November 1984 English translation of original German report; French and Spanish versions are also available.
Swiss Reinsurance Company Mythenquai 50/60, RO. Box, CH-8022 Zurich, Switzerland Telephone 01 208 2121 Telex 815 722 sre oh Telefax 01 208 29 99 Cables swissre
Summary of mportant Figures in millions of Swiss francs Swiss Re, Zurich 1983 1982
Consolidated net profit per share Consolidated net profit per non-voting share
Zumikon, Chairman of the Board of Directors of BBC, Brown, Boveri & Co., Ltd., Baden
Executive Committee and Group Management Chairman of the Board of Directors and Chairman of the Executive Committee and Group Management Walter Diehl
Genera/ Managers Paul E. Christen Paul-Francis Niquille Hermann Odermatt Herbert Schönenberger
Executive Committee and Group Management Chairman of the Board of Directors
German-speaking Switzerland, Ger­ many, Austria, Netherlands, Denmark, Sweden, Norway, Finland, iceland M. Nabholz, Senior Executive Manager E. Etter, Executive Manager B. Heyer, Executive Manager W.Müller, Executive Manager W. Ruetsctii, Executive Manager U. Winter, Executive Manager R. Slegrlst, Manager H.Vollenwelder, Manager
French- and Italian-speaking Switzerland, France, Italy, Spain, Belgium, Luxembourg, Greece, French-speaking Africa G. Lavanctiy, Senior Executive Manager* E Jutzl, Senior Executive Manager R. Martignler, Executive Manager S. Patttiey, Executive Manager R, Rüttlmann, Executive Manager J. Stelnrisser, Executive Manager A. Galtettl, Manager B.Gilliand, Manager M.-L. Musy, Manager
Portugal, Eastern Europe, Near, Middle and Far East, Latin America, Caribbean, English-speaking Africa R-C. Perrenoud, Senior Executive Manager RWürsch, Executive Manager G. Bachmann, Executive Manager R Bierl, Executive Manager G. Holzel, Executive Manager H. Haag, Manager G. Haering, Manager H. Stettler, Manager R. R Brouwer, Member of Management* H, H.Zollinger, Member of Management R. Maag, Member of Management R J. Wingrove, Member of Management
Reinsurance technique, acquisition, special risks, insurance medicine R. Hedlnger, Senior Executive Manager* J.-C. Mayor, Senior Executive Manager H. C. Rutlshauser, Executive Manager E Deled, Executive Manager R. Eckert, Executive Manager L D. KIrlanoff, Executive Manager R Lock, Executive Manager Y Burgener, Manager S.Gourant, Manager H. Fuchs, Manager E HIrzel, Manager R.Joseph, Manager K Küstahler, Manager A. Loye, Manager S. Menn, Manager R Pfenninger, Manager LI PozzI, Manager RSchulthess (Ms.), Manager J.-R Vogel, Manager K Wettenschwiler, Manager M.LHeftl, Member of Management J. Doktor, Member of Management B. R. Lacock, Member of Management A. Perret, Member of Management
Main lines: Accident/Liability, Motor, Fire, Hall, Burglary R. R. Doerr, Executive Manager M.A. Tobler, Executive Manager M. Bradley, Manager R Eugster, Manager R Gasser, Manager R.Schilling, Manager RSzöllösy Manager H.-K. Zulauf, Manager
Special lines: Engineering, Aviation, Nuclear energy. Marine A. Bal, Executive Manager H. Fischer, Executive Manager W. KQnzie, Executive Manager J. W. Youngs, Executive Manager M.-A. Bloesch, Manager M. Gasche, Manager W. Hersberger, Manager H. Lüthl, Manager 0. Olsson, Manager H. F. Enzmann, Member of Management H. TIedemann, Member of Management
Risk management. Special assignments, Consultancy service E. Baumann, Manager B. NIgg, Manager
The titles In this chart are those used by Swiss Re, Zurich, worldwide excluding North America and certain other territories for which the corresponding hierarchical titles are as follows: General Manager
B. Laube, Senior Executive Manager E. Franci, Manager W. Minoretti, Manager* R Schweizer, Manager
Holdings, planning and control, law and taxes T Obrist, Senior Executive Manager J. B. R. Lieberman, Executive Manager 0. Bianc, Manager 0. E. Brooks, Manager R Egger, Manager H. H. Frey, Manager M. Gaai, Member of Management
Reinsurance companies Germany, United Kingdom, Canada, United States insurance companies Switzerland, United Kingdom, United States
In the last Annual Report, we pointed out that the im­ provement of reinsurance results worldwide will only come about when the majority of reinsurers again pay full attention to a careful risk assessment. It would seem that insurers can only be moved to implement long overdue premium increases by a massive shrinkage of reinsur­ ance capacity for major and industrial risks which in most countries are inadequately rated. Instead of an urgently needed restriction of capacity, recent years saw an un­ precedented expansion. The number of reinsurers esca­ lated. An increasingly greater fragmentation of risks among hundreds of reinsurers made it difficult, if not im­ possible, to assess them. Unprofitable covers were con­ cluded or renewed unchanged by numerous reinsurers and retrocessionaires without proper documentation or relying on above-average yield from financial operations.
