Swiss Re Ag · SIX:SREN
Swiss Re — Investor Presentation (2022)
65 slides from Swiss Re's investor presentation, Dec 10, 2022
Slide 1: Swiss Re – leading global reinsurer
Swiss Re – leading global reinsurer Company presentation 2022
Slide 2: Content
Swiss Re – leading global reinsurer Content Group strategy and targets Group underwriting topics Reinsurance Corporate Solutions iptiQ Capital management Asset management Sustainability Company presentation 2022 2 2
Slide 3: Swiss Re in a nutshell
Swiss Re in a nutshell A truly global and diversified reinsurer… … with profitable long-term growth Group financial targets Asia >▪ Premium1 CAGR of 6% over FY 2012-21 14% 19% >▪ Market growth of 5-6% p.a. until 20302 USD 43bn1 49% Americas Return on equity3 EMEA 32% … with very strong capital posit
Slide 4: Group strategy and targets
Group strategy and targets 4
Slide 5: What we do: our strategy offers more than traditional risk transfer
What we do: our strategy offers more than traditional risk transfer >▪ Our strategy is firmly linked to our purpose >▪ Our clients and partners are at the center >▪ We continue to expand our mandate: − while classical risk transfer remains in focus, − we also help clients to address risks through ri
Slide 6: How we do it: three distinct businesses supported by one Group foundation
How we do it: we run three distinct businesses supported by “one” Group foundation Reinsurance is at the core of our business as a leading > global reinsurer Corporate Solutions is a specialised risk partner to > corporate clients iptiQ is our globally leading digital B2B2C insurance > platform, foc
Slide 7: We have a positive outlook for all of our key markets
We have a positive outlook for all of our key markets Corporate Solutions Reinsurance iptiQ > Increasingly complex risk environment > Above-market growth of most relevant > Increase of embedded insurance for corporates risk pools (i.e. nat cat and mortality) sales > Gradual shift from personal lines
Slide 8: Our Reinsurance strategy drives differentiation
Our Reinsurance strategy drives differentiation CORE TRANSACTIONS SOLUTIONS Traditional reinsurance Tailored and structured Additional value-adding offerings reinsurance services Traditional Sophisticated Specialised Competitors ~100 ~10 ~20 Capital strength Diversification Alternative Capital Partn
Slide 9: Our strategic assets underpin our Reinsurance business model
Our strategic assets underpin our Reinsurance business model Capital strength Diversification ACP capabilities FY 2021 expected1 ROE of nat cat book (%) • USD >2.0bn of third-party long-term 26 capital providers of nat cat capacity AA- 223% 12 • #2 cat bond arranger (2000-2021) Group S&P rating Grou
Slide 10: Corporate Solutions aims to generate resilient returns through the cycle
Following the successful transformation, Corporate Solutions aims to generate resilient returns through the cycle CORE DIFFERENTIATED Excess & follow International programmes, Lead capacity capacity innovative risk solutions & services2 Traditional Sophisticated Specialised Competitors ~50 ~20 ~10 C
Slide 11: iptiQ's ambition is to be the leading white label digital insurer
iptiQ’s ambition is to be the leading white label digital insurer Rapid growth… …with break-even expected by 2025 Gross premiums written (USD m) Earnings – illustrative 723 +85% CAGR 371 211 2019 2020 2021 2021 2025 We see significant potential in this B2B2C space Swiss Re’s strategic assets greatly
Slide 12: We act as One Swiss Re to drive partnerships and innovation
We act as “One Swiss Re” to drive partnerships and innovation Selected Oneness examples Corporate Solutions Reinsurance iptiQ Swiss Re Group Long-standing client Partnership Long-standing client Partnership PULSE platform Long-standing client Principal investments solution Co-investment in Alternati
Slide 13: We expect to achieve a 2024 US GAAP ROE of 14%
We expect to achieve a 2024 US GAAP ROE of 14% Profitable growth Earn-through of combined with cost Reduced drag from L&H Re higher under- discipline 14.0% COVID-19 writing margins pre-2004 US book normalisation ~1-1.5%pt ~1%pt ~1%pt ~5%pts 5.7% Reported US GAAP IFRS US GAAP ROE ROE1 ROE2 2021 2024
Slide 14: Our strategy and ambitions drive our financial targets
Our strategy and ambitions drive our financial targets FY 2022 targets Multi-year targets – Swiss Re Group P&C <94% Reinsurance normalised1 combined ratio 14% Return on equity3 L&H ~300m in 2024 Reinsurance net income (USD)2 Corporate <95% Solutions reported combined ratio 10% ENW per share growth4
