André Kreul, Swiss Re Corporate Solutions

• Senior Risk Engineer Property in EMEA Engineering Team with focus on German and French speaking Countries • Expertise in Risk Engineering Services for manufacturing, machinery breakdown and heavy Industry Segments • Swiss Re Corporate Solutions digital Champion for Industrial Internet of Things and Industry 4.0 risk transfer solutions • Previously Brilliant Factory Leader for GE Power implementing Industry 4.0 at GE's global Supply Chain • 23 Years Industry track record in working with large Turbomachines from Field Service Eng. up to leading a global PMO for digital manufacturing transformation • Holds a BSc in mechanical Engineering from ABB-Technical College in Baden and an EMBA from the International Management Institute in Zürich

1 General Public Release

Predictive maintenance from risk engineering perspective

André Kreul, Property Risk Engineering Service General Public Release

Agenda

• Predictive maintenance industry status • Predictive maintenance from insurers perspective • Swiss Re Corporate Solutions risk transfer solutions

André Kreul I Risk Engineering Service 3 TodayData isonly the 1% new of Oil. the It’sdata only generated useful when in Industryrefined! is analysed IBMJess Martina Greenwood, Köderitz Contagious, IBM IBV General Public Release

Predictive maintenance success stories

avoids machine downtime reduced downtime by 50% in increasing productivity by 9% some of their manufacturing plants

Rio Tinto Sandvik Trenitalia GE Elisa

saves daily 2m$ from pdm saves 130m € annually with halved its number of telecom insights on the mining truck fleet dynamic train maintenance network faults in 4 years.

André Kreul I Risk Engineering Service 5 General Public Release

Predictive maintenance industry status

FutureFuture plansplans forfor predictivepredictive maintenance maintenance

60% 40%

35% 50% 51% 30% 40% 40% 25% 40% 30%20% 25% 15% 24% 20% 25% 24% 20% 10% 17% 10% 5% 7% 6% 7% 6% 4% 4% 0%0% Yes,Yes, currently currently working working on Yes,Yes, we we start start next next Year Year Yes,Yes, we we start start within within 3 3 Yes,Yes, no startno start date date No No onit it YearsYears PwC survey PDM 4.0 in September 2018 PwC survey PDM4.0 in June 2017 André Kreul I Risk Engineering Service 6 General Public Release

Operations process transformation => Industry 4.0

Operations process transformation; • integration with all information technology • roll-out throughout the whole Plant • connecting all machines and adding sensors Enterprise Resource Planning to old equipment & manual processes information Predictive Maintenance Indicative benefits; technology

• maintenance cost optimization 20-30% Manufacturing Execution System • machine downtime optimization 15-30% improved quality 10-35% • operation • new business models technology

André Kreul I Risk Engineering Service 7 General Public Release

AI-Predictive maintenance from insurers perspective Hypothesis => risk is improving? improved risk factors; new risk factors;

machinery breakdown cyber vulnerability

business interruption data stream reliability

supplementing OEM maintenance schedules data accuracy & completeness

ERM enterprise risk management prediction uncertainty

∑ =>cumulative risk remains similar

André Kreul I Risk Engineering Service 8 General Public Release

Swiss Re Corporate Solutions your partner for non/standard risk transfer solutions << let’s engage to discuss your developing needs>>

Standard solutions; Non-Standard solutions property damage / BI non damage business interruption casualty / liability unplanned maintenance cover construction & engineering extended warranty marine / transport data based parametric solutions cyber

Swiss Re Value Proposition

Insurance Data Analytics Partnership Innovation Creation of Expertise Risk Transfer Capabilities Track Record Track record value for Client

André Kreul I Risk Engineering Service 9 General Public Release

“Is … growth over?”1

… "Not a chance. It's just being held back by our ability to process all the new ideas fast enough.“2

1R. J. Gordon, "Is US economic growth over? Faltering innovation confronts the six headwinds." CEPR Policy Insight No. 63

2E. Brynjolfsson, A. MacAfee; The Second Machine Age

André Kreul I Risk Engineering Service 10 General Public Release

Backup Innovative Risk Solutions four underlying trends that drive innovation in commercial insurance risk transfer General Public Release

Machinery breakdown service after sales / epidemic failure

Case 1: Recovery Guarantee in Case 2: Bespoke Field Equipment combination with Service and After Machinery Guarantee insurance Sales A world-leading provider of intelligent A heavy machinery manufacturer energy and water metering solutions wanted to enhance its product contributes to one of the biggest smart offerings and create a client loyalty metering projects in Scandinavia program at the same time Swiss Re Corporate Solutions offered a Swiss Re Corporate Solutions Field Equipment insurance to cover the developed an innovative machinery accumulated risk of a high failure rate break-down insurance solution as on installed meters. This could in a an integral part of the client's worst-case scenario threaten the service package for their products. equity of the client when the majority We used an established line of of the meters are installed business but applied it as a 3rd party product benefiting the buyer

André Kreul I Risk Engineering Service 12 Unplanned outage electricity price and outage protection

Unplanned outage . Generator owners and unit-contingent off- $600 takers face two kinds of risk during an outage Losses hedged $500 or derate: $400  volume (unknown duration) and $300 Strike Price  price (exposure to higher spot market) $200 . Additionally, outages often cause or exacerbate $100 high price events $0

. Discount to traditional hedges. Simultaneous management of price and volume risk is difficult and very expensive to hedge dynamically . Automatic / perfect look-back settlement against transparent price indices General Public Release

Suite of parametric nat perils solutions STORM, QUAKE, HazeShield, Insure8, SMOKE Insure8 QUAKE HazeShield

STORM

Smoke / Blaze

André Kreul I Risk Engineering Service 14 General Public Release

Force Majeure return of pre-payments

. Operator enters into a long-term lease of capital goods to be purchased by Special Purpose Vehicle financed via equity and Guaranteed pre-payments debt . Tri-partite manufacture sales agreement (owner, operator, manufacturer) includes contract cancellation option for the owner in case a force majeure event renders the project uneconomical

. In the event of a cancellation of the contract, the manufacturer is obliged to return all pre- payments / instalments made for goods not yet delivered to and accepted by the owner . Cover pays time-dependent return of pre-payments / instalments in accordance with the underlying tri-partite manufacture and lease agreement

André Kreul I Risk Engineering Service 15 Legal notice

©2019 Swiss Re. All rights reserved. You are not permitted to create any modifications or derivative works of this presentation or webinar or to use it for commercial or other public purposes without the prior written permission of Swiss Re.

The information and opinions contained in the presentation are provided as at the date of the presentation and are subject to change without notice. Although the information used was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage or loss resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies be liable for any financial or consequential loss relating to this presentation.

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