The UK is now taking a leadership position in tackling the issue of floods and in strengthening people’s ability to recover from their financial impact. with Flood Re affordable flood cover will be provided to an estimated 350 000 homes at risk. From April 2016 we are proud to support Flood Re in a three-year reinsurance programme that is one of the largest ‘natural peril’ programmes in the world. Swiss Re’s contribution to Flood Re is provided by an international team, including UK property underwriters and Swiss Re global Partnerships, who develop innovative solutions to improve risk resilience for governments and public sector bodies around the world.
Read more online: reports.swissre.com 30 Swiss Re 2015 Business Report reports.swissre.com
Christian Mumenthaler, currently CEO Reinsurance, will become Group CEO as of 1 July 2016, succeeding Michel M. Liès who will retire.
Admin Re® Admin Re® provides risk and capital management solutions by which Swiss Re acquires closed books of in-force life and health insurance business, entire lines of business, or the entire capital stock of life insurance companies. As of 1 January 2016, the open and closed life insurance books of the Group, including Admin Re®, are managed under a new Business Unit called Life Capital.
Property & Casualty Reinsurance portfolio delivers; Life & Health Reinsurance meets target The underwriting performance of P&C Re remained solid in 2015, generating USD 3.0 billion in net income and reflecting the underlying quality of our portfolio, as well as a relatively benign natural catastrophe experience. L&H Re has met the return on equity target we set for it at the June 2013 Investors’ Day, in turn delivering strong net income of USD 939 million.
The new targets are fully consistent with Swiss Re’s capital priorities.
Where do we go from here? Our vision “We make the world more resilient” is supported by our mission — to create smarter solutions for our clients through fresh perspectives, knowledge and capital. The combination of these strengths makes Swiss Re a partner of choice for our clients. Together, we believe we can close the gap between the rising costs of natural disasters and other hazards and the share of those costs that is covered by re/insurance solutions.
2016 has been off to a volatile start amid concerns about the strength of the global economy. Many of the challenges we’ve experienced over the past years, such as continued low interest rates and ample capital in our core business areas, will continue to exist. As communicated in December 2015, we believe our four pillar strategic framework equips us with an agile business model that makes us able to respond more quickly and effectively to change and to drive change ourselves. This is why we remain confident that we will continue to capture attractive business opportunities and we thank you, our shareholders, for placing your confidence in us.
Currency movements The ecB’s announcement of a quantitative easing programme and fears about the stability of the eurozone caused the euro to depreciate against the US dollar and other major currencies during the first quarter of the year. The Swiss franc appreciated strongly after the Swiss national Bank (SnB) removed the exchange rate floor of 1.20 francs per euro in January. against the background of slower growth, persistent pressure on the export industry and the divergence between spot and forward exchange rates, the People’s Bank of china (PBoc) devalued the chinese renminbi to around 6.4 per US dollar in august, surprising the markets. against the US dollar, the renminbi, euro, pound and Swiss franc ended the year down 4%, 10%, 6% and 1% respectively, while the yen remained unchanged.
One of the major concerns for the global economy stems from a pronounced slowdown in chinese economic growth. investment could also drop sharply if china’s debt markets were disrupted by large defaults. This ‘hard landing’ scenario would put further pressure on commodity prices and global trade.
Policy rates set by the major central banks have been close to zero for about seven years. in this context, speculation over the starting point and consequences of the interest rate hike by the US Fed dominated financial markets throughout 2015. While interest rates affect all re/insurers, not all lines of business are affected to the same degree. Short-term business can usually be re-priced on an annual basis, thereby making its sensitivity to interest rate fluctuations marginal. By contrast, interest rates have a significant impact on long-term lines of business, such as life insurance and casualty products, where investment income is a significant source of earnings. although the timing of US rate increases received a lot of attention, the re/insurance industry remains very focused on where they will end up in the long run.
