msg life 6-Month Report of msg life ag expertise.innovation.partnership

Transcription

1 msg life 6-Month Report of msg life ag expertise.innovation.partnership

2 Key figures for the first half-year Turnover 52,247 50,790 EBITDA* 2,927 8,053 EBITDA margin 5.6% 15.9% Operating result (EBIT) 1,972 5,603 EBIT margin 3.8% 11.0% Result before income taxes (EBT) 1,883 5,294 Net income for the period 1,196 5,031 Earnings per share in euros Equity 42,475 45,069 Equity ratio 56.2% 51.8% Total assets 75,613 86,992 Cash flow from operating activity 1,498-2,138 Employees as at * Earnings before interest, taxes, depreciation and amortisation Key figures for the second quarter Turnover 25,665 26,866 EBITDA* 973 1,870 EBITDA margin 3.8% 7.0% Operating result (EBIT) EBIT margin 1.9% 0.3% Result before income taxes (EBT) Net income for the period ,152 Dear shareholders, customers, business associates and colleagues, with aggregate turnover of 52.2 million euros (as at 30 June 2014: 50.8 million euros) and earnings before interest, taxes, depreciation and amortisation (EBITDA) amounting to 2.9 million euros (as at 30 June 2014: 8.1 million euros), msg life ag s first six months of 2015 went according to plan. The decrease in earnings compared to the same period in the previous year is the result of non-recurring effects from the disposal of our Banking segment which were recognised on the balance sheet in the first quarter of 2014 and which had a considerable effect on earnings in that six-month period. Overall, we are set to meet our annual turnover and earnings targets; we expect aggregate turnover of approximately million euros in the 2015 financial year and an operating EBITDA of approximately 8.0 million euros. Following our announcement of the successful introduction of msg.life Factory (LF) in modern JEE technology at AXA Deutschland and msg.life Factory at HUK-COBURG in the first quarter, the further development of the project with Heidelberger Leben (HLE) in the second quarter in particular is strategically significant. Following HLE s decision to engage msg life, as a general contractor, to expand the first run-off platform for life insurance in German-speaking countries (which we have already reported), in the second quarter we received several new orders for other standard software components from msg.insurance Suite, our group-wide end-to-end general platform for insurance. All in all, the first six months of the year were characterised by consistently stable business with existing customers, untempered demand for the migration expertise of msg life and the acquisition of various new customers for our standard software products msg.office, msg. RAN, msg.zulagenverwaltung and msg.tax Connect. The current outlook of our negotiations with customers and potential customers implies that these developments will continue in the second half of the year. Regardless, we expect to attract our first customers for the new JEE mathematics of LF in the second half of the year. The currently promising sales pipeline for our leading core product is partly due to the fact that with these mathematics, all potential customers are able to react more quickly and flexibly to the substantial challenges of the current low interest rate phase within their own product designs and on the basis of innovative standard products. Earnings per share in euros * Earnings before interest, taxes, depreciation and amortisation 2 3

3 The integration of LF with all across-the-board components (workflow, partners, commission, collections and disbursements) into msg.insurance Suite in the second quarter is equally noteworthy. msg life is therefore able to provide a highly pre-integrated end-to-end platform on standard infrastructure which further reduces the costs of implementation and operation. Developments such as those at HLE and related queries in ongoing sales project validate the strategic orientation of our product range and we expect this to drive business forward in the coming years. Consequently, the msg life Group enjoys a promising position in the field of software and consulting services for insurance companies in German-speaking countries and has positive market opportunities and a good competitive position. Additionally, we have established an excellent position on the health insurance market in the USA and we will continue to consolidate it. Simultaneously, we were able to initiate our first activities on the life insurance market in the USA in the first half of the year in order that we will be able to position our solutions in this segment in the future. As the Management Board of msg life ag, we look forward to taking the next steps with you, our shareholders, customers, business partners and colleagues, at our side. Yours faithfully, Rolf Zielke Spokesperson for the Management Board Bernhard Achter Member of the Management Board Interim Management Report Overview The first six months of 2015 were characterised by highly stable business with existing customers. msg life considers this unwavering confidence as an obligation to continuously improve and expand its own services and solutions on its own initiative, innovatively and in close coordination with its customers. In the reporting period, msg life was fortunate enough to attract new customers with its product solutions msg.office, msg.ran, msg.zulagenverwaltung (with regard to the management of Riester policies RSBF) and msg.tax Connect. The ongoing negotiations with customers and potential customers currently imply that this development will continue in the second half of the year, including in connection with other products. Furthermore, msg life expects to attract its first customers for its new msg.life Factory JEE mathematics (LF JEE Product) in the second half of the year. The currently promising sales pipeline for the leading core product LF is partly due to the fact that with these mathematics, all potential customers are able to react more quickly and flexibly to the challenges of the low interest rate phase within their own product designs. msg life s international business is running as planned: after acquiring its first Portuguese customer, the life insurer Credito Agricola Vida, in the first quarter, msg life has since executed a consultancy project for another Portuguese insurer designed to optimise its product configuration. The American insurance market is currently characterised by fusions and takeovers. For example, Cigna and Anthem, two customers of the msg life company in the USA, announced a mega-fusion. All in all, the business of msg life in the USA has continued to remain stable, and in the second quarter of 2015 in particular, a comprehensive group health project was launched with a well-known insurance company. The definition of the range of group life products and services for the American market is on target and the first opportunities to validate and hone the new offering in line with market requirements have presented themselves. Dr. Aristid Neuburger Member of the Management Board 4 5

