Other income and outgo Investment income 648 581 Management expenses - 177 - 153 Rate fluctuations, depreciation, value adjustments - 91 - 31
Dividend" Total dividend 105 * 77 per share Sw.frs. 170.-' Sw.frs. 125.per non-voting share Sw. frs. 34.-' Sw. frs. 25.- * subject to tfie resolutions of ttie General Meeting " the anniversary bonus accounts for Sw.frs. 22 million of the 1988 total dividend, i.e. Sw.frs. 35.- per share and Sw.frs. 7.- per non-voting share in millions of Swiss francs
Underwriting results Non-Life insurance a Life insurance Other income and outgo Investment and other financial income
Profit applicable to minority shareholders Consolidated net profit Consolidated net profit per share Consolidated net profit per non-voting share 248 Sw. frs. 403.Sw.
Rainer E. Gut * Bassersdorf, Chairman of the Board of Directors of Credit Suisse, Zurich 1992
Hans Ulrich St. Gall 1989 * Members of the Committee of Directors
Executive Committee and Group Management Chairman and Chief Executive Officer Walter Diehl
General Managers Paul E. Christen Rolf Camper Paul-Francis Niquille Hermann Odermatt Herbert Schönenberger
M. Nabholz*, Senior Executive Manager B. Heyer, Executive Manager Executive Managers E. Etter, W. Müller, W. Rüetschi* Managers F. Eugster, W. Herslperger, N. Müntener, R Schmid, R. Siegrist
French- and Italian-speaking Switzerland, France, Italy, Belgium, Luxembourg, French-speaking Africa E. Jutzi, Senior Executive Manager R. Martignier, Executive Manager Executive Managers M.-L. Musy, R, Rüttimann Managers A. GalfettI, B. Gilliand
Spain, Portugal, Greece, Turkey, Japan, Asia, Middle East, Latin America, English- and Portuguese-speaking Africa H. Haag, Senior Executive Manager G. Holzel, Executive Manager Executive Managers G. Bachmann, R Bieri, J. Steinrisser Managers R Marcionelll, B. Rorro, L.T. Rozzi, R. Schilling, F. J, Wingrove Members of Management J, D. Arpel, J, Hofmann, W. B. Kielholz, R. Maag
International business, captives, US/UK brokers, Caribbean, retrocession, risk management, claims service U. Winter, Senior Executive Manager H.-K. Zulauf, Executive Manager Managers E. Baumann, J. Bleuler, M. Bradley, R Gasser, W, Meier, B. Nigg, A. Schneeberger, J. Spühler
H. W. Kreis, Senior Executive Manager G. Schmldll, Executive Manager Managers A. Ammann, J. Brun, R Fürst, R. Held, K. Monger, B. Niethammer Membre of Management E. Franclick
A. Briigger, Senior Executive Manager D. Söhner, Executive Manager Managers M. Freyllnger, A. Sulzer, H. Voser
Sw.frs. 35 million to Sw.frs. 38 million. - The result from general income and outgo (investment income less management expenses, rate fluctuations, write-offs and value adjustments) was Sw.frs. 380 mil­ lion, a drop of Sw. frs. 18 million, mainly because of in­ creased write-offs in the holdings sector.
- Gross premiums grew by 9.6% in Swiss francs, in local currency by 1.9%.
Intense competition continued in the year under report to characterize the international reinsurance markets, which experience shows are prone to excessive price fluctua­ tions. The periodic recurrence of inadequate premiums and high underwriting losses is usually followed by a con­ scious attempt to return to sound reinsurance underwrit­ ing with attractive results. Repeatedly a large number of reinsurance carriers appear on the scene and, with varying emphasis on classes of business, regions and forms of cover, manage to stay in the market for a time. Many of them are not, however, able to stay the course and they withdraw after unsatisfactory experience. Our policy, on the other hand, aims at stable reinsurance relationships, in the conviction that this is the best way to serve the client's interests. Only a relationship of many years' standing en­ ables the reinsurer to be fully receptive to the needs of his client - which is essential if he is to provide tailor-made reinsurance protection. From the insurer's point of view, the prospect of a long-term reinsurance relationship is a major factor in helping him to assess his reinsurance costs.
With the single European insurance market in the Euro­ pean Community and its deregulation - starting with large risks-in prospect, the European insurance industry is cur­ rently in a state of upheaval, characterized among other things by national and international company mergers.
Deregulation does not mean that the insurance industry will be freed of the traditional state supervision, but it will substantially weaken the influence of supervisory bodies on insurance markets and in certain classes will reduce control to ensuring an adequate solvency margin (ratio of capital funds to premium volume). Doing away with official­ ly approved or even imposed tariffs will give a great boost to competition. The main emphasis is on the expected benefits for the insurance consumer in the form of lower premiums, but the insurance industry itself also expects positive impulses from deregulation for it brings both a challenge and an opportunity to demonstrate its ability to be competitive and to innovate. We do not share the fears occasionally voiced that excessive competition in Europe will ultimately lead to an undesirable concentration of mar­ ket forces on a few companies. Nevertheless, it is to be as­ sumed that large companies will benefit from crucial cost advantages in mass business and that small insurers will hardly be in a position to provide the advice and capacity needed by demanding industrial clients.
