Group strategic framework - Swiss Re Group | Swiss Re85021250-69ae-4bb2... · Connected car: EUR 50bn market of telematics-based car insurance by 2020?5 Connected health: 20% market

Group strategic framework

Michel M. LièsGroup Chief Executive Officer

Investors' Day | Rüschlikon, 8 December 2015

Outperform our peers

• Reinsurance

• Asset Management

• Admin Re®

Smart expansion

• Corporate Solutions

• Longevity & Health

• High Growth Markets

Current position

The leading player in the wholesale

re/insuranceindustry

Strategic goal:

Swiss Re's current strategy has been successful

4


Life Capital1

Reinsurance

• To be a focused, lean, global player in large commercial business

• To be a recognised force in the closed life book market

• To be the world's leading reinsurer

• The foundation of our strengths

• A key opportunity for growth

• Providing cash dividends

Corporate Solutions

Swiss Re Group

Admin Re®

Current position

Strategic goal

Current position

Strategic goal

Current position

Strategic goal

P&C L&H

Our business model has positioned Swiss Re as a leading player

5

1 As of 1 January 2016


1 EPS CAGR of 10% has been adjusted to 5% for 2015 to account for the distribution of excess capital through the special dividend of USD 1.1bn in April 2015. Methodology is in line with the approach taken for the special dividend of USD 1.6bn paid in April 2014 and USD 1.5bn paid in April 2013

2 Assumes constant foreign exchange rate3 Excl. CPCI4 Cumulative dividends included in ENW per share were translated from CHF to USD using the fx rate of the dividend payment date; dividends included for 2011: USD

3.1 (CHF 2.75), 2012: USD 6.4 (CHF 3.00, or USD 3.3, in addition to the 2011 dividend), 2013: USD 14.5 (CHF 7.50, or USD 8.05, in addition to the 2011 and 2012 dividends), 2014: USD 23.5 (CHF 8.00, or USD 9.03, in addition to the 2011, 2012 and 2013 dividends), 2015: USD 31.1 (CHF 7.25, or USD 7.61 in addition to the 2011, 2012, 2013 and 2014 dividends)

Delivering on the 2011-2015 financial targets has been and remains Swiss Re's top priority

6

3

ROE 700 bps above risk free average over 5 years (2011-2015)

9.2 9.6

13.4 13.7

10.5

14.5

2010 2011 2012 2013 2014 9M2015

avg.2011-2015E

in %

= reported ROE

= 700 bps above US Gov 5 years

8.57.8 8.2 8.6 8.5

89.7 87.8

105.2

123.1

135.7140.9 144.5

2010 2011 2012 2013 2014 H12015

2015E

= reported ENWPS includingcumulative dividends in USD4

= ENWPS @ 10% avg. annual growth (base: 2010)

ENW per share growth plus dividends 10% avg. annual growth rate over 5 years

in USD

98.7

108.5119.4

131.3

3

6.6

7.7

11.913.0

10.210.7

9.2

2010 2011 2012 2013 2014 9M2015

2015E

in USD2

= reported EPS

= EPS @10% avg. annual growth (base: 2010), adjusted for special dividends1

EPS 10% average annual growth rate, adjusted for special dividends1

7.38.0 8.4 8.8


We have delivered a market leading total return to our shareholders

7

Swiss Re had one of the highest annualised total returns to shareholders compared to samples of insurers and reinsurers and to reference indices over the period from 2011 to 2015

12%

11%

8%

5%

4% 12%

9%MSCI Index5

STOXX Europe600 Insurance 14%

Sample ofre/insurers4

10%2 22%

15%

Swiss Re

Sample ofreinsurers3

Annualised total return to shareholders (2011-2015)1

1 31 December 2010 to 30 November 2015, based on USD2 Includes special dividends3 Weighted average of Everest Re, Hannover Re, Munich Re, RGA, RenRe, SCOR4 Weighted average of ACE, Allianz, AIG, AXA, XL Group, Zurich, and reinsurers mentioned in footnote 35 MSCI Daily Total Return Gross World Index

