Investors Day. Zurich, 4 April 2018

Transcription

1 Investors Day Zurich, 4 April 2018

2 Agenda Investors Day 2018 Time Content Management 09:30-10:00 Registration 10:00-10:40 Update on Group strategy Christian Mumenthaler 10:40-11:00 Underwriting priorities Edi Schmid 11:00-11:20 Financial strength and capital generation John Dacey 11:20-12:05 Q&A session 12:05-13:15 Lunch 13:15-13:45 Reinsurance update and Q&A Moses Ojeisekhoba 13:45-14:15 Corporate Solutions update and Q&A Agostino Galvagni 14:15-14:45 Life Capital update and Q&A Thierry Léger 14:45-14:50 Wrap-up Christian Mumenthaler 2

3 Update on Group strategy Christian Mumenthaler, Group Chief Executive Officer

4 Based on three differentiation drivers we have built leading insurance businesses Client Access Risk Knowledge Capital Strength P&C Reinsurance #1 global property reinsurer Reinsurance L&H Reinsurance Top 2 global reinsurer #1 global reinsurer in High Growth Markets Corporate Solutions Top 5-10 in Excess Layer market Growing in Primary Lead segment Life Capital Leading UK life & pension consolidator Leading L&H B2B2C platforms in core markets 4

5 that represent a highly rewarding combination for shareholders The strong value creation of our individual businesses has consistently produced peer-leading margins Total contribution to Economic Net Worth (USD bn) US GAAP net operating margins average % 7% Ordinary dividends in each year more than covered by economic value creation P&C Reinsurance L&H Reinsurance Corporate Solutions Life Capital Group Items Ordinary dividends Swiss Re Group Reinsurance market ¹ Investment Underwriting ¹ Based on weighted average of Munich Re, Hannover Re, SCOR and RGA Operating expenses 5

6 We are benefiting from a more positive current environment and promising long-term opportunities Current market environment improved Improvements in P&C pricing Increasing interest rates to benefit P&C Reinsurance and Corporate Solutions to benefit the return profile of our investment portfolio 5% overall market growth expected 1 Long-term opportunities remain Risk pools continue to grow Opportunities in High Growth Markets Protection gap still expanding we can access global risk pools through all Business Units we are the #1 global reinsurer in High Growth Markets we develop innovative solutions to increase insurance coverage 8% market growth expected in High Growth Markets 1 ¹ Source: Swiss Re Institute; expected premium growth per annum in reinsurance in nominal USD terms over the next five years 6

7 P&C Reinsurance L&H Reinsurance Corporate Solutions Life Capital P&C Reinsurance s strong track record of generating shareholder value leads the industry Economic underwriting profits in excess of EVM capital costs... resulting in peer-leading margins Strong new business profits driven by P&C Reinsurance s leading client platform EVM profit new business (USD bn) US GAAP net operating margins average % 15% USD 4.4bn EVM new business underwriting profit since Swiss Re P&C Re P&C reinsurers 1 Investment Underwriting ¹ Based on weighted average of P&C Re segments of Munich Re, Hannover Re, SCOR, Everest Re and Alleghany Operating expenses Peer-leading underwriting margins are driven by both, capital allocation (beta) & risk selection (alpha) 7

8 P&C Reinsurance L&H Reinsurance Corporate Solutions Life Capital L&H Reinsurance s franchise value continues to increase Economic underwriting profits in excess of EVM capital costs... resulting in peer-leading margins Strong new business profit mostly from EMEA and Asia reflecting the Group s increased footprint EVM profit new business (USD bn) US GAAP net operating margins average % 6% USD 4.5bn EVM new business underwriting profit since Swiss Re L&H Re L&H reinsurers 1 Investment ¹ Based on weighted average of L&H Re segments of Munich Re, Hannover Re, SCOR and RGA Underwriting Operating expenses Outperformance vs. market supported by decisive and timely management actions on underperforming blocks of business 8

9 P&C Reinsurance L&H Reinsurance Corporate Solutions Life Capital Swiss Re s reinsurance client franchise represents the biggest source of our competitive advantage We have strong direct relationships with our customers Direct relationships drive our access to large & tailored transactions P&C Reinsurance L&H Reinsurance EVM profit - new business (USD m) % of premiums from nonintermediated business, FY % 96% CAGR 11% with distinct client interactions Client example Swiss Re Americas APAC EMEA P&C Reinsurance L&H Reinsurance

10 P&C Reinsurance L&H Reinsurance Corporate Solutions Life Capital Commercial insurance has been an attractive business for our shareholders, generating long-term underwriting profits in excess of EVM capital costs Underwriting performance of Swiss Re s commercial insurance business¹, USD bn EVM profit - underwriting EVM gross premiums written Average annual EVM profit Carve-out of Corporate Solutions as separate BU Commercial business premiums grew with a compounded annual growth rate of 10% World Trade Centre Hurricane Katrina, Rita, Wilma Earthquake Chile Earthquake Japan HIM, California Wildfires -0.6 Swiss Re wrote commercial business with EVM underwriting profits in excess of capital costs of > USD 2bn since 2000 This translates into an average annual EVM profit in excess of EVM capital costs of USD 125m Underwriting year (UWY) ¹ Reflects commercial business written by underwriting year, gross of intra-group retrocessions, net of external cessions; excludes commercial business written in derivative form 10

11 P&C Reinsurance L&H Reinsurance Corporate Solutions Life Capital Corporate Solutions performance has been attractive, in particular when considering the total financial contribution USD >5bn reserves left in Reinsurance when carvedout in 2012 US GAAP - Net operating margins, average Total financial contribution (TFC) impact 16% 6% +3%pts Corporate Solutions as reported Investment +7%pts Underwriting Corporate Solutions total financial contribution Operating expenses Total financial contribution (TFC) refers to the estimated contribution of Corporate Solutions business written within Swiss Re Group, incl. development of historical loss reserves remaining in the Reinsurance BU after the carve out from Reinsurance in 2012 related investment income and additional tax expenses TFC impact from positive reserve developments of 7%pts on average per year TFC impact from investment income on reserves of 3%- pts on average per year 11

12 P&C Reinsurance L&H Reinsurance Corporate Solutions Life Capital Net operating margins compare favourably versus peers, driven by a strong underwriting margin US GAAP net operating margins incl. TFC on average 4%pts above peer average Corporate Solutions has comparably strong TFC underwriting margins 42% 11% 23% 17% 15% 18% 21% 10% 9% 7% -19% 6% Investments into future growth drives higher expense margins compared to peer average Corporate Peer Solutions average Corporate Peer Corporate Peer Corporate Peer Corporate Peer Corporate Peer Solutions average 1 Solutions average 1 Solutions average 1 Solutions average 1 Solutions average Investment Underwriting Operating expenses ¹ Based on the weighted average of reported results of six Corporate Solutions peers 12

