Summary of Imporlant Figures in millions of Swiss francs Swiss Re, Zurich 1991 1990
Non-Life reinsurance Life reinsurance Investment income Management expenses Rate fluctuations, depreciation, value adjustments
Profit applicable to minority shareholders Consolidated net profit Consolidated net profit per share* Consolidated net profit per non-voting share*
General Managers Ernesto Jutzi Hans R. Kaufmann Theo Obrist Werner G. Seifert
German-speaking Switzerland, Germany, Austria, Eastern Europe, Netherlands, Denmark, Sweden, Norway, Finland, Iceland B. Heyer, Senior Executive Manager E. Etter, Executive Manager Executive Managers W. Hersberger, W. Müller, R Schmid Managers J. Eugster, T. Hiltmann, R. Hunzlker, N. Müntener, P. Neuwirth, M. Oesterreicher, R. Siegrist
French- and Italian-speaking Switzerland, France, Italy, Belgium, Luxemburg, French-speaking Africa R. Martignier, Senior Executive Manager A. Galfetti, EExecutive Manager Executive Managers B. Gillland, M.-L. Musy Managers D. Corbaz, C. Herzog Member of Management R. Rüttimann
Executive Managers H. Vollenweider F. Eugster Manager J. Spühler Member of Management H. Stettler
International business, captives, US/UK brokers U. Winter, Senior Executive Manager H.-K. Zulauf, Senior Executive Manager E. Baumann, Manager Managers H. Arrenbrecht, M. Becker, M. Bradley, H. HeftI, W. Meier, B. NIgg, P. Schrenz, J. Thinnhof
Reinsurance technique, acquisition, special risks, insurance medicine J.-C. Mayor, Senior Executive Manager* H. Lüthy, Senior Executive Manager Executive Managers R. Boutin, S. Gourant, E. [Jelco, S. Steiner, J.-P. Vogel, K. Wettenschwiler Managers Y. Burgener, A. Chuffart, J. Forster, H. Fuchs, E. Ruber, E. Jean-Malret, P King, M. Lies, A. Loye, H. Menzl, H. Schellenberg Members of Management M. Fessel, W. Müller, A. Perret
A. Sulzer, Executive Manager H. Voser, Manager Managers A. DiezI, M. Freylinger
Executive Committee and Group Management A. W. Saxer, Chief Executive Officer General Managers E. Jutzi, H. R. Kaufmann*, T. Obrist, W. G. Seifert Deputy General Managers R P. Hügle, B. Laube
P. P. Hügle, Deputy General Manager B. Lautre, Deputy General Manager
Capital market investments, real estate B. H. Letsch, Senior Executive Manager F. E. Rohner, Executive Manager Executive Managers A. Decurtins, B. Petrin, J.-P. Preyer Managers 0. Benz, E. Caru, M. Gürber, F. Marty, M. Ringll
Catering, company premises, internal services, share register D. Söhner, Executive Manager Member of Management G. Müller (Special assignments)
Holdings, planning and control, law and taxes J.B.R. Lietrerman, Senior Executive Manager G. Blanc, Executive Manager H.W. Kreis, Senior Executive Manager Managers C. E. Brooks*, R Meier Members of Management M. Gaal, W. Künzi
Personnel service, training R. Oberle, Senior Executive Manager J. Niederer, Executive Manager Managers J. Elmiger, P. Eugster, E. GIger
E. Franci, Senior Executive Manager H. Brechet, Manager W. Engter, Manager Managers R. Böschung, E. Hunold
In the 1991 business year, the head office achieved a profit of Sw.frs. 164.4 million, about Sw.frs. 23.2 million (16.4%) more than in the previous year.
These figures enable the business experience to be sum­ marized as follows: The fact that the underwriting loss in Non-Life reinsurance dropped only marginally and remained at an unsatisfacto­ ry level indicates that specific problems continued to affect this sector in the year under review: - First, the loss development once again followed an adverse trend which was characterized both by a grow­ ing incidence of large individual losses and by natural catastrophes - most prominently two typhoons in Japan. Overall, the year following the severe winter storms in Europe did not bring about the anticipated re­ covery; instead, the 1991 loss burden again amounted to more than the average of recent years.
age awareness among all market participants that private insurance must return to premiums that are commensurate with the risks if it is to fulfil its important economic function of risk spread in an efficient and reli­ able manner. We will use all our influence to ensure that this realization is put into practice through remedial measures - first and foremost in the form of rating pro­ cedures tailored to the corresponding risk and taking into account the loss experience.
- Finally, the large undenwriting loss in Non-Life reinsur­ ance reflects the financial support which SWITZER­ LAND General, a subsidiary of the Swiss Re Group, received in the form of risk transfer when it ran into diffi­ culties in 1990 in connection with financial guarantee transactions. In the meantime, the entire problem area (financial guarantees granted in Surety business be­ tween 1986 and early 1990) has been clarified, and it can now be stated that the maximum loss which the Swiss Re Group could suffer from this ill-fated business is Sw.frs. 338 million. Against this maximum amount can be set collaterals (counter-guarantees and securi­ ties) and we are currently proceeding with recuperation - in part by way of legal proceedings. We are confident that some of the securities will be realized, reducing the loss amount accordingly. Nevertheless, allowance was made for the overall maximum loss by means of value adjustments and provisions, mainly in the parent com­ pany's 1990 account, but also in its 1991 account.
- The rise in management expenses (8.8%), which are largely incurred in Switzerland, has to be viewed in the light of inflation which reached a rate of almost 6% in Switzerland.
