Swiss Re reports embedded value of CHF 16 billion for 2003 Embedded value earnings of CHF 1.1 billion up CHF 700 million compared with prior year
17 May 2004
Zurich, 17 May 2004 - Swiss Re's Life & Health Business Group reports embedded value of CHF 16 billion in 2003. Embedded value earnings of CHF 1.1 billion were up CHF 700 million from the prior year's earnings of CHF 400 million. Value added by new business was lower in 2003 at CHF 314 million reflecting lower capital investment and foreign exchange effects.
Swiss Re's embedded value for its life and health business in 2003 was CHF 16 billion compared with CHF 16.3 billion in 2002. The 2003 embedded value reflects the capital movements into non-life business to harvest the favourable property and casualty market conditions and negative exchange rate movements. The 11% decline in the US dollar exchange rate, together with other exchange rate movements, reduced the 2003 embedded value by more than CHF 800 million.
Embedded value earnings were CHF 1.1 billion in 2003 compared with earnings of CHF 411 million in the prior year, which was negatively affected by the decline in financial markets. The value added by new business at CHF 314 million was down compared with CHF 627 million in 2002 reflecting reduced capital investment in 2003 and negative exchange rate movements.
John Fitzpatrick, Head of Swiss Re's Life & Health Business Group comments, "The embedded value earnings of CHF 1.1 billion reflect a substantial recovery from the low experienced in 2002 when the negative investment environment affected earnings. New business value was lower in 2003 as we seized the profitable opportunities in our non-life business. However, we continue to see attractive new growth opportunities for life and health, as demonstrated by the successful closing of the CNA Admin ReSM transaction at the end of April 2004."
Analysts' Conference Call
Swiss Re is holding an Analysts' Conference Call today at 14.00 Zurich time. The Analysts' Conference Call can be followed by dialing: in Switzerland +41 91 610 5605; in the UK +44 207 107 0613; and in the United States +1 866 865 5144.
Notes to editors
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. Through its three business groups Property & Casualty, Life & Health and Financial Services, 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 is rated "AA" by Standard & Poor's, "Aa1" by Moody's and "A+" by A.M. Best.
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 shareholder's net worth, less the cost of holding solvency capital.
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 our 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:
- 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;
- changes in rating agency policies or practices;
- mortality and morbidity experience;
- policy renewal and lapse rates;
- the change in or loss of one or more of the financial or claims-paying 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.
Contacts:
Group Media Relations, Zurich, tel. +41 43 285 7171
Investor Relations, Zurich, tel. +41 43 285 4444
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