Deutsche Rückversicherung Switzerland Ltd

Transcription

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3 Deutsche Rückversicherung Switzerland Ltd REPORT ON THE 13 TH FINANCIAL YEAR The invaluable alternative. Based in Zurich, Deutsche Rückversicherung Switzerland Ltd (DR Swiss) is a legally independent company within the Deutsche Rück Group. Deutsche Rückversicherung AG in Düsseldorf is the main shareholder in DR Swiss, with a holding of 75 %, the remaining 25 % being held by VHV Holding AG in Hanover. An invaluable alternative on the market, DR Swiss offers its client partners stable and lasting reinsurance cover. With madeto- measure solutions and a high level of flexibility, DR Swiss meets clients specific needs through its experienced, highly expert team and its profound, long-standing knowledge of the market.

4 DR Swiss Key Figures in CHF thousand Change in % Gross premiums written 283, , Premiums earned for own account 284, , Net investment income 25,751 31, Administrative expenses 5,014 4, Result after tax 7,447 7, Financial investments incl. cash deposits 853, , Technical provisions for own account 522, , Shareholders equity incl. mezzanine capital 224, , Loss ratio in % of net premiums earned Expense ratio in % of net premiums earned Number of employees 15 14

5 Contents I DR Swiss 3 Contents 4 Foreword by the Chairman of the Board of Directors and the Managing Director 7 Our Philosophy 8 DR Swiss Organisation 9 Multi-Year Financial Summary 14 Balance Sheet as of 31 December Income Statement for the Period 1 January to 31 December Cash Flow Statement 19 Notes to the Financial Statements 21 Proposal for the Appropriation of Profit 22 Report of the Statutory Auditor

6 4 DR Swiss I Foreword by the Chairman of the Board of Directors and the Managing Director Foreword by the Chairman of the Board of Directors and the Managing Director Dear Shareholders, Dear Business Partners, In the year under review, natural hazard events in Northern and Central Europe dominated the European insurance market. In an environment impacted by natural catastrophe losses, DR Swiss can nevertheless look back on a stable financial year with a solid net profit of CHF 7.4 million. Gross premiums rose 5.1 % to CHF million in 2013, as compared to CHF million in the previous year. Germany accounted for the largest share of premiums, followed by Austria and Switzerland. Claims expenditure totalled CHF million in both gross and net terms. This amounts to a rise of 7.2 % over the previous year. The corresponding increase in the claims ratio of 76.7 % of premiums earned for own account (previous year 75.4 %) is due to an above-average burden from loss events caused by natural hazards. Commissions and profit shares totalled CHF 74.9 million in both gross and net terms. External costs consequently declined by 6.0 % over the previous year. As a result, the expense ratio dropped to 26.3 % (previous year 29.5 %). This was due to a smaller increase in provisions for profit commissions than in the previous year. The technical loss came to CHF 8.4 million net or 2.9 % of the premiums earned for own account, as compared to a technical loss of CHF 13.1 million net or 4.8 % in the previous year. Technical provisions as at 31 December 2013 totalled CHF million (previous year CHF million). This corresponds to a slight drop of 0.9 %, while the premiums earned for own account simultaneously increased by 5.4 %. Dr Arno Junke

7 Foreword by the Chairman of the Board of Directors and the Managing Director I DR Swiss 5 We continue to practise a conservative reserving policy as reflected in our combined ratio of %. Our administration expense ratio remained low, at 1.8 %. In the year 2013, statements by the heads of leading central banks had a major impact on the development of both interest rates and stock markets. The Fed s announcement in May that it would stop buying government bonds led to a massive correction in the markets. However, interest rates at the short end will still remain low for a longer period and this permitted a sharp rise in stock prices during the year. The reduction in bonds purchased by the Fed resulted in ever steeper yield curves. The price of gold, once a symbol of security, dropped substantially as the world economic outlook brightened in general. The trend towards high-risk securities with correspondingly higher yield continued undiminished in 2013, too. The total investment portfolio increased slightly by 1.3 % to CHF million, primarily due to the euro s rise against the Swiss Franc. Our equity share rose from 4.2 % to 5.6 % of total investments as a result of purchases and the pleasing performance. Adjustments in the price of precious metals caused our expos ure here to drop by almost 16 %. The portfolio of indirect real estate remained almost unchanged. The asset class Infrastructure Energy Funds was added to the portfolio. At year-end, this portfolio totalled CHF 10.5 million. As the interest level remained low, current income slipped 4 % in the 2013 financial year, totalling CHF 24.3 million as compared to CHF 25.4 million in the previous year. Income from financial investments amounted to CHF 25.8 million, a decline of 18.9 % or CHF 6.0 million. Frank Schaar

