Swiss Re Ag · SIX:SREN
Swiss Re — FY2022 Earnings Presentation
59 slides from Swiss Re's earnings presentation, Feb 17, 2023
Slide 1: Annual Results 2022
Annual Results 2022 Swiss Re investor and analyst presentation Zurich, 17 February 2023
Slide 2: Focus areas of Annual Results 2022
Focus areas of Annual Results 2022 FY 2022 Capital P&C Re 2023 financial results actions renewals targets This investor and analyst presentation contains preliminary unaudited financial information for 2022. The audited financial statements for 2022 will be included in Annual Results 2022 2 our 2022
Slide 3: 2022 result impacted by significant headwinds
2022 result impacted by significant headwinds Equities mark-to-market Large nat cat losses Economic inflation1 COVID-193 impact2 above expectations4 USD 1.1bn USD 0.6bn USD 0.6bn USD 0.5bn 2022 reported Group net income USD 0.5bn 1 Pre-tax impact of economic inflation on underwriting results across
Slide 4: Solid Q4 performance across the Group
Solid Q4 performance across the Group Swiss Re Group FY 2022 Q4 2022 key figures key figures Combined ratio 102.4% 91.0% P&C Net income Reinsurance Normalised3 (USD m) 1 437 combined ratio 96.9% 98.9% 757 472 179 L&H Reinsurance Net income (USD) 416m 195m FY 21 FY 22 Q4 21 Q4 22 +0.9% -0.2% Corporat
Slide 5: 2022 P&C Reinsurance underwriting result impacted by economic inflation and elevated nat cat losses
2022 P&C Reinsurance underwriting result impacted by economic inflation and elevated nat cat losses P&C Reinsurance – combined ratio P&C Reinsurance – nat cat combined ratio Reported Normalised1 Current accident year Including prior-year development 110% 108% 106% 108% 88% 70% 77% 84% 77% 71% 104% 1
Slide 6: Corporate Solutions delivered a resilient result
Corporate Solutions delivered a resilient result Corporate Solutions – combined ratio Reported 130% 125% Underwriting performance in 2022 120% 115% • Reported combined ratio of 93.1%1 outperformed target of <95% 110% • Combined ratio impacted by reserves related to the Ukraine war 105% (USD 0.1bn, 2
Slide 7: Reserving actions taken on economic inflation throughout the year
Reserving actions taken on economic inflation throughout the year, largely offset by positive reserve development of the broader P&C portfolio P&C prior-year technical result1 (USD bn) -1.3 -0.2 0.5 -0.2 1.5 Prior-year development in 2022 1.0 • Cumulative inflation IBNR2 reserves of USD 1.0bn establ
Slide 8: Third consecutive quarter of strong L&H Reinsurance profitability
Third consecutive quarter of strong L&H Reinsurance profitability, supported by waning COVID-19 impacts COVID-19 800 mortality losses (US GAAP, USD m) 600 400 Incurred 200 Reported 0 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Net income1 (USD m) 299 -225 -2 -1 -193 64 97
Slide 9: Reinvestment yield and recurring income uplift
While the reinvestment yield is expected to have come down from Q4 2022 peak, current interest rate levels continue to provide uplift to recurring income Recurring 5.5 income yield1 and fixed income reinvestment yield (%) 5.1% 5.0 5.1% 4.5 fixed income reinvestment 4.0 yield in Q4 2022 3.5 3.0% 3.0
Slide 10: Dividend of USD 6.40 proposed based on very strong capital position
Dividend of USD 6.40 proposed based on very strong capital position and positive outlook Swiss Re’s capital management priorities remain unchanged Group SST ratio1 development >280% 269% 251% Ensure superior capitalisation Grow the regular dividend 232% at all times and maximise with long-term earni
Slide 11: January renewals outcome reflects elevated risk environment
January renewals outcome reflects elevated risk environment Pricing Volume Economic profitability Structure & terms USD +18% +13% +0.8bn Increased attachment points Tightened nominal price increase premium volume growth of higher expected economic pre-tax terms & conditions more than offset higher l
Slide 12: P&C Reinsurance achieved strong price increases in the January renewals
P&C Reinsurance achieved strong price increases in the January renewals Price change1 +18% • 48% of Swiss Re’s reinsurance treaty business renewed in January Higher loss assumptions +13% • +18% price increase, with rate USD bn Premium volume change + 13% increases most pronounced in nat cat 10.2 • +
Slide 13: January renewals book features improved pricing and benefit of higher interest rates
