Swiss Re Ag · SIX:SREN
Swiss Re — Helvea Swiss equities conference 2015
26 slides from Swiss Re's conference presentation, Jan 15, 2015
Slide 1: Performing in a challenging market environment
Performing in a challenging market environment Helvea Swiss equities conference David Cole, Group CFO Bad Ragaz, 15 January 2015
Slide 2: Today's agenda
Today's agenda Swiss Re at a glance Global growth and implications for insurers Current developments in P&C pricing and Swiss Re's position Importance of active capital management Conclusion Q&A Swiss equities conference | Bad Ragaz 15 January 2015 2
Slide 3: Leadership through geographic and product diversification
Leadership through geographic and product diversification • Swiss Re is a leading and highly diversified global re/insurance group, with over 60 offices in more than 20 countries • Swiss Re has both a superior capital rating and more than 150 years of experience in providing reinsurance solutions fo
Slide 4: Increased transparency and accountability with Business Unit structure introduced in 2012
Increased transparency and accountability with Business Unit structure introduced in 2012 Swiss Re Group Corporate Reinsurance Admin Re® Solutions P&C L&H Strategic goal Strategic goal Strategic goal • To be the world's • To be a focused, lean, • To be a recognised leading reinsurer global player in
Slide 5: Today's agenda
Today's agenda Swiss Re at a glance Global growth and implications for insurers Current developments in P&C pricing and Swiss Re's position Importance of active capital management Conclusion Q&A Swiss equities conference | Bad Ragaz 15 January 2015 5
Slide 6: Global macro outlook: diverging growth and monetary policies
Global macro outlook: diverging growth and monetary policies Global growth will • US supported by consumer spending, business investment and housing construction continue to gradually • Growth in the Euro area remains fragile with public accelerate and private deleveraging constraining the expansion
Slide 7: Growth acceleration of commercial insurance thanks to urbanisation-led infrastructure spending
Growth acceleration of commercial insurance thanks to urbanisation-led infrastructure spending Urbanisation rate, % Between1950 and 2010, the world’s urban population grew nearly fivefold, with on average 47 million more urban residents every year The pace of urbanization in advanced markets has
Slide 8: The rise of Asia's middle-income class will be the fuel for growth of motor and home insurance
The rise of Asia's middle-income class will be the fuel for growth of motor and home insurance in Asia Share of total number of global middle- Share of global middle-income class 100% income class consumption 100% 90% 90% Asia 80% 80% Pacific 70% 70% Asia Pacific Asia 60% 60% Pacific 50% 50% 40% 40%
Slide 9: Despite challenges, profits for life insurers have been improving
Despite challenges, profits for life insurers have been improving 25% 20% 15% 10% RoE 5% 0% -5% -10% 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 3 Canadian companies 7 European Globals 6 UK companies 12 US companies 2 Chinese companies Market cap weighted average Source: Sw
Slide 10: Today's agenda
Today's agenda Swiss Re at a glance Global growth and implications for insurers Current developments in P&C pricing and Swiss Re's position Importance of active capital management Conclusion Q&A Swiss equities conference | Bad Ragaz 15 January 2015 10
Slide 11: Various factors are currently driving P&C re-/insurance prices
Various factors are currently driving P&C re-/insurance prices Prices High Low Nat Cats ? Low interest rates Tighter regulation Reserve releases Factors leading to higher prices1 Low inflation High industry capitalisation Factors leading to lower prices1 Drivers of re-/ insurance prices 1 Nominal pr
Slide 12: Alternative capital continues to pressure but is unlikely to replace the traditional reinsurance market
Alternative capital continues to pressure but is unlikely to replace the traditional reinsurance market • Strong US focus; approximately 23% Estimated size of global AC market that is market share of the US catastrophe focusing on Nat Cat vs cat bond spread market USD bn bps • Due to increased compe
Slide 13: Swiss Re has a different business model from alternative capital providers
Swiss Re has a different business model from alternative capital providers Collateralised Hedge fund Swiss Re reinsurers reinsurers 1. Main income driver Underwriting Investing Underwriting 2. Risk pool US Nat Cat concentrated Low severity only Diversified 3. Service level & client relationships 4.