8 6 DR Swiss I Foreword by the Chairman of the Board of Directors and the Managing Director This investment performance allows us to report a positive overall result despite the negative technical result, distribute an adequate dividend and service our mezzanine capital. DR Swiss was once again given an A+ rating from Standard & Poor s, which allows us to offer our clients the assurance of a robust and financially sound partner. Outlook for 2014 The 1 January 2014 renewals saw a continuing trend towards higher retentions among our clients. Major European insurance groups have increasingly concentrated on intra-group processes when purchasing reinsurance covers. As the volume of business recedes, surplus capacities continue to prevail on the supply market. This circumstance caused numerous price cuts and we therefore expect a drop in premiums in the 2014 treaty year. Where investments are concerned, we expect a fairly volatile stock year. As interest rates are expected to rise slightly, the duration of obligations will be kept short. We will continue our policy of diversification in bonds, depending on their rating. Thanks We would like to thank all our employees, whose dedication and great competence have once again contributed to this pleasing overall performance by DR Swiss. We would also like to express special thanks to our clients for the trust they have placed in us in the increasingly demanding reinsurance environment, and to our shareholders for their support and confidence. Dr Arno Junke Chairman of the Board of Directors Frank Schaar Managing Director and Delegate of the Board of Directors

9 our philosophy I DR Swiss 7 Our Philosophy Continuity reliable and long-lasting partnership approach close cooperation leading to a sustainable success for both parties Competence credible team with high technical expertise and many years of professional experience profound market knowledge Consistency reinsurance arrangements according to specific customer needs strong financial security (A+ rating from Standard & Poor s; stable group of shareholders) Client Focus tailor-made solutions with great flexibility excellent administration and prompt claims payment direct negotiations with the authorised managers

10 8 DR Swiss I DR Swiss Organisation DR Swiss Organisation Board of Directors Rating Dr Arno Junke, Chairman Frank Schaar, Delegate of the Board of Directors Peter Hafner Peter Rainer Friedrich Schubring-Giese Hugo Singer Dr Ulrich Thalmann Dr Frank Walthes Ulrich-Bernd Wolff von der Sahl A+, Standard & Poor s Executive Management Frank Schaar Managing Director and Delegate of the Board of Directors Senior Management Shareholders 75 % Deutsche Rückversicherung AG, Düsseldorf 25 % VHV Holding AG, Hanover Statutory Auditor Andreas Aemisegger Pietro Lodigiani Heinz Lussi Peter Lusti Urs Meier Dr Markus Petermann Juan Serra PricewaterhouseCoopers AG, Zurich

11 Multi-year Financial Summary I DR Swiss 9 Multi-Year Financial Summary Premiums in CHF million 700 Gross premiums Premiums earned Technical provisions in CHF million Technical provisions Combined ratio (on earned premiums) in % Combined ratio

12 10 DR Swiss I Multi-year Financial Summary Financial investments including cash deposits in CHF million 1, Financial investments Asset allocation as of 31 December 2013 in % Asset allocation 83.7 % Fixed income securities 6.3 % Cash and cash equivalents 5.1 % Equity funds 2.7 % Real estate funds 1.2 % Infrastructure energy funds 0.8 % Commodities funds

13 Multi-year Financial Summary I DR Swiss 11 Income after tax in CHF million Income after tax Shareholders equity including mezzanine capital in CHF million Shareholders equity

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15 Annual Accounts 14 Balance Sheet as of 31 December Income Statement for the Period 1 January to 31 December Cash Flow Statement 19 Notes to the Financial Statement 21 Proposal for the Appropriation of Profit 22 Report of the Statutory Auditor

