Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München

Ladies and gentlemen, welcome to the quarterly statement as of March 31st, 2025 of Munich Re. I'm Moritz, the Chorus Call Operator. I would like to remind you that all participants will be in a listen-only mode and the conference has been recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christian Becker-Husson. Please go ahead, sir.

Thank you, Moritz, and welcome to everyone joining us this morning for our Q1 earnings call with our CFO, Christoph Jureka. Same procedure as every quarter. Christoph will start with a short statement. Then we will go right into Q&A, as always. Christoph, please go ahead.

Thank you, Christian. Good morning, everybody, also from my side. Big pleasure to be able to talk a bit about our Q1. And as Christian said, just a few introductory remarks, and then we can go into the questions right away. Q1 was the quarter with quite some volatility in the sector's core insurance business and also capital market returns. While our underlying technical profitability continues to be very strong overall, high large losses, fair value changes in the investment result, and significant currency movement affected our net earnings. By contrast, Ergo and LIFE reposted earnings in line or above expectation. Altogether, we present a resilient result of 1.1 billion euros, which is testament to the broad diversification of earnings drivers in our business and once again demonstrates the effectiveness of our strategy to continuously expand the earnings contribution of less volatile businesses. Let's look at the Q1 earnings drivers in more detail, starting with the investment result. The running yield was pleasingly high at 3.5%, while the ROI of 2.2% was burdened predominantly by negative fair value changes of fixed income instruments. This was more pronounced at Ergo, achieving an ROI of 1.7% compared with 2.9% in the reinsurance segment. In addition, mainly the devaluation of the US dollar resulted in currency losses of around 500 million euros, evenly split between reinsurance and Ergo. As volatile capital markets always provide opportunities, we could noticeably increase the reinvestment yield to 4.6%, providing further support for an upward trend in the running yield. Now turning to the business fields, first of all, I would like to reiterate that our segmentation has changed this year, with GSI being carved out of P&C reinsurance and the two German ergo segments being combined. As always, I will start with reinsurance. The life and health total technical result of 608 million euros came in significantly above the pro rata annual ambition. We do not consider this to be the new run rate, given that we benefited from positive experience driven by the US portfolio, which is not expected to repeat, at least not to the same extent every quarter. Beyond the release of CSM and risk adjustment in line with expectations, the Finn Marie business made a strong contribution once again. Please note that from this year onwards, we changed the methodology regarding currency effects in the result from insurance-related financial instruments, which will now be reflected in the currency result. Benefiting from strong new business, including two large transactions, The stock of CSM further increased despite significant currency headwind, providing a sound basis for a continued high total technical result going forward. The two non-life segments were affected by losses from the LA wildfires of 1.1 billion euros altogether, which is a slight decline from the initially announced 1.2 billion euros due to positive effects of a weaker U.S. dollar, and retrocession. Around 0.8 billion of the LA wildfire claims are attributable to P&C reinsurance. In total, the segment result was affected by major losses of 21.3%. With 17%, our final major loss expectation for the year is at the upper bound of the provisionally indicated range, also reflecting some rate reductions. The combined ratio of 83.9% includes a higher than previously guided discount benefit of around 10%, resulting from the high volume of major losses. For the remainder of 2025, we expect a discount rate which is somewhat higher than the anticipated 7% to 8% after having refined its allocation between P&C and GSI. Please bear in mind that there is an opposing impact due to a correspondingly higher EFE going forward. Business mix effects and an increase in the loss component had an increasing effect on the basic loss ratio, where the normalized comment ratio of 78.8% remained strong and in line with our full year guidance. Releases on basic losses met the expected six percentage points. This brings me to the April renewals, where we maintained high profitability and the sound quality of our book. We continued to manage our portfolio diligently to safeguard an optimal risk-reward. We expanded premiums by more than 6%, in particular driven by selective growth in casualty proportional business in Europe, Asia, and Latin America. On the other hand, we gave up some