Swiss Re Spells Out Future Strategy

Swiss Re’s Group Chief Executive Officer Christian Mumenthaler (pic) has told investors that the company will see to drive growth with the use of technology and increased participation into risk pools as the world’s risk exposures continue to grow.

Speaking at the company’s investor day today he outlined the reinsurer’s strategy for the future.

He said: “Swiss Re’s strategy is centred around diversifying our access to risk pools by leveraging our risk knowledge, unique client access and capital strength. We are winning an increasing proportion of reinsurance business through our capabilities in underwriting large transactions and providing innovative solutions. We are investing in research and technology to give us an edge in accessing growing risk pools, such as natural catastrophe, and drive forward our Corporate Solutions and Life Capital businesses. The Group’s superior capital strength allows us to capture such opportunities and maintain attractive shareholder returns.“

The strategy said that an integral part of its ability to deliver will focus on monetising its research and development (R&D) capabilities, thereby cementing Swiss Re’s position as the leading risk knowledge company.

The Group is running 80 R&D programs with 450 dedicated FTEs and investing about US$300 million a year in key technology projects.

“The aim is to strengthen Swiss Re’s proprietary risk knowledge and to advance its capabilities to enter new risk pools, compete and advise. In particular, digital platforms such as iptiQ, the digital B2B2C business, and Magnum, the leading automated underwriting solution for L&H Re, are becoming a significant business driver,” It added.

“The Reinsurance Business Unit remains the core engine of profitability for the Group, delivering a market-leading combination of shareholder returns and capital repatriation,” it added. “P&C Re’s average performance remains strong despite significant natural catastrophe claims in recent years. L&H Re delivers peer-leading returns underpinned by global diversification and strong growth in Asia.

“Transactions and Solutions are becoming ever more important to Swiss Re’s offering and demonstrate significant further growth potential. Transactions, which contributed approximately 30% to the Business Unit’s economic profit in 2018, continue to be in demand because they can meet a range of client needs, such as greater capital efficiency or reduced earnings volatility. With Solutions, Swiss Re helps its clients to deliver on their strategic priorities, such as improving profitability, developing new products or increasing efficiency. The percentage of clients with whom Swiss Re partners on Solutions has grown from 15% to 25% in just two years.”

The reinsurer said it intends to further grow and diversify its natural catastrophe portfolio, with a positive effect on earnings. The natural catastrophe reinsurance market is forecast to grow to about $40 billion over the next four years from $30 billion now, according to Swiss Re Institute.

“It delivers attractive returns to the Group thanks to proprietary risk knowledge and diversification benefits,” it added.

Swiss Re’s Group Chief Financial Officer John Dacey said: “The establishment of Alternative Capital Partners enhances our already flexible capital structure. It allows us to consider all sources of capital holistically.“

In terms of the casualty sector Swiss Re said its casualty reinsurance portfolio is “well diversified and prudently reserved, giving the Group scope to absorb volatility”. The Group said it is taking targeted actions to improve profitability and manage risk within this portfolio to address a challenging US liability market environment.