investment returns for primary non-life insurers remain under pressure as ave- rage yields are stalling and operating cash flows are weak. eight years after the financial crisis, the investment environment remains challenging for fixed income securities, the main asset class in insurance, with low yields and exposure to mark-to-market losses when interest rates rise again. Portfolio yields are close to bottoming out, but even with market rates forecast to rise, insurers’ running yields will improve only gradually. For 2015, investment returns in non-life are estimated to have been about 11% of net premiums earned, down from 11.4% in 2014, and well below the 14% annual average of 1999–2007. Overall industry profitability has declined with return on equity (rOe) estimated to be 7% in 2015, down from around 9% in 2013 and 2014.2
1 Based on an aggregated sample of large european insurers active in Germany, France, the UK, italy, Spain, Switzerland and the nordic countries. 2 The calculation of the industry average profitability is based on data for the following eight leading non-life insurance markets: australia, canada, France, Germany, italy,
This strategy is also designed to meet a larger goal: to make the world more resilient. Success in our industry means protecting society. That is why we claim “We make the world more resilient” as our vision for the future. We provide both the necessary risk management expertise and the re/insurance coverage to absorb risks and rebuild after a disaster strikes.
common shareholders’ equity, excluding non-controlling interests and the impact of contingent capital instruments, decreased to USD 32.4 billion at the end of 2015 from USD 34.8 billion at the end of 2014. The decrease was due to the distribution of the 2014 regular and special dividends of USD 2.6 billion, the launch of the share buy-back programme in mid-november, unrealised losses on fixed income securities and unfavourable foreign exchange rate movements, partially offset by higher net income. Book value per common share decreased to USD 95.98 or cHF 96.04 at the end of 2015 compared to USD 101.78 (cHF 101.12) 12 months earlier. return on equity increased to 13.7% for 2015 from 10.5% for 2014.
admin re® generated gross cash of USD 543 million in 2015, down from USD 945 million in 2014. Gross cash generation in 2015 was driven by UK assumption updates, primarily to annuitant mortality rates, and by the UK half-year valuation. The 2014 amount included a release of USD 225 million in surplus reserves held against the risk of credit default, a one-time benefit of USD 234 million following the finalisation of the 2013 year-end UK statutory valuation and proceeds of USD 217 million from the sale of aurora.
The Group reported a tax charge of USD 651 million on a pre-tax income of USD 5.3 billion for 2015, compared to a charge of USD 658 million on a pre-tax income of USD 4.2 billion for 2014. This translated into an effective tax rate in the current and prior-year reporting periods of 12.2% and 15.6%, respectively. The lower tax rate in 2015 was largely driven by a tax benefit arising from a local statutory accounting adjustment for restructuring of subsidiaries, higher tax benefits from foreign currency translation differences between statutory and US GaaP accounts, and the release of valuation allowances partially offset by tax on profits earned in higher tax jurisdictions.
Outlook in the short term we expect challenging conditions to persist until demand and supply of capacity start to balance. in such an environment underwriting outperformance remains key. We will therefore seek to continue to exploit our competitive advantage in risk selection and capital allocation to protect our bottom line. We will reduce capacity for flow business in Property & casualty reinsurance and focus on large and tailored transactions for all lines. in addition, we will be pursuing opportunities presented by major demographic, socioeconomic and technological trends, including the rise of high growth markets, where growth remains dynamic; or where the need for health protection is expanding, as in ageing societies. last but not least, we will also focus on areas where protection gaps threaten resilience.
The 2015 market movements occurred against a backdrop of improving economic growth across developed economies, albeit with weaker external demand from the emerging economies. labour markets in the US and UK have become increasingly tight as unemployment rates approach the natural rate, as evidenced by rising wages in the closing stages of the year. However, pass-through to headline inflation has been exceptionally low as commodity price weakness has continued to weigh on prices. Heading into 2016 these base effects may reverse and inflation could steadily rise again. Markets ended 2015 with strong expectations that the ultra-accommodative monetary policy in the US was coming to an end.
Investment result The Group’s investment portfolio, excluding unit-linked and with-profit investments, decreased to USD 116.8 billion at the end of 2015, compared to USD 125.4 billion at the end of 2014. The decrease was due to the impact of rising interest rates, net asset outflows and foreign exchange translation.
Some progress has been made on these issues. in 2015 the Juncker commission on capital Markets Union (cMU) proposed changes that directly address infrastructure investing and securitisation: ̤ On infrastructure, the Solvency ii framework for insurance regulation has a new concept of ‘qualifying infrastructure investments’ for a defined set of safer investments. These will benefit from a lower capital charge, making the asset class more attractive for insurers.
Source: iMF (GDP figures), Towers Watson, Sr er&c, Sovereign Wealth Funds institute, insurance europe.