Slide 14: Swiss Re's underwriting outperformance leading to strong premium share and underwriting profit share
Swiss Re's underwriting outperformance leading to strong premium share and underwriting profit share Swiss Re’s P&C premium and underwriting profit share vs top reinsurers 60% 50% 40% 30% 20% 10% 0% 2006 2007 2008 2009 2010 2011 2012 2013 1H14 Premiums U/W profit (green = loss) In 2011 the industry
Slide 15: Key competencies driving Swiss Re's competitive advantage in underwriting
Key competencies driving Swiss Re's competitive advantage in underwriting Portfolio Hedging R&D Innovation, 151 Years steering large and structured Capital transactions strength In an inefficient Our retro and Re/insurance is a Focus on tailored Superior balance market, skilled hedging team knowledg
Slide 16: Today's agenda
Today's agenda Swiss Re at a glance Global growth and implications for insurers Current developments in P&C pricing and Swiss Re's position Importance of active capital management Conclusion Q&A Swiss equities conference | Bad Ragaz 15 January 2015 16
Slide 17: Swiss Re's Group capitalisation remains very strong
Swiss Re's Group capitalisation remains very strong Group capitalisation – Swiss Solvency Test1 (SST) • Swiss Re maintains a strong capitalisation under all relevant capital adequacy requirements such as the Swiss Solvency Test (SST – see chart), Solvency I and Standard & Poor's AA rating USD bn; %
Slide 18: Swiss Re's target capital structure is on track towards implementation by 2016
Swiss Re's target capital structure is on track towards implementation by 2016 Target capital structure Swiss Re's target capital structure • maximises return on equity within risk tolerance targets • optimises financial flexibility, and • complies with external constraints Core capital ¹ Senior deb
Slide 19: Strong flow of internal and external dividends since the introduction of Business Unit structure in 2012
Strong flow of internal and external dividends since the introduction of Business Unit structure in 2012 USD 7.0bn distribution to shareholders Swiss Re Ltd USD 5.3bn USD 2.7bn USD 0.8bn USD 1.8bn Corporate Reinsurance Admin Re® Solutions P&C L&H As of 30 June 2014 • Group risk tolerance is basis fo
Slide 20: Swiss Re's asset allocation is based on disciplined asset-liability management principles
Swiss Re's asset allocation is based on disciplined asset- liability management principles 1% 0-5% 4% 8% 5-10% 8% • Reduction in cash and short-term investments during Q3 2014 as a 29% 20-30% result of duration lengthening, but 5-10% 38% allocation still above peers 5% • Allocation to credit-related
Slide 21: Swiss Re is on track to deliver on its financial targets
Swiss Re is on track to deliver on its financial targets 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 % in USD2 in USD2 144.5 13.
Slide 22: Today's agenda
Today's agenda Swiss Re at a glance Global growth and implications for insurers Current developments in P&C pricing and Swiss Re's position Importance of active capital management Conclusion Q&A Swiss equities conference | Bad Ragaz 15 January 2015 22
Slide 23: Conclusion
Conclusion • Swiss Re benefits from geographic and business mix diversification and has the ability to reallocate capital to achieve profitable growth • Critical importance of differentiation and underwriting outperformance in current challenging market environment. Swiss Re has outperformed in the
Slide 24: Today's agenda
Today's agenda Swiss Re at a glance Global growth and implications for insurers Current developments in P&C pricing and Swiss Re's position Importance of active capital management Conclusion Q&A Swiss equities conference | Bad Ragaz 15 January 2015 24
Slide 25: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 2015 19 February Annual Results 2014 Conference call 18 March Publication of Annual Report 2014 and EVM 2014 21 April 151st Annual General Meeting Zurich 30 April First Quarter 2015 Results Conference call 30 July Second Quarter 2015 Results Conferenc
Slide 26: 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