Swiss Re Ag · SIX:SREN
Swiss Re — H1 2019 Earnings Presentation
41 slides from Swiss Re's earnings presentation, Jul 31, 2019
Slide 1: Half-year 2019 Results
Half-year 2019 Results Swiss Re investor and analyst presentation Zurich, 31 July 2019
Slide 2: Focus areas of half-year 2019 results
Focus areas of half-year 2019 results Earnings in Strong Life Capital Corporate Solutions perspective renewals update review Half-year 2019 Results 2
Slide 3: Strong performance in Reinsurance and actions to address key challenges
Strong performance in Reinsurance and actions to address key challenges Strong performance in Reinsurance Addressing key challenges P&C Re • Decisive management actions to 16% ROE fix Corporate Solutions’ performance issues in H1 2019 • Focus on executing ReAssure business plan in light of delay in
Slide 4: P&C Reinsurance franchise remains very strong with earnings power further improving
P&C Reinsurance franchise remains very strong with earnings power further improving Core strengths Gaining momentum • Price quality in renewals improved On track to achieve 2019 normalised • Scale of the business • Strong growth in core & transactions 98% combined ratio1 • Strong client access (+23%
Slide 5: Strong outcome of year-to-date renewals for P&C Reinsurance
Strong outcome of year-to-date renewals for P&C Reinsurance Volume development in YTD renewals • Volume up 23% YTD – 16% driven by transactions, 7% from growth in core business (USD bn) +23% Price change 1 +1% 17.0 • Growth mainly driven by short Exposure change +22% duration Casualty transactions 1
Slide 6: ReAssure IPO suspended
ReAssure IPO suspended • Heightened caution and weaker demand from institutional investors in Current shareholding UK primary market • Unchanged mid-term objective to deconsolidate ReAssure; Swiss Re MS&AD 25% will continue to act in shareholders’ best interest • Re-launch of IPO process in 2019 not
Slide 7: Focus on primary risk pools based on B2B(2C) model
Focus on primary risk pools based on B2B(2C) model Gross premiums written, USD m # of counterparties Gross premiums written, USD m # of distribution partners 493 417 +11% 398 ~2x 815 (core business) 850 ~14k at H1 2019 375 42 95 (core business) 24 at H1 2019 H1 2018 H1 2019 390 400 ~12k 19 Weekly po
Slide 8: Combined ratio target
Recent results have been Decisive actions to fix Return to underwriting disappointing performance issues profitability • Soft market environment • Targeted portfolio pruning Combined ratio • Strong push for price increases • Overweight US liability exposure target • Improving productivity 1 • Sub-sc
Slide 9: Financial highlights
Financial highlights Half-year 2019 Results 9
Slide 10: Financial highlights H1 2019
Corporate Life Group Total Total USD m, unless otherwise stated P&C Re L&H Re Solutions Capital items H1 2019 H1 2018 • Premiums earned and fee income 8 719 6 284 2 063 1 094 - 18 160 16 830 • Net income/loss 771 459 -403 5 121 953 1 006 • Return on investments 4.4% 4.4% 3.2% 3.2% 5.3% 4.2% 2.6% • R
Slide 11: Reinsurance
Reinsurance … Half-year 2019 Results 11
Slide 12: P&C Reinsurance reports strong results despite late claims development
P&C Reinsurance reports strong results despite late claims development Net premiums earned Net operating margin1 (%) Combined ratio (%) 100.5 97.2 97.4 -1.9pts 92.9 13.0 88.3 11.1 86.1 84.8 USD 8.7bn in H1 2019 13.8 5.6 H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 11.4 6.2 • Net impact of
Slide 13: L&H Reinsurance continues to deliver strong results
L&H Reinsurance continues to deliver strong results Net premiums earned Net operating margin1 (%) Running yield and ROI (%) +1.0pts 4.3 4.2 4.4 3.6 3.8 3.6 3.2 10.9 9.9 3.9 3.4 3.5 3.5 3.4 3.3 3.4 USD 6.2bn 3.7 5.3 in H1 2019 H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 11.1 10.8 Running
Slide 14: Corporate Solutions
Corporate Solutions Half-year 2019 Results 14
Slide 15: Corporate Solutions results reflect decisive management actions
Corporate Solutions results reflect decisive management actions Net premiums earned Net operating margin1 (%) Combined ratio (%) 132.8 -25.0%pts 3.8 104.5 101.6 101.7 101.2 92.5 94.2 91.7 USD 2.1bn 16.4 -21.2 5.3 8.6 H1 2013 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 in H1 2019 -12.3 -17.9 • Pr
