Maintaining outperformance in P&C Matthias Weber, Group Chief Underwriting Officer Agostino Galvagni, CEO Corporate Solutions Christian Mumenthaler, CEO Reinsurance Investors' Day, London, 3 July 2014
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014 2
Swiss Re's P&C business
Corporate Solutions
Summary and Q&A
Reinsurance
Maintaining outperformance in P&C Agenda
Matthias Weber Group Chief Underwriting Officer
Agostino Galvagni CEO Corporate Solutions
Christian Mumenthaler CEO Reinsurance
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
Swiss Re has been successful in P&C
3
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
104.0 98.4 98.4
114.1
90.4 90.2
97.9 93.7 97.4
104.7
83.1 85.3
95.0
101.1 98.3 98.2 97.3
93.9
96.8 95.4
92.8
93.1
0%
1%
2%
3%
4%
5%
60%
70%
80%
90%
100%
110%
120%
130%
5-year US Treasury risk-free rates (RHS) Group combined ratio (LHS) Group combined ratio, 5y moving avg (LHS)2
1 Assuming an average large loss burden and no material impact from prior year development 2 Historical combined ratios as published; 2009 and later based on new org. structure and calculation method, as initially disclosed at Investors' Day 2012
P&C underwriting Strong and stable track record
4
• Past results demonstrate Swiss Re's commitment to disciplined underwriting
• 2014 combined ratio is estimated1 at 95% for Swiss Re Group, P&C Reinsurance and Corporate Solutions
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
P&C underwriting Successful in both Reinsurance and Corporate Solutions
• Both Corporate Solutions and Reinsurance have contributed to this good result
• Average loss ratio since 2002 has been 57% for Corporate Solutions and 60% for P&C Re
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Reinsurance Corporate Solutions
Loss ratios by underwriting year1
1 Historical split pre-dates legal entity structure and allocation between P&C Re and Corporate Solutions is based on certain assumptions
5
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
Flashpöhler survey Swiss Re is viewed best overall reinsurer in most regions
6
Best overall (North America): 1st
Willingness to recommend (North America): 2nd
Corporate Solutions
Source: Industry Flashpöhler survey 2012/2013
Best overall (EMEA): 1st
Best overall (Asia): 1st
Best overall (Latin America): 2nd
Reinsurance
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
The current market environment
7
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
Low interest rates Reserve releases
High industry capitalisation
Factors leading to lower prices1
Factors leading to higher prices1
Low inflation
Tighter regulation
?
Pricing outlook in P&C industry
Drivers of re-/ insurance prices
Nat Cats
Low
Prices
1 Nominal pricing
8
High
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
• Strong US focus; approximately 23% market share of the US catastrophe market
• Increased competition has lowered cat bond spreads in the last 18 months by more than 40%, however prices have stabilised over the last few weeks
• Some of this AC is here to stay, but is unlikely to replace the traditional nat cat reinsurance market
Alternative capital focusing on Nat Cat is unlikely to replace the traditional reinsurance market
9
Estimated size of global AC market that is focusing on Nat Cat vs cat bond spread
• Clients rely on traditional reinsurers for long-term support and services
• AC has not been tested by rising credit spreads or large losses
200
400
600
800
1000
1200
1400
0
10
20
30
40
50
60
bps USD bn
Collateralised RI, sidecar, ILWILSBB primary issuance spread (cat bond)
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
• Target long-tail, low-volatility business
• Leverage investment return by investing the reinsurance "float"
• Accept business at higher combined ratios than traditional reinsurance
• Weaker underwriting performance is compensated by a riskier investment strategy
Alternative capital focusing on long-tail lines carries substantial risks for clients
10
Some reinsurers launched by hedge funds… … carry substantial risks for clients:
• Liabilities are not fully collateralised
despite high-risk investment strategy
• The attrition rate of hedge funds is much higher than for highly rated reinsurers
0%
10%
20%
30%
01 02 03 04 05 06 07 08
Hedge fund attrition rate1
1 Source: Xu et al (JAI 2011) "An Examination of Hedge Fund Survivorship Bias and Attrition Before and During the Global Financial Crisis"
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
