to the General Meeting of the Shareholders on the 20th November 1970 60 Mythenquai, Zurich
Board of Directors Max E. Eisenring, Chairman Paul Keller, Deputy Chairman Paul Guggenbühl Matheus Klaas Werner Abegg Max H. Schneebeli Max Petitpierre Felix W. Schulthess Marcel Odier Max Troendle Hans Ulrich
Deputy Managers Roger Aeberli * Kurt Aemi Albert Albrecht * Eduard Bart Georges Bassin Erik Bosshardt Hans Brodbeck Edouard Burnens
Ralph Ochsenbein Hermann Odermatt Max D. de Salts Hans Salzmann Herbert Schönenberger Peter Schuppli ^ Edward Spargnapani Paul Strickler *
Samuel Patthey Pierre-Claude Perrenoud ' Heinrich Pfefferte Jan C. Roos Hans G. Rutishauser Otmar Schmidlin * Max Tobler * Paul Würsch *
We have the honour to present you the Annual Report and Statement of Accounts of the Company for the business year 1969/70. The 106th business year embraces the re­ insurance business for the calendar year 1969 and the other income and expenditure from 1st July, 1969 until 30th June, 1970.
Business Experience The 106th year of operations closes with a higher profit than the previous year. Despite considerable fluctuations between the branches and the individual markets, nonLife reinsurance yielded a positive result for the first time for several years. Due to the increased mortality in certain countries the result of Life reassurance was slightly de­ creased. The investment income again grew strongly; at the same time, the management expenses and taxes also increased.
The world-wide decline in the prices of bonds and shares created the conditions in which to effect the concentration of all important shareholdings, as had long been considered desirable, on the New Holding Ltd., Zurich, which is wholly owned by Swiss Re. The resulting book profit was utilized for depreciation on the portfolio of securities.
Within the scope of our technical research programme, we pursued our investigations during the year of report by means of established statistical and newly-developed prospective methods (exploiting the possibilities offered by our electronic data-processing equipment) with regard to determining more exactly the probabilities of claims fre­ quency and claims severity for the different branches of insurance. In the field of non-proportional reinsurance, in particular, these studies led to a better assessment of whether, under given circumstances, the premium rates are commensurate with the risks and whether the claims reserves are adequate.
On the other hand, fortuitous, unforeseeable events cause large fluctuations in the claims experience which defy any prediction. Specific reference is made in this respect to natural catastrophes as well as to other destruction of exceptionally high values and liability claims of all kinds. Apart from the known perils insured, human error, van-
dalism and acts of terrorism are becoming ever more im­ portant causes of losses. At the same time technology is creating larger, more valuable and more damage-prone risks. This trend can only be counterbalanced by setting up corresponding reserves.
The reinsurer is interested in the transparency of the business accepted, just as the direct insurer must know the type and magnitude of the risk to be covered when issuing an insurance contract. Our policy of gaining closer access to the risk, a postulate which results from the pre­ viously mentioned dynamic trends, has been pursued. We are pleased that the majority of our ceding companies recognize our well-founded, indeed technically vital need for information.
The aggregate underwriting result, which showed a small profit in the previous year, improved by almost Sw.frs. 20 million.
Compared with the previous year, the Burglary branch closed with a reduced profit. The reasons for this develop­ ment are rising crime rates coupled with the continuous increase in value of the objects which have always been susceptible to theft. On many markets Burglary insurance is already in the deficit zone and the prospects for the future are not good. As a whole the reinsurance of Water Damage, Glass and Livestock produced a profit.
The Accident business closed with a higher profit than in the previous year due to fortuitous factors; Sickness re­ insurance shows a small loss. The results of this line have been deteriorating for many years. The reason for this is the above-average increase of costs for medical treatment and hospitalization.
Of the assets of our Company shown overleaf, Sw. frs. 53 million are held by Trustees appointed by us in overseas territories.
The last General Meeting elected Mr. Max Troendle and Mr. Hans Ulrich to the Board of Directors. In addition the former substitute, Mr. Rudolf Huber-Rubel, was elected Auditor and Mr. Max Honegger appointed as the new sub­ stitute.
Mr. Paul Keller joined the Board of Directors in 1956 as Deputy Chairman, succeeded Mr. Erwin Hiirlimann as Chairman from 1958 to 1964 and he has since held the office of Deputy Chairman. His profound knowledge of economic and financial matters has been of the greatest value and his distinguished personality will always remain an example to us. We are deeply grateful to Mr. Keller for his many years of service.
The Board of Directors has made the following appoint­ ments with effect from 1st January, 1971: to Manager, Mr. Walter Diehl, to Deputy Manager, Messrs. Roger Aeberli, Albert Albrecht, Paul E. Christen, Fritz Ehrsam, Gerard Lavanchy, Peter Schuppli, Paul Strickler, to Assistant Man­ ager, Messrs. Alfred Bai, Richard R. Doerr, Rolf Eckert, Marius Hoffmann, Walter Isler, Hans R. Kaufmann, Lavre Kirianoff, Albert Kunz, Pierre-Claude Perrenoud, Otmar Schmidlin, Max Tobler and Paul Würsch.
