Stock Market Capitalization, Mythenschloss 18 : Consolidated Profit and Loss Account 38
Balance Sheet 21 Key Figures of Group Companies In 1986 44
Underwriting results Non-Life insurance Life insurance llnvestment and other financial Income 1,093 1,080
Other Income and outgo Including taxes Profit applicable to minority shareholders
^Consolidated net profit 179 145 iConsolldated net profit per share •Consolidated net profit per non-voting share
Hans R. Lüthy* Deputy Chairman, Küsnacht Chairman of the Board of Directors of IBM Switzerland, Zurich 1989
Hans Ulrich St. Gall, Professor Emeritus, St. Gall Graduate School of Economics, Business and Public Administration 1989 * Members of the Committee of Directors
Secretary to ttie Board of Directors Chiristoph Blanc, Executive Manager, Oberrieden
Executive Committee and Group Management Chairman and Chief Executive Officer Walter Dietil
German-speaking Switzerland, Germany, Austria, Eastern Europe, Netherlands, Denmark, Sweden, Norway, Finland, Iceland M. Nabholz, Senior Executive Manager E, Etter, Executive Manager Executive Managers B. Heyer, W. Müller, W. Rüetschl Managers R Gasser, W. Hersberger, R. Slegrlst
French- and Italian-speaking Switzerland, France, Italy, Spain, Belgium, Luxembourg, Greece, French-speaking Africa E.Jutzi, Senior Executive Manager R. Martignier, Executive Manager Executive Manager R. Ruttlmann, J. Steinrlsser Managers A. Gaifetti, B. Giliiand, M,-L Musy
Reinsurance technique and acquisition special lines R. R. Doerr, Senior Executive Manager U. Winter, Executive Manager
Special lines: Engineering, Aviation, Nuclear energy. Marine Executive Managers A. Bai, H. Fischer, W. Künzle, J.W. Youngs Managers M.A. Bloesch, H. Lüthi, O. Olsson, E. Steider Members of Management H.F Enzmann*, H. Tiedemann
Risk management. Special assignments Manager E. Baumann Member of Management J. Hofmann
Capital market Investments, real estate PR Hügie, Executive Manager B. H. Letsch, Manager Executive Manager FE. Rohner Managers A. Decurtlns, M. GOrber, E. Locher, B. Perrin, J.-P Preyer
RE. Christen, General Manager H. Odermatt, General Manager T. Obrist, Deputy General Manager
Share register, organization, public relations, economic studies and other services R. Riiesch, Senior Executive Manager O. Kern, Manager Member of Management E. Schienker
Holdings, planning and control, law and taxes J. B. R. Lieberman, Executive Manager 0. Blanc, Executive Manager Managers G. E. Brooks, R Egger, H, H. Frey Members of Management J. D. Arpei, M. Gaai
Group companies as per November, 1987 * until 31st December, 1987
This encouraging result Is due mainly to the following fac­ tors: The underwriting loss in Non-Life reinsurance was lower by approx. Sw. frs. 74 million. The underwriting prof­ it in Life reinsurance was about the same as in recent years. Genera/ income and Outgo (the financial result less management expenses) did not quite match up to the peak levels of previous years, because of higher write-offs and slightly reduced capital gains.
The further reduction in the underwriting loss in Non-Life reinsurance is very gratifying. It Is the expected result of the efforts we have been pursuing for some years now, re­ gardless of volume setbacks, to prune all portfolios with unsatisfactory business experience. In addition, reinsur­ ers have benefited from premium adjustments in the di­ rect insurance sector in the year under report.
A large number of carefully trained specialists currently offer our clients not only tailor-made reinsurance pack­ ages but also a comprehensive range of special services in the field of risk handling and management. New rein­ surance forms take into account the needs of the individ­ ual client and changes in direct insurance markets.
Generally it can be said that reinsurers' years of efforts to achieve conditions more commensurate with the risk have led - not least thanks to the firm stance of the Swiss Re - to at any rate partial successes in some major mar­ kets: the year under report saw cautious restraint in the supply of reinsurance capacity, and this caused pre­ miums to rise and helped to improve general conditions. Sadly there are already indications that not all reinsurers are and remain consistent; deviations are noticeable here and there, in particular, the impression gained in the European market is that the necessary perception for re­ alistic conditions in Property insurance is by no means to be found everywhere.