13 P&C Reinsurance L&H Reinsurance Corporate Solutions Life Capital ReAssure maintains a market-leading closed book platform in the UK ReAssure s closed book transactions track record Policy count (in million) 5 Transactions Current closed book Recent transactions delivered a return average of >12% MS&AD participation 2 increases ability to pursue further closed book transactions Life Capital s dividend stream is driven by the closed book business (USD 3.8bn since 2012)³ USD bn Funding from Group for Guardian transaction in 2016: USD 1.6bn ReAssure is a major cash generator of the Group ¹ L&G transaction pro-forma, reinsurance agreement effective from 1 January Announced in October/ December 2017; completed in January For FY published results refer to Admin Re 13

14 P&C Reinsurance L&H Reinsurance Corporate Solutions Life Capital Life Capital businesses capture growth opportunities in attractive primary L&H risk pools elipslife premium volume iptiq new policies development The protection gap in sum assured terms is > USD 100trn and growing Gross premiums written, life insurance business (USD m) # new policies written, cumulative¹ B2B2C platforms delivering dynamic growth ¹ Cumulative numbers do not include acquired portfolios Positive customer journeys and cost leadership remain key differentiators 14

15 Our near-term priorities remain unchanged Swiss Re s strategic framework Near-term priorities Group financial targets over-the-cycle I systematically allocate capital to risk pools / revenue streams II broaden and diversify client base to increase access to risk III optimise resources and platforms to support capital allocation Growth through systematic capital allocation Large & tailored transactions Corporate Solutions Life Capital High Growth Markets RoE risk free +700bps Research & Development IV emphasise differentiation Risk Knowledge supporting capital allocation Technology People & Culture ENW per share growth +10% p.a. We are a risk knowledge company that invests in risk pools 15

16 R&D builds on our thought leadership position, bringing us closer to the needs of our clients How R&D drives value at Swiss Re: Estimated annual underwriting outperformance: >USD 1bn 1 R&D improves top down capital allocation leading to outperformance Target Liability Portfolio Insurance beta Strategic Asset Allocation 50-60% ~450 FTE in 13 R&D teams Insurance alpha R&D improves risk selection and further portfolio steering given allocation Product design Product pricing Underwriting criteria R&D provides services and thought leadership enabling higher pricing Client services Thought-leadership publications Curated data 40-50% >200 R&D initiatives ongoing (50% focusing on technology) R&D provides new ideas to reduce the cost of generating a given unit of revenue Cost efficiency Business process disruption & improvement ¹ Based on average annual gross underwriting margin outperformance vs. peers in the last five years 16

17 Advances in technology are impacting the insurance value chain and reshaping the competitive landscape Today Tomorrow Digitalisation improves the design and pricing of new and existing insurance products Impact of technology on insurance Limited demonstrated business impact but heightened interest and hype Long-term fundamental changes to the insurance value chain Blurred industry boundaries and shifting insured risks (from personal to commercial lines) We remain focused on improving our business and developing solutions for ourselves and our clients to secure access to risk pools through our business segments and strategic partnerships Insurers expected to leverage new technology to acquire new customers, improve underwriting and increase efficiency 17

18 Swiss Re s tech strategy is embedded in our business strategy and ensures effective innovation management 1 OUR CLIENTS OURSELVES 2 Increase our clients competitiveness Provide tools and solutions for clients value chains Improve our value chain Apply technology to Swiss Re s value chain Examples: Magnum, Life Guide, CatNet, Liability Risk Drivers Examples: ATLAS, digital claims, document intelligence 4 OUR DATA Swiss Re tech strategy OUR EXPOSURE 3 Harvest full potential of data Build up competitive advantage from proprietary data Get closer to risk Seek access to risk pools through tech platforms Example: Stargate platform Examples: iptiq, elipslife, dynamic parametric pricing platform, Pulse Our tech strategy is implemented with a combination of in-house developments and strategic partnerships 18

19 1 Increase our clients competitiveness Example: Magnum is our market-leading automated underwriting solution for life & health 1 OUR CLIENTS OUR DATA OURSELVES OUR EXPOSURE Our solutions Available in 29 countries and 17 languages >10 million applications processed in 2017 >40 clients worldwide Magnum Pure is our advanced, automated underwriting solution Easily build and optimise the ideal customer journey and underwriting rules Receive unprecedented insights into the underwritten business Magnum Mobile offers innovative underwriting for mobile devices Integrates into an agent s or client s insurance app Enable their customers to be underwritten anytime, anywhere Value for our insurance clients: Automation drives scalability Consistent, predictable underwriting decisions Risk management standards across channels and products Rules-driven assessment, aligned to Swiss Re s LifeGuide underwriting philosophy Faster, efficient underwriting decisions Shorter application times, quicker decisions, easy and secure reports & analytics Easy creation of tailored rules, for smoother go-to-market Magnum represents a tailored and integrated underwriting platform which delivers significant value to our clients and strengthens our relationship 19

20 OUR CLIENTS OURSELVES 2 2 Improve our value chain Selected examples: We leverage scalable technology platforms to streamline internal processes OUR DATA OUR EXPOSURE ATLAS New general ledger and financial steering capabilities Digital claims and technical accounting Document intelligence 90% process standardisation Major roll out in day closing of quarters 80% efficiency gains in processing client documents by 2020 (63% today) 80% of all client documents digitised by 2020 (43% today) >1.4million digitised bookings by 2020 (~0.7million today) 60 million contract pages processed automatically 7 solutions running on one single platform >15 million documents covered by intelligence platform Multi-year effort to provide us with an industryleading steering and reporting platform Expand leadership position in terms of volumes and turnaround times of digitised bookings Our ambition is to have every piece of data fully digitised and automatically understood 20

21 3 Get closer to risk Example: iptiq is our L&H B2B2C platform with industry leading end-to-end digital capabilities OUR CLIENTS OURSELVES OUR DATA OUR EXPOSURE 3 A truly digital experience Sales: digital front-end platform 12 distributors onboarded Omni-channel: accessible from various devices Data & reporting: integrated & automated management information reporting Underwriting: industry-leading automated underwriting Live in 5 markets Self-service: empower customers to self-manage policies with compelling competitive advantages Dynamic growth to continue Cost efficient due to disintermediation of traditional insurance distribution and no retail distribution legacy Knowledge based differentiation with industry leading R&D capabilities Balance sheet strength of Swiss Re Group to support growth Fully digital B2B2C insurance solution allowing plug & play with any client and partner, enabling vast consumer access and contextual sales 21

