Swiss Re Ag · SIX:SREN
Swiss Re — Q3 2014 Earnings Presentation
26 slides from Swiss Re's earnings presentation, Nov 7, 2014
Slide 1: Third quarter 2014 results
Third quarter 2014 results Analyst and investor presentation Zurich, 7 November 2014
Slide 2: Q3 2014 Financial highlights
Q3 2014 Financial highlights Strong Group performance • Good contribution from all Business Units • Group net income USD 1.2bn – Return on equity 14.8%, earnings per share USD 3.59 (CHF 3.21) – Return on investments 3.5% • Reinsurance net income USD 1.0bn – Strong underwriting result in P&C Re, help
Slide 3: Key figures Q3 2014
Key figures Q3 2014 Corporate Admin Group Total Total Total Total USD m, unless otherwise stated P&C Re L&H Re Solutions Re® items Q3 2014 Q3 2013 9M 2014 9M 2013 • Premiums earned and fee income 4 305 2 873 903 231 - 8 312 7 475 23 423 21 052 • Net income/loss1 842 160 103 54 68 1 227 1 072 3 255 3
Slide 4: P&C Reinsurance
P&C Reinsurance Very strong results supported by low nat cat impact Net premiums earned Combined ratio Net income USD m % USD m 9M Q3 81.5% ROE: H1 11 678 (9M: 83.6%) 2 385 25.1% 10 655 2 239 4 305 842 ROE: 3 951 76.7% 784 28.0% 6 704 7 373 (9M: 82.7%) 1 455 1 543 2013 2014 2013 2014 2013 2014 • Inc
Slide 5: L&H Reinsurance
L&H Reinsurance Improvement in operating margin continues Operating revenues Operating margin1 Net income USD m % USD m 9M Q3 9.2% H1 9 637 (9M: 8.8%) 420 8 324 35 ROE: 3 240 385 272 5.9% 2 815 5.6% 6 397 (9M: 8.2%) 160 ROE: 5 509 9.6% 2013 2013 112 2014 2013 2014 2014 • Q3 2014 premiums earned and
Slide 6: Corporate Solutions
Corporate Solutions Profitable organic growth continues Net premiums earned Combined ratio Net income USD m % USD m 9M Q3 95.8% ROE: H1 2 574 (9M: 93.8%) 249 12.2% 2 090 227 903 ROE: 103 791 90.5% 71 15.4% 1 671 (9M: 92.9%) 156 1 299 146 2013 2014 2013 2014 2013 2014 • Q3 2014 increase in net • Q3 2
Slide 7: Admin Re®
Admin Re® Strong gross cash generation Gross cash generation1 Return on investments Net income USD m % USD m 9M Q3 5.2% 615 H1 (9M: 5.0%) 338 142 ROE: 151 4.9% 219 255 473 5.0% 54 ROE: (9M: 5.1%) 187 3.5% 85 165 170 2013 2014 2013 2014 2013 2014 • Strong gross cash generation in • Q3 2014 return on
Slide 8: Group investment result
Group investment result Continued strong performance Average invested assets1 Return on investments2 Total return2 USD bn, basis for ROI calculation % % 9M Q3 5.2% (9M: 7.1%) 114.8 115.3 3.5% flat 3.5% 116.9 111.6 (9M: 3.6%) (9M: 3.7%) 4.6% (9M: -1.1%) 2013 2014 2013 2014 2013 2014 • Increase in ave
Slide 9: Common shareholders' equity Q3 2014
Common shareholders' equity Q3 2014 Increase driven by net income; adverse fx effect largely offset by change in unrealised gains USD m Gov bonds 0.7 Corp bonds 0.0 Sec products 0.0 Equities and others -0.1 Tax -0.2 Total 0.4 -486 356 1 227 33 623 32 526 Common shareholders' Net income Other 2 Net c
Slide 10: Swiss Re's capital structure
Swiss Re's capital structure Well on track towards implementation of target capital structure USD bn Core capital 1 Total hybrid incl. contingent capital Senior debt 2 LOC 3 Senior leverage plus LOC ratio 4 Subordinated leverage ratio5 100% 90% 13.6 13.8 80% 8.5 6.7 6.3 11.3 6.1 70% 7.0 12.7 16.3 9.
