Swiss Re Ag · SIX:SREN
Swiss Re — Investor Presentation (September 2018)
69 slides from Swiss Re's investor presentation, September 2018
Slide 1: Swiss Re – Leading Global Re/Insurer
Swiss Re – Leading Global Re/Insurer Presentation as of September 2018
Slide 2: Swiss Re – Leading Global Re/Insurer
Swiss Re – Leading Global Re/Insurer Overview and Group strategy 3 Capital Management 20 P&C and L&H Reinsurance 27 Corporate Solutions 37 Life Capital 46 Asset Management 52 Global re/insurance & protection gap 58 Swiss Re Group | Company presentation | September 2018 2
Slide 3: Overview and Group strategy
Overview and Group strategy Swiss Re Group | Company presentation | September 2018 3
Slide 4: Swiss Re Group at a glance
Swiss Re Group at a glance • Swiss Re is a leading and highly diversified global re/insurer, founded in Zurich (Switzerland) in 1863 • The financial strength1 of the Swiss Re Group is currently rated: Standard & Poor’s: AA- (stable); Moody’s Aa3 (stable); A.M. Best: A+ (stable) • Swiss Re Group’s Sw
Slide 5: Swiss Re is well diversified across geographic regions and business segments
Swiss Re is well diversified across geographic regions and business segments Net premiums earned1 by segment Net premiums earned1 by region Economic Net Worth2 by segment Life Capital Life Capital Corporate 4% 12% Solutions Asia 11% 21% Corporate P&C Re Americas Solutions 38% P&C Re 48% 9% 49% L&H R
Slide 6: Based on three differentiation drivers, we have built leading insurance businesses
Based on three differentiation drivers, we have built leading insurance businesses Client Risk Capital Access Knowledge Strength Reinsurance Corporate Solutions Life Capital P&C Reinsurance L&H Reinsurance • Top 5-10 in Excess Layer market • Leading UK life & pension • #1 global property • Top 2 glo
Slide 7: 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 Premiums earned and fee income by geography (USD bn, CAGR in %) (USD bn, CAGR in %) 33.7 33.7 +6% +6% 12% 21% 25.4 25.4 27% 12% 20% 31% 30% 10% 42% 11% 29% 21% 48% 38% 26% 22% 2012 2017 2012 2017
Slide 8: Earnings track record
Earnings track record Operating profit (EBIT) Earnings per share (EPS) (USD bn) (USD) 6.3 13.44 6.0 12.97 5.6 11.85 4.9 5.0 10.72 FY 2017 10.23 results impacted by large natural catastrophe losses of USD 4.7bn 1.5 3.24 1.1 1.03 2012 2013 2014 2015 2016 2017 H1 2018 2012 2013 2014 2015 2016 2017 H1 2
Slide 9: Value creation with increasing book value and paid dividends
Value creation with increasing book value and paid dividends Book value per share and accumulated paid dividends (CHF, CAGR in %) +7% 137.99 138.57 137.41 119.62 121.79 30.35 35.20 40.20 18.50 25.75 90.76 93.26 3.00 10.50 107.64 103.37 101.12 96.04 97.21 87.76 82.76 2012 2013 2014 2015 2016 2017 H1
Slide 10: Our near-term priorities remain unchanged
Our near-term priorities remain unchanged Swiss Re’s strategic framework Near-term priorities Group financial targets over-the-cycle I systematically allocate capital to risk pools / Large & tailored transactions revenue streams Growth through Corporate Solutions RoE ≥ II III systematic capital allo
Slide 11: Diversification of earnings streams supported Swiss Re's H1 2018 result
Diversification of earnings streams supported Swiss Re’s H1 2018 result Swiss Re Group • Swiss Re reported a Group net income of USD 1.0 billion for the first six months of 2018, benefiting from strong improvement in P&C underwriting performance • Following the July P&C Re treaty renewals, which foc
Slide 12: We are committed to our over-the-cycle Group financial targets
We are committed to our over-the-cycle Group financial targets Group targets over-the-cycle Group Return on Equity Group ENW per share growth2 13.7% 13.7% 24.6% 13.4% 17.0% 10.5% 10.6% 9.6% 11.0% 10.8% 9.4% 9.4% 9.4% Rf + 8.8% 9.2% 700 10% 10% 7.2% 10% 10% 10% 10% 10% 5.4% bps1 1.0% 2012 2013 2014 2
Slide 13: Swiss Re's capital repatriation remains peer-leading
Swiss Re’s capital repatriation remains peer-leading 3% increase of Dividends and share buy-back per share the regular dividend to CHF (CHF, CAGR in %) 5.00 per share in 2018 +20% 8.65 8.80 8.00 8.25 7.90 7.50 3.80 1 4.40 3.40 3.30 4.00 4.15 New public share buy-back programme of 3.00 up to CHF 1bn
Slide 14: Swiss Re remains fully committed to maintaining its leadership in sustainability
Swiss Re remains fully committed to maintaining Co-led and its leadership in sustainability placed first-ever World Bank pandemic bond Recent sustainability highlights External recognition • Integration of FSB climate- related financial disclosure into 2017 Financial Report Continued • ESG considera
Slide 15: Swiss Re outperforms its peers with higher margins
