Muenchener Rueckversicherungs-Gesellschaft AG — Earnings Release 2017

Nov 9, 2017

Quarterly statement as at 30 September 2017

9 November 2017

Agenda

1 Munich Re (Group)	2	5 Backup	19
2 ERGO	7
3 Reinsurance	13
4 Outlook	17

Nat cats dominate Q3 – Capitalisation remains strong

Q3 2017 (9M 2017)

Munich Re (Group)

–€1,436m (9M: –€146m)

Q3 loss driven by heavy nat cat claims, recapture of a life reinsurance treaty and negative FX effects

Return on investment¹

2.8% (9M: 3.2%)

Solid investment result – Slight increase of reinvestment yield to 2.0%

Shareholders' equity

€27.8bn (–7.9% vs. 30.6.)

Sound capitalisation – Solvency II ratio 258%

Quarterly statement as at 30 September 2017 1 Annualised. 3

IFRS capital position

Equity			€m	Capitalisation				€bn
Equity 31.12.2016	31,785		Change Q3	0.4	0.4	0.4
Consolidated result	–146		–1,436		4.2	4.2	0.4
Changes				4.4			2.8	0.3
Dividend	–1,333		0					2.8
Unrealised gains/losses	–92		–94
Exchange rates	–1,570		–501
Share buy-backs	–743		–272
Other	–131		–65	13.4
Equity 30.9.2017	27,770		–2,369		12.6	12.4	9.5	10.1
				31.0	31.8	32.2	30.1	27.8
Unrealised gains/losses		Exchange rates		2015	2016	31.3.2017	30.6.2017	30.9.2017
Fixed-interest securities		FX effect mainly driven by US\$
9M: –€120m Q3: –€103m				Debt	leverage1	(%)
			Senior and other debt2
Non-fixed-interest securities					Subordinated debt

9M: €36m Q3: €8m

Equity

1 Strategic debt (senior, subordinated and other debt) divided by total capital (strategic debt + equity). 2 Other debt includes Munich Re bank borrowings and other strategic debt. 4

Investment portfolio

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

Investment result

	Investment result	(€m)		Return1 Q2 2017	Q3 2017	Return1	9M 2017	Return1	9M 2016	Return1
Regular income				1,720	3.0% 1,527	2.7%	4,881	2.8%	5,001	2.8%
	Write-ups/write-downs			–49 –0.1%		–84 –0.1%	–160	–0.1%	–284	–0.2%
	Disposal gains/losses			432	0.7%	259 0.5%	1,739	1.0%	1,823	1.0%
Derivatives2				–87 –0.1%		37 0.1%	–412	–0.2%	–196	–0.1%
	Other income/expenses			–127 –0.2%	–151	–0.3%	–421	–0.2%	–402	–0.2%
Investment result				1,889	3.2% 1,589	2.8%	5,629	3.2%	5,942	3.4%
Total return					0.8%	2.5%		1.0%		9.3%
3-month reinvestment yield		Q3 2017	Write-ups/ write-downs	Disposal gains/losses	Derivatives	9M 2017		Write-ups/ write-downs	Disposal gains/losses	Derivatives
Q3 2017	2.0%	Fixed income3	–2	115	116	Fixed income3		–4	1,028	–16
		Equities	–37	142	–95	Equities		–72	702	–373
Q2 2017	1.8%	Commodities/inflation	10		6	Commodities/inflation		39		–19
Q1 2017	2.0%	Other	–55	2	10	Other		–122	10	–3

1 Annualised return on quarterly weighted investments (market values) in %. Impact from dividends on regular income 0.2%-pts in Q3 and 0.5%-pts in Q2.

2 Result from derivatives without regular income and other income/expenses. 3 Thereof interest-rate hedging ERGO: Q3 –€6m/–€1m (gross/net); 9M –€144m/–€19m (gross/net).

ERGO Life and Health Germany

Gross premiums written	€m	Major result drivers				€m
9M 2016	6,823		9M 2017	9M 2016		Technical result  9M: Enhanced profitability in life, health and
Foreign exchange	–9	Technical result	316	207	109	direct business
Divestments/investments	0	Non-technical result	146	331	–185	 9M: Improvements in life driven by one-offs in 2016
Organic change	51	thereof investment result	3,130	3,698	–568
9M 2017	6,865	Other	–353	–519	166	Investment result  9M: Significantly lower derivatives result
		Net result	109	19	90	(mainly interest-rate hedging)
 Life: –€80m Decline in regular premium driven by ordinary attrition, while single premium			Q3 2017	Q3 2016		 Q3: Low disposal gains (financing of ZZR mainly in Q1 2017)  Q3: Return on investment: 2.6%
decreased mainly due to lower product sales		Technical result	106	5	101
 Health: +€115m Positive development in comprehensive and		Non-technical result	28	10	18	Other  9M: Restructuring expenses in 2016
supplementary insurance; travel increased by €17m		thereof investment result	774	895	–121	 Q3: Impacted by strategic investments

