Swiss Re Ag · SIX:SREN
Swiss Re — Investor Day (December 2016)
110 slides from Swiss Re's investor day presentation, Dec 2, 2016
Slide 1: Investors' Day, Rüschlikon, 2 December 2016
@ Swiss Re Investors’ Day Ruschlikon, 2 December 2016
Slide 2: Agenda Investors' Day 2016
Agenda Investors’ Day 2016 Time Content Management 09:45 - 10:15 Registration 10:15 - 10:45 Strategy Christian Mumenthaler 10:45 - 11:05 Underwriting Matthias Weber 11:05 - 11:25 Asset Management Guido Fürer 11:25 – 11:55 Q&A session 12:00 - 13:00 Lunch 13:00 - 13:35 Reinsurance and Q&A Moses Ojeise
Slide 3: Strategy
Strategy Christian Mumenthaler, Group Chief Executive Officer
Slide 4: Challenging environment with attractive long-term opportunities
In the currently challenging environment we see attractive long- term opportunities Key challenges Long-term opportunities • Soft market in the P&C world • Growing risk pools (GDP growth and – demand/supply imbalance demographic trends) – industry consolidation • High Growth Markets • Interest rates
Slide 5: Strategic framework to face industry challenges and seize opportunities
With our strategic framework, Swiss Re is well placed to face the industry challenges and seize opportunities Swiss Re’s strategic framework Near-term priorities I systematically allocate capital to risk pools / Large & tailored transactions revenue streams Growth Corporate Solutions through systema
Slide 6: Investing in R&D to strengthen competitive advantage
Knowledge We invest in R&D to further strengthen our competitive advantage R&D activities amount to nearly 400 FTEs in 2016 How R&D drives competitive Estimated allocation of R&D focused FTE across Swiss Re advantage: • Unique selling proposition to Casualty Customer clients: Structured R/I Solution
Slide 7: Strong asset base of risk knowledge
Knowledge We have created a strong asset base of risk knowledge Selected R&D investments over past 25 years (man-years) 0 100 200 300 400 L&H Products (L&H Reinsurance) • Building knowledge and Nat Cat Risk Modelling (Group) competence through R&D Property & Specialty Products (P&C Reinsurance) has
Slide 8: Creating the Swiss Re Institute
Knowledge We are creating the Swiss Re Institute to further strengthen the differentiation component of our strategy Goals of the Swiss Re Institute: 1. Leverage and steer R&D activities across the organisation 2. Provide access point for our clients and other partners 3. Deploy more of the knowledg
Slide 9: Technological innovation to differentiate and support clients
Knowledge Technological innovation gives us the opportunity to further differentiate and support our clients Selected initiatives on Group level (across the value chain) Cooperation and investments Internal digital competence centres Cooperation through accelerator programmes Digital & Smart Analyti
Slide 10: R&D supports systematic allocation of capital to risk pools
R&D will support our systematic allocation of capital to risk pools Swiss Re applies a holistic capital allocation approach… Strategic Capital Business Performance ambition allocation planning assessment …to systematically deploy capital to risk pools Liability risk pools Asset risk pools Target Lia
Slide 11: Agile capital allocator executing next phase of strategy
Growth Swiss Re has been an agile capital allocator – we are now executing the next phase of our strategy Historic Outlook 2012 - 2014 2015 - 2016 Short-term Long-term Conventional P&C Re Transactions • Long-term, we are optimistic about the growth prospects of L&H Re all our businesses • Short-tem,
Slide 12: Differentiation generates higher margins and outperformance
This differentiation approach has enabled Swiss Re to generate higher margins and outperform Net operating margin (NOM)1 2012 – 9M 2016 NOM – Split by components – Avg. 2012-9M 2016 20% 17% 13% 15% 10% 26% 19% 5% -6% -9% 0% 2012 2013 2014 2015 9M 2016 Swiss Re Reinsurers 2 Swiss Re Reinsurers 2 Oper
Slide 13: Large and tailored transactions in Reinsurance
Growth Large and tailored transactions in Reinsurance provide attractive growth in a challenging market • Further cement differentiated economics model with clients through: – direct C-suite interaction model – delivering useful knowledge to clients – common growth opportunities with clients Return
Slide 14: Corporate Solutions growth with focus on profitability
