Deputy Managers K. Aerni E. Bart E. Bosshardt E. Burnens V. Cachin W. Diehl G. A. Gubler J. J. Hagedorn R. Hedinger W. Küster
P.-F. Niquille R. Ochsenbein H. Odermatt Gh. Robert-Tissot H. Ryffel M. D. de Sails H. Salzmann H. Schönenberger E. Spargnapani
Assistant Managers R. Aeberli A. Albrecht E. Arpagaus G. Bassin E. Baumgartner F. Bolliger H. Brodbeck P. E. Christen F. Ehrsam
We have the honour to present to you the Annual Report and Statement of Accounts of the Company for the business year 1966/67. The 103rd business year embraces the rein­ surance business for the calendar year 1966 and the other income and expenditure from 1st July, 1966 until 30th June, 1967.
Reinsurance Developments in technology, the economy and the social structure are much more rapid today than in the past. These give rise to new perils and sources of liability, which continually and profoundly change the risks insured. All branches of insurance are subject to this development but it particularly affects the General Accident branch, which is constantly gaining in importance.
For treaties under which we must reckon with changes in the risk situation, and thus also in the losses incurred, it is necessary to adjust to the new circumstances. If a reinsured company refuses to take pressing remedial measures, all we can do is to withdraw our cover. Therefore, in the year under report — and in the current year even more than before — cancellations unfortunately proved unavoidable even for connections of long standing. For a considerable time we have been reconciled to the loss of premium associated with the reduction of structurally bad commit­ ments, the object being to improve the business returns.
The fact that the gross premium income has nevertheless risen by 8.7 % is largely explained by the premium rate increases applied by ourselves and the ceding companies.
The premium income for own account amounts to Sw. frs. 1,477 million (in the previous year, Sw. frs. 1,352 million). For the Swiss Re Group the net premium income stands at Sw. frs. 1,998 million (previous year, Sw. frs. 1,832 million). Compared with the preceding year, the sources of our business have not changed essentially, either geographic­ ally or with regard to branches.
The aggregate underwriting result, which closed with a loss of Sw. frs. 21.4 million in the previous year, shows a reduced deficit of Sw. frs. 13.4 million.
The Hail branch again yielded a profit. The Burglary branch similarly closed with a profit. However, the in­ crease of the crime rate, especially the ever-growing num­ ber of bank robberies and cash-in-transit hold-ups, is a source of concern. The smaller lines of Water Damage, Plate Glass and Livestock insurance, which are of less importance in terms of premiums, ran as a whole at a profit. The reinsurance of Engineering risks was promoted according to plan in the year under report. The relevant premium income is, however, still too small to cope with the fluctuations of business experience typical of this branch. Due to several major losses this line of insurance closed with a deficit.
has produced such a high number of total losses (312 ships with 822,538 GRT) as 1966. It must be pointed out that not only old vessels and vessels built during the last War tell victim to the perils ot the seas, but that numerous modern vessels also suffered the same fate. The latest technical advances in shipbuilding, navigational aids and commu­ nications are not yet, in themselves, serving to reduce the losses. It still depends on the men who are called upon to act in dangerous situations. Marine Cargo and Specie insurance were disappointing. Here too, a technical inno­ vation, the use ot containers, has not so tar brought any decline in losses. The improvement measures which tor a long time have been urgently required in direct insurance are only gradually being introduced.
The General Third Party Liability and Motor Third Party Liability branches also showed a considerable loss in the year under report, despite our careful and selective under­ writing policy. The promotion by legislation and court practice of an ever wider concept of liability, the ever larger claims of injured parties, the sustained inflation, and other circumstances, make it clear that in the future too we shall have to contend with further steep rises in the losses incurred in this sector of insurance. For years we have accepted this chronically adverse business only from ceding companies which also cede to us at the same time other business with prospects of profitability. — The reinsurance of Aviation risks closed with a loss, which is attributable to Aircraft Hull insurance. — The reinsurance of Atomic risks was not affected by any major losses.
With a growing volume of business and despite disappoint­ ing results in the United States, the Surety, Fidelity and Credit lines again produced a profit.
In the year under report the "cost or market" method has again been applied in showing the quoted securities in the balance sheet. Thanks to the steadying or slight fall in interest rates in Europe, the depreciation requirement on European bonds was minimal; on the other hand it was necessary to allow for depreciation elsewhere, particularly in the case of our North American subsidiary companies because of the historically high interest rates at the end of the year under report. Nevertheless, the amounts re­ quired for depreciation were far below those of the pre­ vious year. In line with the worldwide improvements in the stock market, the needs for depreciation in the case of ordinary shares were relatively modest. Through the redemption of bonds which had either been purchased below par or written off in previous years, as well as through sales made within the normal course of portfolio management, capital gains were realized which covered the depreciation on bonds. — By virtue of the fairly general improvement in European bond and share prices at the end of the year under review, the hidden surplus on the quoted securities rose by Sw. frs. 37.1 million and, at a total of Sw. frs. 194.9 million, lies only 7 % lower than two years ago.
Of the assets of our Company shown overleaf, Sw. frs. 169,938,000 are held by Trustees appointed by us in over­ seas territories.
