Undated subordinated bonds European roadshow May/June 2007
Disclaimer This document does not constitute an offer to sell, or the solicitation of an offer to subscribe for or buy, any securities in the Company to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision in relation thereto. The contents of this presentation are to be kept confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose. Neither the Company, nor any other party is under any duty to update or inform you of any changes to such information. In particular, it should be noted that the financial information relating to the Company contained in this document has not been audited and in some cases is based on management information and estimates. Recipients of this document who are considering acquiring securities in the Company following publication of the prospectus to be issued in due course, are reminded that any such acquisition should be made solely on the basis of the information contained in the prospectus and any supplements thereto. No reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness. No representation or warranty, express or implied, is given by or on behalf of the Company or any of its affiliates, directors, officers or employees, advisors or any other person as to the accuracy or completeness of the information or opinions contained in this document and no liability whatsoever is accepted for any such information or opinions or any use which may be made of them. This document is intended for distribution only to persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001, as amended, or to those persons to whom it can otherwise lawfully be distributed. Neither this document nor any copy of it may be taken or transmitted in or into the United States or to any U.S. person (as defined by Regulation S of the U.S. Securities Act of 1933 (the Securities Act )) or transmitted in or into Australia, Canada or Japan or to Canadian persons. Securities in the Company have not been and will not be registered under the Securities Act and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration under the Securities Act or exemption from the registration requirements thereof. There will be no public offer of the securities in the Company in the United States. The securities referred to herein have not been and will not be registered under the applicable laws of Australia, Canada or Japan and, subject to certain exceptions, may not be offered or sold within Australia, Canada or Japan or to any national, resident or citizen of Australia, Canada or Japan. Any failure to comply with this restriction may constitute a violation of United States, Australian, Canadian or Japanese securities law. The distribution of this document in other jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Certain statements in this presentation are forward-looking statements under the U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak as only of the date of this presentation. By participating in this presentation or by accepting any copy of this document, you agree to be bound by the foregoing limitations. 2 Agenda Strategic overview Capital position and structure Transaction details Backup 3: Additional information 3
Agenda Strategic overview Capital position and structure Transaction details Backup 3: Additional information 4 Strategic overview Key investment considerations Attractive bond investment Munich Re Group...... serves one global insurance market with strict bottom-line orientation... combines conservative capital structure and very strong financial strength... has successfully reduced unnecessary volatility with state-of-the-art risk management... is committed to profitable growth with Changing Gear programme 5
Strategic overview Munich Re Group at a glance A strong global insurer Munich Re Group Premium breakdown by segment (consolidated) in bn 40.0 2002 Reinsurance 40.4 2003 Diversification as key success factor Leading expertise in non-life and life reinsurance worldwide for 127 years Full range of products: from traditional reinsurance to alternative risk financing Best reinsurer overall by cedant vote 1 1 Flaspöhler-Survey Europe 2006. 39.1 2004 Reinsurance P-C Reinsurance L&H 17.9 4.8 16.9 5.1 5.2 14.0 13.7 5.2 13.8 5.1 11.7 12.5 12.3 12.3 11.6 5.5 5.9 6.6 7.0 6.9 38.2 2005 Primary insurance Primary insurance P-C Primary insurance L&H 37.4 2006 Germany-based with growing importance in selected European markets Multi-brand single back office approach European market leader in health and legal expenses Focused on personal lines business Integrated healthcare to become 3rd pillar over time Asset management (MEAG) has a supportive function 6 Strategic overview Integrated Munich Re Group strategy Serving one global insurance market Reinsurance Property-casualty, life and special risks: Global reach Primary insurance Special focus on growth: European and international retail insurance markets Expanding value chain: Fronting agreements, partnering approaches and advisory business Generating value for shareholders by giving access to all parts of value chain Developing further opportunities: Establishing new sales and distribution initiatives Integrated health approach: Optimised allocation of capacities and capabilities tailored to the state of the market Reducing dependency on the P-C reinsurance cycle Realisation of synergies across the Group Diversification at work reduction in capital requirements 7