4 From a strategic perspective, the development of the project for Heidelberger Leben (HLE) was the highlight of the first six months of Following HLE s decision to engage msg life as a general contractor to expand the HLE run-off platform in the life sector, which was reported in the first quarter of the year, several new and supplementary orders were received for other components and their implementation in the second quarter. It is strategically relevant that all of these new components are from the group-wide msg.insurance Suite. Besides this development at HLE, in ongoing sales projects msg life is also sensing increased demand amongst customers for an integrated insurance platform. Therefore, msg life ag feels validated in its strategic orientation within the msg Group and expects more positive business developments in the coming years. msg.life Factory and msg.insurance Suite The product strategy continues to focus on the integration of msg.life Factory (LF) and its components into msg.insurance Suite, the common insurance platform of the msg Group, as well as the sales-related collaboration taking place in this context. msg.insurance Suite represents the first holistic industrial standard for all sectors of the insurance industry. The platform covers and integrates all necessary system components for an insurance company. The underlying modular principle is characterised by a high degree of end-to-end prefabrication, makes it easy to integrate existing solutions and features a wide variety of potential applications with maximised releasability and low maintenance costs. The first pre-integrated version of msg.insurance Suite for the life sector was successfully released in the second quarter of this year. The current version 4.13 will be made available in two stages in connection with the planned enhancement of LF. The first stage was released at the end of the first quarter of 2015 and the second stage is due for release in October this year. Amongst other things, the current release features enhanced flexibility in connection with biometric products, a range of process optimisations and implemented requirements from the Code of Conduct for insurers. The 4.13 release supports all of the relevant product innovations and legal requirements on the market. As a trustworthy partner and consultant of many years standing, msg life is on hand to help its existing LF customers deal with these issues and guarantees that, as in the past, all necessary activities will be coordinated closely. The planning process has already begun for the upcoming 4.14 release of LF and in March of this year the user group identified the key themes on the basis of customer prioritisation. The deadline for the completion of this release is March Alongside the development of this release, the additional component msg.life Group (group policy management) for the efficient handling of Group and company pension business is being expanded. In the first quarter of 2015, KPMG successfully tested and re-certified versions and of LF as part of a follow-up test in line with testing standard IDW PS 880 from the Institute of Public Auditors in Germany (IDW). The comprehensive flexibilisation of LF will provide customers with numerous competitive advantages in light of the persistently difficult situation on the financial markets (the low interest rate challenge) and the stricter regulatory requirements. For example, the enhancements facilitating the universal handling of different calculation bases or the automated calculation of additional interest reserves and (optional) counter-financing are now commercially important instruments for insurance companies. LF customers can therefore use the current calculation bases, based on the standard, upon commencement of the pension (in line with the term conventional pension 2.0, which is being discussed on the market as a result of a product innovation by Allianz Lebensversicherung). Moreover, dynamic increases, additional payments, or allowances with different calculation bases to name just a few examples can be depicted in the system and subsequently offered to policyholders. In addition, various alternative guarantee mechanisms are available, especially investment guarantees (on the basis of hedging, (i)cppi individual Constant Proportion Portfolio Insurance or index participation) that supplement or replace conventional guarantees. The technical conversion of LF on the basis of modern JEE (Java Platform, Enterprise Edition) technology, beginning with the LF JEE Contract component which was completed in 2014, is also proceeding according to plan. The migration of customers systems to LF JEE is scheduled and even in the process with several customers: in early July 2015, shortly after the end of the reporting period, Provinzial Rheinland reached its next strategic target by successfully upgrading to LF JEE As all new business has been administered using LF JEE technology since 2013, this release will signal the full switch to LF JEE in the coming months. 6 7

