Corporate Governance: Our understanding

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Our Understanding

Corporate governance report1

Corporate governance stands for a form of responsible company management and control geared to long-term creation of value.

The German Corporate Governance Code contains the main legal rules to be observed by listed German companies. In addition, it includes recommendations and proposals based on nationally and internationally recognised standards of good and responsible management. We apply the highest standards to our operations and activities and therefore comply with all the recommendations and proposals of the German Corporate Governance Code. By adopting international guidelines such as the UN Global Compact, the Principles for Responsible Investment for the investments we make and the Principles for Sustainable Insurance for our core business, we further demonstrate our commitment to corporate responsibility.

Efficient practices on the Board of Management and Supervisory Board, good collaboration between these bodies and with the Group’s staff, an organisational structure that fits the purpose of the Group and efficient processes for conducting business are core elements of good corporate governance. They help to secure the confidence of investors, clients, employees and the general public in our corporate activities.

More information on corporate governance can be found on our website at There, you can also find the combined Statement on Corporate Governance in accordance with Sections 289a and 315 (5) of the German Commercial Code (HGB), and the Declaration of Conformity by the Board of Management and Supervisory Board with the German Corporate Governance Code in accordance with Section 161 of the German Stock Corporation Act (AktG). The remuneration report can be found on page 29 ff. of the combined management report.

Corporate legal structure

Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München (Munich Reinsurance Company) has three governing bodies: the Annual General Meeting, the Board of Management and the Supervisory Board. Their functions and powers are defined by law, the Articles of Association, the Co-determination Agreement applicable to Munich Reinsurance Company, and by rules of procedure and internal guidelines. Employee co-determination on the Supervisory Board is governed by the Co-determination Agreement concluded pursuant to the German Act on the Co-Determination of Employees in Cross-Border Mergers (MgVG). There, the principle of parity co-determination on the Supervisory Board has been strengthened by taking into account staff employed in the rest of Europe.

The supervisory requirements for (re)insurance companies, especially the German Insurance Supervision Act (VAG) and the European supervisory regulations (Solvency II implementing rules) are placing additional demands on corporate governance. They include specific rules on various issues such as business organisation or the qualifications and remuneration of members of the Board of Management, Supervisory Board members and other individuals.

Annual General Meeting

The Annual General Meeting regularly reaches a resolution on the appropriation of profits and approving the actions of the Board of Management and Supervisory Board. Besides this, the Annual General Meeting elects the shareholder representatives on the Supervisory Board and, in particular, votes on changes to the Articles of Association and on individual capital measures. Certain corporate contracts also require the approval of the Annual General Meeting to become effective. The principle of “one share, one vote” applies at the Company’s Annual General Meeting. With the aim of making it easier for shareholders to take part and exercise their voting rights, the Company provides the option of online participation at the Annual General Meeting, and a postal vote (also electronically).

Board of Management

Pursuant to Article 16 of the Articles of Association, the Board of Management consists of at least two members; beyond this, the number of members is determined by the Supervisory Board. When appointing the Board of Management, the Supervisory Board pays due regard to diversity. In 2016, the Board of Management of Munich Reinsurance Company had ten members, two of whom were women.

The Board of Management is responsible for managing the Company, in particular for setting the Company’s objectives and determining strategy. In doing so, it is obliged to safeguard Company interests and endeavour to achieve a sustainable long-term increase in the Company’s value. The Board of Management is responsible for effecting adequate risk management and risk control in the Company. It must ensure that statutory requirements and internal Company guidelines are abided by, and works to achieve their compliance by Group companies (compliance).


The Group Compliance Division (GComp) of Munich Reinsurance Company reports directly to the Chairman of the Board of Management. GComp manages the compliance activities of Munich Re (Group) through Group-wide terms of reference, monitoring their implementation on the basis of the compliance management system (CMS). The CMS is the methodical framework for the structured implementation of early warning, risk control, consulting and supervision functions, as well as for the monitoring of background legal conditions.

At the instigation of the Board of Management, another channel has been established to complement the external independent ombudsman and thus strengthen compliance within Munich Re: the compliance whistleblowing portal. Employees and third parties can use this portal to anonymously report activities that may cause reputational damage, suspected criminal behaviour such as bribery and corruption, and contraventions of antitrust, insider trading and data protection laws, and other violations of applicable legislation.

More detailed information can be found at

Collaboration between Board of Management and Supervisory Board

The Board of Management and the Supervisory Board cooperate closely for the benefit of the Company.

