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Munich Re Group
Investors' Day on Life Reinsurance
7 October 2008
Agenda
9.00 Life reinsurance – Essential segment for sustainable Group profits Torsten Jeworrek 2
Ensuring sustainable profitability and growth Wolfgang Strassl 13and growth
Q&A
10.15 Break 15 min.
10.30 Excellence in core business:North American best practice Mary Forrest – Michael DeKoning 28
Growth opportunities in Asia:Positioned for leadership Rudolf Lenhard – Daniel Cossette 39
Superior value-based management Hermann Pohlchristoph – Erwin Schnauder 51
Conclusion Wolfgang Strassl 63
12.30 Informal get-together
2
Investors' Day on life reinsurance Third event to present Munich Re strategy in business segments
Life reinsurance – Essential segment for sustainable Group profits
Third event to present Munich Re strategy in business segments
Munich Re Groupp
Life reinsuranceInternational Health
Gross premiums written 2007, before consolidation
r 200
8
€6.0bn€2.1bn1
Today
uran
ce –
7 O
ctob
er' D
ay o
n Li
fe R
eins
u
Primary insurance€16.5bn2
P-C reinsurance€14.2bn
e G
roup
–In
vest
ors'
3
Mun
ich
Re
Total €38.8bn3
1 Incl. €0.3bn health reinsurance not allocated to international health.2 Excl. internation health.3 Consolidation: €1.5bn.
After consolidation: €37.3bn3
Life reinsuranceCore segment for sustainable Group profits
Life reinsurance – Essential segment for sustainable Group profits
Core segment for sustainable Group profits
Key takeaways
Munich Re is second-largest player in global life reinsurancer 2
008
Munich Re successfully combines life and non-life reinsurance to increase value for shareholders
uran
ce –
7 O
ctob
er
Life reinsurance is a consistently profitable and low volatile core element that contributes to Munich Re Group's target:
' Day
on
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Most profitable among the top 5 reinsurers
Steer life reinsurance
e G
roup
–In
vest
ors'Steer life reinsurance
operations in line withGroup profitability target
Life reinsurance targetby 2011 confirmed
15% VANB average growth
Mid-termexpectation by 2015
VANB >€600m
4
Mun
ich
Re
At least 15% RoRaCp.a. to >€440m VANB >€600m
Estimated market volume development Life reinsurance market with solid growth prospects
Life reinsurance – Essential segment for sustainable Group profits
Life reinsurance market with solid growth prospects
Thereof life reinsuranceGlobal reinsurance market1
€b
37
50
50193
260CAGR 5.8%€bnCAGR 5.6%€bn
r 200
8
30
37
210
3037160
193
uran
ce –
7 O
ctob
er
130 156210
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2006 2010e 2015e2006 2010e 2015e
LifeRegional split 2006 2015 ∆ €bn CAGREurope 11 16 5 ~5%
e G
roup
–In
vest
ors'P-C
Europe 11 16 5 5%North America 14 21 7 ~4%Asia, Australasia 4 11 7 ~9%Latin America 0.5 1 0.5 ~11%Af i N /Middl E t 0 5 1 0 5 11%
5
Mun
ich
ReAfrica, Near/Middle East 0.5 1 0.5 ~11%
Total 30 50 20 5.8%
Gross premiums written. Source: Munich Re Economic Research.
1 Updated in 06/2008.
Life reinsuranceMunich Re life reinsurance Essential pillar with increased importance
Life reinsurance – Essential segment for sustainable Group profits
Munich Re life reinsurance – Essential pillar with increased importance
€bnGross premiums written life reinsurance Munich Re segmental split reinsurance2
%
25 027.1
30.4
€bnCAGR 5.1% 100 100
%r 2
00819.4
25.0
8070
uran
ce –
7 O
ctob
er
6 1 6 0
CAGR 9.1%
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2.74.8
6.1 6.0
2030
e G
roup
–In
vest
ors'1998 2001 2004 2007
Munich Re Global market1998 2007
P-CLife
9 1% life reinsurance CAGR Life reinsurance share
1
6
Mun
ich
Re9.1% life reinsurance CAGR,
mainly based on organic growth Life reinsurance share
increased by 50% 1 Source: Munich Re economic research. 2007: Estimate.2 Share in reinsurance gross premiums written.
Split of Munich Re consolidated result in reinsurance Strong and sustainable contribution by life and health business
Life reinsurance – Essential segment for sustainable Group profits
Strong and sustainable contribution by life and health business
%
Segmental split in reinsurance1
%
100 100 100 100
r 200
8
74
30
Life reinsurance contribution to overall
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70
74 79 78 contribution to overall reinsurance result
sustainably exceeds 20%
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26
70
21 22
exceeds 20%
e G
roup
–In
vest
ors'
2004 2005 2006 2007P-CL&H
2
7
Mun
ich
Re
1 Before consolidation. Health business includes only medical reinsurance; little impact. 2 P-C negatively influenced by high NatCat claims (Katrina, Rita, Wilma).
Life reinsurance supplements cycle management Stable development of life result due to low correlation with P C reinsurance
Life reinsurance – Essential segment for sustainable Group profits
Stable development of life result due to low correlation with P-C reinsurance
… evolves from unique characteristicsLife low volatile business compared to P-C …
Long-term business
Profits locked in by business in force persist on average in excess of 10 years
800
Relative change in result1%
r 200
8
10 years
High independencies of risks within homogeneous portfolios
Correlation to P-C reinsurance only in400
600
P-C
L&H2
uran
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7 O
ctob
erCorrelation to P C reinsurance only in very limited number of event scenarios
Excellent data availability and 0
200L&H
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statistics increase statistical certainty
-400
-200
e G
roup
–In
vest
ors'
-6001999 2000 2001 2002 2003 2004 2005 2006 2007
8
Mun
ich
Re
1 Based on result before impairment losses of goodwill, finance costs and taxes on income.2 Health business includes only medical reinsurance; little impact.
Risk capital requirementsDiversification effects significantly reduce capital requirements
Life reinsurance – Essential segment for sustainable Group profits
Diversification effects significantly reduce capital requirements
Economic risk capital (ERC) in reinsurance segment1
12Sum of
100100Increased diversification mainly
driven by mortality, morbidity and longevity risks
%
r 200
8
12 21 stand-alone ERC
Those are largely
and longevity risks
uran
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88 79
Those are largely uncorrelated to market
and P-C risk
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Excl. life Incl. life
Increased importance due to acknowledgement of diversification
effects also in external models e g QIS4
e G
roup
–In
vest
ors'
