Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München (MUV2) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I now open the Annual General Meeting 2021 of Munich reinsurance Company. My name is Nikolaus von Bomhard, and as Chairman of the Supervisory Board, I will chair this meeting as is stipulated in the Articles of Association. A warm welcome to you, ladies and gentlemen. Due to the ongoing pandemic, the Board of Management, having obtained the Supervisory Board approval, has decided, in accordance with the provisions of the law on measures against COVID-19, to hold this Annual General Meeting as a virtual shareholders meeting in which neither shareholders nor their proxies are present in person. First, I would like to introduce to you those being present here: Mr. Wenning, the Chairman of the Board of Management, is sitting next to me at a good distance. Other members of the Board of Management follow the video and audio transmission of this Annual General Meeting, some of them in the room next door. The same goes for the members of the Supervisory Board. Sitting next to me, I welcome Mr. Jens Kirchner, notary public. He will take the minutes of today's virtual Annual General Meeting. The proxies of the company are also in attendance here. Now before we start going through the agenda, I point out to you the following necessary formalities. Today's Annual General Meeting has been convened in due time and form when it was published in the Electronic Federal Gazette on the 18th of March 2021. All required notifications and publications have been affected in the prescribed manner. For our shareholders and their proxies, this Annual General Meeting is being transmitted in full on our shareholder portal. Access to our shareholder portal is granted to shareholders and their proxies after they entered their access data. Consequently, logging into the shareholder portal is necessary to be able to follow the meeting in full. Until the end of Mr. Wenning's statement, the general public can follow the live broadcast of this virtual Annual General Meeting on the Internet. We have carefully reviewed the necessary technical arrangements for this live broadcast. The notary public had these arrangements explained to him in detail and was able to inspect the technical arrangements. If the broadcast is interrupted despite these efforts, we ask you to be patient. If it is not possible to reestablish the connection, we will provide information on how we are going to continue via our shareholder portal or our Internet page. Now I'm going to explain the various rights and possibilities of shareholders and their proxies in the context of today's Annual General Meeting. You can find all the information and instructions required in this context in the invitation, the company's Internet page and on the shareholder portal. Considering the limited time available, I summarize them briefly. Today, votes can be cast only by submitting post votes or by authorizing and instructing the company appointed proxies. Post votes can be submitted electronically on the shareholder portal until shortly before vote accounting starts. By that time, it is also still possible to revise post votes there. I will determine the exact time after we finished answering your questions. Votes already cast have been recorded in the system. Until shortly before vote counting starts, it is still possible today to authorize and revoke proxies and to provide proof of authorization on the shareholder portal and by sending an e-mail to the e-mail address listed in the invitation. Instructions to the company appointed proxies can be given and revised on the shareholder portal until shortly before vote accounting starts. As I've already said, I will determine the exact time after we've finished answering your questions. In this context, I point out that transmissions over the Internet might be slow. Later, during the vote, the company appointed proxies in attendance here will release their votes in accordance with their instructions recorded. In this way, the votes cast by the company appointed proxies will be included in the voting result as will be the post votes received by then. Now about further modalities of today's Annual General Meeting. Registered shareholders and their proxies have the opportunity to submit questions on our shareholder portal before and on the 26th of April 2021. Later, the Board of Management will answer these questions to their best judgment and at their discretion. I will answer questions concerning the Supervisory Board. And during this Annual General Meeting, it will not be possible to ask questions or follow-up questions. But in addition to the provisions of the law on measures against COVID-19, our shareholders and their proxies have the option to submit video messages and written statements regarding items on the AGM's agenda to be published on the shareholder portal. In this way, shareholders and their proxies were also given the option to comment on the presentation of the Chairman of the Board of Management, which has been pre-released and available on the company's Internet page since the 21st of April 2021. And one shareholder made use of this possibility, and it can be accessed on our portal until the end of the Annual General Meeting. Pursuant to the provisions of the law on measures against COVID-19, countermotions and election proposals submitted in due time are considered as having been submitted during the Annual General Meeting as long as they have been made accessible according to sections 126, 127 of