Strategic overview Building a track record Munich Re Group well on track Continuing the success story Consistent capital management Record result in 2006 Areas of unnecessary volatility addressed Growth initiatives in place Staying focused on our integrated strategy with risk as our business across full value chain of insurance 3.5bn RoRaC 2006 20.3% All targets for 2006 achieved 8 Strategic overview Track record firmly achieved Strict bottom-line orientation pays off Munich Re Group result in m ERGO Group in m 1,887 +87% 2,751 3,536 1 2004 2005 2006 906 +276% 786 241 2004 2005 2006 1 1 Adjusted due to first-time application of IAS 19 (rev. 2004). 9
Strategic overview Changing Gear programme EPS growth >10% p.a. until 2010 EPS 2004 2006 in 8.0 11.7 15.1 1 2004 2005 2006 Changing Gear programme 13.5 2007e 2 Average EPS growth 2007 2010 >10% p.a. Ambitious growth targets Best in class Capital efficiency >18 2010e 1 Adjusted due to first-time application of IAS 19 (rev. 2004). 2 Based on assumed IFRS earnings (excl. minority interests) of ~ 3bn and 220.2 million shares (weighted average). 2 Munich Re target 2010 Most profitable among top 5 global reinsurers Market leadership in international health with integrated approach Expand into primary insurance growth markets/segments Strategic risk management maximising reward for volatility 10 Agenda Strategic overview Capital position and structure Transaction details Backup 3: Additional information 11
Capital position and structure Assets Sensitivity to equity markets substantially reduced Equity exposure as % of shareholders capital 178 110 87 72 71 2002 2003 2004 2005 2006 2007 As at end of year. Definition: Equity exposure (after hedges, net of tax and policyholder participation) divided by shareholders' capital (incl. off-balance sheet reserves, excl. goodwill). 12 Capital position and structure Assets High-quality bond portfolio By rating By type of security Not rated 1% <=B 1% BB 4% A 14% AA 19% 94% rated A or higher Total: 96,881m AAA 61% ABS/MBS 5% 1 Pfandbriefe 24% Corporates 8% As at 31 December 2006. 1 Thereof 0.5bn of subprime HEL (Home Equity Loans), of which 47% AAA-rated and 53% AA-rated. Government 44% Banks 19% 13
Capital position and structure Liabilities Our risk-management strategy for peak (NatCat) exposures VaR for various return periods Aggregate portfolio VaR in bn 1 Risk-management strategy Maximise profits subject to 3.2 3.0 2.25 1.5 0.75 0 Consolidated 2007 net profit target 1 200 1 100 1 50 KRW Year Return periods 1 30 1 20 1 10 maintaining targeted financial strength avoiding financial distress managing peak concentrations Managing NatCat exposures Risk-adequate pricing and maximising shareholder value think before you write Strict budgeting and accumulation control Third-party protection incl. conventional and collateralised retrocession, risk swaps and cat bonds 1 Net of purchased protection and tax as at 31.12.2006 but before allowances for stress tests. Assumes a 37.5% tax rate. Actual tax rate and protection recoveries may differ according to specific circumstances. 14 Capital position and structure Economic and regulatory capital position Comfortable buffer Economic capital Munich Re capital model adopts risk tolerance of two consecutive 1-in-100-year losses bn 32.7 1.8 30.9 18.4 3.4 29.3 Economic and hybrid capital Margin for future risks 1 Available financial resources as at 31.12.06 Required risk capital 12.5 Economic capital buffer Economic capital position resistant to major stress tests 10.8 Adjusted to realised capital mgt. actions finalised in April 07 Adjusted to new share buy-back plan 2007 2 announced on 4.5.07 Regulatory capital Capital position according to BaFin 3 Group solvency requirements bn 24.8 Eligible capital 7.2 Required solvency margin 17.6 Adjusted solvency capital 345% Adjusted solvency ratio Eligible capital is substantially higher than required by law 1 Allowance for additional risk capital charge for uncertainty from P-C segment beyond the current calendar year's requirements. 2 2bn share buy-back to be realised by the 2008 Annual General Meeting. 3 German Federal Financial Supervisory Authority. Refer to backup for detailed derivation. 8.8 as at 31.12.06 15
Capital position and structure Debt leverage Significant reduction... Equity bn 13.9 19.3 20.51 2002 2003 2004 2005 24.4 1 26.4 2006 Continual strengthening of equity base... + Strategic debt bn 6.6 6.5 3.2 3.4 3.4 5.3 3.4 4.1 2.2 2.2 2.2 3.4 1.0 1.0 0.9 1.1 0.8 0.4 0.3 2002 2003 2004 2005 2006 Subordinated debt Senior debt Bank debt and overdraft... while simultaneously redeeming strategic debt... Debt leverage 2 25 24 18 13 12 12 6 2 2002 2003 2004 2005 2006 Incl. subordinated debt Excl. subordinated debt... led to significant reduction of debt leverage 1 Adjusted owing to first-time application of IAS 19 (rev. 2004). 2 Definition: Debt leverage = D / (D+E+M); where D = Debt, E = Equity, M = Minority interests. All subordinated bonds treated as debt. 19 16 Capital position and structure Debt leverage... to a level far below industry average Debt leverage as at 31.12.2006 Munich Re 13 Swiss Re 16 Eureko 17 Brit Insurance 18 Groupama 19 AGF 19 Legal & General 22 Aegon 23 Allianz 23 Amlin 23 Zurich FS 24 Old Mutual 25 Swiss Life 25 AXA 27 CNP Assurances 29 Friends Provident 29 Resolution 29 Hannover Re 29 Aviva 31 Prudential 32 Royal & SunAlliance 32 Beazley 33 Standard Life 33 Generali 39 Source: UBS Investment Research: European Insurance, 25 April 2007. Average 25% Definition Debt leverage = D / (D+E+M), where D = Debt E = Equity M = Minority interests All subordinated bonds treated as debt 17
