Report o f the s ta tu tory audito rs 64
W ith a price increase o f 409.4% since 1 January 1988, Swiss Re's registered shares have perform ed substantia lly better than the Swiss stock market
Performance of Swiss Re registered shares and the Pictet index from 31 December 1987 to 15 May 1997
Swiss m arket at the end o f 1987 w ould have increased in value to CHF 283852.on 15 May 1997 (basis: Pictet index w ith re investm ent of income). The total perform ance am ounts to 343.5% or17.2%
1996 was another very satisfying financial year for the Swiss Re Group. Premium volume rose by a total o f 11 %, with the 27% growth in life business making a particularly large contribution. This increase was in­ fluenced significantly by the depreciation o f the Swiss franc which began in the fin a l quarter o f1996. In original currencies, premium volume fe ll by 3 %. Ordinary Group profit after tax climbed to CHF 1461 million, representing a 3 4 % increase over the previous year. Total Group profit after minority interests and tax amounted to C H F1459 million or CHF 100per share. The return on equity was 13.8% before the offset o f goodwill from the acquisition o f Mercantile & General Re. It should also be noted that Mercantile & General Re is consolidated in the balance sheet but not in the profit and loss account for the financial year. This result represents another major step toward our target return o f 15 %.
ßuh/ Acs**,' Ulrich Bremi Chairman of the Board of Directors Chief Executive Officer 3 Swiss Re Group
Lukas M üh lem a nn * D eputy C hairm an 1998
The terms of office o f Thomas W Bechtler and Bénédict G. F. Hentsch will ex­ pire at the coming General Meeting; the Board of Directors proposes to the General Meeting that both be re-elected for a further four-year term of office.
With effect from 1 March 1997, the Board of Directors appointed Christian R. Speiser to the Executive Board and the Committee of the Executive Board. As Chief Financial Officer he will assume responsibility for Corporate Finance, Investor Relations,Taxes, Information Technology, Accounting, Controlling, Corporate Accounting and Strategic Asset Allocation.
Executive Chief Executive Chief Risk Officer Corporate Communi­ Board Officer cation and Economic and Staff Research
Alhermij Group Cees W aterhou t3 Peter A u f dem Brinke4
Germany, Austria, Marketing Non-life Human Resources Corporate Finance, Investment Centre Controlling and Switzerland, Marine, W alter J. W ickli Carol Franklin Engler Investor Relations Australia Divisional IT Human Resources Inge M ahlstedt
T he 1996 financial year was satisfying for the Swiss Re Group. First, we further improved our return on equity and the structure o f our balance sheet, and second, Swiss Re made great progress toward achieving its stated goals in strate­ gically im portant areas.
Mercantile & General Re was completed. For a price o f GBP 1704 million the Swiss Re Group purchased a leading com petitor with a clear focus on life and health reinsurance. Following this acquisition, the Swiss Re Group has reorganised its activities in the field o f life and health reinsurance: Mercantile & General Re will be renamed Swiss Re Life & Health. It assumes the lead for the Group’s worldwide business in these lines, within the division o f the same name. W ith estimated total premium volume o f about C H F 6 billion, the Swiss Re Life & Health division will establish itself as the leader in this market.
The acquisition o f Mercantile & General Re was completed at the end o f the year and is fully consolidated in the Group balance sheet as o f 31 December 1996. Due to the short period o f time remaining in the 1996 financial year following the acquisition, Mercantile & General Re has not been consolidated in the profit and loss account. The acquisition o f Unione Italiana di Riassicurazione relates to 1997 and does not affect the 1996 Group accounts.
The technical result in the non-life business improved by 19% to C H F 716 mil­ lion, while the combined ratio rose from 108% to 109%. The claims ratio fell slightly from 78% to 77% , even though the provision for future large and catastrophe claims was again strengthened in 1996 by C H F 435 million to the debit o f the underwriting result. T he expense ratio rose from 30% to 32% . This reflects both changed reinsurance conditions and an increase in the internal expense ratio due to substantial investments in the expansion of Group personnel.
Other income and charges resulted in an increase in net outgo from CH F 171 million to C H F 251 million. In addition to the results of the service com ­ panies, currency differences and interest expense, this item includes a provi­ sion o f C H F 100 million for reorganisation expenses related to the acquisition o f Mercantile & General Re and Unione Italiana di Riassicurazione.
Balance sheet Mercantile & General Re is fully consolidated in the balance sheet as o f year- end 1996. M ost balance sheet positions have changed significantly as a result.
Shareholders’ capital and reserves o f the Swiss Re Group were stated at C H F 9.9 billion in the balance sheet at year-end, representing an increase of C H F 760 million compared with the previous year. This am ount already reflects a debit o f C H F 2.14 billion for goodwill mainly relating to the acqui­ sition o f Mercantile & General Re. O n the same basis, but with assets at market value, shareholders’ capital and reserves am ounted to C H F 12.3 bil­ lion, representing an increase o f C H F 1.4 billion compared with the previous year.
- The technical provisions ratio for non-life business rose from 244 % to 268 %,
In addition to the major steps in expansion through acquisitions, we also made im portant progress in other areas: — The Alternative Risk Transfer Markets division established itself as a provider o f covers for captives o f large m ultinational corporate clients and as a sup­ plier o f financial reinsurance products for traditional clients o f the Swiss Re Group. T he various business units o f this division, which was formed only two years ago, have grown strongly in this time. They are currently being reor­ ganised and will operate under the name Swiss Re New Markets in the future.
Gr os s p r e m i u m s Eu ro pe
Professionalism and quality are key factors for successful business, especially in the face o f growing com petition. We intend to defend and expand our position in the marketplace by assuming the leadership role in im portant mar­ ket and product sectors.
U n i t e d K i n g d o m 17%
S w i t z e r l a n d 7%
T he N e t h e r l a n d s 10%
Switzerland Structural change proceeded at a brisk pace in 1996 due to deregulation in the insurance market.This resulted in further market concentration and increased price com petition among primary insurers. A recessive economy and the lifting o f price controls in the m otor liability business caused a drop in domestic non-life premium volume following decades o f uninterrupted growth. Results were satisfactory overall due to exceptionally low claims and favourable invest­ ment income.
Slowing growth in the insurance markets and an increased shift to non­ proportional reinsurance reduced our premium volume. Despite a large fire loss (at the Tela paper factory which should cost the Swiss Re Group C H F 32 mil­ lion), the total result may be considered satisfying.
Germany Primary insurers are using the freedom opened up by deregulation to launch new products and establish risk-based prices. New distribution methods via mail, print media and electronic channels display slightly above-average growth rates.
In the key m otor line, which comprises approximately 40% of total business, lower accident frequencies and another drop in vehicle thefts provided satis­ factory results. The trend to ever higher compensation for severe bodily injuries is, however, cause for concern.
Austria The Austrian market has always been influenced strongly by foreign insurance companies and cannot escape developments in the rest o f Europe. The com ­ petitive situation is thus intensifying in almost all lines. Nevertheless, this market’s good result in the financial year indicates that the insurance industry is equal to the challenge.