Dividend driven returnShare price development


Swiss Re faces various challenges and opportunities

8

Low margins

Evolution of primary players with rich

customer insights

Low yield, low growth environment;regulatory changes

Current

Future

Impact of technology

Industry consolidation

Volatility in High Growth Markets

Reshuffling of value chain

New and enlarging risk pools


Closing the protection gap and providing solutions for emerging risks will improve global resilience

9

Nat Cat: USD 1.3 trillion 2005-20141

Mortality:USD 105 trillion globally2

Casualty accumulation:

e.g. estimated US asbestos litigation costs USD 85bn3

Connected car: EUR 50bn market of telematics-based car insurance by 2020?5

Connected health: 20% market share for

wearables-based health insurance

products by 2025?6

Emerging risk pools

Protection gap

Sources: 1 Swiss Re Sigma 5/2015 2 Swiss Re Economic Research & Consulting 3 Guy Carpenter September 20154 ABI Research and Swiss Re estimate 5 Ptolemus Consulting estimate 6 Roland Berger estimate

Cyber: USD 10bn market by 2020?4


Today we introduce our strategic framework, which will enable us to achieve our new financial targets

10

Areas of strategic action

broadenand diversify client

base to increase access to risk

optimise resources and platforms

to support capital allocation

systematically allocate capital to risk pools / revenue streams

emphasise differentiation

I

II III

IV

Group financial targets

maintain capital management priorities

ROE ≥risk free + 700bps1

ENWper share

growth10% p.a.2

• Building upon our successful strategy introduced in 2011

• Moving to the next stage of our transformation into a capital allocator

• Emphasising four areas of strategic action going forward

1 700bps above risk free (10-year US Gov Bonds); Swiss Re management to monitor a basket of rates reflecting Swiss Re's business mix; over the cycle2 Year-end ENW + dividends from current year divided by previous year end ENW; all per share; over the cycle


Successful aspects of our business model are affirmed under our strategic framework

11

Group strategic framework focuses on systematically allocating capital and resources to provide optionality for value creation

• Continued focus on wholesale re/insurance

• Pursue selected strategic initiatives to access attractive risk poolsWholesale

re/insurance

Global scale and

diversification

• Global reach enabling efficient capital allocation to achieve profitable growth

• Benefits from geographic, business mix and client segment diversification

• Superior balance sheet, credit rating and solvency position allowing flexibility

• Underwriting and asset management discipline with superior risk selectionBalance sheet

for risk

Premium brand

• A leading reinsurance franchise with over 150 years of history

• A preferred partner resulting in long and deep client relationships

Strategic controller

• Group focus on strategy, capital and talent while empowering Business Units to execute

• Business Unit structure benefits from flexibility and efficiency


Agenda

12



optimise resources and

platforms to support capital allocation



I

II III

IV


Key drivers leading to outperformance in value creation

13

I

II III

IV

A multi-risk book provides numerous advantages in addition to capital related diversification benefits

1 EVM, US GAAP, cash flow

Risk selection

Capitalallocation

Portfoliomanagement

Extensive R&D providing a competitive advantage (requires economies of scale)

Active monitoring and hedging of liabilities and continued optimisation of the asset portfolio

Capital deployment based on expected return

Proprietary modelling capabilities to quickly adapt models based on lessons learnt and outlook

Maximise absolute economic profit subject to risk tolerance constraints

Optimal portfolio mix to meet different hurdle rates1


Swiss Re actively manages liability and asset risk pools

14

Asset risk pools

Liability risk pools

Mortality

Longevity

Health

Property

Specialty

Casualty

• Swiss Re benefits from diversification through access to different pools of liability and asset risks

• Group has the flexibility to (re-)allocate capital between lines of business, asset classes and regions

