ABN AMRO Insurance meets Capital

Transcription

1 ABN AMRO Insurance meets Capital Alik Hertel, Head of Group Treasury Marcus Sander, Senior Investor Relations Manager Amsterdam, 9 April 207

2 Founded as a lead insurer by German corporates Group structure History Large German corporates, e.g. Free float 2.0% Industrial Lines Retail Germany (P/C and Life) V.a.G. 79.0% German Mittelstand Retail International Including employee shares and stake of Meiji Yasuda (below 5%) Private policy holders Reinsurance (P/C and Life/Health) Foundation as Haftpflichtverband der deutschen Eisen- und Stahlindustrie in Frankfurt Relocation to Hannover Companies of all industry sectors are able to contract insurance with HDI V.a.G. Foundation of Hannover Rückversicherungs-AG Diversification into life insurance IPO of Hannover Rückversicherungs-AG Renaming of HDI Beteiligungs AG to Talanx AG Start transfer of business from HDI V.a.G. to individual Talanx subsidiaries Acquisition of Gerling insurance group by Talanx AG IPO of Talanx AG Listing at Warsaw Stock Exchange Strong roots: originally founded by German corporate clients; HDI V.a.G still key shareholder 2

3 Four divisions with a strong portfolio of brands Industrial Lines Retail Germany Retail International Reinsurance Financial Services Integrated international insurance group following a multi-brand approach 3

4 International footprint and focussed growth strategy International presence International strategy by divisions Industrial Lines Local presence by own risk carriers, branches and partners create efficient network in >30 countries Key target growth regions: Latin America, Southeast Asia/India, Arabian Peninsula Presence in countries Total GWP: 3.bn (206) 206 GWP: 50% in Primary Insurance (205: 49%), 50% in Reinsurance (205: 5%) Group wide presence in >50 countries 20,039 employees (FTE) in 206 Retail International Reinsurance Target regions: CEE (incl. Turkey) and Latin America # 2 motor insurer in Poland 2 # 5 motor insurer in Brazil 2 # 3 motor insurer in Chile 2 # 7 motor insurer in Mexico 2 Global presence focussing on Western Europe, North- and South America as well as Asia ~5.000 customers in >50 countries By branches, agencies, risk carriers, representative offices 2 Source: local regulatory authorities, Talanx AG Global network in Industrial Lines and Reinsurance leading position in retail target markets 4

5 Among the leading European insurance groups Top 0 German insurers Top 0 European insurers German insurers by global GWP (206, bn) European insurers by global GWP (206, bn) Allianz 6.2 Allianz 6.2 Munich Re 48.9 AXA Talanx 3. Generali 74.2 R + V Munich Re 48.9 Debeka Prudential 47.8 Vk Bayern 7.6 Zurich 43.7 HUK 6.6 Swiss Re Signal Iduna 5.6 CNP 3.8 Gothaer 4.5 Aviva W&W 4.0 Talanx figures 2 preliminary figures Listed insurers Source: Company publications, as of 6 March 207 Third-largest German insurance group with leading position in Europe 5

6 Regional and segmental split of GWP and EBIT GWP by regions 206 (consolidated Group level) GWP by segments 206 4% 8% 8% 5% 28% 8% 9% Germany United Kingdom Central and Eastern Europe including Turkey (CEE) Rest of Europe North America Latin America RoW 20% 5% 2% 8% 6% 20% Industrial Lines Retail Germany P/C Retail Germany Life Retail International Non-Life Reinsurance Life/ Health Reinsurance GWP by regions 206 (Primary Insurance) 2% EBIT by segments 206,2 % % 4% 7% 4% % 5% Germany United Kingdom Central and Eastern Europe including Turkey (CEE) Rest of Europe North America Latin America RoW 47% % 20% 6% 5% Industrial Lines Retail Germany Life Retail International Non-Life Reinsurance Life/ Health Reinsurance Corporate Operations and Consolidation Adjusted for the 50.2% stake in Hannover Re 2 Calculation excludes Retail Germany P/C, which reported a negative EBIT of 2m Well diversified sources of premium and EBIT generation 6

7 B2B competence as a key differentiator Strategic focus on B2B and B2B2C Excellence in distribution channels Industrial Lines Core focus on corporate clients with relationships often for decades Blue-chip client base in Europe Capability and capacity to lead international programs Bancassurance Brazil Retail Germany Market leader in Bancassurance Market leader in employee affinity business Automotive Retail International ~35% of segment GWP generated by Bancassurance Distribution focus on banks, brokers and independent agents Brokers Retail Industrial/Reinsurance Reinsurance Typically non-german business generated via brokers Unique strategy with clear focus on B2B business models Employee affinity business Samples of clients/partners Superior service of corporate relationships lies at heart of our value proposition 7

8 Key Pillars of our risk management 2 3 Asset risk is limited to less than 50% of our SCR (solvency capital requirement) Generating positive annual earnings with a probability of 90% Sufficient capital to withstand at least an aggregated 3,000-year shock 8

9 Focus on insurance risk Risk components of Talanx Group Comments 3% Counterparty default risk 3% Operational risk Total market risk stands at 45% of solvency capital requirements, which is comfortably below the 50% limit 8% 30% 46% Underwriting risk life Non-life risk Market risk Self-set limit of 50% reflects the dedication to primarily focus on insurance risk Non-Life is the dominating insurance risk category, comprising premium and reserve risk and NatCat Equities ~2% of investments under own management Over 75% of fixed-income portfolio invested in A or higher-rated bonds broadly stable over recent quarters Figures show risk categorisation, in terms of solvency capital requirements, of the Talanx Group in the economic view (based on Basic Own Funds) as of 9M 206 Market risk sensitivity (limited to less than 50% of solvency capital requirement) is deliberately low 9

10 Talanx Group and predecessors net income # of loss making 2 Diversification of business model leads to earnings resilience Talanx Group net income Talanx Group net income ( m) competitors Net profit Net loss Net income of Talanx after minorities, after tax based on restated figures as shown in annual reports ( according to IFRS) 2 Adjusted on the basis of IAS 8 3 Top 20 European peers, each year measured by GWP; on group level; IFRS standards Source: Bloomberg, annual reports Robust cycle resilience due to diversification of segments 0