16 14 DR Swiss I Balance Sheet as of 31 December 2013 Balance Sheet as of 31 December 2013 Assets in CHF thousand Fixed assets Investments Fixed income securities 714, ,617 Real estate funds 23,374 23,013 Equity funds 44,673 33,218 Commodities funds 6,735 7,995 Infrastructure energy funds 10,495 Total investments 800, ,843 Other assets Other assets Intangible assets Total other assets Total fixed assets 800, ,229 Current assets Cash and cash equivalents 53,764 13,967 Receivables from shareholders 214 Reinsurance receivables 6, Deposits from reinsurance assumed 29,808 27,643 Other receivables Accrued income and prepaid expenses 11,012 11,951 Total current assets 101,168 54,617 Total assets 901, ,846

17 Balance Sheet as of 31 December 2013 I DR Swiss 15 Liabilities and shareholders equity in CHF thousand Liabilities Technical provisions Reserves for unearned premiums for own account 4,383 5,246 Reserves for outstanding claims for own account 444, ,505 Provisions for profit commissions 73,598 68,396 Total technical provisions 522, ,147 Fluctuation reserves for financial investments 9,250 9,250 Provisions for currency fluctuations Accounts payable Payables to shareholders 15,037 10,743 Payables to insurance and reinsurance companies 127,196 73,556 Other short-term liabilities 1, Total accounts payable 144,009 84,473 Mezzanine capital 42,966 42,252 Accrued expenses and deferred income 1,403 1,357 Total liabilities 720, ,229 Shareholders equity Share capital 150, ,000 Legal reserves on appropriation of profits 12,931 11,331 Legal reserves on contribution of capital 9,177 9,177 Free reserves 1,223 1,223 Profit carried forward from previous year Net income for the year 7,447 7,733 Profit available for distribution 7,733 7,886 Total shareholders equity 181, ,617 Total liabilities and shareholders equity 901, ,846

18 16 DR Swiss I Income Statement Income Statement for the period 1 January to 31 December 2013 Premiums earned for own account in CHF thousand Premiums earned for own account Gross premiums written 283, ,209 Reinsurance premiums ceded Change in gross unearned premiums 951 Total premiums earned for own account 284, ,174 Claims incurred for own account Gross claims paid 234, ,141 Reinsurers share Change in technical provisions 16,320 30,532 Total claims incurred for own account 218, ,609 Insurance operating expense for own account Commissions and profit-sharing 74,864 79,624 Reinsurers share Total insurance operating expense for own account 74,864 79,624 Underwriting result 8,400 13,059

19 Income Statement I DR Swiss 17 Non-technical account in CHF thousand Underwriting result (carried forward) 8,400 13,059 Investment income Current income 24,258 25,355 Price gains on investments 16,426 16,223 Increased valuation Total income from investments 41,429 42,374 Expenditure on investments Investment administration Price losses on investments 14,786 8,801 Decreased valuation Fluctuation reserves for financial investments 750 Total expenses for investments 15,678 10,617 Income from financial investments 25,751 31,757 Other income and expenses Income from revaluation of foreign currencies 317 1,450 Mezzanine capital financing costs 2,222 2,168 Operating expenses 5,014 4,881 Amortisation of tangible assets Profit from other income and expenses 7,692 8,669 Profit from non-technical account 18,059 23,088 Profit for the year before taxes 9,659 10,029 Taxes 2,212 2,296 Profit for the year 7,447 7,733

20 18 DR Swiss I Cash Flow Statement Cash Flow Statement Cash Flow Statement in CHF thousand Cash flow from operating activities Annual surplus 7,447 7,733 Change in reserves for unearned premiums 951 Change in outstanding claims reserves 16,320 30,532 Change in provisions for profit commissions 4,549 11,618 Change in fluctuation reserves for financial investments 750 Realised profit / loss on sale of investments 402 1,449 Amortisation Change in funds held with reinsured companies /reinsurance liabilities 1,767 16,993 Change in other assets and liabilities 53,851 25,087 Other non-cash expenses and income 881 4,822 Total cash flow from operating activities 45,665 8,438 Cash flow from investing activities (net change) Fixed income securities 19,975 18,542 Real estate funds Equity funds 6, Commodities funds 1,124 1,804 Infrastructure energy funds 11,191 In- / decrease of tangible and intangible assets Total cash flow from investing activities ,261 Cash flow from financing activities Payment of dividends 6,000 6,000 Total cash flow from financing activities 6,000 6,000 Total cash inflow / outflow 39,797 30,699 Cash and cash equivalents at start of period 13,967 44,666 Cash and cash equivalents at end of period 53,764 13,967 Inflow / outflow 39,797 30,699