Despite exceptional burdens and adverse market condi­ tions, the profit of the business year rose by 16.4%, which is basically why the Board of Directors has decided to pro­ pose to the General Meeting that both the dividend and the capital funds be increased.
This result has only been possible thanks to the knowl­ edge and ability, the efforts and achievements of Swiss Re's employees. We therefore set great store by express­ ing our sincere thanks to all our members of staff.
The aerial photographs in this report do not reflect homo faber - man the worker, man the producer. They concern more the inquisitive, probing, pensive, hopeful and search­ ing side of man and as such cover a wide range: geo­ graphically above all, having been taken from thirteen countries and each continent; but also thematically, from the places of workship of major religions and Indigenous peoples to a paragon of modern science, a radar radiotelescope probing the cosmos for signs of extraterrestrial life-forms and from the tumulus grave of a Japanese "celestial son" to a "medicine wheel" used by North Ameri­ can Indians to align with the rising of particular stars and the solstitial points on the horizon. Chronologically, too, they extend back to early ages and prehistory. The puzzles posed by turf art In Great Britain and the earth drawings found in the deserts of both Americas also form part of man's inquisitive nature: defying all superficial explanation, the questions they raise are clearly directed at the heav­ ens. It might seem at first glance that thematically the range of pictures Is too extensive. How can the inclusion of a bull-fighting arena, a volleyball court and works of comtemporary land art be justified among this collection of cul­ tural history? Is this a pretentious way of saying that sport and art are merely pseudo-cults? Far from it. They evoke homo ludens, whom the Dutch historian Johan Huizinga put on par with homo faber. Huizinga regarded the play element as nothing less than the origin of culture - and as such the root of all questioning.
0m. : •1i>: •|w jferf •• : t i "1 fJ; .4: T J f*'* JS
"Spiral Jetty" by Robert Smithson in the Great Salt Lake in Utah, USA. The 150 m long spiral jetty is an icon of land art
Fiesta in Pampiona, Spain: for a short while the Plaza de Toros belongs to the fighting bulls and anyone who dares to join them in the arena
Reinsurance according to classes of Insurance, types of reinsurance and geographical origin. In the year under report the prin­ cipal classes of Insurance and categories of reinsurance showed a negaflve underwriting development In Europe, Japan and the USA. The Inauspicious results are not, how­ ever, attributable to a fortuitous development but largely to Insurers' widespread reluctance to Implement remedial measures. There are many reasons why market partici­ pants have adopted such a dilatory attitude although, as far as Europe Is concerned, they are rooted In the deregu­ lation of the Insurance Industry within the European Com­ munity and the accompanying structural changes. Insur­ ers are attaching greater Importance to maintaining and, whenever possible, expanding their Insurance portfolios than they are to effecting a remedy which might jeopardize these goals. Although It Is acknowledged that premiums will have to be raised In the ailing branches, especially In­ dustrial Fire business, and a few tentative efforts aimed at Improvement can be discerned, vigorous measures are needed to bring about a genuine reversal. Reinsurers have a major role to play and Swiss Re will resolutely persist In Its efforts to bring about an Improvement. It depends, however, on whether economic reality Instills In market participants the will to end the unsatisfactory profit situa­ tion.
In the year under report, the Swiss franc weakened slightly against most of the major foreign currencies used In rein­ surance. This development meant that Income earned abroad (especially premiums and Investment Income) rose after conversion Into Swiss francs, although the outgo payable abroad (In particular claims payments, commis­ sions and management expenses) was likewise higher. The 18.3% growth In gross premiums shown In the year under report would have been 14.3%, If exchange rates had remained constant.
The following report refers basically to the annual ac­ counts, I.e. the position In Swiss francs; where the effect of foreign currency rates appears significant. It Is com­ mented upon.
Swiss Re's worldwide reinsurance activity Is made up of a large number of Individual elements and Is summarized
The American market was still marked In the year under re­ port by an oversupply of capacity. From a relative view­ point, however, the loss burden remained unchanged, In­ dicating that premiums In general have not slipped any fur­ ther and In certain segments have even been raised. For some years the undenwrlting cycle has been In a trough and the market Is finding It difficult to Instigate a revival In view of the good financial Income and the Increase In value of capital Investments. The equity ratio of American com­ panies is distinctly higher than that of comparable Euro­ pean Insurance companies, which Is why the free flow of financial Income can Induce a lax underwriting policy that Is then long and wearisome to rectify.
\n Accident reinsurance, the premium income rose by 18%, stemming mainly from some European markets and the United States. - In the year under report business closed with a profit, unlike in the previous year. Premium adjust­ ments as well as the favourable run-off of losses contrib­ uted to the positive result in this difficult and volatile class of business.
Premium volume in Sickness reinsurance rose by 21%. General growth in existing business and higher treaty shares contributed to the increase. - Having barely achieved a profit in the previous year, this type of business, which bears similarities to social security and only allows for modest profit margins, produced a minimal loss.
Premium Income In Engineering reinsurance rose by 15%. The increase In this class of business, which is highly vulnerable to economic influences, stems from a few Euro­ pean and overseas territories. - A series of large losses led to a considerable deterioration of the result. Depressed premiums, especially in CAR and EAR reinsurance, meant that margins are too low to offset an accumulation of larger losses.
The 4% premium Increase in Aviation reinsurance was largely due to foreign exchange rates. The market situation remains unsatisfactory and recovery is long in coming. Premium income from facultative business showed a fur­ ther decline. - The underwriting result of the year under report Improved, but remained negative. Even though premium rates have already doubled in airline business, which is especially ailing, prospects remain unfavourable. Intensive additional efforts are needed to balance out premiums and losses. So far the anticipated tightening of capacity in the relatively small and transparent aviation market has only partially taken place.
