Swiss Re, Zurich Swiss Re Group Board of Directors, Executive Committee and Group Management, Auditors 5 i iGroup Structure 32
Report of the Board of Directors 9 •' Reinsurance Companies 34
Port complex in Manila, an intricate risk of Marine insurance and reinsurance.
Net Life Insurance In force 103,165 89,830 ftUnderwrltlng results |Non-Llfe Insurance |Llfe Insurance
Consolidated net profit Total Per share In Sw. frs. f^er non-voting share T ; in Sw. frs.
* subject to approval by the General Meeting ** half dividend *** consolidated figures (cf. notes on page 42)
Hans R. Lüthy* Küsnacht, Chairman and Managing Director of IBM (Switzerland), Zurich 1985
Marcel Odier Cologny, Partner in Lombard, Odier & Cie, Bankers, Geneva 1984
Hans Ulrich St. Gall, Professor, St.Gall Graduate School of Economics, Business and Public Administration 1985 * Members of the Committee of Directors
Secretary to the Board of Directors Ernst A. Kubli, Manager, Küsnacht
General Managers Paul E. Christen Paul-Francis Niquille Hermann Odermatt Herbert Schönenberger
German-speaking Switzeriand, Ger­ many, Austria, Netheriands, Denmark, Sweden, Norway, Finland, Iceland K.Aerni, Manager M. Nabholz, Deputy Manager E. Etter, Deputy Manager W.Müller, Deputy Manager W. Rüetschi, Deputy Manager P. Schuppll, Deputy Manager (until 31,12.82) B. Heyer, Assistant Manager U. Winter, Assistant Manager
Portugal, Eastern Europe, Near, Middle and Far East, Latin America, Caribbean, English-speaking Africa P.-C. Perrenoud, Manager P.Würsch, Deputy Manager G. Bachmann, Deputy Manager P. Ehrsam, Deputy Manager G. Holzel, Deputy Manager P. Blerl, Assistant Manager G. Haering, Assistant Manager LT.PozzI, Assistant Manager R. Slegrlst, Assistant Manager H. Stettler, Assistant Manager R. P. Brouwer, Member of Management H.H.Zollinger, Member of Management H.Haag, Member of Management R. Maag, Member of Management F. J. WIngrove, Member of Management
W. Isler, Manager W. Sctiiegg, Deputy Manager R. Jeck, Assistant Manager G.Sctimidli, Assistant Manager K, Egg, Member of Management
H. Brodbeck, Manager (until 31.12.82) B. Laube, Deputy Manager H.Wyler, Deputy Manager E. FrancI, Assistant Manager W. Minorettl, Assistant Manager R.Sctiweizer, Assistant Manager
Share register, organization, public relations, economic studies and other central services E. A. Kubii, Manager R. Rüesch, Deputy Manager O. Jenni, Member of Management E.Schlenker, Member of Management
Overall the result of the 1981 business year can be regarded as satisfactory; however, it bears visible signs both of the difficulties faced by the world economy and of the excess of capacity which has been evident for some years in Non-Life reinsurance and which in numerous markets and classes of business has brought about a real collapse of premiums. Nevertheless, the year under report saw Improvements in various sectors of reinsur­ ance; the result from general income and outgo was only slightly above that of the previous year.
priate profitability takes much time. We can concur with such an opinion only if the losses which the reinsurer is expected to bear are limited in time and do not exceed a certain amount and also if there are signs that our busi­ ness partners are taking energetic steps to improve the profit position.
Again in the year under report the underwriting reserves have been carefully calculated. A proposal will be put to the General Meeting to strengthen the free reserves somewhat more than in the previous year in addition to increasing the dividend.
It Is thanks to the versatility, dedication and perseverance of our employees both in Switzerland and abroad, on whom high demands were placed In the not easy busi­ ness year, that under the given circumstances an overall satisfactory result could be achieved. The Board of Direc­ tors expresses its thanks to them for this achievement.
In this situation the patience of the reinsurers is frequently solicited with the argument that the restoration of appro-
The 1981 business year comprises both reinsurance business and genera/ income and expenditure for the period from 1st January to 31st December, 1981.
Net premiums (premium income for own account) rose in Swiss francs by 1.8 %, which is considerably less than the previous year's gro\Anh, this being due to the weakening of many foreign currency rates and to the policy of selec­ tive underwriting pursued by our Company in reinsur­ ance business. In view ofthe unfavourable profit situation in numerous markets, continuation of this policy would appear advisable. The result in Non-Life reinsurance has worsened somewhat, whereas the profit of Life reinsur­ ance is higher. Overall, the reinsurance result of the reporting year is slightly below that of the previous year. Investment income has again improved. After taking into account management expenses, write-offs, fluctuations in stock exchange and foreign currency rates and taxes, a net profit remained of Sw. frs. 80.2 million, as against Sw. frs. 76.2 million in 1980.
The situation in the field of Non-Life reinsurance is much more complex and varied. The very selective underwrit­ ing policy has brought us isolated successes and others are to be expected. Growth objectives are less prominent since we are convinced that, in today's "soft" reinsurance market with its great excess of capacity, indiscriminate volume growth leads to overproportional losses. Never­ theless, in promising classes of business we strive to up­ hold existing connections and to acquire new business. These often involve more complicated classes of busi­ ness or risks where the knowledge and experience of our qualified specialists is of particular value and where ser­ vices, which only a leading professional reinsurer can provide, are needed.
business. In contrast the overall result from overseas countries again improved, although there was a pro­ nounced drop in the profit from the Far East. Outstanding balances due from developing countries rose greatly in the year under report.