21 notes I DR Swiss 19 Notes to the Financial Statements Principles underlying the annual financial statements General These annual financial statements have been prepared in accordance with the transitional rules of the new accounting law and the provisions of the Swiss Code of Obligations on reporting and accounting which applied until 31 December The accounting requires estimates and assessments by the Board of Directors which could affect the value of the reported assets and liabilities, as well as contingent liabilities at the time of preparing the accounts, but which may also have an effect on expenses and earnings for the reporting period. The Board of Directors is free to decide at its discretion the extent to which statutory freedoms will be used for accounting and valuation purposes. Within the scope permitted by the principle of caution, amortisation, value adjustments and provisions may be formed above and beyond the extent required for financial and accounting purposes, if this serves the well-being of the company. Accounting and valuation principles All funds (bonds, indirect real estate, stocks, raw materials and infrastructure energy) are valued at market value on the balance sheet date. Direct bond investments are valued at acquisition cost on the balance sheet date, using the effective interest method. Intangible and tangible assets are valued at purchase cost less scheduled amortisation. Receivables are recognised in the balance sheet at their nominal amount. If necessary, the risk of payment default is accounted for by means of specific value adjustments. Original unearned premiums and original reserves for outstanding claims are recognised in the balance sheet in accordance with the disclosures of the ceding companies. Actuarial estimates are made for the statements of account not yet received from ceding companies as at the balance sheet date. Liabilities are included in the balance sheet at their settlement value Foreign currency positions in the annual accounts are translated at the exchange rate on the balance sheet date. Transactions of the non-technical accounts are translated at current rates; transactions of the technical accounts are translated at annual average rates. Unrealised gains and losses on foreign exchange are recognised in income. A possible surplus will be deferred. The relevant exchange rates on the balance sheet date are shown below. Exchange rates on the balance sheet date 31 Dec Dec EUR / CHF USD / CHF GBP / CHF

22 20 DR Swiss I notes Information, breakdown and notes to items in the balance sheet and income statement Operating expenses in CHF million 31 Dec Dec., 2012 Personnel expenses 3,784 3,745 Material expenses 1,230 1,136 Total operating expenses 5,014 4,881 Changes in the balance sheet layout The breakdown of investments has been changed in relation to the previous year. The commodities funds are now shown separately and the item Infrastructure energy funds is reported for the first time. Investments * in CHF million 31 Dec Dec., 2012 Fixed income securities 714, ,617 Real estate funds 23,374 23,013 Equity funds 44,673 33,218 Commodities funds 6,735 7,995 Infrastructure energy funds 10,495 Total Investments 800, ,843 * The breakdown of investments has been brought into line with the new layout to ensure comparability. Estimates of technical account items with an effect on liquidity Technical account items with an effect on liquidity are shown on the basis of the amounts disclosed in statements of account from ceding companies as well as estimates. The estimated figures are net values. In other words, the opening values as at 1 January 2013 are set off against the closing values as at 31 December These estimates affected the income statement items in the 2013 financial year as follows: Position in CHF million Disclosed Estimated Total recognised Premium payments 273,889 9, ,878 Claims payments 170,335 64, ,686 Commissions / profit shares 67,079 3,236 70,315 Change in provisions for profit commissions 4,549 4,549 Commissions and profit shares 67,079 7,785 74,864 Long-term liabilities to shareholders The long-term liabilities to shareholders from mezzanine equity amount to CHF million. Security for commitments A rent deposit in the amount of CHF 190,905 was lodged with our bankers as security for our rental commitments for business premises. Fire insurance values The fire insurance value of office and business equipment totalled CHF million as at 31 December 2013 (previous year CHF million).