•Rates are trending down across some lines and geographies; however these rate decreases are of a temporary nature
•Opportunities for large transactions and tailor-made deals continue to exist
Critical importance of underwriting outperformance in current environment
11
• In a softening market environment, underwriting outperformance is critical
•We have outperformed in the past, and will continue to so do
– If prices continue to fall we will protect the value of our portfolio
– We will maintain our firm stance on terms and conditions
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
Swiss Re's competitive advantage in underwriting
12
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
Swiss Re's underwriting outperformance
13
Underwriting profit = GAAP premiums earned - claims and claims adjustment expenses - acquisition costs - other expenses. Top 8 reinsurers include: Swiss Re, Munich Re, Hannover Re, PartnerRe, SCOR, General Re, Everest Re, Transatlantic Re/Alleghany Source: Swiss Re Economic Research and Consulting
• Average premium share of 23%
• Average profit share of 41%
0%
10%
20%
30%
40%
50%
60%
2006 2007 2008 2009 2010 2011 2012 2013 1Q14
Premiums U/W profit (green = loss)
Swiss Re’s P&C premium and underwriting profit share vs top reinsurers
In 2011 the industry underwriting result was negative due to extraordinary nat cat losses the low share of underwriting loss is therefore positive for Swiss Re
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
Competitive advantage in underwriting A key strength of Swiss Re
14
Portfolio steering
Hedging R&D Innovation, large and structured transactions
151 Years Capital strength
In an inefficient market, skilled portfolio steering
Our retro and hedging team
Re/insurance is a knowledge business
Focus on tailored and large lines
Superior balance sheets and 151 years of history
creates extra economic value
exploits price differences between re/insurance and capital markets
markets are intransparent
R&D provides competitive advantage in risk selection
requires economies of scale
with better economics than open market placements requires highly developed structuring and UW expertise
are valued by clients give preferential access to long tail business
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
0%
2%
4%
6%
8%
10%
12%
14%
-
1 000
2 000
3 000
4 000
5 000
6 000
7 000
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13
Market premium (net) Market losses Swiss Re market share
Portfolio steering Applying cycle management
•Key success factors:
– Consistent economic framework (EVM)
– Clarity of overarching objectives (economic profit maximisation)
– Centrally steered portfolio optimisation approach
15
Underwriting year
USD m
Airlines insurance
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
Portfolio steering Vast majority of portfolios have added to economic profit
16
• Steering is based on portfolios that are key to overall performance in terms of volume and risk
• Over the last 5 years, vast majority of portfolios have provided positive profit margins, in most cases significantly above our return targets
-20%
0%
20%
40%
60%
80%
EVM profit margin (before fixed cost) 2009 to 2013 average by portfolio
Above 80%
Pro
pert
y A
sia
trea
ty (
due
to n
at c
at e
vent
s)
Each represents a specific P&C underwriting portfolio
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
Example: Swiss Re is developing and implementing a proprietary, forward-looking, exposure based model for Liability risks, similar to the one already in use for Nat Cat
Better risk selection through R&D
Full version
Simplified version
Implementation ongoing
Current implementation status for single risk
17
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
Large and structured transactions Significant economic profit
18
• Customised solutions including quota shares, non-proportional deals, longevity, external run-off and ILS
• Our ability to write large lines allows us to drive terms and write private transactions, often with better economics than open market placements
• During 2013, 32 large transactions produced an EVM economic profit of USD 354m
Number of large transactions
15
12
5
P&C L&H ILS
Type of transaction
Swiss Re large transactions, 2013
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014 19
Swiss Re's P&C business
Corporate Solutions
Summary and Q&A
Reinsurance
Agostino Galvagni CEO Corporate Solutions
Christian Mumenthaler CEO Reinsurance
