Dividend (per share 1970/71 Sw.frs. 85.- *, 1969/70 Sw.frs. 80.-) 34* t 32
Premium income (all branches) — gross 3,011 2,777 — net 2,640 2.468 •
Results: — Non-Life reinsurance - 3 10 — Life reassurance 49 41
Board of Directors Max E. Eisenring, Chairman Paul Guggenbiihl, Deputy Chairman Matheus Klaas Werner Abegg Max Petitpierre Max H. Schneebeli Felix W. Schulthess Marcel Odier Max Troendle Hans Ulrich Walter Berchtold
Management General Managers Werner Leimbacher Helmut F. Rudolf Heinz B. Vischer
Victor Cachin Paul E. Christen Fritz Ehrsam Clinton E. Geiser Johann J. Hagedorn Willy Küster Gerard Lavanchy Paul-Francis Niquille
Pierre-Claude Perrenoud Heinrich Pfefferle Jan C. Roos H. Conrad Rutishauser Otmar Schmidlin Max Tobler Paul Würsch
The gross premiums increased during the year under re­ port by only Sw.frs. 77 million to Sw.frs. 2,151 million, i.e. by only 3.7 % (previous year, 7.0 %) due to the re­ valuation of the Swiss franc and the transfer of a major part of our British business to the newly-founded British subsidiary. All non-Life branches contributed to this growth. In spite of the decrease following the revaluation of the franc, there was an increase in the Life reassurance business in force.
The premium income for own account rose by Sw.frs. 37 million to Sw.frs. 1,733 million, i. e. by 2.2 % (previous year, 7.2 %).
Non-Life reinsurance Fire reinsurance, the largest branch of business, closed with an overall loss. The loss derived from fire damage to industrial risks. The business in the Federal Republic of Germany showed a particulary high loss ratio. It is alarming that the trend towards heavy losses — which has already been pointed to in the past — still persists and that fire has destroyed, in many cases, the most modern of plants. Regrettably, the significance of structural fire protection is still not sufficiently recognized in certain markets and is not adequately stressed at colleges of higher education. Yet the situation is such that any in­ dustrialist could obtain expert and reliable advice as to how a building can be protected against fire.
Fire 684 650 603 584 560 Hail 13 13 12 10 11 Burglary/Fidelity and allied lines 53 59 57 50 49
Accident 130 133 129 117 105 Sickness 121 164 131 118 98 Third Party Liability 144 138 131 125 111
Aviation 90 55 44 30 24 Atomic Risks 2 1 1 1 1 Credit, Surety 74 60 57 59 57
The following severe cases of damage caused by the forces of nature occurred during the year of report: Earthquake damage in Turkey, in South America and South Africa, in addition a flood catastrophe in South Africa, the hurricane «Celia» in the United States and various hailstorms.
General Third Party Liability and Motor Third Party Lia­ bility form together the second largest branch. Both branches of Liability reinsurance grew volume-wise during the year of report. — In General Third Party Liability the Products Liability covers required by trade and industry are gaining in importance from year to year. There is an ever greater need for nearly all self-employed to protect themselves against Professional Liability claims. In addi­ tion, there is an increased need for cover due to stricter legal requirements regarding environmental protection. So far, insurers and reinsurers have been able to provide the required covers at conditions commensurate with the risks. The underwriting result shows a profit. — This is not the case with Motor Third Party Liability reinsurance. In effect, the premium volume, shown separately for the first time, has risen in line with the rising motorisation. However, in terms of the overall result, it produced a deficit due to higher awards and inadequate premiums in many markets and in spite of positive results in certain countries. The deficit from the Federal Republic of Ger­ many overshadows the results of all other markets. Re­ medial measures have already been pushed through on the direct insurance level, consisting of two premium increases within eight months in the order of up to 50 % according to vehicle category.
franchises and, combined with our cautious underwriting policy, should lead to an improvement.
Aviation business is also shown separately for the first time this year. Premiums have grown a great deal com­ pared with the previous year and the result is good. How­ ever, it should not be forgotten that the operation of large aircraft has greatly inereased the loss potential and that the business is still unbalanced despite the higher premium volume.
The reinsurance of Atomic plants is gaining in importance due to the construction of a number of power stations using nuclear energy. No major losses occurred during the year of report.
The Credit and Surety branches have developed favourably both as regards premiums and profits, this being true for most markets. But a particularly cautious assessment of the technical reserves was necessary since the possible effects of an economic slow-down were evidenced by the suspension of payments by some large and reputable firms.