January renewals book features improved pricing and benefit of higher interest rates, while focus on portfolio quality was maintained Gross premium volume by line of business1 (USD bn) Gross premium volume by region1 (USD bn) Up for Outcome Economic Up for Outcome Premium Premium renewal in January
Slide 14: Financial targets reflect positive outlook across our three business segments
Financial targets reflect positive outlook across our three business segments New 2023 financial targets Unchanged multi-year Group targets P&C Reported combined ratio <95% 14% Reinsurance L&H Return on equity2 Reinsurance Net income USD ~900m in 2024 Corporate Solutions Reported combined ratio <94%
Slide 15: The Group targets a US GAAP net income of USD >3bn in 2023
The Group targets a US GAAP net income of USD >3bn in 2023 USD Recurring investment income uplift Cost discipline >3bn Increased L&H Re profitability2 Increased P&C profitability1 USD 0.5bn US GAAP US GAAP net income net income 2022 2023 target 1 Includes P&C Reinsurance and Corporate Solutions, ref
Slide 16: P&C Reinsurance targets a reported US GAAP combined ratio of <95% in 2023
P&C Reinsurance targets a reported US GAAP combined ratio of <95% in 2023 96.9% Earn-through of prior-year business in 2023 Earn-through of business written in 2023 Cost discipline <95% Normalised1 Move from normalised1 to reported combined Reported combined ratio target, including impact from prior
Slide 17: L&H Reinsurance targets a US GAAP net income of USD ~900m in 2023
L&H Reinsurance targets a US GAAP net income of USD ~900m in 2023 Transition from US GAAP to IFRS in 2024 Recurring USD Key drivers of higher Reduced drag from pre- investment income uplift Cost discipline ~900m expected earnings 2004 US book ‐ Acceleration of earnings COVID-19 normalisation1 recogn
Slide 18: New organisational set-up mirrors our Group strategy
New organisational set-up mirrors our Group strategy – putting clients first, and expanding our focus to risk insights and partnerships Rationale Streamlined set-up of Business Units1 Swiss Re • Increased proximity to clients and (C. Mumenthaler, Group CEO) partners by shifting decision-making autho
Slide 19: Financial highlights
Financial highlights 19
Slide 20: Key figures
Key figures Corporate Total Total USD m, unless otherwise stated P&C Re L&H Re Solutions Group items FY 2022 FY 2021 • Premiums earned and fee income 22 028 14 984 5 482 624 43 118 42 726 • Net income/loss 312 416 486 -742 472 1 437 • Return on investments 1.4% 3.2% 1.4% 0.9% 2.0% 3.2% • Combined ra
Slide 21: P&C Reinsurance
P&C Reinsurance 21
Slide 22: P&C Reinsurance result impacted by economic inflation and elevated nat cat losses
P&C Reinsurance result impacted by economic inflation and elevated nat cat losses Net premiums earned Net operating margin1 (%) Combined ratio (%) Reported Normalised2 111.5 107.8 109.0 -9.0pts 104.0 102.4 12.2 99.8 97.1 100.0 99.9 98.4 USD 22.0bn 7.5 96.9 96.9 93.5 94.7 3.2 in 2022 2.6 2016 2017 20
Slide 23: P&C Reinsurance strategy in action
P&C Reinsurance strategy in action Portfolio split by region and line of business CORE • Efficiency gains across the value chain (% of net premiums earned) US GAAP cost ratio1(%) through services tailored towards client 35 needs combined with smart and lean processes 31.8 31.1 • Continuous reallocat
Slide 24: L&H Reinsurance
L&H Reinsurance 24
Slide 25: L&H Reinsurance returned to profitability despite material COVID-19 losses
L&H Reinsurance returned to profitability despite material COVID-19 losses Net premiums earned Net operating margin1 (%) Recurring income yield2 and ROI (%) and fee income 3.4 3.3 3.4 3.3 3.2 +6.1pts 3.0 2.8 4.3 5.0 4.3 3.6 3.7 3.7 3.4 USD 15.0bn 3.2 10.4 9.8 in 2022 2016 2017 2018 2019 2020 20213 2
Slide 26: L&H Reinsurance strategy in action
L&H Reinsurance strategy in action Portfolio split by region and line of business CORE (% of net premiums earned and fee income) US GAAP cost ratio1 (%) • Active cost management, scalability and growth will further improve our cost ratios 21.8 20.9 20.1 • Continuous reallocation of resources to key
Slide 27: Corporate Solutions
Corporate Solutions 27
Slide 28: Corporate Solutions outperformed its combined ratio target
Corporate Solutions outperformed its combined ratio target Net premiums earned Net operating margin1 (%) Combined ratio (%) 133.4 127.9 -2.5pts 117.5 115.5 13.5 11.0 101.1 93.1 USD 5.5bn 90.6 24.3 20.4 FY 2016 FY 2017 FY 2018 FY 2019 FY 20203 FY 2021 FY 2022 in FY 2022 4.4 4.4 • FY 2022 combined rat
