Swiss Re – Leading Global Re/Insurer Thomas Bohun, Head Group Strategy & Performance Management Baader Helvea Swiss Equities Conference, Bad Ragaz, 17 January 2020
Swiss Re’s success is built on three key differentiation drivers Reinsurance Corporate Solutions Life Capital Foundation of our strength with Returning to profitability and Transitioning to a digital increasing earnings power focused on competitive advantages B2B2C player Client Risk Capital Access Knowledge Strength Swiss Re | January 2020 2
Swiss Re is well diversified across geographic regions and business segments Economic Net Worth 2 by segment Net premiums earned 1 by segment Net premiums earned 1 by region Life Capital Life Capital Corporate 5% 12% Solutions Asia Corporate 1 1% P&C Re 21% Americas Solutions 38% P&C Re 47% 9% 47% L&H Re 37% L&H Re EMEA 40% 32% Swiss Re benefits from geographic as well as business mix diversification and has the ability to reallocate capital to achieve profitable growth USD 34.5bn as at 31 December 2018; includes fee income from policyholders; does not reflect the exposure to HGMs through Principal Investments (PI) 1 2 Share of Swiss Re Group’s Economic Net Worth deployed across Business Units (excl. Group Items), 31 December 2018 Swiss Re | January 2020 3
Our client access capabilities are unique Client Access …while also partnering with non -insurance players We maintain strong direct relationships with our for innovative B2C insurance propositions reinsurance clients… Illustrative – Partnership portfolio Illustrative – Global client Swiss Re employees Swiss Re units Partner industries ... Technology Life Capital Americas Reinsurance APAC Real estate Corporate Solutions EMEA OEM Others Finance Client employees ... L&H Re P&C Re Current discussions with >90% >50% >100 of premiums from non-intermediated business non-insurance partners Swiss Re is a trusted partner for insurance and non-insurance companies Swiss Re | January 2020 4
We monetise our R&D capabilities, cementing Swiss Re as the Risk Knowledge leading knowledge company R&D value driver framework Strategic focus areas Project examples Insurance markets and cycle analysis Market intelligence Business steering Macroeconomic R&D Advance Nat Cat risk view Insurance beta Chinese cancer research Capital Nat Cat pricing tools Insurance alpha Efficiency allocation Risk engineering services Magnum Data, solutions, publications Life Guide Commer- Risk selection cialisation and pricing Analytics for contract wording Process re-engineering Group data integration 450 13 80 R&D FTEs R&D teams R&D programmes Swiss Re | January 2020 5
Our capital strength remains industry-leading Capital Strength Comparison of Group SST / Solvency II ratio 1 >260% • As a major risk absorber, Swiss Re’s first capital management priority is to ensure superior capitalisation 241% 234% at all times • The Group benefits from peer-leading diversification 202% resulting in superior capital efficiency and attractive capital management actions • Swiss Re has strong financial flexibility and is well positioned to respond to market shocks and growth Group SST ratio Group Average of Average of opportunities Solvency II reinsurance insurance peers equivalent peers Solvency Solvency II 2 3 ratio II ratio ratio 7/2019 Mid-year 2019 Swiss Re’s superior capital strength allows us to capture profitable growth opportunities and deliver attractive capital distribution to shareholders 1 Comparison was produced on a best effort basis Swiss Re | January 2020 6 2 Average of Hannover Re, Munich Re, SCOR 3 Average of Allianz, Aviva, AXA, Generali
Reinsurance Corporate Solutions Life Capital Reinsurance has built up industry-leading competitive advantages Title to go here two lines maximum 17% 1 1% Global scale market share 1 for L&H Re market share 1 for P&C Re L&H Re with P&C Re with >90% >50% Direct client access 11.5% premiums from non-intermediated business avg. Reinsurance ROE in the last 5 >40% years 4 High diversification risk diversification within Reinsurance 2 ~50% Superior risk knowledge of profit from differentiated business 3 We leverage our competitive advantages and maintain our edge through Core, Transactions and Solutions 1 Source: Swiss Re Institute 2 Diversification between P&C, L&H, Financial Market and Credit risks based on shortfall calculation 3 EVM profit – new business, differentiated business: i) preferential terms & conditions, ii) higher share of wallet, and/or iii) private deals (100% share) Swiss Re | January 2020 7 4 Average 2015-9M 2019
