P.O. Box Telephone Telex Telefax Gables CH-8022 Zurich 01 2852121 815722 are ch 01 2852999 swissre
Summary of mportant Figures in millions of Swiss francs Swiss Re, Zurich 1992 1991
General income and outgo Investment income 828 Management expenses - 234 Rate fluctuations, depreciation, value adjustments 229
General income and outgo Investment and other financial income 2,062 Management expenses and other outgo - 1,062 Rate fluctuations, depreciation and value adjustments 486
Total investments Technical reserves Group capital funds shown based on capital entitled to dividend
Board of Direotors since 20 November 1992 Term to expire in Ulrich Bremi*
Group Management since 1 January 1993 Arnold W. Saxer, Chief Executive Officer
Christoph Dorschel, Peter Prey, Urs Winter, Werner G. Seifert (until 31 July 1993)
Board of Directors U. BremI, Chairman R. E. Gut, A.W. Saxer, U. Bärlocher, H. Bühlmann, P. Forstmoser, K. Furgler, R Languetin
Financial Planning/Investments, Group Accounting, Corporate Finance, Law and Taxes, Share Register C. Dorschel
IVIembers of Senior Management C. Blanc, J. B. R. Lieberman, R. Winzeler
Members of Senior Management J.-J. Bertschi, T. Drisch, K. Häuptli, H.W. Kreis
Members of Senior Management J, Eugster, W. Hersberger, T. Hiltmann, W. Müller, N. Müntener, P. Neuwirth, M. Oesterreicher, P. Schmid, R. Siegrist, K. Weber, J. W. Youngs
Engineering R. Giückier H. Gfeiier Members of Senior Management M. Bommeli, K. Staub
Marine H. Fischer* E. Staider Members of Senior Managemenf M A B'oesch W Heilert, F S'eb'"
Region 3 Spain, Portugal, Greece, Turkey, Caribbean, Japan, Asia, Middle East, Latin America, English- and Portuguese-speaking Africa, USA, United Kingdom G. Hölze! H. Hefti
H.-K. Zulauf E. Baumann Members of Senior Management H. Arrenbrecht, M. Becker, H. Hefti, P Schranz, J. Thinnhof
Life H. Lüthy J.-P. Vogei Members of Senior Management P. Bland, R. Boutin, Y. Burgener, A. Chuffart, S, Courant, E. Delcb, M. Fessel, H. Fuchs, P. King, M. Lies, A. Loye, H. Menzi, W.A. Müller, A. Perret, F. Peter, H. Schellenberg, S. Steiner, K. Wettenschwiler
Product Coordination Property/Casualty F. Eugster (Casualty) H. Stettler (Property) Members of Senior Management W. Meier, J. Spühler
Members of Senior Management C. Benz, E. Cam, A. Decurtins, M, Gürber, F. Marty, B. Perrin, J.-P. Preyer, F. Riedle, M. Ringli
Members of Senior Management A. Ammann, M. Bienz, F Hauser, K. Munger*, B. Niethammer
Members of Senior Management A. Bloch, M, Gaal, P. Gasser, B. Nigg as per 1 November 1993 * until 31 December 1993
- The underwriting profit in Life reinsurance increased by Sw.frs.2.6 million (6.9%) to Sw.frs.41.0 million.
- Taxes fell by Sw.frs. 8.3 million (13.4%) to Sw.frs. 53.6 million.
offs and value adjustments (94.4%) was due to the realization of capital gains; these reflect the quite favourable conditions prevailing In part on the capital market and are the consequence of a consistent, longterm investment policy and earlier write-offs. When valuing assets, we again applied in the year under report the cautious principle of lower of cost or market. - Management expenses are largely incurred in Switzerland; the 9.9% rise is due on the one hand to depreciation of the currency and on the other to modest growth in the number of staff.
Overall, the Board of Directors Is satisfied with the 1992 result, the underwriting loss in Non-Life reinsurance hav­ ing been more than counteracted by the profit of Life re­ insurance and the gratifying financial result, so that on balance the profit of the business year rose by 13.8% as against the previous year.
Apart from day-to-day matters, certain fundamental aspects of business policy were dealt with in the year under report: - First, the strategy developed in the mid-1980s was re­ vised and updated. The "Strategic Philosophy 1992" reproduced on page 10 contains the essence of this operation and establishes the foundation for uniform thought and action within the Swiss Re Group in the coming years; it goes without saying that this base will be reconsidered and adapted accordingly If the mar­ ket environment changes.
- Top management was strengthened by splitting in terms of both personnel and organization the hitherto combined "Executive Committee and Group Man­ agement" into "Group Management" and "Executive Board of Swiss Re, Zurich" as from the start of 1993. This separation proved to be an expedient move as regards both the importance of the overall assignment and the variety of the individual tasks performed. Henceforth, Group Management is responsible for strategic management of the entire Group, while the Executive Board looks after the operative manage­ ment of the largest reinsurance unit. Dividing up tasks enables both management bodies to concentrate on their specific duties with the necessary systematic ap­ proach and thoroughness, and with the ultimate aim of making management more effective overall. - The charts on pages 5 to 7 shows the organization of top management from the beginning of 1993.
The Board of Directors approved the 1992 Swiss Re Group Strategy in April 1992. The corporate principles specified here were stipulated in the Corporate Group Policy and in supplementary guidelines.
The Swiss Re Group is an integrated insurance services concern active primarily in reinsurance and insurance and in addition in the related fields of risk management and claims management.
The Group is subject to the highest ethical standards in all its activities.
The Swiss Re transacts reinsurance and primary insur­ ance, both supplemented by insurance-related services. Through activity in these different areas we want to smooth out fluctuations in the individual sectors, achieve a respectable volume of business and utilize our share­ holders' equity efficiently.
- In reinsurance, the Swiss Re Group operates world­ wide, in ail classes of business and in all client seg­ ments. - Industrial Insurance business with large clients is handled and further developed by the parent company, i.e. under the leadership of the reinsurance area.
