Swiss Re Ag · SIX:SREN
Swiss Re — Investor Presentation (March 2005)
49 slides from Swiss Re's investor presentation, March 2005
Slide 1: A global leader in managing capital and risk
ab A global leader in managing capital and risk Swiss Re 03/2005
Slide 2: Agenda
ab Agenda Introduction & History Philosophy & Strategy Competitive strengths Facts & Figures Outlook Swiss Re 03/2005
Slide 3: Swiss Re Group at a glance
ab Swiss Re Group at a glance Net income amounted to CHF 2.5 billion Premiums earned amounted to CHF 29.4 billion Total investments amounted to CHF 98.5 billion Leading position in P&C reinsurance: 11% market share* Leading L&H reinsurer: 24% market share* Leading provider of financial services solu
Slide 4: Swiss Re's history
ab Swiss Re’s history 1863 Foundation of the company 1906 San Francisco Earthquake, Swiss Re establishes its reputation 1910 First branch office in New York 1950-1956 Opening of offices in South Africa, Canada, Australia, Hong Kong 1968-1976 Creation of several advisory and service companies in Asia
Slide 5: Swiss Re's evolution
ab Swiss Re’s evolution Working as a global firm Organisational Formation Integration Triple 20 Launch of New BG of Divisions of Union Re program e-business structure alignment: Integration of Bavarian Re Build Financial Set-up of Creation Acquisition Acquisition Acquisition Formation of ART Divisio
Slide 6: Agenda
ab Agenda Introduction & History Philosophy & Strategy Competitive strengths Facts & Figures Outlook Swiss Re 03/2005
Slide 7: Corporate philosophy: Mission
Corporate philosophy ab Mission To be the authority on managing capital and risk Swiss Re 03/2005
Slide 8: Corporate philosophy: Core values
Corporate philosophy ab Core values Excellence We rely on profound knowledge and expertise in doing business Efficiency We perform to optimum standards of quality and cost-effectiveness Sustainability We strive for balance between economic, social and environmental development in society at large In
Slide 9: Swiss Re's strategic priorities
ab Swiss Re’s strategic priorities I. Actively manage the cycle for profits II. Optimise organic and transactional growth Excellence in execution III. Extend leadership in Asia IV. Accelerate the balance sheet through risk securitisation Swiss Re 03/2005 Source: Analysts' meeting, 17 March 2005
Slide 10: Balanced Scorecard
ab Balanced Scorecard Financial What we must deliver to our shareholders Increase Shareholder Value Client What our clients Maximum Client Value expect from us Internal What processes Client Focus Underwriting Operational we must excel at & Structuring Excellence Excellence People & Knowledge How we
Slide 11: Organisation
ab Organisation Board of Directors Executive Board Corporate Functions Risk Finance Global Communications Management Information & Human Technology Resources Business Functions Client Markets Products Financial Services Americas Life & Health & Property & Specialty Asset Management Global AdminRe Ca
Slide 12: Agenda
ab Agenda Introduction & History Philosophy & Strategy Competitive strengths Facts & Figures Outlook Swiss Re 03/2005
Slide 13: Competitive strengths
ab Competitive strengths Client base People and culture Financial strength Knowledge Expertise on capital and risk Comprehensive product and service offering Global presence Balanced portfolio Geographical diversification Swiss Re 03/2005 Global leadership position
Slide 14: Client base
ab Client base Reinsurance Property and casualty insurance companies Life insurance companies Captives Large corporations Financial institutions Institutional investors Financial services Swiss Re 03/2005
Slide 15: People and culture
ab People and culture Swiss Re 03/2005 one brand, one group, one strategy
Slide 16: Financial strength ratings
ab Financial strength ratings* Standard & Poor’s AA / negative outlook Moody’s Aa2 / stable outlook AM Best A+ / stable outlook Swiss Re 03/2005 *as of 28 February 2005
Slide 17: Knowledge and expertise – Swiss Re's publications
Knowledge and expertise – ab Swiss Re’s publications Long-established and Swiss Re’s publications proven expertise Extensive research and focused innovation sigma risk series perception Exceptional working series and learning environment risk focus dialogue reports series www.swissre.com Swiss Re 03
Slide 18: Expertise on capital and risk
