Note 17 Information on business segments

The Group provides reinsurance and insurance throughout the world through its business segments. The business segments are determined by the organisational structure and by the way in which management reviews the operating performance of the Group.

The Group adopted a new operational structure effective from 1 January 2012. As a result, the Group presents four core operating business segments: Property & Casualty Reinsurance, Life & Health Reinsurance, Corporate Solutions and Admin Re^®. Asset Management activities are not disclosed as a separate operating segment. Invested assets managed by Asset Management and Group Treasury have been assigned to the new business segments according to risk profile, duration and further asset-liability management considerations. Actual returns on those assets are reported in the respective operating segments.

The presentation of each segment’s balance sheet is closely aligned to the segment legal entity structure. The assignment of assets and liabilities for entities that span more than one segment are determined by considering local statutory requirements, legal and other constraints, the economic view of duration and currency requirements of the reinsurance business written, and the capacity of the segments to absorb risks. These considerations determined each segment’s initial capital positions under the new structure.

Interest expense is incurred from the segment’s capital funding position. The tax position of the operating segments is derived from legal entity tax obligations, subject to Group tax considerations.

Accounting policies applied by the business segments are in line with those described in the summary of significant accounting policies (please refer to Note 1 to the Group’s annual consolidated financial statements). Comparative information for 2011 is presented according to the 2012 segments presentation basis.

The Group operating segments are outlined below.

Property & Casualty Reinsurance and Life & Health Reinsurance

Reinsurance consists of two segments, Property & Casualty and Life & Health. The Reinsurance Business Unit operates globally, both through brokers and directly with clients, and provides a large range of solutions for risk and capital management. Clients include insurance companies and mutual as well as public sector and governmental entities. In addition to traditional reinsurance solutions, the Business Unit offers insurance-linked securities and other insurance-related capital market products in both Property & Casualty and Life & Health.

Property & Casualty includes the business lines property, casualty including motor, and specialty. Life & Health includes the life and health sub-segments.

Corporate Solutions

Corporate Solutions offers innovative insurance capacity to mid-sized and large multinational corporations across the globe. Offerings range from standard risk transfer covers and multi-line programmes to customised solutions tailored to the needs of clients. Corporate Solutions serves customers from over 40 offices worldwide.

Admin Re^®

Through Admin Re^®, Swiss Re acquires closed blocks of in-force life and health insurance business, either through reinsurance or corporate acquisition, and typically assumes responsibility for administering the underlying policies. The administration of the business may be managed directly or, where appropriate, in partnership with a third party. Since 1998, Swiss Re has acquired more than 40 blocks of business spanning a range of product types. It currently operates in the UK, US and the Netherlands.

Admin Re^® completed the sale of its Admin Re^® US operations but retained certain blocks of the US business. For more details, please refer to Note 6.

Group items

Items not allocated to the business segments are included in the “Group items” column, which encompasses Swiss Re Ltd, the Group holding company, the former Legacy reinsurance business in run-off and certain Treasury units. The holding company charges trademark licence fees to the operating segments which are reported as other revenues. Certain administrative expenses of the corporate centre functions that are not recharged to the operating segments are reported as Group items.

Consolidation

Segment information is presented net of external and internal retrocession and other intra-group arrangements. The Group total is obtained after elimination of intra-group transactions in the “Consolidation” column. This includes significant intra-group reinsurance arrangements, recharge of trademark licence fees, and intersegmental funding.

a) Business segments – income statement

For the year ended 31 December

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2011 USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Admin Re^®	Group items	Consoli- dation	Total
Revenues
Premiums earned	10 135	8 317	1 929	897	22		21 300
Fee income from policyholders		87		789			876
Net investment income – non-participating	1 307	1 544	104	1 611	135	–75	4 626
Net realised investment gains – non-participating	512	1 180	214	205	–477		1 634
Net investment result – unit-linked and with-profit		–25		–378			–403
Other revenues	72		6		236	–264	50
Total revenues	12 026	11 103	2 253	3 124	–84	–339	28 083

Expenses
Claims and claim adjustment expenses	–7 381		–1 461		2	30	–8 810
Life and health benefits		–6 280		–2 119		–15	–8 414
Return credited to policyholders		–34		–27			–61
Acquisition costs	–1 848	–1 745	–180	–233	–8	–7	–4 021
Other expenses	–1 318	–716	–442	–466	–372	263	–3 051
Interest expenses	–155	–579	–2	–61	–122	68	–851
Total expenses	–10 702	–9 354	–2 085	–2 906	–500	339	–25 208

Income/loss before income tax expense	1 324	1 749	168	218	–584		2 875
Income tax expense/benefit	–65	–85	–87	123	37		–77
Net income/loss before attribution of non-controlling interests	1 259	1 664	81	341	–547	0	2 798

Income attributable to non-controlling interests	–160			–12			–172
Net income/loss after attribution of non-controlling interests	1 099	1 664	81	329	–547	0	2 626

