November 1992 English translation of original German report; French, Italian and Spanish versions are also available.
98 Sw. frs. 45.Sw. frs. 9.- * subject to the resolutions of the General Meeting
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 1995
Pierre Languetin Berne 1992 * Members of the Committee of Directors
Executive Committee and Group Management Chief Executive Officer Arnold W. Saxer, Managing Director
Retrocession, risk management, claims service A. Schneeberger, Manager M. Bürge, Manager Managers P. Gasser, T. Lörtscher
R. Kellenberger, Executive Manager R. Giückler, Manager Managers M. Bommen, H. Gfeller Member of Management H. TIedemann
G. Schmidii, Senior Executive Manager J. Brun, Executive Manager Executive Managers R. Held, B. Niethammer Managers A. Ammann, M. Blenz, F. Hauser, K. Münger
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
Member of the Executive Committee and Group Management Executive Vice President Senior Vice President Vice President Assistant Vice President
Economic studies. Information, organization, public relations, translation and terminology O. Kern, Executive Manager Manager H.von Aesch Member of Management J. Marbacher*
Group companies as per 1 November 1992 * until 31 December 1992
The year's result is made up of the following principal com­ ponents: - The underwriting loss in Non-Life reinsurance was re­ duced by Sw.frs. 10.3 million (2.2%) to Sw.frs. 468.1 million.
- The underwriting profit in Life reinsurance fell by Sw. frs. 3.2 million (7.7%) to Sw.frs. 38.4 million.
- The result from general income and outgo - comprising investment income and the capital result (rate fluctua­ tions, write-offs and value adjustments) less manage­ ment expenses - improved by Sw.frs. 25.9 million (4.1%) to Sw.frs. 656.0 million.
- Taxes increased by Sw. frs. 9.8 million (18.9%) to Sw. frs. 61.9 million.
- The excesses of competition in the insurance industrywhich were discussed in last year's report - remain, however, the more significant and disturbing issue, hav­ ing continued unabated throughout the year under re­ view and beyond regardless of the unfavourable loss experience. Many insurers and reinsurers still focus their philosophy and actions too much on size and growth, on boosting premium volume instead of tailor­ ing premiums to risks and return. This is especially true of Europe, where many enterprises have been striving to maintain or even extend shares in the opening mar­ kets literally at any cost. For some insurers, the fateful consequences of such short-sighted policies have just recently revealed themselves in serious existential problems (which would have been unthinkable only a few years ago). Swiss Re will spare no effort to encour­
In the reporting period. Life reinsurance sustained an un­ usually high loss burden which caused the underwriting profit to drop to the level of 1988.
We should also like to thank you, our shareholders, for your confidence in Swiss Re. Your trust and the great potential of our staff are a solid basis on which to build a successful future for Swiss Re.
The cruciform church of St. George, cut from a single rock. In Lallbela, Ethiopia
The stone shrine of Borobudur on Java, Indonesia, the consummation of Buddhist architecture, incites meditation
Cretan labyrinth on a country estate near Arkville, New York, USA. Its creator, the British scuiptor Michael Ayrton, conceived it as the symboi of iife through which man wanders in search of the finai truth - death
Fiower-iike umbreiias in the rice fieids of the Sato vailey, ibaraki, Japan, in his "Umbreiia Project", the artist Christo used 3,100 umbreiias to trans­ form simultaneously landscapes in Japan and California
Voileybaii und basketball court at a high school in California, USA
In the 1991 business year, premium Income registered a gratifying development, rising by 18.3% to Sw.frs. 5,651 million. The underwriting loss In Non-Life reinsurance went down from Sw. frs. 478 million to Sw. frs. 468 million. In Life reinsurance the profit fell by Sw.frs. 3 million to Sw.frs. 38 million.
Japan was hit by severe typhoons In the year under report, causing more than Sw.frs. 8 billion worth of Insured dam­ age. As was the case with the winter storms In Europe a year earlier, the Insurance Industry was again surprised by the extent of the damage. As a result of these events, thecapaclty available worldwide fqr catastrophe covers will shrink further and their price will rise. Swiss Re Is monitor­ ing Its catastrophe commitments attentively and sets clear limits on the capacity applied. It Is not so much the extent of the damage which Is causing concern as the frequency with which large occurrences are taking place In various parts of the world. From an underwriting viewpoint the In­ creased frequency can be countered by raising the price for all catastrophe covers. It would be more effective eco­ nomically to Introduce and apply appropriate deductibles on the part of policyholders; this would guarantee the con­ tinued availability of reinsurance capacity.
The underwriting loss dropped from Sw.frs.478 million in the previous year to Sw.frs. 468 million, thus remaining at an unsatisfactory level. This result is due to natural occur­ rences, an accumulation of large individual claims and in particular to unsatisfactory original premiums in major classes of insurance in Europe and the United States.
