November 1991 English translation of original German report; French, Italian and Spanish versions are also available.
Summary of Important Figures in millions of Swiss francs ywvutsrponmlihgfedcaZSRPMLGEDCA Swiss Re, Zurich 1990 1989
Sw.frs. 9.- * subject to the resolutions of the General Meeting in millions of Swiss francs
Swiss Re Group 1990 1989 5 Premium income Gross 1 Net Life insurance in force Net
Managers J. Eugster, T. Hiltmann", R. Hunziker, N. Müntener, R Neuwirth, R. Siegrist
Spain, Portugal, Greece, Turkey, Japan, Asia, Middie East, Latin America, Engiish- and Portuguese-speaking Africa
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
A. W. Saxer, Managing Director P. P. Hügle, Deputy General Manager B. Laube, Deputy General Manager
In the 1990 business year, the head office achieved a net profit of Sw.frs. 141.2 million, about Sw.frs. 35 million (19.7%) less than in the previous year.
The year's result is made up of the following principal components: - The underwriting loss in Non-Life reinsurance rose by Sw.frs. 225 million (89.3%) to Sw.frs. 478 million.
- The result from general income and outgo - comprising investment income and the capital result (rate fluctuations, write-offs and value adjustments) less management expenses - improved by Sw.frs. 153 million (32.2%) to Sw.frs. 630 million.
A year of such trials demonstrates a company's financial strength. It is therefore gratifying to note at this point that Swiss Re is and remains financially strong, even after weathering the storms of 1990. This can be shown with the aid of the following key figures:
- The development on the capital markets has not affected the Profit and Loss Account of the head office, the hidden surplus having completely cushioned the worldwide price slump. This means that by the end of 1990 there had been a substantial drop in the hidden surplus; nine months later, however, a major part of this deficit has again been reconstituted thanks to the positive development of prices. - The fact that the capital result shown in a difficult stock market year is a clear improvement on the previous year is attributable to two special factors: on the one hand, previous burdens from the holdings sector - especially information services - are eliminated; on the other hand, in view of the high interest rate level already achieved, we have limited the writeoffs to the amount called for in accordance with the strict principle of applying the lower of market or book value.
- Finally, the 1990 result enabled Swiss Re, Zurich, to strengthen further its capital funds. If the proposal to allocate the profit is approved, the capital funds shown will rise to over Sw.frs. 2,500 million; in addition, the solvency margin (i. e. the capital funds shown in relation to the total net premium) rises to 64.4%.
Swiss Re looks back on a difficult and significant year that has been well mastered thanks to the knowledge and ability, and thanks to the efforts and achievements, of its employees. We therefore set great store by expressing our sincere thanks to all members of staff in all sectors and at all levels. At the same time, we should like to state our conviction that, thanks to the great potential of its staff, Swiss Re is ideally equipped for the future. yxwvutsrponmlkihgfedcbaWTSRPONMLJIHGEDCBA
All in all it may thus be stated that the result for 1990 despite the decline in profit - can be termed satisfactory in view of the prevailing general difficulties. Since there is every reason to believe that the series of unusual losses was exceptional, the Board of Directors has decided to propose to the General Meeting to leave the dividend at the previous year's level.
Crescent­shaped sand dunes invade the fertile land of the Dachia oasis, Egypt
Even outside Europe, the insurance industry was alarmed by the devastation caused by the winter storms at the be­ ginning of the year under report, fearing that they would lead to a substantial shrinkage of capacity for catastrophe covers and possibly overreaction with regard to demands for premium increases; it was, however, generally ac­ knowledged that adjustment was necessary. As the year continued, the burden from natural occurrences and large individual losses tended to be rather below average. Al­ though the winter storms set back the European insurance industry, and reinsurers in particular, by some Sw.frs. 13,000 million, they did not lead to any perceptible easing of competition. Industrial fire business, for example, is in dire straits almost all over Europe and the United States and yet it is still the object of keen competition. The size and gro\wth of industry's insurance requirements are somewhat restricted by the number of enterprises in exis­ tence. New business is therefore much sought after and growth is often only possible by offering lower terms to lure away existing business. Reinsurers are vulnerable to these effects, because the large sums insured needed call for high reinsurance cessions. Reinsurers and insurers have to work together to bring about a fundamental improve­ ment of industrial business, before capacity starts to get scarce.