Life reassurance In the Life branch we can look back on a successful year. In last year's Annual Report the net business in force was shown to be Sw.frs. 16,442 million. In spite of the reduetion of Sw.frs. 753 million following the revaluation, the net business in force at the end of 1970 totalled Sw.frs. 18,023 million thanks to the above-average production of new business.
The sale of the subsidiary reinsurance companies to the SwissRe Holding Ltd. on 30th June, 1970 led, on balance, to an increase in income for the Swiss Re during the year under review, due to the fact that the dividend paid by the Holding, together with its interest payments on the current account deficit incurred in purchasing the subsi­ diary companies, more than balanced out the cessation of the dividends paid by the subsidiary reinsurance com­ panies during the same period. (The profit and loss account together with the balance-sheet of the SwissRe Holding Ltd. are shown on page 23.)
Shares (excluding Permanent Holdings) 19.9 % (16.6 %) Real Estate 8.7 % ( 8.9 %) Shares and Real Estate 28.6 % (25.5 %)
At Market Values: Fixed-interest investments (including convertibles) 66.6 % (70.3 %)
The bond and share markets recovered during the period under review from their pronounced low at the end of the previous year. However, the extent of this recovery varied considerably in the various investment markets. The North American investments which had been especially depressed, showed, as regards both bonds and shares, marked rises in value. In Europe, by contrast, the parity changes or the switch to floating rates of exchange following the growing currency difficulties in May, 1971 reversed the, in any case, distinctly weaker upswing in prices. However, overall, the prices as at the balancesheet valuation date were still clearly above the level of the previous year: This favourable development had the following effects:
The depreciation requirement on investments decreased from the record level of last year to more normal pro­ portions; a certain amount of depreciation can hardly be avoided due to the application of the «cost or mar­ ket» method, as admitted by the Code of Obligations.
The proportion of shares at market values increased from 21.6 % to 25.9 % as a result of the afore-mentioned accentuation on shares in the new investments and of the proportionally greater increase of the share prices compared with the bond prices.
The hidden surplus on the quoted securities rose during the year under report by Sw.frs. 162 million to Sw.frs. 343 million which more than made good the decrease of Sw.frs. 97 million in the previous year and brought the hidden surplus to a record level. Nevertheless, in relation to the total investments, the hidden surplus at the end of the business year was only slightly higher than that of three years ago and lower than in former years.
Of the assets of our company shown below, Sw.frs. 46 million are held by Trustees appointed by us in overseas
The account for depreciation, fluctuations in stock ex­ change and foreign currency rates closes slightly above the break-even point with a surplus of Sw.frs. 0.4 million (previous year deficit of Sw.frs. 16.9 million). As men­ tioned in the section on investments, the depreciation on investments decreased considerably thanks to the substan­ tially higher quotations on securities at the end of the year of report and was more than compensated by the realized capital gains especially those accruing from the maturity of fixed-interest securities written-off in the previous year.
Pleasing though it is that the parity change of the franc has had and will have only relatively minor, if lasting, effects on the profit and loss account of the Swiss Re, it cannot be overlooked that the net worth of the company has been affected by the revaluation, especially in the holdings sector. The book loss on foreign holdings was in fact incurred by the SwissRe Holding; however, our com­ pany was indirectly affected because the hidden surplus on this subsidiary company has been reduced.
Taxes The increase in taxes of Sw.frs. 3 million during the year of report (previous year, increase of Sw.frs. 4.7 million) resulted from higher direct taxes in Switzerland, Canada and Australia. It is a consequence of the improved profit position of the company and reflects the application of higher rates of taxation due to the greater profitability.
Having reached the prescribed retirement age, Mr. Max Petitpierre, former Federal Councillor, withdraws from the Board, of which he has been a member since 1962; he also belonged to the Committee of Directors for one year. A personalily' enjoying worldwide esteem, he has been of particular value to our company with his clear judge­ ment and vast international experience. We are deeply grateful to Mr. Petitpierre for his services to our company.
The Board of Directors proposes to the General Meeting the following allocation: 1970/71 1969/70
Dividend 34,000,000 32,000,000 Directors' Remuneration 425,000 400,000 Allocation to Special Reserve Fund 7,000,000 5,000,000 Allocation to Reserve Fund for Catastrophe Losses 4,000,000 4,000,000 Donations 425,000 400,000 Balance carried forward 887,183 1,656,393
Dividend If the Board of Directors' proposal is accepted a dividend of Sw.frs. 85 — (previous year, Sw.frs. 80.—) will be paid; thus upon presentation of Coupon No. 16 an amount of Sw.frs. 59.50, after deduction of the Federal Withholding Tax of 30 %, will be paid.
