to the General Meeting of the Shareholders on the 17th November 1967 60 Mythenquai, Zurich
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
Managers W. Bruppacher A.-L. Chenaud W. Eschmann J.-E. Rossier A. Schütz
G. E. Geiser G. Huguenin E. A. Kubli G. Lavanchy W. Mantel M. Nabholz H. G. Rutishauser P. Schuppli P. Strickler
Business Experience On the whole our 103rd year of operations closes more favourably than the previous year, in which the catastroph­ ic hurricane "Betsy" exercised a very adverse effect on the results. The improvement has not, however, occurred to the same extent in all insurance markets and, more particularly, it does not relate to all branches.
Life reassurance again closed with a slightly higher profit compared with the previous year. Thanks to the absence of catastrophes. Fire reinsurance showed a considerably better loss experience. On the other hand, the Marine, Accident and Third Party Liability sectors brought heavy losses. The result of the smaller lines differed little from that of the previous year.
The investment income again increased; on the other hand, there was also a rise in management expenses, amounts required for depreciation and for fluctuations in foreign currencies and stock exchange rates, as well as taxes.
Our experience has shown that in many cases the settle­ ment of Marine and Third Party Liability claims requires five years or more and that the reserves for outstanding claims, which are advised to us by the reinsured companies, are often estimated too low, as a result of insufficient regard for the rise in costs before the date of settlement. We have therefore continuously supplemented our claims reserves — in some cases on the basis of claims portfolio analyses by our Claims Department, with the agreement of our ceding companies, and in some cases on the basis of our knowledge — and we firmly believe them to be realistic and adequate.
The business experience in the individual branches gives rise to the following comments: In Fire insurance the reinsurers carry the main weight of the covers for large industrial plants. In addition to the Fire risk these insurances in most cases cover financial losses caused by business interruption due to a fire. In the year under review it was again evident that it is often the most modern factory, hotel and business premises which suffer conflagrations. With these modern structures the Consequential Loss insurance represents a heavy risk, since even the destruction of or damage to only one installation can paralyse the whole organization for some time. We have the impression that often well-proved fire prevention measures are sacrificed for the sake of rationalization. — Business experience was not uniform in the various mar­ kets. Apart from chance fluctuations in the level of losses incurred, the results of Industrial Fire insurance in every country depend on whether the risk assessment principles applied there recognize the realities of modern technology. The extensions of cover to losses caused by the forces of nature, such as earthquake and windstorm, and to losses arising from civil commotion, did not affect us much during the past business year. Nevertheless, as a conse­ quence of the growth of the world economy and of the fact that some markets have already adjusted Fire insur­ ance conditions to the present-day risk situation, our Fire premium income underwent an above-average increase. At the same time the loss level was on the whole reduced, a development which can be ascribed chiefly to the absence of catastrophe losses. This led to a positive result for this branch of insurance.
The Marine branch, which registered a substantial loss in the previous year, also met with bad experience in the year under report. In Hull insurance no year in peace-time
In contrast to the previous year the Accident branch con­ cluded with a large deficit. Road accidents suffered by highly insured persons and unfavourable experience in Workmen's Compensation insurance were responsible for this. In general, the accident hazard both at work and during recreation has increased as a result of the hurried pace of life in our times. This ever-present hazard to life and limb, especially on the roads, can be countered only through more rigorous action by the authorities respon­ sible for traffic discipline. — The experience of Sickness insurance reflects the mounting costs of medical treatment and of hospitalization and convalescence. In spite of in­ creased business the profit has diminished.
In the Life branch the gross business in force rose from Sw. frs. 13,800 million to Sw. frs. 15,600 million, of which we retained Sw. frs. 14,400 million for own account. All markets of importance for us participated in the increase of the business in force. The rates of return showed a slight downward trend, but by virtue of the increase of business the profit nevertheless rose slightly. The new busi­ ness costs were, as usual, amortized in full. The hidden surplus of our life portfolio again increased.
Fire 559,752,000 506,182,000 Hail 10,685,000 9,419,000 Burglary 29,646,000 27,051,000 Engineering, Water Damage, Plate Glass and Livestock 26,536,000 21,468,000 Marine 134,285,000 122,553,000 Accident 109,420,000 98,766,000 Sickness 98,488,000 88,893,000 Third Party Liability 504,130,000 478,358,000 Fidelity, Surety and Credit 70,925,000 63,538,000 Life 264,876,000 248,828,000
Investments The income from our investments again rose steeply; however, the effect was lessened by an appreciable drop in the dividends from subsidiary companies. It is true that on the strength of net realized capital gains the New Holding, which administers the major part of our holdings in European insurance companies, is again granting in addition to the ordinary dividend of Sw. frs. 2 million (pre­ vious year, Sw. frs. 2.5 million for 15 months) a bonus in the amount of the dividend. On the other hand, the North American Reinsurance Corporation, which handles our American non-Life reinsurance business, had to reduce dividend payments sharply in the year of report, because its capital and free reserves, which already suffered in the previous year due to hurricane "Betsy", decreased as a result of adverse underwriting results which coincided with a fall in share prices at the end of 1966.
