Shaping change in insurance Munich Re equity story

Transcription

1 Image: Getty Images/fStop Shaping change in insurance Munich Re equity story February 2018

2 Equity story Shaping change in insurance Why invest in Munich Re Strong track record Successfully dealing with challenging economic conditions We remain a strong partner for clients and reliable for shareholders, delivering on our promises Business strategy Focus on insurance risks safeguarding sustainable value creation Complementary business profiles limiting correlation to capital market development Rigorous risk management Based on a high level of diversification, actively managing the low-yield environment and strictly budgeting all our insurance risks Strong capital position Continuously built up over years Continuing the long-term track record of attractive capital repatriation while keeping the flexibility to seize opportunities for profitable growth 2

3 Equity story Munich Re at a glance Key financials Munich Re Gross written premiums bn Operating result m 4,025 4,819 4,028 4,398 5,349 Taxes on income m Consolidated result m 2,581 3,122 3,171 3,333 3,204 Investments bn Return on equity % Equity bn Off-balance-sheet reserves 1 bn Net technical provisions bn Staff at 31 December 43,428 43,554 43,316 44,665 45,437 Our shares Earnings per share Dividend per share Amount distributed m 1,338 1,329 1,293 1,254 1,255 Share price at 31 December Market capitalisation at 31 December bn No. of shares at year-end m Including amounts attributable to minority interests and policyholders. 3

4 Equity story Business strategy Realising synergies and economies of scope by combining primary and reinsurance under one roof Agile business model Segmental breakdown Reinsurance Property-casualty 17.8 (36%) bn ERGO Life and Health Germany 9.2 (19%) Reinsurance Well positioned to manage the current market environment and drive innovation P-C: Efficiently running the traditional book, steady expansion of innovative products/solutions strong reserving position Life and Health: Strong position in all major markets increasing contribution from initiatives portfolio Reinsurance Life and Health 13.6 (28%) TOTAL 48.9bn ERGO P-C Germany 3.2 (7%) ERGO International 5.0 (10%) ERGO Strategy Programme well on track, increasing earnings contribution Life and Health Germany: Continuously improving risk/ return profile, comprehensive management of back book P-C Germany: Attractive business mix International: Strong presence in selected developed markets, capture opportunities in growth markets 1 Gross written premium as at

5 Established Markets New Equity story Reinsurance Well positioned to manage the current market environment and drive innovative solutions ILLUSTRATIVE Traditional reinsurance Tailor-made solutions Emerging markets Risk Solutions Underinsurance in developed markets New products/ risk-related services Solutions for emerging risks Incremental innovations Traditional reinsurance Successfully managing the soft cycle Risk Solutions Continuous growth in specialty and niche business Innovation Steady expansion of innovative products/solutions TOTAL 1,2 23bn TOTAL 1 4.8bn TOTAL 1,3 ~ 650m Established Products New 1 Premiums as at Life (traditional and strategic initiatives): 10bn, traditional P-C: 13bn. Both without health business. 3 Munich Re (Group); indirect effects on traditional business not included. 5

6 Equity story Traditional p-c reinsurance Portfolio profitability protected by disciplined underwriting Profitable core business Preferential client access ~50% private placements 1 ~2/3 direct client business TOTAL 2 13bn Renewals Nominal price changes % 2.4 Leading risk know-how ~30% tailor-made solutions 1 Comprehensive service offering Superior diversification Stringent cycle management As regards perils, forms of cover, regions, short/long-tail Strong u/w discipline and conservatism in reserving Deliberate portfolio shifts to less commoditised business Traditional portfolio relatively resilient to pressure on rates Diversification provides flexibility in managing the portfolio 1 Related to premium volume in Gross premium written as at January renewals. 6

7 Low Pricing pressure High Equity story and rigorous portfolio/cycle management Ensures portfolio profitability above cost of capital Portfolio management based on economic management principles 1 Other Casualty Property CAGR: ~ 6% CAGR: ~+11% CAGR: ~ 3% Other Casualty Property ILLUSTRATIVE Property Continuous reduction as economic profitability declined Casualty Less pricing pressure increased relative contribution to value generation Premium development 0% Share in value generation 2 100% 1 Bubble size reflects gross premiums written in 2013 (grey) 2016 (blue). 2 Economic profit. 7

8 Equity story Tailor-made solutions Preferred partner for large transactions, strong deal pipeline in all markets Profitability 1 % Tailor-made Traditional RI Cost of capital Traditional RI Tailor-made Property Premium bn ILLUSTRATIVE 4% 17% % Casualty % Highly structured treaties with lower risk-capital consumption competitive advantage due to diversification benefits in our internal model Mid double-digit number of active, customised deals Deep risk expertise and capital management know-how represent perfect fit for insurers seeking capital-triggered solutions high consulting quality and capacity 1 Economic profitability (RORAC). 2 Contract year view. 8

9 Equity story Risk Solutions Active portfolio management and investments to secure strong earnings contribution Gross earned premiums 1 Combined ratio 1 % Underwriting result 1 bn 3.4 Share in % of total P-C book TOTAL 4.8bn Share in % of total P-C book Drivers in 2016 Gross earned premiums Consolidation following strong growth in past years Exit from financial institutions business at American Modern 1 Management view, not comparable with IFRS reporting. Combined ratio Hartford Steam Boiler with highest result contribution Burdening effect from run-off business, IT investments and outlier losses 9

10 Equity story Munich Re fosters innovation throughout the global organisation Strong focus on tangible business impact Significant focus on innovation Innovation infrastructure Innovation scouting Innovation labs Ideation Corporate partnering with significant impact on business already today Innovation areas Innovation enabler 1 New (re)insurance products 2 New business models 3 New clients and demands 4 New risk-related services Data analytics Agile IT Innovation-related business already sizeable TOTAL 1 ~ 650m Risk carrier for established and new (digital) insurance and non-insurance companies Provider of integrated risk services (e.g. sensor-based) Tailored risk solutions and white-label products Collaboration Data analytics-based services 1 Munich Re (Group); indirect effects on traditional business not included. 10

