November 1993 English translation of original German report; French, Italian and Spanish versions are also available.
Dividend Total dividend per share per non-voting share 117 * Sw. frs. 48- * Sw.frs. 9.60*
Result from general income and outgo Taxes Profit applicable to minority shareholders
Consolidated profit 281 266 Consolidated profit per share* Consolidated profit per non-voting share*
Group Management A.W. Saxer, Group Chief Executive Officer C. Dorschel, P. Frey, U. Winter
Strategy and Structure, Human Resources Management, Personnel Support, informatics/Communication, General Management Support R. Held J. Stoll
Region 1 German-speaking Switzerland, Germany, Austria, Eastern Europe, Netherlands, Denmark, Sweden, Norway, Finland, Iceland Nuciear Energy B. Heyer E. Etter
Region 2 French- and Italian-speaking Switzerland, France, Italy, Belgium, Luxembourg, French-speaking Africa R. Martignier A. Gaifetti Members of Senior Management D. Corbaz, G. Feider, B. Giliiand, C. Herzog, M.-L. Musy, F. Raffaele, R. Rüttimann
Members of Senior Management G. Ayers, P. Bieri, J. Bieuler, M. Bradley, G.D. Cantieni, P. Hagnauer, R. Hunziker, E. Jean-Mairet, U.R. Kaeser, P Marcioneili, B. Porro, L. Pozzi, F. Renggii. A. Solari
Division 3 Division 4 Investments, logistics, management services Information services, personnel, accounting
Management Services Accounting Economic studies, information, organization, public relations, translation and terminology 0. Kern
In the 1992 business year, the head office achieved a profit of Sw.frs. 187.1 million; this amount is Sw.frs. 22.8 mil­ lion (13.8%) more than in the previous year.
- The result from general income and outgo - compris­ ing investment income and the capital result (rate fluc­ tuations, write-offs and value adjustments) less man­ agement expenses - went up by Sw.frs. 167.1 million (25.5%) to Sw. frs. 823.2 million.
- Life reinsurance again proved to be a stable source of income; the profit rose slightly In 1992 following a small drop in the previous year.
- As far as the Individual elements of general Income and outgo are concerned, it should be noted that, after years of stagnation, income from investments again showed a significant increase (10.3%). This is due to the previous year's growth in the investment portfolio, which more than offset the declining tendency of in­ terest rates in the year under report. - The marked rise in the positive balance of rate fluctuations, write­
- Finally, in the year under report a programme was launched aimed at bringing the Swiss Re Group into peak form within a few years on the basis of 1992's strategic philosophy driven and supported by re­ inforced management.The peak form programme calls for the examination throughout the Group (at Group level, operative level and in all sectors) of compliance
with strategy, the performance achieved and existing structures - with a view tc concentrating funds and forces in the core sector and expanding and perma­ nently increasing the Group's profit. - Basically the peak form programme embraces the entire Group, although the repercussions vary for each Group com­ pany. Head office is affected in two respects: indirectly as the owner of Group shareholdings and strategic reinsurer of the Group but most directly as a reinsur­ ance entity. Under the initiative leadership of the new Group Management, head office has to consolidate its position as flagship of the Group's reinsurance divi­ sion thereby making an important contribution towards fortifying Swiss Re's leading position in the market.
To sum up, 1992 can be regarded as a year of transition from a period of coping actively with acute problems from previous years to one of systematic, cautiously optimistic reconstruction. The 1992 strategic philosophy, the strengthening of management and the launching of the peak form programme, but not least the year's re­ sult and the 1992 capital increase have all created the basis for a single-minded fortification of Swiss Re from within. Our sights are set not just on size but above all on strength. We are aiming for controlled and qualitative growth or, in other words, growth with profit.
1992 was another significant year for Swiss Re, one which it has mastered well thanks to the efforts and performance of its staff. It is therefore our desire to extend our sincere thanks to employees at all levels and in all sectors of the entire Group. At the same time we look confidently into the future trusting in the great potential and pro­ nounced motivation of our entire staff.
The Swiss Re Group as a whole and in each and every Group company aims - to achieve a superior and lasting total return (as the sum of increase in value and current return) for its investors (shareholders), - to be the professional and dependable ideal business partner for its clients, - to be a challenging and supportive long-term employer for its employees and - to be a well-known and respected corporate entity in the eyes of government and society.
- In primary insurance, the Swiss Re Group concentrates on European key markets. Here we transact personal and property/casualty insurance business with individ­ uals, private households and smaller businesses.
The Swiss Re Group in concerned to be an attractive employer tor all its employees and especially for qualified technicians and managers.
At the level of management of Individual employees the principle of delegation of tasks is carried out on the basis of - careful selection of employees, - careful training and instruction of employees and - appropriate control of employees.
The valuation of the major foreign currencies against the Swiss franc revealed an irregular picture, as can be seen with EMS currencies, where changes ranged between -15% and +2%.The US dollar (-i-7.6%) and the yen (-i-8.1%) closed the year at a higher level. Overall, however, these movements virtually balanced each other out; the growth of 20,6% in gross premiums shown would have amounted to 20.8% at constant exchange rates.
The series of natural catastrophes continued in the year under report. After Europe (1990) and Japan (1991), this time the USA was again the worst hit. Hurricane Andrew, which raged through Florida and neighbouring states in August 1992, caused insured losses of more than US$ 17 billion - a new record amount for the insurance industry. How national economies should handle natural catastro­ phes and what function insurers and reinsurers should assume in this task are questions that have thus lost none of their topical momentum. The redistribution of loss bur­ dens which Swiss Re has been advocating for several years must therefore be taken in hand more resolutely than ever. The most effective way of keeping the neces­ sary premium increases in future within limits would be to enforce appropriate deductibles for policyholders differentiated as between private persons, trade and industry. The extent of the losses caused by the hurricane also triggered a surge in demand for reinsurance ca­ pacity. Moreover, the simultaneous withdrawal of existing capacity aggravated the capacity bottleneck even more. One of the major tasks for reinsurers is therefore to meet the advancing demand for catastrophe capacity with adequate means, such as optimizing the use of capacity by keeping a complete record of existing liabilities by exposure zone, and providing new capital for risk cov­ erage.
