Remuneration report in accordance with the Decree concerning the supervisory law requirements for compensation systems in the insurance sector (VersVergV)

The information given in this report is based on the requirements in set out in §4 para. 8 of the Insurance Compensation Decree (VersVergV) which came into effect on 13 October 2010.

The report refers to all Board of Management Members in Germany, Managing Directors throughout Munich Re as a whole and other employees whose activities have a material impact on the overall risk profile of the company (“high risk takers”). The group of high risk takers includes operative business leaders and selected control functions plus key functions in the International Organisation.

Munich Re has comprehensive internal control and governance systems which ensure that only appropriate levels of risk are assumed. The remuneration structures reflect this approach and use performance indicators which encourage sustainable business activities as well as create lasting value for Munich Re.

The Group Compensation Committee, which comprises Risk Management, control functions, Human Resources and business functions, reviews compensation structures and monitors compliance with the VersVergV. To mitigate conflicts of interest within the compensation committee, decisions regarding the remuneration structures of high risk takers below Board of Management level are taken by the Board of Management members. The responsibility for the Board of Management members’ remuneration structures lies with the Supervisory Board.

Munich Re remuneration strategies and structures ensure risk management and set standards enabling Munich Re to be competitive and still to adhere to the VersVergV compliance requirements. They vary across the business lines and may be linked to local market remuneration levels, the regulatory environment and the role of the executive.

The remuneration of the high risk takers is composed foremost of the following elements in varying proportions:

• Fixed salary;
• Short-term incentive;
• Multi-year incentive, including share-based remuneration.

The average ratio of fixed versus performance-based remuneration at target for the whole group of high risk takers is approximately 46% : 54%.