Systematically allocate capital to risk pools/revenue streams By applying metrics based on cash flow, US GaaP and our integrated economic Value Management (eVM) framework we seek to steer both Property & casualty (P&c) and life & Health (l&H) reinsurance businesses to the most profitable risk pools. as a result we’ve been shifting the weighting of our lines of business in line with our underwriting framework and growth strategy. in P&c, we prioritised high growth markets and have been reducing property business since 2013 where prices have become increasingly challenging. in l&H we continued to grow the contribution from high growth markets and from health, in particular.
net investment income increased by USD 37 million to USD 1 036 million in 2015, mainly due to additional income from duration lengthening in the second half of 2014 as well as in 2015.
Premiums earned by line of business, 2015 48% Property 37% Casualty 15% Specialty
insurance-related derivative results are not included in the investment figures above.
“at admin re® we achieved a strong performance across all metrics.”
Income/loss before income tax benefit –18 397 – income tax benefit 52 25 –52 Net income attributable to common shareholders 34 422 –
External dividends to shareholders Based on the group’s capital strength, the Board of directors proposes an 8.2% increase in the 2015 regular dividend to CHF 4.60 per share, up from CHF 4.25 in 2014. in addition, the Board of directors proposes a public share buy- back programme of up to CHF 1.0 billion purchase value, exercisable until the Agm in 2017. The programme will only be launched if excess capital is available, no major loss event has occurred, other business opportunities do not meet swiss Re’s strategic and financial objectives and the necessary regulatory approvals have been obtained.
̤ Risk measurement — enables the group to understand the magnitude of its risks and to set quantitative controls that limit its risk-taking.
The risk appetite framework plays a particularly important role in the context of business strategy and planning discussions: the risk appetite statement facilitates discussions about where and how the group should deploy its capital, liquidity and other resources under a risk-return view, while the risk tolerance sets clear boundaries to risk-taking.
in regular training programmes, our employees are sensitised in key areas of risk culture, such as in taking accountability for decisions, learning from past actions and applying risk behaviours in daily work situations. in addition, swiss Re’s annual Risk dialogue days create a platform where Risk management exchanges and discusses with the business current and future risk themes and related risk strategies.
Our central Financial Risk management team oversees activities generating financial market and/or credit risk, proposes limits, provides quantitative risk assessment across financial risk factors, and monitors portfolio risk. it also develops considerations for risk mitigation or risk reduction, reviews risk and valuation models, assesses asset valuations, and approves transactions and new products. These responsibilities are exercised through defined governance procedures, including regular reviews by our senior Risk Council. Financial Risk management is responsible for both internally and externally managed assets, principal investments and all liability-based business generating financial market and/or credit risk, including credit and surety.
Financial market risk is subject to limits at various levels of the organisation (eg, group, Business Units, lines of business and legal entities). individual limits are expressed in terms of stress, VaR and risk factor sensitivities. Asset management determines a more detailed set of risk limits for its portfolio mandates.
in line with the ssT, the group measures its total risk capital requirement at the 99% shortfall (tail VaR) level. This represents an estimate of the average annual loss likely to occur with a frequency of less than once in one hundred years, thus capturing the potential for severe, but rare, aggregate losses.
strategic risks are addressed by examining multi-year scenarios, considering the related risks, as well as monitoring the implementation of the chosen strategy year-by-year in terms of the annual business plan.
Regulatory risk Regulatory risk represents the potential impact of changes in the regulatory and supervisory regimes of the jurisdictions, in which swiss Re operates.
Swiss re’s corporate governance adheres to the SIX Swiss exchange’s Directive on Information relating to Corporate Governance, including its annex. It is also in line with the principles of the Swiss Code of Best practice for Corporate Governance (Swiss Code) of September 2014, issued by economiesuisse, the Swiss business federation. Swiss re, moreover, conforms to the Swiss Financial Market Supervisory authority (FInMa) provisions on corporate governance, risk management and internal control systems, which came into effect on 1 January 2009. Swiss re’s corporate governance also complies with applicable local rules and regulations in all jurisdictions where it conducts business.
compensation of the Group eC for the financial year 2014. the annual General Meeting 2015 approved the compensation motions with overwhelming majorities of 86% and two times 90% of the votes validly cast. For the detailed voting results of the annual General Meeting 2015 please refer to: investors/events/151st_annual_ General_Meeting.html
̤ the annual General Meeting 2015 elected Walter B. Kielholz for a further one-year term of office as Chairman of the Board of Directors.