In major markets the experience in industrial business (both Property and Liability insurance) remains unsatis­ factory. This category of business has had inadequate rates for years, a fact which affects the reinsurer in partic­ ular, since it is the reinsurer who is supposed to bear the brunt of major risks, while at the same time being denied the more balanced medium and small business. The ten­ dency to confine the reinsurer to the cover of target risks (or classes exposed to natural catastrophes) inevitably leads to the question of capacity and price in that sector. Thanks to its great financial strength, the Swiss Re has considerable capacity at its disposal; it must, however, also have the assurance that the price guarantees a com­ mensurate profit in the medium term.
The underwriting loss was significantly reduced in the year under report, namely by 27% to Sw. frs. 195.1 million (a reduction of 10% having already been experienced in the previous year). This gratifying development is due to a variety of factors: improved results in Fire, Accident and Aviation contrast with higher losses in General Liability, Motor and Credit and Surety. The other classes contrib­ uted more or less unchanged positive results. - The over­ all underwriting result is a mosaic of vastly varying stones; it must therefore be judged with the necessary differentiation. Staying with the same image, there are admittedly still too many dark stones in the mosaic; relentless work continues on them, the aim being to
In Hail reinsurance premium Income remained stable. Following a loss In the previous year, an underwriting profit can be reported for 1986.
In Accident reinsurance the development of volume has been greatly affected In recent years by Special American
Accident 185 210 Sickness 93 114 General Third Party Liability 415 377
In Sickness reinsurance the expiry of a significant source of business caused premiums to fall. - The account again closed with a small underwriting profit.
In Motor reinsurance premium Income remained stable, better conditions and natural growth outbalancing the negative effects of foreign exchange rates. - Following the losses which Swiss Re had already suffered In this branch In previous years, the year under report again brought a high loss, about twice that of 1985. This Is due In part to a heavy hailstorm In the French-speaking part of Switzerland, which cost Swiss Re alone some Sw.frs. 40 million In physical damage losses. In addition, the suc­ cession of losses over several years shows that Motor In­ surance has slipped to a point where It Is uneconomical and tariff adjustments - which In major countries are only Implemented periodically and not annually - are un­ avoidable. - In the Liability sector ot Motor reinsurance there Is unfortunately (as In General Liability) a tendency toward delayed, or at any rate not prompt reporting of claims on the part of the customer; this brings about a marked deterioration In the transparency of this busi­ ness.
In Marine reinsurance premium volume has been declin­ ing for years, because world trade has shrunk and re­ mains at a low level, so that numerous ships are laid up. In the year under report foreign exchange rate losses ac­ centuated this continued contraction. - Gratlfylngly (as In the previous year) an underwriting profit was achieved; It Is, however, to be expected that the low demand and the resultant oversupply of Insurance and especially reinsur­ ance capacity will Intensify competition and put pressure on results.
The volume in Aviation reinsurance showed above aver­ age growth; this is due to considerable rises in premium rates and to the increase of insured hull values. - The de­ velopment of the result produced a contrast: Whereas 1985 was worldwide the worst year ever in the history of Aviation insurance, the year under report will go down as one of the best. The underwriting profit was correspond­ ingly gratifying. The good business experience has meanwhile quickly led to excessive reinsurance capacity so that premium reductions have become inevitable.
hand, the allocation to the policy and premium reserve had to be substantially increased. Surrender payments have decreased, while commissions and profit commis­ sions paid and interest yield remained more or less sta­ ble. Overall, there was a profit of Sw.frs. 34.1 million, Sw.frs. 1.0 million lower than in the previous year.
The gross premiums, expressed in Swiss francs, rose by 0.9% to Sw.frs. 420.2 million (in the previous year, there had been a fall of 6.8%). The growth of business therefore well offset the curbing effect of foreign exchange rates. The share of disability premiums on the overall volume has again gained in importance.