In the geographicai composition ofthe gross premiums of Swiss Re, Zurich, there has been a slight shift in favour of overseas territories. This is due to the increase of North American business and the rise in the exchange rate of the U.S. dollar against the Swiss franc. In Europe our most important markets - apart from Switzerland - are still the Federal Republic of Germany, France, Belgium and the Netherlands. Their distribution in the portfolio of the Swiss Re, Zurich, hardly changed in the year under report. The geographical composition of the rest of our gross premium income also remained practically the same.
The distribution of gross premiums by branch has like­ wise hardly changed. Nevertheless, there has been a sharp drop in the premiums from Motor business as a result of the cancellation of chronically loss-bringing quota share reinsurance treaties. Political intervention makes it increasingly difficult in many places for insurers to implement the tariff adjustments needed in this branch. In view of the high interest rates, there is a great temptation for the reinsurer to secure a high flow of cash by participating in Motor quota share reinsurance trea­ ties. We have observed, however, that such shares have in recent years often brought losses even when financial income is taken into account. The pronounced growth of gross premium income in Accident reinsurance is practi­ cally exclusively due to North American business, involv­ ing special business for a limited period of time.
Despite the good experience of Life reinsurance overali European business brought a small loss in the year under report, as against a slight profit in the previous year. This deterioration is almost exclusively attributable to German
The gross premium income from Non-Life reinsurance, when expressed in Swiss francs, rose by only Sw. frs. 63 million to Sw. frs. 3,332 million. This small increase is due to the very selective underwriting policy and to the fact that the exchange rates of all European currencies against the Swiss franc had fallen considerably since the balance-sheet date of the previous year. With today's market conditions reinsurers must keep a constant eye on the results achieved from the various business con­ nections and continually adjust the applicable reinsur­ ance conditions accordingly. Despite major efforts aimed at achieving this, Non-Life reinsurance closed in the reporting year with a loss of Sw. frs. 93.9 million, against a loss in the previous year of Sw. frs. 80.4 million. The result of business handled from Zurich declined, whereas that from the retrocessions of subsidiary companies im­ proved slightly.
In Hail reinsurance drops in premium in Europe con­ trasted with increases from the United States. The report­ ing year closed with a loss, stemming mainly from the Federal Republic of Germany and the United States. Over a five- or ten-year period the result is still a positive one.
The premium income in General Third Party Liabiiity reinsurance showed a slight drop. The loss registered was considerably higher than in the previous year; it stemmed principally from European business and from our subsidiary company in London and was mainly caused by the necessary strengthening of reserves for the settlement of losses from previous years.
In Motor reinsurance there was a substantial and, as already mentioned, intentional drop in the premium volume. The decision to reduce business activity in this branch is justified by the fact f hat the previous year's loss was reduced by half.
Marine reinsurance, the premium income of which re­ mained practically unchanged in the reporting year, is still in a worldwide crisis. The available capacity is en­ couraging premium decay and the reinsurance of risks at conditions which can hardly be technically justified. As a result of our restrained underwriting policy we expect, here too, a reduction of the premium volume in the years to come. The loss has dropped to one-third of that of the previous year. Hull business, the share of which in overall Marine business has been continually reduced in recent years, was particularly bad.
The substantial premium income in Aviation reinsurance is due primarily to pronounced inflationary increases of sums insured as well as to the first effects of the higher premiums imposed because of unsatisfactory results. Following the unusually good loss experience and the favourable seftlement of previous years' losses it was possible to produce a profit after a series of negative years. The current premium level is, however, not enough to stock up adequately the necessary reserves for catas­ trophe losses.
Premium volume in Credit and Surety reinsurance fell over the previous year as a result of foreign currency effects. The experience of Credit insurance business has drastically worsened as a direct consequence of the diffi­ cult economic situation in major markets. Despite the positive result again produced by Surety reinsurance, the overall result for the year under report was negative.
As a result of foreign currency rate losses of over 13%, total net premiums of Sw. frs. 348 million did not quite reach the previous year's level. The decrease brought about by conversion rates was particularly pronounced In the case of our co-Insurance basis business In force.
Through a combination of several positive factors it was possible to achieve a gratifying profit of Sw. frs. 35.2 million (previous year, Sw. frs. 25.8 million). Although the claims burden again Increased substantially for disability benefits, this was more than offset by the very favourable mortality among death risks. Following the strengthening of the reserves for additional benefits and life annuities which had been called for In previous years. It was not necessary this time to make any special allocations to valuation liabilities. Moreover, the marked drop In the production of co-Insurance basis business led to a reduc­ tion in the financing cost of new business, which is always Immediately written off.
firmed in his report that the technical reserves of the Life reinsurance business at the end of 1981 were calculated on the basis approved by the Swiss Federal Council.
1 Shipyard In Portugal 2 Modern container port In Melbourne 3 North Sea off-shore drilling plat­ forms under construction near Stavanger
On the bond markets the rise of interest rates which con­ tinued until autumn led to noticeable price declines, only a fraction of which could be made up again by the end of the year. Under these exceptional circumstances, even our company was obliged to make substantial write-offs, despite the restrained policy exercised for many years with regard to long-term bonds.