̤ the annual General Meeting 2014 approved the required amendments to the articles of association with 93.71% of the votes validly cast.
Information about changes in share capital of our former parent company Swiss reinsurance Company Ltd for earlier years is provided in the annual reports of this company for the respective years.
the company may issue its registered shares in the form of single certificates, global certificates and intermediated securities. the company may convert its registered shares from one form into another at any time and without the approval of the shareholders. the shareholders have no right to demand a conversion into a specific form of registered shares.
and apple Inc. ̤ Member of the Boards of trustees of the Hackley School and Wellesley College
the term of office of a committee member is described in the section on the committees of the Board of Directors.
members and the Company Secretary; reviews their performance and plans their succession; ̤ approves the Human Capital Strategy of the Group and, on an annual basis, reviews progress towards this strategy; and
Legal, regulatory and compliance matters ̤ oversees implementation of Groupwide compliance procedures and monitors remediation of any regulatory and compliance deficiencies
Swiss Solvency Test Report the report provides the legally required update on the assessment of the solvency according to the Swiss Solvency test (SSt) of the Swiss re Group, Swiss reinsurance Company Ltd, european reinsurance Company Ltd and Swiss re Corporate Solutions Ltd.
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 treasury activities ̤ Group regulatory risk report ̤ Financial risk Management Update ̤ own risk and Solvency assessment
GIa staff govern themselves by following the Code of ethics issued by the Institute of Internal auditors (IIa). the IIa’s International Standards for the professional practice of Internal auditing constitute the operating guidance for the department.
all Group eC members comply with the requirements on external mandates set out in the articles of association.
the Independent proxy is elected by the General Meeting of shareholders for a term of office until completion of the next ordinary General Meeting of shareholders.
Agenda the Board of Directors announces the agenda for the General Meeting of shareholders. Shareholders with voting power whose combined holdings represent shares with a nominal value of at least CHF 100 000 may, no later than 45 days before the date of the meeting, request that further matters be included in the agenda. Such requests must be in writing and must specify the items and the proposals to be submitted.
Developing products and services With some of our re/insurance products we aim to support two objectives: mitigation of climate change and adaptation to it.
We also signed a Memorandum of Cooperation with the provincial government of Heilongjiang on the future roll out of a pilot index-based insurance programmes covering natural disaster risks to its agricultural sector. This builds on previous efforts we have undertaken to improve insurance protection in Heilongjiang, which, as China’s biggest crop producer, is key to its food security.
such an inclusive corporate culture is essential for a diverse workforce. inclusion is about respecting the uniqueness of every individual and about providing an atmosphere in which everyone feels valued and empowered to perform at a consistently high level. being a diverse and inclusive company motivates our employees, helps to attract fresh talent and is good for bottom-line results.
swiss Re is committed to a compensation framework that is balanced and performance-oriented, and that aligns the interests of employees and shareholders.
1 Dividend payments are made in april of the following year. For 2015 an ordinary dividend of CHF 4.60 is proposed. special dividends per share for 2013 and 2014 were CHF 4.15 and CHF 3.00, respectively.
Annual General Meeting (AGM) ̤ at the aGm on 21 april 2015,
VAI vesting and payout 50%total 2015 api based on 2015 business and individual performance
additionally, clawback provisions apply in a range of events (the same as outlined under the Vai section) as defined in the plan rules, enabling swiss Re to seek repayment of settled awards.
members have a five-year timeframe to achieve these targets. in addition, because swiss Re believes that a meaningful stock ownership position is essential, restrictions on the immediate cash portion of api delivered will apply if these levels are not met within the specified timeframe.
Compensation Compensation framework * Catlin Group Ltd has now been integrated into XL Group pLC.
these advisors are retained by the Compensation Committee. they provide the Compensation Committee with an external perspective and from time to time provide other services to swiss Re.
this includes the approval by the Chairmen of the audit and the Finance and Risk Committees, of the aggregate api pool of their respective Control Functions, and the approval of the individual compensation for the head of each respective Control Function.
