Note on the illustrations In this Annual Report Laser beams - laser stands for "Light Amplification by Stimulated Emission of Radiation" - are intense, directed beams of monochromatic light at a very high energy level. In other words, a laser beam is an intense light which can be emitted in a single direction with remarkable accuracy. Laser technology plays an increasingly important role in the construction industry, metal processing, medicine and surgery, in light conductor technology, digital audio and video reproduction and in many fields of scientific research. The list of possible uses of lasers, primarily serving peaceful purposes but also gaining in significance in defence, can be extended almost at will. The research and development of new application possibilities in particular, but also the actual uses of laser beams, call tor large investments, often leading to enormous concentrations of property values. Here too insurance and reinsurance play a significant role by covering the various risks. The photos on pages 2,10,15, 30 and 43 show the fields of laser application. Photos: H. R. Bramaz, Kilchberg, Switzerland.
Summary of Important Figures in millions of Swiss francs Swiss Re, Zurich 1984 1983
Franz Luterbacher Zumikon, Chairman of the Board of Directors (ret.) of BBC, Brown, Boveri & Co., Ltd., Baden 1985
Marcel Odier Cologny, Partner in Lombard, Odier & Cie, Bankers, Geneva 1988
Flelmut F. Rudolf Zumikon, General Manager (ret.) of Swiss Re 1986
Auditors Term to expire in Swiss Auditing and Fiduciary Company, Zurich 1985
Portugal, Eastern Europe, Near, Middle and Far East, Latin America, Caribbean, English-speaking Africa R-C. Perrenoud, Senior Executive Manager RWürsch, Executive Manager G. Bachmann, Executive Manager R Bieri, Executive Manager G. Holzel, Executive Manager H. Haag, Manager G.Haering, Manager H. Stettier, Manager H. H.Zollinger, Member ot Management R. Maag, Member ot Management F J. Wingrove, Member ot Management
Reinsurance technique, acquisition, special risks, insurance medicine J.-G. Mayor, Senior Executive Manager H.C.Rutishauser, Executive Manager E. Deled, Executive Manager R. Eckert, Executive Manager L. D. Kirianott, Executive Manager F. Lock, Executive Manager Y. Burgener, Manager S.Courant, Manager H. Fuchs, Manager E. Hirzei, Manager F.Joseph, Manager K. KQstahler, Manager A. Loye, Manager S. Menn, Manager LT.Pozzi, Manager FSchuithess (Ms.), Manager J.-RVogei, Manager K.Wettenschwiier, Manager M. L Hetti, Member ot Management J. Doktor, Member ot Management B. R. Lacock, Member ot Management A. Perret, Member ot Management
Reinsurance technique and acquisition special lines J. 0. Roos, Senior Executive Manager H. R. Kaufmann, Senior Executive Manager
Risk management. Special assignments. Consultancy service E. Baumann, Manager B.Nigg, Manager J. Hotmann, Member ot Management
Capital market investments, real estate A.W. Saxer, Senior Executive Manager R R Hügle, Executive Manager A. Decurtins, Manager B. H. Letsch, Manager E, Lecher, Manager B. Rerrin, Manager J.-R Rreyer, Manager RE.Rohner, Manager
B. Laube, Senior Executive Manager E. Franci, Manager R Schweizer, Manager
Holdings, planning and control, law and taxes T.Obrist, Senior Executive Manager J. B. R. Lieberman, Executive Manager 0. Blanc, Manager 0. E. Brooks, Manager R Egger, Manager H. H. Prey, Manager M. Gaal, Member of Management
Steadfast efforts aimed at stricter risk selection, better reinsurance conditions and appropriate premiums have borne fruit in various sectors of our worldwide business in the year under report. In particular, this applies as regards regions to non-American markets and as regards reinsur­ ance branches to special lines and facultative reinsur­ ance. Although in several countries premiums in the still adverse industrial Fire business have been raised or at least have not been even more reduced, further premium increases in this branch are absolutely necessary, not only in the United States, but also in Europe, e.g. in Germany, France and England. Just as necessary are in­ tensified efforts in the sector of loss prevention and re­ duction.
On the international reinsurance markets the notorious oversupply at unrealistic premiums and conditions has finally given way to a general sobering expressed, for American Liability risks in particular, in a drastic shrink­ age of capacity. In 1984 the American insurance industry registered its worst result this century in the Non-Life branches, with the exception of the 1906 earthquake
The shock effect of the underwriting losses sustained in American business - with more yet to come because of the many Liability claims for damage caused years ago but only becoming apparent today - should prompt in­ surers and reinsurers not only to pay more heed again to the limits of insurability, careful risk assessment and the best possible loss prevention, but also to implement re­ alistic premiums in all branches.