T he Swiss Re Group may also look back on a satisfying year in which it sub­ stantially increased its market share as a result o f additional business.
France Strategically significant and forward-looking mergers characterise the market at present. Insurers are raising their retention as a result, thus reducing the pre­ mium volume ceded to reinsurers. A large portion o f the health insurance po rt­ folio is no longer being reinsured.
We showed a positive result despite declining premium volume and an increased burden from large losses (“Eurotunnel” and “Crédit Lyonnais”, with a C H F 29 million and a C H F 55 million share respectively for the Swiss Re Group). W ith the help o f our branch in Paris, we intend to counter the reduc16 Swiss Re Group
Belgium A wave o f mergers and acquisitions is also sweeping through this market at present. Since catastrophe losses remained absent in the property lines, we posted a gratifying technical result despite the losses in the liability and motor lines.
Netherlands The increasingly complex risks have led to a rise in the demand for compre­ hensive risk management. We have therefore stepped up our advisory activities and focus primarily on innovative solutions which also consider financial aspects.
Currency differences caused our premium volume to fall slightly. A positive result in 1996 offset the loss in the previous year.
W ith agreement on the full acquisition o f Unione Italiana di Riassicurazione at the end o f 1997 and our establishment o f a representative office in Milan, we are increasing our market presence and expanding our service capabilities.
Spain and Portugal An exceptional consolidation process is causing repositioning in the market­ place among primary insurers.
Rising loss frequency in the commercial property business is becoming increasingly insupportable for reinsurers given the predominance o f propor­ tional treaties. We are thus placing growing emphasis on non-proportional types o f treaties.
In the m otor business, the most im portant line for primary insurers, the new adjustm ent procedure for bodily injuries has had little impact up to now.
Gr oss p r e m i u m s by r eg i on 1996: 100% = CHF 1516 m i l l i on
A us t r a l i a / N e w Z ea la nd 20%
India The anticipated liberalisation o f the insurance market was delayed once more due to political considerations. Nevertheless, we are proceeding according to plan with our decision last year to build up the representative office in M um ­ bai in order to improve our handling of currently underw ritten business. This will allow us to follow the further development o f the market very closely and respond to it immediately. We intend to use this head start in dealing with new business partners in order to establish our future market position.
Arab Countries T he prevailing market conditions in these countries still dem and a very selec­ tive and somewhat shorter-term approach. We are focusing increasingly on special lines.
We posted positive total results in the remaining African markets, which we now service from South Africa. O ur long-term plan to expand business here can only be realised slowly and very deliberately, in accordance with the developments in the individual markets.
USA Results in the US reinsurance business were satisfactory again throughout the industry. Since there were again no large natural catastrophe losses in the year under review — the largest insured loss event in 1996 was Hurricane Fran which cost the insurance industry approximately C H F 2.15 billion (Swiss Re Group’s share C H F 16.5 million) - price com petition continued to m ount.
Large corporate acquisitions dom inated events in the industry in 1996. In the summer, American Re and National Re were acquired by M unich Re and General Re respectively. As a result o f these transactions, the so-called direct writers, ie companies which write their business w ithout involving reinsurance brokers, were reduced in num ber to only four, including Swiss Re America. These companies account for roughly 50% of the total US market. The consolidation process in the insurance industry continued in the early months of 1997, with large mergers taking place among insurance brokers.
ments Regional & Specialty and Global & National as well as in the ART market.
- The Swiss Re New Markets division in financial reinsurance and in business with large multinational corporate clients.
Substantial efforts were made in all areas to expand Swiss Re’s position in this, the world’s most im portant insurance market: Swiss Re America reorganised itself under new management and refocused its strategy. Business operations were largely decentralised and relocated to the regional offices. W ith this approach, the Swiss Re Group aims to provide services and expertise as close to clients as possible, and to shorten decision paths in order to respond swiftly to client needs.
T he new focus also involves the shift o f Swiss Re America’s portfolio primarily towards non-proportional and facultative covers. This change and the sim ulta­ neous withdrawal from the brokerage business through the sale o f the portfolio o f our company Western Atlantic Reinsurance Corporation resulted in a 25% drop in premiums in original currency. O ur new underwriting policy, together with the strengthening of provisions and capital funds o f Swiss Re America in 1995, led to a significant improvement in operating results in 1996. In the past months, the company has thus created a sound foundation for the expansion of its business.
Property Deregulation in the insurance industry has triggered intense predatory com pe­ tition in the European and Asian markets. T he accompanying erosion o f original premium rates caused another sharp decline in prices in the reinsurance market. For the first time in five years, some market prices for non-propor- tional covers lie below our risk premium rates. Nevertheless, we could increase total premium volume following growth in facultative, proportional and financial treaty business. T he technical result failed to keep pace with the ex­ panded volume. It was ham pered slightly by a higher basic claims burden and various large claims on individual risks.
T he main products - proportional and to some extent also non-proportional treaty business - display a declining profitability trend. Although the risk premiums for potential future large losses are insufficient, the supply o f capacity is unlikely to drop for the present in view o f the favourable reinsurance results in the past years.
In the special risks category, the massive decline in premium s for the insur­ ance o f financial institutions stands out.
Liability Premium volume changed little compared with the previous year, though a sustained improvement in results was reported. Despite a difficult market environm ent, price reductions generally remained reasonable. O ur efforts at researching and mastering risks focus on environm ental exposure, develop­ ments in the professional liability line, and risks from genetic engineering as well as from electromagnetic fields. We are concentrating on the legal developments, on prom oting an awareness o f risk and on the dialogue with primary insurers in order to devise appropriate solutions.
In the large risks area, we observe greater dem and for multiline and financial covers.
Motor Premium volume could again be slightly increased, and the claims ratio re­ mained constant compared with the previous year. In deregulated markets, participants are attem pting to offset the margin pressure arising on the primary insurance side by economising on reinsurance cessions. T he greater willingness o f insurance buyers to change their insurer due to price considera­ tions is causing portfolio shifts which, together with com petition-induced changes in base premiums, complicate the pricing o f non-proportional treaty covers.
Accident W ith the exception o f questions regarding annuity payments instead o f capital payments, there are scarcely any large technical problems in the accident line at present.
Marine Original rates in the prim ary business have come under pressure in all major markets, especially for ocean hull and offshore business. Since there were no large or catastrophe losses, we posted another very gratifying result. T he under­ writing profits achieved in the past years have led to renewed overcapacity in the reinsurance market. Prices for non-proportional business have fallen to an inadequate level in many cases. In order to m aintain the quality o f our business, we have further reduced our capacity.
Gross p re m ium s avia t ion Aviation Whereas civil aviation and related industry segments continued to grow in 1996, aviation insurers granted substantial rate reductions following only a brief period o f favourable performance. In areas in which market forces place exagger­ ated pressure on conditions, we will adjust our treaty obligations or offer alter­ native forms o f cover. Despite this less than satisfying trend, we closed the past year with a very satisfactory result.