Matthias Weber Group Chief Underwriting Officer
Maintaining outperformance in P&C Agenda
Corporate Solutions
Agostino Galvagni, CEO Corporate Solutions
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014 21
Large Corporates
• Value proposition best fits the needs of large corporate clients (i.e., revenues > USD 750m)
• Neither focused on small corporates nor active in Global Master Policies area, resulting in limited administrative requirements
• Access to risks not placed in wholesale centres
• Lower commissions • Leveraging Swiss Re Group office
network
• Leading brand • Financial strength • “We are here to stay” • Large net capacity • Innovation • Supported by
– superior u/w knowledge
– disciplined cycle management
Lean
Global
Value proposition
21
Target by 2015 GPW1 USD 4-5bn ROE 10-15% 1 Gross premium written net of internal fronting for the Reinsurance Business Unit
Strategy: Lean global player focusing on large corporates
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
• On track to deliver against 2015 targets
• Focusing on current strategy execution
– Progress on investment for growth
– Sales focused on large clients and brokers
– Differentiated underwriting approach for corporates
– Pro-active portfolio steering
– Diversified portfolio composition
• Preparing for profitable growth beyond 2015
– Expand into Primary Lead
– Move more significantly into High Growth Markets
Agenda
22
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014 4
Note: Figures are on total financial contribution basis; 2013 is projection at 30.09. (P9); planned October 2010 adjusted for subsequent portfolio shifts
23
On track to deliver against 2015 targets
2.5
3.8
4.0 – 5.0
0
1
2
3
4
5
Baseline2010
Achieved2013
Target2015
7.4%
9.6%
10% - 15%
0
5
10
15
Achieved2012
Achieved2013
Target2015
GPW1 USD 4-5bn ROE 10-15%
in USD bn in %
On track to deliver USD 4-5bn of premiums by 2015, this will almost double the book, profitably, over 5 years
1 Gross premium written net of internal fronting for the Reinsurance Business Unit
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
• On track to deliver against 2015 targets
• Focusing on current strategy execution
– Progress on investment for growth
– Sales focused on large clients and brokers
– Differentiated underwriting approach for corporates
– Pro-active portfolio steering
– Diversified portfolio composition
• Preparing for profitable growth beyond 2015
– Expand into Primary Lead
– Move more significantly into High Growth Markets
Agenda
24
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
Organic growth 9
Inorganic growth 5
2010 Baseline year
2014
Achieved
Employees ~1 000 ~2 200
Offices 32 46
Operating platform
Operational sustainability
Sales
Underwriting
5
Harmonize and upgrade
Improve and maintain
Progress on investment for growth
25
Note: Number of employees and offices includes 51% acquisition of Seguros Confianza announced in February 2014, pending regulatory approval. The company has 3 main offices and 14 branches, the latter not included above
Maintain
Segment and upgrade
Organic growth ~550
Inorganic growth ~450
Intra Group shifts ~200
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
Sales focused on large clients and brokers
26
• Delivering a holistic value proposition to large clients based upon an in-depth understanding of their needs
• 6% share of wallet1 in 2013 for 125 key accounts
• Strategic agreements with global brokers
• Gradually expand with regional brokers
Become a top-5 insurance partner for half of the Fortune 500 companies
Become a top-10 partner for the key global brokers
26
1 Without workers' compensation, commercial auto and employees benefits, where Corporate Solutions is not active
Ambition
Ambition
Each phase monitored by specific KPIs
Sales Process
• Target
• Prospect
• Opportunity
• Submission
• Quote
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
Underwriting approach
Differentiated underwriting approach for corporates
27
Prudent risk selection in a portfolio context
Paying attention to wordings and clauses
Incorporating actuarial and
R&D intelligence
into risk assessment
tools
Identifying industry
specific risk factors
Including Risk Engineering into the underwriting process
• Disciplined cycle management is important but not sufficient to outperform the market
Highlights
• As a consequence, underwriting must be driven by various activities
1
2
3
4
5
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014 4
28