The technical reserves have been substantially strength­ ened. Moreover, the capital funds shown have been in­ creased. Pending approval by the General Meeting of the distribution of profit, they will amount to Sw.frs. 796 million.
Life reinsurance again brought a good result, financial operations an excellent one. Contributing to the latter were both a substantial increase of current income and, thanks to favourable stock market conditions, consider­ able capital gains.
The Board of Directors would liketo record their apprecia­ tion to all members of staff at home and abroad for the good work once again accomplished this year.
Tunnel construction Lasers are used in tunnel construction as optical axes for the precise alignment of drilling machinery. Lasers are also used in other sectors of the construction industry.
The 1984 business year comprises both reinsurance business and genera/ income and expenditure for the period from 1st January to 31st December, 1984.
In Swiss francs gross premiums rose as compared with the previous year by 9.7%, net premiums by 11.2%. This growth is, however, for a large part, due to the fact that the exchange rates of many foreign currencies were higher than a year earlier. Had exchange rates remained the same, the increase in net premiums would have been only 4.6%. The result of Non-Life reinsurance again wors­ ened on account of the unabated problems in worldwide industrial Fire business and North American Liability business. In contrast. Life reinsurance showed a slightly higher profit. Overall, the underwriting loss from reinsur­ ance business was larger than in the 1983 business year. Investment income rose considerably as compared with the previous year. After taking into account management expenses, taxes and other income and outgo, there re­ mained a net profit of Sw.frs. 101.2 million (previous year, Sw.frs. 90.0 million).
The gross premiums from Non-Life reinsurance, when expressed in Swiss francs, rose in the year under report by Sw.frs. 340 million, or 9.5%, to Sw.frs. 3,921 million. This at first glance striking increase is, however, chiefly due to the higher exchange rates of almost all major foreign currencies. At unchanged rates the premium growth would only have been 2.8%. In view of the contin­ ued unsatisfactory market situation in many fields of in­ surance and reinsurance, a cautious and selective under­ writing policy was maintained in the year under report.
The premium income in Fire reinsurance rose slightly be­ cause of foreign exchange rates. The regional develop­ ment of volume varied greatly and for the most part re­ flected the market conditions. In difficult markets the growth rates were modest almost without exception; in those with good results they were higher. In the year un­ der report it was not possible to achieve more than a slight reduction in the previous year's significant loss. Whereas the overseas business of Swiss Re, Zurich, improved. North American business produced a greatly increased loss. As a consequence of ruinous competi­ tion in industrial Fire business the premium rates in the United States have fallen to a level which can no longer
With stagnating premium income. Burglary, Fidelity and allied lines registered a profit for the first time in years. The efforts to improve the result of Burglary reinsurance appear to be gradually taking effect. There are, however, no signs of an actual decrease in crime and results are expected to remain subject to big fluctuations in future. Fidelity and Glass Breakage produced positive. Water Damage and Livestock reinsurance negative results.
In Accident reinsurance it was possible to raise the pre­ mium income overall, although the increase at Swiss Re, Zurich, was partly offset by a slight reduction stemming from the cessions of subsidiary companies. The profit of the previous year was halved because of the bad experi­ ence in Great Britain and a considerable drop in profit in the United States.
The premium income in Sickness reinsurance again rose slightly; the profit was somewhat larger.
In General Third Party Liability reinsurance the premium income actually fell if unchanged exchange rates are as­ sumed. This applies above all to the particularly critical North American Liability business. The loss remained just as high as in the previous year and stems to a substantial extent from late claims, for which considerable reserves were again allocated. The Executive Committee of the Swiss Re continues to view the situation in North Ameri­ can Liability business as extremely serious. The North American subsidiary companies have been instructed to write no further industrial and professional Liability busi­ ness that does not comply with the newly-formulated re­ quirements for insurance and reinsurance terms and premium rates. In addition, Swiss Re, Zurich, has taken measures to apply limits in time and amount to the lia-
The increase of premium income in Motor reinsurance is due partly to foreign exchange rates, partly to higher tar­ iffs in certain European markets. The underwriting loss has greatly increased. It stems principally from the United States, the Federal Republic of Germany and France. In the United States the inadequate premium rates in direct insurance for both private and commercial vehicles are responsible for the massive deterioration. This applies in part also to Germany. In France the reserves had to be strengthened following an amendment to the law which can make claims already incurred but not yet settled more expensive. Moreover, Germany, France and Switzer­ land were affected by hailstorms which for the Swiss Re brought claims in the Motor Physical Damage branch to­ talling Sw.frs. 31 million.