Events on the foreign exchange markets were character­ ized by the devaluation of practically all major investment currencies against the Swiss franc, the only exceptions being the US and Canadian dollars, which were able to improve marginally. The drop was particularly pro­ nounced among leading European currencies, all of which showed two-digit fluctuation rates against the Swiss franc.
The emphasis in new Investments was again on fixedinterest investments, including also those with equity character, whereas towards the end of the year, in view of the high interest rates worldwide, a slight extension of maturities was aimed at with the usual care being taken in the selection of debtors. The balance-sheet value of shares rose by Sw. frs. 68 million, new investments stemming mainly from overseas countries. The increase in real estate is exclusively from the acquisition of ex­ isting property and the construction of new buildings in the agglomeration of Zurich, which continues the policy of expanding the real estate portfolio parallel to the overall growth of investments.
The first graphic on this page and the table on the follow­ ing page show the distribution, among the various Invest­ ment categories, of capital market investments and real estate at balance-sheet values. The breakdown by cur­ rency is shown in the second graphic.
After deduction of tfie interest required for tfie Life insur­ ance and annuity fund and otfier tecfinical reserves, tfie investment income amounted to Sw. frs. 328 million (previous year, Sw. frs. 280 million). Tfiis increase is due to botfi additional investments and tfie clearly fiigfier yield level on reinvestments; fiowever, income earned in foreign currencies was noticeably impaired by tfie con­ siderably less favourable conversion rates prevailing on tfie balance-sfieet date.
At the end of the business year the staff of Swiss Re, Zurich, totalled 976 employees, as against 954 at the end of 1980. The Increase of 2.3 % resulted from an Intake of 100 new employees against some 80 resignations and retirements. The fluctuation rate of 8.2 % (total number of departures as a percentage of the Initial number of employees) was relatively low compared with the na­ tionwide average In Switzerland.
In addition to accepting risks, our Company offers Its clients additional services, the range of which Is being continually expanded.
Experts from Swiss Re, Zurich, also perform manage­ ment consultancy assignments. In the reporting year, for example, solutions to problems were worked out for Insurance companies In the field of organization, admin­ istration, corporate planning, data processing, account­ ing and marketing. The range of consultancy services are as a rule made available free of charge to clients of the Swiss Re within the scope of reinsurance connections.
The 400,000 registered shares of the Swiss Re are cur­ rently owned by approximately 16,000 shareholders, 14,800 of which are natural persons and 1,200 legal enti­ ties and account respectively for 70% and 30% of all registered shares. The number of individual persons or institutional investors who own the 44,000 bearer shares and 240,000 non-voting shares is not known to the Company.
Since early 1981 all categories of Swiss Re shares (regis­ tered, bearer and non-voting) have been quoted on the stock exchanges of Zurich, Basle and Geneva.
Last year's General Meeting confirmed thie re-eiection of Messrs. E. Luk Keiier, Hans R. Lüthy, Hans Uiricti and Heinz B.Visctier for a further four-year term of office and at the same time elected Mr. Franz Luterbacher as a new Member of the Board.
At the end of June, 1982, Mr. Erich Schneider, Member of Management in an Advisory Capacity, also retired having reached retirement age. To our deep regret he died on 26th August, 1982, after a serious illness. We are greatly indebted to him for his many years of esteemed service as Principal of the Swiss insurance Training Centre, Zurich, which is atfiiiated to the Swiss Re.
The Board of Directors has made the following appoint­ ments with effect from 1st January, 1983: Manager: Mr. Waiter isier; Deputy Managers: Messrs. Enzo Deico, Erich Etter, Heinz Fischer, Leon Genoud, Gerhard Holzel, Werner Künzie, Bruno Laube, Fuico Lock, Robert Martignier, Werner Mül­ ler, Theodor Obrist, Robert Rüesch, Rene Rüttimann, Werner Schiegg, Dieter Söhner and John W. Youngs; Assistant Managers: Messrs. Charles E. Brooks, Josef Doktor (Member of Management in Advisory Capacity), Ennio G. Franci, Aminta Gaitetti, Peter Gasser, Herbert Haag (Member of Management in Advisory Capacity), JGrg Hofmann (Member of Management in Advisory Capacity), Reinhard Jeck, Andre Loye, Michei-Lucien Musy, Felix Renninger, Jean-Pierre Preyer, Gottlieb Schmidii, Rudolf Siegrist, Heinz Stettier, Jean-Pierre Vogei and Heinz Voiienweider.
Non-voting share capital (240,000 non-voting shares at Sw. frs. 50.- nom.) Statutory reserve fund Special reserve fund Reserve fund for catastrophe losses
Technical reserves (unearned premiums and outstand­ ing claims) are based in principle on information pro­ vided by ceding companies. Additional reserves are set up on the basis of past experience for losses that are in­ curred but not reported. In Marine reinsurance, technical reserves are calculated in accordance with practice using a lump-sum method. The Life policy reserve is calculated on the basis approved by the Swiss Federal Council.
Gash in hand, postal bank account and bank balances as well as current-account balances are entered in the Balance Sheet at nominal amounts. This also applies to loans and to mortgages.
Fixed-interest securities and shares are entered individu­ ally, i.e. per category, according to the lower of cost or market method.
