Swiss Re AG · SIX:SREN
Swiss Re — Morgan Stanley European Financials Conference 2014
30 slides from Swiss Re's conference presentation, Mar 27, 2014
Slide 1: Morgan Stanley European Financials Conference
Morgan Stanley European Financials Conference David Cole, Group Chief Risk Officer London, 26-27 March 2014
Slide 2: Agenda
Agenda Introduction to Swiss Re Protection gaps and the High Growth Markets Outlook and Q&A 2 Morgan Stanley | European Financials Conference | London, 26-27 March 2014 2
Slide 3: Differentiated through history
Differentiated through history • Swiss Re is a global operator, with over 60 offices in more than 20 countries • Swiss Re has both a superior capital rating1 and 150 years of experience in providing reinsurance solutions for our clients • A long history of paying claims is valued by clients; during
Slide 4: Swiss Re is broadly diversified by geography and product line
Swiss Re is broadly diversified by geography and product line Net premiums earned1 2013 (USD 28.8 bn) by region (in USD bn) … and by business segment: 11.5 11.3 6.0 Admin Re® Corporate 5% Solutions 10% P&C Re 50% Americas Europe Asia L&H Re (incl. Middle East /Africa) 35% 40% 39% 21% Swiss Re benefi
Slide 5: 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 97.3 104.7 100% 107.8 93.9 95.4 3% 104.0 92.8 93.1% 98.4 98.4 97.9 97.4 90% 93.7 96.8 95.0 90.4 90.2 2% 80% 85.3 83.1 1% 70% 60% 0% 5-year US Treasury risk-free rates (RHS) Group
Slide 6: P&C Reinsurance: 2014 January renewals
P&C Reinsurance: 2014 January renewals Portfolio weighting by line of business and region Gross premium volume, treaty portfolio Up for renewal Estimated outcome 1 Jan 2014 By line of business 17% 15% Casualty 36% 44% 18% Nat Cat 22% Property 1 23% Specialty 1 25% By region 26% 28% EMEA 48% 48% Amer
Slide 7: L&H Reinsurance management actions
L&H Reinsurance management actions L&H Re ROE expected to increase to 10-12% by 2015 Implementation Management action 2012 2013E 2014E 2015E Liability Actively manage pre-2004 US PLT policies management Actively manage recaptured pre-2004 YRT (pre-2004 US book) Capital Extraction of excess
Slide 8: Corporate Solutions
Corporate Solutions Strategy implementation on track Achievements in 2013 Outlook • Profitability • 2014 estimated combined ratio 95%1, driven by – Quality of portfolio remains at continued high quality of the portfolio and declining consistently high level expense ratio, as premium generated from g
Slide 9: Admin Re®
Admin Re® Increased GCG and dividend forecasts Strategy Outlook • Selective growth • 2014-2016E: GCG forecast raised by USD 150m, dividend by – Build and enhance Admin Re® USD 200m franchise in the UK market • Expect low-to-mid single digit returns on equity in the near term – All transactions must
Slide 10: Principal Investments
Principal Investments Clear mandate and investment strategy HGM direct investments in 2013 Outlook • Mandate: generate long-term economic value via • 16 Oct: total commitment of USD 425m to FWD investments in insurance-related businesses by • 18 Nov: 14.9% stake in SulAmérica leveraging our core com
Slide 11: Investment mix
Investment mix Balanced Group asset allocation 100% 1% 0-5% 11% 5-10% • Re-balancing complete 90% – Corporate bonds close to upper 80% 28% 20-30% end of mid-term plan 70% – Net sales of government bonds 60% 5% 5-10% USD 14.2bn in 2013 in part 50% driven by the short duration 40% position 32% 35-55%
Slide 12: Capital management
Capital management Growing regular dividends and profitable business growth remain our priorities • Strong capital position allows Swiss Re to continue to grow the regular dividend… • …and take advantage of business growth Swiss Re's dividend policy opportunities • Highest priority is growing our •
Slide 13: 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 (2011- annual growth rate, adjusted dividends 10% avg. annual 2015) for special dividends1 growth rate over 5 years in % in USD2 in USD2 144.5 13.0 13.4 13.7 11.9 119.4
Slide 14: Reconciliation EVM economic net worth to US GAAP shareholders' equity
Reconciliation EVM economic net worth to US GAAP shareholders' equity Total Re- Corporate Admin Group (after USD billions insurance P&C Re L&H Re Solutions Re® items consolidation) US GAAP shareholders’ equity at 31 Dec 2013 19.5 13.3 6.2 2.8 5.8 4.9 33.0 Discounting 7.3 6.0 1.3 0.5 -1.1 0.0 4.3 Mar
Slide 15: Agenda
Agenda Introduction to Swiss Re Protection gaps and the High Growth Markets Outlook and Q&A 15 Morgan Stanley | European Financials Conference | London, 26-27 March 2014 15
Slide 16: Large protection gap