After the high losses from natural catastrophes and in view of the ongoing deterioration of basic business as a result of price concessions, the prime objective of direct insurers has to be achieving positive underwriting results and shar­ ing them with reinsurers. Additional arguments for the ap­ plication of a sound underwriting policy are the recurrent fluctuations on the capital markets and the interest rates that cannot be called excessive. It goes without saying that the development of new insurance and reinsurance products has to go on, but it is equally self­evident that each participant in the risk­carrying chain has to be paid a fair price for the cover provided.
The premium income in Fire reinsurance remained practi­ cally unchanged as against the previous year as a result of the foreign currency development. Stagnating premiums in proportional reinsurance reflect the constant pressure on the original conditions of reinsured business in all major markets. Facultative reinsurance saw a decline in premium in view of the adverse market situation for large risks and the selective acceptance practice thus rendered neces­ sary. Non­proportional business, on the other hand, rose substantially; this is due to the extra premiums payable after storm covers had been exhausted. ­ The results of Fire reinsurance ­ even leaving aside the losses from natu­ ral catastrophes ­ give cause for concern. Continual premium reductions have resulted in the basic loss burden rising to an unacceptable level. The 1990 winter storms brought exceptionally high loss burdens and inflated the losses in this branch of business to approximately 50% of
Premium volume in Sickness reinsurance, over 80% of which stems from Germany and France, showed a growth of just on 4% in the year under report, only a third of the previous year's rate of increase. ­ This type of business, which bears similarities to social security and does not al­ low for high margins, produced a balanced result, indicat­ ing an improvement over preceding years.
The premium increase of about 10% in General Third Party Liability reinsurance is largely due to a number of special contracts. Because of the lower currency conversion rates, the premium volume of conventional reinsurance business remained at the previous year's level. The re­ served attitude adopted towards Liability risks in the Unit­ ed States was maintained and special attention was paid to risks covered in the field of environmental impairment, e. g. waste deposit sites. All the time new variations of envi­ ronmental damage are being observed, often deriving from causes many years ago. ­ In the 1990 business year, the underwriting loss again decreased as against the pre­ vious year. The profit margin has become somewhat nar­ rower in European business in view of stiffer competition. The profit achieved in this sector did not suffice to offset the run­off losses from late claims in the United States.
The premium income in Motor reinsurance rose by only 2% as against the previous year. In original currencies growth was 11%, thanks mainly to premium growth in insurance and to a lesser extent to new business. ­ The underwriting loss was again slightly higher than in the pre­ vious year, chiefly because of the unfavourable loss experi­ ence in the United States. The hailstorm in Sydney, Austra­ lia, caused further losses. Results have deteriorated so much in the sector of Motor reinsurance that this business as a whole, including attributable interest, now shows a negative trend. zyxwvutsrponmlkjihgfedcbaZYWVUTSRPONMLKJIHGFEDCBA
Premium income in Engineering reinsurance declined slightly in the year under report. In overseas territories the premium growth achieved in local currencies was can­ celled by the negative development of foreign exchange rates, in Europe the stagnation in the insurance sector put a damper on premium development. Nor was there any easing of the worldwide pressure on premium rates. ­ The underwriting result is negative, reflecting the adverse market position and the unsatisfactory conditions in some European markets. The steep rise in large losses ema­ nates mainly from risks in the energy production sector, although the winter storms also impaired the result.
Although A/ds again had little effect on the year's result, the corresponding reserve has again been strengthened in view of the still disquieting development of this illness.
The actuarial auditor, Mr. Hans­Ulrlch Gerber, Lausanne, has confirmed in his report that the technical reserves of the Life reinsurance business at the end of 1990 were cal­ culated on the bases approved by the Swiss Federal Council. wsiS
The early months of 1990 will not only go down in the history of meteorology as an extraordinarily stormy period, but will also remain in the memories of insurers and reinsurers and leave deep traces on their accounts. A succession of eight severe storms swept across central and western Europe within a five­week period, causing an enor­ mous amount of damage. The names given to the eight storms by the Berlin Meteorological Institute were as fol­ lows:
During the period in question, a further phenomenon occurred in the western North Atlantic. Due to severe out­ breaks of cold air over eastern Canada, the mean sea surface tem­ perature in the Newfoundland area dropped to several degrees below the established seasonal norm. The tem­ perature gradient between the Labra­ dor Current and the Gulf Stream was thus enhanced with a corresponding effect on the air masses flowing over them and on cyclonic development. This unusual constellation of meteoro­ logical conditions was the precursor of an active storm period and led to the subsequent series of eight storms.