the German company law and the shareholder submitting the motion has been registered for the Annual General Meeting. Election proposals have not been submitted, but countermotions and the reasons for them have been made available on the company's Internet page insofar as is required. Finally, I would like to address the possibility of objections. Shareholders who exercise their right to vote can submit objections against resolutions of the Annual General Meeting via the shareholder portal from beginning to end of the Annual General Meeting. This also applies to their proxies. Objections submitted will automatically be forwarded to the notary public. Finally, I also must point out that recording any part of today's Annual General Meeting is not permitted. I will announce the attendance list later. Ladies and gentlemen, I will now go through the items of the agenda of today's Annual General Meeting. You will find the full text of all agenda items, including the resolutions as proposed by the management, in the invitation to this Annual General Meeting published in the Federal Gazette on the 18th of March, 2021 and on the Internet page of the company. First, item 1. The annual reports of the group and of Munich Re each for 2020 have been available for retrieval on the company's Internet page since the announcement of this Annual General Meeting. All additional documents relevant to this Annual General Meeting have been available on the company's Internet page since the announcement of this Annual General Meeting. The statements and reports mentioned under item 1 and the appropriation of the net retained profits, as proposed by the Board of Management, are included in the group Annual Report 2020 or in the Annual Report 2020 of Munich Re. You will find the report of the Supervisory Board in the group Annual Report 2020 on pages 9 to 15, the corporate governance statements on the following pages 16 to 29 and the compensation or rather remuneration report on pages 38 to 55. the combined management report, including the combined nonfinancial statement from Munich Re and the group for the 2020 business year can also be accessed on the company's Internet page being included in the group's annual report. In its report, the Supervisory Board presented the result of audit of the financial statement and the consolidated financial statements and explained in detail which tasks and topics it dealt with in the 2020 business year. As in the previous years, its consultations focused on the strategic orientation in each business field of Munich Re and the development of operations. In addition, the Supervisory Board has dealt with the impact of the coronavirus pandemic on Munich Re. The Supervisory Board has given advice to the Board of Management on issues regarding the future orientation of the company like digitalization, growth, investment and sustainability strategies. In addition, the Supervisory Board also dealt with personnel matters relating to the Board of Management and appointed Mr. Stefan Golling to the company's Board of Management as of the 1st of January 2021. He succeeds Mr. Peter Roder, who left the company as of the 31st of December 2020 at his own request having reached 60 years of age. The Board of Management and the Supervisory Board would like to expressly thank him again for his successful work in more than 30 years at Munich Re, of these, serving 14 years on the company's Board of Management. Mr. Stefan Golling has assumed responsibility for the division Global Clients and North America from Mr. Peter Röder. Mr. Golling started his career at Munich Re in 2001 after graduating from his studies in mathematics at the University of Augsburg. After various positions in underwriting and several years abroad as General Manager Non-Life in Sydney, he was Head of Corporate Underwriting from 2015 to the 31st of December 2020. His executive responsibilities for global clients and North America also include responsibilities for the U.S. subsidiary, Hartford Steam Boiler and American Modern and the Lloyd's and Bermuda markets. In addition to the very comprehensive explanations in the group annual report, I would like to talk briefly about the compensation report regarding the Management Board. It is still based on the present remuneration system for members of the Board of Management, which the Annual General Meeting approved in 2018 and which was applied for the last time in 2020. This system corresponded to the society related regulations, including those of the German corporate governance code in its respective applicable versions. In its meeting on the 16th of March 2021, the Supervisory Board took a decision on the evaluation of the annual bonus for 2020. For 2020, consolidated results according to IFRS of EUR 1.2 billion were achieved as a result of the coronavirus impact. Based on the defined linear scale, the company, therefore, achieved 0% of its targets. Regarding the appreciation of the overall performance, the Supervisory Board's considerations, based on the predefined criteria for it, have led to the conclusion that neither increases nor reductions will be made when assessing attainment of targets. The multiyear bonus of the compensation system 2018 is due for a first evaluation in 2022. It is based on the development of our total shareholder returns, which is measured in comparison with the relevant competitors. Ladies and gentlemen, I now proceed to item 2 of the agenda regarding the appropriation of the net retained profits achieved in the 2020 business year. Board of Management and Supervisory