November 1983 English translation of original German report; French and Spanish versions are also available.
Board of Directors, Executive Committee and Group Management, Auditors 5 Group Structure 32
Motorway building site in ttie Leventina Valley, Canton of Ticino. Demanding construction projects of tfiis type represent fiigfily complex Liability risks for insurers and reinsurers from planning to completion and subsequent operation.
Other photographs in this report show the Swiss Re's activity in the many fields of Accident and Liability reinsurance (page 11). The current state of office automation is also illustrated (page 14) and the foreign subsidiary companies in South Africa (page 38) and Australia (page 39) are depicted.
Summary of Important Figures in millions of Swiss francs Swiss Re, Zurich 1982 1981
Management and other expenses, rate fluctuations, depreciation, value adjustments, taxes Profit applicable to minority shareholders
Sw. frs. 167.Sw. frs. 33.- * subject to approval by the General Meeting
Secretary to thie Board of Directors Ernst A. Kubli, Senior Executive Manager, KCisnacfit
Auditors Term to expire in Swiss Auditing and Fiduciary Company, Zuricfi 1985
Executive Committee and Group Management Chairman of the Board of Directors i Secretariat of the Board of Directors, Executive Committee
R. R. Doerr, Executive Manager M.A. Tobler, Executive Manager F.Eugster, Manager P. Gasser, Manager R.Schilling, Manager P. Szöllösy, Manager H. Vollenweider, Manager H.-K.Zulauf, Manager
A. Bai, Executive Manager H.Fischer, Executive Manager W. KQnzle, Executive Manager J. W. Youngs, Executive Manager E.Betz, Manager M.Gasche, Manager H.F. Enzmann, Member of Management H.Tiedemann, Member of Management
Capital market Investments, real estate A. Saxer, Senior Executive Manager P. P. Hügle, Executive Manager F. Bolliger, Executive Manager L Genoüd, Executive Manager J.-P. Micfiot, Manager B. Perrin, Manager J.-P. Preyer, Manager F. E. Rotiner, Manager L. Wüger, Manager
B. Laube, Executive Manager Fi. Wyler, Executive Manager E. Franci, Manager W. Minoretti, Manager P. Sctiweizer, Manager
Holdings, planning and control, law and taxes R.Octisenbein, Senior Executive Manager T. Obrist, Executive Manager C. Blanc, Manager C. E. Brooks, Manager Fl. Fl. Frey, Manager J. B. R. üeberman, Manager
Share register, organization, public relations, economic studies and other central services E.A. Kubli, Senior Executive Manager R. Rüesch, Executive Manager O. Jenni, Member of Management E. Schlenker, Member of Management
The increased net profit over the previous year, thanks to a very good financial result, obscures the fact that world­ wide reinsurance business in the Non-Life branches is still suffering from a serious profitability crisis. Its emer­ gence and unusually long duration are attributable to various developments. The constant increase of the num­ ber of reinsurance suppliers has caused the capacity for risks of almost all branches to swell immensely in recent years. From experience, the result is pressure on prices where supply far exceeds demand. Consequently the prices for reinsurance covers have declined to an unprec­ edented extent.
In direct insurance intensive efforts in the current reces­ sionary phase to retain existing business and to obtain a share of the reduced volume of new business have like­ wise led to excessive competition in most markets. The corresponding trends in direct insurance and reinsur­ ance interacted and intensified each other. This vicious circle was given added impetus by high interest rates and favourable share price developments, as hopes were kindled that inadequate premiums could be offset by financial income. The shift of attention from the underwrit­ ing to the financial side of reinsurance, which came about in the wake of this development, has reached a point where elementary rules of reinsurance technique are be­ ing ignored. The usual methods of incorporating ele­ ments of financial income into the rating of certain mass portfolios of direct insurance where loss ratios are rela­ tively well predictable - for instance in Motor Third Party Liability insurance - are not suited to the totally different risk profile of a reinsurance portfolio, where claims experi­ ence is subject to great fluctuation from year to year. Here the risk assessment, on which the calculation is based, turns out to be much more difficult because of the irregu­ lar occurrence of major losses and the late reporting of claims. Higher safety and inflation loadings as well as sur­ charges for the constantly changing "basic risk" are es­ sential for the reinsurer's business. Such loadings are necessary because experience has shown that, in a busi­ ness which is by nature long-term, there can be no relying on the continuity of temporarily high interest rates and realized capital gains. Insurers and reinsurers in numer­ ous markets are currently experiencing how difficult and time-consuming it is to raise premiums once they have fallen below cost price.