The premium income in Fire reinsurance rose by 16%. A substantial increase was recorded in non-proportional reinsurance, reflecting the improved conditions achieved for catastrophe covers. Proportional business also grew, however, especially in some overseas territories. In Europe specific new business brought higher premium income, while in certain major countries premium income dropped because of the unsatisfactory state of the market and Swiss Re's remedial efforts. Facultative business showed only a marginal increase. In many cases unsatisfactory premiums for industrial risks prevented additional busi­ ness from being accepted. - Although the gross result of Fire reinsurance was a clear improvement over the previ­ ous year, which had been burdened by winter storms, it was nevertheless still unsatisfactory. Two typhoons in Ja­ pan burdened the year's accounts with over Sw.frs. 100 million. Other natural occurrences, floods, earthquakes and a volcanic eruption brought further losses; they were, however, only slightly higher than the average of earlier years. The bad result stems from unsatisfactory original premiums in industrial Fire business, especially in Europe and the United States, which was fully reflected in propor­ tional business. The result was affected not only by de­ creasing premiums but also by the continually increasing load Swiss Re has to bear from losses in the category be­ tween Sw.frs. 1 and Sw.frs. 10 million. The adverse state of Fire reinsurance must compel all market participants to act resolutely to bring about the required improvements.
The premium income ot Hail reinsurance was unchanged as against the previous year. - The year under report was spared major hail damage and consequently closed with a profit. Viewed over the long-term five- or ten-year period needed in Hail business, the results can be termed satis­ factory.
The premium income o1 Burglary, Fidelity and Allied Lines increased by 14%, as a result of a special transaction. The overall balanced result was the outcome of positive experience in Europe and a loss from overseas.
I n General Third Party Liability reinsurance, a 21 % i ncrease in premiums was achieved. Strong growth was registered in facultative business in Europe. Proportional cessions from Europe and overseas likewise increased markedly with the exception of the United States where there was a slight fall. Non-proportlonal business showed a lower growth rate, distributed evenly across all territories. - The result deteriorated markedly in the year under report, after improving in the two preceding years. The reasons for the deterioration are on the one hand the negative settlement of old claims In U.S. Liability business and on the other hand the need to strengthen the loss reserves reported by clients in non-proportional treaty business. The reserved underwriting policy adopted towards Liability risks in the United States was maintained. However, further late claims from products liability, professional indemnity and environmental impairment risks are to be expected partly as the result of changing court practice.
The premium income in Motor reinsurance showed a strong increase of 25%. This exceptional growth stems In part from the new German states, in part from the natural growth of the portfolio in other markets and also from new business. - The underwriting loss remained high. A con­ siderably Improved result in the United States is offset by a higher loss burden in proportional business. A virtual epi­ demic of car thefts in various European markets caused high loss burdens. Experience in non-proportional reinsur-
Fire, Business Interruption 1,608 1,384 Hail 44 45 Burglary, Fidelity and Allied Lines 115 101
Accident 288 244 Sickness 171 142 General Third Party Liability 715 589
Aviation 109 105 Nuclear Energy 18 15 Credit/Surety 332 289 ance, however, is satisfactory. Because of the deregulation of Motor insurance taking place in the EC, future profitabil­ ity in this business is fraught with considerable uncertainty.
In Marine reinsurance premium income rose by 20%, the highest growth rate recorded in many years in this rather stagnant line of business. - The underwriting loss rose considerably. The collapse of original premiums which competition brought about in original currencies over re­ cent years led In major markets to high losses that were only fully realized in the year under report. The reserves for earlier years therefore had to be strengthened. The year under report was not spared large losses either, which brought additional burdens.
The net amount of Life reinsurance business in force rose in the year under report by 21% to Sw.frs.91,000 million. Without the effects of foreign currencies, the increase would have been 16%. This growth was achieved thanks to a pleasing volume of new business, amounting to Sw. frs. 17,500 million.
It is not easy to ascertain to what extent a recession will af­ fect Life insurance business. Some countries have regis­ tered an increase in the suicide rate, while in others there has been a rise in the number of disability cases. On the other hand, it would appear that policyholders are reluc­ tant to alter or even cancel their covers, presumably not wishing to deprive themselves of the savings elements of their policies.
Although Aids continues to spread at an alarming rate, it did not have any major effect on the result of the year under report. The development of this illness is being closely monitored and the reserves adapted accordingly.
Disparate developments were recorded in the money and capital markets. In the United States and Japan, a more pronounced expansion of money supply brought about a decline in interest rates - a decline which was more obvi­ ous with short than with long-term interest rates. In Eu­ rope, the Deutsche Bundesbank and, accordingly, the other central banks adhered to a restrictive monetary poli­ cy. Short-term interest rates remained high. A favourable inflationary outlook allowed long-term interest rates to re­ lax to some degree. With 250 basis points, Spain expe­ rienced the most prominent decline in interest rates, while Switzerland recorded the smallest decrease with 30 basis points.
The balance-sheet value of capital market investments and real estate Increased by Sw.frs. 746 million over the previous year to Sw. frs. 7,779 million. This increase is due to new investments and a higher valuation of all important investment currencies.
The structure of total Investments at balance-sheet values Is shown in the following table.
Capital market Investments and real estate 7,779 7,033 Holdings and loans 2,721 2,200 Net cash deposits from reinsurance transactions 1,880 1,701
Holdings and loans comprise holdings of Sw. frs. 376 mil­ lion (previous year, Sw. frs. 281 million) and loans to Group companies of Sw.frs. 2,345 million (previous year, Sw.frs. 1,919 million). Overall these Investments rose by Sw.frs. 521 million to Sw. frs. 2,721 million, mainly through the ac­ quisition of a participation in the ELVIA Swiss Insurance Company Zurich.