Board propose to appropriate the net retained profits of the past 2020 financial year of EUR 1,631,560,000.72 to be used as follows: payment of a dividend of EUR 9.80 for each no-par share entitled to a dividend, i.e., EUR 1,372,969,523.80. And the rest or the remainder is to be allocated to other retained profit reserves, meaning EUR 258,591,127.92. And item 3 of the agenda, the Board of Management and Supervisory Board propose that approval for the actions of the members of the Board of Management in the 2020 financial year be given for this period. At item 4 of the agenda, the Board of Management and Supervisory Board propose that approval for the actions of the members of the Supervisory Board in the 2020 financial year be given for this period. And item 5 of the agenda deals with the election of the Supervisory Board member. Mrs. Ferrero-Waldner will resign from her position on the Supervisory Board at the end of today's Annual General Meeting. Mrs. Ferrero-Waldner has been a member of the Supervisory Board since February 2010. During her time on the Supervisory Board, she made a very important contribution to the development of the company. We have very much benefited from her diverse and international experience, and have greatly appreciated her wise advice. She's been a valuable asset to the Supervisory Board. We sincerely thank her also today for her many years of dedicated work on our Supervisory Board. The Supervisory Board, on recommendation of the Nomination Committee, proposes the meeting to elect to the Supervisory Board Mrs. Carinne Knoche-Brouillon as representative of the shareholders for Mrs. Ferrero-Waldner's remaining term of office until the end of the Annual General Meeting 2025. Let me introduce Mrs. Knoche-Brouillon, to you briefly. Mrs. Knoche-Brouillon is a member of the management of the C.H. Boehringer Sohn AG & Co. KG. Before that, Mrs. Knoche-Brouillon had various management positions at globally operated pharmaceutical companies. We are delighted that we were able to attract Mrs. Knoche-Brouillon, a very experienced and top class manager, to the Supervisory Board of Munich Re. The Supervisory Board selected Mrs. Knoche-Brouillon having considered the catalog of criteria drawn up by the Nomination Committee, and at the same time, also considered the competence profile targets decided by the Supervisory Board regarding its composition. As a result of her wide range and many years of management experience, Mrs. Knoche-Brouillon has profound knowledge of strategic and operative corporate management. Due to her being a member of the management team of a family business of global renown in this industry, she also brings experience from a different supervision environment to her Supervisory Board work. In addition, she will enrich the Supervisory Board through her scientific expertise, her internationality and her knowledge in HR management. And surely, the Supervisory Board obtained reassurance from Mrs. Knoche-Brouillon to ensure that she will be able to spend the time required and expected for this position. In keeping with code, Mrs. Knoche-Brouillon is to be considered independent. In addition, I refer you to the information in paragraph II1 of the invitation. Well, that's much about it into item 5. Now item 6 of the agenda, it deals with the compensation or remuneration system for members of the Board of Management. The remuneration system submitted for approval is very similar to the remuneration system already confirmed by the Annual General Meeting in 2018. However, some points have been modified in accordance with the provisions of the second shareholder rights directive and of the German Corporate Governance Code 2020. In doing so, requirements and suggestions of our shareholders have been taken into account. And of course, I talked to some of you in person. A detailed description of the new remuneration system can be found in the documents made available for this Annual General meeting. Therefore, I will only address essential points and amendments. Remuneration of the members of the Board of Management consists of fixed and variable components, which when added up, make up the total remuneration. Fixed remuneration comprises basic remuneration, current fringe benefits and remuneration in kind and possible expenses for company pensions. Variable remuneration comprises an annual bonus and a multiyear bonus. Since 2021, 2 remuneration systems for members of the Board of Management have been applied, which differ in one essential point, with and without company pensions. Members of the Board of Management who will join the Board of Management from 2021 will no longer receive an employer finance pension. The same applies to members of the Board of Management who were members before 2021 and decided, within the scope of their voting rights, to switch to the system without the employer finance pension scheme. Members of the Board of Management who decided in favor of staying in the system with the employer finance pension scheme will continue to receive the benefits. Regarding all other components, the systems are identical. The ratios of fixed and variable remuneration is balanced in both systems. To evaluate the annual bonus, the IFRS consolidated result continue to be used. However, due to the strongly asymmetrical results volatilities, scaling has been adjusted. Current consistent linear scaling has been replaced by scaling in which the range between 0% and 100% is twice as long as the range between 100% and 200%. The term of the multiyear bonus is unchanged. Even