In Europe, the losses in Motor damage insurance (theft, hail) have maintained a distinctly high level. However, pre­ mium adjustments in Motor insurance - an unavoidable measure from the reinsurer's viewpoint - are being intro­ duced only very reluctantly because of their political implications, and are additionally delayed by national supervisory authorities. It is difficult to forecast the future development of this branch after deregulation comes into effect on 1 July 1994.
A new catastrophe potential has recently emerged for the first time with individual terrorist attacks which have caused considerable damage. The most severe bomb attacks occurred in London and New York. With few exceptions, losses caused by terrorism are still automati­ cally covered in Property insurance. The recent develop­ ments call for an exclusion of this hazard from standard coverage.
After stabilising somewhat in the previous year, the under­ writing loss again increased substantially. With a net cost of Sw.frs.257 million. Hurricane Andrew was responsible for a large share of the negative result of Sw.frs. 623 mil­ lion. At the same time, considerable burdens also devel­ oped in European Motor business. In Liability, the re­ serves for the losses that occurred in the USA in earlier years also had to be reinforced substantially.
Compared to overall growth, premium income in Fire rein­ surance increased more than the average with 33%. The growth in volume is spread about evenly over propor­ tional, non-proportional and facultative coverage. There are major differences in terms of the geographical origin of business. In Europe, the measures taken to put indus­ trial business on a sound footing are beginning to show initial signs of success with a moderate rise in premium income, although further efforts are still needed to attain the objective of establishing premiums commensurate with the risk. We expanded our portfolio in several impor­ tant overseas markets; combined with substantial price adjustments for non-proportional business in Japan (in response to typhoon Mireille), this helped us to achieve a gratifying growth in volume. - The year under report again demonstrated just how sensitive the result is to nat­ ural hazards. Whereas Europe and Japan were spared any major event. Hurricane Andrew hit the headlines in the USA. Non-proportional reinsurance accordingly pro­ duced disparate results: while the European storm areas and Japan were able to build up reserves, the USA sus­ tained heavy losses.
Dissimilar developments were recorded with premium growth in Burglary, Fidelity and Allied Lines. On average, premiums went up by 18%. - Because of a high loss
Aviation 130 109 Nuclear Energy 19 18 Credit/Surety 381 332 ed in the year under report, the Increases and decreases In premiums largely balanced each other. - The under­ writing loss again increased significantly, highlighting the problematic aspects of this branch of business. The inflow of new capacity in the wake of withdrawals from the catastrophe-prone Property lines renders the necessary adjustments to underwriting concepts and premium rates even more difficult to implement. The negative result is affected by a substantial strengthening of the loss re­ serves for medioal, hospital and pharmaceutical products liability in the USA and in Europe, by additional substan­ tial increases in reserves for asbestos and environmental impairment claims in the USA, and by a major loss in Europe (collapse of a stand In a football stadium in Bastia, Corsica). New claims may gradually emerge from alleged health impairments caused by electromagnetic fields.
Although statistics clearly show that the immune defi­ ciency syndrome Aids is still spreading, it has merely had a marginal effect on the result to date. Even though it is difficult to estimate the effects Aids will have on individual reinsurance portfolios, reserves are regularly examined.
The underwriting result of Sw. frs. 41 million was Sw. frs. 3 million more than in the previous year. Technical interest advanced significantly due to the strengthening of re­ serves in 1991 and interest credited from the assumption of new portfolios. The slight decrease in the policy re­ serves resulted from a marked rise in recaptures following the conversion of reassured portfolios on to a risk basis and especially through a rise in survivorship payments. The increase in commissions, profit commissions and insurance benefits (excluding survivals) was consistent with premium growth.
In 1992, ttre world economy again recorded low growth rates and more pronounced recessive trends. Develop­ ments between the individual economic regions grew increasingly disparate in the course of the year. A modest economic revival gradually emerged in the Anglo-Saxon countries, above all in the USA. Meanwhile, since the poli­ tical priorities in continental Europe were concentrated on ensuring stability following the reunification of Germany, fiscal policies in this region were restrictive and interest rates maintained at a high level. Together with dwindling consumer demand, this brought about a slide into reces­ sion. Even in Japan, the government - despite a ge­ nerously dimensioned programme aimed at stimulating the economy - was unable to effect an economic turn­ about. With sinking capacity utilisation and sluggish economic development, unemployment again rose in the OECD member states. On the other hand, inflationary pressure decreased; the average rate of inflation dropped from 5.6% to 4.1%.
The first graphic on page 20 shows the various Invest­ ment categories at balance-sheet values as percent­ ages of overall capital market investments and real estate. The second graphic shows the breakdown by currency. The table on page 21 gives the balance-sheet values of the various investment categories.
Holdings and loans comprise holdings of Sw, frs. 895 mil­ lion (previous year Sw, frs, 376 million) and loans to Group companies of Sw.frs, 1,853 million (previous year Sw.frs, 2,345 million). These investments as a whole increased slightly by Sw.frs, 27 million to Sw.frs, 2,748 million,The increase in actual holdings and the reduction of loans to Group companies is partially a result of the transfer of the Union Reinsurance Company, Zurich, from SwissRe Holding Limited, Zurich, to Swiss Re, Zurich, Swiss Re, Zurich, has also taken over the ELVIA Insurance Com­ pany's participations in the Italian Savoia Group,
The structure of total investments at balance-sheet values is shown in the following table.
