Masterflex SE — Investor Presentation 2020

Feb 28, 2020

Analysts' and Investors' Call 2020

Good progress towards 2020 ambition – Exploiting opportunities in an improving market environment

28 February 2020

Please note: Presentation based on 2019 preliminary figures Image: Klaus Ohlenschläger / dpa Picture Alliance

Analysts' and Investors' Call 2020

Good progress towards 2020 ambition Joachim Wenning

Group finance and risk Christoph Jurecka

ERGO Markus Rieß

information

Reinsurance Torsten Jeworrek

Strong performance in 2019

IFRS net income

€2.7bn (€2.3bn) Exceeds initial guidance of €2.5bn

9.2%(8.4%) Above cost of capital Return on Equity

237%(245%) Well above target capitalisation Solvency II ratio

€9.80 (€9.25) High pay-out to shareholders Dividend per share 1

Ongoing business and earnings growth supports 2020 ambition

Reinsurance – Strategic growth initiatives well on track

2018 2019

• 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

• Push new business models relayr acquisition 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

2020

Streamline processes towards business and execution

ERGO – Sustainably increasing profitability

• ESP² ahead of financial targets
• Tied agent productivity significantly increased by 20%¹

modular product design

• Cost savings of €174m achieved ▪ Simplification of products, e.g. full
• Fully separated traditional life book
• Strategic investments in mobility ecosystem startups, e.g. ridecell
• Transformation of customer interaction 30%¹ user increase of customer selfservice 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

Successful completion of ESP²

2020

Business and earnings focus – Gradually increasing risk appetite in underwriting where opportunities are good

23.9 26.7 28.4 6.3 7.6 8.8 2017 2018 2019 GWP SCR 31% ²⁸% ²⁶%

Gross premium written Solvency capital requirements

• Disciplined growth in P-C Re in select mature/emerging markets and business lines with unchanged risk limits and in line with risk-bearing capacity (EOF) …
• … taking advantage of rising rates in more capital intensive but increasingly profitable – nat cat lines
• Expansion of Risk Solutions business with favourable risk/return profile
• Positive earnings trajectory in L/H Re to stabilise tendency towards higher volatility in P-C
• Further diversification due to ERGO's growing German P-C and international operations
• Risk management is key: cautious expansion of new lines of business (e.g. cyber) while managing hot-spot areas (e.g. US casualty)

Continued diversification of our global footprint provides flexibility and increases competitiveness

Balancing growth and risk in property-casualty¹

New organisational set-up in investments aims to generate higher returns

Streamlining the organisation Improving risk-return profile

Group approach One consistent investment strategy across the Group

Best ownership

Assigning investment mandates either in-house or to specialised third parties

Close to business

Combining investment and underwriting expertise

Well on track towards best-practice investment processes

Strategic level

Further expand asset classes that still have attractive returns, e.g. illiquid assets such as infrastructure and private equity/debt

Tactical allocation

Actively managing our portfolio by using trading ranges and incorporating external managers

Further diversification

Continuously improving the riskreturn profile to limit downside

Identify untapped return potential without changing the overall risk

Systematically integrating sustainability criteria when creating value – Key achievements in 2019

Enabling new technologies for a low-carbon economy

• Strong growth in innovative insurance solutions for new technologies, e.g. battery storage
• Invested capital in renewable energies: €1.6bn (targeting €2.8bn)
• Increase in green bonds to €1.3bn

Climate-neutral investment portfolio by 2050

▪ Munich Re joins the UN-convened Net-zero Asset Owner Alliance

Consequently improving risk assessment also for the industry, e.g.

• Munich Re's Wildfire Risk Score supports clients in evaluating wildfire risks in North America
• Driving industry standards for climate risk management via UNEP FI PSI¹ Working Group on TCFD²recommendations

Sustainability risk assessment across all asset classes at Munich Re

▪ Sustainability ratio well above 80%

Top positions in major SRI ratings

DVFA Scorecard for Corporate Governance Second among DAX companies "Outstanding"

Shareholders participate in our earnings growth

… supports attractive shareholder returns³

1 Subject to the approval of the Supervisory Board and the Annual General Meeting. 2 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.

Outlook 2020

Gross premiums written ~€52bn Group

Net result ~€2.8bn Return on investment ~3%

ERGO

Gross premiums written ~>€17.5bn

Net result ~€530m P-C Germany ~92% Combined ratio

International ~94%

Reinsurance

Gross premiums written

~€34bn

Net result ~€2.3bn Combined ratio Property-casualty

~97%

Based on new calculation method of cost allocation

Technical result, incl. fee income Life and Health

~€550m

Munich Re Investor Day Presentation of business ambition beyond 2020

8 December 2020

Group finance and risk

Financial results 2019 – Strong earnings despite high large losses and low/negative interest rates

• Earnings growth in Reinsurance despite challenging Q4 improved underlying C/R of ~98-99%
• ERGO contributing €440m ahead of its ESP targets
• High investment result (RoI: 3.2%) and low tax expenses
• Decline in HGB result due to lower underwriting result and higher tax expenses …
• … partially offset by strong investment result
• Distributable earnings support continuation of attractive capital management returns
• Well above target capitalisation
• High economic earnings¹ of >€7bn compensate for …
• … increase of required capital due to business growth and further decline of interest rates

IFRS result Q4 2019 – Major drivers

€217^m (€238m) Net income

Reinsurance: €116m FX losses:

High large losses in P-C and strengthening of disability assumptions in Australian life business (approx. –€200m)

P-C Re C/R: 112.5% – Major-loss ratio: 27.4% Reserve releases¹ : 7.1%

L/H Re technical result including fee income: €70m

€1,965^m (€1,661m) Investment result Return on investment

(€335m)

–€225^m

Technical result

3.1%

ERGO: €101m

Fully in line with run-rate of FY guidance

–€241m

Tax income: €127m

ERGO P-C Germany C/R: 93.2%

ERGO International C/R: 94.8%

Disposal gains overcompensate for derivative losses Reinvestment yield slightly down to 1.9% due to investments in shorter maturities in Q4

IFRS result FY 2019 – Operating performance supported by strong balance sheet

Prudent reserving protecting balance sheet against negative surprises while continuously contributing to earnings strength

Managing industry hot spots Munich Re impact

Asbestos Complex litigation, changes in legal and regulatory environment

US workers' comp.

High losses for reinsurers in business underwritten during late 90s; significant late-loss emergence

De-risking with large claims settlements in the past and very strong survival ratio

Prudent reserving situation allowed for reserve releases again in 2019

US liability

High litigation risk and increasing social-inflation trends

Worsening loss trends in selected portfolios, continuous and pro-active strengthening of reserves to ensure prudence level

Ongoing reserve releases¹

Positive claims experience by far exceeding adverse development in selected hot-spot areas

Investment return – Resilience to low interest rates expected to persist

2016 2017 2018 2019

German GAAP (HGB) – Capital repatriation well funded despite decline of distributable earnings

HGB result below capital repatriation

Sound economic capitalisation continues to support our capitalmanagement strategy – First-time application of VA for four ERGO entities

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.