Diversification effectDiversified ERC
effects also in external models, e.g. QIS4 model (Solvency II) and rating models
9
Mun
ich
Re
Inclusion of life reinsurance almost doubles diversification effect
1 Before diversification with primary insurance.
Impact of Solvency IIMunich Re in optimal position to cover new business opportunities
Life reinsurance – Essential segment for sustainable Group profits
Munich Re in optimal position to cover new business opportunities
Possible impact of Solvency II on life insurance Munich Re's solvency consulting unit
Investigate impact of current developments with clients
Act as sparring partner
Increased capital requirementsLong-term products Consideration of guarantees and options
Hi h i k it l i t f i
Consultingr 2
008
Interactive Solvency II seminars
Illustrate quantitative impacts of reinsurance to clients
Higher risk capital requirements for aggressive asset allocation Available financial resources may rise, but with increased volatility
Interaction
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erreinsurance to clients
Stochastic modelling approach for biometric risks
Risk capital calculation: Standard
increased volatilityQuantitative modelling of overall risk situation and increased transparencyProduct adaptations due to risk capital intensity Modelling
' Day
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Final standard risk model not yet decidedBut: Insurers expect general advice on Client view: Munich Re offers best
Risk capital calculation: Standard model vs. Munich Re capital model
e G
roup
–In
vest
ors'
p gSolvency II from reinsurers right now Solvency II information in market1
10
Mun
ich
Re
Munich Re well positioned to meet clients needs and generate new business
1 Source: 2008 Flaspöhler Reports Europe Non-Life and Life.
Financial strength and client perceptionMunich Re best positioned to benefit under current market developments
Life reinsurance – Essential segment for sustainable Group profits
E cellent risk management Pro idingSignificant capital market stress red ces
Munich Re best positioned to benefit under current market developments
Recent market developments Munich Re's commitmentExcellent risk management – Providing maximum capacity with superior security
Focus on client and underwriting excellence
Q lit i B id it d
Significant capital market stress reduces capital base in financial services industryInsurance industry faces restricted refinancing options in capital market
r 200
8
Quality reinsurer – Besides capacity and security providing service, expertise and innovative solutions
Increased uncertainty likely to result in lower tolerance to risk and weak securityRising demand for highly rated reinsurancecapacity
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er
Munich Re's position and competitive edge confirmed by independent institutions
capacity
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S&P1
"Risk-based capital adequacy as measured by S&P’s model showed a redundancy at the AAA l l t d 2007"
Flaspöhler survey 20082
"Best reinsurer overall non-life and life"
"Preferred reinsurer" in5 t f 7 f i l f t
e G
roup
–In
vest
ors'level at year-end 2007"
"We consider Munich Re's strong balance sheet to be a competitive advantage"
5 out of 7 professional factors7 out of 8 operating attributes18 out of 21 lines of business
11
Mun
ich
Re
Unique combination of capacity, security, quality and brand
1 Rating report on Munich Re, published on 8 September 2008.2 2008 Flaspöhler Reports Europe Non-Life and Life.
Outlook Expansion of life reinsurance is in line with Changing Gear programme
Life reinsurance – Essential segment for sustainable Group profits
Expansion of life reinsurance is in line with Changing Gear programme
Leverage strong market position in core segment and growth in adjacent segments
Life reinsurance market provides room for further profitable growth
Biometric risks
Forward integration on value chain
r 200
8Strong market position in traditional life reinsurance core business
Asset protection
Traditional
Distribution power
Riskknow-how
uran
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erlife reinsurance core business
Munich Re life reinsurance business
Traditional reinsurance
Leverage thecore business
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model enables further expansionRiskcapacity
e G
roup
–In
vest
ors'Low-volatile profitability
supplements non-life business Financially motivated life reinsurance
12
Mun
ich
Re
Global Life Strategy facilitates expansion of life reinsurance
Agenda
Life reinsurance – Essential segment for sustainable Group profits Torsten Jeworreksustainable Group profits
Ensuring sustainable profitability Wolfgang Strassl
r 200
8
and growth Wolfgang Strassl
Excellence in core business: M F t Mi h l D K i
uran
ce –
7 O
ctob
er
North American best practice Mary Forrest – Michael DeKoning
Growth opportunities in Asia:
' Day
on
Life
Rei
nsuGrowth opportunities in Asia:
Positioned for leadership Rudolf Lenhard – Daniel Cossette
e G
roup
–In
vest
ors'
Superior value-based management Hermann Pohlchristoph – Erwin Schnauder
13
Mun
ich
Re
Conclusion Wolfgang Strassl
Competitive positionMunich Re One of the two leading global life reinsurers
Ensuring sustainable profitability and growth
Global market share1
Munich Re – One of the two leading global life reinsurers
Principles
Swiss Re
Munich Re 21
23Focus on organic growth
%r 2
008
RGA
Hannover Re
SCOR
11
8
7
Strict profit orientation
uran
ce –
7 O
ctob
er
GenRe
Transamerica
Scottish Re
5
5
4
Focus on underwriting profits instead of relying on capital market gains
' Day
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Rei
nsuScottish Re
XL Re
Partner Re
2
1
4
Prudent actuarial assumptions
e G
roup
–In
vest
ors'
Other 13
Superior risk capabilities confirmed by independent Flaspöhler client survey:
Client view
14
Mun
ich
ReTop 2 players dominate the global
life reinsurance market1 Source: Munich Re Economic Research. Based on net earned premiums 2007.2 Source: 2008 Flaspöhler Reports Europe Non-Life and Life.
independent Flaspöhler client survey: Best overall life reinsurer2
Premium growth and profitabilitySolid success story founded on organic growth
Ensuring sustainable profitability and growth
%
Solid success story founded on organic growth
Gross premiums written EV earnings (as % of EV beginning of year)
5 46.1
6.5 6.46.0
%€bn
16.2 16.6
14 4
TEV MCEV
r 200
8
5.413.3 13.5
11.3
8.9
11.8
9.0 9.8
14.4
CAGR basic book ~5%
uran
ce –
7 O
ctob
er
4.5 4.8 5.2 5.3 5.4
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2003 2004 2005 2006 2007 2003 2004 2005 2006 2007Operating EV earnings Total EV earnings
e G
roup
–In
vest
ors'
Business with planned recapturesBasic book of business
EV = Embedded valueTEV = Traditional embedded valueMCEV = Market-consistent embedded value
1
15
Mun
ich
Re
Basic book of business with stable growth and consistent profitability1 Planned recaptures of three large-volume accounts in Canada and Germany. All other treaties allocated to basic book of business.2 According to Munich Re's current MCEV methodology. Based on 2004 published CFO Forum EEV principles.