Capital market investments and real estate 8,556 7,779 Eloldings and loans 2,748 2,721 Net cash deposits from reinsurance transactions 2,280 1,880
Net investment income in the broad sense (i.e. on invest­ ments as set out above, plus money market investments) amounts to Sw, frs, 828 million, and so is 10,3% higher than in the previous year (see the comments on investment in­ come on page 27),
On 24 September 1993, the value of Swiss Re, Zurich, on the Zurich stock exchange was as follows: 1,565,142 registered shares at Sw.frs. 3,325 185,400 bearer shares at Sw.frs. 3,320 3,436,000 non-voting shares at Sw.frs. 646
' rate at year end 2 rate at 24 September 1993
On 1 July 1993 a new function and title concept and new signing authority rules came into effect at Swiss Re.
In the course of 1993, Andreas Beerli, Jean-Jacques Bertschi, Thomas Drisch and Martin Fricker joined the company as Members of Senior Management.
For the Board of Directors: Ulrich Bremi, Chairman Arnold W. Saxer, Managing Director
Adjustment in policy and premium reserve 155,803 72,612,867 interest on Life insurance and annuity fund 66,841,107 59,906,553
Statutory reserve fund Special reserve fund Reserve fund for catastrophe losses
Profit brought forward from previous year Profit of the Business Year
The 1992 business year comprises both reinsurance business and general Income and outgo for the period from 1 January to 31 December 1992.
All items of the balance sheet and profit and loss account in foreign currencies were uniformly translated into Swiss francs using the average foreign currency rates as at 31 December 1992. Differences arising from the translation 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*
Real estate is valued at acquisition cost, less the depre­ ciation permitted by the tax authorities.
The surrenders in business assumed amounted to Sw. frs. 113.1 million, of which Sw.frs. 1.0 million was debited to retrocessionaires. A totai of Sw. frs. 112.1 million remained for own account.
The gross income of Sw.frs. 961.0 million is a 10.7% in­ crease over the previous year. Overall the outgo items totalled Sw.frs. 132.9 million for the interest on the Life re­ insurance and annuity fund and other technical reserves as well as for outgo interest and real estate. The remaining net amount of Sw. frs. 828.1 million is an increase of 10.3% over the previous year. Without the effect of foreign cur­ rency fluctuations, an increase of 9.7% would have been registered.
Gross premiums totalled Sw.frs. 746.9 million, Sw.frs. 8.6 million of which were for annuities purchased. After de­ duction of retrocession premiums of Sw.frs. 38.5 million, the remaining net premiums amounted to Sw.frs.708.4 million, corresponding to a rise of 12.5% over the previous year. The effect of foreign currency fluctuafions was in­ significant in the year under report.
A slight drop of Sw. frs. 0.2 million took place as a result of increased surrenders. This is the balance of an increase of Sw.frs. 18.0 million applicable to Life insurance and a decrease of Sw.frs. 18.2 million applicable to annuities.
Overall management expenses rose in the year under re­ port by Sw. frs. 21.1 million or 9.9% to Sw. frs. 233.8 million (previous year, rise of 8.8%). Gross outgo of Sw.frs.287.3 million contrasted with cost reimbursements of Sw.frs. 53.5 million mainly for services rendered by Swiss Re, Zurich, on behalf of Group companies. Personnel ex­ penses rose by 14.9% (previous year, 9.0%); apart from inflation and higher salary expenses because of the larg­ er number of employees, this is also attributable to in­ creased contributions to the personnel welfare institu­ tions. Other costs (operating, marketing and other expenses) remained stable.
This group of accounts closed with a distinctly higher positive balance of Sw.frs. 228.9 million (previous year, Sw.frs. 117.7 million). Realized capital gains and losses on
The portfolio of capital market investments (fixed-interest securities, loans and shares) and real estate rose by Sw.frs. 777.0 million to Sw.frs. 8,556.3 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.742.5 million (previous year, Sw.frs. 686.1 million) or 11.0% (previous year, 11.7%) of the bal­ ance-sheet value of securities. The insured value of busi­ ness property is Sw.frs.357.1 million.
These comprise accrued investment income, i.e. invest­ ment income already earned on the balance-sheet date but not yet received. In addition, it comprises further tran­ sitory items.
Of the current account balances Sw.frs. 1,062.2 million was for reinsurance and Sw.frs. 94.5 million for retroces­ sion business. Other liabilities totalled Sw.frs. 385.7 mil­ lion, mainly with regard to companies of the Swiss Re Group.
Cash deposits for retrocessions rose, as against the pre­ vious year, by Sw. frs. 0.7 million to Sw. frs. 63.9 million.
Changes Valuation difference based on exchange rate fluctuations Increase of technical reserves in year under report
Following the capital increase carried out in the year under report, the company's capital on the balance-sheet date was as follows: The share capital amounted to Sw.frs. 207.8 million, com­ prising 1,892,286 registered and 185,400 bearer shares with a nominal value of Sw. frs.100.- each.The non-voting share capital amounted to Sw. frs. 68.7 million divided into 3,436,000 non-voting bearer shares with a nominal value of Sw. frs. 20.- each.
At the end of the previous year the capital funds shown amounted to Sw.frs. 2,594.7 million. A number of trans­ actions were performed in the course of 1992: the creation of reserve shares from the authorized non-voting share capital of Sw.frs. 2.5 million, capital increase in accor­ dance with the resolution of the 1992 General Meeting as well as placement of part of the reserve shares (bearer shares and non-voting shares). These brought an in­ crease of the share capital by Sw.frs. 15.8 million and the non-voting share capital by Sw.frs. 8.5 million. The pre­ mium total of Sw.frs. 404.2 million was allocated to the reserves shown. Including the proposed allocation of the profit, provided it is approved by the General Meeting, the capital funds shown will amount at the end of 1992 to Sw.frs.3,092.3 million.