Large protection gap Insured vs total natural catastrophe losses world-wide Catastrophe related losses in USD billion, at 2013 prices 450 90% 400 80% 350 70% 300 60% 250 50% 200 40% 150 30% 100 20% 50 10% 0 0% 2005 2006 2007 2008 2009 2010 2011 2012 2013E Insured losses Uninsured losses Uninsured lo
Slide 17: Demand for Nat Cat capacity will continue to increase…
Demand for Nat Cat capacity will continue to increase… • Demand for Nat Cat will further Increase in largest industry loss scenarios (2012 vs. 2020) increase, on average by approx. 50% in mature markets and 100% in High Growth Markets by 2020 – Growth in exposed economic values – Growing middle clas
Slide 18: Stabilising growth in non-life
Stabilising growth in non-life High Growth Markets with strongest growth rates Real premium growth rate for non-life • Non-life premium growth is insurance by region, 2010 to 2015F expected to remain stable at 25% around 8% in 2014 – emerging Asia will maintain 20% stable strong growth at above 10%
Slide 19: Large mortality protection gap
Large mortality protection gap Definition Protection needed Mortality protection gap Income to maintain living standard Net financial assets / savings Protection in place Relevant life insurance Source: Swiss Re … the difference between the protection needed and the protection in- place to maintai
Slide 20: Life insurance – closing the mortality protection gap: Asia-Pacific
Life insurance – closing the mortality protection gap Example 1: Asia-Pacific Asia - Pacific Mortality protection gap per working person with dependents in USDk 300 250 200 150 100 50 0 South Korea India Vietnam Japan Australia Taiwan Hong Kong Thailand Indonesia China Singapore Malaysia Source: Swi
Slide 21: Life insurance – closing the mortality protection gap: Latin America
Life insurance – closing the mortality protection gap Example 2: Latin America • Aggregate gap for eight selected Latin The mortality protection gap in Latin American countries1 America, by country (USD billions, 2012) – USD 7.2 trillion in 2012 Chile Puerto Rico USD 277 – USD 60,628 for the average
Slide 22: Life insurance in High Growth Markets is improving
Life insurance in High Growth Markets is improving Real premium growth rate for life insurance • Real growth of life by region, 2010 to 2015F insurance premiums in 20% emerging markets is 15% expected to accelerate to 8.5% in 2014 from 6.2% in 10% 2013, supported by – a further recovery of China 5%
Slide 23: Actions for profitable growth in the HGMs
Actions for profitable growth in the HGMs Dedicated strategies across all lines of business HGM initiatives Reinsurance: organic growth, partnerships e.g. with local market reinsurers Corporate Solutions: organic growth, new offices, acquisitions Lines of business with particular HGM angle: –
Slide 24: Need to redirect capital and leadership to High Growth Markets
Need to redirect capital and leadership to High Growth Markets to capture market potential 48% 15% 16% 11% 10% 4% Market Earned Assets3 Work- Research & Management Potential1 Premium2 force3 Development3 (MDs)3 1 48% of the global growth of ceded premiums over the next 10 years occurs in HGMs; Sourc
Slide 25: Agenda
Agenda Introduction to Swiss Re Protection gaps and the High Growth Markets Outlook and Q&A 25 Morgan Stanley | European Financials Conference | London, 26-27 March 2014 25
Slide 26: Priorities for 2014
Priorities for 2014 Focus on strategy execution • Maintain industry leading underwriting track record Group strategy • Productivity emphasis to control management expenses • Continue to re-direct capital and talent to High Growth Markets • P&C Re: strict focus on risk selection and portfolio managem
Slide 27: Looking beyond 2015
Looking beyond 2015 Longer-term strategic themes (selection) Management priorities (selection) Risk pool for nat cat grows fast, attracting Capital structure and increasing amounts of management alternative capital Strong growth in high growth markets fuel Profitability demand in all lines of requir
Slide 28: Morgan Stanley | European Financials Conference | London, 26-27 March 2014
Morgan Stanley | European Financials Conference | London, 26-27 March 2014 28
Slide 29: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 11 April 2014 150th Annual General Meeting Zurich 7 May 2014 First Quarter 2014 results Conference call 3 July 2014 Investors' Day London 6 August 2014 Second Quarter 2014 results Conference call 7 November 2014 Third Quarter 2014 results Conference c
Slide 30: 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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