Capital position and structure Interest coverage Increased to comfortable level Interest coverage 11.7 9.4 6.6 5.1 2003 2004 2005 2006 Definition Earnings before interest expenses, tax and depreciation, divided by finance costs and other interest expenses 18 Capital position and structure External economic indicators Success of derisking efforts confirmed Assets Lowered equity gearing Reduced concentration risks Low credit risk Asset-liability management State-of-the-art ALM Strong risk management Liabilities Moody's KMV Expected Default Frequency TM (EDF) for Munich Re 0 Active cycle management 2004 2005 2006 31.3.2007 High diversification Group reserves strengthened Munich Re EDF reduced to 0.02% the smallest value attainable in Moody's KMV model 1 0.6 0.5 0.4 0.3 0.2 0.1 EDF of 0.02% as at 31.3.2007 corresponds to AA/AAA rating Illustration 1 The version of Moody s KMV EDF TM model used for this illustration does not extrapolate default frequencies below 0.02% because of paucity of historic observations below the 0.1% level. 19
Capital position and structure Rating agencies' view Very strong financial strength A.M. Best Fitch Moody s Standard & Poor s A+ 1, negative outlook AA-, stable outlook Aa3, stable outlook AA-, stable outlook Very strong business position Improved earnings Risk management initiatives should lead to lower earnings volatility Stabilising capitalisation despite planned share buyback Outlook could be revised to stable if Munich Re continues to have solid earnings in primary and reinsurance 1 Issuer credit rating: aa-. Excellent business position Very good profitability High degree of diversification Emphasis placed on integrated risk management Very strong capitalisation Share buy-back reflects strong and improving recent profitability together with numerous actions to reduce required risk capital Excellent business franchise and extremely strong market position Excellent capitalisation Conservative management practices and sophisticated capital management model Well-balanced book of business Wider scope for active capital management policies, including moderate share buy-backs Upgrade reflects improvements in operating performance, strong ERM framework and increased certainty about overall reserve adequacy Very strong competitive position, capitalisation, and financial flexibility Large-scale, business and geographical diversity are competitive advantages Expect strong earnings throughout the cycle 20 Agenda Strategic overview Capital position and structure Transaction details Backup 3: Additional information 21
Transaction details Summary terms and conditions EUR Basket D hybrid offering (1/3) Issuer Offered securities Expected issue ratings Listing Denominations Maturity/first call date Coupon payments Coupon pusher and optional deferral Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München ( Munich Re ) Perpetual Subordinated Step-up Notes a (A.M. Best) / A+ (Fitch) / A3 (Moody's) / A (S&P) Application has been made to list the securities on Luxembourg Stock Exchange EUR 50,000 (and multiples thereof) Perpetual NC [2017 or longer] Until first call date: [ ]% payable annually in arrear Thereafter: 3m Euribor + [ ]% +1% payable quarterly in arrear Subject to the Required Deferral provisions, coupons must be paid if, during the 12-month period up to the coupon date: (1) Dividends or other distributions or payments (including payments for the purposes of repurchasing shares) are validly resolved on, paid or made by Munich Re in respect of any class of shares; or (2) Interest or other distributions or payments (including payments for the purposes of redemption or repurchase) are validly resolved on, paid or made by Munich Re in respect of any Parity Securities or Junior Securities; otherwise Munich Re has the option to defer such coupon. 22 Transaction details Summary terms and conditions EUR Basket D hybrid offering (2/3) Required deferral Settlement of deferred coupons Coupons will be mandatorily deferred in the following instances: (A) Where Munich Re breaches minimum solvency requirements (referred to as the Solvency Event ) (B) Where a Mandatory Deferral Event has occurred based on all of the following conditions being met: (i) Consolidated net income of the Group, for the 12 month period comprising four consecutive quarterly reporting periods immediately prior to the two most recently reported quarterly periods is less than zero, (ii) Adjusted Equity for the quarterly reporting period immediately prior to the two most recently reported quarterly periods has declined by more than 10% compared to the Adjusted Equity for the quarterly reporting period 24 months prior; and (iii) Adjusted Capital for the most recent quarterly reporting period has declined by more than 10% compared to Adjusted Equity for the quarterly reporting period 30 months prior (where Adjusted Capital = Adjusted Equity + Qualifying Mandatory Convertibles (QMCs)) Intent to use best endeavours in case of a mandatory deferral to issue shares/securities to settle interest no later than 30 days after original due date Failing the 30 day best endeavours, any deferred coupons must be settled upon (a) any coupon date on which the Optional Deferral Trigger no longer applies, (b) redemption, (c) winding up of Munich Re and (d) at the 5th anniversary from the date of deferral (on a best endeavours basis). 23