5 Likewise, Öffentliche Versicherung Braunschweig (ÖVBS) went live with LF in the new JEE technology in early July This makes ÖVBS the second LF customer to carry out all of its policy management in JEE technology. The other customers, including Heidelberger Leben (HLE) this year, are gradually switching to LF JEE in close coordination with msg life. AXA Deutschland introduced it on the basis of the JEE version on 1 February 2015, and in April, on schedule and with no mishaps, it went live with transactions for the first of three administrative stages. The provision of the new mathematical component LF JEE Product is proceeding according to plan, and the first stage will be made available for the first customer projects at the end of the year. LF JEE Product represents the completion of the transformation of msg.life Factory in Java JEE architecture. The important themes of process efficiency, automation and digitisation will be developed further by the specialist working group Business processes in coordination with LF customers. Such specialist working groups for highly specific groups of functional and technical topics consist of customer representatives and msg life employees and have proved their worth. They help to enhance synergies and define market standards and are now highly significant for further planning- and solution-related developments in relation to LF. After a project duration of just one year, AXA Deutschland went live with LF in the new JEE technology in early February LF, with several additional components, is now AXA s strategic system for the life sector. Around 80 per cent of AXA s new business with an automatic policy processing rate of almost 30 per cent is currently processed using LF. Furthermore, the high flexibility of the msg life product has made it evident that relevant positive effects in the context of the net present value can be generated for product innovations and related investments. Overall, the scope of the project, the degree of innovation, the fixed deadline and the high quality requirements, in connection with the high number of policies from the outset, posed an enormous challenge to everyone involved. The fact that this challenge was overcome so successfully is a clear indication of the extremely high quality of the products of msg life and its related project expertise. The ERGO Insurance Group went live with a new LF release in June of this year. Following the successful introduction of LF in 2013, this was the sixth release to be introduced at ERGO. The current release features expansions relating to company pensions in particular. DEVK Versicherungen also went live with a new LF release in June. This release mainly comprised the introduction of two new products and further expansions to the system. After HUK-COBURG Lebensversicherung, following intense preparation, went live with LF for quotations, new business and all transactions relating to new business in early January 2015, all transactions will now gradually be implemented over the course of the year. The target is to conclude the introduction project by the end of this year. As a result, LF will be fully integrated into the workflow of HUK-COBURG and it will operate in a highly integrated technical environment. The first existing business transactions went live in the second quarter. In this context, a total of 12 transactions were tested in terms of their mathematics and functionality with a focus on benefit processing. msg.migration Factory In the Migration division, release 3.6 of the migration software solution msg.mig Sys was certified like LF before it under the recognised testing standard IDW PS 880 at the end of Furthermore, msg life received numerous additional orders relating to migration plans as part of ongoing projects, and final negotiations are currently under way for two msg.mig Archive upgrade licences in the context of the Code of Conduct for insurers. All key migration projects went according to plan; these included a challenging project for DEVK Versicherungen whereby more than half of its policies will be administrated in LF by the end of In the first six months of the year, msg life received another data analysis contract. This offer of a highly specialised actuarial assessment with a view to migration of life policies available for sale, which was created in 2014, continues to enjoy an exceptionally positive reception and shows that the profound migration expertise of msg life is still considered leading on the market. 8 9

6 Consulting In the Consulting segment, msg life is pursuing a larger and promising project strategy on the product-based environment in Central and Eastern Europe. msg life units are currently supporting various customers in German-speaking countries and from further afield with a wide range of issues. Especially in the Insurance segment, msg life is focusing on the three key aspects of theme and expertise in the field of consultation, i.e. product and business process optimisation and migration support and therefore on thematic areas which are aimed at increasing market shares on the one hand and optimising the cost ratio of msg life s customers on the other. In the Consulting segment, too, msg life sees itself as a reliable partner for insurance companies in dealing with the pressure of change in an efficient and innovative manner. msg.life The enhancement of the policy management system msg.life is on schedule. As with LF, existing msg.life customers were informed of and advised on the German Life Insurance Reform Act (LVRG) and any impact it might have on the products. This resulted in a joint functional conception on the subjects of total expense ratio and hedging requirements, which was implemented in 2014 and which was delivered on time by the start of As msg.life was successfully implemented as part of the project for SOKA-BAU at the turn of the year including the new pay scales of the construction industry it is due to go live on 1 January AXA Versicherung also went live with the version of msg.life in the first quarter, and in doing so it seamlessly implemented the new generation of pay scales for At the end of March 2015, Versicherungskammer Bayern (VKB) successfully went live with release of msg.life for its Hungarian subsidiary MKBB. AXA Pensionskasse successfully introduced version of msg.life in April of this year and, almost simultaneously, Schweizerische Mobiliar went live with version of msg.life. Mobiliar was able to start the sale of a new savings product in Switzerland from early May 2015 on the basis of this release; the levels of turnover generated so far are much higher than originally expected. msg.symass Near the end of the first quarter, the current version of the management system msg.symass was successfully completed and shipped out to all customers; work on the upcoming version is also on schedule. The implementation project designed to expand the msg.symass platform for the foreign business of the Austrian insurance company Merkur Versicherung is also proceeding according to plan. The solution will be used in all five of Merkur s Eastern European subsidiaries in Slovenia, Croatia, Bosnia and Herzegovina, Serbia and Montenegro. This success once again underlines the competitiveness, great flexibility and short development cycles of the cross-segmental management system msg.symass. msg.office In the second quarter, a new version of msg.office a standard product for fully digitised transaction control and document management was completed using Java and web client technology on the basis of modern SOA architecture. It was also successfully integrated with LF. Work is also being carried out on the integration of msg.office into msg.insurance Suite. The project at Heidelberger Leben (HLE) to expand the HLE life platform, where msg.office is used, has also now been launched. msg.zulagenverwaltung The current version 4.3 of msg.zulagenverwaltung, a system designed to manage contracts subsidised under the Riester system, was made available for customer projects in the first half of Work is now being carried out on the 4.4 release, which will be available in the fourth quarter of This release will signal the full expansion of the solution s tax functions (RSBF). msg life will therefore be able to extend its lead over its competitors in terms of its functions and expects to attract even more new customers with this successful standard software solution. Especially with regard to RSBF, msg life sold two new licences in the reporting period and two other promising canvassing processes are ongoing in connection with these Riester tax functions. In the context of Riester, the company has also received additional orders for portfolio optimisation

