Board of Directors Max E. Eisenring, Chairman Paul Keller, Deputy Chairman Karl Brunner Paul Guggenbiihl Matheus Klaas Paul Ruegger Hans Schindler Max H. Schneebeli Max Petitpierre Werner Abegg Felix W. Schulthess
Deputy Managers K. Aerni E. Bart G. Bassin * E. Bosshardt H. Brodbeck* E. Burnens V. Cachin W. Diehl C. E. Geiser* J. J. Hagedorn
W. Küster P.-F. Niquille R. Ochsenbein H. Odermatt Ch. Robert-Tissot H. Ryffel M. D. de Salis H. Salzmann H. Schönenberger E. Spargnapani
R. Aeberli A. Albrecht E. Arpagaus E. Baumgartner G. Benktander * F. Bolliger A. Brügger * P. E. Christen F. Ehrsam L. Genoud * G. Huguenin
E. A. Kubli G. Lavanchy W. Mantel J.-C. Mayor * M. Nabholz S. Patthey * H. Pfefferle* J. C. Roos * H. C. Rutishauser P. Schuppli P. Strickler * With effect from 1st January. 1969
We have the honour to present to you the Annual Report and Statement of Accounts of the Company for the business year 1967/68. The 104th business year embraces the rein­ surance business for the calendar year 1967 and the other income and expenditure from 1st July, 1967 until 30th June, 1968.
Non-Life reinsurance produced a greater deficit than in the preceding year. Contributory factors were a series of large industrial fire losses, the windstorm devastation along the northern coastline of the European Continent, and the severe hailstorms in various countries. As in previous years, the Marine and Third Party Liability branches added to the deficit. Experience in Life reassurance was once again satisfactory.
The investment income was further increased. The account for depreciation, fluctuations in foreign currencies and stock exchange rates closed with a substantial surplus. Tax expenditure declined sharply. However, the upward trend in management expenses continued.
rating can eliminate the effects of the run-off of losses from previous years. This run-off, especially in the Marine, Accident and Third Party Liability branches, is prejudiced by the fact that several of our ceding companies report losses many years after the event and their estimates of the loss amounts are often too conservative.
Despite the extensive reduction of unprofitable business which was begun in 1966, an increase in gross premium of 3.7 % (previous year, 8.7 %) was recorded as a result of premium increases on covers which were still maintained.
The business experience in the individual branches gives rise to the following comments: Fire insurance suffered a number of severe losses. One of the largest which has ever occurred in Europe was the conflagration in the department store "A ITnnovation" in Brussels, which spread to neighbouring buildings, killing 325 persons, of whom 93 were employees and 232 custom­ ers. In addition, a series of industrial fires gave rise to heavy Consequential Loss claims which have been attri­ buted to the behaviour of certain synthetic materials. Some markets appear to have surmounted the problems of insuring modern industrial installations against fire, as is apparent from the results, whereas others continue to encounter difficulty in raising their premium level suffi­ ciently to meet the present risk situation.
The year of report saw serious claims in the sector of insurance against losses caused by the forces of nature. A succession of storms trailed damage from France to Sweden. Furthermore, the year 1967 was beset by hail­ storms. For storm and hail claims our settlements totalled Sw. frs. 22.8 million in the year under review. Storms and hailfall on this scale are an exceedingly rare occurrence in Europe, and on the few previous occasions they affected the insurance industry only to a modest extent. But, owing to the greater concentration of population in the coastal areas, the present-day methods of less resistant building construction, and the higher density of insurance, the risk situation has changed in the course of the years and this has prompted us too to adapt our underwriting policy to the new circumstances.
The Burglary branch as a whole closed with a profit. However, we should not overlook the fact that greater negligence on the part of the insured and the growing number of crimes have led to losses in certain markets.
We are following the development of this business with some concern. The lesser lines of Water Damage, Plate Glass and Livestock, with their smaller volume of pre­ miums, also showed an overall profit. Engineering reinsur­ ance, which is expanding rapidly, likewise gave a small underwriting profit. This business is still very unbalanced, however. The high values covered in some cases call for an appropriate further distribution of risks by means of retrocession.
Accident business, which produced a substantial loss during the previous year, ran profitably in the year under report. Private Sickness insurance has followed the course set by social insurance. Its profit potential is thus restricted. With a growing volume of business it yielded a slightly better result than in the previous year.
The reinsurance of Aviation risks concluded with a profit. This branch is faced with highly complex insurance pro­ blems through the forthcoming introduction of largecapacity and supersonic aircraft into commercial service.
The Surety, Credit and Fidelity lines closed with a small deficit for own account.
