to the General Meeting of the Shareholders on the 21st November 1969 60 Mythenquai, Zurich
Deputy Managers K. Aerni E. Bart G. Bassin E. Bosshardt H. Brodbeck E. Burnens V. Cachin W. Diehl G. E. Geiser J. J. Hagedorn
E. A. Kubli G. Lavanchy W. Mantel J.-C. Mayor M. Nabholz S. Patthey H. Pfefferle J. C. Roos H. C. Rutishauser P. Schuppli P. Strickler
Your Company drew your attention several years ago to the application of mathematical methods in non-Life insurance — such as have been used in Life assurance since the 18th century. These methods have proved par­ ticularly valuable in identifying trend factors and gener­ ally valuable for prospective consideration of the loss ex­ perience, as discussed in last year's annual report. Indeed we believe that we already perceive the initial success of our efforts.
the future prospects of this insurance sector. — Engineer­ ing reinsurance expanded during the year of report, in particular because of a number of major high-exposure projects aimed at improving the infrastructure of devel­ oping countries. Although the year under review saw a number of heavy losses and corresponding reserves were set up for loss events of, as yet, indefinite magnitude, this branch yielded a profit. - The Water Damage. Glass and Livestock lines closed with an overall surplus.
The General Third Party Liability and Motor Third Party Liability lines closed with the largest deficit of the year. Extensive losses in certain markets outweighed the mar­ ginal or slightly profitable results in other markets where the improvement measures introduced in past years are beginning to take effect. — The reinsurance of Aviation risks registered a significant premium growth which can be attributed to the rapid expansion of world air traffic as well as to the raised premium rates necessitated by adverse claims experience. The number of severe aviation accidents during the year was substantially higher than in previous years; notably the fleet hull business of Ame­ rican airlines suffered heavy loss experience. In contrast with the previous year, therefore, this branch closed with a not insignificant deficit. — The reinsurance of Atomic risks was free of losses.
The Surety, Fidelity and Credit lines have been developed for several years, especially by Head Office and by the Canadian and American subsidiary companies. The two first-named underwriting centres again achieved sizeable technical profits which together were more than sufficient to offset the disappointing American result. The lines in question are highly sensitive to economic trends; a credit squeeze or recession can precipitate a loss landslide. For this reason, an especially cautious reserving policy is in­ dicated.
In the Lije branch, the reassurance business in force for own account increased from Sw. frs. 14,100 million to Sw. frs. 15,000 million, the flow of new business from out­ side Europe having risen sharply. The net business in force for the Swiss Re Group expanded from Sw. frs. 26,300 million to Sw. frs. 29,900 million. As the proportion of reassurances on a risk premium basis in the total business again increased, the premium growth remained relatively modest. Reduced expenditure for commissions and acqui­ sition costs — the latter having been fully amortized as usual —was a major contributory factor in achievement of the good result which is shovm, despite the incurrence of somewhat higher claims than in the previous year.
Investments The income from investments grew even more rapidly during the year of report than in the previous year. This is attributable first of all to the imusually favourable rates of retum which were achieved on new investments and reinvestments at fixed interest. A further contributory factor was the dividend paid by the New Holding Ltd., which was raised by Sw. frs. 2 million. As a result of the sale of the Mercantile and General Reinsurance Company, Ltd., London, which was reported in the previous year, the New Holding Ltd. was able to double its former dividend of Sw. frs. 2 million and, in addition, to distribute once again a bonus of Sw. frs. 2 million to the parent company. The profit-bearing investments (cf. table on page 8) rose steeply in the past business year. The cash deposits with ceding companies increased by a net amount of Sw. frs. 69 million (compared with a decrease of Sw. frs. 4 million in the previous year). The investments (excluding Perma­ nent Holdings) expanded by Sw. frs. 235 million (previous year, Sw. frs. 101 million). As in the former year, the accrued funds were placed to a large extent in investments of an equity nature, so that on the balance-sheet valuation date the distribution of investments was as follows: On Balance-Sheet Values: Fixed-interest investments, including convertibles 75.7 % (previous year, 79.4 %) Shares (excluding Permanent Holdings) 15.3% (previous year, 11.1%) Real Estate 9.0 % (previous year, 9.5 %)
Following the unusually low taxes in the previous year, this requirement rose during the year under review to Sw. frs. 8.3 million. Direct and indirect taxes both con­ tributed to the additional expenditure.