The Board of Directors would like to thank all members of staff at home and abroad for the good work achieved.
Compelled by this critical situation in North American Lia­ bility business, the Swiss Re is giving up the reinsurance of heavy Liability risks from this market on the estab­ lished basis, as partial measures, taken overa number of years, have not met with the expected success and because the data used to assess risks and calculate premiums has become insufficient and increasingly questionable.
The 1983 business year comprises both reinsurance business and general income and expenditure for the period from 1st January to 31st December, 1983.
In the year under report the gross premiums from all branches totalled Sw.frs. 3,982 million (previous year, Swfrs. 3,917 million); of this total Sw.frs. 770 million (pre­ vious year, Sw.frs. 884 million) was retroceded, leaving the Company with net premiums amounting to Sw.frs. 3,212 million (previous year, Sw.frs. 3,033 million).
Despite currency devaluations in certain major markets the amount of Life reinsurance business in force con­ tinued to rise. The profit remained at the previous year's level.
In Non-Life reinsurance the expected decline in the over­ capacity mentioned in last year's Annual Report was de­ layed. Although certain difficulties in the placing of pro­ portional covers in particularly unprofitable classes and markets became evident towards the end of the treaty re­ newal period in 1983, these were not yet enough to bring about a decisive and overdue adjustment of reinsurance conditions, particularly in the Property and Casualty classes where experience was worst. Often the reinsurer was only left with a choice between continuing or giving up a connection that was no longer commercially justifi­ able. The Swiss Re decided in favour of cancellation if there were no prospects of an imminent improvement of results.
The gross premium volume from Non-Life reinsurance, when expressed in Swiss francs, rose in the year under report by only Sw.frs. 61 million to Sw.frs. 3,581 million. The weakening of certain major currencies against the Swiss franc impeded the growth of the premium income. The development of volume was more durably affected, however, by our reluctance to accept new business and by the continued intensive pruning efforts in many insur­ ance markets and classes. The underwriting result in Non-Life reinsurance worsened further, the loss increas­ ing from Sw.frs. 197.3 million in the previous year to Sw.frs. 257.6 million. The business handled from Zurich improved; the retrocessions of our subsidiary compa­ nies, on the other hand, showed a higher loss. North Amer­ ican Liability business, the principal contributor to the deterioration in the year under report, is a source of spe­ cial concern. The experience of Fire business is also un­ satisfactory throughout the world and reflects unresolved fundamental problems in insurance and reinsurance.
Burglary, Fidelity and allied lines registered a smaller loss than in the previous year, stemming mainly from the negative experience of Livestock reinsurance business.
The result of the problem-ridden class of Burglary rein­ surance was balanced for the first time in years, but has to be viewed more as coincidence than a fundamental im­ provement of the branch, although progress has been made in adjusting premiums and in loss prevention. The lesser allied lines of Water Damage and Glass Breakage likewise registered a balanced result, while Fidelity brought a loss.
Sickness reinsurance showed a slight increase of the premium volume and a gratifying although small profit.
sions of our British and North American subsidiary com­ panies. Liability business is currently in a veritable crisis, especially in North America. One of the principal prob­ lems, recognising and registering late claims as a re­ quirement for a realistic premium calculation, can only be mastered with difficulty. A further problem is that of the prevailing American court practice of awarding very high damages for bodily injuries including large amounts for pain and suffering. The tools for reinsuring Liability busi­ ness have to be adapted, as the insurance market is hardly able to achieve a solution to these problems on its own and within a useful period of time.
In Marine reinsurance premium income continued to decline. The reasons are, on the one hand, our persisting remedial efforts and, on the other, the decline in world
In the foreign currency sector the US dollar continued to soar - despite deficits in the budget and current account; together with the Canadian dollar it rose within a year by almost 9% against the balance-sheet currency. With the exception of the Japanese yen, all other principal curren­ cies were, however, valued lower against the Swiss franc (cf. table on page 22). The persisting revaluation pressure on the American currency is still explained by the political and economic revitalisation of the United States and by the real interest which can be earned in the dollar.
The balance-sheet value of capital market investments and real estate of Sw.frs. 4,700 million was Sw.frs. 155 million higherthan that of the previous year. This increase is due to new investments and foreign currency adjust­ ments.
rity of the bond portfolio. The balance-sheet value of all fixed-Interest investments fell as a result of the men­ tioned decline of convertibles by Sw.frs. 30 million to Sw. frs. 3,433 million, that of shares on the other hand rose by Sw.frs. 101 million to Sw.frs. 748 million. The increase in real estate (by Sw.frs. 84 million to Sw.frs. 519 million) is due to the acquisition of existing buildings and the con­ struction of new buildings in the Zurich area.
