Organisation 10 Group report 12 Report of the divisions 16 Group accounts
Profit and loss account 28 Balance sheet 30 Cash flow statement 32 Notes 33
Swiss Re registered shares Swiss total index (restated for comparison) Swiss insurance index (restated for comparison) Source: Datastream
Swiss Re’s registered shares have performed substantially better than the Swiss stock market (+323.4%) and Swiss insurance shares (+372.3%).
The return on equity was 14.0% after the offset of goodwill. We have thus largely achieved the Swiss Re Group’s target return of 1000 basis points above the risk-free interest rate, especially in view of the fact that interest rates continued to fall nearly worldwide in 1997.
Last year we spoke of consolidation in the global reinsurance industry. This restructuring continued in 1997, with mediumsized reinsurers taking the lead. More remarkable, however, was the intensity with which the consolidation wave swept across other areas of the financial services sector. Since 1996 we have witnessed spectacular mergers and acquisitions in insurance and banking which will result in fundamental and lasting changes in market structures.
Decisive for the future of your company are the employees. The Swiss Re Group recognised the importance of know-how a long time ago and is undertaking every effort to provide ongoing employee training and introduce new talent into the company through the recruitment of highly qualified specialists. The success of the Swiss Re Group is based on the foundation of financial strength, but the decisive difference in the face of competition will be our available know-how.
We wish to thank all our employees, whose significant contribution helps to guide our company in these times of great change. We also thank our many clients around the world for the confidence they show in us each day.
Ulrich Bremi Walter B. Kielholz Chairman of the Board of Directors Chief Executive Officer 5 Swiss Re Group
Te rm t o e x p ir e i n
The terms of office of Peter Forstmoser and Lukas Mühlemann will expire at the coming General Meeting. The Board of Directors proposes to the General Meeting that both be re-elected for a further four-year term of office.
Urs H. Winter, member of the Executive Board, died in December 1997 following a severe illness. We mourn the passing of an individual whose personal charisma and professional character will live on in our memory.
Bruno Laube, member of the Executive Board, retired at the end of December 1997. The Board of Directors thanks Mr Laube for his long and successful commitment and friendship.
In January 1998, the Board of Directors resolved to modify the structure of the Swiss Re Group as of 1 July 1998. The Board appointed Michel M. Liès to the Executive Board and made him head of the new Latin America division. Bruno Porro joined the Committee of the Executive Board and took over the new Reinsurance & Risk division. Pierre L. Ozendo became head of the Asia division. Erwin K. Zimmermann assumed sole responsibility for the Swiss Re New Markets division, which he had previously shared with Mr Kielholz.
Andreas Beerli Ruurd de Fluiter Jakob Eugster Carol Franklin Engler Christian Herzog Peter Schmid Walter J. Wickli
George J. Bleuler Felix W. Bossert Gion Duri Cantieni Franz-Josef Hahn
The following changes in the scope of consolidation have influenced the annual results: – The Mercantile & General Re Group’s profit and loss account is consolidated for the first time in the 1997 accounts.
Balance sheet Investments at balance sheet value rose from CHF 58.5 billion to CHF 70.1 billion, helped by the increase in the value of the share portfolio, the cash flows from the reinsurance operations and the first-time consolidation of Swiss Re Italia.
Shareholders’ capital and reserves of the Swiss Re Group were stated at CHF 14.2 billion in the balance sheet at year-end, representing an increase of CHF 4.3 billion or 44% compared with the previous year. In addition to factors such as unrealised gains on investments and the profit for the financial year, goodwill in the amount of CHF 293 million was offset directly against capital funds. Valuing investments at market values would give capital funds of CHF 18.1 billion, a rise of CHF 5.8 billion or 47% compared with the previous year.
Key ratios The ratios relevant for the assessment of the overall business have continued to improve: – Investments in relation to net premiums climbed from 373% to 398%; excluding Swiss Re Italia, the figure would have increased to 389%. – The technical provisions ratio for non-life business rose from 268% to 280%, excluding Swiss Re Italia.
The return on equity (profit after tax in relation to average capital funds employed during the financial year) improved from 13.8% to 14.0%. This value is calculated using an adjusted equity basis: the offset of goodwill from acquisitions is added back and the goodwill is depreciated on an imputed basis for a period of between five and twenty years depending on the shareholding.