Gr oss p r e m i u m s e n g i n e e r i n g Engineering Notable premium growth resulted from a stronger market presence, a pro­ gressive underwriting policy with increased capacity com m itm ent, and a favourable currency effect. O ur result benefited once more from a lack of large loss events. The highest claims am ount, approximately C H F 8 million, was caused by Typhoon Herb in Taiwan in sum m er 1996. We expect a further increase in premium volume in Asia, Latin America and Eastern Europe.
Nuclear energy The stagnating premium volume is attributable to the entry o f American captive insurers into the market as well as to lower premium rates and increased retentions. There were no noteworthy claims in 1996.
Gr oss p r e m i u m s Premium volume in credit and surety reinsurance increased due to the depre­ cr ed i t and s u r e t y dation of the Swiss franc, and the result is satisfactory on the whole. This is attributable to active measures to improve and diversify the portfolio as well as to additional enhancements in underwriting. C ontributing factors are the systematic application o f professional credit risk management as well as the increasing acquisition o f business within the scope o f ART activities. The favourable business trend in overseas markets will in future increasingly offset the continuing pressure on premium rates in the European markets. We also anticipate improved results in the Germ an market from m id -1997.
Swiss Re Atrium, which operates in the financial reinsurance field, also increased its profit contribution compared with the previous year. We antici-
pate that the positive trend in this growing market segment will continue in 1997.
Swiss Re Financial Products is about to launch its first product in the market, a bond which covers catastrophe risks in California. We expect strong growth in activity in the securitisation o f insurance risks.
T he Life and H ealth division made notable progress in 1996, advancing our objective o f expanding this business while improving financial performance.
Aside from this acquisition, the past year was characterised by strong devel­ opm ent in a num ber o f markets and a welcome return to profitability for our accident and health portfolio.
The accident and health business results grew satisfactorily: Total growth am ounted to 59% , o f which 11% is attributable to currency movements and 20% to special factors. Growth was evenly distributed throughout the Group, with particularly good performance from N orth America and the United Kingdom. The D utch market also performed well due to the privatisa­ tion o f certain social security programmes; benefits were gained from im ­ provements in risk m anagement and the re-rating o f premiums in this line of business to a more realistic basis. Overall, the accident and health business posted a satisfactory profit for the year.
In addition, our life and health business will benefit from a further en­ hancem ent o f our know-how and client relations following com pletion o f the acquisition o f Unione Italiana di Riassicurazione.
S t r u c t u r e o f i n v e s t m e n t s as at 31.12.1996
Investments am ounted to C H F 58.5 billion at the end o f 1996. The growth of C H F 16.8 billion is attributable primarily to the following factors: - Acquisition o f Mercantile &c General Re (CH F 9.0 billion) - Investment o f the positive cash flow from reinsurance operations - Higher foreign exchange rates - Capital gains on shares
Neither the acquisition o f Mercantile & General Re nor our investment activity had a material impact on the structure o f investments. Fixed income securities still make up the largest category at 67% . Investment in shares grew as a result o f purchases and capital gains, and rose slightly to 21% of the portfolio. Real estate holdings (5% ) further reduced in im portance due to a conservative investment policy which for the most part is limited to the devel­ opm ent o f our own occupational properties. Increased investments and corresponding capital gains slightly increased the proportion o f investments in unconsolidated subsidiaries and affdiated companies (5% ).
■ Investm ents in unconso lida ted sub s id ia rie s and a ffilia te d com pan ies 2 595 5 1 784 4
T he total investment result rose by 27% to C H F 3.3 billion (1995: CH F 2.6 billion), reflecting both portfolio growth and higher capital gains.
This increase is all the more gratifying given that it still excludes any contri­ bution from the acquisition o f Mercantile & General Re. T he return on in­ vestment equals 7.0% (1995: 6.8% ), excluding the investments o f Mercantile & General Re.
The following factors are responsible for the favourable investment result: — Higher realised net gains on investments, reflecting the positive trend on the stock markets.
Sw is s Re G r o u p e m p l o y e e s as of 31.12.1996 in %
Jobs are also being created in Switzerland. An increasing global presence requires the development o f functions which are carried out for the Group centrally in Zurich. This includes developing market products and providing internal Group management and services. More than 600 new positions have been created in Zurich since 1993, 295 o f them in 1996. Personnel numbers continue to grow in 1997.
The training o f new and existing employees requires the provision o f further capacity and resources. In order to use these as efficiently as possible, our efforts focus on meeting real needs and on conveying job-related knowledge and understanding. In the interest o f this goal, we employ mainly in-house instructors and trainers.
During the year we further expanded the group o f employees who receive a variable com ponent o f their com pensation in the form o f Swiss Re shares. In this way, we intend to strengthen the identification with the com pany and foster an entrepreneurial attitude in our employees.
Change in the p ro v is io ns fo r c la im s ou ts ta nd ing 4. Change in the p ro v is io ns fo r life , health and d is a b ility re insurance 5. Change in o th e r techn ica l p ro v is io ns 6. Bonuses and rebates 7. O pera ting expenses
Incom e fro m land and b u ild ing s
Incom e fro m tim e deposits and o th e r investm en ts
Investm ent resu lt 3 309 2 605 4. A llo ca ted in ves tm en t re turn - 2126 - 1792 6. O ther incom e, in c lu d in g o th e r va lua tio n read justm ents 374 402 7. O ther charges, in c lud ing o th er va lua tio n ad justm ents - 544 - 505
III Total resu lt 1. Technical resu lt 894 755 2. N on-techn ica l resu lt 932 642 3. P ro fit on o rd in a ry a c tiv itie s before tax 1826 1 397 4. Tax on o rd in a ry a c tiv itie s - 365 - 305
E xtraord inary p ro fit a fte r ta x - 11 8. M in o r ity in te rests - 2 - 2
V Prepaym ents and accrued incom e 822 690 1. Accrued in te rest and rent 737 555 2. O ther p repaym ents and accrued incom e 85 135 32 Swiss Re Group
CHF m illions 1996 1995 1 Shareholders' capita l and reserves 9 890 9130 1. Share cap ita l 150 301 3. Reserve fo r ow n shares 1 033 708 5. Retained ea rn ings b ro u g h t fo rw a rd 1 523 2 208 6. P ro fit fo r the fina nc ia l year 1 459 1 101
Total lia b ilities and shareholders' capital 64 849 45 617 33 Swiss Re Group
I Cash f lo w from business opera tions 1. Reinsurance opera tions
O ther net techn ica l charges fo r ow n account
Change in deb to rs and lia b ilit ie s fro m re insurance op era tions
Sale o f h o ld ing s in unconso lida ted subs id ia ries and a ffilia te d com panies
Cash flo w fro m in ves tm en t ac tiv itie s
Decrease in o th er fina nc ia l lia b ilit ie s
A d d itio n a l pa id-in cap ita l by shareho lders
A d d itio n a l in fo rm a tio n on the G roup accounts
A d d itio n a l in fo rm a tio n 45 3 5 Swiss Re Group
The G roup accounts are prepared in accordance w ith the European U n ion accoun ting d irec tives fo r insurance com pan ies, w ith Sw iss C orpo ra tion Law and w ith the accoun ting and re p o rtin g reco m m en datio ns issued by the Sw iss F ounda tion fo r
Com panies in w h ich Sw iss Re, Zurich , d ire c tly o r in d ire c tly ho lds a v o tin g m a jo rity are conso lida ted in the G roup accounts in te rm s o f assets, lia b ilit ie s , incom e and ou tgo. C om panies in w h ich Sw iss Re, Zurich , m a in ta in s a d irec t o r in d ire c t ho ld ing o f betw een 20% and 50% and has a s ig n ifica n t bu t no t c o n tro llin g in te rest are valued at Sw iss Re's share o f th e ir equ ity . Sw iss Re's share o f net p ro fit o r loss is accounted fo r in d iv ide nd , in te rest and o th e r incom e from a ffilia te d com pan ies in the p ro fit and loss account. E qu ity and net incom e o f these com pan ies is ad justed to be in line w ith the G roup accoun ting po lic ie s .T h e m ethod o f co n so lid a tio n used is the purchase m ethod w here by a com pany is f irs t con so lida te d at the tim e o f a cq u i­
s ition . D econso lida tion takes place at the tim e the shares in the com pany are d is ­
Shares and un its in in ves tm en t fun ds are va lued at m arket value. U nquoted shares are valued at an estim ated p ru de n t m arket value. Realised ga ins and losses on sales as w e ll as va lua tio n ad jus tm e n ts inc luded in the p ro fit and loss accoun t are based on cost.