̤ 31% Base salary and allowances ̤ 22% Cash api ̤ 19% Vai (paid after 3 years) ̤ 28% Lpp (paid after 5 years)
For Us Gaap and statutory reporting purposes, Vai and long-term incentive awards are accrued over the period during which they are earned. For the purpose of the disclosure required in this Compensation Report, the value of awards granted is included as compensation in the year of performance for the years 2014 and 2015 respectively.
Other payments to members of the Group EC During 2015, no payments (or waivers of claims) other than those set out in the section compensation decisions in 2015 were made to current members of the Group eC or persons closely related.
Auditor’s responsibility our responsibility is to express an opinion on the accompanying Compensation Report. We conducted our audit in accordance with swiss auditing standards. those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Compensation Report complies with swiss law and articles 14 to 16 of the ordinance.
Net unrealised investment gains/losses, net of tax changes during the period 3 796 –2 670 Balance as of period end 5 418 2 748
FINANCIAL STATEMENTS Notes to the Group financial statements 168 Swiss Re 2015 Financial Report
Income attributable to non-controlling interests –1 –2 –3 Net income/loss after attribution of non-controlling interests 2 996 988 340 422 –81 0 4 665
Property & Casualty Reinsurance business segment – by line of business For the year ended 31 December 2015 USD millions Property Casualty Specialty Total
Total revenues before non-participating realised gains/losses 8 164 4 309 12 473
FINANCIAL STATEMENTS Notes to the Group financial statements 184 Swiss Re 2015 Financial Report
Retrocession to external parties –550 26 –59 –31 –614 Net unpaid claims and claim adjustment expenses; life and health benefits 958 171 –246 768 37 1 688
Debt securities issued by governments and government agencies: US Treasury and other US government corporations and agencies 11 639 960 –9 12 590
Level 2 inputs are market-based inputs that are directly or indirectly observable, but not considered level 1 quoted prices. Level 2 inputs consist of (i) quoted prices for similar assets or liabilities in active markets; (ii) quoted prices for identical assets or liabilities in non-active markets (eg markets which have few transactions and where prices are not current or price quotations vary substantially); (iii) inputs other than quoted prices that are observable (eg interest rates, yield curves, volatilities, prepayment speeds, credit risks and default rates); and (iv) inputs derived from, or corroborated by, observable market data.
Liabilities for life and health policy benefits –165 –165 accrued expenses and other liabilities –812 –2 524 –3 336 Total liabilities at fair value –836 –4 098 –746 1 477 –4 203 1 The netting of derivative receivables and derivative payables is permitted when a legally enforceable master netting agreement exists between two counterparties. a master netting agreement provides for the net settlement of all contracts, as well as cash collateral, through a single payment, in a single currency, in the event of default or on the termination of any one contract.
FInanCIaL STaTEMEnTS notes to the Group financial statements 204 Swiss Re 2015 Financial Report
FInanCIaL STaTEMEnTS notes to the Group financial statements 206 Swiss Re 2015 Financial Report
The significant unobservable inputs used in the fair value measurement of the Group’s variable annuity and fair valued guaranteed minimum death benefit (GMDB) contracts are: risk margin, volatility, lapse, mortality adjustment rate and withdrawal rate. a significant increase (decrease) in isolation in each of the following inputs: risk margin, volatility and withdrawal rate would result in a significantly higher (lower) fair value of the Group’s obligation. a significant increase (decrease) in isolation in a lapse rate for in-the-money contracts would result in a significantly lower (higher) fair value of the Group’s obligation, whereas for out-of-the-money contracts, an isolated increase (decrease) in a lapse assumption would increase (decrease) fair value of the Group’s obligation. Changes in the mortality adjustment rate impact fair value of the Group’s obligation differently for living-benefit products, compared to death-benefit products. For the former, a significant increase (decrease) in the mortality adjustment rate (ie increase (decrease) in mortality, respectively) in isolation would result in a decrease (increase) in fair value of the Group’s liability. For the latter, a significant increase (decrease) in the mortality adjustment rate in isolation would result in an increase (decrease) in fair value of the Group’s liability.
The Group uses a variety of derivative financial instruments including swaps, options, forwards, credit derivatives and exchange-traded financial futures in its trading and hedging strategies, in line with the Group’s overall risk management strategy. The objectives include managing exposure to price, foreign currency and/or interest rate risk on planned or anticipated investment purchases, existing assets or liabilities, as well as locking in attractive investment conditions for future available funds.
