Munich Re : Earnings Document

1. Business and performance

A1 Business

General information

The Munich Re Group's ultimate parent entity is Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München (Munich Reinsurance Company Joint-Stock Company in Munich), Königinstrasse 107, 80802 München. Munich Reinsurance Company is a joint-stock company (Aktiengesellschaft) within the meaning of the German Stock Corporation Act (AktG). Its registered seat is Munich, Germany. In addition to its function as a reinsurer, the parent also fulfils the function of holding company for the Group.

Munich Reinsurance Company has three governing bodies: the Annual General Meeting, the Board of Management, and the Supervisory Board. Further details about the governing bodies can be found in section B 1 "Administrative, management or supervisory bodies (AMSB)".

Owing to our international corporate structure, we are subject to a raft of national and international legal systems, standards and corporate governance regulations. Within the Group, our own Code of Conduct binds our management and staff members to engage in ethically and legally impeccable conduct in alignment with the principles of the UN Global Compact. Further information can be found at www.munichre.com/cg-en.

The external auditor EY GmbH & Co. KG Wirtschaftsprüfungsgesellschaft (Flughafenstrasse 61, 70629 Stuttgart) duly audited the Group financial statements, the combined management report and the annual financial statements of Munich Reinsurance Company as at 31 December 2023, and issued them with an unqualified auditor's opinion.

The supervision of Munich Re is conducted by the

Federal Financial Supervisory Authority

(Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin) Graurheindorfer Str. 108

53117 Bonn, Germany

or

Postfach 1253

53002 Bonn, Germany

Tel.: + 49 2 28 41 08-0

Fax: + 49 2 28 41 08-15 50

Email: poststelle@bafin.de

De-Mail:poststelle@bafin.de-mail.de

Legal structure

Munich Re is one of the world's leading risk carriers and provides both insurance and reinsurance under one roof. This enables the Group to cover large stretches of the value chain in the risk market. Almost all reinsurance units operate under the uniform brand of Munich Re. The ERGO Group (ERGO) is active in nearly all lines of life, health and property-casualty insurance. The majority of Munich Re's investments are managed by MEAG, which also offers its expertise to private and institutional investors outside the Group. For up-to-date information about Munich Re, visit www.munichre.com.

The reinsurance companies of the Group operate globally and in virtually all classes of business. Munich Re offers a full range of products, from traditional reinsurance to innovative solutions for risk assumption. Our companies conduct their business from their respective headquarters and via a large number of branches, subsidiaries and affiliated companies. The reinsurance group also includes specialty primary insurers, whose business requires special competence in finding appropriate solutions.

In ERGO, we combine Munich Re's primary insurance activities. Some 67% of ERGO's insurance revenue derives from Germany, and 33% from international business - mainly from central and eastern European countries. ERGO also operates in Asian markets, particularly in India, China, and Thailand.

Munich Reinsurance Company and ERGO Group AG are under unified control within the meaning of the German Stock Corporation Act (AktG). The relevant statutory regulations, control agreements and Group directives govern the distribution of responsibilities and competences for key decisions between Group management and ERGO. Control and profit-transfer agreements are in place with many Group companies, especially between ERGO Group AG and its subsidiaries.

Material lines of business and regions

Reinsurance

In reinsurance, we operate in life, health and property- casualty business. Under reinsurance, we include not only specialised primary insurance activities that are handled by the reinsurance organisation but also business from managing general agents. Organisationally, we have pooled worldwide IoT activities into the divisional unit Global IoT.

As reinsurers, we write our business in direct collaboration with primary insurers, via brokers and within the framework of strategic partnerships. In addition to traditional reinsurance business, we further operate as a primary insurer, participating in insurance pools, public-private partnerships and business in specialist niche segments. We furthermore offer our clients a wide range of special products as well as customised insurance solutions and services, which we manage from within our reinsurance organisation. Our clients thus have direct access to the expertise, innovative strength and capacity of a leading global risk carrier. Thanks to our capital management know-how, we are in demand as a partner for products geared to our clients' balance-sheet, solvency and rating- capital requirements, as well as their risk models.