The wind speeds recorded during the storm period varied considerably ac­ cording to topographical position with great differences registered between mean wind speeds and peak gusts. On 15 February and again on 27 Feb­ ruary peak gust velocities of 190 km/h and approximately 260 km/h respec­ tively were recorded on the Wendel­ stein (1838 metres above sea level) in Germany. Such extreme wind speeds
From an insurance perspective, the number of major storm disasters con­ siderably increased during the 1970s compared to the previous decade. A further sharp increase was recorded during the 1980s. Not only was there an increase in the number of storm occurrences during this period but the amount of insured damage also rose. Of the winter storms of 1990, Daria (25/26 January) was the largest loss occurrence causing damage amount­ ing to Sw. frs. 6 billion. The total in­ sured damage sustained as a result of the eight storms reached Sw. frs. 13 billion and the loss to the economy is estimated at almost double this figure.
The insurance industry is now faced with the question of whether an in­ crease in storm frequency is actually indicative of a trend and, if so, what the driving causes of such a trend might be.
The earth's climate is an extremely complex system which develops over long periods of time. Accordingly, changes are difficult to interpret in the short term and future developments remain unclear. Increases in average global temperatures indicate that we are witnessing a period of climatic change. Atmospheric warming is a scientifically measurable parameter. However, we cannot predict with cer­ tainty how far temperatures will con­ tinue to rise or to what extent man­ made influences will contribute to the greenhouse effect.
The vegetation of the earth is expect­ ed to react rather strongly to these temperature changes, sea levels will rise and the threat of damage from storm floods will increase. So much for the fairly certain consequences of the greenhouse effect reinforced by human activities.
With regard to the bearing of the greenhouse effect on storms, floods, frost, etc., international research is still very much in its infancy.
It seems evident, however, that a warmer atmosphere and warmer seas will cause a more intensive energy exchange which will in turn influence storm activity and lead to heavier out­ breaks of rain. Reinsurers cannot afford to wait for scientists to provide evidence of how climatic change will influence natural events such as storm, hail, flooding and so on. Underwriting policy and commitment acceptance must be adjusted now to possible future developments.
Storm damage is automatically cov­ ered in a number of classes of insur­ ance; in others it may be included on request. Property insurance covers dwellings, commercial and agricultural buildings and industrial installations against storm damage. The largest commitment accumulations occur in this sector. Damage potential from comprehensive motor insurance is gaining significance. Storm losses are additionally covered under erection all risks policies, marine covers for ships and cargo as well as aviation covers for parked aircraft.
It is interesting to note that, with re­ gard to the winter storms of 1990, 80% of the total losses were less than Sw. frs. 3,000.­ and the average loss amounted to Sw. frs. 1,500.­ only. Damage to dwellings was between Sw. frs. 800.­ and Sw. frs. 1,800.­. The loss amounts for commercial and agri­ cultural buildings ranged from Sw. frs. 4,000.­ to 5,000.­. Two thirds of all incurred losses arose from damage to roofs, chimneys, aerials and other external fixtures. Industrial business suffered a relatively small number of losses although some of these reached rather high sums. The largest single loss amounted to Sw. frs. 31 million.
Total of insured losses amounts to Sw. frs. 13.1 billion attributable to approx. 8 million individual losses.
It is important for the reinsurer to be fully aware of the accumulation of all accepted commitments. Commitments are traced and controlled by means of a country and zone accumulation checking procedure. Various scenarios based on assumed storm tracks, wind speeds and average loss amounts as­ sist in evaluating future loss potentials.
It is essential for a reinsurer's activity to ensure that the relation between the capacity allocated for natural hazards
Deutsche Forschungs­ anstalt für Luft­ und Raumfahrt, Oberpfaffen­ hofen KeyColor, Zurich Ringier Dokumentations­ zentrum, Zurich
On the foreign exchange markets the Swiss franc appre­ ciated as a result of the highly restrictive monetary policy pursued by the central bank. Consequently all major cur­ rencies depreciated against the Swiss franc. The threat of recession and a relaxing of monetary policy caused the US dollar to slip back by 17% against the franc. The Deutsche Bundesbank, on the other hand, remained restrictive in its monetary policy, a course followed more or less willingly by other European central banks. The depreciations of the EMS currencies against the Swiss franc were moderate, at between 4 and 6%. The Bank of Japan only decided on a tougher monetary policy and an Increase of interest rates in the course of the year under report. The yen lost 12% against the Swiss franc.
The balance­sheet value of capital market Investments and real estate is practically unchanged as against the previous year at Sw.frs. 7,033 million. zyxwvutsrponmlkjihgfedcbaZYWVUTSRPONMLKJIHGFEDCBA
The structure of total investments at balance­sheet values is shown in the following table.