– Our objective in Italy was to restructure the balance sheet of the former Unione Italiana di Riassicurazione, and in particular to spin off its extensive property portfolio and resolve contractually with the former owners the issue of old liabilities. The takeover was subsequently completed.
– In 1997, two new locations, Shanghai and Warsaw, were added to the list of more than 70 Swiss Re offices.
– With the full consolidation of Mercantile & General Re, our aim of improving the geographical spread of the reinsurance business has been attained: the share of European business has fallen to 51%. The most important individual market is now the USA with gross premiums of CHF 4812 million, followed by Germany (CHF 2339 million), the UK (CHF 1751 million) and France (CHF 865 million).
– At the end of 1997/beginning of 1998, the Swiss Re Group partially restructured its divisional organisation. Union Re, a wholly owned subsidiary which operated independently in Europe and Asia, was merged with the parent company. This move has increased productivity and will also enable us to pool our resources in further expanding the business. The restructuring process is still underway. Further details will be provided in Swiss Re’s Interim Report 1998.
Europe 51.4% USA/Canada 31.7% Asia/Pacific 10.5% Latin America 2.9% Africa 2.7% Others 0.8%
The methods for determining the amount of capital needed to cover business risks have been further refined. This allows a better assessment of risks and provides a more reliable basis for calculating the price of insurance products. The Board of Directors and the Executive Board are also provided with a more comprehensive picture of the trends affecting business risks and the related Group capital.
In December 1997, the Board of Directors signalled its intent to actively manage its capital base within the context of prudent accounting, by announcing the launch of a share repurchase programme. The second line of trading established specifically by Swiss Re for this purpose, the first time this had been done on the Swiss Exchange, gives the company the opportunity to repurchase its own shares at a price similar to that of ordinary trading. As expected, only a small number of shares were repurchased via this channel, in which Swiss Re alone may purchase shares, in the second half of December 1997. In the first five months of 1998, shareholders sold 312 350 registered shares of a total value to CHF 999.8 million to Swiss Re.
Life business is by nature less exposed to cycles than non-life business. We expect further growth and stable results due to our strong market position.
Financial market performance in the first quarter was impressive. Interest rates continued to fall and, with the exception of Asia, bond and stock markets climbed, some of them sharply. However, the rise in market risk has not been insignificant. The Swiss Re Group’s current investment policy is therefore more cautious than in 1997.
As part of our strategy to concentrate on our core business, in April 1998 we sold the wholly owned Group company Audatex Holding AG, Zurich.
For Swiss Re, this trend has, in many cases, meant changes in the volumes ceded in reinsurance as a result of increased deductibles and restructured reinsurance programmes. Opportunities for growth were provided by strengthened demand for holistic reinsurance solutions which go beyond the boundaries of traditional reinsurance.
The Italian insurance industry reacted positively to Swiss Re’s acquisition of the former Unione Italiana di Riassicurazione. This move has made Swiss Re the Italian market leader. The growth in turnover of CHF 700 million which resulted from the acquisition will only become apparent in the 1998 accounts.
The catastrophic flooding of July 1997 in the Czech Republic, Poland and Germany had disastrous consequences: and total damage of approximately CHF 7.3 billion.
Gross premiums by country 1997: 100% = CHF 8952 million in %
Germany 26% United Kingdom 20% France 10% Switzerland 7% The Netherlands 9% Others 28%
The continuing positive technical result in the European markets is due to an absence of major loss events in the year under review and only a slight increase in the overall number of claims. The widespread flooding in Central Europe in the summer of 1997 caused a total loss of CHF 1.5 billion for the insurance industry, of which Swiss Re will pay CHF 55 million. Two major fires, in Belgium and in Austria, caused losses of CHF 35 million.
In Asia, the first half of 1997 was characterised by pressure on premium rates and conditions. The situation changed in the second half-year, during which the flow of business was shaped by the financial crisis. Insurance companies were quick to react to the challenge, in part by placing increased pressure on reinsurance conditions. Swiss Re countered the difficult market situation with innovation and flexibility, without compromising its proven underwriting principles. The impact of the Asian financial crisis on the 1997 accounts is limited mainly to the effects of the lower exchange rates resulting from the weaker Asian currencies. Results developed reasonably, but several major losses in the facultative area impacted claims experience. Short-term expectations for growth had to be readjusted downwards, although the medium- to long-term market potential is still considered to be very positive.
Favourable claims experience in the current and previous insurance years in Australia led to a slight improvement in results, despite a reduction in premiums.