7 Thanks to systematic expansion reaching all the way to the full automation of process stages (especially for previously complex manual work stages in the context of tax assessment), the company s market leadership by virtue of msg.zulagenverwaltung can be safeguarded in the long term. More than half of the contracts subsidised under the Riester system that are concluded in Germany are handled using the msg life solution. The resultant cost advantage for msg life customers, particularly in respect of regulatory or statutory requirements in relation to Riester business, is already proving to be a crucial success factor. The new optimisation product Betriebsoptimierung Zulagenverwaltung, for example, is now being used by four life insurance companies. msg.ran As planned, the current 3.8 release of the pension calculation and verification system msg.ran was made available to customers at the end of Work is currently being carried out on the 3.9 release, which will be available in the fourth quarter of the year. AXA Leben Deutschland and Heidelberger Leben intend to introduce msg.ran in the future and the associated project work is already under way. A new customer was acquired in the second quarter; we are also happy to report that a former customer returned to us. msg life is conducting promising negotiations with other prospective customers. These developments emphasise the consistently high market potential of this standard software solution, not least in light of the growing number of annuity policies on the books of msg life customers. msg.tax Connect Work on the upcoming 2.3 release is on schedule, following the shipment of the current 2.2 release of the standard software msg.tax Connect at the end of The new release is expected to be available in the fourth quarter of The second quarter also saw the sale of two upgrade licences and the successful introduction of the product by a new customer in Luxembourg, who had been acquired in the first quarter of the year. This shows that msg.tax Connect can also be used successfully abroad. The implementation of the Common Reporting Standard (CRS) concerning the automatic exchange of (tax-related) information is scheduled to take place in 2016; due to a legal requirement, these new functions also underline the exceptionally high potential of the solution. msg life has already been able to conclude licence agreements for msg. Tax Connect with a total of 13 customers, including two banks. msg life is currently in talks concerning the use of msg.tax Connect with two other prospective customers. With this product for dealing with taxrelated reporting requirements, the company has once again grasped the insurance market trend towards depicting the increasing regulatory requirements with a single standard software product. The products msg.mig Archive, msg.zulagenverwaltung, msg.ran and msg.tax Connect will be made compatible with the Code of Conduct by 2016, as planned. The user groups coordinated this expansion with the customers and it has already been ordered. Earnings, financial and assets position Earnings Turnover as at 30 June 2015 totalled 52.2 million euros. It is therefore 1.5 million euros higher than the turnover generated in the corresponding period last year, which represents an increase of 2.9 per cent. As expected by msg life and in line with normal market developments in previous years, demand was weaker in the second quarter of the financial year than in the first quarter of The turnover structure has changed only insignificantly compared with the corresponding period last year. At 69.9 per cent as at 30 June 2015, the proportion of aggregate income generated by fixed-price orders and services billed on the basis of time and materials was 2.7 per cent lower than in the previous year. In contrast, licence income continues to represent 9.7 per cent of aggregate turnover. Maintenance turnover, however, fell by 2.4 per cent to 16.3 per cent. The remainder was attributable to other income and income from services and computer centre services. The changes in inventory of finished and unfinished services totalled 3,. Other operating income, which usually consists of rental income and contributions due for the assignment of company cars, totalled 0.9 million euros. Compared to the same period in the previous year, which was strongly characterised by income from deconsolidation, other operating income fell significantly by 11.0 million euros