Slide 15: Group underwriting topics
Group underwriting topics 15
Slide 16: Nat cat is a core line of business and an area of structural growth
Nat cat Inflation Cyber Nat cat is a core line of business and an area of structural growth Nat cat is a USD 35bn reinsurance market, growing faster than GDP More than 60% of nat cat losses still uninsured Nat cat – reinsurance market premiums1 (USD bn) Average nat cat losses1 (2012-2021, USD bn) 48
Slide 17: The global scale and diversification of our nat cat book drives resilient profitability
Nat cat Inflation Cyber The global scale and diversification of our nat cat book drives resilient profitability US GAAP 100% 185% combined ratio of P&C Re nat cat book1 108% 88% 77% 75% 65% 59% 70% 51% 36% 30% FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 Average Cost of capital covere
Slide 18: Core inflation is on the rise, but less relevant for long-tail lines
Nat cat Inflation Cyber Core inflation is on the rise, but less relevant for long-tail lines Core CPI is not the key inflation driver of reserve sensitivity Our exposure to inflation by line of business Duration (years) illustrative US GAAP net reserves EVM net reserves Property 2 Space 2 Agricultur
Slide 19: The cyber market is hardening but fundamental concerns remain
Nat cat Inflation Cyber The cyber market is hardening but fundamental concerns remain Our cyber book of USD 0.5bn benefitted from rate increases Gross premiums written (USD m) +59% Primary market trends 508 > Flood of ransomware claims led to decisive actions (incl. lower limits, rate increases and
Slide 20: Reinsurance
Reinsurance 20
Slide 21: Differentiation drives our reinsurance strategy and enables growth
Differentiation drives our reinsurance strategy and enables growth in Core, Transactions and Solutions CORE TRANSACTIONS SOLUTIONS Traditional reinsurance Tailored and structured Additional value-adding offerings reinsurance services Deploy capital at attractive returns Selectively expand tailored a
Slide 22: We have built a strong client franchise and continue to invest in it
We have built a strong client franchise and continue to invest in it Close relationships built over time are one of our key assets … … leading to top rankings with our clients “Right service for right client” with focus on customer needs and experience Insurers P&C Re1 Low touch High touch High touc
Slide 23: We will continue to progress on cost ratio through growth and focus on efficiency
We will continue to progress on cost ratio through growth and focus on efficiency Reinsurance cost ratios have significantly reduced and we remain focused to further improve1,2 P&C Re total cost ratio % L&H Re total cost ratio % 35 30 33.4 25.8 25 Peer 1 29.8 30 Swiss Re Peer 1 Peer 2,3 20 19.4 Swis
Slide 24: P&C Re: aim to selectively expand the portfolio and increase margins
P&C Reinsurance L&H Reinsurance P&C Re: aim to selectively expand the portfolio and increase margins 1 P&C Re franchise: built on global scale and well diversified 2 Nat cat: continued growth at attractive rates P&C Re Text 3 Specialty: deliver profitability and diversification 4 Casualty: focus on
Slide 25: Our P&C Re franchise has global scale and is well diversified
P&C Reinsurance L&H Reinsurance 1 Our P&C Re franchise has global scale and is well diversified Market opportunities Americas EMEA Asia Market growth CAGR 2021-301 5.0% 4.2% 6.9% Exposure growth due to urbanisation & climate change Market share1 13 11 13 13 14 10 9 8 10 10 8 (%) 7 7 7 6 Increasing c
Slide 26: We continue to grow our nat cat book at attractive rates
P&C Reinsurance L&H Reinsurance 2 We continue to grow our nat cat book at attractive rates Strong growth in nat cat premiums Enhanced profitability USD bn 4.2 USD 1bn 3.8 3.4 pre-tax US GAAP Cat QS 2.8 earnings 2021 2.3 2.1 1.9 1.4 1.5 1.2 1.2 1.3 Cat XL Cat Agg XL 77% 2017 2018 2019 2020 2021 2022E
Slide 27: We built a disciplined specialty book, delivering profitability and diversification
P&C Reinsurance L&H Reinsurance 3 We built a disciplined specialty book, delivering profitability and diversification Continuous expansion of specialty business Enhanced profitability USD bn +8% CAGR USD 0.7bn Credit & surety 3.1 pre-tax US GAAP 3.0 2.8 earnings 2021 Cyber Marine 2.3 2.4 Aviation 2.