though the data refer to 5 calendar years, the effective term is 4 years. The 2021 multiyear bonus is unchanged and is based on the development of the total shareholder returns measured in comparison with the relevant competitors. From 2022, an additional separate category for the so-called environmental, social and governance targets will be included to meet the requirements of our investors of taking greater account of sustainability aspects in the remuneration system for members of the Board of Management. So from 2022, therefore, 80% of the multiyear bonus will relate to the relative development of total shareholder returns and 20% to 1 or several sustainability targets. To give the sustainability aspect, more weight in the annual and multiyear components for 2021 onwards, the criteria for appreciating the total performance have been separated in 10 percentage points for ESG criteria and 10 percentage points for further success and performance criteria. Now to meet the demand expressed by the investors, a lock-up period will be introduced for all members of the Board of Management as of the 1st of January 2021. It has been determined to be 100% of the gross annual basic remuneration for the period of membership on the Board of Management. In addition, the clause that in the event of the company terminating a contract for good cause or of a member of the Board of Management resigning from his or her post without good cause, all variable remuneration components not yet paid out are forfeited, is included in the management contracts concluded with all members of the Board of Management. Well, until now, it has been included in recent contracts only. In conclusion, I would like to address the maximum remuneration, which is to be determined in accordance with the second shareholder rights directives and the German Governance Code. For the Chairman of the Board of Management. It has been determined to be EUR 9.5 million and EUR 7.0 million for the regular members of the Board of Management. Ladies and gentlemen, remuneration for the Board of Management members adopted as of the 1st of January 2021 has the following features. In addition to the company law regulated and supervision requirements, it meets the requirements of our shareholders and their proxies. The remuneration system supports the promotion of the business strategy and of the sustainable and long-term development of the company. Increasing weight is given to the sustainability aspects. Implementing the lock-up period even more strongly aligns the interest of shareholders and management. There is a sufficient number of instruments to sanction breach of duty or violation of compliance rules and to withhold or just variable remuneration. All remuneration components are limited per person and in total. From the perspective of the Supervisory Board, the remuneration system for members of the Board of Management with or without employer finance pension as presented for approval is appropriate, sustainable and transparent. It considers the interest of the company as well as those of the shareholders. In addition, I refer you to the detailed explanations in paragraph II2 of the invitation, and I would like to ask all of you to approve the presented remuneration system for members of the Board of Management. Well, this covers agenda item 6, which was quite a lot, I admit. Now about item 7. It refers to the proposal presented for resolution by the Board of Management and the Supervisory Board on the amendment of the remuneration and on the remuneration system for members of the Supervisory Board and corresponding amendment to Article 15 of the Articles of Association. A synopsis of a comparison of the old and the proposed new regulation can be found on the company's Internet page. Under agenda item 8, the Board of Management and the Supervisory Board propose to cancel the Authorized Capital 2017 to create a new Authorized Capital 2021 and to amend Section 4 Paragraph 1 of the Articles of Association. In addition, I would like to refer you to the report of the Board of Management about the proposed authorizations regarding subscription rights, which you can find in Section II3 to Arabic numeral free of the invitation. Under agenda item 9, the Board of Management and Supervisory Board propose to approve the profit transfer agreements mentioned in the invitation concluded with MR Beteiligungen 20. GmbH, MR Beteiligungen 21. GmbH and MR Beteiligungen 22. GmbH. You have the option to vote on each of the 3 profit transfer agreements separately. Subsequently, Mr. Wenning will explain these proposed resolutions separately. Resolutions under items 7, 8 and 9 of the agenda each require a majority of 3/4 of the share capital represented when passing the resolution. The remaining resolutions can be passed with a simple majority of the votes cast. Mr. Wenning, I now ask you to present to the meeting the report on the 2020 financial year and present us with an outlook for the current financial year. Thank you.