11 Equity story Strong long-term growth in cyber (re)insurance expected Munich Re with leading-edge expertise and market presence 1 New (re)insurance products GWP global cyber insurance market 1 US$ bn GWP Munich Re cyber portfolio US$ m 10 RoW US Reinsurance Primary insurance Reinsurance: First mover and global market leader Dynamic growth through joint projects with cedents Steady growth in the US Strong accumulation models Primary insurance: Specialised single-risk taker Hartford Steam Boiler: Established player in US for SMEs and individuals Corporate Insurance Partner: Focus on larger corporate clients Cooperation with IT providers and Beazley 1 Estimates based on different external sources (Marsh & McLennan, Barbican Insurance, Allianz). 11

12 Lower Return Higher Equity story Reinsurance Life Core business supplemented by well established initiatives ILLUSTRATIVE FinMoRe IFRS technical result Asia Asset protection Adjusted Target 400m 487m Longevity Morbidity 420 Mortality Compared to competitors Overweight Underweight Neutral Unique Higher Risk Lower

13 Equity story ERGO Well on track to become a significant earnings contributor ERGO Strategy Programme/International Strategy Increasing IFRS net profit 1 m Fit Digital Successful! 530 ~600+ Leaner and more efficient structures Transforming the business model Convincing solutions, committed to profitable growth From 2017, figures include primary insurance business of Munich Health. 13

14 Equity story Strong balance sheet supports sound profitability, Medium Low High Strong capitalisation according to all metrics RoE exceeds cost of capital 16 Value creation % 12 Rock-solid reserving position 8 4 Average cost of capital bn unrealised investment gains 1 ~10% > ~8% 13-year average RoE Average cost of capital 1 As at

15 Equity story facilitating attractive shareholder returns Sustainable growth of dividend per share CAGR: 8.9% Dividend yield (%) TSR vs. major peers and insurance index 2 % Total shareholder return (p.a.) Peer Index Peer 1 Peer 4 Peer 5 Peer > 24bn Total pay-out since 2005 (dividend and share buy-back) Peer Volatility of total shareholder return (p.a.) 1 Subject to approval of Supervisory Board and AGM. 2 Annualised total shareholder return defined as price performance plus dividend yield over the period from until ; based on Datastream total return indices in local currency; volatility calculation with 250 trading days per year. Peers: Allianz, Axa, Generali, Hannover Re, Swiss Re, ZIG, Stoxx Europe 600 Insurance ( index ). 15

16 Group 16

17 Backup: Group Preliminary financial highlights 2017 Dividend stable at 8.60 per share 1, despite nat cat losses Price and volume increase in January renewals Munich Re (Group) 2017 (Q4 2017) Net result 392m ( 538m) Reinsurance result of 120m affected by heavy nat cat claims, pleasing ERGO result of 273m Tax income offsets FX losses Operating result 1,241m ( 864m) Technical result including fee income in Reinsurance Life and Health of 428m close to original guidance Good technical profitability at ERGO Investment result RoI: 3.2% (3.4%) Solid investment return, attrition of running yield decelerating Reinvestment yield at 1.9% in Q4 Shareholders' equity 28.2bn (+1.5% vs , 11.3% vs ) Strong capitalisation is basis for high pay-outs SII ratio almost stable 2 at ~240% 3 HGB result (German GAAP) 2.2bn Release of equalisation reserve in fire and aviation Distributable earnings largely unchanged January Renewals Premium increase: 19.0% Price increase: ~0.8% 1 Subject to approval of Supervisory Board and AGM. 2 Based on comparable calculation method vs (242%). 3 Indication, after deduction of potential capital measures of 2.7bn in line with previous years capital management practices. 17

18 Backup: Group Strong balance sheet Short-term earnings pressure mitigated by strong balance sheet Investment result bn P-C reinsurance Release of loss reserves 1 % Ongoing disposal gains Lower reinvestment yields Strong reserving position Reinsurance cycle Net disposal gains Unrealised gains Part of the valuation reserves realised as a result of usual portfolio turnover Ongoing releases of loss reserves without weakening resilience against future volatility Conservative accounting translates into earnings as a result of ordinary business activity 1 Basic losses, in % of net earned premiums, adjusted for corresponding commission effects. 18

19 Backup: Group Capital position Strong capital position according to all metrics facilitates financial flexibility, including high shareholder distribution Solvency II IFRS German GAAP/Rating % bn bn Tier 1 90% SII ratio well above target capitalisation TOTAL 40.7bn Tier 2 8% Tier 3 2% Sound shareholders equity % Strengthened equalisation provision largely protects HGB earnings A AA Rating agencies AAA High-quality eligible own funds Debt leverage 1 among the lowest in the insurance industry Substantial capital buffer 2 supports AA rating 1 Strategic debt (senior, subordinated and other debt) divided by total capital (strategic debt + equity). 2 S&P capital. 19

20 Backup: Group IFRS capital position IFRS capital position 9M 2017 Equity m Capitalisation bn Equity ,785 Change Q3 Consolidated result 146 1,436 Changes Dividend 1,333 0 Unrealised gains/losses Exchange rates 1, Share buy-backs Other Equity ,770 2,369 Unrealised gains/losses Exchange rates Fixed-interest securities 9M: 120m Q3: 103m Non-fixed-interest securities 9M: 36m Q3: 8m FX effect mainly driven by US$ Debt leverage 1 (%) Senior and other debt 2 Subordinated debt 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. 20

21 Backup: Group German GAAP capital position Significant increase in local result of parent company safeguards financing of capital repatriation bn bn Distributable earnings Dividend/ buy-back HGB result 2016 Other 1 Distributable earnings HGB result 2015 Underwriting result Investment result Other HGB result Average Higher major losses, lower reserve releases Intragroup disposal gains (2016) vs. write-down on ERGO (2015) Relief in equalisation provision expected in Changes in restrictions on distribution. 21

22 Backup: Group Economic earnings Economic earnings 2016 Munich Re (Group) Outlook 2017: In the range of IFRS result target bn Actual Normalised Operating economic earnings Expected return existing business 0.6 New business value 1.0 Operating variances existing business 0.2 Economic effects Interest rate 0.0 Equity 0.3 Credit 0.9 Currency 0.8 Other Other non-operating earnings Total economic earnings Total economic earnings Operating economic earnings High operating economic earnings in reinsurance compensate for negative ERGO contribution; normalised for reinsurance P-C prudency margin of 0.7bn, new business value amounts to 1.7bn Normalisation: Operating economic earnings adjusted for variances in new and existing business Economic effects Effects from development of capital market parameters very pleasing overall, however diverse across segments: Reinsurance with high economic gains on risk-free interest rates, credit spreads, FX and equities; economic losses at ERGO driven by further interest-rate decline over the year Normalisation: Adjusted to lower expectation in reinsurance and higher at ERGO Other non-operating earnings Normalisation: Other non-operating earnings adjusted to expected tax rate (all other line items pre-tax) and other items 1 Primarily related to illiquid investments: Property, infrastructure, forestry, hedge funds, private equity. 22

