Swiss Re Ag · SIX:SREN

Swiss Re — Swiss Equities Conference (May 2006)

38 slides from Swiss Re's conference presentation, May 3, 2006

  1. Slide 1: Swiss Equities Conference

    ab Swiss Equities Conference Ann F. Godbehere Chief Financial Officer London, 3 May 2006

  2. Slide 2: Cautionary note on forward-looking statements

    Cautionary note on ab forward-looking statements Certain statements and illustrations contained herein are forward-looking. These statements and illustrations provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to a histo

  3. Slide 3: Disclaimer

    ab Disclaimer No statements made herein regarding earnings enhancements or otherwise are profit forecasts, and no statements made herein should be interpreted to mean that Swiss Re’s earnings or earnings per share for 2006 or any subsequent period will necessarily match or exceed the historical publ

  4. Slide 4: Agenda

    ab Agenda „ Reinsurance market and Swiss Re profile Leading player in a growth industry „ Strategy at work Swiss Re strategies successfully executed „ 2006 renewals Nat cats hit 2005 income, but drive economics of renewed business „ GE Insurance Solutions update Compelling transaction with low execu

  5. Slide 5: Swiss Re at a glance

    Reinsurance market and Swiss Re profile ab Swiss Re at a glance Leading position in P&C reinsurance (CHF 17.3bn NPE) Leading L&H reinsurer (CHF 10.5bn NPE) Leading provider of insurance-linked securitisation solutions (CHF 1.9bn issued last 12 months) Highly diversified portfolio by region and by li

  6. Slide 6: 2005 Swiss Re's capital strength increased with nat cat fully absorbed

    2005 Swiss Re’s capital strength ab increased with nat cat fully absorbed Earnings „ Net income of CHF 1.5bn impacted by record natural catastrophe claims Asset management „ Continued excellent investment performance with RoI of 5.7% Property & Casualty „ Operating income decreased to CHF 1.0bn, ref

  7. Slide 7: Swiss Re's ambition

    Reinsurance market and Swiss Re profile ab Swiss Re’s ambition „ Support clients to manage their risks and capital needs „ Generate steadily growing income from diversified revenue sources including investments „ Leverage scale and securitisation skills to manage earnings volatility „ Deliver attrac

  8. Slide 8: Swiss Re is a leading player in a growth industry

    Reinsurance market and Swiss Re profile Swiss Re is a leading player in a ab growth industry Annual growth 1990 - 2005; nominal values CAGR „ Above GDP growth industry ‘91-’05 in the long run (exponentially in emerging economies) 500 Life reins. 11.0% 450 „ Swiss Re has outperformed Swiss Re 10.1% b

  9. Slide 9: Swiss Re's global leadership position

    Reinsurance market and Swiss Re profile ab Swiss Re’s global leadership position Top ten professional reinsurers by P&C L&H net premiums earned 2005 (USDm) market share %* market share %* Munich Re 24 020 12.1 19.9 Swiss Re 22 336 10.6 20.7 Hannover Re 9 633 5.2 6.9 GE Insurance Solutions 7 136 3.5

  10. Slide 10: Swiss Re's well diversified book complemented by GEIS

    Reinsurance market and Swiss Re profile Swiss Re’s well diversified book ab complemented by GEIS Split of pro-forma Swiss Re / GEIS gross premiums written; total of CHF 39.7bn in 2005 By region By unit SM; Non-life by business Admin Re; 7% RoW L&H; (Swiss Re: Specialty; RoW Non- 3% 9%) 34% life; 8%

  11. Slide 11: GEIS acquisition strengthens US regional presence

    Reinsurance market and Swiss Re profile GEIS acquisition strengthens ab US regional presence Î Little client Direct regional P&C reinsurance business overlap Regionals: 15% Regionals: 35% Swiss Re America Globals/Nationals: 84% GE Ins. Sol. Globals/Nationals: 43% Rest: 1% Rest: 22% Regionals: 21% Pr

  12. Slide 12: Swiss Re's prudent reserving – legacy issues addressed

    Reinsurance market and Swiss Re profile Swiss Re’s prudent reserving – ab legacy issues addressed Adverse development in 2005 „ Diversification of book of business reduces volatility in reserving CHF millions 100 31 „ Strengthening of liability reserves for US business written 1997-2001, 0 mostly of

  13. Slide 13: Swiss Re's reserves very strong, GEIS doesn't change this

    Reinsurance market and Swiss Re profile Swiss Re’s reserves very strong, ab GEIS doesn’t change this Non-life reserve ratio 2005 418% 325% 263% 257% 207% 204% 166% GE ERC Swiss Re Hannover Re Munich Re PartnerRe Everest Re Transatlantic Re Swiss Equities Conference Lombard Odier Darier Hentsch Londo

