Munich Re Group Merrill Lynch CEO Banking & Insurance Conference

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1 Merrill Lynch CEO Banking & Insurance Conference Growth Opportunities Post Crisis? i Nikolaus von Bomhard Chairman of the Board of Management 8 October 2008

2 Agenda Munich Re well positioned during capital market crisis Changing Gear Munich Re growth expectations Outlook 2 Group earnings and capital repatriation Building a track record EPS Payout ratio 2 % Dividend Share buy-back th record result in a row 1 All segments produce strong profits Shareholders benefit Dividends and share from increased buy-backs to ensure capital repatriation efficient capitalisation Adjusted persuant to IAS 8. 2 Dividend and share buy-back divided by consolidated result excl. minorities. 3 1bn buy-back programme concluded in February bn buy-back programme concluded in January

3 Strategic risk management framework Sophisticated risk management complements business strategy A rigorous framework designed to enable Munich Re Group to protect and generate sustainable shareholder value ensurehighest degree of confidence in meeting policyholders' claims Deeply rooted in economic steering concepts "Flexible" enough to reflect other constraints Generate shareholder value while protecting policyholder protect reputation of Munich Re Group 4 Risk criteria Risk management of financial distress Annual Economic Earnings Group level Expected earnings Return period (years) FINANCIAL DISTRESS LIMIT Economic Earnings of 0 or less every 10 years tolerated Worst-case economic earnings in "X" number of years Purpose Manage probability of becoming financially distressed Definition Economic Earnings represent creation of Available Financial Resources over a period in time, gross of capital management activities 1 Expected Economic Earnings derived from planned IFRS earnings Economic Earnings-at-Risk Derived ed from economic o c capital model Earnings-at-risk criterion developed to protect franchise value 1 i.e. not considering dividends, share buy-backs, debt issuances. Limit applies at Group level Financial distress limit almost fully utilised 5

4 Sustainable profitability Significant reduction of asset exposure Equity gearing 1 % as at end of period Q Credit exposure as at Total investments Munich Re Group: 166bn Thereof 78% fixed-interest securities 2, high credit quality: 90% rated A or higher 3 6.7bn structured products exposure 90% rated AAA 46% exposure to Freddie Mac and Fannie Mae 1 Equity exposure (after hedges, net of tax and policyholder participation) divided by shareholders' capital (incl. net off-balance-sheet reserves, excl. goodwill). 2 Incl. loans, part of other securities and cash positions. 3 Excl. cash positions; economic view not fully comparable with IFRS figures. 6 Visible impact of derisking Cost of capital substantially reduced Investment risks Beta factor Munich Re and industry Lowered equity gearing Reduced concentration risks Very moderate credit risk Asset-liability management State-of-the-art ALM Strong risk management Insurance risks Active cycle management High diversification Strong Group reserves Munich Re Significantly reduced to below 0.8 for Munich Re DJ Euro Stoxx insurance Derisking reflected in significant reduction of cost of capital Munich Re now well below industry Source: Bloomberg raw beta to DJ Stoxx 600, total return, daily basis, 1-year. Status 30 September

5 Business potential Munich Re best positioned to benefit under current market developments Recent market developments Significant capital market stress reduces capital base in financial services industry Insurance industry faces restricted refinancing options in capital market Increased uncertainty likely to result in lower tolerance to risk and weak security Rising demand for highly rated reinsurance capacity Munich Re's commitment Excellent risk management Providing maximum capacity with superior security Focus on client and underwriting excellence Quality reinsurer Besides capacity and security providing service, expertise and innovative solutions Munich Re's position and competitive edge confirmed by independent institutions S&P 1 Flaspöhler survey "Risk-based capital adequacy as measured by "Best reinsurer overall non-life and life" S&P s model showed a redundancy at the AAA level at year-end 2007" "We consider Munich Re's strong balance sheet to be a competitive advantage" Unique combination of capacity, security, quality and brand 1 Rating report on Munich Re, published on 8 September Flaspöhler Reports Europe Non-Life and Life. "Preferred reinsurer" in 5 out of 7 professional factors 7 out of 8 operating attributes 18 out of 21 lines of business 8 Agenda Munich Re well positioned during capital market crisis Changing Gear Munich Re growth expectations Outlook 9

