Goldman Sachs European Financials Conference. George Quinn Chief Financial Officer Madrid, 9 June 2010

Transcription

1 Goldmn Schs Europen Finncils Conference George Quinn Chief Finncil Officer Mdrid, 9 June 2010

2 About Swiss Re 2 Swiss Re tody Cpitl strength restored Strong client frnchise demonstrted Legcy issues significntly reduced De-risking: significnt progress Cost efficiency progrmme hed of pln As t 31 Mrch 2010: S&P estimted excess cpitl over AA >USD 12bn Dividend CHF 1 for 2009, first step in returning to norml dividend policy Continued strong trck record of innovtion Substntilly ll PCDS terminted, FG Re commuttion of USD 8.8bn exposure Active mngement of remining positions Significnt reduction of securitised ssets Active hedging of corporte bonds Fit to compete progrmme lrgely completed (including ~ 10% hedcount reduction), on trget for CHF 400m reduction in running costs by end 2010 Trget of 12% RoE verge through the cycle estblished 3

3 Working with clients to deliver innovtive solutions Exmples include: Cpcity Growth Finncing Agriculturl solution in Solvency Support Client Needs Cpitl Efficiency co-opertion with the Chinese government Longevity Swiss Re Solutions Run-off Involvement in the cretion of PERILS Admin Re ILS Longevity swps UK nd Austrli (Re)insurnce EVM Summry Excellent result EVM mesures the risk djusted economic performnce of the firm EVM is used for steering the business nd ssessing performnce EVM profit CHF 7.1 billion Strong performnce by Asset Mngement, P&C nd L&H Economic Net Worth incresed 53% to CHF 28.5 billion ENW per shre CHF 83.2 Includes ll expected cshflows from redemption of CPCI 5

4 EVM 2009 income sttement Excellent result CHF million Profit New business profit/loss Previous yers business profit/loss Totl profit/loss fter cpitl costs Relese of cpitl costs Income before cpitl costs The excellent result reflects strong performnce in Asset Mngement, Property & Csulty nd Life & Helth Economic Net Worth Economic Net Worth (ENW) is the difference between the mrket vlue of ssets nd the economic vlue of libilities ENW is the EVM estimte of shreholders equity CHF billion, s of 31 Dec US GAAP shreholders equity includes CHF 3 billion from the CPCI The CPCI is not included in ENW US GAAP shreholders' equity Economic Net Worth Internl vilble cpitl 7

5 EVM 2009 Economic Net Worth nd vilble cpitl CHF billion Economic net worth 2009 Vlution djustments Additionl riskbering items Internl vilble cpitl 2009 Internl vilble cpitl is bsed on ENW ENW is djusted for vlution differences (minly on cpitl cost reserves) nd dditionl risk-bering items (hybrid cpitl nd CPCI) in line with the Swiss Solvency Test (SST) frmework Internl cpitl required t end 2009 ws CHF16 billion 8

6 P&C Renewls 9 YTD 2010 renewls Lower volumes, cycle mngement improves price dequcy Totl trety portfolio 100% 80% 60% 40% USD 9.5bn 100% 0% -31% -10% 69% 25% 3% USD 8.3bn 87% 20% 0% Totl renewble YTD 2010 Cncelled or replced Renewed Decrese on renewl New business/ replcement Pending Estimted outcome Overll mrket continues to soften with price decrese of round 2% Cycle mngement ctions, portfolio shifts help to improve price dequcy on Swiss Re s portfolio by 2% points Volume reduction driven by repositioning of credit reinsurnce portfolio nd nonrenewl of Chinese quot shres nd Europen motor business in Jnury 10

7 Jnury 2010 renewls Cycle mngement in ction Premiums reduced by CHF 1.4bn or 15% in Jnury 2010 renewls Despite n estimted 2% drop in prices, the price dequcy on Swiss Re s portfolio improved 2% points from portfolio nd cycle mngement ctions Additionl decrese in volume from strtegic re-positioning nd cncelltion of lrge underperforming trnsctions Mjor portfolio chnges Credit reinsurnce Chinese solvency QSs Lrge underperforming Europen motor QS Totl CHF million Rtionle Strtegic re-positioning nd price dequcy Price dequcy Price dequcy 11 April 2010 renewls Premium volume nd price dequcy mintined Continued focus on ctive cycle mngement nd portfolio steering Incresed client retentions nd vilble cpcity led to continued modest price erosion for most mrkets nd lines Selective cpcity deployment, nd portfolio shifts llow Swiss Re to mintin price dequcy Jpn: sluggish primry mrket premium development, reinsurnce mrket slightly softer SEA, Indi: widespred discounting in the mrket, with mny progrmmes below Swiss Re s hurdle rtes. Swiss Re deploys cpcity selectively 12