SCR development – Balanced risk profile between insurance and investment risks maintained

SCR increase largely driven by selective business growth and low interest rates €bn

Selected changes in disclosure as from Q1 2020 to increase comparability across segments and peers

• Focus on economic value creation, stronger consideration of IFRS
• Some inconsistency of KPIs across segments
• Most peers allocate some costs outside admin costs

Current situation Changes as from Q1 2020¹

• IFRS ROE¹ to replace external RORAC
• Harmonise allocation of admin costs between ERGO and Reinsurance²
• Reallocation of some admin costs affecting technical and investment result³
• No impact on operating result
• P-C Re combined ratio reduces by approx. 0.5%-pt. to ~1%-pt.
• Some costs, especially related to Strategy Programme (e.g. project costs) accounted for as non-operating, albeit being rather operating
• Allocation of respective costs to other operating result
• Decline of operating result, other nonoperating result increases accordingly

ERGO

	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 Germany	96.0%	~93%1	92.3%	92%

1 From Annual Report 2018. 2 ESP guidance (total premiums adjusted for Munich Health integration and portfolio streamlining). 28 February 2020

ERGO Strategy Programme – Progress in focus areas

Germany

• Product portfolio optimisation continued, simplified product approach shows first results
• Sales increased by ~6%¹ ; tied-agent productivity further improved (~18%1,2)
• Progress in hybrid customer business model:
• ERGO Direkt, ERV and D.A.S. Germany unified in one brand ERGO; modern OneWebsite "Ergo.de" launched
• Integrated campaigns performed based on new CRM analytics – leads to tied agents significantly increased (>230k, +330%¹ )
• Registered customer portal users reached one million (2018: 900k users)

Digital Ventures

• nexible
• Growth continued (~62k policies; +23%¹ ; ~100k risks insured)
• Focus on process optimization after successful launch
• ERGO Mobility Solutions
• Cooperation strategy successfully expanded
• SAP platform for B2B2C mobility business launched
• Robotics and Artificial Intelligence (AI): Process automation scaled up; more than 70 Bots and first AI applications in operation

International

• High earnings contribution and profitability in core markets continued
• Top 5 positions in core markets maintained
• Footprint in emerging markets expanding, e.g. regional expansion in China; merger in India leading to increasing business opportunities
• International portfolio streamlining finalised while maintaining strong earnings level; sale of 18 subsidiaries completed³

Unlocking further business potential through continued technical integration of products into omni-channel sales system (e.g. health)

Technology

Delivery volume of Digital IT significantly increased while improving efficiency and time-to-market (e.g. OneWebsite, new KPI cockpit for tied agents)

Integrated target IT architecture across ERGO brands currently in implementation

ERGO Group – Key financials 2019

Group

GWP Net result ^{412 440} 2018 2019 +7% €17.5bn (€17.4bn)¹ €440m (€412m)

L&H Germany P-C Germany International

€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 2019, net profit in Life increased; ongoing high Health contribution

Return on investment %

€148m (€45m)

Significant improvement of technical result

commercial and retail business

€4.7bn (€4.6bn)¹ Premiums increased in core markets

€105m (€103m)

Good operating performance offsets divestment effects

Life and Health Germany – Addressing low-interest-rate environment in Life

New business (APE)

Capital-market related

Biometric

New book

• ERGO Vorsorge as unified risk carrier for new product offering through merger¹
• Profitable new business concentrating on biometric offers and products with significantly reduced market risk
• Double-digit APE growth, mainly driven by capital-market related² products
• Already substantial share of Life Germany premiums (~20%)

29 104

44%

71% 56% 59%

EDL 2018

17%

2018 2019

+29%

134

41%

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

75 29% 83%

€m

New book 2018

Life and Health Germany – Maintaining leading positions in Health

€bn³

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"

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

Health Germany €5.6bn¹ (60%)

Property-casualty Germany – Ongoing profitable premium growth

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

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

96

96.0

2016 2017 2018 2019 2020

▪ Lowest combined ratio since 2011

99

98

%

97.0 97.5

Combined ratio

93

92.3

92

ESP guidance Actual

International – Sustainable increase of profitability

ERGO

• 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)

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

2016 2017 2018 2019

95.3

94.6 94.3

98.0

Reinsurance

Image: John Lund Getty Images

Property-casualty – Earnings growth fully supports the 2020 ambition

€1,562^m(€1,135m) Net result 101.0% (99.4%)

• 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

Combined ratio

• 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

5.6% (4.6%) Reserve releases¹

• 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

Technical

€456^m(€584m)

• 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

result¹ €706^m(€729m) result

• Decline of technical result
• High investment result driven by restructuring of assets in Canada, overcompensating strain on technical result

New business contribution

Net

• Again high level
• Strong traditional business development in North America and Asia

• FinMoRe with ongoing strong demand

• 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

1 Strong footprint in all major markets

Canada (€1.7bn / 14%)

• Attractive margins despite competitive environment
• Maintain leadership position in traditional business
• Develop footprint in Group business

USA (€2.9bn / 25%)

• Solid position among market leaders
• Further develop FinMoRe business and predictive analytics to foster growth
• Attractive risk-return profile of new business
• Successful inforce management execution

Continental Europe (€1.0bn / 9%)

• Sound but stagnating traditional business overall
• Demand for tailor-made FinMoRe solutions

UK / Ireland (€1.8bn / 15%)

• Successful FinMoRe and longevity proposition
• Margins in protection business remain unattractive
• Organisational set-up ready for Brexit

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

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

1 Strong new business generation continues – Portfolio composition fosters steady earnings growth

Core

Strong footprint in traditional reinsurance

In-depth expertise in risk assessment and management Fundament of earnings generation

Portfolio management

Australian disability portfolio US pre-2009 mortality block

Improves earnings stability 450 475 500 ~€550m

2017 2018 2019 2020e

Technical result, incl. fee income

Ambition²

Growth

Leading digital services New (re-) insurance products Established growth areas¹ Risk-related services

Safeguards earnings progress

2 January renewals 2020 – Overall positive outcome

Further improving environment – uneven distribution across lines and geographies

Positive trends for loss-affected business and specialty lines

Alternative capital: volume stagnation – some strain in retro markets

Primary markets for commercial single risk and specialty lines developing favourably

Cautiously optimistic outlook on upcoming treaty renewals

Market developments Munich Re January renewals

Overall price increases overcompensating loss-trend expectations

Flat pricing in Asia (ex Japan), distinct price increases in Europe

Worldwide and North American business with stronger rate development

Business expansion for selected markets – top-line growth driven by specialty lines and Europe/Asia

Actively giving up business not meeting our criteria, e.g. casualty with US clients

Continued disciplined portfolio management

2 Select growth in firming market environment

January renewals 2020

%	100	–10.3	89.7	+5.3		+9.3	104.4
€m	10,205	–1,046	9,159	+545		+950	10,655
			Change in premium		+4.4%
			Thereof price movement1		~ 1.2%
			Thereof change in exposure	for our share	+3.2%
	Total renewable from 1 January	Cancelled	Renewed	Increase on renewable		New business	Estimated outcome

1 Price movement is risk-adjusted, i.e. includes claims inflation/loss trend and is adjusted for portfolio mix effects. Furthermore, price movement is calculated on a wing-to-wing basis (including cancelled and new business).