Bonds, certificates of deposits and mortgage bonds 2,414 2,348 Loans (including mortgages) 710 739 Fixed-interest securities with equity character 309 376 Shares 748 647 Real estate 519 435 Capital market investments and real estate 4,700 4,545
Holdings and loans comprise holdings of Sw.frs. 35 mil­ lion (previous year, Sw.frs. 33 million) and the loans to Group companies of Sw.frs. 452 million (previous year, Sw.frs. 454 million). Overall therefore there was no change in these investments over the previous year.
The structure of total investments at balance-sheet val­ ues is shown in the following table.
In the Swiss Re Group, the total number of employees rose by 0.2% to 13,699 (of. table comparing the business years 1974/75—1983 on pages 46 and 47).
Especially with regard to personnel costs, which account for the major part of management expenses, a continual review of the way staff is detailed is of considerable im­ portance. The increasing use of technical aids requires of members of staff the ability to adapt to new professional demands. Our personnel assessment system for em­ ployees, including members of management, specifically serves to clarify the optimal assignment of work, internal mobility is necessary and, for this reason, a large number of employees assumed new functions in the course of 1983.
At the beginning of September 1984 the 400,000 regis­ tered shares of the Swiss Re were distributed among 15,487 shareholders (as against 15,654 at the same time a year earlier). The number of owners of the 44,000 bearer shares and the 340,000 non-voting shares (240,000 of which were issued in 1980 and 100,000 in April 1984) is not known.
Among the holders of registered shares 14,276 were nat­ ural persons, accounting for 68% of the registered share capital, and 1,211 legal entities, accounting forthe remain­ ing 32%. This distribution has hardly changed over the year. Furthermore, over 97% of the registered share­ holders were of Swiss nationality, owning over 93% of the registered share capital. Only about 4% of shareholders owned more than 100 shares, 32% between 11 and 100 shares and 64% between 1 and 10 shares. This shows the very wide distribution of registered shares of the Swiss Re as a typical public company.
100,000 non-voting shares (1984 issue) at Sw.frs. 1,380 Sw.frs. 138.0 million
In the 1983 business year the Swiss Re made donations totalling Sw.frs. 720,000. The largest part of this amount, namely Sw.frs. 246,000, was for training and research; this includes a special donation for student accommoda­ tion to the University of Zurich on the occasion of the 150th anniversary of its foundation. Numerous institu­ tions devoted to a wide variety of activities in the field of general charities and welfare received amounts totalling
At this year's Generai Meeting the terms of office of Messrs. Hans Bühimann and Marcel Odier expire; both gentlemen are standing for re-eiection.
On 31st December, 1983, Messrs. Kurt Aerni, Senior Exec­ utive Manager, Fritz Ehrsam and Hans Wyler, Executive Managers, and Engelbert Betz, Manager, entered retire­ ment. Mr. Paul Strickier, Executive Manager, retired on 30th June, 1984. Ail these gentlemen have rendered our Company great services for decades and we should like to express our sincere gratitude to them. - Mr. Louis Wüger, Manager, left our Company on 31st December, 1983. Mr. Leon Genoud, Executive Manager, left our Com­ pany at the end of June, 1984, to take up other duties at a subsidiary company of our Group. We should like to thank both gentlemen for their many years of valuable service.
Furthermore the Board of Directors has made the follow­ ing appointments with effect from 1st January, 1985: Senior Executive Managers: Messrs. Ernesto Jutzi, Hans R. Kaufmann, Bruno Laube, Jean-Claude Mayor, Max Nabhoiz and Theodor Obrist; Executive Managers: Messrs. Reto W. Arpagaus, Peter Bieri, Balthasar Heyer, Hans Werner Kreis, J. B. Richard Lieberman, Rudolf Oberie, Jürg Steinrisser and Urs Winter;
Claims incurred incl. adjustment in outstanding claims reserve - 203,410,018 - 197,970,427
Cashi in tiand, postal bank account, bank balances Current-account balances Gasti deposits
All items of the Balance Sheet and Profit and Loss Ac­ count in foreign currencies were uniformly converted into Swiss francs using the average foreign currency rates as at 31st December, 1983. The currencies which are most important for our business activity abroad developed over the previous year as follows: Liabilities
Current-account balances and cash deposits are entered in the Balance Sheet at nominal value.
Securities and holdings are in principle entered at acqui­ sition price or, if the stock exchange price is lower on the balance-sheet date, at the lower value. Non-quoted hold­ ings are, where necessary, entered at the lower intrinsic value. The lowervaluation is retained until disposal of the corresponding securities.
Gross premiums in the year under report totalled Sw.frs. 3,581.1 million, as against Sw.frs. 3,519.9 million in the previous year. After deduction of retrocession premiums, the net premiums amounted to Sw.frs. 2,830.7 million, an increase of 6.6% over 1982.
These result from the total of the net premiums and the difference in the unearned premium reserve over the last reporting year. At Sw. frs. 2,812.0 million they were Sw. frs. 186.3 million, or 7.1% above the previous year's amount.