6 Changing Gear Basis for profitable growth Changing Gear programme Ambitious growth target Best in class Capital efficiency Munich Re targets 2010 Most profitable among top 5 global reinsurers PROPERTY-CASUALTY RE Growth initiatives contribute > 250m net profit LIFE RE 15% VANB average growth p.a. Returning > 8bn to shareholders Average EPS growth >10% p.a. 1 Expansion in primary insurance Sustainable RoE 12 15% 2010 EPS target > 18 confirmed Market leadership in International Health Average premium and profit growth >20% p.a. 1 Normalised 2007 EPS 13.5 (based on previously expected 3bn net profit and 220 million shares) 10 Ambitious growth targets p-c reinsurance Realisation of untapped profit pools in p-c reinsurance Net profit reinsurance property-casualty 1 Underwriting result 3 bn m Changing Gear growth initiatives Current reinsurance portfolio Segmental view (not consolidated). 2 Adjusted due to first-time application of IAS 19 (rev. 2004). Result impacted by 1.5bn due to Atlantic windstorms KRW. 3 Underwriting result: Net premiums written less losses, management expenses and deductions (e.g. commissions, fees). 482 CAGR >10% ~665 ~225 ~ e Changing Gear growth initiatives > 250m net profit contribution in underwriting result estimation based on 97% combined ratio 11

7 Ambitious growth targets life reinsurance Extension of profitable growth Strategic ambition Quantum growth in EV earnings by doubling our VANB until 2011 m 228 CAGR 15% VANB development >440 CAGR >8% > In accordance with Munich Re Group RoRaC-target of 15% 12 Ambitious growth targets primary reinsurance ERGO: CEO Agenda 2012 Ambitious targets to sustain excellent profitability Strengthen sales organisation Realign strategy in life Increase share of international business Optimise capital structure PREMIUMS 2012 > 23bn NET PROFIT 2012 > 900m RoE 2010 ~13.5% RoE 2012 ~15% 13

8 Ambitious growth targets - International Health Leveraging our combined health experience bn GWP e bn CAGR +20% e 2013e 2015e Our Strengths Flexible combination of business model and products as a unique selling proposition Outstanding knowledge and experience in health insurance and reinsurance 2007 and 2008 achievements provide solid basis for sustainable growth Going forward, we will focus our efforts on successfully implementing ongoing initiatives, above all the integration of Sterling identifying additional growth opportunities Average premium and profit growth >20% p.a. until Agenda Munich Re well positioned during capital market crisis Changing Gear Munich Re growth expectations Outlook 15

9 Summary Mid-term targets Value-adding integrated business model covers full value chain of risks Diversification and sophisticated asset-liability management are cornerstones of our strategy Excellent financial strength allows participation in market opportunities Capital management and cycle management are key to our future success Current market developments provide unique opportunity Aim to achieve > 18 EPS in 2010 Clear commitment to RoRaC target at least 15% over the cycle 16 Appendix Financial calendar Contacts Disclaimer i 17

10 Appendix Financial calendar 7 November 2008 Interim report as at 30 September March 2009 Balance sheet press conference for 2008 financial statements (preliminary figures) Analysts' conference, Munich 22 April 2009 Annual General Meeting 23 April 2009 Dividend payment 6 May 2009 Interim report as at 31 March August 2009 Interim report as at 30 June 2009; Half-year press conference 5 November 2009 Interim report as at 30 September Appendix For information please contact Sascha Bibert Head of Investor & Rating Agency Relations Tel.: +49 (89) [email protected] com Dr. Thomas Dittmar Tel.: +49 (89) [email protected] Andreas Silberhorn Tel.: +49 (89) [email protected] i h Münchener Rückversicherungs-Gesellschaft Königinstrasse 107, München, Germany Fax: +49 (89) [email protected] Internet: Ralf Kleinschroth Tel.: +49 (89) [email protected] Christine Franziszi Tel.: +49 (89) [email protected] Martin Unterstrasser Tel.: +49 (89) [email protected] t 19

11 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 of our Company. The Company assumes no liability to update these forward-looking statements or to conform them to future events or developments. 20