MunichRe NEXT Investor Presentation 2025 03 20

Company background

Shareholder structure prior to the acquisition

NEXT transforms insurance experience for SMB owners

Exceptional client experience

Proprietary technology platform

• Traditional insurance has left small businesses underserved and, in some cases, underinsured due to complex products, unclear requirements, and outdated processes
• NEXT provides a digital "one-stop" insurance experience with on-the-spot underwriting/policy issuance, delivering simple and tailored insurance solutions for entrepreneurs

NEXT's competitive advantage

• Exclusive focus on small businesses that legacy carriers - designed for higher-premium accounts - struggle to service efficiently
• The data-driven approach and its early adoption for small business insurance allows NEXT to tailor coverage and to build significant operational leverage

Target customers

Small businesses (<20 employees), representing 44% of the US GDP - NEXT is currently serving >600,000 active customers

Product portfolio

>300 different professions across various product lines with focus on general liability and workers' compensation

Distribution channels

Balanced mix of direct-to-business, embedded partnerships and agents

Reinsurance

So far, NEXT has worked with a panel of reinsurers, including Munich Re - going forward, Munich Re America will provide substantially all reinsurance for NEXT's business

Top line1,2

US$ m

548

438

367

202232023 2024

• Growth above market based on a clearly differentiated market position, with:
• • Market-leadingbrand awareness
  • Enhanced conversion rates
  • Higher customer feedback
  • Sustainable customer retention
• In addition, NEXT earns commissions for customers connected to third-party carriers,

Loss ratio2,4

%

78

6965

• Successfully enhanced underwriting over time
• Positive development in all major lines of business
• Exploiting further opportunities for improvement in close collaboration with ERGO and Global Specialty Insurance

Net result5

US$ m

-94

-130

-211

2022 2023 2024

generating other operating income (US$ 54m in 2024)

1 Insurance revenue and MGA premiums. 2 Calculation based on US-GAAP.

3 Non-insurance accounting applicable for MGA business. 4 On insurance revenue and MGA business. 5 According to US-GAAP.

Strategic fit

Synergies

• Attractive US SMB market that Munich Re does not currently have access to, providing a growth opportunity in a less volatile/less cyclical segment
• ERGO/Munich Re have a good understanding of the business model and the company as an investor in NEXT since 2017
• Viable ERGO footprint in the largest insurance market in the world
• Access to a relevant, digital-based technology with entirely digital underwriting
• Attractive retuon investment to clearly exceed Munich Re's cost of equity
• Capital efficiency, as NEXT business is effectively diversified by the Munich Re Group's global insurance portfolio
• Internalisation of reinsurance margin
• Unwinding of fronting business and access to available licences
• Operational integration into existing US structures, leveraging efficiency
• Capitalising on Munich Re's portfolio management experience to maximise retuon investment

Net result ambition

Short-term

Break-even

Medium-term

Mid-triple-digit US$ m

Long-term Further significant increase of earnings potential

• NEXT will continue its growth outperformance over the next few years, based on its differentiated market positioning and its broad business model
• NEXT has achieved a competitive loss ratio in recent years through targeted measures, and will continue to pursue this approach in the future
• Through its digital business model, NEXT will generate operational leverage and significantly reduce its expense ratio - in addition, business for which currently fronting fees are expensed will be fully written on its own books
• With the full support of ERGO/Munich Re, NEXT will increase its retention and internalise reinsurance margins

Integration approach

Financial impact

Transaction structure

• ERGO will fully integrate NEXT into its management structure, with direct functional reporting lines
• NEXT will have the necessary leeway to further develop the digital business model and leverage its positioning in the US SMB market
• Certain non-market-facing functions will be performed through service level agreements with Munich Re America Services
• Acquisition price is based on a valuation of US$ 2.6bn for 100% shareholding
• Transaction will lead to a positive one-off accounting effect at ERGO International segment
• No impact on Munich Re's financial targets for 2025
• Acquisition will lead to a decline in Munich Re Group's Solvency II ratio of ~10%-points after closing
• Munich Re America Corporation (MRAC) will legally acquire NEXT; ERGO will transfer its current shareholding in NEXT to MRAC, which will own 100% of shares in NEXT
• ERGO to become the business owner, Munich Re America will provide substantially all reinsurance for NEXT's business going forward
• Closing expected by Q3 2025