Swiss Re Ag · SIX:SREN
Swiss Re — Q1 2013 Earnings Presentation
42 slides from Swiss Re's earnings presentation, May 2, 2013
Slide 1: First quarter 2013 results
First quarter 2013 results Analyst and investor presentation Zurich, 2 May 2013
Slide 2: Business performance
Business performance George Quinn, Group CFO First quarter 2013 results 2
Slide 3: Q1 2013 Financial highlights
Q1 2013 Financial highlights Very strong result, all business units delivered despite continued low interest rate environment Group net income USD 1.4bn – Return on equity 16.6%, earnings per share USD 4.02 (CHF 3.72) – Group combined ratio 72.4% – Return on investments 3.4% Very strong Reinsura
Slide 4: Key figures Q1 2013
Key figures Q1 2013 Corporate Group Q1 2013 Q1 2012 USD million, unless otherwise stated P&C Re L&H Re Solutions Admin Re® items Total Total Premiums earned and fee income 3 534 2 313 613 322 - 6 782 6 208 Net income/loss 1 009 222 101 78 -30 1 380 1 141 Return on investments 2.6% 3.9% 3.2% 4.
Slide 5: P&C Reinsurance
P&C Reinsurance Strong premium growth and very good claims experience Net premiums earned Combined ratio Net income, ROE USD m % USD m, % +15.1% -15.3%pts +52.9% 3 534 69.7% 1 009 ROE: 35.5% 3 070 85.0% 660 Q1 2012 Q1 2013 Q1 2012 Q1 2013 Q1 2012 Q1 2013 Premiums earned growth of No large nat ca
Slide 6: P&C Reinsurance
P&C Reinsurance Strong and stable underwriting performance; combined ratios and risk-free rates trend downwards 130% 5% 120% 124.0 108.4 4% 117.0 110% 114.1 101.1 98.3 98.2 97.3 100% 104.0 107.8 104.7 95.4 94.1 3% 98.4 98.4 97.9 97.4 90% 93.7 96.8 90.4 90.2 93.9 2% 80% 83.1 1% 70% 72.4 60% 0% 1 5-ye
Slide 7: P&C Reinsurance
P&C Reinsurance April 2013 renewals with moderate growth, high price quality maintained January 2013 renewals January treaty portfolio1 USD 8.5bn USD 9.4bn YTD 2013 renewals (January – April) 100% 111% Treaty portfolio Up for renewal Estimated USD 11.0bn 1 Jan 2013 outcome USD 10.0bn 110% April 2013
Slide 8: L&H Reinsurance
L&H Reinsurance Growth in Health, USD 1bn capital extraction target achieved Operating revenues Benefit ratio1 Net income, ROE USD m % USD m, % +3.9% +4.1%pts +6.2% 2 545 2 643 74.4% 222 ROE: 209 12.6% 78.5% Q1 2012 Q1 2013 Q1 2012 Q1 2013 Q1 2012 Q1 2013 Premiums earned and fee Mortality experi
Slide 9: L&H Reinsurance
L&H Reinsurance Operating income: more work to be done in USD m Q1 2012 variance to expected was USD 123m, the highest in 17 quarters Includes USD 75m gain on recaptures; Q1 2012 expenses 185 were particularly light -76 13 -21 31 -27 105 Q1 2012 Mortality / Pre-2004 Changes Investment income Other,
Slide 10: Corporate Solutions
Corporate Solutions Strong result, continued growth as planned Net premiums earned Combined ratio Net income, ROE USD m % USD m, % +15.4% +2.9%pts +20.2% 613 84.7% 101 ROE: 531 84 13.1% 87.6% Q1 2012 Q1 2013 Q1 2012 Q1 2013 Q1 2012 Q1 2013 Significant premium earned still No impact from nat cat
Slide 11: Admin Re®
Admin Re® Good progress post sale of Admin Re® US Gross cash generation1 Return on investments Net income, ROE USD m % USD m, % -11.3% -0.3%pts -55.2% 174 71 5.0% 63 4.7% ROE: 4.8% 78 Q1 2012 Q1 2013 Q1 2012 Q1 2013 Q1 2012 Q1 2013 Solid gross cash generation in Return on investments of 4.7% R
Slide 12: Group investment result