We bundle our life and health reinsurance business worldwide in the life and health segment. This is split into three geographical regions, and an international unit (Markets) that offers specialised solutions for hedging capital market risks. This division focuses on traditional reinsurance solutions primarily geared to the transfer of insurance risks, mortality risk accounting for the largest share of this. Moreover, we are active in the market for living benefits products. These include insurance products for occupational disability, long-term care, and critical illness. We also provide capacity for longevity risks.

In addition, we support our customers with a wide range of services along large stretches of the value chain. These include the development of new insurance products as well as digital and automated solutions for risk assessment and claims handling.

Our Markets unit combines our global expertise and range of services for capital market risks, which are often a component of savings products. We provide our clients with comprehensive advice on product design while offering hedging for embedded options and guarantees linked to the capital markets. Our own exposure is transferred back to the capital markets.

In order to ensure proximity to our clients, we are represented in many markets with local subsidiaries and branches. We service the extremely important North American market via our Canadian branch and our subsidiary in the USA. In Europe, we have operations in Germany, the United Kingdom, Switzerland, Spain, Italy and Malta. We also operate subsidiaries in Australia and South Africa, and have a local presence in the key markets of South America, the Middle East and Asia. Asian

business activities are centrally managed by a dedicated branch in Singapore, which underlines the strategic importance of this region for life and health reinsurance.

Four other divisions conduct property-casualty reinsurance. The Global Clients and North America division handles our accounts with major international insurance groups, globally operating Lloyd's syndicates and Bermuda companies. It also pools our reinsurance know-how in the North American market in the area of property-casualty business, in particular that of our Munich Reinsurance America Inc. subsidiary domiciled there, as well as in the field of global large-risk business, which is pooled in our Facultative & Corporate unit.

Our Europe and Latin America division is responsible for property-casualty business with our clients from Europe, Latin America and the Caribbean. Business units - for example, in London, Madrid, Paris and Milan - afford us market proximity and regional competence. In the Latin American markets, our Brazilian subsidiary Munich Re do Brasil Resseguradora S.A. headquartered in São Paulo and our liaison offices in Bogotá and Mexico City help to ensure client proximity. Our Europe and Latin America division also includes the credit business - where Munich Re operates as a reinsurer and primary insurer - and New Reinsurance Company Ltd., which is domiciled in Zurich.

The Asia-Pacific and Africa division conducts property- casualty reinsurance business with our clients in Africa, Asia, Australia, New Zealand and the Pacific Islands.

Branches in Mumbai, Beijing, Seoul, Singapore and Tokyo, along with liaison offices in Bangkok and Taipei, as well as a subsidiary in Sydney, allow us to take full advantage of opportunities in the rapidly growing Asia-Pacific insurance market. In the African market, we are represented by our subsidiary Munich Reinsurance Company of Africa Ltd., headquartered in Johannesburg. These units and other liaison offices guarantee our competitiveness in these key markets.

The Global Specialty Insurance (GSI) division comprises worldwide special-lines business, such as marine, cyber, aviation and space, along with specialty property-casualty business. The two large subsidiaries domiciled in the USA and operating in the field of specialised insurance activities

• HSB and American Modern - are allocated to this division, as are Munich Re Specialty Insurance (MRSI), and Munich Re Specialty Group (MRSG). The GSI units specialise in products for which - like in reinsurance - risk understanding as well as insightful claims handling are paramount. American Modern offers specialty personal lines products in the US. MRSI offers various specialty commercial insurance products in the North American market. HSB is a leading provider of products that depend on expertise in engineering, loss control and risk management. MRSG, in turn, through use of the Munich Re Syndicate and other subsidiaries, is a leading provider of marine insurance and insurance solutions for the aviation industry.

ERGO

Munich Re's second pillar is primary insurance business. Three separate units operate under the umbrella of ERGO Group AG: ERGO Deutschland AG, ERGO International AG, and ERGO Technology & Services Management AG. German business is concentrated in ERGO Deutschland AG. ERGO International AG manages the ERGO Group's international business. ERGO Technology & Services Management AG has a transnational mandate as a global technology and service provider for the entire ERGO Group.

