Swiss Re Ag · SIX:SREN
Swiss Re — FY2016 Earnings Presentation
39 slides from Swiss Re's earnings presentation, Feb 23, 2017
Slide 1: Annual results 2016
Annual results 2016 Investor and analyst presentation Zurich, 23 February 2017 We make the world more resilient. Annual results 2016
Slide 2: Today's agenda
Today’s agenda • 2016 financial performance • Business outlook for 2017 Annual results 2016 2
Slide 3: 2016 financial performance
2016 financial performance Annual results 2016 3
Slide 4: Swiss Re delivers good performance in 2016
Swiss Re delivers good performance in 2016 • Swiss Re reports Group net income of USD 3.6bn, supported by continuing solid underwriting performance and strong investment result; ROE 10.6% • P&C Reinsurance delivers good results through differentiation of services; ROE 16.4% • L&H Reinsurance continu
Slide 5: Key figures
Key figures Corporate Life Group Total Total Total Total USD m, unless otherwise stated P&C Re L&H Re Solutions Capital Items FY 2016 FY 2015 Q4 2016 Q4 2015 Gross premiums written 18 149 12 801 4 155 1 489 - 35 622 32 249 7 525 6 988 Premiums earned and fee income 17 008 11 527 3 503 1 193 - 33 231
Slide 6: P&C Reinsurance delivers good results in a challenging environment
P&C Reinsurance delivers good results in a challenging environment Gross premiums written EBIT Net income USD m USD m USD m 18 149 3 564 4 000 45 3 228 20 000 5 000 45 17 571 16 650 4 392 3 008 18 000 16 099 4 500 3 751 40 3 500 3 699 40 16 000 4 000 35 3 000 14 000 12 000 3 500 3 000 2 890 30 2 500
Slide 7: L&H Reinsurance reports another year of good results
L&H Reinsurance reports another year of good results Gross premiums written EBIT Net income USD m USD m USD m 14 000 12 434 11 942 12 801 3 400 45 12 000 11 355 2 900 40 1 500 45 968 35 1 300 10 000 807 2 400 40 30 1 100 8 000 900 1 492 1 900 25 35 1 350 20 700 420 1 047 6 000 1 400 500 30 15 4 000
Slide 8: Corporate Solutions results impacted by continued pricing pressure and large man-made losses
Corporate Solutions results impacted by continued pricing pressure and large man-made losses Gross premiums written1 EBIT Net income USD m USD m USD m 4 209 4 100 4 500 4 400 4 300 4 200 3 870 3 875 700 650 45 700 45 517 4 100 505 4 000 40 40 3 900 600 600 3 800 3 700 3 600 550 35 3 500 35 3 400 392
Slide 9: Life Capital delivers strong performance on all metrics
Life Capital delivers strong performance on all metrics Gross premiums written EBIT Net income USD m USD m USD m 1 800 1 600 1 346 1 489 900 798 638 1 163 1 400 800 700 1 200 700 600 1 000 827 600 500 423 424 800 500 441 417 400 400 600 300 300 400 200 200 100 34 7 200 100 0 0 0 2013 2014 2015 2016
Slide 10: Group investment portfolio continues to produce strong results
Group investment portfolio continues to produce strong results Average invested assets Return on investments Running yield USD bn, basis for ROI calculation 116.3 3.6% 3.7% 115.5 115.4 3.5% 3.4% 3.2% 3.3% 107.2 3.0% 2.9% 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 • Increase in avera
Slide 11: Increase in common shareholders' equity driven by net income and unrealised gains
Increase in common shareholders' equity driven by net income and unrealised gains USD m Gov bonds 0.5 Corp bonds 1.6 Dividends -1.6 Sec products 0.0 Share buy-back -1.1 Equities and others 0.1 Tax -0.5 - 2 662 - 496 3 558 1 717 34 532 32 415 Common shareholders' Net income Dividends and share Net ch
Slide 12: Business outlook for 2017
Business outlook for 2017 Annual results 2016 12
Slide 13: As a risk knowledge company, Swiss Re is well placed to invest in risk pools
As a risk knowledge company, Swiss Re is well placed to invest in risk pools Swiss Re’s strategic framework Near-term priorities I systematically allocate capital to risk pools / Large & tailored transactions revenue streams Growth Corporate Solutions through systematic capital II III Life Capital a
Slide 14: P&C Reinsurance maintains disciplined underwriting through January 2017 treaty renewals
P&C Reinsurance maintains disciplined underwriting through January 2017 treaty renewals Market developments Premium volume • Rate decreases in property (incl. nat cat) and specialty USD bn -18% have started to slow down 10.3 8.5 • Casualty prices remain generally more stable with significant differe