In accordance with Article 30 of the Arti­ cles of Association, the Board of Directors proposes that the General Meeting should allocate the net profit as follows: 5 % Statutory Dividend Directors' Remuneration
In addition the Board of Directors proposes that the remainder plus the balance brought forward from 1968,/69 should be allocated as follows: Additional Dividend Allocation to Special Reserve Fund Allocation to Reserve Fund for Catastrophe Losses Donations
* Comparison with previous years made possible by inclusion of reserve fund for catastrophe losses.
embracing the reinsurance business for the calendar year 1969 and the other income and expenditure for the period from the 1st July, 1969 to the 30th June, 1970
All classes excl. Life Sw. frs. Sw. frs. Sw. frs. Sw. frs.
Outstanding Claims for Own Account All classes excl. Life (incl. Valuation of Current Aimuity Indemnities)
Zurich, 20th October, 1970 By order of the Board: M. E. Eisenring, Chairman
The securities, or the corresponding deposit certificates, were examined on the 14th, 15th and 16th July and on the 17th September, 1970 and foimd to be in order.
Allocation to Special Reserve Fund 5,000,000 Allocation to Reserve Fimd for Catastrophe Losses 4,000,000 Dividend Sw. frs. 80.— per Share 32,000,000 Donations 400,000 Directors' Remuneration 400,000 Carry Forward 1,656,393
The Swiss Re Group Ever since the Swiss Re has owned the subsidiary com­ panies, the Top Management in Zurich have been per­ forming two different functions: on the one hand, they have managed the parent company domiciled in Zurich with its direct reinsurance connections with over one hun­ dred markets, and, on the other hand, they have super­ vised the subsidiary companies who handle their separate markets independently. In 1961 it was already felt that a division of these functions would be desirable as regards organization, and as fa'- as possible, also legal competence and personnel. The most obvious solution, which would at least have led to a structural division, would have been to transfer the non-European subsidiary reinsurance com­ panies to the New Holding Ltd., however, detailed studies revealed that such a transfer would have precipitated pro­ hibitive taxes. The price recessions on the stock exchange during the year under report have now reduced the net worth of these subsidiary companies and also therefore the taxable book profit occurring to the Swiss Re; in addition they oc­ casioned sufficiently large depreciations on the security portfolio of Swiss Re to absorb the accrued book profit. This situation permitted the performance of the oft-men­ tioned transaction without significant consequences as re­ gards taxation. As a result, the portfolio of the New Hold­ ing Ltd. now embraces not only the shareholdings in direct insurance companies but also the shares of all the sub­ sidiary reinsurance companies of the Swiss Re. The only change as regards the capital structure of the Group companies was the doubling from own funds of the Swiss-South African Reinsurance Company's former share capital of Rand 372,000 in order to make allowance for the increased premium volume.
Fire 852 748 Hail 17 17 Burglary 44 40 Engineering 41 34 Water Damage, Class and Livestock 6 6 Marine 179 162 Accident 270 193 Sickness 167 135 Third Party Liability 634 558 Surety, Fidelity and Credit 111 105 Life 456 416
The distribution of these retained premiums between the parent and subsidiary companies is as follows: Swiss Reinsurance Company Premiums for Own Account
Growth in Premium Income for Own Account in millions of francs
Capital and Free Reserves The consolidated capital and free reserves of the Swiss Re Group, after distribution of the profit, amounted to Sw. frs. 412 million compared with Sw. frs. 454 million at the end of the previous year; the fluctuations are caused by the legally prescribed methods of preparing the balance-sheets as applied by the overseas subsidiary companies.
Growth of Capital and Free Reserves shown in Balance Sheet (in millions of francs)
North American Reinsurance Corporation, New York Share Capital US $ 6,000,000
Underwriting Result * (incl. Management Expenses) Investment Income, Net Realized Capital Gains, and Taxes
The rapid growth of the premium income is partially attri­ butable to the fact that in connection with the measures adopted to prune the reinsurance portfolio, the premiums had been considerably reduced in the previous year by portfolio withdrawals. Despite the adverse effects of hurri­ cane "Camille" a substantial improvement of the business underwritten was evident. The decrease in the realized capital gains led to a slightly reduced financial result. — The dividend remained unchanged at US $ 375,000.
Underwriting Result (incl. Management Expenses) - 279,000 174,000 Net Investment Income, Net Realized Capital Gains, and Taxes 677,000 385,000
' adjusted for changes in commission equity Partially due to the influence of portfolio assumptions, an exceptional increase of the gross premium income was achieved. The improvement of the underwriting result is all the more remarkable in the light of the generally ad­ verse trend on the Canadian market. — The dividend re­ mained unchanged at Can. | 187,500.
Underwriting Result (incl. Management Expenses) 184,000 1,067,000 Net Investment Income and Net Realized Capital Gains 231,000 119,000
Underwriting Result (incl. Management Expenses) 2,000 152,000 Investment Income, Net Realized Capital Gains, and Taxes 280,000 105,000
Underwriting Result (incl. Management Expenses) - 349,000 - 659,000 Investment Income, Net Realized Capital Gains, and Taxes 176,000 399,000
The non-Life branches again showed a deficit, mainly due to the adverse experience in the Hail and Fire lines. The Life branch yielded a modest profit. The capital losses in­ curred in the course of restructuring the bond portfolio considerably lessened the Life branch result as well as the financial result. — As in the previous year, no dividend was paid.