Nuclear Energy reinsurance registered a growth of pre­ mium, the first in several years. This was not, however, due to new business but the adjustment of sums insured, re­ flected in increased premiums. - The underwriting result was again positive in the year under report thanks to a largely claims-free experience. A considerable portion of the profit was, as usual, allocated to the catastrophe reserves as a precautionary measure.
Premiums in Credit and Surety reinsurance rose by 15%. The increase is due to greater demand for Credit insur­ ance in Europe and an increase in Surety business in the United States. - The deterioration of Credit results emerg­ ing in the previous year led to a collapse In the year under report and a correspondingly high underwriting loss. A gratitying profit was on the other hand attained in the smaller U.S. Surety sector. The recession has brought high loss burdens In Credit business in some European coun­ tries.
The gross premiums showed a gratifying rise of 18%, to Sw.frs. 664 million. At constant foreign exchange rates, the increase would have been 14%. A significant part of this increase stems from the major markets in Europe and overseas. The growth of net premiums by Sw.frs. 92 mil­ lion to Sw. frs. 629 million was curbed somewhat by higher retrocessions. The proportion of additional covers (acci­ dental death, disability, sickness and annuity covers) dropped slightly in the year under report.
The undenvriting resuit of Sw. frs. 38 million was Sw. frs. 3 million less than in the previous year. Technical interest rose, primarily as a result of the increased reserves in the previous year. The outgo for claims incurred rose by 27%, among other things because of the higher loss burden for both death and disability. Commissions rose because of higher premiums and, despite the increased loss burden, profit commissions also increased. The fall in surrenders was offset by the higher adjustment in the policy reserve.
The actuarial auditor, Mr. Hans-Ulrich Gerber, Lausanne, has confirmed in his report that the technical reserves of the Life reinsurance business at the end of 1991 were cal­ culated on the bases approved by the Swiss Federal Council.
In the foreign exchange markets the Swiss franc depre­ ciated against most other currencies. Money market rates, which were high for Swiss standards, provided only limited support forthe national currency. Short-term interest rates in too many continental European and Anglo-Saxon coun­ tries were higher than in Switzerland. The US-dollar gained 25% against the Swiss franc in the first half of the year be­ fore giving way as the anticipated healthy economic recov­ ery failed to set in and interest rates continued to decline. Compared against the Swiss franc, the US-doliar closed the year under review 5.3% higherthan the preceding year. The EMS currencies experienced approximately the same appreciation against the Swiss franc. The yen advanced significantly until mid-year but lost part of its gains when the Bank of Japan relaxed its monetary policy. On balance, the yen appreciated by 13.7% against the Swiss franc.
On the stock markets, the armed intervention of allied forces against Iraq was taken as a sign that the Gulf con­ flict would come to a rapid conclusion. All stock markets responded favourably with considerable, mostly doubledigit percentage gains. Regardless of the recession, the buoyant mood continued into the second half of the year in the United States, allowing the New York Stock Exchange to close the year at an all-time peak 26% above the previ­ ous year's level. Meanwhile, confidence in an unimpaired economic growth gradually began to erode in Europe, and share prices gave way despite a decline in capital market interest rates. Appreciation against the previous year amounted to an average of 15%. The Japanese stock mar-
ket developed against the general trend, starting with a modest share price Increase before relapsing and produc­ ing a loss of 4% at year-end.
In anticipation of declining Interest rates, new investments focused mainly on fixed-interest investments, as in the preceding year. The balance-sheet value of all fixed-Inter­ est Investments (bonds, loans and equity-linked securi­ ties) increased by Sw. frs. 560 million to Sw. frs. 5,782 mil­ lion. The average life of the bond portfolio was shorter than in the previous year, particularly with Investments In the United States and Canada. There was little investment ac­ tivity in stocks. Currency movements were the main rea­ son for investment in stocks to increase by Sw. frs. 81 mil­ lion to Sw. frs. 759 million. The acquisition of a property in Zurich and the realization of new building projects raised the real estate portfolio by Sw. frs. 105 million to Sw. frs. 1,238 million.
The first graphic on page 20 and the following table show the various investment categories at balance-sheet values as a percentage of overall capital market Investments and real estate as well as in absolute figures. The second graphic on page 20 shows the breakdown by currency.
Net cash deposits (I. e. cash deposits with clients from ac­ tive reinsurance after deduction of the deposit reserves due to retrocessionaires from passive reinsurance) in­ creased by Sw.frs. 179 million to Sw.frs. 1,880 million.
Net investment income in the broad sense (i. e. on invest­ ments as set out above, plus money market investments) amounts, after deduction of the interest required for the Life insurance and annuity fund and other technical re­ serves as well as for current-account balances and cash deposits, to Sw. frs. 751 million (previous year, Sw. frs. 740 million). The rise of 1.5% (previous year, 1.2%) was largely Influenced by the development of foreign currencies; at unchanged conversion rates there would have been a decrease of 1.5%.
On 18 September 1992, the value of Swiss Re, Zurich, on the Zurich stock exchange was as foiiows: 1,422,856 registered shares at Sw.frs. 2,450 154,000 bearer shares at Sw.frs. 2,570 3,010,000 non-voting shares at Sw. frs. 511
Since the end of 1990 an in-depth analysis has been car­ ried out to examine the management of the Swiss Re Group in general and the structure of Group Management in particular. The initial studies were made by various pro­ ject teams and the final work was done by Group Manage­ ment and the Board of Directors. The first decisions have now been taken and come into effect in 1993. Since they indicate Swiss Re's future course, they are outlined here, even though they do not directly concern the year under report.
