• Consolidated Profit and Loss Account 1 ? Consolidated Balance Sheet I
' subject to the resolutions of the General Meeting ^ the anniversary bonus accounts for Sw.frs. 22 million of the 1988 total dividend ^ per share before split 1:3 including anniversary bonus of Sw.frs. 35.- " per non-voting share before spilt 1:3 Including anniversary bonus of Sw.frs. T.­
Other income and outgo Investment and other financial income Other income and outgo including taxes
Board of Directors Term to expire in Walter Diehl * Chairman, Zurich 1991
General Managers Paul E. Christen Hans R. Kaufmann Theo Obrist Hermann Odermatt Herbert Schönenberger Werner G. Seifert
Auditors Term to expire in Swiss Auditing and Fiduciary Company, Zurich 1991
French-and Itaiian-speaking Switzerland, France, Italy, Belgium, Luxembourg, French-speaking Africa R. Martignier, Executive Manager A. Gaifetti, Executive Manager Executive Managers M.-L. Musy, R. Rüttimann Managers B. Giiliand, G. Herzog
Region R4 international business, captives, US/UK brokers, Caribbean, retrocession, risk management, claims service U. Winter, Senior Executive Manager H.-K. Zulauf, Executive Manager E. Baumann, Manager Managers J. Bleuler, M. Bradley, P. Gasser, W, Meier, B. Nigg, A. Schneeberger, J. Spühier
R. Keilenberger, Manager O. Oisson, Manager Member of Management H. Tiedemann
A. Briigger*, Senior Executive Manager A. Sulzer, Executive Manager Executive Manager D. Söhner Managers M. Freyiinger, H. Voser
Executive Committee and Group Management W. Diehl, CEO A.W. Saxer, Deputy CEO General Managers R E. Christen*, H. R, Kaufmann, T. Obrist, H. Odermatf, H. Schönenberger*, W.G. Seifert Deputy General Manager E. Jutzi
Organization, public relations, economic studies, internal services, catering R. Rüesch, Senior Executive Manager O. Kern, Executive Manager Manager H, von Aesch Members of Managemenf J. Marbacher, G, Müller (Special assignments)
Personnel service, training R. Oberle, Senior Executive Manager J, Niederer, Executive Manager Managers R Eugster, H. Spörri*
The titles In this chart are those used by Swiss Re, Zurich, worldwide excluding North America and certain other territories for which the corresponding hierarchical titles are as follows: General Manager Deputy General Manager Senior Executive Manager Executive Manager Manager Assistant Manager
Group companies as per 1 November 1990 * until 31 December 1990
In the 1989 reporting year, Swiss Re achieved a net profit of Sw. frs. 175.8 million, which was 4.3% higher than in the previous year.
The Board of Directors proposes to the General Meeting that a gross dividend of Sw. frs. 45.- per share and Sw. frs. 9.- per non-voting share be paid on the capital as in­ creased at the end of 1989.
- The underwriting loss in Non-Life reinsurance rose by Sw.frs. 73 million to Sw.frs. 253 million.
- The underwriting profit in Life reinsurance increased from Sw.frs. 38 million to Sw.frs. 40 million.
- The result from general income and outgo - comprising investment income less management expenses, rate fluctuations, write-offs and value adjustments - im­ proved by Sw.frs. 97 million to Sw.frs. 477 million.
It is already apparent at the time of this report that the insurance industry will face an exceptionally high loss burden from natural catastrophes in the current year. A series of storms in January, February and March caused widespread devastation mainly in England, France and Germany; total insured damage is estimated at Sw.frs. 13,000 million, while the cost to Swiss Re is some Sw.frs. 500 million. In view of this exceptional accumu­ lation of losses in the first months of the current year, certain provisions in the accounts of the year under re­ port appeared opportune.
In the financial sector investment income was increased by Sw.frs. 83 million to Sw.frs. 731 million. A favourable stock market climate and attractive realized capital gains once more enabled additional write-offs on the securities portfolio and the strengthening of technical reserves and provisions. Further write-offs were made on recently ac­ quired participations - mainly in the services sector.
By systematically developing direct insurance business, we aim to smoothen the reinsurance elements of the Group accounts which are by their nature prone to severe fluctuation.
Village of Nueva Venecia: pile dwellings in a lagoon off the Caribbean coast, Colombia
Grain stores wind their way like a string of pearis through the huts of Labbezanga viilage on an island In the Niger river, Mall
Air conditioning units on the roof of an office building in Tokyo, Japan
In the year under report, the Swiss franc continued to weaken against most of the major foreign currencies used in reinsurance.
This development causes income earned abroad (espe­ cially premiums and investment income) to increase in Swiss francs, although it is offset by a correspondingly higher outgo abroad (in particular claims payments, com­ missions and management expenses). The 6.7% growth in gross premiums shown in the year under report would have been 4.3% if exchange rates had remained constant.