Since the start of 2024, a new division within ERGO Group AG has been responsible for Group marketing, global sales partnerships and all strategic digitalisation initiatives, which were until recently handled by ERGO Digital Ventures AG.

ERGO offers products in all the main classes of insurance: life insurance, health insurance, and in nearly all lines of property-casualty insurance, including travel insurance and legal protection insurance. With these products - in combination with the provision of assistance, other services and individual consultancy - ERGO covers the needs of retail and corporate clients. ERGO serves some 39 million mostly retail customers in over 20 countries, with the focus on Europe and Asia.

In Germany, the focus is on sustainable and profitable growth. ERGO Versicherung AG is one of the largest providers of property-casualty insurance across nearly all classes of business, offering a wide range of products for retail, commercial and industrial clients. ERGO Vorsorge Lebensversicherung AG is ERGO's life insurer for capital- market-linked and biometric products. It offers solutions for all three types of old-age provision, mainly based on innovative and flexible unit-linked insurance products. ERGO Lebensversicherung AG and Victoria Lebensversicherung AG are concentrating on running off their traditional life insurance portfolios. DKV Deutsche Krankenversicherung AG offers a comprehensive portfolio in the healthcare sector: comprehensive private health insurance, products designed to supplement statutory health cover, and company health insurance. ERGO Krankenversicherung AG focuses on products that supplement statutory health insurance, especially supplementary dental plans. The specialist travel insurer ERGO Reiseversicherung AG is a market leader internationally as well as in Germany.

ERGO International AG coordinates and manages ERGO's international operations. The focus is on profitable organic growth in European core markets and selected growth markets in Asia. In the reporting year, ERGO International AG further advanced its business in core markets in Europe by growing in new fields of business and using new distribution models, thus maintaining its good position in the respective markets. ERGO International AG has operations in Asia, including in India, China and Thailand. In Thailand, ERGO concentrated in 2023 on the property insurance market, which is not only the largest in

Southeast Asia but also shows good growth potential. By taking on a majority shareholding in ThaiSri Insurance Public Co. Ltd. and acquiring Nam Seng Insurance Public Co. Ltd. at the beginning of January 2023, ERGO achieved an important milestone on its path towards expanding its market position in Thailand. In the course of the acquisition of a majority stake, ThaiSri Insurance Public Co. Ltd. was renamed ERGO Insurance (Thailand) Public Co. Ltd. This rebranding is intended to give the ERGO marque greater visibility in this Southeast Asian country. The Indian joint venture HDFC ERGO General Insurance Company Ltd. performed strongly in the past year too, and improved its market position overall; it now ranks second in the private non-life insurance market. In China, ERGO increased its shareholding in the Chinese life insurance joint venture ERGO China Life Insurance Co., Ltd. to 65%. This step emphasises the Group's ambition to establish itself in this strategically important market for the long term and to exploit its growing potential. In the Chinese property insurance market, ERGO is striving for further growth and a simultaneous boost in profitability through its stake in Taishan Property & Casualty Insurance Co., Ltd.

ERGO Technology & Services Management AG is a dedicated arm of ERGO Group AG in charge of providing digital platforms, solutions and services. It has a global remit and supports ERGO in designing optimum insurance products and fostering the most effective customer channels. It consists of ITERGO GmbH in Germany, ERGO Technology & Services S.A. in Poland, and ERGO Technology & Services Private Limited in India.

From 2024, a newly created Board member division is responsible for ERGO's digital transformation within the ERGO Group. This also includes the coordination of established technologies such as robotics, artificial intelligence, voicebots, process mining and virtual reality, and the area of operation Embedded Insurance, in which we collaborate with partners like Amazon and Coolblue. From 2024, ERGO Deutschland AG is responsible for controlling the operative business of the digital insurer nexible, ERGO Reiseversicherung AG and the ERGO Mobility Solutions division, for which ERGO Digital Ventures AG was previously responsible.

