Corporate Solutions Agostino Galvagni CEO Corporate Solutions
On track to deliver against 2015 targets Economic Net Worth 1 10% Commercial insurance Business Unit of the Swiss Re Group A key opportunity for growth Gross premiums written in USD bn in % Return on Equity 18.7 Target range 2015: 4-5 3.4 3.9 4.2 ~4 Target range 2015: 10-15 12.5 2.6 2.7 7.4 9.6 2010 2011 Baseline year 2012 2013 2014 2015E 2012 2013 2014 9M 2015 1 Share of Swiss Re Group s Economic Net Worth deployed across Business Units (excl. Group Items), 30 June 2015 Note: Gross premiums written including premium for insurance in derivative form, net of internal fronting for the Reinsurance Business Unit; ROE shown from 2012 as Corporate Solutions has been reported as separate segment from Q1 2012; 9M 2015 ROE is annualised 65
Corporate Solutions has transformed itself since launch in 2010 2010 Baseline year 2015 Achieved Employees ~1 000 ~2 400 Offices 32 52 Operating platform Operational sustainability Sales Underwriting Harmonise and upgrade Improve and maintain Segment and upgrade Maintain excellence 66
and so has our balance sheet, aligning with peers Assets Liabilities in USD bn 2011 9M 2015 in USD bn 2011 9M 2015 Assets under management Reinsurance recoverables 6.8 +26% 8.9 Equity Subordinated debt 2.3 2.4 0.5 Other assets 9.9-28% 7.1 Other Liabilities 17.8 17.0 3.4 3.9 Assets under management to gradually replace reinsurance recoverables which produce no investment income Composition of funding changed with the introduction of subordinated debt Note: Corporate Solutions has been reported as separate segment from Q1 2012, with pro forma figures available for the prior year 67
Corporate Solutions Agenda I systematically allocate capital to risk pools / revenue streams broaden and diversify client base to increase access to risk I optimise resources and platforms to support capital allocation emphasise differentiation 68
I I Our portfolio is well diversified across lines of business, geographies and industries By line of business By geography GPW 9M 2015 GPW 9M 2015 Credit & Surety Special Lines Casualty 14% 21% 29% 36% Asia Pacific Latin America EMEA 8% 11% 24% 57% Property North America By industry GPW 27% 3% 4% 16% 5% 4% 7% 10% 8% 16% Food & Tobacco Retail & Trading Life Sciences Professional Services Aviation Transportation Energy & Utilities Engineering & Construction Mining Credit, Agriculture, Weather Note: Gross premiums written (GPW) including premium for insurance in derivative form, net of internal fronting; Special Lines includes Aviation & Space, Engineering, Marine and Energy Offshore; portfolio composition by industry relates to 9M 2015 69
Combined ratio 2011 2014 I I We delivered strong profitable growth compared to peers since 2010 80% 86% Since 2010, continuously benchmarking ourselves against a selected set of 8 peers 95% Insurers with global master policy capabilities Insurers with wholesale focus Insurers with multiregional focus Corporate Solutions 110% -6% 5% 13% 16% Quadrants are determined based on average combined ratio and gross premiums compound annual growth rate (CAGR) over the years; bubble size = 2014 base Gross premiums growth 2010 2014 CAGR Source: Swiss Re Economic Research & Consulting Note: Peer group average weighted premium growth is in USD; Corporate Solutions combined ratio 2011-2013 is on basis of estimated total financial contribution to Swiss Re Group (ie Corporate Solutions business written, as shown at Investors' Day 2012, incl. development of historical loss reserves remaining in Reinsurance); combined ratio is shown starting 2011 as Corporate Solutions has been reported as separate segment from Q1 2012, with pro forma figures available for the prior year 70
Combined ratio 9M 2015 I I but are very careful in the current market 85% Focused on maintaining underwriting discipline 92% 95% Insurers with global master policy capabilities Insurers with wholesale focus Insurers with multiregional focus Corporate Solutions 104% -19% -8% -2% 15% Gross premiums growth 9M 2015 vs. 9M 2014 Quadrants are determined based on average combined ratio and average gross premium growth rates; bubble size = 9M 2015 base where available, otherwise H1 2015 Source: Swiss Re Economic Research & Consulting Note: Peer group average weighted premium growth is in USD; due to consolidation in market number of peers reduced to 7 over the period 71
I I The commercial insurance market is very diverse and fragmented. Corporate Solutions ranks 25 th overall... Top-30 Players beyond top-30 Top-10 represent ~20% of market Top 11-30 represent ~15% of market Corporate Solutions 4.2 Insurers with global master policy capabilities Insurers with multiregional focus Insurers with regional focus Insurers with wholesale focus Source: Swiss Re Economic Research & Consulting Note: 2014 commercial insurance market premium: USD 740bn. In case of players writing business other than commercial insurance, only the commercial insurance premiums are shown 72
Penetration I I but is a leader in the Excess Layer Market, and expanding into the next segment 2014 commercial insurance market premium: USD 740bn in USD bn Excess Layers (large corporations) Primary Lead (mid-sized corporations) 70 130 Wholesale Deal size Main characteristics Deal complexity Global Master Policies 60 SMEs Workers Compensation and Commercial Auto 210 270 Retail Granularity of distribution Administrative load Source: Swiss Re Economic Research & Consulting 73
