Swiss Re Ag · SIX:SREN
Swiss Re — Berenberg European Conference 2014
23 slides from Swiss Re's conference presentation, Dec 2, 2014
Slide 1: Berenberg European Conference 2014
Berenberg European Conference 2014 John R. Dacey, Group Chief Strategy Officer, Chairman Admin Re® London, 2 December 2014
Slide 2: Differentiated through history and diversification
Swiss Re Differentiated through history and diversification • Swiss Re is a leading and highly diversified global re/insurance group, with over 60 offices in more than 20 countries • Swiss Re has both a superior capital rating and more than 150 years of experience in providing reinsurance solutions
Slide 3: Swiss Re's Group strategy
Swiss Re's Group strategy Unchanged, focus on execution Outperform our peers Strategic goal: • Reinsurance • Asset Management The leading • Admin Re® player in the Current wholesale position Smart expansion re/insurance industry • Corporate Solutions • Longevity & Health • High Growth Markets Berenb
Slide 4: Business Unit strategies
Business Unit strategies Swiss Re Group Corporate Reinsurance Admin Re® Solutions P&C L&H Strategic goal Strategic goal Strategic goal • To be the world's • To be a focused, lean, • To be a recognised leading reinsurer global player in large force in the closed commercial business life book market C
Slide 5: Challenging market environment
Challenging market environment Berenberg European Conference | London, 2 December 2014 5
Slide 6: Pricing outlook in P&C industry
Pricing outlook in P&C industry Prices High Low Nat Cats ? Low interest rates Tighter regulation Reserve releases Factors leading to higher prices1 Low inflation High industry capitalisation Factors leading to lower prices1 Drivers of re-/ insurance prices 1 Nominal pricing Berenberg European Confer
Slide 7: Record low interest rates
Record low interest rates Expected to stay low and continued pressure on running yield Germany United States 7% 7% 6% 6% 5% 5% 4% 4% 3% 3% 2% 2% 1% 1% 0% 0% Running yield of P&C insurers Running yield of P&C insurers 10y government bond yield, average of year 10y government bond yield, average of ye
Slide 8: Low inflation
Low inflation Expected to stay low; also expect continued low economic growth and interest rates 5% 4% 3% 2% 1% 0% -1% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015F 2016F Germany United States Assuming claims inflation follows general inflation we expect some continuation of positive rese
Slide 9: Reinsurance industry capitalisation
Reinsurance industry capitalisation1 Significant capital build-up in recent years 2009=100 Capital excl unr. gains Unrealised gains Net premiums earned Price/Book (r.h. scale) 130 1.3 1.1 100 0.9 70 0.7 4Q09 4Q10 4Q11 4Q12 4Q13 1Q14 2Q14 • Capitalisation driven by underwriting result, less so by unr
Slide 10: Alternative capital continues to pressure but unlikely to replace traditional reinsurance
Alternative capital (AC) continues to pressure but unlikely to replace the traditional reinsurance market • Strong US focus; approximately 23% Estimated size of global AC market that is market share of the US catastrophe focusing on Nat Cat vs cat bond spread market USD bn bps • Due to increased com
Slide 11: 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 12: Swiss Re is well positioned
Swiss Re is well positioned Berenberg European Conference | London, 2 December 2014 12
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 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 13.0 136.1 123.1 11.9 13.4
Slide 14: Nine months 2014 financial highlights
Nine months 2014 financial highlights • Good contribution from all Business Units • Group net income USD 3.3bn – Return on equity 13.3%, earnings per share USD 9.51 (CHF 8.52) – Return on investments 3.7% • Reinsurance net income USD 2.7bn – Strong underwriting result in P&C Re, helped by low nat ca
Slide 15: Swiss Re's underwriting outperformance
Swiss Re's underwriting outperformance Swiss Re’s P&C premium and underwriting profit share vs top reinsurers 60% 50% 40% 30% 20% 10% 0% 2006 2007 2008 2009 2010 2011 2012 2013 1H14 Premiums U/W profit (green = loss) In 2011 the industry underwriting result was negative • Average premium share of 23
Slide 16: Competitive advantage in underwriting
Competitive advantage in underwriting A key strength of Swiss Re Portfolio Hedging R&D Innovation, 151 Years steering large and structured Capital transactions strength In an inefficient Our retro and Re/insurance is a Focus on tailored Superior balance market, skilled hedging team knowledge busines
Slide 17: The protection gap – business opportunities for Swiss Re (I)
The protection gap – business opportunities for Swiss Re (I) Demand for Nat Cat capacity will continue to increase Increase in largest industry loss scenarios per region… … is driven by USD bn Growth in exposed economic values Growing middle class in High Growth Markets (HGM) leading to higher i
Slide 18: The protection gap - business opportunities for Swiss Re (II)
The protection gap - business opportunities for Swiss Re (II) Mortality protection gap Mortality protection gap Protection needed Protection Income to maintain living in place standard Net financial assets / savings Relevant life insurance Asia – Pacific: Mortality protection gap per working person
Slide 19: 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 eg with local market reinsurers • Corporate Solutions: acquisitions, organic growth, new offices • Lines of business with particular HGM angle: – Na
Slide 20: Summary
Summary • Challenging market environment • Swiss Re differentiates through history, knowledge and diversification • Swiss Re delivers strong and stable track record • Business opportunities for Swiss Re Delivering the 2011-2015 financial targets remains Swiss Re's top priority Berenberg European Con
Slide 21: Berenberg European Conference | London, 2 December 2014
Berenberg European Conference | London, 2 December 2014 21
Slide 22: Corporate calendar & contacts
Corporate calendar & contacts Corporate calendar 2015 19 February Annual Results 2014 Conference call 18 March Publication of Annual Report 2014 and EVM 2014 21 April 151st Annual General Meeting Zurich 30 April First Quarter 2015 Results Conference call 30 July Second Quarter 2015 Results Conferenc
Slide 23: 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