Swiss Re Ag · SIX:SREN
Swiss Re — Q3 2013 Earnings Presentation
41 slides from Swiss Re's earnings presentation, Nov 7, 2013
Slide 1: Third quarter 2013 results
Third quarter 2013 results Analyst and investor presentation Zurich, 7 November 2013
Slide 2: Business performance
Business performance George Quinn, Group CFO Third quarter 2013 results 2
Slide 3: Q3 2013 Financial highlights
Q3 2013 Financial highlights Group net income USD 1.1bn – Return on equity 14.3%, earnings per share USD 3.12 (CHF 2.93) – Group combined ratio 83.4% – Return on investments 3.5% Reinsurance net income USD 0.8bn – Strong underwriting performance in P&C continues – L&H impacted by reserve strengt
Slide 4: Key figures Q3 2013
Key figures Q3 2013 Corporate Admin Group Total Total Total Total USD m, unless otherwise stated P&C Re L&H Re Solutions Re® items Q3 2013 Q3 2012 9M 2013 9M 2012 Premiums earned and fee income 3 951 2 452 791 281 - 7 475 6 580 21 052 18 914 Net income/loss 807 12 71 151 31 1 072 2 182 3 238 3 4
Slide 5: P&C Reinsurance
P&C Reinsurance Strong underwriting performance continues Net premiums earned Combined ratio Net income, ROE USD m % USD m, % +19.9% +11.6%pts -21.7% 3 951 3 296 69.3% 1 030 807 80.9% ROE: 29.4% Q3 2012 Q3 2013 Q3 2012 Q3 2013 Q3 2012 Q3 2013 Increase in premiums earned Net impact from large nat
Slide 6: P&C Underwriting
P&C Underwriting Strong and stable underwriting track record 130% 5% 120% 124.0 108.4 4% 117.0 110% 114.1 101.1 98.3 98.2 97.3 100% 104.0 107.8 93.9 104.7 95.4 93.4 3% 98.4 98.4 97.9 97.4 90% 93.7 96.8 90.4 90.2 2% 80% 83.1 84.8 1% 70% 60% 0% 1 5-year US Treasury risk-free rates (RHS) Group combined
Slide 7: L&H Reinsurance
L&H Reinsurance Impacted by reserve strengthening for Australian group disability business Operating revenues Benefit ratio1 Net income, ROE USD m % USD m, % +10.0% +5.8%pts -93.6% 79.0% 2 815 2 560 84.8% 187 ROE: 0.9% Q3 2012 Q3 2013 Q3 2012 Q3 2013 Q3 2012 12 Q3 2013 Premiums earned and fee Re
Slide 8: L&H Reinsurance: Operating income
L&H Reinsurance Operating income USD m Interest: 21m Recaptures & Settlements: 78m Client updates: -25m Other: 5m - 26 - 28 79 - 121 Mortality: -24m Morbidity: 5m PLT: 27m 57 YRT: -20m -19 -5 7 Q3 2012 Australia group Mortality / Changes Pre-2004 Investment Other, incl. Q3 2013 operating income, dis
Slide 9: Corporate Solutions
Corporate Solutions Profitable growth continues Net premiums earned Combined Ratio Net income, ROE USD m % USD m, % +34.5% +8.4%pts -35.5% 791 87.4% 588 110 95.8% ROE: 71 10.8% Q3 2012 Q3 2013 Q3 2012 Q3 2013 Q3 2012 Q3 2013 Gross premiums written net of Nat cat impact 9.9%pts, 3.0%pts Realise
Slide 10: Admin Re®
Admin Re® Strong gross cash generation, robust underlying net income Gross cash generation1 Return on investments2 Net income, ROE USD m % USD m, % flat -81.7% 1 065 823 5.0% 5.0% ROE: 10.3% 85 197 151 Q3 2012 Q3 2013 Q3 2012 Q3 2013 Q3 2012 Q3 2013 Q3 2012 includes USD 804m Return on investment
Slide 11: Group investment result
Group investment result Solid performance Avg. invested assets1 Return on investments Total return USD bn, basis for ROI calculation % % -9.6% -1.0%pts -3.9%pts 123.4 111.6 8.5% 4.5% 4.6% 3.5% Q3 2012 Q3 2013 Q3 2012 Q3 2013 Q3 2012 Q3 2013 Decrease in average assets Group ROI of 3.5% for Q3 201
Slide 12: Investment mix
Investment mix Re-balancing largely complete P&C Reinsurance L&H Reinsurance Corporate Solutions Admin Re® Swiss Re Group 100% 0-5% 3% 0-5% 1% 0-5% 1% 0-5% 1% 0-5% 3% 0-5% 0-5% 15% 5-15% 13% 5-15% 10% 5-10% 90% 80% 10-20% 20-40% 16% 31% 20-30% 15-30% 28% 25% 54% 45-55% 70% 5% 0-10% 60% 5-10% 5-10% 7
Slide 13: Common shareholders' equity
Common shareholders' equity Increase mainly driven by Q3 net income Gov bonds 0.0 Corp bonds 0.1 USD m Sec products 0.0 Equities and others 0.1 Tax 0.0 32 000 Total 0.2 216 362 30 818 30 000 160 1 072 29 008 28 000 26 000 24 000 Common shareholders' Net income Other Foreign currency Net change in Co
Slide 14: Swiss Re's capital structure
Swiss Re's capital structure Well on track towards implementation of optimal 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 7.4 11.3 70% 12.7 16.3 9.5 8.9 16.4
