Our knowledge-based approach continues to guide our capital allocation strategy, as we target the optimal mix of assets and liabilities. In 2017, we became one of the first in the re/insurance industry to integrate environmental, social and governance (ESG) benchmarks into our investment decisions.
Net premiums and fees earned by business segment, 2017 Total: USD 33.7 billion 49% P&C Reinsurance 36% L&H Reinsurance 11% Corporate Solutions 4% Life Capital
+700 bps Over-the-cycle ROE target of at least 700 bps greater than Swiss Re’s designated risk-free rate, currently 10-yr US government bonds.
Who knows where this journey will lead… but we are definitely living in exciting times. I personally remain optimistic and confident that Swiss Re will continue its success story – thanks to our resources, financial latitude, global network and our employees’ wealth of knowledge and expertise.
Technology is also changing insurance distribution channels. Just as we can buy books or groceries online, you can easily buy life insurance online, too. Our digital life insurance platform, provided through our iptiQ business, makes it possible to reach the people who don’t buy insurance through traditional insurance distribution channels, such as agents – and for the price of a coffee per day. With the platform, our clients can take advantage of our technology and knowledge, but distribute products under their own brand. There’s great potential to provide security and peace of mind to millions of people.
180 (Global Economic Policy Uncertainty Index, average 2017, average 1997–2015 = 100, source: www.policyuncertainty.com)
A risk knowledge company We invest in research and development and technology to support our clients and differentiate ourselves from the competition.
Volcano eruptions: a neglected threat Swiss Re has developed the industry’s first global risk model to support clients in assessing volcanic risks and develop suitable insurance products.
Mapping the risk Our Global Storm Surge Zones help our clients pinpoint their storm surge risk for the first time in a quantitative way, thanks to high-resolution global data for flood frequency. Below, a map with probabilistically assessed return periods from Swiss Re’s proprietary CatNet platform, one of the ways we share our know-how with our clients.
Typhoon warning signals of level 8 and above happen on average 1.4 times per year.
HKD 4.29bn According to the Swiss Re Institute, the overall economic impact of a signal 8+ typhoon on Hong Kong’s GDP is estimated at HKD 4.29 billion (USD 627 million) per day.
USD 413 million and Corporate Solutions reported a loss of USD 741 million. As the US is the largest market for our commercial business, Corporate Solutions’ result was particularly impacted by the natural catastrophes there. We remain fully committed to the Business Unit and, as we previously communicated, we have strengthened its capital position with a USD 1.0 billion capital injection.
Acquired present value of future profits 2 003 1 989 –1
Group results – Swiss Re reported a full-year net income of USD 331 million, despite the large natural catastrophes of 2017.
The 2017 loss burden totalled USD 4.7 billion, driven by losses associated with Cyclone Debbie in Australia, hurricanes Harvey, Irma and Maria as well as the Mexico earthquakes and the Californian wildfires.
That being said, financial markets largely shrugged off the political uncertainty. Equity markets rallied through most of the year, with the S&P 500 reaching new all-time highs and returning more than 20% in 2017. Investment-grade corporate bond spreads tightened further, reaching multi-year lows, while government bond yields ended 2017
The Group reported non-participating net realised investment gains of USD 1.7 billion in 2017 compared to USD 1.5 billion in 2016, as additional realised gains from sales within the equity portfolio were partially offset by the absence of gains from derivatives.
Income/loss attributable to non-controlling interests Net income after attribution of non-controlling interests 856 1 140 33
Combined ratio The combined ratio increased to 133.4% in 2017 compared to 101.1% in 2016, due to the large natural catastrophe losses, mainly driven by hurricanes Harvey, Irma and Maria in the third quarter of 2017.
̤ Returning phone calls and emails within one business day. When out of the office, we provide additional contacts, should immediate assistance be needed.
Life Capital – Life Capitalʼs strategy is to create alternative access to attractive life and health risk pools.