Swiss Re outperforms its peers with higher margins Peer-leading margins • Swiss Re is leading insurance business that represents a highly US GAAP net operating margins average 2012-17 rewarding combination for shareholders 14% 7% • The differentiation approach has enabled Swiss Re to generate higher
Slide 16: We are benefiting from a more positive current environment and promising long-term opportunities
We are benefiting from a more positive current environment and promising long-term opportunities Current market environment improved Improvements in P&C …to benefit P&C Reinsurance and Corporate Solutions pricing… 5% overall Increasing interest market …to benefit the return profile of our investment
Slide 17: R&D builds on our thought leadership position, bringing us closer to the needs of our clients
R&D builds on our thought leadership position, bringing us closer to the needs of our clients Estimated annual How R&D drives value at Swiss Re: underwriting outperformance: >USD 1bn1 Insurance “beta” ~450 FTE in R&D improves top down Target Strategic 13 R&D teams capital allocation leading to L
Slide 18: Swiss Re's tech strategy is embedded in our business strategy and ensures effective innovation management
Swiss Re’s tech strategy is embedded in our business strategy and ensures effective innovation management 1 OUR CLIENTS OURSELVES 2 Increase our clients’ competitiveness Improve our value chain Provide tools and solutions for clients’ value chains Apply technology to Swiss Re’s value chain Examples:
Slide 19: We are a risk knowledge company which invests in risk pools
We are a risk knowledge company which invests in risk pools Our investments in R&D are key contributors to Swiss Differentiation is at the heart of Reinsurance’s Re's underwriting outperformance disciplined growth strategy Swiss Re's tech strategy is embedded in our business Corporate Solutions is w
Slide 20: Capital Management
Capital Management Swiss Re Group | Company presentation | September 2018 20
Slide 21: Our capital management priorities remain unchanged
Our capital management priorities remain unchanged Swiss Re’s capital management priorities I II Group SST ratio SST 17 SST 18 USD 7.7bn 262% 269% ordinary dividend I. Ensure superior capitalisation at all times and maximise financial flexibility (FY 13 to FY 17) Rating Payout 1 AA-/Aa3/A+ ratio 47%
Slide 22: Our Group's capital position remains very strong, even after significant losses from natural catastrophes
Our Group’s capital position remains very strong, even after significant losses from natural catastrophes and continued peer-leading capital repatriation to shareholders USD bn, % 269% 80.0 261% 262% 70.0 SST risk-bearing capital (RBC) 60.0 SST target capital (TC) 51.3 52.3 50.1 50.0 40.0 Group SST
Slide 23: Swiss Re maintains a leading capital position in the reinsurance sector and industry
Swiss Re maintains a leading capital position in the reinsurance sector and industry Group SST to Solvency II walk1 >310% 329% 269% 239% 210% Group SST Risk measure Modelling differences Valuation Eligibility of capital Deferred taxes Group Solvency II Average of Average of ratio 2018 (1-year risk)
Slide 24: Strong Group solvency capital generation in spite of peer-leading capital repatriation
Strong Group solvency capital generation in spite of peer-leading capital repatriation Swiss Re’s Solvency capital generation – five year aggregated view from Group SST 2013 to 2018 Change in available capital¹ Change in economic target capital¹ 0.9 3.4 6.9 21.3 1.7 17.0 11.8 14.3 2.5 Other Net solv
Slide 25: Swiss Re's target capital structure and financial flexibility is supported by strong funding platforms
Swiss Re’s target capital structure and financial flexibility is supported by the Group’s strong funding platforms Implementation and maintenance of target capital structure USD bn Established funding platforms in all Business Units to fund capital & liquidity requirements Corporate Life Group Reins
Slide 26: Peer-leading capital repatriation supported by strong dividend upstream by BUs
Peer-leading capital repatriation supported by strong dividend upstream by BUs USD bn in year paid Ordinary dividends Special dividends and share repurchases 7.7 6.5 1.5 1.5 1.6 1.6 1.6 1.6 1.5 1.2 1.1 1.1 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018E1 Per share in CHF 3.85 4.25 4.60 4.85 5.00
Slide 27: P&C and L&H Reinsurance
P&C and L&H Reinsurance Swiss Re Group | Company presentation | September 2018 27
Slide 28: We seek to benefit from a more positive environment and promising long-term opportunities in the reinsurance market
