Earnings Document

SFCR 2021

Solvency and Financial Condition Report

Munich Re Group

2021

Contents

Executive summary 2

ABusiness and performance 4

A1 Business 4

A2 Underwriting performance 7

A3 Investment performance 12

A4 Performance of other activities 14

A5 Other information 14

BSystem of governance 16

B1 General information on the system of governance 16

B2 Fit and proper requirements 23 B3 Risk management system including the own risk and solvency

assessment (ORSA) 26

B4 Internal control system 29

B5 Internal audit function 31

B6 Actuarial function 32

B7 Outsourcing 33

B8 Any other information 34

CRisk profile 36

C1 Underwriting risk 38

C2 Market risk 41

C3 Credit risk 44

C4 Liquidity risk 45

C5 Operational risk 46

C6 Other material risks 46

C7 Other risks 47

DValuation for solvency purposes 51

D1 Assets 51

D2 Technical provisions 63

D3 Other liabilities 71

D4 Alternative methods for valuation 76

D5 Any other information 76

ECapital management 78

E1 Own funds 78

E2 Solvency capital requirement and minimum capital requirement 85 E3 Use of the duration-based equity risk sub-module in the calculation

of the solvency capital requirement 86 E4 Differences between the standard formula and any internal model

used 87 E5 Non-compliance with the minimum capital requirement and non-

compliance with the solvency capital requirement 90

E6 Any other information 90

Annex 91

Templates in accordance with Commission Implementing Regulation (EU)

2017/2190 of 24 November 2017

This document is a translation of the original German version and is intended to be used for informational purposes only. While every effort has been made to ensure the accuracy and completeness of the translation, please note that the German original is binding.

Executive summary

Part

PageA - Business and performanceThe business activities in our reinsurance and ERGO fields of business are broken down into material lines of business and regions. The technical result for the Group as a whole was significantly above the level of the previous year. In property-casualty reinsurance, this was due to a significantly lower impact from COVID-19-related loss expenditure. In life and health reinsurance, the technical result continued to be impacted by the pandemic. The technical result improved in the ERGO field of business. Our investment result was slightly down on the previous year, largely due to lower net profits from the disposal of investments and somewhat lower regular income. Conversely, a significantly improved currency result had a positive effect on the result.

3-14

B - System of governanceMunich Re has an effective system of governance that is adequate for the nature, scale and complexity of the risks inherent in its business. The remuneration system meets the relevant company and supervisory law requirements, and is in line with our business and risk management strategy. Persons who run the undertaking or perform other key tasks, including the key functions under Solvency II, have the professional qualifications, knowledge and experience to perform the relevant tasks and have the requisite fitness for office. The risk management system, including the own risk and solvency assessment (ORSA), is closely integrated into Group-wide planning, risk strategy and decision-making processes. Processes that are subject to material risks are reviewed on a regular basis as part of the internal control system. The outsourcing of operational activities and functions is monitored.

15-34

C - Risk profileWe use an internal model to quantify the solvency capital requirements (SCR) of the Munich Re Group. At Group level, the SCR increased to €20.5bn, compared with the previous year's €19.2bn. The increase was mainly attributable to further business growth in property-casualty reinsurance, and was reinforced by the appreciation of the US dollar. The market risk was up owing to a moderately higher equity-backing ratio and currency translation effects. The credit risk sank as a consequence of the rise in interest rates. We use appropriate limit and early-warning systems to manage risks and limit risk concentrations. Risk is mitigated by means of reinsurance and retrocession, and through the transfer of risk to the capital markets.

35-49

D - Valuation for solvency purposesWe describe material differences in measurement between the solvency balance sheet and IFRS financial reporting for individual balance sheet items under assets, technical provisions and other liabilities, and explain the underlying methods and main assumptions in detail. These differences in measurement are mainly attributable to the fact that the solvency balance sheet is fully based on fair value, whilst IFRS uses a mixed measurement model based on fair value and amortised cost accounting. Three life primary insurance undertakings apply a transitional deduction on technical provisions, and six primary insurance undertakings apply the volatility adjustment.