' rate at year end 2 rate at 18 September 1992
Based on this mission statement, a management struc­ ture has been elaborated allowing optimal implementation of this strategy, the key features of which are: - a strict separation of the hitherto combined functions of "Group Management" and "General Management of Swiss Re, Zurich" in terms of both organisation and per­ sonnel, but not yet with a holding company structure - a systematic realignment of Group Management in accordance with the business segments of reinsurance and insurance, together with services, as specified in the 1992 strategic vision.
It should be stressed that the changes outlined here only take effect in 1993. The current Executive Committee and Group Management (listed on page 5 of the Annual Re­ port) retain full responsibility for the management of Swiss Re until the end of 1992. Shareholders will be notified in due course about the final decisions.
Mr Walter DIehl has asked the Board to accept his resigna­ tion at the forthcoming General Meeting in view of an ail­ ment that arose In the course of the summer of 1992; he has served as Member and Chairman of the Board since 1979.
At this year's General Meeting, the terms of office of Messrs Hans Bühlmann, Rainer E. Gut and Pierre Languetin expire; the Board of Directors will propose to the Gen­ eral Meeting that these gentlemen be re-elected.
The Board of Directors will propose to the forthcoming General Meeting that Mr Ulrich Bremi, Zolllkon (Chairman of the Board of Georg Fischer AG, Schaffhausen), be elect­ ed to the Board.
has for 40 years devoted all his creative energy to Swiss Re, beginning his career in reinsurance and making a name for himself as a leading authority on reinsurance and as a promot­ er of contemporary underwriting techniques. Under his leader­ ship the system of product coordination was conceived and perfected to become an effective Group management tool.
With effect from 1 January 1992, the Board of Directors appointed Ernesto Jutzi as General Manager.
The following promotions were also announced to take ef­ fect on 1 July 1992: Ennio Franci, Bruno H. Letsch, Gottlieb Schmidii, Hans-Kaspar Zulauf (Senior Executive Manag­ ers), Suzanne Stelner (Executive Manager), Alfred Bloch, Hans Gfeller, Peter Hagnauer, Peter King and Johann Thinnhof (Managers).
The accounts are compiled according to Swiss law and the underlying commercial and insurance principles. The principle of caution inherent in these regulations is deter­ mining for the valuation and reserving practice of the Com­ pany. The principles of accounting and valuation hitherto applied were retained in the year under report.
The 1991 business year comprises both reinsurance busi­ ness and general income and outgo for the period from 1 January to 31 December 1991.
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 1991. 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*
German mark 89.15 85.50 4.3 + Pound sterling 253.— 246.— 2.8 + French franc 26.10 25.10 4.0 + Belgian franc 4.3250 4.14 4.5 + Dutch guilder 79.10 75.75 4.4 + Italian lira 0.1176 0.1134 3.7 + Spanish peseta 1.3975 1.3350 4.7 + US dollar 135.25 128.50 5.3 + Canadian dollar 117.25 110.50 6.1 + Yen 1.08 0.95 13.7 + Rand 49.25 50.50 2.5-
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. 4,987.7 million. Retrocession premiums of Sw.frs. 634.4 million were Sw. frs. 189.5 million below the previous year's amount because of fewer retrocessions within the Swiss Re Group. Net premiums registered a rise of 28.5% to Sw.frs. 4,353.3 million. Without the effect of foreign cur­ rency fluctuations, net premiums would have risen by 23.9%.
The commissions and profit commissions calculated for business assumed totalled Sw.frs. 134.9 million. The retrocessionaires' share of this amount was Sw.frs. 4.8 million, so that Sw.frs. 130.1 million remained for own account.
The commissions and profit commissions accounted for gross business totalled Sw.frs. 1,352.5 million. Of this amount, Sw.frs. 130.0 million referred to retrocession­ aires, leaving Sw.frs. 1,222.5 million for own account.
The total of Sw.frs. 751.0 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 1.5%. Without the effect of foreign currency fluctuations, a decrease of 1.5% would have been registered.
Overall management expenses rose in the year under re­ port by Sw. frs. 17.3 million or 8.8% to Sw. frs. 212.8 million (previous year, rise of 2.3%). Personnel costs rose by 9.0% (previous year, 0.6%); this is due to the inflationary in­ crease and the larger number of employees. Personnel expenses also include the remuneration of Sw. frs. 0.9 mil­ lion to the Board of Directors. Non-personnel costs in­ clude especially operating costs and the cost of represen­ tations abroad.
This group of accounts closed with a positive balance of Sw.frs. 117.7 million (previous year, Sw.frs. 85.5 million). Realized capital gains and losses on investments contrib­ uted a net profit of Sw.frs. 307.3 million (previous year, Sw.frs. 188.1 million). 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. 11.4 mliiion (previous year, Sw. frs. 13.9 million). Ttie write-offs on capital market investments, real estate and holdings amounted to Sw. frs. 206.1 million (previous year, Sw.frs. 106.6 million). Other depreciation produced overall a positive amount of Sw.frs. 5.1 million (previous year, outgo of Sw.frs. 9.9 million), which is due to a drop in the value adjustment for current-account balances; the lower value adjustment requirement result­ ed from lower current-account balances with unchanged valuation methods.
