Swiss Re’s embedded value increased 18% to CHF 20.1 billion in 2005 - Operating profit from existing business up 38% to CHF 1.5 billion - Returns on new business increased to 13.1%

11 April 2006, Zurich

Swiss Re’s embedded value of its life and health business increased significantly to CHF 20.1 billion in 2005, up from CHF 17.1 billion in 2004. Operating profit from existing business grew 38% to CHF 1.5 billion from CHF 1.1 billion in 2004. Returns on new business increased to 13.1% compared to 12.5% in 2004 for total value added of CHF 283 million in 2005.

The increase of Swiss Re’s embedded value to CHF 20.1 billion in 2005 reflects the value added by new business and strong operating profit from existing business of CHF 1.8 billion, large positive currency movements relative to the Swiss franc of CHF 1.9 billion as well as a small net negative impact from investment variances and economic assumption changes of CHF 82 million. The strong operating profit from existing business of CHF 1.5 billion in 2005, compared with CHF 1.1 billion in 2004, reflect Swiss Re’s continuing positive mortality experience around the world in 2005.

Value added by new business was CHF 283 million, down from CHF 666 million in 2004, which had benefited from two large Admin ReSM transactions. Profitability of the new business in 2005 increased to 13.1% from 12.5% in 2004 and return on capital invested increased to 31.7% following Swiss Re’s actions to improve pricing for traditional life business in the US.

Jacques Aigrain, Chief Executive Officer of Swiss Re comments, “We‘re pleased with the strong results of our existing business and the attractive rates of return of the new business. As we explore new avenues for growth in our life and health business we remain focused on the quality of the portfolio to provide continued solid returns in the future.”

Analysts’ conference call

Swiss Re is holding an Analysts’ conference call today at 14.00 CET.
The Analysts’ conference call can be followed by dialing:

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Notes to editors

Swiss Re

Swiss Re is one of the world’s leading reinsurers and the world’s largest life and health reinsurer. The company operates through more than 70 offices in over 30 countries. Swiss Re has been in the reinsurance business since its foundation in Zurich, Switzerland, in 1863. Swiss Re offers a wide variety of products to manage capital and risk. Traditional reinsurance products, including a broad range of property and casualty as well as life and health covers and related services, are complemented by insurance-based corporate finance solutions and supplementary services for comprehensive risk management. Swiss Re currently has the following ratings: (i) from Standard & Poor's: long-term counterparty credit, financial strength and senior unsecured debt ratings of "AA (CreditWatch negative)", and a short-term counterparty credit rating of "A-1+", (ii) from Moody's: insurance financial strength and senior debt ratings of "Aa2" (on review for possible downgrade), and a short-term rating of "P-1" and (iii) from A.M. Best: a financial strength rating of A+ (superior) (under review with negative implications).

Embedded value

Embedded value is an actuarially determined estimate 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.

Cautionary note on forward-looking statements

No statements made herein regarding earnings enhancements or otherwise are profit forecasts, and no statements made herein should be interpreted to mean that Swiss Re’s earnings or earnings per share for 2006, 2007 or any subsequent period will necessarily match or exceed the historical published earnings per share of Swiss Re.

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 future investments, acquisitions or dispositions, and any delays, unexpected costs or other issues experienced in connection with any such transaction, including the ability to efficiently and effectively integrate the GE Insurance Solutions operations into our own;
    • 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 investment 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.