The 125th anniversary of Swiss Re is an occasion for grati­ tude. We are greatly indebted to our clients for the confi­ dence shown in us, often for decades. We also recall with
The premium income and overall underwriting result showed gratifying development in the 1988 business year. The underwriting loss in Non-Life reinsurance was 17% less, thanks to more favourable loss experience, while the profit in Life reinsurance rose by 9%. Overall, the under­ writing loss fell by Sw.frs. 39 million to Sw.frs. 141 million.
Swiss Re operates in over 130 currencies, Swiss business accounting for less than 10% of the overall volume. In the 1988 business year the Swiss franc weakened against most foreign currencies, contrary to the years since 1985. The value of the US dollar rose in the year under report by about 17% (following a loss in value of 21% in the preced­ ing year).
This development caused income earned abroad (espe­ cially premiums and investment income) to increase in Swiss francs, although this has to be set against a corre­ spondingly higher outgo abroad (in particular claims pay­ ments, commissions and management expenses). The 9.6% growth in gross premiums shown in the year under report would have been only 1.9% If exchange rates had remained constant.
Overcapacity does not simply arise, however, in response to favourable past or anticipated future results but is just as likely to follow structural changes in the markets. This is particularly true of Europe, the United States and Japan. The European insurance industry is getting ready for the freedom of services which wili apply within the EC from the middle of next year, bringing extensive deregulation to in­ dustrial insurance business. Companies are already locked in battle over market shares in an attempt to secure as advantageous a starting position as possible. The many takeovers and mergers of insurance companies should be viewed in the same context. The aim is to broaden the ba­ sic market, boost market strength, diversify into new areas and optimize costs. Moreover, new forms of cover and in­ surance programmes are being developed for industrial insurance clients.
Reinsurance too will be increasingly affected by these changes in the years to come. They signify a challenge for which Swiss Re is well prepared.
The following report refers basically to the annual ac­ counts, i.e. the position in Swiss francs; where the effect of foreign currency rates appears significant, it is comment­ ed upon.
In Fire reinsurance premium volume rose by just on 5%. This growth is the result ot somewhat divergent tenden­ cies. Genuine growth in certain regions and currency-re­ lated increases contrast with losses in the United States and in business ceded by the subsidiary in South Africa. With tew exceptions, the volume ot proportional treaty business showed satisfactory development. In the Ameri­ can market the massive reductions in original premiums, the trend towards higher retentions by insurers and a greater number ot changeovers from proportional to nonproportional reinsurance covers had a restraining effect on premium growth. - The gross result showed extremely gratifying development in the year under report. With the exception ot Hurricane Gilbert, which caused great devas­ tation in the Caribbean and surrounding areas in Septem­ ber 1988 at a cost to the Swiss Re Group ot Sw. trs. 43 mil­ lion, there were no natural catastrophes in the year under report. Moreover the number ot large claims from individu­ al risks tell.
resulted for American Liability business which continues to show an unfavourable run-off for loss years of the past. As a result the underwriting loss rose substantially. There is still great uncertainty as to the loss potential from environ­ mental impairment, where the causes often lie far back in the past. Swiss Re is meeting developments in Increas­ ingly stricter environmental legislation with new forms of cover, which provide a better definition of such risks and make it easier to calculate premiums.
The increase of premium income in Marine reinsurance is mainly attributable to the development of foreign ex­ change rates. In original currency the volume of business written in the United States and London even decreased. -
The significant reduction in the underwriting profit by more than 50% in comparison to the previous year is due to an accumulation of large losses from drilling platforms. The largest claim in this sector was caused by the total loss of the North Sea drilling platform Piper Alpha. For insurance purposes this is currently estimated at about Sw. frs. 2,500 million and is the largest single loss ever to hit the insur­ ance industry. Swiss Re's share in Marine reinsurance Is Sw.frs. 13 million. Insurance and reinsurance markets have so far reacted far too indecisively to this accumula­ tion of large losses. High overcapacity still remains in the rest of the Marine sector and the stiff competition this gen­ erates persists; in Hull business in particular this has led to a collapse of premium rates.
In Engineering reinsurance above average premium growth was recorded in the year under report. Higher pre­ miums were particularly achieved in overseas territories and certain European countries. - The underwriting profit rose steeply in comparison with the previous year. Siower growth and overcapacity have intensified the competition situation.
\n Aviation reinsurance premium income feii by 5% despite the positive effects of foreign currency developments. Ex­ pressed in iocal currencies, the fall is as much as 17%. As a consequence of positive results in 1986 and 1987 the mar­ ket suffered a setback in the year under report with pre­ mium reductions of 40 to 60%. - The underwriting result was only just positive. Immense efforts are needed on the premium side for this branch to bring the necessary under­ writing profit.
The actuarial auditor, Mr. Hans-Ulrich Gerber, Lausanne, has confirmed In his report that the technical reserves of the Life reinsurance business at the end of 1988 were cal­ culated on the bases approved by the Swiss Federal Council.
On the foreign exchange markets growing confidence in the US dollar caused it to rise. Moreover, attractive interest rates on dollar investments led to extensive capital trans­ fers in the US dollar, with the result that at times it came un­ der considerable revaluation pressure. The central banks managed to subdue the foreign exchange markets by means of coordinated intervention and intensified cooper­ ation in economic policy. Compared with the previous year, the Swiss franc dropped significantly against leading currencies, falling about 17% against the US dollar, 29% against the Canadian dollar and 14% against the yen. The ground lost against most European currencies was less pronounced: only against the pound sterling was the fall as much as 13%.