Transaction details Summary terms and conditions EUR Basket D hybrid offering (3/3) Alternative Coupon Settlement Mechanism (ACSM) Early redemption Subordination Governing law Deferred coupon payments may only be settled by one (or a combination) of the following Alternative Coupon Settlement Mechanisms: (A) Share Settlement, (B) Security Settlement (involves the sale of similar hybrid securities to raise proceeds to pay investors); Certain limits apply in relation to each of these mechanisms when settling coupons deferred pursuant to a Mandatory Deferral Event, but not otherwise. In some limited circumstances where Munich Re is unable to implement the ACSM mechanisms, deferred coupon payments may be cancelled. Customary call events prior to First Call Date including Par Redemption Events (Gross up or Tax Event) and Make-Whole Redemption Events (Accounting, Capital, Regulatory Event) Junior to Senior Securities (unsubordinated and dated subordinated obligations), pari passu among themselves and with Parity Securities, and senior to Junior Securities (including all share capital) German law 24 Agenda Strategic overview Capital position and structure Transaction details Backup 3: Additional information 25
Primary insurance ERGO generates high profits Consolidated result ERGO Group in m RoE ERGO Group 20.2 21.4 906 +276% 786 241 2004 2005 2006 1 7.9 2004 1 2005 2006 RoRaC 2006: 23.1% Best RoE in peer group 2 ERGO 21.4 Peer 1 Peer 2 Peer 3 Peer 4 1 Adjusted due to first-time application of IAS 19 (rev. 2004). 2 Allianz, Axa, Generali, Zurich, according to IFRS Group reporting. 26 Primary insurance: Property-casualty Attractive non-life business mix ERGO 2006 Gross premiums written Other 6.9% Legal expenses 14.3% Liability 14.5% Fire 17.0% Personal accident market 2005 1 25.3 12.1 Allianz ERGO AMB Generali 7.0 7.0 5.4 4.8 R+V Public insurers Motor 22.3% Personal accident 25.0% Axa 38.4 Other 1 Includes pure risk policies as well as policies with premium refunds; ERGO's (Allianz's) share of pure risk policies: 90.3% (38.2%). Source: Annual reports 2005. Market 2005 Gross premiums written Other 14.4% Legal expenses 5.3%% Liability 13.2% Fire 19.5% Key considerations personal accident Motor 37.2% Personal accident 10.4% Personal accident business demands active sales process Portfolio with high degree of stability Growth of portfolio requires long-term effort of management and sales forces 27
Primary insurance: Property-casualty Personal accident A very attractive business German P-C insurance market Loss ratio by class of business Compr. ins. for contents Personal accident Agricultural Industrial Commercial Engineering 1 Compr. ins. for buildings Motor 46.2 56.1 65.6 65.7 70.4 71.4 75.7 92.6 Personal accident insurance is characterised by very low loss ratios Source: GDV (German insurance association) yearbook 2006. 1 Engineering insurance, engineering business interruption insurance. Loss ratio personal accident insurance over time 80 70 57 60 55 56 54 54 53 53 54 55 51 50 40 30 20 10 0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 with minimal volatility over time 28 Primary insurance: Property-casualty Excellent claims ratio offsets portfolio-driven expense ratio Net combined ratio ERGO vs. market (German GAAP) Claims ratio Expense ratio IFRS combined ratios property-casualty 1 100 95 90 85 96.4 93.4 94.0 >95.0 90.5 59.9 33.5 ERGO 2005 97.2 2 101.4 1999 2000 2001 68.6 57.8 25.4 32.7 Market 99.9 2002 96.4 2003 ERGO 93.0 2004 2006 >70.0 >25.0 Market 93.1 2005 1 Incl. legal expenses. 2 Mainly due to German flood losses and acquisitions in Italy and Eastern Europe. 90.8 2006 Trade-off: Higher expense ratios than market due to different business and sales channel mix More than compensated for by lower claims ratios Transfer expertise built up in domestic portfolio to foreign operations: Combined ratio abroad 96.3% (98.1%) 29
Primary insurance: Life Focus on profitability Key considerations Market Growing life market in Germany 1 Low capital requirements due to policyholder participation Demand for old-age provision will increase State gradually reduces pension provision Demographic development Key considerations ERGO Life No. 3 in Germany Diversified distribution mix including largest tied-agent organisation in Germany exclusive cooperation with HVB direct insurance via KarstadtQuelle Strong brands Hamburg-Mannheimer and Victoria but single back office Operating EEV earnings 2006: 25.9% New business in bn 15.4 2005 2010 2005 2010 1 Premiums in bn; source: BaFin, GDV, BVI Initiatives CAGR 12.6% 27.9 Gross premiums in bn 75.1 CAGR 3.6% 89.5 Long-term sustainable bonus levels Cost-saving programmes New management structure for clear earnings responsibility Long-term hedge for guaranteed business Introduction of market-consistent European Embedded Value 30 Primary insurance: Health Strong position in German comprehensive/supplementary health insurance Market shares in Germany 2005: Comprehensive 1. Debeka 15.1 2. ERGO 14.7 GWP: 3,316m 3. Allianz 11.2 4. Signal 7.0 5. Central 5.8 Other 40 comp. 46.3 Market volume 22.6bn Keys to success Strong brand DKV Market leader in European health market DKV again elected best health insurance company by German brokers Broad product portfolio Comprehensive insurance coverage of all types Wide spectrum of health services Supplemented by care components Unique selling proposition "Think healthcare!" Multi-channel distribution Market shares in Germany 2005: Supplementary 1. ERGO 21.0 GWP: 890m 2. Allianz 3. Signal 4. Debeka 5. Central Other 40 comp. Market volume 11.6 9.0 7.4 6.1 44.9 Growth factors in marketing 4.2bn Cooperation with statutory health insurers Cooperation with Zurich, Gerling, HVB, Deutsche Bank Advertising for specific target groups, direct marketing including call centre (KarstadtQuelleVersicherungen) Creation and utilisation of new cross- and up-selling potentials Tapping of new marketing channels (e.g. affinity channels) 31
