Slide 1: Annual EVM Results 2016
Annual EVM Results 2016 Investor and analyst presentation Zurich, 16 March 2017 We make the world more resilient.
Slide 2: EVM is the common measure of economic value creation that guides steering decisions
EVM is the common measure of economic value creation that guides steering decisions at Swiss Re EVM is the core of our steering framework EVM responds to key steering questions: • How much economic value is generated from Learning underwriting activities on a stand-alone basis? Strategy • How much e
Slide 3: Consistent application of EVM principles helps achieve over-the-cycle Group financial targets
The consistent application of the EVM principles will help us to achieve our over-the-cycle Group financial targets EVM methodology Group financial targets A Group-wide process for business Key features steering and underwriting • Market consistent valuation of assets • Shows direct connection betwe
Slide 4: Swiss Re delivers strong EVM profit in 2016
Swiss Re delivers strong EVM profit in 2016 • Swiss Re reports an EVM profit of USD 1.4bn, supported by a strong investment result and large and tailored transactions in L&H Reinsurance • P&C Reinsurance delivered an EVM profit of USD 562m, driven by a favourable previous years’ business result and
Slide 5: EVM key figures
EVM key figures Property & Casualty Life & Health Corporate Life Group Total Total USD millions, unless otherwise stated Reinsurance Reinsurance Solutions Capital items 2016 2015 Premiums and fees 18 440 24 060 3 708 358 46 566 40 562 EVM profit 562 1 197 -111 115 -364 1 399 480 of which EVM profit
Slide 6: P&C Reinsurance result reflects challenging environment and higher large loss burden
P&C Reinsurance result reflects challenging environment and higher large loss burden Premiums and fees new business EVM profit Total contribution to ENW USD m USD m USD m 18 693 18 440 3 568 4 801 16 908 16 061 1 697 2 724 2 367 1 219 1 589 562 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015
Slide 7: L&H Reinsurance economic result supported by large and tailored transactions
L&H Reinsurance economic result supported by large and tailored transactions and strong investment result Premiums and fees new business EVM profit Total contribution to ENW USD m USD m USD m 1 197 2 034 1 916 1 570 24 060 17 137 17 964 294 14 692 168 -295 -619 2013 2014 2015 1 2016 2013 2014 2015 1
Slide 8: Corporate Solutions result impacted by non-recognition of intangible assets
Corporate Solutions result impacted by the non-recognition of intangible assets and higher large man-made losses Premiums and fees new business EVM profit Total contribution to ENW USD m USD m USD m 3 764 3 708 610 581 3 549 357 3 462 81 197 26 -111 140 2013 2014 2015 2016 2013 2014 2015 2016 2013 2
Slide 9: Life Capital delivers strong investment performance under favourable UK conditions
Life Capital delivers strong investment performance under favourable UK financial market conditions Premiums and fees new business EVM profit Total contribution to ENW USD m USD m USD m 1 082 505 233 599 43 115 -983 356 358 304 -331 0 2013 2014 20151 2016 2013 2014 2015 1 2016 2013 2014 20151 2016 •
Slide 10: Strong investment result in 2016 driven by credit spread tightening
Strong investment result in 2016 driven by credit spread tightening Gross outperformance EVM profit Total contribution to ENW USD m USD m USD m 3 605 1 262 1 094 2 679 3 234 2 390 -823 -982 739 433 193 22 2013 2014 2015 2016 2013 2014 2015 2016 2013 2014 2015 2016 • Outperformance in 2016 driven by
Slide 11: ENW per share growth of 11% exceeding over-the-cycle target of 10%
ENW per share growth of 11% exceeding over-the-cycle target of 10% driven by strong economic investment performance and large transactions USD m Dividends -1.6 Share buy-back -1.1 -2 662 4 231 -580 37 358 -1 699 36 648 35 659 ENW as of Change in EVM Adjusted ENW as Total contribution Dividends and O
Slide 12: EVM capital costs increased as of 1 January 2016
EVM capital costs increased as of 1 January 2016 to align with Swiss Re’s implied cost of equity • Swiss Re performed a holistic review of the EVM framework ahead of the 2016 performance cycle • EVM capital costs have been aligned with the cost of equity estimated on the basis of external benchmarks
Slide 13: Strong and flexible capital base in line with target capital structure
Strong and flexible capital base in line with target capital structure USD bn Core capital 1 Total hybrid incl. contingent capital 4 Senior debt 2 LOC 5 Senior leverage plus LOC ratio 3 Subordinated leverage ratio 6 100% 90% 80% 8.5 6.7 6.5 5.8 5.5 7.0 5.4 70% 4.7 5.2 9.5 60% 6.5 6.6 7.0 6.9 5.4 50%
Slide 14: Both over-the-cycle Group financial targets have been exceeded in 2016
Both over-the-cycle Group financial targets have been exceeded in 2016 Group targets over-the-cycle Group Return on Equity Group ENW per share growth2 13.7% 13.7% 17.0% 10.5% 10.6% 10.0% 11.0% 9.2% 9.3% 9.4% Rf + 10% 7.2%10% 10% 10% 700 5.4% bps1 10% 2013 2014 2015 2016 Over- 2013 2014 2015 2016 Ove
Slide 15: Appendix
Appendix Annual EVM Results 2016 15
Slide 16: EVM segmental income statement 2016
EVM segmental income statement 2016 Property & Casualty Life & Health Corporate Life Group Total Total USD millions Reinsurance Reinsurance Reinsurance Solutions Capital items 2016 2015 Underwriting result Premiums and fees 42 500 18 440 24 060 3 708 358 46 566 40 562 Claims and benefits -29 287 -11
Slide 17: EVM balance sheet 2016
EVM balance sheet 2016 Property & Casualty Life & Health Corporate Life Group Total Total USD millions Reinsurance Reinsurance Reinsurance Solutions Capital items Consolidation 2016 2015 Assets Investments 88 237 51 155 37 082 8 252 68 155 6 420 -6 750 164 314 146 856 Cash and cash equivalents 5 332
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 • Non-life business: best estimate • Life & Health business: generally locked-in assumptions Liability cash flows • Discounted
Slide 19: Reconciliation of EVM economic net worth to US GAAP shareholders' equity
Reconciliation of EVM economic net worth to US GAAP shareholders’ equity Property & Casualty Life & Health Corporate Life Group Total Total USD billions Reinsurance Reinsurance Reinsurance Solutions Capital items 2016 2015 US GAAP shareholders' equity 20.6 13.0 7.6 2.2 7.3 5.5 35.6 33.5 Discounting
Slide 20: EVM and Swiss Solvency Test (SST) are largely aligned
EVM and Swiss Solvency Test (SST) are largely aligned EVM SST risk-bearing capital Best estimate liabilities Risk-free discounting same key principles Mark-to-market valuation of investments • After tax • Mainly pre-tax Tax treatment • Market-consistent, reflect internal risk • Run-off assumption an
Slide 21: Key steps from ENW under EVM to SST risk-bearing capital
Key steps from ENW under EVM to SST risk-bearing capital ENW • Largest adjustment is the reversal of EVM • Reversal of EVM capital costs and tax balances capital costs and EVM taxes, not relevant • SST capital costs of subsidiaries (in non-consolidated for SST. SST capital costs are reflected in Val
Slide 22: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 2017 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 Results Conference call Investor Relations contacts Hotline E-mail +4
Slide 23: 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 24: 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