Other –137 –64 –73

Net result –3 –49 46

ERGO Property-casualty Germany (1)

Gross premiums written €m			Major result drivers			€m
9M 2016		2,566		9M 2017	9M 2016		Technical result  Q3: Combined ratio of 98.1% at level of
Foreign exchange		–6	Technical result	122	124	–1	annual guidance
Divestments/investments		0	Non-technical result	73	–37	111	 Loss ratio negatively impacted by nat cat while claims experience in 9M was within
Organic change		59	thereof investment result	137	31	105	expectations
9M 2017		2,619	Other	–132	–169	37	 Expense ratio reduced by 1.7%-pts.

• Positive premium development in almost all lines of business
• Organic growth mainly driven by fire/property and marine

9M 2017	9M 2016	
122	124	–1
73	–37	111
137	31	105
–132	–169	37
63	–83	146
Q3 2017	Q3 2016	
32	40	–8
20	8	12
38	23	15
–49	–39	–11
3	10	–7

Technical result

• Q3: Combined ratio of 98.1% at level of annual guidance
• Loss ratio negatively impacted by nat cat while claims experience in 9M was within expectations
• Expense ratio reduced by 1.7%-pts.

Investment result

• 9M: Disposal losses and equity impairments in 9M 2016
• Q3: Return on investment: 2.2%

Other

• 9M: Restructuring expenses and one-offs in 2016
• Q3: Impacted by strategic investments

ERGO Property-casualty Germany (2)

ERGO International

Gross premiums written €m				Major result drivers €m
9M 2016		3,768		9M 2017	9M 2016		Technical result  Q3: Good combined ratio of 91.5%,
Foreign exchange		–5	Technical result	121	14	107	pleasing technical improvements overall in
Divestments/investments		–84	Non-technical result	48	156	–108	claims as well as costs (e.g. Poland with higher motor profitability) – annual
Organic change		71	thereof investment result	264	438	–174	guidance improved from ~98% to ~97%
9M 2017		3,750	Other	–117	–155	39	Investment result
 Life: –€271m			Net result	52	15	37	 9M: Lower result from derivatives and regular income (lower asset base due to
Italy: Sale of entity in Q2 2016 Less new business in Poland and Austria				Q3 2017	Q3 2016		disposal of Italian entity in 2016)  Q3: Lower impact from disposals and
 P-C: +€215m Increase mainly driven by motor business			Technical result	97	13	84	derivatives compared with 2016  Q3: Return on investment: 2.1%
in Poland and Baltics, as well as ATE			Non-technical result	14	49	–35
acquisition			thereof investment result	89	118	–29	Other  9M: Several one-offs and restructuring

Other –81 –42 –40

Net result 30 20 10

Health: +€38m Growth driven by Belgium and Spain

	Q3: Negative tax effects
	Quarterly statement as at 30 September 2017	11

expenses in 2016

ERGO

ERGO International – Property-casualty, including Health

Legal protection

504

Spain 585

Poland 920

Quarterly statement as at 30 September 2017 12

1 Only short-term health business.

Reinsurance

Reinsurance Life and Health

Gross premiums written	€m	Major result drivers				€m
9M 2016	9,892		9M 2017	9M 2016		Technical result, incl. fee income of €271m  9M: Good underlying business
Foreign exchange	7	Technical result	232	304	–72	development
Divestments/investments	0	Non-technical result	238	94	143	 9M: Technical result below expectations due to negative impact from recaptures
Organic change	347	thereof investment result	661	507	154	in the US (Q3: >€100m, 9M: €170m)
9M 2017	10,246	Other	–173	–15	–158	 Q3: Largely offsetting effects, e.g. better claims development in North America,
		Net result	297	383	–86	adverse claims experience in Australia
 Business growth in Australia, Asia and Middle East			Q3 2017	Q3 2016		Investment result  9M: High regular income supported by
		Technical result	23	161	–137	deposits retained on assumed reinsurance
		Non-technical result	78	23	55	 9M: Disposal gains on equities and
		thereof investment result	208	172	36	fixed income  Q3: Return on investment: 3.2%
		Other	–42	–38	–4	Other
		Net result	59	146	–86	 9M: FX result of –€37m vs. €88m

