Report from the Compensation Committee

“During the last year, the Compensation Committee continued to monitor the alignment of the compensation framework with our long-term business strategy and shareholder interests.”

C. Robert Henrikson

Chairman of the Compensation Committee

Dear shareholders,

I am pleased to share with you Swiss Re’s Compensation Report for the financial year ended 31 December 2016, which has been prepared in accordance with applicable laws, rules and regulations.

Our vision “we make the world more resilient” is supported by our mission — to create smarter solutions for our clients through new perspectives, knowledge and capital. The combination of these strengths makes Swiss Re a partner of choice for our clients. At the same time Swiss Re wants to be an employer of choice for our employees. Its compensation framework is therefore designed to attract, motivate and retain the qualified talent the Group needs to succeed globally while providing superior returns to our shareholders. During the last year, the Compensation Committee continued to monitor:

• The alignment of the compensation framework with our long-term business strategy and shareholder interests;
• The effectiveness of the current performance measurement approach which assesses actual performance versus goals and then determines compensation outcomes;
• The competitiveness of compensation for the Group Board of Directors, Group Executive Committee (Group EC) and other executives; and
• Legal and regulatory developments including continued compliance of Board of Directors’ and Group EC compensation with the Ordinance against Excessive Compensation at Public Corporations (the Ordinance).

It also conducted a self-assessment of its own effectiveness.

The Compensation Committee would like to acknowledge the strong shareholder support at the Annual General Meeting (AGM) 2016. Swiss Re’s shareholders again approved the proposed aggregate compensation of the members of the Board of Directors and the Group EC. Additionally, all proposals for re-election and election to the Compensation Committee were approved and the 2015 Compensation Report received a positive outcome in the consultative vote.

Group business performance 2016

Key considerations for annual compensation decisions continue to cover a combination of US GAAP and Economic Value Management (EVM) based business results, qualitative factors and Swiss Re’s pay-for-performance approach. Compensation decisions were made considering Swiss Re’s overall performance for the reporting year in which the Group delivered good US GAAP and strong economic results. Net income was supported by all Business Units, with a strong contribution from investments. The Group’s overall underwriting performance was solid, with technical profitability across all businesses. Property & Casualty Reinsurance delivered good US GAAP and solid economic results. Life & Health Reinsurance exceeded its return on equity target and reported strong economic results. The Corporate Solutions US GAAP result was driven by continued pricing pressure and large man-made losses, and the economic result was impacted by the non-recognition of intangible assets (including goodwill) related to the IHC acquisition. Life Capital delivered a strong performance across all metrics and generated significant gross cash for the Group.

Group EC changes in 2016

During 2016 significant changes to the Group EC occurred whereby Christian Mumenthaler became the new Group Chief Executive Officer on 1 July 2016, succeeding Michel Liès. All subsequent vacancies were filled with strong internal candidates who were already members of the Group EC or promoted onto the Group EC, all proof of a strong and well established talent pool. The fixed compensation and variable long-term compensation granted to the existing members of the Group EC for 2016 was within the budget approved by the shareholders at the AGM 2015. An additional amount was available to cover compensation granted in 2016 to two new members of the Group EC because of their promotions which is in accordance with Art. 23 of the Articles of Association (see detailed disclosure in the Compensation Report).

Compensation framework

Swiss Re’s compensation framework is designed to promote long-term sustainable performance for the Group and its shareholders through a mix of fixed and variable compensation components. It comprises fixed components such as base salary, pensions and other benefits, as well as a combination of variable short- and long-term incentives as outlined later in this Compensation Report. The Compensation Committee continues to review and monitor the compensation framework of Swiss Re considering business strategy, targets, risk awareness and corporate values. External factors with respect to regulatory requirements and legal developments, the international context and relevant market data are also taken into account.

2016 was a year of stability with no material changes to our existing compensation framework.

AGM 2017

The Compensation Committee remains committed to providing compensation policies and programmes that support our business strategy and align the interests of our employees with those of our shareholders. We are therefore keen to maintain regular interactions with shareholders and other key stakeholders.

As was the case last year and in line with our Articles of Association, shareholders will again be asked to approve the following amounts:

• Aggregate amount of variable short-term compensation for the members of the Group EC for the financial year 2016;
• Maximum aggregate amount of compensation for the members of the Board of Directors for the term of office from the AGM 2017 to the AGM 2018; and
• Maximum aggregate amount of fixed compensation and variable long-term compensation for the members of the Group EC for the financial year 2018.

Separate to this and as in the past, shareholders will also be asked to support this Compensation Report in a consultative vote. The Compensation Committee is satisfied that this Compensation Report complies with applicable laws, rules and regulations and provides a comprehensive view of the compensation framework at Swiss Re and the 2016 compensation decisions.

Zurich, 16 March 2017

C. Robert Henrikson
Chairman of the Compensation Committee