ab Expertise on capital and risk Risk transfer Single risk Whole company Portfolio of risks •Reinsurance underwriting •Risk management services •Claims Balance-sheet •Enhance underwriting capacity management •Optimise use of capital •Stabilise after-tax earnings •Improve ROE Swiss Re 03/2005 •Optimi
Slide 19: Comprehensive product and service offering
Comprehensive product ab and service offering Risk assessment/ Risk transfer/ Claims containment/ risk management absorption or financing claims management Risk awareness Optimise risk-carrying Contain claims cost economics – Contractual/legal aspects Risk portfolio analysis – Reduce volatil
Slide 20: Global presence
ab Global presence More than 70 offices Swiss Re 03/2005 in over 30 countries
Slide 21: Balanced portfolio
ab Balanced portfolio 11% 39% 11% Financial Services 35% 89% Life & Health 61% 54% Property & Casualty Swiss Re 03/2005 1994 1999 2004 All figures as % of premiums earned
Slide 22: Geographical diversification
ab Geographical diversification Swiss Re’s gross premium written by regions in 2004 52% North America 35% Europe 13% Other Swiss Re 03/2005 Source: Swiss Re, Economic Research and Consulting; Swiss Re Annual Report 2004
Slide 23: Global leadership position
ab Global leadership position Top ten professional reinsurers by P&C L&H net premiums earned 2004 (USDm) market share % market share % Munich Re 26 588 12.5 26.2 Swiss Re 23 607 11.0 23.8 Hannover Re 9 379 4.9 7.0 GE Insurance Solutions 8 453 4.4 6.8 Gen Re 7 245 3.7 5.9 XL Capital 4 210 2.1 3.8 Par
Slide 24: Agenda
ab Agenda Introduction & History Philosophy & Strategy Competitive strengths Facts & Figures Outlook Swiss Re 03/2005
Slide 25: Swiss Re Group: Headlines in 2004
Swiss Re Group ab Headlines in 2004 Net income of CHF 2.5 billion, up 45% Return on equity increased to 13.6%, above the three year average target of 13% Excellent investment return of 5.8% in low interest rate environment Business Groups: – P&C: combined ratio of 98.4% unchanged from 2003 despite h
Slide 26: Financial highlights 2004
Swiss Re Group ab Financial highlights 2004 CHF millions 2003 2004 Change Premiums earned 30 740 29 439 -4% Property & Casualty 17 409 15 987 -8% Life & Health 10 229 10 205 0% Financial Services 3 102 3 247 5% Net income 1 702 2 475 45% Earnings per share (in CHF) 5.48 8.00 46% Shareholders’ equity
Slide 27: Performance 2003 vs. 2004
Swiss Re Group ab Performance 2003 vs. 2004 Business Avg target Group Key figures (in %) 2003 2004 2004-06 P&C Combined ratio 98.4 98.4 96 Premium growth 16 -8 5 L&H Return on op. revenue 8.7 9.1 9 Operating revenue growth -10 1 7 FSBG Premium business, traditional: Combined ratio 94.7 92.9 95 Premi
Slide 28: Income statement 2004
Swiss Re Group ab Income statement 2004 CHF millions 2003 2004 Change Change at const. FX Revenues Premiums earned 30 740 29 439 -4% -1% Net investment income 4 606 4 857 5% 10% Net realised investment gains 376 1 116 197% 239% Trading and other revenues 708 681 -4% 3% Total revenues 36 430 36 093 -
Slide 29: Premiums earned 2000 - 2004
Swiss Re Group ab Premiums earned 2000 - 2004 CHF millions 35 000 30 740 29 439 29 058 30 000 25 219 25 000 22 081 20 000 15 000 10 000 5 000 Swiss Re 03/2005 0 2000 2001 2002 2003 2004 Source: Swiss Re Annual Report 2004
Slide 30: Net income 1999 – 2004
Swiss Re Group ab Net income 1999 – 2004 CHF millions 3 500 2966 3 000 2446 2475 2 500 2 000 1702 1 500 1 000 500 -165 -91 0 1999 2000 2001 2002 2003 2004 Swiss Re 03/2005 - 500 Source: Swiss Re Annual Report 2004
Slide 31: Shareholders' equity
Swiss Re Group ab Shareholders’ equity Foreign currency movements do not reflect a change in economic strength CHF millions -341 21'000 2 475 -24 -1 224 -220 19'000 19 177 18 511 17'000 15'000 31.12.2003 31.12.2004 Net income Change in unrealised gains/ Other losses on securities, net Dividends Fore
Slide 32: Property & Casualty: Headlines 2004
Property & Casualty Business Group ab Headlines 2004 Combined ratio stable at 98.4% Liability adverse development absorbed by positive reserve development in other lines Premiums down 5% at constant exchange rates Expenses up, partly for build-up of branche offices and expertise in Asia Swiss Re 03/
Slide 33: Property & Casualty: Results 2004
Property & Casualty Business Group ab Results 2004 CHF millions 2003 2004 Change Change at const. FX Revenues Premiums earned 17 409 15 987 -8% -5% Net investment income 1 165 1 313 13% 13% Net realised investment gains/losses 371 778 110% 129% Total revenues 18 945 18 078 -5% -2% Expenses Claims an
Slide 34: Premiums earned by line of business