11 3 TERM results 9M 206 Capitalisation perspectives Policyholder & Debt investor View (BOF CAR) 239% (6M 206: 262%) Limit 200 % Basic Own Funds (including hybrids and surplus funds as well as non-controlling interests) Risk calculated with the full internal model with haircut operational risk modeled with standard formula HDI solo-funds Solvency II Ratio 60% (6M 206: 72%) Target corridor 50%-200% Eligible Own Funds, i.e Basic Own Funds (including hybrids and surplus funds as well as non-controlling interests) with haircut on Talanx s minority holdings Operational risk modeled with standard formula, ( partial internal model ) For the Solvency II perspective, the HDI V.a.G. as ultimate parent is the addressee of the regulatory framework Note: In the entire presentation, calculations of Solvency II Capital Ratios are based on a 99.5% confidence level, including volatility adjustments yet without the effect of applicable transitionals. Talanx continuously shows a comfortable capital position from all angles

12 Motor 3 Marine Property Industrial Lines Profitabilisation measures in Germany Portfolios under review (GWP) 205/6 206/7 Results from negotiations (gross) and portfolio improvement Portfolios under review (GWP) Results from negotiations (gross) and portfolio improvement 300 Negotiated 303.7m Effects on premium - 8.4% 50 Negotiated 50m Effects on premium - 2.0%,370m Capacity - 2.7%,350m Capacity - 9.0% Premium to capacity ratio +25%,2 Premium to capacity ratio +20.7%,2 72 Negotiated 7.8m Effects on premium -5.3% 25 Negotiated 24.5m Effects on premium +23.2% 325m Capacity -26.9% 350m Capacity -5.0% Premium to capacity ratio +30% Premium to capacity ratio +44% Negotiated 2m 362m 2 Effects on premium -0.% Effect on losses 4 ~ -4% Successfully completed in 206 Expected improvement in loss ratio by FY206 3%pts 5 2 Premium negotiated For portfolio under review 2 Including effect of additional specific reinsurance measures 3 German business only 4 Expected, in terms of loss volume 5 Assuming constant claims statistic; FY205 loss ratio: 84.4% (gross)

13 Retail Germany - Key Messages from Capital Markets Day 206 Retail Germany stands for 2% of Talanx s GWP and 47% of its assets under own management. It adds Life exposure to the Talanx Group which is overall strongly geared to P/C business Retail Germany has a strong and highly committed management team with an excellent professional track-record in handling challenges and in turning businesses around Management initiatives and the central strategic programme KuRS focus on optimising the position in Bancassurance and on turning HDI around. Based on a customer-centric, sustainable and stable business model, we target for a material improvement of the risk-return profile for shareholders KuRS combines three substantial strategic pillars: a new Life strategy, a new P/C strategy and investments in Digitalisation/IT in combination with ongoing cost management KuRS is the by far largest initiative with ~ 330m of investments and a targeted cost cutting of ~ 240m. Targeted strategic investments comprise overall ~ 420m. This includes ~ 90m for Voyager4life targeting at a joint IT Life platform All interim goals have been met. In 207, the KuRS programme savings are likely to first-time exceed costs on EBIT level Retail Germany targets for a sustainable EBIT contribution of at least 240m from 202 onwards 3

14 Retail Germany KuRS programme: Investment and cost reduction targets Estimated project costs and savings Comments in m ~ 240m Cost reduction ~ 330m Investment ~34 ~-60 ~55 ~80 ~222 ~-20 ~-40 ~-5 ~240 ~-3 Strategic target: Gross reduction cost base by ~ 240m Targeted strategic investments for KuRS are expected to be ~ 330m The related cost saving target is ~ 240m p.a. Both numbers refer to Life and P/C business in sum Target is to implement all initiatives in full by the end of 2020 with the full cost benefit to be reached in E 208E 209E 2020E 202E Cost reductions Investment & personnel redundancies Cost reductions planned (205/206) Cost reduction before Inflation Strategic investment of ~ 330m targeted at restructuring HDI (catching up with market) and optimising BA (strengthening excellent market positions) 4

15 Retail Germany KuRS programme: Investment and cost reduction targets P/C Estimated project costs and savings in P/C in m ~ 40m Cost reduction ~ 230m Investment Cost reduction before Inflation EBIT impact -5-5 ~26 ~50 ~80 ~20 ~ E 208E 209E 2020E 202E Cost reduction ~67 ~-4 ~80 Investment & personnel redundancies ~96 ~26 ~40 ~-5 ~-30 ~-5 ~-2 Comments Cumulative costs for KuRS in P/C are expected to account for ~ 230m More than half of all project costs are expected to have been booked until end-206 The expected costs for personnel redundancies have been covered until mid-206 In 207, the KuRS programme savings are likely to exceed costs on EBIT level for the first time From 207 onwards, the improvement in EBIT is expected to visibly progress year by year From 207 onwards, the EBIT contribution of KuRS is expected to be positive 5

16 Retail Germany Asset Management Strategy: Comparison of average running yields versus average guarantee rates HDI Life 4.0% 3.5% 3.0% 2.5% 2.0%.5%.0% 0.5% 0.0% Bancassurance 4.0% 3.5% 3.0% 2.5% 2.0%.5%.0% 0.5% 0.0% Comments The implicit market expectation for 20- year AAA euro government bonds plus 40 bps is taken as the assumed reinvestment yield for in the two diagrams - e.g..22% for 206 The fixed-income reinvestment yield in 9M 206 was higher at.32% for Bancassurance and at.54% for HDI Life avg. running yields avg. guarantee rates (incl. ZZR) reinvestment yield (fixed income) All numbers refer to German GAAP (HGB) Based on these assumptions, the average running yields will be sufficient to finance the guarantees for policyholders 6

17 Retail Germany Targets from Capital Markets Day 206 Targets Retail Germany Gross premium growth (p.a.) 0% Life ~ 0% P/C 3% Cost cutting initiatives to be implemented by end of 2020 ~ 240m Combined ratio % Life new business: share of traditional life products by 202 (new business premium) 25% P/C: Growth in Property & Liability to SMEs and self-employed professionals by % EBIT contribution (targeted sustainably from 202) 240m Talanx definition: incl. net interest income on funds withheld and contract deposits 2 Compared to base year 204 Talanx targets for a combined ratio of ~96% until 209 in Primary Insurance Targets are subject to no large losses exceeding budget (cat), no turbulences on capital markets (capital), and no material currency fluctuations (currency) 7