Income before interest and income tax expense 798 298 −63 Interest expenses –29 –35 21 Income before income tax expense 769 263 −66 Income tax expense –131 –102 −22 Net income attributable to common shareholders 638 161 −75
Unlike in previous years, beyond the Board of Directors’ and regulatory approval, and considering the Group’s capital management priorities, there will be no other pre-conditions to the commencement of the new programme.
Share trading The average on-exchange daily trading volume for 2017 was 1.3 million shares. Trading volume peaked at 2.9 million shares on 11 September 2017.
The EVM loss on new business was USD 1.3 billion compared to an EVM profit on new business of USD 884 million in 2016. The drop was mainly driven by lower Property & Casualty Reinsurance and Corporate Solutions new business results following large natural catastrophe events in the Americas in the second half of 2017. This was partially offset by a strong new business result in Life & Health Reinsurance.
Life Capital generated an EVM profit of USD 572 million in 2017 compared to a profit of USD 115 million in 2016. The 2017 profit reflected a strong investment result as well as a favourable result from large transactions, while the 2016 profit reflected a strong investment result which was partially offset by losses from previous years’ business. The investment result in both years was driven by performance from all asset classes.
Net underwriting result – new business 1 224 1 784 67 −129 −94 2 852
Our responsibility Our responsibility is to perform a reasonable assurance engagement to express a conclusion on the EVM financial information as set out on pages 57 to 63 in the Company’s 2017 Annual Report. We conducted our reasonable assurance engagement in accordance with International Standards on Assurance Engagements 3000 (Revised) ‘Assurance engagements other than audits or reviews of historical financial information’ issued by the International Auditing and Assurance Standards Board. This standard requires that we plan and perform this engagement to obtain reasonable assurance about the assurance conclusions.
Liquidity position of the Swiss Reinsurance Company Ltd (SRZ) liquidity pool The SRZ liquidity pool is the primary liquidity pool of the Group. The estimated total liquidity sources in the SRZ liquidity pool available within one year, after haircuts and net of short-term loans from Swiss Re Ltd and securities lending, amounted to USD 17.9 billion as of 31 December 2017, compared with USD 18.5 billion as of 31 December 2016. The 2017 total includes USD 10.6 billion of liquid assets and cash, referred to as “one-year spot liquidity”, compared with USD 13.4 billion in 2016. Based on the internal liquidity stress tests described above, we estimate that the SRZ liquidity pool holds surplus liquidity after dividends to Swiss Re Ltd.
Group CRO Principal independent risk controller; leads the Risk Management function, represents it within the Group Executive Committee, and reports to the Board’s Finance and Risk Committee as well as to the Group CEO.
Legal entity risk teams are led by dedicated CROs who report directly or indirectly to their top-level entity CRO, with a secondary reporting line to their respective legal entity CEO. These legal entity CROs are responsible for risk oversight in their respective entities, as well as for establishing the proper risk governance to ensure efficient risk
Risk assessment In 2017, our overall risk remained broadly stable, as an increase in insurance risk was largely offset by lower financial market and credit risk.
̤ Life and health risk increased by 4% to USD 7.7 billion, driven mainly by the strengthening of major currencies against the US dollar and lower interest rates, as well as higher lethal pandemic and critical illness exposure.
The Group capital requirement table below shows the 99% tail VaR on a standalone basis for each of Swiss Re’s core risk categories: ̤ Property and casualty risk increased by 5% to USD 9.8 billion, mainly due to the strengthening of major currencies against the US dollar and higher reserve exposure following the 2017 natural catastrophe events.
In addition to underwriting and capacity limits, Swiss Re’s limit framework includes aggregate Group limits for P&C risk as well as individual limits for major natural catastrophe scenarios – Atlantic hurricane, Californian earthquake, European windstorm and Japanese earthquake. These limits guard against exposure accumulations and ensure that risk-taking remains within Swiss Re’s risk tolerance.
In 2017, Actuarial Control extended the independent valuation of coverage provided to ensure that reserves are within an adequate range to segments of life and health business.
Reflecting our strong overall commitment to corporate responsibility, Swiss Re continued to be included in leading sustainability indexes and rankings such as FTSE4Good, Euronext Vigeo World 120, Ethibel Excellence Global, oekom Prime Investment and the Dow Jones Sustainability Index. For more information on our sustainability practices, see also the Corporate Responsibility section on page 138 as well as our 2017 Corporate Responsibility report.