Property & Casualty Business Group ab Premiums earned by line of business Total 2004: CHF 16.0 billion 32% Property Accident 5% Other 16% 30% Liability 17% Motor Swiss Re 03/2005 Source: Swiss Re Annual Report 2004
Slide 35: Premiums earned by division
Property & Casualty Business Group ab Premiums earned by division Total 2004: CHF 16.0 billion Asia 12% 48% Europe Americas 40% Swiss Re 03/2005 Source: Swiss Re Annual Report 2004
Slide 36: Business focus and outlook
Property & Casualty Business Group ab Business focus and outlook Proactive capacity allocation Maintain underwriting discipline Focus on bottom line profitability Combined ratio for 2005 to be in range of 96% Swiss Re 03/2005 Source: Swiss Re Annual Report 2004
Slide 37: Life & Health: Headlines 2004
Life & Health Business Group ab Headlines 2004 Return on operating revenues of 9.1% Operating revenue growth of 1% (underlying growth of 6%) Underlying traditional life operating revenue growth of 2% Completed two largest Admin ReSM transactions to date Premiums increased by 4% at constant fx Swiss
Slide 38: Life & Health: Results 2004
Life & Health Business Group ab Results 2004 CHF millions 2003 2004 Change Change at const. FX Revenues Premiums earned 10 229 10 205 0% 4% Net investment income 3 085 3 178 3% 9% Net realised inv. gains par. policies 51 Operating revenues 13 314 13 434 1% 6% Net realised inv. gains non par. policie
Slide 39: Return on operating revenues
Life & Health Business Group ab Return on operating revenues 13.8 in % 11.6 12 11.1 10.3 9.2 9.5 9.5 9.1 9.1 8.7 7.9 8 7.2 3.5 4 2.5 2.5 0 2000 2001 2002 2003 2004 Swiss Re 03/2005 Life Health Total Source: Swiss Re Annual Report 2004
Slide 40: Premiums earned by product class
Life & Health Business Group ab Premiums earned by product class Total premiums earned 2004: CHF 10 205 million Health 18% 82% Life Swiss Re 03/2005 Source: Swiss Re Annual Report 2004
Slide 41: Premiums earned by region
Life & Health Business Group ab Premiums earned by region Total premiums earned 2004: CHF 10 205 million 65% 26% North America Europe 9% Swiss Re 03/2005 Rest of the world Source: Swiss Re Annual Report 2004
Slide 42: Financial Services: Headlines 2004
Financial Services Business Group ab Headlines 2004 Earnings growth improvement from premium business (87% of operating income) Excellent combined ratio of 92.9% (2003: 94.7%) for traditional business with premium growth of 5% at constant exchange rates Fee business earnings of CHF 87 million in lin
Slide 43: Financial Services: Results 2004
Financial Services Business Group ab Results 2004 CHF millions 2003 2004 Change Change at in % const. FX Revenues Premiums earned 3102 3 247 5 9 Net investment income 319 333 4 8 Net realised investment gains/losses 39 179 Trading revenues, fees and commissions 895 793 -11 -6 Total revenues 4 355 4
Slide 44: Premium business, traditional – combined ratio over time
Financial Services Business Group Premium business, traditional– ab combined ratio over time in % 200 183.2 160 116.0 120 94.7 92.9 80 40 0 Swiss Re 03/2005 2001 2002 2003 2004 Source: Swiss Re Annual Report 2004
Slide 45: Fee business – return on total revenues
Financial Services Business Group ab Fee business – return on total revenues excluding proprietary asset management in % 25 14.7 12.9 3.4 -45.4 0 -25 -50 Swiss Re 03/2005 2001 2002 2003 2004 Source: Swiss Re Annual Report 2004
Slide 46: Agenda
ab Agenda Introduction & History Philosophy & Strategy Competitive strengths Facts & Figures Outlook Swiss Re 03/2005
Slide 47: Target matrix
ab Target matrix Individual growth targets replaced by overall growth in EPS target Avg target Business targets Key figures 2004 2005/06 Property & Casualty Combined ratio 98.4% 96% Life & Health Return on operating revenues 9.1% 9% Financial Services Premium business, traditional: Combined ratio 92
Slide 48: Outlook (I)
Swiss Re Group ab Outlook (I) Risk continues to be a growth industry, particularly in emerging Asian markets, capturing above-GDP growth and profiting from emergence of new risks Cycle management benefits from the ability to diversify across products and markets Swiss Re has the financial strength,
Slide 49: Outlook (II)
Swiss Re Group ab Outlook (II) P&C: Assuming a normal claims burden, Swiss Re expects combined ratio for 2005 to be in the region of 96% L&H: Attractive opportunities for expansion of Admin ReSM, return on revenues above 9% FSBG: Expansion of insurance-linked securities (ILS) and fee income Investme