Balance as of 1 January 116 55 171 Change during the period –302 –68 –370 Amounts reclassified out of accumulated other comprehensive income 91 91
Cash and cash equivalents (including 20 in 2014 and 13 in 2015 subject to securities lending) 568 504 Accrued investment income 44 49 Premiums and other receivables 2 274 2 276 Reinsurance recoverable on unpaid claims 4 7 434 6 182 Funds held by ceding companies 388 20 Deferred acquisition costs 5 360 387
Liabilities Unpaid claims and claim adjustment expenses 4 11 721 10 619
Tax paid was USD 63 million and USD 155 million for the years ended 31 December 2014 and 2015, respectively.
Subsequent events Subsequent events for the current reporting period have been evaluated up to 28 April 2016. This is the date on which the financial statements are available to be issued.
Valuation techniques US government securities typically have quoted market prices in active markets and are categorised as level 1 instruments in the fair value hierarchy. Non-US government holdings are generally classified as level 2 instruments and are valued on the basis of the quotes provided by pricing services, which are subject to the Group’s pricing validation reviews and pricing vendor challenge process. Valuations provided by pricing vendors are generally based on the actual trade information as substantially all of the Group’s non-US government holdings are traded in transparent and liquid markets.
As of 31 December 2015, the Group had USD 48 million net operating tax loss carryforwards, expiring as follows: USD 7 million in 2019, USD 2 million in 2020, USD 9 million in 2021 and beyond, and USD 30 million never expire.
Report of the statutory auditor on the consolidated financial statements As statutory auditors, we have audited the accompanying consolidated financial statements of Swiss Re Corporate Solutions Ltd and its subsidiaries (the “Company”), which comprise the consolidated balance sheet as of 31 December 2015, and the related consolidated income statement, statement of comprehensive income, statement of shareholder’s equity, statement of cash flow and notes (pages 2 to 39) for the year ended 31 December 2015.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
While the risk management organisation is closely aligned to the business organisation in order to ensure effective risk oversight, all embedded teams and CROs remain part of the Group Risk Management function under the Group CRO. This ensures their independence as well as a consistent Group-wide approach to overseeing and controlling risks. The central risk management units support the CROs at Group, Business Unit and lower levels in discharging their oversight responsibilities. They do so by providing services such as: ̤ Financial risk management ̤ Specialised risk category expertise and accumulation control ̤ Risk modelling and analytics ̤ Regulatory relations management ̤ Maintaining the central risk governance framework
Claims paid and claim adjustment expenses gross –676 –994 Claims paid and claim adjustment expenses retroceded 45 –5 Claims paid and claim adjustment expenses net –631 –999 Change in unpaid claims gross –787 –437 Change in unpaid claims retroceded –2 14 Change in unpaid claims net –789 –423 Claims and claim adjustment expenses –1 420 –1 422 Change in equalisation provision –79 –44 Claims incurred –1 499 –1 466 Acquisition costs gross –615 –644 Acquisition costs retroceded – – Acquisition costs net –615 –644 Operating costs –194 –191 Acquisition and operating costs –809 –835 Other reinsurance expenses 0 0 Total expenses from reinsurance business –2 308 –2 301
Legal profit reserves – – Voluntary profit reserves – 16 Retained earnings brought forward 2 80 Net income for the financial year 288 178
Investment income Investments in subsidiaries and affiliated companies 3 – – 3
Allocation to other reserves 90 –90 – Reclassification of reserves –568 568 – Dividend for the financial year 2013 –265 –265 Extraordinary cash dividend –393 –393 Net income for the year 288 288
The Palantine Insurance Company Ltd United Kingdom London 100% 100% Swiss Re Specialty Insurance (UK) Ltd United Kingdom London 100% 100% Swiss Re International SE Luxembourg Luxembourg 100% 100%
Voluntary profit reserves after proposed allocation of legal reserves from capital contributions and cash dividend 16 16 1 The translation into CHF at spot rate on the settlement date may result in a lower reclassification of legal reserves from capital contributions to voluntary profit reserves and a lower cash dividend by a respective amount on the settlement date.
In order to comply with the Swiss Code of Obligations, dividends paid in foreign currencies must meet the capital protection requirements in CHF. In addition, maximum amounts in CHF must be approved by the Annual General Meeting. The Board of Directors proposes to set this maximum amount to CHF 280 million, which shall be funded by CHF 250 million from disposable profit and by maximum CHF 30 million from the legal reserves from capital contributions as in the tables below.
Insurance, operational and other risks As part of the Group’s ordinary course operations, the Group is subject to a variety of risks, including risks that reserves may not adequately cover future claims and benefits, risks that catastrophic events (including hurricanes, windstorms, floods, earthquakes, acts of terrorism, man-made disasters such as industrial accidents, explosions and fires) may expose the Group to unexpected large losses, competitive conditions, cyclicality of the industry, risks related to emerging claims and coverage issues, risks related to investments in emerging markets, and risks related to the failure of, or attacks directed at, the Group’s operational systems and infrastructure. In addition, the occurrence of future risks that the Group’s risk management procedures fail to identify or anticipate could have a material adverse effect on the Group. Any of the foregoing could also give rise to reputational risk.