 13.2 % DEBT Provides financial flexibility 2006 2018 11 1 Subject to approval of AGM. 2 Preliminary figure as at 31.12.2018; strategic debt (senior, subordinated and other debt) divided by total capital (strategic debt + equity). Balance sheet press conference 2019