The underwriting resuit has been affected by varying fac­ tors: claims incurred have clearly dropped - partly as a result of the strength of the Swiss franc. On the other
from a thermai power station to breed fish in a iimnothermai piant mmmmmmm
The merely moderate economic growth and the consider­ able swings on the currency front had varying effects on the capital markets. The climate remained favourable for fixed-interest investments, interest rates continuing their basic, albeit varied, decline in all major markets. Despite lower interest rates it was possible, thanks to modest in­ flation worldwide, to achieve a high real return. Moreover, the drop in interest rates prompted higher bond prices so that current income and appreciation combined to pro­ duce an attractive overall performance. The hidden sur­ plus on bonds increased further.
The structure of total Investments at balance-sheet val­ ues Is shown In the following table.
Net Investment Income In the broad sense (I.e. on Invest­ ments as set out above, plus money market Investments) amounts, after deduction of the Interest required for the Life Insurance and annuity fund and other technical re­ serves as well as for current-account balances and cash deposits, to Sw. frs. 577 million (previous year, Sw. frs. 555 million). This increase In Income by 4.0% (previous year, 5.1%) Is mainly due to the growth of the Investment port­ folio as well as to the emphasis on Investments In fixedinterest securities. Fluctuations In foreign exchange rates had a braking effect; had currency rates remained stable, there would have been an Increase of 14.3% (previous year, 13.5%).
Holdings and loans comprise holdings of Sw.frs. 45 mil­ lion (previous year, Sw. frs. 51 million) and loans to Group companies of Sw.frs. 693 million (previous year, Sw.frs. 526 million). Overall these Investments rose by Sw.frs. 161 million to Sw.frs. 738 million, largely because of an additional loan granted to SwIssRe Holding (North Ame­ rica) Inc., New York.
Net cash deposits (I.e. cash deposits with ceding compa­ nies from active reinsurance after deduction of the depos­ it reserves due to retrocessionaires from passive reinsur­ ance) fell by Sw.frs. 52 million - primarily as a result of the development of foreign exchange rates - to Sw.frs. 1,209 million.
This decision marked the start in 1981 of a planning and construction period which was to abound in problems and exceptional solutions. Despite the caution with which they proceeded, the owners were first confronted with all manner of tenant protection measures and the threat of a demolition ban. The projected new building had to com­ ply not only with official building standards but also with local legislation In the canton of Zurich stipulating that the ratio of residential to office space had to be maintained; in addition, it had to adhere to restrictions designed to pro­ tect the area around the lake. What is more, since the property was located on reclaimed - so-called "conces­ sionary" - land, the cantonal authorities were entitled to a qualified say in proceedings. Then experts classified the "Mythenschloss" as a valuable example of monumental, neo-classlclst architecture, which led to the wish to have the lakeside facade reconstructed. And finally, the build­ ing site itself also had Its surprises in store: the remains of prehistoric settlements were revealed which were of such value that archaeological excavations were called for.
As a result of the "Mythenschloss" project, the Swiss Re found Itself caught up in a conflict of widely varied inter­ ests - but also in the dilemma between the Ideally desir­ able, the technically possible and the commercially ac­ ceptable. If a new building was to be realized at all, the only way to resolve the conflicts was to strive for the best possible compromise solution. The Swiss Re therefore aimed to create a work for the future but at the same time retain those qualities worthy of preservation, to construct a complex large in scale but Imposing a minimal burden on the environment, and to build a user-friendly house for tenants and staff which would also set a positive accent in urban planning.
19841 19851 19861 19372 1 rate at year-end 2 rate at 15tti September, 1987
Total result before tax (1) + (2) + (3) 195,963,301 183,510,917 Taxes - 57,427,290 - 64,025,296
The accounts are compiled according to Swiss law and the underlying commercial and insurance principles. The principle of caution inherent in these regulations is deter­ mining for the valuation and reserving practice of the Company. The principles of accounfing and valuation hitherto applied were retained in the year under report.
All items of the balance sheet and profit and loss account in foreign currencies were uniformly converted into Swiss francs using fhe average foreign currency rates as at 31st December, 1986. Differences arising from the conver­ sion of balance-sheet items in foreign currencies are booked via a corresponding reserve and therefore re­ main outside the profit and loss account. The currencies which are most important for business activity abroad de­ veloped over the previous year as follows: balance-sheet date, at the lower value. Non-quoted hold­ ings are, where necessary, entered at the lower intrinsic value. The lower valuation is retained until disposal of the corresponding securities.