Information on compensation, shareholdings and loans of the members of the Board of Directors and the Group Executive Committee (Group EC) are included in the Compensation Report beginning on page 154 of this Financial Report.
2017 key focus areas Corporate Bylaws revised in 2017 to anticipate developments and trends The SRL, SRZ, SRCS and SRLC Bylaws were revised in 2017 to incorporate stakeholder feedback as well as to anticipate corporate governance, legal and regulatory developments and trends. It is our goal to constantly develop further our corporate documents in order to align them to changing company needs, the evolving regulatory landscape as well as stakeholder feedback.
̤ Carlos E. Represas did not stand for re-election. ̤ The Annual General Meeting 2017 re-elected
If advance subscription rights are excluded, then (i) the Equity-Linked Financing Instruments are to be placed at market conditions, (ii) the exercise period is not to exceed ten (10) years for option rights and thirty (30) years for conversion rights, and (iii) the conversion or exercise price or the calculation methodology for such price of the new registered shares is to be set in line with the market conditions and practice prevailing at the date on which the Equity-Linked Financing Instruments are issued or converted into new registered shares.
The company cannot exercise the voting rights of treasury shares. As of 31 December 2017, shareholders had registered 181 406 549 shares for the purpose of exercising their voting rights, out of a total of 349 452 281 shares issued. As of 31 December 2017, 314 585 765 shares were entitled to dividend payment.
Jacques de Vaucleroy was elected to the Board of Directors of Swiss Re Ltd in 2017. He is a member of the Investment Committee. He is also Chairman of Swiss Re Europe Holdings S.A.
Members ̤ Philip K. Ryan, Chair ̤ Mary Francis ̤ Rajna Gibson Brandon ̤ C. Robert Henrikson ̤ Sir Paul Tucker ̤ Susan L. Wagner ̤ Jay Ralph (since AGM 2017)
Group based on proposals by the Group EC; ̤ approves the capital allocation plan for both Underwriting and Asset Management; ̤ approves the Swiss Re Group risk strategy and risk policy, which defines the Group’s risk appetite and tolerance, key principles for risk taking and control and key capital structuring principles; ̤ approves the entry into new business activities and the exit of existing activities, provided they are of strategic relevance; ̤ approves significant corporate transactions, participations and principal investments and approves an annual capital expenditure plan; ̤ approves the financial objectives and the means necessary to achieve them; and
̤ approves the Annual Report of both Swiss Re Ltd and the Swiss Re Group.
In addition, reports are submitted to the Board committees, such as: ̤ Actuarial Report ̤ Claims Report ̤ Legal Report ̤ Compliance Report ̤ Group Internal Audit Report ̤ Group Tax Report ̤ Group Risk Report ̤ Derivative Use Update ̤ Report on Capital, Liquidity and
Group Performance Management Report The report tracks actual performance of the Group and the segments against pre-defined financial targets, analyses the impact of management actions and provides information on current challenges.
John R. Dacey Group Chief Strategy Officer Born: 1960 Nationality: American
Jean-Jacques Henchoz Chief Executive Officer Reinsurance Europe, Middle East and Africa (EMEA)/ Regional President EMEA Born: 1964 Nationality: Swiss
Professional experience Jean-Jacques Henchoz started his career in 1988 at the Swiss Federal Department of Economic Affairs and the European Bank for Reconstruction and Development.
Independence At least once a year, the external auditor provides a formal written statement delineating all relationships with the company that might affect its independence. Any disclosed relationships or services that might interfere with the external auditor’s objectivity and independence are reviewed by the Audit Committee, which then recommends appropriate action to be taken by the Board.
News release 20 October Swiss Re estimates its claims burden from hurricanes Harvey, Irma and Maria and the Mexico earthquakes at USD 3.6 billion
Climate-related financial disclosures (TCFD) 138 TCFD Governance 139 TCFD Strategy 140 TCFD Risk management 146 TCFD Metrics and targets 148
Regarding the development and adoption of sustainability policies and strategies, the role of the Board of Directors is to review and endorse them, while the Group Executive Committee approves them.