International health Leveraging our combined health experience in insurance and reinsurance Our set-up Combining the world's No. 1 health reinsurer and Europe's No. 1 health insurer (DKV) Health as core business segment within the Munich Re Group Health risk expertise in over 40 countries More than 2,300 healthcare professionals in 25 locations around the globe Global health market Market volume CAGR: ~6.0% in bn 2,300 3,150 4,150 Source: OECD Health Statistics, Compustat, Bloomberg 5,400 2000 2005 2010 2015 Our strengths Flexible combination of business models and products as a unique selling proposition Outstanding knowledge and experience in health insurance and reinsurance gained over two decades of global presence Strong market presence in insurance and/or reinsurance as a solid platform for further growth Main growth drivers Demographic development Medical improvements Lifestyle changes Economic situation The only specialised health risk carrier with global scope 32 Reinsurance: Property-casualty Cycle management State of the cycle above Level of prices compared to technical level below increasing Property NatCat Agro Global casualty Aviation Germany motor USA WC decreasing Expected change of prices in the next 12 months Peak of cycle reached, but broad variance in decline of prices Majority of business at attractive technical level; only selected lines below technical level Increased efforts to acquire new business in attractive segments Munich Re portfolio management New business in m + 2005 China P-C 330 2006 2007 Agro 50 Cancelled in m 2005 US workers' comp 120 2006 2007 US/Europe property Europe casualty US motor proportional Agro US property cat Europe motor Multinational US casualty Germany motor Germany/France motor China P-C Capital management to support sustainable cycle management 70 90 70 90 115 180 95 50 85 210 33
Reinsurance: Property-casualty April renewals: Selective growth in line with profitability targets Global segments and US market: Overall premium increase Global segments: Premium increase Profitable growth in the US market with selected global clients US market: Premiums down US NatCat at attractive price levels, but 1 April not a major renewal date Some pressure on pricing in non-cat lines Japan/Korea premiums fairly flat Disciplined underwriting in competitive segments (e.g. engineering/ property Korea) Profitable new business opportunities in casualty and Japanese EQ exposures Shift from open market layers to private layers due to pressure on prices in open market 8% of total P-C portfolio was up for renewal in April Overall premium increase of around 2%, driven by selective underwriting 34 Reinsurance: Life Profitable growth Strong top-line growth Gross premiums written in bn CAGR 11.5% 6.1 6.4 5.3 3.9 2.7 1998 2000 2002 2004 2006 with sustainable earnings EV earnings (as % of EV BoY) TEV MCEV 15.6 14.7 16.2 16.6 13.3 13.5 11.3 9.0 8.9 9.8 2002 2003 2004 2005 2006 Operating EV earnings Total EV earnings and, in hindsight, conservative assumptions Experience variances in m TEV MCEV 280 98 134 127 3-82 2002 2003 2004 2005 2006 Sum 35
Reinsurance: Life Strong profitability underscored by market-consistent embedded value Distribution of life GPW by region Key considerations Consolidation leading to higher pricing power Room for expansion in USA and other markets Germany UK USA Canada Other 20 33 16 16 19 19 24 12 20 21 2002 2006 Total 2006: 6,356m Benefit from demographic developments Continue profitable growth by taking advantage of changes in accounting (IFRS) and regulatory requirements (Solvency II) Well-balanced portfolio with predominant mortality risk 36 Active use of capital markets More than just securitisation Munich Re s risk trading approach Managing our own risks Optimise portfolio Use of additional capacity Risk warehousing Improve our risk/return profile and save costs Retain risks Be active player in primary and secondary market Risk-based, investment and arbitrage income Managing our clients risks Consulting, structuring, project management and placement support Risk fronting/transformation and (interim) capacity provider Fee and risk-based income Restructuring and reselling Extension of buy and hold strategy Combine and restructure risks Sell at favourable terms and conditions Fee and arbitrage income 37
Agenda Strategic overview Capital position and structure Transaction details Backup 3: Additional information 38 Q1 2007 Overview In spite of Kyrill: Results at the high level of preceding year GROUP Gross premiums written in m REINSURANCE Combined ratio property-casualty PRIMARY INSURANCE Combined ratio property-casualty Q1 2006 Q1 2007 in m Q1 2006 Q1 2007 10,036 10,020 Slight increase in PI offset by decrease in RI due to strong GROUP Investment result 2,129 3,161 Outstanding RoI of 7.1% (ann.) due to gains on disposals Q1 2006 Q1 2007 GROUP Equity in bn 31.12.2006 31.03.2007 91.6 101.8 26.4 26.5 Q1 2006 Q1 2007 in m Q1 2006 Q1 2007 97.0 102.1 Kyrill takes its toll with 450m burden but underlying/basic business in very good shape Excellent profit offsets impact from share buy-back GROUP Group result 979 982 Strong results in all segments 39