22 4 Harvest full potential of data Example: Stargate platform provides the opportunity to transform Swiss Re into a truly data-driven knowledge organisation 4 OUR CLIENTS OUR DATA OURSELVES OUR EXPOSURE Stargate platform accelerates the integration of Swiss Re s data landscape Scalable enterprise wide platform for integrating, analysing & deriving insights on massive data sets Data Internal data Structured/unstructured External data Weather, IoT/wearables Stargate platform Methodology Analytics at scale Data integration/gdpr compliance Machine learning Data visualisation People Democratisation Data and analytics Upskilled workforce users by 2020 >50 initiatives across the group to be implemented by the end of

23 We are a risk knowledge company that invests in risk pools We have built leading (re)insurance businesses based on three differentiating factors: Client Access, Risk Knowledge and Capital Strength These businesses ensure access to growing risk pools in the long term The overall market outlook has improved for our P&C businesses and we will benefit from the positive momentum Our scale, access to clients, risk data and advanced platforms position us well to play a major role in the technological revolution in the insurance space Swiss Re s tech strategy is embedded in our business strategy and is implemented with a combination of in-house developments and strategic partnerships 23

24 Underwriting priorities Edi Schmid, Group Chief Underwriting Officer

25 Competitive advantage achieved through underwriting priorities Underwriting priorities Competitive advantage Target liability portfolio optimises capital allocation Target liability portfolio as basis for active steering of deployed capital Sound capital allocation to the most attractive risk pools Investment into R&D Access existing and new risk pools Knowledge-based underwriting capabilities Beta: Allocating capital to the right risk pools Alpha: Selecting better risks at better economics Forward-looking view on risk pools Smart analytics leveraging big data Broadly diversified underwriting book R&D as basis for continued underwriting outperformance Focus on consistently achieving high underwriting margins 25

26 Outperformance in L&H Reinsurance has been pronounced Gross underwriting margin 1 (L&H Reinsurance) 7.5% Swiss Re Peers Key success factors 5.0% 2.5% 0.0% Swiss Re s average 4.3% 4.4%pts difference Peers average -0.1% Superior risk selection and portfolio steering drive outperformance in L&H Reinsurance Underwriting margin increased in 2017 in both, life and health segments Underperformance in 2014 is the result of decisive and timely management actions related to pre-2004 US individual life business -2.5% -5.0% Gross underwriting margin = 1- technical combined ratio = 1- (benefit ratio + acquisition cost ratio) Note: weighted average of peers, which include Hannover Re, Munich Re, RGA and SCOR. 26

27 Long-term higher underwriting margins than peers in P&C Gross underwriting margin 1 (P&C Reinsurance and Corporate Solutions) 30% 25% 20% 15% 10% 5% 0% Swiss Re Peers Swiss Re s average 17.2% 8.5%pts difference Peers average 8.7% Key success factors Track record reflects superior risk selection (alpha) and active capital allocation (beta) Large & tailored transactions allowed for differentiated pricing Underwriting discipline maintained and expected to benefit from price improvements -5% -10% Gross underwriting margin = 1- technical combined ratio = 1- (loss ratio + acquisition cost ratio) Note: weighted average of peers, which include Alleghany, Everest Re, Hannover Re, Munich Re and SCOR 27

28 Underwriting discipline and reserving linked via feedback loops, allowing reserves adequacy to remain strong Reserving strength is demonstrated by being in the upper half of a range of best estimates Swiss Re has robust reserving process and governance Possible distribution of P&C reserves (USD 53bn in 2017) Illustrative Reserving process provides transparency on best estimate of ultimate claims Strong governance around reserving in all regions and mid-point lines of business, independently assessed at Group level to 60 th percentile be in the 60 th to 80 th percentile of the best estimate range Reserves remain strong and resilient to inflation mid-point Strong feedback loops between underwriting, claims and 80 th percentile reserving teams allow rapid update on reserves and pricing adjustment Reserving at Swiss Re is not a way of managing capital nor creating artificially high reserve buffers Best estimate range Managing inflation Inflation drivers are closely monitored: medical costs, wages, social costs, other claims relevant items Claims inflation assumptions made in costing are included in initial reserves As experience emerges, costing assumptions are replaced by projections of experience and reflected in reserves 28

29 Forward-looking view Capital allocation Risk selection Differentiating services R&D in underwriting is a key contributor to Swiss Re s success Focus of R&D in underwriting 1 2 OUR CLIENTS OURSELVES 4 3 OUR DATA OUR EXPOSURE CatNet our natural hazards online information tool Property Nat cat perils Climate change Cyber Magnum our automated L&H underwriting solution Casualty Specialty Economic, legal, political, changes Credit default probabilities Dynamic pricing platform for parametric insurance Life Health Mortality trends Lapse trends Critical illness Morbidity trends Liability Risk Drivers our forward looking costing tool 29

30 Degree Celsius % of affected insureds with (partial) business interruption at day x Deaths per 100,000 in the U.S. Thyroid incidence Korea Our focus areas in underwriting R&D address key market developments Nat cat perils Cyber Mortality trends Critical illness Measuring correlation between sea surface temperature and hurricane activity Sea surface temperature anomaly Assessing cyber extreme event scenarios and quantifying the insured loss (PML estimation) Cyber extreme event analysis (example malware epidemic ) Assumed gradual recovery based on step-function approximation Assessing the growing impact of opioid epidemic in the U.S., Canada, UK, and Germany on mortality Drug overdose death rates Monitoring of medical practice and disease incidence rates to steer business performance Cancer incidence screening Monthly 3-yr running mean # of days to resolution 5 0 Year Age groups and over # of years after start screening program Age-standardised Female Male Correlation reflected in our proprietary nat cat model and considered in our costing and scenario assessment Sources: Nat cat perils: NOAA, Mortality trends: CDC, CI: Korea cancer statistics Understanding which cyber scenarios constitute threats from an insurance point of view Developing methodologies to estimate exposure and insurance claims for both explicit and nonaffirmative cyber covers Incorporate research for better mortality improvement assumptions and life scenario assessment Recommendations on life underwriting practices with opioid use in the population Adapt costing & business practice to address findings, e.g. exclusions of claims based on practices that lead to over diagnosis of non-critical disease status, or tighten range/description of diagnosis that lead to valid CI claims 30

31 R&D driven insights into risk pool performance to dynamically steer and shape our Target Liability Portfolio Illustrative Historical positioning Current positioning Future attractiveness Target Liability Portfolio No. LOB and Region Portfolio Owner Portfolio weighting Actual vs expected performance Portfolio weighting Economic return US GAAP return Risk impact Premium trends Loss trends Target weighting Priority 1 Property Re Non proportional Americas Name 1 OW OW OW/UW Growth, Profitability 2 Property Re Non proportional EMEA Name 2 OW OW OW/UW Growth, Profitability 3 Critical Illness Asia Name 3 UW Neutral OW/UW Growth, Risk 4 Property Commercial Americas Name 4 UW UW OW/UW Growth, Risk 5 Liability Re Americas Name 5 UW Neutral OW/UW Risk, Profitability 47 portfolios owned by senior leaders, overseeing and assessing performance of portfolios Historical capital allocation versus market and UW performance Strong insights into our positioning vs market, and core economics of each portfolio: EVM, US GAAP, Risk Portfolio-specific R&D quantifies future market trends Targeted approach for growth, profitability (margin) and risk UW = underweight; OW = overweight desirable neutral less desirable 31