Last year's General Meeting elected Messrs Urs Bär­ locher, Peter Forstmoser and Arnold W. Saxer to the Board of Directors for the first time. The Board then appointed Mr Saxer as Managing Director on 23 November 1990 and elected him to the Committee of Directors.
Having reached retirement age, Mr Hans Ulrich is resign­ ing from the Board of Directors at the next General Meet­ ing, having been a member since 1969. Mr Ulrich has served Swiss Re extremely well and we are deeply Indebt­ ed to him.
With effect from 1 January 1991, the Board of Directors ap­ pointed Messrs Peter P. Hügle and Bruno Laube as Deputy General Managers.
On 31 December 1990, Messrs Paul E. Christen, Hermann Odermatt and Herbert Schönenberger retired as General Managers. Our company is greatly Indebted to them for their many years of service and we should like to express our sincere gratitude.
Managers: Messrs Caspar Benz, Markus Blenz, Max Bommeli, Rudolf Böschung, Roland Brändle, Marcel Bürge, Glon Cantleni, Daniel Corbaz, Josef Elmiger, Jakob Eugster, Manfred Fessel (Member of Management In Advi­ sory Capacity), Erich Giger, Ernst Huber, Rolf Hunziker, Peter Meier, Peter Neuwirth, Martin Oesterreicher, Pierre­ Yves Riondel (Member of Management in Advisory Capac­ ity), Hanspeter Schellenberg and Peter Schrenz.
In the course of 1990, Messrs Fulco Lock, Executive Man­ ager, and Stephen J. Riley, Manager, left our company to assume new duties within the Swiss Re Group. We are also grateful to them for their valuable service.
Claims incurred incl. adjustment in outstanding claims reserve ­ 316,584,212 ­ 315,491,254
The 1990 business year comprises both reinsurance busi­ ness and general income and outgo for the period from
Current­account balances and cash deposits are entered in the balance sheet at their nominal value.
Technical reserves (unearned premiums and outstanding claims) are based in principle on information provided by clients. Additional reserves are formed on the basis of past experience for losses that are incurred but not reported. All these reserves are entered at the amounts which will presumably have to be paid in future for the underlying liabilities. Annuity liabilities from Non­Life reinsurance and liabilities from Life business are calculated at actuarially determined present values. The technical reserves of Life reinsurance business are determined on the bases approved by the Swiss Federal Council.
Gross premiums in the year under report totalled Sw.frs. 4,212.4 million. After deduction of retrocession premiums of Sw.frs. 823.9 million, the net premiums amounted to Sw.frs. 3,388.5 million, which corresponds to a rise of 1.6% when compared with the previous year. Without the effect of foreign currency fluctuations, net premiums would have risen by 13.0%.
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. 3,370.6 million they were Sw.frs. 47.5 million, or 1.4% above the previous year's amount.
The total increase of Sw. frs. 54.6 million is formed by a rise of Sw.frs. 73.8 million applied to Life insurance and a de­ crease of Sw.frs. 19.2 million applied to annuities.
The total of Sw.frs. 740.1 million is a net amount 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 account balances and cash deposits. Income rose as compared with the previous year by 1.2%. Without the effect of foreign currency fluctuations, an increase of 9.1 % would have been registered.
Overall management expenses rose in the year under re­ port by Sw.frs. 4.3 million or 2.3% to Sw.frs. 195.5 million (previous year, rise of 7.9%). Personnel costs rose mar­ ginally by 0.6% (previous year, 10.2%); this is due to a change as against the previous year in the contribution limits to the personnel welfare institutions, without which there would have been an increase of 5.3%. Personnel expenses also include the remuneration of Sw. frs. 0.8 mil­ lion to the Board of Directors. Non­personnel costs rose
This group of accounts closed with a positive balance of Sw.frs. 85.5 million (previous year, outgo of Sw.frs. 63.5 million). Realized capital gains and losses on investments contributed a net profit of Sw.frs. 188.1 million (previous year, Sw.frs. 261.4 million after a special allocation to the technical reserves). The fluctuations in foreign currency rates had a positive effect on the result of monetary trans­ fers and the conversion of foreign currency balances, lead­ ing to a profit of Sw. frs. 13.9 million (previous year, outgo of Sw.frs. 22.4 million). The write­offs on capital market
Of the total amount of Sw.frs. 407.7 million, Sw.frs. 404.1 million was for bank balances. A substantial part of these funds is invested short­term in the principal currencies for our business activity and is used to meet current obliga­ tions on time.