50-76

E - Capital managementWe pursue active capital management, which ensures that our capitalisation is needs-based and risk-commensurate. Our total eligible own funds (EOF) were €52.2bn as at 31 December 2021. This figure takes into account the dividend of €1.5bn proposed by the Board of Management for the 2021 financial year. Munich Re's solvency capital requirement (SCR) totalling €20.5bn is equivalent to a solvency ratio of 254%. The solvency ratio shown includes transitional measures under Solvency II. Excluding transitional measures, the solvency ratio would have been 227%.

77-90

Due to rounding, there may be minor deviations in summations and in the calculation of percentages in the present report.

Business and performance

ABusiness and performance

A1 Business

General information

The parent company of the Munich Re Group is Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München (Munich Reinsurance Company Joint-Stock Company in Munich), Königinstrasse 107, 80802 München, Germany. Munich Reinsurance Company is a joint-stock company (Aktiengesellschaft) within the meaning of the German Stock Corporation Act (AktG). Its registered seat is Munich, Germany. In addition to its function as a reinsurer, the parent also fulfils the function of holding company for the Group.

Munich Reinsurance Company has three governing bodies: the Annual General Meeting, the Board of Management and the Supervisory Board. Further details about the governing bodies can be found in section B 1 "Administrative, management or supervisory bodies (AMSB)".

Owing to our international corporate structure, we are subject to a raft of national and international legal systems, standards and corporate governance regulations. Within the Group, our own Code of Conduct binds our management and staff members to engage in ethically and legally impeccable conduct. The principles of the United Nations Global Compact have been integrated in this Code of Conduct. Further information can be found atwww.munichre.com/cg-en.Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft duly audited the Group and Company financial statements and the combined management report as at 31 December 2021, and issued them with an unqualified auditor's opinion. In accordance with Section 341k of the German Commercial Code (HGB), the external auditors of German insurance companies were still appointed by the Supervisory Board as recently as 2021 - not by the Annual General Meeting. As a result of change implemented by the Financial Market Integrity Strengthening Act (FISG), which took effect on 1 July 2021, the Annual General Meeting will, for the first time, undertake the appointment for the 2022 financial year.

The supervision of Munich Re is conducted by the

Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin)

Graurheindorfer Str. 108

53117 Bonn, Germany Postfach 1253

53002 Bonn, Germany

Tel.: +49 228 4108-0 Fax: +49 228 4108-1550

Email:[email protected]

De-Mail:[email protected]

Legal structure

Munich Re is one of the world's leading risk carriers and provides both insurance and reinsurance under one roof. This enables the Group to cover large stretches of the value chain in the risk market. Almost all reinsurance units operate under the uniform brand of Munich Re. ERGO Group AG (ERGO) is active in nearly all lines of life, health and property-casualty insurance. The majority of

Munich Re's investments are managed by MEAG, which also offers its expertise to private and institutional investors outside the Group. For up-to-date information about Munich Re, visitwww.munichre.com.

The reinsurance companies of the Group operate globally and in virtually all classes of business. Munich Re offers a full range of products, from traditional reinsurance to innovative solutions for risk assumption. Our companies conduct their business from their respective headquarters and via a large number of branches, subsidiaries and affiliated companies. The reinsurance group also includes specialty primary insurers, whose business requires special competence in finding appropriate solutions. In ERGO, we combine Munich Re's primary insurance activities. Some 69% of gross premiums written by ERGO derive from Germany, and 31% from international business - mainly from central and easteEuropean countries. ERGO also operates in Asian markets, particularly in India and China.

Munich Reinsurance Company and ERGO Group AG are under unified control within the meaning of the German Stock Corporation Act (AktG). The relevant statutory regulations, control agreements and Group directives govethe distribution of responsibilities and competences for key decisions between Group management and ERGO. Control and profit-transfer agreements are in place with many Group companies, especially between ERGO Group AG and its subsidiaries.

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Munich Re Group - Münchener Rück AG published this content on 07 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 April 2022 08:04:03 UTC.