“ Swiss Re has always been one of the industry leaders, accumulating knowledge and data. This is now even more important than in the past.”
Q What are ‘risk pools’ and how will the company access them?
The Swiss Re Institute, the creation of which was announced in late 2016, will aim to make sure we remain at the forefront in this transformational period in our industry’s history. The Swiss Re Institute will help develop knowledge and approaches that can help clients and end-customers alike. We are actively investing in creating product offerings for new and peak risks arising from technological advancements like telematics, cyber and accumulation risks, while bringing outside innovation into insurance through accelerator programmes that nurture young tech startups (such as Swiss Re’s own accelerator programme in Bangalore, India).
Technology could cut >50% of costs out of the insurance value chain through, for example: ̤ Lowering lapse rates by proactively dealing with customers who are at risk to lapse
Rural and urban resilience in China 22 Swiss Re 2016 Business Report
Canary Care, the first runner-up, has developed an affordable home and personal activity monitoring system. Wireless sensors placed around the home record movement, door activity, temperatures and care visits, alerting Canary Care and relatives if there are concerns.
We provide a detailed record of our financial and operational performance for 2016.
Q You took over as Group CEO in July last year. How have things evolved for the company since then?
Q Let’s take a step back. How do you see Swiss Re’s future prospects?
Economic activity in the Middle East and North Africa was subdued in 2016. Growth in oil-importing countries was modest, and low oil prices took a toll on oil-exporting countries. Business sentiment in the region suffered from a deteriorating security situation and political uncertainty. Latin America’s real GDP contracted for a second year in a row in 2016, dragged down by recessions in Brazil and Venezuela, a growth correction in Argentina, and sluggish growth across the rest of the region. Economic growth in Central and Eastern Europe (CEE) improved from the previous year as economic contraction in Russia moderated and CEE EU-member countries continued to grow albeit at a slower pace.
Increased risk aversion during the first half of the year led to a further decline in benchmark government bond yields (see interest rates chart). The yield on the
The reinsurance industry’s capital base remains strong. The capital position of global reinsurers, the traditional source of capital, grew by around 6% in 2016. The increase was almost entirely due to unrealised capital gains on investments, mainly associated with declines in interest rates during the period. Continued strong capital management returned almost all of the industry’s net income to shareholders.
In emerging markets, premium income rose by an estimated 20% in 2016 after a 13% gain in 2015. Growth was strongest in the emerging markets in Asia: in China, premiums were up 34%, supported by strong sales of ordinary life products, while unit-linked and participating life policies were negatively affected by stock market volatility, Premium growth eased slightly to 7% in Latin America while in CEE, premiums contracted again, despite a strong rebound in Russia, due to declines in Poland and the Czech Republic.
The underwriting equivalent of a beta investor is a re/insurance company that tries to outperform competitors by allocating more or less capital to individual portfolio segments depending on the perceived attractiveness of each segment. In the insurance industry, typical “beta” strategies include portfolio steering, cycle management, and capacity or capital allocation.
For more on the underwriting performance of all Business Units, see pages 36‒49.
Swiss Re is a long-term global investor and risk knowledge company whose vision is to make the world more resilient. It lives up to this vision most visibly through its re/insurance activities, but the investment side is equally important. Specifically, Swiss Re can support economic growth and job creation by channelling funds to the productive areas of the real economy at a time when more private market solutions with stronger involvement of long-term investors like insurers or pension funds are urgently needed.
Additionally, Swiss Re continues to build up its exposure to investments that support the transition to a low-carbon economy. In particular, Swiss Re channels part of its fixed income portfolio consciously into green bonds, issued under the broadly accepted “Green Bond Principles”. Swiss Re also allocates a portion of its infrastructure investments to renewable energy operations.
Acquired present value of future profits 2 964 2 003 –32
Net premiums earned Net premiums earned were USD 17.0 billion in 2016, compared to USD 15.1 billion for 2015. The increase was driven by large and tailored transactions in the US and Europe, partially offset by unfavourable foreign exchange movements. At constant exchange rates, premiums earned increased by USD 2.1 billion.
Shareholders’ equity Common shareholders’ equity was USD 6.8 billion at the end of 2016, compared to USD 5.8 billion as of 31 December 2015. The increase was mainly due to net income for the year and an increase in unrealised gains reflecting a decline in interest rates, partially offset by a dividend payment to the Group of USD 400 million.