Slide 11: Group financial targets
Group financial targets On track ROE 700 bps above risk free EPS growth 10% average ENW per share growth plus average over 5 years annual growth rate, adjusted dividends 10% avg. annual (2011-2015) for special dividends1 growth rate over 5 years in % in USD2 in USD2 144.5 13.0 136.1 123.1 11.9 13.4
Slide 12: Appendix
Appendix • Business segment results Q3 2014 – Income statement • Business segment results Q3 2014 – Balance sheet • Total equity and ROE Q3 2014 • P&C Reinsurance – Underwriting performance • Corporate Solutions – Underwriting performance • Return on investments (ROI) • Overall investment portfolio
Slide 13: Business segment results Q3 2014 – Income statement
Business segment results Q3 2014 Income statement Re- Corporate Admin Group Consoli- Total Total Total USD m insurance P&C Re L&H Re Solutions Re® items dation Q3 2014 Q3 2013 9M 2014 Revenues Premiums earned 7 163 4 305 2 858 903 118 - - 8 184 7 349 23 044 Fee income from policyholders 15 - 15 - 11
Slide 14: Business segment results Q3 2014 – Balance sheet
Business segment results Q3 2014 Balance sheet Re- Corporate Admin Group Consoli- End End 30 September 2014, USD m insurance P&C Re L&H Re Solutions Re® items dation Q3 2014 Q2 2014 Assets Fixed income securities 63 876 32 723 31 153 5 061 20 449 49 - 89 435 82 516 Equity securities 2 460 1 673 787
Slide 15: Total equity and ROE Q3 2014
Total equity and ROE Q3 2014 Re- Corporate Admin Group Total1 Total1 USD m insurance P&C Re L&H Re Solutions Re® items Q3 2014 9M 2014 Common shareholders' equity2 at 31 December 2013 18 384 12 840 5 544 2 771 5 804 4 932 31 850 Common shareholders' equity2 at 30 June 2014 18 230 11 571 6 659 2 667
Slide 16: P&C Reinsurance – Underwriting performance
P&C Reinsurance Underwriting performance Combined ratios in %, premiums and underwriting result in USD m Net Under- Q3 Q3 premiums writing 9M 2013 2014 Main drivers of change earned result 2014 Property 58.8% 60.8% • Both periods benefited from low nat cat impacts 1 964 769 67.6% Casualty 121.3% 102
Slide 17: Corporate Solutions – Underwriting performance
Corporate Solutions Underwriting performance Combined ratios in %, premiums and underwriting result in USD m Net Under- Q3 Q3 premiums writing 9M 2013 2014 Main drivers of change earned result 2014 Property 97.5% 64.7% • Q3 2014 driven by lower than expected nat cat 360 127 83.0% experience and favo
Slide 18: Return on investments (ROI)
Return on investments (ROI) Corporate Admin Group Consoli- Total Total Total USD m P&C Re L&H Re Solutions Re® items dation Q3 2014 Q3 2013 9M 2014 Investment related net investment income 263 295 29 223 22 5 837 804 2 576 Fixed income 172 285 27 211 1 - 696 638 2 097 Equities and alternatives (incl
Slide 19: Overall investment portfolio
Overall investment portfolio 57% invested in cash, short-term investments or government bonds Mortgages Cash and and other cash loans Other equivalents Short-term Equities 2% 5% End 5% investments 6% USD bn Q3 2014 13% Securitised Balance sheet values 156.8 products 5% Unit-linked investments -23.6
Slide 20: Investment mix
Investment mix Reduction in cash and short-term investments 100% 1% 1% 0-5% • Decrease in equities and alternatives 9% 8% 5-10% 90% during Q3 2014 80% 29% 20-30% – Net sales of approximately USD 29% 70% 0.9bn, realising profits while 5-10% reducing exposure 60% 5% 5% 50% • Steady corporate bond and
Slide 21: Fixed income securities
Fixed income securities Net purchases in government bonds Government Corporate Securitised USD m bonds bonds products1 End Q2 2014 42 773 33 267 6 476 End Q3 2014 50 666 32 392 6 377 5% 2% 1% 5% 6% 5% 2% 9% 3% 36% 7% 42% 49% 38% 7% 35% 10% 23% 15% United States United Kingdom CMBS, 104% par Germany
Slide 22: Equities and alternative investments
Equities and alternative investments Listed equity reduction Equities Listed Equities Exchange-traded funds End End by sector Non-Cyclical Consumer Goods 3% 3% 1% USD m Q2 2014 Q3 2014 5% Financials 23% Information Technology Listed Equities1 3 976 3 084 5% Resources 6% Private Equity1 1 794 1 761 C
Slide 23: Group capitalisation
Group capitalisation Swiss Solvency Test1 (SST) USD bn; % SST risk-bearing SST target capital SST ratio capital 70 300% 269% 245% 241% 249% 60 250% 208% 213% 50 200% 40 150% 30 100% 20 10 50% 40.5 15.0 38.5 18.5 40.7 19.1 48.7 19.8 52.2 21.6 55.4 22.3 0 0% SST 1/2010 1/2011 1/2012 1/2013 1/2014 2/20
Slide 24: Sustainability and Swiss Re
Sustainability and Swiss Re Taking the long-term view • Signatory of the UN Global Compact, UN Principles for Sustainable Insurance (PSI) of the UN Environmental Programme Finance Initiative and UN Principles for Responsible Investments • UN Climate summit, 23 Sep 2014, NY: "By the year 2020, Swiss
Slide 25: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 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 30 April First Quarter 2015 Results Conference call 30 July Second Quarter 2015 Results Conferenc
Slide 26: 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