The General Meeting to be held in Zurich on 26 November 1993 has at its disposal the following balance-sheet profit (of. Profit and Loss Account and Balance Sheet, pages 24/25): Sw. frs. Sw. frs.
As auditors of your company we have audited the books of accounts and the financial statements presented by the Board of Directors for the year ended 31 December 1992 in accordance with the provisions of the law. Our audit was conducted in accordance with accepted auditing stan­ dards promulgated by the profession. We confirm that we comply with the legal requirements concerning profes­ sional qualification and independence.
Based on our audit, we conclude that the books of ac­ count, the financial statements and the proposed appro­ priation of the retained earnings are in accordance with the law and the Articles of Association.
Casfi in hand, postal bank account, bank balances Current-account balances Cash deposits
The marais salants (salt marshes), the remains of a saline landscape unrivalled throughout Europe, Gu^rande peninsula, France
Crystallization pond of ttie industrial saltworks in the bay of San Francisco, California, USA
The aim of the "peak form programme" is to concentrate forces and funds in the Group's core sector (i.e. primarily in reinsurance and insurance) and to achieve a lasting increase in the overall profit (the total of income and cap­ ital appreciation). The programme therefore has to encompass the entire Group comprising, on the one hand, all levels (the Group itself, each operating unit and right down to the individual employee) and, on the other, all sectors (reinsurance, insurance, services, financial and technical divisions).
At Group level, the peak form programme entails three key points: - First, we are examining whether strategy is con­ gruent. This led, for example, to the review and sub­ sequent sale (in spring 1993) of our 50% holding in the Fidelity and Deposit Company of Maryland, basi­ cally because, with regard to insurance, Swiss Re wants to concentrate on Europe and is striving for clear-cut majority holdings.
- Second, the performance of all units is being exam­ ined and, where necessary, suitable remedial mea­ sures are being taken.
- Finally, the entire complex of the Group's estab­ lished structure is being analysed and streamlined, where appropriate, to boost management and oper­ ational efficiency. - The prime example of a decisive structural improvement is the merger of the Magde­ burger and Vereinte Groups in Germany which got underway in the autumn of 1992. A similar but sig­ nificantly smaller project was embarked upon at the end of the year under report in Italy: two smallscale units, SCHWEIZ Italy and Magdeburger Italy, were combined with Savoia Insurance, a company taken over from ELVIA Insurance. 1993 saw the start of further projects aimed at improving the Group structure; these will be reported upon at a later stage.
- The top corporate structure was also simplified in the year under report. At the end of 1992, SwissRe Holding Limited absorbed Gotthardfinanz AG, (a sub-holding company). The next phase of the plan calls for Swiss Re, Zurich, to absorb SwissRe Holding Limited during 1993. After this has been achieved, it will be possible to tackle the specific objective of creating an upstream holding company.
As this summary indicates, the peak form programme is a package of diverse projects, actions and measures all aimed at increasing visibly and permanently the Group's overall success and generally renewing the Group from within, strengthening it and bracing it for increasingly tough competition.
Canadian Reinsurance Company, Toronto as per November 1993 * non-consolidated companies • acquired or founded 1992/93
Suiza de Reaseguros (Ibbrica), Madrid * ° 1 Swiss-Baltic Re Advisers, Tallinn * 1
ELVIA Swiss Insurance Company Zurich, Zurich ELVIA Life Swiss Life Insurance Company, Geneva ELVIA Travel Insurance Company, Zurich ELVIA - Assurances S.A., Brussels CAP Compagnie d'Assurances de Protection Juridique S.A., Geneva Grupo La Equitativa, Madrid
Magdeburger Versicherung AG, Hanover Magdeburger Hagelversicherung AG, Hanover Magdeburger Lebensversicherung AG, Hanover Magdeburger Rechtsschutzversicherung AG, Hanover Magdeburger Hellas S.A., Athens Magdeburger SIgorta A.S., Istanbul mh Bausparkasse AG, Munich
The following changes have taken place in the structure ct the Swiss Re Group: SwissRe Holding Limited has transferred its holding in Union Reinsurance Company, Zurich, to Swiss Re, Zurich, which also acquired from ELViA Swiss insurance Company Zurich its holdings in Savoia S.p.A. and Savoia Vita S.p.A., both in Milan, in the course of the current year, the responsible corporate bodies of the Vereinte Versicherung AC and of the Ver­ einte Lebensversicherung AC agreed to merge with the Magdeburger Versicherung AC and the Magdeburger Lebensversicherung AC respectively, in addition, the two German sub-holding companies, SR Beteiligungen AC and «Schweiz Aligemeine» Finanzhoiding AC, both in Munich, merged during the year to form "Vereinte Holding Aktiengesellschaft".
The foreign-exchange rates of the currencies important for the Croup showed an inconsistent development. An increase in the value of the US dollar was offset by decreases in most other currencies. This resulted on balance in a slightly lower valuation of the Swiss franc. The translation of foreign currencies into Swiss francs is explained on page 50.