Investments We measure and monitor the level of integration of our climate-related investment activities.
The weighted average carbon intensity of the UK credit portfolio is comparable to the US portfolio, but is below its corresponding ESG benchmark at the end of 2017.
Group Annual Performance Incentive 2017 In years with relatively benign natural catastrophe environments, variable compensation payouts were positive but not excessive. Conversely, in adverse environments, the negative impact is substantive but also proportionate, given the need to carefully manage key talent and retention risk. Given the significantly lower financial performance compared to last year mainly due to the large natural catastrophes, the strong qualitative performance and the value sharing measurement for shareholders, the Compensation Committee and the Board of Directors have agreed to lower but still balanced variable compensation payouts.
2 Includes shares bought back between 3 November 2017 and 16 February 2018 as part of the buy-back programme authorised at the AGM 2017. The total amount represents an estimate translated at the 2017 average CHF/USD exchange rate.
The aim is to provide compensation that is competitive in local labour markets and to ensure that our employees focus on delivering outstanding results while supporting appropriate and controlled risk-taking. A balanced compensation package is complemented by competitive pension plans and benefits.
Plan duration 3 years 5 years for Group EC members and other key executives* and 3 years for the majority of participants 3 years 1 year
No Yes Yes Yes No No * Certain members of Business Unit Executive Committees (BU ECs) and all Group Managing Directors (GMDs). ** For Group EC members the API payout range is additionally capped at 3 × annual base salary.
Benefits Swiss Re aims to provide a competitive package of employee benefits. Benefits are designed and implemented under a global framework, while appropriately reflecting differing local employment market conditions.
The key objectives of Swiss Re’s benefits packages are to: ̤ provide a degree of security for employees as they relate to pension, health
Supplementary information on Group EC members Performance assessment The Compensation Committee assesses the performance of the Group EC including the Group CEO against the same set of quantitative and qualitative objectives. These objectives are agreed at the beginning of the year and are aligned with the Group’s strategy.
̤ Assesses the individual performance of the members of the Group EC, including the Group CEO, and periodically reviews the effectiveness of the performance management process.
ROE Net operating margin EVM profit (% of ENW) ENW growth per shareFi na nc ia l as se ss m en t
Leadership Performance Plan The LPP award is consistently linked to the Group’s future achievement of multi-year performance conditions (ROE and relative TSR), keeping the focus on the long-term success of the Group. Swiss Re made LPP grants in 2017 consistent with this rationale. The LPP is generally part of total compensation (see page 161 for a detailed description of the LPP).
The table below gives an overview of the RSU and PSU performance achievement for the previous LPP plan years:
The total API amount for 2017 for the Group EC including the Group CEO is CHF 13.0 million which represents a 28.8% decrease when compared to 2016 (CHF 18.3 million). The Compensation Committee and the Board of Directors carefully considered the performance of the Group EC in 2017 and despite several performance highlights across the Group concluded that a balanced but substantive reduction in annual variable compensation was warranted given the aggregate performance of the Swiss Re Group.
AGM 2018 motion for variable short-term compensation for the Group EC for the financial year 2017 At the AGM 2018, the Board of Directors will propose to the shareholders to approve retrospectively an aggregate amount of variable short-term compensation for the 14 members of the Group EC for the completed financial year 2017 of CHF 12 999 781. This amount has been included in the items “Cash Annual Performance Incentive” and “Value Alignment Incentive” in the table for the Group EC compensation on page 173.