The difficult economic situation in South Africa has begun to affect the insurance industry. Negative market trends have been aggravated by the entry into the market of additional foreign direct insurers and reinsurers. Premium income declined as a result. Claims were materially affected by several major property losses though no natural catastrophes occurred.
Gross premiums by region 1997: 100% = CHF 6154 million in %
A strategy aimed at US insurance companies with global portfolios, which focuses on increased client orientation and the provision of holistic solutions, countered the trend towards larger deductibles.
Latin America is heading rapidly towards economic and political stability. The presence of international insurance providers and increasing deregulation have also brought strong competition. The reinsurance market, too, is suffering from considerable price pressure. Against this backdrop, Swiss Re’s positive premium trend must be considered a success. Results are down slightly due to lower original premium rates and individual provisions set up retroactively to cover loss events from previous years.
Gross premiums by line 1997: 100% = CHF 17414 million in %
Property Continued deregulation and globalisation in the markets have increased the pressure on prices, particularly in industrial and commercial business. This action has forced them further away from the conditions which prevailed in individual countries when their markets were regulated. Reinsurers ’ price concessions have been made possible by the above average results experienced over the last five years. It must be assumed that these are attributable mainly to the absence of natural catastrophes (with the exception of the major floods in Central Europe) and the low frequency of other major losses. As a result of this development, premiums in many markets are currently no longer sufficient to cover the expected average long-term claims and the associated costs.
Liability Despite strong competition, premium volume continued to increase. Part of this increase can be attributed to the inclusion for the first time of Mercantile & General Re in the accounts. Demand has grown for liability products relating to professional liability, directors’ and officers’ liability, employment practices liability (discrimination at work) and medical malpractice insurance, as well as multi-year and multi-line covers. Favourable claims development, good claims settlements and a higher allocated investment return all contributed to the very good technical result in liability business.
In the area of risk analysis and assessment, emphasis is being placed on the analysis of the “year-2000” issue with respect to product liability, directors’ and officers’ liability and other liability covers. Intensive discussions are also taking place with clients, policyholders and lawyers to shed light on the complex issues related to genetic engineering, environmental impairment liability and professional liability. One important aim is to define the limits of insurability.
Motor This line was largely influenced in the year under review by deregulation of the insurance market and the resulting competition. Reduced premiums, coupled with our withdrawal from several business relationships because of insufficient profit potential, have led to a decline in premium volume in proportional business. Non-proportional covers also came under price pressure in many markets. The shift from quota share reinsurance to non-proportional covers continued to increase, especially in some European markets, although 21 Swiss Re Group the trend was somewhat slower than expected. In view of the strong competition in the direct insurance business, this is not too surprising.
Accident Accident insurance continues to grow in significance, particularly as an extension to workers’ compensation insurance and employers’ liability insurance. In some markets, these insurances are being increasingly coupled with life insurance cover. In several important Latin American countries, and noticeably also in Europe and Asia, the growing privatisation of social insurance has fuelled demand.
Marine The pressure on original premiums and conditions was noticeable in marine business, as was the move towards consolidation among clients and providers. Premiums and results are therefore down slightly on the previous year, although the overall result remained positive, partly due to the absence of major losses. There is clearly a growing need for holistic and multi-year products in the marketplace.
Engineering Despite declining original premium rates, it was possible to increase premium volume. The largest increases were in the USA, Latin America and Eastern Europe. In Asia, the financial crisis led to a decline in investment and lower exchange rates, which has slowed business developments in this important engineering market. As no major loss events occurred, the technical result has improved compared with the previous year.
Nuclear energy The premium development was positively affected by the increase in insured values and limits, the recovery of some American business and new business relations in Eastern Europe. This success was partially impaired by the persistent decline in premium rates. Premium volume has therefore increased only slightly. The result remained very satisfactory due to the absence of significant losses.
Swiss Re New Markets 1997 saw a rise in the demand for non-traditional risk covers. The units of the Swiss Re New Markets division offer Fortune 500 companies a broad spectrum of risk financing solutions, particularly in the area of low-frequency major losses. They also offer non-traditional covers for the entire Swiss Re client base.
Business with major industrial clients grew in the year under review. The most sought-after products include beta covers (combined property and liability covers) and integrated multi-year and multi-line covers. The division consolidated its position in financial reinsurance by increasingly structuring its products to combine elements of risk cover and financing. These solutions are attracting huge interest from clients 23 Swiss Re Group whose aim is to optimise their use of capital.