In the open books, elipsLife offers employee benefit solutions to partners through an intermediated B2B model, and provides brokers, clients and their policyholders with a seamless digital offering with a simpler, faster and better experience. Our iptiQ business enables individuals to address their protection needs and offers simple, transparent and digital propositions on a white labelled basis. Both businesses we believe are well positioned to capture growth opportunities in Europe and North America.
Cash dividends paid to Swiss Re Ltd totalled USD 18.8 billion since 2012.
42% Cash, short-term investments and reverse repos 41% Government bonds AAA rated & US
9% Developed market supranational, agencies and municipal bonds 8% Other developed market government bonds investment grade
The Group Risk Policy describes Swiss Re’s risk mandate, including our Group risk appetite framework (see page 64), and articulates the Group’s four fundamental risk management principles. We strive to apply these four principles consistently across all risk categories at Group, Business Unit and legal entity level: ̤ Controlled risk-taking: financial strength and sustainable value creation are central to Swiss Re’s value proposition. The Group thus operates within a clearly defined risk policy and risk control framework.
Risk-taking activities are typically subject to three lines of control. The first comprises the day-to-day risk control activities by front-line employees (risk takers) in the business as well as in corporate and enabling functions. Independent oversight performed by functions such as Risk Management and Compliance represents the second line of control. The third consists of independent audits of processes and procedures carried out by Group Internal Audit or by external auditors.
The Group CRO leads the independent Risk Management function, which is responsible for risk oversight and control across Swiss Re. It thus forms an integral part of Swiss Re’s business model and risk management framework. The Risk Management function is comprised of central teams providing specialised risk expertise and oversight, as well as dedicated risk teams for the Reinsurance, Corporate Solutions, and Life Capital (formerly Admin Re®) Business Units.
Transparency Swiss Re’s risk culture builds upon the Group Code of Conduct as well as the Group Risk Policy and stands for the risk and control related values, knowledge and behaviour shared by all its employees. Swiss Re fosters and maintains a strong risk culture to promote risk awareness, rigor and discipline. It also serves to influence appropriate behaviour in four key cultural aspects, which are assessed annually in the performance and compensation process: ̤ Leadership in providing clear vision and direction ̤ Consideration of risk relevant information in decision-making ̤ Risk governance and accountability of risk takers as well as transparent flow of risk information
In order to assess the risk and provide solvency information for individual financial reporting entities within a network of entities, it is necessary to consider the impact of intra-group relationships. For this purpose, the Group’s internal risk model takes the following items into account: ̤ Intra-group transactions (including loans, guarantees and retrocessions) ̤ Intra-group credit risk and (for SST)
Credit risk is monitored and controlled by dedicated credit risk management experts within the Group’s Financial Risk Management team.
Swiss Re works closely with industry peers to develop and share best practices for assessing and managing model-related risks. In this context, we are actively participating in a CRO Forum working group that provides a platform for such exchanges and is working on frameworks for model risk.
Actuarial Control regularly performs deep dive investigations into selected portfolios in order to review the appropriateness of both the reserves and the applied reserving approach. In 2016, Actuarial Control further refined its internal governance to establish common standards throughout the entire reserving process.
̤ the Board Committee Charters, outlining the duties and responsibilities of the Board committees.
The Board of Directors therefore revised the SRL & Group Bylaws and SRZ, SRCS, SRLC & Business Unit Bylaws comprehensively in 2015/2016 with the following aims: ̤ Implementation of corporate governance changes based on the new Group Target Operating Model; and
The subscription rights of existing shareholders may not be excluded with respect to a maximum of CHF 5 000 000 through the issue of up to 50 000 000 registered shares, payable in full, each with a nominal value of CHF 0.10, out of the total amount of authorised capital.
Power Holdings Company Ltd and the Hong Kong and Shanghai Banking Corporation Ltd
Professional experience Trevor Manuel served in the South African government for more than 20 years, including as Minister of Finance from 1996 to 2009 and as Minister in Presidency, responsible for the National Planning Commission, from 2009 to 2014. He held positions at international bodies, including the United Nations Commission for Trade and Development, the World Bank, the International Monetary Fund, the G20, the African Development Bank and the Southern African Development Community. Trevor Manuel is Chancellor of the Cape Peninsula University of Technology, Professor Extraordinaire at the University of Johannesburg and Honorary Professor at the University of Cape Town.
commitment, availability, capacity and independence required in fulfilling their role as Board member.