Growth Corporate Solutions will continue to grow in relevance with unchanged focus on profitability • Short-term outlook is challenging with likely reduction of deployed capacity in the Excess Layer segments • Long-term prospects remain positive Return on Equity – Corporate Solutions • Key initiativ
Slide 15: Life Capital access to open and closed L&H books
Growth Life Capital increases access to attractive risk pools in open and closed L&H books • A primary L&H powerhouse with insurance clients, pension funds and distribution partners • Differentiating through leading edge underwriting and servicing capabilities Return on Equity – Life Capital • Growi
Slide 16: Investing in High Growth Markets
Growth We have invested in High Growth Markets, establishing a strong presence and intend to maintain our leading position Asia Latin America Africa China #1 int. P&C reinsurer #2 int. L&H reinsurer #8 int. Commercial insurer India ` Mexico #2 int. P&C reinsurer #1 P&C reinsurer #3 int. L&H reinsure
Slide 17: Investing in differentiation and growth initiatives
Growth We continue to invest in our differentiation and growth initiatives over the long-term 2012-2015 2016+ 3% productivity Invested in strategic • Currently, the cost line contains above USD savings p.a. priorities 250m of investments into the future per year (total of USD 0.4bn) 1. Primary Lead
Slide 18: Key takeaways
Key takeaways • Swiss Re is well positioned to face industry Near-term priorities challenges and seize opportunities Large & tailored transactions • Our investments in R&D and technology are Corporate Solutions supporting differentiation and are valued by Growth our clients Life Capital High Growth
Slide 19: Underwriting
Underwriting Matthias Weber, Group Chief Underwriting Officer
Slide 20: Underwriting priorities build competitive advantage
Priorities in underwriting build sustainable competitive advantage Challenging market outlook Underwriting priorities • Low margins • Capital allocation in underwriting • Low growth, low interest rates • Retro and hedging • Impact of technology • Risk selection • New and enlarging risks • Large & ta
Slide 21: Higher underwriting margins than peers
Swiss Re has consistently achieved higher underwriting margins than peers Gross underwriting margin1 (P&C Reinsurance and Corporate Solutions) 30% 25% Swiss Re’s average 19.5% 20% 15% 9.4%pts difference 10% 5% Peers’ average 10.1% 0% -5% -10% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Swiss R
Slide 22: P&C underwriting success from risk selection and capital allocation
Knowledge P&C underwriting success results from combination of bottom- up risk selection and top-down capital allocation Underwriting success driven by α and β (P&C Re and Corporate Solutions average 2006-2015) • Swiss Re achieves outperformance in underwriting through lower technical Swiss Re combi
Slide 23: Risk selection and strategic capital allocation
Knowledge Risk selection and strategic capital allocation are key contributors to Swiss Re’s success risk-selection capital allocation Determination Forecasting of of target global trends liability portfolio Cycle Retro β management and hedging Forward Adherence to looking sustainability modelling r
Slide 24: R&D in underwriting enhances risk selection
Knowledge R&D in underwriting enhances risk selection and capital allocation Focus of R&D in underwriting Applications Nat Cat perils Capital allocation Risk selection Property Climate change Cyber Economic, legal, Casualty Human behaviours political, societal Digital analytics changes Specialty Cre
Slide 25: R&D basis for proprietary pandemic loss modelling
Knowledge Example – R&D is the basis for our proprietary pandemic loss modelling Inputs Modelled pandemic mortality Reproduction number Excess mortality (per mille) Random Lethality (spread capability) variables Virus features Simulated pandemic 1 Population structure 2 … plus underlying changes rel
Slide 26: R&D enhances loss projection for US P&C agent E&O
Knowledge Example – R&D enhances loss projection for US P&C agent E&O Insurance industry estimates for US P&C agent E&O losses Correlation of our model with past have often been wrong industry-wide loss ratios US P&C agent E&O Our goal was to identify drivers that explain the past and build an econo
Slide 27: Target liability portfolio process
Our target liability portfolio process allows to effectively allocate capital in underwriting Current UW Target Strategic Capital and liquidity portfolio liability portfolio asset allocation requirements Total Economic Capital Desired UW portfolio Implied Required risk capital (mid-term projection)