Floldings are largely managed via SwissRe Fielding and financed by loans to this company. The holding of Swiss Re, Zurich, in SwissRe Fielding is valued together with a few other holdings (advisory and service companies).
Gross premiums in the year under report amounted to Sw. frs. 3,332.4 million, as against Sw. frs. 3,268.7 million in the previous year. After deduction of retrocession pre­ miums the result is net premiums (premiums for own ac­ count) of Sw. frs. 2,531.0 million, an increase of Sw. frs. 58.3 million over 1980.
The earned premiums of Sw. frs. 2,469.6 million are Sw. frs. 74.1 million, or 3.1 %, above the previous year's total.
Claims comprise death and maturity benefits (term and endowment insurance), annuity payments and the adjustment in the outstanding claims reserve. The total figure for own account fell In the year under report by Sw. frs. 18.0 million to Sw. frs. 183.8 million.
The investment income of Sw. frs. 328.2 million is after deduction of various outgo items. These include the Interest on the Life insurance and annuity fund and other technical reserves; on the other hand outgo interest for bank, current account and cash deposits are deducted.
Of the total amount of Sw. frs. 111.9 million, Sw. frs. 110.2 million was for bank balances and Sw. frs. 1.7 for cash in hand and postal bank account.
As a result of exchange-rate fluctuations cash deposits for retrocessions have fallen over the previous year by Sw. frs. 4.8 million to Sw. frs. 136.9 million.
Technical reserves comprise, in Non-Life reinsurance, reserves for unearned premiums and outstanding claims and, in Life reinsurance, the policy and claims reserves; the composition is shown in the following table: in millions of Swiss francs
Non-Life Reinsurance Unearned premiums Outstanding claims reserve (inci. valuation of current annuity indemnities)
Life Reinsurance Policy reserves 1,174.9 1,219.2 Outstanding claims reserve 155.6 145.9 1,330.5 1,365.1 in % of insurance in force, net 3.2% 3.3%
Other liabilities include various provisions of a nonreinsurance nature and accounts payable. Special men­ tion should be made of a provision for outstanding claims from business transactions in foreign currencies.
The total capital funds shown at the end of the previous year amounted to Sw. frs. 562.7 million and, should the proposed allocation of the profit be approved by the Gen­ eral Meeting of Shareholders, would rise to Sw. frs. 590.1 million. Capital Funds in millions of Swiss francs
Dividend if the proposal of the Board of Directors is accepted, dividends of Sw. frs. 105- per share (nominal value Sw. frs. 250.-) and Sw. frs. 21.- per non-voting share (nominal value Sw. frs. 50.-) are to be paid. Coupon No. 29 of the registered and bearer shares may be pre­ sented for payment of a gross amount of Sw. frs. 105.- or, after deduction of the Federal Withholding Tax of 35%, Sw.frs. 68.25 and coupon No. 29 of the non-voting shares for a gross amount of Sw. frs. 21.-, or Sw. frs. 13.65 net.
For the Board of Directors: W. Diehl, Chairman E. A. Kubli, Secretary
Auditors' ReDort To the General Meeting of the Shareholders of the Swiss Reinsurance Company, Zurich
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 bythe law and the requirements ofthe Articles of Association.
We further confirm that the proposal ofthe Board of Direc­ tors for the disposal ofthe available profit is in agreement with the law and the Articles of Association.
Based on the result of our examination, we recommend that the accounts submitted to you be approved.
Swiss Auditing and Fiduciary Company C. Helbling P. Bachmann Chartered Accountant Chartered Accountant
I Palatine Insurance Company Limited, London I Fidelity and Deposit Company of Maryland, * j Baltimore udor Insurance Company, York
Magdeburger Versicherungsgruppe Magdeburger Feuerversicherungs-AG, Hanover Magdeburger Allgemeine Lebens- und RentenversIcherungs-AG, Hanover Magdeburger Hagelversicherungs AG, Hanover Magdeburger Union Rechtsschutz Versicherungs-AG, Hanover und Rhein Versicherungs-AG, Munich
'ereinigte Versicherungsgruppe Vereinigte Aachen-Berlinische Versicherung AG, Munich Vereinigte Eos-Isar Lebensversicherung AG, Munich Vereinigte Krankenversicherung AG, Munich Salus Krankenhauskosten-VersIcherungs-AG, Munich Saar-Rhein Allgemeine VersIcherungs-AG,
SwissRe Advisers Limited, ila ;: SwissRe Advisers (Singapore) Re. Ltd., Singapore
Audatex Deutschland Datenverarbeitungs-GmbH, Minden mh Bausparkasse AG, Munich * not consolidated
In the year under report two changes took place In the holding structure within the Swiss Re Group.
The Swiss-Am Reassurance Company, New York, a sub­ sidiary company of SwissRe Holding (North America) Inc. granting special covers in Life and Disability reinsurance, took up activity in November, 1981. The Magdeburger Feuerversicherungs-AG - principal company of the Mag­ deburger Gruppe - sold Insummer1981 its holding In the Magdeburger Rückversicherungs-AG, Hanover, to the Continental Reinsurance Corporation, New York.