32 Nat cat Long-term growth through active portfolio management and distinctive R&D Disciplined growth and capital deployment over the cycle and market leading R&D behind consistent underwriting success Premiums 1 / Expected loss EVM capital deployed EVM capital deployed, USD bn Premiums earned CAGR 8% Premiums 1 / Expected loss USD bn Premiums 1 Expected loss Incurred loss Note: Data is presented on an underwriting year basis for P&C Reinsurance. The chart shows Cat XL business. There is additional Nat cat exposure in proportional and per risk treaties 1 Gross premiums written net of commissions 32

33 US Liability Recent growth through tailored transactions followed by strong push for rate improvements US Liability reinsurance, underwriting year view EVM gross premiums earned, USD bn Loss ratio Rate index 1 Loss ratio %, Premium rate (1999=100) Gross premiums earned Grew significantly in hardening market 2010 Contracted quickly, underweight in 2011 Grew in response to positive rate development Grew mainly through tailored transactions Disciplined underwriting with increased focus on profitability and risk management Rate improvement at 1/1/2018 renewals and further rate increases expected Mid-market growth envisaged as large verdict trend against large corporations continues Liability reserves remain strong Note: Data is presented on an underwriting year basis for P&C Reinsurance 1 The Council of Insurance Agents & Brokers (CIAB) rate change, General Liability 33

34 Corporate Solutions Property Solid underwriting performance driving long-term profit Disciplined market participant EVM GPW 1, USD m Rate index 2 EVM gross premiums written Rate index 2 Active cycle management long-term growth goal based on strict underwriting discipline : Average economic profit margin: 13%, Economic profit: >USD 1bn with strong loss ratio performance Loss ratio 3, % Total loss ratio Man-made loss ratio Strong technical underwriting: average loss ratio < 50% EVM gross premiums written by underwriting year, gross of intra-group retrocessions, net of external cessions 2 The Council of Insurance Agents & Brokers (CIAB) rate change 3 Loss ratio calculated as claims / gross premiums written Swiss Re Group-wide balance sheet absorbs nat cat volatility where economically attractive 34

35 Critical Illness (Asia) Profitable, strong growth market made possible by proprietary R&D Strong underlying strategic fundamentals Creating a new, profitable and growing market Secular demand growth from megatrends (e.g. emerging middle class) EVM premiums 1, USD m EVM profit EVM premiums EVM profit, USD m Technically demanding product Margin management capability (e.g. differentiated risk charge per market) Market leading R&D in critical areas Over-diagnosis through emerging technologies (e.g. liquid biopsy) Early warning system (e.g. detect trends in big data) Global standards benchmarking PV premium for new business on EVM basis (net of all reinsurance) 35

36 As a knowledge company we invest in R&D which continues to be the basis of our underwriting outperformance Optimise capital allocation Active monitoring of performance and trends to allocate capital to most attractive risk pools Advanced research and modelling capabilities to enhance risk selection Leverage technology to develop industry leading practices and tools Create client value through differentiated services Develop forward-looking perspective on risk pools Ensure access to existing and new risk pools 36

37 Financial strength and capital generation John Dacey, Group Chief Financial Officer

38 We are committed to our over-the-cycle Group financial targets Group targets over-the-cycle Group Return on Equity Group ENW per share growth % 13.7% 10.5% 13.7% 10.6% 24.6% 17.0% 8.8% 9.4% 9.6% 9.2% 9.4% 9.4% Rf bps 1 10% 11.0% 10.8% 10% 7.2% 10% 5.4% 10% 10% 10% 10% 1.0% actual bps above 10y US Govt. bonds Over-thecycle target actual 2015 target Over-thecycle target Group ROE was below the over-the-cycle target in 2017, reflecting USD 4.7bn of estimated losses from natural catastrophes Group ENW per share growth target achieved in 2017, driven by a strong performance of our L&H businesses and investment activities bps above 10y US Govt. bonds. Management to monitor a basket of rates reflecting Swiss Re s business mix 2 The 10% ENW per share growth target is calculated as: (current-year closing ENW per share + current-year dividends per share) / (prior-year closing ENW per share + current-year opening balance sheet adjustments per share) 38

39 Higher volatility in US GAAP reported earnings expected due to accounting changes Impact of US GAAP rule change on equities and AI investment result USD m (200) (400) (600) Equity / AI investment result As reported Portfolio segments in scope for the rule change Pro forma 2018 rules (estimated) End USD m FY 2017 Equity securities Private equity Hedge funds 359 Real estate Principal Investments Equity securities 539 Private equity Total market value Fully impacted Partially impacted US GAAP available-for-sale classification for equity securities and certain alternative investments (AI) no longer applicable starting in 2018 All unrealised gains on equity investments were transferred to retained earnings as of 1 January 2018 The Group s net realised gains will fully reflect the impact of equity market movements going forward Approx. USD 4.8bn of the Group s investments impacted by the new standard, in addition to USD 1.8bn existing fund investments where the change in market value is already recognised in earnings A 10% downward move in fair values for the combined exposure of USD 6.6bn would reduce pre-tax earnings by approx. USD 0.6bn (net of hedges) 39

40 Our capital management priorities remain unchanged Swiss Re s capital management priorities I. Ensure superior capitalisation at all times and maximise financial flexibility II. Grow the regular dividend with long-term earnings, and at a minimum maintain it III. Deploy capital for business growth where it meets our strategy & profitability requirements IV. Repatriate further excess capital to shareholders I Group SST ratio SST % Rating AA-/Aa3/A+ SST % USD 7.7bn 2 ordinary dividend (FY 13 to FY 17) Payout ratio 47% 4 II Capital management actions The Board of Directors will propose to the AGM 2018 a regular dividend of CHF 5.00 per share (3% increase) The Board will also propose to the AGM a further public share buy-back programme of up to CHF 1bn purchase value commencing at the discretion of the Board subject to AGM approval 1 Beyond Board approval 1, considering the capital management priorities, there will be no other pre-conditions to the commencement of the proposed share buy-back programme 1 Subject to legal and regulatory requirements being satisfied 2 Includes AGM 2018 proposal for ordinary dividend of CHF 5 per share 3 Includes AGM 2018 proposal for share buy-back programme of up to CHF 1bn purchase value 4 Payout ratio calculated as capital repatriation over GAAP net income; assumes AGM approval of the proposed ordinary dividend of CHF 5.00 per share IV 3 USD 6.7bn special dividend & buy-back (FY 13 to FY 17) Extraordinary Payout ratio 41% Capital management priorities 4 Business reinvestments Acquisitions III 40