Slide 28: Risk and return implications by portfolio segment
Knowledge To improve the overall portfolio composition we consider risk and return implications for each portfolio segment Example: income and cash flow patterns Risk and return metrics by portfolio segment of a casualty transaction Property L&H Main line & Casualty Life Health closed ILLUSTRATIVE I
Slide 29: Measures improving portfolio composition and performance
Knowledge Examples of measures that improve portfolio composition and performance relative to a passive renewal strategy Measures to improve portfolio composition Return on equity 160 ROE, indexed Corporate ILLUSTRATIVE Reinsurance Life Capital Solutions 140 120 Acquire closed 100 Strategic Close la
Slide 30: R&D basis for underwriting outperformance
Investment in R&D is the basis for continued underwriting outperformance Key priorities in underwriting Industry-leading practices and tools R&D investments in underwriting are key to continue Dedicated resources to R&D outperforming our peers Day to day underwriting capabilities are the Liability r
Slide 31: Asset Management
Asset Management Guido Fürer, Group Chief Investment Officer
Slide 32: Asset Management creates value from core capabilities
Asset Management creates value by capitalising on its core capabilities Challenging macro and financial market outlook Asset Management capitalises on its competitive edge • Increase in (geo)political risk • Global, long-term investor with stable funding source • Uncertain policy outlook • Strong pl
Slide 33: Asset Management contributes to financial performance
Asset Management contributes to Swiss Re’s financial performance and delivers strong and sustainable results Swiss Re’s investment portfolio • Strong performance in challenging markets USD 135bn1, End Q3 2016 – average ROI of 3.8% and total contribution to 4% 3% 5% ENW of USD 5bn over 2011-2015 3% •
Slide 34: Portfolio reallocation enhanced performance
The portfolio reallocation resulted in enhanced performance 100% 3% 1% 1% 1% 1% 8% 8% 7% 1.20 Other 7% 11% 90% 80% 1.15 Equities & alternatives (incl. 25% 35% Principal Investments) 70% 33% 38% 40% 1.10 Credit investments 60% 50% 1.05 Government bonds 40% 44% 32% 39% 1.00 Cash and short-term 30% 40%
Slide 35: Track record positions for future returns
Building on a successful performance track record we are well positioned for future returns Recent investment performance results • Group ROI remains strong despite 4% 3.6% 3.7% 3.6% challenging rates markets 3.5% 3% 3.2% 3.3% - 1%pt of ROI ≈ 4%pts of Group 3.0% 2.9% 2% 2.5% ROE (pre-tax) 2.3% 2.1%
Slide 36: Low impairments and high quality portfolio
Low impairments due to disciplined investment approach and high quality portfolio Fixed income ratings mix • Overall fixed income portfolio ratings USD 79.3bn - End FY 2013 USD 101.0bn - End Q3 2016 breakdown similar to 2013 3% 2% 3%1% – no “yield chasing” as focus remains on high 15% 17% quality 22
Slide 37: ESG criteria integral to investment process
Knowledge Environmental, Social and Governance criteria are an integral part of the investment process Improved risk/ return profiles Enhancing • Clear evidence for the business case of • ESG benchmarks ESG investing1 Strategic Asset • > 95% of our managers • Credit ESG benchmark shows lower Allocat
Slide 38: Differentiation in extending role as knowledge company
Knowledge Differentiation is pivotal to extending our role as a knowledge company and strategic asset allocator Robust • Sophisticated risk budgeting process investment process • Integrated Asset-Liability Management • ESG fully reflected in the investment process • Best-in-class controls and risk m
Slide 39: Asset Management positioned across uncertain markets
Swiss Re Asset Management is well positioned to maintain strong performance across uncertain markets We create value through superior …by capitalising on our core capabilities and insurance asset management… strong competitive edge Asset Management remains a strong by diversifying sources of income
Slide 40: Reinsurance
Reinsurance Moses Ojeisekhoba, CEO Reinsurance Alison Martin, Head L&H Business Management Reinsurance
Slide 41: Largest Business Unit delivers strong results
