Performance of Swiss Re registered shares Key figures 1997 1 Annual report of the Chairman and the Chief Executive Officer 2 Board of Directors, Executive Board and Auditors 6
Proposal for allocation of profit 58 Report of the statutory auditors 59
Global presence 60 Subsidiaries and affiliated companies 62 The year-2000 problem 71 Swiss Re as sponsor 74 Swiss Re’s communications centre in Rüschlikon 76 Swiss Re Publishing 78 Glossary of technical terms 80 Swiss Re registered shares 84
Performance of Swiss Re registered shares vs the Swiss total index and the Swiss insurance index: With a price increase of
An investor who invested CHF 100 000 in Swiss Re registered shares at the end of 1988 and reinvested all subsequent dividends, share rights, and the 1996 par value repayment of CHF 10, without investing any new funds, held a position with a market value of CHF 930 219 on 15 May 1998. The total performance amounts to 830.2% or an average of 26.9% per year.
An investment of CHF 100 000 in the total Swiss market at the end of 1988 would have increased in value to
(basis: Swiss Performance Index with reinvestment of income). The total performance amounts to 403.9% or 18.8% per year.
Performance of Swiss Re registered shares and the Swiss Performance Index from 31 December 1988 to 15 May 1998
Number of employees in reinsurance companies in service and other companies 1 subject to approval by the General Meeting 2 before offset of goodwill from acquisitions made since 1 January 1996
For the third year running, we are able to report an exceptionally strong increase in Group profit to the shareholders of the Swiss Re Group. Ordinary Group profit after tax rose by CHF 660 million to CHF 2121 million in 1997, representing a 45% increase over the previous year. Total Group profit after minority interests and tax amounted to CHF 2116 million or CHF 145 per share.
The Board of Directors proposes to the General Meeting on 26 June 1998 an increase in the dividend payment from CHF 30 to CHF 44 per share. If the proposed dividend payment and the proposals related to the share repurchase programme announced in December 1997 are approved, a total of CHF 1600 million will be paid out to our shareholders in 1998.
Important events in 1997 for the Swiss Re Group were the integration of two large acquisitions made in 1996. Mercantile & General Re was completely integrated into the Group’s existing structures during the financial year. This integration proceeded smoothly and is primarily responsible for the strong growth of the Group’s premium income, which climbed by 22% or CHF 3164 million. Our efforts to gain complete control of Unione Italiana di Riassicurazione also progressed according to plan in 1997, and by year-end we were able to announce our 100% ownership of this company. The definitive conclusion of this transaction will only fully impact the profit and loss account in 1998.
Many of these transactions are being spurred by the exceptional developments on the international stock exchanges and the continuation of low interest rates. Despite talk of resurgent inflation in the previous year, there is now a widespread consensus that interest rates will remain low. This led to another year of very gratifying financial results for the Swiss Re Group in 1997. In view of our accounting principles, however, these results are only partially reflected in the profit and loss account.
In the initial months of 1998, Swiss Re acquired the majority of NCM Holding of the Netherlands, the parent company of Nederlandsche Credietverzekering Maatschappij NV. Credit insurance and equity holdings in credit insurance companies have been an important part of our strategy for many years now. The rapid consolidation in this sector has provided us with the opportunity to expand our market share. We expect this acquisition to clear all regulatory hurdles and be fully completed in the first half of 1998.
The term of office of Urs Bärlocher will also expire. He has decided not to stand for re-election. Mr Bärlocher has been a member of the Board of Directors since 1990. We thank him for the prudent and valuable advice he gave during his two terms of office, which was of great significance to Swiss Re.
The Board of Directors also proposes to the General Meeting that Walter B. Kielholz, Chief Executive Officer, be elected to the Board for the first time.
In February 1998, Christian R. Speiser stepped down as Chief Financial Officer of the Group. The Board of Directors regrets this decision, which was connected with Mr Speiser’s former role outside of the Swiss Re Group.
This annual report will inform you about the 1997 financial year and the main developments which have taken place in the first four months of 1998.
The 1997 financial year was once again an excellent one for the Swiss Re Group. Profits rose markedly, and the return on equity continued to improve despite a significant increase in shareholders’ equity.
– The balance sheet values of the former Unione Italiana di Riassicurazione,
Rome, are consolidated in full in the annual results, whilst the annual profit is included proportionally only as income from subsidiaries. The company has since been renamed Swiss Re Italia.