Qualifying holdings in Munich Reinsurance Company

As at 31 December 2023, no shareholdings exceeded 10% of the voting rights.

Related undertakings

Related undertakings in the scope of the Group included in our solvency balance sheet can be found in the S.32.01.22 "Undertakings in the scope of the Group" quantitative reporting template in the annex to this report.

Intra-Group transactions

The main material intra-Group transactions of the reporting year were cash-pool transactions. Further new significant intra-Group transactions in the financial year involved the redemption and reissue of intra-Group loans between two subsidiaries, the capital contribution by Munich Reinsurance Company to a subsidiary, the redemption and reissue of an intra-Group loan provided to Munich Reinsurance Company, and the conclusion of derivative transactions between Munich Reinsurance Company and two Group companies.

Munich Re pools cash for the purposes of financial management, pooling excess liquidity of the participating Group units in a centralised account at MEAG Cash Management GmbH. The funds are pooled for the purposes of optimising returns on investment, while taking account of the individual investment terms stipulated by the participants. Short-term liquidity from the cash pool is also available to participating undertakings. In the reporting year, BaFin was notified of two particularly significant cash-pool transactions.

As a rule, the networking of the undertakings in our Group results in further intra-Group business relationships. IntraGroup transactions resulted from areas such as financing, reinsurance contracts, service offsetting, cost-sharing- and guarantee agreements. Regular reporting to the supervisory authority takes place by means of quantitative reporting templates provided under Solvency II. In accordance with Section 274(3) of the Insurance Supervision Act (VAG), the supervisory authority is notified immediately of particularly significant transactions.

Significant business events

The year under review was heavily influenced by major losses from natural catastrophes. The loss burden from these events totalled €2,335m. The largest individual loss for Munich Re in 2023 was the earthquake in Turkey, with a nominal value of around €0.7bn.

Determination of consolidated data (significant differences between IFRS and Solvency II)

As a general rule, under IFRS all subsidiaries over which the parent company can exercise control are fully consolidated in the IFRS consolidated financial statements, irrespective of the business they conduct. Under Solvency II, however, the nature of the business plays a role when determining which subsidiaries are included in the Group solvency balance sheet. Here, only those subsidiary undertakings that are insurance companies, insurance holding companies, special purpose vehicles and ancillary services undertakings are fully consolidated. Alternative investment funds and undertakings for the collective investment in transferable securities (UCITS1) over which control can be exercised are fully consolidated in the IFRS balance sheet. In accordance with the Solvency II rules, we only recognise these types of undertaking at fair value in the Group solvency balance sheet. Under IFRS, joint ventures and associates are accounted for using the equity method. As a general rule, joint ventures are included in the solvency balance sheet in accordance with the principle of proportional consolidation of data. Currently, Munich Re does not include any proportionately consolidated undertakings in the solvency balance sheet. We recognise undertakings for which we hold at least 20% of the voting rights as associates in our IFRS consolidated financial statements. In the solvency balance sheet, undertakings for which we own a 20% or greater share of the capital or voting rights are categorised as participating interests. For the most part, they are accounted for using the adjusted equity method. Where the share in capital is not equal to that of the voting rights, there are reporting differences between the balance sheets produced under Solvency II and IFRS.

Further information on the determination of consolidated data under Solvency II can be found in section D 1 "Holdings in related undertakings, including participations", and in section E 1 "Consolidation methods for own funds".

A2 Underwriting performance

The premiums and results shown below refer to the figures in our Group annual report in accordance with IFRS as at 31 December 2023.

Group underwriting performance

Munich Re generated a total technical result of €7,545m (7,070m) in the reporting year, driven largely by the considerable increase (of 4.5%) in insurance revenue from insurance contracts issued to €57,884m (55,385m), which was due in particular to organic growth in the property- casualty reinsurance segment and at ERGO. The largest individual loss for Munich Re in 2023 was the earthquake in Turkey, with a nominal value of around €0.7bn.