Consolidated net premiums rose in the year under report by 7.8 % (previous year, 16.3 %) from Sw. frs. 7,551 million to Sw. frs. 8,137 million. Overall, underwriting business produced a loss of Sw. frs. 80 million (previous year, loss of Sw. frs. 25 million). The positive results in Life insurance were below the previous year's level. Non-Life insurance brought a loss which was higher than that of the previous year. On the other hand, investment income improved markedly. These increased amounts are, however, partially offset by higher written down book values on capital investments and higher outgo for management expenses and taxes. The additional write-offs as com­ pared with those of the previous year could partly be compensated by extraordinary capital gains from the sale of investments. The Group profit fell from Sw. frs. 95 million in the previous year to Sw. frs. 82 million. The Group's capital funds shown at the end of 1981, including Group profit, amount to Sw.frs. 801 million (previous year, Sw. frs. 824 million).
Despite the negative effects of foreign currency rate fluc­ tuations, the consolidated net premium income in NonLife reinsurance increased by 5.9% (previous year, 11.4%). This premium growth was mainly due to special business of the North American subsidiary companies in Accident and Sickness reinsurance. The excess capacity already ascertained In previous years and the conse­ quent hard price competition again had a pronounced negative effect on the result In the year under report. The underwriting loss In Non-Life reinsurance rose to Sw. frs. 129 million (previous year, Sw. frs. 108 million).
In Life reinsurance income fell as a result of a higher claims burden and increased financing for new business.
With a net amount of business in force of Sw. frs. 93,000 million, the underwriting profit was Sw. frs. 39 million (previous year, Sw. frs. 54 million). As in the previous year, the net amount of business in force does not include the special covers granted by the American subsidiary com­ panies in Life business.
At the North American Reinsurance Corporation, New York, gross premiums rose by US $ 269.3 million to US $ 672.2 million. The strong growth is due mainly to Accident and Sickness business, whereas the remaining branches showed lower growth. The underwriting result Improved and brought a small profit. In Property Insurance it was possible to achieve a result corresponding approxi­ mately to that of the previous year. On the other hand, the loss in the Accident and Liability sector has risen some­ what. The result In Marine reinsurance clearly improved although it is still negative. The experience of Surety busi­ ness was again favourable in the reporting year. The high interest level brought about a clear Increase of In­ vestment income. The overall result, after deduction of management expenses and taxes, amounted to US$ 18.2 million (previous year, US$ 7.8 million). The result which Is applicable forthe Group accounts was, however, greatly Impaired by high write-offs, particularly on fixedInterest investments. In the reporting year the company paid a dividend of U8$ 10.5 million (previous year, US$ 13.3 million).
The North American Reassurance Company, New York, the SwissRe Life insurance Company, New York, and the Swiss-Am Reassurance Company, New York, are man­ aged as one unit as regards organization and personnel. These companies' Life reinsurance business in force has increased greatly. The growth was due to a gratifying development of conventional business, but particularly to special reinsurance covers with characteristically large business volumes and the possibility of considerable portfolio fluctuations. The underwriting profit is lowerthan in the previous year as a result of the higher claims burden from Accident and Sickness reinsurance and the increased financing of new business. The rise in invest­ ment income was offset by higher management ex­ penses and higher write-offs on investments. The overall result of US $ 5.4 million (previous year, US $ 11.8 million) is still favourable. In the reporting year a dividend of US $ 0.8 million (previous year, US$ 0.7 million) was paid.
The Bavarian Reinsurance Company Limited, Munich, did not escape the unsatisfactory development of profit in the German market. Although gross premiums in NonLife reinsurance rose by 17% to DM 1,343 million, the underwriting loss increased. In Life reinsurance it was possible to increase the gross amount of business in force by 17% to DM 3,400 million with a positive under­ writing result. Investment income rose in accordance with the high interest level. The overall unsatisfactory income situation (annual profit of DM 6 million as in the previous year) made it necessary to strengthen the free reserves. A reduced dividend payment of DM 2 million (previous year, DM 6 million) is expected.
Gross premiums in the Non-Life sector increased at the Swiss Reinsurance Company (UK) Limited, London, and the Paiatine insurance Company Limited, London, by 26% to £ 71.6 million. There was an increased underwrit­ ing loss as a result of the bad experience of Liability busi­ ness. - The gross amount of Life business in force rose by 36% to £ 1,300 million, although increased financing for new business impaired the underwriting result. The in­ vestment result was satisfactory; nevertheless, the over­ all result dropped slightly from £ 0.6 million to £ 0.5 million. The dividend was reduced to £ 115,500 (previous year, £ 225,000).
At the Swiss-South African Reinsurance Company Limited, Johannesburg, gross premiums in the Non-Life sector rose by 42% to Rand 71.0 million. The increased underwriting loss was mainly caused by higher claims. The totally inadequate premium level in the principal classes has additionally contributed to the worsening of the result. - In Life reinsurance the gross amount of busi­ ness in force was increased by Rand 1,100 million to Rand 4,400 million and the underwriting profit slightly improved. Good investment income and realized capital gains were not enough to offset the worsening of the result in NonLife insurance so that the net profit of Rand 1.6 million was
Fire 1,496 350 1,846 1,507 407 1,914 Accident/Sickness 797 1,443 2,240 299 1,436 1,735 Third Party Liability/Motor 1,170 637 1,807 1,209 680 1,889 Marine 399 115 514 391 127 518 Other branches 762 127 889 745 142 887 Life 1,598 440 2,038 1,094 353 1,447 Gross premiums 6??? 3,112 9,334 5,245 3,145 8,390 Retrocessions outside Group 719 478 -1,197 394 445 839 Net premiums 5,503 2,634 8,137 4,851 2,700 7,551 in millions of Swiss francs
Consolidated net premiums fell in 1981 as a result of the effect of foreign currency rate fluctuations from Sw. frs. 2,700 miiiion to Sw. frs. 2,634 miiiion. Approximately 88 % of insurance premiums stem from Group companies in Germany. The underwriting account gave overall a posi­ tive result of Sw. frs. 10 miiiion (previous year, Sw. frs. 29 miiiion). Declining results, particularly in Non-Life insur­ ance, contributed to this worsening. Investment income and realized capital gains gave overall, however, a Group profit for insurance companies which was increased to Sw. frs. 18 miiiion (previous year, Sw. frs. 13 miiiion).