Swiss Re’s largest Business Unit continues to deliver strong results in a challenging environment Today’s focus Selected metrics • Differentiation is at the core of our strategy and Return on Equity delivers financial results in % P&C Re L&H Re • Our differentiation approach continues to show a 26.0
Slide 42: Differentiation at core of strategy
Knowledge Differentiation is at the core of our strategy, combining tailored offering with unique interaction Client segmentation and tailored offering Unique client interaction Client example Global client Americas APAC EMEA Swiss Re • Segmentation based on buying preferences addresses • More than
Slide 43: Increased share of differentiated profit
We have increased our share of differentiated profit from 2014 to 2015 Differentiated economic profit margin • Our differentiation efforts lead to tangible and % of economic profit margin with Globals and Large client measurable results segments • Share of differentiated economic profit margin impro
Slide 44: Transactions are a strong differentiator
Growth Transactions are a strong differentiator, offering a profitable opportunity for growth Development of transactions1 • EVM underwriting profit from transactions EVM underwriting profit in USD bn substantially increased over the past 6 years All figures as priced • In 2015, 35% of total EVM new
Slide 45: Client surveys confirm differentiation strategy
The positive impact of our differentiation strategy is also confirmed by client surveys Client loyalty result development 50 • Net Promoter Score1 NPS1 45 From 2011 to 2016, we increased our score 40 35 from 30 to 47 30 2011 2012 2013 2014 2015 1H2016 P&C Flaspöhler2 Flaspöhler2 1 Asia • EMEA We are
Slide 46: Active cycle management and capacity
We differentiate through active cycle management and manage capacity according to price adequacy 6-year comparison of Nat Cat Capacity and LTPA Tropical Cyclone North Atlantic Earthquake California 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Windstorm Europe Earthquake Japan 2011 201
Slide 47: P&C Reinsurance portfolio balanced with attractive returns
Our P&C Reinsurance portfolio is well balanced and generates attractive economic returns, including long tail lines Treaty year, 9 months 2016 Premium split Nominal Technical Economic Technical Main line of business Combined Ratio Combined Ratio1 14% Property 78% 77% 35% Casualty 97% 92% < 51% Speci
Slide 48: Expansion in High Growth Markets
Growth Our expansion in High Growth Markets is focused on sustainable growth Premium development in HGM1 • Growth trend despite adverse fx development US GAAP Gross Earned Premiums (USD bn) while maintaining disciplined underwriting • Diversified portfolio across focus markets and 6 product themes 5
Slide 49: Technology enables differentiated solutions
Knowledge Technology is an enabler for differentiated solutions and provides tangible benefits Technology solutions are being developed across lines of business and the value chain Product Design Distribution & Sales Underwriting Business Management Claims • Leveraging technology to better understan
Slide 50: Life & Health Reinsurance delivers returns in line with target
Life & Health Reinsurance remains strategically attractive for Swiss Re and delivers returns in line with our target Swiss Re L&H Re net income and ROE • Significant management actions in 2014 set the 300 20% foundation for profitable growth • Since the beginning of 2015 the segment 250 shows strong
Slide 51: Profitable new business diversified L&H portfolio
Growth Profitable new business has improved the diversification of our Life & Health Reinsurance portfolio US GAAP premiums by product line US GAAP premiums by country/region USD 11.0bn USD 11.0bn 6% 10% 3% 7% 10% 5% USD 8.0bn USD 8.0bn 1% 6% 7% 2% 1% 9% 5% 10% 40% 7% 10% 11% 40% 8% 52% 66% 40% 44%
Slide 52: Diversified product mix and cash generation
A more diversified mix of product lines also ensures attractive and sustainable cash generation Value generated relative to time to run-off • More diversified mix of product lines reduces US Illustrative GAAP earnings volatility and ensures attractive and sustainable cash generation • We expect long
Slide 53: Positioned to capitalise on growth opportunities
Knowledge Growth We are uniquely positioned to capitalise on growth opportunities Excellent market position and outlook Industry leading underwriting • ~17% L&H market share in 2015 • Life Guide is the industry’s #1 underwriting manual • Ranked # 1 in our target markets based on NMG survey – used by