Slide 29: Corporate Solutions strategy in action
Corporate Solutions strategy in action Portfolio split by region and line of business Reserving adequacy restored (% of net premiums earned and fee income) Net prior-year reserve development (as % of premiums) 6 3 2 • Reinforced portfolio steering framework across costing, -6 14% -7 underwriting, re
Slide 30: iptiQ
iptiQ 30
Slide 31: iptiQ continued its growth trajectory
iptiQ continued its growth trajectory Gross premiums written1 (USD m) Adjusted gross income2 (USD m) Earnings before interest 851 and tax (EBIT) +59% 723 +21% 52 211 371 43 USD -362m in 2022 2019 2020 2021 2022 USD-278m 41 30 • Gross premiums written increased 17.7% year-on-year (27.8% at constant f
Slide 32: iptiQ division strategy in action
iptiQ division strategy in action Portfolio split by region and line of business Underwriting results (% of gross premiums written) Gross loss ratio (as % of gross premiums earned) +1% • Gross loss ratio largely unchanged as claims 78 79 experience, COVID-19 impacts, and business 9% mix remain at si
Slide 33: Group investments
Group investments 33
Slide 34: Investment result reflects steady increase in recurring income
Investment result reflects steady increase in recurring income, though impacted by the decline in global equity markets Return on investments (ROI) Investment portfolio positioning (USD bn) Net investment income (USD m) Recurring income yield (RIY)2 (%) 119.3 0.3 2.9 2.9 2.9 14.5 104.3 2.8 2.0% 0.4
Slide 35: Alternative Capital Partners
Alternative Capital Partners 35
Slide 36: Increased earnings contribution from Alternative Capital Partners
Increased earnings contribution from Alternative Capital Partners Fee and commission revenues (USD m) Sidecar and fund platform1 (USD bn) +36% +29% 116 2.9 85 2.2 57 58 27 2018 2019 2020 2021 2022 2021 2022 • Revenues earned through alternative or traditional activities: • Despite a challenging capi
Slide 37: Appendix
Appendix 37
Slide 38: Business segment results FY 2022
Business segment results FY 2022 Income statement Corporate Total Total USD m Reinsurance P&C Re L&H Re Solutions Group items Consolidation FY 2022 FY 2021 Revenues Gross premiums written 39 834 23 848 15 986 8 198 868 -1 011 47 889 46 658 Net premiums written 37 302 22 826 14 476 6 124 491 - 43 917
Slide 39: Business segment results Q4 2022
Business segment results Q4 2022 Income statement Corporate Total Total USD m Reinsurance P&C Re L&H Re Solutions Group items Consolidation Q4 2022 Q4 2021 Revenues Gross premiums written 8 049 4 046 4 003 2 250 205 -191 10 313 10 748 Net premiums written 7 505 3 931 3 574 1 693 129 - 9 327 9 807 Ch
Slide 40: Business segment results FY 2022 balance sheet
Business segment results FY 2022 Balance sheet Corporate End End 31 December 2022, USD m Reinsurance P&C Re L&H Re Solutions Group items Consolidation FY 2022 FY 2021 Assets Fixed income securities 66 138 38 918 27 220 7 922 513 - 74 573 86 985 Equity securities 1 378 1 110 268 116 620 - 2 114 3 978
Slide 41: Total equity and ROE FY 2022
Total equity and ROE FY 2022 Total USD m FY 2022 Shareholders' equity at 31 December 2021 23 568 Net income attributable to shareholders 472 Dividends -1 825 Net change in unrealised gains/losses -9 738 Other (including fx) 222 Shareholders' equity at 31 December 2022 12 699 Non-controlling interest
Slide 42: Change in shareholders' equity mainly driven by net unrealised investment losses and dividend payment
Change in shareholders' equity mainly driven by net unrealised investment losses and dividend payment USD m Gov bonds -6.8 Corp bonds -4.8 Sec products -0.3 Other -0.3 Tax 2.5 472 - 1 825 23 568 -9 738 222 12 699 Shareholders' Net income Dividends Net change in Other 1 Shareholders' equity attributa
Slide 43: P&C underwriting performance
P&C underwriting performance P&C Reinsurance and Corporate Solutions Combined ratio Main drivers of change in FY 2022 Net premiums earned (USD m) P&C Reinsurance Q4 2021 Q4 2022 FY 2021 FY 2022 Q4 2022 FY 2022 Property 86.8% 62.4% 92.2% 98.7% • Deterioration impacted by elevated large nat cat losses
Slide 44: P&C Reinsurance: combined ratio split