Fire 1,351 1,256 Hail 40 35 Burglary, Fidelity and allied lines 117 112
Accident 341 323 Sickness 109 101 General Third Party Liability 358 346
The premium income in Aviation reinsurance has grown oonsiderably. Approximately one third of the increase is due to the higher premium rates in direct insurance, the rest to the effect of the strength of the dollar against the Swiss franc. The previous year was considered the worst ever in Aviation insurance, whereas the year under report registered the lowest number of Aviation accidents in scheduled flights since the introduction of jet aircraft.
The premium income in Credit and Surety reinsurance rose as compared with the previous year by 31.1%. The above average growth is due on the one hand to general premium increases in Credit insurance and on the other to surety-linked business in the North American market. Despite a collapse In the result of construction contract bonding business in the United States - after a series of profitable years - gratifying results were achieved in both branches.
At thie end of 1984 tfie net amount of business in force totalled Sw.frs. 52,400 million, whicti was 11.3% more tfian in ttie previous year. Ttie net new business of Sw.frs. 11,200 million, calculated according to new methiods, was also hiigtier ttian ttie previous year's pro­ duction. Tfie increase from France and Latin America was very gratifying. In certain major markets, tiowever, par­ ticularly in Europe, ttie previous year's level could just be maintained.
For bond investments the past year was overall satisfac­ tory. The persistently low Inflation rates continued to enable good real Interest rates on Invested capital. Al­
In the case of new Investments, the main emphasis lay on bonds and real estate, while convertible bonds In particu­ lar were reduced. The average maturity of the bond port­ folio has risen slightly. The balance-sheet value of all fixed-Interest Investments rose by Sw.frs. 534 million to Sw.frs. 3,967 million, while that of shares remained al­ most unchanged at Sw.frs. 790 million. The Increase of the real estate portfolio by Sw. frs. 145 million Is due to the acquisition of already completed objects and to new constructions.
Capital Market Investments and Real Estate Distribution by investment category at balance-sheet values (previous year In parentheses)
Bonds, certificates ot deposit and mortgage bonds 3,031 2,414 Loans (including mortgages) 677 710 Fixed-interest securities with equity character 259 309 Shares 790 748 Real estate 664 519
Holdings and loans comprise holdings ot Sw.trs. 49 mil­ lion (previous year, Sw. trs. 35 million) and loans to Group companies ot Sw.trs. 509 million (previous year, Sw.trs. 452 million). These investments have risen by Sw.trs. 71 million to Sw.trs. 558 million, largely because ot the in­ crease ot the loan to SwissRe Holding.
Capital market investments and real estate 5,421 4,700 Floldings and loans 558 487 Cash deposits from reinsurance transactions* 1,422 1,323 * Net amount, i.e. after deduction ot deposits from retro­ cessions. Investments totalling Sw.trs. 81 million (previous year, Sw.trs. 57 million) were held by overseas trustees appointed by us.
Net cash deposits from reinsurance business, i.e. after deduction ot deposits from retrocessions, rose - pri­ marily as a result ot foreign exchange fluctuations - by Sw.trs. 99 million to Sw.trs. 1,422 million.
The stock market capitalization of a company corre­ sponds to the stock exchange value of all outstanding se.curities of the company capital. For the Swiss Re the stock market capitalization at the beginning of Septem­ ber 1985 was as follows: 400,000 registered shares at Sw. frs. 4,630 44,000 bearer shares at Sw.frs. 12,700 340,000 non-voting shares at Sw.frs. 2,300
— • 1 rate at year-end 2 rate at mid-September t985
At this year's General Meeting the terms of office of Messrs. E. Luk Keller, Franz Luterbacher, Hans R. Lüthy and Hans Ulrich expire. All four gentlemen are standing for re-election.
Having reached retirement age, Mr. Heinz B. Vischer is re­ signing from the Board. He has been in the service of our company since 1954, first as head of our advisory com­ pany in Hong Kong. In 1964 Mr. Vischer was promoted to the General Management and in 1973 elected to the Board of Directors. Since 1973 he has also been a mem­ ber of the committee, since 1974 the Deputy Chairman and from 1976 to 1980 he was Managing Director. We should like to thank Mr. Vischer for fhe great service he has rendered our Company.
should like to thank for their many years of valuable ser­ vice, are to take over new functions at one of our Group companies.
Mr. Jürg Spühler joined our Company on 1st September 1985 as Member of Management in an Advisory Capacity.