41 Our Group s capital position remains very strong, even after significant losses from natural catastrophes and continued peer-leading capital repatriation to shareholders USD bn, % 261% 262% 269% SST risk-bearing capital (RBC) SST target capital (TC) Group SST ratio calculation 1 : SST RBC MVM 2 SST TC MVM USD 5.3bn MVM USD 5.2bn MVM USD 5.9bn MVM Group economic solvency remains very strong, comfortably above the Group s capitalisation target of 220% Group SST 2018 ratio reflects proposed capital management actions (increased ordinary dividend and new public share buy-back programme 3 ) Swiss Re remains well positioned to respond to market opportunities 1 SST ratio calculation as defined by FINMA 2 MVM = Market Value Margin = cost of capital of the present value of future regulatory risk capital associated with the portfolio of assets and liabilities 3 Pro-rata share of USD 0.8bn of 2018/2019 public share buy-back programme used for SST 41

42 Our capital strength remains resilient to market movements Group regulatory capital requirement Group SST sensitivities Group SST target capital 2018, USD bn Estimated impact on Group SST ratio 2018 Property and casualty 10.1 Equity Markets (-25%) 267% Life and health 7.7 Equity Markets (+25%) Interest Rates (-50bps) 271% 259% Financial market 12.0 Interest Rates (+50bps) 277% Credit 3.2 Credit spreads (-50bps) 276% Diversification 13.1 Credit spreads (+50bps) 263% Total risk (99% TailVar) 19.9 Real estate (-25%) 264% Other impacts 3.3 Real estate (+25%) 274% SST target capital % Group SST target capitalisation 269% Group SST

43 Swiss Re maintains a leading capital position in the reinsurance sector and industry Group SST to Solvency II walk 1 >310% 329% 269% 239% 210% Group SST ratio 2018 Risk measure (1-year risk) Modelling differences Valuation (discounting) Eligibility of capital Deferred taxes Group Solvency II ratio Average of reinsurers 2 Average of insurers 3 SST and Solvency II are both comprehensive economic and risk-based solvency regimes Due to important differences, Solvency II equivalent ratio is significantly higher For 2018, our comparable Group Solvency II ratio is estimated to be >40%pts higher than our Group SST ratio 1 Comparison was produced on a best effort basis using Swiss Re's SST calculation for 2018; For more details on differences between SST and Solvency II please refer to our SST vs. Solvency II comparison analysis published on our website ( Please note that the difference from capital cost recognition has been eliminated in 2017 with FINMA's change in SST ratio definition. Differences between SST and Solvency II also explained in the booklet Measuring economic performance & solvency at Swiss Re published on our webpage. 2 Average of Munich Re, Hannover Re, SCOR 3 Average of Allianz, Aviva, Axa, Generali 43

44 Economic net worth creation is at the core of our steering framework ENW per share growth vs total return to shareholders 1 over time 300% 250% ENW per share growth 2 Total return to shareholders Total shareholder return performance is best tracked by ENW generation 200% 150% 100% 50% 0% Economic Value Management (EVM) is Swiss Re s integrated economic valuation and accounting framework for planning, pricing, reserving & steering our business: EVM allows consistent performance measurement across product lines and asset investments (on a risk adjusted basis, i.e. post cost of capital) EVM ensures that costing and ALM is based on economic principles 1 Reflects share price development and dividends paid in USD. Shown on a cumulative basis and indexed from Dec Calculated as: (current-year closing ENW per share + current-year dividends per share) / (prior-year closing ENW per share + current-year opening balance sheet adjustments per share). Shown on a cumulative basis and indexed from December 2005 Consistent comparison of economic returns across the Group supports active portfolio steering 44

45 ...and drives our strong solvency capital generation Swiss Re s Solvency capital generation five year aggregated view from Group SST 2013 to 2018 Change in available capital¹ Change in economic target capital¹ More details on following slides Total contribution to ENW Change in suppl. capital Other items² Gross solvency capital generation Capacity deployment (capital allocation) Other items³ Net solvency capital generation Capital repatriation Change in excess capital CHF 12 CHF 10 CHF 7 CHF 8 yearly avg. per share Solvency capital generation is based on Swiss Re s Group SST capitalisation target of 220% Gross solvency capital generation is a long-term proxy for reinvestment and dividend capacity Net solvency capital generation measures how much capital is available for capital repatriation after reinvestments into the business Change in excess capital highlights disciplined capital management with average annual share repatriation of CHF 8 per share 1 Available capital: SST RBC MVM, excluding projected dividends and share repurchases. Swiss Re s economic target capital: 220% x (SST target capital MVM), internal economic target as defined by Swiss Re s Board of Directors in the Group Risk Policy 2 Includes change in other EVM items (including foreign exchange impacts on ENW), change in MVM and change in other SST valuation differences with EVM 3 Includes foreign exchange, interest rate and other impacts on Swiss Re s economic target capital on a best effort basis 4 Includes the sum of paid ( ) and projected (2018) dividends and public share buy-backs 45

46 Solvency capital generation is directly linked to Swiss Re s economic reporting (EVM) USD bn Published 2017 EVM income statement 1 Take a look at the booklet Measuring economic performance & solvency at Swiss Re on our homepage 21.3 Total contribution to ENW FY As published on page 57 of Swiss Re s 2017 Financial Report 46

47 Swiss Re s target capital structure and financial flexibility is supported by the Group s strong funding platforms USD bn Implementation and maintenance of target capital structure YE 2012 YE Subordinated debt Reinsurance -2.0 Established funding platforms in all Business Units to fund capital & liquidity requirements Corporate Solutions +0.5 Life Capital Group (SRL) Outlook Continued focus on optimising capital structure and cost of capital Change in supplementary capital Group SST Contingent capital Senior debt Letters of credit Change in supplementary capital Continued focus on innovative, cost efficient contingent capital instruments at Group Holding level Support business growth in Life Capital in line with leverage targets In line with Reinsurance requirements Third party capital +0.7 MS&AD s commitment is currently utilised at 15% SST supplementary capital includes traditional funded subordinated debt and funded contingent capital instruments. In line with Swiss Re s target capital structure, Swiss Re has reduced its traditional funded subordinated debt instruments by USD 1.5bn since YE 2012 At the same time, the Group has significantly strengthened its financial flexibility through senior debt deleveraging and the issuance of USD 1.0bn contingent capital instruments at the Reinsurance level and USD 2.7bn pre-funded subordinated debt facilities at Group level (not counting as SST supplementary capital until drawn) 1 Change in supplementary capital is calculated using YE 2012 and YE 2017 figures 2 Reflects issuance of USD 1.0bn and redemption of USD 0.4bn 3 Reflects pre-funded subordinated debt facilities, currently fully undrawn 47