– We increased our participation in PartnerRe, Bermuda, to 21%. This company is now equity consolidated. We sold our minority shareholding in Société Anonyme Française de Réassurances (SAFR), Paris, to PartnerRe; SAFR is therefore no longer directly equity consolidated.
Movements in currency exchange rates had only a limited impact on the 1997 accounts. At year-end the US dollar was up 9% and pound sterling was up 4% on the previous year, although most European currencies have fallen. Overall, currency fluctuations have widely cancelled each other out.
Profit and loss account The Swiss Re Group’s ordinary profit improved by 45% in 1997 to CHF 2121 million. This was mainly due to the continued positive influence from the financial result caused by substantially higher investments and favourable developments in the financial markets. The technical result also increased markedly.
Gross premiums rose by 22%, of which 20% can be attributed to the firsttime inclusion in the accounts of Mercantile & General Re. Adjusted for currency fluctuations and consolidation effects, growth was 2%. Growth in life business (60%) was stronger than in non-life business (15%). However, only limited conclusions can be drawn from changes in the premium volume with respect to the amount of risk accepted and its associated profit potential. This result depends, for the most part, upon the structure of the reinsurance treaties.
scope of consolidation and other factors. Internal costs are trending upwards, which can be accounted for in part by the expansion of know-how within the Group. Simultaneously, external costs, such as commissions and profit commissions, are declining. The technical result in the life reinsurance business increased by 98% to CHF 353 million.
The investment result, including allocated investment return, rose by 40% to CHF 4646 million. On the one hand this was due to very favourable developments in the financial markets and on the other to the expansion of the scope of consolidation and the marked increase in the investment portfolio which this has brought. The return on investment rose from 7.0% to 7.4%.
The technical provisions increased from CHF 43.6 billion to CHF 48.7 billion. They contain provisions of CHF 2.6 billion approved by local regulatory authorities for future claims fluctuations and for large and catastrophic losses. CHF 398 million were added to these provisions in 1997.
– Capital funds in relation to net premiums improved from 74% to 88%.
The expansion of the reinsurance business continued in 1997: – Considerable energy was invested into fully integrating the major acquisitions made in 1996 into the structure of the Swiss Re Group. Following the acquisition of Mercantile & General Re, the staffing levels in various locations were reviewed; staff numbers were reduced, particularly in the UK, Australia, Canada and the USA. Our aim of integrating the non-life activities of Mercantile & General Re into the network of local Swiss Re offices and the life business into Swiss Re Life & Health was achieved.
Gross premiums by region 1997: 100% = CHF 17414 million in %
The 1998 renewal negotiations for the non-life business were influenced to a large extent by the good results posted in the 1997 financial year. Pressure on prices and conditions continued unabated. The Swiss Re Group countered this trend with disciplined underwriting and new innovative products, although a fall in growth can be expected. Non-life growth in 1998 will thus be due largely to the consolidation, for the first time, of Swiss Re Italia. Internal growth will be limited by our underwriting policy. The first quarter of 1998 showed a continued low frequency of major losses.
In the first quarter of 1998 we announced our intention to acquire the Dutch credit insurer Nederlandsche Credietverzekering Maatschappij (NCM). The Swiss Re Group has held a 10% share in this company for a number of years. Approval is currently being sought and we expect the transaction to be completed around mid-year.
Developments in the non-life insurance and reinsurance markets 1997 was again a good year for the insurance and reinsurance industry, as conditions remained largely stable. However, competition increased due to the generally favourable situation and continuing deregulation in the markets. Losses from natural catastrophes remained at a low level. Excellent financial results compensated for markets where pressure on prices and conditions caused unsatisfactory underwriting results.
The European insurance industry posted excellent results due to a mixture of good financial results and a favourable claims situation. The markets are therefore characterised by growing competitive pressure, ie falling original premiums and stagnating volumes. The constellation of high financial security with limited growth prospects and rising cost pressures led once again to a spate of mergers and acquisitions which have changed the corporate landscape.
Gross premiums by region 1997: 100% = CHF 1834 million in %
The Middle Eastern markets are experiencing growth fuelled by economic developments. However, Swiss Re’s premium volume has declined slightly due to changes in underwriting conditions, and large losses have impaired the result.
Reinsurance results in the USA and Canada were on the whole satisfactory. The pressure on prices and conditions discernible in many lines was cushioned by excellent investment results and the absence of major catastrophic losses.