Cash deposits with clients rose against the previous year by Sw.frs. 201.7 million to Sw.frs. 1,942.7 million.
The portfolio of capital market investments (fixed-interest securities, loans and shares) and real estate rose by Sw. frs. 746.4 million to Sw. frs. 7,779.3 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. 686.1 million (previous year, Sw.frs. 431.0 million) or 11.7% (previous year, 8.4%) of the bal-
Technical reserves comprise, in Non-Life reinsurance, the reserves for unearned premiums and outstanding claims and, in Life reinsurance, the policy and claims reserves. The changes in the reporting year and the composition are shown in the following table. The rise of the technical reserves by Sw. frs. 1,029.8 million is affected among other things by the already mentioned lower volume of retroces­ sions within the Swiss Re Group, which was reflected in an increase of the total reserves for own account.
Business in force at end of previous year Non-Life reinsurance 6,782.0 7,183.0 Life reinsurance 1,791.9 1,794.3 Total for own account 8,573.9 8,977.3
Life Reinsurance Policy reserves 1,555.8 1,445.9 Outstanding claims reserve 413.4 346.0 1,969.2 1,791.9 in % of net business in force 2.2% 2.4%
The company's capital on the balance-sheet date was as follows: The share capital amounted to Sw.frs. 192.0 million, com­ prising 1,750,000 registered and 170,000 bearer shares with a nominal value of Sw. frs. 100.- each. The non-voting share capital amounted to Sw. frs. 60.2 million divided into 3,010,000 non-voting bearer shares with a nominal value of Sw.frs. 20.- each, in addition, on 31 December 1991, there was an authorized non-voting share capital of Sw. frs. 2.5 million (125,000 non-voting shares with a nom­ inal value of Sw.frs. 20.-).
At the end of the previous year the capital funds shown amounted to Sw. frs. 2,529.3 million; this will rise as a result of the proposed allocation of the profit, provided it is ap­ proved by the General Meeting of Shareholders, to Sw. frs. 2,594.7 million. Up to the end of 1991 2,653 registered shares had been purchased using the free warrants issued in 1989; the resulting premium of Sw. frs. 6.6 million was allocated to the special reserve.
Share capital 192.0 192.0 Non-voting share capital 60.2 60.2 Reserves and profit carried forward 2,342.5 2,277.1 Total 2,594.7 2,529.3
The General Meeting to be held In Zurich on 20 November 1992 has at its disposal the following balance-sheet profit (of. Profit and Loss Account and Balance Sheet, pages 24/ 25): Sw.frs. Sw.frs.
The Tower of Babylon, Iraq, or what was left of the tower and its outdoor stairway after it had been plundered for Its coveted fired bricks
"Medicine Wheel" in the Big­ horn-Mountains, Wyoming, USA, used to sight signifi­ cant points of contact between the stars and the horizon, enabling the Plains Indians to determine a propitious time tor such events as their sun dance
The Giant of Cerro Unitas in the Atacama Desert, Chile. The 100 m high hillside figure of unknown origin was created by the removal of rock
Lloyd Adriatico S.p.A., Trieste Lloyd Adriatico Espana S.A., Madrid Giuliana Assicurazioni S.p.A., Trieste Giuliana Vita S.p.A., Trieste
SWITZERLAND General Insurance Company Limited, Adliswil SCHWEIZ Life, Athens SWITZERLAND Insurance Company UK Limited, London
The foreign-exchange rates of the currencies important for the Group were slightly higher on the balance-sheet date of 31 December 1991. Basically, this had the same effect on the Group accounts as on the annual accounts of Swiss Re, Zurich (cf. page 15). The conversion of foreign currencies into Swiss francs is explained on page 50.
In the 1991 Group accounts, the consolidated gross pre­ miums amounted in the year under report to Sw.frs. 17,452 million, which was 17.3% above the previous year's amount of Sw.frs. 14,881 million. Expressed in origi­ nal currencies, this represented a growth of 12.6% (pre­ vious year, 10.8%). The consolidated net premiums rose by 17.3% to Sw.frs. 16,270 million, reinsurance business accounting for 54% and insurance for 46%.
The consolidated overall result rose by 23.1% to Sw.frs. 266 million (previous year, decrease of 22.0%). In NonLife insurance, the underwriting loss rose by Sw. frs. 64 million to Sw.frs.781 million (previous year, increase of Sw.frs. 303 million). In Life insurance, a profit of Sw.frs. 94 million was shown (previous year, Sw.frs. 93 million). Overall, the underwriting loss amounted to Sw.frs. 687 million (previous year, Sw.frs. 624 million). The income from capital investments rose by Sw.frs. 135 million to Sw.frs. 1,805 million (previous year, increase of Sw.frs. 21 million). Rate fluctuations, depreciation and value ad­ justments gave a positive balance of Sw.frs. 203 million (previous year, Sw.frs. 92 million). Management expenses rose by 9.3% to Sw.frs. 847 million, and taxes by 42.5% to Sw.frs. 181 million. The Group's capital funds shown including Group profit amounted at the end of 1991 to Sw.frs. 3,148 million (previous year, Sw.frs. 2,811 million).