Slide 54: Key messages & outlook
Key messages & outlook • Our differentiation strategy proves to be successful • Transactions remain a strong differentiator and enable selected growth in a challenging market • High Growth Markets remain a key element of our strategy • Technology is and will be an enabler for differentiated solution
Slide 55: Corporate Solutions
Corporate Solutions Agostino Galvagni, CEO Corporate Solutions Serge Troeber, CUO Corporate Solutions
Slide 56: Corporate Solutions path of disciplined growth
Corporate Solutions continues on its path of disciplined growth Today’s focus Selected metrics – Corporate Solutions • Complementary key initiatives for growth: Gross Premiums Written in USD bn 4.2 3.9 4 ~4.0 2.6 by segment by geography Expanding into Further Primary Lead broadening 2010 2014 2015 2
Slide 57: Top 5-10 in Excess Layer Market, expanding
Growth We are top 5-10 in the Excess Layer Market and expanding into the next segments Market presence 2015 commercial insurance market premium: USD 700bn Excess Layers Characteristics of wholesale Top 5 – 10 120 (large corporations) Deal size Entering Primary Lead Degree of wholesale 60 Deal comp
Slide 58: Differentiation across Excess Layers and Primary Lead
Knowledge Growth Differentiation is key and varies across Excess Layers and Primary Lead segments Corporate Solutions’ Value Proposition Relevant Differentiating Factors Excess Primary Lead Primary Lead Layers Single Country Multinational • Leading brand • Financial strength • ”We are here to stay“
Slide 59: Primary Lead: leveraging technology for service differentiation
Knowledge Primary Lead: Ambition to leverage technology in order to achieve differentiation in service Differentiation through innovative IT landscape improvements use of technology Service Excellence We upgraded and harmonised our • Timely and accurate issuance of policies, IT landscape over the pa
Slide 60: Industry-leading Claims Commitment
Knowledge Our “Claims Commitment” is industry-leading and impressing our customers • We communicate principal to principal, not via lawyers and adjusters • Dedicated contact who listens to and engages with clients and Accessible their brokers • Contact in 1 business day of loss notice; initial inves
Slide 61: Acquisitions broadening footprint; Brazil case study
Growth Acquisitions were instrumental in broadening our footprint to 55 offices in 21 countries Acquisitions to date: UBF Seguros (Brazil, 2011), Seguros Confianza (Colombia, 2014), Sun Alliance (China, 2015), IHC Risk Solutions (USA, 2016) and Bradesco Seguros Large Risks (Brazil, 2017E) Case study
Slide 62: Navigating the market with focus on profitability
We continue to navigate the market with focus on profitability Development of historical loss reserves excluded as from FY 2014 9M 2016 2011 - 2015 87% 2011 2012 2013 Combined ratio (9M 2016) 96% 99.3% 2014 2015 105% -31% 3.0% 4.0% 37% Gross premiums growth (9M 2016 vs. 9M 2015) Insurers with global
Slide 63: Framework for forward-looking portfolio steering
Knowledge Growth Solid framework in place for forward-looking portfolio steering and targeted sales activities Key messages Positioning of main steering units Grow • Portfolio consists of various steering units; their strategic and Defend tactical attractiveness is regularly Projected Profitability
Slide 64: Managing the cycle: Large Airlines (1/2)
We manage the cycle on a portfolio and single transaction level… Example: Large Airlines (1/2) Cycle management Top 25 transactions • Our overall market share reduced from 13% to • Transaction-specific market shares are primarily 5% as the market softened driven by the projected profitability and st
Slide 65: Sustainably outperforming the market: Large Airlines (2/2)
…to sustainably outperform the market Example: Large Airlines (2/2) We outperformed the market by 13 loss ratio points over the past 10 years 2006-2015 85% 72% 13% Market Corporate Solutions Outperformance 2011-2015 79% 61% 18% Market Corporate Solutions Outperformance Note: Swiss Re acquired GEIS i
Slide 66: Optimise Business Retention
Knowledge Growth Optimise Business Retention – applying a consistent approach to renewal transactions Transactional retention framework Impact Portfolio steering • Significantly higher retention rates for Define high-level retention guidance based on positioning preferred business of portfolio steer