Group investment result Steady performance Avg. invested assets Return on investments Total return USD bn, basis for ROI calculation % % -5.4% -0.6%pts flat 125.0 118.2 4.0% 3.4% Q1 2012 Q1 2013 Q1 2012 Q1 2013 Q1 2012 0.6% 0.6% Q1 2013 Decrease in average assets due ROI at 3.4%, driven by net
Slide 13: Common shareholders' equity Q1 2013
Common shareholders' equity Q1 2013 Net income partly offset by reduction in unrealised gains and fx Gov bonds -0.8 Corp bonds -0.2 USD m Sec products 0.0 Equities and others 0.4 35 000 Tax 0.2 Total -0.4 148 -321 34 000 -446 1 380 33 661 33 000 32 900 32 000 31 000 30 000 Common shareholders' Net i
Slide 14: Group financial targets
Group financial targets Well on track ROE 700 bps above risk free EPS growth 10% average ENW per share growth plus average over 5 years annual growth rate, adjusted dividends 10% avg. annual (2011-2015) for special dividends1 growth rate over 5 years in % 16.6 in USD2 in USD2 144.5 13.4 11.9 10.1 10
Slide 15: Summary and outlook
Summary and outlook All business units contributed to strong Q1 2013 results Renewals show a continued strong P&C environment – Expect this to continue into July and later renewals in P&C Reinsurance – Nat cat prices for US and Japan peak risks slightly lower but remain strong – Corporate Soluti
Slide 16: Appendix
Appendix First quarter 2013 results 16
Slide 17: Appendix
Appendix Business segment results Q1 2013 – Income Overall investment portfolio statement Fixed income securities Business segment results Q1 2013 – Balance sheet Government bonds Shareholders' equity and ROE Q1 2013 Corporate bonds P&C Reinsurance – Underwriting performance Securi
Slide 18: Business segment results Q1 2013 – Income statement
Business segment results Q1 2013 Income statement Re- Corporate Admin Group Consoli- Total Total USD millions insurance P&C Re L&H Re Solutions Re® items dation Q1 2013 Q1 2012 Revenues Premiums earned 5 833 3 534 2 299 613 171 - - 6 617 5 979 Fee income from policyholders 14 - 14 - 151 - - 165 229
Slide 19: Business segment results Q1 2013 – Balance sheet
Business segment results Q1 2013 Balance sheet Re- Corporate Admin Group Consoli- 31 March 2013, USD millions insurance P&C Re L&H Re Solutions Re® items dation Q1 2013 FY 2012 Assets Fixed income securities 60 282 29 902 30 380 4 775 20 327 97 - 85 481 88 848 Equity securities 2 753 2 266 487 644 3
Slide 20: Shareholders' equity and ROE Q1 2013
Shareholders' equity and ROE Q1 2013 Re- Corporate Admin Group Total1 USD millions insurance P&C Re L&H Re Solutions Re® items Q1 2013 Common shareholders' equity at 31 December 2012 19 593 12 004 7 589 3 032 6 662 3 660 32 900 Net income attributable to common shareholders 1 231 1 009 222 101 78 -3
Slide 21: P&C Reinsurance – Underwriting performance
P&C Reinsurance Underwriting performance Combined ratios in %, premiums and underwriting result in USD m Net premiums Underwriting Q1 2012 Q1 2013 Main drivers of change earned result Property 71.0% 56.3% No new events in 2013; Q1 2012 impacted by 1 658 724 loss estimate increases for prior year c
Slide 22: Nat cat and large man-made claims
P&C Reinsurance and Corporate Solutions Nat cat and large man-made claims Nat cat premiums and claims1 Est. Corporate USD m FY 2013 P&C Re Solutions Expected net premiums 3 400 3 080 320 Expected net claims 1 750 1 580 170 Nat cat and man-made large claims1 Total est. Q1 2013 Corporate USD m FY 2012