The difficult circumstances in reinsurance require great efforts by our employees at home and abroad. The Board of Directors would like to express its gratitude for their perseverance and good work.
The 1982 business year comprises both reinsurance business and genera/ income and expenditure for the period from 1st January to 31st December, 1982.
While a cautious risk acceptance policy was maintained, the growth of net premiums in Swiss francs was 5.4%, a higher rate than in the previous year. In Non-Life reinsur­ ance the result worsened further, following the unfavour­ able trend worldwide. Life reinsurance shows about the same profit as in the previous year. Overall, the underwrit­ ing loss from reinsurance business is considerably greater than In 1981. In contrast, it was once again pos­ sible to improve investment income. After taking into ac­ count management expenses, fluctuations in stock ex­ change and foreign currency rates, write-offs, value ad­ justments and taxes, there remained a net profit of Sw.frs. 87.5 million (previous year, Sw.frs. 80.2 million).
The distribution of gross premiums by branch has hardly changed. As a result of the cancellation of some Fire rein­ surance treaties with high volume but with bad experi­ ence, the relative importance of the Fire branch in the overall portfolio fell somewhat in favour of Accident rein­ surance, which developed to an above average extent thanks to special short-term business in the United States.
In Life reinsurance a gratifying increase in volume and a good result were again achieved. The big tariff reductions in North American business mentioned in the last report, and which are due to more intensive competition, con­ tinue to make themselves felt.
In Non-Life reinsurance the hoped-for improvement in re­ sults did not occur. The pronounced oversupply, which has existed for years in reinsurance, has probably passed its peak. Results have been persistently bad, par­ ticularly In Property insurance, and the run-off develop­ ment of the previous year's claims in Liability unfavour­ able, in certain cases calling for substantial reinforce­ ment of the claims reserves. This appears to have led to the increasing realization that, without specialists and without precise information on the scope of cover, which can vary considerably depending on the geographical area. International reinsurance activity in the sector of major risks is a hazardous enterprise.
In Fire reinsurance, which remains our most important class of business, the premium volume stagnated. A small negative result In the previous year was followed by
The premium Income In Accident reinsurance rose fur­ ther. As In the previous year, the increase Is due to the special business accepted by our U.S. subsidiary com­ pany. The result has Improved;the loss wasathird ofthat of the previous year. In certain countries the state again Intervened In Workmen's Compensation business as regards rating and claims settlement threatening to jeop­ ardize the Insurability of such risks.
2 Major orchestras conclude Group Travel Accident policies for their concert tours.
4 A modern foundry requires Workmen's Compensation insurance for its staff.
in Marine reinsurance, premium income fell compared with the previous year and reflects our efforts - following the motto "Quality before volume" - to improve the chron­ ically bad experience. Nevertheless the loss rose consid­ erably. Since a substantial part is due to the unfavourable run-off of claims from past years, a slight improvement of current business can be expected. The decline in world
Aviation 137 116 Nuclear Energy 12 9 Credit/Surety 201 182 trade as a result of the recession (i.e. fewer trans­ ported goods and less commercial tonnage) has consid­ erably reduced the volume of Marine insurance. The pressure of competition hitherto felt in direct insurance has rather tended to intensify as a result.
in Engineering reinsurance there was a modest growth in premium volume. After years of positive results the branch registered an underwriting loss for the first time. The lack of new business reflects the worldwide stagna­ tion of investment activity.
in Aviation reinsurance premium income increased con­ siderably, as a consequence of fhe rapid growth of U.S. business and the hardening of the U.S. dollar against the Swiss franc. After the profit achieved in the previous year, business closed with a loss. For civil aviation, 1982 was a year with an unusually high number of accidents which were costly for insurance. (There were 14 total losses of commercial jet aircraft in 1981 and 28 in 1982; 650 lives were lost in these accidents as against 425 in 1981.) The efforts to improve aviation business appear to have suf­ fered a setback in fhe reporting year.
Despite foreign exctiange rate losses ot, on average, 7.2% total net premiums rose by Sw.trs.30 million to Sw.trs.378 million, wtiicti corresponds to a growtti ot 8.7%.
The actuarial auditor, Mr. Marc-Henri Amsler, has con­ firmed in his report that the technical reserves ot the Lite reinsurance business at the end ot 1982 were calculated on the basis approved by the Swiss Federal Council.
The amount of information which an international company has to handle is constantly increasing. The Swiss Re uses the latest aids to deal more rationally and quickly with the flow of information.
During the first eight months of the year the share mar­ kets did not indicate any clear trend. A somewhat more generous money supply and, as a consequence, falling interest rates then prompted U.S. stock market prices to improve and this upward trend was followed by most other markets. The upswing which persisted until the end of 1982 ultimately caused share prices which throughout the world were clearly higher on the balance-sheet date than at the beginning of the year.