Slide 16: Actions taken to significantly reduce exposure
Actions taken to significantly reduce exposure Targeted portfolios (premiums) Pruning Actions taken Corporate Solutions Special Risks >95% Significantly reduce Special Risks exposure portfolio (USD 4.7bn GPW in 2018) Agriculture ~75% Significantly reduce exposure, excl. Brazil JV and Mexico Marine >
Slide 17: Developing profitable portfolios supported by positive rate momentum
Developing profitable portfolios supported by positive rate momentum Selected areas (premiums1) Costed CR1 Pricing momentum2 for Corporate Solutions accelerating +17% Corporate Solutions portfolio +12% +11% +12% (USD 4.7bn GPW Property <100% +8% in 2018) +5% Credit & Surety <90% ~65% January Februar
Slide 18: Decisive steps taken to reinforce Corporate Solutions' balance sheet
Decisive steps taken to reinforce Corporate Solutions’ balance sheet Reset back-book Set foundation for future growth • Impact of Q2 2019 reserve review of USD 328m • Capital contribution of USD 600m from Swiss Re Ltd − Reserve strengthening mainly related to large man- • Additional reinsurance prot
Slide 19: Clear path to Corporate Solutions' underwriting profitability in 2021
Clear path to Corporate Solutions’ underwriting profitability in 2021 Expected combined ratio development • Reducing or resetting of underperforming portfolios and 118% refocusing on profitable lines and specific customer segments ~8%pts 110% • Positive momentum in commercial insurance rates ~5%pts
Slide 20: Life Capital
Life Capital Half-year 2019 Results 20
Slide 21: Life Capital result reflects dynamic growth in open book businesses and a strong GCG
Life Capital result reflects dynamic growth in open book businesses and a strong GCG Gross cash generation (USD m) Open book - Gross premiums written (USD m) 848 1 343 CAGR 30% 1 232 532 788 460 775 Medex 659 569 Core 451 329 300 139 116 260 555 457 269 330 191 H1 2015 H1 2016 H1 2017 H1 2018 H1 201
Slide 22: Group investments
Group investments Half-year 2019 Results 22
Slide 23: Very strong investment results
Very strong investment results Return on investments (ROI) Investment portfolio positioning (USD bn) Net investment income (USD m, LHS) Running yield (%, RHS) 140 131.5 122.6 3.4 120 11.9 2 500 3.1 3.5 10.2 3.0 3.0 2.9 2.9 2.9 4.2% 3.0 100 2 000 49.3 52.7 1 739 1 686 1 609 2.5 1 561 1 518 1 560 1 52
Slide 24: Continued focus on integration of sustainability criteria in investment and underwriting decisions
Continued focus on integration of sustainability criteria in investment and underwriting decisions Recently implemented solutions Swiss Re’s Group Sustainability Strategy focuses on climate Protecting coral reefs against risks, societal resilience and digital transformation and on Flood insurance Pa
Slide 25: Appendix
Appendix Half-year 2019 Results 25
Slide 26: Business segment results H1 2019
Business segment results H1 2019 Income statement Corporate Total Total USD m Reinsurance P&C Re L&H Re Solutions Life Capital Group items Consolidation H1 2019 H1 2018 Revenues Gross premiums written 19 359 12 405 6 954 2 201 1 875 - -763 22 672 19 589 Net premiums written 18 159 12 014 6 145 1 831
Slide 27: Business segment results H1 2019: balance sheet
Business segment results H1 2019 Balance sheet Corporate End End 30 June 2019, USD m Reinsurance P&C Re L&H Re Solutions Life Capital Group Items Consolidation H1 2019 FY 2018 Assets Fixed income securities 70 513 40 267 30 246 7 977 24 072 34 - 102 596 95 952 Equity securities 2 320 1 682 638 199 6
Slide 28: Total equity and ROE H1 2019
Total equity and ROE H1 2019 Corporate Total USD m Reinsurance P&C Re L&H Re Solutions Life Capital Group Items H1 2019 Shareholders' equity at 31 December 2018 15 757 9 483 6 274 1 795 5 113 5 265 27 930 Net income/loss attributable to shareholders 1 230 771 459 -403 5 121 953 Dividends and share b
Slide 29: Change in shareholders' equity mainly driven by unrealised gains and net income