The year under report saw competition intensify further in the major insurance markets. While the Personal Lines are not as vulnerable to the pressure of competition, industrial business in particular is hotly contested. High reinsurance cessions are generally a normal feature of industrial busi­ ness in the Non-Life sector. Reinsurers are thus drawn into the competitive arena and to no small extent finance the losses incurred. In view of the overcapacity currently pre­ vailing in reinsurance, individual reinsurers have very little room for manoeuvre. As long as the factors leading to the current market situation persist, the trend is hardly likely to change in favour of better underwriting results. These fac­ tors include the good business results achieved for years by the insurance industry, stemming as they do largely from the financial sector. Also significant are the structural changes in the insurance markets and the company take­ overs and mergers they involved which will continue in the years to come. The introduction of freedom of services in the EC in the sector of industrial insurance and the an­ nounced plans for further liberalisation in the insurance in­ dustry have prompted market participants to adopt a waitand -see attitude and put off essential corrections.
In the year under report, the gross premiums rose by 7.2% to Sw.frs. 4,169 million. Disregarding the effects of foreign currency rates, the increase is 4.5%.
Hugo, which affected the Caribbean and parts of the southern U.S. These events cost Swiss Re Sw. frs. 150 mil­ lion, Hugo accounting for Sw.frs. 118 million. With a total insured loss of Sw. frs. 8,000 million, this last event repre­ sented the most expensive natural catastrophe in the his­ tory of the insurance industry, although it has since been overtaken by the storms which hit Europe in early 1990.
Premium income oi Burglary, Fidelity and Allied lines again rose. - The business, which comes mainly from Europe, once again closed satisfactorily.
Premium income remained practically unchanged in Ma­ rine reinsurance. - For the first time for several years there was an underwriting loss, stemming mainly from business written in the United States and London. Three major events caused a burden in the Marine insurance sector comparable with the previous year's loss of the drilling platform "Piper Alpha". One is the oil spill which occurred when the tanker "Exxon Valdez" ran aground; this devel­ oped into the largest oil pollution loss so far, causing esti-
Accident 233 214 Sickness 137 101 General Third Party Liability 533 495
Nuciear Energy reinsurance also showed a drop in pre­ mium income as a result of increased retentions and a lack of new business. - Despite a major non-nuclear fire loss a satisfactory result was achieved.
The underwriting resuit has again been affected by varying factors. Claims incurred increased, whiie aiiocations to the poiicy and premium reserve feii substantiaiiy. There was a distinct rise in surrenders, and also commissions and profit commissions were higher in the year under report than in 1988. Overall, a profit of Sw.frs. 40 miiiion was achieved, Sw. frs. 2 miiiion more than in the previous year.
The development on the money and capital markets was very varied. The general aim of the leading central banks' monetary policy was to curb the overheating of the econo­ my and rising inflation, but the timing was not uniform in the individual countries. In the United States Interest rates reached their highest level in March and then declined slightly. In Europe, the trend toward higher interest rates only became evident somewhat later. The leading role was assumed by the Deutsche Bundesbank, which increased the bank rate in four instalments. By the end of the year In­ terest rates throughout Europe had hardened noticeably. After prolonged reluctance Japan also followed with in­ creases of the prime rate. The interest rates were above those of the previous year in practically all European countries and In Japan. Thanks to a slight relaxation of monetary policy towards the end of the year the interest rates in the United States and in Canada and Australia only showed marginal change against the previous year. - New investments in long-term fixed-interest securities were made on a selective basis only in dollar currencies. In Euro­ pean countries money market investments were preferred and capital market investments on balance reduced.
Capital Market Investments and Real Estate Distribution by Investment category at balance-sheet values (previous year in parentheses)
On the stock markets the previous year's positive trend continued, hesitatingly at first but more firmiy as the year went on. Despite the unfavourable monetary conditions, the markets benefited from rising corporate profits and positive poiiticai and economic expectations. Particuiarly on European stock exchanges share prices rose sharply, most prominently in Germany with gains of 35%, foilowed by France with 33% and Great Britain with 30%. The Amer­ ican stock market initiaiiy foilowed a phase of consolida­ tion but then reacted with a pronounced rise in prices to the reiaxation on the interest rate front and showed on bal­ ance a 27% improvement as compared with the end of the previous year. The gains on various minor markets were even higher, with improvements of 125% in Austria, 47% in Norway and 43% in Singapore. - Despite this surprisingly positive deveiopment share investments were only selec­ tively expanded.
Bonds, certificates of deposit and mortgage bonds 4,292 4,247 Loans (including mortgages) 915 947 Fixed-interest securities with equity character 95 80 Shares 734 552 Real estate 990 982
Net cash deposits (i.e. cash deposits with clients from ac­ tive reinsurance after deduction of the deposit reserves due to retrocessionaires from passive reinsurance) rose by Sw.frs. 354 miiiion to Sw.frs. 1,737 miiiion.
Capital market investments and real estate 7,026 6,808 Holdings and loans 1,976 1,889 Net cash deposits from reinsurance transactions 1,737 1,383
Training and further education of staff Is one of the central aspects of personnel policy in any company. In the year un­ der report, particular importance was attached to the sec­ tor of management development. The objective Is to pre­ pare the required number of qualified executives thoroughly and In good time for their future management functions. In addition, technical reinsurance training has been revised and better adapted to meet practical de­ mands. Finally, language training was expanded, tailormade courses being set up for groups of employees with similar needs.