Slide 28: We focus on attractive casualty opportunities outside US Large Corporate Risks
P&C Reinsurance L&H Reinsurance 4 We focus on attractive casualty opportunities outside US Large Corporate Risks Diversification across casualty book Ongoing focus on profitability results in improved economics Enhanced profitability Reduced exposure to large corporate risks Financial Lines -55% -65
Slide 29: We made good progress in growing our Regional & National segment
P&C Reinsurance L&H Reinsurance 5 We made good progress in growing our Regional & National segment Successful and well-balanced growth in a less volatile market segment Efficient and client-focused business model by region Economic premiums1 (USD bn) 17% +7% CAGR 43% 9.5 Strong distribution partners
Slide 30: L&H Re: we steer the franchise to deliver in-force margins and sustainable new business growth
P&C Reinsurance L&H Reinsurance L&H Re: we steer the franchise to deliver in-force margins and sustainable new business growth 1 L&H Re franchise: powerful with strong economics 2 New business: sustainable growth in line with target liability portfolio L&H Re 3 In-force portfolio: active in-force ma
Slide 31: We have a powerful global L&H Re franchise with strong economics
P&C Reinsurance L&H Reinsurance 1 We have a powerful global L&H Re franchise with strong economics Market opportunities Americas EMEA Asia Market growth CAGR 2021-301 4.8% 4.9% 8.7% A growing middle class in Asia driving increasing demand 19 21 Market share1 18 18 18 14 14 13 15 14 12 14 12 (%) 11 1
Slide 32: Our sustainable new business production is in line with target liability portfolio
P&C Reinsurance L&H Reinsurance 2 Our sustainable new business production is in line with target liability portfolio Profitable growth over last 10 years… … with balanced new business production Enhanced Economic profit1 (USD m) profitability Mortality Health Longevity Mortality Health +60% 690 +209
Slide 33: We actively manage our in-force business to protect earnings
P&C Reinsurance L&H Reinsurance 3 We actively manage our in-force business to protect earnings Composition of in-force book in 20211 Strongly increased US GAAP margins2 by region Our in-force portfolio has grown 19% > USD bn and is increasingly diversified by region and line of business 54% 27% +105
Slide 34: The US GAAP drag of our pre-2004 US book will reduce from 2023 onwards
P&C Reinsurance L&H Reinsurance 3 The US GAAP drag of our pre-2004 US book will reduce from 2023 onwards Example of 20-year post-level term (PLT) policy Status on 20-year PLT crossovers illustrative PLT period Have yet to (premiums increase) cross over ~20% 20-year level term period US GAAP drag of
Slide 35: We have actively managed COVID-19 and adjusted portfolio structure and prices
P&C Reinsurance L&H Reinsurance 4 We have actively managed COVID-19 and adjusted portfolio structure and prices COVID-19 impact (USD bn) 2.0 Portfolio considerations Pricing changes and outlook 1.0 Overall strict margin discipline Higher risk awareness and > maintained > reduced risk capacity result
Slide 36: Corporate Solutions
Corporate Solutions 36
Slide 37: Corporate Solutions has successfully delivered on its turnaround agenda
Corporate Solutions has successfully delivered on its turnaround agenda Normalised combined ratio development ~5%pts ~10%pts 110% Portfolio remediation completed ~20%pts Profitability targets achieved ~2%pts 95% ~2%pts 91% Reserve adequacy restored Earnings volatility reduced 2018 Assumptions Portfo
Slide 38: Needs-based strategy positions us as a specialised partner for corporates
Needs-based strategy positions us as a specialised partner for corporates Addressable market universe Corporate Solutions strategy CORE DIFFERENTIATED ~40,000 corporates Mainly served Generate resilient returns Further expand value proposition via direct and through the cycle via long-term through d
Slide 39: Aligning cycle-resilience, diversification and profitable growth through long-term portfolio strategy
