Into the eye of the future. Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September 2012

Transcription

1 Into the eye of the future Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September 2012

2 Today's agenda Setting the stage: Challenging environment On stage: What this means for the insurance industry Backstage: Looking into the future Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

3 Setting the stage: Challenging environment Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

4 Challenging environment not just for insurers regulatory environment changing risk landscape weak growth Insurance Industry low interest rates, inflation, price pressure financial markets, sovereign debt shrinking client loyalty mature markets, high growth markets Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

5 Historically low interest rate environment Central Banks' Policy Rates (in %) s U.S. Savings and Loan crisis 1990s U.S. Savings and Loan crisis July 1997 Asian financial crisis 2000 Dot.com bubble 2008 Economic and financial crisis US Federal Fund Target Policy Rate Bank of England Policy Rate European Policy Rate Index (Composite*) Source: Bloomberg data as of 20 March 2012 * Including German Repo Rate until and ECB Refinancing Rate from that date onwards Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

6 How do low interest rates affect non-life insurance? ROE Based on US industry data for % 12% 10% Investment yield 8% 6% 4% 2% 0% 5.1% 4.1% 3.1% 95% 97% 99% 101% 103% 105% 107% Combined ratio Source: Swiss Re Economic Research & Consulting Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September 2012

7 Slowdown of economic growth 10% Real GDP growth 8% 6% 4% 2% 0% % -4% Advanced markets Emerging markets World Source: Economic Research & Consulting Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

8 2011: Annus horribilis in terms of natural catastrophes Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

9 The insurance and financial services industry has entered a new phase in terms of regulatory reforms Speed and number of reforms is alarming The insurance sector has limited time to engage and assess the impact of the regulatory reforms Many regulators and policymakers are also overwhelmed The regulatory clock is ticking... Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

10 On stage: What this means for the insurance industry Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

11 Premium growth was only negative twice before the financial crisis of % 20% Real growth rates 1973: Oil crisis 1980: Global recession 2008: Great recession & after 15% 10% 5% 0% -5% -10% Source: Economic Research & Consulting Total Non-life Life Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

12 Economic recovery, interest rates and regulatory developments impact profitability 20 Profitability of global non-life insurance industry (% of premiums, shareholder capital) ? Underwriting result Investment result Operating result ROE after tax Source: Economic Research & Consulting; Aggregation based on eight major insurance markets Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

13 Backstage: Looking into the future Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

14 Insurance penetration remains low huge potential Natural catastrophe losses * in USD bn % of people claiming to be financially "well positioned" in event of suffering a long-term illness or disability, or death Economic Loss Insured Loss Note: Loss amounts indexed to 2010 Source: Swiss Re sigma catastrophe database Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

15 Risk landscape is changing Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

16 Smart expansion Productoriented Clientoriented Relevant to society Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

17 The re/insurance industry absorbs shocks 2001: World Trade Centre 47% of the total losses were paid by insurance sector. Reinsurers assumed 50%~60% of insured losses : Hurricane Katrina, Rita and Wilma 50% of the total losses were paid by the insurance sector. Reinsurers assumed 35% of insured losses 2010: Earthquake in Chile 27% of the total losses were paid by the insurance sector. Reinsurers assumed 95% of insured losses 2011: Earthquake in New Zealand 80% of the total losses were paid by the insurance sector. Reinsurers assumed 70% of insured losses 2011: Earthquake in Japan 17% of the total losses were paid by the insurance sector. Reinsurers assumed 40% of insured losses 1 Based on Holborn, 2009 catastrophe losses Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

18 and provides capital for the real economy Year-end 2011, USD trillion Pension funds Insurance companies Mutual funds Sovereign wealth funds Private equity Hedge funds Sources: Pension funds CityUK; Insurers Swiss Re Economic Research & Consulting; Mutual funds Investment Company Institute; Sovereign wealth funds Sovereign Wealth Funds Institute; Private equity Deutsche Bank; Hedge funds Hedge Fund Research, Inc. Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

19 Re/insurers absorb shocks, provide capital for the real economy and support risk prevention this becomes ever more important in a challenging environment Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September

20 Thank you

21 Legal notice 2012 Swiss Re. All rights reserved. You are not permitted to create any modifications or derivatives of this presentation or to use it for commercial or other public purposes without the prior written permission of Swiss Re. Although all the information used was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies be liable for any financial and/or consequential loss relating to this presentation. Michel M. Liès, Group CEO Swiss Re PwC Breakfast Briefing Monte Carlo, 10 September