These result from the total of the net premiums and the difference in the unearned premium reserve over the last reporting year. At Sw. frs. 2,985.8 million they were Sw. frs. 26.1 million, or 0.9% below the previous year's amount.
The surrenders in business assumed amounted to Sw.frs. 30.8 million, of which Sw.frs. 2.0 million was deb­ ited to retrocessionaires. A total of Sw.frs. 28.8 million re­ mained for own account.
Of the total increase of Sw.frs. 65.2 million, Sw.frs. 56.3 million applied to Lite insurance and Sw.frs. 8.9 million to annuities.
Management expenses in the year under report showed overall an increase of Sw. frs. 15.8 miliion to Sw. frs. 169.3 million, or by 10.3% compared with 10.2% in the previous year. Pure personnel costs rose by 4.6% (previous year, 3.1%). Other costs rose much more sharply, namely by 19.6%. This increase is mainly due to the higher costs, as against the previous year, of the issue of non-voting shares and to EDP expenditure in connection with the move into a new office building.
loans), i.e. the difference between the lower book and higher market value of the individual securities, taking into account the estimated value of taxes due on realiza­ tion, amounted to Sw.frs. 894.8 million (previous year, Sw.frs. 858.3 million) or 19.9% (previous year, 19.8%) of the balance-sheet value of securities.
The balance-sheet value of holdings fell by Sw.frs. 6.1 million to Sw. frs. 44.8 million. Loans to Group companies increased by Sw.frs. 167.0 million; on the balance-sheet date they amounted to Sw.frs. 693.1 million.
Cf these balances Sw.frs. 644.8 million was for reinsur­ ance and Sw.frs. 38.0 million for retrocession business, ether liabilities totalled Sw.frs. 98.7 million, mainly com­ prising current accounts run for personnel welfare funds and pool companies.
Cash deposits for retrocessions rose, as against the pre­ vious year, by Sw.frs. 5.7 million to Sw.frs. 115.6 million.
Cash deposits with ceding companies fell against the previous year by Sw. frs. 46.3 million to Sw. frs. 1,325.0 mil­ lion. Here too, the decrease is mainly due to lower conver­ sion rates for foreign currencies.
Changes Valuation difference based on exchange rate fluctuations Increase of technical reserves in year under report -1-512.4 Totai business in force on balance-sheet date 6,971.9 7,031.3
In addition, on 31st December, 1986, there was an author­ ized non-voting share capital of Sw.frs. 2.5 million (50,000 non-voting shares with a nominal value of Sw.frs. 50.-).
The Board of Directors proposes to the General Meeting to allocate this profit as follows: Sw. frs. Sw. frs.
Bearer shares and non-voting shares: against presentation of Coupon No. 36.
For the Board of Directors: Walter DIehl, Chairman Christoph Blanc, Secretary
As the Auditors of your Company we have examined the accounts for the year ended 31 st December, 1986, in ac­ cordance with the provisions of the law.
We have come to the conclusion that the Balance Sheet and the Profit and Loss Account are In agreement with the books, the books of account have been properly kept, the financial position and the results of operations are presented in accordance with the principles of evaluation prescribed by the law and the requirements of the Articles of Association.
General income and Outgo Investment income Management expenses Rate fluctuations, depreciation, value adjustments
• Reinsurance business of the calendar year 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 following change in balance-sheet date from 30th June to 31 st December,
SWITZERLAND insurance Company UK Limited, London SCHWEIZ, Compahfa Anönima Espanoia de Seguros y Reaseguros, Barcelona The Federation insurance Limited, Melbourne *
In the structure of the Swiss Re Group the following changes have taken place: The SWITZERLAND General Insurance Company Limited acquired the two Barcelonadomiciled companies, La Constancia CorvpahiaAnonima de Seguros and El Porvenir Sociedad Anonima de Seguros. In 1987, these companies merged with the Finasyr Seguros y Reaseguros S.A., Barcelona, to form a new company, SCHWEIZ, Compahia Anonima Espahola de Se­ guros y Reaseguros, Barcelona. Similarly In 1987, the SWITZERLAND General Insurance Company Limited took over The Federation Insurance Limited, Melbourne.