Slide 23: L&H Reinsurance – Income break-down
L&H Reinsurance Income break-down Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 USD m 2011 2011 2011 2011 2012 2012 2012 2012 2013 Net income 14 525 492 633 209 248 187 95 222 of which approximately: Net realised gains/losses1 -156 333 451 524 118 280 288 23 111 VA, pre-2000 GMDB, impact from B36 -2 22 -25 -40 -19 -15
Slide 24: L&H Reinsurance – Impact of business recaptures
L&H Reinsurance Impact of business recaptures Q1 2013 income statement impact Q1 2013 balance sheet impact USD m Q1 2013 USD m Acquisition costs 75 Assets Pre-tax gain 75 Cash and cash equivalents 650 Income tax expense -20 Deferred acquisition costs 59 Income statement gain on recaptures 55 Acquire
Slide 25: Corporate Solutions – Underwriting performance
Corporate Solutions Underwriting performance Combined ratios in %, premiums and underwriting result in USD m Net premiums Underwriting Q1 2012 Q1 2013 Main drivers of change earned result Property 79.5% 77.7% No nat cat impact in either year 224 50 Casualty 93.7% 110.9% 2013 driven by negative r
Slide 26: Net investment income
Net investment income Corporate Admin Group Consoli- Total Total USD m P&C Re L&H Re Solutions Re® items dation Q1 2013 Q1 2012 Investment related income 234 248 30 223 31 -9 757 950 Government bonds 111 146 10 76 - - 343 444 Corporate bonds 39 80 12 126 - - 257 293 Securitised products 16 22 3 10 2
Slide 27: Net realised gains/losses
Net realised gains/losses Corporate Admin Group Consoli- Total Total USD m P&C Re L&H Re Solutions Re® items dation Q1 2013 Q1 2012 Investment related 85 111 26 52 -19 - 255 338 Government bonds 47 75 5 54 - - 181 649 Corporate bonds 28 14 18 5 - - 65 34 Securitised products 1 4 - -3 - - 2 -81 Equit
Slide 28: Net unrealised gains/losses
Net unrealised gains/losses Corporate Admin End End USD m P&C Re L&H Re Solutions Re® Group items Q1 2013 FY 2012 Government bonds 550 1 242 36 1 212 - 3 040 3 816 Corporate bonds 195 577 40 1 324 - 2 136 2 305 Securitised products 46 108 19 80 2 255 259 Equities 281 53 94 - 52 480 313 Other 268 16
Slide 29: Return on investments basis
Return on investments basis Investments included in the ROI calculation USD bn FY 2012 Q1 20131 Total investment portfolio 163.7 164.5 Unit-linked investments -22.7 -22.7 With-profit business -3.6 -3.4 Total (excl. unit-linked and with-profit) 137.4 138.4 Cash and cash equivalents -10.0 -11.1 Policy
Slide 30: Return on investments (ROI)
Return on investments (ROI) Corporate Admin Group Consoli- Total Total USD m P&C Re L&H Re Solutions Re® items dation Q1 2013 Q1 2012 Net investment income 234 248 30 223 31 -9 757 950 Net realised gains/losses (incl. fx) 85 111 26 52 -19 - 255 338 Other revenue 10 - - - - -10 - 6 Investment operati
Slide 31: Overall investment portfolio
Overall investment portfolio 61% invested in cash, short-term investments or government bonds Other - Other - Mortgages investment insurance Cash and cash and other related related equivalents loans 9% 1% 8% 1% USD bn End Q1 2013 Short-term investments Balance sheet values 164.5 Securitised 14% prod
Slide 32: Fixed income securities