Term of office Effective since the Annual General Meeting 2014, the members of the Board of Directors are elected for a term of office until completion of the next General Meeting of shareholders. Members whose term has expired are immediately eligible for re-election.
Nominations for re-election and election by the Annual General Meeting on 21 April 2017 On 1 January 2014 the Ordinance Against Excessive Compensation at Public Corporations entered into effect. It provides that, as of the Annual General Meeting 2014, the shareholders will annually elect the members of the Board of Directors, the Chairman of the Board of Directors, as well as the members of the Compensation Committee, individually and separately, for one-year terms. The Board of Directors proposes that the following Board members be re-elected for a one-year term: ̤ Walter B. Kielholz ̤ Raymond K.F. Ch’ien ̤ Renato Fassbind ̤ Mary Francis ̤ Rajna Gibson Brandon ̤ C. Robert Henrikson ̤ Trevor Manuel ̤ Philip K. Ryan ̤ Sir Paul Tucker ̤ Susan L. Wagner
̤ regulates the compensation framework of the Swiss Re Group as well as the Board of Directors and Group EC compensation for ultimate approval by the General Meeting of shareholders.
Professional experience David Cole began his career in 1984 with ABN AMRO. In 1999, he was appointed Executive Vice President and regional Head of Risk Management for Latin America, located in Brazil. In 2001, he returned to Amsterdam to assume Corporate Centre responsibility within Group Risk Management. He became Chief Financial Officer of Wholesale Clients (WCS) in 2002 and was appointed Senior Executive Vice President and Chief Operating Officer of WCS in 2004. In January 2006, he became Head of Group Risk Management for ABN AMRO Bank and in 2008 was named Chief Financial Officer and Chief Risk Officer.
Chief Executive Officer Reinsurance Europe, Middle East and Africa (EMEA)/ Regional President EMEA
Professional experience Thierry Léger started his career in the civil construction industry before joining Swiss Re as an engineering underwriter in 1997. In 2001 he moved to Swiss Re New Markets, providing non-traditional solutions to insurance clients. Between 2003 and 2005 he was a member of the executive team in France as leader of the sales team. From 2006 Thierry Léger assumed increasing responsibility for Swiss Re’s largest clients, ultimately becoming the Head of the newly-created Globals Division in 2010 and a member of the Group Management Board. In 2013, Thierry Léger became Head of L&H Products Reinsurance. As of 1 January 2016 he was appointed Chief Executive Officer Life Capital and member of the Group Executive Committee.
Registrations in the share register In recent years, Swiss Re Ltd has recognised the voting rights of shares registered no later than two working days before the General Meeting of shareholders.
The official medium for publications of the company is the Swiss Official Gazette of Commerce (Schweizerisches Handelsamtsblatt). In addition, we use our website to provide comprehensive, timely news and information on our activities as well as background discussion and analysis of issues relating to Swiss Re’s business and the broader insurance and reinsurance industries. Investors and other stakeholders can subscribe to receive ad hoc disclosures and further corporate news automatically at www.swissre.com/media. Our contact details are provided on page 316.
Sector leader in the Dow Jones Sustainability Indices Swiss Re was once again named insurance industry group leader in the Dow Jones Sustainability Indices for 2016. This is the tenth time since 2004 that we have led our industry group in these rankings. The award highlights our long-term commitment to sustainable business and our efforts to continuously and progressively embed sustainability into key business processes and operations.
Not materialised * Starting in mid-2015, we have refined our SBR process, which has led to a decrease in the number of referrals
Executive/senior management positions1 21.4 22.1 22.9 All management positions1 31.5 32.2 32.9 1 “Executive/senior management positions” comprises the management levels of Director/Senior Vice President upwards. “All management positions” refers to Vice President and above.
The VAI 2012 performance factor of 101.5%, which applies to all Group functions, was driven by slightly positive business developments and good investment performance in 2013, mostly offset by the investment underperformance in 2014 and 2015.
Base salary Base salary is the fixed compensation paid to employees for carrying out their role and is established based on the following factors: ̤ scope and responsibilities of the role, and qualifications required to perform the role; ̤ market value of the role in the location in which Swiss Re competes for talent; and
Funding of the Annual Performance Incentive and Leadership Performance Plan pools The Compensation Committee focuses on both financial results and qualitative criteria in determining global variable compensation pools.