Investm ents fo r un it-lin ked life re insurance are va lued at m arket value. U nrealised gains and losses are d isclosed in the p ro fit and loss account.
Other assets Fixed assets are depreciated over the ir est imated useful lives.
C om pensation o f the Board o f D irectors and the Executive Board
Prem ium s w ritte n re la ting to fu tu re periods are accrued as pro v is io ns fo r unearned p re m ium s and are ca lcu la ted in d iv id u a lly o r by s ta tis tica l m ethods. P rovis ions fo r unearned p re m ium s are show n a fte r de duction o f de ferred acq u is ition costs.The am o un t deducted is d isclosed in the notes to the fina nc ia l sta tem ents.
They also inc lude p ro v is io ns fo r c la im s incurred bu t no t ye t reported as w e ll as p ro ­
v is io ns prescribed by local re g u la to ry au th o ritie s fo r fu tu re cla im flu c tu a tio n s and fo r large and ca tastroph ic losses. The am oun t o f these pro v is io ns is disclosed in the notes to the fina nc ia l sta tem ents.
In a d d itio n , incom e fro m investm en ts re la ting to un it-lin ked life re insurance is also part o f the a llocated in ves tm en t re turn .
ences betw een the G roup and the local accounts are inc luded in the p ro v is io n fo r de ferred ta xa tio n .T hese are calcula ted using the expected fu tu re tax rates.
In tra-G roup transa c tion s are e lim ina ted . R em ain ing p ro fit and loss account d iffe rences are inc luded in net incom e; rem a in ing balance sheet re lated d ifferences are e lim ina ted th ro u g h reta ined earnings. Details re la ting to unconso lida ted
South A frican rand ZAR 28.71 31.56 - 9.05 3 8 Swiss Re Group
Additional in formation on the profit and loss account and balance sheet
Change in the p ro v is io ns fo r unearned p rem ium s 21
Change in the p ro v is io ns fo r life , health and d is a b ility re insurance 0
P rovis ions fo r life , health and d is a b ility re insurance 8 949 - 242 8 707 4 436 - 193 4 243
P rovis ions fo r c la im s o u ts ta nd ing 31 790 -1 270 30 520 23 692 - 871 22 821
P rov is ions fo r c la im s ou ts ta n d in g 4 832 10 502 5 525 3 872 5 111 29 842 678 30 520
Technical prov is ions by currency, net 4 980 5450 1979 5 558 13 483 12106 43 556 41 Swiss Re Group
Additional in form ation on the p ro fit and loss account and balance sheet
Loans to unconso lida ted subs id ia ries and a ffilia te d com pan ies 38
Investm ents in unconso lida ted subs id ia ries and a ffilia te d com pan ies 19 23 48
Loans to unconso lida ted subs id ia ries and a ffilia te d com panies
Loans to uncon so lida ted sub s id ia rie s and a ffilia te d com pan ies 41 41
D eposits w ith ced ing com pan ies 390 500 371 31 248 1 861 3 401
Total in ves tm en ts fo r ow n accoun t 9 998 8 044 3 311 5 411 15 343 15 193 57 300
A d d itio n a l pa id-in cap ita l by sha reho lders / Repaym ents to sha reho lders - 151 283
G oo dw ill o ffse t aga inst reta ined earn ings - 2 140 - 435
Capital fun ds on 31 Decem ber 9 890 9 130
Return on eq u ity 13.8 2 12.7 1 Refer to glossary fo r defin ition 2 Before offset o f goodw ill from the acquisition o f Mercantile & General Re 4 4 Swiss Re Group
S ub s id ia rie s and a ffilia te d com pan ies
The A lh e rm ij G roup, acquired on 30 June 1995, was conso lida ted fo r on ly part o f 1995 in the p ro fit and loss account; the com pany is conso lida ted fu lly in the p ro fit and loss accoun t fo r 1996. On 5 Decem ber 1996,100% o f the M ercantile & G eneral Re
G oo dw ill a ris ing on a cq u is itions is o ffse t in the year o f acq u is ition against retained earn ings and not cap ita lised , a lth ou gh th is w o u ld be possib le. G oo dw ill fro m a cq u is i­
are o ffse t against the unearned p re m ium reserve and in the am oun t o f CHF311 m illio n
Changes in de ferred a cq u is ition costs are trea ted in the p ro fit and loss account as part o f changes in the p ro v is io n s fo r unearned p re m ium s and fo r c la im s ou ts tand ing respective ly.
Em ployee benefits 134 127 o f w h ich pension related 82 88
Land and bu ild in g s w ith a cost o f CHF756 m illio n (1995: CHF 632 m illio n ) and a m ar­
ket va lue o f CHF 949 m illio n (1995: CHF 810 m illio n ) are used by G roup com panies fo r ow n purposes. Fair m arket ren t is charged fo r th e ir use.The to ta l cost o f land and bu ild in g s is CHF 2.424 b illio n (1995: CHF 2.184 b illio n ).