The consolidated overall result rose by 5.6% to Sw. frs. 281 million. In Non-Life insurance, the underwriting loss increased by Sw. frs. 336 million to Sw. frs. 1,117 million. In Life insurance, a profit of Sw. frs. 130 million was shown (previous year, Sw.frs. 94 million). Overall, the underwrit­ ing loss amounted to Sw.frs. 987 million (previous year, Sw.frs. 687 million). Investments and other financial in­ come increased by Sw.frs. 219 million to Sw.frs. 2,062 mil­ lion. Rate fluctuations, depreciation and value adjustments gave a positive balance of Sw.frs. 486 million (previous year,Sw. frs.203 million). Management expenses and other outgo rose by 21.2% to Sw.frs. 1,062 million, while taxes fell by 6.6% to Sw.frs. 169 million. At the end of 1992, the Group's capital funds shown including Croup profit for the year amounted to Sw.frs. 3,945 million (previous year, Sw.frs.3,148 million).
In Non-Life reinsurance the consolidated net premiums rose in Swiss francs by 26.0% to Sw.frs. 8,924 million. When expressed in original currencies, the growth rate was 25.4% (previous year, 15.5%). The underwriting loss increased from Sw.frs. 690 million to Sw.frs. 928 million because of the heavy burden of Hurricane Andrew in the USA and the persistently adverse general business development. Andrew caused a debit to Group accounts of Sw. frs. 472 million gross and Sw. frs. 399 million net.
In Life reinsurance premium income rose only marginally. The underwriting result improved from Sw.frs.70 million in the previous year to Sw. frs. 93 million, for which overseas subsidiaries were largely responsible. The net amount of business in force increased by 8.2% to Sw.frs. 286,000 million.
Investment income rose by 5.4% to Sw.frs. 1,274 million. The positive balance from rate fluctuations, depreciation and value adjustments increased again to Sw. frs. 429 mil­ lion (previous year, Sw.frs.254 million). Management ex­ penses rose by10.7% to Sw. frs.623 million, while taxes fell distinctly to Sw. frs. 78 million (previous year, Sw.frs. Ill million).
The European General Reinsurance Company of Zurich showed in Non-Life reinsurance an increase of gross pre­ miums by 31.0% to Sw.frs.505.4 million.The underwriting loss continued to fall as against the previous year. - In Life reinsurance the gross amount of business in force rose mainly because of exchange rate fluctuations - to Sw. frs. 52,600 million (previous year, Sw. frs. 49,400 million), while the underwriting loss was somewhat higher. - The result from general income and outgo fell slightly. The profit for the year amounted to Sw.frs. 11.9 million (previous year, Sw.frs. 10.6 million), from which an unchanged dividend of Sw. frs. 10.0 million will be paid.
The gross premiums of the Union Reinsurance Company, Zurich, rose in Non-Life reinsurance by 65.5% to Sw.frs. 1,029.4 million. Three quarters of this growth is due to the takeover of the reinsurance portfolio of the SWITZER­ LAND General Insurance Company. The underwriting re­ sult showed only a marginal change as against the pre­ vious year. - In Life reinsurance the gross amount of business in force increased by 10.5% to Sw. frs. 9,900 mil­ lion, and the underwriting profit again rose slightly. Investment income remained at about the previous year's level, while realized capital gains increased substantially. The profit for the year was Sw. frs. 7.9 million (previous year, Sw.frs. 3.6 million), from which a dividend of Sw.frs. 4.0 million (previous year, Sw.frs. 1.8 million) was paid.
At the Canadian Reinsurance Company, Toronto, the gross premiums increased by 10.7% to Can.$ 230.9 mil­ lion. This growth was mainly attributable to Property and Motor business. The turnover of other lines of business was consistent with the previous year's level. Motor busi­ ness showed a further distinct improvement, while the result of Property and Surety reinsurance was unfavour­ able. The financial sector suffered exceptional write-offs, especially in real estate, given the recession-hit economy; capital gains reduced slightly because of lower interest rates. The company's overall profit fell to Can.$ 0.8 million (previous year, Can.$ 1.8 million). As in the previous year, the company paid a dividend of Gan.$ 0.8 million.
At the North American Reassurance Company New York, the Life reinsurance business in force fell by 1.6% to US$ 79,200 million, mainly as a result of the lower volume of new business. Because of higher losses in individual dis­ ability business and reduced investment returns, the pub­ lished profit dropped to US$ 4.3 million (previous year, US$ 29.7 million). The company paid a dividend of US$ 1.5 million (previous year, US$ 0.8 million).
At the Canadian Reassurance Company, Toronto, the Life reinsurance business in force increased by 6.1% to Gan.$ 27,800 million. The published profit rose as a result of the lower mortality in individual business to Gan.$ 15.2 million (previous year, Gan.$ 7.6 million). The dividend paid was unchanged at Gan.$ 0.8 million.
The gross premiums of the Bavarian Reinsurance Com­ pany Limited, fvlunich, rose in Non-Life reinsurance by 16.5% to DM 2,484.6 million, growth being particularly pronounced in foreign business and in the Property lines. The underwriting loss rose significantly as against the previous year, which can largely be attributed to a further deterioration of the result in Motor business, losses from natural catastrophes (hail damage in Germany, Hurricane Andrew) and the bomb attack in the Gity of London. In Life reinsurance, the gross amount of business in force rose slightly to DM 13,200 million (previous year, DM 13,000 million). The underwriting result was below that of the previous year. - Investment income showed a
further increase. In order to bring capital funds into line with the steep rise in premium volume experienced in recent years, part of the hidden surplus on investments was realized. Consequently the profit for the year of DM 52.0 million was significantly higher than the previous year (DM 12.0 million). The dividend is to be raised to DM 7.0 million (previous year, DM 6.0 million).
