to the General Meeting of the Shareholders on the 15th November 1968 60 Mythenquai, Zurich
Managers W. Bruppacher A.-L. Chenaud W. Eschmann R. Hedinger* J.-E. Rossier A. Schütz
Business Experience On the whole our 104th year of operations closes more favourably than the previous year.
Reinsurance The technological and sociological changes mentioned in the last Annual Report and the universally perceptible inflationary movements, which continue to influence the risk situation in insurance, have persisted in the year under review.
However, a number of factors hinder the speedy imple­ mentation of these measures for improvement. As is illus­ trated by the Marine branch, which has succeeded in reducing its losses substantially, years of sustained effort are required.
As a basis for new tariffs, the loss statistics for previous years have been largely robbed of their value by the rapid succession of changes in the risk situation. A prospective approach must take their place. But not even prospective
The unrealistic assessment of loss amounts is a direct con­ sequence of lengthy surveys, of the imfortunate slowness of legal processes in many cases, and of the difficulty of evaluating, before completion of rehabilitation therapy, the degree of possible permanent disablement resulting from bodily injury. These circumstances deserve the closer attention of many direct insurers in their estimates of the share of loss devolving upon the reinsurer.
The premium income for own account amounted to Sw. frs. 1,556 million (previous year, Sw. frs. 1,477 million). For the Swiss Re Group the net premium income reached Sw. frs. 2,101 million (previous year, Sw. frs. 1,998 million). Although minor shifts of emphasis occurred, the structure of our business, both geographically and with regard to branch composition, changed little from the year before.
The aggregate underwriting result, which showed a deficit of Sw. frs. 13.4 million in the previous year, deteriorated in the year imder report to a deficit of Sw. frs. 23.3 million.
The Marine branch, which direct insurers and reinsurers have for years been striving to improve, seems to have passed its nadir. By rejecting business on the one hand and improving conditions on the other, it has been possible to halve the deficit of the previous year. This deficit derives largely from the run-off of losses which occurred in earlier underwriting years. Although it is particularly difficult to form a true impression of the future development of Marine business, owing to its characteristic run-off of losses for many years, it would seem to be a reasonable forecast that the improvement in results will continue.
The General Third Party Liability and Motor Third Party Liability branches still incurred a considerable loss, albeit smaller than in the previous year. The opening remarks as to the existence of delayed loss-reporting by ceding com­ panies and of frequent underestimation of loss amounts deny us the conclusion that the slightly less adverse deficit this year signifies an improvement trend. We are tackling the problems of this unprofitable branch in various ways and by various methods, some of them newly devised, in order to bring the situation rmder control.
Bonds and Preference Shares of Banks, Public Utilities, Industrial and other Gompanies 510,705,000 483,682,000
Following the abolition of the personnel quota for Swiss, the serious shortage of qualified staff has finally been reduced. The number of employees, which stood at 480 even in 1960, mounted from 504 to 546 during the year under review. The consequent additional costs have not been felt to full effect in the year of report. Rationalization measures also helped to account for the fact that manage­ ment expenses for the year rose by only 8.3 % (9.6 % in the previous year) to Sw. frs. 23.6 million. The business year 1965/66 served as the basis of assess­ ment for Zurich Cantonal and Community taxes paid dur­ ing the year under report, and it reflected, of course, the losses caused by the American hurricane "Betsy". Further relief was derived from the reclaiming of taxes paid at source on investment income in various countries with which Switzerland has concluded new or modified doubletaxation agreements. For these exceptional reasons the overall tax requirement diminished from Sw. frs. 6.6 mil­ lion to Sw. frs. 4.1 million. In the account for Depreciation, Fluctuations in Foreign Currencies and Stock Exchange Rates, appreciable gains were made under the heading of foreign currencies, in connection with the devaluations of November 1967, and these more than sufficed to offset the depreciation on se­ curities and other depreciation not covered by realized capital gains; there remained a surplus of Sw. frs. 4.9 mil­ lion (net depreciation requirement of Sw. frs. 1.3 million in previous year), which contributed essentially to the better result for the year under report.
Our esteemed Honorary Chairman, Mr. Erwin Hürlimann, died on 6th July, 1968 in his 89th year. The deceased served in our Company from 1904 to 1966. As General Manager from 1921 to 1930, and later as Managing Director and Chairman of the Board of Directors, he devoted all his energies, his vast knowledge and his world-wide expe­ rience to the development of our Company. We mourn the death of a unique figure and shall hold him in lasting memory.
On 30th June, 1968, Mr. G. A. Gubler, Deputy Manager, entered well-earned retirement. We would like to express our gratitude to Mr. Gubler for his many years of valuable service and his devotion to the interests of our Company.