Interest on contingent capital instruments
Net income/loss attributable to common shareholders	1 099	1 664	81	329	–547	0	2 626

Claims ratio in %	72.8		75.7				73.3
Expense ratio in %	31.2		32.2				31.4
Combined ratio in %	104.0		107.9				104.7
Management expense ratio in %		7.2
Benefit ratio in %		74.5


2012 USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Admin Re^®	Group items	Consoli- dation	Total
Revenues
Premiums earned	12 329	9 050	2 284	992	6		24 661
Fee income from policyholders		72		713			785
Net investment income – non-participating	1 451	1 365	109	1 548	18	–18	4 473
Net realised investment gains – non-participating	259	562	142	–89	73		947
Net investment result – unit-linked and with-profit		222		2 348			2 570
Other revenues	95	1	1	3	385	–297	188
Total revenues	14 134	11 272	2 536	5 515	482	–315	33 624

Expenses
Claims and claim adjustment expenses	–6 306		–1 448		–14	5	–7 763
Life and health benefits		–6 787		–2 086		–5	–8 878
Return credited to policyholders		–271		–2 688			–2 959
Acquisition costs	–2 316	–1 787	–300	–142	–3		–4 548
Other expenses	–1 325	–833	–449	–457	–403	250	–3 217
Interest expenses	–111	–586		–53	–51	65	–736
Total expenses	–10 058	–10 264	–2 197	–5 426	–471	315	–28 101

Income/loss before income tax expense	4 076	1 008	339	89	11	0	5 523
Income tax expense/benefit	–934	–231	–143	101	82		–1 125
Net income before attribution of non-controlling interests	3 142	777	196	190	93	0	4 398

Income attributable to non-controlling interests	–134			–7			–141
Net income after attribution of non-controlling interests	3 008	777	196	183	93	0	4 257

Interest on contingent capital instruments	–18	–38					–56
Net income attributable to common shareholders	2 990	739	196	183	93	0	4 201

Claims ratio in %	51.2		63.4				53.1
Expense ratio in %	29.5		32.8				30.0
Combined ratio in %	80.7		96.2				83.1
Management expense ratio in %		7.9
Benefit ratio in %		75.5

Business segments – balance sheet

As of 31 December 2011 & 2012

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2011 USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Admin Re^®	Group items	Consoli- dation	Total
Assets
Fixed income securities	28 611	32 217	4 501	31 266	628		97 223
Equity securities	1 459	183	403	9	477		2 531
Other investments	18 791	3 691	213	5 439	2 819	–4 492	26 461
Short-term investments	7 004	3 368	973	1 096	1 219		13 660
Investments for unit-linked and with-profit business		719		21 630			22 349
Cash and cash equivalents	6 550	2 367	685	1 472	333		11 407
Deferred acquisition costs	1 247	2 663	–25	34	4		3 923
Acquired present value of future profits		1 674		2 552			4 226
Reinsurance recoverable	4 951	2 902	9 900	3 641		–9 557	11 837
Other reinsurance assets	12 500	10 133	2 147	358	3	–4 636	20 505
Goodwill	2 006	2 028	17				4 051
Other	4 769	1 886	1 249	791	163	–1 132	7 726
Total assets	87 888	63 831	20 063	68 288	5 646	–19 817	225 899

Liabilities
Unpaid claims and claim adjustment expenses	49 451	9 310	12 465	1 695	24	–8 067	64 878
Liabilities for life and health policy benefits		18 367	198	21 229		–750	39 044
Policyholder account balances		2 423		32 486		–747	34 162
Other reinsurance liabilities	11 334	2 056	4 654	2 143	14	–5 504	14 697
Short-term debt	856	797	230	963	2 674	–1 393	4 127
Long-term debt	3 376	12 930			235		16 541
Other	11 209	8 976	229	1 980	2 074	–3 305	21 163
Total liabilities	76 226	54 859	17 776	60 496	5 021	–19 766	194 612

Shareholders’ equity	10 389	8 972	2 277	7 378	625	–51	29 590

Non-controlling interests	1 273		10	414			1 697
Total equity	11 662	8 972	2 287	7 792	625	–51	31 287

Total liabilities and equity	87 888	63 831	20 063	68 288	5 646	–19 817	225 899


2012 USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Admin Re^®	Group items	Consoli- dation	Total
Assets
Fixed income securities	31 115	31 366	4 616	21 608	143		88 848
Equity securities	2 360	303	578	3	530		3 774
Other investments	11 893	3 178	107	1 774	6 180	–7 088	16 044
Short-term investments	10 005	5 053	1 549	1 557	481		18 645
Investments for unit-linked and with-profit business		842		24 659			25 501
Cash and cash equivalents	6 904	1 412	978	1 472	71		10 837
Deferred acquisition costs	1 103	2 713	219	2	2		4 039
Acquired present value of future profits		1 358		1 665			3 023
Reinsurance recoverable	5 583	2 447	9 440	469		–7 830	10 109
Other reinsurance assets	12 419	8 631	2 901	3 459	3	–2 639	24 774
Goodwill	2 018	2 057	17				4 092
Other	7 352	2 170	640	612	345	–5 020	6 099
Total assets	90 752	61 530	21 045	57 280	7 755	–22 577	215 785