48 Investment into business (capital allocation) reflects our strategy and growth areas in a competitive environment USD bn Capital allocation by business segments (incl. asset risks) 6.9 Capacity deployment Group SST P&C Reinsurance -9% 1/ / Corporate Solutions L&H Reinsurance +40% 1/ / Life Capital Since 1/1 2013, the Group deployed capital of USD 6.9bn (at Swiss Re s Group SST capitalisation target of 220%, net of FX and interest rate impacts and diversification) Capital was mostly deployed to L&H Reinsurance, Corporate Solutions and Life Capital +49% +101% 1/ / / /

49 Peer-leading capital repatriation supported by strong dividend upstream by BUs USD bn in year paid Ordinary dividends 7.7 Special dividends and share repurchases Per share in CHF E E Swiss Re Capital repatriation Group SST ¹ P&C Reinsurance L&H Reinsurance Corporate Solutions Life Capital Received capital contribution of USD 1bn in 2017 Received capital contribution of USD 1.6bn in 2016 for the acquisition of Guardian 1 Capital repatriation includes dividends and share repurchases paid and projected for Capital repatriation includes AGM 2018 proposal for regular dividend and share buy-back programme of up to CHF 1bn purchase value, of which a pro-rata share of USD 0.8bn is used for SST 49

50 Swiss Re s capital allocation aims to deliver sustainable shareholder value We invest in risk pools aiming to deliver industry-leading shareholder returns 269% Group SST, comfortably above our 220% capitalisation target We remain committed to our financial targets and our capital management priorities are unchanged Our Group s capital position remains very strong and resilient towards market movements Economic net worth creation is at the core of our EVM steering framework and drives our strong solvency capital generation CHF 10 per share of annual average gross capital generation since YE 2012 CHF 8 per share of annual average capital repatriation since YE

51 Reinsurance Moses Ojeisekhoba, CEO Reinsurance

52 We seek to benefit from a more positive current environment and promising long-term opportunities in the reinsurance market Current market environment improved Improvements in P&C reinsurance pricing 5% overall market growth 1 Increasing interest rates benefit our long tail lines in Life and Casualty Stronger global economic growth increases demand in and from primary markets Long-term opportunities remain #1 global reinsurer in High Growth Markets, well positioned to take advantage of projected growth Growth from innovative solutions to address the global protection gap Mortality protection gap > USD 105 trillion As a knowledge company we benefit from the growing importance of R&D and technology 1 Source: Swiss Re Institute, expected growth per annum in reinsurance in nominal USD terms over the next five years 52

53 Our engagement model is driven by identifying and responding to client needs We tailor our level of engagement to clients individual needs and earning potential Client interactions over 12 months Low touch client 236 distinct interactions High touch client Global client distinct interactions We segment our clients based on their stated needs High touch with those clients who value our services Increasing client engagement, knowledge sharing, premium and profit We have strong direct relationships with our customers and brokers P&C Reinsurance L&H Reinsurance % of premiums from nonintermediated business, FY % 96% Our deep understanding of client needs translates into differential terms 53

54 Differentiation is at the heart of what we do We access risk pools through the three pillars of our strategy Core Transactions Solutions Simplify and drive efficiencies in our traditional business Deliver innovative deals by combining our knowledge and capital Add value to clients original business by providing tech enabled solutions Differentiation 54

55 We are focused on continuing to improve the efficiency of our Core business OUR CLIENTS OUR DATA OURSELVES OUR EXPOSURE 2 Simplified underwriting process in P&C Streamlined underwriting approach at 1/ renewals 45% 24% % of deals renewed with simplified approach Contribution of these deals to EVM profit Simplified L&H system landscapes Digital harmonisation of L&H systems since regional landscapes global landscape Digitised and automated claims Share of total P&C claims submissions processed automatically 2% % % % 2017 Increased efficiency in underwriting large numbers of smaller deals Simplified decision making, lower operational risk and reduced costs Reduced turnaround times and improved client experience By simplifying processes, without compromising quality, we can focus on higher value-add deals and client services 55

56 Neutral We actively steer our P&C portfolio for growth and quality Market price development at 1/ Property cat Motor General liability Marine Price change 2 Our success in 1/ renewals (largest 15 portfolios 1 ) Positive 2% price increases in 1/1 renewals 99% combined ratio 4 Engineering Credit & Surety Aviation Negative Neutral Volume change 3 Positive 8% volume growth in 1/1 renewals 1 Change between 1/17 and 1/18 renewals, size of bubble indicative of portfolio size by expiring premium 2 Long-Term Pricing Adequacy change 3 EVM premium change 4 Estimate for FY 2018, assuming an average large loss burden and no prior-year development 56

57 We leverage our knowledge, capital and client relationships to address our clients needs with innovative, structured transactions Transactions are an important contributor to earnings Transactions EVM profit - new business 800 CAGR 11% ~30% average contribution to our economic profit over past 3 years >170 transactions closed in 2017 Designated resources help focus on deal origination and execution Demand for tailored transactions remains strong P&C L&H 57

58 We leverage technology in solutions to add value to our clients original business and value chain 1 OUR CLIENTS OUR DATA OURSELVES OUR EXPOSURE Our innovation mind-set allows us to focus on commercialisation of proven solutions Pilot / Proof of concept With clients and partners Selected examples of commercialised solutions in P&C and L&H Reinsurance Development Build resources and infrastructures Automotive Solutions Parametric Smart Homes SwiftRe Magnum Commercialisation Bring to market viable solutions Life Guide Customer Retention Management Liability Analytics Claims Deep Dive 58

59 Deep dive on selected solutions 1 OUR CLIENTS OUR DATA OURSELVES OUR EXPOSURE Customer Retention Management Customer Retention Management (L&H in-force) We offer strong interdisciplinary knowledge including customer analytics & propensity modelling, behavioural economics and targeted policyholder marketing campaigns Recent success: helped one large insurer to reverse its lapse trend, improving lapses by 13% and campaign results by >30% Parametric: Flight delay and nat cat protection insurance Sophisticated machine learning based pricing engine accurately prices flight delay risks and occurrence probabilities such as wind speed, rainfall & earthquake intensity Platform allows real-time steering and claims payments are fully automated Recent success: flight delay product launched in China with a major insurer, distribution is via WeChat Parametric Life Guide Life Guide: the L&H industry s number one underwriting guide Life Guide is the industry s #1 underwriting manual, used by 900+ companies with users in 100+ countries In 2017, underwriting professionals consulted Life Guide 20 million times, an increase of over 40% in the last five years 59