The development of foreign exchange rates, marked by the strength of the Swiss franc (as shown on page 11), has basically had a similar effect on the Group Accounts as on the Annual Accounts of Swiss Re, Zurich. The conver­ sion of foreign currencies Into the Swiss franc Is ex­ plained on page 40.
In the 1986 Group accounts, the consolidated gross pre­ miums declined by 4.3% to Sw.frs. 10,665 million as a result of the lower foreign exchange rates. Expressed in original currencies, there was, however, a growth of 6.6% (previous year 6.3%). The consolidated net premiums fell by 2.4% to Sw. frs. 9,718 million; reinsurance business accounts for 61% and insurance for 39% of the net premiums.
Despite the braking effect of foreign exchange rates, In­ vestment Income was only slightly less (Sw.frs. 876 mil­ lion, down from Sw.frs. 886 million in the previous year). Securities transactions again gave rise to handsome re­ alized capital gains although they did not quite reach the previous year's level. The requirement for write-offs and reserves rose, whereas management expenses and the tax burden fell. The consolidated Group profit of the rein­ surance companies rose to Sw.frs. 122 million (previous year, Sw.frs. 93 million).
At the North American Reinsurance Corporation, New York, the gross premiums in the year under report rose by 15.1% to US$ 850.8 million. All branches register growth except for Credit, Surety and Marine reinsurance where the volume remained stable. The share of Property busi­ ness remained unchanged at almost 50%, while that of the Liability lines has marginally increased to 26%. - The generally positive development in the American insur­ ance market and the special remedial efforts made by our U.S. subsidiary led to an overall significant reduction of the underwriting loss. In Liability business the results have improved - despite reinforcement of the reserves for late claims. Surety business, on the other hand, suf­ fered a further deterioration, although the bottom ap­ pears to have been reached. The remaining Non-Life rein­ surance business was spared extreme effects in the year under report (such as tornadoes or spring tides) and therefore once more showed better results. The good stock exchange climate again brought higher investment income and realized capital gains. The company pub­ lished a profit of US$ 70.9 million (previous year, loss of US$ 15.3 million). No dividend was paid, as in the pre­ vious year.
The gross premiums of the Canadian Reinsurance Com­ pany, Toronto, rose by 25.6% to Can.$ 139.5 million. All branches, but Casualty reinsurance in particular, contrib­ uted to the strong premium growth. The underwriting loss showed only a slight decrease against the previous year, investment income remaining below the previous year's record result. Thanks to further high realized capital gains, the company achieved a profit of Can. $ 10.8 million (previous year, Can.$ 10.9 million). In the year under re­ port, it bought back part of the preference share capital. A dividend of Can. $ 1.5 million (previous year. Can. $ 3.1 mil­ lion) was paid on the preference shares and common shares.
The selective underwriting policy continued by the North American Reassurance Company, New York, the SwissRe Life insurance Company, New York, and the Swiss-Am Reassurance Company, New York, brought about an in­ significant drop in the Life reinsurance business in force. Although the remedial measures were consistently im­ plemented, the premium income rose slightly. Investment income rose as against the previous year, whereas man­ agement expenses dropped minimally. In American ter­ minology a net loss from operations of US$ 11.1 million (previous year, loss of US$ 17.1 million) was reported, which was, however, offset by realized capital gains, so that the overall result was positive. Again, however, no dividend was paid.
result amounted to Can.$ 7.1 million (previous year, Can.$ 11.1 million). In addition to the normal dividend of Can.$ 0.55 million, the company paid out a special divi­ dend of Can.$ 6.0 million.
higher investment income led to an overall profit of Austr. $ 7.6 million (previous year, Austr. $ 5.7 million).The dividend was raised from Austr. $ 1.0 million to Austr. $ 1.2 million.
At the Swiss-South African Reinsurance Company Limi­ ted, Johannesburg, the gross premiums grew in Non-Life reinsurance by 39.8% to Rand 113.2 million. Improved market conditions and the absence of natural catas­ trophes led to an underwriting profit following the pre­ vious year's loss. - The gross amount of business In force In Life reinsurance increased to Rand 8,000 million. The underwriting result (including Accident and Sickness reinsurance) deteriorated in comparison to the previous year, primarily because of the costs for new business. The improvement in Non-Life reinsurance and higher in­ vestment income led to an overall profit of Rand 11.4 mil­ lion (previous year. Rand 7.1 million). The company paid a dividend of Rand 3.0 million (previous year. Rand 2.0 mil­ lion).