The General Managers: R E. Christen, R-F. Niqullle H. Odermatt, H. Schönenberger
On 31st December, 1984, Messrs. Erwin E. Arpagaus, Gerard Lavanchy and Ralph Ochsenbein, Senior Execu­ tive Managers, Fritz Bolliger, Executive Manager, Robert R Brouwer, Member of Management in an Advisory Capacity, and Walter MInorettI, Manager, entered retire­ ment. Messrs. Ernst A. Kubli, Senior Executive Manager, General Secretary and Secretary of the Board of Direc­ tors, and Jean-Rlerre MIchot, Manager, retired on 30th June, 1985. All these gentlemen have rendered our Com­ pany great services for decades and we should like to ex­ press our sincere gratitude to them. - Mr. Reto Arpagaus, Executive Manager, left our Company at the end of Sep­ tember, 1985, and Mr. Felix Renninger, Manager, will leave at the end of October, 1985. Both gentlemen, whom we
Cash in hand, postal bank account, bank balances 319,919,410 196,140,667 Current-account balances 1,205,317,526 1,037,920,177 Cash deposits 1,531,843,878 1,431,838,700
Fixed-interest securities 3,289,181,671 2,723,295,387 Loans (including mortgages) 677,323,659 709,767,257 Shares 790,451,413 748,236,359 Real estate 663,766,379 518,762,816
Profit brought forward from previous year 3,167,114 2,379,772 Net Profit 101,221,623 90,030,342
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 31st December, 1984. Differences arising from the conver­ sion of balance sheet items in foreign currencies are booked via a corresponding reserve and therefore re­ main outside the profit and loss account. The currencies which are most important for our business activity abroad developed over the previous year as follows: Liabilities
Claims comprise benefits forterm and endowment insur­ ance, paid annuities and the adjustment in the outstand­ ing claims reserve. The total figure for own account rose in the year under report by Sw.frs. 23.0 million to Sw.frs. 226.4 million. The additional amount is the result of an increase of Sw.frs. 24.2 million in the payments for Life insurance and annuities and a decrease of Sw.frs. 1.2 million in the outstanding claims reserve.
These result from the total of the net premiums and the difference in the unearned premium reserve over the last reporting year. At Sw.frs. 3,111.4 million they were Sw.frs. 299.4 million, or10.6% above the previous year's amount.
Gross premiums totalled Sw.frs. 447.0 million, Sw.frs. 15.7 million of which were for annuities purchased. After deduction of retrocession premiums of Sw.frs. 22.3 mil­ lion, the remaining net premiums amounted to Sw.frs. 424.7 million, corresponding to a growth rate of 11.3% over the previous year.
Of the total increase of Sw.frs. 77.1 million, Sw.frs. 65.7 million applied to Life insurance and Sw.frs. 11.4 million to annuities.
The investment income of Sw.frs. 528.2 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.
Management expenses in the year under report showed overall an increase of Sw.frs. 11.0 million to Sw.frs. 139.4 million, or by 8.5% compared with 7.7% in the previous year. Personnel costs rose by 2.5% (previous year, 8.4%) with a decrease in the number of staff of 0.3% (previous year, increase by 4.3%). Other costs rose much more sharply, namely by 25.2%. This increase is mainly due to investments in the field of data processing.
The tax burden in the year under report amounted to Sw.trs. 51.2 million, as against Sw.trs. 55.4 million in the previous year. This also includes the single payment ot stamp duty tor the increase ot capital funds in 1984. The slightly lower tax amount resulted primarily from a refund in the United States.
Holdings are largely managed by SwissRe Holding and financed by loans to this company. The shareholding ot Swiss Re, Zurich, in SwissRe Holding appears in the bal­ ance sheet together with certain other holdings in advi­ sory and service companies.
Ot these balances Sw.trs. 670.3 million was tor reinsur­ ance and Sw.trs. 36.6 million tor retrocession business. Other liabilities totalled Sw.trs. 68.9 million, mainly com­ prising current accounts run tor personnel welfare funds and pool companies.
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 increase of the tech­ nical reserves includes an exceptional strengthening for late claims in American Liability business of Sw.frs. 115 million, which was charged to the realized capital gains on securities.
Life Reinsurance Policy reserves 1,228.1 1,128.5 Outstanding claims reserve 217.1 192.9 1,445.2 1,321.4 in % of insurance in force, net 2.8% 2.8%
On the balance-sheet date the capital comprised the share capital of Sw. frs. Ill million (400,000 registered and 44,000 bearer shares each with a nominal value of Sw. frs. 250.-) and a non-voting share capital of Sw.frs. 17 million (340,000 non-voting shares each with a nominal value of Sw.frs. 50.-).
Share capital 111.0 111.0 Non-voting share capital 17.0 12.0 Reserves and profit carried forward 667.8 536.7 Total 795.8 659.7
The Board of Directors proposes to the General Meeting the following allocation: Sw. frs. Sw. frs.
If the proposal of the Board of Directors is accepted, dividends of Sw. frs. 115.- per registered or bearer share (nominal value, Sw.frs. 250.-) and Sw.frs. 23.- per non­ voting share (nominal value Sw.frs. 50.-) will be paid.
Bearer shares and non-voting shares: against presentation of Coupon No. 33.