The growth of the «SWITZERLAND» General Group was slight as a result of foreign currency rate effects. Con­ solidated gross premiums rose by 1.3% to Sw. frs. 455 miiiion. The underwriting loss exceeded that of the previ­ ous year, but investment income clearly increased. The two subsidiary companies in New York and London were again able to pay dividends. The overall result of the parent company was unsatisfactory with Sw. frs. 0.5 miiiion (previous year, Sw. frs. 3.1 miiiion) and no dividend was paid.
The consolidated gross premiums of the Vereinigte Ver­ sicherungsgruppe, Munich, rose by 17.2 % to DM 2,570.4 miiiion (previous year, DM 2,193.6 miiiion). The Verei­ nigte Aachen-Berlinische Versicherung AG increased its gross premiums by 6.0% to DM 535.2 miiiion. The merger of the Berlinische Feuer with the Aachen-Leipziger in 1980 had a positive effect on the cost situation. There was, however, an increased loss, which was principally due to the unsatisfactory experience of industrial Fire, Com­ bined Fiousehoid and Combined Building insurance. Thanks to the higher investment income, an annual profit of DM 6.0 miiiion (previous year, DM 5.7 miiiion), was achieved, enabling an allocation to be made to the free reserves and the payment of an unchanged dividend of DM 2.0 miiiion. - in spring of 1981 the merger took place of the Isar Lebensversicherung AG with the Eos Lebensver­ sicherung AG to form the Vereinigte Eos-isar Lebensver­ sicherung AG. The 1981 business year was satisfactory. The business in force rose by 6.2 % to DM 10,100 miiiion. Risk and cost experience improved, in addition to the allocation to the reserve for bonuses, the free reserves could be strengthened. From the annual profit of DM 2.4 miiiion (previous year, DM 0.7 miiiion) a dividend of DM 0.5 miiiion was paid together with a contribution of DM 0.9 miiiion to the paid-up capital. - in the gratifying account of the Vereinigte Krankenversicherung AG the gross pre­ miums rose by 14.0 %to DM 1,619.0 miiiion (previous year, 11.5 %). The acquisition and management expenses were approximately the same as in the previous year. The resuit of capital investments was greatly increased, so that a larger allocation was possible to the reserve for bo­ nuses. From the annual profit of DM 14.4 miiiion, which was DM 7.6 miiiion above that of the previous year, a dividend was paid of DM 2.6 miiiion (as in the previous year), in addition to the allocation to the free reserves, and DM 3.5 miiiion was contributed to the paid-up capital.
The mh Bausparkasse, Munich, currently being built up, again showed satisfactory production in the year under report. Overall a total number of 9,623 savings contracts were concluded with a sum of DM 349.3 miiiion. On re­ deemed savings contracts amounts of DM 53.5 miiiion were so far paid in. Expansion costs were financed as planned by means of a shareholders' contribution of DM 3.5 miiiion (previous year, DM 2.8 miiiion).
The Fidelity and Deposit Company of Maryland, Balti­ more, in which the Swiss Re and the «Zurich» insurance Company each have a 50 % shareholding, is not included in the consolidation. Thanks to good investment income
the company was able to show a satisfactory overall result of US $ 10.6 million (previous year, US $ 15.1 million) despite a worsening of the underwriting result following an increasing claims and cost burden. The dividend pay­ ment was US$ 8.0 million (previous year, US$ 6.0 mil­ lion).
In the reporting year dividend payments rose by Sw. frs. 5.2 million to Sw. frs. 34.2 million. The effect of foreign cur­ rency rate fluctuations was minimal since positive and negative changes practically offset each other. Higher dividends were paid by the SwissRe Holding (North America) Inc., New York, Swiss-South African Reinsur­ ance Company and the Canadian Reassurance Com­ pany. Among the minority holdings mention should be made of the first dividend payment of the Transatlantic Reinsurance Company, New York. On the other hand the European General, the Magdeburger Feuerversicherungs -AG and the General Surety & Guarantee Go. Lim­ ited were unable to pay a dividend. The «SWITZERLAND» General waived payment of a dividend to the SwissRe Holding in order to strengthen further the company's capital funds.