Reinsurance Property-casualty

Gross premiums written	€m	Major result drivers				€m
9M 2016	13,733		9M 2017	9M 2016		Technical result  Q3: High nat cat loss ratio of 70.3%,
Foreign exchange	27	Technical result	–1,381	1,642	–3,022	thereof impact from hurricanes Harvey,
Divestments/investments	0	Non-technical result	462	368	94	Irma and Maria, of €2.7bn/64.1%
Organic change	–236	thereof investment result	1,436	1,266	170	Investment result
9M 2017	13,524	Other	252	–248	501	 9M: Stable regular income also compared with previous year
 Slightly positive FX effects from US\$		Net result	–667	1,761	–2,428	 9M: Less disposal gains, improved derivative result
 Cancellation/modification of large treaties especially in agro, fire and liability			Q3 2017	Q3 2016		 Q3: Return on investment: 3.1%
		Technical result	–2,306	597	–2,903	Other
		Non-technical result	176	108	67	 9M: FX result of –€168m vs. €299m  9M: Tax income of €494m, thereof
		thereof investment result	479	411	68	€671m in Q3
		Other	605	–147	752

Net result –1,525 558 –2,083

Combined ratio

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

Outlook

Outlook 2017

GROUP

Gross premiums written €48–50bn

Net result Small profit (prev. €2.0–2.4bn)

Return on investment

REINSURANCE ERGO

Gross premiums written €31–33bn

Gross premiums written €17–17.5bn

L&H: Technical result incl. fee income ~€400m

P-C combined ratio P-C combined ratio ¹ ~112% (prev. ~97%)

Net result €200–250m

Germany ~98% International

~97% (prev. ~98%)

Backup

Premium development

Gross premiums written	€m	Segmental breakdown	€m
9M 2016	36,782	Reinsurance Property-casualty 13,524 (37%) ( –1.5%)	ERGO Life and Health Germany 6,865 (19%) ( 0.6%)
Foreign exchange	15
Divestments/ investments	–84		ERGO Property-casualty Germany 2,619 (7%) ( 2.1%)
Organic change	291
9M 2017	37,004	Reinsurance Life and Health 10,246 (28%) ( 3.6%)	ERGO International 3,750 (10%) ( –0.5%)

Quarterly statement as at 30 September 2017 20

Reconciliation of operating result with net result

Reconciliation of operating result with net result			€m
	9M 2017		Q3 2017
Operating result	377		–1,732
Other non-operating result	–659		–243
Goodwill impairments	–6		–6
Net finance costs	–160		–53
Taxes	302		597
Net result	–146		–1,436

Other non-operating result (€m)	9M 2017	Q3 2017	Tax rates (%)	9M 2017	Q3 2017
Foreign exchange	–293	–74	Group	67.4	29.4
Restructuring expenses	–11	–2	Reinsurance	50.9	30.7
Other	–355	–167	ERGO	26.9	64.3

Backup: Reinsurance

Breakdown of regular income

Investment result – Regular income (€m)	Q3 2017	9M 2017	9M 2016	Change
Afs fixed-interest	725	2,224	2,427	–203
Afs non-fixed-interest	91	499	443	56
Derivatives	23	83	88	–5
Loans	485	1,451	1,515	–65
Real estate	112	311	302	10
Deposits retained on assumed reinsurance and other investments	90	313	226	87
Total	1,527	4,881	5,001	–119

Breakdown of write-ups/write-downs

Investment result – Write-ups/write-downs (€m)	Q3 2017	9M 2017	9M 2016	Change
Afs fixed-interest	–1	–5	0	–5
Afs non-fixed-interest	–37	–72	–296	224
Loans	–1	1	–26	27
Real estate	–49	–99	–55	–44
Deposits retained on assumed reinsurance and other investments	4	16	92	–76
Total	–84	–160	–284	125

Breakdown of net result from disposals

Investment result – Net result from disposal of investments (€m)	Q3 2017	9M 2017	9M 2016	Change
Afs fixed-interest	116	307	1,113	–806
Afs non-fixed-interest	142	702	334	368
Loans	–1	720	507	214
Real estate	0	6	14	–8
Deposits retained on assumed reinsurance and other investments	2	4	–145	148
Total	259	1,739	1,823	–84