Slide 67: Key messages & outlook
Key messages & outlook • We continue on our path of disciplined growth, with the ambition to further increase our relevance to the Swiss Re Group • Key initiatives for growth are: – expanding into Primary Lead and – further broadening of the footprint • Our value proposition includes differentiating
Slide 68: Life Capital
Life Capital Thierry Léger, CEO Life Capital Ian Patrick, CFO Life Capital
Slide 69: Life Capital performing well in challenging environment
Life Capital is performing well in a challenging macro environment Today’s agenda Selected metrics – Life Capital • Life Capital creates alternative access to Return on Equity1 attractive L&H risk pools in % 14.5 • Guardian integration on track. Active market for new closed book acquisitions with ri
Slide 70: Alternative access to attractive L&H risk pools
Knowledge Growth Life Capital creates alternative access to attractive L&H risk pools… Closed L&H books Open L&H books Active UK closed book market with legacy reserves of Global protection market of approx. USD 400bn approx. USD 440bn1 premiums2 USD ~440bn USD ~400bn Asia 154 Africa 8 LatAm 24 4401
Slide 71: Complementary earnings
Knowledge …offering complementary earnings Illustrative Closed Individual Group L&H Targets book L&H Economic Return US GAAP 6-8% ROE mid-term metrics USD 1.4bn-1.7bn between Gross Cash Generation 2016 and 2018 Growth Gross premiums written metric very desirable attractive adequate less attractive u
Slide 72: Life Capital delivering on priorities
Life Capital is delivering on its priorities • Successful Guardian integration; on track and on budget Closed books • Promising UK closed book pipeline maintained; targets rigorously assessed for appropriate return profiles • Accelerated growth of open books in Europe during 2016; elipsLife premiu
Slide 73: Growing closed book business
Growth We are keen to further grow our closed book business… Strategy • Provide effective and efficient service for policyholders • Create value through operational, capital and asset management synergies • Pursue selective growth with rigorous assessment of opportunities in the UK against return re
Slide 74: Guardian integration on track for synergies
…whilst Guardian integration is on track to deliver USD ~500m1 of synergies Key integration actions Synergies Part VII • Key activities decoupled to support rapid Costs delivery: • Removal of duplicate London head – rebrand in 6 months office/overhead costs – complex Part VII completion expected • A
Slide 75: Open book businesses access L&H risk pools
Knowledge Growth Our open book businesses provide alternative access to attractive L&H risk pools… Europe Asia Group L&H 132bn Individual L&H North America 330bn USD bn Protection gap 175bn Other protection gap premium equivalent Mortality protection gap premium 300 Africa equivalent Latin 10bn Amer
Slide 76: Group L&H
Growth …in Group L&H… Strategy • Provide benefits to employees where provision shifts from state to private sector • Offer solutions to pension funds, corporates and affinity groups across Europe through an intermediated business to business ("B2B") model • Actions initiated reflect the ambition to
Slide 77: Individual L&H
Growth …as well as Individual L&H Strategy • Help individuals address their protection needs • Offer simple, transparent and digital propositions on a white labelled basis • Combine iptiQ’s capabilities and platforms with our clients’ and partners’ distribution expertise • Provide an outstanding exp
Slide 78: Investing in technology across the value chain
Knowledge Life Capital invests heavily in technology to power growth, offering solutions across the value chain Business Product Design Distribution & Sales Underwriting Claims Management Selected examples Customer experience Platforms iptiQ and elipsLife offer elipsLife provides iptiQ and elipsLife
Slide 79: Disciplined approach to asset management
Disciplined approach to asset management… Well balanced investment portfolio High quality fixed income allocation USD 33.2bn, End Q3 2016 USD 27.9bn, End Q3 2016 2% 2% 4% 6% 5% 9% AAA Credit investments (excl. loans) AA Government bonds 32% 32% A Cash and short-term investments BBB 24% 59% Loan inve
Slide 80: Capital management and predictable dividend upstream