- As a supplement to its main activities the Swiss Re Group offers Insurance-related services concentrated in the two areas - Risk management including risk analysis (identification and assess­ ment), consulting on risk prevention, retention and transfer to the insurance carrier and - Claims management including claims assessment, reduction and devel­ opment.
The Swiss Re Group aims to achieve long-term a superior competitive position in all areas, in particular in reinsur­ ance and primary insurance. We want to do this by offering our clients the following advantages: - fulfillment of our obligations at all times on the basis of superior financial strength which is recognized to be such, - an above-average value for money thanks to the leading quality of our products and services and - long-term stable partnership through unremitting atten­ tion to our business relationships and professional and innovative problem solving.
On the one hand, the Group offers challenging jobs and, within the framework of appropriate delegation, mean­ ingful development possibilities to its employees. It furthers its employees and makes possible a variety of professional careers. On the other hand, it expects a strong commitment and outstanding performance - ori­ ented toward the corporate and individual goals set - of all employees.
At Group Management/eve/this principle is embodied in the following three elements: - centralized strategy (developed by Group Manage­ ment), - decentralized operations (operating companies), - centralized control {by Group Management and its sup­ port staff).
Ore prospecting, the search for precious metals and stones, the extraction of salt from deposits, salt wells and from the sea - all of these are activities which man has been carrying out since time immemorial. Modern mining technology makes It possible to literally move mountains and hollow out pits with the most fantastic dimensions, such as the Bingham Canyon mine, the largest man-made mine in the world. Once set in motion, the search for nat­ ural resources can seriously scar the landscape. It cannot be disputed, however, that this process simultaneously creates new beauty, as illustrated by these photographs which cover thirteen countries and every continent. The extraction of salt through the evaporation of brackish or sea water can create a particularly picturesque impres­ sion, whether on a small scale in Africa or in large-scale Industrial production In North America. Salt-loving microorganisms breed at an explosive rate in the high quality salt, colouring the crystallization pond red. As a subject, "salt" would admittedly seem to be somewhat over-represented in this selection of photographs, though this is easy to justify, not least - though certainly not exclu­ sively - due to its aesthetic attraction. The hunger of humanity for salt has been a driving force behind the activities of man ever since our species abandoned its hunter-gatherer phase in favour of the plough and the cooking pot. Since then, salt has no longer been consid­ ered an ordinary commodity, but an essential Ingredient of life itself, a substance which is surrounding by the same mythical aura as gold. Salt was described by Homer as a "god-like" substance, and although Its use as a raw mate­ rial In the chemical industry since 1800 has made it appear a little more profane, its consumption became a yardstick by which a society's material progress could be measured. Ecological considerations have recently brought salt's impeccable reputation into question, though even its harshest critics would agree that a certain word indicates that the esteem with which salt has been held over the centuries has not diminished. The word? It Is a derivative of the Roman "salt money", salarium - our modern "salary".
Gross premium income rose by 20,6% over the previous year to Sw. frs. 6,816 million. This renewed surge in growth primarily stems from the acquisition of new business in the booming markets of South East Asia and Latin America, from the marked recovery of price levels in certain insur­ ance and reinsurance branches, and from the expansion of existing business connections.
The underwriting loss in Non-Life reinsurance increased from Sw.frs. 468 million to Sw.frs. 623 million. In Life re­ insurance the profit went up by Sw. frs. 3 million to Sw. frs. 41 million.
The following report refers basically to the annual accounts, i.e. the position in Swiss francs.
If the influence of natural occurrences is left out of account, Property insurance actually showed first signs of recovery. Efforts to provide proper underwriting assess­ ments and the appropriate pricing methods have been markedly intensified, particularly in Europe. In industrial Fire insurance, industry and insurers have recognized the significance of intensifying the risk dialogue. The resulting transparency in the relation between insured perils and the appropriate net premium could bring about a signifi­ cant improvement of results. In the USA, stiff price com­ petition persisted virtually throughout the year. The situa­ tion eased slightly only towards the end of the period under review, when the true dimensions of the hurricane losses could be assessed more reliably.
Casualty and Liability insurance produced a far less sat­ isfactory result. In the US market, claims burdens from asbestosis originating several decades ago continued unabated. Recently, there has also been an increase in environmental impairment indemnity claims which neces­ sitate very big reserves. The run-off of these reserves lasts many years and, accordingly, interest earnings constitute an important component of the result. The sharp drop in interest rates will, however, make it more difficult to make up for the underwriting loss with the financial result in the immediate future.
In the year under report, the gross premiums recorded strong growth, rising by 21.7% to Sw.frs. 6,069 million.
In industrial Fire business, the absence of peak loss occurrences and the modest rise in premium levels In Europe brought about a moderate though still unsatisfac­ tory improvement. Efforts to apply a more transparent method of recording and assessing risks have shown promising results especially with facultative acceptances. Proportional treaties, however, have not benefited much from this development.
Premium income in Hail reinsurance advanced by 9%. A series of major losses seriously affected the result and once again underscored the cyclical pattern in this line of business. The loss in the year under report amounted to just under 50% of premium income.
America 15% (17%) •••••• USA/Canada 10% (12%), Latin America 5% (5%)
Sickness reinsurance experienced a quiet year. Premium volume, which again largely stems from the major Euro­ pean insurance markets, rose only insignificantly by just under 2%.-The result has deteriorated slightly against the previous year. This line of business runs parallel to social security insurance, and thus only allows for modest profit margins over the years.
Premium income in General Third Party Liability reinsur­ ance climbed by 10%. European facultative business contributed mainly to this result. The treaties in individual segments of this branch of Insurance are extremely inten­ sive in terms of premium. Business movements, i. e. the in­ crease or decrease in the number of treaties, could there­ fore have significant effects on the portfolio in individual markets. Although considerable fluctuations were record-
Fire, Business Interruption 2,136 1,608 Hail 48 44 Burglary, Fidelity and Allied Lines 136 115
Premium growth In /Wotorre/nsurance was 17%.The share of business which is reinsured via proportional treaties was increased by new business written in Europe and the Far East. - As against the previous year, the result again deteriorated. Whereas results improved in markets out­ side Europe, they worsened significantly in those Western European countries which are strongest in terms of pre­ mium. Quota-share reinsurance, which is customary in certain markets, immediately involves the reinsurer in the development of the original business. The losses resulting from car thefts in Europe were once again significantly above those in the previous years. Initial adjustments have meanwhile been made to the corresponding tariff items for Motor damage insurance; more must follow.