23 Proposal for the Appropriation of Profit I DR Swiss 21 Proposal for the Appropriation of Profit The following net result for the year is available at the General Meeting on 27 March 2014 in Zurich: Proposal for the appropriation of profit as at 31 December 2013 in CHF thousand Profit carried forward from previous year Net income for the year 7,447 7,733 Disposable profit 7,733 7,886 The Board of Directors proposes to the General Meeting that the disposable profit be distributed as follows: Dividends 6,000 6,000 Allocation to legal reserves 1,500 1,600 Balance carried forward

24 22 DR Swiss I Report of the statutory auditor Report of the Statutory Auditor Report of the statutory auditor on the 2013 financial statements As statutory auditor, we have audited the enclosed financial statements of Deutsche Rückversicherung Switzerland Ltd, which comprise the balance sheet, income statement, cash flow statement and notes (pages 14 to 21) for the financial year ended 31 December Board of Directors responsibility The Board of Directors is responsible for the preparation of financial statements in accordance with the requirements of Swiss law and the company s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, due to either fraud or error. The Board of Directors is also responsible for selecting and applying appropriate accounting policies and making reasonable accounting estimates. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We have conducted our audit in accordance with Swiss law and Swiss auditing standards. These standards require that we plan and perform the audit in such a way as to obtain reasonable assurance that the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence concerning the carrying amounts and other disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including assessment of the risks of material misstatement in the financial statements, due to either fraud or error. In assessing these risks, the auditor takes account of the internal control system where it is relevant to the entity s preparation of 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 entity s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the plausibility of the estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained provides a sufficient and appropriate basis for our audit opinion. Opinion In our opinion, the financial statements for the year ended 31 December 2013 comply with Swiss law and the company s articles of incorporation.

25 Report of the statutory auditor I DR Swiss 23 Report based on other legal requirements We confirm that we meet the statutory requirements on licensing according to the Swiss law on audit supervision (RAG) and on independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence. In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm the existence of an internal control system for the preparation of financial statements designed according to the instructions of the Board of Directors. We also confirm that the proposed appropriation of available earnings complies with Swiss law and the company s articles of incorporation and recommend that the financial statements be approved as submitted. PricewaterhouseCoopers AG Zurich, 27 March 2014 Michael Stämpfli Audit expert Auditor in charge Stefan Zumthor Audit expert

26 Publishing details Published by Deutsche Rückversicherung Switzerland Ltd Schweizergasse 21 Am Löwenplatz CH-8021 Zurich Phone Fax info@drswiss.ch Design FIRST RABBIT GmbH, Cologne Printed by Woeste Druck, Essen Print compensated Id-No

27 Schaffhausen Basle-Town Thurgovia Zurich Basle-Country Jura Argovia Zurich Appenzell Outer-Rhodes Appenzell Inner-Rhodes Solothurn St. Gall Zug Lucerne Schwyz Neuenburg Berne Glarus Nidwalden Berne Obwalden Uri Grisons Vaud Fribourg Ticino Valais Geneva Argovia (AG) 1803 (1415) Appenzell Outer-Rhodes (AR) 1513 Appenzell Inner-Rhodes (AI) 1513 Basle-Country (BL) 1501 Basle-Town (BS) 1501 Berne (BE) 1351 Fribourg (FR) 1481 Geneva (GE) 1814 Glarus (GL) 1352 Grisons (GR) 1803 Jura (JU) 1978 Lucerne (LU) 1332 Nechâtel (NE) 1814 Nidwalden (NW) 1291 Obwalden (OW) 1291 Schaffhausen (SH) 1501 Schwyz (SZ) 1291 St. Gall (SG) 1803 Solothurn (SO) 1481 Ticino (TI) 1803 Thurgovia (TG) 1803 Uri (UR) 1291 Vaud (VD) 1803 Valais (VS) 1814 Zug (ZG) 1352 Zurich (ZH) 1351

28 Deutsche Rückversicherung Switzerland Ltd Schweizergasse 21 Am Löwenplatz CH-8021 Zurich Phone Fax info@drswiss.ch