Income before interest and income tax expense 4 978 1 091 Interest expenses –606 –566
Balance as of 1 January 4 459 –5 –7 –6 074 –1 135 –2 762 Change during the period 2 755 4 30 347 348 3 484 Amounts reclassified out of accumulated other comprehensive income –2 372 1 –33 –17 43 –2 378 Tax –96 –2 196 –76 22
Additional paid-in capital Balance as of 1 January 482 341 Gain on sale to minority shareholder 34 Contingent capital instrument issuance costs 8 Cancellation of shares bought back –176 Share-based compensation 2 –14 Realised gains/losses on treasury shares 33 –1 Balance as of period end 341 368
Assets Fixed income securities 31 574 29 980 6 361 25 350 11 93 276 Equity securities 1 292 867 539 737 3 435 Other investments 11 962 3 355 141 2 421 4 785 –7 446 15 218 Short-term investments 4 672 2 558 1 272 1 456 951 10 909 Investments for unit-linked and with-profit business 548 31 630 32 178 Cash and cash equivalents 4 922 410 472 2 636 571 9 011 Deferred acquisition costs 2 280 3 465 444 11 6 200 Acquired present value of future profits 966 1 037 2 003 Reinsurance recoverable 2 449 1 580 5 698 2 210 –4 476 7 461 Other reinsurance assets 9 620 6 369 2 616 3 949 4 –1 104 21 454 Goodwill 1 852 1 810 173 130 3 965 Other 8 640 4 049 1 279 1 470 1 181 –6 664 9 955
Business segments – balance sheet As of 31 December 2017 Property & Casualty Reinsurance
Claims paid, thereof: Gross claims paid to external parties –9 866 –9 505 –2 571 –3 170 –25 112 Intra-group transactions (assumed and ceded) –177 –226 177 226 0
Reinsurance recoverable on unpaid claims and policy benefits As of 31 December 2016 and 2017, the Group had a reinsurance recoverable of USD 7 461 million and USD 7 942 million, respectively. The concentration of credit risk is regularly monitored and evaluated. The reinsurance programme with Berkshire Hathaway and subsidiaries accounted for 40% and 34% of the Group’s reinsurance recoverable as of year-end 2016 and 2017, respectively.
Retrocession to external parties –401 –1 343 –339 –376 –2 459
Collateral accepted which the Group has the right to sell or repledge As of 31 December 2016 and 2017, the fair value of the equity securities, government and corporate debt securities received as collateral was USD 7 666 million and USD 7 476 million, respectively. Of this, the amount that was sold or repledged as of 31 December 2016 and 2017 was USD 3 469 million and USD 1 981 million, respectively. The sources of the collateral are securities borrowing, reverse repurchase agreements and derivative transactions.
Liabilities for life and health policy benefits –144 –144 Accrued expenses and other liabilities –384 –4 084 –4 468
1 The redemption frequency varies by position. 2 Cash distribution can be delayed for an extended period depending on the sale of the underlyings.
Derivatives designated as hedging instruments Foreign exchange contracts 12 362 101 –184 –83
Components of net periodic benefit cost The components of pension and post-retirement cost for the years ended 31 December were as follows: 2016 USD millions Swiss plan Foreign plans Other benefits Total
Derivative financial instruments –6 –6 Real estate 612 612 Other assets 514 387 901
Assets measured at fair value using significant unobservable inputs (Level 3) For the years ended 31 December, the reconciliation of fair value of pension plan assets using significant unobservable inputs were as follows: 2016 USD millions Real estate Other assets Total
Purchases, issuances and settlements 19 11 30 Transfers in and/or out of Level 3 0 Impact of foreign exchange movements 27 3 30
276 Swiss Re 2017 Financial Report 15 Share-based payments As of 31 December 2016 and 2017, the Group had the share-based compensation plans as described below.
Restricted shares The Group granted 47 795 and 29 914 restricted shares to selected employees in 2016 and 2017, respectively. Moreover, as an alternative to the Group’s cash bonus programme, 300 382 and 276 483 shares were delivered during 2016 and 2017, respectively, which are generally not subject to forfeiture risk.
Leadership Performance Plan The Leadership Performance Plan (LPP) awards are expected to be settled in shares, and the requisite service as well as the maximum contractual term are three years. For LPP 2014, LPP 2015, LPP 2016 and LPP 2017 awards, an additional two-year holding period applies for all members of the Group EC and other key executives. At grant date the award is split equally into two underlying components — Restricted Share Units (RSUs) and Performance Share Units (PSUs). The RSUs are measured against a ROE performance condition and will vest within a range of 0–100%. The PSUs are based on relative total shareholder return, measured against a pre-defined group of peers and will vest within a range of 0–200%. The fair values of both components are measured separately, based on stochastic models.