60 We have significantly grown and diversified our portfolio Portfolio developments EVM premium, USD bn 7.4 1% 50% 3% 18% 16% 12% 2010 Americas EMEA Asia CAGR 10% % 39% 3% 34% 7% 13% % 17% 21% 24% 10% 16% 2010 CAGR 6% % 35% 12% 24% 7% 11% CAGR 18% 27% 18% 12% 20% 14% 9% % 23% 5% 10% 7% 7% 2017 More balanced regional portfolios Overall portfolio CAGR of 10% from 2010 to 2017 Increased diversification of product lines Property Nat Cat Casualty Specialty Life Health 60

61 Material growth in L&H Reinsurance, increasing diversification of sources of earnings L&H Business split by region EVM premium, USD bn CAGR 14% % Asia 7.2 5% 17% 45% L&H Reinsurance Asia key facts Core: Health CAGR of 14% from 2010 to 2017 Transactions: accounted for ~40% of L&H Re Transactions 1 over past 5 years Diversified mix of products across durations and cash flow generation % 30% 50% % 32% 2017 Americas EMEA Asia 33% 2017 Mortality Critical illness Solutions: Magnum 150k mobile points of sale in China Disability Medical Contribution from Core, Transactions and Solutions Asia: #1earnings contributor in L&H Re in EVM profit new business 61

62 Our differentiation strategy delivers improved economics We measure differentiation based on Differential terms are a strong contributor to our profits Margin 1 Preferential terms & conditions Definition Price and/or terms & conditions above market placement Rationale Benefit of accessing business at better price or conditions 42% Contribution of differentiation to total EVM profits 49% 54% Volume 2 3 Share of Wallet Private Deals Share of business above a defined threshold Deals with 100% share Benefit of being considered as strategic partner and/or solution provider Benefit of being considered as preferred partner and unique client access We measure differentiation within our Globals and Large client segments Differentiation has grown to ~50% of our EVM profit Private deals through transactions are a strong driver of differentiation 62

63 Differentiation is at the heart of what we do in Reinsurance Current market environment is more constructive with positive long-term trends Our differentiation strategy positions us well for the future - We are focused on improving the efficiency of our Core business - We use our knowledge and capital to tailor Transactions to our clients needs - Through Solutions we add value to our clients businesses and partner for growth We actively allocate capital to areas with superior returns and have increased the diversification of our earning streams 63

64 Corporate Solutions Agostino Galvagni, CEO Corporate Solutions 64

65 Corporate Solutions remains key to Swiss Re s growth strategy Historical performance Market position 2018 priorities % Average ROE incl. TFC 11.7% 3.1% Average reported ROE Excess Layers Top 5 10 Primary Lead Domestic Entered in 2016 Strategic Primary Lead Reported ROE ROE incl. TFC Average reported ROE Average ROE incl. TFC Primary Lead International Entering now Global Master Policies Ready as from 2020 Drive the market post Q events Tactical Increase productivity Note: Total financial contribution (TFC) refers to the estimated contribution of Corporate Solutions business written within Swiss Re Group, incl. development of historical loss reserves remaining in the Reinsurance BU as well as related investment income, and additional tax expenses 65

66 We are actively addressing the key underwriting performance drivers Combined ratio decomposition Outlook for key drivers %pts Prior-year development 2017 unfavourable prior-year development driven by large man-made losses with accident dates in 2015 and The magnitude and responsibility for these losses were only established in subsequent years Positive development on Corporate Solutions historical loss reserves remaining in the Reinsurance Business Unit (~4-5%pts of combined ratio per annum) Large natural catastrophe impact To manage future volatility, the reinsurance programme has been enhanced with lower attaching per-event cover and the addition of an aggregate cover FY 2015 FY 2016 FY 2017 Prior-year development Loss ratio (excl. large losses) Large natural catastrophe impact Acquisition costs Large man-made impact Admin expenses Note: Large natural catastrophe and large man-made includes losses exceeding USD 10m threshold Loss ratio (excl. large losses) Portfolio pruned to address underperforming areas (e.g. re-underwriting liability lines in North America) Steady price increases expected across Corporate Solutions portfolio following 2017 loss events Admin expenses Investment in growth represents ~3-4%pts of combined ratio per annum Focus on productivity maintained, with ambition to reach and maintain admin expense ratio below 20% by

67 Combined ratio Combined ratio Corporate Solutions has shown a disciplined performance within its peer-group Average % 101.4% % -8% 3% 14% Gross premiums growth Corporate Solutions (Combined Ratio published) Corporate Solutions (Combined Ratio incl. TFC) Gross premiums growth Peers Source: Swiss Re Institute Note: Quadrants are determined based on average combined ratio and gross premiums compound annual growth rate (CAGR); premium growth & bubble size are in USD; Size of bubbles corresponds to GPW; From : Unchanged set of 8 peers, 2015: peer group reduced to 7 due to M&A. 2016: 10 peers, 3 players added to ensure comparison is representative of market 67

68 We strive for differentiation in all our offerings Differentiating factors of Corporate Solutions value proposition Leading brand Financial strength We re here to stay Large net capacity Innovation Excess Layers 1 Primary Lead Domestic Primary Lead International 2 Primary Lead Domestic capabilities rolled out in 18 countries USD 0.5bn additional Primary Lead GPW production since 2015 vs. USD bn target by 2020 Our Claims Commitment Corporate Solutions market position Top 5-10 Entered in 2016 Entering now with Global Master Policies readiness targeted by 2020 Note: 2016 total commercial insurance market premium of USD 720bn; Excess Layers and Primary Lead segments total market premium of USD 180bn 1 Product related innovation 2 Service related innovation Primary Lead International capabilities rolled out in 9 countries 68

69 Primary Lead International has a high degree of operational complexity Key complexities in Primary Lead International Illustrative example: Information flow for a typical International Programme Information flow 6+ Types of information flows, including: Exposures Compliance Policy issuance Cash flows Claims 20+ Countries to cover Financial Management $ 350+ per year Operational interactions for a typical program covering one line of business 1-4 Lines of business administrated Compliance Legend: Network Management Carrier HQ Carrier subsidiary/ network partner Client HQ Broker HQ Exposure information Compliance information Policy issuance information Cash flow information Claim information Mid-term exposure change information 150+ Countries to serve (multiple languages, currencies, regulatory regimes) 69