A specialised Run-off unit offers clients financial and organisational support in the run-off of claims portfolios. In the year under review, cover was provided in the areas of motor liability, general liability and workers’ compensation.
Aviation and satellite insurance continues to suffer from overcapacity, although the claims experience has prevented a further deterioration in premiums and conditions. The good result in this line reflected our selective underwriting policy and good claims settlements. In view of the prevailing market conditions, cooperation is being sought with clients to develop multi-line and multi-year risk financing solutions.
Swiss Re Life & Health 1997 was the first complete financial year following the integration of Mercantile & General Re. The financial and organisational objectives of the merger were met. Client confidence remained high throughout the entire integration process. With a few exceptions, we were able to expand our business even in markets where Swiss Re already possesses a very large share of the market.
Swiss Re has thus become one of the world leaders in life and health reinsurance. Growth in the emerging countries, particularly in Latin America, also had a positive impact.
The crisis in Asia had little effect on life and health reinsurance. Premium growth in original currencies reached double figures in most countries and we expect substantial growth in the future. The Life & Health division is currently recruiting in Asia in view of the expected business expansion in this region.
Increased interest is being shown in the life insurance market by banks and non-insurance-related corporations. Swiss Re has been successful in offering support to these and other new market players.
The financial crisis in Southeast Asia had little impact, as only a small proportion of investments are held in that region.
At the end of 1997, the Swiss Re Group employed 7588 people, representing an increase in the reinsurance companies of 681. Included in this number are the 392 employees of the former Unione Italiana di Riassicurazione.
By recruiting new staff, Swiss Re aims to consolidate its market presence in areas where strategic success is possible. The setting up of global structures and the further increase in innovation also require additional resources in marketing support and infrastructure.
Swiss Re is a global and highly specialised service company. To maintain and improve its performance, the company must place extraordinarily high demands on its employees with regard to the key areas of responsibility, personal integrity, willingness to learn and adapt, working by objectives and the ability to adapt to a multi-cultural environment.
Swiss Re places significant emphasis on offering employees the opportunity to develop both professionally and personally. Training and management development programmes are constantly adapted both qualitatively and quantitatively to support this process. Salary structures, in particular the inclusion of employee share programmes and the issue of employee options, have been defined to promote performance and individual development. In doing so, Swiss Re offers its employees the right environment in which to accept the challenges of rapidly changing markets and the company’s increased globalisation strategy.
Dividend, interest and other income from unconsolidated subsidiaries and affiliated companies
IV Other assets 1. Fixed assets 2. Cash at bank and in hand 3. Other
III Technical provisions 1. Provisions for unearned premiums 2. Provisions for life, health and disability reinsurance 3. Provisions for claims outstanding 4. Provisions for bonuses and rebates 5. Other technical provisions
IV Technical provisions for unit-linked life reinsurance policies where policyholders bear the investment risk
VII Other liabilities 1. Creditors arising out of reinsurance operations 2. Debenture loans 3. Amounts owed to banks 4. Other creditors
Premiums written relating to future periods are accrued as provisions for unearned premiums and are calculated individually or by statistical methods. Provisions for unearned premiums are shown after deduction of deferred acquisition costs. The amount deducted is disclosed in the notes to the financial statements.
Intra-Group transactions are eliminated. Remaining profit and loss account differences are included in net income; remaining balance sheet related differences are eliminated through retained earnings. Details relating to unconsolidated Group companies and minority holdings are disclosed in the notes to the financial statements.
All items in the balance sheet and the profit and loss account denominated in foreign currencies are translated at the currency exchange rates applicable on the balance sheet date. The currency translation adjustment from the recalculation of the opening balance sheet is netted against retained earnings.
CHF millions Gross Retroceded Net Gross Retroceded Net 37 Swiss Re Group
Previous year 1 refer to glossary for definition 2 excluding Swiss Re Italia
CHF millions CHF DEM FRF GBP USD Other Total 40 Swiss Re Group
Dividend by the parent company for the financial year according to proposed allocation of profit
The balance sheet positions of the Mercantile & General Re group, acquired at the end of 1996, were included in the 1996 consolidated balance sheet. The results of this group are now also included fully in the profit and loss account for 1997. On 1 January 1997, Swiss Re, Zurich, acquired a minority holding of 49% in Unione Italiana di Riassicurazione, Rome. The annual profit of this company is included proportionally as income from subsidiaries. On 17 December 1997, we increased our holding to 100%. The balance sheet values of the company, since renamed Swiss Re Italia, are consolidated in full in the annual results.
