Strategy
Page contents
- Swiss Re’s framework for long-term value creation
- Strategic goals and performance
- Strategic Map 2004
- Target Matrix
- Balanced Scorecard
- Top Topics
As a global reinsurance company, Swiss Re continuously monitors the risk landscape to identify emerging risks and opportunities. In order to ensure long-term value creation, Swiss Re focuses on increasing shareholder value and balancing the interests of all stakeholders through a comprehensive strategic framework.
Swiss Re's framework for long-term value creation
The management of risk and capital, in its many facets, is Swiss Re’s core business. Providing economically viable reinsurance and financial services solutions generates economic benefits for Swiss Re’s clients and value for its shareholders. Swiss Re’s mission is ”to be the authority on managing capital and risk”, recognised as the industry leader for its comprehensive knowledge of risk transfer, risk financing and asset management.
In fulfilling its mission, Swiss Re strives to produce attractive financial returns in a constantly changing business environment. The company assumes a comprehensive and long-term perspective on the business it writes and attaches great importance to balancing the interests of various Stakeholder groups.
Swiss Re has a clearly defined Corporate Philosophy and strategy designed to serve as a coherent framework for long-term value creation. The Corporate Philosophy sets out common standards of behaviour in which Swiss Re as a company believes, and aims to guide decisions and behaviour across the business groups and divisions in more than 70 offices worldwide. Four core values form the centrepiece of this philosophy:
- Excellence, defining Swiss Re’s standards of knowledge and expertise;
- Efficiency, governing quality and cost-effectiveness;
- Sustainability, setting the balance between Swiss Re’s economic, social and environmental responsibilities; and
- Integrity, ensuring that the highest standards of ethical conduct are met in business activities.
"Our strategy and the expertise of our global team differentiates Swiss Re and enables us to grow and sustain our earnings power.”
John R. Coomber, CEO
Strategic goals and performance
Building upon its mission and value framework, Swiss Re has defined four strategic goals:
- To be the global market leader in property and casualty and life and health reinsurance;
- To be the premier provider of capital, risk and asset management solutions in business-to-business financial services with a specific focus on insurers and other financial institutions;
- To deliver attractive returns to shareholders whilst maintaining top financial strength and ratings;
- To be a global company built on teams with unrivalled risk and capital expertise, professionalism and commercial insight.
In order to achieve these goals, Swiss Re actively pursues a strategy of diversification through its business groups, Property & Casualty, Life & Health and Financial Services, allocating resources to those businesses which present the best risk/return profile. Each business group maintains, fosters and further develops long-term client relationships, applies sound risk management and underwriting discipline and pursues effective cost management.
The Strategic Map 2004 highlights Swiss Re’s priorities.
Strategic Map 2004
Corporate Centre
- Set strategic direction and promote innovation and growth
- Exercise effective control and coordinate operations by managing capital and a diversified risk portfolio, enhancing and protecting brand reputation, providing information and technology
- Attract, retain and develop people and skills
- Manage the framework of governance and compliance
Property & Casualty
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Life & Health
|
Financial Services
|
The implementation of Swiss Re’s strategy is assessed through both the Target Matrix and Group Balanced Scorecard.
The Target Matrix focuses on financial objectives for the Group and the individual business groups. Each business group is measured against a profitability as well as a growth target over three years.
Target Matrix
Business group |
Key figures |
Average target
|
|
|
|
|||
| Property & Casualty |
Combined ratio Premium growth |
96%
5% |
|
| Life & Health |
Return on operating revenues Operating revenues growth |
9%
7% |
|
| Financial Services |
Premium business: Combined ratio Premium growth Fee business: Return on total revenues Total revenue growth |
95% 3% 15% 10% |
|
| Group |
Return on investment Return on equity |
5.3%
13% |
|
Balanced Scorecard
The Balanced Scorecard complements the Target Matrix, measuring value-creating activities and supporting sound management of Swiss Re's performance drivers. It ensures that client focus, underwriting expertise, knowledge and skills, and excellence in operational business processes generate financial benefits for Swiss Re's clients and, ultimately, create value for its shareholders.
Top Topics
Swiss Re continuously monitors industry developments which could potentially impact its corporate value, bottom line or strategy. “Top Topics” is the process through which Swiss Re works to anticipate, identify, analyse and communicate to stakeholders the key issues affecting global management of capital and risk.
A selection of Top Topics in 2003
- Accounting standards: new standards and transparency have become increasingly important. Swiss Re works closely with the International Accounting Standards Board (IASB) and monitors the discussions at the Financial Accounting Standards Board (FASB) in the US and other accounting boards worldwide. Swiss Re collaborates with insurers and industry organisations to try to assess the effects of proposed accounting changes on the insurance industry.
- Insurance-linked securities(ILS): since the inception of the market for catastrophe bonds in 1996, Swiss Re has been at the forefront of developing ILS, both as a sponsor and as an underwriter of these supplementary methods of managing peak risks. Swiss Re concluded three successful ILS related transactions in 2003 and continuously shares its expertise with clients.
- Liability regimes: negative developments in liability regimes pose a major challenge to the industry. Swiss Re is well positioned as a thought leader in raising awareness, supporting necessary corrective actions and developing new techniques for managing liabilities.
- Mortality trends: advances in medicine, among other factors, have produced a clear trend towards improved mortality experience. Insurers and reinsurers must be alert, however, to extreme mortality events such as a lethal epidemic, as well as to the emergence of new risks such as obesity which could the positive mortality trend if not addressed. Swiss Re has conducted various research studies in order to better understand the drivers of mortality trends.
- Natural catastrophes: the insurance industry is experiencing an increasing frequency and severity of losses triggered by natural disasters. This accumulation is due primarily to the increased concentration of insured values, especially in highly exposed areas. Even though individual extreme weather events cannot be directly attributed to climate change, this recent increase is consistent with the evolution climatologists expect towards a warmer climate. Swiss Re has been active in developing ways to assess and manage the risks from natural disasters, designing risk transfer solutions and mitigation strategies for its clients.
- Reinsurance regulation and supervision: the regulatory environment for reinsurers is about to change significantly as many European countries are reforming their prudential rules. Enhanced disclosure provisions and new risk based capital adequacy requirements are being introduced. Swiss Re closely monitors these developments and interacts with private sector groups and regulatory bodies at national and international level. As a leading reinsurer, Swiss Re supports cost efficient measures encouraging insurers to implement high level risk management processes.
- Sustainability: climate change and the deteriorating quality and availability of natural water resources have an increasing impact on the insurance and reinsurance industries. Swiss Re is committed to promoting responsible approaches to the natural environment and is developing appropriate risk transfer solutions (for more information, refer to section "Sustainability") .
- Terrorism: the tragedy of 11 September 2001 revealed the scale of potential losses due to terrorism and threw into question the limits of insurability. Appropriate public-private partnerships are needed to support the development of private insurance industry risk transfer and finance solutions. Through its technical publications and experts’ statements, Swiss Re has been contributing actively to the global debate and to the development of solutions to terrorism risks.
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