…complemented by a continued focus on capital management allowing a predictable upstream of dividends to the Group • Capital and liquidity management in line with Swiss Re Group policy • Life Capital has a range of capital management tools Legal Entity • Pooling risks from the various businesses wit
Slide 81: Key messages & outlook
Key messages & outlook • Life Capital creates alternative access to attractive L&H risk pools • Attractive pipeline of opportunities across Life Capital • Disciplined asset management and cost control • Pursuit of selective closed book growth with rigorous assessment of opportunities • Continued inv
Slide 82: Risk Management
Risk Management Patrick Raaflaub, Group Chief Risk Officer
Slide 83: Group risk appetite and risk tolerance
Knowledge Group risk appetite and risk tolerance ensure controlled risk- taking at Swiss Re Risk appetite Group risk appetite framework Expression of the types of risk Swiss Re wants to Risk appetite Risk tolerance Optimise risk/return portfolio take or avoid, providing key directions for risk- Cont
Slide 84: Large & tailored transactions assessed against risk aspects
Growth Large & tailored transactions are assessed against various risk aspects and require Risk Management approval Risk Management independently challenges the risks taken by the business • Review of key risks, including • Solvency impact analysis reputation, sustainability and • Accumulation and r
Slide 85: Robust modelling and sound valuation
Knowledge Risk Management is based on robust modelling and sound valuation ensuring strong reserving adequacy Model risk management Model & tool validation framework • Ensuring soundness of mathematical and scientific concepts • Result testing and fit for purpose assessment • Key tool to avoid inapp
Slide 86: Internal Group risk model basis for SST
Knowledge Our internal Group risk model is the basis for SST and risk tolerance • Central proprietary risk model used to measure the Sensitivities on SST Group’s capital requirements, for defining risk tolerance, risk limits and liquidity stress tests Estimated impact on SST 2016 • Risk model also u
Slide 87: Group respectability criteria to be adjusted
Group respectability criteria will be adjusted as new FINMA rules expected to increase our Group SST ratio Group SST 2016 vs comparable Solvency II ratio Expected FINMA change in as reported in April 2016 January 2017 312% • SST capital cost recognition (MVM) is likely to change, +38pts positively i
Slide 88: Strong Risk Management protects franchise value
Swiss Re’s strong Risk Management forms the basis for protecting our franchise value and enabling profitable growth …supported by industry-leading We ensure controlled risk-taking… set-up, governance and tools Risk Management is an integrated function with a Independent Risk Management function holi
Slide 89: Capital Management
Capital Management David Cole, Group Chief Financial Officer
Slide 90: Holistic capital allocation approach
Our holistic capital allocation approach aims to deliver industry-leading shareholder returns Financial Holding company capital allocation approach Capital allocation targets since new structure created in 2012 • Strategic framework and priorities ROE • Liability portfolios & key asset classes Divid
Slide 91: Business Unit structure supported value generation and dividends
Our Business Unit structure and our capital allocation have supported a strong value generation and flow of dividends 2012 – 2016: • We aim to maximise USD 13.2bn3 distribution shareholder value to shareholders Avg. ordinary • Utilised funds in Avg. pay-out ratio1: dividend pay-out 68% different way
Slide 92: Optimal risk portfolio balancing short and long term
Knowledge We target an optimal risk portfolio to balance short-term considerations with creating long-term shareholder value Portfolio comparison matrix ILLUSTRATIVE • We manage both liability and High asset risk pools • EVM and US GAAP financial targets are core in evaluating risk pools • Other con
Slide 93: Investing in financial steering and reporting capabilities
Knowledge We invest in our financial steering and reporting capabilities to become industry leader in financial management • Optimising processes and increasing standardisation to maximise efficiency • Improving operational risk management through a single source of financial data • Creating innovat
Slide 94: Leading capital position in the sector