MarketsLeading position in most regions
Ensuring sustainable profitability and growth
Leading position in most regions
Distribution of gross premiums written Market share
%
Excellent geographic diversification Significant market shares, but …
21Global market
%r 2
008
Germany 53
50
Canada
Germany
uran
ce –
7 O
ctob
er
UK
USA
50
28
y
UK
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Canada
Other
14
10
Asia
Rest of Europe
e G
roup
–In
vest
ors'
TOTAL 2007
9USA
room for further expansion
16
Mun
ich
ReTOTAL 2007
€6.0bn… room for further expansion
in some markets
Munich Re market splitNorth America with significant contribution
Ensuring sustainable profitability and growth
Contribution to VANB by region
North America with significant contribution
Continental Europe, Asia1
19%Canada
34%
r 200
8ur
ance
–7
Oct
ober
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nsu
USAUK, Australia, Africa
e G
roup
–In
vest
ors'
TOTAL 2007€277m
27%20%
17
Mun
ich
Re
1 Incl. rest of world.
Risk portfolioEmphasis on mortality and morbidity risks
Ensuring sustainable profitability and growth
Emphasis on mortality and morbidity risks
Products
Inherent risks
Ordinary life1
Grouplife1
Living benefits2 Annuity Biometric risk
portfolio3 Munich Re risk appetiter 2
008Bio-
metric
Mortality 72%
Morbidity 24%
Focus on mortality and morbidity
uran
ce –
7 O
ctob
ermetric risks
Morbidity 24%
Longevity 4%Longevity d i
' Day
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Rei
nsuLongevity 4%
Lapse risk S l ti h
under review
e G
roup
–In
vest
ors'risk
Invest-mentrisks
Selective approachto lapse and
investment risk
18
Mun
ich
Rerisks
Selective coverFull cover1 Ordinary life and group life include all types of mortality covers such as term life and permanent life.
2 Living benefits business comprises critical illness, disability income and long term care.3 Share of net premium 2007.
Sustainable profitabilityPrudent risk management pays off
Ensuring sustainable profitability and growth
Prudent risk management pays off
€mConsistently positive experience variances and operating assumption changes€m
124TEV MCEV1
Focus on risks we understand
r 200
8
69
88 Application of prudent actuarial assumptions in pricing
uran
ce –
7 O
ctob
er69 66
Adequate assumptions for valuation
' Day
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nsu
11
assumptions for valuation
Continuous
e G
roup
–In
vest
ors'
2003 2004 2005 2006 2007Continuous
optimisation of in-force business
19
Mun
ich
Re
Solid risk management and underwriting
1 According to Munich Re's current MCEV methodology. Based on 2004 published CFO Forum EEV principles.
Strategic ambition Extension of profitable growth
Ensuring sustainable profitability and growth
Extension of profitable growth
Strategic ambition
Quantum growth in EV earnings by doubling our VANB until 2011 r 2
008
VANB development
CAGR >8%€m
uran
ce –
7 O
ctob
er
>440
>600
CAGR 15%
CAGR >8%
' Day
on
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Rei
nsu
228
e G
roup
–In
vest
ors'
2006 2011 2015
20
Mun
ich
ReIn accordance with
Munich Re Group RoRaC-target of 15%
Global Life StrategyAchieve ambition through key strategies and enabling initiative
Ensuring sustainable profitability and growth
Strategic ambition
Achieve ambition through key strategies and enabling initiative
Quantum growth in EV earnings by doubling our VANB until 2011
VANB 2006 €228m
r 200
8
Enabling initiative
Our key strategies
1 2 3 plus
Total contribution
VANB 2006 €228m
uran
ce –
7 O
ctob
er
Put in place superior
financial model
Continuously improve core
business
Grow non-traditional business
Expand business
model
Evaluate non-organic growth opportunities
' Day
on
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nsu
€35m€120m €40m €25mAdditional VANB by 2011
€220m
e G
roup
–In
vest
ors'
€€ € €
Additional VANB by 2015
€
VANB 2011 > €440m
21
Mun
ich
Re€10m€95m €65m €5m €175m
VANB 2015 >€600m
Strategy 1: Continuously improve core businessBest in class capabilities in biometric analysis and underwriting
Ensuring sustainable profitability and growth
Best-in-class capabilities in biometric analysis and underwriting
Excellence in biometric analysis Continuous improvements in price differentiation
Share best-in-class actuarial and biometric know-how
IllustrativePrice
Highr 2
008
Leverage large market-specific data base
Continuous enhancement of risk segmentation and modelling
Low level of segmentation
uran
ce –
7 O
ctob
errisk segmentation and modelling
Underwriting expertise Low High level of segmentation
segmentation
' Day
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nsu
Cutting edge clinical expertise in medical underwriting
g
RiskLowHigh
e G
roup
–In
vest
ors'
State-of-the-art underwriting manual and analysis tools
Efficient control systems for
Avoid adverse selection
C titi i i f d i k
22
Mun
ich
Rey
internal and client reviews Competitive pricing for good risks
Strategy 2: Grow non-traditional businessAsset protection for variable annuity business
Ensuring sustainable profitability and growth
Asset protection for variable annuity business
Demand for financial solutions Munich Re's approach to asset protectionI t l t i f " t t ti "Shift in lines and policy
Variable annuities and unit-linked policies growth Increased risk awareness in
Productd l t
Riskt f
Active risk management/ Risk
t lli
Internal steering of "asset protection"
r 200
8
Increased risk awareness in respect of options and guarantees
Raise demand for protection f lif i ' li biliti
development transfer ghedging controlling
Advice in developing
Transfer of investment/
Platform for effective
uran
ce –
7 O
ctob
erof life insurer's liabilitiesNaturally extending to variety of ALM issues, where holistic cover is sought for overall
manageable products
insurance risks
management
Value proposition for client
' Day
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Rei
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Close cooperation with cedant at early stage
balance sheetMunich Re approach
e G
roup
–In
vest
ors'
Combined insurance and financial markets expertise to structure and price risks resulting from these productsSound platform for management of inherent complexity resulting f h b id i d fi i l i k
23
Mun
ich
Refrom hybrid insurance and financial risks
Strategy 3: Expand business modelMunich Re contributes to underwriting and processing
Ensuring sustainable profitability and growth
Munich Re contributes to underwriting and processing
Benefits for Munich ReProvide underwriting and processing services
Become indispensable partner for clients
Improved underwriting quality and ff
Extend consulting service range
Processing and admin tools combined with Munich Re's underwriting expertise
r 200
8
Life insurance
efficiency
uran
ce –
7 O
ctob
er
Productdevelopment Distribution Underwriting Processing/
AdminClaims
handlingRisktaking
value chain
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Benefits for Munich ReSupport alternative channels
e G
roup
–In
vest
ors'
Create reinsurance opportunities in mature and emerging markets
Substitute fully integrated primary
Cooperate with banks or brokers as direct distribution channel for insurance products
Close involvement in product development
24
Mun
ich
Reinsurer in parts of value chainRisk-taking support through reinsurance
Outlook VANB growth ambition achievable
Ensuring sustainable profitability and growth
VANB growth ambition achievable
Munich Re VANB development €m
>600
€m
CAGR >8%
r 200
8
348399
444CAGR 15%
uran
ce –
7 O
ctob
er
228277 286
348
' Day
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Rei
nsu
e G
roup
–In
vest
ors'
2006 actual
2007 actual
2008forecast
2009 plan
2010 plan
2011 target
... 2015expectation
25
Mun
ich
Re
VANB growth ambition: Well on track
According to Munich Re's current MCEV methodology. Based on 2004 published CFO Forum EEV principles.