8 The sum total of capacity-driven external services costs and personnel expenses as at 30 June 2015 amounted to 41.8 million euros, 1.4 million euros below their previous year s level. This underlines that the Group is monitoring its expenses and benefiting from the measures implemented in previous years. The proportion of these capacity-driven expenses was 80.1 per cent, which represents a reduction of 5.1 per cent compared to the corresponding period. Compared to the first six months of the previous year, other operating expenses decreased by 2.9 million euros to 8.3 million euros. As a result, the proportion of aggregate turnover accounted for by these costs fell by 6.2 per cent to 16.0 per cent compared to the same quarter in the previous year. As a consequence of the planned turnover and expenses, earnings before interest, taxes, depreciation of property, plant and equipment and amortisation of intangible assets (EBITDA) amounted to 2.9 million euros in the first six months of the year. In the same period in the previous year which, as mentioned above, was strongly characterised by deconsolidation income, the EBITDA was 5.1 million euros higher. Depreciation and amortisation as at 30 June 2015 amounted to 1.0 million euros and was therefore 1.5 million euros less than in the same period last year. Depreciation of property, plant and equipment and amortisation of intangible assets accounted for 0.6 million euros, with a further 0.4 million euros being accounted for by the scheduled amortisation of the intangible assets from shareholdings that were identified during corporate acquisitions. At -0.1 million euros, the financial result is 0.2 million euros better than in the same period in the previous year. All in all, msg life generated consolidated earnings of 1.2 million euros as at 30 June 2015 (prior-year period: 5.0 million euros). Earnings per share amounted to 0.03 euros, representing a decrease of 0.09 euros compared to the result of the previous year. This is another result of the deconsolidation income from the same period in the previous year. Financial position The company s cash in banks decreased by 2.4 million euros in the first six months of 2015 and amounted to 19.3 million euros as at 30 June With regard to investments, the msg life Group has remained conservative; therefore, the cash flows from investing activities amounted to -0.6 million euros. The positive cash flows from operating activities totalled 1.5 million euros. This shows that the Group is operating profitably. The free cash flow (cash flow from operating activities plus cash flow from investing activities) was therefore 0.9 million euros in the first six months of the current financial year. Taxes of 0.7 million euros were paid in the reporting period. Assets position Current assets totalled 46.1 million euros, which represents a decrease of 3.6 million euros compared to 31 December This is the result of the decrease of 2.4 million euros in cash and cash equivalents. Trade receivables totalled 23.4 million euros as at the balance sheet date. Of this, 13.3 million euros was attributable to invoiced receivables; these therefore decreased by 1.4 million euros. A total of 10.1 million euros was attributable to PoC receivables not covered by progress payments, which fell by just 0.1 million euros. In relation to turnover, the average days sales outstanding (DSO) for the company s receivables amounted to 47 days. The DSO of the PoC receivables not covered by progress payments, in terms of turnover, was 35 as at 30 June Other current assets increased by 0.2 million euros to 2.7 million euros and consist primarily of deferred expenses. Non-current assets decreased by 0.1 million euros, totalling 29.5 million euros in the reporting period; the 0.4 million euros in scheduled amortisation of intangible assets was the main reason for this decline. The deferred tax assets remained almost unchanged, totalling 1.5 million euros at the end of the six months. As mentioned above, the other intangible assets and property, plant and equipment depreciated by 0.3 million euros to 6.3 million euros as planned. Overall, current liabilities decreased by 1.6 million euros and amounted to 22.4 million euros at the end of the quarter. This was caused by the decrease of other financial liabilities by 1.6 million euros. As at 30 June 2015, the msg life Group had no financial liabilities. As at the balance sheet date, this resulted in a negative change of 2.4 million euros in the net cash position

9 By way of comparison, other current liabilities increased by 2.7 million euros. Financial debt, trade payables and other financial liabilities decreased in the first six months of the 2015 financial year by 2.1 million euros to their present total of 13.0 million euros. This was essentially caused by the aforementioned decrease of other financial liabilities by 1.6 million euros. As before, the Group has no current financial liabilities. Trade payables fell by 0.5 million euros and amounted to 1.1 million euros at the end of the reporting period. Overall, non-current liabilities totalled 10.8 million euros. This represents a decline of 4.3 million euros. This decrease is primarily due to the repayment of the loan of 4.0 million euros to the main shareholder. Furthermore, the Group has no non-current financial liabilities. The deferred tax liabilities remained almost unchanged, totalling 1.6 million euros at the end of the reporting period. Equity as at 30 June 2015 totalled 42.5 million euros, which represents an increase of 2.2 million euros in comparison with the balance sheet date in The equity ratio was 56.2 per cent as at 30 June Segmental reporting Following the restructuring of the Group, msg life made changes to the composition of its segments in the 2014 financial year. These concern the products and services on offer. The reporting in accordance with IFRS 8 ( Business Segments ) is carried out in line with the management approach to the management of the company for Life Insurance, Nonlife Insurance and, since October 2014, the new Consulting & Services segment. This new method of segmental reporting also reflects the new methods of submitting internal reports to the Management and Supervisory Boards of the company. The segment earnings statement is based on the Group s internal international and cross-company profit centre earnings statement in accordance with which the msg life Group is managed. Despite a high level of specialisation, the segments support each other in development and customer projects. This internal exchange of services is shown under inter-segment revenue. The turnover between the segments is generated at internal prices which are based on the cost of production plus a markup. Expenses for central functions (management, sales, central services) are charged to the operating segments via allocations based on their origins and cause. The segment earnings represent the earnings before interest; taxes; depreciation of property, plant and equipment and amortisation of intangible assets (EBITDA). The amortisation of the intangible assets identified during the course of the merger is allocated to the segments as amortisation expenses based on their origins and cause. The transition to EBITDA in the previous year (2014) essentially comprises income and expenses resulting from the deconsolidation of the plenum sub-group and the former Banking segment. The valuation methods used in the segmental reporting are in accordance with those applied for in the consolidated financial statements as at 31 December The Life Insurance segment generated 35.3 million euros, corresponding to 67.8 per cent of aggregate turnover, and EBITDA amounting to 1.2 million euros. Before the allocation of 4.1 million euros in administrative costs, the operating EBITDA of the segment was 5.3 million euros. The Non-life Insurance segment generated 14.2 million euros, corresponding to a 27.1 per cent proportion of aggregate turnover, and EBITDA of 1.4 million euros. Its operating EBIDTA was 2.6 million euros before the allocation of 1.2 million euros in administrative costs. The Consulting & Services segment generated 2.7 million euros, corresponding to 5.1 per cent of aggregate turnover, and EBITDA of 0.3 million euros. Its operating EBIDTA was 0.8 million euros before the allocation of 0.5 million euros in administrative costs. Administrative costs, including in-house IT, accounted for per cent of the Group s total costs as at 30 June

