Report from the Compensation Committee

“During the past year, the Compensation Committee continued to monitor the alignment of Swiss Re’s compensation framework with shareholders’ interests and with our long-term business and risk strategy.”

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 2017, which has been prepared in accordance with applicable laws, rules and regulations.

Swiss Re’s 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 past year, the Compensation Committee continued to monitor:

• the alignment of Swiss Re’s compensation framework with shareholders’ interests and with our long-term business and risk strategy;
• 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 Board of Directors, Group Executive Committee (Group EC) and other executives; and
• legal and regulatory developments, including the alignment of the compensation framework with the amended Swiss Financial Market Supervisory Authority (FINMA) and SIX Swiss Exchange (SIX) regulations, and continued compliance of the Board of Directors and Group EC compensation with the Ordinance against Excessive Compensation at Public Corporations (the Ordinance).

Furthermore, the Compensation Committee also conducted a self-assessment of its own effectiveness.

On behalf of the Compensation Committee, I would like to acknowledge the strong shareholder support at the Annual General Meeting (AGM) 2017. 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 2016 Compensation Report again received a positive outcome in the consultative vote.

Through discussions with key investors and proxy advisors, Swiss Re continued to identify potential areas of enhanced compensation disclosure. As a result, the 2017 Compensation Report contains additional information, particularly in the areas of variable compensation and committee fees paid to the members of the Board of Directors.

Group business performance 2017

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 performance for the reporting year, in which the Group’s US GAAP and economic results were significantly impacted by the large natural catastrophe events in 2017, partially offset by the very strong investment result.

• The Property & Casualty Reinsurance reported US GAAP and economic results reflected high insurance claims in the aftermath of a string of natural catastrophes in Australia, over the Atlantic Ocean, in Mexico and in California.
• Life & Health Reinsurance exceeded its return on equity target and reported strong economic results, demonstrating sustainability in its performance, driven by a good underwriting result and continued strong investment performance.
• The Corporate Solutions’ US GAAP and economic results were heavily impacted by the large natural catastrophes, resulting in a loss for the year.
• Life Capital delivered strong performance across all metrics and generated significant gross cash for the Group.

Group Annual Performance Incentive 2017

In years with relatively benign natural catastrophe environments, variable compensation payouts were positive but not excessive. Conversely, in adverse environments, the negative impact is substantive but also proportionate, given the need to carefully manage key talent and retention risk. Given the significantly lower financial performance compared to last year mainly due to the large natural catastrophes, the strong qualitative performance and the value sharing measurement for shareholders, the Compensation Committee and the Board of Directors have agreed to lower but still balanced variable compensation payouts.

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 in which we operate and relevant market data are also taken into account.

There were no material changes to our compensation framework in 2017.

AGM 2018

The Compensation Committee remains committed to recommending 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.

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

• maximum aggregate amount of compensation for the members of the Board of Directors for the term of office from the AGM 2018 to the AGM 2019;
• maximum aggregate amount of fixed compensation and variable long-term compensation for the members of the Group EC for the financial year 2019; and
• aggregate amount of variable short-term compensation for the members of the Group EC for the financial year 2017.

Separately from 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 2017 compensation decisions.

Zurich, 15 March 2018

C. Robert Henrikson
Chairman of the Compensation Committee