The European General Reinsurance Company of Zurich showed in Non-Life reinsurance a decrease of gross pre­ miums by 35.9% to Sw.frs. 385.9 million, caused by the fact that an intra-Group retrocession was no longer appli­ cable. The underwriting loss fell as against the previous year. - In Life reinsurance the gross amount of business in force rose - mainly because of foreign exchange rates - to Sw.frs.49,400 million (previous year, Sw.frs. 45,700 mil­ lion), while fhe underwriting profit was somewhat lower. The result from general income and outgo rose. The profit for the year amounted to Sw.frs. 10.6 million (previous year, Sw.frs. 2.5 million), from which a dividend of Sw.frs. 10.0 million (previous year, no dividend) is to be paid.
The gross premiums of the Union Reinsurance Company, Zurich, rose in Non-Life reinsurance by 26.9% to Sw.frs. 622.0 million. A quarter of this growth is due to the defer­ ral of the closing date. Despite the lower burden of ca­ tastrophe losses as against the previous year, the under­ writing result showed only a marginal improvement as premium rates remained inadequate. - In Life reinsurance the gross amount of business in force increased by 4.3% to Sw.frs. 9,000 million, and the underwriting profit again rose. - Investment income remained at about the previous year's level. The profit for the year was Sw.frs. 3.6 million (previous year, Sw.frs. 3.2 million), from which a dividend of Sw.frs. 1.8 million (previous year, Sw.frs. 2.4 million) was paid.
At the Canadian Reinsurance Company, Toronto, the gross premium volume declined by 6.7% to Can.$ 208.7 million. This development is due to the decreased volume from financial reinsurance treaties. The turnover of other lines of business was consistent with the previous year's level. Motor business showed a further distinct improve­ ment, while Property and Surety reinsurance worsened. In the financial sector, capital gains were considerably higher, investment income remaining unchanged. The company's overall profit rose to Gan.$ 1.8 million (previous year, Can.$ 0.5 million). As in the previous year, the company paid a dividend of Can.$0.8 million.
At the Canadian Reassurance Company, Toronto, the Life reinsurance business in force increased by 4.8% to Can.$ 26,200 million. The result published by the company fell to Can.$ 7.6 million (previous year, Can.$ 8.2 million), owing to the deterioration of mortality in group disability busi­ ness. The dividend was increased from Can.$ 0.6 million to Can.$ 0.8 million.
ment income again rose and the published profit in­ creased to Rand 19.7 million (previous year. Rand 12.5 mil­ lion), from which a dividend of Rand 10.0 million was paid, an increase of Rand 2.0 million as against the previous year.
The Austraiian Reinsurance Company Limited, Mel­ bourne, showed in Non-Life reinsurance an increase in gross premiums by 20.9% to Austr.$ 125.6 million, stem­ ming mainly from Fire and Motor reinsurance. The under­ writing profit fell as a result of inadequate premium rates and the generally unfavourable loss experience. - In Life reinsurance the gross amount of business in force rose by 3.8% to Austr.$ 8,200 million, while the underwriting profit declined as against the previous year. - Investment in­ come was in line with the previous year. The overall profit amounted to Austr.$ 19.3 million (previous year, Austr.$ 21.7 million). The dividend was doubled to Austr.$ 3.4 mil­ lion.
The Englewood Reinsurance Company Limited, Hamilton, Bermuda, was founded in 1989 to reinsure captive insur­ ance companies and is primarily active in the sector of financial reinsurance. In its second full business year the company doubled its premium volume to LIS$ 34.1 million and the profit to US$ 3.5 million. The dividend paid was LIS$ 0.9 million (previous year, US$ 0.5 million).
The European International Reinsurance Company Limit­ ed, Bridgetown, Barbados, has been a wholly owned member of the Swiss Re Group since April 1991. The com­ pany writes financial reinsurance business and in 1991 achieved a gross premium volume of US$ 97.9 million and a profit of LIS$ 8.2 million. The company paid a dividend of US$ 1.8 million.
Fire 2,701 881 3,582 2,240 851 3,091 Accident/Sickness 495 3,303 3,798 416 2,836 3,252 Third Party Liability/Motor 2,611 2,793 5,404 2,058 2,451 4,509 Marine 350 202 552 284 196 480 Other branches 1,047 183 1,230 923 148 1,071 Life 1,757 1,129 2,886 1,497 981 2,478 Gross premiums 8,961 8,491 17,452 7,418 7,463 14,881 Net premiums 8,775 7,495 16,270 7,324 6,545 13,869 in millions of Swiss francs
As a result of exceptional loss burdens especially in Motor business, the underwriting result of Non-Life insurance worsened, while in Life insurance the undenwriting profit remained unchanged, investment income rose significant­ ly and the negative balance from rate fluctuations, depre­ ciation and value adjustments declined. Management ex­ penses remained stable, while taxes were higher than in the previous year. Overall, the Group profit of insurance companies amounted to Sw.frs. 72 miiiion (previous year, Sw.frs. 61 miiiion).