Pro-active portfolio steering
Action: Market share reduced from 14% to 4% in 2014 for the steering unit
• Segmentation of the portfolio into homogenous steering units (i.e., a combination of line of business, region and industry)
Highlights
0
1
2
3
4
5
UnderlyingDemand of
Product/Service
Market Growthand Potential
Market PriceLevel
(Historic)Market
Profitability
AvailableCapacity
Terms andConditions
Swiss RePositioning
Legal andregulatory
Environment
201320142015
• Regular quantitative and qualitative assessments of each steering unit
• Steering actions
0 1 2 3 4 5
2013 2014 2015
1 = Poor 2 = Fair 3 = Good 4 = Very Good 5 = Excellent
Overall Rating
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014 4
29
41%
28%
19%
12%
0%
10%
20%
30%
40%
50%
Property Casualty SpecialLines
Credit &Surety
58%
24%
10% 8%
0%
10%
20%
30%
40%
50%
60%
70%
NorthAmerica
EMEA LatinAmerica
Asia
Diversified portfolio composition
1 Special Lines includes Aviation & Space, Engineering, Marine and Energy Offshore Note: Portfolio composition relates to 2013
by line of business
by geography
10%
9%
9%
8%
7% 5% 5% 5%
4%
38%
Construction/EngineeringAviation/Space/Ship BuildersAgriculture/ForestryProfessional ServicesEnergy OnshoreMarineMiningHealth Care/Pharmaceuticals/ChemicalsUtilitiesVarious ~ 10 other industry segments
by industry
1
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
• On track to deliver against 2015 targets
• Focusing on current strategy execution
– Progress on investment for growth
– Sales focused on large clients and brokers
– Differentiated underwriting approach for corporates
– Pro-active portfolio steering
– Diversified portfolio composition
• Preparing for profitable growth beyond 2015
– Expand into Primary Lead
– Move more significantly into High Growth Markets
Agenda
30
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
Growth beyond 2015
31
• Expand into Primary Lead • Move more significantly into
High Growth Markets
Corporate Solutions on track to reach a ~4% share in the excess layer market (focus of current portfolio)
At current profitability further growth in the excess layer market will be difficult
Two complementary initiatives for growth beyond 2015
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014 32
Expand into Primary Lead
32
Source: Swiss Re Economic Research & Consulting
125 70
195
60
230
Future focus/Primary Lead
Rest of the market
Additional benefits Expand the target market
2013 commercial insurance market premium: USD 680bn
Capabilities which need to be further developed
• Products: Ability to price primary products, notably costing benchmarks for ground-up losses
• Services: Establish local services (claims managers, field engineers) to handle high claims frequency business
• Systems: Integrate management of co-insurance panels into current platform
• Client stickiness is enhanced
• Creates higher priority with brokers
• Opens new cross-selling opportunities
Global Master Policies
Current focus/excess layer market
in USD bn
Small and medium size corporates
Workers' compensation
and commercial auto
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
10%
Enter or strengthen presence in 8 High Growth Markets
Focus on selected 13 High Growth Markets
Chile
Brazil
South Africa
Indonesia
China
Hong Kong
Mexico
Singapore • Insurance licence
obtained in 2013
UAE • Dubai office opened in
2012
India
Turkey
South Korea
Already well covered
Local presence to be strengthened No local presence
Colombia • Agreed to acquire
51% stake in Seguros Confianza in Q1 2014 (closing targeted for H2 2014)
33
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
• On track to deliver against 2015 targets
• Focusing on current strategy execution
• Preparing for profitable growth beyond 2015
– Expand into Primary Lead
– Move more significantly into High Growth Markets
Key messages
34
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014 35
Swiss Re's P&C business
Corporate Solutions
Summary and Q&A
Reinsurance
Agostino Galvagni CEO Corporate Solutions
Christian Mumenthaler CEO Reinsurance
Matthias Weber Group Chief Underwriting Officer
Maintaining outperformance in P&C Agenda
P&C Reinsurance
Christian Mumenthaler, CEO Reinsurance
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014 37
Our strategy is to create value through differentiation and targeted growth
Global Presence
Brand
Diversification
Financial Strength
Data
R & D
Structuring & UW
Client Relationships
DIFFERENTIATE
Regionals & Nationals
Casualty