The consolidated net premiums rose in the year under re­ port by 5.3% to Sw. frs. 3,804 million (previous year, in­ crease of 10.7% to Sw. frs. 3,612 million). Prior to conver­ sion Into Swiss francs the Increase was 8.6% (previous year, 10.4% ). About 83% of this premium volume stems from the Group companies in Germany. Although there were divergent developments in the Individual compa­ nies, Non-Life insurance showed a higher profit. In Life in­ surance, too, the profit was somewhat larger. The repeat­ ed rise in investment Income and the further positive bal­ ance from realized capital gains and write-offs, as weli as the reduced tax burden led overall to a Group profit from insurance companies of Sw. frs. 38 million (previous year, Sw. frs. 22 million).
After the previous year's decrease brought about by for­ eign currency rates, the gross premiums of the SWITZER­ LAND General Insurance Company Limited, Zurich, rose by 7.9% to Sw. frs. 687.1 million (previous year, Sw.frs. 636.8 million). Of the premium volume 67% was for Insur­ ance, 33% for active reinsurance. Had foreign exchange rates remained unchanged, growth would have been 20.0%. An above average increase was achieved in Swit­ zerland with 8.3%. - The net underwriting result and In­ vestment Income developed favourably. The profit for the year rose to Sw.frs. 12.4 million (previous year, Sw.frs. 8.5 million), which enabled a dividend of Sw.frs. 2.5 million (previous year, Sw.frs. 2.25 million) to be paid.
The consolidated gross premiums of the Magdeburger Versicherungsgruppe, Hanover, rose by 4.2% to DM 969.7 million. - The gross premiums oühe MagdeburgerFeuerverslcherungs -AG increased by 4.0% to DM 714.6 million (previous year, DM 687.0 million). The underwriting loss fell by DM 4.6 million, but is still DM 19.4 million. Together with the investment income a marginally higher profit for the year of DM 8.3 million (previous year, DM 8.2 million) was achieved. Of this amount, DM 5.1 million (previous year, DM 5.0 million) was paid out as dividend. -The busi­ ness in force of the Magdeburger LebensversicherungsAG rose by 7.3% to DM 6,400 million (previous year, DM 5,900 million). Having dropped in the previous year, insur­ ance benefits again rose. Overall a profit for the year re­ mained of DM 0.61 million (previous year, DM 0.58 mil­ lion). This was used to make a contribution to the paid-up capital as well as to pay a dividend of DM 0.36 million (previous year, DM 0.33 million).
Gross premiums 1,109 587 1,696 1,784 Premiums ceded - 219 - 14 - 233 - 300 Net premiums 890 573 1,463 1,484 Adjustment in policy and annuity valuations - 233 - 255 - 488 - 362 Interest on Lite insurance and annuity fund 109 318 427 406 Commissions and profit commissions - 214 - 372 - 586 - 606 Claims incurred incl. adjustment in outstanding claims reserve - 508 - 175 - 683 - 719 Surrenders - 19 - 71 - 90 - 176
Casfi In fiand, postal bank account, bank balances 1,012 109 1,136 861 Current-account balances 1,356 362 1,731 1,903 Cash deposits 1,649 128 1,777 1,806
•The figures in this column do not always amount to the total ot the figures in the two preceding columns as figures tor holding and other companies are also included.
The figures shown in the Group accounts are based on consoiidation and valuation principles which are basi­ cally uniform for all Group companies. Individual excep­ tions are of minor importance and are mentioned sepa­ rately. Balances receivable and payable as well as inter­ est and dividend payments between consolidated com­ panies are eliminated. Similarly the Group's consolidated figures contain no premiums from the intra-Group ex­ change of business. The consolidation and valuation principles are the same as in the previous year.
The scope of consolidation includes all domestic and for­ eign companies in which Swiss Re, Zurich, directly or in­ directly maintains a holding of more than 50%. Each indi­ vidual item of the profit and loss accounts and the bal­ ance sheets of these companies is shown at 100%. The shares of the capital funds and profit applicable to minori­ ty shareholders are shown as separate items in the con­ solidated balance sheet and profit and loss account.
