to the General Meeting of the Shareholders on the 18th November 1966 60 Mythenquai, Zurich
Managers W. Bruppacher A.-L. Chenaud W. Eschmann J.-E. Rossier A. Schütz H. Zwingli
R. Ochsenbein Ch. Robert-Tissot H. Ryffel M. D. de Sails H. Salzmann
Assistant Managers R. Aeberli K. Aerni A. Albrecht G. Bassin F. Bolliger H. Brodbeck E. Bumens P. E. Christen W. Diehl
C. E. Geiser J. J. Hagedorn G. Huguenin E. A. Kubli P.-F. Niquille H. Odermatt H. Schönenberger P. Schuppli E. Spargnapani
In accordance with the amendment to the Articles of As­ sociation passed by a resolution of the General Meeting on the 22nd May, 1964, the Annual Report of last year was, for the first time, prepared as at the 30th June. As before, it referred to the insurance operations of the previous calendar year (1964), although the financial transactions were, by way of exception, recorded for the 18 months from the 1st January, 1964 to the 30th June, 1965. The present Annual Report, for the 102nd business year, now embraces the operations for 12 months in both sectors, viz. the insurance business for the calendar year 1965 and the other income and expenditure for the business year, i. e. from the 1st July, 1965 to the 30th June, 1966.
Reinsurance In the past business year, which comprises the underwriting figures for the calendar year 1965, the gross premium income increased from that of the previous year by Sw. frs. 94.1 million to Sw. frs. 1,665 million. Taking into account that the premium income recorded in the last Annual Re­ port was inflated by non-recurring supplementary entries in the amount of Sw. frs. 74 million, the actual rise in premium income is 10.7% (previous year, 10%). Since a sizeable quantity of business has been cancelled and since great restraint has been exercised in the acceptance of new business, the expansion in volume is mainly explained on the one hand by the growth of the world economy and on the other by the numerous increases in premium which have been achieved in direct insurance and by us our­ selves.
The aggregate underwriting result shows a deficit of Sw. frs. 21.4 million (previous year, Sw. frs. 3.3 million), thus reflecting the heavy commitment of our Accounts, to the extent of approximately Sw. frs. 23 million, by the "Betsy" catastrophe loss. This abnormal occurrence represents the greatest insurance loss event since the San Francisco earth­ quake in 1906.
The essentially less favourable result of the year under review, due to the "Betsy" loss, was greatly influenced by non-Life cessions to us from our Group companies. The retrocessions of our American non-Life reinsurance com­ pany constituted the heaviest loss — due on the one hand to hurricane "Betsy", as already mentioned, and on the other to belated claims in the Liability and Motor classes. The latter figured largely in the running-off of cancelled treaties, in which the settlement of claims proved even more unsatisfactory than was anticipated by the reinsurer at the time of treaty cancellation. Consequently, yet stricter standards will be set for the acceptance of treaties in these classes and in our view this must lead to an improvement in results.
The following paragraphs give an account of business ex­ perience in the individual classes.
Hail, Engineering, Water Damage, Plate Glass and Live­ stock, the smaller lines which play a relatively minor role in our total business, closed with an overall profit, whereas Burglary insurance again showed a loss, for the same reasons as were given in last year's report.
In the Accident branch the profits have diminished in comparison with the previous year, mainly because of the increase in losses incurred in Switzerland and in Ger­ many. In Sickness insurance we are able to report, as for many years, a proportionally small but nevertheless steady surplus.
The trend towards a gradual improvement which became apparent last year in individual classes of Third Party Liability insurance has unfortunately been interrupted by the very adverse results from USA business, which su­ stained an exceptional deficit due to an accumulation of heavy losses and — as has already been mentioned — be­ lated loss reporting from previous years.
In General Third Party Liability insurance and in Motor insurance both the direct insurer and the reinsurer have constantly to contend with serious difficulties, which we have often had occasion to mention and which have now become even more pronounced. As a rule, the ever higher compensation payments, especially for bodily injury, weigh more heavily on the reinsurer than on the direct insurer. Moreover, the latter often achieves a balance by virtue of other lines which he runs mainly for own account. In this context too it must therefore be made quite clear that the reinsurer's primary function is to even out fluc­ tuations in the loss experience which the direct insurer himself is rmable to absorb. The accompanying symptoms of the "expanding economy" (inflation, unduly liberal court awards, increasing carelessness, etc.) constitute a commercial risk which the direct insurer must take into account in his premium. Furthermore, only he can nego­ tiate the unpopular but necessary premium increases with the authorities and with the insured. Our Company is no longer prepared to share in the consequences of inade­ quate premium levels. For this reason we have felt our­ selves obliged to sever connections which have become untenable.