First a fundamental discussion took place aimed at up­ dating and simplifying the strategy of the Swiss Re Group. The results of these deliberations form a document en­ titled "Strategic Vision 1992" which contains the following mission statement: "The Swiss Re is an integrated insur­ ance services concern active primarily in reinsurance and insurance, as well as in the related fields of risk manage­ ment and claims management". The 1992 strategic vision is therefore not radically new but a continued development of the strategy hitherto applied.
In addition, having reached retirement age, Messrs Hans R. Lüthy and Paul R. Jolles are resigning from the Board of Directors at the forthcoming General Meeting. Mr Lüthy was elected to the Board and its Committee in 1973 and has been Deputy Chairman since 1985. Mr Jolles has been a Member of the Board since 1984. Both gentlemen have served Swiss Re extremely well and we are deeply indebt­ ed to them.
Mr DIehl was promoted to the General Management In 1974 and, after his election as Chairman of the Board in 1979, con­ tinued to exert a profound influence on reinsurance; In particu­ lar he gained a worldwide reputation as a staunch and astute critic of the intricacies of American Liability business. - Hav­ ing guided Swiss Re through a period of both prudent under­ writing and economy measures, he has set an expansionary course founded on innovative strategy. The Group has expand­ ed its operations into the field of direct insurance, embracing also Insurance-related services.
The Board of Directors wishes to thank the retiring Chairman for his service to the company and extends to him best wishes for a well-earned retirement.
Immediately after the General Meeting, the Board of Direc­ tors intends to appoint Mr Bremi as Chairman of the Board and Mr Gut as Deputy Chairman.
On 31 December 1991, Robert Rüesch, Senior Executive Manager, Alfred Beer, Member of Management In Advisory Capacity, Eduard Locher and H. Conrad Rutishauser, Ex­ ecutive Managers, and Cle Cisson, Manager, retired. Hans-Heinrich Prey, Manager, retired on 30 June 1992. We are deeply Indebted to all these gentlemen for their many years of valuable service to our company.
The Board of Directors announced the following promo­ tions which took effect on 1 January 1992; Herbert Lüthy (Senior Executive Manager); Fritz Eugster, Hermann Hefti, Rudolf Kellenberger, Beat Niethammer, Bruno Ferro and Peter Schmid (Executive Managers); Graeme Ayers, Max Becker, Alfred DIezI, Carol Engler Franklin, Richard Glück­ ler, Fridolin Hauser, Hans Hefti, Thomas Hiltmann and Tho­ mas Lörtscher (Managers).
In the course of 1992, Willy Künzl, Walter A. Müller and Heinz Stettler joined the company as Members of Man­ agement in an Advisory Capacity.
For the Board of Directors: Walter Diehl, Chairman Arnold W. Saxer, Managing Director
Claims incurred incl. adjustment in outstanding claims reserve - 403,566,105 - 316,584,212
Securities and holdings are in principle entered at acquisi­ tion cost or, if the stock exchange price is lower on the bal­ ance-sheet date, at the lower value. Non-quoted holdings are, where necessary, entered at the lower Intrinsic value. The lower valuation Is retained until disposal of the corre­ sponding securities.
Real estate Is valued at acquisition cost, less the deprecia­ tion permitted by the tax authorities.
Current-account and bank balances and cash deposits are entered In the balance sheet at their nominal value.
Technical reserves (unearned premiums and outstanding claims) are based in principle on Information provided by clients. Additional reserves are formed on the basis of past experience for losses that are Incurred but not reported. All these reserves are entered at the amounts which will presumably have to be paid In future for the underlying liabilities. Annuity liabilities from Non-Life reinsurance and liabilities from Life business are calculated at actuarially determined present values. The technical reserves of Life reinsurance business are determined on the bases ap­ proved by the Swiss Federal Council.
The surrenders in business assumed amounted to Sw. frs. 46.7 million, of which Sw.frs. 2.0 million was debited to retrocessionaires. A total of Sw.frs. 44.7 million remained for own account.
The claims incurred comprise claims paid and the adjust­ ment in the outstanding claims reserve. In the year under report this figure for own account rose by Sw.frs. 578.0 million to Sw. frs. 3,519.7 million. Here too, the higher con­ version rates and the fewer retrocessions contributed to the rise.
The tax outgo contains both taxes on profit and on capital as well as indirect taxes. It amounted to Sw.frs. 61.9 mil­ lion, as against Sw. frs. 52.1 million in the previous year and comprises current taxes levied abroad together with the outgo expected in Switzerland on the basis of the 1991 result.
ance-sheet value of securities. The increase of the valua­ tion difference is due to the higher valuation of the bond portfolio because of interest-rates, the favourable devel­ opment of most stock markets and the positive effect of foreign currencies. The insured value of business property is Sw.frs. 347.5 million.
Holdings are largely managed by SwissRe Holding Limited and financed by loans to this company. The shareholding of Swiss Re, Zurich, in SwissRe Holding Limited appears in the balance sheet together with certain other holdings.
Of the total amount of Sw. frs. 403.7 million, Sw. frs. 401.6 million was for bank balances. A substantial part of these funds is invested short-term in the principal currencies for our business activity and is used to meet current obliga­ tions on time.
Of the total amount of current-account balances of Sw. frs. 1,086.2 million, Sw.frs. 877.8 million was for reinsurance and Sw. frs. 118.0 million for retrocession business; Sw. frs. 90.4 million concerned other balances. The decrease of current-account balances over the previous year was Sw.frs. 69.8 million.