As in previous years, advisory and service companies are not consolidated in view of their insignificant effect on the Group's funds and income. The mh Bausparkasse AG in Munich is, however, included in the consoiidation.
The net assets of foreign companies have been adjusted in accordance with the altered exchange rates at the end of the business year. The conversion loss of Sw.frs. 96 million (previous year, loss of Sw.frs. 81 million) resulting from the revaluation at invariably lower foreign exchange rates was directly debited to the consolidated capital funds.
Fixed-interest investments are in principle entered at ac­ quisition cost or, if they are quoted and the stock ex­ change price is lower on the balance-sheet date, at the lower value. The lower valuation is retained until disposal of the corresponding securities. Special treatment is given to registered debentures owned by Group com­ panies in Germany which, in accordance with German practice, are shown at nominal value and incorporated in the Group accounts unchanged.
Reai estate is entered at the balance-sheet values of the individual Group companies: these correspond as a rule to the acquisition value less the maximum depreciation permitted by the tax authorities.
The technical reserves are calculated in principle accord­ ing to the provisions ofthe supervisory authorities applic­ able to individual Group companies. However, in the case of the North American Reinsurance Corporation the re­ serves are included in the Group accounts at the amount calculated according to Generally Accepted Accounting Principles (GAAP).
The consolidated gross premiums fell in all classes by 4.3% to Sw. frs. 10,665 million, although in original curren­ cies a growth rate of 6.6% was achieved. The reason for the decrease in premium income when converted into Swiss francs lies in the weakness of all foreign currencies, especially in the pronounced drop in the exchange rate of the US dollar and dollar-related currencies.
Investment income also includes dividend payments of non-consolidafed holdings in the amount of Sw.frs. 28 million (previous year, Sw.frs. 25 million).
These items refer fo components of the profit and loss account of the holding companies and of the mh Bau­ sparkasse AG which, in view of their special nature, are not included under insurance and reinsurance.
The claims incurred comprise claims payments and the adjustment in the outstanding claims reserve. In the year under report this outgo item for own account fell by Sw.frs. 35 million to Sw.frs. 6,232 million. Of this amount, Sw.frs. 3,986 million was for reinsurance companies and Sw.frs. 2,246 million for insurance companies.
The income from the Group's capital investments rose by 2.8% (previous year, 1.6%) and (before the crediting of in­ terest in Life and Sickness business) reached a total of Sw.frs. 1,761 million (previous year, Sw.frs. 1,713 million). Of this amount, the interest on the Life insurance and An­ nuity fund accounted for Sw.frs. 427 million (previous year, Sw.frs. 406 million); in the Non-Life classes it includ­ ed a credit of Sw.frs. 256 million (previous year, Sw.frs. 239 million) to Sickness business.
Non-Life Insurance Unearned premiums 1,686 2,837 4,523 4,389 Outstanding claims reserve 7,703 1,830 9,533 9,504 Reserve for profit commission 17 596 613 608 in % of net premiums earned 190.4% 184.2% 188.1% 185.5%
These items correspond to the capital funds at book value of the Swiss Re, Zurich. The reserves shown com­ prise the statutory reserve fund, the special reserve fund, the reserve fund for catastrophe losses as well as the profit carried forward from the previous year.
The consolidation reserve fund results from the differ­ ence between the capital funds shown of Group com­ panies and the corresponding book values applied by SwissRe Holding Limited and Swiss Re, Zurich. As a re­ sult ot the significant weakening of all foreign currency rates, the consolidated reserve fund fell by Sw. frs. 41 mil­ lion to Sw.frs. 191 million (previous year, fall of Sw.frs. 65 million).
The capital funds shown in the consolidated balance sheet (sum of share and non-voting share capital, re­ serves, consolidation reserve funds and Group profit) correspond to the book value of the funds invested in the entire Group by shareholders and non-voting share­ holders of Swiss Re, Zurich. In the year under report Group capital funds rose by Sw. frs. 499 million to Sw. frs. 2,104 million, mainly because of the capital increase of Swiss Re, Zurich, of July 1986 which strengthened the Group's capital by Sw.frs. 459 million.