Unrecognised compensation cost As of 31 December 2017, the total unrecognised compensation cost (net of forfeitures) related to non-vested, share-based compensation awards was USD 54 million and the weighted average period over which that cost is expected to be recognised is 1.9 years.
278 Swiss Re 2017 Financial Report 16 Compensation, participations and loans of members of governing bodies
Minimum rentals for all operating leases (except those with terms of one month or less that were not renewed) for the years ended 31 December 2016 and 2017 were USD 76 million and USD 94 million, respectively. Sublease rental income for the years ended 31 December 2016 and 2017 was nil and USD 2 million, respectively.
The party that has a controlling financial interest is called a primary beneficiary and consolidates the VIE. The party is deemed to have a controlling financial interest if it has both of the following: the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and the obligation to absorb the entity’s losses that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE.
Revenues Premiums earned 23 577 22 664 19 652 Fee income 746 847 918 Net investment income 7 331 6 399 5 422 Net realised investment gains/losses –8 677 875 2 783 Other revenues 249 178 60
Loans from subsidiaries and affiliated companies Loans from subsidiaries and affiliated companies are carried at nominal value.
Cash dividends from subsidiaries and affiliated companies 3 517 3 832 Realised gains on sale of investments 7 46 Income from short-term investments 2 6 Income from loans to subsidiaries and affiliated companies 35 63 Investment management income 1 1 Other interest revenues 51 70
In addition, Swiss Re Ltd held, as of 31 December 2017, directly and indirectly 34 866 516 (2016: 34 093 834) own shares, representing 9.98% (2016: 9.47%) of voting rights and share capital. Swiss Re Ltd cannot exercise the voting rights of own shares held.
Board of Directors’ responsibility The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the Company’s Articles of Association. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.
Use of models; accounting matters The Group is subject to risks related to the preparation of estimates and assumptions that management uses as part of its risk models; it is also subject to risks that affect the reported amounts of assets, liabilities, revenues and expenses in the Group’s financial statements, including assumed and ceded business. For example, the Group estimates premiums pending receipt of actual data from ceding companies, which actual data could deviate from the estimates. In addition, particularly with respect to large natural catastrophes, it may be difficult to estimate losses, and preliminary estimates may be subject to a high degree of uncertainty and change as new information becomes available. Deterioration in market conditions could have an adverse impact on assumptions used for financial reporting purposes, which could affect possible impairment of present value of future profits, fair value of assets and liabilities, deferred acquisition costs or goodwill. Moreover, regulators could require the use of standard models instead of permitting the use of internal models. To the extent that management’s estimates or assumptions prove to be incorrect, it could have a material impact on underwriting results (in the case of risk models) or on reported financial condition or results of operations, and such impact could be material.
Photography: Geri Krischker Marc Wetli Deniz Kenber, Swiss Re Fredi Lienhardt All other images provided by Getty Images and Shutterstock
As in previous years, our Corporate Responsibility Report serves as our disclosure document for two ongoing commitments we have made to the United Nations: the UN Global Compact and UNEP Principles for Sustainable Insurance. You will find both documents as fully linked reference tables in the online version of this publication.
You can get more information on our strategy in the 2017 Business Report at: reports.swissre.com/2017/businessreport /our-strategy.html
Life Capital manages closed and open life and health insurance books. It provides alternative access to the life and health risk pool, helping to generate stable returns and seize attractive new opportunities.
Creating an inclusive culture that encourages diversity of thought and opinion.
Completed a number of longevity transactions in recent years and, in 2017, launched a major campaign on how re/insurers can help fund the “ageing wallet”, with fact sheets on six major markets (page 43).
OVERVIEW: OUR CORPORATE RESPONSIBILITY TOPICS, SDG LINKS, GOALS AND KEY ACHIEVEMENTS
Regularly update our compliance policies as appropriate, oversee effective implementation thereof and deliver meaningful training and communication to our employees.
