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Swiss Re — Investor Presentation (November 2023)
19 slides from Swiss Re's investor presentation, Nov 21, 2023
Slide 1: sigma 6/2023: Global economic and insurance outlook
sigma 6/2023: Global economic and insurance outlook Dr. Jérôme Haegeli, Group Chief Economist Charlotte Mueller, Chief Economist Europe Media Roundtable, November 21, 2023 1
Slide 2: Key letter
Key letter Swiss Re Institute | November 2023 2
Slide 3: How will 2024 look like?
How will 2024 look like? 1969 2008 2022 What it will not be… Swiss Re Institute | November 2023 3
Slide 4: Global economy is slowing down with Europe in stagflation
Economic outlook Insurance outlook Themes Global economy is slowing down with Europe in stagflation 2022 2023E 2024F 2025F ▪ Economic growth: US-Euro area growth divergence to Actual SRI Consensus SRI Consensus SRI Consensus continue as monetary policy tightening filters Real GDP growth, annual avg.
Slide 5: Major economies are diverging with the US > Europe
Economic outlook Insurance outlook Themes Major economies are diverging with the US > Europe but likely with the slowest growth in advanced economies since the 1980s outside major recession periods • Economic resilience in the US reinforces interest rates staying restrictive for longer, heightening
Slide 6: The cost-of-living crisis is not over in the UK
Economic outlook Insurance outlook Themes The cost-of-living crisis is not over in the UK with another “winter of discontent” adding to stagflation risks • The UK – among other countries – has seen the highest number of strikes in decades, yet the scale of industrial action is still well below the l
Slide 7: Probability of adverse global economic outcomes over the next 3 years
Economic outlook Insurance outlook Themes We attach a 10-20% probability for adverse global economic outcomes over the next 3 years with downside risks higher than upside potential Prob: 5-10% Prob: 10-20% Productivity revival 1970s-style structural stagflation Severe global recession Tech driven pr
Slide 8: Further hardening expected for Non-Life; high rates support Life savings
Economic outlook Insurance outlook Themes For the global primary insurance markets further hardening is expected for Non-Life, while high interest rates continue to support Life savings business Non-life premiums real growth by regions 7% ▪ Premiums growth: The global real premiums over 2024-25 to g
Slide 9: Finally, (nominal) financial repression has ended!
Economic outlook Insurance outlook Themes Finally, (nominal) financial repression has ended! Insurers’ role in narrowing protection gaps is strengthened • 100bps additional investment yield is roughly equivalent to 250bps improvement in the combined ratio for the avg. non-life business. In the US, t
Slide 10: Theme 1: The economic pain of higher interest rates still to come
Economic outlook Insurance outlook Themes Theme 1: The economic pain of higher interest rates still to come Regime shift in bond markets is for real with the economic pain yet to come and the US exporting its strong USD and high interest rates mix • Longer-dated real sovereign bond yields have now a
Slide 11: Theme 2: Fiscal risks have yet to be discounted
Economic outlook Insurance outlook Themes Theme 2: Fiscal risks have yet to be discounted with politicisation of central banks likely meaning higher tolerance for inflation misses • The US national debt is now 122% of gross domestic product and on an unsustainable trajectory. A structurally higher i
Slide 12: Theme 3: Rise in industrial policy is here to stay
Economic outlook Insurance outlook Themes Theme 3: Rise in industrial policy is here to stay with insurance helping to de-risk the multi-polar global economy Governments are committing to more industrial policies,… … in turn generating higher demand for commercial insurance coverage • Macro benefits
Slide 13: Key takeaways
Key takeaways Global economic activity to slow considerably next year, as the lagged impact of higher interest rates filters through. We see inflation and interest rates moderating in 2024-25, but flag upside risks to both Economic growth slowdown and geopolitical reinforce the insurance industry’s
Slide 14: Get your publication today and subscribe to our research
Get your publication today and subscribe to our research Sigma Expertise Publications Economic Insights Economic Outlook • Market information for • Expert analysis of specific • Key findings on macro • Monthly newsletters on global managers and specialist in risk topics in regional developments and
Slide 15: Any questions?
Any questions? Contact us Follow us Dr. Jérôme Haegeli Group Chief Economist jerome_haegeli@swissre.com @JeromeHaegeli 15
Slide 16: Middle East conflict: a direct war escalation could be a route to stagflation
Middle East conflict: a direct war escalation could be a route to a 1970s style stagflation Confined War: Israel - Hamas Proxy War: Israel – Hamas, Lebanon, Syria Direct War: Israel – Hamas, Lebanon, Syria, Iran Long-lasting localised conflict, Expanded two fronts war, ie Hamas, Iran enters directly
Slide 17: Downside risks to the outlook remain elevated
Economic outlook Insurance outlook Themes Downside risks to the outlook remain elevated Risk scenario Impact Trend Inflation risks. Headline inflation is falling, but we expect inflation to remain elevated through 2024 before a return to target in H1 2025. However, continued moderation in headline a
Slide 18: Swiss Re Institute | November 2023
Swiss Re Institute | November 2023 18
Slide 19: Legal notice
Legal notice ©2023 Swiss Re. All rights reserved. You may use this presentation for private or internal purposes but note that any copyright or other proprietary notices must not be removed. You are not permitted to create any modifications or derivative works of this presentation, or to use it for