We seek to benefit from a more positive environment and promising long-term opportunities in the reinsurance market Market environment improved Broadly stable P&C reinsurance pricing developments 5% overall market Increasing interest rates benefit our long tail lines in Life and Casualty growth1 Glo
Slide 29: Differentiation is at the heart of what we do
Differentiation is at the heart of what we do We access risk pools through the three pillars of our strategy Core Transactions Solutions Differentiation Simplify and drive Add value to clients’ Deliver innovative deals by efficiencies in our original business by combining our knowledge traditional b
Slide 30: Swiss Re's reinsurance client franchise represents the biggest source of our competitive advantage
Swiss Re’s reinsurance client franchise represents the biggest source of our competitive advantage We have strong direct relationships with our customers… Direct relationships drive our access to large & tailored transactions P&C Reinsurance L&H Reinsurance EVM profit - new business (USD m) % of pre
Slide 31: We have significantly grown and diversified our portfolio
We have significantly grown and diversified our portfolio Portfolio developments 2010-17 EVM premium, USD bn Americas EMEA Asia Overall portfolio CAGR of 10% CAGR 10% from 2010 14.2 to 2017 CAGR 6% 4% 12.1 CAGR 18% 11% More balanced 10.3 39% regional portfolios 7.8 35% 7.4 47% 3% 1% 12% 17% 50% 12%
Slide 32: P&C Reinsurance result in H1 2018 reflects stronger underwriting performance
P&C Reinsurance result in H1 2018 reflects stronger underwriting performance Gross premiums written EBIT Net income USD m USD m USD m 12'000 11'124 2'000 1'772 1'400 1'278 10'000 9'650 9'404 9'570 1'800 1'600 1'200 8'000 1'400 1'241 1'000 870 1'200 1'070 800 752 6'000 1'000 862 600 546 800 4'000 600
Slide 33: P&C Reinsurance's strong track record of generating shareholder value leads the industry
Strong new P&C Reinsurance’s strong track record of business profits generating shareholder value leads the industry driven by P&C Reinsurance’s leading client Economic underwriting profits in …resulting in peer-leading platform excess of EVM capital costs... margins US GAAP net operating margins US
Slide 34: L&H Reinsurance continues to deliver strong results and profitable growth in H1 2018
L&H Reinsurance continues to deliver strong results and profitable growth in H1 2018 Gross premiums written EBIT Net income USD m USD m USD m 8'000 7'372 900 841 600 6'586 6'399 743 708 509 704 7'000 800 5'934 500 417 432 398 700 6'000 600 400 5'000 500 4'000 300 400 3'000 300 200 2'000 200 100 1'00
Slide 35: L&H Reinsurance's franchise value continues to increase
L&H Reinsurance’s franchise value continues to Strong new increase business profit mostly from EMEA and Asia reflecting Economic underwriting profits in …resulting in peer-leading the Group’s excess of EVM capital costs... margins increased footprint US GAAP net operating margins EVM profit – new bu
Slide 36: Material growth in L&H Reinsurance, increasing diversification of sources of earnings
Material growth in L&H Reinsurance, increasing diversification of sources of earnings L&H Business split by region EVM premium, USD bn 7.2 L&H Reinsurance Asia key facts CAGR 14% 5% Diversified mix 17% Core: Health CAGR of 14% from 2010 of products across 19.0 to 2017 durations and cash flow Asia 45
Slide 37: Corporate Solutions
Corporate Solutions Swiss Re Group | Company presentation | September 2018 37
Slide 38: We are top 5-10 in the Excess Layer Market and expanding into the next segments
We are top 5-10 in the Excess Layer Market and expanding into the next segments Market presence 2016 commercial insurance market premium: USD 720bn Excess Layers Characteristics of wholesale Top 5 – 10 120 (large corporations) Deal size Primary Lead Degree of wholesale Entering now 60 Deal complex
Slide 39: Corporate Solutions expects to benefit from overall market recovery
Top player in Corporate Solutions expects to benefit from Excess Layers overall market recovery market and expanding into Primary Lead Global composite renewal rate changes 4.0% 2.0% 0.0% -2.0% -4.0% Start of JV with -6.0% 1 2012 2012 2 3 4 1 2013 2013 2 3 4 1 2014 2014 2 3 4 1 2015 2015 2 3 4 1 201
Slide 40: Corporate Solutions delivering on key priorities
Expansion of Primary Lead Corporate Solutions delivering on key priorities capabilities: global network Primary Lead coverage for • Expansion of own domestic and international primary 18 Number of own producing countries international lead producing capabilities to 18 and 9 countries programmes >80
Slide 41: Corporate Solutions benefits from a moderately improving market environment in H1 2018