Last year's General Meeting confirmed the re-election to the Board of Directors of Messrs Hans R. Lüthy and Hans Ulrich for a further term of office of three and two years re­ spectively.
Mr Walter Diehl, Chairman of the Board of Directors and Chief Executive Officer of the Executive Committee and Group Management, has expressed the wish to concen­ trate in future on his duties as Chairman of the Board of Di­ rectors. The Board of Directors will therefore propose to this year's General Meeting that Mr Arnold W. Saxer be elected to the Board. Mr Saxer would then be appointed Managing Director and Chief Executive Officer of the Ex­ ecutive Committee and Croup Management.
With effect from 1 January 1990, Messrs Hans R. Kauf­ mann, Theo Obrist, Arnold W. Saxer and Werner C. Seifert were promoted to General Manager and Mr Ernesto Jutzi to Deputy General Manager by the Board of Directors.
Mr Paul-Francis Niquille, General Manager, retired on 31 December 1989 having reached retirement age. We are greatly indebted to him for his many years of service and should like to express our sincere gratitude. In addition, Messrs Rolf Camper, General Manager, and Pierre-Claude Perrenoud, Deputy General Manager, retired in the first half of 1990.
On 31 December 1989, Messrs Max Nabholz, Senior Ex­ ecutive Manager, Rolf Eckert, Werner Künzle and Willi Rüetschi, Executive Managers, Ms Frangoise Schulthess, Manager, and Mr Josef Doktor, Member of Management in an Advisory Capacity, retired. Messrs Othmar Schmidlin, Executive Manager, and Peter Fürst, Manager, retired on 30 June 1990. They have all rendered our company great services and we are indebted to them for their valuable work.
The Board of Directors announced the following promo­ tions with effect from 1 January 1990: Executive Managers: Messrs Miklos Gaal (Member of Management in Advisory Capacity), Aminta Galfetti, Rene R Held, Adrian Sulzer, Jean-Pierre Vogel and Heinz Vollenweider.
Managers: Ms Nilou Gitzelmann (Member of Management in Advisory Capacity) and Messrs Peter Eugster, Christian Herzog, Erich Hunold, Eduarde Jean-Mairet, Urs R. Käser, Ferdinand Marty and Franco Renggli.
In the course of 1990, Mr Andre Chuffart, Manager, and Messrs Hans Ulrich Giezendanner and Herbert Lüthy, Members of Management in Advisory Capacity, joined our company.
Mr Francis Wingrove, Manager, died on 24 April 1990. We are greatly indebted to him for his many years of valuable service.
The General Managers: RE. Christen, H.R. Kaufmann, T. Christ, H. Cdermatt, A.W. Saxer, H. Schönenberger, W.G. Seifert
All items of the balance sheet and profit and loss account in foreign currencies were uniformly converted into Swiss francs using the average foreign currency rates as at 31 December 1989. Differences arising from the conver­ sion of balance-sheet items in foreign currencies are booked via a corresponding reserve; this serves to offset valuation differences of foreign currency items based on exchange rate fluctuations. The currencies which are most important for business activity abroad developed over the previous year as follows: Average Foreign Currency Rates on Balance-sheet Date*
French franc 26.60 24.82 7.2 + Belgian franc 4.32 4.04 6.9 + Dutch guilder 80.55 75.02 7.4 + Italian lira 0.1212 0.1151 5.3 + Spanish peseta 1.4025 1.32 6.3 + US dollar 154.— 151.— 2.0 + Canadian dollar 133.50 127.— 5.1 + Yen 1.0775 1.2025 10.4-
Cash in hand and credit balances are entered in the bal­ ance sheet at their nominal amounts. This also applies to loans and to mortgages.
Gross premiums in the year under report totalled Sw.frs. 4,169.0 million. After deduction of retrocession premiums of Sw.frs. 832.4 million, the net premiums amounted to Sw.frs. 3,336.6 million, which corresponds to a rise of 6.6% when compared with the previous year. Without the effect of foreign currency fluctuations, net premiums would have risen by 3.8%.
The commissions and profit commissions accounted for gross business totalled Sw.frs. 1,179.3 million. Of this amount, Sw.frs. 227.2 million referred to retrocession­ aires, leaving Sw.frs. 952.1 million for own account.
The claims incurred comprise claims paid and the adjust­ ment in the outstanding claims reserve. In the year under report this figure for own account rose by Sw.frs. 174.3 million to Sw.frs. 2,623.7 million.
The commissions and profit commissions calculated for business assumed totalled Sw. frs. 111.1 million. The retro­
Claims comprise benefits for term and endowment insur­ ance, paid annuities and the adjustment in the outstanding claims reserve. The total figure for own account rose in the year under report by Sw.frs. 14.0 million to Sw.frs. 315.5 million.
The surrenders in business assumed amounted to Sw. frs. 91.8 million, of which Sw.frs. 1.1 million was debited to retrocessionaires. A total of Sw. frs. 90.7 million remained for own account.
