shifting risk burdens The governments of many countries are constrained and the needs of their populations are growing. Individuals are taking on more of the responsibility for risk.
> A knowledge company So what does a 150-year old Swiss reinsurer know that can help a Colombian entrepreneur?
In September Swiss Re announced its contribution to a USD 200 million fund raised by leapfrog Investments, a specialist investor in emerging markets financial services, particularly insurance. leapfrog typically invests in companies that bring insurance and similar financial products to people who earn less than USD 10 a day. As part of Swiss Reʼs strategy to support the development of insurance in high growth markets, the new investment vehicle will take stakes in companies offering insurance and related products and services to low-income consumers in Africa, South Asia and Southeast Asia.
“Swiss Re Corporate Solutions is a true partner. They ask good questions. They challenge us to take a fresh look at what we’re doing. In my line of work, that’s invaluable.”
For swiss re corporate solutions, the storm enhanced our understanding of the risks to offshore wind — and thus strengthened our support for a sustainable energy future.
a source of competitive advantage for us. clients can see we’re as detail-oriented as they are.”
Humberto lives in the northern part of paraná, Brazil, where June rains bring much needed water to his crops. When the rains stay away, the results can be disastrous. two years ago an unprecedented drought in the region cost Humberto 60% of his soy bean harvest. “i could not believe it; that had never occurred,” he recalls.
Swiss Re opens new London headquarters. Designed by architect Norman Foster, the 41-storey building was one of the first ecological skyscrapers, setting the benchmark for a new generation of tall buildings. The iconic building is soon to be known as “the Gherkin”.
David Bloom Chair, Harvard university’s Department of Global Health and Population
yet a sense of vulnerability endured, along with a number of questions. Why was the region not better prepared? Did climate change play a role? and most importantly: what should be done to protect against such storms in the future?
protection, city infrastructure and the built environment. the plan laid out the need for investments of about UsD 20 billion, UsD 15 billion of which are already funded.
through this process, and through consultation with hundreds of stakeholders and experts, City authorities now have a credible, long-term plan to better protect its population against the impact of natural disasters.
Left: Residents of Bajo Lempa, the delta region of el Salvadorʼs Lempa River, receive training from the Swiss Red cross in emergency evacuation.
About the cover as part of our 150th anniversary celebrations, swiss Re led industry-wide dialogues and thoughtful discussions about the risks facing our communities today and for generations to come. the theme of the anniversary is “open minds connecting generations.”
together with clients, supported by a strict focus on risk selection and portfolio management, will remain a key value driver. We are determined to meet the challenge of low returns in Life & Health Reinsurance through management actions and generating profitable new business. Corporate Solutions is managing its costs and investing for growth, especially in high growth markets. Admin Re® continues to make progress to transform its operations and grow selectively in the UK.
Despite low policy rates, benchmark government bond yields rose significantly during the summer as markets began to anticipate a reduction in monthly asset purchases by the Fed. However, with ongoing political uncertainty and only modest employment growth, the Fed decided to delay its tapering actions. as a result, bond yields dropped, but increased again towards the end of the year, with
Market overview Global non-life reinsurance premiums in 2013 totalled about USD 190 billion, approximately 25% of which came from ceding companies in emerging markets. In general, reinsurance demand depends on the size and capital resources of primary insurance companies, as well as on the risk profile of the insurance products provided.
through insurance-linked securities and other form of collateralised reinsurance they complement the traditional capacity of re/insurance carriers in certain peak risk markets where margins are comparably high and entry barriers are low.
Demand for life and health insurance is projected to increase due to urbanisation, especially in emerging markets.
Outlook traditional life reinsurance is expected to stagnate in advanced economies over the next few years. cessions will continue to contract in the US and in Uk, but other advanced markets will have moderate growth in line with growth in the primary protection business. In emerging markets, life reinsurance is expected to grow by about 6%–7%. there continues to be considerable pressure on primary life insurers (including regulatory issues, the low interest rate environment and weak economic activity), which could generate further demand for capital solutions and other forms of non-traditional reinsurance.
the IaIS is developing a specific set of policy measures to be applied to G-SIIs. the main aspects of the policy measures consist of three pillars (see below).