Cash and short-term investments

Government bonds

Equities & alternatives

Credit investments

I

II III

IV

P&C Reinsurance L&H Reinsurance Corporate Solutions Life Capital1

1 Effective 1 January 2016Note: Bars illustrate current exposure to risk pools

Illustrative


Swiss Re’s portfolio selection maximises value creation

15

Bubble size reflects asset allocation

• Asset risk selection is based on the requirement to match insurance liabilities within strict risk limits and the search for attractive risk-return patterns

• Liability risk selection balances Swiss Re’s profitability levels and attractiveness of markets

• Swiss Re targets an optimal portfolio of asset and liability risks to balance short-term targets with long-term shareholder value creation

I

II III

IV

Credit Investments

Equities & alternatives (incl. PrincipalInvestments)

Risk HighLowLow

Re

turn

Government bonds

Selected asset risks

High

Cash and short-term investments

High risk/return

Low risk/return

Bubble size reflects premium volume

Risk HighLowLow

Re

turn

High risk/return

Low risk/return

Selected liability risks

High

Property Re(incl. Nat Cat)

Health Re

Specialty Re

Property Commercial

Note: Return based on historic 3 year economic profitability. Risk based on standalone SST risk capital requirements.

Specialty Commercial


Agenda

16



optimiseresources and




I

II III

IV


Three ways to broaden and diversify our access to risk

17

I

II III

IV

Geographies

• Extend leadership in mature markets

• Maintain market leadership in High Growth Markets (HGM)

Clients Risks

• Offer tailored solutions

• Access new clients

• Develop innovative approaches

• Leverage Swiss Re’sknowledge and thought leadership

• Enhance capabilities and new products


Geographies – Dedicated initiatives in place to maintain leading position in HGM

18

Dedicated strategic initiatives across Swiss Re in place to remain the leading wholesale re/insurer in HGM

Reinsurance

Expansion in focus countries

• Organic growth

• Partnerships

Corporate Solutions

Further broadening the footprint

• Organic growth

• New offices

• Acquisitions

Aspiration for 2020

30%

20202012 2014

27%15%

30% HGM premium share

Principal Investments Swiss Re Group

Optimise diversification

• Coordination and advisory for HGM

Investment in selected HGM countries

• Increase exposure

• Complement HGMfocus of Business Units

I

II III

IV


Clients – Broadening our access through profitable growth initiatives

19

Corporate Solutions Life Capital

Large corporates Insurance companies

Mid-size corporates

New forms of exposure to client pools

Continued focus

• Dedicated growth initiatives targeting Regional & National companies in Reinsurance, mid-size corporates in Corporate Solutions, and distribution partners in Life Capital

• Innovative approaches to access new client pools, extending beyond the traditional business models

Dedicated growth initiatives

Global insurance companies

Large insurance companies

Regional and National insurance companies

Governments & supranationals

Reinsurance

Principal Investments

Distribution partners

I

II III

IV

Pension funds

20

I

II III

IV

VietnamAgriculture yield cover

Pacific Islands Earthquake and

tropical cyclone risk

UruguayEnergy

production shortfalls

due to drought

IndiaWeather insurance

for farmers

CaribbeanHurricane,

earthquake and excess rainfall risk

BeijingAgricultural risk

TurkeyEarthquake pool

Louisiana Hurricane risk

MexicoEarthquake/hurricane

and livestock risk

BangladeshFlood

insurance

African Risk CapacityGovernment drought

insurance pool

FloridaHurricane risk

United KingdomFlood risk

Shenzhen typhoon/rainfall Thailand

Crop insurance

• First dedicated public sector team in the reinsurance industry

• Over 200 closed transactions since 2006

• Develop insurance, reinsurance and capital markets solutions onall perils (natural disasters, weather risks, pandemics, etc.)