23 Backup: Group Economic earnings P&L attribution Pleasing economic earnings overall Reinsurance compensates for adverse development at ERGO Munich Re (Group) 2016 bn Reinsurance Life Reinsurance P-C ERGO L/H Germany ERGO P-C Germany ERGO International Munich Health Munich Re (Group) Operating economic earnings Expected return existing business New business value Operating variances existing business Economic effects Other non-operating earnings Total economic earnings Capital measures 2.3 Changes in other own funds items 0.0 Change in SII eligible own funds

24 Backup: Group Risk disclosure Strong SII ratio SII ratio development 1 302% % SII ratio Opening adjustments incl. model changes Capital measures Expectation Operating and non-op. variances Capital market variances SII ratio EOF 40.7bn bn SCR 13.5bn bn 1 Expected EOF change refers to normalised economic earnings; all figures including tax effect. 24

25 Backup: Group Risk disclosure Given high levels of uncertainty, risk profile remains relatively stable Breakdown of solvency capital requirement (SCR) Munich Re s SII ratio 1 Property-casualty Life and Health Market Credit Operational risk Other bn Increase largely driven by FX, low interest rates, business growth in Life Reinsurance and model refinements % % 267% bn bn EOF SCR SII ratio in a very comfortable range, with flexibility for additional risk taking 1 All figures do not include effects of transitionals or long-term-guarantee (LTG) measures, e.g. volatility adjustment. 2 Ratio after dividend of ~ 1.3bn for 2016 to be paid in April 2017: 258%. SII ratio considering transitionals for ERGO Leben and Victoria Leben: 316%. 25

26 Backup: Group Risk disclosure Breakdown of solvency capital requirement (SCR) by risk category and segment Group RI ERGO MH Div. Risk category ( bn) Delta Remarks Property-casualty Life and Health Market Credit Appreciation of US$ Low-interest-rate environment Model reflects negative interest rates Operational risk Reassessment of cyber scenarios Other Change in disclosure Simple sum Diversification Diversification benefit: 36% Tax Total SCR Low interest-rate environment largest determinant of SCR changes 1 Capital requirements for associated insurance undertakings and other financial sectors, e.g. institutions for occupational retirement provisions. 26

27 Backup: Group Risk disclosure Property-casualty risk High global diversification, both within nat cat risks and between major and basic losses Nat cat exposure (net of retrocession) AggVaR 1 bn SCR property-casualty bn 5 4 Top 5 exposures 1 Atlantic Hurricane 2 Earthquake Los Angeles 3 Storm Europe 4 Cyclone Australia 5 Earthquake Japan Basic losses Major losses 2 Diversification Total Top nat cat exposures Overall, portfolio remained stable vs. last year SCR increase mainly due to FX, esp. strong US$, affecting major and basic losses 1 Munich Re (Group). Return period 200 years, pre-tax. 2 Natural catastrophes, man-made (including terrorism and casualty accumulation) and major single losses. 27

28 Backup: Group Risk disclosure Development of Munich Re s Solvency II ratio Munich Re actions >220%: Above target capitalisation Capital repatriation Increased risk-taking Holding excess capital to meet external constraints SII ratio % 267% 175% 220%: Target capitalisation Optimum level of capitalisation 140% 175%: Below target capitalisation Tolerate (management decision) or If necessary, take management action (e.g. risk transfer, scalingdown of activities; raising of hybrid capital) <140%: Sub-optimal capitalisation Take risk-management action (e.g. risk transfer, scaling-down of activities; raising of hybrid capital) or In exceptional cases, tolerate situation (management decision) 220% 175% 140% 100% Transition into SII metric. 28

29 Backup: Group Risk disclosure Sensitivities of SII ratio SII ratio Sensitivity % Ratio as at Interest rate +50bps 1 Interest rate 50bps 1 Spread +100bps GOV 2 Spread +100bps CORP 2 Equity markets +30% Equity markets 30% FX 20% Inflation +100bps 3 Atlantic Hurricane 4 UFR 50bps Volatility adjustment Parallel shift until last liquid point, extrapolation to unchanged UFR. 2 Due to diversification, spread sensitivity simultaneously stressing GOV and CORP spreads (226%) is lower than the sum of shown separate sensitivities. 3 Based on CPI inflation. 4 Based on 200-year event

30 Backup: Group Reserving position Actual versus expected comparison Loss-monitoring yields consistent picture across years Reinsurance group Comparison of incremental expected losses with actual reported losses 1 m By exposure year 10,000 1, Actual reported loss Actuals for first run-off year (2015) are 10% below expectations consistent with picture in previous years By line of business Third-party-liability ,000 Motor Fire and prior 2010 Marine 2008 Engineering 2009 Credit Risks other Property 2007 Personal accident Expected reported loss Aviation Expected reported loss ,000 10, ,000 10,000 Legend: Green Actuals below expectation Solid line Actuals equal expectation Red Actuals above expectation Dotted line Actuals are 50% above/below expectations 10,000 Actual reported loss Very stable actual versus expected development per line of business Actual losses consistently below actuarial expectations Very strong reserve position 1 Reinsurance group losses as at Q4 2016, not including parts of Risk Solutions, special liabilities and major losses (i.e. events of over 10m or US$ 15m for Munich Re's share). 30

31 Backup: Group Reserving position Positive run-off result without weakening resilience against future volatility Ultimate losses 1 (adjusted to exchange rates as at ) m Accident year (AY) Date Total , ,659 12, ,145 12,928 14, ,478 12,824 14,440 13, ,900 12,742 14,383 13,891 14, ,694 12,704 14,083 13,385 14,522 18,544 Ultimate reduction Prior-year releases of 1.4bn driven by reinsurance portfolio Favourable actual vs. expected comparison facilitates ultimate reductions for prior years Reserve position remains strong ,193 12,320 13,924 13,243 14,388 18,646 15, ,125 12,064 13,751 13,216 14,475 18,307 14,972 15, ,894 11,978 13,471 12,890 14,512 17,901 14,742 15,325 15, ,588 11,744 13,330 12,663 14,318 17,771 14,519 15,270 15,128 14, ,339 11,771 13,241 12,618 14,081 17,298 14,482 14,953 15,089 14,408 15,336 CY 2016 runoff change CY 2016 runoff change (%) , Reinsurance 2 1,268m ERGO 144m 1 Basic and major losses; accident year split partly based on approximations. 2 Thereof 1,148m basic and 120m major losses. 31