Slide 15: Group financial targets
Group financial targets Well 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 13.6 119.4 13.4 11.9 1
Slide 16: Appendix
Appendix Third quarter 2013 results 16
Slide 17: Appendix
Appendix Business segment results Q3 2013 – Income Overall investment portfolio statement Government bonds Business segment results Q3 2013 – Balance Corporate bonds sheet Securitised products Shareholders' equity and ROE Q3 2013 Equities and Alternative Investments P&C Reinsurance
Slide 18: Business segment results Q3 2013: Income statement
Business segment results Q3 2013 Income statement Re- Corporate Admin Group Consoli- Total Total Total USD m insurance P&C Re L&H Re Solutions Re® items dation Q3 2013 Q3 2012 9M 2013 Revenues Premiums earned 6 390 3 951 2 439 791 168 - - 7 349 6 388 20 649 Fee income from policyholders 13 - 13 - 11
Slide 19: Business segment results Q3 2013: Balance sheet
Business segment results Q3 2013 Balance sheet Re- Corporate Admin Group Consoli- End End 30 September 2013, USD m insurance P&C Re L&H Re Solutions Re® items dation Q3 2013 Q2 2013 Assets Fixed income securities 54 527 25 681 28 846 4 577 19 976 80 - 79 160 79 120 Equity securities 5 170 3 778 1 39
Slide 20: Shareholders' equity and ROE Q3 2013
Shareholders' equity and ROE Q3 2013 Re- Corporate Admin Group Total1 USD m insurance P&C Re L&H Re Solutions Re® items Q3 2013 Common shareholders' equity at 30 June 2013 15 728 10 256 5 472 2 587 5 662 5 074 29 008 Net income attributable to common shareholders 819 807 12 71 151 31 1 072 Dividends
Slide 21: P&C Reinsurance and Corporate Solutions: Nat cat and large man-made claims
P&C Reinsurance and Corporate Solutions Nat cat and large man-made claims Nat cat premiums and claims1 Est. Corporate USD m FY 2013 P&C Re Solutions Expected net premiums 3 090 2 760 330 Expected net claims 1 665 1 485 180 Nat cat and man-made large claims1 Total est. Q3 2013 Corporate USD m 2012 ne
Slide 22: P&C Reinsurance: Underwriting performance
P&C Reinsurance Underwriting performance Combined ratios in %, premiums and underwriting result in USD m Net premiums Underwriting Q3 2012 Q3 2013 Main drivers of change earned result Property 57.7% 58.2% Large losses in Q3 2013 (Hailstorm Germany and 2 064 862 flash floods in Toronto) were more t
Slide 23: L&H Reinsurance: Income break-down
L&H Reinsurance Income break-down Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 USD m 2012 2012 2012 2012 2012 2013 2013 2013 Net income 209 248 187 95 739 222 141 12 of which approximately: Net realised gains/losses1 118 280 288 23 709 111 133 30 VA, pre-2000 GMDB, impact from B36 -19 -15 -8 -41 -83 91 -49 22 Mortality
Slide 24: Corporate Solutions: Underwriting performance
Corporate Solutions Underwriting performance Combined ratios in %, premiums and underwriting result in USD m Net premiums Underwriting Q3 2012 Q3 2013 Main drivers of change earned result Property 80.1% 97.5% Large hurricane losses in Mexico impacted 2013 316 8 compared to very benign nat cat acti
Slide 25: Net investment income
Net investment income Corporate Admin Group Consoli- Total Total Total USD m P&C Re L&H Re Solutions Re® items dation Q3 2013 Q3 2012 9M 2013 Investment related income 233 285 25 218 47 -4 804 854 2 365 Government bonds 85 127 10 62 - - 284 372 936 Corporate bonds 43 103 12 135 - - 293 291 825 Secur
Slide 26: Net realised gains/losses
Net realised gains/losses Corporate Admin Group Consoli- Total Total Total USD m P&C Re L&H Re Solutions Re® items dation Q3 2013 Q3 2012 9M 2013 Investment related 142 30 15 60 -54 1 194 571 758 Government bonds 22 -79 -4 69 - - 8 548 385 Corporate bonds 4 -14 -3 -10 - - -23 53 57 Securitised produ
Slide 27: Return on investments basis
Return on investments basis Investments included in the ROI calculation End End USD bn Q3 2013 Q2 2013 Total investment portfolio 159.8 156.1 Unit-linked investments -23.7 -22.0 With-profit business -3.4 -3.2 Total (excl. unit-linked and with-profit) 132.7 130.9 Cash and cash equivalents -8.1 -10.3
Slide 28: Net unrealised gains/losses