18 Retail International Core Markets: FY206 overview Brazil GWP growth (local currency) -4.8% Poland Combined ratio 02.% +2.8%pts GWP growth (local currency) -6.4% EBIT ( ) Mexico 42.3m -8.8% o/w Life o/w Non-Life Combined ratio % -4.% 96.% -0.4%pts GWP growth (local currency) +7.0% EBIT ( ) 89.3m -20.9% Combined ratio EBIT ( ) 95.3% 8.m +2.%pts -2.6% o/w Life o/w Non-Life 4.3m 84.9m -8.6% -4.9% Chile Turkey GWP growth (local currency) +24.7% GWP growth (local currency) +24.2% Combined ratio 88.7% -3.5%pts Combined ratio 02.5% 0.0%pts EBIT ( ) 24.m +2.3% EBIT ( ) 5.8m +9.9% Includes all entities of HDI Chile Group operating in the Chilean market; Magallanes integrated in February Combined ratio for Warta only Most of our core markets in Retail International with business growth 8

19 Retail International Cycle management: Strategic initiatives in Core Markets Brazil Behavioral economics to improve claims & service process HDI Digital & Recycle to optimise profitability Increase usage ratio of Bate Prontos Mexico Combined Ratio in %: E Poland (Warta) Innovation in pricing ( Big Data ) Data driven claims handling 360 sales management Combined Ratio in %: E Channel consolidation P&C diversification Combined Ratio in %: Pricing intelligence & Behavioral economics E Turkey Chile Increase direct online sales Focus on customer service Increase sales through mid-sized brokers Combined Ratio in %: 88.7 Pro-active risk selection in Motor, benefit from hard market in MTPL Cost management in claims handling Offer best in class IT processes Combined Ratio in %: E E Magallanes integrated in February 205 Strategic initiatives as key drivers of combined ratio improvement supported by transfer of best practices 9

20 Outlook for Talanx Group 207 Gross written premium > % Return on investment Group net income 3.0% ~ 800m Return on equity >8.0% Dividend payout ratio 35-45% target range The targets are based on a large loss budget of 290m (206: 300m) in Primary Insurance, of which 260m (206: 270m) in Industrial Lines. The large loss budget in Reinsurance stands at an unchanged 825m Targets are subject to no large losses exceeding budget (cat), no turbulences on capital markets (capital), and no material currency fluctuations (currency) 20

21 Management ambition Earnings balance Primary Insurance vs. Reinsurance EBIT 206 EBIT ambition by % 58% ~50% ~50% Primary Insurance Reinsurance Primary Insurance Reinsurance Adjusted for the 50.2% stake in Hannover Re Profitability improvement in Primary Insurance to lead to a balanced EBIT split 2

22 Management ambition Reducing the valuation discount on Primary Insurance Implicit valuation Primary Insurance in bn Key measures Implicit valuation Primary Insurance P/E x P/Book x Talanx Primary insurance (implicit value) Hannover Re (Talanx stake) In this analysis, Primary insurance also contains Corporate Operations and Consolidation. Share prices as of 4 March 207 Calculated as of 4 March in market cap Primary Insurance of ~.0bn Industrial Lines: optimisation of domestic portfolios pushing profitable foreign growth process excellence Retail International: continuing focused profitable growth Retail Germany: consequent de-risking of our Life business forceful profitabilisation of our P/C business specific focus on investments in Digitalisation/IT Corporate Operations / Holding: further cost reductions strict capital discipline A comprehensive set of measures to raise the profitability in Primary Insurance 22

23 Summary - Investment highlights Global insurance group with leading market positions and strong German roots Leading and successful B2B insurer Value creation through group-wide synergies New profitability measures implemented in Industrial Lines and Retail Germany Dedication to focus on insurance rather than market risks Commitment to continuously fulfill a AA capital requirement by Standard & Poor s Dedication to pay out 35-45% of IFRS earnings to shareholders 23

24 Mid-term Target Matrix & Current Status Segments Key figures Strategic targets ( ) /206 8 Group Gross premium growth Return on equity Group net income growth Dividend payout ratio Return on investment 3-5% 750 bps above risk free 2 mid single-digit percentage growth rate 35-45% risk free + (50 to 200) bps 2 (0.3%) 0.4% [ 8.4%] 23.6% 37.6% 3.6% [ %] 2.2% 9.7% [ 8.6%] 9.5% 4.2% 3.6% [ %] Industrial Lines Gross premium growth Retention rate 3-5% 60-65% (0.%) 53.4%.2% 52.6% Retail Germany Gross premium growth 0% (5.7%) (4.5%) Retail International Gross premium growth 0% 0.2% 8.4% Primary Insurance P/C Reinsurance 7 Life & Health Reinsurance 7 Combined ratio 3 EBIT margin 4 Gross premium growth 6 Combined ratio 3 EBIT margin 4 Gross premium growth Average value of New Business (VNB) after minorities 5 EBIT margin 4 financing and longevity business EBIT margin 4 mortality and health business ~ 96% ~ 6% 3-5% 96% 0% 5-7% 0m 2% 6% 98.% 5.3% (0.2%) 93.7% 7.2% (4.3%) 448m 9.4% 3.4% - 4.5% 4.% - 7.2% 2.5% 36m 0.2% 3.5% Organic growth only; currency-neutral 2 Risk-free rate is defined as the 5-year rolling average of the 0-year German government bond yield 3 Talanx definition: incl. net interest income on funds withheld and contract deposits 4 EBIT/net premium earned, 5 Reflects Hannover Re target of at least 220m 24 6 Average throughout the cycle; currency-neutral, 7 Targets reflect Hannover Re s targets for strategy cycle 8 Growth rates calculated as CAGR; otherwise arithmetic mean Note: growth targets are based on 204 results. Growth rates, combined ratios and EBIT margins are average annual targets

25 25 - Debt Financing Overview -

26 Capital / liquidity management (excluding Hannover Re) Organisational overview Comments Capital markets capital/ liquidity Treasury Subordinated Bonds Senior Bonds Equities Convertibles Banks/Investors dividend/ interests One central function for capital and liquidity management Secure a comfortable level of liquidity at Talanx AG Active capital and liquidity management Know-how centre for capital market instruments Central steering of all capital markets processes for the group Financing of group companies at arm s-length Cost reduction as a consequence of concentration of all bank relations in one function and due to benchmark sizes in capital and liquidity funding FX / Interest rate hedging Investment of Liquidity buffers Credit facilities Realisation of efficiency and scale effects through central state-of-the-art treasury function 26

