Note 10 Debt 32 Note 11 Income taxes 33 Note 12 Related parties 36 Note 13 Subsidiaries 37 Note 14 Risk assessment 38
Balance as of period end 98 103 201 2014 USD millions
Adjustments to reconcile net income to net cash provided/used by operating activities: Depreciation, amortisation and other non-cash items 74 70 Net realised investment gains/losses –63 –158 Change in: Technical provisions and other reinsurance assets and liabilities, net –404 80 Funds held by ceding companies and under reinsurance treaties –136 –111 Reinsurance recoverable on unpaid claims and policy benefits 1 003 787 Other assets and liabilities, net –103 –24 Income taxes payable/recoverable 28 129 Trading positions, net 5 100 Securities purchased/sold under agreement to resell/repurchase, net –111 112
Qualifying purchased intangible assets, including agent relationship intangibles and goodwill, have been established.
Investments available-for-sale Amortised cost or cost and estimated fair values of fixed income securities classified as available-for-sale as of 31 December were as follows: 2013 USD millions
Maturity of fixed income securities available-for-sale The amortised cost or cost and estimated fair values of investments in fixed income securities available-for-sale by remaining maturity are shown below. Fixed maturity investments are assumed not to be called for redemption prior to the stated maturity date. As of 31 December 2013 and 2014, USD 1 211 million and USD 1 376 million, respectively, of fixed income securities available-for-sale were callable.
Assets Fixed income securities held for proprietary investment purposes 1 273 3 238 40 4 551
Equity securities held for proprietary investment purposes 966 966 Other invested assets 21 21 Total assets at fair value 2 239 3 238 61 5 538 2014 USD millions
The Group’s debt as of 31 December was as follows: Interest expense on long-term debt Interest expense on long-term debt for the year ended 31 December was as follows: Long-term debt issued in 2014 In September 2014, Swiss Re Corporate Solutions Ltd issued a 30-year subordinated fixed rate resettable callable loan note with a first optional redemption date on 11 September 2024 and a scheduled maturity in 2044. The note has a face value of USD 500 million, with a fixed coupon of 4.5% per annum until the first optional redemption date.
Income tax at the Swiss statutory tax rate of 20.5% (2013 - 21.0%) 81 121 Increase (decrease) in the income tax charge resulting from: Foreign income taxed at different rates 27 42 Impact of foreign exchange movement –3 23 Tax exempt income/dividends received deduction –6 –12 Other income based taxes 5 10 Other, net –7 11
As of 31 December 2014, the Group had USD 50 million net operating tax loss carryforwards, expiring as follows: USD 2 million in 2019, USD 17 million in 2020 and beyond, and USD 31 million never expire.
United States First Specialty Insurance Corporation, Jefferson City USD 5 100 f North American Capacity Insurance Company, Manchester USD 4 100 f North American Elite Insurance Company, Manchester USD 4 100 f North American Specialty Insurance Company, Manchester USD 5 100 f SR Corporate Solutions America Holding Corporation, Wilmington USD 0 100 f Swiss Re Corporate Solutions Global Markets Inc., New York USD 0 100 f Washington International Insurance Company, Manchester USD 4 100 f Westport Insurance Corporation, Jefferson City USD 6 100 f
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, 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, we consider internal control 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, 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.
Liabilities Total liabilities increased by 76% to CHF 4 890 million as of 31 December 2014, compared to 31 December 2013. At constant foreign exchange rates the growth was 61%.
Premiums written relating to future periods are recorded as unearned premiums and are earned based on an individual treaty basis over the underlying risk period. The accrual of commissions is determined proportionally and is reported under “Deferred acquisition costs”.
As such the effective ordinary cash dividend, translated into CHF at spot rate on the settlement date, must not exceed CHF 210 million. In the below tables the threshold of CHF 210 million is presented and reflect the maximum amount in CHF to be paid out. The effective CHF amount, translated at spot rate on the settlement date, will not exceed the below stated figures in CHF.
The Group may not be able to secure new sources of liquidity or funding, should projected or actual liquidity fall below levels it requires. The ability to meet liquidity needs through asset sales may be constrained by market conditions and the related stress on valuations, and through third-party funding may be limited by constraints on the general availability of credit and willingness of lenders to lend. In addition, the Group’s ability to meet liquidity needs may also be constrained by regulatory requirements that require regulated entities to maintain or increase regulatory capital, or that restrict intra-group transactions, the timing of dividend payments from subsidiaries or the fact that certain assets may be encumbered or otherwise non-tradable. Failure to meet covenants in lending arrangements could give rise to collateral posting or defaults, and further constrain access to liquidity. Finally, any adverse ratings action could trigger a need for further liquidity (for example, by triggering termination provisions or collateral delivery requirements in contracts to which the Group is a party) at a time when the Group’s ability to obtain liquidity from external sources is limited by such ratings action.