Core Differentiated Aligning cycle-resilience, diversification and profitable growth objectives through long- term portfolio strategy Systematic portfolio strategy … ... defining selected focus portfolios for prioritised growth Key input dimensions Sub-portfolio Portfolio benefits Mid-term aspiratio
Slide 40: Positioning us uniquely within the USD ~65bn International Programme market
Core Differentiated Positioning us uniquely within the USD ~65bn International Programme market Value proposition of International Programme Financial aspiration 45 90 197 354 ~900 Integrated technology platform and global network to administrate multinational insurance coverage Gross revenues1 at r
Slide 41: iptiQ
iptiQ 41
Slide 42: iptiQ is dynamically growing and diversifying across life, health and P&C
iptiQ is dynamically growing and diversifying across both individual life and health as well as property and casualty We are expanding our market reach and growing together with our 51 distribution partners1 United States Europe Asia B2B B2C •> Life protection • > Life protection •> Life protection
Slide 43: iptiQ provides a state-of-the-art digital B2B2C insurance platform
iptiQ provides a state-of-the-art digital B2B2C insurance platform, further supported by Swiss Re’s strategic assets iptiQ is leveraging Swiss Re’s strategic assets… … combined with unique value propositions Brand & global reach Global, digital-native insurer Trusted brand across the globe, opening
Slide 44: iptiQ is growing dynamically, while maintaining cost discipline
iptiQ is growing dynamically, while maintaining cost discipline and competitive underwriting performance Dynamic growth trajectory Effective cost management Solid technical results Gross premiums written (USD m) US GAAP operating expenses (USD m) Adjusted gross income2 (USD m) 723 +85% +12% +143% CA
Slide 45: We expect to achieve break-even by 2025
We expect to achieve break-even by 2025 Our focus on continued growth with high quality underwriting and cost discipline drives our path towards break-even Cost & underwriting Revenue expansion Earnings – illustrative discipline > Grow sales with current > Maintain high partners underwriting quality
Slide 46: Capital management
Capital management 46
Slide 47: Our capital management priorities remain unchanged
Capital management IFRS ACP Our capital management priorities remain unchanged Group SST ratio1 development Our capital management priorities USD bn unless otherwise stated 269% 262% 251% Target range Ensure superior 215% 223% Grow the regular dividend 200-250%2 232% capitalisation with long-term ea
Slide 48: Our strong economic earnings are based on sustainable new business profit and in-force earnings
Capital management IFRS ACP Our strong economic earnings are based on sustainable generation of new business profit and in-force earnings 1 EVM profit new business USD bn 3 1.2 1.2 1.4 EVM profit USD -767m USD 569m 0.4 0.0 avg. 2017 – 2021 previous years’ avg. 2017 – 2021 -1.3 excl. COVID-19 busines
Slide 49: Economic earnings have comfortably covered ordinary dividends in the last 5 years
Capital management IFRS ACP Economic earnings have comfortably covered ordinary dividends in the last 5 years, even in a difficult environment Group capital generation since beginning of 2017 1• Generated USD ~10bn of economic 1 2 3 4 5 earnings since 2017, despite above- Ordinary average nat cat lo
Slide 50: The Group's dynamic capital structure provides significant financial flexibility
Capital management IFRS ACP The Group’s dynamic capital structure provides significant financial flexibility Group available capital and leverage Upcoming debt maturities USD bn USD bn 1.3 47.8 0.3 1.1 1.9 45.8 0.9 44.5 3.1 1.1 Additional USD 2.7bn 0.8 Senior debt 1.0 3.0 3.2 pre-funded subordinated
Slide 51: IFRS 17 brings accounting principles much closer to an economic view