27 Market transactions since 202 Latest capital market transactions (excluding Hannover Re) April April Subordinated bond 8.367%, 30-NC-0 Strengthening of capitalisation of Talanx Group m 500 July Liability management exercise Reduction of external debt (204) July Oct Oct IPO Financing of organic and inorganic growth and partially repay amounts outstanding under two credit facilities Oct Feb Feb Senior bond 3.25%, 0 years Refinancing of internal debt 750 July Senior bond 2.50%, 2 years Refinancing of internal debt 500 conversion of the Tier Meiji Yasuda bond Capital market footprint resulting in reasonably efficient market prices as a basis for new issues 27

28 Outstanding Talanx hybrid and senior bonds Talanx Talanx Group Group maturity maturity structure structure (excluding Hannover Re) Outstanding, publicly held volume of hybrid and senior bonds (as of 3/03/205): 200: 500m (Hannover Finance), callable : 500m (Hannover Finance), callable : 500m (Talanx Finanz), callable : 565m (Talanx AG) 204: 500m (Talanx AG) 204: 500m (Hannover Rück SE), callable m 3NC0 5.00% (HR) Talanx Hannover Re 500mm 30-nc % 3m 20NC % 500m 30NC0 5.75% 500m 30NC % 565m 0 year 3.25% 500m o.e.c0 3.38% 500m 2 year 2.50% 0m PerpNC % At the moment: No refinancing needs mid-term 28

29 Leverage Level Capital structure benchmarking 50% 24% 2% 23% 7% 7% 9% 5% 2% 0% Ø 20% Total capital ( bn) 2 60% 30% 30% 32% 28% 32% 25% 5% 9% 3% % 3% 0% 6% 9% 9% % 6% 5% % 0% 5% 9% % 0% 9% 9% 7% 3% 0% 36% 5% 7% 4% 95% 87% 8% 70% 70% 68% 72% 75% 68% 40% Ø 27% Peer Peer 2 Peer 3 Peer 4 Talanx Peer 5 Peer 6* Peer 7 Peer 8 Peer 9 2% 3 Equity Sub Debt Senior Debt Pensions Senior and subordinated debt leverage 4 Peer group consist of Allianz, AXA, Baloise, Generali, Mapfre, Munich RE, RSA, VIG, Zurich. Numbers as of FY6 2 Defined as the sum of total equity (incl. min.), subordinated debt and senior debt 3 Funded status of defined benefit obligation 4 Calculated in % of total capital 5 In %-points of total capital 2% 3% 4% 28% 0% 3% 9% % 6% Reasonable, but no excessive use of debt leverage * Numbers as of FY205. Senior and subordinated debt + pensions leverage 4 Minorities 5 29

30 30 - FY206 -

31 I FY206 results further improved FY206 Group net income markedly up to 907m (FY205: 734m), even when adjusting for last year s goodwill impairment of 55m. Primary Insurance share of Group EBIT already at ~42% (205: ~33%), well on track to reach target of roughly 50% by 202 The Group s combined ratio improved by 0.3%pts to 95.7% (FY205: 96.0%). Both Primary Insurance as well as Reinsurance remained within their respective large loss budgets Talanx pursues its policy of continuously increasing dividends. For FY206, the dividend proposal to the AGM stands at.35, up from.30 for FY205 End of FY206, shareholders equity stood at 9,078, or 35.9 per share. This is significantly above the FY205 level (8,282m or per share). RoE reached a remarkable 0.4% (FY205: 9.0%) In February, Talanx already raised its 207 Outlook for the Group net income to around 800m (from at least 750m ) Adjusted for the 50.2% stake in Hannover Re 3

32 I FY206 Target achievement Return on Investment 5.0% 4.0% 3.0% 2.0% 4.3% 4.0% 4.% 3.6% 3.6%.0% 0.0% Outlook Rol 3.0% % +7.8% +3.6% +4.8% -0.3% Outlook GWP stable GWP growth (curr.-adj) in bn ( ) Return on Equity 5% 0% 5% 0% 0.8% 0.0% 0.2% 0.2% 9.0% 0.4% Minimum target 206: 8.4% Net income and Payout in m p.s..20 p.s % 4.5%.25 p.s %.30 p.s %.35 p.s % Ø pay-out ratio 4 FY202 6: 40% 206 Outlook RoE > 8.5% 206 Outlook Net income 750m 3 ; pay-out ratio 35-45% Note: Figures restated on the base of IAS8 Dividend pay-out ratio After adjustment for goodwill impairment in German Life business of 55m reported in Q2 205 Adjustment for goodwill impairment in German Life ( 55m/Q2 205) 2 Proposal to AGM Outlook for Group net income was adjusted from ~ 750m to at least 750m at our Q3 206 reporting in November Includes dividend proposal for FY206 of.35 per share 32

33 I FY206 Drivers of change in Group net income in m (20) 55 (4) (6) ~93 (8) (3) 26 ~ FY205 reported Goodwill Termination impairment fee Ret. Germany Life/Health Life Re in positive currency result KuRS costs Retail Germany P/C Writedown deferred tax assets Group Funct. Asset tax (Poland) Retail International C-Quadrat disposal Corporate Operations Tax effects Operating Primary performance 2 Insurance & Reinsurance FY206 reported Effects on Group EBIT 2,82 55 (39) (93) (24) - (22) ,300 Reported in FY205 2 Incl. minor other effects Improvement also in underlying bottom-line result 33

34 I FY206 results Key financials Summary of FY206 m, IFRS FY206 FY205 Change Gross written premium 3,06 3,799 (2%) Net premium earned 25,742 25,937 (%) Net underwriting result (,520) (,370) n/m Net investment income 4,023 3,933 +2% Operating result (EBIT) 2,300 2,82 +5% Net income after minorities % Key ratios FY206 FY205 Change Combined ratio non-life insurance and reinsurance 95.7% 96.0% (0.3%)pts Return on investment 3.6% 3.6% 0.0%pts Balance sheet FY206 FY205 Change Investments under own management 07,74 00,777 +6% Goodwill,039,037 +0% Total assets 56,57 52,760 +2% Technical provisions 0,429 06,83 +3% Total shareholders' equity 4,688 3,43 +9% Shareholders' equity 9,078 8,282 +0% Comments GWP down by 2.2% y/y, mainly due to currency effects. On a currency-adjusted basis GWP were nearly stable (-0.3% y/y) Combined ratio improved by 0.3%pts y/y to 95.7%, mainly due to lower large losses in Industrial Lines (FY206 combined ratio: 96.8% vs. 99.2% in FY 205) and improved loss ratio from P/C Reinsurance. Combined ratio in Retail Germany P/C (03.3% vs. 99.3%) was affected by costs for KuRS programme (impact: 3.4%pts; FY205: 0.9%pts). Retail International s combined ratio (96.5% vs. 96.3%) broadly flat FY206 EBIT significantly up, helped by base effect from Q2 205 goodwill writedown ( 55m) and C-Quadrat disposal gain (~ 27m; Q 206), while burdened by e.g. higher costs for KuRS programme (~ 24m vs. FY205), lower - yet positive - currency results (~ 93m) and the Polish asset tax (~22m) FY206 ZZR allocation of 73m significantly above previous year s level ( 493m) Net income benefitted from positive tax effects of ~ 70m in sum in the operating segments, roughly balanced by a writedown in deferred tax assets (~ 80m) Shareholders equity increased to 9,078m, or 35.9 per share (FY205: 32.76; Q3 206: 35.6). NAV up to 3.80 per share (FY 205: 28.66, Q3 206: 3.49) Significantly higher net income benefitting from improved loss ratio and the positive base effect from FY205 goodwill writedown 34

