Swiss Re Ag · SIX:SREN
Swiss Re — Q2 2016 Earnings Presentation
31 slides from Swiss Re's earnings presentation, Jul 29, 2016
Slide 1: Second quarter 2016 results
Second quarter 2016 results Investor and analyst presentation Zurich, 29 July 2016 We make the world more resilient.
Slide 2: Today's agenda
Today’s agenda • Achievements in H1 2016 Christian Mumenthaler, Group CEO • Q2 2016 business performance David Cole, Group CFO • Business update and priorities Christian Mumenthaler, Group CEO Second quarter 2016 results 2
Slide 3: Achievements in H1 2016
Achievements in H1 2016 Christian Mumenthaler, Group CEO Second quarter 2016 results 3
Slide 4: Macroeconomic conditions and industry trends remain challenging
Macroeconomic conditions and industry trends remain challenging Macroeconomic environment Low growth, low interest rates Financial market volatility Political / Regulatory environment Political instability Re-nationalisation Industry environment Soft market (near the bottom?) Technologic
Slide 5: Solid results in the first half of 2016 demonstrate Swiss Re's resilience
Solid results in the first half of 2016 demonstrate Swiss Re’s resilience to the market environment Solid Group ROE in current market 10.9% ROE 102% risk adjusted price Reduction in flow business & growth in large transactions quality maintained Strong investment performance from Asset Management 3.
Slide 6: All Business Units achieved significant successes in the first half of the year
All Business Units achieved significant successes in the first half of the year I II III IV Reinsurance Corporate Solutions Life Capital • Underwriting discipline in • Acquisition of IHC Risk • Guardian integration renewals maintained Solutions to broaden proceeding as planned • Multiple large and t
Slide 7: Q2 2016 business performance
Q2 2016 business performance David Cole, Group CFO Second quarter 2016 results 7
Slide 8: Solid Q2 2016 results despite high level of large losses
Solid Q2 2016 results despite high level of large losses and continued challenging market conditions • Swiss Re reports second quarter net income of USD 637m; ROE of 7.2% • P&C Reinsurance’s results reflect level of large losses, with net income of USD 283m; ROE of 9.4% • L&H Reinsurance maintains a
Slide 9: Key figures
Key figures Corporate Life Group Total Total Total USD m, unless otherwise stated P&C Re L&H Re Solutions Capital items Q2 2016 Q2 2015 H1 2016 • Gross premiums written 4 116 3 181 1 009 283 - 8 403 7 370 19 798 • Premiums earned and fee income 4 136 2 860 875 307 - 8 178 7 144 16 118 • EBIT 432 306
Slide 10: P&C Reinsurance impacted by large losses
P&C Reinsurance impacted by large losses H1 Gross premiums written EBIT Net income Q2 Q1 16 000 14 000 USD m USD m USD m 11 124 2 500 1 800 1 543 12 000 10 388 10 328 1 979 1 600 1 455 9 650 2 000 1 763 1 772 1 400 1 278 10 000 4 116 455 553 3 583 3 610 351 716 1 241 1 200 870 8 000 3 450 1 500 680
Slide 11: Solid performance of L&H Reinsurance continues
Solid performance of L&H Reinsurance continues H1 Gross premiums written EBIT Net income Q2 16 000 USD m USD m USD m Q1 14 000 841 900 600 12 000 800 766 704 509 500 700 385 417 384 10 000 600 282 400 226 6 344 6 586 306 5 934 407 8 000 5 620 500 300 154 173 6 000 400 3 114 2 833 3 181 192 2 737 300
Slide 12: Corporate Solutions' results reflect large man-made losses
Corporate Solutions’ results reflect large man-made losses H1 Gross premiums written1 EBIT Net income Q2 USD m USD m USD m Q1 2 500 400 359 300 248 1 799 1 783 350 2 000 1 676 250 1 478 300 229 123 76 250 217 200 156 146 1 500 966 1 006 200 76 150 1 015 93 47 55 66 55 848 150 100 172 1 000 100 236 1
Slide 13: Life Capital delivers a strong performance across all metrics
Life Capital delivers a strong performance across all metrics H1 Gross premiums written EBIT Net income Q2 USD m USD m USD m Q1 886 569 1 000 900 769 717 570 677 750 800 700 283 650 470 248 242 550 311 600 447 370 500 450 250 429 266 187 400 350 246 217 270 165 42 228 603 527 300 250 65 406 170 321
Slide 14: Group investment portfolio continues to provide a strong contribution
Group investment portfolio continues to provide a strong contribution to the overall financial results H1 Average invested assets Return on investments Running yield Q2 USD bn, basis for ROI calculation 116.1 114.2 110.3 115.3 4.2% 3.8% 4.1% 3.7% 3.5% 3.2% 114.6 113.7 108.6 119.1 2.9% 2.9% (H1: 3.6%
Slide 15: Increase in common shareholders' equity due to net income and unrealised gains
Increase in common shareholders' equity due to net income and unrealised gains, partially offset by external dividends Gov bonds 1.6 Corp bonds 1.2 USD m Sec products 0.0 Equities and others 0.0 Tax -0.6 - 257 637 2165 35 811 - 1 561 34 827 Common shareholders' Net income Dividends Net change in Oth
Slide 16: Business update and priorities