This group of accounts closed with a negative balance of Sw.frs. 63.5 million (previous year, Sw.frs. 90.5 million). Realized capital gains and losses on investments contrib­ uted a net profit of Sw.frs. 261.4 million (previous year, Sw. frs. 237.3 million) from which a special allocation to the technical reserves has already been deducted. The fluc­ tuations in foreign currency rates had a negative effect on the result of monetary transfers and the conversion of for­ eign currency balances, leading to an outgo of Sw.frs. 22.4 million (previous year, profit of Sw. frs. 3.0 million). The write-offs on capital market investments, real estate and holdings amounted to Sw. frs. 280.9 million (previous year, Sw.frs. 285.8 million). Other depreciation amounted to Sw.frs. 21.6 million (previous year, Sw.frs. 45.0 million).
The tax outgo contains both taxes on profit and on capitai as weli as indirect taxes. It amounted to Sw.frs. 88.7 mil­ lion, as against Sw. frs. 70.5 million in the previous year and comprises current taxes levied abroad together with the outgo expected in Switzerland on the basis of the 1989 re­ sult. It also includes the stamp duty on the capital increase carried out in the year under report.
Cash deposits with clients rose against the previous year by Sw.frs. 358.3 million to Sw.frs. 1,774.8 million.
The portfolio of capitai market investments (fixed-interest securities, loans and shares) and real estate rose by Sw.frs. 218.7 million to Sw.frs. 7,026.2 million. The valua­ tion difference on capital market investments (excluding loans), i.e. the difference between the lower book and higher market value of the individual securities, taking into account the estimated value of taxes due on realization, amounted to Sw.frs. 748.0 million (previous year, Sw.frs. 728.9 million) or 14.6% (previous year, 14.9%) of the bal­ ance-sheet value of securities. The slight rise of the valua­ tion difference is the result of diverging developments; the favourable development of prices on the stock and foreign exchange markets was almost counterbalanced by the lower valuation of the European bond portfolio because of interest rates. The insured value of business property is Sw.frs. 272.5 million.
Holdings are largely managed by SwissRe Holding Limited and financed by loans to this company. The shareholding of Swiss Re, Zurich, in SwissRe Holding Limited appears in the balance sheet together with certain other holdings in advisory and service companies.
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 increase of technical re­ serves includes additional reinforcements of Sw.frs. 110 million, which were taken from the realized capital gains on securities, in connection with exceptional claims already notified in the current business year.
Changes Valuation difference based on exchange rate fluctuations Increase of technical reserves In year under report
+ 415.5 Totai business in force on baiance-sheet date 8,977.3 8,040.7
Non-Life Reinsurance Unearned premiums 1,029.6 874.8 Outstanding claims reserve (Incl. valuation of current annuity Indemnities) 6,153.4 5,488.6 7,183.0 6,363.4 in % of earned net premiums 216.2% 201.6%
Life Reinsurance Policy reserves 1,457.9 1,382.7 Outstanding claims reserve 336.4 294.6 in % of insurance in force, net 2.4% 2.7%
For 1989 a total of 1,420,000 registered shares, 154,000 bearer shares and 3,010,000 non-voting shares are en­ titled to dividend. The 330,000 registered shares and 16,000 bearer shares are reserved for the free warrants is­ sued in connection with the 1989 capital increase and to secure conversion or option rights from future issues, to acquire holdings or for other business in the company's in­ terest.
Share capital 192.0 111.0 Non-voting share capital 60.2 43.0 Reserves and profit carried forward 2,234.3 1,794.8
Contingent liabilities (sureties and guarantees) amounted to Sw.frs. 521,800.- per 31 December 1989.
After deduction of the Federal Withholding Tax of 35%, the dividends of Sw.frs. 29.25 and Sw.frs. 5.85 respectively will be paid after 27 November 1990 as follows: Registered shares by means of dividend order to the shareholders in the rec­ ords of the share register or to their deposit banks.
We have come to the conclusion that the balance sheet and the profit and loss account are In agreement with the books, the books of account have been properly kept, the financial position and the results of operations are presented in accordance with the principles of evaluation prescribed by the law and the requirements of the Articles of Association.
Cash in hand, postal bank account, bank balances Current-account balances Cash deposits Fixed-interest securities Loans (including mortgages) Shares Real estate Holdings Loans to Group companies Transitory entries and other assets
Masterpiece of Islamic urban architecture; the royal city of Fez, Morocco
Part of the city of Rotterdam, Netheriands, rebuilt after the Second World War
Urban lay-out to meditate on: lagoon town of Mexcaltitän in Nayarit, Mexico
Roofs of industrial buildings in: Kimltsu, Japan Los Angeles, USA Nagasaki, Japan
Oficina de Asesorfa Tecnica, Bogota • OFATEC (Mexico) S.A. de CV., •V- 1 Mexico
In the service sector, Gay & Taylor Inc., Winston-Salem (USA), which is active in the field of claims handling, was acquired in the course of the current year. As in the past, service holdings are not consolidated in view of their spe­ cial activity, but are included in the list of Group companies (page 41).