Premium development Currency effects offset by growth in m Gross premiums written Q1 2006 Foreign exchange effects Divestment/ Investment Organic change Gross premiums written Q1 2007 Breakdown by segment (consolidated) 10,036 256 90 150 10,020 Reinsurance Property-casualty 3,660 (36%) ( 1.3%) Reinsurance Life: 1,321 (13%) ( 11.8%) Health: 286 (3%) ( +9.2%) Primary insurance Property-casualty 1,899 (19%) ( +10.9%) Primary insurance Life: 1,471 (15%) ( 4.4%) Health: 1,383 (14%) ( +5.1%) 40 Development of consolidated result Strong results in all segments in m Q1 2006 Q1 2007 Reinsurance: Life and health 182 172 Reinsurance: Property-casualty Primary insurance: Life and health Primary insurance: Property-casualty Asset management Consolidation Consolidated result 14 108 2 64 14 34 136 194 659 626 979 982 41
Underwriting results Kyrill within lower range of earlier expectations REINSURANCE P-C Combined ratio 127.3 PRIMARY INSURANCE P-C (incl. legal expenses) Combined ratio 120 118.8 120 110 100 90 80 95.6 Q1 103.4 Q2 2005 Q3 Q4 91.6 Q1 91.7 Q2 2006 90.4 Q3 96.5 Q4 Substantial increase in NatCat claims Kyrill contributing losses of 390m 1 or 11.2 percentage points to combined ratio Lower level of major man-made claims at 142m (Q1 2006: 196m) 101.8 Q1 2007 110 100 90 80 99.0 Q1 90.3 Q2 2005 91.3 Q3 92.2 Q4 97.0 Q1 87.2 Q2 2006 89.1 Q3 90.2 Q4 Increase in claims mainly driven by Kyrill 60m 1, adds 5.8 percentage points to combined ratio High underlying profitability 102.1 Q1 2007 1 Before tax, after retrocession. 42 Return on investment Extremely good due to sales of real estate and equities Q1 2007 Regular income Other income/expenses in m 1,827 111 Return 1 4.1% 0.2% Gains/losses on the disposal of investments Write-downs/write-ups of investments 1,691 246 Investment result 3,161 Interest-rate development (yield on ten-year German government bonds) 4.08 3.96 4.07 4.0 3.77 3.5 3.33 3.71 3.0 1.1.06 1.1.06 1.3.06 1.5.06 31.3.06 1.7.06 30.6.06 1.9.06 1.11.06 30.9.06 1.1.07 31.12.06 1.3.07 31.3.07 1 Return on quarterly weighted investments (market values) p.a. 2 On- and off-balance-sheet reserves. 3.8% 0.6% 7.1% Including variation in reserves: Change in total reserves 2: 1,581 ( 3.6%) Total income: 1,580 (3.5%) 43
Investments Well-balanced portfolio mix Investment structure by asset classes (market values) 31.12.2004 1 31.12.2005 2,3 31.12.2006 31.03.2007 in bn 181 180 179 180 Land and buildings 5.9 4.0 3.6 2.9 11.7 14.3 16.4 16.8 Loans Fixed-interest securities 57.0 1 After reclassification of owner-occupied properties of Munich Reinsurance Company to other assets. 2 After reclassification of owner-occupied properties of Munich Reinsurance Group to other assets. 3 Decrease of 13.2bn in assets (market values) due to sale of Karlsruher in Q4 2005. 4 After taking equity derivatives into account: 13.5%. 56.0 54.9 55.9 Shares, equity funds and participating interests 13.9 14.0 14.6 14.1 4 Miscellaneous 11.5 11.7 10.5 10.3 44 Investments Off-balance-sheet reserves Comfortable valuation reserves in real estate portfolio in m Land and buildings 1 1,096 At equity Other investments 2 Off-balance-sheet reserves 31.03.2007 Policyholders' participation Deferred taxes Minority interests Shareholders' stake 288 523 861 104 203 9 545 1 Without reserves on owner-occupied properties. 2 Mainly loans. 45
Unrealised gains and losses on securities available for sale Still at very high level despite high gains on disposals in m Unrealised losses (gross) Unrealised gains (gross) 31.12.2004 8,440 426 8,866 31.12.2005 31.12.2006 31.03.2007 Gross unrealised gains and losses Policyholders' participation Deferred taxes Minority interests Consolidation Shareholders' stake 10,973 9,287 8,508 8,508 2,162 354 52 81 6,021 426 1,004 1,132 9,640 10,291 11,399 46 Munich Re Group balance sheet as of 31.12.2006 Derivation of economic equity from IFRS equity in bn 3.4 3.8 26.4 IFRS equity 0.8 Valuation reserves European Embedded Value not recognised in IFRS equity Discounting (after tax) of P-C reserves 1 Goodwill and other intangibles 1 Represents IFRS reserves less the economic value of reserves, determined by discounting the expected pay-out pattern of outstanding claims at the currency-specific risk-free rates after tax. 3.7 1.2 Loss carry-forward component of deferred tax assets 29.3 Economic equity 47
Economic capital requirements Breakdown of Group required risk capital as at 1 January 2007 in bn Risk category 1 Reinsurance segment Property-casualty Life and health Market Credit Total reinsurance segment Credit Total primary insurance segment Group diversification effect 2 Munich Re Group total 1 January 2007 Stand-alone 0.2 14.5 4.3-0.4 18.4 1 January 2006 Stand-alone Simple sum 19.9 19.5 Segment diversification effect 2-5.4-6.3 Primary insurance segment Property-casualty Life and health Market Simple sum 4.5 3.8 Segment diversification effect 2-0.2 0.0 8.2 2.6 8.1 1.0 0.4 0.7 3.2 1 Risk categories broadly based on refined "Fischer II" risk categories recommended for standardised industry disclosures. Munich Re Group includes an allowance for operational risk in each of the risk categories. 2 The measured diversification effect depends on the risk categories considered and the explicit modelling of fungibility constraints. The first-time application of fungibility constraints in the RI segment reduces RI segment diversification credits by 0.7bn. The first-time recognition of diversification effects within PI P-C and between RI and PI segments increases diversification credits by 0.6bn. Currently, diversification within the L&H PI segment is not recognised. Group 7.9 2.7 8.1 0.8 0.5 0.4 2.7 0.2 Group 13.2 3.8 0.0 17.0 +4-4 ±0 +25 +2-14 +10-20 +75 +19 ±0 +18 +13 +8 48 Economic capital position Summary of economic capital disclosure Position as at 31 December 2006 (2005) in bn 2006 (2005) Economic and hybrid capital 29.3 3.4 32.7 (26.9) Margin for future risks 1 Available financial resources 2 Required risk capital 3 Economic capital buffer Position adjusted to include capital management action as at 30 April 2007 Economic capital buffer after dividends 4 and share buy-back 5 1.8 30.9 18.4 12.5 10.8 ( 1.9) (25.0) (17.0) 1 Allowance for additional risk capital charge for uncertainty from P-C segment beyond the current calendar year's requirements. 