non-proportional property business specifically in Japan. Coming off a particularly high level, the risk and inflation adjusted prices in our total portfolio declined by 2.5%. Excluding business mix effects related to a higher share of proportional business, the decline was more muted at 1.7%. On a year-to-date basis, which means January and April renewals combined, the price decline of our portfolio decreased was less than 1%. From our point of view, the overall market environment remains attractive, allowing us to earn good margins on the risk we take. At the same time, we were able to largely defend achieved improvements in terms and conditions. I conclude the reinsurance part with our new segment, Global Specialty Insurance. Before moving on to the Q1 figures, please allow me a brief look at the full year 2024 numbers, which we disclosed for the first time. The explanation of the total technical result of 534 million euros is pretty straightforward, as the combined ratio of 93.6% was elevated due to several major losses, reserve prudency, and reserve strengthening for U.S. casualties. For 2025, we expect a higher technical result driven by an improved comment ratio of around 90% and ongoing revenue growth. Compared to P&C reinsurance, the net financial result is comparatively low, almost zero in 2024. This is not unusual given the limited risk taking against the replication of insurance liabilities. Finally, the negative other operating result of minus 290 billion euros is comparatively higher than in reinsurance, as a primary insurer like GSI has a structurally higher cost base. Furthermore, the result contains services for insurance-related activities and continued investments in the development of a joint operational platform, which are expected to pay off in terms of higher business growth and economies of scale going forward. All in all, GSI achieved a net result of €182 million in 2024, which we expect to increase significantly in the years to come. Now let's have a look at the Q1 figures. The LA wildfire losses of around €0.2 billion, together with claims from severe convective storms in the US, left their mark on the combined ratio, which came in at 95.5%. Please note, that around 40% of the large losses of GSI in Q1 are ultimately borne by P&C reinsurance. Our IFRS numbers do not include this relief as internal reinsurance is fully eliminated due to consolidation. On an underlying basis, we are in line with the 90% full year guidance. The business continues to grow nicely, particularly at American Modern in the United States. In primary insurance, Ergo delivered a pleasing net result of 241 million euros, slightly ahead of the pro rata expectation. Ergo Germany posted a pleasing segment result of 140 million euros. The technical performance in life and health increased due to improvements in life, short-term health, and travel business. The stock of CSM increased, driven mainly by higher interest rates, model updates, and premium increases in long-term health, while the CSM release was in line with expectations. In P&C, the combined ratio of 88.8% met our full year guidance. Please note that from this year onwards, we changed the methodology regarding acquisition costs, which are now evenly spread across the year. As mentioned earlier, the investment result came in lower. The international business of Ergo achieved a good net result of 100 million euros, mainly driven by a strong operating performance of P&C business in Poland and Greece, plain health, as well as by an increased contribution from our Asian joint ventures. The technical performance in Q1 was in line with expectations in life and health, as well as in the P&C business. and the combined ratio improved slightly to 89%, driven by the major P&C entities and short-term health business. Just a few remarks on capital management. The group's economic position remains very strong. The Solvency II ratio was largely stable at 285% in Q1, as the strong operating performance offset the deduction of 2 billion euros for the new share buyback. I would like to conclude with the outlook for 2025, which remains unchanged. We continue to anticipate a net result of about 6 billion euros as we consider our Q1 net earnings within the range of normal fluctuation in a single quarter. As usual, we anyway do not change any KPIs so early in the year as volatility can derive from various sources and can have an impact in different directions in the remainder of the year. While in this quarter we had to deal with high major losses and a negative currency result, we expect an earnings benefit after closing the acquisition of next insurance, presumably in Q3, just to name one other earnings driver in the course of the year. And as always, our full year guidance takes all of these factors into account. Our shareholders can fully rely on us to actively manage the inherent volatility of our businesses. With this, I'm at the end of my opening remarks, and I'm looking forward to answering your questions. But first, I hand it back to Christian.