R e fe rto page 68 fo r in fo rm a tio n on unconso lida ted subs id ia ries and a ffilia te d com ­
Investm ents in unconso lida ted CHF m illions 1996 1995 subs id ia ries and a ffilia te d com pan ies A ffilia te d com pan ies va lued at Sw iss Re's share o f th e ire q u ity 968 606
Investm ents in un conso lida ted subs id ia ries and a ffilia te d com pan ies as stated in the balance sheet 2 595 1 784
Incom e fro m unconso lida ted subs id ia ries CHF m illions 1996 1995 and a ffilia te d com pan ies Incom e fro m com pan ies stated at Sw iss Re's share o f th e ire q u ity 140 86
Incom e fro m un conso lida ted subs id ia ries 43 64
Incom e fro m un conso lida ted subs id ia ries and a ffilia te d com pan ies 227 166
unconso lida ted subs id ia ries and s id ia ries is as fo llo w s : a ffilia te d com pan ies
The am o un t in the respective balance sheet po s itio n s re la ted to a ffilia te d com pan ies is as fo llo w s : CHF m illions 1996 1995
L iab ilities fro m insurance op era tions 20 36
O ther assets inc lude a de ferred tax c red it o f CHF 518 m illio n .
As a p re cau tiona ry m easure, de ferred tax cred its o f CHF 81 m illio n booked lo ca lly
S ta tem ent o f changes: (CHF m illions) 1996 1995
Effect o f cu rre ncy tra n s la tio n 3625 - 2668
(1995: CHF 1.788 b illio n ) p rescribed by local reg u la to ry au th o ritie s fo r fu tu re c la im f lu c tu a tio n s and fo r large and ca tastroph ic losses. In 1996 CHF 435 m illio n were added to p ro v is io n s a fte r reva lua tion at cu rre n t exchange rates.
The Sw iss Re G roup 's o b lig a tio n s fo r c la im s paym ents and c la im s s e ttlem e n t charges also inc lude o b lig a tio n s fo r long la te n t in ju ry c la im s o ccu rring m a in ly in the fie ld s o f
C um ula tive th ro u g h D ecem ber 1996 514 580
P rovis ions fo r long la ten t in ju ry c la im s ou ts ta n d in g on 31 D ecem ber 1996 re flect the ca re fu lly estim ated fu tu re trend o f c la im s paym ents and c la im s s e ttlem e n t charges.
O ther p ro v is io ns con ta in a p ro v is io n o f CHF 450 m illio n in the books o f Sw iss Re,
There are lia b ilit ie s due a fte r m ore than five years in the sum o f CHF 28 m illio n
There are lia b ilit ie s covered by va luab le secu rity in the sum o f CHF2 m illio n
C o nting en t lia b ilit ie s at 31 D ecem ber are as fo llo w s : CHF m illions 1996 1995
In a d d itio n , the re are seven u n lim ite d g u a ra n te e s .lt is no t expected th a t any pay­
m ents w ill be made u n d e rth e se guarantees.
E m ployee fig u re s are on page 28.
As auditors o f the group, we have audited the consolidated financial state­ ments on pages 30 to 48 o f the Swiss Reinsurance Group for the year ended 31 December 1996.
These consolidated financial statements are the responsibility o f the Board o f Directors. O ur responsibility is to express an opinion on these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence.
We recommend that the consolidated financial statements subm itted to you be approved.
Change in the p ro v is io ns fo r life , health and d is a b ility re insurance - 826 - 789 - 1 046 - 1 370 - 1 362
A lloca ted in ves tm en t re turn 933 860 1 084 1 443 1 530
A llo ca ted in ve s tm e n t re turn 1 648 1 525 1 792 2 126
Tax on o rd in a ry a c tiv itie s - 225 - 255 305 - 365
M in o r ity in te rests 4 4 2 2
S ha reh o ld ers ' cap ita l and reserves stated in the balance sheet 8 175 8019 9 130 9 890
S ha reh o ld ers ' cap ita l and reserves at m arke t va lue, a fte r taxes 10 143 9 008 10 973 12 348
Executive Board Chief Executive Officer Chief Risk Officer Corporate C om m unication CEO Office and Staff and Economic Research
Northern Europe / Southern Europe / Asia Pacific / Swiss Re Special Lines Latin America Africa New M arkets**
Rudolf Kellenberger* Bruno Porro Urs H. W in ter W alter B. K ie lh o lz*/ E rw in K. Z im m erm ann
Corporate M arketing W illy Hersberger Lorenz Flückiger, Peter Gujer, Thomas Raschewski, Jean- Paul Schweizer, Diego Vieli, Richard H.Vögeli
Insurance M arketing Eduardo Jean-M airet Aviation: Heini Bürgi Hans-Peter Brunner, Peter Hoppler, Rolf Hunziker, J iirg Stoll, Hans Voser
Financial S o lu tions Guido Fürer, Ernst Huber, Joachim Leis, Urs-O liver Neukomm
C lient Service Group Hans-Jörg Fricker Hannes L. Arrenbrecht, René Greber, Johannes Scherrer
Finance & O perations Balz Heyer A lfred Diezi, Erwin Franclick, Erich Giger, Charlotte A. Gubler, Roland Nyffeler
Unione Integra tion Project Andreas Beerli A nton io Solari, Johann Th innhof
France, Belgium, Luxem bourg Pierre Bieri Jean-Pierre Bugnon, Jacques Burri, Daniel Corbaz, Gerhard Felder, Peter Gasser, Christian Herzog, Peter Neuwirth
Product M anagem ent Ernst Baumann A lfred Bloch, Peter Bütikofer, Fritz Eugster1, Thomas H iltm ann, Marcel Lemblé, W erner Meier, Niklaus Müntener, W erner Schaad, Peter Schranz, Jürg Spühler, Heinz S tettler
Reinsurance Services A lexander Schneeberger Marcel Bürge, Jürg Hofmann, A lfred Klaus, Thomas Lörtscher
Analytica l and M athem atical Services Felix W. Jenni Thomas Drisch
John R. Coomber Christoph Dorschel* Christian R. Speiser* Peter R Hügle Bruno Laube3
Europe and Latin America Herbert Lüthy Luigi Berto lo tti, Philip Bland, Yvan Burgener, Sim on Courant, Roger Dix, M anfred Fessel, Heinz Kramreiter, Bogom il M am , Hannes Menzi, A la in Perret3, Hanspeter Schellenberg, Fredy Schöpflin, Suzanne Steiner, Hanspeter Tobler, Jan von Overbeck, Bruno Walther, Kurt W ettenschwiler, Peter Zutter
Product and Financial Management Douglas B. Keir Hans Peter W ürm li
Suisse de Réassurances (France) Paris * M em ber o f the Comm ittee o f the Executive Board * * replaces the current structure o f the ART division as o f Ju ly 1997 1 until June 1997 2 as o f Ju ly 1997 3 until end o f 1997
Corporate Finance, Investor Relations J. B. Richard Lieberman Group Information Technology Yury Zaytsev A ndy Ben-Artzy, Markus Bienz, Josef Brun, Hanswalter Buff, Fridolin Hauser, Thomas Jäggi, Christoph Locher, Beat W. Niethammer, Sylvia Stein- mann, Markus Vogel
Investment Centre Europe Bruno H. Letsch Caspar Benz, A do lf Decurtins, Marcel Gürber, Bernard Perrin, Fredy Riedle, Max Ringli, Felix Stutz, Dom inique Zen-Ruffinen
Controlling and Divisional IT Walter Engler Arm in Frei, Marie-Louise Gänger, Carol Stadler-Graf
Corporate Accounting Helmut Brechot Rudolf Böschung, Guido Emmenegger, Tony Ricken­ bacher, Barbara Trentini-Gut, René W inzeier
Reinsurance and holding company Swiss Re, Zurich, performs a dual role w ithin the Swiss Re Group as both a reinsurance and a holding company. Around 40% o f the total gross premium income o f the Swiss Re Group is attributable to business acquired directly by Swiss Re, Zurich. Nevertheless, assessment o f our market position, prof­ itability and financial strength must focus primarily on our consolidated financial statements.