8 Cycle mngement delivers Combined rtio comprison 125% 120% 115% 110% 105% 100% 95% 90% Hnnover Re SCOR Trnstlntic Re Everest Re Munich Re 85% Generl Re Swiss Re Prtner Re 80% FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 Q Active cpitl lloction nd cycle mngement delivers results Source: Compny reports nd Swiss Re Economic Reserch & Consulting Combined rtios s published, Swiss Re incl. Credit nd excl. FG Reinsurnce 13

9 First Qurter Q Highlights High nt cts, strong underlying performnce Q net income of USD 158m (vs USD 130m in Q1 2009) EPS CHF 0.5, (USD 0.5) Shreholders equity incresed by USD 0.8bn to USD 26.2bn Book vlue per ordinry shre CHF 72.2, up 7%, (USD 68.6) P&C result impcted by higher thn expected nt cts (USD 540m pretx bove norml levels) but underlying business strong Estimted excess cpitl >USD 12bn bove AA cpitl requirement t end Mrch

10 Property & Csulty Nturl ctstrophes impct result Premiums erned USD m Premiums erned decresed by 15.6%, minly driven by ctive cycle mngement nd portfolio steering, prticulrly t Jnury 2010 renewls At constnt fx rtes premiums erned decresed by 19.3% Operting income USD m Combined rtio, trd % -69.4% +19.2pts 90.2% Decrese driven by nturl ctstrophe experience Net investment income declined by USD 0.1bn % (88.6% excl. unwind) 109.4% (107.8% excl. unwind) Net impct from nturl ctstrophes ws 26% pts, which is 19% pts bove expected Expense rtio incresed by 1.9% pts due to the reduction in premium volume, prtly offset by the bsolute expense sving 16 Life & Helth Strong underwriting performnce Operting revenues USD m Operting income USD m Benefit rtio % -5.4% +0.4% +0.5pts Lower premium nd fee income driven by retrocession trnsction which resulted in pproximtely 14% lower premium volume, prtly offset by new business Excluding FX nd the retrocession greement noted bove, premiums nd fees were 3.5% higher thn in Q1 2009, driven by new trditionl life business cross ll regions Strong mortlity experience, minly in North Americ nd Asi prtly offset by unfvourble morbidity experience VA nd pre-2000 GMDB gin of USD 55m (Q USD 92m gin) 86.9% 87.4% Strong mortlity prtly offset by unfvourble morbidity Approx. 1.0 % points increse in rtio relted to VA nd pre-2000 GMDB. Impct for both periods ws positive, but Q ws less positive thn Q

11 Asset Mngement Strong totl return Operting income 1 USD m Return on Investments % Totl return 2 % -4.2% +0.9pts pts % 2.8% AM investment portfolio of USD 143bn (excl. unit-linked nd with-profit) AM fixed income running yield of 4.2% (4.7% in Q1 2009) Decrese in impirments to USD 90m, (Q1 09: USD 569m) Lower relised gins thn Q1 09 Short durtion reduced in Q1, DVO1 USD 6.6m 1.9% RoI of 2.0% for rtes, 4.4% for credit nd 5.2% for equities nd lterntive investments Positive performnce on equity nd lterntive investments more thn offsets lower investment income -7.1% Totl return17.9% for credit, from continued spred tightening nd improved mrket performnce in certin securitised sset clsses nd 3.2% for rtes s rtes continue to decline 12.5% for equities nd lterntive investments Increse in shreholders equity of USD1.5bn in credit nd rtes 1 Minority interests included in operting income but excluded from the RoI nd Totl Return 2 Totl return includes chnge in unrelised gins/losses 18 Swiss Re s cpitl strength Further strengthening in Q Q estimted S&P excess cpitl over AA >USD 12bn Q1 increse driven by incresed vilble cpitl, lower sset libility durtion mismtch, less cpitl required for P&C due to cycle mngement nd reduction of credit reinsurnce nd for L&H due to retro trnsction Q estimted Solvency I rtio > 200% Q estimted SST > 200% 19