In Non-Life reinsurance the consolidated net premiums rose, after conversion into Swiss francs, by 15.9% to Sw.frs. 5,979 million (previous year, increase of 6.6%). About three fifths of the growth is due to the Union Rein­ surance Company, Zurich, which was consolidated forthe first time in the year under report. In local currencies the former scope of consolidation experienced an average 3.4% growth of turnover (previous year, decline of 2.8%). The underwriting loss rose for the first time in four years and amounted to Sw.frs. 422 million (previous year, Sw.frs. 184 million). The worse loss experience is specifi­ cally due to major losses in the United States (Hurricane Hugo, San Francisco earthquake) and the still unfavour­ able settlement of late claims from American Liability business.
The profit improved in Life reinsurance, mainly thanks to the good results of the subsidiary companies in Australia and the United Kingdom. In some companies the result was marred by further allocations to the reserves for Aids claims. The underwriting profit rose overall to Sw.frs. 51 million (previous year, Sw.frs. 35 million) and the net amount of business in force - partly affected by the ex­ tended scope of consolidation - rose by 26.9% to Sw. frs. 228,000 million (previous year, Sw.frs. 180,000 million).
Investment income rose by Sw.frs. 177 million to Sw.frs. 1,147 million (previous year, Sw. frs. 970 million). The Union Reinsurance Company, which is consolidated for the first time, accounts for just over a third of this increase. Securi­ ties transactions once again produced attractive capital gains, while write-offs remained in the same range as in the previous year. Management expenses and taxes rose as compared with the previous year. The consolidated Group profit of the reinsurance companies amounted to Sw.frs. 143 million (previous year, Sw.frs. 169 million).
ment income increased. The overall profit was Sw.frs. 7.2 million (previous year, Sw.frs. 7.1 million), from which an unchanged dividend of Sw.frs. 2.4 million was paid.
At the North American Reinsurance Corporation, New York, the gross premiums rose by 0.8% to US$ 701.8 mil­ lion, income from traditional reinsurance having risen, while the volume from Special Markets declined. The growth stemmed from all branches of treaty business, whereas facultative business declined. The underwriting result was negative as a consequence of the burden from Hurricane Hugo and the earthquake in San Francisco and because of further large losses. Reinforcements needed in Liability business also contributed to this result. In con­ trast, Surety, Engineering and especially Special Markets showed favourable experience, while the result from Marine business deteriorated because of large losses. The underwriting result reflects the generally unfavourable ex­ perience of the U.S insurance industry. Investment income and in particular capital gains again rose. The company's overall profit dropped to US$ 5.9 million (previous year, US$ 41.6 million). The dividend was LIS$ 2.5 million as in the previous year.
The North American Reassurance Company, New York, and the Swiss-Am Reassurance Company, New York, re­ ported an increase of the Life reinsurance business in force to US$ 67,600 million (previous year, US$ 59,700 million) and a rise of gross premium income to US$ 293.9 million (previous year, LIS$ 258.5 million). Both investment income and management expenses rose marginally as against the previous year. Overall, a profit of LIS$ 0.7 mil­ lion (previous year, loss of LIS$ 2.2 million) was reported. The improved result is not only due to realized capital gains but also to a favourable underwriting result. Again no dividend was paid.
At the Canadian Reassurance Company, Toronto, the Life reinsurance business in force rose by 40.5% to Can.$ 24,400 million, mainly thanks to a major portfolio takeover. The mortality trend was somewhat less favourable than in the previous year; the result published by the company declined to Can.$ 9.9 million (previous year, Can.$ 11.4 million). The dividend paid remained unchanged at Can. $ 0.55 million.
The gross premiums of the Bavarian Reinsurance Com­ pany Limited, Munich, rose in Non-Life reinsurance by 3.1 % to DM 1,798.7 million (previous year, DM 1,744.4 mil­ lion). The underwriting result deteriorated noticeably as against the previous year, as the improved results in Liabil­ ity and Motor business were not enough to offset the loss in Property insurance caused by an accumulation of large losses. - In Life reinsurance high gro\«th of the gross amount of business in force to DM 9,400 million (previous year, DM 7,200 million) was once more achieved. The un­ derwriting result was distinctly better than that of the previ­ ous year. - Despite a further increase in investment in­ come, the profit for the year fell to DM 10.0 million (previous year, DM 20.0 million). The dividend is to remain at DM 5.0 million.
The consolidated gross premiums of the Swiss Reinsur­ ance Company (UK) Limited, London, and the Palatine Insurance Company Limited, London, fell in Non-Life business by 3.9% to E 57.2 million. The drop is the result of higher retentions by clients and their still cautious under­ writing policy. Because of the unsatisfactory experience of Marine business the underwriting result is somewhat be­ low that of the previous year. - In Life reinsurance the gross amount of business in force rose sharply to £ 7,300 million (previous year, £ 5,500 million). The result was again satis­ factory in the year under report. - The investment income rose distinctly as against the previous year. The profit shown amounted to £ 1.6 million (previous year, £2.1 mil­ lion), from which an increased dividend of £0.5 million (previous year, £0.3 million) was paid.
