Swiss Re Reports Good Results, with Full-Year Net Income of USD 3.6 Billion for 2016; Proposes New Share Buy-Back

ZURICH, Feb. 23 -- Swiss Reinsurance issued the following news release:

Corporate Solutions delivers net income of USD 135 million; ROE of 6.0 percent

Corporate Solutions' net income was USD 135 million in 2016 (vs USD 357 million in 2015). The 2016 result was impacted by continued pricing pressures and large man-made losses, mainly in North America, offset by lower-than-expected natural catastrophe losses, income from investment activities and realised gains from insurance in derivative form. The ROE was

6.0 percent (vs 15.5 percent). Management actions to address current market conditions have been taken.

Net premiums earned increased by 3.7 percent to USD 3.5 billion in 2016, driven by the IHC Risk Solutions, LLC acquisition completed in the first quarter of 2016. The combined ratio increased to 101.1 percent in 2016 (vs 93.2 percent).

Corporate Solutions continued to pursue its disciplined growth strategy. In 2016, Corporate Solutions acquired IHC Risk Solutions in the US, opened an office in Kuala Lumpur and obtained an insurance license in Hong Kong. In addition, the recently announced joint venture with Bradesco Seguros S.A., which is pending regulatory approval, will create a leading commercial large-risk insurer in Brazil.

Strong Life Capital net income of USD 638 million; ROE of 10.4 percent

Created on 1 January 2016, the Business Unit Life Capital manages Swiss Re's closed and open life and health insurance books, including the existing ReAssure (formerly Admin Re(R) UK), as well as the Guardian operations acquired in January 2016, and primary life and health insurance businesses.

Life Capital reported net income of USD 638 million in 2016, compared to USD 424 million in 2015. The increase was driven by a strong investment performance, mainly from the Guardian portfolio, and solid underlying business performance. The ROE was 10.4 percent (vs 7.5 percent), due to higher net income.

Premiums earned and fee income in 2016 rose 5.7 percent to USD 1.2 billion (vs USD 1.1 billion). Gross cash generation increased to USD 721 million in 2016 (vs USD 543 million).

Fourth quarter results

The Group reported net income of USD 517 million for the fourth quarter (vs USD 938 million in Q4 2015). Net investment income for the quarter was USD 881 million. The Group ROI was 2.8 percent (vs 2.7 percent).

P&C Re net income declined to USD 552 million (vs USD 710 million), after large losses in the US and New Zealand. The ROE for the fourth quarter was 17.4 percent. Net premiums earned rose to USD 4.3 billion. The combined ratio was 92.7 percent (vs 89.3 percent).

Net income in L&H Re was USD 172 million (vs USD 187 million). The ROE for the quarter decreased to 9.5 percent from 12.8 percent. Net premiums earned rose to USD 3.0 billion, driven by growth in the Americas and new business growth in Asia.

Corporate Solutions reported a USD 15 million net loss for the fourth quarter (vs a net income of USD 20 million in Q4 2015) due to continued pricing pressure and large man-made losses. The ROE for the quarter was -2.6 percent. Net

premiums earned increased by 5.9 percent to USD 909 million. The combined ratio was 105.9 percent (vs 99.0 percent).

Life Capital reported a net loss of USD 88 million (vs a net income of USD 151 million) due to unfavourable movements on the Guardian investment portfolio driven by rising interest rates in the fourth quarter. The ROE for the fourth quarter was -4.5 percent. Premiums earned and fee income was USD 295 million (vs USD 304 million). Gross cash generation for the quarter was USD 357 million with underlying cash generation benefiting from rising interest rates during the quarter.

Swiss Re Group Chief Financial Officer David Cole says: "We were reminded in the fourth quarter that large losses do occur, but paying claims and helping to make the world more resilient is what we're here for. In addition, we have the strength and skills to continue to focus on our agile capital allocation and stick to our capital management priorities."

Swiss Re showed disciplined underwriting at its January 2017 renewals

Swiss Re renewed USD 8.5 billion as compared to the USD 10.3 billion premium volume up for renewal on 1 January 2017. This represents a decrease of 18 percent, driven by disciplined underwriting and reduced capacity in almost all segments, in particular Chinese quota share business due to China Risk Oriented Solvency System (C-ROSS) regulation. Risk-adjusted price quality decreased slightly from 102 percent to 101 percent, exceeding the hurdle rate to achieve Swiss Re's targeted Group ROE of 700bp above risk free over the cycle.

Overall market conditions are challenging but rate decreases in property (including natural catastrophe business) and specialty have started to slow down. Casualty prices remain generally more stable with significant differences by market and product.

New quarterly financial reporting format

Going forward, Swiss Re will adjust the format of its financial reporting for the first and third quarter results. For these quarters, Swiss Re Ltd will report concise information on key financial metrics and business developments in press releases. Furthermore, it will maintain quarterly conference calls with the media as well as investors and analysts. Swiss Re will cease publishing full quarterly reports and investor presentations. First-half and full-year financial reports and investor presentations will continue to be published in its current form. Swiss Reinsurance Company Ltd, a subsidiary issuing debt and contingent capital instruments, will only publish annual and semi-annual financial reports going forward.