The Magdeburger Versicinerungsgruppe, Hanover, was able to increase its consolidated gross premiums, in­ cluding the non-recurring premiums from the reserve for bonuses to policyholders, icy 4.8% to DM 1,139.6 miiiion. The gross premiums of the Magdeburger Versicherung AG rose by 3.4% to DM 773.3 miiiion. Underwriting business produced a loss of DM 10.7 miiiion (previous year, DM 3.8 miiiion); this is mainly due to investments in the new German states. The greatly improved result of the non­ technical account led to a profit for the year of DM 19.0 mii­ iion (previous year, DM 18.0 miiiion) which was again paid out in full to shareholders. - At the Magdeburger Lebens­ versicherung AG the insurance business in force rose by 9.3% to DM 10,000 miiiion. Following an allocation of DM 104.5 miiiion (previous year, DM 59.5 miiiion) to the re­ serve for bonuses to policyholders, an unchanged profit for the year remained of DM 0.7 miiiion, which was again paid out in full as dividend.
The Vereinte Versicherungen, Munich, increased its con­ solidated gross premiums, including the non-recurring premiums from the reserve for bonuses to policyholders, by 10.5% to DM 4,827.1 miiiion. -The gross premiums of the Vereinte Versicherung AG grew by 10.2% to DM 980.8 miiiion. High claims payments as a result of the negative experience of Motor collision damage insurance and addi­ tional investments needed to expand the sales and ad­ ministration organisation in the new German states led to an underwriting loss of DM 20.1 miiiion (previous year, DM 9.1 miiiion). Since the capital investment result im­ proved significantly, the profit for the year rose to DM 17.3 miiiion (previous year, DM 14.9 miiiion). Including the profit of DM 0.4 miiiion carried forward from the previous year, a total of DM 17.7 miiiion (previous year, DM 14.6 miiiion) was paid out as dividend and bonus. -The amount of business in force of the Vereinte Lebensversicherung AG grew by 8.6% to DM 18,700 miiiion. After an allocation of DM 230.3 miiiion (previous year, DM 141.8 miiiion) to the reserve for bonuses to policyholders, the profit remaining for the year was DM 4.2 miiiion (DM 2.9 miiiion). Of this amount DM 2.0 miiiion (previous year, DM 1.4 miiiion) was allocated to bonus reserves, a contribution of DM 0.6 miiiion made to the outstanding paid-up capital and DM 1.6 miiiion (previous year, DM 1.4 miiiion) paid out as dividend. The Vereinte Krankenversicherung AG increased its gross premiums, including non-recurring premiums from the reserve for bonuses to policyholders, by 11.6% to DM 3,147.3 miiiion. The amount of benefit payments rose by 11.3% to DM 2,451.4 miiiion. After an allocation of DM 56.0 miiiion (previous year, DM 51.8 miiiion) to the reserve for bonuses to policyholders, the profit for the year was DM 11.8 miiiion (previous year, DM 12.6 miiiion), from which a contribution of DM 4.5 miiiion was made to the outstand­ ing paid-up capital and a dividend paid of DM 7.3 miiiion (previous year, DM 6.3 miiiion).
The SCHWEIZ Compahia Anonima Espahola de Seguros y Reaseguros, Barcelona, increased its premium income by 2.5% to Ptas 28,100 miiiion. The profit for the year amounted to Ptas 102 miiiion (previous year, Ptas 196 mii­ iion). Again no dividend was paid in order to strengthen further the technical reserves.
The General Surety & Guarantee Company Limited, Wilmslow, which is active in the Surety field, registered
The Fidelity and Deposit Company of Maryland, Baltimore, in which the Zurich Insurance Company and Swiss Re each have a 50% shareholding, is not consolidated in the Group accounts. In a difficult economic climate the com­ pany achieved gross premiums of US$ 326.3 million, the same as in the previous year. With the exception of Prop­ erty business, which was affected by a large loss, all classes of business showed gratifying results. Following a distinct improvement on the capital markets as against the previous year, the investment result, in particular capital gains, turned out to be far better. The overall profit reached US$ 15.6 million (previous year, US$ 9.2 million). The com­ pany paid an unchanged dividend of US$14.0 million.
The Group companies operating in the field of insurancerelated services are not included in the scope of consoli­ dation in view of the special nature of the branch and their relatively modest significance for the asset and income situation of the Swiss Re Group.
In the risk management sector, the International Risk Management Group, with head office in Hamilton, Ber­ muda, showed an increase of turnover by 4% to US$ 33.6 million. The profit shown amounted to US$ 3.4 million (pre­ vious year, US$ 3.3 million) and was again paid out in full as dividend.
In the year under report, SwissRe Holding Ltd. and Swiss Re, Zurich, acquired a majority share of the voting capital of ELVIA Swiss Insurance Company Zurich. In addition, SwissRe Holding increased its holding of European Inter­ national Reinsurance Company Limited, Bridgetown, Barbados, to 100%. In contrast the minority holding of the Geneva Life Insurance Company, Geneva, was sold. On balance, the funds Invested in company holdings increased significantly. The loan granted by Swiss Re, Zurich, rose by Sw. frs. 457.0 million to Sw. frs. 2,163.5 mil­ lion.