Net unrealised gains/losses Corporate Admin End End USD m P&C Re L&H Re Solutions Re® Group items Q3 2013 Q2 2013 Government bonds 33 367 -27 553 - 926 969 Corporate bonds 37 143 -4 905 - 1 081 937 Securitised products 29 89 8 53 2 181 153 Equities 369 36 119 - 76 600 395 Other 198 14 1 19 12 244 27
Slide 29: 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 2013 Q3 2012 9M 2013 Net investment income 233 285 25 218 47 -4 804 854 2 365 Net realised gains/losses (incl. fx) 142 30 15 60 -54 1 194 571 758 Other revenue 10 - - - - -1
Slide 30: Overall investment portfolio
Overall investment portfolio 53% invested in cash, short-term investments or government bonds Mortgages Other - Cash and and other investment cash loans related equivalents End 2% 10% 6% Short-term investments USD bn Q3 2013 Equities² 15% 7% Balance sheet values 159.8 Securitised Unit-linked investm
Slide 31: Government bonds
Government bonds High quality portfolio S&P rating End USD m 30 Sept 20131 Q3 2013 % of Total United Kingdom AAA 11 898 28.4% Eurozone other: USD 1 226m United States AA+ 11 473 27.4% Canada AAA 3 494 8.3% Finland Other 20% 7% China AA- 904 2.2% Australia AAA 836 2.0% EEC/EU Austria super- 36% Switz
Slide 32: Corporate bonds
Corporate bonds Further re-balancing End % of End USD m Q3 2013 Total Q3 2013 United States 6% 2% 55% Resources 3 302 10.8% Pfandbriefe / 15% United Kingdom covered bonds 2% Basic industries 1 494 4.9% Netherlands Banks 51% 3% Australia Cyclical consumer goods 947 3.1% 5% Specialty 13% Canada Cyclic
Slide 33: Securitised products
Securitised products 54% AAA rated, 88% investment grade 3% End End BB and Est. % USD m, market values Q2 2013 Q3 2013 Aaa Aa A BBB below par 37% CMBS 2 949 2 927 1 444 306 432 250 495 100% 46% RMBS 880 905 235 26 346 103 195 86% Other ABS 2 389 2 402 1 756 295 176 118 57 101% 14% Other Securitised
Slide 34: Equities and Alternative Investments
Equities and Alternative Investments Listed equities re-balancing Equities Listed Equities Exchange-traded funds End End by sector Non-Cyclical Consumer Goods Q2 2013 Q3 2013 3% 1% 2% 1% Financials USD m, market values 4% 4% Information Technology Listed Equities 5 022 6 030 6% Cyclical Services Str
Slide 35: Common shareholders' equity 9M 2013
Common shareholders' equity 9M 2013 Decrease driven by dividends and reduction in unrealised gains Gov bonds -2.9 USD m Corp bonds -1.3 Sec products -0.1 38 000 Equities and others 0.8 36 000 Tax 1.0 Total -2.5 3 238 -2 760 34 000 81 -128 32 000 32 900 -2 513 30 000 30 818 28 000 26 000 24 000 Commo
Slide 36: Group capitalisation
Group capitalisation Swiss Solvency Test1 (SST) USD bn; % SST risk-bearing SST target capital SST ratio capital 70 300% 269% 245% 60 229% 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 47.3 20.7 0 0% SST 1/2010 1/2011 1/2012 1/2013 2/2013 2 Group solvency
Slide 37: Sustainability and Swiss Re
Sustainability and Swiss Re A long standing commitment Signatory of the UN Global Compact and Principles for Sustainable Insurance (PSI) of the UN Environmental Programme Finance Initiative Swiss Re's proprietary Sustainability Risk Framework: integrated approach to identify, assess and control
Slide 38: Number of shares
Number of shares in millions Q3 2013 Total shares 370.7 of which Treasury shares and shares reserved for 28.5 corporate purposes Shares outstanding1 (as at 30 September 2013) 342.2 Shares outstanding1 (weighted average) 343.1 1 Shares outstanding is the number of shares eligible for dividends and is
Slide 39: Exchange rates
Exchange rates Average rates CHF/USD EUR/USD GBP/USD Gross premiums written Q3 2013 split by main currencies 9M 2012 1.06 1.28 1.58 6M 2013 1.07 1.31 1.54 Other 9M 2013 1.07 1.31 1.54 14% Change 9M 2012/9M 2013 0.94% 2.34% -2.53% CAD USD 4% 43% Change 6M 2013/9M 2013 0.00% 0.00% 0.00% CNY 5% AUD 6%
Slide 40: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 20 February 2014 Annual Results 2013 Conference call 18 March 2014 Publication of Annual Report 2013 and EVM 2013 24 March 2014 Annual General Meeting (AGM) Briefing Conference call 11 April 2014 150th Annual General Meeting Zurich 7 May 2014 First Qu
Slide 41: 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