Swiss Re proposes to elect Jay Ralph and Joerg Reinhardt to the Board

The Board of Directors proposes to elect Jay Ralph and Joerg Reinhardt as new, non-executive and independent members at the Annual General Meeting of shareholders on 21 April 2017.

Jay Ralph was most recently a member of the Board of Management of Allianz SE and Chairman at Allianz Asset Management. His prior roles at Allianz include CEO of Allianz Re within Allianz SE, Munich and CEO of Allianz Risk Transfer, Zurich. He started his career at Arthur Andersen & Company, Chicago and went on to Northwestern Mutual Life Insurance Company, Milwaukee and Centre Re Bermuda Ltd, Bermuda before joining Allianz. Jay Ralph is an American and Swiss citizen and was born in 1959. He holds an MBA in Finance and Economics from the University of Chicago and a BBA in Finance and Accounting from the University of Wisconsin. He is also a Certified Public Accountant (CPA) and a Chartered Financial Analyst (CFA).

Joerg Reinhardt has been the Chairman of the Board of Directors of Novartis since 2013. He is also Chairman of the Board of Trustees of the Novartis Foundation. Previously, he was Chairman of the Board of Management and the Executive Committee of Bayer HealthCare, Germany. He was also a member of the Supervisory Board of MorphoSys AG in Germany and a member of the Board of Directors of Lonza Group AG in Switzerland. Reinhardt joined Sandoz Pharma Ltd. in 1982 and held various senior positions at Sandoz and later Novartis, including Head of Development and Chief Operating Officer. He is a German citizen and was born in 1956. He graduated with a doctorate in pharmaceutical sciences from Saarland University in Germany.

As already communicated on 29 July 2016, Swiss Re also proposes to elect Jacques de Vaucleroy to its Board of Directors. Carlos E. Represas, who has been a member of Swiss Re's Board since 2010, will not stand for re-election.

Matthias Weber to step down as Group Chief Underwriting Officer; Edouard Schmid to succeed him

After 25 years with Swiss Re, Matthias Weber has decided to step down from his current role as Group Chief Underwriting Officer, effective 30 June 2017, to begin a new chapter in his life. Matthias Weber has been with Swiss Re since 1992, working across a diverse number of roles and markets. At every stage, he has created value for the organisation and promoted its highest values, most significantly since April 2012, when he accepted his current position. He will be succeeded by Edouard Schmid, currently Head Property & Specialty Reinsurance, who has been with Swiss Re since 1991.

Swiss Re Chairman Walter B. Kielholz says: "We very much regret Matthias Weber's decision but we respect his desire to focus on his family after such a successful career. We will miss his experience and guidance as a member of the Group Executive Committee, but look forward to continuing our relationship in whatever form suits him. Over his long and successful career,

Matthias Weber has been a champion of Swiss Re strengths: disciplined underwriting and a focus on the long-term. We wish him all the best for the future."

Walter B. Kielholz continues: "Once again, due to our strong talent pipeline, we are able to fill the role with an internal candidate. Edouard Schmid, who has shown equal skill and dedication to our organisation will take over as Group Chief Underwriting Officer on 1 July 2017. He has broad underwriting experience across various lines of business, in varied markets and in both Reinsurance and Corporate Solutions. This exceptional track record makes him the ideal candidate to step into Matthias Weber's shoes."

Priorities for the future

At the Investors' Day in December 2016 Swiss Re introduced its near-term priorities that build on its strategic framework. As a result of this framework, Swiss Re is well placed to face industry challenges and seize opportunities. A fundamental pillar is risk knowledge, which is at the core of Swiss Re's competitive advantage and differentiation. Swiss Re uses this knowledge to allocate capital and invest in attractive risk pools.

In Reinsurance, Swiss Re's ability to write large and tailored transactions is a strong differentiator, offering profitable opportunities for growth. Corporate Solutions will continue its path of disciplined growth and Life Capital creates alternative access to life and health risks for Swiss Re. Finally, Swiss Re has established a strong presence in High Growth Markets.

The successful application of these priorities and the strategic framework enables Swiss Re to continue to focus on its over-the-cycle Group and Business Unit targets. Despite short-term challenges in the industry, the long-term outlook for accessing risk pools is positive.

Group Chief Executive Officer Christian Mumenthaler says: "The environment was more challenging in 2016 than in past years, but we achieved and exceeded the Group performance target we set ourselves. The disciplined underwriting strategy Matthias Weber accounted for was part of our past success and will remain key for our future profitability as I welcome Edouard Schmid to our Group Executive Committee and look forward to working with him. We are all determined to continue on our path of becoming a risk-knowledge company that invests into pools of risks with long-term growth potential. The upcoming launch of the Swiss Re Institute on 1 March 2017 highlights this ambition, bringing together our various high-quality research capabilities under one roof."

See the table here (http://media.swissre.com/documents/nr_20170223_fy_en.pdf)

The foregoing and the 2016 Financial Review of the Swiss Re Group contain updates on our business and results and preliminary unaudited financial information for 2016. The updates on our business and results will be included in our 2016 Annual Report, together with our audited financial statements for 2016 and other disclosures we are required to include or historically have included in an annual report. The foregoing and the 2016 Financial Review of the Swiss Re Group are not intended to be a substitute for the full 2016 Annual Report, which will be published on the Swiss Re website on 16 March 2017.

22KumarA-5787627 22KumarA