Wüstenrot & Württembergische AG – An attractive investment

Dr. Michael Gutjahr Chief Financial Officer Berenberg and Goldman Sachs Third Annual German Corporate Conference Munich, 22 September 2014

Agenda

1: W&W at a glance 2: W&W Group: Half year financial results 2014 3: Positive track record since 2006 4: W&W share with upside potential 5: Strategy outlook

W&W AG, Investor Relations

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1. W&W at a glance

Our roots: Foundations of strong expertise Established in 1828, Württembergische PrivatFeuer-Versicherungsgesellschaft is the oldest private property insurance in southern Germany. In 1833, Allgemeine Rentenanstalt, the first pension insurance in Germany, was established. In 1991, both companies formed the Württembergische Insurance Group.

Founded 1921, Wüstenrot was Germany‘s first home loan and savings bank. 1828

1921

In 1999, merger between Wüstenrot & Württembergische: 

Mobile sales force of about 6,000 tied agents



7,600 employees by year end 2013



6 m customers



No 2 in German home loan savings



No 11 in German casualty/property insurance



No 13 in German life insurance

1991

2014

W&W AG, Investor Relations

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1. W&W at a glance

Our vision: Sustainability for customers and shareholders 

The world is changing, at an ever-increasing pace. Given the complexity of today's world, many customers are looking for a reliable, long-term partner to satisfy their needs in terms of financial services. We want to be their partner of choice.



Our position in the market is unique: With the two well established strong brands "Wüstenrot" and "Württembergische", the W&W Group is a specialized one-stop shop for financial planning of retail clients and small/medium commercial customers in Germany and the Czech Republic.



Personal services delivered locally by our mobile sales force ensure a customer relationship which is characterized by trust, understanding and reliability.



We offer solutions for each customer's individual needs, throughout all stages in life, in the areas of  retail banking with focus on banking products and mortgage lending (B),  life and health insurance (L/H)  property and casualty insurance (P/C).



We deliver clear and systematically defined quality standards. Continuous quality management forms an integral part of our corporate culture.

W&W AG, Investor Relations

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1. W&W at glance

Our brands: Wüstenrot & Württembergische united since 1999

W&W AG, Investor Relations

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1. W&W at a glance

Our strong pillars: Reliable partners for all stakeholders

Czech Republic W&W companies in the fields of Property/Casualty and Life insurance; Home loans and mortgages



With its strong pillars, W&W Group’s business model is well diversified to face challenging market conditions

W&W AG, Investor Relations

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1. W&W at a glance

Our sales channels: Focus on multi-channel distribution

Sales force Württembergische

Sales force Wüstenrot

Direct channel1

Brokers

Own sales channels ~ 3,000

~ 3,000

Banks / coop. partners

Other

Partnerships and cooperations @ Banks

Insurance companies Financial sales networks



Potential access to 40 m customers in Germany

Brokers

8,000 brokers

Cooperations

1) Direct sales, supporting the mobile sales force through mailshots, call centres, online transactions

W&W AG, Investor Relations

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1. W&W at a glance

W&W's Unique Selling Proposition  The two strong brands Wüstenrot and Württembergische guarantee diversification and synergies for the whole Group  W&W products cover the whole range of basic financial needs of its 6 million customers; further access to 40 million customers in Germany  High customer loyalty and excellent advisory service supported by a salesforce of about 6,000 well educated agents within the W&W Group  Basis of our value based management and control system are performance indicators in the fields of  profitability  market performance / customer satisfaction  cost efficiency and  regulatory requirements



W&W's corporate culture stands for security, corporate and social responsibility, sustainability, credibility and independence

W&W AG, Investor Relations

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1. W&W at a glance

W&W meets basic needs of customers Property/Casualty Insurance  Security in the case of damages or loss of property

Life insurance  Protection against hazards to life and health and  financial provisions for old age, e.g. by nursing care provision schemes

Home loan and savings  Living and saving energy  Old-age housing  Real estate as a form of capital investment



Highest priority for customers' needs and satisfaction

W&W AG, Investor Relations

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1. W&W at a glance

W&W Group at a glance Shareholders: Wüstenrot Holding AG: 66,31 % Horus Finanzholding: 13,42 % UniCredit Bank AG: 7,56 % L-Bank: 4,91 % Freefloat: 7,80 %

6 m private and commercial customers

6,000 tied agents 7,600 employees in Germany

Key Figures W&W Group (2013, IFRS)

New home loan savings (gross) New mortgages (Group) Gross premiums written (P/C+Life) W&W investments Group net income Equity Balance sheet total

