Swiss Re embedded value earnings up 38% at CHF 2.4 billion - Embedded value increases by 13% to CHF 22.6 billion - Value added by new business up 135% at CHF 664 million

03 April 2007, Zurich

Swiss Re’s life & health embedded value earnings grew by 38% to CHF 2.4 billion, up from CHF 1.7 billion in 2005. Embedded value increased by 13% to CHF 22.6 billion in 2006, up from CHF 20.1 billion in 2005. Value of new business was CHF 664 million in 2006. The internal rate of return for new business was 12.7%.

Swiss Re’s embedded value profit increased 85% to CHF 1.0 billion, up from CHF 562 million in 2005. As a result of the value added by new business, continuing favourable mortality experience and a higher return on in-force policies, embedded value earnings grew by 38% to CHF 2.4 billion.

Embedded value increased to CHF 22.6 billion in 2006, up CHF 2.6 billion, or CHF 3.2 billion at constant exchange rates. The acquisition of GE Insurance Solutions, which closed in June 2006, contributed strongly to the increase in embedded value and close to 100% of the business was retained. New business value of CHF 664 million was driven by the GE Life UK acquisition, which closed in December 2006, and the effect of higher margins in the traditional life business, reflecting pricing actions and a favourable change in the mix of business. The after tax internal rate of return of the new business was 12.7%.

In 2006 the Life & Health business generated capital of CHF 2.9 billion. Close to CHF 2 billion was reinvested in Admin ReSM and in the traditional life business.

Notes to editors

Embedded value 

Embedded value is an actuarially determined estimate of the value of an insurer’s life insurance operations, excluding future new business. It is the estimated present value of future regulatory profits from the inforce business plus the value of free surplus and required capital, less the cost of holding solvency capital.

Swiss Re

Swiss Re is the world’s leading and most diversified global reinsurer. The company operates through offices in more than 25 countries. Founded in Zurich, Switzerland, in 1863, Swiss Re offers financial services products that enable risk-taking essential to enterprise and progress. The company’s traditional reinsurance products and related services for property and casualty, as well as the life and health business are complemented by insurance-based corporate finance solutions and supplementary services for comprehensive risk management. Swiss Re is rated “AA-“ by Standard & Poor’s, “Aa2” by Moody’s and “A+” by A.M. Best.

Cautionary note on forward-looking statements

Certain statements contained herein are forward-looking. These statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to a historical fact or current fact. Forward-looking statements typically are identified by words or phrases such as "anticipate", "assume", "believe", "continue", "estimate", "expect", "foresee", "intend", "may increase" and "may fluctuate" and similar expressions or by future or conditional verbs such as "will", "should", "would" and "could". These forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause Swiss Re's actual results, performance, achievements or prospects to be materially different from any future results, performance, achievements or prospects expressed or implied by such statements. Such factors include, among others:

  • the impact of significant investments, acquisitions or dispositions, and any delays, unexpected costs or other issues experienced in connection with any such transactions, including, in the case of acquisitions, issues arising in connection with integrating acquired operations;
  • cyclicality of the reinsurance industry;
  • changes in general economic conditions, particularly in our core markets;
  • uncertainties in estimating reserves;
  • the performance of financial markets;
  • expected changes in our investment results as a result of the changed composition of our invested assets or changes in our investment policy;
  • the frequency, severity and development of insured claim events;
  • acts of terrorism and acts of war;
  • mortality and morbidity experience;
  • policy renewal and lapse rates;
  • changes in rating agency policies or practices;
  • the lowering or withdrawal of one or more of the financial strength or credit ratings of one or more of our subsidiaries;
  • changes in levels of interest rates;
  • political risks in the countries in which we operate or in which we insure risks;
  • extraordinary events affecting our clients, such as bankruptcies and liquidations;
  • risks associated with implementing our business strategies;
  • changes in currency exchange rates;
  • changes in laws and regulations, including changes in accounting standards and taxation requirements; and
  • changes in competitive pressures.

These factors are not exhaustive. We operate in a continually changing environment and new risks emerge continually. Readers are cautioned not to place undue reliance on forward-looking statements. We undertake no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.