Of the current account balances Sw.frs. 869.7 million was for reinsurance and Sw.frs. 42.5 million for retrocession business. Other liabilities totalled Sw.frs. 152.8 million, mainly comprising current accounts run for personnel wel­ fare funds and Group companies.
Cash deposits for retrocessions rose, as against the pre­ vious year, by Sw.frs. 23.7 million to Sw.frs. 63.3 million.
Non-Life Reinsurance Unearned premiums 1,055.2 961.0 Outstanding claims reserve (incl. valuation of current annuity indemnities) 6,877.9 5,821.0 7,933.1 6,782.0 in % of earned net premiums 185.6% 201.2%
For 1991 a total of 1,422,856 registered shares, 154,000 bearer shares and 3,010,000 non-voting shares are en­ titled to dividend. The 327,144 registered shares and 16,000 bearer shares not entitled to dividend were re­ served at the end of 1991 to secure conversion or option rights from future issues, to acquire holdings or for other business in the company's interest.
If the proposal of the Board of Directors is accepted, divi­ dends of Sw.frs. 48 - per share (nominal value Sw.frs. 100.-) and Sw.frs. 9.60 per non-voting share (nominal value Sw.frs. 20.-) will be paid.
After deduction of the Federal Withholding Tax of 35%, the dividends of Sw.frs. 31.20 and Sw.frs. 6.25 respectively will be paid after 25 November 1992 as follows: Registered shares by means of dividend order to the shareholders in the rec­ ords of the share register or to their deposit banks.
Bearer shares and non-voting shares against presentation of Coupon No. 3.
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 1991 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.
General Income and Outgo Investment income Management expenses Rate fluctuations, depreciation, value adjustments
The Herodeion, King Herod's palace and mausoleum, on the threshold of the wilderness of Judah, West Jordan
The cemetery for the city of the Doges on San MIchele, the "Island of the dead", In the lagoon of Venice, Italy
The tumulus grave of Emperor RIchu (fifth century) near Osaka, Japan. The hill Is 365 m long and "zempokoen", rectan­ gular at the front and rounded at the back
More than a geological curiosity: Ayers Rock, Australia, is tor the aborig­ ines a mount of the gods totally enveloped in legends and myths of the "Dreamtime "
The White Horse of Uttington, England. The turf drawing was created, pre­ sumably 2000 years ago, by uncovering the chalk beneath the grass; total length: 120 m
Western Atlantic Reinsurance Corporation, New York as per November 1992 * non-consolidated companies • acquired or founded 1991/92
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 dAssurances de Protection Juridique S.A., Geneva Grupo La Equitativa, Madrid Savoia S.p.A., Milan Savoia Vita S.p.A., Milan
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
Gay & Taylor, Inc., * 1 Atlanta, GA (USA) International Risk Management Group * 1 with worldwide organization Schweizer Rück Fondsleitung AG, ^ 1 Zurich
The following changes have taken place in the structure of the Swiss Re Group: In the year under report SwissRe Holding Limited and Swiss Re, Zurich, acquired a majority share of the voting capital of ELVIA Swiss Insurance Com­ pany Zurich, which in turn owns majority shares in insur­ ance companies in Switzerland, Belgium, Italy and Spain. As part of the realignment of insurance activity in Switzer­ land, the Swiss insurance business of SWITZERLAND General Insurance Company Ltd., Adiiswil, was trans­ ferred to ELVIA.
In Life reinsurance premium income again increased and the underwriting result improved from Sw.frs. 68 million in the previous year to Sw.frs. 70 million. The declining re­ sults of subsidiary companies in Europe were offset by better results in the United States. The net amount of busi­ ness in force increased by 19.4% to Sw.frs. 264,000 mil­ lion.
The premium volume of the North American Reinsurance Corporation, New York, rose as against the previous year by 17.1% to US$ 868.3 million. All lines of business, with the exception of Credit and Surety, contributed to the growth. Facultative business and financial reinsurance registered exceptionally high premium growth. Following a further year without major catastrophe losses, the under­ writing result stayed at about the previous year's level, facultative business having improved in particular, while the result from treaty business was somewhat worse than in the previous year. Surety business and Marine rein­ surance continued to be good. The favourable develop­ ment on the capital markets led to a higher investment result and also a vastly improved overall result. The profit shown amounted to US$ 16.4 million (previous year, loss of US$ 15.8 million). The dividend paid of US$ 5.0 million was double the previous year's amount.
In fhe year under report, the North American Reassurance Company, New York, achieved a 14.2% increase of the Life reinsurance business in force to US$ 80,500 million, partly the result of three substantial portfolio acquisitions. De­ spite losses in individual disability business, the published profit rose to US$ 29.7 million (previous year, US$ 1.9 mil­ lion) - thanks above all to high realized capital gains. The company paid an unchanged dividend of US$ 0.8 million.
The Atlantic International Reinsurance Company Limited, Bridgetown, Barbados, the North American International Reinsurance Company Limited, Hamilton, Bermuda, and the Swiss-Am Reassurance Company, New York, are active in the field of non-traditional Life reinsurance busi­ ness with insurers in the United States. In the year under report the activity of these companies produced a profit of US$ 3.7 million (previous year, loss of US$ 2.7 million). No dividend was paid, as in the previous year.
tion of major losses in industrial Fire business as well as a significant deterioration of loss experience in Motor busi­ ness (increase of thefts). - In Life reinsurance, the gross amount of business in force rose to DM 13,000 million (previous year, DM 10,800 million). The underwriting result continued to show a gratifying development. - The rise in investment income and the fall in realized capital gains produced an unchanged profit for the year of DM 12.0 mil­ lion. The dividend will again amount to DM 6.0 million.