On 21 August 1997, the Swiss Re Group acquired 100% of Facility Insurance Corporation, Texas. Our intention is to sell on a majority shareholding in this company. For this reason, our participation in this company is not consolidated fully in the accounts, but is included only with the share of profits and equity.
Land and buildings with a cost of CHF 979 million (1996: CHF 756 million) and a market value of CHF 1174 million (1996: CHF 949 million) are used by Group companies for own purposes. Fair market rent is charged for their use. The total cost of land and buildings is CHF 2.647 billion (1996: CHF 2.424 billion).
Refer to page 62 for information on unconsolidated subsidiaries and affiliated companies.
The amount in the respective balance sheet positions related to affiliated companies is as follows: CHF millions 1997 1996
Own shares held on 31 December 1997 at cost 1 032 443 1 052
Own shares held on 31 December 1996 at market value 1 028 104 1 248
The provisions for claims outstanding include provisions of CHF 2.615 billion (1996: CHF 2.270 billion) prescribed by local regulatory authorities for future claim fluctuations and for large and catastrophic losses. In 1997 CHF 398 million were added to provisions after revaluation at current exchange rates (1996: 435 million).
Other liabilities contain net liabilities for current taxes of CHF 108 million (1996: CHF 66 million).
There are liabilities due after more than five years in the sum of CHF 14 million (1996: CHF 28 million).
Contingent liabilities at 31 December are as follows: CHF millions 1997 1996
In addition, there are six unlimited guarantees. It is not expected that any payments will be made under these guarantees.
To the General Meeting of Shareholders of Swiss Reinsurance Company Zurich
In our opinion, the consolidated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance with the 4th and 7th Directives and the Insurance Directive of the European Union, and comply with the law, and the accounting principles prescribed by the Listing Rules of the Swiss Exchange.
Swiss Re, Zurich, performs a dual role within the Swiss Re Group as both a reinsurance and a holding company. Around 35% of the total gross premium income of the Swiss Re Group is attributable to business acquired directly by Swiss Re, Zurich. Nevertheless, assessment of our market position, profitability and financial strength must focus primarily on our consolidated financial statements.
Investments stated in the balance sheet have increased again over the previous year. The proportion of shares in capital market investments was built up significantly.
The technical provisions continued to rise and amounted to CHF 15.3 billion on the balance sheet date. Provisions for claims outstanding increased by CHF 345 million, and CHF 279 million were allocated to the provision for catastrophe claims.
Investment result 3. Allocated investment return 4. Interest expense 5. Other income 6. Other charges
III Total result 1. Technical result 2. Non-technical result 3. Ordinary profit before tax 4. Tax on ordinary profit
1. Land and buildings 2. Investments in subsidiaries and affiliated companies 3. Loans to subsidiaries and affiliated companies 4. Shares 5. Fixed income securities and registered debt instruments 6. Loans 7. Mortgages 8. Time deposits 9. Deposits with ceding companies
V Other liabilities 1. Creditors arising out of reinsurance operations 2. Amounts owed to banks 3. Debenture loan 4. Loans 5. Other creditors
The 1997 financial year comprises the accounting period from 1 January to 31 December 1997. However, due to local convention, reinsurance business from Japan included in the accounts is for the period from 1 April 1997 to 31 March 1998.
The allocated investment return includes the actual investment income which can be directly attributed to the reinsurance business. In the remaining instances, it contains the investment return generated on the investments covering the technical provisions. The interest rate reflects the currency-weighted 5-year average yield on 5-year government bonds.
The following items are stated at nominal value in the balance sheet, after deduction of known delcredere risks if applicable: – Loans to subsidiaries and affiliated companies – Loans – Mortgages – Time deposits – Deposits with ceding companies – Debtors – Cash at bank and in hand
Global presence Support from over 70 offices in more than 30 countries
Capital funds on 31 December after allocation of profit 1 excluding reduction of capital proposed to the General Meeting
The current account obligations towards employee pension funds amounted to CHF 42 million on the 1997 balance sheet date (1996: CHF 29 million).
Other liabilities are long-term liabilities in the amount of CHF 2.6 billion (1996: CHF 1.6 billion) and short-term liabilities in the amount of CHF 3.0 billion (1996: CHF 3.0 billion).