2 Growth initiatives gaining traction – Profitable business expansion

Gross premiums written¹ €bn

Mature markets²

France: Successful re-entry and already ahead of plan, further strengthened as at 1.1.2020, now >€300m premiums

Global Clients: Growth in longstanding 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

Emerging 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

Risk Solutions business² +4% +21% +14%

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

Expansion of nat cat business

US

2 Growth areas – Expansion of nat cat business globally, but locally selective based on risk appetite and terms

nat cat Secondary perils, e.g. wildfire, only written with material price increases, otherwise reduced appetite in reinsurance for US and global clients

US hurricane Reinsurance with selective increase and opportunities written, e.g. in Florida – also given up business in January renewals, which did not meet expectations

Japan Wind prices better after Jebi and Trami, therefore exposure slightly increased

Caribbean markets After strong hit in the Bahamas (Dorian), acutely aware of need for appropriate cover, thus willing to accept material price increases

Risk Solutions Given loss experience 2017–2019, all primary units profiting from the primary market hardening and certain capacity retreat, e.g. F&C direct

2 US casualty – Sustaining a robust portfolio

Global traditional casualty book¹

US traditional casualty book¹ approx. 40% of global traditional casualty book % %

• 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

• 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%

3 Risk Solutions – 2019 with another step back to target profitability

Gross premiums written Combined ratio

€5.0bn (€4.3bn)

Capturing profitable growth opportunities

Normalised for large losses (aerospace) C/R in line with mid-nineties ambition (elevated prior to 2019 due to attritional losses)

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

100.7% (103.4%)

• 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

4 We focus on tangible business impact – Innovative and more disruptive offerings are gaining traction

Munich Re strategic advantages … Domain expertise in underwriting, claims, risk management

Efficient access to new solutions Global presence Financial strength

Strong brand and reputation

No IT legacy

… 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 Details next slides

Expanding the boundaries of insurability

• Cyber (re)insurance: GWP 2019 US\$ 604m, good profitability, accumulation control Details
• Cyber embedded service solutions and growing cooperation network (e.g. DXC Technology) next slides
• 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

4 Munich Re New Ventures – Tapping opportunities in the CAD 44bn Canadian group insurance market

Bringing concrete solutions to our clients with the vision to enhance the Group insurance market and create new income streams

• Grow the voluntary group benefits market with a B2B2C model
• Improve scalability and efficiency of mandatory and voluntary products by straight-through processing
• Ensure scalability and expansion in other markets and product lines where possible

Reinsurance – Cyber (re)insurance

4 Cyber insurance – Continuously one of Munich Re's main strategic growth areas

Gross premiums written cyber portfolio¹ US\$ m

• Profitable growth in line with strategy and ambition

• Cautious participation in a further growing market balancing growth and stringent risk management – market share of up to 10%

• Early and full commitment to cyber allows us to shape the market and results in a lead position

• Good profitability of the cyber insurance book
• Competitive knowledge advantage and further investments in leading cyber expertise (~100 FTE)
• Further establishing relevant and efficient partnerships and detecting new distribution channels
• Actively addressing the topic silent cyber, managing our own exposure and creating new business by supporting clients
• Accumulation management is constantly challenged, further refined and state of the art

Additional information

Segment income statement Q4 2019

€m	Reinsurance L/H1	Reinsurance P-C	ERGO L/H Germany	ERGO P-C Germany	ERGO International	Total Q4 2019
Gross premiums written	3,091	5,172	2,327	695	1,256	12,540
Net earned premiums	2,778	5,347	2,331	863	1,195	12,515
Income from technical interest	155	327	849	18	127	1,477
Net expenses for claims and benefits	–2,315	–3,947	–2,752	–529	–919	–10,462
Net operating expenses	–589	–2,071	–392	–281	–422	–3,754
Technical result	30	–344	36	72	–20	–225
Investment result	225	623	932	52	132	1,965
Insurance related-investment result	11	39	173	0	69	292
Other operating result	47	–20	–17	14	2	25
Deduction of income from technical interest	–155	–327	–849	–18	–127	–1,477
Non-technical result	128	315	239	48	77	805
Operating result	158	–30	275	120	57	580
Other non-operating result	0	–3	–93	–64	–32	–193
Currency result	–36	–102	–95	–6	–1	–241
Net finance costs	–10	–33	–6	–1	–7	–56
Taxes on income	–23	195	–37	–5	–4	127
Net result	89	27	44	43	13	217

Segment income statement 2019

€m	Reinsurance L/H1	Reinsurance P-C	ERGO L/H Germany	ERGO P-C Germany	ERGO International	Total 2019
Gross premiums written	11,716	22,091	9,238	3,500	4,912	51,457
Net earned premiums	10,540	20,566	9,191	3,362	4,621	48,280
Income from technical interest	652	1,215	4,196	75	591	6,729
Net expenses for claims and benefits	–8,580	–13,714	–11,701	–2,056	–3,633	–39,685
Net operating expenses	–2,283	–7,066	–1,415	–1,077	–1,408	–13,249
Technical result	329	1,000	271	303	171	2,074
Investment result	1,080	2,152	3,916	157	430	7,737
Insurance related-investment result	30	65	751	0	330	1,176
Other operating result	62	–238	–61	22	–39	–254
Deduction of income from technical interest	–652	–1,215	–4,196	–75	–591	–6,729
Non-technical result	520	763	410	105	131	1,930
Operating result	849	1,764	681	408	302	4,004
Other non-operating result	–10	–47	–305	–212	–92	–665
Currency result	47	149	–41	–24	–59	73
Net finance costs	–39	–128	–23	–5	–27	–222
Taxes on income	–142	–176	–127	–19	–19	–483
Net result	706	1,562	187	148	105	2,707

IFRS P&L statements – Changes as from Q1 2020 Actual 2019 (restated)

Actual vs. analysts' consensus

Operating result –		Actual vs. analysts' consensus1	€m	Major developments in Q4 2019
	Q4 2019	Consensus	Delta	Reinsurance Property-casualty
Reinsurance Property-casualty	–30	251	–281
Reinsurance Life and Health	158	63	95
ERGO Life and Health Germany	275	115	160	Reinsurance Life and Health Technical result, incl. fee income of €70m; RoI: 3.1%
ERGO Property-casualty Germany	120	84	36
ERGO International	57	75	–18	ERGO Life and Health Germany
Operating result	580	588	–8	one-off; RoI: 2.9%
				ERGO Property-casualty Germany
FX	–241
Other	–249			ERGO International
Taxes	127
Net result	217	293	–76

Reinsurance Property-casualty

Combined ratio: 112.5% (consensus: 105.1%) – major-loss ratio: 27.4%, reserve releases basic losses: 7.1%; RoI: 3.8%

Reinsurance Life and Health

Technical result, incl. fee income of €70m; RoI: 3.1%

ERGO Life and Health Germany

Policyholder participation in FX result and tax-related positive one-off; RoI: 2.9%