Slide 15: L&H Reinsurance has a unique selling proposition in an attractive market
L&H Reinsurance has a unique selling proposition in an attractive market Market outlook Premiums and fees USD bn • Expanding need for life and health protection driven by +6% CAGR ageing societies and more private sector involvement in welfare 11.5 • Opportunities for transactions in mature markets
Slide 16: Corporate Solutions focuses on profitability and disciplined growth in a challenging market
Corporate Solutions focuses on profitability and disciplined growth in a challenging market Market outlook Corporate Solutions is expanding into the next segments • Prices for commercial insurance are under significant Corporate Solutions’ 2015 commercial insurance market premium: pressure, with man
Slide 17: Life Capital creates alternative access to attractive L&H risk pools
Life Capital creates alternative access to attractive L&H risk pools Market outlook Gross cash generation USD bn • Strong growth opportunities based on key trends including regulatory reforms, technology, changes in ≈(0.3) distribution channels, efficient capital allocation and 1.4-1.5 1.0 ≈ 1.4- cl
Slide 18: Strong investment management framework alongside a high quality portfolio
Strong investment management framework alongside a high quality portfolio Market outlook 1% 1% • Baseline scenario of moderate and uneven global 8% 7% growth with challenging structural factors over the medium term 38% 40% • Potential for higher inflation and stronger US growth in 2017 Current portf
Slide 19: Swiss Re proposes another set of attractive capital management actions
Swiss Re proposes another set of attractive capital management actions Capital management actions Dividend flows since new structure created in 2012 • Full execution of the 2016 public share buy- USD 14.8bn1 back programme distribution to shareholders • The Board of Directors will propose to the Buy
Slide 20: Swiss Re continues to focus on over-the-cycle Group and Business Unit targets
Swiss Re continues to focus on over-the-cycle Group and Business Unit targets Group targets over-the-cycle Group Return on Equity Group ENW per share growth2 13.7% 13.7% 18.1% 10.5% 10.6% 11.6% 10.0% 9.2% 9.3% 9.4% Rf + 10% 10% 10% 700 bps1 4.0% 10% 2013 2014 2015 2016 Over- 2013 2014 2015 Over-the-
Slide 21: Appendix
Appendix • Business segment results Q4 2016 – Income statement • Overall investment portfolio • Business segment results FY 2016 – Income statement • Fixed income securities • Business segment results FY 2016 – Balance sheet • Equities and alternative investments • Total equity and ROE FY 2016 • Sen
Slide 22: Business segment results Q4 2016
Business segment results Q4 2016 Income statement Re- Corporate Life Group Consoli- Total Total USD m insurance P&C Re L&H Re Solutions Capital Items dation Q4 2016 Q4 2015 Revenues Gross premiums written 6 120 2 863 3 257 1 282 305 - -182 7 525 6 988 Net premiums written 5 668 2 771 2 897 1 161 165
Slide 23: Business segment results FY 2016
Business segment results FY 2016 Income statement Re- Corporate Life Group Consoli- Total Total USD m insurance P&C Re L&H Re Solutions Capital Items dation FY 2016 FY 2015 Revenues Gross premiums written 30 950 18 149 12 801 4 155 1 489 - -972 35 622 32 249 Net premiums written 29 227 17 768 11 459
Slide 24: Business segment results FY 2016
Business segment results FY 2016 Balance sheet Re- Corporate Life Group Consoli- End End 31 December 2016, USD m insurance P&C Re L&H Re Solutions Capital Items dation FY 2016 FY 2015 Assets Fixed income securities 61 554 31 574 29 980 6 361 25 350 11 - 93 276 82 331 Equity securities 2 159 1 292 86
Slide 25: Total equity and ROE 2016
Total equity and ROE 2016 Re- Corporate Life Group Total1 Total1 USD m insurance P&C Re L&H Re Solutions Capital Items FY 2016 Q4 2016 Common shareholders' equity2 at 30 September 2016 20 406 12 719 7 687 2 351 8 401 6 275 37 430 Common shareholders' equity2 at 31 December 2015 18 819 12 995 5 824 2
Slide 26: P&C Reinsurance: Underwriting performance
P&C Reinsurance Underwriting performance Combined ratio Main drivers of change Net Under- premiums writing Combined ratio earned result FY 2016 FY 2016 Q4 2016 FY 2015 FY 2016 USD m USD m USD m Property 72.7% 86.6% • 2016 impacted by several large nat cat losses 6 652 891 86.1% and a series of agric