Swiss Re experienced premium growth in all lines in the USA. The most important contributors to overall growth were the special lines credit, engineering and marine, as well as alternative risk transfer products. The decentralisation of responsibilities to eight branch offices made it possible to increase the contribution from traditional property/casualty reinsurance.
The special lines business was able to draw benefit from new products introduced to the market, thus counteracting the decline in premium volume caused by the systematic shift to non-proportional covers. Swiss Re is a market leader in many special lines.
Developments in the alternative risk transfer segment were particularly promising, though demand was dampened by competition from traditional products.
Growth in Canada was achieved mainly through the acquisition of Mercantile & General Re. However, because there was significant overlap in client accounts, many clients limited their placements with the Swiss Re Group to less than the combined sum of the previous placements.
Overall, the technical result of our North American business has improved markedly. This confirms the need to continue our strategic reorientation introduced two years ago to tap these promising market segments.
Property 23% Liability 10% Motor 14% Accident/health 18% Other lines 15% Life 20%
An increase in insurers’ retentions has impaired growth in facultative reinsurance, and the trend has now spread to proportional reinsurance. One exception is the number of acceptances in the alternative risk transfer area, where long-term strategies have provided more price stability.
Non-proportional treaty business, in particular catastrophe covers, has been subject to strong price pressure for the last three years, and it is assumed that this situation will continue until major losses occur. Global capacities are continuing to increase. Despite the first-time consolidation of Mercantile & General Re, these developments coupled with a cautious underwriting policy have led to a slight decrease in premium volume, although the result for this line remains good due to a favourable claims experience.
A reduction in capitalisation rates for annuity benefits stipulated by supervisory authorities in several countries necessitated the strengthening of such present value provisions.
Work being carried out at a height of 170 metres on the Pont de Normandie. The 1.9 kilometre-long structure links Le Havre with Honfleur and carries a volume of 8000 vehicles every day.
The successful securitisation of catastrophe risks in California and Japan was the first such capital market transaction to have obtained an “investment-grade rating” and therefore attracted great attention and interest in the markets.
The first-time consolidation of the former Mercantile & General Re group companies brought a significant increase in business volume.
The division produced varied technical results. The results in the life reinsurance business were very satisfactory reflecting both premium growth and favourable mortality experience. Developments in health business were disappointing. Negative results in the USA, in particular for medical expense business, led to an extensive reunderwriting of the book at the 1998 treaty renewal. This will lead to a reduction in premium income but an improved result in future years.
The integration of the Mercantile & General Re group has made Swiss Re one of the world leaders in life and health reinsurance.
The sharp rises in world share prices, with the notable exception of Asia, significantly affected the shape of the investment portfolio. Whilst fixed income securities were still the largest category at 61% (1996: 67%), the proportion invested in shares increased to 27% (1996: 21%). The proportions invested in real estate and in unconsolidated subsidiaries and affiliated companies remained unchanged at 5% each. At market value, the proportion invested in 26 Swiss Re Group unconsolidated subsidiaries and affiliated companies rose slightly to 9% (1996: 8%).
The total investment result rose by 40% to CHF 4.6 billion (1996: CHF 3.3 billion), reflecting both growth in the portfolio and favourable developments in financial markets. The realised net gains on investment contributed 31% to the investment result (1996: 29%). The overall return on investment increased slightly to 7.4% (1996: 7.0%). The investment result and return on investment figures exclude Swiss Re Italia which was only taken over at the end of 1997.
Change in the provisions for claims outstanding 4. Change in the provisions for life, health and disability reinsurance 5. Change in other technical provisions 6. Bonuses and rebates 7. Operating expenses
Realised gains on sale of investments 2. Unrealised income on investments for unit-linked life reinsurance
I Shareholders’ capital and reserves 1. Share capital 2. Share premium account 3. Reserve for own shares 4. Revaluation reserve 5. Retained earnings brought forward 6. Profit for the financial year
V Provisions for other risks and charges 1. Provisions for pensions 2. Provisions for taxation 3. Other provisions
The Group accounts are based on the accounts of the consolidated companies that have been prepared in accordance with uniform accounting policies and valuation principles. Intra-Group transactions are eliminated.
Land and buildings are valued at market value. Market value is periodically assessed by experts. Any decrease in the market value between assessments by experts is taken into account. Realised gains and losses from sales as well as valuation adjustments included in the profit and loss account are based on cost.
Fixed income securities are valued at amortised cost. The difference between cost and redemption value is amortised as a premium or discount. This amortisation is included in income from fixed income securities in the profit and loss account. Provisions required for permanent diminution in value are deducted.