Fair value hedging relationships Foreign exchange contracts 122 –120 119 –119 Total gain/loss recognised in income 122 –120 119 –119
The major classes of assets and liabilities held for sale as of 31 December 2014 and disposed during the second quarter of 2015 were as follows: USD millions 2014 2015
Benefit obligation as of 1 January 3 531 2 305 341 6 177
Amounts recognised in “Other assets” and “Accrued expenses and other liabilities” in the Group’s balance sheet as of 31 December were as follows: USD millions Swiss plan Foreign plans Other benefits Total
From 2013 onwards, the Employee Participation Plan was discontinued and no more options were issued. In 2014 and 2015, the Group contributed USD 12 million and USD 1 million, respectively, to the outstanding plans.
Liechtenstein Elips life AG, Triesen CHF 12 100 f Elips Versicherungen AG, Triesen CHF 5 100 f
Non-consolidated VIEs The following table shows the total assets and liabilities in the Group’s balance sheet related to VIEs in which the Group held a variable interest but was not the primary beneficiary as of 31 December: The following table shows the Group’s assets, liabilities and maximum exposure to loss related to VIEs in which the Group held a variable interest but was not the primary beneficiary as of 31 December: The assets and liabilities for the swaps in trusts represent the positive and negative fair values of the derivatives the Group has entered into with the trusts. liabilities are recognised for certain debt financing VIEs when losses occur. To date, the respective debt financing VIEs have not incurred any losses.
2 The Group updated its balance sheet presentation of deferred tax assets and liabilities. Deferred tax assets and liabilities are presented on a gross basis as per the first quarter 2013. The comparative period has been adjusted accordingly and is consistent with the relevant income tax disclosure in the notes to the financial statements in the prior year.
the provision for taxation represents an estimate of taxes payable in respect of the reporting year.
Weighted average strike price in CHF 74.34 n/a Walter B. Kielholz, Chairman 20 000 0
Allocation to voluntary profit reserves –4 110 –3 865 Retained earnings after allocation 4 4
insurance that provides for the payment of a sum of money upon the death of the insured, or upon the insured surviving a given number of years, depending on the terms of the policy. in addition, life insurance can be used as a means of investment or saving.
adjustment of the book value or collateral value of a security, portfolio or account to current fair market value.
investment related operating income as a percentage of invested assets. invested assets include investments, securities in transit, certain financial liabilities and exclude policy loans, minority interests, cash and cash equivalents, as well as assets related to securities lending, repurchase agreements and collateral balances.
General impact of adverse market conditions the operations of Swiss Re ltd (“Swiss Re”) and its subsidiaries (the “Group”) as well as its investment returns are subject to market volatility and macro-economic factors, which are outside of the Group’s control and are often inter-related.
the Group is also subject to credit and other risks in its credit business, including reliance on banks that underwrite and monitor facilities in with the Group participates and potential default by borrowers under those facilities.
the Group may not be able to secure new sources of liquidity or funding, should projected or actual liquidity fall below levels it requires. the ability to meet liquidity needs through asset sales may be constrained by market conditions and the related stress on valuations, and through third-party funding may be limited by constraints on the general availability of credit and willingness of lenders to lend. in addition, the Group’s ability to meet liquidity needs may also be constrained by regulatory requirements that require regulated entities to maintain or increase regulatory capital, or that restrict intra-group transactions, the timing of dividend payments from subsidiaries or the fact that certain assets may be encumbered or otherwise non-tradable. failure to meet covenants in lending arrangements could give rise to collateral posting or defaults, and further constrain access to liquidity. finally, any adverse ratings action could trigger a need for further liquidity (for example, by triggering termination provisions or collateral delivery requirements in contracts to which the Group is a party) at a time when the Group’s ability to obtain liquidity from external sources is limited by such ratings action.