35 I Large losses in FY206 m, net Primary Insurance Reinsurance Talanx Group Earthquake; Taiwan February Hail storm; Texas April Earthquake; Japan April Earthquake; Ecuador April Wild fires; Canada April/May Storm Elvira ; Central Europe May/June Flood; China June/July Storms; Germany June Hail, Canada July Typhoon ; Taiwan/China September Hurricane; Carribean/USA October Earthquake; New Zealand November Total NatCat Transport Fire/Property Aviation -.. Credit Other Total other large losses Total large losses pro-rata large loss budget ,25.0 Impact on Combined Ratio (incurred) 4.0%pts 7.8%pts 6.%pts Total large losses FY Impact on Combined Ratio (incurred) FY %pts 7.%pts 6.4%pts Definition large loss : in excess of 0m gross in either Primary Insurance or Reinsurance FY206 Group large loss burden of 883m, below FY205 level of 922m and well below large loss budget of,25m FY206 large loss burden of 257m in Primary and 627m in Reinsurance both remain below their FY206 large loss budgets Main impact resulting from Canada wild fires ( 28m), earthquakes (Japan, Ecuador, Taiwan, New Zealand), storms in Central Europe and hurricane Matthew (Carribean/USA) Large losses in Q4 206 above pro-rata large loss budget in Reinsurance and in Primary Insurance 35 Note: 206 Primary Insurance large losses (net) are split as follows: Industrial Lines: 236m; Retail Germany: 2m; Retail International: 0m, Corporate Operations: 0m; from FY206 onwards, the table includes large losses from Industrial Liability line, booked in the respective FY. The latter also explains the stated increase in the large loss budget for Primary Insurance by 0m for FY206.

36 I Combined ratios Development of net combined ratio Combined ratio by segment/selected carrier FY205: 96.0% FY206: 95.7% 96.5% 96.2% 98.0% 96.3% 97.3% 96.4% 93.3% 93.% FY206 FY205 Q4 206 Q4 205 Industrial Lines 96.8% 99.2% 93.5% 96.6% Retail Germany P/C 03.3% 99.3% 03.3% 94.2% Retail International 96.5% 96.3% 95.2% 96.3% 70.7% 68.6% 7.4% 66.0% 68.3% 69.0% 68.5% 65.7% HDI Seguros S.A., Brazil 02.% 99.3% 0.2% 00.3% HDI Seguros S.A., Mexico 95.3% 93.2% 94.4% 95.9% HDI Seguros S.A., Chile % 92.2% 83.5% 9.% TUiR Warta S.A., Poland 96.% 96.4% 94.4% 95.9% 26.0% 27.8% 26.8% 27.4% 28.0% 28.6% 28.% 27.5% TU Europa S.A., Poland 83.0% 84.6% 84.2% 84.4% Q Q2 Q3 Q4 Q Q2 Q3 Q4 HDI Sigorta A.Ş., Turkey 02.5% 02.5% 02.5% 02.0% HDI Assicurazioni S.p.A., Italy 94.0% 95.4% 95.% 94.4% Expense ratio Loss ratio Non-Life Reinsurance 93.7% 94.5% 89.7% 9.4% Incl. net interest income on funds withheld and contract deposits 2 Incl. Magallanes Generales; merged with HDI Seguros S.A. on April 206 Combined ratios in all non-life segments below the 00% level also Retail Germany when adjusting for KuRS costs 36

37 I Q4 206 results Key financials Summary of Q4 206 m, IFRS Q4 206 Q4 205 Change Gross written premium 7,356 7,444 (%) Net premium earned 6,609 6,69 (%) Net underwriting result (352) (82) n/m Net investment income, % Operating result (EBIT) (4%) Net income after minorities % Key ratios Q4 206 Q4 205 Change Combined ratio non-life insurance and reinsurance 93.% 93.3% (0.2%)pts Return on investment 3.6% 3.4% +0.2%pts Balance sheet FY206 FY205 Change Investments under own management 07,74 00,777 +6% Goodwill,039,037 +0% Total assets 56,57 52,760 +2% Technical provisions 0,429 06,83 +3% Total shareholders' equity 4,688 3,43 +9% Shareholders' equity 9,078 8,282 +0% Comments Q4 206 GWP down by.2% y/y, predominantly due to currency effects (curr.-adj.: +0.0%). Decline in Life segments (Primary and Reinsurance) is (nearly) compensated by pleasing growth in all other segments Combined ratio on Group level slightly improved to 93.% (Q4 205: 93.3%). Lower combined ratios in all segments, except Retail Germany P/C, which was affected by ~ 8m higher costs for KuRS and by higher frequency losses Net investment income significantly up as impact from low interest rate environment was overcompensated by extraordinary investment gains, mainly to finance aboveaverage allocation to ZZR in Retail Germany Life at the same time having a negative effect on the net underwriting result Q4 206 EBIT down ~4% y/y, as lower underwriting result cannot be fully compensated by higher investment income and improved other result Increase in net income helped by positive tax effects in the operating segments (~ 70m), largely balanced by a writedown in deferred tax assets (~80m) Q4 206 net income benefited from improved profitability in Industrial Lines 37