Events on the foreign currency markets in 1982 were characterized by the strong impetus of the U.S. dollar. De­ spite a partial decline towards the end of the year, the val­ uation against the Swiss franc was still up by 11%. Other currencies which are important for our business activity, such as the German mark, guilder and yen, were also able to improve on the previous year's level.
The balance-sheet value of capital market investments and real estate of Sw.frs. 4,545 million was Sw.frs. 582 million higherthan that of the previous year. This increase is due to new investments and foreign currency adjust­ ments.
The distribution among the various investment catego­ ries of capital market investments and real estate at bal­ ance-sheet values is shown in the first graphic on page 15 and in the following table. The breakdown by currency is shown in the second graphic on page 15.
Bonds, certificates of deposits and mortgage bonds 2,348 1,994 Loans (including mortgages) 739 653 Fixed-interest securities with equity character 376 277 Shares 647 636 Real estate 435 403
After deduction of the interest required for the Life insur­ ance and annuity fund and other technical reserves, the investment income amounted to Sw. frs. 388 million (pre­ vious year, Sw.frs. 328 million). This increase is due to both additional investments and to the clearly higher yield on reinvested funds. On the other hand, foreign cur­ rency rate fluctuations in the year under report have only made a slight contribution to the increase of investment income.
Net cash deposits from reinsurance business, i.e. after deduction of the shares due to retrocessionaires, rose by Sw.frs. 58 million to Sw.frs. 1,370 million.
Capital market investments and real estate 4,545 3,963 Holdings and loans 487 496 Cash deposits from reinsurance transactions* 1,370 1,312 * Net amount, i.e. after deduction of the shares due to retro­ cessionaires. Investments in the amount of Sw.frs. 77 million (previous year, Sw.frs. 86 million) were held by trustees appointed by us in overseas territories.
During the year under report the number ot employees rose more sharply than in previous years. At the end ot the business year Swiss Re, Zurich, had a total statt ot 1,031 employees.
Personnel fluctuation in 1982 was about the same as in previous years. The fluctuation rate was 8.7%, excluding retirements and deaths 6.7%. Ot the 85 people leaving the company, 19 had reached retirement age.
After an interval ot several years Swiss Re has again start­ ed taking in apprentices and is also instructing trainees under the newly created Swiss scheme ottering commer­ cial training tor school graduates.
The SITG (Swiss Insurance Training Centre), Zurich, a foundation otthe Swiss Re, regularly holds courses tor in­ surance specialists primarily from developing countries.
In October 1982, after several years ot medical and statis­ tical research, Swiss Re issued a new rating manual tor Lite insurance. This Lite Underwriting Manual contains more than 600 pages covering the risk assessment ot over 1000 impairments tor Lite insurance and additional Accident and Disability benefits. The Swiss Re's manual, which is based on an entirely new concept, is a modern, comprehensive and expandable working tool torthe doc­ tors and underwriters ot our clients. The manual has been published in several languages and has been introduced into a variety ot markets by means ot seminars and a slide show with commentary especially created tor this pur­ pose.
Among institutional investors, retirement funds, other personnel welfare institutions and foundations still owned the largest share of the registered share capital (some 16%), followed by insurance companies (7.1%), banks (2.4%), investment funds (1.8%) and commercial and industrial enterprises (1.4%).
The diagram below shows the donations by category for the last three business years. The relatively high share of donations for training and research purposes in 1980 and for general charities and welfare in 1982 is primarily due to substantial anniversary donations to various institu­ tions.
Foreign and domestic development aid Humanitarian aid 1980 General charities and welfare 1980 Training and research Cultural aid/environmental protection Other donations 4% ma^m
Foreign and domestic development aid Humanitarian aid 1981 General charities and welfare 1981 Training and research Cultural aid/environmental protection Other donations
Foreign and domestic development aid Humanitarian aid 1982 General charities and welfare 1982 Training and research Cultural aid/environmental protection Other donations 6%
To our deep regret Mr. Albert Kunz, Executive Manager, died on 26th May, 1983, after a serious illness. We are greatly indepted to him for over thirty years of valuable service fo our Company.
The General Managers: P. E. Christen, P.-F. Niquille H. Odermatt, H.Schönenberger
Claims incurred incl. adjustment in outstanding claims reserve - 197,970,427 - 183,823,244
Total result before tax (1) + (2) + (3) 138,256,586 123,246,056 Taxes - 50,712,695 - 43,089,994
The surrenders in business assumed amounted to Sw. frs. 63.8 million, of which Sw. frs. 0.6 million was deb­ ited to retrocessionaires. A total of Sw.frs. 63.2 million remained for own account as against Sw.frs. 29.3 million in the previous year.