Of the total amount of current­account balances of Sw. frs. 1,155.9 million, Sw.frs. 807.1 million was for reinsurance and Sw.frs. 250.6 million for retrocession business; Sw.frs. 98.2 million concerned other balances. The in­ crease of current­account balance over the previous year was Sw.frs. 223.7 million.
Cash deposits with clients fell against the previous year by Sw.frs. 33.8 million to Sw.frs. 1,741.0 million.
These comprise accrued investment income, i.e. invest­ ment income already earned on the balance­sheet date but not yet received. In addition, it comprises further tran­ sitory items and precious metals.
Of the current account balances Sw. frs. 946.5 million was for reinsurance and Sw.frs. 50.3 million for retrocession business. Other liabilities totalled Sw.frs. 65.9 million, mainly comprising current accounts run for personnel wel­ fare funds and pool companies.
Bank balances on the balance­sheet date amounted to Sw.frs. 20.0 million.
The portfolio of capital market investments (fixed­interest securities, loans and shares) and real estate rose by Sw. frs. 6.7 million to Sw. frs. 7,032.9 million. The valuation 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. 431.0 million (previous year, Sw.frs,
On the balance­sheet date the technical reserves com­ prised the following:
These include, in addition to various accounts payable, in particular the value adjustments on outstanding balances together with reserves for foreign­currency risks, taxes and imminent losses. wsiS
Bearer shares and non­voting shares against presentation of Coupon No. 2.
the balance sheet and the profit and loss account are in agreement with the books,
Garden near Timbuktu, Mall. The hollow extends down into the groundwater; the gardeners then use vessels to distribute the water to the beds
Foreign exchange rates were invariably, and in part sub­ stantially, lower on the balance­sheet date ot 31 December 1990. Basically, this had the same effect on the Group accounts as on the annual accounts ot Swiss Re, Zurich (ct. page 15). The conversion ot foreign currencies into Swiss francs is explained on page 50.
In Non­Life reinsurance the consolidated net premiums rose in local currencies by 10.2% (previous year, 12.4%). However, in view of the Swiss franc's strength against most foreign currencies, conversion resulted in a fall of 1.5% to Sw.frs. 5,892 million (previous year, increase of 15.9% to Sw.frs. 5,979 million). The underwriting loss again rose and amounted to Sw.frs. 701 million (previous year, Sw. frs. 422 million). This increase is mainly due to the winter storms in Europe and other exceptional loss occur­ rences.
The profit improved in Life reinsurance, mainly thanks to the good underwriting results of the subsidiary companies in Australia, South Africa and the United States. The un­ derwriting profit rose overall to Sw.frs. 68 million (previous year, Sw.frs. 51 million), while the net amount of business in force fell, because of the unfavourable foreign currency rate development, to Sw.frs. 222,000 million (previous year, Sw.frs. 228,000 million).
Investment income rose marginally as against the previous year, amounting to Sw.frs. 1,159 million (previous year, Sw.frs. 1,147 million). Rate fluctuations, depreciation and value adjustments showed a significantly higher positive balance than in 1989. A slight drop was reported in man­ agement expenses and taxes fell by about half. The con­ solidated Group profit of the reinsurance companies amounted to Sw. frs. 97 million (previous year, Sw. frs. 143 million).
The results shown below of the individual Group com­ panies correspond to the figures published in accordance with local accounting provisions.
The European General Reinsurance Company of Zurich showed in Non­Life reinsurance a decrease of gross pre­ miums by 5.2% to Sw.frs. 602.2 million, owing to the foreign currency rate development. The underwriting loss rose significantly because of the loss burden from the European winter storms. ­ In Life reinsurance the gross amount of business in force dropped ­ mainly because of foreign exchange rates ­ to Sw.frs. 45,700 million (previ­ ous year, Sw.frs. 57,800 million), while the underwriting profit was higher than in the previous year. ­ The result from general income and outgo rose. The net profit of Sw.frs. 2.5 million (previous year, Sw.frs. 2.4 million) is again to be used to strengthen the reserves.
The premium volume of the North American Reinsurance Corporation, New York, rose as against the previous year by 5.6% to US$ 741.4 million. There was a strong increase in premiums from Special Markets, whereas production in traditional reinsurance remained at the previous year's level. Facultative business rose in this latter sector, while treaty business declined slightly. The underwriting result improved owing to the absence of catastrophe losses. Better experience was achieved especially in Property in­ surance business, although the loss also declined in Liabil­ ity reinsurance. Surety business continued to be good and the result of Marine reinsurance recovered again. The un­ favourable situation on the capital market led to a lower in­ vestment result and also put the overall result in the red. The company's loss shown amounted to US$ 15.8 million (previous year, profit of US$ 5.9 million). The company paid out an unchanged dividend of US$ 2.5 million.