32 Backup: Group Outstanding bonds Munich Re (Group) Outstanding bonds Senior and subordinated bonds 1 Nominal volume Coupon rate p. a. Emission/Issue Maturity First possible redemption date 900m Until %, thereafter variable May m Until %, thereafter variable May ,000m Until %, thereafter variable May m Until %, thereafter variable June 2018 US$342m 7.45% Maturity pattern m Currency pattern % 2,411 USD 11 EUR undated 25 GBP 27 TOTAL 3.1bn 1 As at 30 September Bonds with a nominal value below 100m not considered. In addition, Munich Re has placed some natural catastrophe bonds. 32

33 Backup: Group Corporate responsibility Turning risk into sustainable value Company success through responsibility Commitments implementation Environmental, Social, Governance (ESG) Group-wide carbon-neutrality since 2015; sharedvalue projects closely related to our core business; high corporate governance standards external recognition Corporate responsibility in insurance Integration of ESG aspects into core business (process, guidelines, tools); prudent Group-wide control, support and training Corporate responsibility in investment Sustainability one criterion for investment decision; incorporated in our Group-wide investment guideline We actively embrace ESG factors along the value chain in our insurance business operations and asset management 33

34 Reinsurance 34

35 Backup: Reinsurance Munich Re Leading global reinsurer Rank Company Country Net reinsurance premiums written 2016 (US$ m) 1 Swiss Re Switzerland 33,570 2 Munich Re Germany 31,839 3 Hannover Re Germany 15,363 4 Berkshire Hathaway Re USA 13,917 5 SCOR France 13,231 6 Reinsurance Group of America USA 9,249 7 Lloyd s UK 8,959 8 China Re China 7,514 9 Everest Re Bermuda 5, MS&AD Holdings Japan 5, Partner Re Bermuda 4, General Ins. Corp. of India India 4, Transatlantic Holdings Inc. USA 3, Korean Re South Korea 3, XL Catlin Bermuda 3, Mapfre Re Spain 2, Sompo Japan 2, Tokio Marine Japan 2, Maiden Re Bermuda 2, R+V Versicherung Germany 2,302 Total top ,973 Source: Standard & Poor's, September

36 Backup: Reinsurance Reinsurance Overview Gross written premiums bn Investments bn Net technical provisions bn Major losses (net) m 1,542 1,046 1,162 1,689 1,799 Thereof natural catastrophes m ,284 Combined ratio % Premium split by region 2016 % Combined ratio Basic losses Africa, Middle East Latin America 5 TOTAL 27.8bn North America Asia and Australasia 16 Europe 29 36

37 Backup: Reinsurance Reinsurance Property-casualty 9M 2017 Gross premiums written m Major result drivers m 9M ,733 Foreign exchange 27 Divestments/investments 0 Organic change 236 9M ,524 Slightly positive FX effects from US$ Cancellation/modification of large treaties especially in agro, fire and liability 9M M 2016 Technical result 1,381 1,642 3,022 Non-technical result thereof investment result 1,436 1, Other Net result 667 1,761 2,428 Q Q Technical result 2, ,903 Non-technical result thereof investment result Other Net result 1, ,083 Technical result Q3: High nat cat loss ratio of 70.3%, thereof impact from hurricanes Harvey, Irma and Maria, of 2.7bn/64.1% Investment result 9M: Stable regular income also compared with previous year 9M: Less disposal gains, improved derivative result Q3: Return on investment: 3.1% Other 9M: FX result of 168m vs. 299m 9M: Tax income of 494m, thereof 671m in Q3 37

38 Backup: Reinsurance Combined ratio 9M 2017 Combined ratio % Basic losses 50.8 Major losses Expense ratio M Q Major losses Nat cat Man-made Reserve releases 1 Normalised combined ratio Q Q Q Q Q Q Q Q M Q Ø Annual expectation ~12.0 ~8.0 ~4.0 ~ 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. 38

39 Backup: Reinsurance Traditional book and Risk Solutions complement each other and provide diversification Total P-C book % Traditional % Risk Solutions % Risk Solutions 27 (28) TOTAL 1 18bn Tailor-made solutions 23 (18) Nat cat XL 10 (10) TOTAL 13bn Casualty 47 (47) Other 24 (23) Watkins 8 (9) TOTAL 5bn American Modern 22 (23) Hartford Steam Boiler 21 (19) Other traditional business 50 (54) Other property 34 (33) Specialty 2 9 (10) Specialty markets 13 (13) Corporate Insurance Partner 3 12 (13) Demand for tailor-made solutions compensates for the reduction in other traditional business Risk Solutions an important pillar for top-line contribution Well balanced traditional portfolio Slight shift from specialty lines to other property Dominated by US business More than 50% HSB top-line growth driven by new innovative products Well balanced portfolio from a regional and line-of-business perspective 1 Gross premiums written property-casualty reinsurance as at ( ). 2 Aviation, marine and credit. 3 Part of Special and Financial Risks providing solutions for large corporate clients. 39

40 Backup: Reinsurance Well balanced portfolio as basis for sustainable earnings generation Traditional % Portfolio developments Aviation 1 (1) Marine 3 (4) Credit 5 (5) TOTAL 13bn Casualty motor 28 (27) Proportional 74 (72) TOTAL 13bn Facultative 9 (9) Share increases Proportional casualty motor and property following the realisation of profitable business opportunities during the year Accordingly, ongoing shift towards proportional business Agro 7 (7) Casualty ex motor 19 (20) XL 17 (19) Share decreases Deliberate reductions in marine (offshore energy) Property ex nat cat XL 27 (26) Property nat cat XL 10 (10) Growth in casualty ex motor below portfolio average Continued reduction of more volatile XL portfolio Increase in proportional business supports earnings resilience 1 Traditional reinsurance, incl. tailor-made solutions. Allocation based on management view, not comparable with IFRS reporting. 40

