Swiss Re AG · SIX:SREN
Swiss Re — Morgan Stanley European Financials Conference 2015
28 slides from Swiss Re's conference presentation, Mar 26, 2015
Slide 1: Transforming Business Models: Digital, Regulation and Macro Challenges
Transforming Business Models: Digital, Regulation and Macro Challenges David Cole, Group CFO Swiss Re Morgan Stanley European Financials Conference London, 26 March 2015
Slide 2: Today's agenda
Today's agenda Swiss Re performance Monetary policies challenges P&C re/insurance pricing pressure Regulatory challenges Digital developments and cyber risk Conclusion Morgan Stanley Conference | 26 March 2015 2
Slide 3: Swiss Re at a glance
Swiss Re at a glance Swiss Re is a leading and highly diversified global reinsurer, founded in Zurich (Switzerland) in 1863 The Group offers traditional reinsurance products and related services for property and casualty, as well as for life and health businesses The Group also offers commercial ins
Slide 4: Leadership through geographic and product diversification
Leadership through geographic and product diversification Net premiums earned1 2014 (USD 31.3bn) by region (in USD bn) … and by business segment: 12.2 11.3 7.8 Admin Re® Corporate 3% Solutions 11% P&C Re 50% Americas Europe Asia L&H Re (incl. Middle East /Africa) 36% 39% 36% 25% Swiss Re benefits fr
Slide 5: Strong flow of internal and external dividends since 2012
Strong flow of internal and external dividends since the introduction of Swiss Re's Business Unit structure in 2012 • Based on 2014 performance, the Board Dividend flows and capital measures since of Directors will propose to the AGM implementation of new BU structure in 2012 2015 USD 10.7bn2 – A re
Slide 6: Swiss Re is on track to meet 2011-2015 financial targets
Swiss Re is on track to meet 2011-2015 financial targets ROE 700 bps above risk free EPS growth 10% average ENW per share growth plus average over 5 years (2011- annual growth rate, adjusted dividends 10% avg. annual 2015) for special dividends1 growth rate over 5 years in % in USD2 in USD 13.0 135.
Slide 7: Today's agenda
Today's agenda Swiss Re performance Monetary policies challenges P&C re/insurance pricing pressure Regulatory challenges Digital developments and cyber risk Conclusion Morgan Stanley Conference | 26 March 2015 7
Slide 8: Diverging global monetary policies increasing market uncertainties
Diverging global monetary policies increasing market uncertainties • US expansion is robust and supported by consumer spending, business investment and housing construction Global growth • Low oil prices and a weak euro will boost Euro area growth • Growth in oil-importing emerging markets will like
Slide 9: Policy actions causing financial repression carry unintended consequences
Policy actions causing financial repression carry a number of unintended consequences Swiss Re's financial repression index The unintended consequences • Asset price bubbles • Changes in asset allocation strategies • Increase in economic inequality • Risk to central bank independence • Managing the
Slide 10: Steady investment performance through active asset re-balancing
Swiss Re has achieved a steady investment performance through active asset re-balancing 6% 6.3 5.5 5% 5.3 5.1 5.0 4.7 4.7 4% 4.4 4.0 3.6 3.7 3.5 3% 2% 1.8 1% 10-year avg US Treasury risk-free rates ROI 1 • Asset re-balancing helped mitigate the effect of the lower interest rate environment on the re
Slide 11: Today's agenda
Today's agenda Swiss Re performance Monetary policies challenges P&C re/insurance pricing pressure Regulatory challenges Digital developments and cyber risk Conclusion Morgan Stanley Conference | 26 March 2015 11
Slide 12: Key drivers of P&C reinsurance pricing are mostly adding downward pressure
Key drivers of P&C reinsurance pricing are mostly adding downward pressure Pricing drivers Impact Comments Low interest rates Improve P&C underwriting discipline Greater recognition of risk mitigating tools under risk- Regulatory changes based and economic solvency frameworks Natural catastrophes No
Slide 13: Swiss Re has a different business model from alternative capital providers
Swiss Re has a different business model from alternative capital providers Collateralised Hedge fund Swiss Re reinsurers reinsurers 1. Main income driver Underwriting Investing Underwriting 2. Risk pool US Nat Cat concentrated Low severity only Diversified 3. Service level & client relationships 4.