  14. Slide 14: Swiss Re's balance sheet equipped to absorb large events

    Reinsurance market and Swiss Re profile Swiss Re’s balance sheet equipped ab to absorb large events Internal capital adequacy as of 30.06.2005 „ Available economic capital to: CHF billions 99% VaR = 329% 99.5% VaR = 255% Available capital Required capital 99% shortfall (TailVaR) = 211% 30.0 32.6 „ E

  15. Slide 15: Swiss Re's strategies successfully executed

    Strategy at work ab Swiss Re’s strategies successfully executed „ Leveraged strong consolidation in mid/late 90s Life & health „ Organic growth supported by successful acquisitions growth strategy „ Embedded value exceeds CHF 20bn „ GEIS adds attractive European book „ Strong organic growth in P&C 2

  16. Slide 16: Life & Health growth strategy

    Strategy at work ab Life & Health growth strategy „ Grow stable life business to mitigate more volatile non-life business „ Life & Health has grown from 16% to 40% of Swiss Re’s premiums since 1995 „ Growth has been organic and transactional (1995: Alhermij, 1996: M&G, 1998: Life Re, 2001: Lincoln R

  17. Slide 17: Swiss Re's cycle management maximising profits

    Swiss Re’s cycle management ab maximising profits „ Over proportional growth in times Superior business quality will positively impact results going forward of strong rate increases Swiss Re premium growth* and rate adequacy indexed „ Volume decrease 2004 to June 2005 180 171 to maintain rate 166 ad

  18. Slide 18: Active balance sheet management addresses volatility & capital efficiency

    Strategy at work Active balance sheet management ab addresses volatility & capital efficiency Manage Growth RoE volatility Queensgate Jan 05 USD 245m US Admin EV monetisation ReSM 9 9 9 Increase sustainability of Vita II Apr 05 USD 362m Extreme Peak risk mortality protection 9 9 franchise Arbor Mar

  19. Slide 19: Volume flat but quality further improved – GEIS will add 18%

    2006 renewals ab Volume flat but quality further improved – GEIS will add 18% to Swiss Re’s renewed book Total traditional portfolio CHF 10.6bn CHF 10.6bn 120% 100% 100% 18% CHF 1.9bn 13% 1% 100% -1% 5% Rate changes are 81% 80% pure improve- -18% ments of quality 60% of our book This represents 6% i

  20. Slide 20: Renewals 2006: expectations vs achievements (I)

    2006 renewals Renewals 2006: expectations vs ab achievements (I) What Swiss Re said/ expected* What the market did What Swiss Re did „ Property, marine, nat cat „ Achieved „ Achieved US “high double digit increases” „Property nat cat non-US „ European markets already „ Swiss Re slightly outperforms

  21. Slide 21: Renewals 2006: expectations vs achievements (II)

    2006 renewals Renewals 2006: expectations vs ab achievements (II) What Swiss Re said/ expected* What the market did What Swiss Re did** „ “Overall high single digit „ Volume range of -5% to „ Premium volume increased by increases” +5% with large, well- 1% ; economic margin after diversified players

  22. Slide 22: Swiss Re's record of acquisition successes

    Swiss Re’s record of acquisition ab successes M&G Re „ Swiss Re became the leading global L&H reinsurer GBP 1.7bn(1) „ Increased Swiss Re’s size by 1/3 1996 „ Positive P&C reserve development Life Re „ Admin ReSM: Swiss Re has completed more than USD 1.8bn(1) 40 transactions (USD 4bn) since acquisit

  23. Slide 23: GEIS – a compelling transaction

    GE Insurance Solutions update ab GEIS – a compelling transaction Powerful „ Complementary strengths business fit GE Insurance Solutions Further „ Swiss Re to become leading strengthens global reinsurer P&C Reinsurance Primary Commercial Ins. L&H Reinsurance Swiss Re’s „ Well established US regional

  24. Slide 24: GEIS closing on track – low execution risk

    GE Insurance Solutions update GEIS closing on track – ab low execution risk Area of focus Activities since announcement Low execution risk Integration „ Established integration team from both organisations ; Complementary client base „ Work stream structure based on Swiss Re’s organisation limiting

  25. Slide 25: Lower volatility of earnings – attractive growth perspectives

    Summary Lower volatility of earnings – ab attractive growth perspectives Lower volatility of earnings going forward „ Strong underwriting discipline and focus on business quality „ Legacy issues addressed „ Further refinement of peak nat cat exposures „ Sophisticated asset management with systematic