Continuously assess our corporate governance against regulatory developments, best practice and new stakeholder demands.
Report profile Our Corporate Responsibility Report covers the whole Swiss Re Group as it was organised on 31 December 2017, ie the publicly listed holding company Swiss Re Ltd, its three Business Units Reinsurance, Corporate Solutions and Life Capital, and all directly or indirectly held subsidiaries.
Sustainable energy sources play a crucial role in reducing CO2 emissions and securing future energy supplies. Given our strategic focus on climate change, we are keen to support energy generation from renewable sources. But as sustainable energy projects increase in scale and complexity, so do the risks associated with them. However, innovative risk transfer solutions can help reduce these risks and drive investment in the sector.
Our Sustainability Risk Framework is an advanced risk management instrument specifically designed to identify and address the potentially negative effects of our transactions on local communities, workforces and the environment. This framework applies to all of our business transactions in re/insurance as well as investments, to the extent that we can influence their various aspects.
The Sensitive Business Risk process Each of the two umbrella policies and seven sector guidelines of our Sustainability Risk Framework contains criteria and qualitative standards which define precisely when a transaction may present a “sustainability risk”. We assess such transactions through our Sensitive Business Risk (SBR) process, which consists of two due diligence mechanisms – the SBR online assessment tool and the SBR referral tool.
This decision takes the form of a binding recommendation either to go ahead with the transaction, to go ahead with certain conditions attached, or to abstain. If there is disagreement about the recommendation, the case can be escalated to the next management level and, ultimately, to the Group Chief Risk Officer and the Group Executive Committee.
Forestry, pulp & paper and oil palm ̤ Illegal logging; ̤ Uncertified logging and timber/oil palm processing in sensitive regulatory environments; ̤ Greenhouse gas emissions from peatland conversion, timber processing activities and/or forest clearance using bushfires; ̤ Significant adverse environmental or social impacts, particularly where critical natural habitats, vulnerable groups and/or critical cultural heritages are impacted.
Further activities on emerging risks identified in the past The emerging risks we previously examined in more detail and featured in our Corporate Responsibility Reports since 2007 are: 2007: Electromagnetic fields 2008: Critical infrastructure 2009: Carbon nanotubes 2010: Smart grids 2011: Cyber attacks 2012: 3D printing 2013: New forms of mobility 2014: Electronic cigarettes 2015: The Internet of Things 2016: Human-induced earthquakes
Antimicrobial resistance (AMR) obstructs the effective treatment of an increasing range of infections. Most prominent among these are bacterial infections, which are treated by antibiotics.
CONTENT IN THE 2017 FINANCIAL REPORT You can find information about our engagement in the general regulatory debate in the “Risk and capital management” chapter, pages 88–89.
The overall responsibility for our ESG approach lies with the Group Chief Investment Officer who signs off investment decisions within the Group’s Strategic Asset Allocation.
In 2017, we continued to work on these Top Topics with many partners from the public and private sectors. In the following sections we introduce each topic, explain why we consider it to be important and give examples of our activities.
Today, the financial services industry has many products that help people address risk in the “accumulation” phase of life, but better solutions are needed to help smooth uncertainties in the “decumulation” phase – this is the space where we want to help create new opportunities.
Need types are consistent across countries, yet specific to the local context and sources of funding
TOTAL ANNUAL SPEND FOR EVERYONE OVER AGE 65 IN USD TRILLION
In 2017, an issue of our sigma publication series (4/2017) took a detailed look at “Insurance: adding value to development in emerging markets”. The publication first presents the empirical evidence on the positive link between insurance and economic development and then describes the existing barriers for insurance solutions, emphasising that emerging markets are heterogeneous and present different supply- and demand-side barriers.
Harnessing the power of wind to drive our economies is a booming industry. From 2013 to 2015, installed capacity globally grew 25%, and projections for 2030 nearly quadruple this capacity again. But many of the areas where wind farms will be built are exposed to earthquakes. How can we build reliable energy supplies on such dangerous grounds?