Dear shareholders, dear share representatives, dear present and former colleagues a very warm welcome to Munich Re's AGM. Now this is, of course, the second time that our AGM is being held in an entirely digital format. Under normal circumstances, we would be meeting at the International Congress Center Munich today, which is we currently have a vaccination center. Thousands of people are being vaccinated against COVID-19 there every single day. Now that tells us 3 things. First of all, the pandemic will be here, unfortunately, and affect our lives for some time to come. Second, there is hope. And third, Germany can be proud of the inventive minds who developed the vaccines. It is entrepreneurship at its best. The pandemic has demanded a lot from us. Last year, the Munich Re Group incurred COVID-19 losses of nearly EUR 3.5 billion. Now we expect there will be about EUR 600 million in pandemic-related losses in 2021. So this year, we are, thus, playing a key role in mitigating the financial impact of the coronavirus crisis. Now despite the burden of COVID-19, we generated a profit of EUR 1.2 billion in the past financial year. And today, we can propose to you a stable dividend of EUR 9.80 per share. Now this profit, of course, is naturally below -- considerably below the target we set before the emergence of COVID-19. But it cannot be taken for granted that a company can make a profit whatsoever in a year with such extraordinary losses. Now we are proud of this feat and of our 40,000 colleagues around the globe. My dear colleagues, you have set great examples during this crisis and kept our group on track. Dear shareholders, resilience is a key attribute of good insurers, yet it cannot be scaled indefinitely. The boundaries of resilience end where the boundaries of insurability end as well. Now as a systemic risk, the risk of a pandemic lies fundamentally beyond these boundaries, making it impossible to ensure a pandemic in its totality. That's why we must find new ways of protecting our national economies against the next pandemic. Government and the private sector, they should pool their expertise and capabilities and then jointly develop forward-looking solutions. Last year, Munich Re, together with other insurers, proposed a public-private partnership between governments and insurers. Now in simple terms, the model would work as follows. Insurers provide a minimum level of protection against pandemic risks within a framework of state-backed risk pools. And in this way, the insurers create incentives for small- and medium-sized enterprises, in particular, to implement in-house measures. Now wherever that is exceeded, government would then be liable for the losses. Such a solution should be based on predefined criteria and standardized terms. This would save valuable time in an emergency and make an immediate impact. On behalf of everybody, I urge all of us to create such a strategy and put it into practice soon after conquering this pandemic. Now thinking one step further, such a public-private model could also address other systemic risks. For example, thinking of cyberattacks on systemically important networks, or critical infrastructures, for example. A targeted virus attack can cripple computer systems worldwide in mere minutes, resulting in tremendous economic losses. Just as a pandemic is uninsurable by conventional means, the private sector can also not ensure such a digital blackout. But at the same time, providing cover for cyber risks remains one of Munich Re's top priorities. It is possible to limit cyber risks that do not accumulate or are at most slightly systemic, making it possible to ensure them. And as in the past, there are considerable market opportunities here. In fact, We recently announced a trailblazing partnership with Google and Allianz that focuses on cloud risks. Now this demonstrates that we are pioneers in the cutting-edge market for cyber risks. Our partnership here will help us again gain an even better understanding of cyber risk and refine our simulation models of them. We aim to continually expand the boundaries of insurability, and that includes cyber risk. Now at the same time, we always have to exercise due caution as to not overstep these boundaries. Dear shareholders, as 2020 ended, we simultaneously concluded 3 projects, the 3-year Munich Re group ambition, the 3-year reinsurance strategy and the 5-year ERGO strategy program. In these times, we have made Munich Re more profitable, more digital and leaner. I would now like to provide some details, starting with profitability. Adjusted for one-off effects and major losses, our operating earnings have risen considerably over the past 3 years. From just over EUR 2 billion in 2017 to an unadjusted -- sorry, to an adjusted, excuse me, EUR 2.8 billion last year. Now this fundamental trend is actually unaffected by the impact of COVID-19 on our financial statements for 2020. Talking about digital transformation, we intelligently use data and digital technologies. For instance, we have automated and honed our products and services. Investing in them boost our core business and allow us to tap into new business opportunities and new markets. This, in turn, further enhances our good positioning over the competition. We are also in excellent shape, thanks to our broad portfolio of digital partnerships, initiatives and shareholdings, which ensures that we will continue to profit from this trend in the digital transformation. Just think, for example, of automated platforms for underwriting or insurance policies for the performance of algorithms. Now last year, we formed the Internet of Things partnerships with Porsche and TRUMPF. And then there is our share in Next Insurance, a digital start-up. And of course, I can mention others in our portfolio, with more to come. When it comes to reduced complexity, we have keenly focused on the market and our customers. With that, we have clearly streamlined our organization and generated additional business momentum. Moreover, we have made substantial structural process and organizational changes at ERGO and in reinsurance. Now we seek