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. 231.2 million to Sw.frs. 2,057.9 million. The increase was due to the claims paid.
Gross premiums totalled Sw.frs. 397.3 million, Sw.frs. 11.3 million of which were for annuities purchased. After de­ duction of retrocession premiums of Sw.frs. 18.9 million, the remaining net premiums amounted to Sw.frs. 378.4 million, corresponding to a growth rate of 8.7% over the previous year.
Of the total increase of Sw.frs. 35.0 million, Sw.frs. 27.4 million applied to Life insurance and Sw.frs. 7.6 million to annuities.
The investment income of Sw.frs. 388.4 million was after deduction of various outgo items, such as the interest on the Life reinsurance and annuity fund and other technical reserves as well as outgo interest for bank and current ac­ count balances and cash deposits.
In the year under report there was an increase in manage­ ment expenses of Sw.frs. 6.1 million, or 5.4% (previous year, -P 6.5%), to Sw. frs. 119.3 million. Personnel costs rose by 6.8% (previous year, 7%), which is primarily due to a growth of 5.6% (previous year, 2.2%) in the number of staff. Non-personnel costs rose less sharply despite higher bank and deposit charges.
The account for rate fluctuations, depreciation, and value adjustments closed with a positive balance of Sw.frs. 31.0 million (previous year, loss of Sw.frs. 33.1 million). Re­ alized oapitai gains and /esses contributed a net profit of Sw.frs. 140.4 million (previous year, Sw.frs. 110.2 million); fiuctuations in foreign currency rates on monetary trans­ actions contributed Sw.frs. 12.1 million (previous year, Sw.frs. 15.3 million).
Because of the worldwide decline in interest rates the need for write-offs on oapitai market investments (in­ cluding real estate) fell from Sw.frs. 148.2 million in the previous year to Sw.frs. 93.5 million. Depreciation out­ side the sector of investments also led to a reduced debit of Sw.frs. 3.3 million as opposed to Sw.frs. 6.4 mil­ lion in the previous year.
In the year under report the tax burden amounted to Sw. frs. 50.7 million, an increase of Sw. frs. 7.6 million over the previous year. This increase reflects the rise in direct taxes both in Switzerland and abroad. In contrast indirect taxes fell.
Holdings are largely managed by SwissRe Holding and financed by loans to this company. The shareholding of Swiss Re, Zurich, in SwissRe Holding appears in the Bal­ ance Sheet together with certain other holdings in advi­ sory and service companies.
The balance-sheet value of holdings rose by approx. Sw.frs. 6.0 million to Sw.frs. 32.9 million; of this amount Sw.frs. 4.9 million was for the capital increase of the Canadian Reinsurance Company, Toronto, in the form of preferential shares and some Sw. frs. 1 million was due to the effects of foreign currency rate fluctuations. As a re­ sult of repayments of Sw.frs. 14.8 million loans to Group companies fell to Sw.frs. 454.3 million.
Of the total amount of Sw. frs. 176.3 million, Sw. frs. 174.4 million was for bank balances. The major part of this amount is invested short-term in the principal currencies for our business activity and is used to meet current obli­ gations on time.
Of the total amount of current-account balances of Sw. frs. 989.8 million, Sw.frs. 740.8 million was for reinsurance and Sw. frs. 221.1 million for retrocession business; Sw. frs. 27.9 million concerned other balances, the most signifi­ cant part of which comprised reclaimed taxes. The overall increase over the previous year was Sw. frs. 85.0 million.
The portfolio of capital market investments (fixed-interest securities, loans and shares) and real estate rose by Sw. frs. 582.4 million to Sw. frs. 4,545.2 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 realiza­ tion, amounted to Sw.frs. 493.0 million or 14.6% of the bal­ ance-sheet value of securities.
Changes Valuation difference based on exchange rate fluctuations •f 57.6 -446.5 Increase of fechnical reserves in year under report 472.5 547.9 Total business in force on balance-sheet date 6,140.6 5,610.5
The total capital funds shown at the end of the previous year amounted to Sw. trs. 590.1 million which would rise to Sw.trs. 624.9 million by the proposed allocation of the profit, provided it is approved by the General Meeting of Shareholders. The capital funds would then be com­ posed as follows: in millions of Swiss francs
Contingent liabilities (sureties and contingent obliga­ tions to liberate not fully paid up shares) amounted to Sw.trs. 108,013,410 per 31st December, 1982.