ERGO Property-casualty Germany

Combined ratio: 93.2% (consensus: 94.8%); RoI: 2.8%

ERGO International

Combined ratio: 94.8% (consensus: 98.0%); RoI: 2.8%

IFRS capital position

Equity		€m
Equity 31.12.2018	26,500	Change in Q4
Consolidated result	2,707	217
Changes
Dividend	–1,335	0
Unrealised gains/losses	3,661	–1,078
Exchange rates	422	–313
Share buy-backs	–957	–236
Other	–423	407
Equity 31.12.2019	30,576	–1,003

Unrealised gains/losses Exchange rates

Fixed-interest securities 2019: +€2,672m Q4: –€1,195m

Non-fixed-interest securities

2019: +€992m Q4: +€119m

FX effect mainly driven by US\$

Subordinated debt

Equity

Premium development

Reconciliation of operating result with net result

Reconciliation of operating result with net result €m 2019 Q4 2019 Operating result 4,004 580 Other non-operating result –665 –193 Currency result 73 –241 Net finance costs –222 –56 Taxes on income –483 127 Net result 2,707 217

Other non-operating result (€m)	2019	Q4 2019	Tax rates (%)	2019	Q4 2019
Goodwill impairments	–1	0	Group	15.1	–139.8
Restructuring expenses	–60	–4	Reinsurance	12.3	307.7
Other	–605	–189	ERGO	27.2	31.4

Very strong reserve position – Actual basic losses continue to be consistently below actuarial expectations

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

By exposure year By line of business

Legend: Green Actuals below expectation Red Actuals above expectation Solid line Actuals equal expectation Dotted line Actuals 50% above/below expectations

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

						Accident year (AY)
€m	≤2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	Total
31.12.2009	53,838												▪	Ultimate reductions in particular for basic losses
31.12.2010	53,118	13,517											▪	Negative run-off in AY 2018
31.12.2011	52,226	13,707	17,594											largely driven by adverse
31.12.2012	51,079	13,585	17,745	14,520										outlier development (e.g.
31.12.2013	50,588	13,669	17,459	14,301	14,409									Typhoon Jebi), and to a much smaller extent also
31.12.2014	49,641	13,698	17,043	14,096	14,630	14,324								impacted by prudent
31.12.2015	48,728	13,496	16,918	13,883	14,586	14,351	13,587							reserving for US casualty loss trend
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				▪	Reserve position remains strong
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	–	1,597		Reinsurance2 ERGO	€1,531m €66m
CY 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

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.

Response to benign emergence of basic losses in line with considered judgement

Actual vs. expected Changes in projection Business rationale

Releases follow favourable indications

• Positive actual-versus-expected indications
• Short-tail lines develop relatively quickly
• Releases spread across various property lines of business

Favourable loss development leads to release

• Favourable indications across all lines
• Reserve release primarily in credit and marine

Small releases despite favourable indications

• Deliberately small reserve release, despite favourable overall actual-versus-expected development
• Releases in motor and third-party liability
• Cautious reaction to signs of deterioration in selected casualty portfolios

Property-casualty provision for outstanding claims

By line of business Credit 3 (3) Other 6 (4) Third-party liability 37 (38) Fire 17 (17) Engineering 6 (6) Personal accident 4 (5) Marine 3 (3) TOTAL €50.7bn Motor 22 (22) Aviation 3 (2) % By maturity 5–10 years 12 (11) >15 years 4 (4) 0–1 years 35 (36) TOTAL €50.7bn 10–15 years 3 (4) % 1–2 years 20 (20) 2–3 years 12 (12) 3–4 years 8 (8) 4–5 years 5 (5)

Asbestos and environmental survival ratio 31 December 2019

Munich Re (Group) – Net definitive as at 31 December 2019¹ €m

Investment result

Total return		–4.9%		7.7%		1.4%
Investment result	1,965	3.1%	7,737	3.2%	6,526	2.8%
Other income/expenses	–228	–0.4%	–767	–0.3%	–691	–0.3%
Derivatives2	–509	–0.8%	–717	–0.3%	103	0.0%
Disposal gains/losses	1,108	1.8%	2,779	1.1%	1,582	0.7%
Write-ups/write-downs	–24	0.0%	–309	–0.1%	–1,054	–0.5%
Regular income	1,618	2.6%	6,751	2.8%	6,586	2.8%
€m	Q4 2019	Return1	2019	Return1	2018	Return1

3-month reinvestment yield		Q4 2019	Write-ups/ write downs	Disposal gains/ losses	De rivatives	2019	Write-ups/ write downs	Disposal gains/ losses	De rivatives
Q4 2019	1.9%	Fixed income	–3	597	–269	Fixed income	–51	1,530	184
Q3 2019	2.1%	Equities	–83	500	–268	Equities	–311	1,037	–927
		Commodities/Inflation	7	0	46	Commodities/Inflation	70	0	13
Q2 2019	2.2%	Other	55	11	–18	Other	–18	211	12

1 Annualised return on quarterly weighted investments (market values) in %. Impact from dividends in regular income: 0.2%-points in Q4 and 0.3%-points in Q1-4. 2 Result from derivatives without regular income and other income/expenses.

Return on investment by asset class and segment 2019

%1	Regular income	Write-ups/ -downs	Disposal result	Extraord. derivative result	Other inc./exp.	RoI	ᴓ Market value (€m)
Afs fixed-income	2.3	–0.0	1.0	0.0	0.0	3.2	130,076
Afs non-fixed-income	4.1	–1.7	5.7	0.0	0.0	8.1	18,112
Derivatives	6.7	0.0	0.0	–32.9	–1.1	–27.3	2,181
Loans	2.8	–0.0	0.3	0.0	0.0	3.1	65,979
Real estate	4.7	–1.1	1.4	0.0	0.0	5.0	10,899
Other2	3.3	1.0	0.3	0.0	–4.5	0.1	16,416
Total	2.8	–0.1	1.1	–0.3	–0.3	3.2	243,663
Reinsurance	2.9	–0.1	1.2	–0.1	–0.4	3.5	91,991
ERGO	2.7	–0.2	1.1	–0.4	–0.3	3.0	151,672

Return on investment Average

3.1%

Investment portfolio

%

Governments/ Semi-government

63 (64)

Cash/Other 1 (0)

1 Approximation – not fully comparable with IFRS figures. Fair values as at 31.12.2019 (31.12.2018). 2 Net of hedges: 6.4 (5.2%). 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

Pfandbriefe/ Covered bonds 41 (44 )

Governments/ Semi-government

41 (41)

Fixed-income portfolio Total

Fixed-income portfolio %

Bank bonds 1 (2)

Structured products 2 (2)

Loans to policyholders/ Mortgage loans 4 (4)

Cash/Other 5 (5)

Corporates 13 (12)

Pfandbriefe/ Covered bonds 21 (23)

Governments/ Semi-government 53 (53)

Fixed-income portfolio Total

Rating structure % TOTAL €207.9bn NR¹ 5 (5) BB 3 (3) BBB 12 (12)

A 13 (13)

Maturity structure

n.a. 3 (3)