Fire 506,182,000 461,694,000 Hail 9,419,000 10,055,000 Burglary 27,051,000 25,023,000 Engineering, Water Damage, Plate Glass and Livestock 21,468,000 17,912,000 Marine 122,553,000 139,730,000 Accident 98,766,000 91,274,000 Sickness 88,893,000 80,202,000 Third Party Liability 478,358,000 420,046,000 Fidelity, Surety and Credit 63,538,000 58,451,000 Life 248,828,000 266,605,000
The last General Meeting re-elected Mr. Hans Schindler to the Board of Directors. Mr. Ernst Froelich and Mr. R. S. Hegner, to whom our appreciation was expressed in the last Annual Report, have retired from the Board.
Mr. E. Hiirlimann joined our Company in 1904. He rose rapidly to the Management and in 1921 he was appointed General Manager. From 1930 to 1942 he held the office of Managing Director, following which he assumed the Chairmanship of the Board. In 1958 he expressed the wish to be relieved of his executive functions and, in recognition of his unparalleled services, the General Meeting of the Shareholders nominated him as Honorary Chairman for life. Over a span of 62 years Mr. Hiirlimann, whose vision, vitality and generous nature earned him international re­ cognition, devoted his untiring and decisive efforts to the development of our Company. To a substantial degree the Swiss Re owes its present stature to the work of Erwin Hiirlimann and we remain greatly indebted to him.
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 Ftmd Directors' Remuneration
If this proposal is accepted, a gross dividend of Sw. frs. 60.— will be paid on presentation of Dividend Coupon No. 11 (Sw. frs. 42.— after deduction of the Federal Coupon Tax of 3 % and the Federal Withholding Tax of 27 %).
The Swiss Re Group In addition to the parent company and the European Gen­ eral Reinsurance Company of Zurich, the Swiss Re Group currently comprises the foreign branch offices, subsidiary companies and advisory offices shown on page 24. These organizations make the facilities and services of our bus­ iness enterprise available to our ceding friends in all cor­ ners of the world. The form and functions of our Group members in fact differ considerably from one to another and a special role is assumed by the subsidiary companies. These are purely reinsurance companies whose share cap­ ital, apart from the qualifying shares of the Board mem­ bers, is owned wholly by the Swiss Reinsurance Company. In view of the fact that our overseas subsidiary companies operate instead of the parent company in important mar­ kets, with the notable inclusion of the United States of America, and that they retain a substantial portion of their premium production for own account, we are again prompted to present a rather more specific picture of their development. The relevant statistics appear on pages 21 to 23. In this connection it should be borne in mind that the business year of our subsidiaries abroad corresponds to the calendar year.
The tables below and on pages 18—20 provide a summary of the principal figures for the parent and subsidiary companies.
Fire 649 586 Hail 10 10 Burglary 30 27 Engineering, Water Damage, Plate Glass and Livestock 23 19 Marine 122 144 Accident 114 111 Sickness 90 81 Third Party Liability 556 502 Surety, Fidelity and Credit 98 90 Life 370 374
North American Reinsurance Corporation, New York Share Capital US $ 6,000,000 us$ US$
Underwriting Result (inch Management Expenses) 1,227,000 576,000 Net Investment Income, Taxes - 59,000 401,000
The gross business in force rose by $ 154 million to S 2,323 million. Owing to the higher mortality rate in individual Life assurance the gross business yielded a rather lower profit than in the previous year, but this only affected the cessions to retrocessionaires and not the retention of the Company. The improvement in the overall result was les­ sened by increased tax expenditure. — The dividend re­ mained unchanged at I 0.3 million.
* adjusted for changes in commission equity The experience for the gross business was better than in the previous year but the effects of this improvement were felt chiefly in the business retroceded. However, the in­ creased investment income made it possible to double the net profit. — A dividend was paid for the first time and totalled C $ 187,500.
Underwriting Result (incl. Management Expenses) - 129,000 - 402,000 Net Investment Income and Net Realized Capital Gains 102,000 110,000
The gross business in force increased by C $ 134 million to C $ 514 million, which meant correspondingly heavy pre­ financing costs. The immediate amortization of these led once more to a book deficit, despite the satisfying under­ writing experience, but this deficit was practically covered by the investment income. — As in the previous year, no dividend was paid.
Underwriting Result (incl. Management Expenses) - 306,000 - 144,000 Investment Income, Net Realized Capital Gains, and Taxes 438.000 445,000
Swiss-South African Reinsurance Company Ltd. 1950 All classes 121 Eloff Street, Braamfontein, Johannesburg with an Office in Cape Town
Australian Branch 1955 Embank House, 325 Collins Street, Melbourne C. 1 with an Office in Sydney
SwissRe Corporation 161 East 42nd Street, New York, N. Y. 10017 *
London Contact Office 196A Union Building, 78-80 Cornhill, London E.C.3 * As from 1967; 245 Park Avenue, New York, N. Y. 10017