At the Swiss-South African Reinsurance Company Limit­ ed, Johannesburg, the gross premiums in Non-Life rein­
Rre 2,127 670 2,797 1,727 635 2,362 Accident/Sickness 412 2,726 3,138 304 2,199 2,503 Third Party Liability/Motor 2,008 2,240 4,248 1,807 1,691 3,498 Marine 298 208 506 242 205 447 Other branches 1,220 329 1,549 1,076 304 1,380 Life 1,510 949 2,459 1,265 871 2,136 Gross premiums 7,575 7,122 14,697 6,421 5,905 12,326 Net premiums 7,438 6,266 13,704 6,297 5,211 11,508 in millions of Swiss francs
The consolidated net premiums rose in the year under re­ port by 20.2% to Sw.frs. 6,266 million (previous year, Sw.frs. 5,211 million). In local currencies, premium growth was 13.1% (previous year, 5.7%). Part of this increase is due to the full inclusion of Lloyd Adrlatico in the consolidat­ ed account for the first time.
The Vereinte Versicherungen, Munich, increased their con­ solidated gross premiums, including the non-recurring premiums from the reserve for bonuses to policyholders, by 9.2% to DM 4,019.2 million. - The gross premiums of the Vereinte Versicherung AG grew by 5.0% to DM 853.9 million. The underwriting result improved against the previ­ ous year, the loss falling to DM 1.6 million (previous year, DM 7.5 million). At the same time investment income rose so that overall a profit for the year of DM 20.0 million (previ­ ous year, DM 18.1 million) was achieved. Of this amount.
DM 7.9 million was paid out as dividend (previous year, DM 7.6 million), in addition to a bonus of DM 12.4 million (previ­ ous year, DM 10.5 million). - The amount of business in force of the Vereinte Lebensversicherung AG grew by 8.1% to DM 16,000 million. After an allocation of DM 181.7 million (previous year, DM 191.2 million) to the reserve for bonuses to policyholders, the remaining profit for the year was DM 2.9 million, the same as In the previous year. From this amount an unchanged dividend of DM 1.4 million was paid. - The Vereinte Krankenversicherung AG was able to increase its gross premiums, including non-recurring pre­ miums from the reserve for bonuses to policyholders, by 16.1% to DM 2,555.0 million, although the amount of ben­ efit payments also rose by 11.5% to DM 1,993.1 million, while the investment result grew by 8.9% to DM 378.6 mil­ lion. After an allocation of DM 35.2 million (previous year, DM 76.8 million) to the reserve for bonuses to policy­ holders, the profit for the year was DM 8.8 million (previous year, DM 16.3 million). This was used to pay an unchanged dividend of DM 6.3 million.
The gross premiums of Lloyd Adrlatico S.pA., Trieste, in­ creased in the year under report by 11.6% to Lit. 913,600 million. Of this amount, approx. 12% was attributable to Life insurance, which reported a 20.3% increase in gross premiums (previous year, 29.8%). The profit for the year was increased by 12.4% to Lit. 40,800 million, from which dividends were paid of Lit. 12,300 million (previous year. Lit. 11,400 million) on ordinary shares and Lit. 4,400 million (previous year. Lit. 4,100 million) on savings (risparmlo) shares.
The gross premiums of the North American Specialty In­ surance Company, Manchester, New Hampshire, rose by 47.3% to US$ 27.1 million. The company, which has been in the process of development as a Non-Life insurance company since 1985, reached the profit zone in the year under report. The profit shown of US$ 0.5 million (previous year, loss of US$ 1.7 million) has been used to strengthen reserves.
In the mid-1980s Swiss Re began to extend its business activity beyond traditional reinsurance and insurance busi­ ness moving toward insurance-related services, with a view to penetrating above all the sectors of risk manage­ ment, claims management and information services.
As the development phase in this young sector has now been concluded and experience gathered for some years, the achievements were thoroughiy reviewed in the year under report. On the basis of this investigation. Group Management has come to the conclusion that information service companies cannot really be regarded as strategi­ cally relevant to the Swiss Re Group; the group of informa­ tion service companies is therefore being redimensioned since 1989 - taking into account the interests of clients, staff and shareholders; these measures are being pursued more intensively in 1990. - The sectors of risk manage­ ment and claims management will, however, be further developed as planned.
The net profit in 1989 amounted to Sw.frs. 15.1 million (previous year, Sw.frs. 14.8 million). Dividend payments from company holdings continued to rise, as did the bal­ ance of realized capital gains over write-offs and value adjustments. The interest payment rose substantially as a result of the increased loan. An unchanged dividend of Sw.frs. 9.0 million was paid from the year's slightly higher result.
At the request of the Executive Committee and Group Management, we have examined the Consolidated Bal­ ance Sheet of the Swiss Reinsurance Company per 31 December 1989 and the Consolidated Profit and Loss Account for the 1989 business year.
On the basis of our examination, we confirm that the sub­ mitted Group accounts are presented in accordance with the consolidation and valuation principles set out in the notes on Group accounts.