The share capital of Sw.trs. Ill million is divided into 400,000 registered shares and 44,000 bearer shares each with a nominal value of Sw.trs. 250.-. The non-
If the proposal of the Board of Directors is accepted, dividends of Sw. frs. 105- per share (nominal value Sw. frs. 250.-) and Sw. frs. 21.- per non-voting share (nominal value Sw. frs. 50.-) are to be paid. Coupon No. 30 of the registered and bearer shares may be pre­ sented for payment of a gross amount of Sw. frs. 105.- or, after deduction of the Federal Withholding Tax of 35%, Sw. frs. 68.25 and coupon No. 30 of the non-voting shares for a gross amount of Sw. frs. 21.-, or Sw. frs. 13.65 net.
As the Auditors of your Company we have examined the accounts for the year ended 31 st December, 1982, in ac­ cordance with the provisions of the law.
«SWITZERU\ND» General Group «SWITZERU\ND» General Insurance Company Limited, Zurich SWITZERLAND General Insurance Company (London) Limited, London
Magdeburger Versicherungsgruppe Magdeburger FeuerversIcherungs-AG, Hanover Magdeburger Allgemeine Lebens- und Rentenversicherungs-AG, Hanover Magdeburger Hagelversicherungs AG, Hanover Magdeburger Union Rechtsschutz Versicherungs-AG, Hanover
Vereinigte Versicherungsgruppe Vereinigte Aachen-Berlinische Versicherung AG, Munich Vereinigte Eos-Isar Lebensversicherung AG, Munich Vereinigte Krankenversicherung AG, Munich Salus Krankenhauskosten-Versicherungs-AG Munich Saar-Rhein Allgemeine Versicherungs-AG, Saarbrücken
The holding structure within the Swiss Re Group under­ went two changes in the year under report. The Union und Rhein Versicherungs-AG, Munich, merged on 1st Janu­ ary, 1982, with the Magdeburger Feuerversicherungs-AG, Hanover, and therefore no longer appears as a separate Group company, in addition, the «SWITZERLAND» General sold its American subsidiary, SWITZERLAND General Insurance Corporation of New York, Tarrytown, to the Storebrand insurance Company Ltd., Oslo.
At the North American Reinsurance Corporation, New York, gross premiums decreased by US$ 28.5 million to US$ 643.7 million. The fall Is an expression of a restrictive risk acceptance policy, since there was pressure on pre­ miums in almost all branches as a consequence of tough competition. Reinsurance activity produced overall an underwriting loss as against a slightly positive underwrit­ ing result in the previous year. The deterioration stems principally from Property reinsurance. On the one hand, this development reflects an inadequate premium level In direct insurance; on the other hand, the claims burden al­ most doubled over the 1981 level as a result of storm losses. In contrast. It was possible to reduce clearly the underwriting loss In the Casualty sector. While Marine reinsurance closed with a slightly higher underwriting loss. Surety business was again gratifying. The reduced premium volume led to lower new Investments and con­ sequently to a stagnation of investment income. The overall result, after deduction of management expenses and taxes, amounted to US$ 16.7 million (previous year, US$ 18.2 million). In the year under report a dividend of US$ 10.5 million was paid, the same as in the previous year.
At the Canadian Reassurance Company, Toronto, too there was an increase of conventional business in force. Nevertheless, the underwriting result fell. High financing costs for new business reduced the profit shown to Can. $ 1.4 million (previous year. Can. $ 4.4 million). The dividend remained unchanged at Can.$ 0.5 million.
Fire 1,574 376 1,950 1,496 350 1,846 . Accident/Sickness 795 1,687 2,482 797 1,443 2,240 Third Party Liability/Motor 1,218 677 1,895 1,170 637 1,807 Marine 390 116 506 399 115 514 Other branches 842 148 990 762 127 889 Life 1,752 483 2,235 1,598 440 2,038 Gross premiums 6,571 3,487 10,058 6,222 3,112 9,334 Retrocessions 776 542 1,318 719 478 1,197 Net premiums 5,795 2,945 8,740 5,503 2,634 8,137 in millions of Swiss francs
The gross premiums of the Magdeburger Versicherungs­ gruppe, Hanover, increased by 3.7% to DM 805.8 million (previous year, DM 1112. million). Measures to improve the portfolio structure in Non-Life insurance led to a growth rate which was below the market average. - The business year of the Magdeburger FeuerversicherungsAG was affected by the merger with the "Union und Rhein". Comparison of figures with the previous year is of little relevance. The gross premiums amounted to DM 603.1 million. Despite the more favourable development of costs, the underwriting loss increased following the strengthening of the technical reserves. Because of the good investment result it was possible to achieve an an­ nual profit in the amount of DM 6.2 million, of which DM 3.4 million was allocated to the free reserves and a divi­ dend of DM 2.8 million (previous year, DM 2.3 million) paid. - The amount of business in force of the Magdebur­ ger Allgemeine Lebens- und RentenversIcherungs-AG rose by 6.5% to DM 4,800 million (previous year, DM 4,500 million). The good risk experience of the previous year was not repeated. The improvement of the result was due to the increased investment income. The profit of DM 0.5 million (previous year, DM 0.3 million) remaining after allocation to the reserve for policyholders' bonuses was used to make a contribution to the paid-up capital as well as to pay an unchanged dividend of DM 0.2 million.