Investments The income from investments again rose steeply, although some slackening of the upward trend is evident. On the one hand, the rates of interest in many markets have al­ ready steadied or even fallen, and on the other hand the portfolio of low-interest bonds which can be converted into high-interest securities is continuously declining. Of course, the rejection of unprofitable reinsurance business also has a restricting effect on the growth of new funds for investment. This we are quite ready to accept, because in our experience the loss potential, particularly with nonproportional covers, is often many times greater than the yield and profit potential of the additional investments. — The New Holding, Ltd., is again granting, in addition to the ordinary dividend of Sw. frs. 2 million, a bonus in the amount of the dividend. For the above reasons the profit-bearing investments (of. table on page 8) rose less strongly during the year under report than in the previous year; indeed, the cash deposits with ceding companies declined by a net amount of Sw. frs. 4 million (compared with an increase of Sw. frs. 82 million in the previous year); the investments (excluding Permanent Holdings) increased by only Sw. frs. 101 mil­ lion in the year under report (in the previous year by Sw. frs. 135 million). However, accrued funds were placed, to a larger extent than in the previous year, in investments of an equity nature (shares, convertible bonds and con­ vertible preference shares) so that on the balance-sheet valuation date the distribution of investments was as follows: On Balance-sheet Values Fixed-interest investments, including convertibles 79.4% (previous year, 81.4 %) Shares (excluding Permanent Holdings) 11.1 % (previous year, 9.0%) Real Estate 9.5 % (previous year, 9.6%) On Market Values Fixed-interest investments, including convertibles 72.4 % (previous year, 76.5 %) Shares (excluding Permanent Holdings) 19.3 % (previous year, 14.9 %) Real Estate (at balance-sheet values) 8.3 % (previous year, 8.6%) In the year of report the "cost or market" method has once more been applied in showing investments in the balance sheet. Whereas interest rates in Continental Europe, with the exception of France, remained stable or even declined, they rose again in the United States and Canada, so that amounts required for depreciation on fixed-interest investments were appreciably higher than those of the previous year and also exceeded the realized capital gains. Thanks to the stable or even very favourable state of all our important share markets, the depreciation requirement on shares remained moderate. In the year under review, the hidden surplus on the quoted securities rose bySw. frs. 72.8 million to Sw. frs. 267.7 million. The sale of the Mercantile and General Reinsurance Com­ pany, Ltd., London, by the New Holding, Ltd., provided the latter with the means for, inter alia, the assumption from the Swiss Re of permanent holdings to the value of approximately Sw. frs. 63 million; the resulting book profit, in the region of Sw. frs. 24 million, was set aside entirely for belated claims. Of the assets of our Company shown overleaf, Sw. frs. 159 million are held by Trustees appointed by us in overseas territories.
The term of office of Mr. Max E. Eisenring, Ghairman, Mr. Paul Keller, Deputy Chairman, Mr. Karl Brunner, Mr. Paul Ruegger, and Mr. Werner Ab egg has now expired by rotation. Having attained the prescribed retirement age Mr. Karl Brunner withdraws from the Board. The other gentlemen stand for re-election and are immediately eligible under the Articles of Association.
Mr. Karl Brunner was elected to the Board in 1959. As a member of our Committee of Directors he gave us the benefit not only of his legal knowledge but also of his many years of experience in countries of importance to us in the East. His counsel, as also his accomplishment of spe­ cial missions, have always been of particular value to us, and we are indeed grateful to Mr. K. Brunner for wellnigh ten years' service to our Company.
For reasons of age Mr. W. Saxer retires as actuarial auditor on the day of the General Meeting. We are very grateful to him for his long years of devoted service. The Board of Directors has elected Mr. H. Bühlmann as his successor.
The Board of Directors has made the following appoint­ ments with effect from 1st January, 1969: to Manager, Mr. R. Hedinger; to Deputy Manager, Messrs. G. Bassin, H. Brodbeck, C. E. Geiser; and to Assistant Manager, Messrs. G. Benktander, A. BrUgger, L. Genoud, J.-C. Mayor, S. Patthey, H. Pfejferle, ]. C. Roos.
In accordance with Article 30 of the Arti­ cles of Association, the Board of Directors proposes that the General Meeting should allocate the net profit as follows: 5 % Statutory Dividend Staff Life Assurance and Pension Fund Directors' Remimeration
In addition the Board of Directors proposes that the remainder plus the balance brought forward from 1966/67 should be allocated as follows: Sw. frs.
Capital Funds The capital and free reserves remain unchanged at Sw. frs. 200 million; to these are added the balance brought for­ ward of Sw. frs. 1.5 million (previous year, Sw. frs. 2.7 million).
Ali Classes exci. Life Sw. frs. Sw. frs. Sw. frs. Sw. frs.
Outstanding Claims for Own Accotmt All classes excl. Life (incl. Valuation of Current Annuity Indemnities)
The securities, or the corresponding deposit certificates, were examined on the 16th and 17th July and on the 12th September 1968 and found to be in order. A check carried out on the 12th September, 1968 showed that the cash in hand corresponded with the books.
Dividend Sw. frs. 60.— per Share 24,000,000 Bonus Sw. frs. 10.— per Share 4,000,000 Staff Life Assurance and Pension Fund 2,500,000 Donations 350,000 Director's Remuneration 350,000 Carry Forward 1,477,105
Fire 736 711 Hail 11 12 Burglary 36 33 Engineering, Water Damage, Plate Glass and Livestock 31 27 Marine 152 134 Accident 151 136 Sickness 136 101 Third Party Liability 589 578 Surety, Fidelity and Credit 109 110 Life 385 400
Investments For the following comparisons too, those items which could produce a duplication of figures have been eliminated. Within the Group the statistics shown represent the sub­ sidiary companies' assets instead of their book value. Consequently the holdings included here are merely those which are not counted as investments within the Group.
Growth in Investment Income in millions of francs (excl. income allocated to the underwriting sector to cover legally prescribed reserves)
Capital and Free Reserves * 1964/65 investment income converted to 12-month basis
The consolidated capital and free reserves of the Swiss Re Group, after distribution of the profit, attained the figure of Sw. frs. 359 million at the 30th June, 1968, as against Sw. frs. 363 million at the end of the previous business year.
' adjusted for changes in commission equity The Fire lines were largely responsible for the deterioration of the technical result, riots and conflagrations being the primary factors. — The dividend was again reduced by half to $ 375,000.
The gross business in force increased by $ 244 m. to $ 2,713 m. The favourable mortality experience and in­ creased investment income led to a substantial improve­ ment in the underwriting result. The financial result was greatly affected by the tax expenditure. — The dividend remained unchanged at $ 360,000.
The result for the year under report was again satisfactory. Non-Life reinsurance business produced profitable results, and the underwriting loss shown in the Life department was more than offset by interest income and realized capital gains. — The dividend remained unchanged at Rand 27,900.
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