Global Life Strategy Following presentations will provide more detail
Ensuring sustainable profitability and growth
Following presentations will provide more detail
Strategic ambition
Quantum growth in EV earnings by doubling our VANB until 2011
Enabling initiativeKey strategies
r 200
8
Enabling initiative
Put in place
Key strategies
Continuously i
Grow non-t diti l
Expand b i
Evaluate non-i th
1 2 3 plus
uran
ce –
7 O
ctob
ersuperior financial model
improve core business
traditional business
business model
organic growth opportunities
' Day
on
Life
Rei
nsu
Presentations detail initiatives in exemplary markets and introduce steering methodology
e G
roup
–In
vest
ors'
Excellence in core business: Growth opportunities in Asia: Superior value-based
26
Mun
ich
Re
North American best practicepp
Positioned for leadershipp
management
Key takeaways
Ensuring sustainable profitability and growth
Key takeaways
Ensuring sustainable profitability
Strong track record in life reinsurance is based upon superior risk management and excellent underwriting
r 200
8Ambition: Significantly extend profitability growth achieving >€440m VANB in 2011. Expected VANB 2015: >€600m
uran
ce –
7 O
ctob
erExpected VANB 2015: >€600m
' Day
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Clear strategy to strengthen the core and expand business model
e G
roup
–In
vest
ors'
Leverage our excellence in
biometric analysis
Grow our proportion in non-
t diti l b i
Opportunistically evaluate non-organic growth
Extend our positioning on the
lif i k l h i
27
Mun
ich
Rey
and underwriting traditional business g gopportunities life risk value chain
Agenda
Life reinsurance – essential segment for sustainable Group profits Torsten Jeworreksustainable Group profits
Ensuring sustainable profitability Wolfgang Strassl
r 200
8
and growth Wolfgang Strassl
Excellence in core business: M F t Mi h l D K i
uran
ce –
7 O
ctob
er
North American best practice Mary Forrest – Michael DeKoning
Growth opportunities in Asia:
' Day
on
Life
Rei
nsuGrowth opportunities in Asia:
Positioned for leadership Rudolf Lenhard – Daniel Cossette
e G
roup
–In
vest
ors'
Superior value-based management Hermann Pohlchristoph – Erwin Schnauder
28
Mun
ich
Re
Conclusion Wolfgang Strassl
North AmericaThe largest and most developed markets
Excellence in core business: North American best practice
Munich Re portfolio
The largest and most developed markets
Global life reinsurance market
Canada34%
UK, Australia,Africa
VANB by region%
Other27%
Canada7%
Distribution of life gross premiums written%
r 200
8
34%Africa20%
27% 7%
uran
ce –
7 O
ctob
er
USA50%
UK10%
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USA27%
Continental Europe, Asia1
19%Germany 6%
e G
roup
–In
vest
ors'
Source: Munich Re Economic Research 1 Incl. rest of world.
29
Mun
ich
Re
Growth opportunity in price competitive and sophisticated market place
North American business philosophyTranslate core principles into entrepreneurial approach
Excellence in core business: North American best practice
Translate core principles into entrepreneurial approach
Business model Operations modelClient model
Large case capacity with unsurpassed financial strength Client focus
Employ industry leaders in allSuperior knowledge of
Availability and ability to utilise data better than competitors
Profit-maximising and
r 200
8
Employ industry leaders in all key roles
Superior knowledge of customer
Profit maximising and risk-management mindset
uran
ce –
7 O
ctob
er
Nimble and opportunistic approach to the market
' Day
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Rei
nsu
Allocate resources and capital to opportunities with greatest
Retrench from markets where risk-reward balance is not
Strive to anticipate client needsSuperior local capital management
e G
roup
–In
vest
ors'to opportunities with greatest
profit potentialrisk-reward balance is not
appropriate Regulatory development knowledge Deal structuring skills
30
Mun
ich
Re
Munich Re Canada: Market share and premium developmentMunich Re has become the unrivalled market leader in Canada
Excellence in core business: North American best practice
Munich Re has become the unrivalled market leader in Canada
Munich Re Canada market share% of gross premi ms ritten% of gross premiums written
Decline in premium and market share
driven by44 47 4855
63 63 6153
r 200
8
driven by scheduled
termination of one short-term non-
traditional business treaty
uran
ce –
7 O
ctob
er
Munich Re Canada premium development
business treaty2000 2001 2002 2003 2004 2005 2006 2007
' Day
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Rei
nsu
CAN$ m
1 295 1,306 1,156 645
1,664
2,330 2,453 2,371 1,947
e G
roup
–In
vest
ors'
744 772 933 931 1,035 1,147 1,215 1,302 19 134140
7331,295 ,
645
763 906 1,073 Non-traditionalTraditional
31
Mun
ich
Re744 772
2000 2001 2002 2003 2004 2005 2006 2007
New businessMunich Re No 5 with upside potential
Excellence in core business: North American best practice
US$ b M k h
2007 US recurring new business assumed
Munich Re No. 5 with upside potential
US$ bn Market share
RGA 161 23.6%Transamerica 144 21.1%Swiss Re 126 18.6%
Top 5 control 85%
of market
r 200
8
Generali USA 73 10.8%Munich Re 60 8.8%Canada Life 26 3.8%SCOR 24 3 6%
of market
uran
ce –
7 O
ctob
erSCOR 24 3.6%Scottish Re 22 3.3%General Re 14 2.1%Wilton Re 7 1.1%
Large gap between
Munich Re and next competitor
' Day
on
Life
Rei
nsu
Optimum Re 7 1.0%Hannover Re 6 0.8%Ace-Tempest 5 0.7%XL Re 4 0.6%
e G
roup
–In
vest
ors'%
Total 683 100.0%
32
Mun
ich
Re
High potential for future development
Source: Munich Re reinsurance survey conducted on behalf of the Society of Actuaries.