Still under the impact of the market crash and prone to se­ vere fluctuations, the share markets began to find their bearings again at the start of the year. In the face of dynam­ ic economic growth and improved prospects for corpor­ ate profits, share prices strengthened on the leading mar­ kets. The revival started in East Asia, notably in Japan, and spread, hesitantly at first, then with distinct price gains, to European markets and North America. Overall, the picture on world stock markets in 1988 was a very favourable one. The list is headed by France with a gain of 48%, followed
Capital Market investments and Real Estate Distribution by investment category at balance-sheet values (previous year in parentheses)
Net cash deposits (i.e. cash deposits with clients from ac­ tive reinsurance after deduction of the deposit reserves due to retrocessionaires from passive reinsurance) rose by Sw.frs. 184 million to Sw.frs. 1,383 million.
The structure of total investments at balance-sheet values is shown In the following table.
The first graphic on page 16 and the following table show how capital market investments and real estate at bal­ ance-sheet values are distributed among the various in­ vestment categories. The second graphic on page 16 shows the breakdown by currency.
Capital Market investments and Real Estate balance-sheet value in millions of Swiss franos
Capital market investments and real estate 6,808 6,484 Holdings and loans 1,889 887 Net cash deposits from reinsurance transactions 1,383 1,199 Total investments 10,080 8,570
The company is now able to look back on 125 years and, over the past few months, the anniversary has been cele­ brated in moderation, as it was felt important - indeed in­ dispensable for the development of corporate culture - to set a festive contrast to daily business routine. At the same time efforts were made to redefine the image Swiss Re currently projects and wishes to project in future, both within the company and outside.
Festivities got under way with a musical prelude for mem­ bers of staff on 19 December 1988.
Our clients throughout the world were presented with a gift as a token of our thanks for their loyal support. Swiss clients and business associates were also invited to a gala performance of Verdi's "Un Ballo in Maschera" in the Zurich Opera House.
For our staff a family sports jamboree was organised at the Adiiswil sports ground and an anniversary ball in the Kon­ gresshaus. All members of staff also received a bonus graded according to their years of service.
Last year's General Meeting confirmed the re-election of Messrs Hans Bühlmann, Rainer E. Gut and Paul R. Jolles for a further four-year term of office. In addition, Mr Pierre Languetin was elected to the Board of Directors for the first time.
At this year's General Meeting, the terms of office of Messrs Hans R. Lüthy, Franz Luterbacher and Hans Ulrich expire: the Board of Directors will propose to the General Meeting that Messrs Lüthy and Ulrich, who are standing for re-election, be confirmed for a further term.
In view of the current retirement age, which he will reach in 1990, Mr Luterbacher, who has been a Member of the Board since 1981 and also a member of the Committee of Directors since 1985, is not standing for re-election. Thanks to his commitment to these bodies, he has made an extremely valuable contribution to Swiss Re and we are deeply indebted to him.
Claims incurred incl. adjustment in outstanding claims reserve - 301,528,289 - 240,014,695
Technical reserves (unearned premiums and outstanding claims) are based in principle on information provided by clients. Additional reserves are formed on the basis of past experience for losses that are incurred but not reported. All these reserves are entered at the amounts which will pre­ sumably have to be paid in future for the underlying liabili­ ties. Annuity liabilities from Non-Life reinsurance and liabili­ ties from Life business are calculated at actuarially deter­ mined present values. The technical reserves of Life rein­ surance business are determined on the bases approved by the Swiss Federal Council.
Gross premiums in the year under report totalled Sw. frs. 3,888.8 million. After deduction of retrocession premiums of Sw.frs. 758.1 million, the net premiums amounted to Sw.frs. 3,130.7 million, which corresponds to a rise of 9.5% when compared with the previous year. Without the effect of foreign currency fluctuations, net premiums would have risen by 1.0%.
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. 3,155.7 million they were Sw. frs. 317.8 million, or 11.2% above the previous year's amount.
Of the total increase of Sw.frs. 82.8 million, Sw.frs. 70.9 million applied to Life insurance and Sw. frs. 11.9 million to annuities.
This group of accounts closed with a negative balance of Sw.frs. 90.5 million (previous year, Sw.frs. 30.6 million). Realized capital gains and losses on investments contrib­ uted a net profit of Sw.frs. 237.3 million (previous year, Sw. frs. 187.2 million after deduction of a special allocation to the technical reserves). The fluctuations in foreign cur­ rency rates had a positive effect on the result of monetary transfers and the conversion of foreign currency balances, leading to a profit of Sw.frs. 3.0 million (previous year, outgo of Sw.frs. 24.2 million). The write-offs on capital market investments, real estate and holdings amounted to Sw.frs. 285.8 million (previousyear, Sw.frs. 177.2 million). The increase as compared with the previous year is due to distinctly higher write-offs among holdings; the service
companies acquired or newly founded in the year under report were written off at substance value. Depreciation outside the sector of investments and holdings amounted to Sw.frs. 45.0 million (previous year, Sw.frs. 16.4 million); it comprised on the one hand an increase of the value ad­ justment on outstanding claims and on the other hand outgo for the rebuilding and extension of business prop­ erty.