41 Backup: Reinsurance January renewals January renewals Roughly half of total P-C book up for renewal, regional focus on Europe Total property-casualty book 1 % Regional allocation of January renewals % Remaining business 29 January renewals 47 Worldwide 24 Europe 33 Latin America 3 TOTAL 8bn TOTAL 18bn Asia/Pacific/Africa 12 Nat cat shares of renewable portfolio 2 Nat cat Other perils North America 27 % January April July July renewals 15 April renewals 9 Total Gross premiums written. Economic view not fully comparable with IFRS figures. 2 Total refers to total p-c book, incl. remaining business. Preliminary key figures 2017 and January renewals 41

42 Backup: Reinsurance January renewals Substantial rate increases in loss-affected business attractive business opportunities lead to top-line growth January renewals 2018 % m 8,327 1,190 7, ,327 9,909 Change in premium +19.0% Thereof price movement 1 ~ +0.8% Thereof change in exposure for our share +18.2% Positive price change for the first time in four years Nat cat losses in 2017 stop downward trend substantial rate increases in loss-affected business, stabilisation elsewhere Significant top-line growth, seizing various opportunities in proportional casualty and property business, Total renewable from 1 January Cancelled Renewed Increase on renewable New business Estimated outcome including a few very large transactions Overall portfolio profitability clearly improved 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). 42

43 Backup: Reinsurance Munich Re utilising all ART channels as instrument for risk management and expanded product range Munich Re channels to tap alternative capacity sources Sidecar programme 1 Queen Street programme Retrocession Protection per nat cat scenario 2 m Eden Re II renewed with 2017 series at previous year s level (US$ 360m) Broader investor base and cession with four lines of business Additional cat bond of US$ 190m issued (Queen Street XII) Broadened investor base for fully collateralised cover of Munich Re peakzone risk 1,500 1, Australia Cyclone US Windstorm NE US Windstorm SE Retrocession use reflects favourable market terms and strong Munich Re capital base Enhanced risk management and client offerings on basis of ART channels Combining Munich Re s unique value proposition in managing peak risk with client access to institutional investor capacity Taking advantage of new sources of capital for clients and Munich Re s own book Munich Re ILS service for third parties completes offer as customised stand-alone service or integrated into traditional solutions Broadened distribution channels to ART markets to increase flexibility of Munich Re balance sheet relationship-based approach allows for scaling-up 1 Munich Re structured and arranged transactions. 2 Including indemnity retrocession, ILW/derivatives, risk swaps, cat bonds and the sidecars including Eden Re. Selection of main scenarios. 43

44 Backup: Reinsurance Munich Re's maximum in-force nat cat protection Munich Re's maximum in-force nat cat protection as at January 2017 m 1,500 1,000 Cat bonds Risk swaps Sidecars Indemnity retro US windstorm northeast US windstorm southeast US earthquake EU windstorm EU other perils Japan earthquake Australia cyclone Benefiting from favourable market environment As at January Protection before reinstatement premiums. EU other perils including Earthquake Turkey. Broadening of relationship to end-investors 44

45 Backup: Reinsurance Outstanding insurance-linked securities (ILS) Munich Re's Capital Partners unit is a recognised player in the ILS market For clients For Munich Re s book 1 Transaction Closing Maturity Volume Perils covered Pandemic Emergency Financing Facility 7/2017 7/2020 US$ 225m US$ 95m Class A Pandemic influenza, Coronavirus Class B Filovirus, Coronavirus, Lassa Fever, Rift Valley Fever, and Crimean Congo Hemorrhagic Fever Lion Re II DAC 6/2017 7/ m Europe Windstorm, Italy Earthquake, Europe Flood Vitality Re VIII Re Ltd. 1/2017 1/2021 US$ 200m US health risks Vitality Re VII Re Ltd. 1/2016 1/2020 US$ 200m US health risks Bosphorus 2 Re Ltd. 8/2015 8/2018 US$ 100m Earthquake Turkey Azzurro Re I DAC 6/2015 1/ m Italy Earthquake Fonden 8/2017 8/2020 US$ 150m Class A Mexico Earthquake 8/ /2019 US$ 100m Class B Atlantic Hurricane 8/ /2019 US$ 110m Class C Pacific Earthquake Eden Re II Ltd. (Series ) 12/2017 3/2022 US$ 300m Various perils Eden Re II Ltd. (Series ) 12/2016 3/2021 US$ 360m Various perils Queen Street XII Re DAC 5/2016 4/2020 US$ 190m Hurricane US & Windstorm Europe Queen Street XI Re DAC 12/2015 6/2019 US$ 100m Hurricane US & Cyclone Australia Queen Street X Re DAC 3/2015 6/2018 US$ 100m Hurricane US & Cyclone Australia Generation of fee income Active investor in the primary and secondary market Improvement of own risk/return profile and cost efficiency Utilisation of unexhausted risk budgets Offering one-stop shopping to clients as sponsors 1 Excluding private transactions. 45

46 Backup: Reinsurance Life and Health Reinsurance Life and Health 9M 2017 Gross premiums written m Major result drivers m 9M ,892 Foreign exchange 7 Divestments/investments 0 Organic change 347 9M ,246 Business growth in Australia, Asia and Middle East 9M M 2016 Technical result Non-technical result thereof investment result Other Net result Q Q Technical result Non-technical result thereof investment result Other Net result Technical result, incl. fee income of 271m 9M: Good underlying business development 9M: Technical result below expectations due to negative impact from recaptures in the US (Q3: > 100m, 9M: 170m) Q3: Largely offsetting effects, e.g. better claims development in North America, adverse claims experience in Australia Investment result 9M: High regular income supported by deposits retained on assumed reinsurance 9M: Disposal gains on equities and fixed income Q3: Return on investment: 3.2% Other 9M: FX result of 37m vs. 88m 46

47 Backup: Reinsurance Life Well diversified global portfolio 35% 65% Canada 60% United Kingdom 30% 10% Continental 10% Europe 25% 65% Mortality 65 % Morbidity 25 % Longevity 10 % 15% Asia 40% USA 85% 60% 70% 30% NA 60 % Europe 20 % Asia 10 % Latin America 10% 90% 10% South Africa 90% Australia Australia 5 % Africa / LA 5 % North American overweight reflective of size of reinsurance markets Biometric risk exposure dominated by mortality Size of bubbles indicative of present value of future claims. 47