15.4 €bn 4.6 €bn 3.9 €bn 44.7 €bn 154.9 €bn 3.3 €bn 75 €bn

W&W AG, Investor Relations

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1. W&W at a glance

The Wüstenrot Foundation (Wüstenrot Stiftung e.V) Legal status  Registered non-profit foundation, which exclusively pursues charitable and non-profit-making purposes  57 honorary members from the worlds of culture and economics, as well as public and social affairs  About 40 own projects each year  Funding of various projects of other non-profit-organisations

Wüstenrot Stiftung 100 % Wüstenrot Holding 66.31 %

Purpose of the foundation Projects in the fields of  Protection and restoration of historical buildings  Arts and culture  Science and Research  Education

W&W AG

Advantages of Wüstenrot Foundation as major shareholder of W&W AG

   

Ensures the independence of the W&W Group Provides the W&W Group with a high stability Helps to strengthen W&W‘s image as a rock-solid company As a non-profit organisation it is part of W&W‘s corporate and social responsibilty

W&W AG, Investor Relations

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2. W&W Group: Half year financial results 2014

Highlights as of 30 June 2014 W&W strategy

Business environment

New business

 Thanks to the progress of our strategy programme "W&W 2015", our business performance and market position have further improved and are bearing first fruits: costs decreased by € 34m in 2013.  For the year 2014, cost reduction will be even higher than originally planned.

   

Low domestic interest rates Higher capital requirements Increased consumer protection High pressure for cost reductions

 Own home loan and savings business above market level; as planned, mortgage lending business was reduced, preferring profitability over growth.  P/C with overwhelming gross premiums written, exceeding €1bn for the first time (+ 3.9%); life business decreased slightly, but bears more sustainable and profitable business.

Earnings

 W&W achieved €130.6m (vs €125.9m) net income, exceeding the forecasts (€180m for year end 2014) and previous years' half year earnings.

Risk assessment

 W&W has a sound capitalization with a solvency ratio of 138.2 % (financial conglomerate).  Risk diversification is a strategic key success factor.

Guidance

 It is probable that we will significantly exceed our forecast of €180m net income by the year end 2014.

W&W AG, Investor Relations

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2. W&W Group: Half year financial results 2014

Net Income – Actual and target figures Segment Overview (W&W Group) €m

2013 30/06/2013

Home loan and savings bank division

2014

Delta

30/06/2014

HJ 2014 vs HJ 2013

Delta HJ 2014 vs HJ target

2014 Target 31/12/2014

2014 1. Projection 31/12/2014

37.6

30.4

-7.2

2.8

55.2

55

Life and health insurance

25.5

22.6

-2.9

3.9

37.5

45

Property/Casualty insurance

43.2

79.6

36.4

42.3

74.7

67

19.5 125.8

-2.0 130.6

-21.5 4.8

-8.3 40.7

12.5 179.9

17 184

Consolidation/All other segments Group net income

  

Net income January to June 2014 significantly above plan and above previous half-yearly results. W&W 2015 is a stable earnings driver. Segment property/casualty insurance in the first half year significantly above previous year and above planned figures due to fewer damages to be covered. Outlook: It is probable that we will significantly exceed our forecast of €180m net income by the year end 2014. However, these earnings are subject to some uncertainties, in particular with regard to further claims for damages, possible one-off tax effects and the results of our investment in BWKU.

W&W AG, Investor Relations

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2. W&W Group: Half year financial results 2014

Value oriented new business Banking Products and Mortgage Lending €m 30/06/14

€m 30/06/13

in %

New home loan savings, gross

7 017.5

7 522.7

– 6.7

New home loan sav., net

5 531.4

5 718.9

– 3.3

New mortgages (Banking)

1 117.0

1 489.5

– 25.0

New mortgages (Group)

1 884.7

2 279.0

– 17.3

Life and Health Insurance €m 30/06/14

Property and Casualty Insurance €m 30/06/13

€m 30/06/14

in %

124.9

– 1.9

Motor insurance

92.2

95.6

– 3.6

Business customers

16.6

16.4

1.2

Private customers

13.7

12.9

6.2

359.1

– 5.9

Total new premiums

274.4

292.6

– 6.2

Regular premiums life

59.5

59.1

0.7

New premiums health

4.0

7.4

– 45.9

Single premiums life



in %

122.5

337.9

Total new premiums

€m 30/06/13

New business is on target: Focus on sustained value creation

W&W AG, Investor Relations

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3. Positive track record since 2006

Since 2006, W&W net income has increased by more than ten-fold Net income IFRS, in €m 300

250 220

205 200

166

100

16

“W&W 2009“ Restructuring programme

“W&W 2012“ Expansion programme

“W&W 2015“ Programme to reinforce our strengths

0

-100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 ff. Group annual net income Average group net income



All targets achieved despite global financial market crisis

W&W AG, Investor Relations

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3. Positive track record since 2006

W&W equity strengthened by almost €1bn since 2006 IFRS, in €m

3,253

+947 €m

2,306

2006

2013

W&W AG, Investor Relations

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3. Positive track record since 2006