Benchmarking The external compensation advisor to the Compensation Committee conducts an annual review of the compensation for the Group EC relative to a group of reference companies in the financial services industry to ensure that market competitiveness is maintained. The reference companies are regularly reviewed by the Compensation Committee to ensure their continued relevance. The core peer group consists of the following globally active primary insurance and reinsurance firms: Allianz SE, American International Group Inc, Aviva PLC, AXA SA, Chubb Limited, Hannover Rueck SE, Metlife Inc, Muenchener Rueckversicherungs- Gesellschaft AG, Prudential Plc, QBE Insurance Group Ltd, Reinsurance Group of America Inc, SCOR SE, XL Group Ltd and Zurich Insurance Group Ltd.
Influence of the behavioural assessment on compensation The risk and control related behaviour assessment of Group and business functions provides additional input for helping determine the Group API pool and its allocation to each business function.
Pensions, social security and benefits 12 767 473 14 053 479
3 Covers 2015 equity sign-on awards which were not included in the 2015 Compensation Report.
Fixed compensation Base salaries 213 77 210 79 Pensions, social security and benefits 213 39 210 35
Compensation decisions for members of governing bodies The section below is in line with Swiss law and specifically with Arts. 14 to 16 of the Ordinance which requires disclosure of compensation granted to members of the Board of Directors and the Group EC. Compensation to members of the Board of Directors and the highest paid member of the Group EC is shown separately.
CHF 45.4 million (including the effects of the Group CEO change from Michel Liès to Christian Mumenthaler as per 1 July 2016 and the promotion of Moses Ojeisekhoba to CEO Reinsurance as per 1 July 2016); ̤ Additional total compensation of approximately CHF 6 million was paid to the new members of the Group EC: Thierry Léger (new CEO Life Capital) for the full year 2016 and to Jayne Plunkett (new CEO Reinsurance Asia) for the second half of the year 2016. The CHF 45.4 million and CHF 6 million combine to give a total of CHF 51.4 million for the 14 members in 2016 (shown in the table above); ̤ The aggregate amount for fixed compensation, pensions, social security, allowances and other benefits and for long-term variable compensation of the above mentioned 12 members of the Group EC in 2016 was CHF 29.5 million and therefore within the budget of CHF 31.0 million approved by the AGM 2015 for these 12 members of the Group EC. Such amount included a reserve of 10% which was only partially used, primarily to cover foreign taxes in connection with a change of residence in accordance with Swiss Re’s international assignment rules; and
2 Benefits or allowances paid in cash. Consisting of housing, schooling, lump sum expenses, relocation expenses/ taxes, child and similar allowances. 3 For 2016, subject to shareholder approval at the AGM 2017. For 2015, as part of the aggregate amount of shortterm variable compensation approved by the shareholders at the AGM 2016.
2 Term of office expired at the AGM of 21 April 2015 and did not stand for re-election. 3 Term of office expired at the AGM of 22 April 2016 and did not stand for re-election. 4 Includes fees received for duties on the board of Luxembourg Group companies. 5 Elected to Swiss Re’s Board of Directors at the AGM of 21 April 2015.
Acquired present value of future profits 6 2 964 2 003
Changes during the period –2 670 1 711 Balance as of period end 2 748 4 459
Net income after attribution of non-controlling interests 4 665 3 626 Interest on contingent capital instruments, net of tax –68 –68 Dividends on common shares1 –1 328 –1 561 Cancellation of shares bought back –841 Balance as of period end 37 526 38 682 168 Swiss Re 2016 Financial Report
Share-based payment transactions As of 31 December 2016, the Group has a Leadership Performance Plan, stock option plans, restricted shares, and a Global Share Participation Plan. These plans are described in more detail in Note 15. The Group accounts for share-based payment transactions with employees using the fair value method. Under the fair value method, the fair value of the awards is recognised in earnings over the vesting period.
FINANCIAL STATEMENTS Notes to the Group financial statements a) Business segments – income statement For the year ended 31 December 2015 USD millions
Acquired present value of future profits 1 134 1 830 2 964
Fee income from policyholders 49 49 Net investment income – non-participating business 865 465 1 330 Net realised investment gains/losses – non-participating business 89 42 180 311 Net investment result – unit-linked and with-profit business 42 42
2 Letter of credit fees of USD 45 million in Life & Health Reinsurance have been reclassified from “Operating expenses” to “Interest expenses”. 3 The Group’s new internal service cost framework resulted in a reallocation of operating expenses to Group items from the Life & Health Reinsurance segment. Comparative information for 2015 has been adjusted accordingly.
