Helmut F. Rudolf Zumikon, General Manager (ret.) of Swiss Re 1986
The "basic risk" is determined by developments of tech­ nology, legislation and jurisdiction, but also by social phe­ nomena. The unrest of a conflict-charged contemporary world is reflected for example in changes in the behaviour of widespread sections of the population and is evidentto the reinsurer in a growing number of avoidable major losses caused by gross negligence or even with intent. The insurance industry is to a certain extent at the mercy of such a development, as, for instance, in the case of ar­ son by unknown perpetrators. Such behavioural changes increase the "moral hazard". They do not even appear to spare Life insurance, as a number of major claims in the Swiss Re Group in the year under report would indicate. If professional reinsurers like the Swiss Re, who for years have been urgently drawing attention to these develop­ ments and have been taking remedial measures, also show high underwriting losses, then this means that they too are unable to escape totally the undercurrent of events in their branch of the economy. An improvement of worldwide reinsurance results will only come about when the majority of reinsurers again pay full attention to a careful risk assessment. For this they are dependent on the understanding of insurers who are indeed them­ selves also frequently active as reinsurers and as such likewise suffer high underwriting losses.
Hail reinsurance registered a drastic loss, which was due to Crop Insurance business. Flail business as such was profitable. The unbalanced nature of this class calls for an assessment of the results over periods of several years. From this perspective the result does not yet give cause for concern.
loss compared with the previous year is disappointing. The business handled from Zurich closed with an almost balanced result but subsidiary companies showed higher losses than in the previous year, in industrialized countries the rating collapse continues because of the lack of new business, and cover extensions bring addi­ tional problems.
The premium income in Nuclear Energy reinsurance again rose, partly as a result of improvements in the assessment of insurance values. The profit is as ex­ pected for a year without major losses.
The premium volume of Credit and Surety reinsurance rose by approximately 10% over the previous year, pri­ marily as a result of premium adjustments in Credit insur­ ance. Experience in this branch was unfavourable, as was to be expected in view of the economic recession throughout the world. Gratifyingiy, a significant profit was again achieved in Surety reinsurance.
Compared witti ttie previous year ttie overall claims cost tias again increased, wittiout, tiowever, ttiere being any significant deviation from ttie average experienced over ttie past tew years. Ttie claims cost tor disability benefits rose only sligtitly ttiis time ttianks to ttie corrective measures taken in a brancti wtiose experience greatly depends on ttie economy. For ttie financing ot new co­ insurance business less tiad to be spent ttian was re­ couped from the earlier investment ot funds. Overall, it was possible to achieve a profit ot Sw.trs.35.5 million which was slightly higher than that ot the previous year (Sw.trs.35.2 million).
In new Investments the emphasis again lay on fixedinterest investments, including those with equity charac­ ter. The average maturity periods were only reduced slightly towards the end of the year as a result of switches. The balance-sheet value of all fixed-interest investments rose by Sw. frs. 539 million to Sw. frs. 3,463 million, that of shares by Sw.frs. 11 million to Sw.frs. 647 million. The in­ crease in real estate is due to the acquisition of existing property and the construction of new buildings in the agglomeration of Zurich and to the purchase of an office building in Australia.
During the year under report a Swiss Re Group "Trainers' Meeting" was held tor the first time and was attended by the training managers ot subsidiary insurance and rein­ surance companies. The objectives were to promote co­ operation within the Group, compare the training pro­ grammes ot the individual companies and to work out methods ot better exploiting the know-how available throughout the Group.
Technical reserves comprise, in Non-Life reinsurance, the reserves for unearned premiums and outstanding claims and, in Lite reinsurance, the policy and claims reserves. The changes in the reporting year and the composition are shown in the following table: voting share capital of Sw.trs. 12 million is composed of 240,000 non-voting shares each with a nominal value of Sw.trs. 50.-.
Other liabilities include, in addition to various accounts payable, in particular the value adjustments on outstand­ ing balances together with a reserve tor foreign-currency risks.
' Reinsurance business of the calendar year and general income and outgo tor the period from 1.7.-31.12.79 ' These figures are not comparable with those of the other years following change in balance-sheet date from 30th June to 31st December.
Of the currencies which are important for the Group ac­ count the U.S. dollar, the Canadian dollar and the German mark showed rates at the end of the year which were higher than a year earlier, while other currencies weak­ ened.
The consolidated net premium income in Non-Life rein­ surance increased by 6.0% (previous year, +5.9%) to Sw.frs. 4,327 million. Approximately half of this growth Is due to higher foreign currency rates. When considered in local currencies, growth as an all-company average di­ minished markedly. Because of the persisting glut of rein­ surance covers and the high investment income which it was possible to achieve, there was a noticeable further in­ tensification of competition In all major markets. This market development led to an underwriting loss of Sw.frs.294 million (previous year, Sw.frs. 129 million).
The 1982 business year completed the planned start-up phase of the mh Bausparkasse AG, Munich, founded in 1979. In new business the company achieved a growth rate which was clearly above the market average. At the end of the year the mh Bausparkasse showed a portfolio of savings contracts of over DM 1,000 million. The growth of savings deposits from DM 59.1 million to DM 112.6 mil­ lion is very substantial. In the first half of 1983 the existing holding partners were joined by two further companies; these were the German branch of the Helvetia Swiss Fire Insurance Company Limited and the Baloise Life Insur­ ance Company Limited.
Investment income also Includes dividend payments of non-consolidated holdings In the amount of Sw.frs.22 million (previous year, Sw.frs.19 million).
• Insurance business of the calendar year 1979 and general income and outgo for the period from 1.7.-31.12.79 . •• These figures are not comparable with those of the other years as a result of the change of the balance-sheet date from 30th June to 31st December of Swiss Re.
Consolidated balance sheet: Combined balance sheet for the companies belonging to the Group.
Generai third party liability: Insurance of industrial, commercial, employers, products, professional or private liability to third parties.
Marine insurance: Insurance against damage or loss of strips and cargoes; also includes off-sfiore drilling plat­ forms and oil rigs.
Reinsurance commission: Amount paid by ttie ^ rein­ surer, to ttie insurer for costs in connection witti ttie acquisition and administration of insurance business.