2 Sum of economic capital and hybrid capital less the margin for future risks. 3 Based on requirements of internal risk model, calibrated to withstand two 1-in-100-year losses; equivalent to observable probability of default in the AA to AAA range. 4 Value (31 December 2006): 988m. 5 Value (31 December 2006): 750m. Share buy-back of 250m in 2006 already included in IFRS equity. 9.1 7.4 3.4 3.4 Hybrid capital (8.0) 49
Economic capital position Stress scenario testing Confirms robustness of capital position Position as at 1 January 2007 in bn Severe pandemic excluding tail dependencies 2) NatCat model strengthening 3) Increased operational risk charges 4) Cumulative stress tests Economic capital buffer after dividends and share buy-back 1) 7.4 7.1 6.5 5.8 Additional available equity 3.4 Hybrid capital 3.4 3.4 3.4 0.9 1.6 0.3 Sum 1 10.8 10.5 9.9 9.2 Cumulative stress test Notes: 1) Excess of available financial resources (AFR) over required risk capital (RRC) in internal model after dividends and share buy-back 2) Bottom-up modelling of cross-segment pandemics over and above allowances in base capital model 3) Extension of modelled territorial coverage and inclusion of clash scenarios 4) Operational risk charges based on increased benchmark approach 1 Excl. cumulative stress test. 50 Strategic debt and finance cost Substantially reduced in recent years Strategic debt Finance costs Issuance Maturity 31.12.2004 31.12.2005 31.12.2006 2004 2005 2006 Munich Re Finance B.V., 6.75%, 3.000m Subordinated Bonds 2003 2023 2,973 2,975 2,977 206 205 205 Munich Re Finance B.V., 7.625%, GBP300m Subordinated Bonds Munich Re America Corporation, 7.45%, US$500m, Senior Notes Strategic bank debt and overdraft ERGO International AG, Exchangeables E.ON and Sanofi-Aventis Munich Reinsurance Company, Exchangeable Allianz Total 2003 1996 2001 2000 2028 2026 2006 2005 420 367 881 652 1,223 6,516 433 423 772 674 5,277 442 378 262 4,059 34 30 55 32 69 426 33 30 47 32 31 378 34 30 25 16 0 310 51
Key figures of Munich Re Group 2002 2006 Munich Re Group and our shares Munich Re Group 2006 2005 2004 2003 2002 Gross premiums written bn 37.4 38.2 38.1 40.4 40.0 Result before amortisation of goodwill m 5,498 4,150 1 3,369 1,971 20 Taxes on income m 1,648 1,014 1 712 1,752 605 Consolidated result m 3,536 2,751 1 1,887 468 214 Thereof attributable to minority interests m 96 72 54 34 74 Investments bn 176.9 177.2 178.1 171.9 156.3 Return on equity % 14.2 12.5 1 9.5 3 3.0 3 1.1 3 Equity bn 26.4 24.4 1 20.5 1 19.3 13.9 Off-balance-sheet reserves 2 bn 1.9 2.6 3.2 1.8 1.1 Net technical provisions bn 153.8 154.0 1 154.3 147.5 143.0 Staff at 31 December 37,210 37,953 40,962 41,431 41,396 Our shares Earnings per share Dividend per share Amount distributed Share price at 31 December Market capitalisation at 31 December No. of shares at year-end (ex own shares) m bn 1 Adjusted owing to first-time application of IAS 19 (rev. 2004). 2 Including amounts attributable to minority interests and policyholders. 3 Previous years figures adjusted owing to change in measurement basis. 4 Taking into account the capital increase in November 2003. m 2006 15.12 4.50 988 130.42 29.9 225.6 2005 11.70 1 3.10 707 114.38 26.3 228.0 2004 8.01 2.00 457 90.45 20.8 228.5 2003 2.25 1.25 286 96.12 22.1 229.1 2002 1.54 4 1.25 223 114.00 20.4 178.3 52 Key figures of Munich Re Group 2002 2006 Reinsurance and primary insurance segment Reinsurance 1 Gross premiums written Investments Net technical provisions Reserve ratio property-casualty Large and very large losses (net) Thereof natural catastrophe losses Combined ratio property-casualty Primary insurance 1 Gross premiums written Investments Net technical provisions Reserve ratio property-casualty Combined ratio property-casualty 1 Before elimination of intra-group transactions across segments. 2 Adjusted owing to first-time application of IAS 19 (rev. 2004). bn bn bn % m m % bn bn bn % % 2006 22.2 85.0 59.6 280.9 854 177 92.6 2006 16.7 107.4 94.2 124.9 90.8 2005 22.3 87.0 63.4 295.8 3,293 2,629 111.7 2005 17.6 105.9 90.6 2 113.1 93.1 2004 22.4 81.2 58.2 243.8 1,201 713 98.9 2004 17.5 115.0 96.1 116.8 93.0 2003 24.8 80.4 56.7 205.0 1,054 288 96.5 2003 17.6 108.3 91.0 114.5 96.4 2002 25.4 68.6 55.3 201.1 1,844 577 123.7 2002 16.6 104.4 88.4 116.3 99.9 53
Outlook 2007 A clearer picture Previous assumptions Gross premiums written Currency environment Normal major losses Combined ratio property-casualty European Embedded Value earnings Return on investment Tax environment Net profit Consolidated net profit for the Group RoRaC target: 15% Reinsurance 22 23bn NatCat 5% below 97% in the range of 8 9% 2.3 2.6bn stable 4.5% stable 2.8 3.2bn Primary insurance 17 17.5bn NatCat n.a. below 95% in the range of 8 9% 0.6 0.75bn Assumption changes Gross premiums written reinsurance 21.0 21.5bn 1 Normal major losses reinsurance Consequences NatCat 7% Return on investment 5.0% Net profit reinsurance 2.7 2.9bn Net profit primary insurance 0.7 0.8bn Consolidated net profit for the Group 3.0 3.2bn Rationale Strong euro Kyrill Gains on disposal 1 Based on currency levels as at Q1 2007. 54 Agenda Strategic overview Capital position and structure Transaction details Backup 3: Additional information 55