6 Premises of tfie Swiss Reinsur­ ance Company (UK) Limited, London 7, 8 Forum House, Lime Street, London, housing the underwriting rooms of the Marine and Aviation section of the Swiss Reinsurance Company (UK) Limited and the Palatine insurance Company Limited 9,10 Head office of the General Surety & Guarantee Co. Limited, Wilmslow
Consolidated Profit and Loss Account cf. notes on page 42 in millions of Swiss francs
Gross premiums 4,624 2,672 7,296 6,943 Premiums ceded outside tfie Group - 540 - 463 -1,003 - 728 Net premiums 4,084 2,209 6,293 6,215 Adjustment in unearned premiums* - 72 - 176 - 248 - 285 Earned premiums* 4,012 2,033 6,045 5,930 Interest on Sickness insurance fund* - 119 119 103 Commissions and profif commissions, tecfinical management expenses* -1,122 - 530 -1,652 -1,666 Claims incurred* -3,019 -1,629 -4,648 -4,469
Investment income 556 94 668 590 Other income - - 4 5 Management expenses - 261 - 59 - 328 - 297 Depreciation, fluctuations in stock exchange and foreign currency rates - 93 20 - 81 - 94 Other outgo - - 3 2
Current-account balances 823 453 1,280 1,234 Cash deposits 384 163 547 226
Technical reserves Non-Life insurance 6,879 2,677 9,556 9,332 Life insurance 2,672 2,264 4,936 3,902
Profit applicable to minority shareholders - 5 5 3 Capital funds applicable to minority shareholders - 22 25 33
Share and non-voting share capital 123 123 Reserves 440 412 Consolidated reserve fund 156 194 Group Profit 82 95
Ail domestic and foreign companies in which Swiss Re, Zurich, directly or indirectly maintains a majority holding were included in the consolidation. However, the Fidelity and Deposit Company of Maryland (50% share) was not consolidated nor were all advisory and service compa­ nies with the exception of the mh Bausparkasse AG, Munich.
Movements from intra-Group transactions were elimina­ ted. The consolidated gross premiums therefore contain no premiums from intra-Group cessions.
Ail balance sheet and profit and loss account figures from foreign Group companies were uniformly converted into Swiss francs using the average foreign currency rates as at 31st December, 1981.
The foreign currency loss of Sw. frs. 28.6 million (previous year, profit of Sw. frs. 21.9 million) resulting from the re­ valuation of the opening balance-sheet figures was, in ac­ cordance with established practice, accounted under the consolidation reserve fund.
Of the foreign currencies used in the Group accounts, the U.S. dollar and the Canadian dollar showed slightly higher exchange rates than they did on the previous closing date; the Australian dollar was valued slightly
Foreign exchange rates had a negative effect of 10.5% (previous year, positive one of 2.8 %) on the gross volume.
The claims incurred comprise current claims payments and the adjustment in the outstanding claims reserve, in the year under report this outgo item for own account rose by Sw. frs. 179 million to Sw. frs. 4,648 million. Cf this amount, Sw. frs. 3,019 million was for reinsurance compa­ nies and Sw. frs. 1,629 million for insurance companies.
The income on the Group's capital investments rose by 15.7 % despite negative foreign-exchange influences and reached a total of Sw. trs. 1,012 million (previous year, Sw. trs. 875 million).
While the balance-sheet value of shares tell by 3% as a result of stock exchange fluctuations, there was an in­ crease of 11 % on fixed-interest investments and one of 7% on real estate. "Non-consolidated holdings" refers to holdings of 50% or less in insurance and reinsurance companies. The hidden surplus on the investment portfolio tell by Sw. trs. 327 million to Sw. trs. 517 million as a result of the increased interest rates; it still totalled 4.5% of the pres­ ent balance-sheet value (previous year, 8.1 %).
The consolidation reserve fund results from the differ­ ence between the capital funds of Group companies and the corresponding book values applied by SwissRe Hold­ ing Ltd. and Swiss Re, Zurich. Changes in the holding percentages and some pronounced drops in the ex­ change rates over the previous year caused the consoli­ dation reserve to tall by Sw. trs. 38 million to Sw. trs. 156 million.