The tax outgo contains both taxes on profit and on capital as well as Indirect taxes. It amounted to Sw.frs. 70.5 mil­ lion, as against Sw. frs. 68.2 million in the previous year and comprises current taxes levied abroad together with the outgo expected in Switzerland on the basis of the 1988 re­ sult.
Of the total amount of Sw.frs. 552.1 million, Sw.frs. 549.4 million was for bank balances. The major part of this amount is invested short-term in the principal currencies for our business activity and is used to meet current obli­ gations on time.
Cash deposits with clients rose against the previous year by Sw.frs. 108.4 million to Sw.frs. 1,416.5 million. This in­ crease is mainly due to foreign exchange rates.
ance-sheet value of securities. This rise is due to the devel­ opment of prices on the stock and foreign exchange markets. The insured value of business property is Sw. frs. 268.2 million.
Holdings are largely managed by SwIssRe Holding Limited and financed by loans to this company. The shareholding of Swiss Re, Zurich, in SwissRe Holding Limited appears in the balance sheet together with certain other holdings in advisory and service companies.
The balance-sheet value of holdings rose by Sw.frs. 23.8 million to Sw. frs. 70.6 million as a result of the takeover of some service companies. Loans to Group companies in­ creased by Sw.frs. 977.8 million; on the balance-sheet date they amounted to Sw.frs. 1,818.4 million. The funds newly made available were used by SwissRe Holding Ltd. to extend its holdings (Uoyd Adriatico S.p.A., Trieste, and Union Reinsurance Company, Zurich).
These comprise accrued investment income, i.e. invest­ ment income already earned on the balance-sheet date but not yet received. In addition, it comprises further tran­ sitory items and precious metals.
Of the current account balances Sw.frs. 859.7 million was for reinsurance and Sw.frs. 48.2 million for retrocession business. Other liabilities totalled Sw.frs. 88.7 million, mainly comprising current accounts run for personnel wel­ fare funds and pool companies.
For the first time bank balances are also included in this item, amounting on the balance-sheet date to Sw.frs. 393.2 million. They were used as interim financing in con­ nection with the purchases of holdings already mentioned.
Cash deposits for retrocessions fell, as against the previ­ ous year, by Sw.frs. 75.8 million to Sw.frs. 33.3 million. The drop is the result of the abolition of mutual deposits between companies of the Swiss Re Group.
Business in force at end of previous year Non-Life reinsurance 5,526.3 5,464.4 Life reinsurance 1,517.5 1,507.5 Total for own account 7,043.8 6,971.9
On the balance-sheet date the technical reserves com­ prised the following: Share capital 111.0 111.0 Non-voting share capital 43.0 43.0 Reserves and profit carried forward 1,794.8 1,711.3 Total 1,948.8 1,865.3 in millions of Swiss francs
Non-Life Reinsurance Unearned premiums 874.8 840.6 Outstanding claims reserve (Incl. valuation of current annuity Indemnities) 5,488.6 4,685.7 6,363.4 5,526.3 in % of earned net premiums 201.6% 194.7%
The General Meeting to be held In Zurich on 24 November 1989 has at its disposal the following profit (cf. Profit and Loss Account and Balance Sheet, pages 20/21): Sw.frs. Sw.frs.
accepted by the will be paid: Dividend per share Sw.frs. 135.— Anniversary bonus per share Sw.frs. 35.— Total dividend, gross Sw.frs. 170.— less 35% Federal Withholding Tax Sw.frs. 59.50 Total dividend, net Sw.frs. 110.50 Non-voting shares (nominal value Sw. frs. 50.-) Dividend per non-voting share Sw. frs. 27.— Anniversary bonus per non-voting share Sw. frs. 7.— Total dividend, gross Sw.frs. 34.— less 35% Federal Withholding Tax Sw. frs. 11.90 Total dividend, net Sw. frs. 22.10
The net amount will be paid after 28 November as follows: For registered shares by means of dividend order to the shareholders in the records of the share register or to their deposit banks.
For bearer shares and non-voting shares against presen­ tation of Coupon No. 38.
As statutory auditors of your company we have examined the accounts for the year ended 31 December 1988 in accordance with the provisions of the law.
Baiance Sheet Assets Cash in hand, postal bank account, bank balances Current-account balances Cash deposits Fixed-interest securities Loans (including mortgages) Shares Real estate Holdings Loans to Group companies Transitory entries and other assets
Englewood Reinsurance Company Limited, Hamilton *D • 1 SwissRe Advisers Limited, 1 Hong Kong *
European General Reinsurance Company of Zurich, Zurich 1 SwissRe Advisers Limited, 1 Manila
North American Internationai Reinsurance Company Limited, Hamiiton 1 SwissRe Advisers (Singapore) Pte. Ltd., 1 Singapore *
Vereinte Versicherung AG, Munich Vereinte Krankenversicherung AG, Munich Vereinte Lebensversicherung AG, Munich
The consolidated overall result rose by 23.4% to Sw.frs. 248 million (previous year, increase of 12.3% to Sw. frs. 201 million). There was varied development in the elements that constitute the Profit and Loss Account. In Non-Life in­ surance the trend of preceding years towards improved underwriting results continued; the underwriting loss fell by Sw.frs. 46 million, or 21%, to Sw.frs. 176 million (previ­ ous year, drop of Sw.frs. 147 million, or 40%). In Life insur­ ance, on the other hand, the previous year's good result could not quite be matched; the underwriting profit fell by Sw. frs. 9 million to Sw. frs. 49 million. Overall the underwrit­ ing loss amounted to Sw.frs. 127 million (previous year, Sw.frs. 164 million). The income from capital investments rose by Sw.frs. 217 million to Sw.frs. 1,333 million (previ­ ous year, increase of Sw.frs. 41 million). About a third of this increase is attributable to the inclusion of Lloyd Adria­ tico in the consolidation. Realized capital gains rose somewhat more steeply than write-offs so that the loss on financial operations fell to Sw. frs. 53 million (previous year, Sw.frs. 68 million). Management expenses and taxes in­ creased. The Group's capital funds shown (including Group profit) amounted at the end of 1988 to Sw. frs. 2,221 million (previous year, Sw.frs. 2,151 million).