The Board of Management coordinates the Company’s strategic approach with the Supervisory Board and discusses the current state of strategy implementation with it at regular intervals. The Board of Management reports regularly and as needed to the Supervisory Board about all questions relevant to the Company. Beyond this, the Board of Management reports to the Audit Committee on specific topics falling within the latter’s scope of responsibility. The Supervisory Board has defined the Board of Management’s information and reporting requirements in detail. Specific types of transactions, such as certain investments and divestments pursuant to Article 4 of the Articles of Association, require the Supervisory Board’s consent. The Supervisory Board’s approval is also required for sideline activities assumed by members of the Board of Management, and for important transactions involving members of the Board of Management or persons or undertakings closely associated with them.

Supervisory Board

In compliance with Munich Reinsurance Company’s Articles of Association, the Supervisory Board has 20 members. Half are representatives of the shareholders, elected by the Annual General Meeting. The other half are elected representatives of the Group’s employees in the European Economic Area.

The Supervisory Board monitors the Board of Management and gives counsel where appropriate, but it is not authorised to take management action in place of the Board of Management. In accordance with a special rule applicable to (re)insurance companies, the Supervisory Board also appoints the external auditor for the Company and Group financial statements and for the Half-Year Financial Report.

Objectives of the Supervisory Board for its composition, diversity, independence and competences

In accordance with Section 5.4.1 (2) of the German Corporate Governance Code, the Supervisory Board has set itself the following objectives for its composition:

  • The main criteria for selecting future members of the Supervisory Board are professional knowledge, personal abilities and experience (especially of an international nature), independence, commitment to sustained corporate profitability, and enterprise of the nominated persons.
  • The Supervisory Board should have at least sixteen independent members within the meaning of Section 5.4.2 of the German Corporate Governance Code, including at least eight shareholder representatives. No members of the Supervisory Board should have any relevant conflicts of interest.
  • In selecting candidates for membership, the Supervisory Board should pay due regard to diversity, especially in terms of age, internationality and gender. The objective of having at least 30% of the seats on the Supervisory Board to be filled by women by the start of the following term of office continues to apply. With a 45% representation of women since 3 January 2017, up from 40% at the end of 2016, the Supervisory Board’s objective has already been surpassed at this juncture.
  • Future nominations of candidates for election to the Supervisory Board should also take into account that, as a rule, at the time of election no candidate should already have been on the Supervisory Board for a continuous period of more than ten years. Normally, Supervisory Board members should not serve on the Board for a continuous period of more than twelve years.

In addition, the Supervisory Board’s rules of procedure provide for a recommended age limit of 70 for candidates.

The aforementioned objectives apply to the Supervisory Board as a whole. Shareholder and employee represent- atives will each contribute towards meeting these objectives.

The Supervisory Board is of the opinion that all 20 of its members are to be regarded as independent within the meaning of Section 5.4.2 of the German Corporate Governance Code. The Supervisory Board is not aware of any business or personal relationship between a member and the Company, its governing bodies, a controlling shareholder or an entity affiliated with such a shareholder, as a result of which a major and not only temporary conflict of interest could arise. The Supervisory Board assumes that the employee representatives on the Supervisory Board elected in accordance with the Act on the Co-Determination of Employees in Cross-Border Mergers and the Co-Determination Agreement are independent as a matter of principle.

The Supervisory Board’s Nomination Committee selects candidates for the shareholder representatives based on a defined set of criteria. Besides the objectives mentioned, these criteria include a good overall understanding of the Company’s business model, sufficient time availability and special professional skills. Consequently, it must be ensured that the Supervisory Board as a whole possesses adequate knowledge, skills and experience with regard to markets, business processes, competitors, and the requirements of reinsurance, primary insurance, international health and investment, besides having an adequate knowledge of risk management, accounting, controlling and internal auditing, asset liability management, legal and regulatory affairs, compliance and tax matters.

The set of criteria also includes other personal qualities of the Supervisory Board members, such as a strong commitment to corporate governance and to a sustainable corporate strategy and business policy geared to creating long-term value for shareholders, strategic and problemsolving skills, and competence in dealing with change.

Additional requirements will be defined on a case-by-case basis for specific tasks to be handled by the Supervisory Board. The European Electoral Board, which is responsible for the election of the employee representatives, also uses a corresponding set of criteria. In addition, the specific rules for co-determination apply.

The Supervisory Board is of the opinion that its composition meets the defined criteria.

Share trading and shares held by Board members

The Company has to be notified promptly of the acquisition or sale of Company shares (or financial instruments based on these) by members of the Board of Management and Supervisory Board and by specified persons closely related to or connected with them. This notification must take place for acquisition and sales transactions totalling €5,000 or more in a single calendar year.

Munich Reinsurance Company publishes information of this kind on its website without undue delay.

1 In accordance with Section 3.10 of the German Corporate Governance Code.

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