Market development and market share Stable market share due to underwriting discipline
Excellence in core business: North American best practice
Stable market share due to underwriting discipline
Cession rate Peak of US competitive cycle
62%59% 62% 60%
56%
Munich Re market share
r 200
842%
51% 52%56%
47%
40%37%
High cession rates in peak primarily l t d t i ti l
uran
ce –
7 O
ctob
er37% related to irrational pricing by reinsurers
' Day
on
Life
Rei
nsu
6% 6%9%
12% 11%7%
10% 13% 12% 11%9%
Munich Re market share remains within
10% range
e G
roup
–In
vest
ors'
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
33
Mun
ich
Re
Munich Re with stable position over years –In a market that has seen rising and falling stars
Changed market conditions and scope of businessSignificant improvements support Munich Re to benefit from market changes
Excellence in core business: North American best practice
Significant improvements support Munich Re to benefit from market changes
High competition in pricing results in market action and changed market conditions
Scottish Re
ING even paid for US life re business transfer
Swiss Re
Improved pricing for traditional life business
RoE
Market profitability increased from mid
Cession rates
Declined due to more
r 200
8
life re business transfer due to underpricing
traditional life business in the US
increased from mid single to double digit
to more rational pricing
uran
ce –
7 O
ctob
er
Munich Re well prepared for future challenges
Re-priced every treaty in 2005/06
' Day
on
Life
Rei
nsup y y
Enhanced management information systems and mortality analysis capabilities
e G
roup
–In
vest
ors'
Restructured sales and pricing functions resulting in greater pricing discipline and risk management
34
Mun
ich
Re
Profit margin improved by 50% since 2000
Large case programmeAbility to provide large capacity differentiates Munich Re from competitors
Excellence in core business: North American best practice
Ability to provide large capacity differentiates Munich Re from competitors
Superpool programme: Innovation example for North America
Purpose Detail
Maximise benefits of Munich Re's increased per life capacity
Clients get access to increasing levels
r 200
8
Create sustainable competitive advantage for selected clients
Control access to larger retention for
Clients get access to increasing levels of Munich Re's US$50m capacity per life
uran
ce –
7 O
ctob
erControl access to larger retention for retention management purposes
Capacity
Tiered based on volume ceded
Unencumbered by retrocession constraints
' Day
on
Life
Rei
nsuUnencumbered by retrocession constraints
Programme well on track in Canada and US
e G
roup
–In
vest
ors'
35
Mun
ich
Re
Large case programme supports growth and profit ambitions
Best practice North AmericaLeveraging strengths across North America
Excellence in core business: North American best practice
Leveraging strengths across North America
Early example – Life underwriting
Moved to a US$50m per life
Introduction of one uniform improved
Usage of one uniform improved
Implemented a North American underwriting
r 200
8
retention underwriting manual underwriting system best practices leader
uran
ce –
7 O
ctob
er
More opportunities to be looked at in next 6–9 months
Administration and claims processes and tools
' Day
on
Life
Rei
nsuAdministration and claims processes and tools
Operational and financial information systems
e G
roup
–In
vest
ors'
Human resources
36
Mun
ich
Re
Scope of businessLeveraging best practices in all lines of business
Excellence in core business: North American best practice
Leveraging best practices in all lines of business
Not a "one-trick pony"
Long term care (LTC)incl. LifePlans Critical illness
Individual
r 200
8Individual disability income Group life and Group LTC
life
uran
ce –
7 O
ctob
er
Individual life is core, but leading positions in all lines of business
' Day
on
Life
Rei
nsu
e G
roup
–In
vest
ors'
Diversification of VANB
Options for future growth
Enhanced solution-orientation through cross-line offerings
37
Mun
ich
Re
Key takeaways
Excellence in core business: North American best practice
Extremely strong franchise in CanadaExtremely strong franchise in Canada, with significant potential for profitable growth in the US
r 200
8
We will leverage resources and best practices across North America
uran
ce –
7 O
ctob
er
Growth will only come with strict adherence to disciplined pricing and underwriting
' Day
on
Life
Rei
nsug g
Our goal: to be nimble, entrepreneurial and
e G
roup
–In
vest
ors'
business-minded with unparalleled customer focus
38
Mun
ich
Re
Agenda
Life reinsurance – Essential segment for sustainable Group profits Torsten Jeworreksustainable Group profits
Ensuring sustainable profitability Wolfgang Strassl
r 200
8
and growth Wolfgang Strassl
Excellence in core business: M F t Mi h l D K i
uran
ce –
7 O
ctob
er
North American best practice Mary Forrest – Michael DeKoning
Growth opportunities in Asia:
' Day
on
Life
Rei
nsuGrowth opportunities in Asia:
Positioned for leadership Rudolf Lenhard – Daniel Cossette
e G
roup
–In
vest
ors'
Superior value-based management Hermann Pohlchristoph – Erwin Schnauder
39
Mun
ich
Re
Conclusion Wolfgang Strassl
Life reinsurance markets in AsiaStrong growth prospects in Asian markets
Growth opportunities in Asia: Positioned for leadership
Strong growth prospects in Asian markets
N d d i 2008 US$
Relative attractiveness of Asian marketsStatus quo – China and Korea dominateNew ceded premiums 2008 US$ m
India
SEA
Greater China
SEA Japan
I di
r 200
8
Growth rates
SEA
Japan
South Korea
Greater China South Korea
India
uran
ce –
7 O
ctob
er
SEA = South-East AsiaSource: NMG Life and Health Reinsurance Programme 2008
Total US$454m Reinsurance volume
SEA = South-East Asia
' Day
on
Life
Rei
nsu
Significant growth i d l i
High demand for i ' i Increasing weight
Drivers for future growth
By far largest l ti ith t
e G
roup
–In
vest
ors'in underlying
insurance marketreinsurers' service,
capital and expertise
g gof Takaful modelpopulation with strong
economic growth
40
Mun
ich
Re
gekürztEXPECTED TOTAL NEW CESSION MARKET GROWTH
10–15% p.a.
Future growth prospectsMunich Re initiatives support above market growth expectation
Growth opportunities in Asia: Positioned for leadership
Munich Re initiatives support above-market growth expectation
Ambitious growth expectations
223256
Gross premiums written, €mCAGR 19%
r 200
8
144 151180
MID-TERM GROWTH EXPECTATION
>15% p.a.
uran
ce –
7 O
ctob
er
p
' Day
on
Life
Rei
nsu
2006 2007 2008e 2009e 2010e
Global Life Strategy
e G
roup
–In
vest
ors'
Clear focus on profitabilityAdditional growth from health and
41
Mun
ich
ReClear focus on profitability non-traditional business expected
Munich Re in AsiaStrong presence basis for significant share in future growth
Growth opportunities in Asia: Positioned for leadership
Strong presence basis for significant share in future growth
Strong and increasing market share% of estimated total new reinsurance premiums in 2008
Local presence in every important market% of estimated total new reinsurance premiums in 2008
14%
19%
Munich Re
RGA
Multinational reinsurer (70%)
●●●Tokyo
SeoulBeijing
r 200
87%
8%
12%
Hannover Re
Gen Re
Swiss Re
●●
●
●
Shanghai
TaipeiHong Kong
Mumbai
uran
ce –
7 O
ctob
er
5%
2%
3%
Other
Trans-america
Scor
D i i (30%)■●
Kuala Lumpur Singapore
' Day
on
Life
Rei
nsu
8%
7%
15%
Other
China Re
Korea Re
Domestic reinsurer (30%)
e G
roup
–In
vest
ors'
Regional head office in Singapore t bli h d i 2007 M lti l l ti id
Source: NMG Life and Health Reinsurance Programme - 2008
8%Other
Market dominated by top 3 global life i d ti i f
42
Mun
ich
Re
Asia excludes Australia, New Zealand, Middle East and Pakistan.