Swiss Re maintains a leading capital position in the reinsurance sector and industry Solvency II peer comparison (May 2016) • SST and Solvency II are both comprehensive, 312% economic and risk-based solvency regimes • Due to important differences, SST ratio can 90% be significantly lower than Solven
Slide 95: Capital structure within target leverage ranges
Our capital structure is comfortably within our target leverage ratio ranges providing further flexibility Target Capital Structure 2010-2016 in USD bn WACC development 2010-2016 • Net deleveraging by over USD 5bn achieved since year-end 2012 • Swiss Re's WACC and cost of equity have fallen, • Senio
Slide 96: Target capital structure and funding platforms
Swiss Re’s target capital structure and financial flexibility is supported by the Group’s strong funding platforms YE 2012 – Q3 2016 Corporate Reinsurance Life Capital Group Outlook USD bn Solutions Further reduction in line Letters of with reducing Established credit -2.9bn requirements in Reinsu
Slide 97: Over-the-cycle Group and Business Unit targets
We continue to focus on our over-the-cycle Group and Business Units’ targets Group financial performance Return on Equity ENW per share growth2 13.7% 11.6% Rf + 10.0% 10.5% 700 11.6% bps1 4.0% 2014 2015 9M 2016 Over the 2014 2015 Over the cycle cycle Target Target Business Units’ Return on Equity P&
Slide 98: Capital allocation aims to deliver sustainable shareholder value
Swiss Re’s capital allocation aims to deliver sustainable shareholder value Long-term shareholder value …underpinned by our creation… capital management priorities Our Business Unit structure and our capital allocation have 1 supported a strong value generation and flow of dividends Ensure superior
Slide 99: Wrap-up
Wrap-up Christian Mumenthaler, Group Chief Executive Officer
Slide 100: Near-term priorities for growth and risk knowledge
We focus on near-term priorities to achieve attractive growth and leverage our risk knowledge Swiss Re’s strategic framework Near-term priorities I systematically allocate capital to risk pools / Large & tailored transactions revenue streams Growth Corporate Solutions through systematic capital II I
Slide 101: We make the world more resilient
Our Vision We make the world more resilient. Investors' Day | Rüschlikon, 2 December 2016 101
Slide 102: Management CVs
Management CVs @ Swiss Re 102
Slide 103: Management CVs
Management CVs Christian Mumenthaler Group CEO Christian Mumenthaler became Group Chief Executive Officer effective July 2016. He joined Swiss Re in 1999 being responsible for key company projects. Christian Mumenthaler served as Group CRO from 2005 to 2007 and was head of Life & Health between 2007
Slide 104: Management CVs
Management CVs Moses Ojeisekhoba CEO Reinsurance Moses Ojeisekhoba became Chief Executive Officer Reinsurance effective July 2016. He joined Swiss Re in February 2012 and was appointed Chief Executive Officer Reinsurance Asia in March 2012. From 1992 to 1996, Moses Ojeisekhoba was Risk and Underwrit
Slide 105: Management CVs
Management CVs Agostino Galvagni CEO Corporate Solutions Agostino Galvagni was appointed Chief Executive Officer Corporate Solutions in October 2010. He joined Swiss Re in 1985 through Bavarian Re, a former Swiss Re subsidiary, undertaking various activities in underwriting and marketing. He moved t
Slide 106: Management CVs
Management CVs Thierry Léger CEO Life Capital Thierry Léger was appointed Chief Executive Officer Life Capital in January 2016. He joined Swiss Re as engineering underwriter in 1997. In 2001, he moved to Swiss Re New Markets. Between 2003 and 2005 he was a member of the executive team in France as l
Slide 107: Management CVs
Management CVs Patrick Raaflaub Group CRO Patrick Raaflaub was appointed Group Chief Risk Officer in September 2014. He joined Swiss Re in 1994 and was appointed Chief Financial Officer of Swiss Re Italia SpA in 1997 and then Divisional Controller Americas Division in 2000. He worked as Head of Fina
Slide 108: Investors' Day | Rüschlikon, 2 December 2016
Investors' Day | Rüschlikon, 2 December 2016 108
Slide 109: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 2017 23 February Annual Results 2016 Conference call 16 March Publication of Annual Report 2016 21 April 153rd Annual General Meeting Zurich Investor Relations contacts Hotline E-mail +41 43 285 4444 Investor_Relations@swissre.com Philippe Brahin Jutt
Slide 110: 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