The Australian Reinsurance Company Limited, Mel­ bourne, showed in Non-Life reinsurance gross premiums of Austr.$ 148.5 million, an increase of 18.0% as against the previous year. The increase stemmed mainly from pro­ portional Fire business. The underwriting profit fell be­ cause of adverse results in Hail reinsurance and the strengthening of Workers' Compensation technical re­ serves. - In Life reinsurance the gross amount of business in force rose by 18.9% to Austr.$ 9,700 million.The under­ writing profit rose sharply because of favourable runoff results and a slightly improved mortality rate.- Investment income was consistent with that of the previous year. The lower market values of real estate and shares as a result of the recession necessitated higher write-offs. The over­ all profit amounted to Austr.$ 22.5 million (previous year, Austr.$ 19.3 million). The company paid a dividend of Austr.$ 3.6 million (previous year, Austr.$ 3.4 million).
The gross premiums of the European International Rein­ surance Company Limited, Bridgetown, Barbados, rose
Fire 3,566 933 4,499 2,701 881 3,582 Accident/Sickness 571 3,986 4,557 495 3,303 3,798 Third Party Liability/Motor 3,154 3,527 6,681 2,611 2,793 5,404 Marine 491 128 619 350 202 552 Other branches 1,163 538 1,701 1,047 183 1,230 Life 1,830 2,038 3,868 1,757 1,129 2,886 Gross premiums 10,775 11,150 21,925 8,961 8,491 17,452 Net premiums 10,652 10,018 20,670 8,775 7,495 16,270 in millions of Swiss francs
The consolidated net premiums rose In the year under report by 33.6% to Sw.frs. 10,018 million. Of this growth, 25.5% Is attributable to changes In the scope of consoli­ dation. The growth rate of the companies hitherto In­ cluded In the scope of consolidation was 8.1% In Swiss francs and 11.5% when expressed In local currencies.
The underwriting result of Non-Life Insurance continued to worsen because of the unremitting exceptional burden, especially In Motor business, while the profit of Life Insur­ ance was higher than In the previous year. Investment In­ come increased, as did management expenses and taxes. Overall, the Group profit of insurance companies amount­ ed to Sw. frs. 78 mllllon (previous year, Sw. frs. 72 mllllon).
The Savoia S.p.A., Milan, which is consolidated for the first time in the year under report registered a fall In gross premiums to Lit. 215,400 million. The underwriting result was unfavourable and investment income fell. The com­ pany reported a loss of Lit 2,800 million. - The amount of insurance business in force of the Savoia Vita S.p.A., Milan, totalled Lit.1,124,700 million.The company reported a profit of Lit. 200 million.
The Group companies operating in the field of insurancerelated services comprise the Audatex Group, Zurich, the International Risk Management Group, Bermuda, the Thomas Howell Group, London, and Gay & Taylor, Inc., Atlanta. In view of the dissimilar character of their activity and their relatively modest impact on the asset and income situation of the Swiss Re Group, these companies are excluded from the scope of consolidation.
The Thomas Howeil Group, with head office in London and operating in the field of claims management, expanded further in the year under report. Its turnover rose accord­ ingly to £74.0 million (previous year, £59.3 million). The published result Is still slightly negative because of the development costs Incurred and the unfavourable eco­ nomic situation In the principal markets.
Gay& Taylor, Inc., Atlanta, which works in close coopera­ tion with the Thomas Howell Group, mainly operates in the south-east of the USA and achieved sharp growth in its scope of business in the year under report. Income rose to US$ 72.3 million (previous year, US$ 51.3 million), corresponding to an increase of 41%. This increase is attributable to large claims arising from natural catastro­ phes. The dividend was increased from US$ 0.8 million to US$ 2.0 million.
SwissRe Holding Limited owns most majority and minority shareholdings of the Group. Service companies and a few other shareholdings are, however, directly owned by Swiss Re, Zurich.
In the year under report, SwIssRe Holding Ltd. transferred its holding in Union Reinsurance Company, Zurich, to Swiss Re, Zurich.This and a few other transactions of mar­ ginal significance have significantly reduced the amount of funds invested by SwissRe Holding in its companies. The loan from Swiss Re, Zurich, fell by Sw. frs. 663.4 million to Sw. frs. 1,500.1 million.
Dividend income was again higher than in the previous year, as were realized capital gains, and also deprecia­ tion and interest rates. The profit for the year amounted to Sw. frs. 13.4 million (previous year, Sw. frs. 0.3 million). No dividend was paid in view of the planned merger with Swiss Re, Zurich, which is expected to take place in the course of the current business year.
Gross premiums 8,945 9,111 18,056 14,566 Net premiums 8,924 8,084 17,008 13,511 Adjustment in unearned premiums - 362 - 642 - 1,004 724 Earned premiums 8,562 7,442 16,004 12,787 Interest on Sickness insurance fund - 413 413 365 Commissions, profit commissions, expenses - 2,042 - 1,997 - 4,039 - 3,257 Claims incurred - 7,448 - 6,047 - 13,495 - 10,676
Underwriting result from Non-Life insurance - 928 - 189 - 1,117 781
Gross premiums 1,830 2,039 3,869 2,886 Net premiums 1,728 1,934 3,662 2,759 Adjustment in policy and annuity valuations - 307 - 1,063 - 1,370 - 1,046 Interest on Life insurance and annuity fund 257 773 1,030 719 Commissions and profit commissions - 280 - 725 - 1,005 809 Claims incurred incl. adjustment in outstanding claims reserve - 1,075 - 777 - 1,852 - 1,313 Surrenders - 230 - 105 335 216
" The underwriting result figures of reinsurance and insurance companies correspond to the net values in accordance with commercial law (in­ cluding mutual cessions).
" The figures in this column do not always amount to the total of the figures in the two preceding columns as figures for holdings and other com­ panies are also included.
Profit applicable to minority sfiarefiolders - 46 49 36 Capital funds applicable to minority sfiarefiolders 1 552 571 310
The figures in this column do not always amount to the total of the figures in the two preceding columns as figures for holding and other compa­ nies are also included.