established in 2007 – Multiple locations provide flexibility and advanced marketability
reinsurers; domestic reinsurers face more intensified competition
Business, relationship and operational management quality indexLeading perception in business quality and operational management
Growth opportunities in Asia: Positioned for leadership
Leading perception in business quality and operational management
Operational management quality index (diff. from avg.)Market penetration
60
80
1001.0
0.9
0.8
0 7
r 200
8
-20
0
20
40Munich Re
Munich Re
0.7
0.6
0.5
0.4
uran
ce –
7 O
ctob
er
-80
-60
-40
20
0.3
0.2
0.1
' Day
on
Life
Rei
nsu
-100-100 -80 -60 -40 -20 0 20 40 60 80 100
Relationship management quality index (diff. from avg.) –All respondents
550 600 650 700 750
Business quality index – All respondents
0
e G
roup
–In
vest
ors'
Source: NMG Life and Health Reinsurance Programme 2008 Source: NMG Life and Health Reinsurance Programme 2008
43
Mun
ich
Re
Superior retention supported by high level of customer satisfaction
Favourable terms of trade based on superior business quality index
Key growth initiativesParticipate in Asian growth ensured by selected initiatives
Growth opportunities in Asia: Positioned for leadership
Participate in Asian growth ensured by selected initiatives
Munich Re's key growth initiativesMunich Re s key growth initiatives r 2
008
Product development TakafulFinancially motivated reinsurance Process consulting
uran
ce –
7 O
ctob
er
Infrastructure processes and data management system improved continuously
' Day
on
Life
Rei
nsuInfrastructure, processes and data management system improved continuously
e G
roup
–In
vest
ors'
Significant demand for consulting service across Asia
44
Mun
ich
Re
Product developmentRemains key business strategy
Growth opportunities in Asia: Positioned for leadership
Remains key business strategy
Client needs Munich Re benefits
Example: Living benefits Leveraging exclusive partners
Fast-growing segment
Underwriting, claims, actuarial and product
LifePlans – LTC expertise
Best Doctors – Exclusive joint venture
r 200
8
design expertise needed
Mostly long term care (LTC), disability income and critical illness (second
ti )
agreement across Asia
uran
ce –
7 O
ctob
ergeneration)
Expertise in Germany – Direct and
Leveraging global network
' Day
on
Life
Rei
nsuExpertise in Germany Direct and
reinsurance level
Expertise from advanced Anglo-Saxon markets
e G
roup
–In
vest
ors'
45
Mun
ich
Re
Financially motivated reinsuranceLarge potential for future growth
Growth opportunities in Asia: Positioned for leadership
Large potential for future growth
Environmental factors
Joint venture partners with limited capital New business growth is capital intensiveNew solvency regime
Subprime and credit crisisHigh volatility in equity marketUnfavourable environment to raise equity or debt capital
r 200
8
capital
uran
ce –
7 O
ctob
er
Ability to structure and leverage local knowledge
Structuring expertise in Germany and Singapore regional head office
Key success factors Munich Re's position
' Day
on
Life
Rei
nsug
Availability of capital and collateralFinancial strength
g p gStrong local knowledge with offices in all key marketsAvailability of collateral
e G
roup
–In
vest
ors'
Excellent balance sheet as leading global reinsurer
46
Mun
ich
Re
Strict focus on genuine risk transfer transactions
Process consultingAllfinanz brings international best practice to Asia
Growth opportunities in Asia: Positioned for leadership
Allfinanz brings international best practice to Asia
Combining the strength of two leading companies in their respective area of expertise
r 200
8
AUTOMATEDUNDERWRITING UNDERWRITING
RULESSOFTWARESOLUTIONS
uran
ce –
7 O
ctob
erRULESSOLUTIONS
' Day
on
Life
Rei
nsu
We expect Asia to follow trend of UK and Australia
More compelling proposal for distribution and customers
e G
roup
–In
vest
ors'
Clear advantages: Superior data management, lower costs, UW consistency and improved profitability
47
Mun
ich
Re
Allfinanz will be significant contributor to Munich Re's long-term success in Asia
Munich Re RetakafulParticipating in significant Takaful growth
Growth opportunities in Asia: Positioned for leadership
Islamic markets with low insurance penetration
Participating in significant Takaful growth
Munich Re´s International Retakaful Hub
4050607080
8
10
12
14Composite Retakaful license by Central Bank of Malaysia in 2007
First foreign Retakaful operator in Malaysia
Highest rated Retakaful operator worldwide under
r 200
8010203040
0
2
4
6
d K a d a an E an ar ait a
Wakala model
International Shari´a Advisor Board to ensure worldwide compliance
uran
ce –
7 O
ctob
er
Wor
l UK
Mal
aysi
Thai
lan d
Indo
nesi
Pak
ist a
UA
Om
a
Qat
a
Kuw
a
Sau
di A
rabi
Life insurance penetration GDP per capita (US$) Genuine Retakaful model, high rating and full service
Munich Re´s unique value proposition
' Day
on
Life
Rei
nsu
capabilities
Already placed treaties in Malaysia, Indonesia, Pakistan and Middle East
Trend towards conversion from conventional
Strong growth potential in countries with low life insurance penetration, high GDP per capita and
large and young Muslim populations
e G
roup
–In
vest
ors'reinsurance to Retakaful
Expect higher reinsurance penetration rate under Takaful model
Increasing acceptance of Takaful, Islamic Banking and "Bancatakaful"
48
Mun
ich
Re
Munich Re aims to be the dominant player in the worldwide Retakaful market
Need for service, capacity and capitalMunich Re competitive advantages
Growth opportunities in Asia: Positioned for leadership
Munich Re competitive advantages
Consulting service Capacity Capital management
Access to reinsurers´know-how
Risk transfer Improve balance sheet or finance growth
Intellectual capital Good understanding of Structuring expertise in
Motivation
r 200
8
Intellectual capital capabilities due to unique positioning as direct insurance and
Good understanding of risk: Research and experience studies
High internal retentions
Structuring expertise in Munich and Singapore
Easy access to collateral
Large and solid balance
uran
ce –
7 O
ctob
er
Munich Re position
reinsurance player in all lines of business
Strong local knowledge and presence
g
Strong rating: S&P AA-Large and solid balance sheet
' Day
on
Life
Rei
nsuand presence
Exclusive partners –Allfinanz and LifePlans
e G
roup
–In
vest
ors'
49
Mun
ich
Re
Key takeaways
Growth opportunities in Asia: Positioned for leadership
Key takeaways
Significant competitive advantage and high barrier to entrySignificant competitive advantage and high barrier to entry due to strong local presence and intellectual capital
r 200
8
Aggressive service strategy to ensure solid growth
uran
ce –
7 O
ctob
er
Growth will come together with strict underwriting discipline geared to profitability
' Day
on
Life
Rei
nsu
Combination of strong capital management expertise and capacity provides
e G
roup
–In
vest
ors'incommensurable reliability in volatile environment
50
Mun
ich
Re
Agenda
Life reinsurance – Essential segment for sustainable Group profits Torsten Jeworreksustainable Group profits
Ensuring sustainable profitability Wolfgang Strassl
r 200
8
and growth Wolfgang Strassl
Excellence in core business: M F t Mi h l D K i
uran
ce –
7 O
ctob
er
Excellence in core business: North American best practice Mary Forrest – Michael DeKoning
Growth opportunities in Asia:
' Day
on
Life
Rei
nsuGrowth opportunities in Asia:
Positioned for leadership Rudolf Lenhard – Daniel Cossette
e G
roup
–In
vest
ors'
Superior value-based management Hermann Pohlchristoph – Erwin Schnauder
51
Mun
ich
Re
Conclusion Wolfgang Strassl
Gross premiums writtenSteady growth of base business despite more difficult market environment
Superior value-based management
Life
Steady growth of base business despite more difficult market environment
Top-line developmentIFRS gross premiums written Decrease from 2005 onwards result of planned
recaptures of three large-volume accounts in
Drivers
€bn6 5 6 4
r 200
8
Canada and Germany
Portfolio excluding those treaties shows steady growth …
5.46.1 6.5 6.4 6.0
CAGR basic book ~5%
uran
ce –
7 O
ctob
er
… partially offset by trend of treaties being transformed from coinsurance to pure risk premium reinsurance4.5 4.8 5.2 5.3 5.4
CAGR basic book ~5%
' Day
on
Life
Rei
nsu
Recent impacts: strengthening of euro andslight reduction of cession rates in North America and Europe2003 2004 2005 2006 2007
e G
roup
–In
vest
ors'Business with planned recaptures
Basic book of business
52
Mun
ich
ReSteady capitalisation on profitable growth opportunities
along with strict adherence to profitability targets
Superior value-based management
Underwriting resultIFRS underwriting result reveals contribution of operations to overall success
Life and health
IFRS underwriting result reveals contribution of operations to overall success
Transition from IFRS underwriting result to reported IFRS consolidated result 20071. Underwriting result 2. Consolidated result€m €m
r 200
8
827–5,433
7,024 705 –189
–251
uran
ce –
7 O
ctob
er
725
' Day
on
Life
Rei
nsu
–1,958 460 30 Health
430
e G
roup
–In
vest
ors'
460
Net earned premiums
Income from technical
Expenses for claims and
Operating expenses
Underwriting result
Underwriting result
Other investment
Other result
Income taxes
Consolidated result
430 Life
53
Mun
ich
Repremiums technical
interestsclaims and
benefitsexpenses result
1 Investment result from assets backing technical provisions. 2 Investment result of reinsurance L&H less investment result from assets backing technical provisions.