10 Consolidated segment information as at the reporting date, in thousand euros: as at 30 June 2015 Sales Intersegment turnover Aggregate turnover EBITDA Life Insurance 35, ,717 1,686 Non-Life Insurance 14, ,653 1,405 Consulting & Services 2,670 4,161 6, Total 52,158 5,043 57,200 2,856 Reconciliation 89-5,043-4, Group as a whole 52, ,247 2,927 as at 30 June 2014 Sales Intersegment turnover Aggregate turnover EBITDA Life Insurance 33, ,519-2,005 Non-Life Insurance 13, ,211 2,702 Consulting & Services 2,922 4,320 7, Total 49,892 5,079 54,971 1,013 Reconciliation 898-5,079-4,181 7,041 Group as a whole 50, ,790 8,053 Employees At the end of June 2015, the msg life Group had 859 permanent employees (30 June 2014: 883 permanent employees; 31 December 2014: 865 permanent employees). Distribution by region: Germany 583 USA 85 Slovakia 80 Austria 41 Slovenia 26 Switzerland 19 Portugal 16 Poland 4 Benelux 3 Czech Republic

11 Forecast Report As well as cultivating its existing customers and winning new ones, msg life is continually pressing ahead with the further technical and functional optimisation and completion of its broad product range in the field of life insurance and pensions. Having made major investments in the creation of new product offerings in other segments that could not be positioned successfully on the market in the past, msg life will be able to keep its investment expenditure and therefore also the costs of freelance employees at a relatively normal level for a software company in the current year as well. The single-product strategy adopted for the policy management systems the completion of the policy management system msg.life Factory on the basis of innovative, modern Java JEE architecture remains the core project. This year, msg life will invest around 4,000 person days in development capacity for this purpose (previous year: 6,500 person days) into the development of the actuarial component LF JEE Product. The component will be made available for the first customer projects at the end of the year. LF JEE Product is the final stage of the transformation of msg.life Factory in Java JEE architecture. Independent consulting activities, an essential development component, will continue to be expanded in 2015 simultaneously. msg life is assuming that the positive trend in this area in 2013 and 2014 can be continued and is putting its faith in the compared with other consulting firms unique selling point of being able to transform triedand-tested solutions from the msg life product area into solutions for non-product customers more economically than its competitors. In view of the current market and sales situation, the msg life Group is expecting to generate turnover of roughly million euros and earnings before interest, taxes, depreciation, and amortisation (EBITDA) of about 8.0 million euros in the 2015 financial year. The msg life Group can currently discern no significant changes in its target markets and is therefore expecting 2016 to provide a slight increase in turnover over 2015 and operating EBITDA of between 8.5 million and 10.5 million euros. Opportunity and risk report In respect of future opportunities and risks, msg life refers to the relevant sections of the condensed management report and Group management report for the 2014 financial year, as we currently estimate that there have been no significant changes in this area. Related party disclosures In the reporting period, there were no significant transactions with related parties that would require separate reporting. In addition to these ongoing enhancements of the company s central products and services, the management is rigorously implementing the new strategic orientation that the msg life Group has undertaken. By refocusing on its core business which revolves around software for the European life insurance market and health insurers in the USA, discontinuing product development in the Non-life Insurance segment, focusing its international growth on established markets, carrying out a full readjustment of its shareholding structure and changing its name to msg life, the company has positioned itself in a new and promising way. The main focus is now on more intense cooperation within the msg Group over the long term. The integration of the core product msg.life Factory and its components into msg.insurance Suite, the common insurance platform of the msg Group, is an important aspect here, as is the sales-related collaboration taking place in this context. In addition to this, msg life continues to strive to achieve organic and incomebased growth first and foremost