10 years 34 (33)

7–10 years 15 (15)

AAA
43 (43)
AA 24
(25)
%
0–1 years
9 (10)
1–3 years
13 (13)

%

3–5 years 13 (13) 5–7 years 13 (13)

	Regional breakdown
	Without	With	Total
	policyholder participation		31.12.2019	31.12.2018
Germany	4.8	22.0	26.8	28.2
US	14.0	1.7	15.6	14.3
France	2.2	5.1	7.3	8.1
UK	3.1	2.0	5.1	4.9
Canada	4.1	0.7	4.7	4.5
Netherlands	1.4	2.9	4.3	4.5
Supranationals	0.7	2.9	3.6	3.7
Spain	1.0	2.1	3.1	2.8
Australia	2.6	0.4	3.1	2.8
Austria	0.5	2.1	2.6	2.5
Belgium	0.8	1.6	2.4	2.3
Ireland	0.7	1.4	2.2	2.1
Poland	1.3	0.5	1.8	1.7
Sweden	0.2	1.2	1.4	1.6
Italy	0.5	0.8	1.3	1.7
Other	6.7	7.8	14.6	14.2
Total	44.7	55.3	100.0	100.0

Approximation – not fully comparable with IFRS figures. Fair values as at 31.12.2019 (31.12.2018). 1 Mainly loans to policyholders, mortgage loans and bank deposits.

Fixed-income portfolio Governments/semi-government

Rating structure % BB 2 (2) BBB 7 (7) A 16 (15) AA 32 (33) TOTAL €111.2bn

Maturity structure

10 years 44 (42)

7–10 years 15 (15)

%	Regional breakdown

AAA 43 (43)

0–1 years 9 (10) 1–3 years 11 (13) 3–5 years 11 (10) 5–7 years 11 (10)

%

	Without	With Total
		policyholder participation	31.12.2019	31.12.2018
Germany	3.1	20.8	23.9	25.1
US	15.2	1.3	16.5	15.6
Supranationals	1.3	5.5	6.7	6.9
Canada	5.8	0.7	6.5	6.2
Spain	1.3	3.0	4.3	3.7
Belgium	1.3	2.8	4.1	3.9
Australia	4.0	0.1	4.0	3.6
France	1.7	2.1	3.8	4.6
Poland	2.3	0.9	3.2	3.1
Austria	0.5	2.6	3.2	3.4
UK	2.8	0.0	2.8	2.7
Finland	0.3	1.8	2.0	2.2
Netherlands	0.6	1.3	1.9	2.2
Ireland	0.4	1.2	1.6	1.7
Italy	0.5	0.9	1.4	2.1
Other	7.6	6.5	14.1	13.0
Total	48.5	51.5	100.0	100.0

Fixed-income portfolio
Pfandbriefe/covered bonds

TOTAL €43.4bn NR 1 (1) BBB 0 (1) A 2 (4) AA 20 (21)

Maturity structure

10 years 21 (25)

7–10 years 21 (19)

Rating structure		%	Regional breakdown		%
NR 1 (1)		AAA 77 (74)	Germany	31.12.2019 35.4	31.12.2018 37.7
			France	19.5	19.7
BBB			UK	9.8	8.4
0 (1)	TOTAL		Netherlands	8.4	7.8
	€43.4bn		Sweden	5.9	6.0
A			Norway	5.4	5.7
2 (4)			Spain	1.8	2.0
AA			Italy	1.1	1.0
			Ireland	0.3	0.3
20 (21)			Other	12.5	11.5

Cover pools %

Public 29 (29)

9 (10)

%

0–1 years 5 (7)

1–3 years 15 (12) 3–5 years 17 (18) 5–7 years 20 (19)

TOTAL €43.4bn Mixed and other

Mortgage 62 (61)

Approximation – not fully comparable with IFRS figures. Fair values as at 31.12.2019 (31.12.2018).
-------------------------------------------------------------------------------------------------------	--

Fixed-income portfolio Corporate bonds (excluding bank bonds)

Maturity structure TOTAL €26.5bn NR 0 (1) 10 years 24 (21) 7–10 years 12 (13)

	5–7 years
15	(16)

AVERAGE MATURITY 7.5 years

	%			%
	AAA		31.12.2019	31.12.2018
				13.7
		Utilities	13.6	16.2
		Oil and gas		11.9
		Financial services	9.6	9.0
		Telecommunications	8.0	7.9
BBB 61 (60)	19 (20)	Healthcare	7.5	7.3
		Technology	6.0	4.8
		Food and beverages		3.7
	0–1 years	Automobiles	3.9	3.0
		Media	3.6	4.1
	1–3 years	Basic resources	3.5	2.7
7.5 years	(19)	Personal and household goods	3.1	3.7
		Construction	2.8	3.1
	(22)	Other	9.2	8.9
	TOTAL €26.5bn AVERAGE MATURITY	2 (2) AA 5 (4) A % 10 (10) 19 3–5 years 20	Sector breakdown Industrial goods and services	14.2 10.9 4.0

Approximation – not fully comparable with IFRS figures. Fair values as at 31.12.2019 (31.12.2018).

Fixed-income portfolio Structured products

Structured products portfolio (at market values): Breakdown by rating and region €m

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		Rating		Region											Market-to
		AAA	AA	A	BBB	<bbb< th="">	NR	USA + RoW	Europe	Total	par	NR	USA + RoW	Europe	Total	par
ABS	Consumer-related ABS1	174	80	66	0	0	0	188	133	320	101%
	Corporate-related ABS2	0	7	188	40	0	0	32	202	235	100%
	Subprime HEL	1	0	0	0	0	0	1	0	1	95%
CDO/ CLN	Subprime-related	0	0	0	0	0	0	0	0	0	0%
	Non-subprime-related	748	1,359	35	18	0	9	764	1,405	2,169	100%
MBS	Agency	1,402	26	0	0	0	0	1,428	0	1,428	104%
	Non-agency prime	4	17	1	0	0	0	1	22	23	100%
	Non-agency other (not subprime)	101	26	2	0	0	0	18	110	129	100%
	Commercial MBS	446	13	11	0	0	0	438	32	470	104%
	Total 31.12.2019	2,876	1,527	303	58	0	9	2,870	1,904	4,774	101%
	In %	60%	32%	6%	1%	0%	0%	60%	40%	100%
	Total 31.12.2018	2,217	1,264	378	89	0	0	2,107	1,840	3,947	100%

1 Consumer loans, auto, credit cards, student loans. 2 Asset-backed CPs, business and corporate loans, commercial equipment. Approximation – not fully comparable with IFRS figures. Fair values as at 31.12.2019 (31.12.2018).