At the Canadian Reinsurance Company, Toronto, sizable financial reinsurance treaties in particular caused the gross premiums to grow by 46% to Can.$ 223.6 million. The turnover of all other insurance classes also rose. The result of Motor business improved; the underwriting result was, however, impaired by allocations to strengthen the reserve for asbestosis claims and by major losses in surety business. In the financial sector investment income rose, while capital gains were lower than in the previous year. The published profit of the company amounted to Can.$ 0.5 million (previous year, Can.$ 8.9 million). The company paid an unchanged dividend of Can.$ 0.8 million.
The Atlantic Internationai Reinsurance Company Limited, Bridgetown, Barbados, the North American International Reinsurance Company Limited, Hamilton, Bermuda, and the Swiss­Am Reassurance Company, New York, are ac­ tive in the field of non­traditional Life reinsurance business with insurers in the United States. In the year under report the activity of these companies produced a loss of US$ 2.7 million (previous year, loss of US$ 1.1 million). This is pri­ marily due to the financing of new treaties. No dividend was paid (previous year, dividend of US$ 0.3 million).
At the Canadian Reassurance Company, Toronto, the Life reinsurance business in force rose by 2.7% to Can.$ 25,000 million. The result published by the company fell to Can.$ 8.2 million (previous year, Gan.$ 9.9 million), owing to the drop in premium and the increase of management expenses. The dividend paid remained unchanged at Can.$ 0.6 million.
At the Swiss­South African Reinsurance Company Limit­ ed, Johannesburg, the gross premiums in Non­Life rein­ surance rose by 7.2% to Rand 225.1 million. The lower un­
The Australian Reinsurance Company Limited, Mel­ bourne, showed in Non­Life reinsurance an increase in gross premiums by 8.1% to Austr.S 103.9 million. The un­ derwriting profit fell as a result of large losses, e.g. hail damage in Sydney and the generally more adverse loss experience. ­ In Life reinsurance the gross amount of busi­ ness in force rose by 31.7% to Austr.$ 7,900 million, while the underwriting result was substantially better than in the previous year. ­ Investment income was about the same as in the previous year. The overall profit amounted to Austr.S 21.7 million (previous year, Austr.S 15.6 million). The dividend was raised from Austr.S 1.6 million to Austr.S
The consolidated net premiums rose in the year under report by 4.4% to Sw.frs. 6,545 million (previous year, Sw.frs. 6,266 million). The growth rate in local currencies was 11.6% (previous year, 13.1%).
The Vereinte Versicherungen, Munich, increased its con­ solidated gross premiums, including the non­recurring premiums from the reserve for bonuses to policyholders, by 8.7% to DM 4,369.6 million. ­ The gross premiums of the Vereinte Versicherung AG grew by 4.2% to DM 890.1 million. There was an underwriting loss of DM 9.1 million (previous year, DM 1.6 million) primarily as a result of the severe winter storms. Overall a profit for the year of DM 14.9 million (previous year, DM 20.0 million) was achieved. Of this amount, DM 9.4 million was paid out as dividend (previous year, DM 7.9 million), in addition to a bonus of DM 5.2 million (previous year, DM 12.4 million). ­ The amount
The gross premiums of Lloyd Adriatico S.pA., Trieste, in­ creased in the year under report by 13.2% to Lit. 1,034,100 million. Of this amount, 12.0% was attributable to Life in­ surance, which reported a 16.9% increase in gross pre­ miums (previous year, 20.3%) as against the previous year. The profit for the year was increased by 14.7% to Lit. 46,800 million, from which dividends were paid of Lit. 17,000 million (previous year. Lit. 12,300 million) on ordi­ nary shares and Lit. 3,700 million (previous year. Lit. 4,400 million) on savings (risparmio) shares.
The SCHWEIZ Compahia Andnima Espahola de Seguros y Reaseguros, Barcelona, which was transferred in the course of the year under report from the SCHWEIZ Allge­ meine Verslcherungs­AG to Swiss Re, Zurich, Increased Its premium income by 43.1% to Ptas 27,400 million. The profit for the year rose to Ptas 196 million (previous year, Ptas 109 million). Again no dividend was paid.
The Group companies operating in the field of insurance­ related services are not included in the scope of consolida­ tion in view of the special nature of the branch and their relatively modest significance for the asset and income situation of the Swiss Re Group.