Corporate Solutions benefits from a moderately improving market environment in H1 2018 Gross premiums written1 EBIT Net income USD m USD m USD m 359 2'500 400 300 2'014 350 250 248 2'000 1'676 1'783 1'699 300 200 250 1'500 200 150 1'000 150 100 100 77 55 58 500 50 47 45 50 39 0 0 0 H1 2015 H1 2016 H
Slide 42: We strive for differentiation in all our offerings
We strive for differentiation in all our offerings Differentiating factors of Corporate Solutions’ value proposition Excess Primary Lead Primary Lead Layers Domestic International USD 0.5bn³ additional Primary Leading brand Lead GPW production since Financial strength Primary Lead 2015 vs. USD Domes
Slide 43: Commercial insurance has been an attractive business for our shareholders
Commercial insurance has been an attractive business for our shareholders, generating long-term underwriting profits in excess of EVM capital costs Underwriting performance of Swiss Re’s commercial insurance business¹, USD bn Carve-out of Corporate 3.8 3.8 Commercial business EVM profit - underwriti
Slide 44: We are actively addressing the key underwriting performance drivers
We are actively addressing the key underwriting performance drivers Combined ratio decomposition Outlook for key drivers %pts 133.4 Prior-year development 7.2 • 2017 unfavourable prior-year development driven by large man-made losses with accident dates in 2015 and 2016. The magnitude and responsibi
Slide 45: Corporate Solutions has shown a disciplined performance within its peer-group
Corporate Solutions has shown a disciplined performance within its peer-group 2012 - 2017 Average 2012 - 2017 90% 2012 2013 2014 Combined ratio 101.4% Combined ratio 2015 2016 2017 112.8% -8% 3% 14% Gross premiums growth Corporate Solutions (Combined Ratio published) Corporate Solutions (Combined Ra
Slide 46: Life Capital
Life Capital Swiss Re Group | Company presentation | September 2018 46
Slide 47: Life Capital businesses provide Swiss Re access to attractive primary risk pools
Life Capital businesses provide Swiss Re access to attractive primary risk pools UK life & pension closed book Group protection solutions through White-labelled individual protection products Business consolidator intermediaries through distributors Protection, annuities, unit-linked Products insura
Slide 48: Life Capital delivers exceptional gross cash generation and makes significant dividend distribution
Life Capital delivers exceptional gross cash generation and makes significant dividend distribution to the Group in H1 2018 Gross premiums written EBIT Net income USD m USD m USD m 2'000 1'841 800 717 600 569 1'800 700 500 1'600 600 1'400 400 500 1'200 886 932 250 769 1'000 400 300 800 300 266 600 2
Slide 49: Life Capital continues to grow in open books as well as extracting GCG
USD 1.1bn Life Capital continues to grow in open books as dividend well as extracting GCG upstreamed to the Group in USD m H1 2018 1 761 1 841 1 489 Gross 1 346 Closed Books / other 1 163 Premiums 827 Open Books Written 2013 2014 2015 2016 2017 H1 2018 GCG 2016- 2018 target of USD 2.3-2.5bn 998 1 05
Slide 50: Swiss Re is exploring a potential IPO of its UK closed book business ReAssure
Swiss Re is exploring a potential IPO of its UK closed book business ReAssure in 2019 UK Closed Book Market Opportunity Total reserves ~ USD 440bn • UK closed book market represents an attractive cash-flow driven business opportunity and remains a growth area for Swiss Re • ReAssure has proven abili
Slide 51: Life Capital businesses capture growth opportunities in attractive primary L&H risk pools
The protection gap in sum Life Capital businesses capture growth assured terms is opportunities in attractive primary L&H risk pools > USD 100trn and growing elipsLife premium volume iptiQ new policies development Gross premiums written, life insurance # new policies written, cumulative¹ business (U
Slide 52: Asset Management
Asset Management Swiss Re Group | Company presentation | September 2018 52
Slide 53: Group investment result impacted by change in accounting guidance and lower realisation of gains
Group investment result impacted by change in accounting guidance and lower realisation of gains, while running yield remains stable in H1 2018 Average invested assets Return on investments Running yield USD bn, basis for ROI calculation 140 115.3 114.3 116.1 120 110.3 4.0% 3.7% 100 3.5% 3.0%1 3.0%
Slide 54: Group investment portfolio is well positioned for increase in recurring income
Group investment portfolio is well positioned for increase in recurring income Global portfolio composition drives H1 2018 Running yield profile by fixed income maturity bucket diversification USD bn and sustainable 4.0% 100 performance Group running 3.1% 80 3.0% yield, 2.9% 2.5% 60 ~97% of fixed 2.