Management expense ratio in % 6.2 5.5 6.0 Net operating margin1 in % 9.0 8.5 10.4 1 Net operating margin is calculated as “Income before interest and income tax expense” divided by “Total revenues” excluding “Net investment result – unit-linked and withprofit business”.
The 2007 accident year includes the run-off of business written by entities acquired as part of the acquisition of General Electric Insurance Solutions during 2006. This business was not renewed. The increase in incurred losses for accident years 2015 and 2016 compared to previous accident years is due to an increase in the volume of workers' compensation written.
In certain situations, the Group uses inputs to measure the fair value of asset or liability positions that fall into different levels of the fair value hierarchy. In these situations, the Group will determine the appropriate level based on the lowest level input that is significant to the determination of the fair value.
Total subordinated long-term debt as of 31 December 2016 5 630 Total subordinated long-term debt as of 31 December 2015 6 823
Effect of dilutive securities Change in income available to common shares due to contingent capital instruments1 68 68 Change in average number of shares due to contingent capital instruments 35 745 192 35 745 192 Change in average number of shares due to employee options 2 241 636 1 768 217
Effect on total of service and interest cost components 1 –1 Effect on post-retirement benefit obligation 27 –23
Global Share Participation Plan In June 2013, Swiss Re introduced the Global Share Participation Plan, which is a share purchase plan that was rolled out for the benefit of employees of companies within the Group. Swiss Re makes a financial contribution to participants in the Plan, by matching the commitment that they make during the plan cycle with additional Swiss Re shares.
Grant date fair value in CHF 52.59 60.21 61.37 50.04 262 Swiss Re 2016 Financial Report
The Group consolidates an investment vehicle, because the Group holds the entire interest in the entity and makes investment decisions related to the entity. The investment vehicle is a VIE under ASU 2015-02, because it is structured as an umbrella company comprised of multiple sub-funds. The majority of the investments held in this vehicle are accounted for as available-forsale and are disclosed in the investment note and not included in the tables below.
Fixed income securities available-for-sale 52 525 Equity securities available-for-sale 492 Policy loans, mortgages and other loans 1 876
Key audit matter Given the ongoing market volatility and macroeconomic uncertainty, investment valuation continues to be an area of inherent risk. The risk is not the same for all investment types and is greatest for those listed below, where the investments are more difficult to value because quoted prices are not always available: ̤ Fixed income securitised products ̤ Fixed income mortgage and asset-backed securities ̤ Private placements ̤ Private equity ̤ Derivatives — equity funds ̤ Derivatives — credit contracts ̤ Derivatives — rates ̤ Other derivatives and insurance-related financial products
data utilised by the Company’s actuaries in estimating P&C loss reserves.
The provision for currency fluctuation comprises the net effect of foreign exchange gains and losses arising from the yearly revaluation of the opening balance sheet and the translation adjustment of the income statement from average to closing exchange rates at year-end. These net impacts are recognised in the income statement over a period of up to three years. Where the provision for currency fluctuation is insufficient to absorb net foreign exchange losses for the financial year, the provision for currency fluctuation is reduced to zero and the excess foreign exchange loss is recognised in the income statement.
Restricted shares For the years ended 31 December 2015 and 2016, neither the members of the Board of Directors nor the members of the Group EC held any restricted shares.
In performing impairment assesments of investments in subsidiaries and affiliated companies, management uses considerable judgement in determining different valuationmethod inputs.
̤ the lowering or loss of financial strength or other ratings of one or more Group companies, and developments adversely affecting the Group’s ability to achieve improved ratings; ̤ the cyclicality of the reinsurance industry; ̤ uncertainties in estimating reserves; ̤ uncertainties in estimating future claims for purposes of financial reporting, particularly with respect to large natural catastrophes, as significant uncertainties may be involved in estimating losses from such events and preliminary estimates may be subject to change as new information becomes available; ̤ the frequency, severity and development of insured claim events; ̤ acts of terrorism and acts of war; ̤ mortality, morbidity and longevity experience; ̤ policy renewal and lapse rates; ̤ extraordinary events affecting the Group’s clients and other counterparties, such as bankruptcies, liquidations and other credit-related events; ̤ current, pending and future legislation and regulation affecting the Group or its ceding companies and the interpretation of legislation or regulations by regulators; ̤ legal actions or regulatory investigations or actions, including those in respect of industry requirements or business conduct rules of general applicability; ̤ changes in accounting standards; ̤ significant investments, acquisitions or dispositions, and any delays, unexpected costs or other issues experienced in connection with any such transactions; ̤ changing levels of competition; and
The Group is also subject to credit and other risks in its credit business, including reliance on banks that underwrite and monitor facilities in which the Group participates and potential default by borrowers under those facilities.