to concentrate and focus on our top priority, which is business performance. The implementation of strategic priorities I mentioned before have provided effective -- have proved effective across the entire group. I would like to particularly emphasize the development of ERGO, our primary insurer. Just 5 years ago, ERGO was in dire need of restructuring. Ever since then, ERGO has since then, in Germany, invested resolutely in the modernization of its operations and sales. In international business, the focus was on profitability, growth and market leadership. This way, ERGO has rebuilt its competitiveness and earnings power on a solid new foundation. ERGO is now adding more value for our group and will create more value through future growth. ERGO has hence turned itself around and is back on a path to success. In reinsurance, we have generated fresh momentum in new business and consolidated our top positions in many markets. And this is, of course, despite low interest rates and major losses, which has been a burden. However, the slowly improving rates in the property-casualty business started playing a role only recently. So our success is not just based on either luck or coincidence. It is, instead, the outcome of raising the bar higher consistently, putting resolute plans in practice and applying hands-on discipline. After completing our strategy programs at the end of 2020, we are now looking ahead and focusing on the next 5 years. In December 2020, we, therefore, presented our even more aspiring Munich Re Group Ambition 2025. And the framework of this new medium-term target setting, we are relying on the proven strategies for reinsurance, ERGO and capital investments. However, we're also enhancing the strategic components that drive organic growth because we are anticipating good business prospects in the years to come. But what does that mean in practice for each business field? ERGO, of course, will boost its profitability for the long time to come, which means strict cost discipline and efficient processes which are essential to achieve this. On top of that, of course, ERGO is also and especially prioritizing the business expansion outside of Germany. Spotlight here are India and China as well as other growth markets. systematically exploring promising business models, including the hybrid customer model in Germany will play a crucial role here. These measures will be supported by the expansion of a uniform and state-of-the-art IT architecture for sales. Propelled by combined ratios, it will keep improving. And by premium income increases by 2.5% annually, ERGO is striving for profitable growth. In the property-casualty reinsurance segment, we expect the market to continue hardening and prices will rise. In the important renewals as of January 1, 2021, we were able to expand the volume of business written by 10.9%, and the price for a reinsurance cover actually rose by 2.4%. In short, we're doing more business on better terms. Munich Re will exploit these favorable conditions to grow organically and consolidate our presence in selected markets. We will continue to excel here, thanks to our underwriting excellence. In the Risk Solutions business, we are expecting additional expansion based on robust growth, thanks to our strong client base and an exceptional portfolio. We specifically -- more specifically until 2025, premiums in property-casualty business are set to increase from EUR 24.6 billion today to about EUR 31.5 billion. The share of business attributable to Risk Solutions is expected to gradually rise from 25% to 30%. In Life and Health, we see ongoing good opportunities to grow, particularly in North America and Asia. We will, likewise, profit from additional offerings in financial market operations and in longevity business. In the Life and Health segment, we expect annual premium growth of about 4%, with premium income totaling about EUR 15 billion in 2025. When it comes to investments, we are pursuing sustained improvements in our return on investments by MEAG, specializing in certain classes of investment and by outsourcing. In this way, we will partially offset the repercussions of low interest rates on investment returns. Now I wish to add that our risk appetite for investments has not changed at all. Now the strategy I've just outlined will propel Munich Re to higher revenue by 2025. We expect the return on equity to rise to between 12% and 14%, both for reinsurance as well as for ERGO. Now this puts Munich Re in the top of group ahead of most peers. Our financial strength in terms of the Solvency ratio is poised to remain in the optimum range of 175% to 220%. However, our Ambition 2025 is not limited to meeting financial targets alone. We also have defined ambitious ESG targets. Worldwide natural disasters in 2020 produced losses of USD 210 billion, which, once again, is considerably more than in the long-term average. Climate change is real, and it makes weather-related natural disasters more likely, not to mention more frequent and more extreme in many regions. Now we have been drawing attention to climate change for 50 years while calling for climate protection. Governments around the world have, thus far, not managed to agree on a joint climate policy. It is now incumbent on market and thought leaders to service role models and persuade as many people as possible to likewise set good examples. And that is why, as part of our Ambition 2025, we have established truly bold and climate protection targets that are based on science. What's more, our targets are compatible with