Gross premiums Net premiums Adjustment in unearned premiums Earned premiums Interest on Sickness insurance fund Commissions, profit commissions, expenses Claims incurred
Investment income Otfier financial income Management expenses Rate fluctuations, depreciation, value adjustments Other outgo
Casti in hand, postal bank account, bank balances 1,354 430 1,812 1,017 Current-account balances 1,709 988 2,747 2,532 Cash deposits 2,324 95 2,419 1,818
Fixed-interest investments 11,672 12,741 25,829 22,661 Shares 1,597 1,936 3,533 2,535 Real estate 1,526 1,104 2,634 2,325 Non-consolidated holdings 149 107 755 1,030
Current-account and bank balances 1,165 1,366 2,834 2,603 Cash deposits 343 121 464 372
Building society deposits _ 1,027 779 Transitory entries, value adjustments and other liabilities 1,188 553 1,792 2,016
Share and non-voting share capital 252 154 Reserves shown 2,158 1,711 Consolidation reserve fund 111 108 Group Profit 277 248
The Group accounts were compiled according to the pub­ lished financial statements as at 31 December 1989 of the companies belonging to the Swiss Re Group. Only the re­ sults of the Bavarian Reinsurance Company Limited and the European General Reinsurance Company of Zurich had not yet been published at the time of the consolida­ tion.
The figures shown in the Group accounts are based on consolidation and valuation principles which are basically uniform for all Group companies. Individual exceptions are of minor importance and are mentioned separately.
Lloyd Adriatico S.p.A., Trieste, which was consolidated in the previous year for the period from the time of acquisi­ tion, was included in the Group account with a full busi­ ness year for the first time, together with its Spanish sub­ sidiary company Lloyd Adriatico Espana S.A., Madrid.
The net assets of foreign companies have been calculated using the exchange rates at the end of the year. The con­ version profit of Sw.frs. 45 million (previous year, Sw.frs. 93 million) resulting from the revaluation was directly cred­ ited to the consolidated capital funds.
Fixed-interest investments are in principle entered at ac­ quisition cost or, if they are quoted and the stock exchange price is lower on the balance-sheet date, at the lower val­ ue. The lower valuation is retained until disposal of the cor­ responding securities. Special treatment is given only to registered debt instruments owned by Group companies in Germany which, in accordance with German practice, are shown at nominal value and incorporated in the Group accounts unchanged.
The consolidated gross premiums rose in all classes by 19.2% to Sw.frs. 14,697 million (previous year, increase of 18.1%). Part of this increase (5.4%) is due to the compa­ nies consolidated for the first time. In addition higher for­ eign exchange rates have affected the premium volume by 4.6%. In original currencies the previous scope of consoli­ dation produced a growth of 9.2% (previous year, 2.9%).
In Non-Life insurance premiums rose by 20.1% (previous year, 17.5%) to Sw.frs. 12,238 million and in Life insurance by 15.1% (previous year, 21.2%) to Sw.frs. 2,459 million.
The claims incurred comprise payments for Life and An­ nuity insurance as well as the adjustment in the outstand­ ing claims reserve. The total outgo for own account rose in the year under report by Sw.frs. 166 million to Sw.frs. 1,031 million. Of this amount, Sw.frs. 771 million con­ cerned reinsurance companies and Sw.frs. 260 million in­ surance companies.
These items correspond to the capital funds at book value of Swiss Re, Zurich. The reserves shown comprise the statutory reserve fund, the special reserve fund, the re­ serve fund for catastrophe losses as well as the profit car­ ried forward from the previous year.
Atlantic International Reinsurance Company Ltd. US $ 100 362 50,669 677
North American international Reinsurance Company Limited US $ 100 5,169 5,743 921
Gross premiums 1 Fidelity and Deposit Company of Maryland ^ US $ 50 216,045 482,236 306,547 1 General Surety & Guarantee Go. Limited £ 100 2,245 12,349 5,559 1 North American Specialty Insurance Company US$ 100 27,957 42,069 27,060 1 Saar-Rhein Allgemeine Versicherungs-AG DM 55 2,415 18,803 21,442 1 SWIlZtHLAND General Insurance 1 Company Limited Svy.frs. 99.9 169,582 1,721,263 966,251 1 SCHWEIZ Ccmpahfa Anönima Espahcia 1 de Segurcs y Reasegurcs Ras. 100 5,623,000 27,891,000 19,152,000 1 SWITZERLJ4ND Insurance Company UK Limited £ 100 11,886 39,846 28,227 1 The Federation Insurance Limited Austr. $ 100 5,410 18,951 51,290 ti ^ not consolidated ' of the voting share capitai ' in miliions of lira
European General Reisuranee Company of Zurich Mythenquai 50/60, CH-8022 Zurich with a branch office in Madrid
Union Reinsurance Company Genferstrasse 27, CH-8027 Zurich with branch offices in Montreal and Sydney
United Kingdom Swiss Reinsurance Company (UK) Limited 71-77 Leadenhall Street London EC3A 2P0 with a branch office in Hong Kong
Australia/New Zealand Australian Reinsurance Company Limited 31 Cueen Street, Melbourne, Vic. 3000 with branch offices in Sydney and in Auckland and Wellington, New Zealand