Return on investment by asset class and segment 9M 2017

%1	Regular income	Write-ups/-downs	Disposal result	Extraord. derivative result	Other inc./exp.	RoI	ᴓ Market value (€m)
Afs fixed-income	2.3	0.0	0.3	0.0	0.0	2.6	129,047
Afs non-fixed-income	4.1	–0.6	5.7	0.0	0.0	9.2	16,432
Derivatives	6.3	0.0	0.0	–31.1	–0.4	–25.2	1,763
Loans	3.0	0.0	1.5	0.0	0.0	4.5	65,016
Real estate	5.8	–1.8	0.1	0.0	0.0	4.0	7,216
Other2	3.2	0.2	0.0	0.0	–4.2	–0.8	13,135
Total	2.8	–0.1	1.0	–0.2	–0.2	3.2	232,610
Reinsurance	2.7	–0.1	0.7	0.1	–0.3	3.1	89,471
ERGO	2.9	–0.1	1.2	–0.4	–0.2	3.3	143,139

3.2% Return on investment Average

Investment result by segment

Reinsurance Life and Health (€m)	Q3 2017	Return1	9M 2017	Return1	9M 2016	Return1
Regular income	178	2.8%	579	2.9%	531	2.7%
Write-ups/write-downs	–4	–0.1%	–10	–0.1%	–17	–0.1%
Disposal gains/losses	31	0.5%	125	0.6%	157	0.8%
Derivatives2	19	0.3%	12	0.1%	–123	–0.6%
Other income/expenses	–15	–0.2%	–44	–0.2%	–41	–0.2%
Investment result	208	3.2%	661	3.3%	507	2.6%
Average market value		25,887		26,349		26,362

Reinsurance Property-casualty (€m)	Q3 2017	Return1	9M 2017	Return1	9M 2016	Return1
Regular income	376	2.5%	1,239	2.6%	1,258	2.6%
Write-ups/write-downs	–29	–0.2%	–54	–0.1%	–40	–0.1%
Disposal gains/losses	118	0.8%	374	0.8%	728	1.5%
Derivatives2	69	0.5%	32	0.1%	–532	–1.1%
Other income/expenses	–55	–0.4%	–154	–0.3%	–149	–0.3%
Investment result	479	3.1%	1,436	3.0%	1,266	2.6%
Average market value		60,889		63,123		64,342

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

Investment result by segment

ERGO Life and Health Germany (€m)	Q3 2017	Return1	9M 2017	Return1	9M 2016	Return1
Regular income	838	2.8%	2,643	3.0%	2,724	3.0%
Write-ups/write-downs	–51	–0.2%	–85	–0.1%	–170	–0.2%
Disposal gains/losses	95	0.3%	1,147	1.3%	844	0.9%
Derivatives2,3	–38	–0.1%	–384	–0.4%	481	0.5%
Other income/expenses	–70	–0.2%	–191	–0.2%	–180	–0.2%
Investment result	774	2.6%	3,130	3.5%	3,698	4.0%
Average market value		118,786		119,406		122,403

ERGO Property-casualty Germany (€m)	Q3 2017	Return1	9M 2017	Return1	9M 2016	Return1
Regular income	39	2.3%	121	2.4%	123	2.4%
Write-ups/write-downs	–3	–0.2%	–6	–0.1%	–57	–1.1%
Disposal gains/losses	9	0.6%	47	0.9%	12	0.2%
Derivatives2	–3	–0.2%	–15	–0.3%	–34	–0.7%
Other income/expenses	–4	–0.2%	–11	–0.2%	–12	–0.2%
Investment result	38	2.2%	137	2.7%	31	0.6%
Average market value		6,853		6,804		6,787

1 Return on quarterly weighted investments (market values) in % p.a. 2 Result from derivatives without regular income and other income/expenses. 3 Thereof interest-rate hedging ERGO: Q3 –€4m/€0m (gross/net); 9M –€135m/–€13m (gross/net).

Investment result by segment

ERGO International (€m)	Q3 2017	Return1	9M 2017	Return1	9M 2016	Return1
Regular income	96	2.3%	300	2.4%	364	3.1%
Write-ups/write-downs	3	0.1%	–5	–0.0%	0	–0.0%
Disposal gains/losses	6	0.1%	46	0.4%	81	0.7%
Derivatives2	–9	–0.2%	–56	–0.4%	13	0.1%
Other income/expenses	–7	–0.2%	–21	–0.2%	–20	–0.2%
Investment result	89	2.1%	264	2.1%	438	3.7%
Average market value		17,028		16,928		15,809

