to the General Meeting of the Shareholders on the 19th November 1965 60 Mythenquai, Zurich
Board of Directors E. Hürlimann, Honorary Chairman M. E. Eisenring, Chairman Paul Keller, Deputy Chairman Ernst Froelich Karl Brunner Paul Ruegger R. S. Hegner Hans Schindler Max H. Schneebeli Max Petitpierre Werner Ahegg
Deputy Managers E. Bart E. Bosshardt V. Cachin G. A. Gubler R. Hedinger W. Küster
J. J. Hagedorn G. Huguenin E. A. Kubli P.-F. Niquille H. Odermatt V. Philippi H. Schönenberger P. Schuppli E. Spargnapani
By a resolution of the General Meeting of Shareholders on the 22nd May 1964, paragraph 29 of the Articles of Asso­ ciation has been amended so that the Company's books will in future be closed and the annual balance struck as at the 30th June instead of the 31st December. The purpose of this change of date is to base the Profit and Loss Account and the Balance Sheet on more exact figures and to reduce the necessary estimates to a minimum. As before, our Profit and Loss Account is based upon the insurance opera­ tions of the past calendar year, but the financial trans­ actions are recorded for the period from the 1st July to the 30th June and the balance-sheet valuations are effected as at the 30th June. This 101st Annual Report, which marks the change-over from the old to the new accounting scheme, embraces the operations for the calendar year 1964 and — by way of exception — the financial transactions, in parti­ cular the interest income and the entire management ex­ penses, for the 18 months from the 1st January 1964 to the 30th June 1965.
Business Experience The overall result of the 101st business year features an even less favourable outcome than the previous year in non-Life business, as against a raised profit in Life assu­ rance and a pronounced increase in investment earnings, accompanied by lower requirements for depreciation and lighter tax expenditure.
Reinsurance The gross premium income has risen by Sw. frs. 210 mil­ lion, or more than 15%, to Sw. frs. 1,571 million. The in­ crease is greater than in the previous years and this is partly explained by the amended date of closing the books; the premium income figure in fact still relates to the ca­ lendar year but as practically all ceding company state­ ments were for the first time available for the complete calendar year the figure for the year under report has been influenced by extensive, supplementary entries of a non­ recurring nature, especially in the Marine and Life bran­ ches. The additional premiums, which will not re-appear in the next statement of accounts, amounted to about Sw. frs. 74 million, which reduces the ordinary business growth to Sw. frs. 136 million, or 10 %. All branches have contributed to the rise in business volume.
The aggregate underwriting result has further deteriorated in comparison with the previous year and shows a deficit
of Sw.frs. 3.3 million. Apart from the Life sector, surpluses have been achieved only in a few of the lesser lines of insurance, whereas in some of the main classes the deficits swelled considerably as compared with the previous year. A disquieting characteristic is that these deficits were not provoked by solitary catastrophes but must clearly be attri­ buted principally to the inadequate direct insurance pre­ miums for certain risk complexes or for entire areas.
In Marine insurance the modified postings in connection with the new balancing date have created an enormous and unique rise in premiums. However, the business result
is disappointing. In this branch too, which was remarkably stable for decades, the premium rates have been forced down to a completely inadequate level. The year under review was also adversely affected by belated claim char­ ges from earlier business years.
For many years now we have shown the quoted securities in the balance sheet by the "cost or market" method, i. e. in principle at the cost price hut at a lower value if the market quotation is below the cost value on the balancesheet valuation date. Hence, over the course of time a very appreciable hidden surplus has accumulated on a part of the quoted securities — in particular the older holdings of shares — and this serves to cushion even sizeable stock exchange fluctuations. — Application of the "cost or mar­ ket" method in the year of report necessitated provision for depreciation on shares and especially on fixed-interest securities. However, this depreciation is of no material effect on the Profit and Loss Account, as it is more or less offset by realized capital gains. — Despite the realization of these gains and the unusual fall in the market, both for shares and for bonds, in several countries, the hidden surplus on quoted securities receded only by approximately 14% between the 31st December 1963 and the 30th June 1965.
The unquoted investments, especially the permanent hold­ ings and real estate, figure in the balance sheet on a similar basis. They likewise incorporate substantial hidden sur­ pluses. The item "Shares of Insurance Companies and Permanent Holdings", with a book value of Sw.frs. 176.7 million, chiefly consists of the shares of our six overseas reinsurance subsidiaries, the shares of the New Holding, and the block of Nationale-Nederlanden shares acquired in the year under report.