The renewed expansion of business in Marine reinsur­ ance begun in the previous year continued with an in­ crease in volume by 47%. Special influences boosted growth substantially, but a premium increase of 27% would have been achieved even without them. The previously restrictive underwriting policy was somewhat eased thanks to more favourable original conditions - thus facil­ itating the acquisition of new business in selected Far Eastern markets. The share of non-proportional reinsur­ ance has increased. - The underwriting loss remained at approximately the same level as in the previous year. In certain markets, the raised original rates brought about a healthy Improvement in the result. Conversely, substantial run-off losses were also recorded. Flurricane Andrew was the worst loss occurrence In Marine reinsurance, too.
Premium volume went up by 17% in Engineering reinsur­ ance. Above-average growth was recorded in certain overseas markets, in the Far East and Latin America, whereas the volume in the USA continued to shrink. -The underwriting result recovered slightly against the previous year despite a persistently high burden of major losses. As in the other lines of insurance, Flurricane Andrew also left Its traces in this branch. Premiums and conditions are showing initial signs of hardening, thus giving rise to hope for an end to the adverse business development which has persisted for several years.
The increase of 19% in Aviation reinsurance premium volume Is a sign of the long-awaited recovery In this branch. The largest percentage increase was recorded
in facultative reinsurance, wtiere marked premium in­ creases in airline business make possible several new par­ ticipations.-The negative underwriting result is marked by a single high reservation requirement for a treaty which has already been cancelled. The portfolio, which has been steadily reduced in recent years, could not absorb the burden resulting from several major losses. The improvements in prices and conditions suggest that a cautious expansion of the portfolio might be possible.
In Nuclear Energy reinsurance, premium income rose by 7%. The increase is due to value adjustments of the in­ sured nuclear energy plants. - Precautionary allocations to loss reserves have slightly reduced the result, which was once again positive. Nevertheless, a respectable surplus remained available for the further build-up of the catastrophe loss reserve.
Premiums in Credit and Surety reinsurance again rose by 15%.This growth stems primarily from the traditional Euro­ pean Credit insurance markets. Meanwhile, premium in­ come declined slightly against the previous year in the USA. -The high underwriting loss of the previous year was reduced substantially thanks to measures specifically aimed at putting the business on a sound basis. The dif­ ficult economic environment has triggered a rise in demand for Credit insurance. At the same time, the reces­ sion is affecting profit expectations in our key markets.
ment in some countries, requires particular attention in others. Generally, the burden of losses in Disability in­ surance has increased slightly due to a more cautious reserving policy. The economic situation is holding back the development of special classes of insurance, such as health, dread disease, long-term care annuities and finan­ cial reinsurance. Reinsurance of these products is there­ fore being given particular attention.
The actuarial auditor, Mr. Hans-Ulrich Gerber, Lausanne, has confirmed in his report that the technical reserves of the Life reinsurance business at the end of 1992 were cal­ culated on the bases approved by the Swiss Federal Council.
Net Life reinsurance business in force rose by 12% in the year under report to Sw.frs. 101.7 billion, thanks to a gratifying inflow of new business amounting to Sw.frs. 23 billion. Currency exchange fluctuations had no effect on this increase.
Gross premiums rose by 13% to Sw.frs. 747 million. This gratifying increase primarily resulted from new business written in a small number of European and overseas pri­ ority markets. A slight increase in retrocessions caused net premiums to rise somewhat less markedly. The pro­ portion of additional covers (accidental death, disability, sickness and annuity covers) in the overall volume advanced marginally.
The dissimilarity of the markets makes it difficult to iden­ tify any general trends. For example. Disability insurance, while currently experiencing a highly gratifying develop-
System (EMS) put the member states under a severe strain, which ultimately forced fhe British pound to with­ draw from the system and the peseta and the lira to de­ value repeatedly. The yen tended to follow the movements of the dollar and accordingly advanced steeply in value during the final quarter. On balance, the US dollar and the German, French, Belgian, Dutch and Japanese cur­ rencies all gained in strength against the Swiss franc, while the Canadian and Australian dollars, the pound, the peseta and the lira depreciated.
Uneven developments were once again recorded in the money and capital markets. In contrast to the situation in continental Europe, a reasonably harmonious develop­ ment was recorded with the reduction of interest rates in the Anglo-Saxon regions and Japan thanks to generous money supplies from the central banks. The turbulence within the EMS also affected European interest rates. In the case of the weaker currencies, in particular, the cen­ tral banks were forced to intervene in the markets in order to fight off currency speculation; in some cases, money market rates had to be raised substantially. The move­ ments in the money markets were reflected, albeit to a lesser extent, in the capital markets. However, the overall favourable inflationary outlook and subdued private credit demand caused interest rates in most capital markets to decline considerably in comparison with the rates at the beginning of the year.
The regional variations in interest rates and the economy were also reflected in the stock markets. In the USA, rising
economic hopes and declining interest rates promoted expectations of growing company profits and brought about a modest rise in the stock market (+4%). Stimulated mainly by past and expected drops in interest rates, the stock markets in Switzerland (+15%) and the United Kingdom (+14%) also closed with positive results. Con­ versely, nearly all of the other European stock markets reacted negatively to the restrictive monetary environ­ ment and the weakening of economic activity. Compared with the previous year's level, the following changes were recorded: Germany -3%, France +1%, Belgium -2%, Italy -12%, Spain -13%, The stock markets in Canada (-5%) and Australia (-6%) also closed the year at lower levels; this was due to pressure on prices in the raw mate­ rial markets. The Japanese stock market sustained one of the largest setbacks (-24%),
The balance-sheet value of capital market investments and real estate increased by Sw, frs. 111 million over the previous year to Sw. frs, 8,556 million. This increase is due to new investments and a higher valuation of several major investment currencies.