Fixed-income portfolio Bank bonds

Maturity structure

%
0–1 years 13 (25)
1–3 years 40 (31)
3–5 years

Rating structure	%	Regional breakdown	%

			Total
	Senior bonds	Subordinated	Loss-bearing	31.12.2019	31.12.2018
US	26.1	8.8	0.5	35.4	43.4
Canada	11.4	0.0	0.0	11.4	5.4
Germany	4.9	0.3	5.1	10.2	11.8
Ireland	8.8	0.0	0.0	8.8	8.6
UK	5.9	1.0	0.2	7.2	7.8
France	4.2	0.8	0.0	5.0	4.8
Australia	2.8	0.0	0.0	2.8	1.1
Netherlands	2.5	0.0	0.0	2.6	1.4
Guernsey island	2.3	0.0	0.0	2.3	2.6
Other	12.8	1.5	0.0	14.3	13.1

Cover pools %

Loss-bearing¹

6 (7)

Subordinated² 12 (13)

A 38 (40)

AA 17 (12)

30 (25)

AAA 1 (0)

TOTAL €3.0bn

Senior 82 (80)

Approximation – not fully comparable with IFRS figures. Fair values as at 31.12.2019 (31.12.2018). 1 Classified as Tier 1 and upper Tier 2 capital for Solvency purposes. 28 February 2020 2 Classified as lower Tier 2 and Tier 3 capital for Solvency purposes.

Sensitivities to interest rates, spreads and equity markets

Sensitivity to risk-free interest rates – Basis points	–50	–25	+50	+100
Change in gross market value (€bn)	+9.1	+4.4	–8.3	–15.7
1 Change in on-balance-sheet reserves, net (€bn)	+2.3	+1.1	–2.1	–4.1
1 Change in off-balance-sheet reserves, net (€bn)	+0.4	+0.2	–0.4	–0.7
1 P&L impact (€bn)	+0.2	+0.1	–0.2	–0.4
Sensitivity to spreads2 (change in basis points)			+50	+100
Change in gross market value (€bn)			–6.0	–11.3
1 Change in on-balance-sheet reserves, net (€bn)			–1.4	–2.8
1 Change in off-balance-sheet reserves, net (€bn)			–0.3	–0.5
1 P&L impact (€bn)			–0.1	–0.2
Sensitivity to equity and commodity markets3	–30%	–10%	+10%	+30%
Change in gross market value (€bn)	–6.0	–2.0	+2.0	+6.2
Change in on-balance-sheet reserves, net (€bn) 1	–1.4	–0.6	+0.9	+2.7
Change in off-balance-sheet reserves, net (€bn) 1	–1.1	–0.4	+0.4	+1.3
P&L impact (€bn) 1	–1.5	–0.3	–0.0	+0.1

1 Rough calculation with limited reliability assuming unchanged portfolio as at 31.12.2019. 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 fixedinterest securities, except government securities with AAA ratings. 3 Worst-case scenario assumed, including commodities: impairment as soon as market value is below acquisition cost. Approximation – not fully comparable with IFRS figures.

On- and off-balance-sheet reserves

€m	31.12. 2017	31.12. 2018	30.9. 2019	31.12. 2019	p in Q4
Market value of investments	231,885	231,876	253,521	247,310	–6,210
Total reserves	25,395	22,002	38,148	33,120	–5,029
On-balance-sheet reserves
Fixed-interest securities	7,622	4,953	14,026	10,738	–3,288
Non-fixed-interest securities	3,261	1,817	3,311	3,632	320
Other on-balance-sheet reserves1	189	207	223	203	–19
Subtotal	11,072	6,977	17,560	14,574	–2,987
Off-balance-sheet reserves
Real estate2	2,744	4,769	4,941	5,600	659
Loans3	10,788	9,453	14,897	12,147	–2,750
Associates	792	803	750	799	49
Subtotal	14,323	15,024	20,588	18,546	–2,042
Reserve ratio	11.0%	9.5%	15.0%	13.4%

1 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.

On- and off-balance-sheet reserves

€m	On-balance-sheet reserves	Off-balance-sheet reserves1
Total reserves (gross)	14,574	18,546
Provision for deferred premium refunds	–6,200	–10,861
Deferred tax	–1,782	–2,348
Minority interests	–7	0
Consolidation and currency effects	–206	0
Shareholders' stake	6,379	5,338

Breakdown of SCR – Increase driven by substantial business growth and lower interest rates

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

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

Life and Health risk Life and Health – VaR¹ €bn Longevity Mortality Morbidity Health Other Total 1.6 1.5 4.3 3.6 3.4 2.7 0.9 0.8 0.5 0.3 6.4 5.3 2019 2018

Overall increase driven by

Reinsurance

Lower interest rates and increase in exposure, esp. US mortality business

ERGO Lower Euro interest rates

Market risk – Solvency capital requirement

Market risk – Interest-rate sensitivity

1 Fair values as at 31.12.2019 (31.12.2018): 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. 2 Liabilities comprise technical provisions according to Solvency II. 3 Figures for ERGO and consequently Munich Re Group include VA for Q4 2019. Historical values are not restated.

Operational risk

Operational risk scenarios¹ – VaR €m

Integral part of the internal model

Internal control system implemented to actively manage operational risks for Munich Re (Group)

Overall no changes to quantitative assessment

Sensitivities of SII ratio

1 Parallel shift until last liquid point, extrapolation to unchanged UFR. 2 Based on CPI inflation. 3 Based on 200-year event.

Preliminary SII ratios of Munich Re and solo entities¹

€bn	EOF	SCR	S-II Ratio	S-II Ratio
Internal Model	(without TM2 )	(without TM2 )	(without TM2 )	(incl. TM2 )
Munich Re	41.5	17.5	237%	274%
Munich Reinsurance Company	41.9	17.5	239%	276%
Munich Re of Malta	3.0	0.7	431%	–
GLISE	0.4	0.2	184%	–
ERGO Versicherung AG	2.8	0.6	455%	–
DKV	3.8	1.1	335%	–
Standard Formula
ERGO Leben	2.23	2.1	107%	420%
Victoria Leben	1.34	0.5	262%	677%
ERGO Vorsorge Leben	0.8	0.1	520%	–
ERGO Austria	0.55	0.3	156%	305%
ERGO Belgium Life	0.8	0.3	259%	–
ERGO Poland P-C (PLN bn)	2.6	1.7	148%	–

1 Entities with internal model and selected companies with standard formula application. 2 Transitional measures. 3 Including transitional measures €6.4bn. 4 Including transitional measures €3.3bn. 5 Including transitional measures €0.9bn.