In Non-Life reinsurance the consolidated net premiums dropped in local currencies by 2.8% (previous year, in­ crease of 8.6%). The reasons for this development are declining premium rates and higher retentions by insurers, especially in North America. A general rise in foreign ex­ change rates led, after conversion into Swiss francs, to an increase in net premiums by 6.6% to Sw. frs. 5,159 million (previous year, decrease of 3.7% to Sw.frs. 4,838 million). The underwriting loss fell by a further Sw. frs. 66 million to Sw. frs. 184 million (previous year, drop of Sw. frs. 134 mil­ lion); the settlement of late claims from American Liability business was still negative.
The European General Reinsurance Company of Zurich showed in Non-Life reinsurance a decrease of gross pre­ miums by 14.8% to Sw.frs. 624.2 million (in the previous year, the volume had risen by 13.2% because of an excep­ tional transaction). The underwriting loss again increased slightly. - In Life reinsurance the gross amount of business in force rose to Sw.frs. 49,500 million (previous year, Sw. frs. 39,000 million), with a positive underwriting result. The result from general income and outgo increased slightly. The net profit was Sw.frs. 2.4 million (previous year, Sw.frs. 2.0 million) and is again to be used to strengthen the reserves.
The gross premiums of the Canadian Reinsurance Com­ pany, Toronto, fell by 8.5% to Can.$ 108.3 million. The de­ cline could be observed in all branches with the exception of Surety business. The underwriting result remained sta­ ble, despite a number of weather-related claims in the Property portfolio and asbestos claims from the early 1970s. A reduced investment portfolio and practically un­ changed interest rates led to a drop in investment income. The profit of the reporting year in the amount of Can.$ 6.8 million is below that of the previous year (Can.$ 8.9 million). In 1988 the company redeemed the remainder of the still outstanding preference share capital and paid out an un­ changed dividend of Can.$ 1.0 million.
The North American Reassurance Company, New York, and the Swiss-Am Reassurance Company, New York, were able to report an increase of the Life reinsurance business in force and of gross premium income. The de­ velopment of the result is likewise positive. Both invest­ ment income and management expenses rose as against the previous year. Overall, in American terminology, a net loss from operations of US$ 2.2 million (previous year, loss of US$ 8.7 million) was reported. In contrast to the previ­ ous year, the realized capital gains exceeded the capital losses, which substantially lowered the loss from opera­ tions. Again no dividend was paid.
At the Canadian Reassurance Company, Toronto, the Life reinsurance business in force rose by 10%. The result shown is Can.$ 11.4 million (previous year, Can.$ 3.4 mil­ lion); in contrast to the previous year, there were strikingly few large losses. The company again paid a dividend of Can.$ 0.55 million.
The gross premiums of the Bavarian Reinsurance Compa­ ny Limited, Munich, rose in Non-Life business by 2.4% to DM 1,744.4 million (previous year, DM 1,703.5 million). The underwriting result improved slightly as against the previ­ ous year. - In Life reinsurance steep growth of the gross amount of business in force to DM 7,200 million (previous year, DM 5,500 million) was achieved. The underwriting re­ sult was worse than that of the previous year because of the unfavourable experience in the disability sector. - Cap­ ital investment income increased and the profit for the year rose to DM 20 million (previous year, DM 16 million). The dividend is to be increased to DM 5 million (previous year, DM 4 million).
business. The drop of 4% was, however, far less pro­ nounced than In the previous year. Although the company was once again hit by catastrophe losses (Piper Alpha dril­ ling platform. Hurricane Gilbert) the underwriting result was further improved. - In Life business the gross amount of business in force rose sharply to £ 5,500 million (previ­ ous year, £ 3,800 million). The result was again satisfactory in the year under report, although the reserve for Aids claims was again strengthened. - The investment income remained practically unchanged as against the previous year. The overall profit amounted to £ 2.1 million (previous year, £ 1.4 million). To comply with the increased demands of the market, the paid-up capital of £ 9.75 million was raised to £ 15.0 million. An unchanged dividend of £ 0.3 million was paid on the preference shares.
At the Swiss-South African Reinsurance Company Limit­ ed, Johannesburg, the gross premiums in Non-Life rein­ surance fell from Rand 192.6 million in the previous year to Rand 188.0 million, as a result of lower premium rates and strong competition. The favourable claims experience and the lack of catastrophe losses led to an underwriting profit. - The gross amount of business in force in Life rein­ surance rose to Rand 11,600 million (previous year, Rand 10,200 million). The underwriting result was impaired by the strengthening of the Aids reserve. - Investment in­ come rose. Overall a profit of Rand 11.1 million was shown (previous year. Rand 10.2 million), from which an increased dividend of Rand 5.0 million (previous year. Rand 4.0 mil­ lion) was paid.