Insurance, operational and other risks as part of the Group’s ordinary course operations, the Group is subject to a variety of risks, including risks that reserves may not adequately cover future claims and benefits, risks that catastrophic events (including hurricanes, windstorms, floods, earthquakes, acts of terrorism, man-made disasters such as industrial accidents, explosions, and fires, and pandemics) may expose the Group to unexpected large losses (and related uncertainties in estimating future claims in respect of such events); changes in the insurance industry that affect ceding companies, particularly those that further increase their sensitivity to counterparty risk; competitive conditions (including as a result of consolidation and the availability of significant levels of alternative capacity); cyclicality of the industry; risks related to emerging claims and coverage issues (including, for example, trends to establish stricter building standards, which can lead to higher industry losses for earthquake cover based on higher replacement values); 278 Swiss Re 2015 financial Report
Americas armonk 175 King Street armonk, new York 10504 telephone +1 914 828 8000
Independent assurance report to the management of Swiss Re Ltd, Zurich 76
Our process to identify material issues When identifying material ESG issues, we both use our internal, embedded risk expertise and the insights we gain from our stakeholder dialogue. In addition, we also take into account the views of various standard setters on materiality, eg: reporting requirements, materiality definitions by sustainability rating agencies, multilateral discussions such as the UN Sustainable Development Goals, relevant academic research and regulatory developments.
While the impact of climate change will increase gradually over the coming decades, most of our business is renewed annually and our risk models are refined every few years. Risks are normally covered for 12 months (up to five years for cat bonds). Thus, reinsurance premiums do not reflect expected loss trends over the coming decades. Rather, for underwriting and risk management purposes, our models provide an estimate of the current risk. But as natural catastrophe losses continue to rise as a result of the different factors described above, our models will gradually factor in this trend, since they are updated and refined at regular intervals.
USD 2.1 billion Total amount of climate protection offered to sovereigns and sub-sovereigns since 2014 1.6 million Smallholder farmers benefiting from the Grow Africa Partnership
Gode Wind 1 and 2: large wind farms in the North Sea Swiss Re Corporate Solutions also continued to be involved in large, mainstream projects, eg the Gode Wind 1 and 2 offshore wind farms. Both are located in the German sector of the North Sea, approximately 45 km off the German coast and 33 km from the islands of Juist and Norderney. Construction of the two wind farms, which are being developed by Danishbased DONG Energy (www.dongenergy. com), started in 2015. We provide a CAR cover, ie an all-risk policy for material damage during the construction phase.
Extending our risk intelligence We address sustainability, political, regulatory and emerging risks in our core business transactions. To do so, we have developed specific tools and know-how.
If this initial screening reveals any potential issues, our underwriters carry out further due diligence measures. Finally, they transfer the most critical transactions through the Sensitive Business Risks (SBR) referral tool to our team of sustainability experts, who conduct targeted research to decide whether the transaction at hand is acceptable on ethical grounds.
In 2015, our sustainability risk management unit decided in 24 SBR assessments to proceed with conditions. In most cases, these conditions required the particular underwriter to engage with the client on specific questions about environmental protection or human rights issues. In line with the Ruggie Framework on corporate respect for human rights, we strive to address such issues when we spot them and raise them with our clients.
Political risks In today’s increasingly integrated world we need to be aware of any political developments, actions and decisions that may affect our business. Within our risk management organisation, we have a team of specialists who look at a wide range of both commerce- and securityrelated political risks at global, country and business transaction levels.
After more than ten years of development, Solvency II was implemented across the European Economic Area in January 2016. Swiss Re has been actively engaged in the implementation process, particularly in supporting the equivalence for the Swiss insurance supervisory system. The European Union has recognised the Swiss system, including the Swiss Solvency Test (SST), as fully equivalent.
Given these challenges, we believe it is essential to foster risk dialogue with various partners. By sharing perceptions and assessments, all parties can gain a better understanding of potential emerging risks. In 2015, we contributed to the following strategic initiatives: CRO Forum Emerging Risk Initiative (CRO ERI) The CRO ERI was launched in 2005 to raise awareness of major emerging risks relevant to society and the re/insurance industry. www.thecroforum.org/emerging-riskinitiative -2/
By the end of 2015, the combined value of our MINERGIE®-certified buildings reached USD 0.4 billion, or 21.4% of our Swiss portfolio of direct real estate investments. The total energy consumption surface in accordance with the MINERGIE® standard was 82 497 m2 at the end of 2015. In addition, more than 56 000 m2 was sold on to third parties in previous years.
 87% Voted with management  10% Voted against management  1% Withheld  2% Abstained
With our re/insurance solutions we help our clients and partners to cope with the risks they face. This helps to create stability and enables economic growth. But many of today’s risks are complex and may threaten sustainable progress. To find effective, long-term responses to such risks, partners from the public and the private sector need to work together.