W&W achieved its targets Programme

Programme

Effects of *

"W&W 2009"

"W&W 2012"

"W&W 2015"

successfully completed

successfully completed

Costs: - 34 €m Income: + 20 €m

Net income IFRS, in €m

300

Net income IFRS (actual figures)

200 100 0 2007



Net income IFRS (target figures)

2008

2009

2010

2011

2012

2013

All targets achieved despite global financial market crisis and low interest rates * prior to tax and provisions for premium refunds (RfB) W&W AG, Investor Relations

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4. W&W share with upside potential

Financial Ratios HJ 2014 Price/Earnings Ratio IFRS Earnings per share Book value/share Price/Book Ratio Market cap Share price Dividend

Dividend yield



2013

2012

11.1

6.4

1.38 €

1.56 €

2.41 €

34.30

34.43 €

36.00 €

0.56

0.50

0.43

1,766.3 bn

1,593.3 bn

1,423.1 bn

19.20 €

17.32 €

15.47 €

0.50 €

0.50 €

2.88 %

3.23 %

W&W AG offers upside potential to its shareholders

W&W AG, Investor Relations

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5. Strategy outlook

W&W faces multiple challenges… OmniChannel

Low interest rates

Price stability Digitalizatíon

Climate change and environmental protection

Ecology Society

Technology

Policy

Changes in demography Changing customer needs and changes in values



Increasing regulation

Efficiency of the Government

Reputation

Data security and consumer protection

… and is addressing these issues with vigour

W&W AG, Investor Relations

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5. Strategy outlook

Prepared for the future Basic financial needs

Focus on customers' needs Flexible business model

Individualization



Consistent orientation towards markets and customers' needs

W&W AG, Investor Relations

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Thank you for your kind attention!

For further information please contact:     

Dr. Michael Gutjahr Chief Financial Officer Gutenbergstraße 30 70176 Stuttgart phone: +49 711 662 724701

   

Investor Relations [email protected] internet: ww-ag.com phone: +49 711 662 725252

W&W AG, Investor Relations

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Disclaimer This presentation and the information contained herein, as well as any additional documents and explanations (together the “material“), are issued by Wüstenrot & Württembergische AG (“W&W”). This presentation contains certain forward-looking statements and forecasts reflecting W&W management’s current views with respect to certain future events. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts, including, without limitation, those regarding W&W’s future financial position and results of operations, strategy, plans, objectives, goals and targets and future developments in the markets where W&W participates or is seeking to participate. The W&W Group’s ability to achieve its projected results is dependent on many factors which are outside management’s control. Actual results may differ materially from (and be more negative than) those projected or implied in the forward-looking statements. Such forward-looking information involves risks and uncertainties that could significantly affect expected results and is based on certain key assumptions. The following important factors could cause the Group’s actual results to differ materially from those projected or implied in any forward-looking statements:

– the impact of regulatory decisions and changes in the regulatory environment; – the impact of political and economic developments in Germany and other countries in which the Group operates; – the impact of fluctuations in currency exchange and interest rates; and – the Group’s ability to achieve the expected return on the investments and capital expenditures it has made in Germany and in foreign countries. The foregoing factors should not be construed as exhaustive. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forwardlooking statements as a prediction of actual results. All forward-looking statements included herein are based on information available to W&W as of the date hereof. W&W undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law. All subsequent written and oral forward-looking statements attributable to W&W or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The material is provided to you for informational purposes only, and W&W is not soliciting any action based upon it. The material is not intended as, shall not be construed as and does not constitute, an offer or solicitation for the purchase or sale of any security or other financial instrument or financial service of W&W or of any other entity. Any offer of securities, other financial instruments or financial services would be made pursuant to offering materials to which prospective investors would be referred. Any information contained in the material does not purport to be complete and is subject to the same qualifications and assumptions, and should be considered by investors only in light of the same warnings, lack of assurances and representations and other precautionary matters, as disclosed in the definitive offering materials. The information herein supersedes any prior versions hereof and will be deemed to be superseded by any subsequent versions, including any offering materials. W&W is not obliged to update or periodically review the material. All information in the material is expressed as at the date indicated in the material and is subject to changes at any time without the necessity of prior notice or other publication of such changes to be given. The material is intended for the information of W&W´s institutional clients only. The information contained in the material should not be relied on by any person. In the United Kingdom this communication is being issued only to, and is directed only at, intermediate customers and market counterparties for the purposes of the Financial Services Authority’s Rules ("relevant persons"). This communication must not be acted on or relied on by persons who are not relevant persons. To the extent that this communication can be interpreted as relating to any investment or investment activity then such investment or activity is available only to relevant persons and will be engaged in only with relevant persons.

W&W AG, Investor Relations

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