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. 175.1 million fo Sw.frs. 2,233.0 million.
Of the total increase of Sw.frs. 19.6 million, Sw.frs. 14.6 million applied to Life insurance and Sw. frs. 5.0 million to annuities.
The surrenders in business assumed amounted to Sw.frs. 78.9 million, of which Sw.frs. 0.9 million was deb­ ited to retrocessionaires. A total of Sw.frs. 78.0 million remained for own account as against Sw. frs. 63.2 million in the previous year.
The investment income of Sw.frs. 424.9 million is a net amount after deduction of various outgo items, such as the interest on the Life reinsurance and annuity fund and othertechnical reserves as well as outgo interest for bank and current account balances and cash deposits.
Management expenses in the year under report showed overall an increase of Sw.frs. 9.1 million to Sw.frs. 128.4 million, or by 7.7% compared with 5.4% in the previous year. Personnel costs rose by 8.4% (previous year, 6.8%) with a growth in the number of staff of 4.3% (previous year, 5.6%). Other costs rose less sharply, namely by 5.9%.
This account closed with a positive balance of Sw.frs. 70.6 million (previous year, Sw.frs. 31.0 million). Reaiized capitai gains and iosses contributed a net profit of Sw. frs. 187.2 million (previous year, Sw. frs. 140.4 million). On the other hand, fluctuations in foreign currency rates on monetary transfers and the conversion of foreign cur­ rency balances led to a debit of Sw.frs. 3.7 million; in the previous year there had been a credit of Sw.frs. 12.1 mil­ lion. The write-offs on capitai market investments and reai estate in the amount of Sw.frs. 94.1 million were ap­ proximately the same as in the previous year (Sw. frs. 93.5 million). Depreciation outside tine sector of investments led to an increased debit of Sw. frs. 5.3 million as opposed to Sw.frs. 3.3 million in the previous year.
As a result of payment difficulties in certain countries, the balances outstanding there again grew. The conse-
The tax burden in the year under report amounted to Sw.frs. 55.4 million. A pronounced increase in taxes abroad, especially in the United States, contrasted with a lower burden in Switzerland. Indirect taxes increased. Overall the tax burden rose by Sw.frs. 4.7 million to the above mentioned amount of Sw.frs. 55.4 million.
The balance-sheet value of holdings rose by Sw.frs. 1.8 million to Sw. frs. 34.7 million. This increase overthe previ­ ous year is exclusively due to the effects of foreign cur­ rency fluctuations. Loans to Group companies fell by Sw.frs. 1.6 million; on the balance-sheet date they amounted to Sw.frs. 452.7 million.
Of the total amount of current-account balances of Sw. frs. 1,037.9 million, Sw.frs. 842.5 million was for reinsurance and Sw. frs. 177.1 million for retrocession business; Sw. frs. 18.3 million concerned other balances, the most signifi­ cant part of which comprised reclaimed taxes. The overall increase over the previous year was Sw. frs. 48.1 million.
Cash deposits with ceding companies fell overthe previ­ ous year by Sw.frs. 65.3 million to Sw.frs. 1,431.8 million, as a result of weaker foreign currency rates.
The portfolio of capital market investments (fixed-interest securities, loans and shares) and real estate rose by Sw.frs. 154.9 million to Sw.frs. 4,700.1 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 realiza­ tion, amounted to Sw.frs. 627.2 million (previous year, Sw.frs. 493.0 million) or 18.1% (previous year, 14.6%) of the balance-sheet value of securities.
Life Reinsurance Policy reserves 1,128.5 1,188.9 Outstanding claims reserve 192.9 180.3 1,321.4 1,369.2 in % of insurance In force, net 2.8% 3.1 %
In addition, on 31st December, 1983, there was an autho­ rized non-voting share capital of Sw.frs. 10 million (200,000 non-voting shares with a nominal value of Sw.frs. 50.-), of which Sw.frs. 5 million (100,000 non­ voting shares with a nominal value of Sw.frs. 50.-and en­ titled to dividend payment from the 1984 business year) were offered in spring 1984 to existing holders of shares and non-voting shares. The remaining authorized non­ voting share capital is therefore Sw.frs. 5 million (100,000 non-voting shares with a nominal value of Sw.frs. 50.-).
Share capital 111.0 111.0 Non-voting share capital 12.0 12.0 Reserves and profit carried forward 536.7 501.9 Total 659.7 624.9
Contingent liabilities (sureties and contingent obliga­ tions to liberate not fully paid up shares) amounted to Sw.frs. 85,766,825 per 31st December, 1983.
Other liabilities include, in addition to various accounts payable, in particular the value adjustments on outstand­ ing balances together with a reserve for foreign-currency risks.
We have come to the conclusion that the Balance Sheet and the Profit and Loss Account are in agreement with the books, the books of account have been properly kept, the financial position and the results of operations are presented in accordance with the principles of evaluation prescribed by the lawand the requirements of the Articles of Association.