The following com m entary on the 1996 financial year o f the parent com ­ pany therefore complements the review o f the financial year o f the Swiss Re Group and is intentionally kept short.
Modest increase in profit After-tax profit for the financial year am ounted to C H F 517 million, following C H F 501 million in 1995.
Investments stated in the balance sheet (excluding subsidiaries and affiliated companies) have increased again over the previous year. Growth was, how­ ever, dam pened by the valuation adjustments. Shares were again emphasised for new investments.
Capital funds Capital funds am ounted to C H F 5.345 billion at year-end 1995 (before profit allocation).The capital reduction proposed to the General Meeting on 24 November 1995 was completed with the repayment o f CH F 151 million to the shareholders on 1 March 1996. Following the distribution of CH F 329 million in dividends and the inclusion o f disposable profit, capital funds equalled C H F 5.382 billion at year-end 1996.
The nominal share capital o f the company totalled C H F 150433010 on the balance sheet date, consisting o f 15 043301 registered shares with a par value o f C H F 10.-. For the 1996 financial year 14 620 161 registered shares are entitled to dividend. The remaining 423 140 registered shares are reserved for option rights.
Technical provisions The increase in technical provisions to C H F 14.6 billion is mainly attributable to the weak Swiss franc. Due to currency fluctuations, they grew by CHF 1.3 billion compared with the previous year. C H F 249 million was allocated to the provision for catastrophe claims.
Change in the p ro v is io ns fo r c la im s ou ts ta nd ing - 519 5 - 514 3. Change in the p ro v is io ns fo r life re insurance 32 6 26 4. P ro fit com m iss ion s - 180 3 - 177 6. A lloca ted in ves tm en t re turn
Investm ent resu lt 3. A lloca ted in ves tm en t re turn 4. In terest expense 5. O ther incom e 6. O ther charges
Incom e fro m land and b u ild ing s 106 102
Incom e fro m deposits w ith ced ing com pan ies 28 82
III Total resu lt 1. Technical resu lt 383 707 2. N on-techn ica l resu lt 261 - 31 3. O rd in a ry p ro fit be fore tax 644 676 4. Tax on o rd in a ry p ro fit - 127 - 175
P ro fit fo r the financia l year 517 501 57 Swiss Re, Zurich
Investm ents in subs id ia ries and a ffilia te d com pan ies 7 263 2 958
IV Accruals 1. Accrued in te res t and rent 2. O ther accruals
I S ha reho lders 'cap ita l and reserves 1. Share cap ita l 2. Legal reserve 3. Reserve fo r ow n shares 4. O ther reserves 5. D isposable p ro fit
P ro fit fo r the fina nc ia l year
III Provisions fo r o ther risks and charges 1. P rovis ions fo r taxa tion 2. O ther pro v is io ns
V O ther liab ilities 4615 1 680 1. C red ito rs aris ing ou t o f re insurance opera tions 954 776 2. A m o u n ts ow ed to banks 392 203 4. O ther c red ito rs 980 701
The 1996 fin a n c ia l year com prises the accoun ting period fro m 1 January to 31 D ecem ber 1996. However, due to local co n ven tion , re insurance business fro m
Japan inc luded in the accounts is fo r the pe riod fro m 1 A p ril 1996 to 31 M arch 1997.
The allocated investm ent return inc ludes the actual in ves tm en t incom e w h ich can be d ire c tly a ttr ib u te d to the re insurance business. In the rem a in ing instances, it con ta ins the in ves tm en t re turn generated on the investm en ts cove ring the techn ica l p ro v is io n s .T h e in te res t rate reflects the curre ncy-w e igh ted 5-year average y ie ld on 5-year go ve rn m e n t bonds.
ties used fo r ow n purposes is inc luded in these expenses as w e ll as in incom e from land and buildings.
The fo llo w in g assets are stated at cost, less necessary and le ga lly pe rm iss ib le depre­
c ia tion : - Land and buildings (purchase or construction cost) - Investm ents in subsidiaries and affiliated com panies - Shares - Fixed incom e securities and registered debt instrum ents These assets are no t sub ject to reva lua tion s .T he va lua tio n ru les prescribed by the
Sw iss insurance su p erv iso ry a u th o rity are observed.
W ith the exception o f p roperty , fixed assets are stated at cost, less in d iv id u a lly schedu led s tra ig h t-lin e deprec ia tion over th e ir useful lives. Item s o f m in o r va lue and all purchase costs p r io r to 1994 are not d isclosed.
The technical provisions are va lued in accordance w ith the fo llo w in g p rinc ip les : P rem ium s w ritte n re la ting to fu tu re periods are stated as provisions for unearned prem ium s and are n o rm a lly ca lcu la ted by s ta tis tica l m ethods.
The technical provisions fo r life re insurance business are de te rm ine d on the basis o f a c tu a ria lly ca lcu la ted present va lues tak ing experience in to account. They also inc lude the p ro v is io ns fo r unearned p re m ium s o f life re insurance and the deduction o f de ferred charges.
A t the d irec tion o f the Sw iss insurance sup e rv iso ry au th o rity , a provision for catastrophe claims is be ing established.
Provisions for o ther risks and charges are fo rm e d accord ing to business p rinc ip les and are based on estim a ted needs. Provisions for taxation con ta in prospective taxes on the basis o f the fina nc ia l year ju s t ended.
Deposits retained from ceded reinsurance business as w e ll as other liabilities are stated at red em p tio n value.
A ll item s in the balance sheet and the p ro fit and loss account de no m ina te d in fo re ign currencies w ere u n ifo rm ly trans la ted in to Sw iss francs at the curre ncy exchange rates app licab le on the balance sheet date. D ifferences a ris ing fro m the reca lcu la tion o f the open ing balance sheet are booked via a co rre sp o n d in g p ro v is io n and have no im pact on the p ro fit and loss account.
P ro v is io n s fo r p ro f it c o m m is s io n s 56 - 2 54 16 - 2 14
P ro v is io n fo r c a ta s tro p h e c la im s 1 487 - 1 487 1 238 - 1 238
R epaym ent o f share cap ita l - 151 -
Share p re m ium _ - 283 P ro fit fo r the fin a n c ia l year 517 501
From e x tra o rd in a ry a lloca tion 184 184
C apita l fun ds on 31 D ecem ber a fte r a lloca tion o f p ro fit 4 943 5016 61 Swiss Re, Zurich
Deposits reta ined fro m ceded re insurance business 3 3
This item consists m a in ly o f p ro v is io ns fo r cu rre ncy flu c tu a tio n s and a p ro v is io n re la ting to a guarantee p ro v ide d in connection w ith the m in o r ity ho ld in g in C redit
O ther lia b ilit ie s are n o rm a lly sh o rt-te rm lia b ilit ie s . In d e v ia tio n fro m th is , the item con ta ins lo ng-te rm loans in the am o un t o f CHF 1.6 b illio n .