Health
L&H Protection Partners
High Growth Markets
GROW
Policyholders/ Society
DEVELOP
People, Culture & Operational
Excellence
DELIVER
GAAP & EVM profit
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
We have a "high touch" interaction model
38
• …we have documented 1 986 meetings and 1 060 phone calls between Swiss Re employees (87 ) and those of a Global Client (99 )
• …we have documented more than 90 000 meetings and 45 000 phone calls with our clients in total. Altogether, 4 500 Swiss Re employees were in contact with more than 55 000 client employees
Swiss Re
Global client
Visualisation of a client relationship with a large Global client
Individuals
8+ interactions over last 4 years
Over the last four years…
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014 39
We deliver much more than just reinsurance to our clients
Type of service
Assumed benefit
~ 80+ reinsurance treaties, ~400+ facultative certificates
are driving our partnership
Emerging Risks Workshops
Joint product development
(LatAm)
Casualty workshops
Support SME business
strategy
Property strategy initiatives
P&C workshops
(Asia)
Engineering workshop
Interactive seminars
UW claims exchange
A&H workshop
(Asia)
Non- customised
WBCs
Cat Model comparison
SR Cat data (GeoPortal,
CatNet)
Reinsurance solutions
Knowledge exchange
Support strategy
Med
ium
H
igh
Low
A&H prod development
workshop
Full spectrum of traditional and innovative reinsurance solutions.
Knowledge exchanges, on-site and virtual workshops, trainings, etc.
Directly supporting client's strategy with joint product development, strategy support, capital management etc.
Exam
ple
of a
Glo
bal P
&C
Clie
nt
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
14%
26%
19%
41%
Renewed dealsNew dealsStructured solutions
As a result, we also get differentiated economics
40
• This model has developed over the last 5-10 years and is most advanced with the largest global clients
• Remuneration for the differentiated services comes mostly through the access to unique (private) transactions
• Unique transactions produce higher margins for Swiss Re
Expected economic profit by source
Globals Division, January 2014 renewals
Model maturity and mechanism
Flow business Large & customised deals
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
We focus on High Growth Markets that offer growth now and in the long term
41
HGM focus countries Long-term focus Other HGM
Vietnam Outperforming long-term market growth by delivering broad range of covers
Sub-Saharan Africa Nurturing primary market growth and establishing ourselves as a leader
Brazil Accelerating growth through local carrier
Mexico Building on an existing successful franchise Indonesia
Developing capabilities to meet emerging local market needs
India Focus only on few selected segments
We generate almost 20% (>USD 5bn US GAAP) of our reinsurance premiums in HGM
China Expanding our offering despite increasing competition
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
• We are growing both top and bottom line in HGM P&C Reinsurance
• China dominates top line due to large motor quota shares, but we are also growing strongly in other HGM
• The growth in FTEs demonstrates our commitment to HGM
• We have a strong track record of deals and innovative collaboration in HGMs, e.g.:
– India: Strategic partnership with AICI (Agriculture Insurance Company of India)
– Brazil: Sustainable flood risk coverage with Allianz
We are successfully growing in High Growth Markets
42
50 100 150 200 250 300 350
2
1
EVM profit (USD m)
4
3
US
GA
AP
Gro
ss E
arne
d P
rem
ium
s (U
SD
bn)
6
5
2009
2009
HGM P&C Re ex China
HGM P&C Re total
Bubble size represents headcount (incl L&H Re)
2013
2013
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
Our Regionals & Nationals segment is attractive
43
• Our Regionals & Nationals (R&N) segment comprises more than 1 300 P&C clients that focus on a specific geography or niche
• These clients tend to be smaller, need more reinsurance (typical cession rate of 25%), have a C-suite involved in reinsurance, value continuity and relationships and are very loyal
• The diversity of the R&N client segment provides a buffer against volatility inherent to the industry
Regionals & Nationals segment R&N segment displays lower volatility
1,5
1,0
0,5
0,0
2012 2010 2008 2006 2004 2002
2,0
3,0
2,5
(USD bn)
3,5
Large & Global Clients
R&N
Economic Gross Margin1
1 Economic Gross Margin = NPV Premiums – Claims – Commissions