Bonds, certificates of deposit and mortgage bonds 5,630 4,979 Loans (including mortgages) 517 658 Fixed-interest securities with equity character 109 145 Shares 1,021 759 Real estate 1,279 1,238
Net cash deposits (i.e. cash deposits with clients from active reinsurance after deduction of the deposit reserves due to retrocessionaires from passive reinsurance) in­ creased by Sw.frs, 400 million to Sw.frs, 2,280 million.
In a move to emphasize function instead of rank, the reg­ istered titles hitherto used (such as Superintendent, As­ sistant Manager, Senior Executive Manager, General Man­ ager) have been dropped. Instead, the position of each Swiss Re employee, for both internal and external pur­ poses, is defined by reference to the function performed. It is hoped that the use of function titles for internal and external purposes will make it possible to contact the right business partner more easily and quickly.
At the same time, the management structure has been simplified. Apart from Group Management and the Exec­ utive Board of Swiss Re, Zurich, there will in future only be two managerial levels: "Members of Management" and "Members of Senior Management". Both categories apply equally to executive and technical functions.
According to the new rules, all Swiss Re employees will in principle have signing authority as regards those mat­ ters which fall within the area of their responsibility and authority. This makes the signature a tool that is no longer connected to the company's hierarchy and has consider­ ably enlarged the circle of persons with signing authority. All documents of a binding nature for Swiss Re have to be signed jointly by two persons. Exceptions to this regu­ lation apply only in special cases where circumstances dictate, especially in the sector of facultative reinsurance business. The number of signatures entered in the Com­ mercial Register is to be kept to a minimum.
At last year's General Meeting, Mr Ulrich Bremi was elected to the Board of Directors for the first time; the Board subsequently appointed him Chairman and Mr Rainer E. Gut Deputy Chairman.
Having reached retirement age, Mr Pierre Languetin is resigning from the Board of Directors. He has been a Member of the Board since 1988, and we should like to express our gratitude for the service he has rendered Swiss Re.
In mid-1992 the Board of Directors approved the separa­ tion of Group Management and Management of Swiss Re, Zurich, in terms of both organization and personnel, with effect from 1 January 1993.The members of the new man­ agement bodies were named as follows: Group Management: Arnold W. Saxer (Chief Executive Officer), Christoph Dorschel, Peter Frey, Werner G. Seifert and Urs Winter.
On 31 December 1992, Hans Rudolf Kaufmann, General Manager, retired, as did Charles E. Brooks, Richard R. Doerr, Horst Lüthi and Jean-Claude Mayor, Members of Senior Management. In addition, Jakob Forster, Egon Ritter and Herbert Tiedemann, Members of Senior Man­ agement, retired on 30 June 1993. We are deeply indebted to all these gentlemen for their many years of valuable service to our company.
The Board of Directors announced the following promo­ tions to Members of Senior Management to take effect from 1 July 1993: Martin Benz, Philip Bland, Gerhard Felder, Konrad Häuptli, Max Klingler, Joachim Leis, Walter Meliert, Fritz Peter, Filippo Raffaele, Fredy Riedle, Christoph Sievers, Antonio Solari, Fritz Stabinger, Kurt Staub, Jürg Stell, Kurt Weber and Rene Winzeier.
Executive Board: Ernesto Jutzi (Head), Peter P. Hügle, Rudolf Kellenberger, Walter B. Kielholz and Bruno Laube.
Werner G. Seifert left Group Management on 31 July 1993. We are deeply indebted to him for his service to Swiss Re.
Claims incurred inci. adjustment in outstanding ciaims reserve - 477,482,620 - 403,566,105
The accounts are compiled according to Swiss law and the underlying commercial and Insurance principles. The principle of caution inherent in these regulations is deter­ mining for the valuation and reserving practice of the Company. The principles of accounting and valuation hitherto applied were retained in the year under report.
French franc 26.47 26.10 1.4 + Belgian franc 4.3850 4.3250 1.4 + Dutch guilder 80.30 79.10 1.5 + Italian lira 0.10 0.1176 15.0-
Securities and holdings are in principle entered at acqui­ sition cost or, if the stock exchange price is lower on the balance-sheet date, at the lower value. Non-quoted hold­ ings are, where necessary, entered at the lower Intrinsic value. The lower valuation is retained until disposal of the corresponding securities.
These result from the total of the net premiums and the difference in the unearned premium reserve over the last year under report. At Sw. frs. 5,156.9 million they were Sw.frs. 882.9 million, or 20.7% above the previous year's amount.
The commissions and profit commissions accounted for gross business totalled Sw.frs. 1,565.8 million. Of this amount, Sw. frs. 184.6 million referred to retrocessionaires, leaving Sw.frs. 1,381.2 million for own account.
investments contributed a net profit of Sw.frs. 619.1 mil­ lion, whicfi was more tfian double that of the previous year (Sw.frs. 307.3 million).The write-offs on capital market in­ vestments, real estate and holdings were also distinctly higher at Sw. frs. 335.5 million (previous year, Sw. frs.206.1 million). The fluctuations in foreign currency rates had a negative effect on the result of monetary transfers and the conversion of foreign currency balances, leading to a loss of Sw.frs. 14.8 million (previous year, profit of Sw.frs. 11.4 million). Other depreciation outgo amounted to Sw. frs. 39.9 million (previous year, income of Sw. frs. 5.1 million), the major part of which is due to the increase of the value adjustment for current-account balances.
Holdings are largely managed by SwissRe Holding Lim­ ited and financed by loans to this company. The share­ holding of Swiss Re, Zurich, in SwissRe Holding Limited appears in the baiance sheet together with certain other holdings.