12 Summry Building on our strengths Strong underlying results nd client frnchise Cpitl strength nd expertise position us well to support clients Recent lrge losses expected to increse risk wreness nd crete stbilising influence on pricing Fit to Compete progrmme lrgely completed (including ~10% hedcount reduction), on trget for CHF 400m reduction in running costs by end 2010 Active cycle mngement to continue, focus on sustinble profitbility in line with 12% through the cycle ROE trget 20

13 Q & A 21 Corporte clendr & contcts Corporte clendr 11 June 2010 Investors Dy London 05 August 2010 Second Qurter 2010 results Conference cll 13 September 2010 Investors nd Medi meeting Monte Crlo 04 November 2010 Third Qurter 2010 results Conference cll 17 Februry 2011 Annul Results 2010 Zurich Investor Reltions contcts Hotline E-mil Investor_Reltions@swissre.com Susn Hollidy Ross Wlker Chris Menth John Piper Simone Fessler

14 Cutionry note on forwrd-looking sttements Certin sttements nd illustrtions contined herein re forwrd-looking. These sttements nd illustrtions provide current expecttions of future events bsed on certin ssumptions nd include ny sttement tht does not directly relte to historicl fct or current fct. Forwrd-looking sttements typiclly re identified by words or phrses such s nticipte, ssume, believe, continue, estimte, expect, foresee, intend, my increse nd my fluctute nd similr expressions or by future or conditionl verbs such s will, should, would nd could. These forwrd-looking sttements involve known nd unknown risks, uncertinties nd other fctors, which my cuse Swiss Re s ctul results, performnce, chievements or prospects to be mterilly different from ny future results, performnce, chievements or prospects expressed or implied by such sttements. Such fctors include, mong others: further instbility ffecting the globl finncil system nd developments relted thereto; chnges in globl economic conditions; Swiss Re s bility to mintin sufficient liquidity nd ccess to cpitl mrkets, including sufficient liquidity to cover potentil recpture of reinsurnce greements, erly clls of debt or debt-like rrngements nd collterl clls under derivtive contrcts due to ctul or perceived deteriortion of Swiss Re s finncil strength; the effect of mrket conditions, including the globl equity nd credit mrkets, nd the level nd voltility of equity prices, interest rtes, credit spreds, currency vlues nd other mrket indices, on Swiss Re s investment ssets; chnges in Swiss Re s investment result s result of chnges in its investment policy or the chnged composition of its investment ssets, nd the impct of the timing of ny such chnges reltive to chnges in mrket conditions; uncertinties in vluing credit defult swps nd other credit-relted instruments; possible inbility to relise mounts on sles of securities on Swiss Re s blnce sheet equivlent to its mrk-to-mrket vlues recorded for ccounting purposes; the outcome of tx udits, the bility to relise tx loss crryforwrds nd the bility to relise deferred tx ssets (including by reson of the mix of ernings in jurisdiction or deemed chnge of control), which could negtively impct future ernings; the possibility tht hedging rrngements my not be effective; the lowering or loss of one of the finncil strength or other rtings of one or more compnies in the Group; the cycliclity of the reinsurnce industry; uncertinties in estimting reserves; the frequency, severity nd development of insured clim events; cts of terrorism nd cts of wr; mortlity nd morbidity experience; policy renewl nd lpse rtes; extrordinry events ffecting Swiss Re s clients nd other counterprties, such s bnkruptcies, liquidtions nd other creditrelted events; current, pending nd future legisltion nd regultion ffecting Swiss Re or its ceding compnies, nd regultory or legl ctions; chnges in ccounting stndrds; significnt investments, cquisitions or dispositions, nd ny delys, unexpected costs or other issues experienced in connection with ny such trnsctions, including, in the cse of cquisitions, issues rising in connection with integrting cquired opertions; chnging levels of competition; nd opertionl fctors, including the efficcy of risk mngement nd other internl procedures in mnging the foregoing risks. These fctors re not exhustive. Swiss Re opertes in continully chnging environment nd new risks emerge continully. Reders re cutioned not to plce undue relince on forwrd-looking sttements. Swiss Re undertkes no obligtion to publicly revise or updte ny forwrd-looking sttements, whether s result of new informtion, future events or otherwise. 23