In the property-casualty reinsurance segment, the total technical result was down on the previous year's figure at €3,968m (4,224m). Major losses from natural catastrophes rose to €2,335m (2,118m). The total technical result for life and health reinsurance amounted to €1,433m (1,041m), thus falling within the adjusted expected range. New business developed very favourably and made a positive contribution to the result. The improvement in underwriting conditions for a number of current contracts coupled with the annual review of our reserve position also had a positive effect on the insurance service result. The total technical result in the ERGO field of business rose to €2,144m (1,806m). The increase is primarily attributable to the ERGO International segment. While the total technical result also increased in the ERGO Property-casualty Germany segment, it was slightly down on the previous year in the ERGO Life and Health Germany segment.

Reinsurance

Reinsurance - Life and health

The development of insurance revenue from insurance contracts issued (insurance revenue) was shaped by negative currency translation effects. We write the majority of our business in non-euro currencies (around 94%). Exchange-rate fluctuations therefore have a significant impact on revenue development. If exchange rates had remained unchanged, our insurance revenue would have remained largely constant (−0.2%) compared with the previous year. Revenue was down in our business in continental Europe, mainly due to a large-volume treaty, and also in Asia and Australia. This was largely compensated for by growth in North America and the United Kingdom.

The very pleasing growth in our financially motivated reinsurance is not reflected in the insurance revenue, as the majority of new contracts are presented in the result from insurance-related financial instruments.

Based on insurance revenue, around 50% of our reinsurance business is written in North America, with the USA accounting for approximately 35% and thus ranking before Canada. Around 25% of our insurance revenue

stems from Europe, with approximately 20% generated in the United Kingdom and Ireland. Another significant share of around 20% stems from Asia and the MENA (Middle East, North Africa) region. Australia and New Zealand contribute around 5% to premium income. We are also well positioned in Africa and Latin America, but due to the small size of the markets their share of our global business is small.

In the USA, insurance revenue increased to about €4.0bn (3.8bn) despite negative currency translation effects. We therefore continue to be one of the most important reinsurers in this market, which is the largest worldwide. The insurance service result was lower than expected due to higher mortality claims. By contrast, the result from insurance-related financial instruments again showed encouraging development. We continue to be very satisfied with the development of our new business, both in terms of volume and profitability.

In Canada, insurance revenue increased slightly to €1.3bn (1.2bn). Once again, exchange rates had a negative impact on development. The insurance service result developed very well.

In Europe, on the other hand, insurance revenue dropped to €2.6bn (2.8bn), with €2.2bn (2.1bn) stemming from the United Kingdom and Ireland. Our longevity business continued to expand very pleasingly, boosting insurance revenue. By contrast, a large-volume treaty had a negative impact on insurance revenue, albeit without any material impact on profit or loss. We are highly satisfied with our total technical result.

Insurance revenue in Asia/MENA decreased to €2.0bn (2.2bn). Alongside exchange-rate developments, the deciding factor in this trend was the termination of a number of contractual relationships, which had a minor impact on profit or loss. New business was again at a very gratifying level. This included the expansion of our financially motivated reinsurance business, the majority of which is posted as part of the result from insurance-related financial instruments. The total technical result outstripped our expectations and made a disproportionately high contribution to the net result from this segment.

The insurance revenue generated by our business activities in Australia and New Zealand fell to €578m (726m). This includes negative exchange-rate effects. Our main focus remains the rehabilitation of our existing portfolio; currently, we are very selective regarding the writing of new business. The total technical result was positive and in line with our expectations. This reflects the benefits of the rehabilitation measures we have taken in recent years.

The total technical result is comprised of the insurance service result and the result from insurance-related financial instruments. The total technical result improved significantly as against the previous year, bringing it into

line with our guidance for the reporting year, which we had raised after Q3.

New business developed very favourably and made a positive contribution to the result. The improvement in underwriting conditions for a number of current contracts coupled with the annual review of our reserve position also had a positive effect on the insurance service result. Overall, claims expenditure in the US portfolio was higher than expected, driven by mortality risk business. Otherwise, underwriting performance in our core markets was positive.