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
In other areas we are further developing some capabilities and tailoring our approach to the specific needs:
• Streamlined processes
• Cost-efficient approach
Traditional strengths and a tailored approach enable us to exploit the potential of the R&N market
44
Tailored R&N approach
Some of our key strengths directly meet R&N clients' needs and preferences:
• Reliable long term orientation
• Personal relationships
• Knowledge and expertise
Swiss Re's traditional strengths
• Significant opportunity in all geographies, with the US standing out as the largest R&N market
• Swiss Re's estimated P&C global market share is only 6% in R&N, compared to 16% in other segments
Growth in the R&N market + =
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
We will broaden our Casualty portfolio and continue to build our future
45
Casualty strategy
Broaden our portfolio through increased share of wallet and new clients
Continue to execute large transactions
Build our future
Accumulation
Forward-looking modelling
Key themes (2 examples)
Developing new ways to systematically and transparently assess liability risk
Increasing our capability for managing casualty risk accumulations
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
• We manage the business according to the pricing cycle
• We will continue to pursue a profitability-focused expansion, taking account of relevant factors, e.g.
– rate development
– macro economics
– social, regulatory and legal developments
– cession rates
We are growing our casualty portfolio again
46
Portfolio development and rates Steering and growth approach
US
GA
AP
Gro
ss E
arne
d P
rem
ium
(US
D b
n)
CIA
B1 R
ate
Inde
x
1 CIAB: The Council of Insurance Agents & Brokers
70
80
90
100
110
120
130
140
0
1
2
3
4
5
6
7
'01 '03 '05 '07 '09 '11 '13
SR global casualty portfolio (ex motor)
CIAB market index: US general liability rates1
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014 47
Collateralised reinsurers
Hedge fund reinsurers
Swiss Re
1. Main income driver Underwriting Investing Underwriting
2. Risk pool
US Nat Cat concentrated Low severity only Diversified
3. Service level & client relationships
4. Underwriting expertise
5. Creditworthiness
6. Admin expenses
7. Long-term reliability
Swiss Re has a different business model from alternative capital providers
Strong Weak
Our competitive position remains strong
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
• We have entered a softening phase of the reinsurance market
• We expect to continue our outperformance in the reinsurance market through:
– further developing our differentiated service model
– executing our P&C strategic initiatives
• Our long term expected ROE for P&C Re remains 10-15%
Key messages
48
We are focused on achieving our financial goals in a more challenging environment
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014 49
Swiss Re's P&C business
Corporate Solutions
Summary and Q&A
Reinsurance
Agostino Galvagni CEO Corporate Solutions
Christian Mumenthaler CEO Reinsurance
Matthias Weber Group Chief Underwriting Officer
Maintaining outperformance in P&C Agenda
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
• We have had a good track record in P&C
• In the current environment underwriting outperformance is critical; we will continue to outperform by focusing on our areas of strength and will add value through differentiation and targeted growth
• We will continue to identify and take advantage of opportunities to deploy excess capital profitably, both in Reinsurance and Corporate Solutions
– If P&C lacks such opportunities, we will either deploy capital elsewhere in the Group or return it to shareholders
Conclusion
50
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014 51
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
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
Simone Lieberherr Simone Fessler +41 43 285 4190 +41 43 285 7299
Corporate calendar & contacts
Corporate calendar 2014 6 August Second Quarter 2014 results Conference call 7 November Third Quarter 2014 results Conference call 2015 19 February Annual Results 2014 Conference call 18 March Publication of Annual Report 2014 and EVM 2014 21 April 151st Annual General Meeting Zurich
52
Investors' Day | Maintaining outperformance in P&C | London, 3 July 2014
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;
• 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.
53