Fixed income securities USD bn End FY 2012 End Q1 2013 Balance sheet values 93.5 89.8 Unit-linked investments -2.6 -2.4 With-profit business -2.1 -1.9 Balance sheet values (excl. unit-linked and with-profit business) 88.8 85.5 Government bonds1 Corporate bonds2 Securitised products3 58.0 53.9 23.8 2
Slide 33: Government bonds
Government bonds High quality portfolio S&P rating 31 March USD m 20131 End Q1 2013 % of Total Eurozone other: USD 1 516m United States AA+ 17 027 31.6% United Kingdom AAA 14 215 26.4% Other 10% Canada AAA 4 318 8.0% Austria Australia AAA 1 331 2.5% Finland 33% 22% Switzerland AAA 634 1.2% EIB RoW a
Slide 34: Corporate bonds
Corporate bonds Continued re-balancing in high quality assets End Q1 % of End Q1 USD m 2013 Total 2013 6% 2% 53% United States Resources 2 849 11.4% Pfandbriefe / 19% 3% United Kingdom covered bonds Basic industries 1 291 5.2% Australia Banks 47% 6% Canada Cyclical consumer goods 703 2.8% Specialty
Slide 35: Securitised products
Securitised products 53% is AAA 2% End FY End Q1 BB and Est. % USD m, market values 2012 2013 Aaa Aa A BBB below par 37% CMBS 3 175 2 999 1 445 330 479 261 484 103% 47% RMBS 990 914 244 47 321 91 211 85% Other ABS 2 408 2 331 1 630 307 228 107 59 102% 14% Other Securitised 100 107 23 32 - 23 29 50%
Slide 36: Equities and Alternative Investments
Equities and Alternative Investments Mark-to-market gains Equities Listed Equities Exchange-traded funds by sector Non-Cyclical Consumer Goods USD m, market values End FY 2012 End Q1 2013 2% 3% 1% Financials 4% Information Technology Listed Equities 2 626 3 051 5% 36% Cyclical Services 6% Strategic
Slide 37: Investment mix and mid-term plan
Investment mix and mid-term plan 100% 0-5% 3% 0-5% 0-5% 1% 0-5% 2% 0-5% 5% 9% 0-5% 0-5% 8% 5-10% 90% 5-15% 5-15% 12% 22% 10-30% 80% 10-20% 20% 21% 10% 20-30% 15-30% 48% 70% 5% 7% 45-55% 0-10% 5-15% 6% 5% 60% 5-10% 5-10% 50% 39% 3% 34% 0-10% 41% 40-50% 51% 40% 40-60% 35-55% 35-55% 30% 38% 35-50% 20%
Slide 38: Swiss Re's capital structure
Swiss Re’s capital structure USD bn Senior long-term financial debt Hybrid capital Mandatory convertibles 45 CPCI (2009) and contingent capital instruments (part of shareholders' equity) 75% Common shareholders' equity 4.8 Senior financial debt to total capital 5.0 Hybrid to total capital 5.0 0.7 4.
Slide 39: Number of shares
Number of shares in millions Q1 2013 Total shares 370.7 of which Treasury shares and shares reserved for 26.5 corporate purposes Shares outstanding1 (as at 31 March 2013) 344.2 Shares outstanding1 (weighted average) 343.5 1 Shares outstanding is the number of shares eligible for dividends and is use
Slide 40: Exchange rates
Exchange rates Average rates EUR/USD GBP/USD CAD/USD CHF/USD Gross premiums written Q1 2013 split by main Q1 2012 1.31 1.57 1.00 1.08 currencies Q4 2012 1.28 1.58 1.00 1.06 Other Q1 2013 1.33 1.56 0.99 1.08 15% Change Q1 2012/Q1 2013 1.53% -0.64% -1.00% 0.00% CAD USD 4% 35% AUD Change Q4 2012/Q1 201
Slide 41: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 24 June 2013 Investors' Day Zurich 08 August 2013 Second Quarter 2013 results Conference call 09 September 2013 Investors and Media meeting Monte Carlo 07 November 2013 Third Quarter 2013 results Conference call 20 February 2014 Annual Results Confere
Slide 42: 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