Details on the Swiss Re Group’s subsidiaries and affiliated companies are to be found on pages 62 ff.
Income from subsidiaries and affiliated companies includes CHF 308 million of pledged dividends still outstanding (1996: CHF 71 million).
Own shares held by the Swiss Re Group are stated on page 45.
Swiss Re, Zurich, employed a staff of 2339 on the balance sheet date (1996: 2115). Personnel expenses for the 1997 financial year amounted to CHF 451 million (1996: CHF 352 million).
The General Meeting to be held in Zurich on 26 June 1998 has at its disposal the following balance sheet profit (cf. profit and loss account and balance sheet, pages 51 to 53): in CHF 1997 1996
The Board of Directors proposes to the General Meeting to allocate this profit as follows: in CHF 1997 1996
To the General Meeting of the Shareholders of Swiss Reinsurance Company Zurich
Our audit was conducted in accordance with auditing standards promulgated by the profession in Switzerland, which require that an audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
Method of consolidation: f full e equity – non-consolidated 1 acquisition/ foundation 1998 2 consolidated figures 3 previous years’ figures 4 sold as of 27 April 1998 5 merged with Swiss Re,
R e su lt i n m il li o n s
European Reinsurance d 100 f CHF 29.8 388.6 Company of Zurich Mythenquai 50/60 8022 Zurich with a branch office in Hamilton, Bermuda
Reinsurance Derivatives Holding AG s 100 f CHF 126.4 127.7 Mythenquai 50/60 8022 Zurich
RFC Reinsurance Finance d 33.33 e CHF – 2.3 –2.4 Consultants Ltd. Freigutstrasse 16 8002 Zurich
Bavarian Reinsurance d 100 f DEM 40.0 472.6 Company Limited 3
Euler Société Anonyme d 19.99 e FRF 451.3 4 562.7 1, rue Euler 75008 Paris
Crawford THG Limited d 40 e USD 7.1 63.2 Trinity Court 42 Trinity Square London EC3N 4TH
Credit Suisse Financial Products d 20 e USD 409.4 1 614.5 One Cabot Square London E14 4QJ
Swiss Re Investors Limited d 100 – – – – 71–77 Leadenhall Street London EC3A 2PQ
SR International d 100 f GBP 4.4 34.3 Business Insurance Company Ltd.
Swiss Re Capital Markets Limited d 100 – – – – 71–77 Leadenhall Street London EC3A 2PQ
The Mercantile & General d 100 f GBP 88.6 680.5 Reinsurance Company St James’s House St James’s Square Cheltenham Gloucestershire, GL50 3RD
Method of consolidation: f full e equity – non-consolidated 1 acquisition/ foundation 1998 2 consolidated figures 3 voting share 22.55% 4 profit and loss account at equity, balance sheet fully consolidated
Swiss Re Italia S.p.A. d 100 e/f 4 – – – Via dei Giuochi Istmici, 40 00194 Roma with a representative office in Milan
Reassurantie Maatschappij d 100 f NLG 2.1 75.0 Nederland nv Burgemeester Rijnderslaan 28 1185 MC Amstelveen
Suiza de Reaseguros (Ibérica) d 100 – – – – Agencia de Reaseguros, S.A. de la Cía. Suiza de Reaseguros Paseo de la Castellana, 95, pl. 18 28046 Madrid
European International d 100 f USD 9.7 313.7 Reinsurance Company Ltd. Chancery House High Street Bridgetown 64 Swiss Re Group
International Risk d 70 f USD 8.2 19.4 Management Group Ltd.2
Belvedere Building 69 Pitts Bay Road Hamilton HMCX with 28 subsidiaries, affiliated companies, and branch offices in 12 countries
SwissRe Investments (Bermuda) Ltd. d 100 f USD 0.1 117.5 41 Cedar Avenue Hamilton HM12
Swiss Re Life & Health Canada d 100 f CAD – 8.2 220.2 Suite 3000, Canada Trust Tower 161 Bay Street Toronto, Ontario M5J 2T6 with a branch office in Montreal, and a representative office in Hamilton, Bermuda
North American d 100 f USD 6.1 82.7 Specialty Insurance Company 650 Elm Street Manchester, NH 03101-2524 with branch offices in Atlanta and Cleveland, and a representative office in Middleburg Heights 65 Swiss Re Group
Method of consolidation: f full e equity – non-consolidated 1 acquisition/ foundation 1998 2 consolidated figures
Swiss-Am Reassurance Company d 100 – – – – 237 Park Avenue New York, NY 10017
Swiss Re America Holding s 100 f USD 253.5 1 705.4 Corporation 2 237 Park Avenue New York, NY 10017
Swiss Re Atrium Corporation d 100 f USD – 0.3 6.9 Park Avenue Plaza 55 East 52nd Street New York, NY 10055
Swiss Re Financial Products d 100 f USD – 0.4 9.6 Park Avenue Plaza 55 East 52nd Street New York, NY 10055
