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Munich Re Group Annual Report Key figures (IFRS) Munich Re 2011 2010 2009 2008 2007 Gross premiums written €bn 49.6 45.5 41.4 37.8 37.3 Operating result €m 1,180 3,978 4,721 3,834 5,573 Taxes on income €m –552 692 1,264 1,372 801 Consolidated result €m 712 2,430 2,564 1,579 3,923 Attributable to non-controlling interests €m 10 8 43 24 83 Investments €bn 201.7 193.1 182.2 174.9 176.2 Return on equity % 3.3 10.4 11.8 7.0 15.3 Equity €bn 23.3 23.0 22.3 21.1 25.3 Valuation reserves not recognised in balance sheet1 €bn 5.7 3.6 3.2 2.5 0.8 Net technical provisions €bn 181.2 171.1 163.9 157.1 152.4 Staff at 31 December 47,206 46,915 47,249 44,209 38,634 Reinsurance2 2011 2010 2009 2008 2007 Gross premiums written €bn 26.5 23.6 21.8 21.9 21.5 Investments €bn 88.7 83.7 76.8 78.4 81.9 Net technical provisions €bn 64.3 56.6 53.4 55.8 55.5 Large and very large losses (net) €m 5,126 2,228 1,157 1,507 1,126 Natural catastrophe losses €m 4,544 1,564 196 832 634 Combined ratio property-casualty3 % 113.6 100.5 95.3 99.4 96.4 Primary insurance2 2011 2010 2009 2008 2007 Gross premiums written €bn 17.6 17.5 16.6 17.0 17.3 Investments €bn 123.9 121.8 118.4 114.0 109.3 Net technical provisions €bn 113.5 111.2 107.7 101.4 96.9 Combined ratio property-casualty % 97.8 96.8 93.2 90.9 93.4 Munich Health2 2011 2010 2009 Gross premiums written €bn 6.1 5.1 4.0 Investments €bn 5.9 4.1 3.1 Net technical provisions €bn 3.4 3.3 2.9 Combined ratio4 % 99.4 99.7 99.4 Our shares 2011 2010 2009 2008 2007 Earnings per share € 3.94 13.06 12.95 7.74 17.83 Dividend per share € 6.25 6.25 5.75 5.50 5.50 Amount distributed €m 1,110 1,110 1,072 1,073 1,124 Share price at 31 December € 94.78 113.45 108.67 111.00 132.94 Munich Re’s market capitalisation at 31 December5 €bn 17.0 21.4 21.5 22.9 29.0 Book value per share € 129.86 126.31 114.89 106.42 119.33 Premium/result development 8.9% 2011 –70.7% 9.9% 2010 –5.2% 9.5% 2009 62.4% 1.5% 2008 –59.8% –0.5% 2007 11.5% –80% –60% –40% –20% 0% 20% 40% 60% 80% Premium Consolidated result 1 Including amounts attributable to minority interests and policyholders. 2 Before elimination of intra-Group transactions across segments. 3 The figure for 2011 is not adjusted for relief of 1.3 percentage points from economic risk transfer to the capital markets. 4 Excluding health insurance conducted like life insurance. 5 This includes own shares earmarked for retirement. Diversified structure – Diversified risk Munich Re (Group) Reinsurance Munich Health Primary insurance The Hartford Steam Boiler Inspection and Insurance Company Munich Re ERGO Lebensversicherung DKV Seguros ERGO Versicherung New Reinsurance Company Ltd. DKV Belgium Belgium ERGO Direkt American Modern Insurance Group, Inc. DKV Luxembourg Luxembourg ERGO Austria DKV Globality ERGO Hestia Daman National Health Insurance ERGO Turkey Windsor Health Group ERGO Belgium Apollo Munich Health Insurance ERGO Italia almeda Assistance and MedNet Health services Deutscher Storebrand Automobil Schutz Deutsche Krankenversicherung ERV Asset management MuniCH ERGO AssetManagement The diagram provides a general overview of our Group and makes no claim to completeness. For further details, please see the list of shareholdings on page 277 ff. Our operations encompass all aspects of risk assumption in primary insurance and reinsurance. We are one of the world’s largest reinsurers, and one of the largest primary insurers in Germany and Europe. // Reinsurance: We have been in the business of insuring insurers since 1880. // Munich Health: We have a strong footing in the international health market. // Primary insurance: Our primary insurers offer security mainly for private clients and for small and medium-sized businesses. // Our subsidiary MEAG manages our assets and offers investment products for private clients and institutional investors. Munich Re’s global presence1 Munich Re’s presence – Worldwide * * Singapore Munich Re’s presence – Europe-wide Reinsurance Primary insurance Reinsurance and primary insurance 1 Including Munich Health’s primary insurance and reinsurance activities in the health market as at 31 December 2011. contentS Munich Re 2011 To our shareholders 001 letter to shareholders 003 notable events in 2011 007 the Board of Management 008 Munich Re shares 010 our strategy 015 Corporate governance 019 Report of the Supervisory Board 021 corporate governance report and corporate governance statement 026 Management report 049 Munich Re 052 Business environment 067 Business performance 072 Financial position 103 other success factors 112 Risk report 120 prospects 141 Consolidated financial statements 149 consolidated balance sheet 154 consolidated income