In its third business year, the Tudor insurance Company, New York, increased its gross premiums to US$ 3.1 mil­ lion (previous year, US $ 1.8 million), although the under­ writing loss exceeded somewhat that of the previous year. After incorporating investment income and man­ agement expenses, an overall profit remained of US$ 28,000 (previous year, US$ 151,000). As in the previous year, no dividend was paid.
(previous year, US$ 10.6 million). The dividend payment for 100% was unchanged at US$ 8.0 million.
The outgo of the Profit and Loss Account comprises mainly the interest of Sw.frs. 18.2 million (previous year, Sw. frs. 17.7 million) on the loans granted by Swiss Re, Zurich, taxes of Sw.frs. 2.9 million (previous year, Sw.frs. 3.5 million), management expenses of Sw.frs.1.5 million (previous year, Sw. frs. 1.4 million) and rate fluctua­ tions, depreciation and value adjustments of Sw.frs. 5.5 million (previous year, Sw. frs.10.0 million). No book value adjustments because of foreign currency rates were ne­ cessary on Group company holdings, since their book values were below the actual market values on the bal­ ance-sheet date. On the other hand, write-offs were made in connection with various minority holdings as a result of foreign-currency rate fluctuations. Moreover, in certain cases unsatisfactory profitability was accounted for by value adjustments.
The net profit amounted to Sw. frs. 2.6 million (previous year, Sw.frs. 1.6 million) and enabled a dividend payment of Sw.frs. 2.5 million (previous year, Sw.frs. 2.0 million) to be paid to Swiss Re, Zurich.
Underwriting result from Non-Lite insurance - 294 - 25 - 319 - 136
Cross premiums 1,752 483 2,235 2,038 Premiums ceded - 284 - 14 - 298 - 194 Net premiums 1,468 469 1,937 1,844 Adjustment in policy and annuity valuations - 212 - 234 - 446 - 543 Interest on Lite insurance and annuity fund 98 204 302 225 Commissions and profit commissions - 290 - 264 - 554 - 594 Claims incurred incl. adjustment in outstanding claims reserve - 773 - 115 - 888 - 792 Surrenders - 231 - 47 - 278 - 84
Profit applicable to minority shareholders - 6 6 5 Capital funds applicable to minority shareholders - 26 29 25
Share and non-voting share capital 123 123 Reserves shown 467 440 Consolidation reserve fund 185 156 Group Profit 97 82
'The figures in this column do not always amount to the total ot the figures in the two preceding columns as figures tor holding and other companies are also Included.
The Group accounts were compiled according to the published statements as at 31st December, 1982, of the companies belonging to the Swiss Re Group. Only the re­ sults of the Bavarian Reinsurance Company Limited had not yet been published at the time of the consolidation.
The scope of consolidation includes all domestic and for­ eign companies in which Swiss Re, Zurich, directly or in­ directly maintains a holding of more than 50%. Assets and liabilities and outgo and income of these companies are shown at 100%. The shares of the capital funds and profit applicable to minority shareholders are shown as separate items in the consolidated balance sheet and profit and loss account.
Advisory and service companies are not consolidated in view of their insignificant effect on the representation of the Group's funds and income. The sole exception is the mh Bausparkasse AG. The Union und Rhein Versicherungs -AG merged with the Magdeburger Feuerversicherungs -AG on 1st January, 1982, and therefore no longer appears as a Group company. Having been sold, the SWITZERLAND General Insurance Corporation of New York, a subsidiary company of the «SWITZERLAND» Gen­ eral, is no longer included in the Group accounts.