We further confirm that the proposal of the Board of Direc­ tors for the disposal of the available profit is in agreement with the law and the Articles of Association.
Generai Income and Outgo investment income Ivlanagement expenses Rate fluctuations, depreciation, value adjustments
The holding structure within the Swiss Re Group has un­ dergone four changes: In the year under report, the Tudor Insurance Company, New York, was sold to the Western World Insurance Company, New Jersey. The North Ameri­ can Reinsurance Corporation, New York, founded the Atrium Corporation, New York, which will serve as con­ sulting firm and reinsurance broker. In 1984 two further companies were added. Swiss Re, Zurich, founded Prudentia Services Ltd., Zurich, which will be used as a con­ sulting and broking company and SwissRe Holding (North America) Inc., New York, founded Surety Support Sen/ices inc.. Oak Brook, iiiinois, as consulting company in the Surety sector.
In the year under report there was only a slight increase in consolidated net premiums by 1.8% (previous year, 7.4%) from Sw.frs. 8,740 million to Sw.frs. 8,894 million. The growth of the premium volume was slowed by the devel­ opment of foreign currency rates, a cautious underwriting policy and the fact that special reinsurance covers granted to certain American Life insurance companies no longer applied.
The elements of the Group profit developed in differing ways. The result of Non-Life insurance was worse than in the previous year as a consequence of the sustained diffi­ cult conditions in the reinsurance sector worldwide. In Life insurance, too, it was not possible to achieve entirely the good result of the previous year. Overall, underwriting produced a loss of Sw. frs. 299 million (previous year, loss of Sw.frs. 246 million). The lower premium growth brought about a drop in the funds available for new in­ vestments and a correspondingly slowed rise of invest­ ment income, i.e. by Sw.frs. 69 million (previous year, Sw.frs. 115 million). Write-offs of about the same amount as the previous year and higher realized capital gains on securities led on balance to an increased profit of Sw. frs. 104 million (previous year, Sw.frs. 46 million). The outgo for management expenses and taxes, however, likewise increased. Overall the Group profit rose by Sw.frs. 8 mil­ lion to Sw.frs. 105 million. The Group's capital funds shown, including Group profit, amounted at the end of 1983 to Sw. frs. 936 million (previous year, Sw. frs. 872 mil­ lion).
Although the effects of foreign currency rates on the vol­ ume had on balance a negative etfect of just under 2%, the consolidated net premium income in Non-Life rein­ surance increased by 6.0% (previous year, likewise 4-6.0%) to Sw.frs. 4,587 million. Inadequate premium rates in certain classes and high claims expenditure — greatly affected by the resen/es for late claims in North
In Life reinsurance the profit declined, particularly that of the subsidiary companies in North America; the strong growth of recent years entailed high prefinancing costs and temporarily impaired profitability. It is, however, ex­ pected that these financing costs will be recouped again as profit in forthcoming years. At the same time it must be mentioned that the pressure of competition in North American markets has greatly increased, with a negative effect on the price level. Overall, the underwriting profit in Life reinsurance was Sw.frs. 49 million (previous year, Sw. frs. 60 million) with a net amount of business in force of Sw.frs. 159,000 million.
The overall results of the individual Group companies mentioned below correspond to the results published in accordance with local accounting provisions.
surance was greatly burdened by high losses caused by storms and extreme winter conditions. In contrast the re­ sult of Marine reinsurance improved. Surety business again closed with a gratifying result. The company was successful in applying newforms of reinsurance. In the in­ vestment sector high capital gains were made, whereas there were less new Investments as a result of the decline In premiums and current investment income fell. Thanks to the generally good Investment results, the published overall profit improved to US$ 30.2 million (previous year, US$16.7 million). The dividend amounted to US$10.5 mil­ lion, the same as in the previous year.
The gross premiums of the Canadian Reinsurance Com­ pany, Toronto, stagnated at Can.$ 148.1 million (previous year, Can.$ 149.0 million). The underwriting loss was high­ er than in the previous year, especially as a result of the bad experience of Liability business. In contrast. It was possible to increase the investment result. Nevertheless, this was still not enough to Improve the overall result over that of fhe previous year. For the business year there was a loss of Can.$ 1.9 million (previous year, loss of Can.$ 0.1 million). The company waived payment of a dividend for ifs common shares and made an unchanged payment of Can.$ 0.8 million for its preference shares.
The Life reinsurance business inforceofthe A/orth/Amencan Reassurance Company, New York, the SwissRe Life Insurance Company, New York, and the Swiss-Am Reas­ surance Company, New York, increased satisfactorily in the year under report. The underwriting profit decreased.
The Canadian Reassurance Company, Toronto, was like­ wise able to maintain Its amount of conventional busi­ ness in force. Here too the underwriting result fell. The profit shown amounted to Can.$ 1.0 million (previous year, Can.$ 1.4 million); the dividend remained unchanged at Can.$ 0.5 million.