As the Auditors of your Company we have examined the accounts for the year ended 31 st December, 1984, in ac­ cordance with the provisions of the law.
Liabilities Current-account balances Casfi deposits Tectinical reserves Non-Life reinsurance Life reinsurance Transitory entries, value adjustments and otfier provisions (incl. dividend) Capital Funds Shown (after distribution of profit)
• Reinsurance business of the calendar year and general income and outgo for the period from 1.7.-31.12.79 •• These figures are not comparable with those of the other years following change in balance-sheet date from 30th June to 31st December.
in the year under report the consolidated net premiums reached Sw.frs. 9,815 million, a rise of 10.4% (previous year, increase of 1.8% to Sw.frs. 8,894 million). Disre­ garding the effect of foreign exchange rates, the growth rate of consolidated net premiums dropped to 3.8%. Reinsurance accounted for 67% of the premium volume and insurance for 33%.
The consolidated overall result rose by 14.3% to Sw.frs. 120 million (previous year, increase of 8.2% to Sw. frs. 105 million). The various elements of the Group profit devel­ oped in differing ways. The difficult market conditions in the American reinsurance sector led to a further deterio­ ration of the underwriting result in Non-Life insurance. On the other hand, the previous year's positive result in Life insurance improved further. Overall, underwriting busi­ ness produced a loss of Sw.frs. 450 million (previous year, loss of Sw.frs. 299 million). The increase of the investment volume, a generally attractive interest rate level and in particular the higher foreign exchange rates brought about an increase of investment income by Sw.frs. 188 million to Sw.frs. 1,040 million (previous year, Sw.frs. 852 million). Slightly higher write-offs and the substantially Increased realized capital gains from secu­ rity transactions as a result of the generally good stock market climate led on balance to an increased profit of Sw. frs. 166 million (previous year, Sw. frs. 104 million). The outgo for management expenses and taxes was, how­ ever, likewise more substantial because of the exchange rates. The Group's capital funds shown, including Group profit, amounted at the end of 1984 to Sw.frs. 1,172 million (previous year, Sw.frs. 936 million).
The consolidated net premium income in Non-Life rein­ surance increased by 12% (previous year, 6%) to Sw.frs. 5,134 million, primarily as a result of the massively higher valuation of U.S., Canadian and Australian dollars; without these effects the increase was 4%. The persis­ tently fierce competition in major markets, the accumula­ tion of loss occurrences and the need for further reserves for late claims in American Liability business caused the underwriting loss to rise to Sw.frs. 530 million (previous year, Sw. frs. 380 million), the greater part of this loss be­ ing due to reinforcing of reserves.
New investments, generally higher interest rates and positive foreign exchange rate changes improved the in­ vestment income once again by Sw. frs. 175 million (pre­ vious year, Sw.frs. 59 million) to Sw.frs. 888 million. The prevailing trend in certain markets for rising interest rates as well as new investments caused a slightly higher write­ off requirement, which could be covered by realized capi­ tal gains. Management expenses and taxes had a greater burden on the Profit and Loss Account than in the previ­ ous year because of exchange rates. The consolidated Group profit of the reinsurance companies amounted to Sw.frs. 86 million (previous year, Sw.frs. 71 million).
At the North American Reinsurance Corporation, New York, gross premiums rose to US$ 734.6 million (previous year, US$ 609.2 million). The major part of the premium growth stems from Accident and Sickness business which showed balanced results. The premium Increase In the other branches was among other things the out-
come of improved treaty conditions. Thie competitive struggle reached its climax in 1984. Falling premium rates and rising claims and cost burdens throughout the mar­ ket brought the worst underwriting result for the American insurance industry since the San Francisco earthquake catastrophe (1906). In the case of Non-Life reinsurers the average rate for paid and reserved claims plus acquisi­ tion costs and management expenses was 27% more than the premiums earned. This market situation also hampered our remedial efforts and the results of our sub­ sidiary company. The underwrifing loss approximately corresponded to the market average and also affected the investment income. Overall, the company published a negative result of US$ 11.4 million (previous year, profif of US$ 30.2 million). The dividend was reduced to US$ 4.5 million (previous year, US$ 10.5 million).
The Canadian Reassurance Company, Toronto, in­ creased slightly its amount of conventional business in force. The underwriting profit rose substantially, partly as a result of the reduced financing requirements for new business. The profit shown amounted to Gan.$ 6.0 million (previous year, Can.$ 1.0 million); the dividend remained unchanged at Can.$ 0.5 million.