The last General Meeting re-elected to the Board of Di­ rectors Mr. Max E. Eisenring, Mr. Paul Keller, Mr. Paul Ruegger and Mr. Werner Ahegg. At the same time, Mr. Marcel Odier, a partner in the banking house of Lombard, Odier and Co., in Geneva, was newly elected to the Board.
Having attained the prescribed retirement age, Mr. Paul Ruegger and Mr. Hans Schindler withdraw from the Board.
Mr. Paul Ruegger, Ambassador, has served on the Board for a total of twenty-one years. He took up his seat in a period during which countries throughout the world, and especially in Europe, had to overcome the political, eco­ nomic and currency difficulties of post-war years. His great experience in matters of international law and his high connections in all parts of the world were of particular value to us at that time as in subsequent years. We are greatly indebted to Mr. Ruegger.
A change in our Auditors will also take place as Mr. A. ]. LUthi-Habholz is withdrawing from this body. We are grateful to Mr. Lüthi-Nabholz for his valued services dur­ ing the past 24 years. The Board proposes the present substitute, Mr. R. Huber-Rübel, for election as successor to Mr. Lüthi-Nabholz. As a new subsitute the Board no­ minates Mr. Max Honegger for election.
The Board of Directors has decided that the reserve fund for catastrophe losses, previously shown under technical reserves as the fund for extraordinary losses, will in future be incorporated in the capital reserves. Accordingly, the capital and free reserves, after distribution of the profit as proposed above, amount to Sw. frs. 236.0 million (adjus­ ted figure for the previous year, Sw. frs. 230.0 million) to which is added the balance brought forward of Sw. frs. 1.6 million (previous year, Sw.frs. 1.5 million).
The actuarial auditor, Mr. H. Bühlmann, has moreover con­ firmed in his report that the technical reserves of the Life department at the end of 1968 were correctly calculated on the basis approved by the Swiss Federal Coxmcil.
embracing the insurance business for the calendar year 1968 and the other income and expenditure for the period from the 1st July, 1968 to the 30th June, 1969
Zurich, 21st October, 1969 By order of the Board: M. E. Eisenring, Chairman
The Board of Directors proposes the following distribution of the profit: Sw. frs.
The pruning of the reinsurance portfolio as well as treaty cancellations due to mergers of ceding companies have brought about a decrease of the gross premium income. The underwriting result showed an encouraging improve­ ment, but was still adversely affected by claims incurred in previous years. The overall result was a profit for the first time since 1964. — The dividend remained unchanged at US $ 375,000.
Underwriting Result * (incl. Management Expenses) - 119,000 - 452,000 Investment Income, Net Realized Capital Gains, and Taxes 571,000 615,000 * adjusted for changes in commission equity The gross underwriting result was again satisfactory, but as in the previous year, the profit was to the benefit of the parent company and of other retrocessionnaires. The financial result was slightly diminished, due to increased taxes. — The dividend remained unchanged at C I 187,500.
The experience of the non-Life branches slightly improved while the Life business deteriorated, due to higher mor­ tality. The financing of new Life business is reflected in the above underwriting result. This debit had to be covered by a transfer of A $ 500,000 from the parent company. The capital gains realized in the Life section and the changes of the free reserves in the Life fund are, for the first time, included in the underwriting result, and the comparative figures for 1967 were adjusted accordingly. — As in the previous year, no dividend was paid.
'North American Reinsurance Corporation 245 Park Avenue, New York, N.Y. 10017 with Offices in Atlanta, Chicago and San Francisco
Australian Reinsurance Company Ltd. Embank House, 325 Collins Street, Melbourne C. 1 with Offices in Sydney and Hong Kong