In contrast to the New Holding, the trusts set up overseas, partly on account of supervisory regulations and partly as a war safeguard, are not legal entities; the assets vested in these trusts appear directly in the Balance Sheet, and the investment income in the Profit and Loss Account, of the Swiss Reinsurance Company.
In accordance with Article 30 of the Artic­ les of Association, the Board of Directors proposes that the General Meeting should allocate the net profit as follows: 5 % Statutory Dividend Staff Life Assurance and Pension Fund Directors' Remuneration
If this proposal is accepted, and after deduction of the Federal Coupon Tax of 3% and the Federal Withholding Tax of 27%, Sw.frs. 52.50 will be paid on presentation of Dividend Coupon No. 10.
Capital Funds After approval of the Annual Accounts for the business year 1964/65 the capital and free reserves of the Company amount to Sw.frs. 206,060,000.
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 1964 were correctly calculated on the basis approved by the Swiss Federal Council.
Sw. frs. Sw. frs. Sw. frs. Sw. frs. All classes excl. Life
Investment Income (less Interest on Life Assurance and Annuity Funds and other technical reserves) 85,107,351 52,268,161
Fire 586 523 Hail 10 9 Burglary 27 28 Engineering, Water Damage, Plate Class and Livestock 19 17 Marine 144 103 Accident 111 107 Health 81 • 81 Third Party Liability 502 463 Surety, Fidelity and Credit 90 86 Life 374 318
Investments For the following comparisons too, those items which could produce a duplication of figures have been eliminated. Holdings within the Group do not appear as such, since the consolidation of statistics involves presentation of the subsidiary companies' assets instead of their book value. Consequently the holdings included here are merely those which are not counted as investments within the Group.
Capital and Free Reserves The consolidated capital and free reserves of the Swiss Re Group, after distribution of the profit, attained the figure of Sw.frs. 402 million at the 30th June 1965, as against Sw. frs. 359 million at the end of the previous business year.
Net Premiums in millions of US 1 in millions of US I
Investment Income, Net Realized Capital Gains, and Tax Refund * adjusted for changes in commission equity The large underwriting deficit is due to the very disappoint­ ing experience in Fire business and the belated claim advices in the Third Party Liability lines. — The dividend paid has remained unchanged at US I 1.5 million.
Share Capital US I 3,000,000 in millions of US | in millions of US $
* adjusted for changes in commission equity The adverse underwriting result derived chiefly from losses in the Motor business. However, the investment income has made it possible to achieve a modest net profit. As in the previous year, no dividend was paid.
Underwriting Result (incl. Management Expenses) — 0.1 — 0.1 Investment Income, Net Realized Capital Gains, and Taxes Q 4 Q 2
The South African business experience was satisfactory, both in Life and in the non-Life branches; on the other hand, the experience in foreign business was adverse. The realized capital gains have contributed materially to the increased net profit. The dividend paid remained unchanged at Rand 27,900.
Australian Reinsurance Company Ltd. Melbourne Share Capital A 3S 500,000 in millions of A £ in millions of A £
Underwriting Result (incl. Management Expenses) — 0.06 — 0.03 Investment Income, Net Realized Capital Gains, and Taxes 0.08 0.05
United States Branch 1910 All classes excl. Life 161 East 42nd Street, New York, N. Y. 10017
'North American Reinsurance Corporation 1940 All classes excl. Life 161 East 42nd Street, New York, N.Y. 10017 with Offices in Atlanta, Chicago and San Francisco
North American Reassurance Company 1923 Life 161 East 42nd Street, New York, N.Y. 10017 with Offices in Atlanta, Chicago, Dallas and San Francisco
Swiss - South African Reinsurance Company Ltd. 1950 All classes 408 Swiss House, 86 Main Street, Johannesburg with an Office in Cape Town
Australian Branch 1955 All classes 51 Queen Street, Melbourne C. 1 with an Office in Sydney
SwissRe Corporation 1948 161 East 42nd Street, New York, N.Y. 10017
SwissRe Advisers Ltd. I955 Rooms 820/23, Union House, Connaught Road/Chater Road, Hong Kong
London Contact Office 1964 Union Building, 78—80 Cornhill, London E. C. 3