Provisions for claims outstanding are based on the full expected amount of the related payments, with the exception of the life business and partly for the accident, health and disability businesses, in which the present value of future income and outgo is set aside as provisions. In alternative risk transfer business, provisions for claims outstanding are also partially accounted for at present value for some products.
Compensation of the Board of Directors and the Executive Board 35 Swiss Re Group
Currency exchange rates in CHF per 100 units of foreign currency
Operating ratio 1 refer to glossary for definition 2 whilst the combined ratio has remained the same, the claims ratio has increased and the expense ratio has decreased. 2 This results from the composition of a structured financial reinsurance treaty.
CHF millions Property Liability Motor health lines non-life Life Total in %
CHF millions CHF DEM FRF GBP USD Other Total 41 Swiss Re Group
Acquisitions since 1 January 1996 have led to the offset of goodwill in the amount of CHF 2440 million. A scheduled amortisation would reduce this figure by CHF 136 million. This calculation is based on periods of between five and twenty years determined individually for each shareholding; the remaining value of goodwill is reviewed periodically.
Deferred acquisition costs in the amount of CHF 444 million (1996: CHF 446 million) are offset against the unearned premium reserve and in the amount of CHF 546 million (1996: CHF 311 million) against provisions for life, health and disability reinsurance. Changes in deferred acquisition costs are treated in the profit and loss account as part of changes in the provisions for unearned premiums and for life, health and disability reinsurance respectively.
The expected claims burden for payments and claims settlement charges relating to long latent injury claims increased in the year under review (see note on Provision for claims outstanding). The provisions in the balance sheet of the prior year for claims from 1996 and previous years were in total adequate when reassessed for the current year.
These items refer mainly to charges and income of the service companies active in the fields of loss adjustment and risk management. They also include currency differences and other charges and income not attributable to the technical account or to investments. In 1997, a provision of CHF 50 million for internal costs arising from the year-2000 issue was recorded.
Affiliated companies valued at Swiss Re’s share of their equity 1 586 968
Investments in unconsolidated subsidiaries and affiliated companies as stated in the balance sheet 3 404 2 595
Income from companies stated at Swiss Re’s share of their equity 253 140
The shares stated at market value in the balance sheet cost CHF 12.424 billion (1996: CHF 9.265 billion).
Own shares The following own shares of Swiss Re, Zurich, are held by the Swiss Re Group: Number of registered CHF
Own shares held on 1 January 1997 at cost 1 028 104 1 033
Own shares held on 31 December 1997 at market value 1 032 443 1 866
Own shares held on 1 January 1996 at cost 791 971 708
Own shares held on 31 December 1996 at cost 1 028 104 1 033
The portfolio includes shares serving as a guarantee for obligations arising from the convertible bonds and bull spread warrants issued by SwissRe Finance (Bermuda) Ltd and the call warrants issued in 1997. As part of the share repurchase programme launched in December 1997, 7000 shares with a total value of CHF 18.0 million had been bought back by the end of the year.
As security for own obligations, assets totalling CHF 4.146 billion (1996: CHF 2.396 billion ) have been either deposited, pledged or assigned in favour of ceding companies.
Other assets include a deferred tax credit of CHF 629 million (1996: CHF 518 million).
The provisions for claims outstanding relating to alternative risk transfer business are partially accounted for at present values.
The routine reassessment showed an increase in the expected claims of USD 66 million. Included for the first time are the provisions belonging to Swiss Re Italia. In the same way as for other claims, the Swiss Re Group continues to make provisions for long latent injury claims on a cautious but realistic basis, being the undiscounted value of potential ultimate claims payments and claims settlement charges, less amounts paid to date.
Provisions for long latent injury claims outstanding on 31 December 1997 reflect the carefully estimated future trend of claims payments and claims settlement charges. Due to the inherent uncertainties and assumptions on which these estimates are based, however, we cannot exclude the need to make further additions to these provisions in the future.
Other provisions contain a provision of CHF 450 million (1996: CHF 450 million) in the books of Swiss Re, Zurich, relating to a guarantee made in connection with the minority holding in Credit Suisse Financial Products, London. The provision was established at the direction of the Swiss insurance supervisory authority.
Capital market issues made in 1995 resulted in obligations of CHF 1728 million, of which CHF 492 million are convertible bonds and CHF 530 million bull spread warrants. A loan of CHF 500 million was issued in 1997.