The gross premiums of the Australian Reinsurance Com­ pany Limited, Melbourne, fell in Non-Life reinsurance by 5.0% to Austr.S 97.6 million. The main reasons were lower premium rates and higher retentions by clients. Thanks to the favourable loss experience and the absence of catas­ trophe losses, an undenwriting profit was achieved. - In Life reinsurance the gross amount of business in force rose by 13% to Austr.S 5,100 million. The underwriting result was affected by a reinforcement of the Aids reserve. - Capital investment income rose. The overall profit was Austr.S 5.1 million (previous year, Austr.S 9.4 million). The dividend was raised from Austr.S 1.4 million to Austr.S 1.5 million.
Fire 1,727 635 2,362 1,720 512 2,232 Accident/Sickness 304 2,199 2,503 267 1,955 2,??? Third Party Liability/Motor 1,807 1,691 3,498 1,613 985 2,598 Marine 242 205 447 224 167 391 Other branches 1,076 304 1,380 987 241 1,228 Ufe 1,265 871 2,136 1,008 755 1,763 Gross premiums 6,421 5,905 12,326 5,819 4,615 10,434 Net premiums 6,297 5,211 11,508 5,763 4,078 9,841
The consolidated net premiums rose in the year under re­ port by 27.8% to Sw.frs. 5,211 million (previous year, Sw. frs. 4,078 million). About 60% of the increase is due to the consolidation for the first time of the majority holding in Lloyd Adriatico. The Group profit from insurance compa­ nies rose to Sw.frs. 40 million (previous year, Sw.frs. 32 million).
The SWITZERU\ND General Insurance Company Limited, Zurief), increased its gross premiums by 23.9% to Sw.frs. 881.6 million (previous year, Sw.frs. 711.2 million). Of this amount, 67% was for insurance and 33% for active rein­ surance. On the outgo side, growth-related costs in­ creased, while the loss experience was more favourable than in the previous year. Overall the company achieved a profit for the year of Sw.frs. 8.2 million (previous year, Sw.frs. 8.0 million) and paid an unchanged dividend of Sw.frs. 3.5 million.
The Magdeburger Versicherungsgruppe, Hanover, report­ ed an increase of its consolidated gross premiums, includ­ ing the non-recurring premiums from the reserve for bo­ nuses to policyholders, by 3.1% to Dfyl 1,041.3 million. The gross premiums of the Magdeburger Versicherung AG rose by 2.0% to DM 747.4 million (previous year, DM 732.6 million). The underwriting result again improved, the loss now being DM 0.6 million (previous year, DM 10.3 million). After taking into account the general income and outgo, a higher profit for the year of DM 11.5 million (previous year, DM 9.1 million) was achieved. Of this amount, DM 5.7 mil­ lion was paid out as dividend, as in the previous year, in ad­ dition to a bonus - after inclusion of the profit carried for­ ward - of DM 7.7 million. - At the Magdeburger Lebens­ versicherung AG the insurance business in force rose by 9.8% to DM 7,600 million (previous year, DM 6,900 million). Following an allocation of DM 78.8 million (previous year, DM 70.5 million) to the reserve for bonuses to policyhold­ ers, a profit for the year remained of DM 0.67 million (previ­ ous year, DM 0.64 million). This was used to make a contri­ bution to the outstanding paid-up capital as well as to pay a dividend of DM 0.42 million (previous year, DM 0.39 mil­ lion).
The Vereinte Versicherungen, Munich, increased their con­ solidated gross premiums, including the non-recurring premiums from the reserve for bonuses to policyholders, by 3.1% to DM 3,681.7 million. - The gross premiums of the Vereinte Versicherung AG grew by 7.9% to DM 813.4 million (previous year, DM 754.1 million). The underwriting result improved, the loss falling to DM 7.5 million (previous year, DM15.8 million). At the same time investment income rose so that a profit for the year of DM 18.1 million (previous year, DM 7.7 million) was achieved. Of this amount, DM 7.6 million was paid out as dividend, as in the previous year, in addition to a bonus of DM 10.5 million. - The amount of business in force of the Vereinte Lebensversicherung AG grew by 9.1% to DM 14,800 million (previous year, DM 13,600 million). After an allocation of DM 191.2 million (pre­ vious year, DM 136.5 million) to the reserve for bonuses to policyholders a profit for the year remained of DM 2.9 mil­ lion (previous year, DM 2.1 million). From this amount the company paid out a dividend of DM 1.4 million (previous year, DM 1.1 million). - The Vereinte Krankenversicherung AG was able to increase its gross premiums by 3.2% to DM 2,200.5 million (previous year, DM 2,132.5 million), de­ spite a reduction of DM 60.3 million in the non-recurring premiums from the reserve for policyholders' bonuses. There was also an increase in the amount of benefit pay­ ments, while the investment result improved. Following an allocation of DM 76.8 million (previous year, DM 78.4 mil­ lion) to the reserve for bonuses to policyholders, a profit for the year remained of DM 16.3 million (previous year, DM 14.3 million). This was used to pay an unchanged dividend of DM 6.3 million.