The consolidated gross premiums of the Swiss Reinsur­ ance Company (UK) Limited, London, and the Palatine Insurance Company Limited, London, rose in Non-Life business by 24.8% to £ 79.6 million, this growth being at­ tributable for the most part to Fire reinsurance. The under­ writing loss was again higher than in the previous year in view of the generally adverse state of the British insurance market in the fields of Fire, CAR and Marine business. In Life reinsurance the growth rate was somewhat less pronounced than in the previous year, the gross amount of business in force rising to £ 10,800 million (previous year, £9,500 million). The underwriting result was again satis­ factory. - The investment income rose slightly as against the previous year. Overall, a higher loss of £ 1.2 million (pre­ vious year, £0.7 million) was shown.
At the Swiss-South African Reinsurance Company Limit­ ed, Johannesburg, the gross premiums in Non-Life rein­ surance rose by 3.9% to Rand 233.8 million. Owing to the absence of natural catastrophes and because of the lower number of large fire losses, the underwriting profit was higher. - The gross amount of business in force in Life rein­ surance rose by 15.7% to Rand 18,400 million. The under­ writing result deteriorated, in particular because of the unfavourable development of disability business. - Invest­
The consolidated net premiums rose in the year under report by 14.5% to Sw.frs. 7,495 miiiion (previous year, Sw.frs. 6,545 miiiion). The growth rate in iocai currencies was 10.1% (previous year, 11.6%).
The «Schweiz Ailgemeine» Finanz Holding AG, Munich, complements with its subsidiary companies the range provided by the "Magdeburger" and the "Vereinte" groups by offering building society and bank products; it is also active in the field of direct marketing by way of the «Schweiz Allgemeine» Direkt Versicherung AG, Augsburg. - The mh Bausparkasse AG, Munich, showed at the end of the year under report a portfolio of savings contracts of DM 12,000 miiiion (previous year, DM 10,100 miiiion), cor­ responding to a growth of 19.3%. The year's profit of DM 9.4 miiiion (previous year, DM 6.5 miiiion) was paid out in full. - The balance-sheet amount of the Augsburger Aktienbank AG, Augsburg, in which the «Schweiz Aligemeine » Finanz Holding AG has a 50% share, rose by 4.0% to DM 513.7 miiiion. The balance-sheet profit of DM 6.6 miiiion (previous year, DM 2.9 miiiion) was paid out to shareholders.
The gross premiums of Lloyd Adriatico S.p.A., Trieste, increased in the year under report by 19.6% to Lit. 1,236,900 miiiion. Of this amount, 12.5% was attributable to Life insurance with an amount of business in force of Lit. 3,540,800 miiiion (previous year. Lit. 2,593,300 mii­ iion). The profit for the year was increased by 11.2% to Lit. 52,000 miiiion, from which dividends were paid of Lit. 18,000 miiiion (previous year. Lit. 17,000 miiiion) on ordinary shares and Lit. 3,900 miiiion (previous year. Lit. 3,700 miiiion) on savings (risparmio) shares.
The SWITZERLAND General Insurance Company Limited, AdIlswII, registered a slight drop in its gross premiums by 0.9% to Sw.frs. 1,019.3 miiiion. Of this amount, 58.5% was for insurance and 41.5% for active reinsurance. In the year under report measures were introduced to restruc­ ture the company: in future international business will be handled by Swiss Re, Zurich, while certain foreign units have been restructured, sold or prepared for sale, in the course of the current year the transfer of Swiss business to ELVIA Swiss insurance Company Zurich and the take­ over of active reinsurance business by other companies of the Swiss Re Group have been concluded. The entire restructuring is, however, a complex matter and will take several years. The result was again a balanced one.
no change in Its gross premiums of £ 6.1 million. The pub­ lished profit of £97,000 is significantly less than the pre­ vious year's result of £408,000. The dividend was set at £50,000 (previous year, £150,000).
The gross premiums of the A/orth American Specialty Insurance Company, Manchester, New Hampshire, more than doubled to US$ 93.3 million. This growth is to a large extent attributable to business written for other Group companies. The company showed a profit of US$ 0.7 mil­ lion (previous year, loss of U8$ 0.5 million).
In the field of claims management, the Swiss Re's Group companies again achieved differing results./Audafex/\G, Zurich, was able to increase its turnover to Sw.frs. 39.7 million (previous year, Sw.frs. 25.9 million). The profit shown amounted to Sw.frs. 3.6 million (previous year, Sw.frs. 3.2 million), from which a dividend of Sw.frs. 2.0 million (previous year, Sw.frs. 1.8 million) was paid. - The turnover of the Thomas Howeii Group, with head office in London, rose by 12% to £63.6 million. The costs of developing further its international activity again led to a loss of £2.2 million (previous year, £ 1.2 million). - Gay & Taylor, Inc., Atlanta, registered a drop in turnover to US$ 51.3 million (previous year, US$ 54.5 million); the profit shown fell to US$ 0.9 million (previous year, US$ 1.7 mil­ lion). This development is due to the fact that traditional business declined because of structural changes and the economic situation and that the company shifted part of its activity into new segments with greater growth potential. The company paid a dividend of US$ 0.8 million (previous year, US$ 2.1 million).
The SwissRe Holding comprises most majority and mi­ nority holdings of the Group. Service companies and other holdings are, however, directly owned by Swiss Re, Zurich.
At the request of the Executive Committee and Croup Management, we have audited the consolidated financial statements for the year ended 31 December 1991 of Swiss Reinsurance Company. Our audit was conducted in ac­ cordance with accepted auditing standards promulgated by the profession. We confirm that we comply with the legal requirements concerning professional qualification and independence.