Reinsurance Corporate Solutions Life Capital Differentiation is at the heart of what Reinsurance does Core Transactions Solutions Differentiation Add value to clients’ Simplify and drive Deliver innovative deals by original business by efficiencies in our combining our knowledge providing tech enabled traditional business and capital solutions We access risk pools through the three pillars of our strategy Swiss Re | January 2020 8
Reinsurance Corporate Solutions Life Capital Reinsurance has significantly grown and diversified its portfolio, building on core strengths Portfolio developments 2010-18 EVM premium (USD bn) Americas EMEA Asia Core strengths CAGR 21% 15.4 CAGR 7% 12.6 CAGR 4% Scale of the business • 3% 43% 10.9 34% 16% Strong client access • 7.8 7.4 22% 3% 1% 12% Diversification between • 31% 17% 15% P&C Re and L&H Re 50% 36% 21% 3.3 4% 28% 3% 18% 24% Risk knowledge 27% • 18% 11% 9% 12% 10% 7% 16% 9% 5% 20% 15% 12% 16% 14% 12% 6% 2010 2018 2010 2018 2010 2018 Property Nat Cat Casualty Specialty Life Health Swiss Re | January 2020 9
Reinsurance Corporate Solutions Life Capital Corporate Solutions is focused on returning to underwriting profitability and on differentiated growth Good progress in implementing management actions Strategic priorities • Targeted portfolio pruning While implementing management actions, Corporate Solutions will grow • Strong push for price increases selectively in line with its strategic priorities • Improving productivity • Optimised reinsurance structure Combined ratio target 1 98% in 2021and further improvement De-commoditise our Grow with Expand through tech- core business differentiating assets driven solutions expected thereafter Access to commercial lines risk pool and to corporate clients remains strategic to Swiss Re Group 1 Assuming an average large Nat Cat loss burden and excluding prior-year reserve development Swiss Re | January 2020 10
Reinsurance Corporate Solutions Life Capital Life Capital’s three businesses continue to execute on their strategies UK life & pension closed book Group life, disability and income White-labelled individual protection consolidator protection solutions provider solutions provider • Swiss Re agreed to sell its subsidiary • elipsLife continues to deliver steady ReAssure to Phoenix Group. Transaction growth in group L&H through service and • iptiQ applies cutting-edge technology to valued ReAssure at GBP 3.25bn cost leadership deliver fair value P&C and L&H insurance products through partners • Swiss Re will receive a cash payment of • Profitable business for several years in GBP 1.2bn, shares in Phoenix representing mature markets allowing to self-fund the • iptiQ businesses are growing dynamically, a 13% to 17% stake and be entitled to a expansion to new markets, including Italy, with significant expansion opportunities seat on its Board of Directors Ireland, Germany and US Swiss Re | January 2020 11
Investment portfolio shifts support longer term stability of results Shift to higher return generating strategies Defensive credit positioning with focus on quality, yield and diversification Total SAA Total SAA change Credit bonds Private Debt Real Estate USD 131.3bn since End FY 2016 USD 48.1bn USD 3.3bn USD 4.6bn 1% Other Indirect 8% Infrastructure Other 4% 4% 2% Equities & alternatives 1 Commercial Loans Direct 8% AAA Mortgage 7% Switzer- 15% Loans AA +9.0% land 39% A 48% 52% 17% Germany 30% 47% 41% Credit investments BBB <BBB 27% NR US A- +65% +2 4% Government Average rating of credit bond 41% Portfolio growth since 2016 Portfolio growth since 2016 -0.4% bonds portfolio AA- vs. A+ 7 5 bps 7 .7% Cash and 9% short-terms Average rating of total fixed Gross private debt premium vs. peer Average net yield on portfolio +4.1% Total 9M 2019 income portfolio relative to peers 2 average of 20-35bps 3 over last 3 years 1 Includes Principal Investments and real estate Swiss Re | January 2020 2 Peer group includes Allianz, AXA, Chubb, Everest Re, Hannover Re, Munich Re, RGA, SCOR, Zurich 12 3 Source: BlackRock, Inframation, Market Participants infrastructure loan spreads
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