I I We are on our way to become a Primary Lead insurer Ambition: Generate additional premiums of USD 1.0bn 1.5bn by 2020 North America: Canada (P&C) US (Property, FinPro; 2016: Casualty) EMEA: Italy (P&C, FinPro, Marine) France (P&C, Marine) Germany (P&C; 2016: FinPro) UK (2016: P&C, FinPro) Netherlands (2016: P&C) South Africa (2016: P&C) Switzerland (2016: P&C, FinPro) Latin America: Colombia (Casualty; 2016: Property) Brazil (Property, Marine; 2016: Casualty) Asia Pacific: China (P&C) Singapore (Casualty, FinPro) Australia (2016: Property) Primary Lead capabilities (in place or to be rolled-out in 2016) Capabilities being developed: Products: Develop primary products in line with local standards; ability to price primary products Services: Establish local services (esp. Claims and Risk Engineering) Systems: Integrate management of co-insurance panels into current platforms and processes 74
I I Our distribution footprint is global and growing 52 offices across 20 countries North America: 23 offices EMEA: 12 offices Asia Pacific: 10 offices Latin America: 7 offices Local presence & insurance license Note: Latin America includes Miami as hub for the region Local presence & reinsurance license Local insurance license 75
I I and we strengthened our presence in our 12 key High Growth Markets Mexico Turkey UAE Dubai office opened in 2012 India China Sun Alliance China acquisition in 2015 Hong Kong Colombia Seguros Confianza acquisition in 2014 Chile Brazil UBF acquisition in 2011 South Africa Office opened in 2015 Singapore Insurance license obtained in 2013 Malaysia Reinsurance license obtained in 2015, Origination/UW out of Singapore Already well covered Local presence to be strengthened No local presence 76
Number of employees I I We hired ~2 000 new employees since launch in October 2010 2010 Baseline year ~7% 2015 Achieved ~25% ~600 ~600 Inorganic growth ~200 Intra Group shifts (~600) ~600 Attrition Replacements 33 ~2 400 ~1 000 Organic growth Tailor-made onboarding programme Employee engagement index 12% above global financial insurance industry Share of staff in High Growth Markets increased to ~25% X% Share of High Growth Markets 77
I I and we significantly increased our productivity Work units per FTE Premiums per FTE in USD m 2013 H1 2015 2013 H1 2015 +23% productivity increase +10% productivity increase ~110 ~135 ~2.9 ~3.2 Productivity gains achieved through: Re-design and simplification of end-to-end underwriting process More efficient allocation of underwriting tasks, leveraging service centres Re-shaping of IT landscape Note: Work units per FTE are transactional actions related to handling submissions, submitting quotes and binding transactions. FTE are weighted: underwriters/originators: 1, business support: 0.5, service centre support: 0.25; productivity metrics are rolling full-year views available since 2013; lower increase in Premium per FTE compared to Work units per FTE mainly reflects shift towards smaller deal size 78
I I Three key factors differentiate us from competitors Corporate Solutions' value proposition Leading brand Opens doors and attracts talents Financial strength "We are here to stay Large net capacity Innovation ~500 transactions with USD 100m capacity or more in 2014 Supported by Superior underwriting knowledge Disciplined cycle management Proactive claims management ~40 innovative transactions in 2014 79
I I Innovation capabilities in several areas, acknowledged by the market Bespoke structures New risks Derivative solutions Multi-line/multi-year solutions Non-damage business interruption Parametric solutions Cyber risk: Partnership with IBM Temperature and weather related derivatives Crop shortfall derivatives Awards Innovative transaction of the year in Switzerland 2015 Energy Risk Weather House of the year 2012, 2013, 2014 First solar radiation index transaction in China 2015 80
Corporate Solutions Agenda I systematically allocate capital to risk pools / revenue streams broaden and diversify client base to increase access to risk I optimise resources and platforms to support capital allocation emphasise differentiation Summary and Q&A 81
Key messages On track to deliver against 2015 targets Conclusion Transformed into a larger and more solid player, with a Distinct value proposition building on our leading brand, large net capacity and innovation capabilities Leadership position in the Excess Layer Market Distribution network of 52 offices in 20 countries Ambition to grow, further increasing Corporate Solutions relevance to the Swiss Re Group Outlook & priorities Key initiatives for growth beyond 2015 are Expanding into Primary Lead and Further broadening of the footprint Continue to carefully navigate the current market with unchanged focus on profitability 82
Corporate calendar & contacts Corporate calendar 2016 23 February Annual Results 2015 Conference call 16 March Publication of Annual Report 2015 and EVM 2015 22 April 152 nd Annual General Meeting Zurich 29 April First Quarter 2016 Results Conference call Investor Relations contacts Hotline E-mail +41 43 285 4444 Investor_Relations@swissre.com Philippe Brahin Jutta Bopp Chris Menth +41 43 285 7212 +41 43 285 5877 +41 43 285 3878 Simone Lieberherr Iunia Rauch-Chisacof +41 43 285 4190 +41 43 285 7844
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