In the risk management sector, the international Risk Management Group Ltd., with head office in Flamilton, Bermuda, showed an increase of turnover by 12% to US$ 32.2 million. The profit shown amounted to US$ 3.3 million (previous year, US$ 2.7 million).
Overall, between 1986 and 1989, the Swiss Re Group in­ vested worldwide Sw. frs. 340 million in 19 small and medium­sized information and special service companies. The sale of these companies brought a net return of Sw.frs. 50 million in 1990/91. The net cost of this strategic initiative over a period of several years was therefore Sw.frs. 290 million. This has largely been borne by the parent company, in part also by Group companies in the United States, the United Kingdom and Australia by means of write­offs and provisions in the business ac­ counts of the years 1986­89. The 1990 Group account is no longer affected by this operation.
The SwissRe Holding Limited comprises most majority and minority holdings of the Group. Service companies and other holdings are, however, directly owned by Swiss Re, Zurich.
* The underwriting result figures of reinsurance and insurance companies correspond to the net values in accordance with commercial law (including mutual cessions).
*The figures in tfiis column do not always amount to the total of the figures In the two preceding columns as figures for holding and other companies are also Included.
The Group accounts were compiled according to the pub­ lished financial statements as at 31 December 1990 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.
Balances receivable and payable as well as interest and dividend payments between consolidated companies are eliminated. Similarly the Group's consolidated figures con­ tain no premiums from the intra­Group exchange of busi­ ness. The consolidation and valuation principles are the same as In the previous year.
The scope of consolidation includes all domestic and for­ eign insurance and reinsurance companies in which Swiss Re, Zurich, directly or indirectly maintains a holding of more than 50% in the voting share capital. Each individual item of the profit and loss accounts and the balance sheets of these companies is shown at 100%. The shares of the capital funds and profit applicable to minority share­ holders are shown as separate Items In the consolidated balance sheet and profit and loss account.
Gross premiums as well as all balance sheet and profit and loss account figures from foreign Group companies which are shown in the various local currencies were uniformly converted into Swiss francs using the average foreign cur­ rency rates as at 31 December 1990.
The net assets of foreign companies have been calculated using the exchange rates at the end of the year. The con­ version loss of Sw. frs. 166 million (previous year, profit of Sw. frs. 45 million) resulting from the revaluation was di­ rectly offset against the consolidated capital funds.
The published annual accounts of the various Group com­ panies must be compiled In the relevant local currencies and in accordance with local accounting regulations. For the consolidation, however, uniform valuation rules are ap­ plied.
In Non­Life insurance premiums rose by 1.2% (previous year, 20.1%) to Sw.frs. 12,403 million and in Life insurance by 0.8% to Sw.frs. 2,478 million. yxwvutsrponmlkihgfedcbaWTSRPONMLJIHGEDCBA
This group shows a positive balance of Sw.frs. 92 million (previous year, negative balance of Sw.frs. 41 million). Re­ alized capital gains on investments produced a profit of Sw.frs. 665 million (previous year, Sw.frs. 684 million), while depreciation on investments amounted to Sw.frs. 536 million (previous year, Sw.frs. 660 million). Foreign currency fluctuations had a positive effect on the result of monetary transfers and conversion of foreign currency balances, producing a profit of Sw.frs. 6 million (previous year, loss of Sw. frs. 28 million). For value adjustments and depreciation on assets outside the investment sphere Sw.frs. 43 million (previous year, Sw.frs. 37 million) was
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. 57 million to Sw. frs. 1,088 million. Of this amount, Sw. frs. 772 million concerned rein­ surance companies and Sw.frs. 316 million insurance companies.
Investment income also includes dividend payments of non­consolidated holdings in the amount of Sw. frs. 51 mil­ lion (previous year, Sw.frs. 55 million). iI
The consolidated balance­sheet values of capital invest­ ments (incl. non­consolidated holdings) fell by 1.2%, or Sw.frs. 381 million, to Sw.frs. 33,132 million. The fall is exclusively due to the 14.0% drop in the share portfolio (previous year, increase of 39.4%). Fixed­interest invest­ ments rose by 2.7% (previous year, 14.0%) and real estate by 4.2% (previous year, 13.3%).The item "Non­consolidat­ ed holdings", which likewise increased, contains holdings at book values of 50% or less in insurance and reinsurance companies as well as in service companies.
The profits and capital funds applicable to third party shareholders correspond to the percentage shares of non­Group shareholders in the capital funds or in the results of the relevant companies. The capital funds applicable to minority shareholders rose in the reporting year by Sw.frs. 70 million to Sw.frs. 267 million. This is mainly due to the capital increase of the Lloyd Adriatico, Trieste, effected in 1990. The share of profit applicable to third party shareholders fell by Sw.frs. 3 million to Sw.frs.