12 Consolidated income statement first half-year 2015 and Sales Change in inventory of finished and unfinished services Other operating income Cost of purchased services/merchandise Personnel expenses Other operating expenses EBITDA* Depreciation of property, plant and equipment and amortisation of intangible assets Operating result (EBIT) Interest income Interest expenses Earnings before income taxes (EBT) Taxes on income and revenues Net income for the period 52,247 50, ,843-3,403-3,519-38,423-39,752-8,348-11,268 2,927 8, ,451 1,972 5, ,883 5, ,196 5,031 Of which: Shareholders of the parent company Non-controlling interests Net income for the period 1,196 4, ,196 5,031 Earnings per share (undiluted) in euros Earnings per share (diluted) in euros Shares in circulation on average (undiluted) Shares in circulation on average (diluted) 40,895,861 40,895,861 40,895,861 40,895,861 * Earnings before interest, taxes, depreciation and amortisation 22 23

13 Consolidated statement of comprehensive income first half-year 2015 and Net income for the period Unrealised profits and losses from currency differences Actuarial gains/losses Income tax effect Total income after taxes 1,196 5,031 1, ,248 5,

14 Consolidated income statement second quarter 2015 and Sales Change in inventory of finished and unfinished services Other operating income Cost of purchased services/merchandise Personnel expenses Other operating expenses EBITDA* Depreciation of property, plant and equipment and amortisation of intangible assets Operating result (EBIT) Interest income Interest expenses Earnings before income taxes (EBT) Taxes on income and revenues Net income for the period 25,665 26, ,636-1,746-1,672-19,139-20,433-4,114-4, , , , ,150 Of which: Shareholders of the parent company Non-controlling interests Net income for the period , ,150 Earnings per share (undiluted) in euros Earnings per share (diluted) in euros Shares in circulation on average (undiluted) Shares in circulation on average (diluted) 40,895,861 40,895,861 40,895,861 40,895,861 * Earnings before interest, taxes, depreciation and amortisation 26 27

15 Consolidated statement of comprehensive income second quarter 2015 and Net income for the period Unrealised profits and losses from currency differences Actuarial gains/losses Income tax effect Total income after taxes , ,

16 Consolidated statement of financial position Assets Current assets: Cash and cash equivalents Securities Trade receivables Invoiced receivables PoC receivables Receivables from affiliated companies Inventories Ongoing income tax claims Other financial receivables Other short-term assets Current assets, total 19,286 21, ,390 24,930 13,322 14,726 10,068 10, ,737 2,581 46,145 49,705 Non-current assets: Goodwill Other intangible assets Property, plant and equipment Financial investments Deferred tax claims Ongoing income tax claims Long-term assets, total 21,470 21,470 3,506 3,916 2,760 2, ,511 1, ,468 29,587 Assets, total 75,613 79,

17 Consolidated statement of financial position Equity and liabilities Short-term liabilities: Trade payables Amounts owed to affiliated companies Current income tax liabilities Other provisions Other current liabilities Other financial liabilities Short-term liabilities, total 1,097 1, , ,509 4,796 11,902 13,487 22,379 23,973 Long-term liabilities: Other provisions Other financial liabilities Deferred tax liabilities Pension provisions Other long-term liabilities Long-term liabilities, total 344 1, ,640 1,467 8,019 8, ,000 10,759 15,092 Liabilities, total 33,138 39,066 Equity: Subscribed capital of msg life ag Capital reserves of msg life ag Group-retained income Shares in parent held by shareholders 40,896 40,896 33,601 33,601-32,022-34,270 42,475 40,227 Equity total 42,475 40,227 Equity and liabilities, total 75,613 79,

18 Consolidated cash flow statement Net income for the period Taxes on income Earnings before income taxes (EBT) 1,196 5, ,883 5,294 Adjustments for the transfer of earnings to the cash flow from operational activities: Depreciation of property, plant and equipment and amortisation of intangible assets Result from the disposal of property, plant and equipment and intangible assets Other expenses/income with no impact on earnings Change in provisions for pensions Interest income Interest expenses Income taxes paid less reimbursed payments 955 3, ,153 0 Change in: Trade receivables Inventories Other assets/other financial receivables/ongoing income tax claims Other provisions Adjustment item(s) for disposed-of subsidiaries Trade payables Other debts/financial liabilities Change in provisions for taxes Cash flow from operating activities 1,540 2, , , ,825 2,342-1, ,498-2,

19 Consolidated cash flow statement Cash flow from investment activities: Investments in tangible assets Cash inflows from the disposal of financial investments Cash inflows from the disposal of property, plant and equipment/ subsidiaries Currency differences in fixed assets Cash flow from investment activities , ,030 Cash flow from financing activities: Profit distributions Repayment of short-term financial liabilities Repayment of long-term financial liabilities Assumption of long-term financial liabilities (Finance Lease) Interest received Interest paid Cash flow from financing activities ,000-2, , ,111-9,058 Net change in cash funds -3, Change in cash and cash equivalents 0-3,309 Cash and cash equivalents at the start of the reporting period 21,730 14,366 Change in cash funds due to exchange rate fluctuations Cash and cash equivalents at the end of the reporting period 19,286 11,