There are liabilities covered by valuable security in the sum of CHF 195 million (1996: CHF 2 million).
Our audit was conducted in accordance with auditing standards promulgated by the profession in Switzerland and with the International Standards on Auditing issued by the International Federation of Accountants (IFAC), which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also assessed the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
The following commentary on the 1997 financial year of the parent company therefore complements the review of the financial year of the Swiss Re Group and is intentionally kept short.
After-tax profit for the financial year amounted to CHF 802 million, following CHF 517 million in 1996.
This rise in profit is attributable to the non-technical result, which climbed by CHF 388 million to CHF 649 million. The technical result amounted to CHF 341 million, slightly below the previous year’s level. Taxes increased in line with the pre-tax profit.
Investments in subsidiaries and affiliated companies now include Unione Italiana di Riassicurazione S.p.A., Rome, since renamed Swiss Re Italia, which was acquired in the 1997 financial year. Combined with other transactions, valuation adjustments and the favourable currency effect, the book value of subsidiaries and affiliated companies increased modestly compared with the previous year. Moreover, additional loans were granted to subsidiaries and affiliated companies.
Capital funds amounted to CHF 5.382 billion at year-end 1996 (before profit allocation). Following the dividend distribution of CHF 439 million and the inclusion of the 1997 profit, capital funds equalled CHF 5.745 billion at yearend 1997.
The nominal share capital of the company totalled CHF 150 433 010 on the balance sheet date, consisting of 15 043 301 registered shares with a par value of CHF 10.
The company issued a debenture loan in the amount of CHF 500 million during the year under review.The loan liabilities of CHF 2.1 billion are in connection with the financing of acquisitions in 1996 and 1997.
III Other assets 1. Fixed and other assets 2. Cash at bank and in hand
III Provisions for other risks and charges 1. Provisions for taxation 2. Other provisions
The accounts of the parent company are prepared in accordance with the regulations of Swiss Corporation Law. Swiss Re’s profit and loss account and balance sheet are presented in line with European Union directive-based accounting and reporting recommendations for insurance companies.
The overall investment management charges are allocated to the reinsurance business and the investment business on an imputed basis. Self-charged rent on properties used for own purposes is included in these expenses as well as in income from land and buildings.
The following assets are stated at cost, less necessary and legally permissible depreciation: – Land and buildings (purchase or construction cost) – Investments in subsidiaries and affiliated companies – Shares – Fixed income securities and registered debt instruments These assets are not subject to revaluations. The valuation rules prescribed by the Swiss insurance supervisory authority are observed.
At the direction of the Swiss insurance supervisory authority, a provision for catastrophe claims is being established.
The currency exchange rates applicable for key currencies are shown on page 36.
Switzerland 3.9% Germany 13.4% United Kingdom 10.1% France 5.0% Netherlands 4.8% Spain 1.9% Italy 3.0% Other European countries 9.3%
Amsterdam Cologne Dublin Hannover London Madrid Milan Moscow Munich Offenbach Paris Rome Tallinn Warsaw Zurich
Atlanta Bridgetown, Barbados Hamilton, Bermuda Boston Chicago Cleveland Dallas Delaware Fort Lee Georgetown Manchester Middleburg Heights Montreal New York Philadelphia Phoenix San Francisco Toronto Vancouver
Auckland Bangkok Beijing Hong Kong Kuala Lumpur Manila Melbourne Mumbai Seoul Shanghai Singapore Sydney Taipei Tel Aviv Tokyo Wellington
Contingent liabilities, mainly towards Group companies, amounted on 31 December 1997 to CHF 2.248 billion (1996: CHF 1.920 billion). In addition there were fifteen unlimited guarantees; ten of these are for obligations towards Group companies. No payments are expected under these guarantees.
To secure the technical reserves on the 1997 balance sheet date securities in the amount of CHF 1.228 billion were deposited in favour of ceding companies (1996: CHF 1.227 billion).
The insurance value of tangible assets, comprising the real estate portfolio and other tangible assets, amounted on 31 December 1997 to CHF 1.987 billion (1996: CHF 1.848 billion).
The company has the following outstanding debenture loan: 33⁄4% loan, 2 July 1997–2007, CHF 500 million.
Based on the information at our disposal, Credit Suisse Group (including the merged Winterthur Group) owned 1 578 110 registered shares of Swiss Reinsurance Company on 15 May 1998, representing 10.49% of the total share capital.