Slide 55: Overall investment portfolio
Overall investment portfolio Other investments (incl. policy Cash and cash equivalents loans) 4% Mortgages and other 8% End loans Short-term investments USD bn H1 2018 4% 3% Balance sheet values 162.6 Equities 5% Unit-linked investments -29.6 Government bonds 41% With-profit business -5.4 Assets for
Slide 56: Fixed income securities
Fixed income securities Government Credit USD m bonds bonds End • Decrease in government bonds driven by net sales and FY 2017 54 658 47 128 market value losses stemming from rising interest rates as End well as foreign exchange impacts H1 2018 52 435 44 667 • Credit bonds include corporate bonds (U
Slide 57: Equities and alternative investments
Equities and alternative investments Equity securities Exchange-traded funds by sector Non-Cyclical Consumer Goods End End 2% Financials USD m FY 2017 H1 2018 2% 2% 3% Information Technology 6% Equity securities 3 326 2 706 6% Cyclical Services General Industrials Private equity 1 382 1 427 7% 46% B
Slide 58: Global re/insurance & protection gap
Global re/insurance & protection gap Swiss Re Group | Company presentation | September 2018 58
Slide 59: Global insured losses from disaster events in 2017 were highest ever
Global insured losses from disaster events in 2017 were highest ever Swiss Re Group | Company presentation | September 2018 59
Slide 60: Disaster losses still mostly uninsured
Disaster losses still mostly uninsured Insured vs uninsured losses, 1970-2017, in USD billion at 2017 prices 500 450 400 350 Economic losses = 300 insured + uninsured 250 losses 200 150 100 50 0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Insured losses Uninsured losses 10-year moving average
Slide 61: Insured losses in 2017: USD 144 billion
Insured losses in 2017: USD 144 billion Insured losses, 1970-2017, in USD billion at 2017 prices Japan, NZ Hurricanes earthquakes, Harvey, Irma, 160 Hurricanes Thailand flood Maria Katrina, Rita, Wilma 140 120 Hurricanes Ivan, 100 Hurricane Charley, Frances Hurricanes Sandy 80 Ike, Gustav Winter Sto
Slide 62: Economic growth and wealth are the most important drivers for insurance market growth
Economic growth and wealth are the most important drivers for insurance market growth Direct premiums as a % of GDP Direct premiums as a % of GDP • Swiss Re’s developed United States insurance “S-Curve” illustrates Canada Switzerland the various stages of insurance 4% penetration • Insurance penetra
Slide 63: Mortality protection gap is estimated to be USD 105 trillion globally, and growing
Mortality protection gap is estimated to be USD 105 trillion globally, and growing … Americas Europe USD 17 trillion Asia USD 23 trillion USD 58 trillion USD 7 trillion Source: Swiss Re Remark: Protection gap is expressed as sums assured Swiss Re Group | Company presentation | September 2018 63
Slide 64: Different solutions are available to address the insurance gap
Different solutions are available to address the insurance gap How to close the gap? Economic Solution type Description loss Foregone revenues Damaged public Risk transfer solutions physical assets for (sub)sovereigns to cover Macro their direct or indirect costs gap Clean up costs Emergency relief
Slide 65: Swiss Re Global Partnerships enables the Group to broaden our client base and address the protection gap
Swiss Re Global Partnerships enables the Group to broaden our client base and address the protection gap Caribbean Bangladesh Louisiana United Kingdom United States Hurricane, Flood insurance Heilongjiang Hurricane risk Florida Flood risk Turkey Flood risk earthquake and Multiperil disaster risk Hur
Slide 66: Swiss Re Group | Company presentation | September 2018
Swiss Re Group | Company presentation | September 2018 66
Slide 67: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 2018 1 November Nine Months 2018 Key Financial Data Conference call 2019 21 February Annual Results 2018 Conference call 14 March Publication of Annual Report 2018 17 April 155th Annual General Meeting Zurich Investor Relations contacts Hotline E-mail
Slide 68: 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 69: Legal notice
Legal notice ©2018 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