The Bavarian Reinsurance Company Limited, Munich, again showed in Non-Life reinsurance a slight growth of gross premiums to DM 1,390.7 million (previous year, DM 1,326.3 million) after the previous year's decline. The positive effects of remedial measures were wiped out by higher claims payments following various natural events, in particular the Munich hailstorm of 12th July, 1984, so that the underwriting loss rose slightly. - In Life reinsur­ ance the gross amount of business in force grew to DM 5,300 million (previous year, DM 3,700 million). The un­ derwriting result was, however, unsatisfactory. - Invest­ ment income again rose over the previous year, so that a profit for the year of DM 8.0 million (previous year, DM 6.0 million) can be shown. The company expecfs to make a dividend payment of DM 4.0 million (previous year, DM 3.0 million).
The consolidated gross premiums of the Vereinigte Versicherungsgruppe, Munich, rose by 2.0% to DM 2,984.2 million. The Vereinigte Aachen-Berlinische Versicherung AG increased its gross premiums by 4.5% to DM 610.0 million (previous year, DM 583.5 million). Fol­ lowing the underwriting losses of preceding years, an underwriting profit was achieved for the first time. This improvement and the significant investment income enabled a higher profit of DM 17.0 million (previous year, DM 15.1 million) to be shown. Of this amount, DM 3.1 mil­ lion was paid out as dividend and - in view of the capital increase carried out in 1985 - DM 13.9 million as special distribution. The latter, taxed at a lower rate, was returned to the company on account of the capital increase. - The business year of the Vereinigte Eos-Isar Lebensversiche­ rung AG was satisfactory. The amount of insurance in force rose by 4.4% to DM 11,400 million (previous year, DM 10,920 million). Claims payments fell steeply. Fligher in­ vestment income was again responsibleforthe improved result. After direct credits and an allocation to the reserve for policyholders' bonuses, a profit for the year remained of DM 2.8 million (previous year, DM 2.7 million). Out of this amount, a dividend of DM 0.8 million (previous year, DM 0.7 million) was paid and DM 1.0 million (previous year, DM 1.0 million) contributed to the paid-up capital. The premium growth of the Vereinigte Krankenversiche­ rung AG was 1.1% taking into account the merger per 1st January, 1984 of the Salus Krankenhauskosten-Versi-
The General Surety & Guarantee Co. Limited, Wilmslow, an insurance company specializing in surety business, registered gross premium income of £ 2.8 million (previ­ ous year, £ 2.9 million). The improved development of claims is clearly reflected in the higher profit for the year of £ 138,000 (previous year, £ 61,000). A dividend of £ 70,000 (previous year, £ 50,000) was paid.
The net profit of the reporting year doubled from Sw.frs. 3.3 million in the previous year to Sw.frs. 6.6 million. The pronounced improvement of the profit is the result of clearly reduced overall outgo with only a slight decline in dividend payments. The gratifying result enabled the allo­ cation of Sw.frs. 2.5 million to the special reserve fund and the payment of an increased dividend of Sw.frs. 3.5 million (previous year, 3.0 million).
Responsible for the decrease of the overall outgo was the surplus of realized capital gains over write-offs and value adjustments of Sw. frs. 5.0 million, compared with a nega­ tive balance of Sw.frs. 1.6 million in the previous year. Further outgo comprises mainly the loan Interest of Sw. frs. 24.4 million (previous year, Sw. frs. 22.4 million) to Swiss Re, Zurich, taxes of Sw.frs. 3.3 million (previous year, Sw.frs. 3.2 million) and management expenses of Sw.frs. 2.2 million (previous year, Sw.frs. 1.7 million). The slight drop in dividend payments by Sw.frs. 0.7 million to Sw.frs. 31.5 million was due to lower income of minority holdings as a result of both a reduction of dividends and a smaller portfolio. The dividends of Group companies, on the other hand, rose minimally. Higher dividends were paid by the Australian Reinsurance Company Limited, the Swiss-South African Reinsurance Company Limited and the SWITZERLAND General Insurance Company Limited as well as by certain insurance companies in Germany. The SwissRe Holding (North America) Inc. and the SR Beteiligungen AG showed lower dividends. For­ eign currencies had overall a positive effect on dividend payments.