The independent actuary, Paul Embrechts, Oberrohrdorf, has confirmed in his report that the balance sheet provisions for the life reinsurance business stated at year-end 1997 have been calculated in accordance with European Union guidelines.
Disposable profit 1 provisional. Should the General Meeting approve the proposal to reduce the amount of capital, the number of shares entitled to dividend and the dividend amount will be reduced. The corresponding difference will be carried forward to the following year.
If the proposal of the Board of Directors is accepted, a dividend of CHF 44.– per share will be paid.
After deduction of the Federal Withholding Tax of 35%, the dividend will be paid from 1 July 1998 by means of dividend order to shareholders recorded in the share register or to their deposit banks.
Swiss Re Investors Zurich d 100 – – – – Mythenquai 50/60 8022 Zurich
Swiss Re New Markets d 100 – – – – Mythenquai 50/60 8022 Zurich
Union Reinsurance Company 5 d 100 f CHF 39.1 365.5 Genferstrasse 27 8027 Zurich
Schweizer Rück Risk Management d 100 – – – – und Produktentwicklung für Versicherungen GmbH1
SwissRe Advisers Tallinn d 100 – – – – Roosikrantsi 11 EE0001 Tallinn 62 Swiss Re Group
Suisse de Réassurances (France) d 100 – – – – 7, rue de Logelbach 75847 Paris Cedex 17
Swiss Reinsurance d 100 f GBP 13.9 174.8 Company UK Limited 71–77 Leadenhall Street London EC3A 2PQ
Swiss Re Life & Health Limited d 100 – – – – Moorfields House, Moorfields London EC2Y 9AL with a representative office in Israel
Swiss Re New Markets Ltd. d 100 – – – – 71–77 Leadenhall Street London EC3A 2PQ
Bavarian Reinsurance Ireland Ltd. d 100 f XEU 18.5 233.6 54 Fitzwilliam Square Dublin 2 63 Swiss Re Group
Algemene Levensherverzekering d 100 f NLG 52.2 365.9 Maatschappij nv Burgemeester Rijnderslaan 28 1185 MC Amstelveen
Swiss Re Advisers Poland d 100 – – – – Ai. Jerozolimskie 65/79, 16th Floor 20-697 Warsaw
Atlantic International Reinsurance d 100 f USD 11.0 21.9 Company Ltd.
A re a o f b u si n e ss
Securitas Capital Partners I, L.P. d 99 f USD – – c/o Hemisphere Management Ltd. Hemisphere House, 9 Church Street Hamilton HMDX
SwissRe Finance (Bermuda) Ltd. d 100 f USD 24.4 737.9 41 Cedar Avenue Hamilton HM12
Partner Reinsurance Company d 20.93 e USD 79.2 1 978.3 106 Pitts Bay Road Pembroke HM08
Swiss Reinsurance d 100 f CAD 40.4 165.7 Company Canada Suite 2200, 150 King Street West Toronto, Ontario M5H 1J9 with branch offices in Montreal and Vancouver
European Reinsurance Corporation d 100 f USD 4.6 122.6 of America 55 East 52nd Street New York, NY 10055
SwissRe Investors, Inc. d 100 – – – – 55 East 52nd Street New York, NY 10055
Swiss Re Capital d 100 f USD 0.2 5.3 Markets Corporation Park Avenue Plaza 55 East 52nd Street New York, NY 10055
SwissRe Finance (US) Inc. s 100 f USD 1.5 42.7 237 Park Avenue New York, NY 10017
Swiss Re Life & Health America Inc. d 100 f USD – 8.7 278.5 237 Park Avenue New York, NY 10017
Swiss Re New Markets Corporation 2 d 100 f USD 7.2 92.7 Park Avenue Plaza 55 East 52nd Street New York, NY 10055 66 Swiss Re Group
Suiza de Reaseguros S.A. d 100 – – – – Bouchard 547, Piso 19 1106 Buenos Aires
Compañía Suiza de Reaseguros d 100 – – – – Oficina de Asesoría Técnica Calle 72, No. 12-65, Piso 9 Apartado aéreo 057293 Santa Fe de Bogotá, D.C.
Suiza Re México, S.A. de C.V. d 100 – – – – Av. Insurgentes Sur No. 1685, Piso 13-B Colonia Guadalupe Inn Delegación Alvaro Obrégón 01020 México, D.F.