Of the total amount of current-account balances of Sw. frs. 1,538.0 million, Sw.frs. 1,029.5 million was for reinsurance and Sw. frs.154.3 million for retrocession business; Sw. frs. 354.2 million concerned other balances mainly with re­ gard to companies of the Swiss Re Group. The increase of current-account balances over the previous year was Sw.frs.451.9 million.
Bank balances on the balance-sheet date amounted to Sw.frs. 1.5 million.
Cash deposits with clients rose significantly against the previous year by Sw.frs. 401.0 million to Sw.frs. 2,343.7 mil­ lion as a result of portfolio growth.
Technical reserves comprise, in Non-Life reinsurance, the reserves for unearned premiums and outstanding claims and, in Life reinsurance, the policy and claims reserves. The changes in the reporting year and the composition are shown in the following table. The rise of the technical reserves is due to the distinct rise in the volume of busi­ ness.
Life Reinsurance Policy reserves Outstanding claims reserve in % of net business in force 2.0 2.2
For 1992 a total of 1,565,142 registered shares, 185,400 bearer shares and 3,436,000 non-voting shares are en­ titled to dividend. The 327,144 registered shares not entitled to dividend were reserved at the end of 1992 to secure conversion or option rights from future issues, to acquire holdings or for other business in the company's interest.
Contingent liabilities (mainly guarantees) amounted to Sw.frs. 258.1 million per 31 December 1992. In addition there were four unlimited guarantees in favour of compa­ nies of the Swiss Re Group.
If the proposal of the Board of Directors is accepted, divi­ dends of Sw, frs. 48 - per share (nominal value Sw. frs.100.-) and Sw.frs. 9.60 per non-voting share (nominal value Sw. frs. 20.-) will be paid.
After deduction of the Federal Withholding Tax of 35%, the dividends of Sw. frs. 31.20 and Sw. frs. 6.25 respectively will be paid after 2 December 1993 as follows: Registered shares by means of dividend order to the shareholders in the records of the share register or to their deposit banks.
Bearer shares and non-voting shares against presentation of Coupon No. 5.
Transitory entries, value adjustments and other liabilities (incl. dividend and donations)
The Foreword to the Annual Report of Swiss Re, Zurich, (pages 8 to 10) describes the groundwork accomplished in 1992: formuiating the 1992 strategic philosophy, strengthening management and launching the "peak form programme".
At the level of the operative units, the peak form pro­ gramme is being formulated by Group Management in conjunction with the management of the relevant com­ pany: the aim is a tailor-made peak form programme which local management can implement in the coming years.
Compahia Suiza de Reaseguros, Oficina de Asesoria Tecnica, Bogota • 1
Lloyd Adriatico S.p.A., Trieste Lloyd Adriatico Espafia S.A., Madrid Giuliana Assicurazioni S.p.A., Trieste Giuliana Vita S.p.A., Trieste
Vereinte Versicherung AG, Munich Vereinte Krankenversicherung AG, Munich Vereinte Lebensversicherung AG, Munich Vereinte SpezialVersicherung AG, Munich
In the 1992 Group accounts, the consolidated gross pre­ miums amounted to Sw. frs. 21,925 million, an increase of 25.6% as against the previous year. About half of this increase is attributable to changes in the scope of con­ solidation. The growth rate of the companies hitherto included in the scope of consolidation was 13.1%. When expressed in original currencies, the growth rate was 14.4% (previous year, 12.6%). The consolidated net pre­ miums rose by 27.0% to Sw.frs. 20,670 million, reinsur­ ance business accounting for 52% and insurance for 48%.
The "results of the individual Group companies com­ mented on below correspond to the figures published in accordance with local accounting regulations.
The North American Reinsurance Corporation, New York, experienced a drop of the gross premium volume by 9.3% to US$ 787.4 million. This development is due to the dis­ tinctly lower volume of financial reinsurance treaties.
whereas the premium income in the other lines of busi­ ness could again be increased. Following two years without major catastrophe losses, the underwriting re­ sult was affected by Hurricanes Andrew and Iniki in par­ ticular as well as by the adverse run-off of Liability busi­ ness. The capital markets remained buoyant giving an investment result in line with that of the previous year. The loss shown amounted to US$ 20.5 million (previous year, profit of US$ 16.4 million). The company paid a dividend of US$ 8.5 miilion (previous year, US$ 5.0 million).
The Atlantic International Reinsurance Company Limited, Bridgetown, Barbados, and the Swiss-Am Reassurance Company, New York, are active in the field of non-tradi­ tional Life reinsurance business with insurers in the USA. In the year under report these companies reported a loss of US$ 1.6 million (previous year, profit of US$ 3.7 million). Swiss-Am paid a dividend of US$ 0.3 million (previous year, no dividend).
The consolidated gross premiums of the Swiss Reinsur­ ance Company (UK) Limited, London, and the Palatine Insurance Company Limited, London, rose in Non-Life business by 72.5% to £137.2 million. This exceptional growth Is largely due to the market situation which prompted even large Insurance companies to cede more business in reinsurance. The underwriting loss persisted at the previous year's level. The result recorded by Marine reinsurance was again particularly unsatisfactory. - In Life reinsurance the gross amount of business in force increased to £11,800 million (previous year, £10,800 mil­ lion). The underwriting result was again satisfactory. Investment income rose sharply as against the previous year. Overall, a loss of £0.1 million (previous year, £1.2 mil­ lion) was disclosed. A dividend of £0.3 million was paid (previous year, no dividend).
At the Swiss-South African Reinsurance Company Lim­ ited, Johannesburg, the gross premiums in Non-Life rein­ surance rose by 21.8% to Rand 284.7 million. The under­ writing profit was lower because of the greater frequency of Fire losses. -The gross amount of Life reinsurance busi­ ness in force rose by 4.9% to Rand 19,300 million. The underwriting result improved despite further losses in dis­ ability business. - investment income was again higher and the published profit amounted to Rand 22.4 million (previous year. Rand 19.7 million), from which a dividend of Rand 12.0 million was paid, an increase of Rand 2.0 mil­ lion as against the previous year.
substantially to US $ 290.2 mllllon (previous year, US$97.9 million). Part of tfils Increased volume Is due to an excep­ tional transaction.The published profit amounted to US$ 19.8 million (previous year, US$ 8.2 million).The company paid a dividend of US$ 14.4 million (previous year, US$ 1.8 million).