Swiss Reinsurance America d 100 f USD 261.2 1 482.5 Corporation 237 Park Avenue New York, NY 10017 with branch offices in Atlanta, Boston, Chicago, Dallas, New York, Philadelphia, Phoenix and San Francisco
Suiza de Reaseguros Venezuela C.A. d 100 – – – – Oficina de Representación Edificio Torre La Noria, Piso 8 Norte Paseo Enrique Eraso, Urb. Las Mercedes Apartado No. 6633, Carmelitas Caracas 1060
Swiss Reinsurance Company d 100 – – – – Beijing Representative Office Unit 1110 Landmark Building 8 North Dongsanhuan Road Chaoyang District Beijing 100004
Swiss Reinsurance Company d 100 – – – – Singapore Branch 24 Raffles Place # 13-01/05 Clifford Centre Singapore 048621
Swiss Reinsurance Company d 100 – – – – Korea Liaison Office 7th Floor, Kwanghwamun-Building 211 Sejong-ro, Chongro-ku Seoul 110-050
Swiss Reinsurance Company d 100 – – – – Taipei Liaison Office 10th Floor, Suite E Hung Tai Century Tower 156–158 Ming Sheng East Road, Section 3 Taipei 105
Swiss Re Australia Ltd. d 100 f AUD 5.6 366.6 31 Queen Street Melbourne, Vic. 3000 with branch offices in Sydney, and in Auckland and Wellington, New Zealand
Swiss Re Life & Health d 100 f AUD 38.9 408.3 Australia Limited Level 10 7 Macquarie Place Sydney, NSW 2000 with a representative office in Melbourne and a branch office in Wellington, New Zealand
The Mercantile & General d 100 f AUD – 27.0 35.9 Reinsurance Company of Australia Limited 31 Queen Street Melbourne, Vic. 3000
The countdown has begun. Around 19 months remain until the hour of reckoning, and it hardly seems likely that the lost time can be made up. For example, in the United States approximately two million specialists are working on the conversion, but it has been estimated that three million would be necessary to get the job done on time. According to estimates, roughly half of all companies equipped with computers in the USA will be unable to resolve the problem completely in the time remaining. In the EU as well, many companies have very little time to spare.
The brief time remaining is likely to have consequences even for those companies which have recognised the problem early on and will therefore have completed their homework by New Year’s Eve 1999. As a result of networking with other systems, dangers which are not directly controllable lie in wait at the external interfaces. They come specifically from clients and suppliers who cannot solve their problems on time, and the dependence on public infrastructure, such as electricity and phone services, is a potential threat.
The insurance industry can do quite a bit to limit the risk. In underwriting, ie with respect to policy renewals or new policies, this can be done through the judicious selection of clients and the exclusion of particular exposures in certain risk categories. In instances in which cover is provided, a thorough risk analysis should be carried out prior to signing. The lack of claims experience could be expressed through relatively high premiums. With regard to existing policies, the insurance companies should explicitly draw the policyholders ’ attention to their obligation to engage in loss prevention.
Gaius Maecenas, that legendary patron of letters, is a little passé. We live in a time where the open hand of generosity is seldom seen. Of course, Maecenas himself was not always a model of selflessness – holding court, as a would-be poet, to the literary greats of his time. And there are still benefactors around today: art collectors such as Reinhart, Rupf, Hahnloser, who have gone against the grain by making public bequests of their treasures; or high-minded “money men”, such as Warburg and Gulbenkian, who have bequeathed important institutions and foundations.
We have various perceptions of “culture”. One has to do with living together, interdependently, in a finite, definable society. At a time when the public purse strings are stretched to the breaking point, the state is not always in a position to 74 Swiss Re Group meet its undoubted obligations towards those toiling in the fields of cultural and social endeavour. This must be the point of entry for sociopolitical sponsorship by large corporations who have their own obligations towards the wider culture of which they are a part. If this gives rise to a new form of civic spirit, engaging the wealthy in a new “social contract”, we are on the right track.
