Swiss Re Ag · SIX:SREN
Swiss Re — H1 2020 Earnings Presentation
38 slides from Swiss Re's earnings presentation, Jul 31, 2020
Slide 1: Half-year 2020 Results
Half-year 2020 Results Swiss Re investor and analyst presentation Zurich, 31 July 2020
Slide 2: Focus areas of half-year 2020 results
Focus areas of half-year 2020 results Earnings in Strong Corporate Solutions Successful context renewals turnaround ReAssure sale Half-year 2020 Results 2
Slide 3: Swiss Re's half-year results remain solid excluding COVID-19 impact
Swiss Re’s half-year results remain solid excluding COVID-19 impact Corporate USD m, unless otherwise stated P&C Re L&H Re Solutions Life Capital Total Including COVID-19 Premiums1 (growth) 9 601 (+10%) 6 676 (+6%) 2 004 (-3%) 1 048 (-4%) 19 329 (+6%) Combined ratio 115.8% - 122.6% - - Net income/lo
Slide 4: Market impact of COVID-19 P&C loss expected to be manageable
Market impact of COVID-19 P&C loss expected to be manageable and comparable to previous large events Largest recorded catastrophe losses for the P&C insurance industry1 (USD bn) 100 90 80 loss estimate 70 Range of COVID-19 60 (P&C) 50 40 30 20 10 0 Hurricanes Hurricane Earthquake Hurricane Hurricane
Slide 5: Vast majority of Swiss Re's COVID-19 losses are booked as IBNR
Vast majority of Swiss Re’s COVID-19 losses are booked as IBNR Swiss Re’s reported COVID-19 losses in H1 2020 (USD m, pre-tax) 411 2 541 IBNR Paid & case reserves 544 129 973 72% 484 28% Event cancellation Business interruption Credit & surety Mortality1 Other lines Total1 P&C Re 232 863 38 - 362 1
Slide 6: Majority of ultimate COVID-19 insurance losses expected to have been incurred in H1
Majority of ultimate COVID-19 insurance losses are expected to have been incurred in H1 Business closings in Europe1 (number of countries) • Under US GAAP, all losses that are deemed to have been incurred in 25 H1 are recognised, irrespective of whether or not they have been 20 reported to us by our
Slide 7: Successfully steered investment portfolio through market turbulence
Successfully steered investment portfolio through market turbulence Proactive management decisions taken to protect Swiss Re’s balance sheet Outperformance of ESG portfolio Proactive portfolio management Tactical hedges +1.4% 67% vs. traditional equity benchmark1 fewer issuer downgrades2 ~USD 120m n
Slide 8: Underlying performance of all businesses is in line with expectations
Underlying performance of all businesses is in line with expectations H1 2020 H1 2020 as reported excl. COVID-19 P&C -12.8% 14.9% • Results primarily affected by COVID-19 losses Reinsurance Return on equity Return on equity • Underlying 2020 performance in line with 97% estimated combined ratio1 L&H
Slide 9: Strong outcome of year-to-date renewals for P&C Reinsurance
Strong outcome of year-to-date renewals for P&C Reinsurance Price change1 0% ‐ Nominal price change +6% ‐ Impact of lower interest rates -4% ‐ Impact of higher loss assumptions -2% • Volume up 6% YTD – of which 4% driven by large transactions Exposure change +6% (USD bn)2 +6% • Growth mainly from sh
Slide 10: Corporate Solutions turnaround is well on track
Corporate Solutions turnaround is well on track, with ongoing implementation of decisive management actions Underwriting profitability is improving… … supported by continued strong rate momentum Corporate Solutions combined ratio (%) Corporate Solutions compound price quality increase (%) 25 112% 20
Slide 11: Strategic milestone achieved with completion of ReAssure sale
Strategic milestone achieved with completion of ReAssure sale Successful completion of ReAssure sale Future disbandment of Life Capital GBP 3.25bn GBP 1.2bn transaction cash proceeds valuation to Swiss Re • will move to Corporate Solutions1 • will become a standalone division • Phoenix shares to be
Slide 12: We make the world more resilient
Continued support to clients and partners throughout COVID-19 crisis • We entered the crisis with a very strong balance sheet and capital position • We took substantial measures to protect our balance sheet and hedge our investment portfolio • We ran our business without interruptions and concluded
Slide 13: Financial highlights
Financial highlights
Slide 14: Key figures
Key figures Corporate Total Total USD m, unless otherwise stated P&C Re L&H Re Solutions Life Capital Group items H1 2020 H1 2019 • Premiums earned and fee income 9 601 6 676 2 004 1 048 - 19 329 18 160 • Net income/loss - 519 74 - 301 - 217 - 172 -1 135 953 • Return on investments 3.6% 4.1% 3.0% 3.