Capital management IFRS ACP IFRS 17 brings accounting principles much closer to an economic view US GAAP vs. economic earnings Comparison of our main reporting frameworks 2012-2021 – illustrative US GAAP IFRS 17 EVM Static Fully economic L&H Re I/S: over coverage period of I/S: at inception CorSo Ea
Slide 52: Transition from US GAAP to IFRS accelerates earnings recognition
Capital management IFRS ACP Transition from US GAAP to IFRS leads to an acceleration of earnings recognition and better reflection of underlying economics L&H Re cumulative earnings recognition Different earning streams under EVM, IFRS and US GAAP illustrative illustrative Cumulative earnings 100% b
Slide 53: L&H Re's performance under IFRS is expected to be closer to reported EVM numbers
Capital management IFRS ACP L&H Re’s performance under IFRS is expected to be closer to our reported EVM numbers Increased new business and in-force contribution under IFRS L&H Re outlook: expected earnings uplift from 2023 onwards 2017-21 earnings under different reporting regimes (excl. COVID-19 i
Slide 54: Alternative Capital Partners (ACP) has rapidly scaled up
Capital management IFRS ACP Alternative Capital Partners (ACP) has rapidly scaled up Exposure management Capital efficiency AC market leadership Sidecar / fund platform1 Shortfall relief TCNA2 Underwriting capital relief3 Principal investor in ILS4 Structurer & bookrunner5 USD bn USD bn USD bn USD b
Slide 55: Asset management
Asset management 55
Slide 56: Investment portfolio is well-diversified and flexible for opportunistic deployment
Investment portfolio is well-diversified and flexible for opportunistic deployment Diversified investment portfolio… … focused on quality and yield End FY 2021 Fixed income, End FY 2021 Equities & alternatives, End FY 2021 USD 119.3bn USD 87.0bn USD 14.5bn Cash and 11% short-terms 3% 14% 3% 20% 19%
Slide 57: Investment metrics remain strong but responsive to market environment
Investment metrics remain strong but responsive to market environment Investment performance (%) 4.7 3.9 3.5 3.4 1.7 3.5 3.2 Running yield/recurring income yield1 3.6% 1.3 2.8 average ROI since 0.9 0.8 0.5 1.5 ROI due to 2015 3.0 2.9 2.9 2.9 2.8 net realised gains 2.4 2.2 ROI due to net investment i
Slide 58: Sustainability
Sustainability 58
Slide 59: Swiss Re has a long track record of sustainability: our milestones
Swiss Re has a long track record of sustainability: our milestones Signing of Further tightened Adopted FSB TCFD 100% powered exclusion of by renewable Net-zero recommendations re/insurance Signing of Reduced sources GHG Reduced investing to 10% most re/insurance emissions First sustainability- in t
Slide 60: We continue to implement our Group Sustainability Strategy
We continue to implement our Group Sustainability Strategy Our Group Sustainability Strategy guides us in identifying what is most material Through this, we aim to reinforce our efforts to make the world more resilient and sustainable, thus helping to maintain our competitiveness today and in the fu
Slide 61: Swiss Re is committed to reach net-zero emissions by 2050
Swiss Re is committed to reach net-zero emissions by 2050 across our whole business Present focus Future focus: continuing progress towards net-zero targets e.g. Re/insurance strengthened oil Net-zero Insurance Alliance and gas policy e.g. carbon Asset Management reduction Net-zero Asset Owner Allia
Slide 62: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 2022 28 October 9M 2022 Results Conference call 2023 17 February Annual Results 2022 Conference call 16 March Publication of Annual Report 2022 12 April 159th Annual General Meeting 04 May Q1 2023 Results Conference call Investor Relations contacts Ho
Slide 63: @ Swiss Re
@ Swiss Re 63
Slide 64: 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
Slide 65: Legal notice
Legal notice ©2022 Swiss Re. All rights reserved. You may use this presentation for private or internal purposes but note that any copyright or other proprietary notices must not be removed. You are not permitted to create any modifications or derivative works of this presentation, or to use it for