Business update and priorities Christian Mumenthaler, Group CEO Second quarter 2016 results 16
Slide 17: P&C Reinsurance maintains attractive portfolio despite challenging market
P&C Reinsurance maintains attractive portfolio despite challenging market environment January 2016 treaty renewals1 +20% YTD 2016 renewals (January – July) USD 10.3bn Treaty portfolio volume USD 8.6bn Up for renewal Estimated 1 January 2016 outcome +18% April 2016 treaty renewals1 USD 15.2bn +23% US
Slide 18: Group strategic framework will continue to drive 2016 priorities
The Group strategic framework will continue to drive our Business Units’ 2016 priorities I II III IV Reinsurance Corporate Solutions Life Capital • Portfolio steering, large • Focus on underwriting • Successfully integrate transactions and discipline Guardian business and underwriting discipline • D
Slide 19: Appendix
Appendix • Business segment results Q2 2016 – Income statement • Return on investments (ROI) • Business segment results Q2 2016 – Balance sheet • Overall investment portfolio • Total equity and ROE Q2 2016 • Fixed income securities • P&C Reinsurance – Underwriting performance • Equities and alternat
Slide 20: Business segment results Q2 2016 - Income statement
Business segment results Q2 2016 Income statement Re- Corporate Life Group Consoli- Total Total Total USD m insurance P&C Re L&H Re Solutions Capital items dation Q2 2016 Q2 2015 H1 2016 Revenues Gross premiums written 7 297 4 116 3 181 1 009 283 - -186 8 403 7 370 19 798 Net premiums written 6 749
Slide 21: Business segment results Q2 2016 - Balance sheet
Business segment results Q2 2016 Balance sheet Corporate Group Consoli- End End Re-insurance Life Capital 30 June 2016, USD m P&C Re L&H Re Solutions items dation Q2 2016 Q1 2016 Assets Fixed income securities 67 393 35 428 31 965 5 757 27 375 14 - 100 539 97 936 Equity securities 2 586 1 690 896 91
Slide 22: Total equity and ROE Q2 2016
Total equity and ROE Q2 2016 1 Re- Corporate Life Group Total Total1 USD m insurance P&C Re L&H Re Solutions Capital items Q2 2016 H1 2016 Common shareholders' equity2 at 31 December 2015 18 819 12 995 5 824 2 279 4 947 6 373 32 415 Common shareholders' equity2 at 31 March 2016 18 058 11 717 6 341 2
Slide 23: P&C Reinsurance - Underwriting performance
P&C Reinsurance Underwriting performance Combined ratio Main drivers of change Net Under- Combined premiums writing ratio earned result Q2 2016 Q2 2016 Q2 2015 Q2 2016 USD m USD m H1 2016 Property 84.9% 107.1% • Q2 2016 impacted by several large nat cat and 1 554 -111 94.1% man-made losses Casualty
Slide 24: P&C Reinsurance: 2016 renewals
P&C Reinsurance: 2016 renewals Portfolio weighting by line of business and region Gross premium volume, treaty portfolio Up for renewal July YTD Estimated outcome July YTD By line of business 14% 12% Casualty 41% 20% Nat cat 23% 50% Property 1 Specialty 22% 18% By region 29% 27% EMEA 36% 36% America
Slide 25: Corporate Solutions - Underwriting performance
Corporate Solutions Underwriting performance Combined ratio Main drivers of change Net Under- Combined premiums writing ratio earned result Q2 2016 Q2 2016 Q2 2015 Q2 2016 USD m USD m H1 2016 Property 79.6% 91.7% • Q2 2016 impacted by a higher frequency of 314 26 84.2% small- and medium-sized losses
Slide 26: 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 Q2 2016 Q2 2015 H1 2016 Investment related net investment income 231 284 39 253 -20 -22 765 790 1 560 Fixed income 177 274 34 239 - - 724 625 1 415 Equities and alternative
Slide 27: Overall investment portfolio
Overall investment portfolio Other Cash and Mortgages and investments cash other loans incl. policy equivalents 3% loans 5% Short-term End Equities 7% investments USD bn Q2 2016 5% 7% Securitised Balance sheet values 171.5 products 4% Unit-linked investments -29.2 Government bonds With-profit busine
Slide 28: Fixed income securities
Fixed income securities Government Credit USD m bonds bonds End • Increase in government bonds Q1 2016 49 370 48 566 driven by net purchases as well End as mark-to-market gains due to Q2 2016 52 572 47 967 declining interest rates • Credit bonds include corporate bonds (USD 42.3bn) and securitised p
Slide 29: Equities and alternative investments
Equities and alternative investments Equity securities Exchange-traded funds by sector Non-Cyclical Consumer Goods End End 2% 2% 1% Information Technology USD m Q1 2016 Q2 2016 4% 3% Financials Equity securities 3 763 3 503 6% 36% General Industrials 7% Cyclical Services Private equity 1 469 1 466 R
Slide 30: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 2016 3 November Third Quarter 2016 Results Conference call 2 December Investors’ Day Zurich 2017 23 February Annual Results 2016 Conference call 16 March Publication of Annual Report 2016 and EVM 2016 21 April 153rd Annual General Meeting Zurich Inves
Slide 31: 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 an