Deferred acquisition costs and other intangible assets 7 062 8 293 17 liabilities and equity Unpaid claims and claim adjustment expenses 63 670 61 484 –3 Liabilities for life and health policy benefits 36 117 36 033 0
We continue to see growth opportunities in health and high growth markets, particularly in the focus countries china, India, Indonesia, Brazil and Mexico, as well as Sub-Saharan africa. We are continuing to build our footprint in these markets through a combination of organic growth and direct investment, and building expertise by hiring and developing local talent.
expense ratio the administrative expense ratio decreased to 10.1% in 2013, compared to 10.7% in 2012. the effect of higher absolute expenses due to strategic investments in high growth markets was more than offset by the increased premium volume year on year.
Management expense ratio in % 7.9 8.3 Operating margin in % 8.6 5.2 32 Swiss Re 2013 Financial Report
the Business Unit will continue to execute its strategy, focusing on underwriting excellence and sustained profitable growth.
In other specialty, the combined ratio improved to 95.3% in 2013 from 102.0% in 2012. the improvement of 6.7 percentage points was mainly driven by profitable growth in marine and engineering, as well as by favourable development in 2013, partly offset by various medium- to small-sized man-made losses.
Combined ratio the combined ratio improved by 1.1 percentage points to 95.1% in 2013 from 96.2% in 2012. the quality of the book remained consistently high year on year. Both years benefited from positive reserve development, although to a lesser extent in 2013. the expense ratio deteriorated by 1.7 percentage points to 34.5% in 2013 from 32.8% in 2012 as investment in long-term growth continues.
external dividends to shareholders Based on our strong capital position and retained earnings of uSd 30.8 billion for 2013, the Board of directors proposes a regular dividend of cHF 3.85 per share for 2013, up from the previous year’s dividend of cHF 3.50 per share. In addition, Swiss Re proposes to pay a special dividend of cHF 4.15 per share for 2013 (a special dividend of cHF 4.00 per share was paid for 2012). If approved, the combined 2013 dividends will represent a total return of capital to shareholders of approximately uSd 3.1 billion. our priority remains to achieve our financial targets while providing a sustainable, growing dividend.
liquidity risk management our core liquidity policy is to retain sufficient liquidity in the form of unencumbered liquid assets and cash to meet potential funding requirements arising from a range of possible stress events. to allow for regulatory restrictions on intra-group funding, liquidity is managed within groups of entities known as liquidity pools. Swiss Re is served by four main liquidity pools representing the parent companies of the Group and the three Business units: the Swiss Re Ltd liquidity pool, the Swiss Reinsurance company Ltd (SRZ) liquidity pool, the Swiss Re corporate Solutions Ltd liquidity pool, and the Swiss Re Life capital liquidity pool. each liquidity pool comprises the parent company and its unregulated subsidiaries whose funds are freely transferable to the parent company. the amount of liquidity held is largely determined by internal liquidity stress tests, which estimate the potential funding requirements stemming from extreme loss events. the funding requirements under stress include: ̤ cash and collateral outflows, as well as potential capital and funding support required by subsidiaries as a result of loss events; ̤ repayment or loss of all maturing unsecured debt and credit facilities; ̤ additional collateral requirements associated with a potential ratings downgrade; ̤ further contingent funding requirements related to asset downgrades; and
the primary liquidity stress test is based on a one-year time horizon, a loss event corresponding to 99% tail vaR (see pages 52–53), and a three-notch ratings downgrade.
the Group Risk Management function is comprised of central departments providing shared services (such as Risk Reporting), along with dedicated departments for the Reinsurance, corporate Solutions, and Admin Re® Business units.
Swiss Re’s life and health insurance risk arises from the business we take on when providing mortality (death), longevity (annuity), and morbidity (illness and disability) coverage through both the Reinsurance Business unit, and when acquiring run-off business through the Admin Re® Business unit. In addition to potential shock events, such as a severe pandemic, we monitor and manage underlying risks inherent in life and health contracts (such as pricing and reserving risks) that arise when mortality, morbidity, or lapse experience deviates from expectations. the investment risk that is part of some life and health business is monitored and managed as financial market risk.
Swiss Re distinguishes between three types of credit exposure: the risk of issuer default from instruments in which Swiss Re invests or trades, such as corporate bonds; counterparty exposure in a direct
In 2013, Swiss Re was, for the seventh consecutive year, awarded the “RobecoSAM Gold class distinction” for superior sustainability performance in the dow Jones Sustainability Index (dJSI).