38 II Segments Industrial Lines P&L for Industrial Lines m, IFRS FY206 FY205 Δ Q4 206 Q4 205 Δ Gross written premium Combined ratio 4,266 4,295 (%) % Net premium earned 2,243 2,23 +% (3%) Net underwriting result 73 8 >+00% % Net investment income % % Operating result (EBIT) % % Group net income % >+00% Return on investment (annualised) 3.2% 2.8% +0.4%pts 3.8% 2.5% +.3%pts FY204: FY205: 03% 99% FY206: 97% 99% 99% 03% 97% 98% 98% 98% 93% 8% 73% 8% 7% 77% 75% 74% 73% 8% 25% 22% 26% 20% 23% 24% 20% Q 205 Q2 205 Q3 205 Q4 205 Q 206 Q2 206 Q3 206 Q4 206 Expense ratio Loss ratio Comments FY206 GWP slightly down by 0.7% y/y, dampened by currency effects (curr.-adj.:-0.%), effects from re-underwriting (i.e. Balanced Book ) and the withdrawal from Aviation business. Positive effects from international markets, e.g. US and new business unit in Brazil. Q4 206 GWP slightly up by.7% (curr.-adj.: +.6%) FY206 retention rate up to 53.4% (FY205: 5.8%) due to significantly lower reinstatement premiums and higher retention in Liability lines, partly compensated by higher cessions in Property FY206 combined ratio improved to 96.8% (FY 205: 99.2%). Loss ratio was.6%pts lower y/y at 74.9%. Large losses remained well within budget, while run-off result below average. Cost ratio improved to 2.8% (FY205: 22.7%) - partly due to an EBIT-neutral accounting change FY206 net investment result is up vs. FY205, mainly due to a positive impact from investments in alternative assets (incl. private equity) and lower writedowns Net income benefited from improved tax results (incl. 5m tax income from previous years) Incl. net interest income on funds withheld and contract deposits Improved net underwriting result and positive tax effects led to significantly higher net income 38

39 II Industrial Lines Run-off results Run-off results and reserve coverage (IFRS) Annual reserve reviews Talanx actuaries Auditor KPMG S&P / A.M.Best Towers Watson 8% 6% 3% 29% Ø ( ): 8.% Ratio of segmental run-off result to net premium earned; data for main carrier HDI Global SE, representing 93% of Industrial Lines GWP in 205 (IFRS); from 204 data for segment Industrial Lines Ratio of technical reserves to net premium earned 6% 4% 20% 6% 7% % 330% 353% 347% 285% 293% 270% 256% Ø ( ): 5.% 244% 2% 245% Comments In FY206, Industrial Lines contributed a lower net positive run-off result compared to the previous year (FY206: 263m vs. FY205: 386m) FY206 run-off result relates to ~2% of net premium earned, significantly below previous year s level Historically, run-off results have proven a substantial earnings stabiliser for Industrial Lines High ratio of technical reserves to net premium earned compares favourably with peer levels Historically, run-off results have proven a very steady contributor to Industrial Lines results 39

40 II Segments Retail Germany Division P&L for Retail Germany m, IFRS FY206 FY205 Δ Q4 206 Q4 205 Δ Gross written premium 6,286 6,667 (6%),50,523 (%) of which Life 4,788 5,67 (8%),273,303 (2%) of which Non-Life,498,500 (0%) % Net premium earned 4,92 5,48 (9%),35,356 (3%) Net underwriting result (,700) (,463) n/m (462) (262) n/m of which Life (,656) (,473) n/m (450) (284) n/m of which Non-Life (44) 0 n/m (2) 22 n/m Net investment income,889,73 +9% % Operating result (EBIT) 90 3 >00% % Group net income 68 (76) n/m 29 (3) n/m Return on investment (annualised) EBIT ( m) 56 FY205: 3m (6) 3.9% 3.7% +0.2%pts 3.9% 3.2% +0.7% FY206: 90m Q 205 Q2 205 Q3 205 Q4 205 Q 206 Q2 206 Q3 206 Q4 206 Comments Having started with 6M 206 reporting, the Life and P/C segments in the German Retail business report separately. In addition, we continue to show the aggregated numbers for the Division FY206 GWP -6% down (Q4 206: -0.9%), predominantly due to premium decline in Life - consistent with the targeted phase-out of traditional guarantee business and the intended reduction in single-premium business. GWP development in P/C is broadly stable (FY206: -0.% y/y) with momentum improving (Q4 206: +7.6% y/y ) Net investment income is up by ~9%, predominantly due to higher extraordinary gains in Retail Germany Life to finance ZZR. Moderate decline in ordinary investment result of ~3% is reflecting the low-interest rate environment Cost impact from KuRS affected the Division by a total of ~ 2m (Q4 206: 37m). The impact on the FY206 EBIT was 78m (Q4 206: 27m). Higher burden from KuRS (~ 24m higher cost vs. FY 205) and faster amortisation of PVFP ( 33m) explain the bulk of the EBIT reduction, when adjusting FY205 EBIT for goodwill writedown ( 55m) There is a positive tax effect (~ 20m), which at the same time partly burdens the EBIT (impact: ~ 4m) because of policyholder participation. Division slightly above EBIT guidance of ~ 85m FY206 EBIT significantly improved despite KuRS burden and impact from PVFP amortisation 40

41 II Segments Retail Germany P/C P&L for Retail Germany P/C m, IFRS FY206 FY205 Δ Q4 206 Q4 205 Δ Gross written premium FY205: 99%,498,500 (0%) % Net premium earned,405,424 (%) (0%) Net underwriting result (44) 0 n/m (2) 22 n/m Net investment income (9%) 9 34 (43%) Operating result (EBIT) (2) 5 n/m 7 (0) n/m EBIT margin (0.2%) 3.5% (3.7%)pts 2.0% (2.7%) 4.7%pts Investments under own Management Return on investment (annualised) Combined ratio 3,806 3,742 +2% 3,806 3,742 +2% 2.3% 2.9% (0.6%)pts 2.0% 3.6% (.6%)pts Expense ratio FY206: 03% 00% 02% 0% 94% 04% 06% 00% 03% 67% 67% 66% 57% 68% 7% 66% 62% 33% 35% 35% 37% 36% 35% 34% 4% Q 205 Q2 205 Q3 205 Q4 205 Q 206 Q2 206 Q3 206 Q4 206 Loss ratio Comments FY206 GWP broadly stable y/y (Q4 206 up by 7.6% y/y). Gross premiums negatively impacted by profitabilisation measures in Motor. Positive effects from growth in SMEs and self-employed professionals, in unemployment insurance and from the start of the digital distribution ( direct business ) in Motor - all gaining momentum in Q4 206 FY206 combined ratio was impacted by 47m costs for KuRS programme (Q4 impact was ~ 7m, 4.7%pts impact) and a more conservative reserving policy. Adjusting for KuRS, the 206 combined ratio reached 99.9% (FY205: 98.4%). In Q4 206, the KuRS adjusted combined ratio was 98.6% (vs. 9.9%) Net investment income down, reflecting low interest rate levels and a significantly lower extraordinary investment result, predominantly in Q As a consequence, FY206 RoI was down to 2.3% (FY205: 2.9%) Overall, FY206 EBIT was burdened by 78m (FY205: 54m) costs for KuRS, of which ~ 32m (205: 4m) in other result, i.e. mainly personnel redundancy cost Incl. net interest income on funds withheld and contract deposits Higher investments in KuRS, lower investment income and a more conservative reserving policy explain planned EBIT decline 4