Gross premiums 5,776 3,337 9,113 7,936 Premiums ceded - 642 - 579 -1,221 - 823 Net premiums 5,134 2,758 7,892 7,113 Adjustment in unearned premiums - 57 - 270 - 327 - 259 Earned premiums 5,077 2,488 7,565 6,854 Interest on Sickness insurance fund - 205 205 168 Commissions, profit commissions, underwriting expenses -1,382 - 726 -2,108 -1,962 Claims incurred -4,225 -1,965 -6,190 -5,428
Gross premiums 1,901 518 2,419 2,215 Premiums ceded - 483 - 13 - 496 - 434 Net premiums 1,418 505 1,923 1,781 Adjustment in policy and annuity valuations - 103 - 213 - 316 - 206 Interest on Lite insurance and annuity fund 175 266 441 320 Commissions and profit commissions - 411 - 339 - 750 - 687 Claims incurred incl. adjustment in outstanding claims reserve - 874 - 145 -1,019 - 905 Surrenders - 137 - 64 - 201 - 234
Investment Income 888 128 1,040 852 Ottier financial income - - 10 7 Management expenses - 400 - 82 - 500 - 434 Rate fluctuations, depreciation, value adjustments 145 18 166 104 Otfier outgo - - - 7 6
Fixed-interest investments 8,106 7,138 15,484 12,886 Sfiares 1,491 403 1,894 1,814 Real estate 960 568 1,528 1,330 Non-consolidated fioldings 52 29 394 345
Tecfinical reserves Non-Life insurance 9,663 4,201 13,864 11,685 Life insurance 3,389 3,323 6,712 5,858
Building society deposits — - 228 145 Transitory entries, value adjustments and otfier provisions 895 250 1,178 1,038
Profit applicable to minority sfiarefiolders - 9 9 9 Capital funds applicable to minority sfiarefiolders - 32 33 29
Sfiare and non-voting sfiare capital 128 123 Reserves sfiown 627 502 Consolidation reserve fund 297 206 Group Profit 120 105
"The figures in this column do not always amount to the total ot the figures in the two preceding columns as figures tor holding and other companies are also included.
The figures shown in the Group accounts are based on consolidation and valuation principles which are basi­ cally uniform for ail Group companies, individual excep­ tions are of minor importance and are mentioned sepa­ rately. Balances receivable and payable as well as inter­ est and dividend payments between consolidated com­ panies are eliminated. Similarly the Group's consolidated figures contain no premiums from the intra-Group ex­ change of business. The consolidation and valuation principles are the same as in the previous year.
The Salus Krankenhauskosten-Versicherungs-AG, Mu­ nich, belonging to the Vereinigte Versicherungsgruppe, was merged at the beginning of 1984 with the Vereinigte Krankenversicherung AG, Munich, and therefore no longer appears in the Group Structure, in the course of the current year, the Swiss Re acquired a small company in the United States, the North American Specialty insur­ ance Company, Cleveland, Ohio, in the same period the SWITZERLAND General insurance Company Limited ac­ quired a majority holding in the Financiera Nacionai de Seguros y Reaseguros G.A.E. (Finasyr), Barcelona.
Gross premiums as well as ail balance sheet and profit and loss account figures from foreign Group companies which are shown in local currency were uniformly con­
The net assets of foreign companies have been adjusted in accordance with the altered exchange rates at the end of the business year. The conversion profit of Sw.frs. 66 million (previous year, Sw.frs. 15 million) resulting from the revaluation was not entered into the consolidated profit and loss account but reflected directly in the con­ solidated capital funds.
Fixed-interest investments are in principle entered at ac­ quisition cost or, if they are quoted and the stock ex­ change price is lower on the balance-sheet date, at the lower value. The lower valuation is retained until disposal of the corresponding securities. Special treatment Is given to registered debentures owned by Group com­ panies in Germany which, in accordance with German practice, are shown at nominal value and incorporated in the Group accounts unchanged.
Real estate is consolidated at the balance-sheet values of the Individual Group companies: these correspond as a rule to the acquisition value less the maximum depre­ ciation permitted by the tax authorities.
The technical reserves are calculated in principle ac­ cording to the provisions of the supervisory authorities applicable to individual Group companies in their rele­ vant areas of activity. Each individual company adheres to the principle of prudence in its reserving practice.
The income from the Group's capital investments rose by 25.8% (previous year, 8.7%) and (before the crediting of Interest in Life and Sickness business) reached a total of Sw.frs. 1,686 million (previous year, Sw.frs. 1,340 million). Of this amount, the interest on the Life insurance and An­ nuity fund accounted for Sw.frs. 441 million (previous year, Sw.frs. 320 million); In the Non-Life classes It includ­ ed a credit of Sw.frs. 205 million (previous year, Sw.frs. 168 million) to Sickness business.
These Items refer to components of the profit and loss account of the mh Bausparkasse AG and to the holding companies which. In view of their special nature, are not included under insurance and reinsurance.
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. 762 million to Sw.frs. 6,190 million. Of this amount, Sw.frs. 4,225 million was for reinsurance companies and Sw.frs. 1,965 million for Insurance companies.
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. 114 million to Sw.frs. 1,019 million. Of this amount, Sw.frs. 874 million con­ cerned reinsurance companies and Sw. frs. 145 million In­ surance companies.