The consolidation reserve fund results from the difference between the capital funds shown of Group companies and the corresponding book values applied by SwissRe Hold­ ing Limited and Swiss Re, Zurich. In the year under report the consolidation reserve fund fell by Sw.frs. 3 million to Sw. frs. 108 million (previous year, increase of Sw. frs. 3 mil­ lion).
Atlantic International Reinsurance Company Ltd. US $ 100 4,715 43,361 550
Investment and othier financial income Management and other expenses Rate fluctuations, depreciation, value adjustments Result from general income and outgo Taxes Share of profit applicable to minority shareholders
Swiss Reinsurance Company (UK) Limited 71­77 Leadenhall Street London EC3A 2Pa
North American Reassurance Company 237 Park Avenue, New York, NY 10017
Atlantic International Reinsurance Company Limited Hadley House, St. George Street Bridgetown
Englewood Reinsurance Company Limited Belvedere Building, Pitts Bay Road Hamilton HM CX
with branch offices in Sydney and in Auckland and Wellington, New Zealand
OFATEC Buenos Aires S.A. Av. Gördoba 456, Piso 2 A 1054 Buenos Aires
Compafifa Suiza de Reaseguros Oficina de Aseson'a Tecnica Galle 72, No. 12­65, Of. 502, Bogota
OFATEG Venezuela G.A. Edificio Torre La Noria, Piso 8­Norte Paseo Enrique Eraso Urb. Las Mercedes, Caracas 1060
SwissRe Holding (Nortfi America) Inc. 237 Park Avenue, New York, NY 10017
Turkey Magdeburger Sigorta A.S. Ihlamur, Yesil Cimen Cad. No. 47 Besiktas­lstanbul
North American Specialty Insurance Company 650 Elm Street, 6th Floor Manchester, NH 03101­2596
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.
Cession: Insurance that Is reinsured; passing on of the ̂ insurer's ^ risks to the reinsurer against payment of a ^ premium.
­ Claims handling: The work in connection with the in­ vestigation, settlement and payment of claims from the time of their occurrence until settlement.
­ Outstanding claims reserve: Reserve for claims which have been incurred but not yet finally settled.
Hull damage: Damage to or loss of aircraft and water­ borne vehicles.
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.
Portfolio: The totality of ̂ risks assumed by an insurer or ^ reinsurer; also the totality of investments of a com­ pany.
­ Earned premium: Part of the premium (including ^ unearned premium of the previous year) applicable to the expired part of a reinsurance period continuing after the balance­sheet date (cf. unearned 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.
­ 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).
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.
­ Non­proportional reinsurance (also excess of loss reinsurance): Form of reinsurance in which the ̂ rein­ surer assumes that part of the insurer's losses that ex­ ceed a certain amount against payment of a specially calculated ^ premium.
­ Proportional reinsurance: Form of reinsurance in which the ̂ premiums and losses of the ̂ insurer are shared proportionally by the ̂ insurer and ̂ reinsurer.
­ Treaty reinsurance: Participation of the reinsurer in certain sections of the ­> insurer's business as agreed by treaty.
­ Risk of change: Fluctuation of actual from statistically anticipated claims experience as a result of technical, social, commercial or political changes.
­ Risk spread: Stabilization of the claims experience by as large a number of similar risks as possible.
­ Accident Insurance: Insurance of individuals (per­ sonal accident) or of groups (group accident) against the economic ̂ risks in the event of death or temporary or permanent disability.
­ 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.
­ General Third Party Liability Insurance: Insurance of industrial, commercial, employers, products, profes­ sional or private liability to third parties.
­ Hall Insurance: Insurance of crops in open fields or of greenhouses and their contents against hail, storm and other natural hazards.
­ Marine Insurance: Insurance against damage or loss of ships and cargoes; also includes off­shore drilling platforms and oil rigs.
­ Mortgage Guaranty Insurance: Insurance protection of the mortgagee against loss of capital and interest.
­ Property Insurance: Collective term for Fire and Busi­ ness interruption insurance as well as Burglary, Fidelity and Allied lines.
­ Surety Insurance: Sureties and guarantees issued to third parties for the fulfilment of contractual liabilities.
Life Insurance: Insurance providing payment of a sum of money upon death of the insured or, in the case of endow­ ment insurance, upon survival of a specified period.
­ Annuity Insurance: Life insurance in which the benefits consist of a regular income payment for a specified peri­ od of time.
­ 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 specified age.