Balances receivable and payable as well as interest and dividend payments between consolidated companies are eliminated on consolidation. Similarly the Group's consol­ idated figures contain no premiums from the intra-Group exchange of business. The consolidation and valuation principles are the same as in the previous year.
The scope of consolidation includes all domestic and for­ eign insurance and reinsurance companies in which Swiss Re, Zurich, directly or indirectly maintains a holding of more than 50% in the voting share capital. Each Indi­ vidual item of the profit and loss accounts and the bal­ ance sheets of these companies is shown at 100%. The shares of the capital funds and profit applicable to minor­ ity shareholders are shown as separate items in the con­ solidated balance sheet and profit and loss account.
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 their activities are dissimilar. The mh Bausparkasse AG, fvlunich, is, however, included in the consolidation.
The consolidation includes for the first time the ELVIA Swiss Insurance Company Zurich, together with its sub­ sidiary companies, in which the Swiss Re Group has had a majority holding since autumn 1991. The ELVIA Group operates in Switzerland and in several other European markets. The Savoia companies, with head office in Milan, which formerly belonged to the ELVIA Group, were trans­ ferred to Swiss Re, Zurich, in December 1992. The Savoia Group is also included for the first time in this year's con­ solidation. The same applies to the Union Reinsurance Company's direct insurance subsidiaries.The Compagnie Europeenne d'Assurances, Neuilly-sur-Seine, the Compania Europea de Seguros, S.A., Madrid, and the Europeesche Verzekeringen, Amsterdam, operate chiefly in the field of travel insurance, while the Union FrancoSuisse d'Assurances Vie, Neuilly-sur-Seine, provides Life insurance.
There was no consistency in the development of the for­ eign currencies used in the Group accounts. The value of the US dollar rose, while most other currencies fell. Overall the valuation of the Swiss franc was slightly lower.
The income from the Group's capital Investment rose by 201% (previous year, rise of 14.2%) and, before the cred­ iting of interest in Life and Sickness business, reached a total of Sw. frs. 3,471 million. Of this amount, the interest on the Life insurance and Annuity fund accounted forSw. frs. 1,030 million (previous year, Sw.frs. 719 million); in the Non-Life classes it included a credit of Sw.frs.413 million (previous year, Sw.frs. 365 million) to Sickness business.
Investment income also includes dividend payments of non-consolidated holdings in the amount of Sw. frs. 89 mil­ lion (previous year, Sw. frs. 58 million).
The consolidated gross premiums rose by 25.6% to Sw.frs. 21,925 million (previous year, increase of 17.3%).
In Non-Life insurance premiums rose by 24.0% (previous year, 17.4%) to Sw. frs. 18,056 million and in Life insurance by 341% (previous year, 16.5%) to Sw.frs. 3,869 million.
These Items refer to components of the profit and loss account of the mh Bausparkasse AG which, in view of their special nature, are not Included under insurance and reinsurance.
The profits and capital funds applicable to third party shareholders correspond to the percentage shares of non-Group shareholders in the capital funds or in the re­ sults of the relevant companies. The capital funds appli­ cable to minority shareholders rose in the reporting year by Sw. frs. 261 million to Sw.frs. 571 million. This is mainly due to the shares of minority shareholders In the ELVIA Group, consolidated for the first time. The share of profit applicable to third party shareholders rose by Sw.frs. 13 million to Sw. frs. 49 million.
These Items correspond to the capital funds at book value of Swiss Re, Zurich. The reserves shown comprise the statutory reserve fund, the special reserve fund, the re­ serve fund for catastrophe losses as well as the profit car­ ried forward from the previous year.
The consolidation reserve fund results from the difference between the capital funds shown of Group companies and the corresponding book vaiues applied by SwissRe Hold­ ing Limited and Swiss Re, Zurich. In the year under report the consolidation reserve fund rose by Sw.frs. 295 million to Sw. frs. 641 million (previous year, rise of Sw. frs.238 mil­ lion).
Non-Life Insurance Unearned premiums 2,228 6,656 8,884 7.530 Outstanding claims reserve 14,822 4,959 19,781 16,923 Reserve for profit commission 2 399 401 116 Total 17,052 12,014 29,066 24,569 in % of net premiums earned 199.2 161.4 181.6 192.1
Life Insurance Life insurance and annuity fund 4,519 10,283 14,802 10,259 Outstanding claims reserve 878 94 972 745 Reserve for profit commission 4 1,336 1.340 1,145 Total 5,401 11,713 17.114 12,149 in % of Life insurance in force, net 1.9 25.3 5.1 4.1
European General Reinsurance Company of Zurich Sw. frs. 100 91,581 3,193,321 730,825
; Western Atlantic Reinsurance Corporation US$ 100 91,098 153,757 137,341 1 consolidated with Palatine Insurance Company Limited mM
General Surety & Guarantee Co. Limited £ 100 2,792 12,726 5,908
1 Magdeburger Rechtsschutzversicherung AG DM 100 11,660 107,543 49,983 Wi'.:'-'.,' "
• : 1 ELVIA Swiss Life Insurance Company Sw. frs. 100 96,666 3,723,969 721,378
• : CAP Compagnie dAssurances de Protection Juridique S.A. Sw. frs. 100 6,976 53,448 31,900
SCHWEIZ Companfa Anönima Espanola de Seguros y Reaseguros Ptas. 100 6,681,599 35,517,174 29,601,278
Casfi in hand, postal bank account, bank balances Current-account balances Cash deposit Fixed-interest investments Shares and real estate Transitory entries and other assets
Current-account and bank balances Cash deposits Technical reserves 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)
Switzerland Swiss Reinsurance Company Mythenquai 50/60, CH-8022 Zurich with branch offices in IVIelbourne, New York and Toronto
European General Reinsurance Company of Zurich Mythenquai 50/60, CH-8022 Zurich with a branch office in Madrid
United States North American Reassurance Company 237 Park Avenue, New York, NY 10017
Western Atlantic Reinsurance Corporation 380 Madison Avenue New York, NY 10017
Barbados Atlantic International Reinsurance Company Limited Chancery House, High Street Bridgetown
Australia / New Zealand Australian Reinsurance Company Limited 31 Oueen Street, Melbourne, Vic. 3000 with branch offices in Sydney and in Auckland and Wellington, New Zealand
South Africa/Zimbabwe Swiss-South African Reinsurance Company Limited Swiss Park, 10 Queens Road Parktown 2193, Johannesburg 2000 with branch offices in Durban, Cape Town and Pretoria and in Harare, Zimbabwe as per November 1993
Spain Suiza de Reaseguros (Iberica) Agencia de Reaseguros, S.A. Pasee de la Castellana, 135 Madrid 28046
Colombia Compania Suiza de Reaseguros Oficina de AsesorfaTecnica Calle 72, No. 12-65, Piso 9 Apartado aereo 057293, Bogota, D. E.