The ELVIA Insurance Group, Zurich, which Is consoli­ dated for the first time, achieved In the year under report consolidated gross premiums of Sw.frs. 2,508.8 million (previous year, Sw.frs. 2,322.3 mllllon). - The gross pre­ miums of ELVIA Swiss Insurance Company Zurich rose by 20.9% to Sw.frs. 1,282.9 million. The Increase Is largely due to the takeover of the Swiss business of the SWITZER­ LAND General Insurance Company Limited. The under­ writing and financial results showed Improvement. The profit for the year rose to Sw. frs. 30.0 mllllon (previous year, Sw. frs. 27.9 million), from which a dividend of Sw.frs. 23.6 million (previous year, Sw.frs.21.7 million) was paid. - At the ELVIA Life Swiss Life Insurance Company, Geneva, the amount of business In force rose by 3.2% to Sw.frs. 16,600 million. Thanks to a well-balanced under­ writing result and higher Investment Income, the profitsharing bonus to policyholders was Increased and an Increased profit for the year of Sw. frs. 5.2 million (previous year, Sw.frs. 4.7 million) was reported.The dividend paid was unchanged at Sw.frs. 3.1 million. - The gross pre­ miums of ELVIA Travel Insurance Company, Zurich, rose by 24.3% to Sw.frs.250.5 mllllon. The underwriting result again Improved, and Investment Income Increased slightly. The profit for the year amounted to Sw. frs. 3.8 mll­ llon (previous year, Sw.frs. 3.7 million), from which a divi­ dend of Sw.frs. 2.3 mllllon (previous year, Sw.frs. 2.0 mll­ llon) was paid.
The Magdeburger Versicherungsgruppe, Hanover, was able to Increase Its consolidated gross premiums. In­ cluding the non-recurring premiums from the reserve for bonuses to policyholders, by 4.6% to DM 1,191.8 million.The gross premiums of the Magdeburger Versicherung AG rose by 3.9% to DM 803.3 million. Underwriting busi­ ness produced a loss of DM 17.0 million (previous year, DM 10.7 million); this Is mainly due to tfie heavy loss burden from autumn storms, the sharp rise In car thefts and additional Investment In the new German states. The further rise In the result of the non-technical account led to a profit for the year of DM 20.2 million (previous year, DM 19.0 million) which was again paid out In full to share­ holders. - At the Magdeburger Lebensversicherung AG the Insurance business In force rose by 6.4% to DM 10,700 million. Following an allocation of DM 91.9 million (previous year, DM 104.5 million) to the reserve for bo­ nuses to policyholders, a profit for the year remained of
DM 1.4 million (previous year, DM 0.7 million), which was again paid out in full as dividend.
The Vereinte Versicherungen, Munich, increased its con­ solidated gross premiums, including the non-recurring premium from the reserve for bonuses to policyholders, by 9.0% to DM 5,261.4 million. - The gross premiums of the Vereinte Versicherung AG rose by 8.9% to DM 1,068.2 million. The loss experience deteriorated gravely be­ cause of persistently high claims payments from natural events, a further increase in losses in Motor collision damage insurance and additional investments needed to expand the organization in the new German states. The underwriting loss of DM 40.9 million was double that of the previous year. Thanks to the further improvement in the investment result, a profit for the year remained of DM 12.5 million (previous year, DM 17.3 million), which was distributed to shareholders in full. - The amount of busi­ ness in force of the Vereinte Lebensversicherung AG grew by 8.7% to DM 20,400 million. After an allocation of DM 254.5 million (previous year, DM 230.3 million) to the reserve for bonuses to policyholders, the profit remaining for the year was DM 4.1 million (previous year, DM 4.2 mil­ lion). Of this amount, DM 2.4 million (previous year, DM 2.0 million) was allocated to make unpaid into fully paid share capital and DM 1.7 million (previous year, DM 1.6 million) was paid out as dividend. - The Vereinte Krankenver­ sicherung AG increased its gross premiums, including non-recurring premium from the reserve for bonuses to policyholders, by 8.9% to DM 3,425.8 million.The amount of benefit payments rose by 9.6% to DM 2,685.9 million. After an allocation of DM 180.3 million (previous year, DM 56.0 million) to the reserve for bonuses to policy­ holders, the profit for the year was DM 20.5 million (pre­ vious year, DM 11.8 million), from which DM 3.5 million was paid into revenue reserves, DM 9.0 million (previous year, DM 4.5 million) was allocated to make unpaid into fully paid share capital and DM 8.0 million (previous year, DM 7.3 million) was paid as dividend.
The insurance products provided by the "Magdeburger" and "Vereinte" groups are complemented by building society and banking services. - The mh Bausparkasse AG, Munich, showed at the end of the year under report a portfolio of savings contracts of DM 13,400 million (pre­ vious year, DM 12,000 million), corresponding to a growth of 11.8%. The profit for the year of DM 9.2 million (previous year, DM 9.4 million) was paid out in full. - The total assets of the Augsburger Aktienbank AG, Augsburg, which is 50% Group-owned, rose by 18.8% to DM 610.5 million. The revenue reserves fell to DM 3.0 million (previous year, DM 6.6 million), from which the company paid out a divi­ dend of DM 2.2 million (previous year, DM 6.6 million).
The SCHWEIZ Campania Anbnima Espanola de Seguros y Reaseguros, Barcelona, increased its premium income by 5.4% to Ptas 29,600 million. The profit for the year amounted to Ptas 109 million (previous year, Ptas 102 mil­ lion). In order to strengthen further the technical reserves, again no dividend was paid.