̤ In line with the Group’s diversity efforts, Swiss Re is pleased that with the election of Mary Francis, the Board of directors currently has two female members.
changes in capital changes in 2013 the Annual General Meeting of shareholders 2013 approved that the limitation included in the provisions of the Articles of Association to issue registered shares from conditional capital, where the existing shareholders’ advance subscription rights on the equityLinked Financing Instruments were excluded, be extended to 10 April 2015 and the maximum number of shares under the same paragraph be set to 74 000 000 from 74 140 927 previously.
options Stock options granted to Swiss Re employees will be settled with treasury shares. the number of issued shares will not be affected.
For details on stock options granted to Swiss Re employees, see note 13 to the Group financial statements on pages 202–204.
** the members of the Board of directors were elected for a term of office which would have ended as follows: Mathis cabiallavetta, Renato Fassbind, Raymund Breu, Raymond K.F. ch’ien, Rajna Gibson Brandon, hans ulrich Maerki in 2014; Jakob Baer, John R. coomber and c. Robert henrikson in 2015; and walter B. Kielholz, Mary Francis, Malcolm d. Knight, carlos e. Represas and Jean-Pierre Roth in 2016. the “ordinance Against excessive compensation at Public corporations” entered into effect on 1 January 2014. It provides that the shareholders at the AGM must elect members of the Board of directors individually for one-year terms, beginning at the AGM 2014. the current terms of all members of the Board of directors therefore end at the AGM 2014.
external appointments ̤ Board member of credit Suisse Group AG ̤ chairman of the european Financial
̤ Member of the economic development commission of the Government of the hong Kong SAR
74 Swiss Re 2013 Financial Report coRpoRate goveRnance | BoARd oF dIRectoRS
Involvement of executive management in Board committee meetings As a matter of principle, selected members of the Group ec as well as further senior management members participate at Board committee meetings as advisers. the charters of the Board committees specify management participation at committee meetings. A detailed summary of executive management participation in Board committee meetings is provided on page 81.
Duty to inform on extraordinary events As soon as the Group ceo or the Group ec becomes aware of any significant extraordinary business development or event, it is obliged to inform the Board of directors immediately. the Board has specific reporting procedures in place for this eventuality.
GIA staff govern themselves by following the code of ethics issued by the Institute of Internal Auditors (IIA). the IIA’s International Standards for the Professional Practice of Internal Auditing constitute the operating guidance for the department.
Professional experience George Quinn started his career as an adviser and consultant to insurance and reinsurance companies with KPMG in London. he joined Swiss Re in 1999 as chief Accounting officer. Between 2003 and 2005, he served as chief Financial officer for the Financial Services business group, then was named Regional chief Financial officer for Swiss Re Americas in new York in 2005. he has been Group chief Financial officer and member of the Group executive committee since March 2007.
̤ Phd in natural Sciences, Swiss Federal Institute of technology (eth), Zurich, Switzerland thomas Wellauer (1955), Swiss Group chief operating officer
evaluation of the external auditor the Audit committee, which is responsible for recommending an audit firm to the Board of directors for election at the Annual General Meeting of shareholders, assesses the performance of the external auditor annually and presents its findings to the Board. this assessment is based on the external auditor’s qualifications, independence and performance.
In accordance with the Swiss code of obligations and to foster external auditor independence, the lead audit partner rotates out from his or her role after seven years.
one of the primary means of checking our progress in these areas is through the employee engagement survey, conducted every other year. In 2013, 74% of our employees took part. Results improved over the 2011 survey, and although no Group-wide actions were specified, there are many working groups or teams who analyse their division or department results to see where improvements can be made.
Report 2012 was subject to a consultative vote. at the annual General meeting on 10 april 2013, the Report was approved by 90% of shareholder votes (up from 81% in 2012).
̤ Reviews principles, policies and plans annually to ensure that they remain in line with Swiss Re’s objectives and strategy, shareholders' interests as well as legal and regulatory requirements
̤ 16% executive sessions ̤ 25% other topics decision on proposed Reviewed/endorsed approved total amount for apI payments Compensation Committee
̤ approval of individual compensation proposals for the Group eC and review of compensation proposals for the GmB February
impact of share price on payout no no no yes yes yes no
Group Ceo 50% of apI Group eC members 45% of apI GmB members 40% of apI all other employees 50% of the amount at or above uSd 100 000 up to a maximum of 40% of apI
Leadership performance plan purpose the lpp is a forward-looking instrument focusing on motivating select members of Swiss Re’s senior management to take decisions that are in the shareholders’ long-term interest and to achieve sustainable business performance. the intention of the lpp is to: ̤ focus participants’ energies on earnings, capital efficiency and our position against peers, all of which are critical to long-term shareholder value creation; ̤ attract and retain individuals of exceptional skill; and
the VaI 2009 performance factor resulted from favourable claims development in 2011 and 2012, and a positive investment result. however, compared to the VaI 2008 performance factor, the positive developments were lower.
aggregate compensation of the Swiss Re Group the aggregate compensation for the performance years 2012 and 2013 for all employees was as follows: as of 31 december 2013, Swiss Re Group employed 11 574 regular staff worldwide, compared to 11 193 employees at the end of 2012.