Slide 14: Strong and stable underwriting track record in P&C
Swiss Re has demonstrated a strong and stable underwriting track record in P&C underwriting 130% 5% 120% 4% 110% 114.1 101.1 98.3 98.2 97.3 100% 104.0 93.9 104.7 95.4 3% 92.8 91.2 98.4 98.4 97.9 90% 93.7 97.4 96.8 90.4 90.2 2% 80% 85.3 85.4 83.1 1% 70% 60% 0% 1 5-year avg US Treasury risk-free rates
Slide 15: Gap between total and insured losses illustrates market potential
Massive gap between total and insured losses illustrates market potential in P&C re/insurance Natural catastrophe losses 1980-2014, in USD billion (2014 prices) 450 400 Uninsured losses 350 Insured losses 300 250 Ocean Drive, FL, 1926 200 150 100 50 0 1980 1985 1990 1995 2000 2005 2010 Ocean Drive,
Slide 16: Today's agenda
Today's agenda Swiss Re performance Monetary policies challenges P&C re/insurance pricing pressure Regulatory challenges Digital developments and cyber risk Conclusion Morgan Stanley Conference | 26 March 2015 16
Slide 17: Global regulatory agenda remains challenging for international re/insurers
Seven years after the financial crisis, the global regulatory agenda remains challenging for international re/insurers • G20 agenda driving new rules and regulations High-level − FSB list of global systemically important insurers (G-SIIs) G20 political agreement − FSB/IAIS guidance on insurance reso
Slide 18: Solvency reforms represent challenges but also opportunities
Solvency reforms represent challenges but also opportunities for global re/insurers Examples Challenges and concerns Opportunities and benefits G-SII • Excessive requirements • Strengthened group structure and risk based on banking governance • Inconsistent application • First steps to a global insu
Slide 19: Operating under an economic and risk based solvency regime since 2008
Swiss Re has been operating under a comprehensive economic and risk based solvency regime since 2008 Very strong Group capitalisation under the Swiss Solvency Test1 (SST) • SST as a precursor to economic and risk based solvency regimes • Internal models required for groups and reinsurers • First fin
Slide 20: Today's agenda
Today's agenda Swiss Re performance Monetary policies challenges P&C re/insurance pricing pressure Regulatory challenges Digital developments and cyber risk Conclusion Morgan Stanley Conference | 26 March 2015 20
Slide 21: Big Data and Smart Analytics are transforming the insurance industry
Trends in Big Data and Smart Analytics are transforming the insurance industry Explosion of data Rapid change in volume consumer behaviour Significant Proliferation of digital improvements of platforms/market sensing and places analytical capabilities Emergence of agile Substantial increase in digit
Slide 22: Cyber risk represents an opportunity, but sound underwriting is a pre-requisite
Cyber risk represents an opportunity, but sound underwriting is a pre-requisite to develop adequate solutions Cyber insurance products is evolving − Increased publicity around breaches, which reinforces the Case Study – Target potential economic impact of a cyber attack December 2013, security bre
Slide 23: Swiss Re initiatives to respond to cyber risk and big data
Swiss Re initiatives to respond to cyber risk challenges and big data opportunities Cyber risk • Engage with industry bodies to align wider industry positions and develop best practices • Collaborate with IT services companies and academic institutions on threat scenarios and modelling • Monitor exi
Slide 24: Today's agenda
Today's agenda Swiss Re performance Monetary policies challenges P&C re/insurance pricing pressure Regulatory challenges Cyber risk and digital developments Conclusion Morgan Stanley Conference | 26 March 2015 24
Slide 25: Conclusion
Conclusion • Swiss Re benefits from geographic and business mix diversification. We reported another strong set of results in 2014 • Swiss Re is well positioned to face the challenges and opportunities in the re/insurance sector • Financial repression penalises savers and long-term investors. Swiss
Slide 26: Q&A
Q&A Morgan Stanley Conference | 26 March 2015 26
Slide 27: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 2015 21 April 151st Annual General Meeting Zurich 30 April First Quarter 2015 Results Conference call 30 July Second Quarter 2015 Results Conference call 29 October Third Quarter 2015 Results Conference call 8 December Investors' Day Zurich Investor R
Slide 28: 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
Swiss Re — Morgan Stanley European Financials Conference 2015 on 6ix