48 Backup: Reinsurance Life Initiative portfolio Financially Motivated Reinsurance Well established value proposition, strong demand prevails Gross premiums written Technical result and fee income NBV 1 m % of total 4,536 4,109 3,356 3,313 2, Technical result Fee income % of total % of total Portfolio development Geographically well diversified portfolio Lower result from scheduled termination of some large treaties 2016 new business again exceptional; approx. 25 new transactions, including large portfolio transaction in Australia New business value dominated by APAC and Europe, including 8 SII-related treaties MCEV, from 2015 Solvency II. Expectations going forward Demand will remain high Transaction types will vary by geographical region Number, size and type of transactions are difficult to predict and will vary on an annual basis 48

49 Backup: Reinsurance Life Strategic focus Asia Vital new business production secures growth across the region Gross premiums written m Technical result and fee income m NBV 1 m 1,178 % of total , Technical result % of total Fee income % of total Portfolio development Sustained growth path volume of recurring business steadily increasing Tailor-made market and client strategies Growth supported by broad range of services New business production second only to the exceptionally strong year MCEV, from 2015 Solvency II. Expectations going forward Reinsurance markets will continue their growth path Demand for solvency relief and financing solutions remains high Underwriting discipline remains high although competition and pressure on prices are expected to increase We are watching product trends in critical illness closely 49

50 Backup: Reinsurance Life Initiative portfolio Longevity Book developed carefully in line with risk appetite Gross premiums written m Liability assumed p.a. m Strategic proposition 53 % of total ,788 1,366 1,884 Longevity considered to be primarily a risk management tool to balance mortality portfolio and to stabilise earnings Prudent approach in pricing and valuation because of uncertainty around future mortality trend Portfolio development Expectations going forward Portfolio comprises longevity swaps in UK First transaction concluded in 2011 after in-depth research Executed 1-2 transactions per year to build portfolio carefully and to allow for selective underwriting approach 2014: Participation in one particularly large transaction Evolutionary development of portfolio within clearly defined risk tolerance Careful investigation of expansion into other markets High market potential but also significant pressure on prices Continuation of highly selective approach and prudent valuation (no significant recognition of NBV) 50

51 Backup: Reinsurance Life Initiative portfolio Asset protection Comprehensive solutions to non-biometric financial risks IFRS contribution margin 1 m Product portfolio Strategic proposition Solutions to Basel III and Solvency II needs Resolution of accounting asymmetry ALM solutions for smaller players, i.e. reinsurance solutions for business with significant market risk Wide range of tailor-made solutions Legal, regulatory and structuring expertise State-of-the-art in-house hedging platform Development of modern savings products Portfolio development Portfolio continues to gain significance Growing contribution to NBV Expectations going forward Existing book dominated by Asia/Japan Current opportunities mainly in Europe and Asia/Japan Active exploration of business potential in North America 1 Part of non-technical-result, incl. insurance-related investment result. 51

52 Backup: Reinsurance Life New business profitability RORAC spread 1 % IRR spread 1 % Payback period 2 years 20% 20% 20 15% 15% 15 10% 10% 10 5% 5% 5 0% % Very good new business profitability relative to economic risk capital (RORAC spread) New business profitability relative to total investment in new business (IRR spread) influenced composition of new business portfolio Lower share of business with shorter durations (as typically the case for FinMoRe) slightly increased payback period compared with Spread in addition to reference rate (weighted-average swap yield curves), after tax. 2 Number of years it takes to amortise the total investment in new business through future (undiscounted) earnings distributable to shareholders. 52

53 ERGO 53

54 Backup: ERGO ERGO Overview Gross written premiums bn Investments bn Net technical provisions bn Combined ratio p-c Germany % Combined ratio p-c International % Premium split by region 2016 % Distribution channels Germany New business 2016 % Rest of World 14 Germany 74 Banks/other 5 Tied agents 55 Belgium 2 TOTAL 16.0bn Direct 18 UK 3 Poland 7 Broker 22 54

55 Backup: ERGO ERGO Strategy Programme (ESP) Financial impact Net profit impact of ESP overall 1 m P-C Germany Combined ratio % ESP Guidance Actual Net profit impact of investments 2 m Annual cost savings m Gross Net After policyholder participation and taxes, including impact of investments, savings, premium growth and other cost effects on net income. 2 After policyholder participation and taxes

56 Backup: ERGO ERGO Life and Health Germany 9M 2017 Gross premiums written m Major result drivers m 9M ,823 Foreign exchange 9 Divestments/investments 0 Organic change 51 9M ,865 Life: 80m Decline in regular premium driven by ordinary attrition, while single premium decreased mainly due to lower product sales Health: + 115m Positive development in comprehensive and supplementary insurance; travel increased by 17m 9M M 2016 Technical result Non-technical result thereof investment result 3,130 3, Other Net result Q Q Technical result Non-technical result thereof investment result Other Net result Technical result 9M: Enhanced profitability in life, health and direct business 9M: Improvements in life driven by one-offs in 2016 Investment result 9M: Significantly lower derivatives result (mainly interest-rate hedging) Q3: Low disposal gains (financing of ZZR mainly in Q1 2017) Q3: Return on investment: 2.6% Other 9M: Restructuring expenses in 2016 Q3: Impacted by strategic investments 56

57 Backup: ERGO ERGO Life Germany Separation of traditional back book and new business strengthens focus Life insurance legal entities back book ERGO Leben Victoria Leben ERGO Pensionskasse Traditional back book New business from portfolio only (legal, contractual obligation) New business ERGO VORSORGE New business promoting capital-light products Special case of underwriting agreements Organisational changes Separation of traditional life back book (~ 3.7bn in premium volume and >5m policies) Establishment of an effective, separate organisational entity with optimised processes (from 2018) Focus on administration Realisation of significant management advantages, e.g. reduced resource conflicts or faster decision-making and improved transparency Comprehensive management Long duration of fixed-income portfolio keeps average yield at relatively high level Asset and liability duration difference <1 year Low bonus rates: 2.25% vs. market average 2.59% Interest-rate hedging programme: protection against reinvestment risk via receiver swaptions since 2005 Cash flow matched for 40 years Risk carrier for new business Concentration on capital-marketrelated and biometric products More efficient set-up and bundling of competencies in capital-marketrelated products 57

