Group strategy

A strategy to help meet our financial targets and to make the world more resilient.

Swiss Re’s strategic framework

I. Systematically allocate capital to risk pools/revenue streams

II. Broaden and diversify client base to increase access to risk

III. Optimise resources and platforms to support capital allocation

IV. Emphasise differentiation

Areas of strategic action

  1. Systematically allocate capital to risk pools/revenue streams

    We have a defined target portfolio of asset and liability risks. Risks can always be added to this target portfolio, and they may also be withdrawn.

    Flexible capital allocation among these portfolios — and taking advantage of the diversification benefits — is what drives value creation at Swiss Re. We aim to make our decisions based on capital usage and returns from each portfolio, balancing cash flow, Economic Value Management (EVM) and US GAAP metrics.

    See this strategy in action: Using key trends and metrics to achieve results

  2. Broaden and diversify client base to increase access to risk

    New markets, new clients and new risks: these are the three primary ways to achieve this strategic objective. We aim to generate 30% of premiums and fee income from targeted high growth markets by 2020. We also aim to serve broader client segments, such as expanding our regional and national insurer client base and even expanding to work with governments and multilateral institutions. We can also find new opportunities — helping clients deal with new risks such as cyber threats or taking on different risks through our investments, such as infrastructure debt.

    See this strategy in action: Finding new clients and new risks

  3. Optimise resources and platforms to support capital allocation

    Our capital allocation strategy requires us to attract the right talent and to equip them with the right resources, platforms and processes. Reaching new markets, for example, often requires local expertise. For this reason our local talent pool in high growth markets has more than doubled between 2011 and 2015.

    This strategic focus goes beyond talent and geographies. Smart analytics and cognitive computing, for example, have the potential to change our industry. Our initiatives focus on concrete applications with direct business impact, such as in sales and contracts.

    See this strategy in action: Bringing deep insight and industry understanding

  4. Emphasise differentiation

    Financial strength, client relationships, and being a knowledge company are the main components of our differentiation. All three have underpinned our strong performance. They remain pivotal going forward. Our clients take comfort in our financial strength. This helps form direct client relationships through which we can deliver large and tailored transactions. As part of our offer we bring top talent and a deep understanding of market dynamics — the practical benefit of being a knowledge company.

    See this strategy in action: Setting ourselves apart by generating knowledge

Financial targets

Return on equity

At least 700 basis points greater than the risk-free rate, as measured by ten-year US government bonds.

Econo­mic net worth per share

10% growth per annum, using year-end ENW plus dividends, divided by previous year-end ENW.

Over the past five years our strategy has worked — and now we have the chance to build on it.

At our December 2015 Investors’ Day we introduced the next phase in our Group’s strategic framework. It has four key areas, each of which we will emphasise even more strongly to better position ourselves for continued success.

The strategic framework shown to the right represents the next phase of a transformation journey that we accelerated in 2012, when we completed our Business Unit structure. Our aim then was to become the most successful capital allocator in insurance and associated asset risks while maintaining our strong balance sheet.

The framework is our roadmap for continuing on that path, focusing on four key areas.

The first area for strategic action is to systematically allocate capital to risk pools and revenue streams. Capital allocation is at the core of our Group’s strategy. We allocate capital to risk pools and measure performance over time. Disciplined and agile capital allocation is the key to outperformance and the engine to pursue our strategic ambitions.

The second area is to broaden and diversify our client base. Many lines of business face shrinking cession rates and competition is increasing overall. At the same time, new risks (such as cyber) are emerging while other underinsured risks continue to grow. We believe new client segments and distribution channels can strengthen our position as the supply and demand equilibrium shifts.

The third area is the optimisation of resources and platforms. We have more than doubled our workforce in high growth markets since 2011 and invested in strengthening our IT architecture, adding smart analytics and cognitive computing to our toolset.

Lastly, it is important to emphasise differentiation. This strategic priority builds on what makes us who we are: our financial strength, our client relationships and our status as a knowledge company. We must continue to offer superior service and a differentiated and unique approach to our clients.

We believe these four areas of strategic action will better position us to deliver on our new Group financial targets, which we communicated in February 2015.

This strategy is also designed to meet a larger goal: to make the world more resilient. Success in our industry means protecting society. That is why we claim “We make the world more resilient” as our vision for the future. We provide both the necessary risk management expertise and the re/insurance coverage to absorb risks and rebuild after a disaster strikes.

The strategy supports our overall mission: together, we apply fresh perspectives, knowledge and capital to anticipate and manage risk. That’s how we create smarter solutions for our clients, helping the world rebuild, renew and move forward.