The «Schweiz Allgemeine» Finanz Holding AG, Munich, complements the range provided by the Magdeburger and the Vereinte groups by including building society and bank products in its range. - At the mh Bausparkasse AG, Munich, contracts were produced with a savings amount of DM 1,633.7 million, 23.3% higher than in the previous year. At the end of the year, the company had a portfolio of savings contracts totalling DM 6,668.8 million, an increase of 25.8%. The year's profit was DM 1.7 million (previous year, DM 1.5 million). - The balance-sheet amount of the Augsburger Aktienbank AG, Augsburg, grew by 40.1% to DM 488.1 million. The profit for the year rose by 42.9% to DM 5.0 million (previous year, DM 3.5 million).
The General Surety & Guarantee Company Limited, Wilmslow, which specializes in Surety business, managed to increase its gross premiums by £ 1.3 million to £ 4.7 mil­ lion. The overall result of £ 248,000 is once again distinctly above the previous year's figure. The dividend was there­ fore raised to £ 125,000 (previous year, £ 100,000).
(previous year, US$ 34.1 million). The company paid a divi­ dend of US$ 14.0 million (previous year, US$ 22.0 million, including a special dividend).
Overall turnover in the service sector amounted in 1988 to Sw. frs. 195 million. The results achieved by the companies operating in the fields of risk management and loss adjust­ ing in the short time that they have belonged to the Group meet expectations. Other companies, primarily in the in­ formation services sector, have not yet achieved their goals; the organizational measures implemented as a re­ sult will be pursued.
Gross premiums 5,156 5,034 10,190 8,671 Net premiums 5,159 4,373 9,532 8,174 Adjustment in unearned premiums 91 - 335 - 244 - 307 Earned premiums 5,250 4,038 9,288 7,867 Interest on Sickness insurance fund - 276 276 253 Commissions, profit commissions, expenses - 1,313 - 1,073 - 2,386 - 2,069 Claims incurred -4,121 - 3,233 - 7,354 - 6,273
Taxes Group company profit applicable to minority shareholders no * The underwriting result figures of reinsurance and insurance companies correspond to the net values In accordance with commercial law (Including mutual cessions).
" The figures in this column do not always amount to the total of the figures in the two preceding columns as figures for holdings and other companies are also included.
Current-account and bank balances 1,464 1,062 2,603 1,919 Cash deposits 206 166 372 356
Technical reserves Non-Life insurance 10,817 7,631 18,448 14,998 Life insurance 3,446 5,185 8,631 7,177
Building society deposits _ — 779 579 Transitory entries, value adjustments and other liabilities 1,343 573 2,016 1,513
Profit applicable to minority shareholders 24 25 8 Capital funds applicable to minority shareholders 1 176 191 53
in the year under report the scope of consolidation was ex­ tended to include five new companies. The majority hold­ ing in Lloyd Adriatico S.p.A., Trieste, acquired by SwissRe Holding Limited, Zurich, was consolidated for the nine months since the date of acquisition. Also new in the Group accounts are North American International Rein­ surance Company, Hamilton, a subsidiary company of SwissRe Holding (North America) Inc., New York, and Western Atlantic Reinsurance Corporation, New York, founded in the previous year by North American Reinsur­ ance Corporation, New York. Finally «Schweiz Allgemeine» Direkt Versicherung AG, Augsburg, and «Schweiz Allge­ meine» Finanz-Vertriebs-Service GmbH, Munich, the two new subsidiary companies of «Schweiz Allgemeine» Finanz Holding AG, Munich, are included.
Shares and non-consolidated holdings are valued accord­ ing to the same principles as fixed-interest securities. Nonquoted participations are entered at acquisition cost tak­ ing into consideration any necessary depreciation.
The technical reserves are calculated in principle accord­ ing to the provisions of the supervisory authorities appli­ cable to individual Group companies. However, in the case of the North American Reinsurance Corporation the re­ serves are included in the Group accounts at the amount calculated according to Generally Accepted Accounting Principles (GAAP).
In Non-Life insurance premiums rose by 17.5% to Sw.frs. 10,190 million (previous year, fall of 3.3%) and in Life insur­ ance by 21.2% (previous year, 3.9%) to Sw.frs. 2,136 mil­ lion.
The claims incurred comprise claims payments and the adjustment in the outstanding claims reserve. In the year under report this outgo item for own account rose by Sw.frs. 1,081 million to Sw.frs. 7,354 million. Of this amount, Sw.frs. 4,121 million was for reinsurance compa­ nies and Sw.frs. 3,233 million for insurance companies.
The income from the Group's capital investments rose by 16.2% (previous year, 3.0%) and (before the crediting of in­ terest in Life and Sickness business) reached a total of
The Consolidated balance-sheet values of capital invest­ ments (incl. non-consolidated holdings) increased overall by 21.1%, or Sw.frs. 4,979 million, to Sw.frs. 28,551 mil­ lion. This affected all investment categories, fixed-interest investments rising by 19.9% (previous year, 4.1%), shares by 11.3% (previous year, 1.9%) and real estate by 18.7% (previous year, 10.1 %). The Item "Non-consolidated hold­ ings" contains holdings of 50% or less in insurance and reinsurance companies as well as in service companies. This item also includes the Investment for the majority holding in the Union Reinsurance Company, Zurich, acquired in November 1988.