Compensation decisions for the Group Ceo michel m. Liès, Group Ceo since February 2012 additional information on compensation decisions all amounts reported are gross (that is, before any statutory social security or tax deductions). amounts reported under base salary and allowances include the base salary which is paid in cash, as well as benefits or allowances paid in cash.
3 Chairman of the Finance and Risk Committee since 13 april 2012, Chairman of the Investment Committee 4 elected to Vice Chairman as of 13 april 2012.
UsD millions 2012 2013 cash flows from operating activities net income attributable to common shareholders 4 201 4 444 add net income attributable to non-controlling interests 141 2 adjustments to reconcile net income to net cash provided/used by operating activities: Depreciation, amortisation and other non-cash items 3 888 4 013 net realised investment gains/losses –2 688 –3 324 change in: technical provisions, net –3 397 –4 062 Funds held by ceding companies and other reinsurance balances 46 –1 103 Reinsurance recoverable on unpaid claims and policy benefits 17 1 179 Other assets and liabilities, net 235 1 739 income taxes payable/recoverable 1 138 –162 income from equity-accounted investees, net of dividends received –380 –152 trading positions, net –543 –263 securities purchased/sold under agreement to resell/repurchase, net 1 845 –28
the cost of equity securities afs is reduced to fair value, with a corresponding charge to realised investment losses if the decline in value, expressed in functional currency terms, is other-than-temporary. subsequent recoveries of previously recognised impairments are not recognised in earnings.
liabilities for life and health policy benefits liabilities for life and health policy benefits from reinsurance business are generally calculated using the net level premium method, based on assumptions as to investment yields, mortality, withdrawals, lapses and policyholder dividends. assumptions are set at the time the contract is issued or, in the case of contracts acquired by purchase, at the purchase date. the assumptions are based on projections from past experience, making allowance for possible adverse deviation. interest assumptions for life and health (re)insurance benefits liabilities range from 0.2% to 12.6%. assumed mortality rates are generally based on experience multiples applied to the actuarial select and ultimate tables based on industry experience.
liabilities for life and health policy benefits are increased with a charge to earnings if it is determined that future cash flows, including investment income, are insufficient to cover future benefits and expenses. Where assets backing liabilities for policy benefits are held as afs these liabilities for policyholder benefits are increased by a shadow adjustment, with a charge to other comprehensive income, where future cash flows at market rates are insufficient to cover future benefits and expenses.
funds withheld assets are assets that would normally be paid to the Group but are withheld by the cedent to reduce a potential credit risk or to retain control over investments. in case of funds withheld liabilities, it is the Group that withholds assets related to ceded business in order to reduce its credit risk or retain control over the investments.
as of 31 December 2012 and 2013, securities of usD 12 994 million and usD 16 215 million, respectively, were pledged as collateral in securities lending transactions and repurchase agreements. the associated liabilities of usD 2 612 million and usD 1 991 million, respectively, were recognised in accrued expenses and other liabilities.
Values of residential mortgage-backed securities (rmBs), commercial mortgage-backed securities (cmBs) and other asset-backed securities (other aBs) are obtained both from third-party pricing vendors and through quoted prices, some of which may be based on the prices of comparable securities with similar structural and collateral features. Values of certain aBs for which there are no significant observable inputs are developed using benchmarks to similar transactions or indices. for both rmBs and cmBs, cash flows are derived based on the transaction-specific information, which incorporates priority in the capital structure, and are generally adjusted to reflect benchmark yields, market prepayment data, collateral performance (default rates and loss severity) for specific vintage and geography, credit enhancements, and ratings. for certain rmBs and cmBs with low levels of market liquidity, judgments may be required to determine comparable securities based on the loan type and deal-specific performance. cmBs terms may also incorporate lock-out periods that restrict borrowers from prepaying the loans or provide disincentives to prepay and therefore reduce prepayment risk of these securities, compared to rmBs. the factors specifically considered in valuation of cmBs include borrower-specific statistics in a specific region, such as debt service coverage and loan-to-value ratios, as well as the type of commercial property.
the Group’s otc foreign exchange derivatives primarily include forward, spot and option contracts and are generally valued based on the cash flow discounting models, utilising as main inputs observable foreign exchange forward curves.