58 Backup: ERGO ERGO Life Germany Key figures and ZZR Average yield vs. average guarantee 4% 2% 0% Key figures 1 avg. yield avg. guarantee Reinvestment yield Average yield ILLUSTRATIVE Average guarantee 2016 ~1.3 ~3.4 ~ ~1.8 ~3.4 ~ ~2.6 ~3.6 ~3.0 % ZZR reference rate Projection 2 % Guarantee level ILLUSTRATIVE Reference rate 3.50 Increase 3.25 Stable 3.00 Decrease ZZR Low interest-rate reserve Local GAAP reserve against low interest rates Expected accumulated ZZR in 2017: ~ 5bn Partly financed through unrealised gains positive impact on IFRS earnings when realised Effect on IFRS net income in 2016: + 22m Key financials 3 bn Free RfB Terminal bonus fund Unrealised gains Accumulate ZZR German GAAP figures for ERGO Leben, Victoria Leben and ERGO Direkt Leben. 2 Based on interest-rate scenarios. 3 German GAAP figures. 58

59 Backup: ERGO ERGO Health Germany Stabilise comprehensive insurance, strengthen supplementary insurance Market view on comprehensive insurance 1 bn ERGO business mix Gross premiums written % Peer 1 ERGO Peer 2 Peer 3 Peer 4 MARKET VOLUME 29bn ERGO 12.4% 4.4bn bn 70 Comprehensive insurance ERGO number 2 in German market stable results and stable political environment Market view on supplementary insurance 1 bn MARKET VOLUME 7bn ERGO 21.0% Supplementary insurance ERGO clear market leader expansion in long-term care and direct insurance ERGO Peer 1 Peer 2 Peer 3 Peer 4 1 Gross premiums written as at Source: PKV Verband. 59

60 Backup: ERGO ERGO Property-casualty Germany 9M 2017 Gross premiums written m Major result drivers m 9M ,566 Foreign exchange 6 Divestments/investments 0 Organic change 59 9M ,619 Positive premium development in almost all lines of business Organic growth mainly driven by fire/property and marine 9M M 2016 Technical result Non-technical result thereof investment result Other Net result Q Q Technical result Non-technical result thereof investment result Other Net result 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 60

61 Backup: ERGO ERGO Property-casualty Germany 9M 2017 Combined ratio % Gross premiums written m Loss ratio 64.7 Expense ratio 33.2 Other 304 Motor M Q Legal protection 313 TOTAL 2,619m Personal accident Fire/property 477 Liability 465 Q Q Q Q Q Q Q Q

62 Backup: ERGO ERGO International 9M 2017 Gross premiums written m Major result drivers m 9M ,768 Foreign exchange 5 Divestments/investments 84 Organic change 71 9M ,750 Life: 271m Italy: Sale of entity in Q Less new business in Poland and Austria P-C: + 215m Increase mainly driven by motor business in Poland and Baltics, as well as ATE acquisition Health: + 38m Growth driven by Belgium and Spain 9M M 2016 Technical result Non-technical result thereof investment result Other Net result Q Q Technical result Non-technical result thereof investment result Other Net result Technical result Q3: Good combined ratio of 91.5%, pleasing technical improvements overall in claims as well as costs (e.g. Poland with higher motor profitability) annual guidance improved from ~98% to ~97% Investment result 9M: Lower result from derivatives and regular income (lower asset base due to disposal of Italian entity in 2016) Q3: Lower impact from disposals and derivatives compared with 2016 Q3: Return on investment: 2.1% Other 9M: Several one-offs and restructuring expenses in 2016 Q3: Negative tax effects 62

63 Backup: ERGO ERGO International Property-casualty, including Health 9M 2017 Combined ratio 1 % Gross premiums written m M Q Loss ratio Expense ratio Other 788 Turkey 141 Greece 185 TOTAL 3,123m Poland 920 Spain 585 Legal protection Combined ratio 9M % Q Q Q Q Q Q Q Q Poland Spain Legal protection Greece Turkey Total 1 Only short-term health business. 63

64 Backup: ERGO International strategy embedded in ERGO Strategy Programme (ESP) to achieve ambitious goals Fit Digital Successful! Governance Central steering with dedicated responsibilities Portfolio Foster strong market positions Establish efficient global business models Exploit growth market exposure Best practice exchange Interregional transfer of capabilities, e.g. implementation of adapted imonitor from Poland in Turkey Regional cooperation Integration of back offices, e.g. in Baltics and Poland Accelerated innovation Digital delivery, e.g. via omni-channel communication to customers in India Interlocked business model reinsurance/primary insurance Identify value drivers in an interlocked business model between ERGO entities and Munich Re Commercial business Strengthen commercial business internationally Pure digital player Roll-out of nexible in attractive markets Establishing leaner and more effective structures to ensure swift execution Laying the foundations for transforming the business model Committing to profitable growth Munich Health primary insurance business to be managed by ERGO in

65 Backup: ERGO ERGO International portfolio focuses on three pillars Strong presence in selected developed markets Country GWP, 2016 m Focus segment Market position 5 Specialised global business expertise Existing global businesses 2 GWP, 2016 m JVs Promising exposure in prioritised growth markets GWP 3, 2016 m Segment Expected CAGR, , % Poland Austria Baltics 1, Life Non-life 206 Non-life 2 14% 4 9% 3 5% Legal protection Market presence in 18 countries Travel Market presence in 24 countries 1, China 25 Life India Non-life Vietnam 11 Non-life Thailand 21 Non-life Greece Non-life 8% Launch new global businesses Pure Digital Player Mobility Solutions Subsidiaries Turkey 249 Non-life 10 Leverage existing scale to strengthen organic growth Efficient management and expansion of global businesses Capture opportunities in growth markets Rank Share 1 ATE acquisition effective 1 June 2016; hence, only half year of ATE premium included. 2 Respective German and international business; D.A.S. including Italian JV. 3 ERGO share. 4 Step-up during 2016; premiums based on average share during the year. 5 In focus segment 6 Thereof German LPI business: 401m. 7 Thereof German travel business: 182m. 65

66 Investments 66

67 Backup: Investments Investment result 9M 2017 Investment result ( m) Q Return 1 Q Return 1 9M 2017 Return 1 9M 2016 Return 1 Regular income 1, % 1, % 4, % 5, % Write-ups/write-downs % % % % Disposal gains/losses % % 1, % 1, % Derivatives % % % % Other income/expenses % % % % Investment result 1, % 1, % 5, % 5, % Total return 0.8% 2.5% 1.0% 9.3% 3-month reinvestment yield Q % Q % Q % Q Write-ups/ write-downs Disposal gains/losses Derivatives Fixed income Equities Commodities/inflation 10 6 Other M 2017 Write-ups/ write-downs Disposal gains/losses Derivatives Fixed income 3 4 1, Equities Commodities/inflation Other 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). 67