  26. Slide 26: Swiss Re's outlook

    Summary ab Swiss Re’s outlook „ Attractive market environment in which Swiss Re enjoys a preferred position „ Swiss Re’s acquisition of GEIS reinforces its global leadership position and provides structural growth in phase of low market growth „ Regulatory changes will benefit diversified players wi

  27. Slide 27: Appendix

    ab Appendix Swiss Equities Conference Lombard Odier Darier Hentsch London, 3 May 2006 Slide 27

  28. Slide 28: Swiss Re's effective capital management

    Reinsurance market and Swiss Re profile ab Swiss Re’s effective capital management CHF billions 30 30% „ Swiss Re’s value 3.3 0.7 proposition includes Senior financial 3.0 5.2*) 25 3.8 25% commitment to debt 1.9 1.1 1.4 prudent capital Hybrid capital 2.2 4.2*) 20 3.4 20% management 3.5 Shareholders'

  29. Slide 29: Katrina, Rita and Wilma (KRW)

    Reinsurance market and Swiss Re profile ab Katrina, Rita and Wilma (KRW) Large caps equipped to handle large events Capital of smaller Market capitalisation (USD) less diversified > 15bn 5 – 15bn < 5bn companies significantly USD m impacted by KRW 5 000 75% hurricanes 144% Average net claim 4 000 in

  30. Slide 30: Swiss Re's strategic priorities

    Strategy at work ab Swiss Re’s strategic priorities Accelerate the balance sheet Actively manage Optimise organic Extend leadership Accelerate the the cycle for and transactional in Asia balance sheet profits growth Products Client Markets Financial Services Slide 30

  31. Slide 31: Major programme restructuring

    2006 renewals ab Major programme restructuring Cat rating example: US hurricane Most larger clients have restructured their programmes by increasing Rate on line retentions and buying higher layers. Layers 2005 2006 This means that the higher RoL at the lower layers are replaced by Retention 150 low

  32. Slide 32: Swiss Re's profitability further increased in 2006 renewals

    2006 renewals Swiss Re’s profitability further ab increased in 2006 renewals „ Swiss Re January 2006 renewals showed strong economic profit (+7%) on renewed book „ Premium volume of renewed book increased 8% in European dominated January renewals despite shift to higher layers in non-proportional bu

  33. Slide 33: Acquisition at an attractive price

    GE Insurance Solutions update ab Acquisition at an attractive price Book value reconciliation in USD billion(1) „ Current adjusted BV of 0.5 1.7 USD 8.9bn 10.1 „ Agreed purchase price of -2.1 8.9 USD 6.8bn 0.8 7.6 „ Implies book multiple of 0.76x 6.8 6.8 „ Expected total consideration of USD 7.6bn i

  34. Slide 34: Combined pro forma accounts

    GE Insurance Solutions update ab Combined pro forma accounts „ Historical pro forma accounts are hypothetical ones and do not represent results or financial position prospectively „ 2005 pro forma accounts include material one-off impact of USD 3.8bn reserve strengthening „ Income statement adjustme

  35. Slide 35: Very strong capital position and cash flow reduce external financing

    Financing update and offering details Very strong capital position and ab cash flow reduce external financing Capital funding In USD millions 0 2 000 4 000 6 000 8 000 „ External capital financing reduced by 7 600 USD 812m to USD 6 688m and Rights Total consideration Offering maintained GEIS (est.)

  36. Slide 36: Equity instruments – possible number of shares to be issued

    Financing update and offering details Equity instruments – possible ab number of shares to be issued Assumptions (market prices 26.4.2006) USD/CHF 1.2703 Swiss Re share price CHF 90.90 Instruments USD m CHF m Shares m Comments I Mandatory convertible 787 1 000 10.460 11m conditional capital (placed

  37. Slide 37: Equity offering timetable

    Financing update and offering details ab Equity offering timetable 26 April 2006 Ex-dividend date Approval of prospectus by SWX/UKLA 27 April 2006 Nominal share capital increase 28 April 2006 Prospectus available Start of rights subscription period 8 May 2006 End of rights subscription period (12:00

  38. Slide 38: Corporate calendar & contacts

    ab Corporate calendar & contacts 4 August 2006 Interim results 2006, Analysts’ meeting November 2006 Investors’ day Contacts Investor Relations Zurich +41 43 285 4444 Stefan Senn, Andreas Leu, Kathrin Schriber New York +1 914 828 8078 Gloria Vogel Swiss Equities Conference Lombard Odier Darier Hents

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