Based on our audit we conclude that the consolidated financial statements are presented In accordance with the consolidation and valuation principles set out In the notes on Croup accounts.
Dividend payments were again higher than in the previous year, while realized capital gains fell. Depreciation and higher interest rates considerably burdened the profit and loss account, reducing the profit for the year to Sw.frs. 0.3 million (previous year, Sw.frs. 15.3 million).
Underwriting result from Non-Lite insurance - 690 - 91 - 781 - 717
Cross premiums 1,757 1,129 2,886 2,478 Net premiums 1,692 1,067 2,759 2,363 Adjustment in policy and annuity valuations - 461 - 585 - 1,046 - 789 Interest on Lite insurance and annuity fund 215 504 719 560 Commissions and profit commissions - 293 - 516 - 809 - 731 Claims incurred incl. adjustment in outstanding claims reserve - 954 - 359 - 1,313 - 1,088 Surrenders - 129 - 87 - 216 - 222
Fixed-interest investments 13,641 15,414 30,884 26,197 Shares 1,537 1,823 3,360 3,377 Real estate 1,851 1,259 3,113 2,745 Non-consolidated holdings 377 282 1,554 813
Current-account and bank balances 1,976 1,379 3,730 2,966 Cash deposits 377 194 571 479
Share and non-voting share capital 252 252 Reserves shown 2,284 2,235 Consolidation reserve fund 346 108 Group Profit 266 216 *The figures in tfiis column do not always amount to ttie total of tfie figures in the two preceding columns as figures for holding and other companies are also included.
All foreign currencies used in the Group accounts rose slightly as against the previous year. This growth was not, however, enough to offset entirely the previous year's in part substantial drops.
The scope of consolidation includes all domestic and foreign insurance and reinsurance companies In which Swiss Re, Zurich, directly or indirectly maintains a hold­ ing 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 shareholders are shown as separate items in the consolidated balance sheet and profit and loss ac­ count.
As in previous years, advisory and service companies as well as a few other small companies are not consolidated in view of their insignificant effect on the Group's funds and income or because of the nature of their activity. The mh Bausparkasse AG, Munich, is, however, included in the consolidation.
European International Reinsurance Company Limited, Bridgetown, Barbados, which has been a wholly owned member of the Swiss Re Group since the spring of 1991, is included In the consolidation for the first time. The company is active in the field of financial reinsurance. The majority holding in ELVIA Swiss Insurance Company Zurich, acquired in the fourth quarter of the year under report, will be consolidated with effect from the 1992 busi­ ness year.
Shares and non-consolidated hoidings are valued accord­ ing to the same principles as fixed-interest securities. Nonquoted participations are entered at acquisition cost tak­ ing into consideration any necessary depreciation.
serves are included in the Group accounts at the amount calculated according to Generally Accepted Accounting Principles (GAAP).
Sw.frs. 2,889 million. Of this amount, the interest on the Life insurance and Annuity fund accounted for Sw. frs. 719 million (previous year, Sw.frs. 560 million); in the Non-Life classes It included a credit of Sw. frs. 365 million (previous year, Sw. frs. 300 million) to Sickness business.
Investment income also includes dividend payments of non-consolidated holdings in the amount of Sw. frs. 58 mil­ lion (previous year, Sw.frs. 51 million).
The consolidated gross premiums rose by 17.3% to Sw.frs. 17,452 million (previous year, increase of 1.2%). In original currencies the growth was 12.6% (previous year, 10.8%).
In Non-Life insurance premiums rose by 17.4% (previous year, 1.2%) to Sw.frs. 14,566 million and in Life insurance by 16.5% to Sw.frs. 2,886 million.
In addition to commission payments and profit commis­ sion reimbursements, this item includes the general ex­ penses incurred In Insurance operations.
The claims incurred comprise claims payments and the adjustment in the outstanding claims reserve. In the year under report this outgo item for own account rose by Sw.frs. 1,325 million to Sw.frs. 10,676 million. Of this amount, Sw. frs. 5,863 million was for reinsurance compa­ nies and Sw.frs. 4,813 million for insurance companies.
The consolidated balance-sheet values ot capital invest­ ments (incl. non-consolidated holdings) rose by 17.4% to Sw.trs. 38,911 million. The rise is mainly due to the 17.9% increase in fixed-interest investments (previous year, 1.4%). The share portfolio changed slightly while real estate rose by 13.4%. The item "Non-consolidated hold­ ings" contains holdings at book values ot 50% or less in insurance and reinsurance companies as well as in service companies. In the year under report the acquisition ot ELVIA and other holding transactions led to an increase ot Sw.trs. 741 million.
Non-Life Insurance Unearned premiums 1,857 5,673 7,530 6,410 Outstanding claims reserve 12,538 4,385 16,923 14,523 Reserve for profit commission 3 113 116 309 in % ot net premiums earned 205.7% 175.8% 192.1% 193.4%
The profits and capital funds applicable to third party shareholders correspond to the percentage shares ot non-Group shareholders in the capital funds or in the results ot the relevant companies. The capital funds applicable to minority shareholders rose in the reporting year by Sw.trs. 43 million to Sw.trs. 310 million. This is mainly due to the higher capital funds ot the Lloyd Adriatico, Trieste. The share ot profit applicable to third party shareholders rose by Sw. trs. 9 million to Sw. trs. 36 million.
