Swiss Re AG · SIX:SREN
Swiss Re — Bellevue Meets Management Seminar: Defying Austerity (January 2013)
24 slides from Swiss Re's conference presentation, Jan 10, 2013
Slide 1: Bellevue Meets Management Seminar: Defying Austerity
Bellevue Meets Management Seminar: "Defying Austerity" Michel M. Liès, Group CEO Zurich, 10 January 2013
Slide 2: A challenging environment, and not just for (re)insurers
A challenging environment, and not just for (re)insurers regulatory environment regulatory environment financial markets, changing risk landscape sovereign debt changing risk landscape financial markets, Insurance sovereign debt, Insurance interest rates Industry Industry mature markets, weak growth
Slide 3: Historically low interest-rate environment
Historically low interest-rate environment Central Banks Policy Rates (in %) 25 1980s 1990s July 1997 2000 2008 U.S. Savings and U.S. Savings and Asian financial Dot.com bubble Economic and Loan crisis Loan crisis crisis financial crisis 20 15 10 5 0 US Federal Fund Target Policy Rate Bank of Englan
Slide 4: Slow-down of economic growth
Slow-down of economic growth Real GDP growth 10% 8% 6% 4% 2% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -2% -4% -6% Advanced economies Emerging markets World Source: Swiss Re Economic Research & Consulting Defying Austerity | Bellevue Meets Management Seminar | Zurich, 10 January 2013 4
Slide 5: Our industry now faces a mosaic of rules and regulations
Our industry now faces a mosaic of rules and regulations… United States Europe NAIC solvency modernization Solvency II implementing measures Federal Insurance Office (FIO) New supervisory architecture (ESAs, ESRB) Systemic risk regulation (FSOC) CRD IV for banks CDS regulation & clearing houses Bank
Slide 6: Swiss Re's Group strategy
Swiss Re's Group strategy Outperform our peers Strategic goal: ▪Reinsurance ▪Admin Re® The leading ▪Asset Management player in the Current wholesale position Smart expansion re/insurance ▪ Corporate Solutions industry ▪ Longevity & Health ▪ High Growth Markets Defying Austerity | Bellevue Meets Mana
Slide 7: Swiss Re Group
Swiss Re Group Overview Swiss Re Group Corporate Reinsurance Admin Re® Solutions P&C L&H Strategic goal Strategic goal Strategic goal To be a focused, lean, To be a recognised To be the world's global player in large force in the closed leading reinsurer commercial business life book market Cu
Slide 8: Cornerstones of Swiss Re's underwriting
Cornerstones of Swiss Re's underwriting R&D as a key differentiator R&D is a value driver in underwriting Property Own research team and models for Cycle management storm, earthquake and flood Ability to compare to commercial tools and understand differences Casualty Portfolio R&D Risk Forward
Slide 9: Swiss Re's approach to underwriting leads to outperformance
Swiss Re's approach to underwriting leads to outperformance … and growth at the right time Swiss Re’s P&C premium and underwriting profit share vs top 8 reinsurers 60% 2006 – 1H 2012 50% SR premium share of 23% 40% SR U/W profit share of 38% SR U/W loss share of 3% 30% 20% 10% 0% 2006 2007 2008 2009
Slide 10: Factors driving P&C re-/insurance prices
Factors driving P&C re-/insurance prices Prices High Low Nat Cats Low inflation Low interest rates Regulatory changes Continuous reserve Industry capitalisation releases Factors leading to higher prices Factors leading to lower prices Drivers of re-/ insurance prices Defying Austerity | Bellevue Mee
Slide 11: Industry capitalisation
Industry capitalisation Is there any excess capital? 150 2005 = 100 Relevant capital adequacy ratios are not public 130 ? Very rough approximation is to use premiums as 110 measure for risk and GAAP/IFRS capital as 90 measure for available capital 70 Taking out artificial effect of unrealised
Slide 12: Swiss Re is well positioned
Swiss Re is well positioned Low interest rates Lean casualty book L&H: focus on wholesale/reinsurance, avoiding primary business with guarantees Prudent, ALM-matched asset portfolio with room for moderate re-risking Regulatory changes SST has given us 5 years practical experience in implemen
Slide 13: Our L&H strategy addresses challenges by entering new fields
Our L&H strategy addresses some of the challenges of the environment by entering new fields World's protection gaps are vast ~ USD 70 trillion Partner for growth Working with clients and distributors to develop consumer- with our clients friendly products and processes, e.g. our in-house predict
Slide 14: Admin Re: overview of transformational programme
Admin Re® Overview of transformational programme Today 2011 2012 2013 Re-establish business Execute on strategy Leverage optionality Transformation Active portfolio mgmt. and Fully establish and programme launched steering to optimise capital recognise franchise Re-investment into usage and
Slide 15: Supported by a robust risk framework
Supported by a robust risk framework Swiss Re's limit framework translating risk tolerance into defined risk appetite Available capital Risk tolerance Annual Plan Diagram shows examples of risks Tail VaR of Plan P&C risk L&H risk Financial risk Nat Cat Equity Business capacity measure Business capac
Slide 16: We see plenty of opportunities
We see plenty of opportunities Natural catastrophe losses 1980-2012 % of people claiming to be financially "well in USD bn positioned" in event of suffering a long-term illness or disability, or death 400 350 300 250 200 150 100 50 0 1980 1985 1990 1995 2000 2005 2010 Note: Loss amounts indexed to 2
Slide 17: High Growth Markets (I)
High Growth Markets (I) Tangible growth opportunities exist Agriculture Nat Cat Infrastructure Life Health Defying Austerity | Bellevue Meets Management Seminar | Zurich, 10 January 2013 17
Slide 18: High Growth Markets (II)
High Growth Markets (II) A contributor to Swiss Re's targets High growth rates allow emerging 20% Life insurance, real premium growth markets to "emerge" rather quickly 10% – High Growth Markets (including BRICs) now constitute ~15% of premiums… 0% – …expected to grow to 20-25% by 2015 -10% – Prof
Slide 19: USD 600 billion premium market just for commercial insurance
USD 600 billion premium market just for commercial insurance…. Illustration of a supply chain for commercial insurance Corporates Mutual Insurers, Captives Risk Retention USD 50 to 60bn Groups, Self- Insurance Commercial Insurer direct premiums USD 600bn Reinsurer ceded premiums USD 100 – 110bn Retr
Slide 20: Yet we only insure a small fraction of all risks
…yet we only insure a small fraction of all risks Commercial insurance premium growth Commercial insurance penetration versus per- in emerging and advanced markets. capita income by country Source: Swiss Re Economic Research & Consulting, 2010 data Defying Austerity | Bellevue Meets Management Semin
Slide 21: Summary and outlook
Summary and outlook We expect to see profitable business growth including expiry of 20% Berkshire quota share High Growth Markets are not an "option", but a contributor towards our financial targets Our capital management priorities: – maintaining and growing our regular dividend with earnings
Slide 22: Thank you
Thank you Defying Austerity | Bellevue Meets Management Seminar | Zurich, 10 January 2013 22
Slide 23: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 21 February 2013 Annual Results Conference call 18 March 2013 AGM Briefing Call Conference call 10 April 2013 149th Annual General Meeting Zurich 02 May 2013 First Quarter 2013 results Conference call 08 August 2013 Second Quarter 2013 results Confere
Slide 24: 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
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