Details on the Sw iss Re G roup 's subs id ia ries and a ffilia te d com pan ies are to be fou nd on pages 68 to 75.
O wn shares held by the Sw iss Re G roup are sta ted on page 47.
tered shares o f Sw iss Reinsurance C om pany on 15 M ay 1997, rep resen ting 8.88% o f the to ta l share cap ita l.
Sw iss Re, Zurich , em p loyed a s ta ff o f 2115 on the balance sheet date (1995:1862).
T he Board o f Directors proposes as follows: to the General Meeting to allocate this profit in CHF 1996 1995
A llo ca tio n to reserves 78 000 000 172 000 000
After deduction o f the Federal W ithholding Tax o f 35% , the dividend will be paid from 2 July 1997 by means o f dividend order to shareholders in the records o f the share register or to their deposit banks.
To the General M eeting o f the Shareholders o f the Swiss Reinsurance Com pany Zurich
The financial statements are the responsibility o f the Board o f Directors. O ur responsibility is to express an opinion on these financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence.
O ur audit was conducted in accordance with auditing standards promulgated by the profession in Switzerland, which require that an audit be planned and performed to obtain reasonable assurance about whether the financial state­ ments are free from material misstatement. We have examined on a test basis evidence supporting the am ounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statem ent presentation. We believe that our audit pro­ vides a reasonable basis for our opinion.
In our opinion, the accounting records and the financial statements and the proposed appropriation o f retained earnings comply with the law and the company’s Articles o f Association.
We recommend that the financial statements subm itted to you be approved.
N u m be r o f reg istered shares issued 1 892 266 14023 601 14023 601 15 043 301 15043301 15043301 o f w h ich reserved fo r w a rra n t exercise 151144 1138011 561 380 - - reserved fo r o th e r co rp o ra te purposes 176 000 416 848 416848 423140 423 140 423140
P arent-com pany o rd in a ry p ro fit per reg istered s h a re 12 CHF 77 36 21 34 35
A d justed o rd in a ry G roup p ro fit per reg is te red s h a re 12 CHF 22 41 50 75 100
A d justed G roup cap ita l per reg is te red s h a re 12 3 CHF 472 752 640 751 845
A verage d a ily tra d in g v o lu m e 6 CHF m illio n s 7.8 17.2 44.7 75.1 99.0 105.7
M organ G uaranty Trust C om pany o f New York.Th is o ffe rs A m erican in s titu tio n a l investo rs a s im p le and a ttrac tive w ay to invest in
Sw iss Re. One A m erican D e posito ry Share corresponds to V20 o f a Sw iss Re reg is tered share. Its ticke r sym bo l is SWCEY.
C onvertib le bonds and issuance o f bu ll spread w arrants
(on 30 June 2000), can be con verted in to a to ta l o f 490 330 reg istered shares o f Sw iss Re, Z u rich .T he s im u lta ne ou s ly issued bull spread w a rran ts are secu rities w h ich g ive the in ve s to r the o p p o rtu n ity to be ne fit fro m the apprec ia tion po ten tia l o f Sw iss Re reg is te red shares w ith in a range and to lim it the risk o f loss.These w a rran ts w ere issued on 500 000 Sw iss Re reg is tered shares.
The shares o f Sw iss Re, Z urich , are lis ted on the Sw iss Exchange.
Registered shares RUKN RUKZn 1 Figures from 1993 onward not com parable w ith previous year 2 Per share entitled to dividend 3 Includes published unrealised capital gains, ie based on market value 4 Closing rates - Source: Datastream 5 1997: price on 15 May 1997 6 On the stock exchanges o f Zurich, Basle and Geneva or the Swiss Exchange 7 Based on shares entitled to dividend 65 Swiss Re,Zurich
Gross prem ium s fo r the Swiss Re Group 1996 (percentage share by country/reg ion)
Subsidiaries and affi l iated companies as of May 1997 a o CO (/) O (0 '(0 w a) o ■O in
M ythenquai 50/60 8022 Zurich w ith branch offices in M adrid and
Union Reinsurance Com pany 8027 Zurich w ith branch offices in Singapore,
n g - ° >■ - T- T3 — si w o ï n o £ ü <o ©
Suisse de Réassurances (France) • 100 7 rue de Logelbach 75847 Paris Cedex 17
Credit Suisse Financial Products • 20 e USD 345.8 1 384.2
A tlan tic International Reinsurance • 100 f USD 0.4 10.9
N ewYork, NY 10017 w ith branch offices in A tlanta, Boston,
Reinsurance Com pany o f Am erica 177 M adison Avenue, CN 1930,
Shanghai Representative O ffice1 11/F Shartex Plaza 83 Z u nV i Road (S)
Korea Liaison Office 7th Floor, Kw anghw am un-Build ing 211 Sejong-ro, Chongro-ku
HungTai C enturyTow er 156-158 M ing Sheng East Road, Section 3
Swiss Re Austra lia Ltd. • 100 f AUD 45.0 356.0 31 Queen Street
Swiss Re Southern Africa Lim ited • 100 f ZAR 58.7 369.4 10 Queens Road
Durban, Harare (Z im babwe), Pretoria and representatives in Port Elizabeth
Reinsurance Com pany o f South A frica Lim ited 7 Main Road, M om bray
A selection of the m ost recent publications: Marine cargo reinsurance per risk or per policy? The advantages and disadvantages o f both systems. Order number: 96-74
sigma T he sigma series tackles economic issues, market trends and their effects on the insurance industry, structural changes in the different markets and lines as well as international comparisons. O utstanding research and reporting gained sigma the 1995 “Analyst/Researcher o f the Year”
award, sigma is published in English, G erman, French, Italian and Spanish and is also available on Swiss Re’s Internet server.
Swiss Re on video Three short videos provide informative highlights on
Publications 9 7 U pdated annually, this work provides a summary o f all
Swiss Re offers extensive information to a whole range o f users at its Website http ://w w w .sw issre .com on the following: Swiss Re Group, reinsurance, facts & figures, media and contact.
Please send your order fo r publications (quoting order number), Publications 97, a n d /o r Swiss Re videos to
Existing environmental and climate protection activities were consolidated and new measures im plemented in 1996. These focus on the Statem ent o f Environ­ mental C om m itm ent by the Insurance Industry signed by Swiss Re w ithin the scope o f the United Nations Environm ent Programme (UN EP), the Climate Position Statement, and, for Swiss Re, Zurich, the energy and the environm ent policies. Swiss Re’s efforts are coordinated at Executive Board level by the Climate and Environm ent Steering Com m ittee, and by two full-time experts: a climate change adviser and an environmental protection manager in Zurich.