Gross premiums 7,204 7,362 14,566 12,403 Net premiums 7,083 6,428 13,511 11,506 Adjustment in unearned premiums - 82 - 642 - 724 - 524 Earned premiums 7,001 5,786 12,787 10,982 Interest on Sickness insurance fund — 365 365 300 Commissions, profit commissions, expenses - 1,828 - 1,429 - 3,257 - 2,648 Claims incurred - 5,863 -4,813 - 10,676 - 9,351
Investment income 1,209 504 1,805 1,670 Other financial income — — 38 38 Management expenses - 563 - 233 - 847 - 775 Rate fluctuations, depreciation. value adjustments 254 - 48 203 92 Other outgo — — - 29 31
Taxes Croup company profit applicable to minority shareholders * The underwriting result figures of reinsurance and insurance companies correspond to the net vaiues in accordance with commercial law (including mutual cessions).
Cash in hand, postal bank account, bank balances 575 175 769 795 Current-account balances 1,915 1,327 3,335 3,270 Cash deposits 2,798 169 2,967 2,467
Technical reserves Non-Life insurance 14,398 10,171 24,569 21,242 Life insurance 4,895 7,254 12,149 10,475
Profit applicable to minority shareholders — 33 36 27 Capital funds applicable to minority shareholders — 293 310 267
The Group accounts were compiled according to the published financial statements as at 31 December 1991 of the companies belonging to the Swiss Re Group. Only the results of the Bavarian Reinsurance Company Limited and the European General Reinsurance Company of Zurich had not yet been published at the time of the con­ solidation.
The net assets of foreign companies have been calculated using the exchange rates at the end of the year. The con­ version profit of Sw.frs. 60 million (previous year, loss of Sw.frs. 166 million) resulting from the revaluation was directly offset against the consolidated capital funds.
Fixed-interest investments are in principle entered at ac­ quisition cost or, if they are quoted and the stock exchange 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 only to registered debt instruments 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 entered at the balance-sheet values of the individual Group companies; these correspond as a rule to the acquisition cost less the depreciation permitted by the tax authorities. Revaluations which certain Group companies are required by law to make are incorporated in the consolidated accounts but have no effect on the overall result.
The technical reserves are calculated in principle accord­ ing to the provisions of the supervisory authorities appli­ cable to individual Group companies. However, in the case of the North American Reinsurance Corporation the re-
The valuation of all other items of the Group balance sheet plays a subordinate role. Foreseeable risks of loss are taken Into consideration by means of value adjustments by the Individual Group companies.
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.
This group shows a positive balance of Sw. frs. 203 million (previous year, Sw.frs. 92 million). Realized capital gains on investments produced a profit of Sw.frs. 628 million (previous year, Sw.frs. 665 million), while depreciation on investments amounted to Sw.frs. 449 million (previous year, Sw.frs. 536 million). Monetary transfers and conver­ sion of foreign currency balances produced a profit of Sw.frs. 26 million (previous year, Sw.frs. 6 million). For value adjustments and depreciation on assets outside the investment sphere Sw.frs. 2 million (previous year, Sw.frs. 43 million) was needed.
The claims incurred comprise payments for Life and Annuity insurance as well as the adjustment In the out­ standing claims reserve. The total outgo for own account rose In the year under report by Sw.frs. 225 million to Sw.frs. 1,313 million. Of this amount, Sw.frs. 954 million concerned reinsurance companies and Sw. frs. 359 million insurance companies.
The income from the Group's capital Investments rose by 14.2% (previous year, fall of 2.0%) and, before the crediting of interest in Life and Sickness business, reached a total of
In the case ot fixed-interest securities and shares and the quoted non-consolidated holdings, the difference be­ tween the lower book and higher market value otthe indi­ vidual securities, taking into account the estimated value ottaxes due on realization, amounted to Sw. trs. 2,112 mil­ lion, or 6.1% ot the balance-sheet value (previous year, Sw.trs. 1,554 million or 5.1%).
Life Insurance Life insurance and annuity fund 4,197 6,062 10,259 8,844 Outstanding claims reserve 691 54 745 642 Reserve for profit commission 7 1,138 1,145 989 in % of Life insurance In force, net 1.9% 23.6% 4.1% 4.2%
These items correspond to the capital funds at book value ot Swiss Re, Zurich. The reserves shown comprise the statutory reserve fund, the special reserve fund, the re­ serve fund tor catastrophe losses as well as the profit car­ ried forward from the previous year.
The capital funds shown in the consolidated balance sheet (sum ot share and non-voting share capital, reserves shown, consolidation reserve fund and Group profit) cor­ respond to the book value ot the funds invested in the entire Group by shareholders and non-voting share­ holders ot Swiss Re, Zurich. In the year under report Group capital funds rose by Sw.trs. 337 million to Sw.trs. 3,148 million. The positive effect from the conversion ot foreign currencies amounted to Sw.trs. 60 million (previous year, negative effect ot Sw.trs. 166 million).