the Paris Climate Agreement. They are specific, binding and measurable. They apply to our investments, our insurance business, and our own operations from 2021, so from now, until 2050. Now we will proceed step-by-step gradually and verifiably reducing our emissions over the course of 5-year periods. For instance, we will shrink our carbon footprint with regards to directly insuring coal business by 35% in the next 5 years and another 35% 5 years after that. In fact, by 2040, we will phase out coal completely from both our direct insurance business and our investment. And until 2050 Munich Re will have net 0 greenhouse gas emissions. At the same time, we are facilitating the transition from fossil fuels to renewable energies. We provide cover that allows the photovoltaic manufacturers to offer 25-year performance guarantees. And we handle warranties worth millions for general contractors that construct offshore wind farms out in the high seas. In addition, we foster the boom in electric mobility by ensuring manufacturers' performance guarantees for electric powertrain and batteries. In this way, we really help drive forward new technologies for the low-carbon economy of tomorrow. That is our primary objective. It is to help promote progress so as to benefit humanity. As a global company, of course, we are operating in a world that change. In the face of increasing challenges, close collaboration is indispensable between governments; between governments and businesses; and between governments, businesses and the general public at large. We must join forces to surmount challenges that would overwhelm a single government or a single company. So to solve such problems, we must work together. We also have to become better at dealing with systemic risks, as I've already mentioned. A second challenge concerns technology and big data. Both can benefit humanity and ultimately will. But we must make sure that the right people harness the technology and the big data in the right ways, while ensuring that we -- that they do not fall in the wrong hands. In the 21st century, progress is digital. If we can all see that sooner or later, everything will be digitalized, that can be digitalized. What does that mean? I have to say that digital progress in Europe is being hindered by excessive government regulation of data, which means that just so far, the United States and China will continue to reap the benefits of digital transformation without protecting Europeans from any drawbacks. To this end, we need an organizational framework in Europe that allows people to responsibly tap into opportunities. This is the only path for Europe to become less dependent on others and more competitive. And in this way, the EU can also forge digital progress on its own terms for the benefit of all Europeans. Europe must remain an economically strong and assertive partner on a global stage. A strong Europe rests on the foundation of liberty, resolve and excellence, 3 virtues that enable progress into promising -- and a promising future for young people. We need Europe to be sturdy if we want to achieve greater solidarity in society. And this is especially true for up-and-coming generation. The Europe I'm speaking of would be a magnet for people who are motivated to get things done. Now EU governments need to act along these lines instead of perpetuating an ultra-expansionary monetary policy, sliding down a slippery slope to a transfer union and tolerating excessive federalism ending in deadlocks. Dear shareholders, from 2018 and 2020 with outstanding -- was outstanding compared with the leading 8 global reinsurers and European primary insurers. Now we hope and believe that by realizing our ambition 2025, we can continue to the competition. What does that mean for you specifically? Of course, continued earnings growth which will translate into higher earnings per share, which are set to increase annually at least by 5% on average by 2025. Similarly, the dividend per share is to, likewise, rise by at least 5% on average or even more and thus, at a somewhat higher rate than in recent years. It is also expected that the dividend per share will at least remain in the same following years with an unusually high claims burden as we experienced in 2020. We anticipate a profit of EUR 2.8 billion in 2021, and that would lift us back to our level prior to the pandemic and its burdens, allowing us to start out strong as we work on our ambitious targets. Now more than ever, I would like to thank you very much for your trust, also on behalf of the Board of Management and all of our colleagues. We greatly appreciate your loyalty to Munich Re, and I look forward to seeing you next year.

Thank you very much, Mr. Wenning, for your clear and succinct overview of the last financial year and the current situation of Munich Re and particularly also about relevant framework conditions. On behalf of the Supervisory Board, I take the opportunity to thank the members of the Board of Management as well as all employees worldwide for your great personal commitment and the success you achieved in your work, despite the burdens caused by the coronavirus pandemic, which resulted in a gratifying operating result in 2020. Now I would like to point out to those watching our virtual Annual General Meeting over the Internet that the public part of the live stream will end at this point. From this point on, only those shareholders of the company and their proxies who have joined via the shareholder portal will be able to follow the course of this Annual General Meeting.