Cultural events 60% Humanitarian aid/ miscellaneous 20% Training/research/ science/ecology/ climate/environment 15% Regions lacking in infrastructure 5%
Swiss Re supports not only the four major cultural institutions in the City of Zurich, but also small experimental projects, often combining sponsoring with client-related activities.
Although emphasis is placed on cultural aspects, Swiss Re is particularly interested in supporting social and humanitarian projects. These range from boating trips for the disabled to soup kitchens in Colombia.
To complement our active involvement in ecological issues, Swiss Re also selectively aids interesting and promising projects relating to climate, the environment and the ecology.
There are places where the past is a powerful presence you cannot ignore. As though you were standing at the meeting point of lines that stretch back into the distance, as far as the eye can see and beyond, seeming to emanate from the depths of time.
Swiss Re is fortunate indeed to have found such a spot to build a communications centre and meeting place for its 7600 employees from all over the world. The plans include rooms for business and leisure purposes, a restaurant, a hotel and a reception complex, set in immaculate gardens and parks in the French and English styles. As a return on all the effort and expense involved, the company is undoubtedly looking for added value in the form of productive encounters and discussion.
Which areas of insurance are of interest to you? Do you want to know more about the phantom risk electrosmog? Or are you more concerned with product liability? Whatever your preferences, we will send you the desired reading material free of charge.
Our publications bring threefold benefits. Firstly, they aim to offer the industry support in the area of prevention. In this sense, a flyer published in 1997 on the flooding in the Czech Republic, Poland and Germany was entitled “Learning from disaster”. Secondly, they should have a prospective effect and help to prepare for possible future hazards and even catastrophes. Swiss Re must be ready today to cope with tomorrow ’s eventualities. Thirdly, Swiss Re’s publications stem from a large pool of technical know-how, and thus represent not only our expertise but also an ideal marketing and communication tool for promoting the company.
It soon came to light, however, that it was necessary for the responsibility towards consumers to exceed mere financial compensation for a loss suffered. The next step was therefore to legally obligate entrepreneurs to ensure the safety of a product for its entire life span. In accordance with this, a car manufacturer must observe a particular model during its entire probable life span and introduce corresponding mea-
Swiss Re Publishing Index 1998 lists our entire range of published matter
Please send your order for publications (quoting order number) to: Swiss Re
New Swiss Re publications can be down loaded from our Web-site or ordered by e-mail from the following address: publications@swissre.com
Preferred risks in life insurance. A mortality study for the years 1958–1994
A summary of approaches and techniques involved in multiyear multiline insurance agreements.
Multiline multiyear agreements A guide for the drafter and negotiatorA guide for the drafter and negotiator
The first publication in the series “Electronic equipment” offers a summary of the most important developments in electronics and related insurance issues.
Outstanding claims provision: Provision for claims which have been incurred but not yet finally settled.
The excess of cost of an acquired company over the fair value of the company’s separately identifiable net tangible assets.
Employers’ liability insurance: Insurance by employers covering employees for injuries arising out of their employment.
The totality of risks assumed by an insurer or reinsurer; also the totality of investments of a company.
Surplus reinsurance: Form of proportional reinsurance in which risks are reinsured over a specified amount.
Amount of the risk accepted in reinsurance that is passed on by the reinsurer to other reinsurance companies.
Adjusted stock exchange prices per registered share 4 high low year-end 5
The shares of Swiss Re, Zurich, are listed on the Swiss Exchange. In addition, on 1 February 1996, an American Depository Receipts Program (Level 1, over-the-counter) was launched together with Morgan Guaranty Trust Company of New York. One American Depository Share corresponds to 1⁄20 of a Swiss Re registered share.
1 Excluding reduction of capital proposed to the General Meeting 2 Per share entitled to dividend 3 Includes published unrealised capital gains, ie based on market value 4 Closing rates – Source: Datastream 5 1998: price on 15 May 1998 6 On the stock exchanges of Zurich, Basle and Geneva or the Swiss Exchange 7 Based on shares entitled to dividend 84 Swiss Re, Zurich
Magnum/Peter Marlow (73 bottom) Heinrich Helfenstein (77 top, centre) RDB/Max Messerli (75)
The contributions on pages 74–77 of this Annual Report were written by Dieter Bachmann, editor-in-chief of the Swiss cultural magazine “du” from 1988–1998.