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) and the UK Ministry of Justice’s decision on whether to change the personal injury discount rate (based on the so-called Ogden tables) in the United Kingdom (which could have a significant impact on claims payouts and reserving)); macro developments giving rise to emerging risks, such as climate change and technological developments (including greater exposure to cyber risks, which could have a range of consequences from operational disruption, to loss of proprietary or customer data, to greater regulatory burdens and potential liability); risks arising from the Group’s dependence on policies, procedures and expertise of ceding companies; risks related to investments in emerging markets; and risks related to the failure of, or attacks directed at, the Group’s operational systems and infrastructure. Any of the foregoing, as well as the occurrence of future risks that the Group’s risk management procedures fail to identify or anticipate, could have a material adverse effect on the Group, and could also give rise to reputational risk.
Regional Presidents * Since 1 January 2016 Admin Re® is part of the Business Unit Life Capital.
2 FY 2016 is estimated based on average year-to-date CHF/USD FX rates as of February 2017. The dividend is subject to Annual General Meeting (AGM) approval and the amount depends on the final number of dividend eligible shares and FX rates upon dividend payout.
Reporting frameworks The present report incorporates our 2016 Communication on Progress for the UN Global Compact (www.unglobalcompact.org/). References to the Compact’s ten principles are incorporated into the GRI Content Index (see pages 87–91). For the third consecutive year, we also report against the Principles for Sustainable Insurance, PSI (www.unepfi.org/psi). You can find our Public Disclosure of Progress on page 86.
This general trend will continue. But crucially, losses will be further aggravated by climate change. The scientific consensus is that a continued rise in average global temperatures will have a significant effect on weather-related natural catastrophes. According to the Special Report on Extremes (SREX, 2012) and the Fifth Assessment Report (AR5, 2014), published by the Intergovernmental Panel on Climate Change (IPCC, www.ipcc.ch), a
Offshore wind farms come with complex risks. Swiss Re Corporate Solutions has the financial capacity and the technical know-how to offer effective insurance for such risks.
Demand for commercial health insurance solutions has also been growing, driven by several major demographic and socio-economic trends. These include: the greater healthcare needs of ageing societies; rising healthcare expectations of the new middle class, especially in growth markets; and healthcare finance reform, particularly in mature markets. We offer a variety of health reinsurance solutions to meet these needs, from short-term protection against the risk of volatility in medical expenses for insurers or employers, to very long-term protection against the financial impact of disability or critical illness.
In the US, for example, several state insurance regulators are evaluating the impacts of climate change on re/insurers, including through insurer surveys. The State of California even requires insurers to disclose investments in fossil fuels and is asking them to divest voluntarily from thermal coal concerns. In Europe, certain EU insurance supervisors, including the UK’s Prudential Regulation Authority (www.bankofengland.co.uk/pra), are examining the impact of climate change on insurer underwriting and investment risks.
2016 – ESG: An integral part of the investment process We look at ESG integration primarily from the viewpoint of generating sustainable long-term returns, which aligns well with our focus on a highquality investment portfolio. ESG integration makes economic sense because it improves risk/return profiles. As part of our active risk management, we are therefore adopting ESG-based benchmarks in our credit and equity portfolios.
In 2016, the Centre for Global Dialogue organised the “Agricultural and Natural Catastrophe Insurance Forum” to discuss the underlying challenges, assess possible solutions and share experiences. Nearly 40 Chinese government officials and insurance professionals met with international experts to explore the feasibility of introducing parametric solutions across China, drawing on the learnings offered by the two pilot projects in Heilongjiang and Guangdong. In addition, experts from Swiss Re and other organisations elaborated on the latest developments in flood risk management, catastrophe bonds, agricultural and aquaculture insurance, and public-private partnerships.
̤ We have regularly contributed to platforms such as the World Economic Forum, B20, G20 and G8 to share our insights on key risks, and support the United Nations Framework Convention on Climate Change (UNFCCC) process.