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)	+8.1	+4.0	–7.5	–14.6
1 Change in on-balance-sheet reserves, net (€bn)	+1.9	+0.9	–1.8	–3.4
1 Change in off-balance-sheet reserves, net (€bn)	+0.4	+0.2	–0.4	–0.7
1 P&L impact (€bn)	–0.0	–0.0	+0.0	–0.0
Sensitivity to spreads2 (change in basis points)			+50	+100
Change in gross market value (€bn)	–5.3	–10.3
1 Change in on-balance-sheet reserves, net (€bn)			–1.1	–2.1
1 Change in off-balance-sheet reserves, net (€bn)			–0.3	–0.5
P&L impact (€bn) 1			–0.0	–0.1
Sensitivity to equity and commodity markets3	–30%	–10%	+10%	+30%
EURO STOXX 50 (3,595 as at 30.9.2017)	2,516	3,235	3,954	4,673
Change in gross market value (€bn)	–5.3	–1.8	+1.8	+5.4
1 Change in on-balance-sheet reserves, net (€bn)	–1.4	–0.6	+1.0	+3.0

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

P&L impact (€bn) ¹ –1.8 –0.4 +0.0 +0.2

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

On- and off-balance-sheet reserves (gross)

€m	31.12.2015	31.12.2016	31.3.2017	30.6.2017	30.9.2017
Market value of investments	230,529	236,153	235,399	229,737	229,149
Total reserves	25,969	28,496	26,180	24,743	24,565
On-balance-sheet reserves
Fixed-interest securities	7,886	8,649	7,815	7,658	7,496
Non-fixed-interest securities	2,446	2,924	3,311	2,917	3,011
Other on-balance-sheet reserves1	201	186	201	191	196
Subtotal	10,533	11,759	11,327	10,766	10,702
Off-balance-sheet reserves
Real estate2	2,273	2,413	2,450	2,450	2,516
Loans and investments (held to maturity)	12,610	13,591	11,692	10,761	10,589
Associates	553	733	711	767	758
Subtotal	15,436	16,738	14,853	13,977	13,863
Reserve ratio	11.3%	12.1%	11.1%	10.8%	10.7%

On-balance-sheet reserves

On-balance-sheet reserves		€m
	30.9.2017	Change Q3
Investments afs	10,506	–69
Valuation at equity	110	–1
Unconsolidated affiliated enterprises	65	5
Cash-flow hedging	22	1
Total on-balance-sheet reserves (gross)	10,702	–63
Provision for deferred premium refunds	–4,763	–60
Deferred tax	–1,337	8
Minority interests	–15	1
Consolidation and currency effects	–206	23
Shareholders' stake	4,381	–92

Off-balance-sheet reserves

Off-balance-sheet reserves		€m
	30.9.2017	Change Q3
Real estate1	2,516	67
Loans	10,589	–172
Associates	758	–9
Total off-balance-sheet reserves (gross)	13,863	–114
Provision for deferred premium refunds	–9,648	97
Deferred tax	–1,275	–2
Minority interests	0	0
Shareholders' stake	2,940	–20

Changes to shares in circulation

Shares (millions)	31.12. 2016	Acquisition of own shares in 9M 2017	Retirement of own shares in 9M 2017	30.9. 2017	of shares in circulation	Weighted average number			(millions)
Shares in circulation	156.9	–4.2	–	152.7	172.2	165.9	160.0	154.8	153.5
Own shares held	4.2	4.2	–6.0	2.3
Total	161.1	–	–6.0	155.0
					2014	2015	2016	9M 2017	Q3 2017

Financial calendar

2017
21 November	Investor Day "Munich Re driving digital transformation"
2018
6 February	Preliminary key figures 2017 and renewals
15 March	Balance sheet press conference for 2017 financial statements Analysts' conference in Munich with videocast
25 April	Annual General Meeting 2018, ICM – International Congress Centre Munich
8 May	Quarterly statement as at 31 March 2018
8 August	Half-year financial report as at 30 June 2018
7 November	Quarterly statement as at 30 September 2018

Quarterly statement as at 30 September 2017 35

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

Britta Hamberger

Tel.: +49 (89) 3891-3504 E-mail: bhamberger@munichre.com

Ingrid Grunwald

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

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

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

Christine Franziszi

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

Andreas Silberhorn

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

Angelika Rings

Tel.: +49 (211) 4937-7483 E-mail: angelika.rings@ergo.de

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

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

The primary insurance units of the disbanded Munich Health field of business are now recognised in the ERGO International segment, units with reinsurance business in the Reinsurance Life and Health segment. Previous year's figures were adjusted to ensure comparability.