After a below-average increase in the previous year the management expenses, of which 60 % consists of salaries, grew by approximately 10 % in the year under report. Salary increases on merit and cost of living increases which are unfortunately permanent have an important influence on this growth. Since we have a serious shortage of qualified staff, we very much welcome the abolition of the personnel quota for Swiss at the end of 1967; however, as a result of this we shall have to reckon with a further appreciable increase in personnel costs.
The last General Meeting re-elected Mr. Max Petitpierre to the Board of Directors. For reasons of age, Mr. E. Hiirlimann, Honorary Chairman, to whom our appreciation was expressed in the last Annual Report, did not stand for re-election and has retired from the Board.
The term of office of Mr. Karl Brunner and Mr. Max H. Schneebeli on the Board has expired by rotation. Both gentlemen offer their services again and are immediately eligible under the Articles of Association.
The new General Management has been formed by the former Deputy General Managers, Messrs. W. Leimbacher, H. F. Rudolf and H. B. Wischer. They were appointed as General Managers by the Board of Directors with effect from 1st January, 1967.
The net profit for the year of report amounted to Sw. frs. 27.5 million compared with Sw. frs. 23.3 million (after an allocation of Sw. frs. 5 million from the Fund for Extra­ ordinary Losses) in the previous year. Including the balance brought forward of Sw. frs. 2.3 million the sum of Sw. frs. 29.8 million is at the disposal of the General Meet­ ing. The Board of Directors proposes payment of an un­ changed dividend of Sw. frs. 60 per share, and the allo­ cation of a contribution of Sw. frs. 2.5 million as in the previous year to the Staff Life Assurance and Pension Fund, Sw. frs. 300,000 to Donations and Sw. frs. 300,000 to Directors' Remuneration. Upon acceptance of these propos­ als by the General Meeting the balance carried forward would be Sw. frs. 2.7 million.
In addition the Board of Directors proposes that the remainder plus the balance brought forward from 1965/66 should be allocated as follows: Additional Dividend Donations to Charity
Capital Funds After approval of the Annual Accounts for the business year 1966/67 the capital and free reserves of the Company amount to Sw. frs. 202.7 million (previous year Sw. frs. 202.3 million).
Audit In accordance with Art. 723 of the Swiss Code of Obliga­ tions the present Annual Statement has been examined and found correct by an independent Accountant.
The actuarial auditor, Mr. W. Saxer, has moreover con­ firmed in his report that the technical reserves of the Life department at the end of 1966 were correctly calculated on the basis approved by the Swiss Federal Council.
The report of the Auditors appointed by the Shareholders appears after the balance sheet.
Sw. frs. Sw. frs. Sw. frs. Sw. frs. Aii Classes excl. Life
We have pleasure in recommending that the Accounts as at the 30th June, 1967 be approved, that the Adminis­ tration of the Company be given full discharge in this respect with best thanks, and that the proposals of the Board regarding the distribution of the profit be accepted.
in millions of Sw. frs. in millions of Sw. frs. Fire 711 649 Hail 12 10 Burglary 33 30 Engineering, Water Damage, Plate Class and Livestock 27 23 Marine 134 122 Accident 136 114 Sickness 101 90 Third Party Liability 578 556 Surety, Fidelity and Credit 110 98 Life 400 370
Capital and Free Reserves The consolidated capital and free reserves of the Swiss Re Group, after distribution of the profit, attained the figure of Sw. frs. 363 million at the 30th June, 1967, as against Sw. frs. 370 million at the end of the previous business year.
Underwriting Result * (incl. Management Expenses) - 4,883,000 - 8,819,000 Investment Income, Net Realized Capital Gains, Taxes 4,839,000 4,761,000 * adjusted for changes in commission equity The underwriting deficit emanated mainly from Liability and Surety business; a sharp rise in the cost of the average claim and belated claims were the determining factors. — The dividend was reduced by half, to $ 750,000.
The gross business in force increased by $ 146 m. to $ 2,469 m. With a continued favourable mortality expe­ rience, the gross result, in which the retrocessionaires participated to a somewhat larger extent than in the pre­ vious year, showed little change. The improvement of the overall result was attributed to the amendment of statutory requirements regarding valuations. The dividend was raised from $ 300,000 to $ 360,000.
Underwriting Result * (inch Management Expenses) - 614,000 - 537,000 Investment Income and Net Realized Capital Gains 870,000 913,000
The gross business in force rose by C| 119 m. to C$ 633 m. In spite of the further considerable pre-financing costs, a favourable result was achieved; for the net account the result was even better, since the retrocession bore a deficit. As in the previous year, no dividend was paid.
Underwriting Result (inch Management Expenses) - 137,000 - 306,000 Investment Income, Net Realized Capital Gains, and Taxes 260,000 438,000
Underwriting Result (incl. Management Expenses) - 539,000 - 650,000 Investment Income, Net Realized Capital Gains, and Taxes 179,000 165,000
"North American Reinsurance Corporation 245 Park Avenue, New York, N. Y. 10017 with Offices in Atlanta, Chicago and San Francisco
Swiss-South African Reinsurance Company Ltd. 121 Eloff Street, Braamfontein, Johannesburg with an Office in Cape Town 1950 All classes
Australian Branch Embank House, 325 Collins Street, Melbourne C. 1 with an Office in Sydney