Debt securities issued by us government and government agencies 13 474 752 14 226 us agency securitised products 4 178 4 178 Debt securities issued by non-us governments and government agencies 39 608 39 608 residential mortgage-backed securities 990 990 other asset-backed securities 2 800 2 800 fixed income securities backing unit-linked and with-profit life and health policies 4 630 4 630 equity securities backing unit-linked and with-profit life and health policies 18 607 10 18 617 equity securities held for proprietary investment purposes 3 174 526 74 3 774 foreign exchange contracts 26 415 441 total assets at fair value 36 264 87 871 3 880 –5 645 122 370 liabilities interest rate contracts –205 –3 972 –4 177 foreign exchange contracts –12 –792 –804 Derivative equity contracts –43 –380 –232 –655 credit contracts –412 –271 –683 other contracts –14 –18 –2 362 –2 394 liabilities for life and health policy benefits –272 –272 accrued expenses and other liabilities –885 –2 556 –3 441 total liabilities at fair value –1 159 –8 130 –3 137 4 990 –7 436 1 the netting of derivative receivables and derivative payables is permitted when a legally enforceable master netting agreement exists between two counterparties. a master netting agreement provides for the net settlement of all contracts, as well as cash collateral, through a single payment, in a single currency, in the event of default or on the termination of any one contract.
assets and liabilities not measured at fair value but for which the fair value is disclosed assets and liabilities not measured at fair value but for which the fair value is disclosed as of 31 December, were as follows: policy loans, other loans and certain mortgage loans are classified as level 3 measurements, as they do not have an active exit market. the majority of these positions need to be assessed in conjunction with the corresponding insurance business. considering these circumstances, the Group presents the carrying amount as an approximation for the fair value.
the total fair value of derivative financial instruments containing credit risk-related contingent features amounted to usD 1 446 million and usD 855 million as of 31 December 2012 and 2013, respectively. for derivative financial instruments containing credit risk-related contingent features, the Group posted collateral of usD 524 million and usD 303 million as of 31 December 2012 and 2013, respectively. in the event of a reduction of the Group’s credit rating to below investment grade, a fair value of usD 552 million additional collateral would have had to be posted as of 31 December 2013. the total equals the amount needed to settle the instruments immediately as of 31 December 2012 and 2013, respectively.
the maximum potential payout is based on notional values of the credit derivatives. the Group enters into total return swaps mainly with variable interest entities which issue insurance-linked and credit-linked securities.
as of 31 December, the fair values and maximum potential payout of the written credit derivatives outstanding were as follows: total fair values of credit derivatives written/sold maximum potential payout (time to maturity)
maturity Instrument Issued in Currency Nominal in millions Interest rate first call in Book value in USD millions 2024 Subordinated contingent write-off loan notes 2013 USD 750 6.38% 2019 831 2042 Subordinated fixed-to-floating rate loan note 2012 eUR 500 6.63% 2022 679 2045 Subordinated contingent write-off securities 2013 ChF 175 7.50% 2020 234
Interest and penalties related to unrecognised tax benefits are recorded in income tax expense. Such expense for the period ending 31 December 2013 was USD 128 million (USD 56 million for the period ending 31 December 2012). As of 31 December 2012 and 31 December 2013, USD 266 million and USD 138 million, respectively, were accrued for the payment of interest (net of tax benefits) and penalties. The accrued interest balance as of 31 December 2013 is included within the deferred and other non-current taxes section reflected above and in the balance sheet.
Residential mortgage-backed securities 49 49 Commercial mortgage-backed securities 5 5 other asset-backed securities 5 5
Derivative financial instruments 3 3 total assets at fair value 919 3 429 697 5 045
Residential mortgage-backed securities 21 21 Commercial mortgage-backed securities 1 1 other asset-backed securities 5 5
The fair value assumptions included in the grant valuation are based on market estimates for dividends (and an additional special dividend of CHF 4.00 for the lPP 2013) and the risk free rate based on the average of the 5-year US government rate taken monthly over each annual period in the performance period. This resulted in risk free rates between 1.0% and 2.3% for lPP 2012 and lPP 2013.