Slide 15: P&C Re reports solid underlying results and strong business growth
P&C Re reports solid underlying results and strong business growth Net premiums earned Net operating margin1 (%) Combined ratio (%) 115.8 -16.1pts 100.5 100.5 11.1 97.2 97.4 92.9 excl. COVID-19 5.6 88.3 USD 9.6bn 86.1 11.4 9.3 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 H1 2020 in H1 2020 -5.9 -
Slide 16: L&H Re maintains strong underlying performance
L&H Re maintains strong underlying performance Net premiums earned Net operating margin1 (%) Running yield and ROI (%) 3.9 3.5 3.5 3.4 3.4 3.3 3.1 -6.9pts 10.9 3.2 3.6 3.8 4.2 3.6 4.4 4.1 USD 6.6bn 5.3 3.9 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 H1 2020 in H1 2020 10.8 12.3 Running yield ROI
Slide 17: Corporate Solutions turnaround well on track
Corporate Solutions turnaround well on track Net premiums earned Net operating margin1 (%) Combined ratio (%) 132.8 122.6 +3.6%pts 104.5 101.6 101.7 98.4 94.2 91.7 USD 2.0 bn -21.2 excl. COVID-19 -17.6 8.6 3.9 H1 2014 H1 2015 H1 2016 H1 2017 H1 2018 H1 2019 H1 2020 in H1 2020 -5.2 -12.3 -16.3 • Prof
Slide 18: Life Capital result reflects continued strong open book growth
Life Capital result reflects continued strong open book growth Net income # of iptiQ distribution Open books - Gross premiums written (USD m) partners USD -217m 36 CAGR 28% 1 578 1 343 1 232 in H1 2020 in H1 2020 856 788 775 USD 5m 29 659 569 451 329 300 722 in H1 2019 in YE 2019 260 555 330 457 191
Slide 19: Strong investment result despite unprecedented market volatility
Strong investment result despite unprecedented market volatility Return on investments (ROI) Investment portfolio positioning (USD bn) Net investment income (USD m, LHS) Running yield (%, RHS) 140 133.4 3.4 14.5 2 500 3.5 120 109.9 113.4 3.0 3.0 3.2% 2.9 2.9 2.9 3.0 100 13.3 19.9 2 000 2.5 54.4 1 73
Slide 20: High quality portfolio maintained due to timely review and targeted exposure reduction
High quality portfolio maintained due to timely review and targeted exposure reduction Diversified credit portfolio Stable credit rating mix maintained throughout crisis End H1 2020: USD 31.6bn (ReAssure excluded) End H1 2020: USD 31.6bn (ReAssure excluded) 13% 4% 3% 8% Financials 6% Non-cyclical co
Slide 21: Appendix
Appendix
Slide 22: Business segment results H1 2020
Business segment results H1 2020 Income statement Corporate Total Total USD m Reinsurance P&C Re L&H Re Solutions Life Capital Group items Consolidation H1 2020 H1 2019 Revenues Gross premiums written 20 136 12 776 7 360 2 238 1 875 - - 691 23 558 22 672 Net premiums written 18 937 12 270 6 667 1 66
Slide 23: Business segment results H1 2020
Business segment results H1 2020 Balance sheet Corporate End End 30 June 2020, USD m Reinsurance P&C Re L&H Re Solutions Life Capital Group items Consolidation H1 2020 FY 2019 Assets Fixed income securities 68 678 37 321 31 357 6 937 3 351 95 - 79 061 81 573 Equity securities 1 714 1 178 536 171 83
Slide 24: Total equity and ROE H1 2020
Total equity and ROE H1 2020 Corporate Total USD m Reinsurance P&C Re L&H Re Solutions Life Capital Group items H1 2020 Shareholders' equity at 31 December 2019 16 571 8 318 8 253 2 005 5 289 5 386 29 251 Net income attributable to shareholders - 445 - 519 74 - 301 - 217 - 172 -1 135 Dividends and s
Slide 25: Change in shareholders' equity mainly driven by net loss, dividend payments and share buyback
Change in shareholders' equity mainly driven by net loss, dividend payments and share buyback, USD m Gov bonds 1.7 Dividends -1.8 Corp bonds 0.6 Share buyback -0.2 Sec products 0.0 29 251 Other -0.2 - 1 135 Tax -0.4 45 27 933 - 1 956 1 728 Shareholders' Net income Dividends and share buyback 1 Net c
Slide 26: Gross premium volume by line of business and region