• Global footprint

• Pioneer in emerging and industrialised markets

Clients – Swiss Re Global Partnerships enables the Group to broaden our client base and address the protection gap


Health lines are emerging as key markets

Risks – Selected access to additional risk pools

21

Focusing on product development leveraging aging, technology, and data to increase share in global medical reinsurance

Helping establish infrastructure debt as tradable asset class to strengthen long-term investors’ capacity to support the real economy

Investing significantly in the understanding of cyber risks, rolling out solutions prudently in the primary and reinsurance space

Building on excellent biometric data to develop innovative solutions in the primary insurance and reinsurance market

I

II III

IV

Infrastructure investment enhances economic growth

Expected % of GDP spending requirement in infrastructure vs

historicals

Required spending(to achieve 1.7% p.a. real GDP growth)

Historical average, 2002-11

Global health premiums,USD bn

Infrastructure investmentsHealth portfolio

USD 105tr mortality protection gap

Mortality gapCyber

USD 2bn premiums globally in 2014

Source: Swiss Re Economic Research & Consulting; Swiss Re estimates; McKinsey Global Institute

2.9

2.8

Continental Europe

Europe2.6

UK and Ireland 3.4

2.3

2.31 000

500

0

1 500

2 000

20

15

E

20

05

20

25

E

20

20

E

20

10

5-10

2015E

6-10

2025E

2.6

2020E

3

12-18

7-84-6

2-5

0.5

USRoW

Cyber market premiums (base case), USD bn

Mortality protection gap by region, USD trn

5823

17

7Europe

NorthAmerica

Latin America

Asia


Agenda

22







I

II III

IV


Swiss Re optimises resources and platforms to support capital allocation

23

Examples

Dynamic and forward-looking capital allocation supported by agile resources and platforms

• Use of smart analytics and cognitive computing to improve our underwriting capabilities (e.g. impact from 200 examples identified)

Smart analytics

• Alignment of the workforce to actively support our HGM strategy (e.g. increase of FTE in Latin America and Asia by 421% and 66% respectively since 2011)

Talent

• Leverage distribution platforms to maximise value from our wholesale model (e.g. distribution partnerships in Life Capital via elipsLife and iptiQ)

Distribution platforms

• Flexible access to funding for our businesses (e.g. access to external funding recently established for Swiss Re Ltd, Corporate Solutions and Life Capital)

Funding platform

• Simplification, modernisation, and integration of IT architecture (e.g. 20% net reduction of applications, consolidation to two main data centres)

IT platforms

• Continued development of our AM capabilities (e.g. first Swiss company to receive Renminbi Qualified Foreign Institutional Investor license)

Asset Management

I

II III

IV


`

Long-term focus Corporate SolutionsPrincipal Investments (PI)

Targeted by Reinsurance and Corporate SolutionsLong-term focus Reinsurance

HGM

Swiss Re has more than doubled its workforce in HGMsbetween 2011 and 2015

24

India2

China

Indonesia

Brazil

Mexico

1 Including Shared Service Centre of 430 FTEs in 2011 and 580 FTEs in 20152 Bangalore 41% of Asian FTEs in 2015

We successfully increased our workforce in HGMs and will continue in line with our 2020 aspiration

Latin America FTEs

~730

Jun 2015Jan 2011

~140

Asia FTEs

~1 4301

Jun 2015Jan 2011

~8601

Africa FTEs

~60

Jun 2015Jan 2011

~40

I

II III

IV

Investors' Day | Rüschlikon, 8 December 2015 25

Swiss Re adopts smart analytics and cognitive computing to further extend its competitive positioningSelected examples from over 200 delivered cases

Transparent motor China

Reinsurance

For China, we have built a sophisticated model predicting motor accident frequencies leveraging a wide range of data sources

Rapid sales analytics

Corporate Solutions

Improve sales effectiveness: binding likelihood increases by 20% when sales activities happen after quotes

Screening risk engineering reports

Through text analytics, we structure a large number of property risk reports, reducing the single risk report analysis time down from 4 hours to real time