The consolidation reserve fund results from the difference between the capital funds shown ot 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 rose by Sw. trs. 238 million to Sw.trs. 346 million (previous year, drop ot Sw.trs. 3 mil­ lion).
Atlantic International Reinsurance Company Ltd. US $ 100 5,036 125,516 1,160
European General Reinsurance Company of Zurich Sw. frs. 100 90,960 2,454,777 604,723
Insurance and Banking Currency Holding funds shown Balance-sheet amount Gross premiums
North American Specialty Insurance Company US $ 100 27,040 74,652 93,257
SWITZERLV\ND General Insurance Company Limited Sw. frs. 99.9 169,627 1,875,319 1,019,329
SCHWEIZ, Compahia Anönima Espanola de Seguros y Reaseguros Ptas. 100 6,594,965 37,554,363 28,079,626
' not consolidated ^ of the voting share capital ^ in millions of lira
Balance Sheet Assets Cash in hand, postal bank account, bank balances Current-account balances Cash deposits Fixed-interest investments Shares and real estate Transitory entries and other assets
Non-Life insurance Life insurance Transitory entries, value adjustments and other liabilities (incl. share of minority shareholders and building society deposits) Group Capital Funds Shown (incl. Group profit)
Western Atlantic Reinsurance Corporation 380 Madison Avenue, New York, NY 10017
North American International Reinsurance Company Limited Clarendon House, Church Street Hamilton HM DX
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
Mexico OFATEC (Mexico) S.A. de CV. Viena 71, Piso 5 Col. del Carmen Coyoacan 04100 Mexico, D.F.
Venezuela OFATEC Venezuela C.A. Edificio Torre La Noria, Piso 8-Norte Paseo Enrique Erase Urb, Las Mercedes, Caracas 1060
Japan Swiss Reinsurance Company Representative Office Tokyo Sansho Building 7 F, 2-9 Nihonbashi 3-chome, Cfiuo-ku, Tokyo 103
ELVIA Travel Insurance Company Tödistrasse 65 CH-8039 Zurich with branch offices in Amsterdam, Brussels, Milan, Munich, Paris and Vienna
Belgium ELVIA - Assurances S.A. Avenue des Arts 23 B-1040 Brussels
Magdeburger Versicherungsgruppe Giuliana Assicurazioni S.p.A. Kirchhorster Strasse 2 Via Locchi, 19b D-W-3000 Hanover 51 1-34123 Trieste mh Bausparkasse AG Giuliana Vita S.p.A. Wotanstrasse 88 Via Locchi, 19b D-W-8000 Munich 19 1-34123 Trieste
SWITZERLAND Insurance Company DK Limited Three Quays, Tower Hill London EC3R 6DS
Palatine Insurance Company Limited 71-77 Leadenhall Street London EC3A 2P0 as per November 1992
SCHWEIZ, Compania Anonima Espanola de Seguros y Reaseguros Via Augusta 153-157 E-08021 Barcelona
United States Fidelity and Deposit Company of Maryland 300 Saint Paui Place Baltimore, MD 21203
North American Specialty Insurance Company 650 Elm Street, 6th Floor Manchester, NH 03101-2596 with a branch office in Cleveland
Commission: Remuneration paid by the^ insurer to his agents, ^ brokers or other commercial intermediaries or by the ̂ reinsurer (reinsurance commission) to the ̂ in­ surer for their costs in connection with the acquisition and administration of insurance business.
Insurance company: Enterprise which accepts in return for payment of a premium.
risks - Insurer (also direct/primary insurer): Insurance com­ pany in a direct contractual relationship with the ̂ poli­ cyholder.
- Reinsurer: Company which accepts a share of the in­ surer's risks in return for payment of a ̂ premium.
- Gross amount: Life insurance in force of the ̂ insurer before deduction of the ̂ cessions or Life business of the ^ reinsurer before deduction of ^ retrocessions.
Portfolio: The totality of ̂ risks assumed by an ̂ insurer or ^ reinsurer; also the totality of investments of a com­ pany.
- Gross premium: Insurance premium before deduction of the ceded premium cession) or reinsurance pre­ mium before deduction of the retroceded premium (-^ retrocession).
- Proportional reinsurance: Form of reinsurance in which the ̂ premiums and losses of the insurer are shared proportionally by the ̂ insurer and ̂ reinsurer.
- Surplus reinsurance: Form of ̂ proportional reinsur­ ance, in which ^ risks are reinsured over a specified amount.
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 co-insurance basis).
Non-Life Insurance: All classes of insurance business with the exception of Life.
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.).
- Nuclear Energy Insurance: Insurance against prop­ erty damage, liability and accident in connection with the operation of nuclear energy installations.
- Occupational Incapacity Insurance: Insurance against the incapacity to exercise a profession as a re­ sult of sickness or other infirmity.