The insurance sector plays a key role in supporting Africa’s policymakers and governments with long-term solutions to the challenges ahead and safeguarding growth across Sub-Saharan Africa as a whole. ̤ Through the pooling of risk, insurers and reinsurers enable African citizens and businesses to be confident they are protected against adverse risk events that could destroy their business or livelihood.
The goal of this initiative is to unite 100 of the world’s largest companies in a shared commitment to use 100% renewable power by 2020. To achieve this, the RE100 group approaches policymakers and regulators at national and sub-national level to make renewable energy more available. RE100 grew substantially again in 2016 and now includes more than 80 of the world’s largest companies.
We have received the preliminary MINERGIE-P-ECO® certificate and successfully passed the LEED design review.
At Swiss Re we aim to collaborate in the spirit of “Let’s be smarter together”, because together we can achieve much more than we ever could alone. Our organisation constantly looks for new ways to improve the wellbeing of society and prepares for the changing needs of the future, drawing on the know-how and experience of a diverse, multigenerational group of employees. We aspire to be a place where a flexible and inclusive culture is the norm and where everyone can contribute. We are passionate about building an environment of trust, respect, cooperation and responsibility. Where how we achieve results is every bit as important as what we achieve.
In terms of our key strengths, 82% of surveyed employees feel that Swiss Re values diversity and has an open, inclusive culture. All questions about manager effectiveness are above or close to the high performance
The Association of Chartered Certified Accountants, the global body for professional accountants, awarded Swiss Re approved employer status. Therefore, participation in the Swiss Re
Academy’s development options are now credited with Continuous Professional Development points, enabling our people to retain their professional qualifications.
Number of employees who have recorded absence due to illness 1 900 1 979 1 809 Average number of sick days 7.4 7.2 7.9
The network also includes our retirees. This important group of stakeholders continues to take great interest in the company. Through extended access rights, we enable them to utilise resources that are normally available to employees only.
Further information on Swiss Re’s approach to compensation and benefits can be found in our 2016 Financial Report (pages 138–163).
All the members of the Board of Directors meet our independence criteria with the exception of our Chairman. In line with Swiss Re’s independence criteria, he is not considered independent being a fulltime Chairman. In addition to the independence criteria applicable to Board members in general, additional independence criteria apply for members of the Audit Committee.
Natural catastrophes are increasing in frequency and severity. What is more, the gap between economic and insured losses has remained stubbornly large. The consequences are especially severe in emerging markets, which are both the worst hit and the least prepared. Tools exist to narrow that gap using innovative solutions that can help countries, cities and individuals preserve hard-won development gains.
Food safety in a globalised world: Keeping our food safe in the 21st century
Risk management tools that ensure our food is safe already exist, but they must be applied and adapted to ever more complex global markets and supply chains. Adaptation also means spreading lessons learned. This publication is part of the process.
Our responsibility Our responsibility is to form an independent opinion, based on our limited assurance procedures, on whether anything has come to our attention to indicate that the corporate responsibility information reporting is not stated, in all material respects, in accordance with the reporting criteria. We planned and performed our procedures in accordance with International Standard on Assurance Engagements 3000 (revised), Assurance Engagements other than Audits or Reviews of Historical Financial Information, and, in respect of greenhouse gas emissions, International Standard on Assurance Engagements 3410, Assurance Engagements on Greenhouse Gas Statements, issued by the International Auditing and Assurance Standards Board. These standards require that we plan and perform this engagement to obtain limited assurance about whether the identified CR indicators are free from material misstatement.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our assurance conclusions.
Conclusion Based on our work performed and described in this report on the identified CR Reporting 2016 nothing has come to our attention causing us to believe that in all material respects: a) Nothing has come to our attention that causes us to believe that the Swiss Re internal CR reporting guidelines are not applied in all material respects, in accordance with the reporting criteria; b) Nothing has come to our attention that causes us to believe that the internal reporting processes to collect and aggregate CR data and information is not functioning as designed and does not provide an appropriate basis for the presentation of CR data and information, in all material respects; c) Nothing has come to our attention that causes us to believe that the CR data and information disclosed in the 2016 CR Report is not stated, in all material respects, in accordance with the reporting criteria; d) Nothing has come to our attention that causes us to believe that the CO2 emissions data and information disclosed in the 2016 CR Report is not stated, in all material respects, in accordance with the reporting criteria; and e) Nothing has come to our attention that causes us to believe that the retirement of 80 700 tonnes of CO2e has not been conducted, in all material aspects, in accordance with the internal requirements.