Mexico OFATEC (Mexico) S.A. de C.V. Viena71, Piso 5 Col. del Carmen Coyoacan Apartado postal 12-747 Oficina de correos No. 12 03020 Mexico
Philippines SwissRe Advisers Limited lltfi Floor, PCI Bank Tower I Makati Avenue cor. H.V. de la Costa Street Makati, Metro Manila
Singapore SwissRe Advisers (Singapore) Pte. Ltd. Raffles Place No. 44-03 UOB Plaza 1, Singapore 0104
Switzerland ELVIA Swiss Insurance Company Zurich Bleicherweg 19 CH-8022 Zurich with branch offices in Amsterdam and Paris with branch offices in Amsterdam and Paris
ELVIA Travel Insurance Company Tödistrasse 65 CH-8039 Zurich with branch offices in Amsterdam. Brussels, Milan, Munich, Paris and Vienna
CAP Compagnie d'Assurances de Protection Juridique S.A. Avenue de Champel 8c CH-1211 Geneva12
Union Franco-Suisse d'Assurances Vie 29, rue des Poissonniers F-92522 Neuilly-sur-Seine Cedex
Spain Compahia Europea de Seguros, S.A. C/Serrano, 213-lnfanta M.^ Teresa, 23 E-28016 Madrid
Grupo La Equitativa Alcala, 63 E-28014 Madrid with branch offices in Lisbon and Oporto
United Kingdom General Surety & Guarantee Co. Limited Hawthorn Hall, Hall Road Wilmslow, Cheshire SK9 5BZ with a branch office in London
Glossary of Teohnioal Terms and Classes of Business For readers who are not familiar with insurance and reinsurance, the following glossary briefly defines various tech­ nical terms and classes of business as used in the Annual Report.
Cash deposits: A sum left by the ->• reinsurer in the hands of his client to guarantee contractual liabilities.
Cession: Insurance that is reinsured; passing on of the ->• insurer's ->• risks to the ->• reinsurer against payment of a premium.
- Retrocession: Passing on by the ^ reinsurer of the ->• risk accepted in reinsurance to other companies (-• retrocessionaire).
Claim: Payment for the loss incurred under the terms of a ->• (re)insurance contract.
- Claims incurred: All claims payments plus the adjust­ ment in the -• outstanding claims reserve of a business year.
Co-insurance: Where a number of -• insurers and/or -»• reinsurers each share part of a ->• risk.
Co-insurance basis: System of Life reinsurance under which the ->• reinsurer assumes a share of the -• risk (pre­ miums, benefits, setting-up of reserves, etc.) at the same terms as the reinsurer's client (cf. risk premium basis).
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.
Hull damage: Damage to or loss of aircraft and waterborne vehicles.
risks - Insurer (also direct/primary insurer): Insurance com­ pany in a direct contractual relationship with the ->• policyholder.
Life insurance in force: All sums insured in Life busi­ ness.
- 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.
Premium: Amount paid by the -i- policyholder to the ->• in­ surer in the business year in return for insurance cover.
- Earned premium: Part of the premium (including unearned premium of the previous year) applicable to the expired part of a reinsurance period continuing after the balance-sheet date (cf. unearned premium).
- Gross premium: Insurance premium before deduc­ tion of the ceded premium (->• cession) or reinsurance premium before deduction of the retroceded premium (->• retrocession).
- Retrocession premium: Premium paid to the retro­ cessionaire for the part of the risk accepted.
insur- - Financial reinsurance: Form of reinsurance treaty with reduced ^ risk and specific consideration of accounting features of the -• insurer.
- Treaty reinsurance: Participation of the ->• reinsurer in certain sections of the -• insurer's business as agreed by treaty.
Risk premium basis: System of Life business under wtiich the -• reinsurer only participates in the death risk in so far as it exceeds the -+ policy reserves (-• co-insurance basis).
Technical reserves: In the Non-Life sector: Reserves for unearned premiums and -• outstanding claims; in the
Non-Life insurance: All classes of insurance business with the exception of Life.
- Aviation insurance: Insurance of accident and liability risks, as well as ->• hull damage, in connection with the operation of aircraft.
- Business interruption/Loss of Profits/Business In­ come Protection insurance: Insurance against finan­ cial effects of a loss on a company's income. The insur­ ance covers overhead costs (interest, salaries, etc.) and lost profit. This business is mostly included in the corresponding insurance class (principally Fire and Engineering insurance).
- Haii insurance: Insurance of crops in open fields or of greenhouses and their contents against hail, storm and other natural hazards.
- Products Liabiiity insurance: Insurance of the liability of the manufacturer or supplier of goods for damage caused by their products.