Performance outcomes 2019

Key considerations for Swiss Re’s annual compensation decisions continue to cover US GAAP and EVM based business results, qualitative factors and Swiss Re’s pay for performance approach.

The outcomes of the financial, qualitative and overall assessment, all part of Swiss Re’s three-step funding process (as described in Annual Performance Incentive in this Financial Report), determined the Group API pool for 2019.

Financial assessment (step 1)

Swiss Re Group and Business Units

In 2019, the Group’s US GAAP performance and Economic Value Management (EVM) results were significantly impacted by large natural catastrophe events, man-made losses and increased claims in US casualty, which are reflected in both the Property & Casualty Reinsurance and Corporate Solutions result. The investment result reflected strong equity market performance, including a significant contribution from the sale of the Group’s investment in the Brazilian insurance group SulAmérica S.A. and gains within the fixed income portfolio. Life & Health Reinsurance delivered strong US GAAP and economic results. Life Capital generated significant gross cash for the Group.

US GAAP financial performance

Property & Casualty Reinsurance’s net income was adversely affected by the large natural catastrophe and man-made losses. Life & Health Reinsurance’s performance benefited from realised gains on fixed income securities and solid underwriting results due to active portfolio management and improved mortality developments in the Americas, partially offset by a negative adjustment to the carrying value of an existing treaty, which had to be fair valued following the acquisition of Old Mutual Wealth Life Assurance Limited by ReAssure from Quilter plc, reflecting the decrease in interest rates since treaty inception.

Corporate Solutions reported a net loss, reflecting the impact of large and medium-sized claims, mainly from prior accident years, related to recent deterioration in the US casualty business.

Life Capital’s result reflected a charge related to the agreement to sell ReAssure. Excluding this one-time accounting impact, the net result would have been favourable. The strong gross cash generation was mainly driven by the 10%-stake sale in ReAssure to MS&AD and the sale of subordinated bonds issued by ReAssure.

For further details on the US GAAP financial performance, refer to the Group financial statements in this Financial Report.

EVM financial performance

The underwriting result of Property & Casualty Reinsurance was primarily driven by higher-than-expected claims, mostly in Casualty, as well as large natural catastrophes and man-made losses. The investment profit mainly reflected a strong performance from equities and alternative investments as well as favourable market development on credit investments and bonds. The Life & Health Reinsurance underwriting new business profit showed transactional business growth in the Americas and EMEA and strong business performance in the Americas, partially offset by a previous years’ business loss driven by reserve strengthening and higher-than-expected losses in all regions. The investment profit was mainly driven by favourable market development on USD credit investments and strong performance from equity investments.

Corporate Solutions generated an underwriting loss primarily driven by a combination of reserve strengthening and high frequency and an increasing severity of large and medium-sized man-made losses. Investment activities were outperforming across credit and equity investments.

The unfavourable underwriting result of Life Capital was primarily driven by expenses, partially offset by the gain on the agreement to sell ReAssure. This was more than offset by investment activities, driven by favourable market development on UK credit investments and positive performance from equity exposure arising from the unit-linked portfolio.

For further details on the EVM financial performance, refer to the EVM chapter in this Financial Report.

Qualitative assessment (step 2)

In 2019, Swiss Re’s 15 401 employees performed well on the qualitative dimension: an increase in transactions in conjunction with cost discipline, strengthened client satisfaction, continued focus on sustainability, relevant research activities and thought leadership at industry events set a strong foundation for the coming years.

Joint efforts across Business Units and Group Functions have enabled Swiss Re to deliver on key strategic initiatives in 2019. Examples include the strategic repositioning of Corporate Solutions (to restore profitability and transform into a business that sets new standards and leads the industry forward). In ReAssure, the preparation for deconsolidation within a timeframe significantly below market norms stood out and the subsequent agreement to sell ReAssure to Phoenix Group Holdings plc (subject to regulatory and anti-trust approvals) maximises the long-term value for Swiss Re shareholders.

The Group developed innovative solutions and played a leading technical role. It cooperated with clients, and public and private partners. For example, together Swiss Re:

  • Landed China’s first ever county-level natural catastrophe programme, providing comprehensive coverage against losses caused by geological disasters.
  • Co-developed a first-of-its-kind telematics solution, giving insurers a better and more personalised risk assessment, while supporting safer driving behaviour.
  • Launched a new holistic cyber reinsurance solution, providing a single, flexible, end-to-end solution to insurers’ cyber exposure challenges.

When it comes to franchise building, Swiss Re is a recognised voice on topics such as societal resilience and climate risks at major industry events such as the World Economic Forum. Our data-driven research publications, including the industry leading sigma, enabled risk-focused decision-making and identified strategic opportunities in the re/insurance industry. Reinsurance’s NatCat campaign further strengthened Swiss Re’s thought leadership position.

Sustainability and Environment, Social and Governance (ESG) considerations continued to be key topics in 2019. Swiss Re refined its Group Sustainability Strategy, further embedding sustainability in its core activities. Swiss Re was co-founder of the United Nations’ Net-Zero Asset Owner Alliance and committed to decarbonise its business model, for example through a carbon-neutral investment portfolio by 2050.

Swiss Re’s client and service quality is assessed on an annual basis through leading external benchmarks. Both clients and non-clients perceived Swiss Re as a leading brand in property and casualty and life and health reinsurance in 2019. Corporate Solutions received positive client feedback on the implemented management actions and the transparent communication related to pruning activities as well as the de-commoditising of its core business. Life Capital successfully improved the client experience by focusing on operational excellence and enhanced processes. Swiss Re demonstrated its societal engagement beyond traditional risk transfers, for example by contributing to disaster relief in the aftermath of Cyclone Idai in Mozambique.

