Group strategy update - Swiss Re9e534c9a-3adb-46be... · Investors' Day | Group strategy update | Zurich, 24 June 2013 . 4 . Swiss Re's Group strategy . Unchanged, focus on execution

Group strategy update Michel M. Liès, Group Chief Executive Officer

Investors' Day, Zurich, 24 June 2013

Investors' Day | Group strategy update | Zurich, 24 June 2013

Swiss Re Group strategy is unchanged

– Focus on execution, keeping the pressure on

– High growth markets contribution is growing

– Productivity emphasis to control expenses

L&H Reinsurance is "back in the game"

– In-depth review, incl. pre-2004 US business

– Concrete actions to improve L&H profitability

– ROE expected to increase to 10-12% by 2015

Capital and asset management stepped up

– Improving ROE and EPS through deleveraging

– Rebalancing assets faster to mid-term plan

– Growing regular dividends and our business

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Investors' Day 2013 Group CEO's highlights

Investors' Day | Group strategy update | Zurich, 24 June 2013 3

Agenda

Group strategy

High growth markets

Outlook and Q&A

3

Michel M. Liès Group CEO

Productivity emphasis


Swiss Re's Group strategy Unchanged, focus on execution

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/insurance industry

Strategic goal:


Business Unit strategies Unchanged

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

5


?

6

Investor perceptions

Feedback on Swiss Re's strategy and "equity story"

Swiss Re investor perception survey, May 2013; in-depth anonymised interviews with a sample of investors and analysts, conducted by Brunswick Group LLP. Unprompted "top of mind" items when asking about Swiss Re's strengths and weaknesses. Only items that were independently mentioned several times listed.

Frequency mentioned

more

less


The vast majority of our L&H Re business performs at or above our profitability requirements

We have an underperforming pre-2004 US book of business which is being addressed by management…

…and further reduced in relative size by writing profitable new business

Additional management actions which cover the entire portfolio are underway

Less exposed to guarantees and interest rate risks than primary players: we are focused on biometric risks and a widening "protection gap"

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"L&H Reinsurance performance" An attractive business that plays to our strengths

Slide title refers to Swiss Re investor perception survey, see slide 6.


Key strategic drivers

Value Extraction

Consistent management of portfolio of assets and blocks of businesses

Sale of Admin Re® US business in 2012

Scalable operating platform Consistent, reliable customer service

Operational Excellence

Gross Cash Generation

Pursue selective growth strategy to build and enhance Admin Re® franchise

Third party capital remains a focal point

Selective Growth

USD 1.2bn of dividends upstreamed to Group in the course of 2012

Additional gross cash generation of USD 1.2-1.3bn targeted for 2013-2016E

Additional achievements

Operational improvements to platform and cost position

Group dependence reduced, arms-length agreements

Risk, compliance, capital management capabilities remain at Group standards

"Admin Re®" Strategy focused on three key drivers



We accelerated the rebalancing of our assets in the first half of 2013

We plan to have moved the asset allocation towards the upper range of our mid-term plan by end of the year

Asset allocation should move closer towards peers' levels, while remaining balanced overall and as a result…

… we expect a higher running income and potential for capital appreciation

Target capital structure to move closer to peers' levels, too: Group leverage to reduce by more than USD 4bn by 2016

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"Asset management too risk adverse" Accelerated rebalancing towards our mid-term plan



Agenda

Group strategy

High growth markets

Outlook and Q&A

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1%

2%

10%

3%

6%

8%

9%

14%

Mature markets

World

High growth markets

Sub-Saharan Africa

CEE

Latin America

MENA and Turkey

Emerging Asia

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High growth markets (HGMs) Premium growth with strong compounding effect

Emerging Asia has so far sustained the

highest growth rates

High growth markets expected to continue to grow faster than

mature markets

468%

CAGR Cumulative

213%

173%

124%

55%

233%

34%

21%

Market premium (real) growth 2000-2013E

Source: Swiss Re Economic Research and Consulting


Swiss Re is broadly diversified HGM contribution growing in all geographies

Swiss Re Group net premiums earned1 2012 (USD 25.4bn) by region (in USD bn)

Well on track towards target of 20-25% of premiums from HGMs by 2015

Further business exposure in HGMs expected through direct investments

EMEA Asia Americas

38% 42% 20%

1 Includes fee income from policyholders

9.6 10.7

5.2

of which

HGMs: ~3% ~3% ~9% ≈ 15%

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Swiss Re's focus high growth markets Five markets jointly targeted across Swiss Re Group

China India

Brazil Indonesia

Mexico

Singapore Colombia

South Africa

Hong Kong

Chile

UAE

South Korea Turkey

Reinsurance and Corporate Solutions Corporate Solutions


Reinsurance: organic growth, partnerships e.g. with local market reinsurers

Corporate Solutions: organic growth, new offices, acquisitions

Lines of business with particular HGM angle:

– Nat Cat

– Agro

– Infrastructure

– Health and medical

– Solvency relief

Direct investments, e.g. into HGM (re)insurers

Stronger diversity of employee base

2012 HGMs 15% of Swiss Re Group premiums1, ~11% of profits2

2015E HGMs 20-25% of Swiss Re Group premiums1

2020E (re)insurance market opportunity: Estimated premium pool of USD >100bn in reinsurance and USD ~2,000bn in primary insurance

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Actions for profitable growth in the HGMs Dedicated strategies across all lines of business

1 Gross earned premiums for the Swiss Re Group across all business units 2 Pre-tax profits after cost of capital

HGM initiatives


Agenda

Group strategy

High growth markets

Outlook and Q&A

15




Swiss Re's Group management expense ratio1 "breathes" with cycle management

Management expenses are used for creating leading skills in areas core to our strategy, leading to superior results e.g. underwriting

Goal is not to "cut costs", rather to control management expenses at lower levels in a sustainable way, supporting financial targets

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Productivity emphasis Improve efficiency, redeploy for higher returns

Core productivity

USD 250-300m cash savings by 2015E vs 2012

All functions across Swiss Re have savings targets

Additional cross-functional levers: sourcing, shared services, etc.

Controls, Culture

Group tracks cost targets and audits

Enforcing right mindset: Group CEO cold calls to cost centre owners

1 Definition: "Other expenses" divided by sum of "Net Premiums earned " and "Net investment income - non-participating"

Reinvestment

Main focus on redeploying savings to higher return opportunities

8%

9%

10%

11%

Management expense ratio (Swiss Re Group)


6.6 7.7

11.9

4.0

10.1

2010 2011 2012 Q12013

… 2015E

Group financial targets 2011-15 Delivering on the targets remains our top priority

1 EPS CAGR of 10% has been adjusted to 5% for 2013 to account for the distribution of excess capital through the special dividend of USD 1.5bn in April 2013. Special dividend assumed to be fully reinvested and thus comparable to excess capital re-deployment via share buyback at a share price of approx. CHF 70

2 Assumes constant foreign exchange rate 3 Excl. CPCI 4 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 (additional CHF 3.00 or USD 3.3 on top of the 2011 dividend) 1

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in USD2

9.2 9.6

13.4 16.6

2010 2011 2012 Q12013

… avg.2011-2015E

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

in %

8.5

= reported ROE

3

7.8 7.3 8.0

3

= reported EPS

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

= 700 bps above US Gov 5 years

in USD2

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

98.7

= reported ENWPS including cumulative dividends in USD4

108.5

144.5

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

7.8

89.7 87.8

105.3

2010 2011 2012 … 2015E

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

2.1


Agenda

Group strategy

High growth markets

Outlook and Q&A

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Management priorities (selection)

New distribution channels in insurance offer substantial new opportunities

Risk pool for nat cat grows fast, attracting increasing amounts of alternative capital

Strong growth in high growth markets fuel demand in all lines of (re)insurance business

'Big Data' and smart analytics impact insurance underwriting, pricing and marketing

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Longer-term strategic themes (selection)

Swiss Re Group strategy and financial targets 2016-20

Talent management

Capital structure and management

Profitability requirements and targets

Productivity management

Looking beyond 2015

Swiss Re Group strategy and financial targets 2011-15


L&H Reinsurance: ROEs expected to improve to 10-12% by 20151

Admin Re®: continue to evaluate deals based on Group profitability requirements; strengthen operational efficiency; third-party capital

Priorities for the Group CEO Perform and grow

P&C Reinsurance: successful renewals at adequate rate levels expected to continue, expect net premium growth from expiry of QS

Corporate Solutions: on track to achieve profitable growth targets

Outperform our peers in P&C

Strategy unchanged, focus on execution, keeping the pressure on Continued emphasis on high growth markets for all business lines Productivity emphasis to control mgmt. expenses at lower levels1

Group strategy

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1 Added/updated priorities in bold

Address low returns in L&H

Capital and asset management

Continue active capital management in line with dividend policy, USD >4bn deleveraging planned by 2016, improving EPS and ROE1

Asset rebalancing towards mid-term plan for credit and equity accelerated in 2013, utilising approx. USD 3bn of economic capital1

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Q&A


Investor Relations contacts Hotline E-mail +41 43 285 4444 [email protected] Eric Schuh Ross Walker Chris Menth +41 43 285 4708 +41 43 285 2243 +41 43 285 3878

Lorenz Fichter Simone Fessler +41 43 285 7129 +41 43 285 7299

Corporate calendar 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 Conference call

Corporate calendar & contacts

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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 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, liquidity position or prospects to be materially different from any future results of operations, financial condition, solvency ratios, liquidity position 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, including as a result of concerns over, or adverse developments relating to, sovereign debt of euro area countries;

further 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.

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Group strategy update - Swiss Re9e534c9a-3adb-46be... · Investors' Day | Group strategy update | Zurich, 24 June 2013 . 4 . Swiss Re's Group strategy . Unchanged, focus on execution