1 2result investment
resultresult taxes result
Underwriting resultValue orientation at Munich Re is already reflected in improved IFRS result
Superior value-based management
Life
Value orientation at Munich Re is already reflected in improved IFRS result
Steady increase in IFRS results – but slight volatility unavoidable
… and its driversIFRS underwriting result separated for life
Result contribution of life reinsurance …
€m
r 200
8
329
430 Margins flowing through from historical superior business selection
Exceptionally good mortality and morbidity
~€300m normalisedl l
uran
ce –
7 O
ctob
er
215
Exceptionally good mortality and morbidity experience in 2007
Development in line with portfolio growth and value orientation
ExpectationSlight, but steady
level
' Day
on
Life
Rei
nsu
140 value orientationyincrease fromcurrentnormalisedlevel
e G
roup
–In
vest
ors'
2004 2005 2006 2007
54
Mun
ich
Re
Munich Re's course for profitable growth visible in IFRS figures –Strong performance to continue in the future
Market-consistent embedded value (MCEV)The challenge is to adequately value and steer long term business
Superior value-based management
The challenge is to adequately value and steer long-term business
Long-term life reinsurance business … Pattern of shareholder cash-flows Illustrative
r 200
8ur
ance
–7
Oct
ober
… but what is the shareholder value at present?
' Day
on
Life
Rei
nsu
Present value of future profits available to shareholder
Present value of future after tax regulatory profits
Time value of financial options and guarantees
Cost of non-hedgeable risks
e G
roup
–In
vest
ors'
Adjustments for risks of cash flows
C it l i d f / ll t d
-
Required capital
Cost of non hedgeable risksCost of double taxation and cost of asset management related to assets backing required capital
MCEV
55
Mun
ich
ReCapital required for/allocated
to the portfolio at time of valuation+Required capital
Free surplus
MCEV movement analysisMCEV discloses the drivers of value creation in life reinsurance
Superior value-based management
Munich Re MCEV earnings 20071
MCEV discloses the drivers of value creation in life reinsurance
6,662
277 88
336 10148 -159€m
r 200
8
5,962
277 88
uran
ce –
7 O
ctob
er
Operating MCEV earnings
Opening Total MCEV earnings Closing
' Day
on
Life
Rei
nsu
Capital andcurrency
movements
Other non-operating variances
OpeningMCEV
Expectedreturn
Economic variances
ClosingMCEVExperience
variances & assumption
changes
VANB
e G
roup
–In
vest
ors'
Value generation through management
actionChanges due to external factors
Risk-freerate ofreturn
56
Mun
ich
Re
Focus of internal steering approach1 According to Munich Re's current MCEV methodology. Based on 2004 published CFO Forum EEV principles.
Munich Re's life reinsurance business Timing of the emergence of distributable earnings
Superior value-based management
Distributable earnings (undiscounted)
Timing of the emergence of distributable earnings
2.4
2 0
€bn, 5-year steps, as at 2007
r 200
8
2.0 1.91.6
1.41.2
uran
ce –
7 O
ctob
er
0.90.8 0.7 0.5 0.4
0.3 0 2
' Day
on
Life
Rei
nsu0 3 0.2 0.1 0.1 0.0
2008–
2012
2013–
2017
2018–
2022
2023–
2027
2028–
2032
2033–
2037
2038–
2042
2043–
2047
2048–
2052
2053–
2057
2058–
2062
2063–
2067
2068–
2072
2073–
2077
2078–
2082
2083–
2087
e G
roup
–In
vest
ors'
PRESENT VALUE EQUALS EMBEDDED VALUE EXCLUDING FREE SURPLUS
57
Mun
ich
RePRESENT VALUE EQUALS EMBEDDED VALUE EXCLUDING FREE SURPLUS
€5.8bn
BenefitsMCEV perfectly combines external requirements with internal steering
Superior value-based management
MCEV perfectly combines external requirements with internal steering
Strong theoretical foundation through Market value of liabilities fully compatible with finance theorymarket consistency
Standardised rules ensure high degree of transparency and consistency
Market value of liabilities fully compatible with finance theory
Compliance with MCEV Principles and Guidance as published in June 2008 by CFO Forum (representing 20 of the largest European life (re)insurers)
r 200
8
In conformity with IASB, European regulators and the CRO Forum
Using rationale for determining cost of capital comparable to CFO Forum
European life (re)insurers)
uran
ce –
7 O
ctob
er
Overall methodology perfectly suits our
Allowing for optimal integration of economic risk capital
Powerful alignment of pricing, valuation and controlling of
Adopting Munich Re economic risk capital model enables steering of life business on overall RoRaC targets
' Day
on
Life
Rei
nsugy p y
steering and pricing philosophyg p g g
business
e G
roup
–In
vest
ors'
58
Mun
ich
Re
Risk capital in MCEVRisk capital requirements clearly reflected in MCEV in two ways
Superior value-based management
Risk capital requirements clearly reflected in MCEV in two ways
Definition of required capital in ANW1 Allowance for non-hedgeable risksMaximum of Cost of non-hedgeable risks
Minimum level of solvency capital requirements IAnnual charge
Economic risk capital for non-hedgeable risk
X
r 200
8
Minimum target level of capital demand by third partiesII
Annual charge
Cost of
XNon-hedgeable risk rate
Present value of annual charge
uran
ce –
7 O
ctob
er
IIInon-hedgeable
risk
Present value of annual charge discounted at risk-free interest rateRequirements from internal risk model
' Day
on
Life
Rei
nsu
e G
roup
–In
vest
ors'
