A strategy to help meet our financial targets and to make the world more resilient.
Swiss Re’s strategic framework
1 Systematically allocate capital to risk pools/revenue streams
Capital allocation is at the core of our Group’s strategy. We allocate capital to risk pools and measure performance over time. We believe disciplined and agile capital allocation is the key to outperformance and the engine to pursue our strategic ambitions.
To support that capital allocation we devote substantial resources to developing state-of-the-art knowledge of the risks we underwrite and assets we invest in, looking at both historical performance and future outlook.
Over time Swiss Re has been an agile capital allocator and we are continuing to steer capital toward lines of business where the outlook is most positive and pruning in lines where trends are unfavourable.
2 Broaden and diversify client base to increase access to risk
Many lines of business face shrinking cession rates and competition is increasing overall. At the same time, new risks are emerging while other underinsured risks continue to grow. We believe new client segments and distribution channels — both of which have been enhanced by technology — can strengthen our position as the supply and demand equilibrium shifts.
3 Optimise resources and platforms to support capital allocation
We have more than doubled our workforce in key high growth markets since 2011 and invested in strengthening our IT architecture, adding smart analytics and cognitive computing to our toolset. We are also investing in our financial steering and reporting capabilities to become an industry leader in financial management.
4 Emphasise differentiation
We continue to build on the aspects that set Swiss Re apart: our financial strength, our client relationships and our status as a risk knowledge company.
In 2016 we took another step forward by announcing the creation of the Swiss Re Institute, which we believe will further differentiate us from our peers. The Swiss Re Institute will leverage and steer our research and development activities, building on our role as a knowledge partner for clients.
Technological innovation is another source of differentiation, especially when we can deliver unique products and solutions, such as CatNet. CatNet plots hazard, loss, exposure and insurance information over maps and satellite imagery to help visualise the risk of individual locations or entire client portfolios.
Such examples illustrate the superior service and unique approach that we strive to deliver to our clients.
Growth Through systematic capital allocation
Large & tailored transactions
High growth markets
Risk knowledge Supporting capital allocation
Research & development
People & culture
Our near-term priorities focus on achieving growth in targeted areas and sustaining the risk knowledge that underpins our capital allocation overall.
Reinsurance is our core business. Market conditions are challenging, however, and prices have reached unsustainable levels in some lines of business and markets. We therefore emphasise to investors, clients, employees and others that we remain committed to disciplined underwriting and long-term success.
One way to achieve growth in a challenging reinsurance market is through large and tailored transactions, where margins are seen as more favourable. We can also achieve growth by getting closer to policyholders, such as corporate customers of Corporate Solutions and life and health policyholders through Life Capital. Finally we are increasing our presence in high growth markets, where we expect substantial, long-term growth.
Swiss Re is a risk knowledge company. In 2016 we announced the creation of the Swiss Re Institute to defend and even enlarge this source of competitive advantage. We have long employed leading experts in the perils we insure and the activities we undertake, investing over 3 200 man-years in research & development over the past 25 years. We believe this advantage is virtually impossible for new players to replicate within a reasonable time frame. We are especially eager to capitalise on the enormous technological opportunities before us and have prioritised activities in this area as well.
Return on equity
At least 700 basis points greater than Swiss Re’s designated risk-free rate, currently ten-year US government bonds.
Economic net worth (ENW) per share
10% growth per annum per share, using year-end ENW plus dividends, divided by prior year-end ENW.