Change in shareholders' equity mainly driven by unrealised gains and net income, partially offset by dividend payments and share buy-back USD m Gov bonds 1.7 Corp bonds 2.0 Sec products 0.1 Other 0.1 Dividends -1.7 Tax -0.8 Share buy-back -0.4 205 30 117 953 3 098 - 2 069 27 930 Shareholders' Net in
Slide 30: Gross premium volume by line of business and region
Gross premium volume by line of business1 (USD bn) Gross premium volume by region1 (USD bn) Up for Premium Estimated Price Up for Premium Estimated renewal YTD change outcome YTD change renewal YTD change outcome YTD Nat Cat 2.8 +17% 3.3 Americas 4.8 +39% 6.7 Property2 3.2 +8% 3.4 EMEA 5.3 +23% 6.5
Slide 31: Change in Group natural catastrophe risk exposure
Change in Group natural catastrophe risk exposure (99.5% VaR in USD bn; net of retrocession) 4.7 • Capital deployed to P&C Tropical Cyclone North Atlantic +40% significantly increased 6.5 Net Gross • Higher exposure reflects growth 2.9 from successful renewals in 2019 in Earthquake California +50% a
Slide 32: P&C underwriting performance
P&C underwriting performance P&C Reinsurance and Corporate Solutions Combined ratio Main drivers of change Net premiums Underwriting earned result P&C Reinsurance H1 2019 H1 2019 H1 2018 H1 2019 USD m USD m Property 83.6% 100.5% • H1 2019 impacted by late claims development from Typhoon Jebi, while
Slide 33: P&C Reinsurance and Corporate Solutions: combined ratio split
P&C Reinsurance and Corporate Solutions: combined ratio split P&C Reinsurance (%) Corporate Solutions (%) 132.8 110 0.5 130 6.0 105 100.5 120 100 23.7 3.2 110 92.9 1.5 101.7 95 0.1 0.5 0.7 5.1 100 6.8 90 7.4 1.8 19.1 6.7 90 85 19.0 26.2 80 15.2 70 25.7 15.5 60 60.3 60 68.3 58.3 57.9 0 -1.6 0 -5 -10
Slide 34: Overview of equity and debt holding changes in ReAssure
Overview of equity and debt holding changes in ReAssure Equity and debt holdings in ReAssure Recent changes Impact on GCG Additional 10% stake sale in USD +411m Swiss Re Ltd 1 ReAssure to MS&AD (SRL) Outstanding debt: SR ReAssure Holder of ReAssure bonds: EUR 750m senior bonds Ltd. GBP 250m Tier 2 N
Slide 35: Return on investments (ROI)
Return on investments (ROI) Corporate Group Consoli- Total Total USD m P&C Re L&H Re Solutions Life Capital items dation H1 2019 H1 2018 Investment related net investment income 655 536 122 398 114 -216 1 609 1 686 Fixed income 459 509 112 375 - - 1 455 1 449 Equities and alternative investments -in
Slide 36: Overall investment portfolio
Overall investment portfolio Other investments (incl. policy Cash and cash equivalents loans) Mortgages and other 4% 5% End loans Short-term investments 4% 5% USD bn H1 2019 Equities Balance sheet values 164.5 5% Unit-linked investments -27.6 Government bonds With-profit business -5.0 41% Assets for
Slide 37: Fixed income securities
Fixed income securities Government Credit USD m bonds bonds End FY 2018 50 876 45 076 • Increase in government bonds driven by market value End gains stemming from declining interest rates as well as H1 2019 54 680 47 916 net purchases • Credit bonds include corporate bonds (USD 43.3bn) and securiti
Slide 38: Equities and alternative investments
Equities and alternative investments Equity securities Exchange-traded funds by sector Non-Cyclical Consumer Goods End End Financials FY 2018 H1 2019 2% 2% USD m 2% 2% Information Technology 6% Equity securities 2 695 2 582 35% Cyclical Services 9% General Industrials Private equity 1 463 1 501 Cycl
Slide 39: 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
Slide 40: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 2019 31 October 9M 2019 Key Financial Data Conference call 25 November Investors’ Day 2019 Zurich Investor Relations contacts Hotline E-mail +41 43 285 4444 Investor_Relations@swissre.com Philippe Brahin Daniel Bischof +41 43 285 7212 +41 43 285 4635
Slide 41: Legal notice
Legal notice ©2019 Swiss Re. All rights reserved. You are not permitted to create any modifications or derivative works of this presentation or to use it for commercial or other public purposes without the prior written permission of Swiss Re. The information and opinions contained in the presentati