Allocation of required capital fully reflects all requirements from regulators,
rating agencies and internal risk models
Approach to calculating cost of non-hedgeablerisk entirely in line with
Munich Re's risk capital model
59
Mun
ich
Re
1 Asset net worth.
Derived VBM targetsInternal steering at Munich Re aims for maximum value creation
Superior value-based management
Internal steering at Munich Re aims for maximum value creation
Absolute VANB target to ensure desired level of1 VANB ≥ Target VANB
Absolute VANB target to ensure desired level of new business generation in terms of size and profitability
r 200
8
New business targets
2 VANB at "target RoRaC spread" ≥ 0Relative target ensuring a minimum return relative to inherent business risk consistent with the RoRaC steering principle of Munich Re
uran
ce –
7 O
ctob
er
3 VANB at "target IRR spread" ≥ 0Relative target ensuring a minimum return relative to the full capital invested to meet overall expectations on return on equity
' Day
on
Life
Rei
nsu
In-force business
target4 Operating experience variances +
operating assumption changes ≥ 0
Absolute target based on movement analysis ensuring adequate actuarial assessment and risk management
e G
roup
–In
vest
ors'target management
60
Mun
ich
Re
All management incentive schemes are strictly based on these VBM targets
Connection between MCEV and IFRSConvergence between MCEV earnings IFRS result and cash flows
Superior value-based management
Life
Convergence between MCEV earnings, IFRS result and cash flows
Development of MCEV earnings vs. IFRS result
High investment in the first year mainly due to acquisition costs
Shareholder cash flows
Shareholder cash flow After tax IFRS result MCEV earnings
Illustrative
r 200
8
Compensated for in subsequent returns
IFRS result
Shareholder cash flow After tax IFRS result MCEV earnings
uran
ce –
7 O
ctob
erProfits distributed evenly (as a percentage of IAS benefit reserves) over the lifetime of the business
Fi t fit ll l t
1 2 3 4 5 6 7 8 9 10 11 Σ
' Day
on
Life
Rei
nsu
MCEV earnings
First-year profit usually close to zero
Value creation shown at time of policy
e G
roup
–In
vest
ors'
p yissue
Expected return based on roll-forward of MCEV
61
Mun
ich
Re
MCEV most appropriately reflects the value of life business
Key takeaways
Superior value-based management
We continuously advance our steering methodology to ensure profitabilityr 2
008
MCEV reflects adequate actuarial approach to risk management
uran
ce –
7 O
ctob
er
Applying MCEV for internal steering with RoRaC target ensures consistency with overall Group targets
' Day
on
Life
Rei
nsu
Development and prognoses of IFRS result and VANB
e G
roup
–In
vest
ors'prove Munich Re's ability to generate profitable business
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ich
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Agenda
Life reinsurance – Essential segment for sustainable Group profits Torsten Jeworreksustainable Group profits
Ensuring sustainable profitability Wolfgang Strassl
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8
and growth Wolfgang Strassl
Excellence in core business: M F t Mi h l D K i
uran
ce –
7 O
ctob
er
Excellence in core business: North American best practice Mary Forrest – Michael DeKoning
Growth opportunities in Asia:
' Day
on
Life
Rei
nsuGrowth opportunities in Asia:
Positioned for leadership Rudolf Lenhard – Daniel Cossette
e G
roup
–In
vest
ors'
Superior value-based management Hermann Pohlchristoph – Erwin Schnauder
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ich
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Conclusion Wolfgang Strassl
Conclusion of the day
Life reinsurance is an attractive market
W h l f f d l Lif i i l
Life reinsurance is an attractive market, Munich Re has successfully established a global leadership position
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8
We have a clear strategy for future development – Life reinsurance is not always sexy, but will create value for clients and shareholders
uran
ce –
7 O
ctob
er
Profitability is key – dependent on market situation we adjust market shares in different countries
' Day
on
Life
Rei
nsu
We are persistent in our approach –therefore we invest today into the growth markets of the future
e G
roup
–In
vest
ors'
Superior steering is basis of our success – therefore we are at the forefront in developing state-of-the-art industry standards
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ich
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Appendix
Financial calendar
Contacts
Disclaimer
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8ur
ance
–7
Oct
ober
' Day
on
Life
Rei
nsu
e G
roup
–In
vest
ors'
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ich
Re
Financial calendar
Appendix
Financial calendar
7 November 2008 Interim report as at 30 September 2008
3 March 2009Balance sheet press conference for 2008 financial statements (preliminary figures)Analysts' conference, Munich
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22 April 2009 Annual General Meeting
23 April 2009 Dividend payment
uran
ce –
7 O
ctob
er
6 May 2009 Interim report as at 31 March 2009
4 August 2009 Interim report as at 30 June 2009; Half year press conference
' Day
on
Life
Rei
nsu4 August 2009 Interim report as at 30 June 2009; Half-year press conference
5 November 2009 Interim report as at 30 September 2009
e G
roup
–In
vest
ors'
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ich
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66
For information please contact
Appendix
For information please contact
Sascha Bibert Ralf Kleinschroth
Head of Investor & Rating Agency RelationsTel.: +49 (89) 38 91-39 10E-mail: sbibert@munichre.com
Tel.: +49 (89) 38 91-45 59E-mail: rkleinschroth@munichre.com
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Dr. Thomas Dittmar
Tel.: +49 (89) 38 91-64 27E-mail: tdittmar@munichre.com
Christine Franziszi
Tel.: +49 (89) 38 91-38 75E-mail: cfranziszi@munichre.com
uran
ce –
7 O
ctob
er
Andreas Silberhorn Martin Unterstrasser
' Day
on
Life
Rei
nsu
Tel.: +49 (89) 38 91-33 66E-mail: asilberhorn@munichre.com
Tel.: +49 (89) 38 91-52 15E-mail: munterstrasser@munichre.com
e G
roup
–In
vest
ors'
Münchener Rückversicherungs-GesellschaftKöniginstrasse 107, 80802 München, Germany
Fax: +49 (89) 38 91-98 88@
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ich
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Internet: www.munichre.com
67
Disclaimer
Appendix
Disclaimer
This presentation contains forward-looking statements that are based on current assumptions and forecasts of the management of Munich Re. Known and unknown risks, uncertainties and other factors could lead to material differences between the forward-looking statements given here and the actual development, in particular the results, financial situation and performance
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p , p , pof our Company. The Company assumes no liability to update these forward-looking statements or to conform them to future events or developments.
uran
ce –
7 O
ctob
er' D
ay o
n Li
fe R
eins
ue
Gro
up –
Inve
stor
s'
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ich
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