Contract intelligence hub

Group

Client and market intelligence

Reinsurance

We have developed an advanced contract analytics solution covering all re/insurance contracts from all lines which allows us to analyse clauses

Analysing internal and external communication, we quantify Swiss Re client relationships and identify hot topics and market trends

• Competence centre for smart analytics (30 data scientists, 200 smart analytics affine re/insurance professionals)

• Cognitive computing competence centre which Swiss Re is jointly building with IBM

I

II III

IV

Corporate Solutions


Agenda

26







I

II III

IV


Active differentiation remains pivotal to extending our lead as a knowledge company and allocator of risk capital

27

'We’re smarter together'

Client relationships

• Preferred partner

• Decade-long relationships

• Global presence and broad product offering

Knowledge company

• Thought leadership

• Technical expertise

• Risk insights and modelling

• Proprietary data and research

Financial strength

• Capital strength

• Financial flexibility

• Integrated risk management and systematic ALM

• Distinctive access to contingent capital

I

II III

IV


Swiss Re benefits from direct access to clients in all Business Units

28

• Swiss Re differentiation based on unique access to clients and development of tailored risk solutions

• Direct client interactions also for intermediated business

Percentage of premiums derived from non-intermediated business, 9M 2015

1 Reflects Admin Re®

I

II III

IV

P&C Reinsurance L&H Reinsurance Life Capital1Corporate Solutions

52% 11% 100%96%


Delivering distinctive thought leadership, R&D and industry dialogue through unique channels

29

Industry-leading “sigma” publications

Distinctive thought leadership State-of-the art delivery

Large and highly educated pool of talents

• 300 FTEs working on research matters

• 30 FTEs in Economic Research & Consulting, 50 FTEs in nat cat modelling

Client and expert events

• 100+ client and expert events per year hosted at the Centre for Global dialogue for 1 000+ clients (15 000+ people)

• 50+ client training courses offered

On-the-go access to knowledge

Research and publications in

partnership with leading institutions

I

II III

IV

Our thought leadership is a true driver of business impact: highly informed decisions, access to world-class talents, state-of-the-art support for clients, impacting societal development

First-class client events

Acclaimed proprietary research into trends and products

Wide-ranging global database, covering all types of insurance markets and products


Summary







I

II III

IV

Agenda

30


Current

Future

Our strategic framework positions us strongly vis-à-vis current and future challenges and opportunities

31

Growing tailored solutions

Broadening our access to client and risk pools

Optimised AM and funding

Agile capital (re-)allocation & wholesale approach

Investing to differentiate on knowledge leadership

Creating optio-nality through strategic partnerships

Embedding cognitive computing in our UW

Bringing new sustainable solutions to the market

Examples Examples

Low margins

Low yield, low growth environ-ment; regulatory

changes

Evolution of primary players

with rich customer insights

Impact of technology

Industry conso-lidation

Volatility in High Growth

Markets

Reshuffling of value chain

New and enlarging risk pools


• P&C Reinsurance remains a key contributor through differentiation and underwriting discipline

• L&H Reinsurance benefits from increasing demand

• Corporate Solutions expands into Primary Lead and broadens the footprint

• Life Capital pursues growth opportunities

• Focus on attractive opportunities above our return hurdles

• Sustain long-term earnings through effective portfolio steering

• Deliver market leading returns

Our four areas of strategic action create long-term value for our shareholders

32

Profitability: ROE

Growth: ENW per share



optimise resources and




I

II III

IV



Corporate calendar & contacts

Investor Relations contacts

Hotline E-mail+41 43 285 4444 [email protected]

Philippe Brahin Jutta Bopp Chris Menth +41 43 285 7212 +41 43 285 5877 +41 43 285 3878

Simone Lieberherr Iunia Rauch-Chisacof+41 43 285 4190 +41 43 285 7844

Corporate calendar

201623 February Annual Results 2015 Conference call16 March Publication of Annual Report 2015 and EVM 201522 April 152nd Annual General Meeting Zurich29 April First Quarter 2016 Results Conference call