Forfeitures –54 710 Vested1 –961 350 Outstanding as of 31 December 0 873 795 1 Refers to the number of units before the application of the payout factor lPP 2012 lPP 2013 RSU PSU RSU PSU
Unrecognised compensation costs As of 31 December 2013, the total unrecognised compensation cost (net of forfeitures) related to non-vested, share-based compensation awards was USD 56 million and the weighted average period over which that cost is expected to be recognised is 1.8 years.
Investments for unit-linked and with-profit business 842 24 659 25 501
Management expense ratio in % 8.6 6.6 7.9 1 operating margin is calculated as operating income divided by total operating revenues. Total operating revenues are total revenues excluding unit-linked and with-profit revenues.
d) net premiums earned and fee income from policyholders by geography Net premiums earned and fee income from policyholders by regions for the years ended 31 December
Bermuda CoRe Reinsurance Company Limited, hamilton 0 0 100 f Group Ark Insurance holdings Limited, hamilton 235 209 14 fv Swiss Re Global Markets Limited, hamilton 0 0 100 f Swiss Re Capital Management (Bermuda) Ltd., hamilton 0 0 100 f Swiss Re Investments (Bermuda) Ltd., hamilton 0 0 100 f
accrued income Accrued income includes other expenditures incurred during the financial year but relating to a subsequent financial year, and revenues relating to the current financial year but which are receivable in a subsequent financial year.
loans to subsidiaries and affiliated companies Loans to subsidiaries and affiliated companies are carried at nominal value. Value adjustments are recorded where the expected recovery value is lower than the nominal value.
As of 31 december 2013, Swiss Re Ltd had the following conditional capital and authorised capital: conditional capital for equity-linked Financing instruments the share capital of the Company shall be increased by an amount not exceeding CHF 5 000 000 through the issuance of a maximum of 50 000 000 registered shares, payable in full, each with a nominal value of CHF 0.10, through the voluntary or mandatory exercise of conversion and/or option rights granted in connection with bonds or similar instruments including loans or other financial instruments by the Company or Group companies (hereinafter collectively the “equity-Linked Financing instruments”). existing shareholders’ subscription rights are excluded.
2 Allowances consist of housing, schooling, lump sum expenses, child and similar allowances. 3 For 2012, notional loan interest of CHF 8 265 for one Group eC member was not included. For 2013, the notional loan interest is included. 4 For 2012, does not include sign-on bonuses in the amount of CHF 1.4 million as payments were made prior to joining the Group eC. 5 A post-award adjustment was made in 2013 in respect of one employee for the 2012 performance year. this incremental amount of CHF 220 000 related to duties prior to joining the Group eC which is not included in the table above.
during 2013, payments in the total amount of CHF 1.1 million were made to seven former members of the Group eC. this amount includes a pro-rata base salary payment, company contributions to social security and pension systems paid by Swiss Re in line with applicable laws, benefits in the context of the outstanding mortgages and loans not at market rates, risk benefits as well as company commitments for tax related services.
the following unvested restricted shares were held by members of the Group eC as of 31 december: the remaining restricted share units granted to Moses Ojeisekhoba, CeO Reinsurance Asia, vest in 2014. For the years ended 31 december 2012 and 2013, the members of the Board of directors did not hold any restricted shares.
applies to derivative products. difference in the value of two options, when the value of the one sold exceeds the value of the one bought.
Some of the terms included in the glossary are explained in more detail in note 1 to the Group financial statements.
as claims paying and financial strength ratings are key factors in establishing the competitive position of reinsurers, a decline in ratings alone could make reinsurance provided by the Group less attractive to clients relative to reinsurance from competitors with similar or stronger ratings. a decline in ratings could also cause the loss of clients who are required by either policy or regulation to purchase reinsurance only from reinsurers with certain ratings. a decline in ratings could also impact the availability and terms of unsecured financing and obligate the Group to provide collateral or other guarantees in the course of its reinsurance business or trigger early termination of funding arrangements. any rating downgrades could also have a material adverse impact on the Group’s costs of borrowing and limit its access to the capital markets. Further negative ratings action could also impact reinsurance contracts.
title: 2013 Financial Report design: addison corporate Marketing, london Swiss Re corporate Real Estate & logistics/ Media Production, Zurich