Swiss Reinsurance Company d 100 – – – – Shanghai Representative Office1 2508 Shui On Plaza # 333 Huaihai Zhong Road Shanghai 200021
Swiss Reinsurance Company d 100 – – – – Hong Kong Branch 6107-08 Central Plaza 18 Harbour Road Hong Kong 67 Swiss Re Group
Areas: d Reinsurance d Reinsurance advisers d Insurance d Banking d Services s Holding
Swiss Re (Israel) Ltd. d 50 – – – – Mozes House Rothschild Boulevard 76 65785 Tel Aviv
Swiss Reinsurance Company d 100 – – – – Kuala Lumpur Branch Suite 27-01 Menara Keck Seng 203 Jalan Bukit Bintang 55100 Kuala Lumpur
Swiss Reinsurance Company Manila d 100 – – – – 19D Tower One, Ayala Triangle Ayala Avenue, Makati City 1200 Metro Manila
SR Risk Management Services Limited d 49 – – – – Unit 901, 9th Floor M. Thai Tower, All Seasons Place 87, Wireless Road Lumpini Phatumwan Bangkok 10330 68 Swiss Re Group
Swiss Re Southern Africa Limited d 100 f ZAR 57.7 474.3 Swiss Park, 10 Queens Road, Parktown 2193 Johannesburg with a branch office in Harare (Zimbabwe) and representatives in Cape Town and Durban
Swiss Re Life & Health d 100 f ZAR 86.9 161.0 Southern Africa Limited 7 Main Road, Mowbray 7700 Cape Town with branch offices in Durban, Harare (Zimbabwe) and Johannesburg 69 Swiss Re Group
At the dawn of the computer age memory was in scarce supply. Years were thus recorded as two-digit numbers.
Although the capacity constraints have long since disappeared in micro-electronics, the years are still represented by two digits. This could have grave consequences at the turn of the millennium. Many computers are not yet capable of interpreting 00 as the dawn of the new millennium. They will thus produce incorrect results, or systems will fail altogether.
The danger exists equally for large systems and small applications. One can imagine all kinds of possible mishaps. Examples include disruptions to business or incorrect price calculations at the phone company, life-support equipment failures in hospitals, erroneous flight bookings in aviation, and power station shutdowns. In short, the millennium bug can entrench itself anywhere, and the consequences can be serious if action is not taken quickly.
The only beneficiary of the year2000 problem is likely to be the legal industry. A renowned US law firm estimates the costs of lawsuits at USD 1000 billion for the United States alone. This figure may be exaggerated, yet it is an indication that the legal industry is gearing up for the business opportunity of the century. Thus law firms are already beginning with the formation of “millennium-bug teams”.
In this situation, it is good to know that the policyholders are obligated to take preventative measures. Thus anyone today who sits back and waits is acting negligently and cannot rely on salvation through insurance. The same applies to companies which woke up too late and are confronted today with the capacity constraints of the computer industry.
Within Swiss Re itself, operations were reviewed at a very early stage. The efforts surrounding the year2000 problem are coordinated centrally by the Information Technology department. Local projects are underway in Swiss Re’s divisions around the globe. The necessary adjustments will be completed before the end of 1998, including the tests on the mainframe applications. All other applications, such as those on servers or PCs, must be adapted and tested before mid-1999.
For information on how you can order these publications, please refer to page 78 of this annual report.
Today, companies with a commitment to the arts are engaged in “sponsoring”. The word is English, the idea American – so we Continentals are bound to be wary. What creative artists fear is that giving in to sponsorship means selling out to a publicity machine. For the artist, being on the qui vive is nothing less than a duty. In the matter of sponsoring, creative artists will have to learn to be discriminating. They must decide whether the type and source of funding is germane to the activity it supports, including the more “difficult” areas of artistic endeavour. Or whether the sponsor wants to sell cultural and social merchandise simply to gain kudos within the industry and in the public eye. The right kind of sponsorship is discreet, sometimes almost to the point of anonymity. So what’s in it for the sponsor? According to Swiss Re: We should give some thought to finding “appropriate means of expression for our corporate culture”.
At Rüschlikon near Zurich, you know you have lighted on such a spot – somewhere significant. It has something of the magic of Monte Verità at Ascona; in both places, you sense hidden forces. You look across the lake into the distant Alps, which have provided the inspiration for so many poets. You look over to Zurich: a Zurich that is as much the city of Gottfried Keller, as it is the home of insurance companies and banks; you see the University and the Federal Institute of Technology, the towering chimney of the municipal waste incinerator, the high-rise apartment blocks. It is small as cosmopolitan cities go – spread out, yet hemmed in on all sides. From this vantage point, you feel you are looking into its history.