P&C Reinsurance: combined ratio split Quarterly performance (%) Full-year performance (%) Main drivers of change in FY 2022 105 105 102.4 • Current accident year (CAY) loss ratio excluding large 0.8 losses increased vs. prior-year period, primarily due to 100 100 97.1 96.0 higher-than-expected econo
Slide 45: Corporate Solutions: combined ratio split
Corporate Solutions: combined ratio split Quarterly performance (%) Full-year performance (%) Main drivers of change in FY 2022 100 93.1 100 90.6 1.1 93.1 • Current accident year (CAY) loss ratio excluding large 95 89.0 3.1 95 6.5 2.7 losses benefitted from improved portfolio resilience and 3.6 4.2
Slide 46: L&H Reinsurance EBIT movements
L&H Reinsurance EBIT movements EBIT movements (USD m) FY 20213 FY 2022 Life Health L&H Life Health L&H EBIT reported -1 052 412 -2994 285 304 7204 Net operating margin, % -9.0 8.6 -1.8 2.4 6.4 4.3 Mortality/morbidity experience vs. expected1 102 9 111 -58 -40 -98 Valuation/assumption changes2 4 -36
Slide 47: Return on investments (ROI) FY 2022
Return on investments (ROI) FY 2022 Corporate Total Total USD m P&C Re L&H Re Solutions Group items Consolidation FY 2022 FY 2021 Investment related net investment income 1 105 1 035 228 177 -271 2 274 2 834 Fixed income 745 946 166 14 - 1 871 1 725 Equities and alternative investments – incl. RE PE
Slide 48: Return on investments (ROI) Q4 2022
Return on investments (ROI) Q4 2022 Corporate Total Total USD m P&C Re L&H Re Solutions Group items Consolidation Q4 2022 Q4 2021 Investment related net investment income 277 290 67 64 -79 619 683 Fixed income 221 243 48 4 - 516 418 Equities and alternative investments – incl. RE PE HF 34 3 - 11 - 4
Slide 49: Overall investment portfolio
Overall investment portfolio Other investments (incl. policy loans) Cash and cash equivalents Short-term investments Mortgages and other loans 7% 4% 4% 8% Equities1 6% 36% Government bonds 35% Credit bonds Corporate End End USD bn P&C Re L&H Re Solutions Group items Consolidation FY 2022 FY 2021 Cas
Slide 50: Fixed income securities
Fixed income securities Government Credit USD m bonds bonds End FY 2021 47 205 39 780 • Decrease in government bonds driven by market End value losses, reflecting the impact of rising interest FY 2022 37 722 36 851 rates • Decrease in credit bonds reflects the impact of rising interest rates as well
Slide 51: Equities and alternative investments
Equities and alternative investments Equity securities by sector 1% 1% ETF (excl. fixed income) 1% 1% 3% Non-cyclical consumer goods End End 4% Financials USD m FY 2021 FY 2022 7% Information technology Equity securities 2 739 1 535 34% Cyclical services 11% General industrials Private equity 3 054
Slide 52: Overview of proposed capital management actions
Overview of proposed capital management actions • The Board of Directors will propose to the AGM 2023: − Regular dividend of USD 6.40 per share − Replacement of the existing authorised capital approval (up to 85 million shares), which expires at the AGM 2023, with a capital band that: − has an upper
Slide 53: 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 -0.9 -0.5 +1.4 Estimated impact on economic net worth (EVM) -0.9 -0.5 +1.4 Estimated impact on income/loss before income tax expen
Slide 54: Premiums by market
Premiums by market 2022 Gross premiums written and fees assessed against policyholders by market1 (USD m) Total Total Life & Health Non-Life FY 2022 FY 2021 United States 7 006 14 434 21 440 20 094 United Kingdom 1 927 2 317 4 244 4 246 Australia 929 1 020 1 949 2 096 China 783 888 1 671 1 754 Canad
Slide 55: Premiums by line of business and region
Premiums by line of business and region Premiums earned and fee income by line of business (USD bn) 28.8 31.3 30.2 33.2 33.7 34.5 38.6 40.8 42.7 43.1 12% 13% 13% 12% 12% 14% 14% 14% 13% 13% 27% 26% 26% 26% 27% 28% 26% 25% 26% 25% 11% 11% 12% 10% 10% 10% 11% 11% 11% 10% 22% 24% 25% 28% 29% 28% 26% 26
Slide 56: Corporate calendar and contacts
Corporate calendar and contacts Corporate calendar 2023 16 March Publication of Annual Report 2022 17 March Management Dialogues 2023 London 12 April 159th Annual General Meeting Zurich 04 May Q1 2023 Results Conference call 04 August H1 2023 Results Conference call 03 November 9M 2023 Results Confe
Slide 57: Annual Results 2022
(in) Swiss Re Annual Results 2022 87
Slide 58: 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
Slide 59: Legal notice
Legal notice ©2023 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