Slide 27: P&C Reinsurance: 2017 renewals
P&C Reinsurance: 2017 renewals Portfolio weighting by line of business and region Gross premium volume, treaty portfolio Up for renewal January Estimated outcome January By line of business 14% 14% Casualty 20% Nat cat 53% 21% 51% Property 1 13% Specialty 1 14% By region 19% 25% EMEA 42% 48% America
Slide 28: L&H Reinsurance: EBIT movements
L&H Reinsurance EBIT movements EBIT movements In USD m FY 2015 FY 2016 Life Health L&H Life Health L&H EBIT reported 725 587 1 4923 783 352 1 3503 Net operating margin, % 9.0 14.7 12.2 9.0 8.5 10.4 Mortality/morbidity experience vs. expected1 42 -48 -6 -108 -58 -166 Valuation/assumption changes2 7 7
Slide 29: Corporate Solutions: Underwriting performance
Corporate Solutions Underwriting performance Combined ratio Main drivers of change Net Under- Combined premiums writing ratio earned result FY 2016 FY 2016 FY 2015 FY 2016 USD m USD m Q4 2016 Property 76.3% 84.4% • Combined ratio increased mainly due to 1 191 186 91.5% higher natural catastrophe los
Slide 30: Return on investments (ROI)
Return on investments (ROI) Corporate Life Group Consoli- Total Total Total USD m P&C Re L&H Re Solutions Capital items dation FY 2016 FY 2015 Q4 2016 Investment related net investment income 892 1 100 158 942 101 -94 3 099 2 860 747 Fixed income 708 1 053 137 898 1 - 2 797 2 547 680 Equities and al
Slide 31: Overall investment portfolio
Overall investment portfolio Mortgages and Other Cash and cash other loans investments incl. equivalents 3% policy loans 6% 6% End Short-term Equities investments USD bn FY 2016 5% 8% Balance sheet values 164.0 Securitised products Unit-linked investments -28.2 4% Government With-profit business -5.
Slide 32: Fixed income securities
Fixed income securities Government Credit • Increase in government bonds USD m bonds bonds mainly due to net purchases, End partially offset by fx impacts FY 2015 45 651 36 680 End • Credit bonds include corporate FY 2016 48 374 44 902 bonds (USD 39.8bn) and securitised products (USD 5.1bn) 3% • Inc
Slide 33: Equities and alternative investments
Equities and alternative investments Equity securities Exchange-traded funds by sector Non-Cyclical Consumer Goods End End 3% 2% 1% Financials USD m FY 2015 FY 2016 3% 3% Information Technology 5% Equity securities 4 087 2 698 General Industrials 6% 44% Cyclical Services Private equity 1 526 1 430 8
Slide 34: Sensitivities
Sensitivities USD bn, pre-tax Fall in market values (Equities and Alternative Investments, excl. Real Estate) -10% -25% Estimated impact on shareholders' equity - 0.7 -1.8 Estimated impact on economic net worth (EVM) - 0.8 -2.1 Change in interest rates -50bps -25bps +50bps +100bps Estimated impact o
Slide 35: Premiums by country
Premiums by country 2016 Gross premiums written and fees assessed against policyholders by country1 Total Total USD m Life & Health Non-Life FY 2016 FY 2015 United States 5 647 8 937 14 584 12 144 United Kingdom 2 455 1 443 3 898 3 489 China 320 2 089 2 409 2 503 Australia 1 337 651 1 988 1 650 Germ
Slide 36: Swiss Re is broadly diversified
Swiss Re is broadly diversified Swiss Re Group net premiums earned1 2016: USD 33.2bn USD 15.1bn USD 10.9bn USD 7.2bn Americas EMEA Asia 45% 33% 22% of which HGMs: ~3% ~4% ~12% ≈19% HGMs incl. PI2: ~5% ~4% ~16% ≈25% 1 Includes fee income from policyholders; does not reflect the exposure to HGMs throu
Slide 37: Premium development by line of business and geography
Premium development by line of business and geography Premiums earned and fee income by line of business, USD bn 24.3 20.6 22.2 25.4 28.9 31.3 30.2 33.2 23.5 10% 9% 11% 11% 12% 12% 13% 13% 12% 35% 37% 34% 31% 28% 26% 26% 26% 36% 11% 11% 12% 10% 11% 15% 15% 13% 12% 21% 22% 24% 25% 28% 20% 18% 17% 18%
Slide 38: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 2017 16 March Publication of Annual Report 2016 and 2016 EVM Results 21 April 153rd Annual General Meeting Zurich 4 May First Quarter 2017 Results Conference call 4 August Second Quarter 2017 Results Conference call 2 November Third Quarter 2017 Resul
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