68 Backup: Investments 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 ,047 Afs non-fixed-income ,432 Derivatives ,763 Loans ,016 Real estate ,216 Other ,135 Total ,610 Reinsurance ,471 ERGO ,139 Return on investment Average 3.2% 3.4% 4.1% 4.7% 3.6% 3.2% 3.0% 2.6% 2.9% 2.7% 2.7% 2.7% 2.8% Q Q Q Q Q Q Q Q Q Q Q Q Annualised. 2 Including management expenses. 68

69 Backup: Investments Investment portfolio 9M 2017 Investment portfolio 1 % Portfolio management in Q3 Land and buildings 3.3 (2.9) Miscellaneous (6.2) Shares, equity funds and participating interests (6.1) Loans 27.9 (28.5) TOTAL 229bn Fixed-interest securities 55.3 (56.3) Ongoing geographic diversification Increase in corporate bond exposure Slight decrease in structured products, covered bonds and bank bonds Further increase in equity exposure Investments in infrastructure (wind park) Portfolio duration 1 DV01 1,4 m Assets Liabilities Assets Liabilities Net Reinsurance 5.9 (5.9) 4.9 (4.6) 41 (45) 42 (43) 1 ERGO 8.8 (9.3) 9.5 (10.6) 112 (121) 123 (143) 11 Munich Re (Group) 7.8 (8.0) 7.6 (8.1) 153 (166) 165 (185) 12 1 Fair values as at ( ). 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. 69

70 Backup: Investments Investment portfolio H Fixed-interest securities and miscellaneous Investment portfolio % Fixed-interest securities 1 % Miscellaneous 6.5 (6.2) Loans 27.6 (28.5) TOTAL 230bn Fixed-interest securities 55.8 (56.3) Cash/Other 1 (0) Structured products 3 (4) Corporates 16 (16) Banks 2 (3) TOTAL 128bn Governments/ Semi-government 63 (62) Pfandbriefe/ Covered bonds 14 (15) Miscellaneous % Loans 1 % Other 19 (19) Derivatives 2 7 (11) Investment funds 3 11 (15) Bank deposits 27 (20) TOTAL 15bn Deposits on reinsurance 36 (36) Loans to policyholders/ mortgage loans 11 (10) Corporates 1 (1) Banks 3 (4) Approximation not fully comparable with IFRS figures. Fair values as at ( ). 2 Non-fixed derivatives. 3 Non-fixed property funds and non-fixed bond funds. TOTAL 63bn Governments/ Semi-government 40 (41) Pfandbriefe/ Covered bonds 45 (44) 70

71 Backup: Investments Fixed-income portfolio H Allocation and regional structure Fixed-income portfolio % Regional structure % Loans to policyholders/ mortgage loans 3 (3) Structured products 2 (2) Bank bonds 2 (3) Cash/other 4 (4) Corporate bonds 11 (11) Pfandbriefe/covered bonds 23 (24) TOTAL 199bn Approximation not fully comparable with IFRS figures. Fair values as at ( ). Governments/ semi-government 54 (53) Without With Total policyholder participation Germany US France UK Canada Netherlands Supranationals Spain Australia Italy Belgium Austria Ireland Norway Sweden Other Total

72 Backup: Investments Fixed-income portfolio H Rating and maturity structure Rating structure Market value ( bn) AAA (%) AA A BBB BB <BB NR Total Governments/semi-government Pfandbriefe/covered bonds Corporate bonds (excluding bank bonds) Bank bonds Structured products Maturity structure Average maturity (years) 0-1 years (%) 1-3 years 3-5 years 5-7 years 7-10 years >10 years n.a. Total Governments/semi-government Pfandbriefe/covered bonds Corporate bonds (excluding bank bonds) Bank bonds

73 Backup: Investments Fixed-income portfolio H Corporate bonds and bank bonds Corporate bonds Sector breakdown Utilities Industrial goods and services Oil and gas Telecommunications Financial services Healthcare Technology Food and beverages Basic resources Automobiles Media Retail Personal and household goods Other Classified as Tier 1 and upper Tier 2 capital for solvency purposes. 2 Classified as lower Tier 2 and Tier 3 capital for solvency purposes. Approximation not fully comparable with IFRS figures. Fair values as at ( ). % Regional breakdown of bank bonds Total Senior bonds Subordinated Loss-bearing US Germany UK Ireland France Canada Jersey Austria Belgium Other Investment category of bank bonds Loss-bearing 1 7 (6) Subordinated 2 11 (12) TOTAL 5.0bn % % Senior 82 (82) 73

74 Backup: Investments On and off-balance-sheet reserves (gross) 9M 2017 m Market value of investments 230, , , , ,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 reserves Subtotal 10,533 11,759 11,327 10,766 10,702 Off-balance-sheet reserves Real estate 2 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 Subtotal 15,436 16,738 14,853 13,977 13,863 Reserve ratio 11.3% 12.1% 11.1% 10.8% 10.7% 1 Unrealised gains/losses from unconsolidated affiliated companies, valuation at equity and cash-flow hedging. 2 Excluding reserves from owner-occupied property. 74

75 Backup: Investments Sensitivities to interest rates, spreads and equity markets 9M 2017 Sensitivity to risk-free interest rates Basis points Change in gross market value ( bn) Change in on-balance-sheet reserves, net ( bn) Change in off-balance-sheet reserves, net ( bn) P&L impact ( bn) Sensitivity to spreads 2 (change in basis points) Change in gross market value ( bn) Change in on-balance-sheet reserves, net ( bn) 1 Change in off-balance-sheet reserves, net ( bn) 1 P&L impact ( bn) Sensitivity to equity and commodity markets 3 30% 10% +10% +30% EURO STOXX 50 (3,595 as at ) 2,516 3,235 3,954 4,673 Change in gross market value ( bn) Change in on-balance-sheet reserves, net ( bn) Change in off-balance-sheet reserves, net ( bn) P&L impact ( bn) Rough calculation with limited reliability assuming unchanged portfolio as at 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. 75

76 Shareholder information 76