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 a historical fact or current fact.Forward-looking statements typically are identified by words or phrases such as “anticipate“, “assume“, “believe“, “continue“, “estimate“, “expect“, “foresee“, “intend“, “may increase“ and “may fluctuate“ and similar expressions or by future or conditional verbs such as “will“, “should“, “would“ and “could“. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause Swiss Re’s actual results of operations, financial condition, solvency ratios, capital or liquidity positions or prospects to be materially different from any future results of operations, financial condition, solvency ratios, capital or liquidity positions or prospects expressed or implied by such statements or cause Swiss Re to not achieve its published targets. Such factors include, among others:

• further instability affecting the global financial system and developments related thereto;

• deterioration in global economic conditions;• Swiss Re’s ability to maintain sufficient liquidity and access to capital markets,

including sufficient liquidity to cover potential recapture of reinsurance agreements, early calls of debt or debt-like arrangements and collateral calls due to actual or perceived deterioration of Swiss Re’s financial strength or otherwise;

• the effect of market conditions, including the global equity and credit markets, and the level and volatility of equity prices, interest rates, credit spreads, currency values and other market indices, on Swiss Re’s investment assets;

• changes in Swiss Re’s investment result as a result of changes in its investment policy or the changed composition of its investment assets, and the impact of the timing of any such changes relative to changes in market conditions;

• uncertainties in valuing credit default swaps and other credit-related instruments;• possible inability to realise amounts on sales of securities on Swiss Re’s balance

sheet equivalent to their mark-to-market values recorded for accounting purposes;• the outcome of tax audits, the ability to realise tax loss carryforwards and the

ability to realise deferred tax assets (including by reason of the mix of earnings in a jurisdiction or deemed change of control), which could negatively impact future earnings;

• the possibility that Swiss Re’s hedging arrangements may not be effective;• the lowering or loss of one of the financial strength or other ratings of one or more

Swiss Re companies, and developments adversely affecting Swiss Re’s ability to achieve improved ratings;

• the cyclicality of the reinsurance industry;• uncertainties in estimating reserves;• uncertainties in estimating future claims for purposes of financial reporting,

particularly with respect to large natural catastrophes, as significant uncertainties may be involved in estimating losses from such events and preliminary estimates may be subject to change as new information becomes available;

• the frequency, severity and development of insured claim events;• acts of terrorism and acts of war;• mortality, morbidity and longevity experience;• policy renewal and lapse rates;• extraordinary events affecting Swiss Re’s clients and other counterparties,

such as bankruptcies, liquidations and other credit-related events;• current, pending and future legislation and regulation affecting Swiss Re or its

ceding companies, and the interpretation of legislation or regulations by regulators;

• legal actions or regulatory investigations or actions, including those in respect of industry requirements or business conduct rules of general applicability;

• changes in accounting standards;• significant investments, acquisitions or dispositions, and any delays,

unexpected costs or other issues experienced in connection with any such transactions;

• changing levels of competition; and• operational factors, including the efficacy of risk management and other

internal procedures in managing the foregoing risks.

These factors are not exhaustive. Swiss Re operates in a continually changing environment and new risks emerge continually. Readers are cautioned not to place undue reliance on forward-looking statements. Swiss Re undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.This communication is not intended to be a recommendation to buy, sell or hold securities and does not constitute an offer for the sale of, or the solicitation of an offer to buy, securities in any jurisdiction, including the United States. Any such offer will only be made by means of a prospectus or offering memorandum, and in compliance with applicable securities laws.

Cautionary note on forward-looking statements

Documents

Group strategic framework - Swiss Re Group | Swiss Re85021250-69ae-4bb2... · Connected car: EUR 50bn market of telematics-based car insurance by 2020?5 Connected health: 20% market