70 OUR CLIENTS OUR DATA OURSELVES OUR EXPOSURE 2 Our technology platform, operating model, and service mind-set are key to managing high operational complexity Market-leading technology platform Programme Structuring Knowledge Management Integration into underwriting systems enables fast quote and policy turn-around Ambition to outperform Programme Transparency Information Exchange Online, real-time programme overview for clients and brokers via Swiss Re PULSE Specialised operating model Ambition to match peers International Desk International Network Management International Financial Management Competitive set-up facilitating timely quote and policy issuance Full compliance with regulations across jurisdictions Active monitoring of service levels Client centricity Ambition to match/ outperform peers Client Commitment being launched to foster strong client service mind-set Net Promoter Score of 54 in 2016 for excess layer clients 70

71 1 OUR CLIENTS OUR DATA OURSELVES OUR EXPOSURE Introducing PULSE, a secure digital portal enabling clients and brokers to manage risk and insurance needs Weather & nat cat exposure Programme & policy overview Claims services Monitors and manages insurance programmes from one secure online platform. Insightful: easy access to real-time policy, claim and risk improvement information In control: review policies, submit loss notifications, track progress of a risk improvement or monitor natural hazard exposure for risks worldwide Knowledge & industry insights Risk engineering services Video 71

72 We are well positioned to benefit from the expected gradual market turn 2018 anticipated rate increases in Corporate Solutions portfolio >10% Magnitude, pace and duration of change are a function of current price deficiency and actual loss experience Average anticipated increase Medium-paced, steady increase expected for 2018 with the following underlying dynamics: 0% % of total Corporate Solutions 2017 premiums North America Latin America EMEA Asia Pacific 59% 10% 22% 9% Highest increase expected in property, followed by casualty and selected special lines (e.g. marine, engineering) Strongest price increases expected in large corporate segment followed by middle market and small and medium enterprises Note: Average anticipated increase is based on weighted average of total 2017 premiums 72

73 OUR CLIENTS OUR DATA OURSELVES OUR EXPOSURE 2 Sustainable productivity improvements driven by a series of process and technology initiatives Improvements enabled by technology Core systems enhanced for Underwriting, Claims, Risk Engineering and Primary Lead business Emerging technologies leveraged (e.g. Text Mining, Artificial Intelligence, Robotics) Process improvements Alignment of business processes with complexities of product offerings Optimisation of work allocation across functions and locations Example: Underwriting Front Desk Automation (FDA) Example: Lean Underwriting (LU) 50% Productivity increase in submission induction 50% Efficiency gain in Underwriting process for deals in scope of LU FDA automates the extraction of key submission information from s into our underwriting processing platform, through scanning attachments via an algorithm LU introduces a faster and leaner end-to-end underwriting process for less exposed, middle market business 73

74 Corporate Solutions remains a key part of Swiss Re s growth strategy The challenges faced in 2017 are addressed in order to restore profitability Focus on driving the market post the 2017 nat cat events and increasing productivity Expansion into Primary Lead continues to be the strategic priority; technology-enabled service excellence is the differentiating element of our offering Transformational M&A opportunities remain a long-term option 74

75 Life Capital Thierry Léger, CEO Life Capital

76 Life Capital businesses provide Swiss Re access to attractive primary risk pools Business UK life & pension closed book consolidator Group protection solutions through intermediaries White-labelled individual protection products through distributors Products Protection, annuities, unit-linked insurance Group life, disability, income protection Term life, whole life, disability, critical illness Clients Insurers, banks, PE firms Pension providers, pension funds, corporates and affinity groups Distribution partners UK Closed Book Market Reserves Group L&H Market GPW Individual L&H Market GPW ~ USD 440bn ~ USD 150bn ~ USD 300bn 14% 1% 4% Total risk pool (market) Swiss Re share Source: Swiss Re Institute 2017; Reinsurance share of Group and Individual L&H risk pools indicative only 76

77 Life Capital delivers a solid financial performance and increases GCG target for Financial performance Comments USD m unless otherwise stated Gross Cash Generation (GCG) Gross Premiums Written Return on Equity (ROE) % Closed Books / other 0.6% % 10.4% Open Books 2.2% Strong GCG generated in 2016 and 2017, confirming ability to upstream significant cash to Group Additional closed book transactions expected to contribute to future GCG ROE movements in line with income performance, with 2016 benefiting from significant one-off gains ROE supported by new transactions at or above 11% Group hurdle rate ROE contribution from investments into open books to materialise in medium term Equity base impacted by significant unrealised gains USD bn of GCG expected for Open books expected to maintain dynamic growth Selective growth pursued for closed books business

78 Growing ReAssure remains a key element of Life Capital s strategy Transaction track record One transaction closed on average every 18 months since 2012 Alico UK Assets of GBP 1.6bn HSBC UK Life Assets of GBP 4.0bn Guardian Assets of GBP 12.5bn Legal & General Assets of GBP 33.0bn Proven integration capabilities Strong transaction track record: ~1 deal every 18 months MS&AD equity investment into ReAssure Transaction valued ReAssure at GBP 3.5bn GBP bn 3.5 5% 95% Oct % 87% Jan 2018 MS&AD Swiss Re % 85% Feb 2018 MS&AD participation strengthens ability to pursue transactions 78

79 OUR CLIENTS OURSELVES OUR DATA OUR EXPOSURE 3 elipslife is transforming from a Swiss start-up to an international player elipslife footprint Country Market entry Market share 1 CH 2009 ~3.9% Top line growth GPW in-force 3 USD m +23% 400 Insured lives s +20% % of 2017 business renewed for 2018 NL 2011 ~3.6% DE 2017 <1% IT 2017 <1% IE 2018 <1% 2 Source: Swiss Re Institute E E On track with expansion into US, the largest single Group L&H market Leverage lean, standardised platform to scale fast 1 Refers to market shares for those business lines elipslife is actively writing business in: mortality, accident and disability 2 Excludes medex business numbers subject to change: USD 400m refer to retained business from 2017 plus new business written at beginning of 2018; medex business excluded insured lives number estimated; medex business excluded 79

80 iptiq s dynamic growth expected to continue OUR CLIENTS OURSELVES OUR DATA OUR EXPOSURE 3 Year Policies Ø weekly new policies year-end run rate Distribution Partners No. of partners / selected brands ~2.4x ~2.7x Serving primary insurance clients and other partners Sophisticated cloud based data models B2B2C model attractive to increasing number of distribution partners 80

81 B2B B2C Video 81

82 Life Capital transitions from closed book consolidator to dynamic primary B2B2C business Evolution of capabilities Today Tomorrow Continue focusing on GCG extraction Yesterday Origination Integration GCG extraction Customer focus Cost leadership Enabling platforms Origination Integration GCG extraction Global open books Open > Closed books Ecosystem relevant Customer focus Cost leadership Enabling platforms Origination Integration Further optimise financing of growth via 3 rd party capital Pursue selective growth with rigorous opportunity assessment GCG extraction 82