Reinsurance in Europe: The role of Swiss Re a global reinsurer in Switzerland

Transcription

1 Reinsurance in Europe: The role of Swiss Re a global reinsurer in Switzerland Agostino Galvagni, Swiss Re

2 Content Reinsurance and its value proposition Current reinsurance challenges Swiss Re s role in the European reinsurance sector Conclusions Slide 2

3 What is reinsurance? Insurance for insurers! Reduces volatility of insurers results Provides capital relief and flexible financing to insurers Grants insurers access to expertise and services, especially in the fields of product development, pricing and underwriting and claims management Reinsurance is the most important risk and capital management tool available to insurers Slide 3

4 Size of the reinsurance market: EUR 134bn, thereof EU: EUR 39bn Globally, 11% of direct premiums is passed to reinsurers (except for saving-type life business) Rest of EU 10% France 4% 1% 49% 3% Germany 7% United Kingdom 8% 6% 12% Slide 4 EU Switzerland 2005 figures, excl. cessions to affiliated companies Source: Swiss Re Economic Research & Consulting North America Latin America Asia Rest of World

5 Content Reinsurance and its value proposition Current reinsurance challenges Swiss Re s role in the European reinsurance sector Conclusions Slide 5

6 Growing values in exposed areas are a major driver of higher losses Ocean Drive, Miami, 1926 Ocean Drive, Miami, 2000 The number of Floridians increased by 70% from 1980 to 2001, while state GDP soared by 130% Slide 6

7 Katrina, Rita and Wilma (KRW) Large caps equipped to handle large events KRW total loss to (re)insurance industry: EUR 67bn Market capitalisation (USD) USD m > 15bn 5 15bn < 5bn 144% 75% Average net claim in % of shareholders' equity = 43% 60% % Swiss Re* % % Slide 7 0 Notes: Shareholders equity as of 2004; market cap as of * Swiss Re claims estimate net of equalisation reserve release 0% Current net claims estimate (before tax) Net claim in % of shareholders' equity Source: Company data

8 Main challenges faced by the reinsurance industry 1. Scale Capital markets can help 2. Diversification (by geography, by line of business) Recognition by regulators & rating agencies 3. Risk management, incl. a) dealing with emerging risks Recognition by regulators & rating agencies b) dealing with unlimited covers Recognition by legislators Slide 8

9 Content Reinsurance and its value proposition Current reinsurance challenges Swiss Re s role in the European reinsurance sector Conclusions Slide 9

10 Swiss Re in the EU Reinsurance/Insurance Carrier Branches/Permanent Establishment Rep Offices Swiss Re staff in the EU: approx (~30% of total) Swiss Re s premium volume in the EU: EUR 6.4bn (33% of total) United Kingdom, EUR 1773m France, EUR 789m Netherlands, EUR 430m Germany, EUR 1205m Slide 10 Italy, EUR 587m Note: 2005 gross premiums written, staff as at 30 September 2006

11 Swiss Re for the EU Swiss Re single event exposures, 200 year return period as of EURbn Gross Net Gross Net Gross Net Gross Net Gross Net European windstorm Swiss Re Atlantic hurricane Insurance Solutions California earthquake Japanese earthquake Combined net exposure* Japanese typhoons Slide 11 * Net of estimated hedging impacts (cat bonds, industry loss warranties, retrocessions)

12 Content Reinsurance and its value proposition Current reinsurance challenges Swiss Re s role in the European reinsurance sector Conclusions Slide 12

13 Conclusions The EU is a key market for Swiss Re Swiss Re serves the EU clients locally, but provides them with the benefits of its global knowledge, worldwide diversification and financial strengths Swiss Re welcomes the introduction of Solvency II as risk-based solvency regimes will encourage sound risk management practices and proper governance structures In particular, diversification as well as risk mitigation measures - including derivatives, reinsurance and securitization - should find appropriate consideration Slide 13

14 Appendix Slide 14

15 Reinsurance reduces volatility of insurers results 3 Overall French non-life market, EURbn Winter storm Lothar Underwriting result before reinsurance Underwriting result after reinsurance Slide 15 Sources: FFSA, Swiss Re Economic Research & Consulting

16 Acquiring GEIS, Swiss Re consolidates its global leadership position Top professional reinsurers by net premiums earned 2005 (USDm) Swiss Re Munich Re Berkshire Hathaway Group Hannover Re GE Insurance Solutions XL Capital RGA Partner Re Transatlantic Re P&C market share % * L&H market share % * Slide 16 Munich Re: Including intra-group transactions with NPE of USD 2 073m Gen Re: Gen Re and Berkshire Hathaway Re combined had NPE of USD m * Note that not all companies released their financial reports For these companies (eg CCR, Korean Re, Revios), 2004 figures were taken into account. Source: Strategy Development based on publicly available data

17 Reinsurance in Europe: The role of Swiss Re a global reinsurer in Switzerland