The Bavarian Reinsurance Company Limited, Munich, showed in Non-Life reinsurance a decline of gross pre­ miums fo DM 1,326 million (previous year, DM 1,370 mil­ lion). The underwrifing loss priorto equalization reserves was less than in the previous year. — In Life reinsurance the gross amount of business in force amounted to DM 3,900 million (previous year, DM 3,700 million) with a neg­ ative underwriting result. A further increase in investment income over the previous year led to an unchanged an­ nual profit of DM 6 million. A dividend payment of DM 3.0 million, the same as in the previous year, is expected.
Fire 1,769 382 2,151 1,574 376 1,950 Accident/Sickness 614 1,738 2,352 795 1,687 2,482 Third Party Liability/Motor 1,276 666 1,942 1,218 677 1,895 Marine 347 110 457 390 116 506 Other branches 877 157 1,034 842 148 990 Life 1,725 490 2,215 1,752 483 2,235 Gross premiums 6,608 3,543 10,151 6,571 3,487 10,058 Premiums ceded 720 537 1,257 776 542 1,318 Net premiums 5,888 3,006 8,894 5,795 2,945 8,740 in millions of Swiss francs
increased to £ 1,800 million and the underwriting result improved. Although the investment result was satisfacto­ ry, there was still an overall loss of £ 1.6 million (previous year, loss of £ 0.5 million). No dividend was paid, as in the previous year.
The consolidated gross premiums of the «SWiTZERLAND » General insurance Company Limited, Zurich, and the SWITZERLAND General insurance Company (Lon­ don) Limited, London, rose by 11.3% to Sw.frs. 537.1 mil­ lion (previous year, Sw.frs. 482.4 million). This pro­ nounced growth was primarily achieved in direct insur­ ance, where it was possible to improve the result distinct­ ly. In contrast the reinsurance result worsened. Together with a further increase in investment income the parent company showed an annual profit of Sw.frs. 5.2 million, almost double that of the previous year (Sw.frs. 2.7 mil­
lion). This enabled the payment of a dividend of Sw.frs. 1.13 million (previous year, Sw. frs. 0.75 million). To streng­ then the capital funds further the share capital has been increased in 1984 by Sw. frs. 6.25 million to Sw. frs. 25 mil­ lion. Including the share premium the company received Sw.frs. 18.75 million in new funds.
The consolidated gross premiums of the Vereinigte Versi­ cherungsgruppe, Munich, rose by 5.5% to DM 2,925.6 million. — The Vereinigte Aachen-Berlinische Versiche­ rung AG increased its gross premiums by 3.4% to DM 583.5 million (previous year, DM 564.5 million). It was possible to reduce the underwriting loss substantially, especially in Property insurance. This improvement, together with the significant investment income, made it possible to show a considerably higher annual profit of DM 15.1 million (previous year, DM 2.4 million). Of this amount, DM 5.2 million (previousyear, DM 2.0 million) was paid out in view of the capital increase carried out in 1984. Part of this dividend, taxed at a lower rate, was returned to the company on account of the capital increase. — The business year of the Vereinigte Eos-Isar Lebensversiche­ rung AG was satisfactory. The amount of insurance in force rose by 4.2% to DM 10,920 million (previous year, DM 10,480 million). The steep increase of surrenders and the maturity of tax-favoured endowment insurances had a negative effect on the accounts. The higher investment income was again responsible for the improved result. After an increased allocation to the reserve for policyhold­ ers' bonuses an annual profit remained of DM 2.7 million (previous year, DM 2.6 million). Out of this amount, a divi­ dend of DM 0.7 million (previous year, DM 0.6 million) was paid and DM 1.0 million (previous year, DM 1.0 million) contributed to the paid-up capital. — The premium growth
of the Vereinigte Krankenversicherung AG was within the market average at 5.8%. The gross premiums amounted to DM 1,903 million (previous year, DM 1,799 million). In­ ternal measures and external influences led to a drop in the outgo tor claims payments and consequently to a much better claims ratio. In addition the result could again be improved by the increased investment income. The gratifying result enabled the allocation to the reserve tor policyholders' bonuses to be doubled. With the re­ maining annual profit of DM 15.9 million (previous year, DM 15.4 million) the tree reserves were strengthened, a dividend of DM 4.0 million (previous year, DM 3.3 million) paid and DM 3.0 million (previous year, DM 3.0 million) contributed to the outstanding paid-up capital.
The fourth business year of the mh Bausparkasse AG, Munich, founded in 1979, was very satisfactory. Measured in terms of net new business, consisting of savings con­ tracts of DM 629 million (4-49.4%), the company already occupied 12th place among the 18 private Icuilding soci­ eties in Germany. At the end of the year the mh Bauspar­ kasse AG had a portfolio of savings contracts of approxi­ mately DM 1,527 million, corresponding to a growth of 62.5% over the previous year. After shareholders' contri­ butions of DM 0.7 million (previous year, DM 1.1 million) a balanced result was achieved.