ERGO Life and Health Germany (1)

Gross premiums written	€m	Major result drivers							€m
2018	9,345		Q4 2019		Q4 2018	p	2019	2018	p
Foreign exchange	1	Technical result		36	94	–58	271	552	–281
		Non-technical result		239	118	120	410	238	172
Divestments/investments	–5	thereof investment result		932	1,008	–76	3,916	3,502	415
Organic change	–102	Other		–231	–147	–84	–494	–527	33
2019	9,238	Net result		44	66	–22	187	264	–77
Life and Health Germany (€m)			Q4 2019		Return1	2019	Return1	2018	Return1
Regular income			849		2.6%	3,571	2.8%	3,489	2.9%
Write-ups/write-downs			–69		–0.2%	–249	–0.2%	–387	–0.3%
Disposal gains/losses			611		1.9%	1,439	1.1%	650	0.5%
Derivatives2			–362		–1.1%	–499	–0.4%	83	0.1%
Other income/expenses			–97		–0.3%	–345	–0.3%	–333	–0.3%
Investment result			932		2.9%	3,916	3.1%	3,502	2.9%
Average market value				129,142			125,982		120,251

1 Return on quarterly weighted investments (market values) in % p.a. 2 Result from derivatives without regular income and other income/expenses. 28 February 2020

ERGO Life and Health Germany (2) – Key figures

Key figures1 %	2017	2018	2019
Reinvestment yield	1.5	1.6	1.8
Average yield	3.0	2.9	2.8
guarantee2 Average	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

€bn Life Germany Health Germany GWP – Market view³

Comprehensive insurance – ERGO number 2 in German market

Supplementary insurance – ERGO clear market leader

ERGO Property-casualty Germany (1)

Gross premiums written	€m	Major result drivers						€m
2018	3,377		Q4 2019	Q4 2018	p	2019	2018	p
Foreign exchange	1	Technical result		72	37 36	303	166	138
		Non-technical result		48	18 30	105	62	42
Divestments/investments	0	thereof investment result		52	35 17	157	133	24
Organic change	122	Other	–77	–49	–27	–260	–183	–77
2019	3,500	Net result		43	5 38	148	45	103
Property-casualty Germany	(€m)		Q4 2019	Return1	2019	Return1	2018	Return1
Regular income			40	2.1%	159	2.1%	148	2.1%
Write-ups/write-downs			–5	–0.2%	–27	–0.4%	–40	–0.6%
Disposal gains/losses			27	1.4%	100	1.3%	30	0.4%
Derivatives2			–6	–0.3%	–51	–0.7%	13	0.2%
Other income/expenses			–4	–0.2%	–23	–0.3%	–19	–0.3%
Investment result			52	2.8%	157	2.1%	133	1.9%
Average market value				7,617		7,504		7,085

1 Return on quarterly weighted investments (market values) in % p.a. 2 Result from derivatives without regular income and other income/expenses. 28 February 2020

ERGO Property-casualty Germany (2)

ERGO International (1)

Gross premiums written	€m	Major result drivers							€m
2018	5,057		Q4 2019		Q4 2018	p	2019	2018	p
Foreign exchange	–28	Technical result		–20	7	–26	171	228	–57
		Non-technical result		77	15	62	131	14	116
Divestments/investments	–142	thereof investment result		132	107	25	430	348	82
Organic change	25	Other		–44	–40	–4	–197	–139	–58
2019	4,912	Net result		13	–18	31	105	103	2
International (€m)			Q4 2019		Return1	2019	Return1	2018	Return1
Regular income			96		2.0%	368	2.0%	406	2.3%
Write-ups/write-downs			8		0.2%	40	0.2%	–55	–0.3%
Disposal gains/losses			59		1.3%	112	0.6%	3	0.0%
Derivatives2			–24		–0.5%	–65	–0.4%	22	0.1%
Other income/expenses			–6		–0.1%	–25	–0.1%	–27	–0.2%
Investment result			132		2.8%	430	2.4%	348	2.0%
Average market value					18,763		18,186		17,361

1 Return on quarterly weighted investments (market values) in % p.a. 2 Result from derivatives without regular income and other income/expenses. 28 February 2020

ERGO International (2)

Overweight in North America and traditional mortality risk

Reinsurance Life and Health

Gross premiums written	€m	Major result drivers							€m
2018	10,849		Q4 2019		Q4 2018	p	2019	2018	p
Foreign exchange	309	Technical result		30	141	–111	329	503	–175
		Non-technical result		128	40	87	520	427	94
Divestments/investments	0	thereof investment result		225	261	–36	1,080	988	92
Organic change	558	Other		–69	–56	–13	–144	–201	58
2019	11,716	Net result		89	126	–37	706	729	–23
Reinsurance Life and Health (€m)			Q4 2019		Return1	2019	Return1	2018	Return1
Regular income			191		2.6%	791	2.8%	806	3.1%
Write-ups/write-downs			14		0.2%	14	0.0%	–108	–0.4%
Disposal gains/losses			48		0.7%	322	1.1%	358	1.4%
Derivatives2			–13		–0.2%	–9	0.0%	–2	0.0%
Other income/expenses			–15		–0.2%	–38	–0.1%	–65	–0.3%
Investment result			225		3.1%	1,080	3.8%	988	3.8%
Average market value					29,170		28,205		25,812

1 Return on quarterly weighted investments (market values) in % p.a. 2 Result from derivatives without regular income and other income/expenses. 28 February 2020

Result below guidance – Growth of fee income partly balances lower than expected technical result

Financially Motivated Reinsurance – Strong demand prevails

Portfolio development

• 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

• Demand expected to remain high

• Transaction types tailored to client needs
• Number and size of transactions will vary on an annual basis

Asia – Success through tailor-made market and client strategies

Portfolio development

• 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

• 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

Longevity – Hold on to prudent underwriting approach

Gross premiums written Liability p.a. Strategic proposition 381 484 417 614 685 4 4 3 6 6 2015 2016 2017 2018 2019 % of total

• Portfolio comprises longevity transactions in the UK
• Market entry in 2011 after in-depth research
• Prudent approach in pricing and valuation

Portfolio development

• 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

• No change to prudent underwriting approach

• Carefully consider expansion beyond UK and extension of product offering

Financial Markets¹ – Comprehensive market risk solutions for the financial services industry

IFRS earnings contribution² €m Strategic proposition

Portfolio development

• 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

• 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

• 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

Reinsurance Property-casualty

Gross premiums written	€m	Major result drivers							€m
2018	20,437		Q4 2019		Q4 2018	p	2019	2018	p
Foreign exchange	638	Technical result	–344		56	–401	1,000	1,250	–249
		Non-technical result		315	–122	436	763	284	479
Divestments/investments	–183	thereof investment result		623	249	374	2,152	1,555	597
Organic change	1,200	Other		57	124	–67	–202	–399	197
2019	22,091	Net result		27	59	–32	1,562	1,135	427
Reinsurance Property-casualty	(€m)		Q4 2019	Return1		2019	Return1	2018	Return1
Regular income			442	2.7%		1,862	2.9%	1,736	2.9%
Write-ups/write-downs			28	0.2%		–87	–0.1%	–463	–0.8%
Disposal gains/losses			363	2.2%		807	1.3%	540	0.9%
Derivatives2			–104	–0.6%		–94	–0.1%	–12	0.0%
Other income/expenses			–106	–0.6%		–336	–0.5%	–246	–0.4%
Investment result			623	3.8%		2,152	3.4%	1,555	2.6%
Average market value				65,725			63,786		60,684

1 Return on quarterly weighted investments (market values) in % p.a. 2 Result from derivatives without regular income and other income/expenses.

