Slide 1: Annual EVM Results 2014
Annual EVM Results 2014 Zurich, 18 March 2015
Slide 2: EVM methodology
EVM methodology An integrated economic valuation and Key features accounting framework for business • Market consistent valuation of assets planning, pricing, reserving, and steering and liabilities • Shows direct connection between risk • Exclusion of potential future new taking and value creation
Slide 3: 2014 highlights
2014 highlights • Swiss Re reports EVM profit of USD 1.3bn, supported by strong new business underwriting partially offset by losses on the Group's net short duration position • P&C Reinsurance delivered EVM profit of USD 1.2bn, mainly driven by new business profit, partially offset by the impact of
Slide 4: EVM key figures
EVM key figures Corporate Admin Total Total USD millions, unless otherwise stated P&C Re L&H Re Solutions Re® Group items FY 2014 FY 2013 Premiums and fees 16 908 14 692 3 764 505 0 35 869 36 660 EVM income 2 367 2 034 357 304 127 5 189 6 339 EVM profit (loss) 1 219 168 81 43 -175 1 336 4 007
Slide 5: P&C Reinsurance
P&C Reinsurance Continued strong underwriting performance partially offset by investment losses Premiums and fees EVM profit New business profit margin new business a USD m USD m % +5.3% -65.8% -5.7%pts 16 908 3 568 17.5% 16 061 11.8% 1 219 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013 FY 2014 • Premium g
Slide 6: L&H Reinsurance
L&H Reinsurance Strong new business performance partially offset by unfavourable previous years' business development Premiums and fees EVM profit New business profit margin new business As USD m USD m % -14.3% +1.8%pts 17 137 14 692 6.7% 168 4.9% -295 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013 FY 2014
Slide 7: Corporate Solutions
Corporate Solutions Growth plan on track, result lower due to special impacts Premiums and fees EVM profit New business profit margin new business A USD m USD m % +8.7% -86.1% -4.7%pts 581 3 462 3 764 7.6% 2.9% 81 FY 2013 FY 2014 FY 2013 FY 2014 FY 2013 FY 2014 • Continued successful organic • EVM p
Slide 8: Admin Re®
Admin Re® EVM profit driven by the sale of Aurora partially offset by unfavourable in-force development and investment losses Premiums and fees EVM profit Gross cash generation1 new business USD m USD m USD m -81.5% +81.4% 804 233 945 505 521 0 0.00 FY 2013 FY 2014 FY 2013 43 FY 2014 FY 2013 FY 2014
Slide 9: Investment activities
Investment activities EVM loss driven by declining interest rates, partially offset by positive performance on equities and alternative investments Outperformance EVM profit EVM income USD m USD m USD m -79.5% -83.8% 1 262 2 679 3 605 -823 FY 2013 739 FY 2014 FY 2013 FY 2014 FY 2013 433 FY 2014 • Sh
Slide 10: Economic net worth (ENW)
Economic net worth (ENW) Increase driven by EVM income partly offset by dividends USD m 46 000 42 000 -3 129 5 189 1 470 -2 353 38 000 38 365 37 188 34 000 30 000 26 000 22 000 2 ENW Changes in EVM EVM income Dividends Other ENW 31 Dec 2013 accounting 31 Dec 2014 1 principles 1 Changes in EVM accoun
Slide 11: Reconciliation of EVM economic net worth to US GAAP shareholders' equity
Reconciliation of EVM economic net worth to US GAAP shareholders' equity Total Re- Corporate Admin (after USD billions insurance P&C Re L&H Re Solutions Re® Group items consolidation) US GAAP shareholders' equity at 31 Dec 2014 21.1 14.2 6.9 2.3 6.4 6.1 35.9 Discounting 3.2 3.7 -0.5 0.0 -3.6 0.0 -0.
Slide 12: Group financial targets
Group financial targets On track ROE 700 bps above risk free EPS growth 10% average ENW per share growth plus average over 5 years (2011- annual growth rate, adjusted dividends 10% avg. annual 2015) for special dividends1 growth rate over 5 years in % in USD2 in USD 13.0 135.6 11.9 123.1 144.5 13.4
Slide 13: Swiss Re's capital structure
Swiss Re's capital structure On track to implement target capital structure, reducing cost of capital and optimising financial flexibility USD bn Core capital 1 Total hybrid incl. contingent capital Senior debt 2 LOC 3 Senior leverage plus LOC ratio 4 Subordinated leverage ratio 5 100% 90% 13.6 13.8
Slide 14: New Group targets for 2016 and beyond
Looking at 2016 and beyond, our new Group targets are focusing on profitability and economic growth Two Group financial targets to be introduced in 2016 Return on Equity ENW Per Share Growth (Year end ENW + dividends from current year 700bps above risk free (10-year US Gov Bonds1) divided by previou
Slide 15: Appendix
Appendix Annual EVM Results 2014 15
Slide 16: EVM segmental income statement 2014
EVM segmental income statement 2014 Re- Corporate Admin Group USD millions insurance P&C Re L&H Re Solutions Re® items Total Underwriting result New business result Premiums and fees 31 600 16 908 14 692 3 764 505 0 35 869 Claims and benefits -19 987 -9 072 -10 915 -2 024 -14 0 -22 025 Commissions -
Slide 17: EVM balance sheet 2014
EVM balance sheet 2014 Re- Corporate Admin Group Consoli- 31 December 2014, USD millions insurance P&C Re L&H Re Solutions Re® items dation Total Assets Investments 88 630 50 527 38 103 8 202 55 901 8 289 -6 083 154 939 Cash and cash equivalents 5 643 5 069 574 730 1 029 64 0 7 466 In-force business
Slide 18: Key differences between EVM and US GAAP
Key differences between EVM and US GAAP EVM US GAAP Profit recognition on • At inception • Over lifetime of the contract new contracts Actuarial assumptions • Best estimate • Property & Casualty: best estimate • Life & Health: generally locked-in assumptions Liability cash flows • Discounted using r
Slide 19: MCEV and EVM 2014 comparison
MCEV and EVM 2014 comparison MCEV recognises higher value than EVM USD bn 44 -0.8 0.0 42.6 42 42.0 40 37.2 4.4 38 38.4 36 34 Economic net worth Differences Differences Non-Life Differences other MCEV 31 Dec 2014 Life business business 31 Dec 2014 (estimate) • In line with MCEV guidelines, swap yield
Slide 20: EVM developments
EVM developments EVM developments as of 1 January 2014 • The application of frictional capital costs has been revised. Parent companies benefit from a funding credit for business that provides net liquidity. In addition, funding rates charged to users of funding have been lowered • Swiss Re's risk t
Slide 21: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 21 April 2015 151st Annual General Meeting Zurich 30 April 2015 First Quarter 2015 results Conference call 30 July 2015 Second Quarter 2015 results Conference call 29 October 2015 Third Quarter 2015 results Conference call 8 December 2015 Investors' D
Slide 22: Cautionary note on non-GAAP financial measures
Cautionary note on non-GAAP financial measures Economic Value Management ("EVM") is Swiss Re's proprietary integrated economic valuation and accounting framework for business planning, pricing, reserving, and steering. The EVM information in this presentation contains non-GAAP financial measures. Th
Slide 23: Cautionary note on forward-looking statements
Cautionary note on forward-looking statements Certain statements and illustrations contained herein are forward-looking. These statements (including as to plans objectives, targets and trends) and illustrations provide current expectations of future events based on certain assumptions and include an