The Fidelity and Deposit Company of Maryiand, Baitimore, in which the «Zurich» Insurance Company and the Swiss Re each have a 50% shareholding, is not included in the Group consolidation. The gross premiums rose to US$ 122.8 million (previous year, US$ 110.0 million), with the company again achieving a gratifying underwriting profit slightly less than that of the preceding year. The overall result was US$ 14.4 million (previous year, US$ 14.1 million). The dividend payment tor 100% was un­ changed at US$ 8.0 million.
In the reporting year dividend payments rose by Sw.trs. 1.5 million to Sw.trs. 32.2 million. Foreign currency rate fluctuations only slightly impaired this increase. A series of Group companies increased their dividends; this con­ cerns SR Beteiligungen AG, Bavarian Reinsurance Com­ pany Limited, and the Swiss-South African Reinsurance Company. Moreover, the «SWITZERLAND» General re­ sumed payment of a dividend. On the other hand, the Swiss Reinsurance Company (UK) Limited had to waive payment in view of the unfavourable development of the result. Income from minority holdings declined as a result of waived or reduced dividend payments.
The outgo of the Profit and Loss Account increased by Sw.trs. 0.8 million to Sw.trs. 28.9 million and comprises mainly the interest of Sw.trs. 22.4 million (previous year, Sw.trs. 18.2 million) reimbursed to Swiss Re, Zurich, tor the loan it grants, taxes of Sw.trs. 3.2 million (previous year, Sw.trs. 2.9 million), management expenses of Sw.trs. 1.7 million (previous year, Sw.trs. 1.5 million) and rate fluctuations, depreciation and value adjustments of Sw.trs. 1.6 million (previous year, Sw.trs. 5.5 million). No write-offs were necessary on Group company holdings because of foreign currency rates, since their book values on the balance-sheet date were below the actual market values. On the other hand, write-offs were made in con­ nection with various minority holdings in France and the Netherlands as a result of foreign currency rate fluctua­ tions. Further value adjustments had to be made in con­ nection with Swiss Reinsurance Company (UK) Limited and Transatlantic Reinsurance Company, New York, in view of the unsatisfactory profitability.
Underwriting result from Non-Lite insurance - 380 12 - 368 - 319
Investment income 713 112 852 783 Cttier financial income - - 7 5 Management expenses - 356 - 65 - 434 - 379 Rate fluctuations, depreciation. value adjustments 109 - 4 104 46 Ottier outgo - - 6 3
Taxes Group company profit applicable to minority stiaretiolders * The figures in this column do not always amount to the total ot the figures in the two preceding columns as figures tor holdings and other companies are also included.
Fixed-interest Investments 6,582 6,134 12,886 12,242 Stiares 1,477 337 1,814 1,289 Real estate 813 517 1,330 1,247 Non-consolidated tioldlngs 49 28 345 327
Current-account balances 1,132 553 1,691 1,463 Cast! deposits 561 211 772 789
Profit applicable to minority stiaretiolders _ 9 9 6 Capital funds applicable to minority stiaretiolders - 25 29 29
In the year under report the Tudor Insurance Company, New York, was sold to the Western World Insurance Com­ pany, New Jersey, and therefore no longer appears in the Group Structure Chart. The Atrium Corporation, New York, a newly founded company belonging to North American Reinsurance Corporation, New York, has been added. In the course of the current year Surety Support Services, Inc., Oak Brook, Illinois, a subsidiary company of SwissRe Holding (North America) Inc., and Prudentia Services Ltd., Zurich, a company belonging to Swiss Re, were founded. The three new companies are advisory and service companies and like the other advisory and service companies - with the exception of the mh Bau­ sparkasse AG in Munich - are not consolidated in view of their insignificant effect on the Group's funds and income.
Real estate is consolidated at the balance-sheet values of the individual Group companies: these correspond as a rule to the acquisition value less the maximum depre­ ciation permitted by the tax authorities.
Investment income also includes dividend payments of non-consolidated holdings in the amount of Sw.frs. 20 million (previous year, Sw.frs. 22 million).
These items refer to components of the profit and loss account of the mh Bausparkasse AG and to the holding companies which, in view of their special nature, are not included under insurance and reinsurance.
The consolidated balance-sheet values of capital Invest­ ments (Incl. non-consolidated holdings) Increased over­ all by 8%, orSw.frs. 1,270 million, to Sw.frs. 16,375 million. The Increase affected all Investment categories and amounted to 5% on fixed-Interest Investments (previous year, 20%), 41% on shares (previous year, 9%) and 7% on real estate (previous year, 6%). The Item "Non-consolldated holdings" contains holdings of 50% or less In Insur­ ance and reinsurance companies.
The valuation difference on fixed-Interest Investments and shares. I.e. the difference between the lower book and higher market value of the Individual securities, tak­ ing Into account the estimated value of taxes due on real­ ization, amounted to Sw.frs. 1,126 million and conse­ quently rose to 7.7% of the balance-sheet value (previous year, 7.2%).