Capital Funds After distribution of the profit in accordance with the pro­ posal on page 12, the capital and free reserves, including the balance brought forward, would be increased from Sw.frs. 247 million to Sw.frs. 257 million.
The report of the Auditors appointed by the Shareholders appears on page 18.
All classes excl. Life Sw. frs. Sw Irs. Sw. frs. Sw. frs. 1
Zurich, 19th October, 1971 For the Board of Directors: M. E. Eisenring, Chairman
Auditors' Report To the Generai Meeting of the Shareholders of the Swiss Reinsurance Company, Zurich.
The Swiss Re Group, in the narrower sense, comprises, apart from the parent company, the Swiss Re, Zurich and its rating, claims and advisory offices abroad, the following companies: SwissRe Holding Ltd., Zurich and its Subsidiaries (cf. page 28) North American Reinsurance Corporation, New York North American Reassurance Company, New York Canadian Reinsurance Company, Toronto Canadian Reassurance Company, Toronto Swiss-South African Reinsurance Co. Ltd., Johannesburg Australian Reinsurance Company Ltd., Melbourne Swiss Reinsurance Company (U. K.) Ltd., London European General Reinsurance Company of Zurich
The profit of the SwissRe Holding was lower than in the previous year; on the other hand, the overall results of the subsidiary reinsurance companies were better than in the previous year. After pruning its portfolio, the North Ame­ rican Reinsurance Corporation achieved a satisfactory overall result for the second time. The results of the South African company were unsatisfactory.
Fire 956 850 747 733 712 Hail 14 17 17 11 12 Burglary/Fidelity and allied lines 66 70 65 60 58
Aviation 97 62 46 32 26 Atomic Risks 2 2 1 1 1 1 Credit, Surety 107 92 88 90 90 A
Real Estate and Real Estate Companies 207 195 195 181 171
Taxes 2.0 1.3 Net Profit ifr ' 5.4 • ; 11.8 10.8 10,8 Balance Sheet (after allocation of profit) in millions of francs
Liabilities Creditors Dividends Share Capital Reserve Fund Special Reserve Profit Carried Forward 31.12.70 31.12.69 Sw.frs. Sw.frs.
Following the transfer of the overseas subsidiary rein­ surance companies from the Swiss Re to the SwissRe Hold­ ing on 30th June, 1970 the balance sheet and profit and loss account of the Holding have changed fundamentally. Through the sale of the Mercantile and General in June 1968 the Holding became a current account creditor of SwissRe; after taking over the said subsidiary companies it has again become a current account debtor of the parent company. The outgoing interest of Sw.frs. 3.3 million in the 1970 profit and loss account relates only to the second half-year, a period during which no dividends were re­ ceived from the companies taken over. The Holding there­ fore paid to the Swiss Re a dividend for 1970 of Sw.frs. 4.0 million (as in previous year) but no bonus (previous year, Sw.frs. 2.0 million).
Net Profit * adjusted for changes in commission equity c$ C$
Swiss Reinsurance Company (U. K.) Ltd., London Share Capital £ 500,000
' Commencement of business 1/8/1969 In Great Britain it is usual to perform a valuation of the Life assurance business in three-year periods; this is why the above figures relate to non-Life business only. The premium income of the first full year was strongly in­ fluenced by portfolio transfers from the parent company. The result of the year under review was satisfactory. — The net profit was used in full to reinforce the technical reserves and the funds.
European General Reinsurance Company of Zurich Share Capital Sw.frs. 10,000,000 1970/71 ' 1969/70
Underwriting Result - 3,493,000 1,389,000 Investment Income 12,571,000 11,470,000 Management Expenses - 5,158,000 - 3,888,000 Depreciation, Fluctuations in Stock
Exchange and Foreign Exchange Rates - 724,000 - 5,971,000 Taxes - 962,000 - 707,000
Republic of South Africa Swiss-South African Reinsurance Company Ltd. Swiss House, 86 Main Street, Johannesburg with an Office in Cape Town
Swiss Reinsurance Company (U. K.) Ltd. 108 Cannon Street, London E. C. 4