: Nortti American Reinsurance Corporation US $ 100 201,138 893,162 850,805
Fidelity and Deposit Company of Maryland* US $ 50 181,411 398,211 244,572
General Surety & Guarantee Co. Limited £ 100 1,256 8,020 3,032
Magdeburger Versicherungsgruppe: Vereinte Versicherungen: Saar-Rhein Allgemeine Versicherungs-AG DM 55 2,145 15,606 18,831
SwissRe Holding (North America) Inc. US $ 100 266,804 465,037 -
* Insurance business of the calendar year 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,
Switzerland Switzerland Swiss Reinsurance Company Mythenquai 50/60, GH-8022 Zurich with branch offices in Melbourne, New York and Toronto European General Reinsurance Company of Zurich Mythenquai 50/60, CH-8022 Zurich with a branch office in Madrid
Australia/New Zealand Australian Reinsurance Company Limited 31 Queen Street, Meibourne, Vic. 3000 with branch offices in Sydney and in Auckland and Wellington, New Zealand
SWITZERLAND General Insurance Company Limited Gotthardsfrasse 43, CH-8022 Zurich with branch offices in Barcelona, Brentwood, Brussels, Copenhagen, Genoa, Hamburg, Istanbul, Milan, Munich, Paris, Thessaloniki, Vienna, Hong Kong, Jakarta, Manila, Meibourne and Montreal SWITZERLAND Insurance Company UK Limited Three Quays, Tower Hill, London, EC3R6DS SCHWEIZ, Compahia Anönima Espahola de Seguros y Reaseguros Via Augusta 153-157, E-08021 Barcelona The Federation Insurance Limited 342 Flinders Street, Melbourne, Vic, 3000
United Kingdom General Surety & Guarantee Co. Limited Hawthorn Hali, Hall Road, Wilmslow, Cheshire, SK9 5BZ Palatine Insurance Company Limited 108 Cannon Street, London, EC4N 6HE
Mexico OFATEC (Mexico) S.A. de C.V. Viena 71, Piso 5, Col. del Carmen Coyoacan, 04100 Mexico, D. F
Japan Swiss Reinsurance Company, Representative Office Tokyo Sansho Building 7 F 2-9 Nihonbashi 3-chome, Chuo-ku, Tokyo 103
Singapore SwissRe Advisers (Singapore) Re. Ltd. 24 Raffles Place No. 25-06A, Clifford Centre, Singapore 0104
Broker: Insurance or reinsurance intermediary with no contractual connection to a particular ^ insurer or -> re­ insurer.
Cash deposits: A sum left by the ̂ reinsurer in the hands of the ^ ceding company to guarantee contractual lia­ bilities.
Commission: Remuneration paid to the ̂ insurer, to ̂ brokers or other commercial intermediaries for their costs in connection with the acquisition and administration of insurance business.
Death and maturity benefits: Life insurance in which the benefit takes the form of a contractually determined amount payable upon death or on survival to a specified age.
Earned premiums: Premiums applicable to the expired part of a reinsurance period continuing after the balancesheet date (-> unearned premiums).
Facultative reinsurance: Reinsurance of ^ risks on an individual basis (of. treaty reinsurance) in which the ^ reinsurer is free to accept or reject the offer.
Hull damage: Damage to or loss of aircraft and waterborne vessels.
Life insurance: Insurance providing payment of a sum of money upon deatfi of the insured and, in the case of en­ dowment insurance, upon survival of a specified period.
Outstanding ciaims reserve: Reserve for claims which have been incurred but which have not yet been finally settled.
Poiicy reserve: Reserve fund needed to cover future claims under Life insurance and ^ annuity contracts.
Portfolio: The totality of ^ risks assumed by an ̂ insurer or -»• reinsurer; also the totality of investments of a com­ pany.
Proportional reinsurance: Form of reinsurance in which the premiums and iosses of the ^ insurer are shared proportionally by the insurer and reinsurer.
Retrocession premiums: Premiums paid to the ^ retro­ cessionaire for the part of the -> risk accepted.
Treaty reinsurance: The participation of the ^ reinsurer in certain sections of the ^ insurer's business as agreed by treaty (cf. facultative reinsurance).
Unearned premiums (= premium reserve): Premiums applicable to that part of the period of reinsurance con­ tinuing after the business year of the balance sheet.