The consolidation reserve fund results from the differ­ ence between the capital funds shown of Group compa­ nies and the corresponding book values applied by SwIssRe Holding Limited and Swiss Re, Zurich. The con­ tradictory effect of retained profits and partly weaker foreign exchange rates resulted In the Increase of the consolidation reserve fund by Sw.frs. 21 million to Sw.frs. 206 million being slightly less than In the previous year (Increase of Sw.frs. 29 million).
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 results of the relevant Group companies. The capital funds applicable to minority shareholders remained un­ changed In the reporting year at Sw. frs. 29 million, while the applicable profit Increased by Sw.frs. 3 million to Sw.frs. 9 million. The lower valuation of the German mark had a negative effect on the Increased capital funds and the higher dividends.
Capital funds on 1st January 872 801 Pald-out profits for previous year - 53 - 53 Group profit 105 97 Effects of exchange rate fluctuations on opening balance-sheet figures 15 19 Other movements - 3 8
Holding and Other Companies mh Bausparkasse AG DM 60.1 10,000 197,001 -
Profit and Underwriting result from Reinsurance companies Loss Account Non-Life insurance Insurance companies
United Kingdom Swiss Reinsurance Company (UK) Limited 108 Gannon Street, London, EC4N 6HE with a branch office in Hong Kong
Vereinigte Aachen-Berlinische Versicherung AG Vereinigte Eos-Isar Lebensversicherung AG Vereinigte Krankenversicherung AG Fritz-Schäffer-Strasse 9, D-8000 Munich 83 Saar-Rhein Aligemeine Versicherungs-AG Suizbachstrasse 16-18, D-6600 Saarbrücken 3
United States Fidelity and Deposit Company of Maryland Charles and Lexington Streets, Baltimore, Md. 21203
Switzerland Audatex AG Gotthardstrasse 35, CH-8022 Zurich Prudentia Services Ltd. Mythenquai 50/60, GH-8022 Zurich
Philippines S\wissRe Advisers Limited Doha Narcisa Building, Room 703, 8751 Paseo de Roxas, Makati, Metro Manila
Singapore S\wissRe Advisers (Singapore) Pte. Ltd. 24 Raffles Place No. 25-06A, Clifford Centre, Singapore 0104
United States SwissRe Corporation 100 East 46th Street, Ne\w York, N.Y 10017 SwissRe Advisers, Inc. 100 East 46th Street, New York, N.Y 10017 Atrium Corporation 100 East 46th Street, New York, N.Y 10017 Surety Support Services, Inc. Suite 426 1211 West 22 Street, Oak Brook, Illinois 60521
Mexico OFATEC (Mexico) S.A. de C.V Viena 71, Piso 5, Col. del Carmen Coyoaoan, 04100 Mexico, D. F
Hong Kong SwissRe Advisers Limited 2902 Great Eagle Centre, 23 Harbour Road, Hong Kong
United States SwissRe Holding (North America) Inc. 100 East 46th Street, New York, N.Y 10017
Glossary of Technical Terms For readers who are not familiar with insurance and reinsurance, thefollowing glossary briefly defines various technical terms as used In the Annual Report.
Accident insurance: Insurance providing payment in the event of death, temporary or permanent disability and/or for medical costs as a result of an accident, of Individuals (personal accident) or groups (group accident insur­ ance).
Broker: Insurance or reinsurance Intermediary with no contractual connection to a particular Insurer or ^ re­ insurer.
Burgiary, fideiity and allied lines: Insurance 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.
Commission: Remuneration paid to the insurer, to -»• brokers orothercommercial intermediaries fortheircosts in connection with the acquisition and administration of insurance business.
Facultative reinsurance: Reinsurance of ^ risks on an individual basis (of. treaty reinsurance) in which the reinsurer is free to accept or reject the offer.
Incurred but not reported losses (IBNR): Provision for losses which have occurred but which have not yet been reported to the ^ insurer or reinsurer on the balancesheet date.
Net premiums: ^ Reinsurance premium of a business year less -> retrocession premiums.
Non-proportionai reinsurance: Form of insurance in which the reinsurer decides on the amount he is willing to retain for his own account and buys reinsurance, at a specially calculated premium, for those loss amounts which exceed the retention.
Reinsurer: Company which accepts a share of the surer 's risks.
Retrocession premiums: Premium paid to the ^ retro­ cessionaire for the part of the risk accepted.
Risk premium basis: System of Life reinsurance under which the ̂ reinsurer only participates in the death risk in so far as it exceeds the -> policy reserves (cf. co-insur­ ance basis).
Treaty reinsurance: The participation of the ̂ reinsurer in certain sections of the ̂ insurer's business as agreed by treaty (cf. facultative reinsurance).
Underwriting result: Result of underwriting after taking into account ^ earned premiums, ^ commissions, -»profit commissions and claims incurred.
Reinsurance commission: Amount paid by the -»- rein­ surer, to the ̂ insurer for costs in connection with the ac­ quisition and administration of insurance business.