20 Consolidated statement of changes in equity Subscribed capital Capital reserve Group retained income Interim total Equity Currency compensation item Net investment Other Equity held by the shareholders in the parent company Noncontrolling interests As at ,896 33,601 2,836-2,337-33,243 47,359 1,004 42,758 Consolidated earnings ,821 4, ,031 Unrealised profits and losses Allocation to pension provision Total income ,479 5, ,561 Other changes 0-2, ,641-1,214-3,250 As at ,896 31,566 2,707-2,337-27,763 45, ,069-27,393 As at ,896 33,601 4,4755-2,337-36,388 40, ,227 Consolidated earnings ,196 1, ,196 Unrealised profits and losses 0 0 1, , ,052 Allocation to pension provision Total income 0 0 1, ,196 2, ,248 As at ,896 33,601 5,507-2,337-35,192 42, ,475-32,

21 Notes Accounting principles These interim financial statements of msg life ag as at 30 June 2015 were prepared in euros, the Group currency, in accordance with IAS 34 ( Interim Financial Reporting ) while giving due consideration to the International Financial Reporting Standards (IFRS) applicable as at the reporting date. Neither the accounting and valuation methods applied in the consolidated financial statements as at 31 December 2014, nor the calculation methods used, have changed. For further explanatory notes, please refer to the consolidated financial statements of msg life ag as at 31 December The reporting in accordance with IFRS 8 ( Operating Segments ) is carried out in line with the management approach to the management of the company for the three Life Insurance, Non-Life Insurance and Consulting & Services segments. Consolidation group There were no changes to the consolidation group described in the consolidated financial statements for the 2014 financial year as at 31 December Nominal capital The subscribed capital is divided up into 42,802,453 no-par-value bearer shares, each with a nominal amount of 1.00 euro. As at 30 June 2015, the company holds 1,906,592 of its own shares, which corresponds to approximately 4.45 per cent of the total share capital. 40,895,861 shares are currently in circulation. Contingent liabilities and contingent claims There are no contingent claims. With regard to the contingent liabilities, there have been no material changes since the reporting date as at 31 December Changes in the shareholdings structure In the reporting period, the following disclosures were published in accordance with Section 21 Para. 1 or Section 26 Para. 1 of the German Securities Trading Act (WpHG). msg life ag: Publication under Section 26 Para. 1 WpHG with the objective of distribution throughout Europe Ennismore Fund Management Limited, London, United Kingdom, informed us in accordance with Section 21 Para. 1 WpHG on 04/06/2015 that its proportion of the voting rights in msg life ag as at 29/05/2015 exceeded the threshold of 3% and that on this day they amounted to 3.07% (corresponding to 1,315,270 out of a total of 42,802,453 voting rights) in msg life ag. All of the voting rights are attributable to Ennismore Fund Management Limited pursuant to Section 22 Para. 1 (1) No. 6 WpHG. Furthermore, Mr William Geoffrey Oldfield, United Kingdom, informed us in accordance with Section 21 Para. 1 WpHG on 04/06/2015 that his proportion of the voting rights in msg life ag as at 29/05/2015 exceeded the threshold of 3% and that on this day they amounted to 3.07% (corresponding to 1,315,270 out of a total of 42,802,453 voting rights) in msg life ag. All of the voting rights are attributable to Mr William Geoffrey Oldfield pursuant to Section 22 Para. 1 (1) No. 6 WpHG. Information on purchase or sale of shares by the members of the Management Board and the Supervisory Board No securities transactions in accordance with Section 15a of the German Securities Trading Act (WpHG) were reported in the reporting period. Events after the reporting period Beyond the event described below, no other transactions of particular significance took place following the end of the reporting period (30 June 2015): Under the purchase agreement of 28 July 2015, msg life ag sold its subsidiary msg life metris gmbh to msg systems ag. The purchase agreement concerned all of the shares in the company. The commercial transition will be effective from 1 October

22 Audit review This six-month report was not subjected to an auditing procedure. Declaration by the statutory representatives We affirm to the best of our knowledge that, in accordance with the applicable accounting principles to be used for interim reporting in the consolidated interim financial statements, a true and fair picture of the assets, financial and income position of the msg life Group is conveyed, and that the course of business, including the business results, and the position of the Group are presented in such a way in the consolidated interim financial statements that a true and accurate picture is communicated and the material opportunities and risks of the Group s likely future development in the remainder of the financial year are described. The msg life share Market segment Prime Standard, Frankfurt Number of shares 42,802,453 ISIN DE German code (WKN) IPO Leinfelden-Echterdingen, 18 August