The Fidelity and Deposit Company of Maryland, Balti­ more, in which the "Zurich" Insurance Company and Swiss Re each had a 50% shareholding in the year under report, is not consolidated in the Group accounts. Swiss Re sold its holding to the "Zurich" in April 1993. In an economic cli­ mate which remains arduous, the company achieved a 1.7% increase in gross premiums to US$ 331.8 million. With the exception of Property business, which was af­ fected by several large losses (Hurricanes Andrew and Iniki, rioting in Los Angeles), gratifying results were re­ corded in all classes of business. Thanks to the continued buoyancy of the capital markets, financial income was again significantly improved. The overall profit was US$ 10.3 million (previous year, US$ 15.6 million). The company paid a dividend of US$ 12.0 million (previous year, LIS$ 14.0 million).
The gross premiums of the North American Specialty Insurance Company, Manchester, New Hampshire, again showed a sharp increase from LIS$ 93.3 million in the pre­ vious year to LIS$ 161.1 million. This growth is due on the one hand to an increase of the business written for other Group companies and on the other to a massive rise in the sales of insurance programmes for commercial and service enterprises. As a result of growth-related devel­ opment costs and higher loss ratios, the company re­ ported a loss of US$ 2.5 million (previous year, profit of US$0.7 million).
The turnover of service companies from royalties and licence fees rose in the year under report to Sw. frs. 415 million, corresponding to a 17% increase as against the previous year. This substantial growth was due to abun­ dant claims from natural occurrences (hurricanes, storms and floods). Handling the claims caused by Andrew and other storms in America was a major undertaking for the claims management companies and brought a significant increase in fee income. By way of contrast, recession in the Anglo-Saxon countries, curtailed the demand for risk management services.
The Audatex Group, Zurich, presented its first consoli­ dated accounts. The consolidated turnover amounted to Sw. frs. 91.7 million.Thanks to substantial investments in the development of data bases and communications systems, the client base was expanded and profitability further improved. The company paid a dividend of Sw. frs. 3.0 million (previous year, Sw. frs.2.0 million).
At the International Risk Management Group, Bermuda, which is mainly active in captive management and risk analysis, the fee income of US$ 33.9 million remained at the same level as the previous year. The formation of new captive companies declined, and impaired economic growth had for the time being a negative impact on the de­ mand for services in the risk management sector. Never­ theless, an unchanged dividend of US$ 3.4 million was paid.
in millions of Swiss francs 1992 1991 Reinsurance Insurance Total" Total
Investment income 1,274 652 2,028 1,805 Otfier financial income 34 38 Management expenses - 623 - 363 - 1,040 847 Rate fluctuations, depreciation. value adjustments 429 53 486 203 Other outgo - - 22 29
Taxes 78 66 169 181 Group company profit applicable to minority shareholders - 46 49 36
Casfi In fiand, postal bank account, bank balances 1,364 399 1,811 769 Current-account balances 2,038 1,719 3,833 3,335 Gasfi deposits 3,467 118 3,585 2,967
Fixed-interest investments 15,803 20,682 38,384 30,884 Sfiares 1,948 2,331 4,314 3,360 Real estate 1,918 2,491 4,412 3,113 Non-consolidated fioldings 312 276 1,269 1,554
Sfiare and non-voting sfiare capital 276 252 Reserves sfiown 2,747 2,284 Consolidation reserve fund 641 346 Group Profit 281 266
The Group accounts were compiled according to the published financial statements as at 31 December 1992 of the companies belonging to the Swiss Re Group. Only the results of the Bavarian Reinsurance Company Limited and the European General Reinsurance Company of Zurich had not yet been published at the time of the con­ solidation.
The SWITZERLAND General Insurance Company, AdIlswil, is no longer included in the consolidation. The company has for the most part transferred its insurance and reinsurance portfolios to other companies in the Swiss Re Group and has discontinued its activity in Switzerland. Its operations are now confined to run-off business and the curtailment of business activity abroad. The SWITZERLAND Insurance Company UK Limited, London, was transferred this year to Swiss Re, Zurich, and remains in the consolidation.
Gross premiums as well as all balance sheet and profit and loss account figures from foreign Group companies which are stated in the various local currencies were uni­ formly translated into Swiss francs using the average for­ eign currency rates as at 31 December 1992.
The net assets of foreign companies have been calcu­ lated using the exchange rates at the end of the year. The loss on translation of Sw. frs. 22 million (previous year, profit of Sw. frs. 60 million) resulting from the revaluation was directly offset against the consolidated capital funds.
Shares and non-consolidated holdings are valued ac­ cording to the same principles as fixed-interest securities. Non-quoted participations are stated at acquisition cost less any necessary depreciation.
The technical reserves are calculated in principle accord­ ing to the provisions of the supervisory authorities appli­ cable to Individual Group companies. However, In the case of the North American Reinsurance Corporation the reserves are included in the Group accounts at the amount calculated according to Generally Accepted Accounting Principles (GAAP).
The claims incurred comprise payments for Life and Annuity insurance as well as the adjustment in the out­ standing claims reserve. The total outgo for own account rose In the year under report by Sw.frs. 539 million to Sw.frs. 1,852 million. Of this amount, Sw.frs. 1,075 million concerned reinsurance companies and Sw. frs.777 million insurance companies.
The claims incurred comprise claims payments and the adjustment in the outstanding claims reserve. In the year under report this outgo item for own account rose by Sw.frs. 2,819 million to Sw.frs. 13,495 million. Of this amount, Sw.frs.7,448 million was for reinsurance compa­ nies and Sw.frs. 6,047 million for insurance companies.
In the case of fixed-interest securities and shares and the quoted non-consolidated holdings, the difference be­ tween the lower book and higher market value of the indi­ vidual securities, taking into account the estimated tax effects on realization, amounted to Sw. frs. 2,145 million, or 5.0% of the balance-sheet value (previous year, Sw.frs. 2,112 million or 6.1%).
Third party contingent liabilities as at 31 December 1992 totalled Sw.frs. 121.6 million. Of this amount guarantees accounted for Sw. frs. 91.6 million, sureties Sw. frs. 26.0 mil­ lion and pledges and charges Sw.frs.4.0 million. In addi­ tion there are six unlimited guarantees. Contingent liabili­ ties arising from insurance and reinsurance business are not included.