Gross premium volume by line of business1 (USD bn) Gross premium volume by region1 (USD bn) Up for Premium Estimated Price Up for Premium Estimated renewal YTD change outcome YTD change renewal YTD change outcome YTD Nat cat 3.3 +14% 3.8 Americas 6.4 +8% 6.9 Property2 3.3 +11% 3.7 EMEA 6.5 +2% 6.7 A
Slide 27: P&C underwriting performance
P&C underwriting performance P&C Reinsurance and Corporate Solutions Combined ratio Main drivers of change Net premiums Underwriting earned result P&C Reinsurance H1 2020 H1 2020 H1 2019 H1 2020 USD m USD m Property 100.5% 120.4% • Impacted by business interruption and event cancellation losses rela
Slide 28: P&C Reinsurance and Corporate Solutions: combined ratio split
P&C Reinsurance and Corporate Solutions: combined ratio split P&C Reinsurance (%) Corporate Solutions (%) 132.8 0.5 130 130 6.0 122.6 120 115.8 120 23.7 110 110 24.2 15.3 100.5 100 3.2 100 2.5 1.5 5.6 5.1 0.5 19.1 3.9 3.3 90 90 6.7 6.2 16.9 80 80 15.2 70 25.7 26.0 70 15.2 60 60 58.9 68.3 60.7 58.3 0
Slide 29: Return on investments (ROI)
Return on investments (ROI) Corporate Group Consoli- Total Total USD m P&C Re L&H Re Solutions Life Capital items dation H1 2020 H1 20192 Investment related net investment income 446 544 89 58 -58 -185 894 1 609 Fixed income 345 504 86 44 3 - 982 1 455 Equities and alternative investments – incl. RE
Slide 30: Overall investment portfolio
Overall investment portfolio Other investments (incl. policy loans) Cash and cash equivalents Mortgages and other loans 6% 9% Equities 3% Short-term investments 5% 8% End USD bn H1 2020 Balance sheet values 114.8 Unit-linked investments -0.4 Credit bonds 28% With-profit business - Assets for own acc
Slide 31: Fixed income securities
Fixed income securities Government Credit USD m bonds bonds • Decrease in government bonds (ReAssure excluded) End driven by net sales and negative fx impact, partially FY 2019 (ReAssure included)1 56 399 45 624 offset by market value gains stemming from End declining interest rates FY 2019 (ReAssur
Slide 32: Equities and alternative investments
Equities and alternative investments Equity securities Non-cyclical consumer goods by sector Information technology 2% End End 3% 2% Financials USD m FY 20191 H1 2020 3% 5% Cyclical services Equity securities 2 599 1 969 21% ETF, excl. fixed income 7% General industrials Private equity 1 626 1 598 1
Slide 33: Sensitivities
Sensitivities USD bn, pre-tax Change in market values (Equities and Alternative Investments, excl. Real Estate) -25% -10% +25% Estimated impact on shareholders' equity -1.1 -0.5 +1.3 Estimated impact on economic net worth (EVM) -1.1 -0.5 +1.3 Estimated impact on income/loss before income tax expense
Slide 34: Swiss Re continues to drive sustainability leadership in insurance and decarbonise its business activities
Swiss Re continues to drive sustainability leadership in insurance and decarbonise its business activities Recent highlights Revised Sustainable SONAR 2020 report on Sustainability Leadership in New key publications on Business Risk Framework, emerging risk, incl. special Insurance event series with
Slide 35: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 2020 30 October 9M 2020 Key Financial Data Conference call 20 November Investors’ Day 2020 Zurich Investor Relations contacts Hotline E-mail +41 43 285 44 44 Investor_Relations@swissre.com Philippe Brahin Olivia Brindle Deborah Gillott +41 43 285 72 1
Slide 36: Half-year 2020 Results
(in) Swiss Re Half-year 2020 Results 36
Slide 37: Certain statements and illustrations contained herein are forward-looking
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 any statement that does not directly relate to
Slide 38: ©2020 Swiss Re. All rights reserved
©2020 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 commercial or