Consistently managing portfolio quality – Profitability comfortably exceeds cost of capital

Traditional P-C portfolio – Outlook 2020¹

• Quite stable portfolio composition with slight move to specialty lines
• Varying pricing trends depending on distinct geographies and lines of business
• Favourable development in Marine and Aviation
• Upcoming renewals to determine situation on cat XL markets
• Overall economic profitability of portfolio slightly increased
• Interest rate environment puts pressure on economic profitability for long-tail lines

US casualty – Closely monitoring adverse trends, reserving risks manageable

Traditional US casualty

83

%

US casualty provisions for outstanding claims

%

UY 2003-2014 33 (79% IBNR) 19 (62% IBNR)

UY 2015+ 48 (88% IBNR)

Immediate response to early signs of adverse development

Continuous and strong reaction to adverse US casualty loss trends over the last years to maintain prudence level for our reserve position

2017	2018	2019
Decisive action on our US primary book by changing strategy, but also by strength ening reserves in motor and general liability lines	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

US casualty market highly differentiated – Still allows us to seize opportunities while active risk management remains key

Market observations

• 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

• 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

Ongoing qualitative improvement of our proportional US commercial liability portfolio

GWP growth 20191,2

Combined ratio 2019¹

Risk Solutions: AMIG, F&C and MRS with particularly good results – Aerospace hit by large loss events

Combined ratio 2019¹

• Transformation investments bearing fruits with higher growth than expected
• One-offs IT costs and business run off partly impact the result

Hartford Steam Boiler

• Strong growth of strategic products and further growth in core business

• Investing in new MR wide IoT activities

• Investing in newly created unit and building up E&S business

• Solid property result
• Turnaround of casualty business executed

92%	+13%

GWP growth 20191,2

Munich Re Syndicate (MRS) ▪ Better market conditions and diversification in new specialty lines supporting positive growth ▪ Investing in digitalisation and process automation F&C ▪ Good and profitable market position after a period affected by severe outlier events ▪ Premiums with strong growth above expectations, particularly driven by property 96% +31% American Modern (AMIG) 93% +35% Aerospace ▪ Unusual accumulation of large loss events for Space and Aviation business ▪ Growing premium due to better market conditions and an improving competitive landscape 88% +17% Munich Re Specialty Insurance 166% +20% 102% +7%

1 Economic view – not fully comparable with IFRS figures. 2 Compared to previous year. Gross premiums written.

Reinsurance Property-casualty – Combined ratio

	Major losses	Nat cat	Man-made	Reserve releases1
2019	15.2	10.0	5.2	–5.6
Q4 2019	27.4	21.1	6.3	–7.1
Ø Annual expectation	~12.0	~8.0	~4.0	~–4.0

Additional information: Reinsurance Property-casualty – Risk trading

Retrocession – Stable programme structure despite a tightened market

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

€m Munich Re key channels

Traditional 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)
• 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.

Munich Re's maximum in-force nat cat protection

Nat cat protection before reinstatement premiums, as at January 2020

€m

January renewals with satisfactory outcome – Overall portfolio profitability increased

Munich Re portfolio – Price and volume change in major business lines

	Total		Property		Casualty		Specialty lines
Business line		Prop.	XL	Prop.	XL	Marine	Credit	Aviation
Premium split1	€10.7bn	22%	10%	46%	5%	9%	5%	3%
Price change								8.2%
	1.2% ~	0.8%	0.7%	0.8%	1.5%	3.3%	0.2%
Volume change	4.4%		11.5%	2.0%	5.0%	31.0%	14.5%	24.5%
		–5.8%

Price change

• Overall price increases
• Proportional casualty and property business slightly increased, property XL mixed picture with ongoing rate pressure on loss free accounts and rate increases in loss-affected accounts.
• Price increases in aviation and marine supported by primary market rate increases

January renewals 2020 – Split by line of business and region

Split by line of business

% Split by region

%

January renewals – Almost half of total P-C book up for renewal

Total property-casualty book¹ % Remaining business 30 July renewals 16 January renewals 46 April renewals 8 TOTAL €22bn

Cautiously optimistic outlook for upcoming renewals

Total P-C book¹ Treaty business April July Rest of Asia/ Pacific/Africa Europe Worldwide NA² LA³ Australia/ New Zealand January² 46 Worldwide LA³ Europe TOTAL €3.5bn NA² Claims experience in the individual market segments will play a major role Focus: USA, LA, Australia Nat cat share: 20% Focus: USA, Europe Nat cat share: 10% Positive price change of ~1.2% TOTAL €10.2bn Rest of Asia/ Pacific/Africa Europe NA² LA³ Worldwide Japan Focus: Japan Nat cat share: 26% TOTAL €1.8bn TOTAL €22bn Remaining 30 April 8 July 16 Nat cat share: 14% ~50% of total P-C book renewed in January Asia/Pacific/ Africa January

Renewal results – Nominal price change 2011–2020

Increased top line – Well-balanced diversified portfolio

• Stable portfolio composition
• Well-balanced traditional portfolio
• Slight move towards specialty

▪ Strong proportion of US business, spread across all lines of business

Portfolio management and high share of proportional business support earnings resilience

9 (8)

%

XL

Traditional¹

• Share increases
• Nat cat XL
• Accordingly, ongoing slight shift towards non-proportional business
• Agro business

Share decreases

• Proportional property
• Casualty

Strong long-term growth in cyber (re)insurance expected – Munich Re with leading-edge expertise and market presence

GWP global cyber insurance market¹ US\$ bn

GWP Munich Re cyber portfolio US\$ m 191 263 354 473 604 2015 2016 2017 2018 2019 Reinsurance Primary 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)

Financial calendar

18 March	Annual report (Group), Annual report (Company)
29 April	Annual General Meeting 2020
7 May	Quarterly statement as at 31 March 2020
6 August	Half-year financial report as at 30 June 2020
5 November	Quarterly statement as at 30 September 2020
8 December	Investor Day, Munich

For information, please contact

Investor Relations Team

Christian Becker-Hussong

Head of Investor & Rating Agency Relations Tel.: +49 (89) 3891-3910 E-mail: cbecker-hussong@munichre.com

Ralf Kleinschroth

Tel.: +49 (89) 3891-4559 E-mail: rkleinschroth@munichre.com

Maximiliane Hörl (ERGO)

Tel.: +49 (211) 477-7483 E-mail: maximiliane.hoerl@ergo.de

Thorsten Dzuba

Tel.: +49 (89) 3891-8030 E-mail: tdzuba@munichre.com

Christine Franziszi

Tel.: +49 (89) 3891-3875 E-mail: cfranziszi@munichre.com

Andreas Silberhorn (Rating agencies)

Tel.: +49 (89) 3891-3366 E-mail: asilberhorn@munichre.com

Ingrid Grunwald (ESG)

Tel.: +49 (89) 3891-3517 E-mail: igrunwald@munichre.com

Münchener Rückversicherungs-Gesellschaft | Investor & Rating Agency Relations | Königinstraße 107 | 80802 München, Germany Fax: +49 (89) 3891-9888 | E-mail: IR@munichre.com | Internet: www.munichre.com

Disclaimer

This presentation contains forward-looking statements that are based on current assumptions and forecasts of the management of Munich Re. Known and unknown risks, uncertainties and other factors could lead to material differences between the forward-looking statements given here and the actual development, in particular the results, financial situation and performance of our Company. The Company assumes no liability to update these forward-looking statements or to make them conform to future events or developments.