42 II Segments Retail Germany Life P&L for Retail Germany Life m, IFRS FY206 FY205 Δ Q4 206 Q4 205 Δ Gross written premium 37 (27) 4,788 5,67 (7%),273,303 (2%) Net premium earned 3,56 3,994 (2%) 959,000 (4%) Net underwriting result (,656) (,473) n/m (450) (284) n/m Net investment income,802,622 +% % Operating result (EBIT) 4 92 (48) n/m 3 28 (55%) EBIT margin 2.6% (.2%) 3.8%pts.4% 2.9% (.5%)pts Investments under own Management Return on investment (annualised) EBIT ( m) 45,803 43,647 +5% 45,803 43,647 +5% 4.% 3.8% +0.3%pts 4.% 3.2% +0.9%pts FY205: -47m FY205: 99% FY206: 92m Q 205 Q2 205 Q3 205 Q4 205 Q 206 Q2 206 Q3 206 Q4 206 Comments Lower GWP (206: -7.3% y/y; Q4 206: -2.3%), mainly due to the targeted phase-out of traditional/single-premium business, a negative base effect from the spill-over of the strong 204 year-end business into 205 just partly compensated by significant growth in credit life insurance business in all Bancassurance risk carriers 34m cost impact from KuRS (incl. 20m restructuring costs in other result ) completely compensated in the EBIT due to policyholder participation Investment result is up, mainly due to higher extraordinary gains to finance ZZR and lower writedowns, while ordinary investment result is impacted by low interest rate environment FY206 ZZR allocation of 73m (FY205: 493m; Q4 206: 2m). Total ZZR stock reached 2.27bn in FY206 FY206 EBIT impacted by an accelerated and more conservative amortisation of PVFP (~ 33m, of which ~ 22m already booked in Q3 206), which has been completely written off for the traditional life business FY206 EBIT burdened by the complete write-off of PVFP for traditional life business roughly in line with FY205 when adjusting for the goodwill impairment in Q

43 II Retail Germany Life - portfolio overview New business premium by product Business in force 206 5% E 8.0bn 2% 28% 37% 7.4bn ~ 9.3bn Split of in-force-business by business line (GWP) % Biometric, Credit Life & Others Capital-efficient products 37% ~24% ~49% ~27% Traditional Life products Note: Dynamics in existing contracts impact new business premium split in favour of traditional life products 9% +.4%pts 3.3%.9% +0.8%pts 2.3% 3.% +0.7%pts 2.3% 3.0% +0.5%pts 2.5% 3.0% Retail Germany Average guarantee rate +0.7%pts 2.3% 3.% Average running yield 56% 4.8bn 25% Average guarantee rate Average running yield Biometric, Credit Life & Others Capital-efficient products Traditional Life products +x.x%pts Investment spread Note: According to German GAAP Positive investment spread stable in Retail Germany Life 43

44 II Segments Retail International P&L for Retail International Comments m, IFRS FY206 FY205 Change Q4 206 Q4 205 Change Gross written premium 4,98 4,643 +6%,249,8 +6% of which Life,677, % (8%) of which Non-Life 3,24 3,248 (0%) % Net premium earned 4,22 3,706 +%, % Net underwriting result 9 (7) n/m 3 (8) n/m of which Life (86) (03) n/m (22) (32) n/m of which Non-Life (%) % Net investment income (6%) (6%) Operating result (EBIT) (2%) % Group net income (7%) (40%) Return on investment (annualised) Combined ratio FY205: 96% 3.7% 4.4% (0.7%)pts 3.4% 4.5% (.%)pts Expense ratio FY206: 97% 95% 96% 99% 96% 96% 97% 98% 95% 63% 65% 68% 64% 65% 65% 67% 64% 3% 3% 3% 33% 3% 32% 3% 3% Q 205 Q2 205 Q3 205 Q4 205 Q 206 Q2 206 Q3 206 Q4 206 Incl. net interest income on funds withheld and contract deposits Loss ratio FY206 GWP up by 6.0% y/y despite currency headwinds in Latin America (curr.-adj.:+0.2%). Top-line growth helped by significant increase in single-premium Life business in Italy and the consolidation of CBA/Italy end of June 206 (GWP impact: ~ 20m). In Q4 206 GWP grew by 5.8%, while currency effects turned into tailwind (curr.-adj.:+5.2%) On a currency-adjusted basis, FY206 GWP in P/C grew by 4.9% y/y, backed by Warta/Poland and underlying double-digit growth in Chile, Mexico and Turkey FY206 combined ratio slightly up by 0.2%pts y/y to 96.5%. Cost ratio improved by 0.3%pts y/y in 206 despite ongoing business diversification. Loss ratio 0.5%pts up as currency depreciation has led to higher prices for spare parts and triggers increase in theft rates, namely in Brazil and in Mexico. This is just partially compensated by improved combined ratios in most European markets and Chile. In Q4 206, combined ratio for the segment improved by.%pts y/y to 95.2% Moderate FY206 EBIT decline despite negative currency translation effect (~ 0m) and the additional asset tax charge in Poland (~ 22m), only partially offset by a positive one-off in Brazil (~ 8m) Turkey added ~ 5.8m to FY206 EBIT (205: 4.8m). Contribution from Chile 2 was 30m GWP ( 254m) and ~ 24m EBIT ( 0m) 2 Consolidated from 3 Feb 205; as-if numbers for HDI Seguros S.A after merger ( April 206) with Magallanes Generales Decline in FY206 profit is fully explained by currency headwind and impact from asset tax in Poland 44