Non-Life Insurance Unearned premiums Outstanding claims reserve Reserve for profit commission shown, consolidation reserve fund and Group profit) cor­ respond to the book vaiue of the funds invested in the en­ tire Group by shareholders and non-voting shareholders of Swiss Re, Zurich. In the year under report Group capital funds rose by Sw.frs. 70 million to Sw.frs. 2,221 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 rose in the reporting year by Sw.frs. 138 million to Sw.frs. 191 million, appli­ cable profit by Sw.frs. 17 million to Sw.frs. 25 million. The steep increases are primarily due to inclusion of Lloyd
SwissRe Holding (North America) Inc. US $ 100 331,715 497,053 -
General Surety & Guarantee Co. Limited £ 100 2,090 10,471 4,705
Magdeburger Rechtsschützversicherung AG DM 100 8,260 71,664 41,394 mh Bausparkasse AG DM 60.1 24,917 1,101,123 -
Investment and other financial income Management and other expenses Rate fluctuations, depreciation, value adjustments Result from general Income and outgo Taxes Share of profit applicable to minority shareholders Group Profit
• Insurance business of the calendar year and general income and outgo for the period from 1.7.-31.12.79 . .. These figures are not comparable with those of the other years as a result of the change of the balance-sheet date from 30 June to 31 December of Swiss Re,
European General Reinsurance Company of Zurich Mythenquai 50/60, OH-8022 Zurich with a branch office in Madrid
Union Reinsurance Oompany Genferstrasse 27, OH-8027 Zurich with branch offices in Montreal and Sydney
South Africa/Zimbabwe Swiss-South African Reinsurance Company Limited Swiss Park, 10 Queens Road Parktown 2193, Johannesburg 2000 with branch offices in Durban, Cape Town and Pretoria and in Harare, Zimbabwe
Japan Swiss Reinsurance Company Representative Office Tokyo Sansfio Building 7 F, 2-9 Nitionbashi 3-cfiome, Chuo-ku, Tokyo 103
Magdeburger Versicherungsgruppe Kirchhorster Strasse 2 0-3000 Hanover 51 mh Bausparkasse AG Wotanstrasse 88 D-8000 Munich 19
SWITZERLAND Insurance Company UK Limited Three Quays, Tower Hill London EC3R 6DS
Spain SCHWEIZ Compahia Anönima Espahola de Seguros y Reaseguros Via Augusta 153-157 E-08021 Barcelona
Insurance Software and Systems, Inc. 120 Wtilte Plains Road Tarrytown, NY 10591 (USA)
PCL Computer Services Group Limited 47 High Street Rickmansworth, Herts WD3 1ES (UK)
IRM Group Contact address International Risk Management Group Ltd. Belvedere Bullding, Pitts Bay Road Hamilton HM CX, Bermuda
Thomas Howell Seife Group 6th Floor "A' Plantation House Fenchurch Street London EC3M 3BQ
Ceding company: The reinsurer's client, i.e. the -> insur­ er, who passes on (cedes) risks to the ^ reinsurer against payment of a ^ premium.
Claim: Payment for the loss incurred under the terms of a -> (re)insurance contract.
- Claims incurred: All claims payments plus the adjust­ ment in the outstanding claims reserve of a business year.
Insurance company: Enterprise which accepts ̂ risks in return for payment of a ^ premium.
- Reinsurer: Company which accepts a share of the in­ surer's ^ risks in return for payment of a ̂ premium.
Policyholder: The ^ insurer's contractual partner who receives cover in return for payment of a ^ premium.
- Net premium: Insurance premium after deduction of the ceded premium (-^ cession) or reinsurance pre­ mium after deduction of the retroceded premium (-> retrocession).
- Retrocession premium: Premium paid to the retro­ cessionaire for the part of the ^ risk accepted.
- Non-proportional reinsurance (also excess of loss reinsurance): Form of reinsurance in which the ̂ rein­ surer assumes that part of the insurer's losses that ex­ ceed a certain amount against payment of a specially calculated -> premium.
- Proportional reinsurance: Form of reinsurance in which the ̂ premiums and losses of the ̂ insurer are shared proportionally by the insurer and ̂ reinsurer.
- Risk management: Management tool for the compre­ hensive identification and assessment of risks based on knowledge and experience in the fields of natural sciences, technology, economics and statistics.
Surrender: In Life insurance payment to the insured of the cash value of an insurance policy before it has run its course.
Underwriting result: In the Non-Life sector: Total of -» earned premiums, less-> commissions,^ profit commis­ sions and -»claims incurred. In the Life sector: -> net pre­ miums, plus adjustment in policy reserves, less ̂ com­ missions, profit commissions and ^ claims incurred.
Non-Life Insurance: All classes of insurance business with the exception of -» Life.
- Aviation insurance: Insurance of accident and liability risks, as well as ̂ hull damage, in connection with the operation of aircraft.
- Credit insurance: Insurance against financial losses sustained through the failure for commercial reasons of policyholders' customers to pay for goods or services supplied to them.
- Disability insurance: -»Health insurance Life insur­ ance - Employers Liability insurance: Insurance by employ­ ers in respect of employees for injuries arising out of their employment.
- Engineering insurance: Insurance of construction and erection objects during the construction or erection period and the insurance of machinery in operating plants (incl. EDP installations).
- General Third Party Liability insurance: Insurance of industrial, commercial, employers, products, professi­ onal or private liability to third parties.
Life insurance: Insurance providing payment of a sum of money upon death of the insured or, in the case of endow­ ment insurance, upon survival of a specified period.