The capital funds shown in the consolidated balance sheet (sum of share and non-voting share capital, re­ serves shown, consolidation reserve fund and group profit) correspond to the book value of the funds invested in the entire Group by shareholders and non-voting share­ holders of Swiss Re, Zurich. In the year under report Group capital funds rose by Sw.frs. 797 million to Sw.frs. 3,945 million.The negative effect from the conversion of foreign currencies amounted to Sw.frs.22 million (previous year, positive effect of Sw. frs. 60 million).
Capital funds at end of previous year 3,148 2,811 Effects of exchange rate fluctuations on opening balance-sheet figures - 22 60 Paid-out profits for previous year -106 - 99 Increase of Swiss Re's share and non-voting share capital 429 7 Group profit 281 266 Other movements 215 103
• : 1 North American Specialty Insurance Company US$ 100 28,037 107,439 161,622
• : '--fl; j , •' 1 ELVIA Swiss Insurance Company Sw. frs. 60.3 447,652 2,687,156 1,282,866
• : 1 ELVIA Travel Insurance Company Sw. frs. 100 49,002 241,573 247,101
Investment and otfier financial income Management and otfier expenses Rate fluctuations, depreciation, value adjustments Result from general income and outgo Taxes Sfiare of profit applicable to minority shiarefiolders
United Kingdom Swiss Reinsurance Company (UK) Limited 71-77 Leadenhall Street London EC3A2PQ with a branch office in Hong Kong
Argentina OFATEC Buenos Aires S.A. Av. Cordoba 836, Piso 5 1054 Buenos Aires
Venezuela OFATEC Venezuela C.A. Edificio Torre La Noria, Piso 8-Norte Paseo Enrique Erase Urb. Las Mercedes, Apartado No. 6633, Carmelitas Caracas 1060
ELVIA Life Swiss Life Insurance Company Avenue du Bouchet 2 CH-1211 Geneva 28
France Compagnie Europeenne d'Assurances 29, rue des Poissonniers F-92522 Neuilly-sur-Seine Cedex
Lloyd Adriatico Espana S.A. Orense 81 - planta 5® E-28020 Madrid
SCHWEIZ Compahia Anonima Espahola de Seguros y Reaseguros Via Augusta 153-157 E-08021 Barcelona
Turkey Magdeburger Sigorta A.S. Ihlamur, Yesil Cimen Cad. No. 47 Besiktas-lstanbul
United States North American Specialty Insurance Company 650 Elm Street, 6th Floor Manchester, NH 03101-2524 with branch offices in Cleveland and Sarasota as per November 1993
International Risk Management Group Atrium Corporation Contact address 200 Park Avenue
^ ^ ^ . New York, NY 10166 Belvedere Building, Pitts Bay Road Hamilton HM CX, Bermuda j ̂ Batterstiill Reinsurance
Accumulation; Concentration of -• risks which may be affected by the same loss event or concentration of shares in the same ->• risk through ->• reinsurance treaties.
Ceding company: The reinsurer's client, i.e. the insur­ er, who passes on (cedes) ->• risks to the ->• reinsurer against payment of a -» premium.
- Incurred but not reported (IBNR) losses (also late claims): Losses which have occurred but which have not yet been reported to the ->• insurer or reinsurer on the balance-sheet date.
- Outstanding claims reserve: Reserve for claims which have been incurred but not yet finally settled.
Insurance company: Enterprise which accepts in return for payment of a ^ premium.
- Reinsurer: Company which accepts a share of the in­ surer's ^ risks in return for payment of a ->• premium.
- Net amount: Life insurance in force of the -+ insurer after deduction of the ->• cessions or Life business of the ->• reinsurer after deduction of ->• retrocessions.
Policyholder: The -> insurer's contractual partner who receives ^ cover in return for payment of a ->• premium.
- Net premium: Insurance premium after deduction of the ceded premium (->• cession) or reinsurance pre­ mium after deduction of the retroceded premium retrocession).
- Reinsurance premium: Premium paid to the ->• rein­ surer by the -• insurer for the -• risk accepted.
- Single premium: A single payment of Life insurance premium as opposed to annual premium payment.
- Unearned premium (also premium reserve): Premium applicable to that part of the period of reinsurance con­ tinuing after the business year of the balance sheet (->• earned premium).
- 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: Form of proportional reinsurance, providing that the reinsurer accepts a specified share of each -• risk of an ->• insurer in a specified class of business.
- Surplus reinsurance: Form of ->• proportional reinsur­ ance, in which risks are reinsured over a specified amount.
- Risk category: Grouping together of risks with similar hazard characteristics.
Underwriting result: In the Non-Life sector: Total of -• earned premiums, less -> commissions, ->• profit commis­ sions and -• claims incurred. In the Life sector: -• net pre­ miums, plus adjustment in -• policy reserves, less ->• com­ missions, -• profit commissions and -• claims incurred.
Sickness insurance ->• Life in- - Empioyers Liabiiity insurance: Insurance by employers in respect of employees for injuries arising out of their employment.
- Engineering insurance: Insurance of construction and erection objects during the construction or erec­ tion period and the insurance of machinery in oper­ ating plants (incl. EDP installations).
- Generai Third Party Liability insurance: Insurance of industrial, commercial, employers, products, profes­ sional or private liability to third parties.
- Mortgage Guaranty insurance: Insurance protection of the mortgagee against loss of capital and interest.
- Occupationai incapacity insurance: Insurance against the incapacity to exercise a profession as a re­ sult of sickness or other infirmity.
- Sickness insurance: Insurance against sickness or disability as a result of sickness.
- Surety insurance: Sureties and guarantees issued to third parties for the fulfilment of contractual liabilities.
- Death and Maturity Benefits: Life insurance in which the benefits take the form of a contractually determined amount payable upon death or on survival to a speci­ fied age.