statement 156 Statement of recognised income and expense 157 Group statement of changes in equity 158 consolidated cash flow statement 160 notes to the consolidated financial statements 161 Auditor’s report 288 Declaration of the Board of Management 289 Munich Re GRoup annual RepoRt 2011 contentS General information 291 Glossary 292 index of key terms 299 important addresses 300 Service 302 locations Multi-year and quarterly overview important dates More detailed lists of contents are provided on the pages separating the individual sections. Munich Re GRoup annual RepoRt 2011 to ouR ShaReholders To our shareholders 2 to ouR ShaReholders // contentS To our shareholders letter to shareholders 003 notable events in 2011 007 the Board of Management 008 Munich Re shares 010 our strategy 015 Munich Re GRoup annual RepoRt 2011 Dr. Nikolaus von Bomhard chairman of Munich Reinsurance company´s Board of Management We look back on a year that placed great demands on us. Our indus- try faced an unprecedented cluster of severe natural catastrophes. On top of this, we had to contend with upheavals in government bond markets and persistently low interest-rate levels due to the continuing financial crisis. Against this backdrop, the expectations we had at the beginning of the year were not fulfilled. It became apparent after the first quarter of 2011 that the consolidated result of €2.4bn we had originally envisaged could no longer be attained. In this exceptional situation, our integrated business strategy – com- bining primary insurance and reinsurance under one roof – and our management philosophy once again proved their worth. For we were able to conclude the year with a positive annual result: a notable achievement and impressive testimony to the Group’s resilience. With our still robust capitalisation and favourable earnings prospects, we will be able to propose an unchanged dividend of €6.25 a share at the Annual General Meeting, thus expressing our thanks to you, our shareholders, for your confidence in us. Altogether, we will then have Munich Re GRoup annual RepoRt 2011 paid over €5bn in dividends since the beginning of the crisis, that is in the period from 2007 to 2011. In terms of dividend yield, this puts us at the head of the field among DAX 30 stocks. How did the individual fields of business perform? In primary insurance, ERGO’s successful launching of its brand campaign in 2010 was followed by a setback in 2011. Severe trans- gressions by individual employees and agents came to light in con- nection with a series of disputes with intermediaries who had left HMI, an ERGO structured sales organisation. ERGO clearly acknow- ledged its responsibility, apologised, conducted an extensive inquiry and took the necessary corrective measures. As a consequence, with effect from 1 January 2012, the compliance function was strength- ened significantly and assigned to a separate organisational unit reporting to the ERGO CEO. Furthermore, shortcomings in process- ing business, which emerged in the course of investigations into various allegations, were immediately and comprehensively addressed. ERGO naturally remains committed to its goal of realising its brand mission “To insure is to understand” and is pursuing it with great resolve. Likewise, ERGO is further advancing the international- isation of its business, expanding its activities in growth markets such as Asia as well as central and eastern Europe. In reinsurance, market development is increasingly heterogeneous. Players who want their business to be successful must therefore maintain close proximity to their clients and the markets in order to identify individual market trends early on. We are ideally positioned throughout the world and can steer our business according to the individual state of the market; we refer to this approach as cycle management. Overall, we are currently seeing largely stable price levels, although certain loss-affected segments and countries are showing significant price increases. It is also our aim to develop steadily profitable growth areas through innovation. A recent example of this strategy is the cover we provide in the field of renewable Munich Re GRoup annual RepoRt 2011 energies, in which we see medium-term business potential for premium income in the mid three-digit billion euro range. In addition, we anticipate that demand for reinsurance will continue to rise as a consequence of the financial crisis and the introduction of Solvency II. The solutions we offer our clients in this area are flexible, customised, and provide capital relief. Munich Health has continued its consolidation and achieved a solid result.

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