Colombia Compania Suiza de Reaseguros Oficina de Asesoria Tecnica Calie 72, No. 12-65, Of. 502, Bogota
Venezuela OFATEC Venezuela C.A. Edificio Torre La Noria, Piso 8-Norte Paseo Enrique Eraso Urb. Las Mercedes, Caracas 1060
Philippines SwissRe Advisers Limited Dofia Narcisa Building, Room 703 8751 Paseo de Roxas Makati, Metro Manila
Singapore SwissRe Advisers (Singapore) Pte. Ltd. 24 Raffles Place No. 25-06A Oiifford Centre, Singapore 0104
Switzerland SWITZERLAND General Insurance Company Limited Gotthardstrasse 43 CH-8022 Zurich with branch offices in Athens, Brentwood, Brussels, Copenhagen, Genoa, Hamburg, Istanbul, Milan, Munich, Paris, Thessaloniki, Vienna, Hong Kong, Jakarta, Manila, Montreal, Sydney and Taipei
The Federation Insurance Limited 436 St Kilda Road Melbourne, Vic. 3004
Greece SCHWEIZ Life Voukourestiou 16 GR-10671 Athen as per November 1990
PCL Computer Services Group Limited 47 High Street RIckmansworth, Herts WD3 1ES (UK)
International Risk Management Group Contact address Belvedere Bullding, Pitts Bay Road Hamilton HM CX, Bermuda
Riskex Group Contact address Riskex Holding AG Mythenquai 50/60 CH-8022 Zurich
J. K. Battershill Reinsurance Intermediaries, Inc. 237 Park Avenue New York, NY 10017
CIS Technologies, Inc. One Warren Place 6100 South Yale Suite 1901 Tulsa, OK 74136-1930 (USA)
Glossary of Technical Terms and Classes of Business For readers who are not familiar with insurance and reinsurance, the following glossary briefly defines various technical terms and classes of business as used in the Annual Report.
Claim: Payment for the loss incurred under the terms of a ^ (re)insurance contract.
- Claims incurred: All claims payments plus the adjust­ ment in the ̂ outstanding claims reserve of a business year.
Co-insurance: Where a number of ̂ insurers and/or^ reinsurers each share part of a risk.
Co-insurance basis: System of Life reinsurance under which the^ reinsurer assumes a share of the ̂ risk (pre­ miums, benefits, setting-up of reserves, etc.) at the same terms as the reinsurer's client (cf. risk premium basis).
- Gross amount: Life insurance in force of the insurer before deduction of the ̂ cessions or Life business of the reinsurer before deduction of ^ retrocessions.
- Net amount: Life insurance in force of the ̂ insurer af­ ter 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.
Premium: Amount paid by the ̂ policyholder to the in­ surer in the business year in return for insurance ̂ cover.
Profit commission: Contractually agreed -»commission paid by the ^ insurer or reinsurer in proportion to his profit in a particular piece of insurance or reinsurance busi­ ness.
- Quota-share reinsurance: Form of ^ proportional reinsurance, providing that the ^ reinsurer accepts a specified share of each ̂ risk of an ̂ insurer in a speci­ fied class of business.
Risk premium basis: System of Life business under which the ̂ reinsurer only participates in the death risk in so far as it exceeds the ̂ policy reserves (cf. co-insurance basis).
Surrender: In ̂ Life insurance payment to the insured of the cash value of an insurance policy before it has run its course.
Technical reserves: In the Non-Life sector: Reserves for ^ unearned premiums and ^ outstanding claims; in the Life sector: the ^ polioy and claims reserves.
Non-Life insurance: All classes of Insurance business with the exception of ^ Life.
- Burglary, Fidelity and Allied Lines insurance: Insur­ ance against burglary, breaking and entering, robbery, embezzlement; also Includes water damage, glass breakage, damage to and loss of jewellery or damage or losses in connection with the keeping of animals.
- Business Interruption/Loss of Profits/Business In­ come Protection insurance: Insurance against finan­ cial effects of a loss on a company's income. The insur­ ance covers overhead costs (interest, salaries, etc.) and lost profit. This business is mostly included in the corre­ sponding insurance class (principally Fire and Engineer­ ing insurance).
- Disability insurance: ̂ Health insurance ̂ Life insur­ ance - Employers Liability insurance: Insurance by employ­ ers in respect of employees for Injuries arising out of their employment.
- Engineering insurance: Insurance of construction and erection objects during the construction or erection period and the insurance of machinery in operating plants (Incl. EDP installations).
- Fire insurance: Insurance against fire, lightning, explo­ sion and damage caused by falling aircraft; it can also embrace insurance against windstorm, earthquake, flood, other natural hazards and political risks (riot, strike, etc.).
- General 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.
- Nuclear Energy insurance: Insurance against proper­ ty damage, liability and accident In connection with the operation of nuclear energy installations.
- Annuity insurance: Life insurance in which the benefits consist of a regular Income payment for a specified peri­ od of time (of. Death and Maturity Benefits).