In the published annual accounts of the individual Group companies capital investments are valued in accordance with local accounting regulations, which are subject in part to great variation. For the consolidation, however, uni­ form valuation rules are applied; fixed-interest invest­ ments, shares and holdings are in principle entered at ac­ quisition cost or, if the stock exchange price is lower on the balance-sheet date, at the lower value. Non-quoted participations are, where necessary, entered at the lower intrinsic value. The lower valuation is retained until dis­ posal of the corresponding securities. Special treatment is given to registered debentures of Group companies in Germany which, in accordance with German practice, are shown at nominal value and incorporated in the Group account unchanged. Real estate is consolidated at the balance-sheet values of the individual Group companies; these correspond as a rule to the acquisition value taking into consideration the depreciation permitted by the tax authorities.
Gross premiums as well as all balance sheet and profit and loss account figures from foreign Group companies which are shown in local currency were uniformly con­ verted into Swiss francs using the average foreign cur­ rency rates as at 31st December, 1982.
Of the foreign currencies used in the Group accounts, the U.S. dollar, the Canadian dollar and the German mark showed higher exchange rates than they did on the previous closing date; the South African rand and the Australian dollar were valued marginally lower, the pound sterling considerably lower (cf. table on page 22).
The net assets of foreign companies have been adjusted in accordance with the altered exchange rates at the end of the business year. The resulting valuation differences over the previous year were not entered into the consoli­ dated profit and loss account but were booked direct via
The following notes supplement the remarks made above with regard to gross premiums and results of Group companies.
The claims incurred comprise current claims payments and the adjustment in the outstanding claims reserve. In the year under report this outgo item for own account rose by Sw.frs. 611 million to Sw.frs. 5,259 million. Of this amount, Sw.frs. 3,433 million was for reinsurance compa­ nies and Sw.frs.1,826 million for insurance companies.
nuity fund accounted for Sw.frs.302 million (previous year, Sw.frs. 225 million); In the Non-Life classes It includ­ ed a credit of Sw.frs. 148 million (previous year, Sw.frs. 119 million) to Sickness business.
In addition to commission payments and profit commis­ sion reimbursements this item includes the expenses Incurred in direct insurance by the field service and exter­ nal offices.
The consolidated balance-sheet values of capital Invest­ ments (Incl. non-consolidated holdings) Increased over­ all by 17%, or Sw. frs. 2,255 million, to Sw. frs. 15,105 million. The Increase affected all investment categories and amounted to 20% on fixed-Interest Investments (previous year, 11%), 9% on shares (previous year, fall of 3% as a result of stock-exchange fluctuations), and 6% on real estate (previous year, 7%). The Item "Non-consolidated holdings" contains holdings of 50% or less In Insurance and reinsurance companies.
The valuation difference on fixed-Interest Investments and shares, I.e. the difference between the lower book and higher market value of the Individual securities, tak­ ing Into account the estimated value of taxes due on real­ ization, amounted to Sw. frs. 980 million and consequent­ ly rose to 7.2% of the balance sheet value (previous year, 4.5%).
The consolidation reserve fund results from the differ­ ence between the capital funds shown of Group compa­ nies and the corresponding book values applied by SwIssRe Holding Limited and Swiss Re, Zurich. The higher foreign currency rates over the previous year and the Increase In the capital funds of various Group compa­ nies caused the consolidation reserve fund to rise by Sw.frs.29 million to Sw.frs.185 million.
The profits and capital funds applicable to third party shareholders correspond to the percentage shares of non-Group shareholders In the capital funds or In the results of the relevant Group companies. The capital funds applicable to minority shareholders rose In the re­ porting year by Sw. frs. 4 million to Sw. frs. 29 million, while the applicable profit Increased by Sw.frs.1 million to Sw. frs. 6 million. These Increases were due to the rise In capital funds and to the higher dividends, but also to the higher valuation of the German mark.
European General Reinsurance Company of Zuricti Sw.frs. 100 51,638 1,073,964 520,299
Fidelity and Deposit Company of Maryland* us $ 50 114,963 234,284 110,025
SWITZERLAND General Insurance Company (London) Limited £ 100 2,292 11,547 5,181
Magdeburger Versicherungsgruppe: j Magdeburger Allgemeine Lebens- und Rentenversicherungs-AG DM 100 9,316 1,291,033 174,594 i; Magdeburger Union Rechtsschutz 1 Versicherungs-AG DM 100 4,960 29,806 28,388 j Vereinigte Versicherungsgruppe: Vereinigte Aachen-Berlinische Versicherung AG DM 96.3 76,650 726,216 564,556 1 Vereinigte Eos-Isar Lebensversicherung AG DM 95 21,773 2,491,602 365,294 1 Salus Krankenhauskosten-Versicherungs-AG DM 100 9,790 109,592 38,645 1 1 Saar-Rhein Allgemeine Versicherungs-AG DM 55 1,920 12,712 15,760 -
' Holding and Other Companies 1 SwissRe Holding Limited Sw. frs. 100 135,195 600,582 1 SwissRe Holding (North America) Inc. US $ 100 192,625 239,893 -
Investment and other income Management and other expenses Rate fluctuations, depreciation, value adjustments Result from general income and outgo Taxes Share of profit applicable to minority shareholders Group Profit
Balance Sheet Assets Cash in hand, postal bank account, bank balances Current-account balances Cash deposits Fixed-interest investments Shares and real estate Other assets
Liabilities Current-account balances Cash deposits Technical reserves Non-Life insurance Life insurance Other liabilities (incl. share of minority shareholders and building society deposits) Group Capital Funds Shown (incl. Group profit)
This summary covers 9 business years, as a consolidated Group account was first published for the 1974/75 business year.