45 II Division Reinsurance P&L for Reinsurance m, IFRS FY206 FY205 Change Q4 206 Q4 205 Change Gross written premium 6,354 7,069 (4%) 3,900 4,23 (5%) Net premium earned 4,47 4,592 (%) 3,65 3,763 (3%) Net underwriting result EBIT ( m) FY205:, % 7 62 (56%) Net investment income,565,675 (7%) (8%) Operating result (EBIT),70,802 (6%) (5%) Group net income (2%) (5%) Return on investment 3.% 3.4% (0.3%)pts 3.2% 3.6% (0.4%)pts FY206:, Comments The Division Reinsurance combines the two segments P/C Reinsurance and Life/Health Reinsurance. Aligned to our reporting on the Retail Germany Division, we now additionally show the aggregated numbers for the Reinsurance Division FY206 GWP down by -4.2% y/y; adjusted for currency effects: -2.% y/y. Net premium rather stable on a reported basis; Increase by.0% on a currency-adjusted basis Satisfactory EBIT margin of.8 (FY205: 2.3%) Decrease in outstanding hybrid capital leads to lower leverage and savings in interest Tax ratio within normal range Q 205 Q2 205 Q3 205 Q4 205 Q 206 Q2 206 Q3 206 Q4 206 EBIT margin reflects a Talanx Group view; Note: Differences between figures from Reinsurance Division and Hannover Re reporting may occor due to different recognition of common private equity investments. At Talanx, they are fully consolidated due to Hannover Re s majority stakes. Favourable earnings contribution from both underwriting and investments 45

46 III Net investment income Net investment income Talanx Group m, IFRS FY206 FY205 Change Q4 206 Q4 205 Change Ordinary investment income thereof current investment income from interest thereof profit/loss from shares in associated companies Realised net gains/losses on investments Write-ups/write-downs on investments Unrealised net gains/losses on investments 3,302 3,444 (4%) (6%) 2,747 2,887 (5%) (3%) % % % % (66) (23) n/m (28) (90) n/m % (9) 3 n/m Investment expenses (253) (23) n/m (79) (7) n/m Income from investments under own management Income from investment contracts Interest income on funds withheld and contract deposits 3,704 3,546 +4% % 5 9 (47%) (2) 3 n/m (7%) (2%) Comments Ord. investment income reflects the decline in interest income - and for the negative base effect from the one-off payment following a withdrawel from a US-transaction (~ 39m) in L/H Reinsurance in Q 205 Realised investment net gains increased by ~46% y/y to 770m in FY206, partly due to higher realised gains in Retail Germany to finance ZZR (FY206 allocation: 73m vs. FY205: 493m) Lower investments writedowns in FY206 despite above-average writedowns from lower equity prices in Q Q 205 impairment of the bond position in Heta Asset Ressolution (50% on position, i.e. mid double-digit m amount) has been largely unwound in Q4 206 RoI unchanged compared to previous year at 3.6% and well above the FY206 outlook of at least 3.0% ModCo derivatives: 0m (Fy205: -26m); in Q4 206: m (Q4 205: -7m); no impact from inflation swaps ( 0m) as these have been terminated in FY205 (FY206: -4m; Q4 205: 0m) Total 4,023 3,933 +2%, % FY206 RoI at 3.6% - at the same level compared to previous year and well above the FY206 Outlook of at least 3.0% 46

47 III Equity and capitalisation Our equity base Capital breakdown ( bn) Comments Compared to FY205, shareholders equity increased by 796m to 9,078 m. The FY205 dividend payout in May 206 ( 329m) was more than compensated by the net income ( 907m) and the positive change in OCI ( 233m) the latter predominantly due to lower interest rates compared to year-end 205 Book value per share stood at 35.9 compared to in FY205, while NAV per share was 3.80 (FY205: 28.66) Mar 5 30 June 5 30 Sep 5 3 Dec 5 3 Mar 6 30 June 6 30 Sep 6 3 Dec 6 Shareholders equity Minorities Subordinated liabilities Neither book value per share nor NAV contain off-balance sheet reserves. These amounted to 332m (see next page), or.3 per share (shareholder share only). This would add up to an adjusted book value of per share and an adjusted NAV (excluding goodwill) of 33. Shareholders equity up by ~ 800m compared to end of FY205 47

48 III Equity and capitalisation Unrealised gains Unrealised gains and losses (off and on balance sheet) as of 3 December 206 ( m) 528 4,9 4, (296) (68) 9,666 4,928 4,948 Loans and receivables Held to maturity Investment property Real estate own use Subordinated loans Notes payable and loans Off balance sheet reserves Available for sale Other assets On balance sheet reserves Total unrealised gains (losses) 3 Dec 5 4, (294) (89) 4,887 3, ,669 8,557 Note: Shareholder contribution estimated based on FY205 profit sharing pattern Δ market value vs. book value Off-balance sheet reserves of ~ 4.9bn 332m (.3 per share) attributable to shareholders (net of policyholders, taxes & minorities) 48

49 III Equity and capitalisation Contribution to change in equity In m 8, (329) 233 (5) 3 Dec 205 Net income Dividend Other Other after comprehensive minorities income 9,078 3 Dec 206 Comments At the end of FY206, shareholders equity stood at 9,078m, or 35.9 per share This was above the level at the end of FY205 ( 8,282m or per share) predominantly driven by the FY206 Group net income and a positive OCI movement - well above the dividend payout in May 206 At the end of Q3 206, the Solvency II Ratio (Regulatory View, HDI Group level) stood at 60 (FY205: 7; Q 206: 66; Q2 206: 72) percent. FY206 Solvency II ratio expected at least in the order of FY205 Based on Basic Own Funds, so taking the full internal model into account, Talanx s capitalisation was 239 (FY205: 253; Q 206: 245; Q2 206: 262) percent all numbers before transitional Shareholders equity up to 9,078m, or 35.9 per share 49

50 IV Outlook for Talanx Group FY 207 Expected change factors in Group net income in m ~(85) ~(35) ~(0) (26) ~(25) ~25 ~ ~800 FY206 Change in net income from Reinsurance Investment result in Primary insurance According to Hannover Re guidance (after Talanx s minorities) 2 In case of neutral currency result booked in other result Currency result in Primary Insurance 2 C-Quadrat disposal Full utilisation of large loss budget in Primary Insurance Result improvement KuRS Operating performance & other Expected operating inprovement in Primary Insurance (incl. KuRS effects) likely to be overcompensated by lower investment result and guided profit decline in Reinsurance FY207E 50