Natural catastrophes and man-made disasters in 2016: a year of widespread damages 01 Executive summary 02 Catastrophes in 2016: global overview 06 Regional overview 13 Floods in the US – an underinsured risk 18 Tables for reporting year 2016 40 Terms and selection criteria
Take a look at our website for further information on our collaborative projects: institute.swissre.com/ research/collaborations/in_focus/
The Fairwinds building where we now have our offices fits the bill perfectly. Offering over 2 800 m2 of rooftop space, it has enabled us to build a solar power plant the size of ten tennis courts, comprising 1 058 individual solar panels.
Switching to biomass fuel also benefits the employees’ health and working conditions in a number of ways. The employees no longer need to carry heavy wood to the factory. Before the switch, they were also exposed to extreme heat and air pollution when firing up the kilns with wood. In both projects, the factories have had new equipment such as automatic feeders installed, which allow for an efficient use of the biomass and improve working conditions.
The factories of the Ceará project have also adopted a system to reuse industrial wastewater, a crucial step in a region afflicted by severe droughts. At the Balsas factory, finally, ceramic houses have been built for employees and their families, with utility costs included.
* The 2015 numbers for full-time and part-time employees do not add up to the total headcount, because employees on unpaid leave were not included in the calculations. As from 2016, employees on unpaid leave are included in the figures.
Listening to our employees We foster a culture of open dialogue and frequent feedback on all levels, where employees and managers are encouraged to maintain regular exchange, as described in our behavioural framework. In addition, once a year, we seek feedback more formally through the Employee Engagement Survey (EES). The EES is an opportunity for us to hear from our employees what engages them and what ideas they have to improve their experience at Swiss Re. Feedback from our employees in the 2017 EES shows that we continue to make progress. After a steep increase in employee engagement from 2015 to 2016 (+9 percentage points), our 2017 employee engagement score further increased by 2 percentage points from 67% to 69%. With a high response rate of 87%, our overall engagement score puts us well above the Aon Hewitt Global Financial/Insurance Average benchmark of 65%.
Learning hours per employee 15.5 15.3 15.0 Learning costs per employee (in USD) 1 024 919 784
Externally, Swiss Re continues to contribute to the advancement of female talent. We have a partnership with the association Advance – Empowering Women in Swiss Business, of which Swiss Re is a founding member. We again hosted their Annual Conference at our Centre for Global Dialogue. The event was devoted to “The Future of Leadership” and saw the launch of the first Advance Gender Intelligence Report Switzerland 2017.
Owning the way we work As a company that operates globally and around the clock, Swiss Re can strengthen its competitive advantage by embracing the new opportunities of an increasingly connected world.
At our Zurich headquarters, where almost a quarter of our total workforce is employed, we work closely with the Personnel Committee (PECO). Representing the interests of all Zurich employees, PECO aims to create and maintain a positive working environment. It is involved in changes or adaptions to the General Working Conditions or other important policies, such as the Social Plan. The Committee also seeks to ensure the de facto equality of men and women, and places special emphasis on the challenges faced by employees with family obligations.
All the members of the Board of Directors meet our independence criteria with the exception of our Chairman. As a full-time Chairman, he is not considered independent. In addition to the independence criteria applicable to Board members in general, additional independence criteria apply for members of the Audit Committee.
The Code also offers practical guidance and examples for deciding the appropriate course of action and solving ethical dilemmas. It further sets out how all employees should react when they observe a possible breach of the principles in the Code. All employees are obligated to uphold both the letter and spirit of the Code and the Group’s corporate governance principles in their daily business activities, and to respect and obey applicable laws and regulations in all jurisdictions where we do business.
Whistleblowing There are several ways in which alleged violations of the Code can be reported, both by internal and external sources. For our employees, the options are described in the Code and include a whistleblowing hotline, which they can use anonymously (where legally permitted) or with identification. The hotline is operated independently by an external vendor and includes translation services into numerous languages.
Graphic design and production: Swiss Re Corporate Real Estate & Services/ Media Production, Zurich