Backup 3: Additional information Changing Gear programme Growth approach of Munich Re Group Reinsurance International health Primary insurance Organic growth Analyse life re portfolios to supplement our strong franchise Growth of underlying risk values, peak risks and accumulations Emerging markets Higher penetration of established markets Product development Solvency II Investment in selected markets to become a leader in integrated health insurance solutions; bridging financial protection, services and provision of care Flexible and parallel use of primary and reinsurance brands and business models according to market requirements Exploit significant growth potential through unique selling proposition International expansion in selected countries with high growth/high margin potential: Expansion of and striving for leading market position in southern and eastern Europe Scrutinising market entry options in emerging markets Expansion of legal expenses insurance Organic growth in Germany with special focus on retail P-C, corporate pension, supplementary health M&A activities 56 Backup 3: Additional information Risk management Strategic risk management Optimising reward for volatility Our strategic risk management framework operates on whole portfolio and on individual risk accumulations Storm Europe as a % of 31.12.2006 shareholders' equity (pre tax) 16 14 12 10 8 6 4 2 0 25 years 100 years 200 years Return period (years) Ceded Retained Hurricane US SE and Caribbean as a % of 31.12.2006 shareholders' equity (pre tax) 16 14 12 10 8 6 4 2 0 Ceded Retained 25 years 100 years 200 years Return period (years) We do not "overhedge" digestible short-term event volatility Munich Re's diversified portfolio minimises reliance on external protection strong competitive advantage in hard markets 57
Backup 3: Additional information Ratings Insurance Financial Strength Ratings of selected reinsurance companies A++ A+ A A B++ B+ B A.M. Best Gen Re Caisse Centrale de Re Everest Re Munich Re Partner Re Swiss Re Transatlantic Re XL Re Munich Re America Axa Re Hannover Re Lloyds Renaissance Re Revios Re SCOR Converium AAA AA+ AA AA A+ A A BBB+ BBB BBB- BB+ Gen Re Fitch Everest Re Munich Re Munich Re America Swiss Re XL Re Hannover Re Lloyds Renaissance Re SCOR Converium Aaa Aa1 Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3 Ba1 Moody s Gen Re Swiss Re Everest Re Munich Re Munich Re America Partner Re Transatlantic Re XL Re Renaissance Re Hannover Re SCOR Converium AAA AA+ AA AA A+ A A BBB+ BBB BBB BB+ Standard & Poor s Caisse Centrale de Re Gen Re Axa Re Everest Re Hannover Re Munich Re Munich Re America Partner Re Swiss Re Transatlantic Re Renaissance Re XL Re Lloyds Revios Re SCOR Converium As at 23 May 2007 58 Backup 3: Additional information Share information Munich Re's weighting in leading stock indices DAX 30 DJ EURO STOXX 50 DJ EURO STOXX Insurance MSCI Euro FTSE EUROTOP 100 DJ Sustainability World Securities codes Reuters Bloomberg WKN ISIN Other information MUVGn MUV2 843002 DE0008430026 31.03.2007 4.0 1.3 8.9 0.9 0.6 0.4 No-par-value registered shares Each share entitles the holder to one vote Traded on all German stock exchanges as well as in the Xetra trading system Dividend per share in (rounded) Year 2006 2005 2004 2003 2002 2001 Dividend per share 4.50 3.10 2.00 1.25 1.25 1.25 Number of shares entitled to dividend 219,645,444 1 228,007,663 2 228,519,407 3 229,003,159 4 178,330,916 5 176,618,201 6 1.25 2000 176,944.072 1999 7 0.95 176,919,776 1998 8 0.92 88,459,840 97/98 0.92 84,959,840 96/97 9 0.87 82,975,200 1 1,893,971 own shares were not entitled to dividend. 2 1,572,570 own shares were not entitled to dividend. 3 1,060,826 own shares were not entitled to dividend. 4 577,074 own shares were not entitled to dividend. 5 336,371 own shares were not entitled to dividend. 6 331,732 own shares were not entitled to dividend. 7 After 1:2 stock split of the registered shares in January 1999. 8 Short financial year. 9 After 1:10 stock split in August 1997. 59
Appendix Financial calendar Contacts Disclaimer 60 Appendix Financial calendar 6 August 2007 Interim report as at 30 June 2007 5 November 2007 Interim report as at 30 September 2007 12 March 2008 Balance sheet press conference for 2007 financial statements 17 April 2008 Annual General Meeting 18 April 2008 Dividend payment 8 May 2008 Interim report as at 31 March 2008 7 August 2008 Interim report as at 30 June 2008 6 November 2008 Interim report as at 30 September 2008 61
Appendix For information please contact Sascha Bibert Head of Investor & Rating Agency Relations Tel.: +49 (89) 38 91-39 10 E-mail: sbibert@munichre.com Ralf Kleinschroth Tel.: +49 (89) 38 91-45 59 E-mail: rkleinschroth@munichre.com Dr. Thomas Dittmar Tel.: +49 (89) 38 91-64 27 E-mail: tdittmar@munichre.com Robert Kinsella Tel.: +49 (89) 38 91-30 19 E-mail: rkinsella@munichre.com Andreas Silberhorn Tel.: +49 (89) 38 91-33 66 E-mail: asilberhorn@munichre.com Ingrid Grunwald Tel.: +49 (89) 38 91-35 17 E-mail: igrunwald@munichre.com Frank Kopfinger Tel.: +49 (89) 38 91-28 94 E-mail: fkopfinger@munichre.com Münchener Rückversicherungs-Gesellschaft Königinstrasse 107, 80802 München, Germany Fax: +49 (89) 38 91-98 88 E-mail: IR@munichre.com Internet: www.munichre.com 62 Appendix Disclaimer This report 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. 63