Capital funds at end of previous year 2,811 2,798 Effects of exchange rate fluctuations on opening balance-sheet figures 60 -166 Paid-out profits for previous year - 99 - 99 Increase of Swiss Re's share and non-voting share capital 7 Group profit 266 216 Other movements 103 62
North American International Reinsurance Company Limited US $ 100 1,015 1,369 169
Fidelity and Deposit Company of Maryland ^ US$ 50 246,419 547,316 326,283
General Surety & Guarantee Co. Limited £ 100 2,550 11,963 6,053 mh Bausparkasse AG DM 70.0 60,025 2,070,951 -
Canada Canadian Reassurance Company 99 Yorkville Avenue, Suite 300 Toronto, Cntario M5R 3K5 with a branch office in Montreal
Bermuda Englewood Reinsurance Company Limited Belvedere Building, Pitts Bay Road Hamilton HM CX
South Africa/Zimbabwe Swiss-South African Reinsurance Company Limited Swiss Park, 10 Oueens Road Parktown 2193, Johannesburg 2000 with branch offices In Durban, Cape Town and Pretoria and In Harare, Zimbabwe as per November 1992
Colombia Compania Suiza de Reaseguros Oficina de Asesoria Tecnica Calle 72, No. 12-65, Of. 502, Bogota
Singapore SwissRe Advisers (Singapore) Pte. Ltd. 24 Raffles Place No. 25-06A Clifford Centre, Singapore 0104
Germany «Schweiz Allgemeine» Finanz Holding AG Leopoldstrasse 4, D-W-8000 Munich 40
Switzerland ELVIA Swiss Insurance Company Zurich Blelcherweg 19 GH-8022 Zurich with branch offices in Amsterdam and Paris
CAP Compagnie d Assurances de Protection Juridique S.A. Avenue de Champel 8c CH-1211 Geneva 12
Germany Italy Augsburger Aktienbank AG Lloyd Adriatico S.p.A. Haiderstrasse 21 Largo Ugo Irneri, 1 D-W-8900 Augsburg 1 1-34123 Trieste
Spain Grupo La Equitativa Alcalä, 63 E-28014 Madrid with branch offices in Lisbon and Oporto
International Risk Management Group Contact address Belvedere Building, Pitts Bay Road Hamilton MM OX, Bermuda
Gay & Taylor, inc. Six Concourse Parkway Suite 3300 Atlanta, GA 30328
J. K. Battershili Reinsurance intermediaries. Inc. 237 Park Avenue New York, NY 10017
Cash deposits: A sum left by the ̂ reinsurer in the hands of his client to guarantee contractual liabilities.
Ceding company: The reinsurer's client, i.e. the ̂ insur­ er, who passes on (cedes) ^ risks to the ^ reinsurer against payment of a ^ premium.
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 (-^ ret­ rocessionaire).
- Incurred but not reported (IBNR) losses (also late claims): Losses which have occurred but which have not yet been reported to the ̂ insurer or ̂ reinsurer on the balance-sheet date.
Co-insurance: Where a number of ^ insurers and/or ̂ reinsurers each share part of a ^ risk.
IBNR: ^ Incurred but not reported ^ Claim incurred but not reported: ̂ Claim
- Net amount: Life insurance in force of the ^ insurer after deduction of the ^ cessions or Life business of the reinsurer after deduction of ^ retrocessions.
Policy reserve: Reserve fund needed to cover future claims under Life insurance and annuity contracts.
- Net premium: Insurance premium after deduction of the ceded premium (-^ cession) or reinsurance pre­ mium after deduction of the retroceded premium retrocession).
- Unearned premium (also premium reserve): Premium applicable to that part of the period of reinsurance con­ tinuing after the business year of the balance sheet (-^ earned premium).
Facultative reinsurance: Reinsurance of theer 's ^ risks on an individual basis.
• insur- - Financial reinsurance: Form of reinsurance treaty with reduced ^ risk and specific consideration of accounting features of the insurer.
- Quota-share reinsurance: Form of ^ proportional reinsurance, providing that the reinsurer accepts a specified share of each ̂ risk of an -> insurer in a speci­ fied class of business.
- Treaty reinsurance: Participation of the ̂ reinsurer in certain sections of the ̂ insurer's business as agreed by treaty.
Retention: The amount of a -> risk which the ^ insurer does not reinsure but keeps for own account.
Underwriting result: In the Non-Life sector: Total of ^ earned premiums, less ̂ commissions, ̂ profit commis­ sions and ̂ claims incurred. In the Life sector: ̂ net pre­ miums, plus adjustment in ̂ policy reserves, less ̂ com­ missions, profit commissions and -> claims incurred.
- Accident Insurance: Insurance of individuals (per­ sonal accident) or of groups (group accident) against the economic ̂ risks in the event of death or temporary or permanent disability.
- Aviation Insurance: insurance of accident and liability risks, as well as hull damage, in connection with the operation of aircraft.
- Burglary, Fidelity and Allied Lines Insurance: Insur­ ance against burglary, breaking and entering, robbery, embezzlement: also includes water damage, glass breakage, damage to and loss of jewellery or damage or losses in connection with the keeping of animals.
- Credit Insurance: Insurance against financial losses sustained through the failure for commercial reasons of policyholders' customers to pay for goods or services supplied to them.
Employers Liability Insurance: Insurance by employ­ ers in respect of employees for injuries arising out of their employment.
General Third Party Liability Insurance: Insurance of industrial, commercial, employers, products, profes­ sional or private liabiiity to third parties.
Marine Insurance: Insurance against damage or loss of ships and cargoes; also includes off-shore drilling platforms and oil rigs.
- Mortgage Guaranty Insurance: insurance protection of the mortgagee against loss of capital and interest.
- Motor Insurance: Insurance against accident and lia­ bility, as well as against accidental collision damage, in connection with motor vehicles.
- Products Liability Insurance: Insurance of the liability of the manufacturer or supplier of goods for damage caused by their products.
- Property Insurance: Collective term for Fire and Busi­ ness interruption insurance as well as Burglary, Fidelity and Allied lines.
- Sickness Insurance: Insurance against sickness or disability as a result of sickness.
- Surety Insurance: Sureties and guarantees issued to third parties for the fulfilment of contractual liabilities.