The growing volume of business led to a renewed increase in profit-bearing investments: the cash deposits with ceding companies showed a net increase by Sw. frs. 82 million, the investments in securities by Sw. frs. 141 million and those in real estate by Sw. frs. 13 million. Of this increase in securities 78 % related to fixed-interest securities, in­ cluding substantial amounts in convertible bonds, 10 % to ordinary shares, and 12 % to expenditure for permanent holdings. The breakdown of the investments on the balance-sheet valuation date may be seen from the table on page 8.
Common Shares of Public Utility, Industrial, Railway and other Companies 137,249,000 125,181,000
Despite the unsatisfactory business yield, the tax require­ ment has risen by Sw. frs. 1.1 million to Sw. frs. 6.6 million. The additional expenditure was incurred exclusively abroad, in the form of indirect taxes on investment income.
Moreover, the following appointments were made with effect from 1st January, 1967: to Deputy Manager, Messrs. K. Aerni, E. Burnens, W. Diehl, J. J. Hagedorn, P.-F. Niquille, H. Odermatt, H. Schönenberger, E. Spargnapani; to Assistant Manager; Messrs. E. Arpagaus, E. Baumgartner, F. Ehrsam, G. Lavanchy, W. Mantel, M. Nabholz, H. C. Rutishauser, P. Strickler.
On 30th April, 1967, Mr. H. Zwingli, Manager, entered re­ tirement. Mr. Zwingli devoted long service to our Company and we are indebted to him for his valuable contribution.
In the year under report the Swiss Insurance Training Centre (SITC), which was founded by our Company in 1960 with the object of training insurance specialists from abroad and in particular from developing countries, held a further six-month course, in English, on non-Life insurance. To date a total of 150 officials from 34 overseas countries have been trained in nine separate courses (six non-Life and three Life insurance courses).
The formal proposal of the Board of Directors thus reads; Sw. frs. • J •
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' Remuneration
If this proposal is accepted, a gross dividend of Sw. frs. 60.— will be paid on presentation of Dividend Coupon No. 12 (Sw. frs. 42.— after deduction of the Federal With­ holding Tax of 30 %).
embracing the insurance business for the calendar year 1966 and the other income and expenditure for the period from the 1st July, 1966 to the 30th June, 1967
Zurich, 17th October, 1967 By order of the Board: M. E. Eisenring, Chairman
The securities, or the corresponding deposit certificates, were examined on the 13th and 14th July and on the 14th September, 1967 and found to be in order. A check carried out on the 14th September, 1967 showed that the cash in hand corresponded with the books.
We have taken cognizance of the report made by the In­ dependent Auditor appointed by the Board of Directors in accordance with Article 723 of the Swiss Code of Obliga­ tions, and in particular of his findings that the accounts have been correctly kept.
The Swiss Re Group The composition of the Swiss Re Group in the narrower sense of the word remained unaltered in the year under report. It continues to comprise the parent company, the European General Reinsurance Company of Zurich and, apart from the Foreign branch offices and a number of administrative and advisory offices, the six subsidiary companies operating abroad, the principal figures of which are given on pages 21—23. In terms of share capital the structure of the Group re­ mained as before; however, in the year under report the following subsidiary companies received contributions to strengthen their financial position: The Australian Reinsur­ ance Company A $ 200,000 for the financing of new Life business, and the North American Reinsurance Corpo­ ration US S 4 million to reinforce its surplus, which was affected by the adverse underwriting results and the fall­ ing stock exchange rates. Once again the underwriting sector called for serious attention in the non-Life branches. In American business in particular, further rigorous improvement measures are under way, but owing to the long-term run-off of losses in the Liability and Surety lines these can only gradually influence the overall result. It should be borne in mind that the business year of our overseas subsidiaries corresponds to the calendar year.
Premium income The first table shows the total premiums actually produced by the Swiss Reinsurance Company and its subsidiaries; thus the inter-company exchange of business has not been taken into account. By deducting retrocessions to companies outside the Croup, we obtain the net retained premiums of the Croup, as indicated.
' adjusted for changes in commission equity Owing to a number of major claims the underwriting deficit was rather greater than in the previous year. A decline of the realized capital gains brought about at the same time a slight reduction of the financial result. The dividend remained unchanged at C $ 187,500.
Further steep rise in both non-Life and Life premium income. The underwriting results in the non-Life branches have improved slightly but are not yet satisfactory. Life assurance again made substantial demands in the pre­ financing of new business and inevitably led to a book deficit. — No dividend was paid.
United States Branch 245 Park Avenue, New York, N. Y. 10017
North American Reassurance Company 245 Park Avenue, New York, N. Y. 10017 with Offices in Atlanta, Chicago, Dallas and San Francisco
London Contact Office Union Building, 78—80 Comhill, London E. C. 3