In the year under report the consolidated capital funds of the Group tell by Sw. trs. 23 million to Sw. trs. 801 million. Reasons tor this decrease are the mentioned drop in the consolidation reserve fund and the lower Group profit. The changes in the consolidated capital funds are shown in the following table: Changes in Group Capital Funds in millions of Swiss francs
Capital funds on 1st January 824 665 Paid-out profits tor previous year - 48 - 45 issue of non-voting share capital by Swiss Re, Zurich — 84 Group profit 82 95 Effects of exchange rate fluctuations on opening balance-sheet figures - 29 22 Various movements - 28 3 Capital funds on 31st December 801 824
European General Reinsurance Company of Zuricti Sw. frs. 100 49,644 899,020 482,926
I Insurance Companies •rr.-iaa 1 Fidelity and Deposit Company of Maryland* US $ 50 98,215 218,054 107,965 1 General Surety & Guarantee Co. Limited £ 100 579 4,539 2,299 1 «SWITZERLAND» General Insurance 1 Company Sw. frs. 99.7 51,331 585,384 420,116 1 SWITZERLAND General Insurance Company 1 (London) Limited £ 100 2,274 11,397 8,503 1 SWITZERLAND General Insurance Corporation 1 of New York US $ 100 10,163 28,365 33,520 * not consolidated
Vereinigte Versicherungsgruppe: - Vereinigte Aactien-BerlinischeVersictierung AG DM 96.2 75,274 669,934 535,244
H Vereinigte Eos-Isar Lebensversichierung AG DM 95 20,773 2,181,320 353,429 1 Salus Krankenhauskosten-Versicherungs-AG DM 100 8,790 96,145 38,427
H SwissRe Holding Limited Sw. frs. 100 135,552 . 606,965 -
Investment and other income Management and other expenses Depreciation, fluctuations in stock exchange and foreign currency rates Result from geneial inuunie and uulyo Taxes Uhare ot profit applicable tu minuiily silaieliuldeis Group Profit
Liabilities Current-account balances Cash deposits Technical reserves Non-Life insurance Life insurance Other liabilities (incl. share of minority shareholders and building society deposits) Group Capital Funds (incl. Group profit)
Number of Employees Flemsurance companies Insurance companies Holding and other companies
* Insurance business of tfie calendar year 1979 and general income and outgo for tfie period from 1,7.-31.12.79. '* Tfiese figures are not comparable wiffi ffiose of ffie offier years as a result of tfie cfiange of tfie balance-sfieet date from 30fti June to 31st December of Swiss Re,
United Kingdom Swiss Reinsurance Company (UK) Limited 108 Cannon Street, London EC4N 6HE with a branch office in Hong Kong
Canada Canadian Reassurance Company 95 St. Clair Avenue West, Toronto M4V 1N9, Ontario with a branch office in Montreal Canadian Reinsurance Company 95 St. Clair Avenue West, Toronto M4V1N9, Ontario with branch offices in Montreal and Vancouver
Vereinigte Aachen-Berlinische Versicherung AG Vereinigte Eos-Isar Lebensversicherung AG Vereinigte Krankenversicherung AG Salus Krankenhauskosten-Versicherungs-AG Fritz-Schäffer-Strasse 9, D-8000 Munich 83 Saar-Rhein Allgemeine Versicherungs-AG Sulzbachstrasse 16-18, D-6600 Saarbrücken 3
Colombia Gompahia Suiza de Reaseguros, Oficina de Asesoria Tecnica Garrera 13, No. 38-29, Piso 6, Bogota
Mexico OFATEG (Mexico) S.A. de G.V., Gomunal 80 Bis, Piso 5, Gol. Acacias, 03240 Mexico, D. F.
Japan Swiss Reinsurance Company, Representative Office Tokyo 2-9, Nihonbashi 3-chome, Ghuo-ku, Sansho Building, Tokyo 103
Philippines SwissRe Advisers Limited, Dona Narclsa Building, Room 703, 8751 Paseo de Roxas, Makati, Metro Manila
Singapore SwissRe Advisers (Singapore) Pte. Ltd. Suite 2406 A, Clifford Centre, Raffles Place, Singapore 0104
United Kingdom General Surety Holdings Limited Hawthorn Hall, Hall Road, Wilmsiow, Cheshire, SK9 5BZ
Accident insurance: Insurance against Injury, death, disability and/or medical costs as a result of an accident; used for both individuals (personal accident) or groups (group accident).
Broker: Insurance or reinsurance intermediary with no contractual connection to a particular ̂ Insurer or re­ insurer.
Burglary, fidelity and allied lines: Insurance against burglary, breaking and entering, robbery, infidelity; also includes water damage, glass breakage, damage to and loss of jewellery or damage or losses in connection with the keeping of animals.
Capacity: The maximum amount of a risk that can be accepted.
Cash deposits: A sum left by the ->• reinsurer in the hands of the ^ ceding company to guarantee contractual liabilities.
Co-insurance: Where a number of ^ insurers and/or->• reinsurers each share part of a ^ risk.
Co-insurance basis: System of Life reinsurance under which the ̂ reinsurer assumes a share of the ->• risk (i.e. premiums and benefits) as well as setting-up of reserves at the same terms as the ^ ceding company.
Commission: Remuneration paid to the -> insurer, to brokers or other commercial Intermediaries forthelrcosts In connection with the acquisition and administration of insurance business.
Gross premiums: Reinsurance premiums of a business year before deduction of -»• retrocession premiums.
Incurred but not reported losses (IBNR): Losses wfiicfi hiave occurred but wfiicli hiave not yet been reported to ffie ^ Insurer or -> reinsurer on ffie balance-sfieef date.
Life insurance in force: All reinsured Life business in the ^ portfolio of the ^ reinsurer.
Motor insurance: Insurance against accident and liabil­ ity, as well as against accidental collision damage. In con­ nection with motor vehicles.
Policy reserve: Reserve fund needed to cover claims under ^ Life insurance and ^ annuity contracts.
Proportional reinsurance: Form of reinsurance in which the premiums and losses of the ^ insurer are shared proportionally by the ^ insurer and ->• reinsurer.
Quota share reinsurance: ^ Treaty reinsurance pro­ viding that the ^ reinsurer accepts a specified share of each ^ risk.
Reinsurance commission: Amount paid by the ^ rein­ surer, to the insurer for costs in connection with the acquisition and administration of insurance business.
Reinsurance premium: ^ Premium paid to the -> rein­ surer by the insurer for the ^ proportional or ^ nonproportional cover granted by the reinsurer.
Retrocession premiums: Premium 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).
Underwriting result: Result of underwriting after taking into account ^ earned premiums, ^ commissions, -> profit commissions and ^ claims incurred.
Unearned premium (= premium reserve): Premium applicable to that part of the period of reinsurance con­ tinuing after the business year of the balance sheet.