Modern infrastructure and multifunctional room facilities, a conference centre seating 300 in the forum and 56 guestrooms.
Architects responsible: Marcel Meili, Markus Peter, Zurich 76 Swiss Re Group directly and deeply. We all live with risks, and the fact that some of them are growing by the day is evident – you just have to open a newspaper. Our society is going global in a world of growing risk. Seen in this wider landscape, reinsurance is a very special business indeed.
Our aim, here in Rüschlikon, is to create a centre for risk dialogue and strategy discussion, and a general awareness of the risks of a modern world – perhaps together with other bodies and institutions, with people from science and research. If we succeed in that goal, our new centre will be an enterprise worthy of this wonderful setting and the promise it holds: to be a crossroads where different worlds and lines of thought can meet.
Swiss Re’s conference facilities and guesthouse in Rüschlikon (Zurich) will play a crucial role as the highly innovative communications centre for the entire Swiss Re Group, with an atmosphere moulded out of the established and newly constructed buildings, plus a unique park setting overlooking the lake of Zurich and the Alps.
Contemporary architecture, spacious planning and a wellworked design are the key qualities of the Rüschlikon complex.
Swiss Re has been publishing its technical know-how, developed by specialists from around the world, regularly since the 1980s. Our target audience is clients, although the brochures, available in the languages of the markets in which we do business, are also aimed at our own employees and, of course, our shareholders and the media. Of particular interest are our flyers, with their lively and concise style, which tackle topical issues such as the “millennium bug”.
Swiss Re is also present on the Internet (www.swissre.com). Our Web-site offers publications in elec78 Swiss Re Group tronic format, around the world and around the clock. If you wish to find out more about Swiss Re on video, the Swiss Re Publishing Index offers a choice of three titles.
The sigma series tackles economic issues, market trends and their effects on the insurance industry, structural changes in the different markets and lines as well as international comparisons. Outstanding research and reporting gained sigma the “Analyst/Researcher of the Year” award in 1995 and 1997. sigma is published in English, German, French, Italian and Spanish and is also available on Swiss Re’s Internet server.
sures – or even recall the product – if deficiencies are detected. This obligation contains a high expense risk, which also places demands on the insurer. To meet this challenge, it is necessary to make available sufficient insurance protection in this new area and provide the client with advice and support in the event of a loss.
How is the susceptibility of enterprises affected by their globalisation and increased complexity, and what effect does this have on business interruption insurance? Order number: 98-105
A study of mortality in Europe based on Swiss Re’s medical statistics. Order number: 97-94
Electronic equipment Understanding the risksUnderstanding the risks in electronic equipment insurancein electronic equipment insurance
Acceptance of the risks of the policyholder by the insurance company. Also known as primary or direct insurance.
Equal to the combined ratio adjusted by the addition of allocated investment return (allocated investment return in relation to net premiums earned). This ratio enables the assessment of business performance in non-life reinsurance after inclusion of allocated investment return.
Facultative reinsurance: Reinsurance of the insurer’s risks on an individual basis.
Financial reinsurance: Form of reinsurance treaty with specific consideration of accounting features of the insurer.
Non-proportional reinsurance: Form of reinsurance in which the reinsurer assumes that part of the insurer’s claims that exceed a certain amount against payment of a specially calculated premium.
Risk management: Management tool for the comprehensive identification and assessment of risks based on knowledge and experience in the fields of natural sciences, technology, economics and statistics.
Premiums received for future financial years and carried over to the next year’s financial statements.
Reserved for other corporate purposes of which reserved for employee options
Registered shares RUKN RUKZn.S RUKN SW ADR, Level 1 SWCEY SWCEY US
Photographs Horst Wackerbarth (3, 8) dpa/Wolfgang Kumm (16 top) Keystone/Czarek Sokolowski (16 bottom) Keystone/Wolfram Steinberg (17) Magnum/Hiroji Kubota (18 left) Magnum/Pinkassov (18 right) Keystone/Jon Levy (19) RDB/Ferdi Hartung (21 top) Magnum/Martin Parr (21 centre) Magnum/Paul Lowe (21 bottom) Magnum/Jean Gaumy (22) Keystone (23) Tony Stone Images (25) Christian Kurz (71, 73 top, 75 top,
Graphic design Weiersmüller Bosshard Grüninger WBG, AG für visuelle Kommunikation, Zurich