The net profit for the year of report amounted to Sw. frs. 30.0 million, compared with Sw. frs. 27.5 million in the pre­ vious year. Including the balance brought forward of Sw. frs. 2.7 million the sum of Sw. frs. 32.7 million is at the disposal of the General Meeting. Although the reinsurance business in the most important non-Life branches is still far from producing a satisfactory result, the Board of Di­ rectors considers it warranted, in view of the exceptionally good showing in the financial sector, to propose payment of an unchanged dividend of Sw. frs. 60.— and of a bonus of Sw. frs. 10.— per share. Furthermore, it proposes a contri­ bution of Sw. frs. 2.5 million, as in the previous year, to the Staff Life Assurance and Pension Fund, Sw. frs. 350,000 to Donations (Sw. frs. 300,000 in the previous year), and Sw. frs. 350,000 to Directors' Remuneration (Sw. frs. 300,000 in the previous year). Upon acceptance of these proposals by the General Meeting the balance carried forward would be Sw. frs. 1.5 million.
The formal proposal of the Board of Directors thus reads: Sw. frs.
If this proposal is accepted, an amount of Sw. frs. 70.— will be paid on presentation of Dividend Coupon No. 13 (Sw. frs. 49.— after deduction of the Federal Withholding Tax of 30 %).
The actuarial auditor, Mr. W. Saxer, has moreover con­ firmed in his report that the technical reserves of the Life department at the end of 1967 were correctly calculated on the basis approved by the Swiss Federal Council.
embracing the insurance business for the calendar year 1967 and the other income and expenditure for the period from the 1st July, 1967 to the 30th June, 1968
Zurich, 15th October, 1968 By order of the Board: M. E. Eisenring, Chairman General Managers: W. Leimbacher H. F. Rudolf H. B. Vischer
We have pleasure in recommending that the Accounts as at the 30th June, 1968 be approved, that the Adminis­ tration of the Company be given full discharge in this respect with best thanks, and that the proposals of the Board regarding the distribution of the profit be accepted.
The Swiss Re Group The composition of the Swiss Re Group in the narrower sense of the word remained unaltered in the year under report. It continues to comprise the parent company, the New Holding, Ltd., the European General Reinsurance Company of Zurich and, apart from the branch establish­ ments and a number of administrative and advisory offices, the six subsidiary companies domiciled abroad, the prin­ cipal figures for which are given on pages 21 — 23. In terms of share capital the structure of the Group re­ mained as before; however, the Australian Reinsurance Company received from the parent company a further contribution of A $ 250,000 to reinforce its resources for the development of new Life business. In American non-Life reinsurance business the measures for improvement are being vigorously pursued; however, this has proved to be a protracted process and up to the end of 1967 it had not yielded the expected improvement; on the other hand, the progress of the other overseas sub­ sidiaries has been satisfactory. The business year of the New Holding and of our overseas subsidiaries corresponds to the calendar year 1967.
As far as the Group in the broader sense is concerned, the majority holding in the Mercantile and General Reinsur­ ance Company, Ltd., London, which duplicated to a large extent the activities of the world-wide organization of the Swiss Re, was sold in June 1968 to the Prudential Assur­ ance Company, Ltd., London. This produces a clearer market situation and enhances the earning power of the Swiss Re.
Premium Income The first table shows the total premiums actually produced by the Swiss Reinsurance Company and its subsidiaries; thus the inter-company exchange of business has not been taken into account. By deducting retrocessions to com­ panies outside the Group, we obtain the net retained pre­ miums of the Group, as indicated: in millions of Sw. frs. in millions of Sw. frs.
The distribution of these retained premiums between the parent and subsidiary companies is as follows: in millions of Sw. frs. in millions of Sw. frs.
1967/68 1966/67 in millions of Sw. frs. in millions of Sw. frs.
Underwriting Result (incl. Management Expenses) Net Investment Income, Net Realized Capital Gains, and Taxes
Underwriting Result (inch Management Expenses) 28,000 764,000 Net Investment Income and Net Realized Capital Gains 128,000 777,000
The gross business in force increased by C $ 103 m. to C $ 736 m., which meant correspondingly heavy pre-financing costs. The immediate amortization of these resulted in a reduced technical profit, despite a satisfactory under­ writing experience and a higher investment income. — As in the previous year, no dividend was paid.
Underwriting Result (incl. Management Expenses) - 310,000 i - 137,000 Investment Income, Net Realized Capital Gains, and Taxes 428,000 260,000
Experience in Non-Life branches was again adverse, pre­ dominantly in the Third Party Liability, Burglary and Engineering lines. Favourable mortality experience pro­ duced good results in Life business, but these are not apparent owing to the pre-financing of new business. — As in the previous year, no dividend was paid.
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