The consolidated balance-sheet values of capital invest­ ments (incl. non-consolidated holdings) increased over­ all by 18%, or Sw.frs. 2,925 million, to Sw.frs. 19,300 mil­ lion. The increase affected all investment categories and amounted to 20% on fixed-interest investments (previous year, 5%), 4% on shares (previous year, 41 %) and 15% on real estate (previous year, 7%). The item "Non-consoli­ dated holdings" contains holdings of 50% or less in insur­ ance and reinsurance companies.
Life insurance Life Insurance and annuity fund 2,836 2,643 5,479 4,924 Outstanding claims reserve 543 19 562 417 Reserve for profit commission 10 661 671 517
In % of Life Insurance In force, net 1.9% 23.2% 3.5% 3.4%
The capital funds shown in the consolidated balance sheet (sum of share and non-voting share capital, re­ serves, consolidation reserve funds and Group profit) correspond to the book value of the funds invested in the entire Group by shareholders and non-voting share­ holders of Swiss Re, Zurich. In the year under report Group capital funds rose by Sw. frs. 236 million to Sw. frs. 1,172 million. The reasons for this are, on the one hand, the new issue of non-voting share capital by the Swiss Re, Zurich, in 1984 and, on the other, the higher Group profit, the increase of capital funds achieved by the individual Group companies and the largely positive effect of foreign currency rates. The following table shows the changes in the Group capital funds.
Capital funds at end of previous year 936 872 Effects of exchange rate fluctuations on opening balance-sheet figures 66 15 Raid-out profits for previous year - 55 - 53 Issue of non-voting share capital of Swiss Re, Zurich 95 _ Group profit 120 105 Other movements 10 - 3
Metal processing Lasers are used in precision work, e.g. for welding, drilling and cutting metals and other hard materials.
General Surety & Guarantee Co. Limited £ 100 1,183 5,533 2,815
SWITZERLAND General Insurance Company (London) Limited £ 100 5,275 25,684 6,790 *not consolidated
Magdeburger Versicherungsgruppe: Magdeburger Allgemeine Lebens- und Rentenversicherungs-AG DM 100 9,316 1,582,017 199,189
Vereinigte Versicherungsgruppe: Vereinigte Aachen-Berlinische Versicherung AG DM 96.6 99,500 869,178 609,979
Assets Casii in hand, postal bank account, bank balances Current-account balances Gash deposits Fixed-interest investments Shares and real estate Transitory entries and other assets
South Africa Swiss-South African Reinsurance Company Limited Swiss Park, 10 Queens Road, Parktown 2193, Johannesburg with branch offices in Cape Town and Pretoria
Magdeburger Feuerversicherungs-AG Magdeburger Allgemeine Lebens- und Rentenversicherungs -AG Magdeburger Hagelversicherungs AG Magdeburger Union Rechtsschutz Versicherungs-AG Kirchhorster Strasse 2, D-3000 Hanover 51
Germany Audatex Deutschiand Datenverarbeitungs-GmbH Kuhienstrasse 15, D-4950 Minden mh Bausparkasse AG Wotanstrasse 88, D-8000 Munich 19
Mexico OFATEC (Mexico) S.A. de C.V. Viena 71, Piso 5, Col. del Carmen Coyoacan, 04100 Mexico, D. F.
Venezuela OFATEC Venezuela C.A. Torre La Noria, Piso 8-Norte, Paseo Enrique Eraso, Urb. Las Mercedes, Caracas 1060
Japan Swiss Reinsurance Company, Representative Office Tokyo Sansho Building 7 F, 2-9 Nihonbashi 3-chome, Chuo-ku, Tokyo 103
Co-insurance basis: System of Life reinsurance under which the ̂ reinsurer assumes a share of the ̂ risk (i.e. premiums and benefits) as well as setting-up of reserves at the same terms as the ^ ceding company.
Fire insurance: Insurance against fire, lightning, explo­ sion and damage caused by falling aircraft; can also embrace insurance against windstorm, earthquake, flood, other natural hazards, political risks (strike, riot, etc.) and loss of profits (business interruption) as a result of these events.
Policy reserve: Reserve fund needed to cover future claims under ^ Life insurance and ^ annuity contracts.
Reinsurance premium: ^ Premium paid to the ^ rein­ surer by the ^ insurer for the ^ proportional or ^ nonproportional cover granted by the ^ reinsurer.
Retrocession premiums: Premium paid to the ^ retro­ cessionaire for the part of the ^ risk accepted.
Risk premium basis: System of Life reinsurance under which the ̂ reinsurer only participates in the death risk in so far as it exceeds the policy reserves (cf. co-insur­ ance basis).
Proportional reinsurance: Form of reinsurance in which the premiums and losses of the insurer are shared proportionally by the ^ insurer and ^ reinsurer.
Reinsurance commission: Amount paid by the ^ rein­ surer, to the ^ insurer for costs in connection with the ac­ quisition and administration of insurance business.