The result from insurance-related financial instruments is largely determined by that part of our financially motivated reinsurance that does not transfer significant insurance risk. The portfolio continues to show very encouraging growth, with results from the contracts that are in line with expectations. The result was influenced by changing economic parameters, in particular exchange rates, which are not reported as part of the currency result for this business. During the reporting period, they produced a negative effect.

The Russian war of aggression against Ukraine did not have any direct impact on the segment's total technical result. The impact of the Hamas terrorist attack on Israel was negligible in the reporting year.

Reinsurance - Property-casualty

Our insurance revenue from insurance contracts issued (insurance revenue) in property-casualty reinsurance was up 6.9% on the previous year, although changes in exchange rates had a negative impact on revenue development. 12% of the portfolio is written in euros and 88% in foreign currency, of which around 60 percentage points is in US dollars and around 8 percentage points in pounds sterling. If exchange rates had remained unchanged, insurance revenue would have risen by 10.3% year on year.

The substantial increase in insurance revenue was due to an expansion of business across almost all lines and regions. The main drivers were the expansion of existing and acquisition of new business with selected clients - particularly in our primary insurance units in North America. We realised growth in reinsurance business with natural hazard exposure in Europe, South America, Asia and Australia in particular.

Prices at the reinsurance contract renewals in 2023 developed positively overall, and for the most part more than compensated for the significantly higher loss estimates in some areas - owing especially to inflation or other loss trends. Risk-adjusted prices rose slightly, especially in regions affected by natural catastrophes. Primary insurance prices also climbed in many markets. Overall, price gains were evident around the world to varying degrees. For Munich Re, risk-adjusted prices for the 2023 renewals increased by approximately 3.1%.

Quality continues to play an important role in the selection of reinsurers. This allows financially solid reinsurers to position themselves as reliable long-term partners. Overall, we are adhering to our clearly profit-oriented underwriting policy.

Based on insurance revenue, around 40% of our global property-casualty reinsurance business is written in North America. Around 40% of our premium comes from Europe, of which around 15% is generated in the United Kingdom. Further substantial shares were contributed by Asia and Australia/New Zealand (about 15%), and by Africa and Latin America (approximately 5%).

Prices in the US reinsurance market have continued to improve, particularly in property insurance. Major losses from natural catastrophes were below expectations due to the below-average impact of hurricanes.

In the year under review, insurance revenue for US reinsurance business decreased despite new business and the positive market environment as a consequence of selective portfolio restructuring and quota share reductions. The result for US reinsurance business was up on that of the previous year owing to higher prices and lower major losses.

In Canada, we are represented by the Munich Reinsurance Company of Canada and Temple Insurance Company. By virtue of the positive market environment, insurance revenue rose further to €551m (507m). The result for 2023 is pleasing, as in the past.

Insurance revenue in the United Kingdom and in continental Europe increased significantly year on year to €3,941m (3,061m). In many markets, the increase was driven by the targeted development of business with selected clients and additional profitable new business. Thanks to a favourable environment, high growth rates were achieved in almost all markets - particularly through the expansion of business exposed to natural hazards. We posted the greatest boosts in insurance revenue in Italy, growing to €636m (508m); in Spain, climbing to €473m (378m); and in France, rising to €216m (146m).

At our Swiss subsidiary, New Reinsurance Company Ltd., property-casualty business volume increased to €1,316m (556m). In particular, profitable traditional business was significantly supplemented by expanding existing client relationships, and by new business.

Insurance revenue in Australia and New Zealand increased considerably to €1,431m (886m), continuing the ongoing growth trend seen in recent years.

Business in Japan, which is aligned strongly with natural hazard risks, benefited from price increases that led to insurance revenue improving further to €519m (511m).

Revenue in China has been increased on an ongoing basis in recent years. Nevertheless, it dropped slightly, partially because we withdrew from unprofitable business.

Insurance revenue came to €676m (699m).

India continued on its profitable growth path, with insurance revenue climbing to €626m (444m).