In 1996, a fund was created by Swiss Re, Zurich, to finance the im plem entation o f dedicated energy conservation measures in Swiss Re’s real estate investment properties; the fund is designed to cover costs which cannot be recuperated in today’s marketplace through increased rents. Initially, C H F 1 million will be transferred to the fund each year. In a new project, an ecological concept has been launched in catering operations at Swiss Re, Zurich. T he concept defines the environmentally-friendly criteria and measures to be im plemented in different areas, ranging from food purchasing to waste disposal and cleaning.
The re tu rn on investm en ts re la ting to the f lo w o f funds fro m re insurance opera tions is deb ited to the non-techn ica l accoun t and c red ited to the techn ica l account as a lloca ted in ve s tm e n t re tu rn .T h is accoun ting tra n s fe r is ca lcu la ted as the in te res t on the average level o f reserves.
Claims handling .T h e w o rk in connection w ith the in ves tiga tion , se ttlem e nt and paym en t o f c la im s fro m the tim e o f th e ir occurrence un til se ttlem ent.
Outstanding claim s provision: P rovis ion fo r c la im s w h ich have been incurred but not yet f in a lly settled .
R em uneration paid by the in sure r to its agents, brokers o r in te rm ed ia rie s o r by the re insu re r to the in sure r fo r its costs in connection w ith the acq u is ition and a d m in is tra tio n o f insurance business.
Insurance and re insurance p ro te c tion based on con tractua l agreem ent.
Sum o f com m iss ion s, ad m in is tra tive expenses, bonuses and rebates and o th er techn ica l charges and incom e, in re la tion to net p rem ium s w ritte n .T h is ra tio enables the assessm ent o f business pe rfo rm ance in n o n -life re insurance.
The excess o f cost o f an acquired com pany ove r the fa ir va lue o f the com pany 's separa te ly id e n tifia b le net ta n g ib le assets.
A conso lida ted accoun ting o f all G roup com panies.
Hull dam age Damage to o r loss o f a irc ra ft o r w a te rb o rn e veh icles.
Life insurance Insurance p ro v id in g paym ent o f a sum o f m oney upon death o f the insured , o r in the case o f e n d o w m en t insurance, upon su rv iva l o f a specified period .
A nnu ity insurance: life insurance in w h ich the bene fits cons is t o f a reg u la r incom e paym ent fo r a specified period o f tim e.
Net Insurance am o un t o r re insurance am o un t a fte r de duction o f the cess ion/re trocess ion.
N on-life insurance A ll classes o f insurance business w ith the excep tion o f life .
Burglary, fidelity guarantee and a llied lines insurance: Insurance aga inst bu rg la ry , breaking and en te ring , robbery, em bezzlem ent; also inc ludes w a te r dam age, glass breakage, dam age to and loss o f je w e lle ry o r dam age o r losses in connection w ith the keeping o f an im als.
Business interruption/loss o f profits/business incom e protection insurance: Insurance against the fina nc ia l effects o f an insured loss on a com pany 's incom e.T he insurance covers overhead costs and los t p ro fit.
Credit insurance: Insurance against fin a n c ia l losses susta ined th ro u g h the fa ilu re fo r com m erc ia l reasons o f p o lic yh o ld e rs ' custom ers to pay fo r goods o r services supp lied to them .
Disability insurance: Insurance aga inst the incapac ity to exercise a pro fess ion as a resu lt o f sickness o r o th er in firm ity .
E m ployers' liability insurance: Insurance by em p loye rs cove ring em ployees fo r in ju rie s aris ing o u t o f th e ir em p loym e n t.
Engineering insurance: Insurance o f con s tru c tio n and e rection ob jec ts d u rin g the co n s tru c tion o r e rection period and the insurance o f m ach ine ry in op e ra tin g plants.
Fire insurance: Insurance aga inst fire , lig h tn in g , exp los ion o r dam age caused by fa llin g a irc ra ft; it can also em brace insurance aga inst w in d s to rm , earthquake, f lo o d , o th e r na tura l hazards o r p o litica l risks.
G eneral third party liability insurance: Insurance o f in d u s tria l, com m e rc ia l, em p loye rs ', p roduct, p ro fess iona l o r p riva te lia b il ity to th ird parties.
Hail crop insurance: Insurance o f crops in open fie ld s o r o f greenhouses and th e ir con­ ten ts against ha il, s to rm and o th e r na tura l hazards.
Health insurance: Insurance aga inst sickness as a resu lt o f acc iden t o r illness.
M arine insurance: Insurance aga inst dam age o r loss o f sh ips and cargoes: also inc ludes o ff-sho re d r illin g p la tfo rm s and oil rigs.
M ortgage guarantee insurance: Insurance p ro te c tion o f the m ortgagee aga inst loss o f cap ita l and in terest.
M otor insurance: Insurance against acc iden t and lia b il ity as w e ll as against accidental co llis io n dam age in connection w ith m o to r vehicles.
Property insurance: C o llective te rm fo r fire and business in te rru p tio n insurance as w e ll as bu rg la ry , f id e lity guarantee and a llied lines.
Equal to the com b ined ra tio ad justed by the a d d itio n o f a lloca ted in ves tm en t re turn
(a llocated in ves tm en t re turn in re la tion to net p re m ium s ea rned).T h is ra tio enables the assessm ent o f business pe rfo rm ance in n o n -life re insurance a fte r in c lus io n of a lloca ted in ves tm en t re turn .
The to ta lity o f risks assum ed by an in su re r o r re insure r; also the to ta lity o f in ves t­
Acceptance o f the risks o f insurance com pan ies by re insurance com panies.
C ontractua l agreem ent betw een insure r and re insurer.
Financial reinsurance: Form o f re insurance tre a ty w ith specific con s ide ra tio n o f accoun ting fea tu res o f the insurer.
Retained earn ings b ro u g h t fo rw a rd
Net incom e fro m investm en ts , ie inves tm en t incom e, va lu a tio n read justm ents , realised ga ins and losses, less m anagem ent charges, in re la tion to average in ves t­
The d iffe rence between the m arket va lue and cost o f shares and prem ises is stated separa te ly as part o f the sha reh o ld e rs ' cap ita l and reserves a fte r de du c tion o f all due taxes.
Risk m anagem ent: M anagem ent to o l fo r the com prehens ive id e n tific a tio n and assess­ m ent o f risks based on know ledge and experience in the fie ld s o f na tura l sciences, tech no logy , econom ics and s ta tis tics.
Risk o f change: F luc tua tion o f actual fro m s ta tis tica lly an tic ipa te d c la im s experience as a resu lt o f techn ica l, socia l, com m e rc ia l o r po litica l changes.
Risk spread: S ta b ilisa tio n o f the c la im s experience by as large a nu m be r o f risks as possib le.
Result fro m re insurance opera tions, in c lu d in g a lloca ted in ve s tm e n t re tu rn and p ro p o rtio n a te a d m in is tra tive expenses.
Prem ium s received fo r fu tu re fina nc ia l years and carried over to the next year's financ ia l sta tem ents.