United Kingdom Swiss Reinsurance Company (UK) Limited 108 Cannon Street,, London, EC4N 6HE with a branch office in Hong Kong
Canada Canadian Reassurance Company 95 St. Clair Avenue West, Toronto, Ontario M4V 1N9 with a branch oftice in Montreal Canadian Reinsurance Company 95 St. Clair Avenue West, Toronto, Ontario M4V 1N9 with branch offices in Montreal and Vancouver
United Kingdom General Surety & Guarantee Co. Limited Hawthorn Hall, Hall Road, Wilmslow, Cheshire, SK9 5BZ Palatine Insurance Company Limited 108 Cannon Street, London, EC4N 6HE SWITZERLAND General Insurance Company (London) Limited Tower House, 38 Trinity Square, London, EC3N 4HR
Australia/New Zealand Australian Reinsurance Company Limited 31 Queen Street, Melbourne, Vic. 3000 with branch offices in Sydney and in Auckland and Wellington, New Zealand
Venezuela OFATEC Venezuela C.A. Torre La Noria, Piso 8-Norte, Paseo Enrique Erase, Urb. Las Mercedes, Caracas 1060
Singapore SwissRe Advisers (Singapore) Pte. Ltd. 24 Raffles Place No.25-06A, Clifford Centre, Singapore 0104
Annuity: Contract under which the benefits consist of a regular income payment for a specified period of time (cf. death and maturity benefits).
Cash deposits: A sum left by the -^reinsurer in the hands of the ceding company to guarantee contractual liabilities.
Ceding company: The insurer which cedes (passes on) ->• risks to the ^ reinsurer.
Claims handling: The work in connection with the in­ vestigation, settlement and payment of claims from the time of their occurrence until final settlement.
Co-insurance: Where a number of ^ insurers and/or ^ reinsurers each share part of a ^ risk.
Facuitative reinsurance: Reinsurance of -> risks on an individual basis (cf. treaty reinsurance) in which the ^ reinsurer is free to accept or reject the offer.
incurred but not reported losses (IBNR): Provision for losses which have occurred but which have not yet been reported to the ^ insurer or ^ reinsurer on the balancesheet date.
Non-proportional reinsurance: Form of insurance in wfiicfi ttie reinsurer decides on ttie amount tie is willing to retain for tiis own account and buys reinsurance, at a specially calculated premium, for ttiose loss amounts wtiicti exceed ttie retention.
Portfolio: Ttie totality of risks assumed by an ̂ insurer or ^ reinsurer; also ttie totality of investments.
Premium: Amount paid by ttie policytiolder to ttie • surer in return for insurance cover.
Reinsurance premium: ^ Premium paid to ttie ^ rein­ surer by ttie ^ insurer for ttie ^ proportional or ^ nonproportional cover granted by ttie ^ reinsurer.
Risk premium basis: System of Life reinsurance under wtiicti ttie ̂ reinsurer only participates in ttie deatti risk in so far as it exceeds ttie -> policy reserves (cf. co-insur­ ance basis).
Surety insurance: Sureties and guarantees issued to ttiird parties for ttie fulfillment of contractual liabilities (executing construction projects, providing services, etc.).
Products liability insurance: Insurance against liability arising from the manufacture and distribution of defective products.
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 rein­ surance providing that the reinsurer accepts a speci­ fied share of each ̂ risk of an ̂ insurer in a specific class of business.
Treaty reinsurance: The participation of the ^ reinsurer in certain sections of the insurer's business as agreed by treaty (cf. facultative reinsurance).
Underwriting result: Result of underwriting after taking into account earned premiums, -> commissions, profit commissions and -> claims incurred.
Rate fluctuations: Fluctuations in foreign currency rates (profits or losses arising from the difference between the