We periodically review our Top Topics portfolio to reflect new business developments and shifting global agendas. Since an extensive review in 2012, we have been focusing on the following five Top Topics in our stakeholder dialogue: ̤ Advancing sustainable energy solutions ̤ Funding longer lives ̤ Managing climate and natural disaster risk ̤ Partnering for food security ̤ Supporting financial resilience
As long-term investors, re/insurers could play a pivotal role in bridging the emerging infrastructure financing gap, which in turn would contribute to a healthier economic environment. But for that to happen, the right framework needs to be put in place. Standardisation of infrastructure investments would be an important step forward, while infrastructure debt as a tradable asset class would certainly make infrastructure more attractive for long-term investors.
Unconventional monetary policies help to finance the public sector’s debt burden. While a number of these policies were crucial and beneficial to managing the financial crisis, they also come with significant costs. The unintended consequences include potential asset price bubbles, an impaired credit intermediation channel and increasing economic inequality.
Environmental objectives and targets are defined centrally at our headquarters, but responsibility for implementing improvement measures also lies with the Corporate Real Estate & Logistics departments in our regions and individual locations. Some of them define additional environmental targets that reflect specific local conditions and challenges.
(RECs). 3 The UK government claims all green credentials of renewable electricity produced in the country.
Spruced up communication As Swiss Re Next is slowly but surely taking shape, we also introduced a new element to its project website. A number of green tiles with short aphorisms now draw attention to some of the building’s key sustainability features. They engage the reader with the invitation to “let’s talk about this together” and highlight environmental, social and ethical aspects of the project. Here are some examples “People who work in glass houses …”, “It’s a hat trick – chapeau!”, “Better than new?”, “What’s in a symbol”, “Blessings from above”. To find out more, we invite you to go directly to www.next.swissre.com
Therefore, we made a number of changes to more effectively embed the 70/20/10 approach to development and growth. This approach advocates a shift from formal training (only 10%) to more actions that reflect “on-the-job experiences” (70%) and “learning from others” (20%).
To support the professional development of our employees, Swiss Re Academy provides a portfolio of “blended” learning paths, combining face-to-face learning, eLearning, peer-to-peer coaching and virtual classrooms. By combining and linking some of our training courses, they offer a flexible approach to learning. Topics addressed in blended learning paths include communication skills, conflict handling, influencing skills, presentation skills, and remote management and working.
In 2015, we employed 55 interns. This includes three internship positions for students from the African Leadership Academy (ALA) in support of our high growth market talent strategy in Africa. The interns@swissre programme is mainly aimed at university students who are pursuing a Bachelor’s or Master’s degree, and at graduates with less than one year of full-time work experience. Interns join teams in core business areas, where they take on specific tasks and various projects. In India, the US and the UK we offer traditional summer internships that typically last between eight and 12 weeks, while in Germany and Switzerland the internships usually span a period of three to six months.
Swiss Re’s commitment to sustainability The Code includes our formal commitment to sustainability, providing a guiding principle for our efforts to act as a responsible company.
Serving low-income areas of Lima, Peru, that lack municipal sanitation, x-runner offers water-free toilets and solid waste pick-up at affordable prices.
With its exceptional size, perpendicular track to the coast and record-breaking low pressure, Sandy is generally regarded as a 1-in-500-year event. The storm offered many new lessons to modellers, underwriters and coastal communities, but it should not be the only catastrophe benchmark in the quest for improved resiliency. This publication draws on hurricanes of greater magnitude to paint a scenario that will help plan for the future.
Building a sustainable energy future: risks and opportunities 01 Executive summary 02 Introduction 04 Key technology developments impacting life insurers 13 Impacts on life insurance industry 26 Strategic implications 31 New challenges 39 Conclusion
Top Company for Graduates to Work for from TheJobCrowd We were recognised as the “Top Accountancy & Insurance Company for Graduates to Work for” (larger intake) and came third overall.
As described in our “approach to corporate responsibility”, we engage in regular dialogue with all our stakeholders (see page 12).
Starting in 2012, we have been disclosing our progress in implementing the Principles on an annual basis, as an integrated part of our Corporate Responsibility Report.
GRI Content Index with UN Global Compact Communication on Progress (COP) references