On Human Capital and Talent Management, Swiss Re increased female representation in management positions as we believe this is critical to our success. Bloomberg recognised our strong commitment to and transparency on gender-related topics in the workplace by again including Swiss Re in its Gender-Equality Index. Staff commended the open and inclusive culture that embraces individual differences. Initiatives to foster this diverse and inclusive culture comprised policy and benefit changes to Swiss Re’s LGBTI+ community, among other measures.

Reinsurance and risk are intrinsically linked. The continuous assessment by Swiss Re’s Assurance functions kept the Group focused: there was a robust risk governance framework with a clear risk appetite and accountability for managing risk. A clear tone from the top encouraged an effective and open risk culture.

Overall assessment (step 3)

The labour market review concluded that Swiss Re is acting in line with the majority of reinsurance organisations, which have projected an increase in their annual incentive pools compared to the prior year, although pools are still below target levels.

The capital market review highlighted that Swiss Re’s proposed value-sharing with employees in terms of revenue is below peers’ historical three-year median levels, giving a higher percentage distribution to shareholders.

Analysis showed that market competitiveness of Swiss Re’s compensation is decreasing. Attrition rates are increasing in certain business areas and locations, and retention risks are emerging for critical talent.

Annual Performance Incentive

Both the Compensation Committee and the full Board of Directors assessed in depth the 2019 performance of Swiss Re Group. The financial performance was below target, but higher than last year, as shown in US GAAP and EVM results. Combined with the Group’s strong qualitative performance, this has resulted in steps 1 and 2 in variable compensation payouts that are below target levels. Considering in step 3 aspects such as pay positioning, key talent retention risk and future growth potential, the Compensation Committee has applied upward discretion to the proposed API pool recommended for approval to the Board of Directors. This payout decision is supported by our long-standing practice where we have positive but not excessive variable compensation payouts in years with relatively benign natural catastrophe environments, and conversely, lower but proportionate variable compensation payouts in adverse environments.

Performance targets used for the financial assessment are considered to be commercially sensitive and disclosure of such may provide an unfair advantage to Swiss Re’s competitors. However, to further increase transparency on the bonus-setting process, indicative achievements against the targets are disclosed.

Group API pool outcome 2019
Group API pool outcome 2019 (graphic)

Value Alignment Incentive

VAI performance is measured for the Group and each underlying business area. The performance factor for each participant is determined based on the business area that the participant worked for on 31 December of the year preceding the award (see Value Alignment Incentive for a detailed description of the VAI). The VAI 2016 (awarded 2017) performance factor of 97.4% for the Swiss Re Group is based on the three-year average previous years’ business performance for years 2017, 2018 and 2019. The main drivers were previous years’ business reserve increases, especially for US casualty in Corporate Solutions and Property & Casualty Reinsurance. Business area performance factors for the VAI 2016 (awarded 2017) ranged from 68.0% to 103.8%.

VAI plan year

Performance period remaining as of 31 December 2019

Swiss Re Group performance factor

2011 (awarded 2012)



2012 (awarded 2013)



2013 (awarded 2014)



2014 (awarded 2015)



2015 (awarded 2016)



2016 (awarded 2017)


2017 (awarded 2018)

1 year

to be determined

2018 (awarded 2019)

2 years

to be determined

Illustrative example of realised performance for the VAI 2016 (awarded 2017)

Granted and realised VAI are shown below for a grant of CHF 100 000 on the VAI 2016 (awarded 2017). For illustrative purposes, this example considers only the Group performance factor. For disclosure of actual realised compensation 2019 for the Group CEO, please refer to Compensation decisions for the Group EC in this Financial Report.

Illustrative example of realised performance for the VAI 2016 (awarded 2017) (graphic)

Leadership Performance Plan

The LPP award is consistently linked to the Group’s future achievement of multi-year performance conditions (ROE and relative TSR), keeping the focus on the long-term success of the Group. Swiss Re made LPP grants in 2019 consistent with this rationale. The LPP is generally part of total compensation (see Leadership Performance Plan for a detailed description of the LPP).

The RSU component is measured against an ROE performance condition. At the end of each year, the performance is assessed and one third of the RSUs is locked in within a range of 0% to 100%. At the end of the three-year period, the total number of units locked in vests. For the LPP 2016 and LPP 2017, the average performance factor for the RSUs was 32.3% and 1.67%, respectively, for the three-year period.

The PSU component is based on relative TSR, measured against a pre-defined basket of peers, and vests within a range of 0% to 200%. For both the LPP 2016 and LPP 2017, the performance factor for the PSUs was 0% for the three-year period. The table below gives an overview of the RSU and PSU performance achievement for the previous LPP plan years:

LPP plan year

Performance period remaining as of 31 December 2019

RSU average performance factor for the three-year period

PSU performance factor for the three-year period

























1 year

to be determined

to be determined


2 years

to be determined

to be determined

2017 RSU performance outcomes
2017 RSU performance outcomes (bar chart)
2017 PSU performance outcomes
2017 PSU performance outcomes (graphic)

Illustrative example of realised performance for the LPP 2017–2020

Granted and realised LPP 2017–20 are shown below for a a sample grant of CHF 100 000 on the LPP 2017. This is a simplified representation for illustrative purposes only. The number of RSUs and PSUs has been rounded to the nearest full number for ease of readability. For the disclosure of actual realised compensation for the Group CEO, please refer to Compensation decisions for the Group EC in this Financial Report.

Illustrative realised performance for the LPP 2017–2020 (graphic)

1 The LPP 2017 grant was based on a grant valuation share price of CHF 90.70 (as of 24 February 2017, ie the date after publication of the 2016 annual results).

2 Since vesting of LPP 2017 will occur after the publication of this report, the closing share price at year-end 2019 was used to estimate the realised value.