Liabilities
Unpaid claims and claim adjustment expenses	48 465	9 505	12 258	1 247	21	–7 826	63 670
Liabilities for life and health policy benefits		17 439	216	18 469		–7	36 117
Policyholder account balances		1 466		27 883			29 349
Other reinsurance liabilities	12 543	1 709	4 913	713	8	–3 106	16 780
Short-term debt	3 799	1 529		634	1 245	–3 595	3 612
Long-term debt	3 779	12 461			46		16 286
Other	9 796	9 082	616	1 672	2 775	–7 996	15 945
Total liabilities	78 382	53 191	18 003	50 618	4 095	–22 530	181 759

Shareholders’ equity	12 356	8 339	3 032	6 662	3 660	–47	34 002

Non-controlling interests	14		10				24
Total equity	12 370	8 339	3 042	6 662	3 660	–47	34 026

Total liabilities and equity	90 752	61 530	21 045	57 280	7 755	–22 577	215 785

b) Property & Casualty Reinsurance business segment – by line of business

For the year ended 31 December

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2011 USD millions	Property	Casualty	Specialty	Total
Premiums earned	4 766	3 313	2 056	10 135

Expenses
Claims and claim adjustment expenses	–4 502	–2 248	–631	–7 381
Acquisition costs	–612	–781	–455	–1 848
Other expenses	–617	–373	–328	–1 318
Total expenses before interest expenses	–5 731	–3 402	–1 414	–10 547

Underwriting result	–965	–89	642	–412

Net investment income				1 307
Net realised investment gains/losses				512
Other revenues				72
Interest expenses				–155
Income before income tax expenses				1 324

Claims ratio in %	94.4	67.9	30.7	72.8
Expense ratio in %	25.8	34.8	38.1	31.2
Combined ratio in %	120.2	102.7	68.8	104.0


2012 USD millions	Property	Casualty	Specialty	Total
Premiums earned	5 795	4 630	1 904	12 329

Expenses
Claims and claim adjustment expenses	–2 832	–2 818	–656	–6 306
Acquisition costs	–781	–1 128	–407	–2 316
Other expenses	–687	–406	–232	–1 325
Total expenses before interest expenses	–4 300	–4 352	–1 295	–9 947

Underwriting result	1 495	278	609	2 382

Net investment income				1 451
Net realised investment gains/losses				259
Other revenues				95
Interest expenses				–111
Income before income tax expenses				4 076

Claims ratio in %	48.9	60.9	34.4	51.2
Expense ratio in %	25.3	33.1	33.6	29.5
Combined ratio in %	74.2	94.0	68.0	80.7

c) Life & Health Reinsurance business segment – by line of business

For the year ended 31 December

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2011
USD millions

Life

Health

Total

The benefit ratio is calculated as life and health benefits in relation to premiums earned, both of which exclude unit-linked and with-profit business. Additionally, the impact of guaranteed minimum death benefit (GMDB) products is excluded, as this ratio is not indicative of the operating performance of such products.

Revenues

Premiums earned

5 977

2 340

8 317

Fee income from policyholders

Net investment income – non-participating

1 004

540

1 544

Net investment income – unit-linked and with-profit

Net realised investment gains/losses – unit-linked and with-profit

–55

Net realised investment gains/losses – insurance-related derivatives

–8

Other revenues

Total revenues before non-participating realised gains/losses

7 079

2 872

9 951

Expenses

Life and health benefits

–4 647

–1 633

–6 280

Return credited to policyholders

–34

Acquisition costs

–1 286

–459

–1 745

Other expenses

–569

–147

–716

Total expenses before interest expenses

–6 536

–2 239

–8 775

Operating income

543

633

1 176

Net realised investment gains/losses – non-participating and excluding insurance-related derivatives

1 152

Interest expenses

–579

Income before income tax expenses

1 749

Management expense ratio in %

8.1

5.1

7.2

Benefit ratio¹ in %

76.3

69.8

74.5

2012
USD millions

Life

Health

Total

Revenues

Premiums earned

6 176

2 874

9 050

Fee income from policyholders

Net investment income – non-participating

899

466

1 365

Net investment income – unit-linked and with-profit

Net realised investment gains/losses – unit-linked and with-profit

190

Net realised investment gains/losses – insurance-related derivatives

–147

Other revenues

Total revenues before non-participating realised gains/losses

7 223

3 340

10 563

Expenses

Life and health benefits

–4 625

–2 162

–6 787

Return credited to policyholders

–271

Acquisition costs

–1 299

–488

–1 787

Other expenses

–613

–220

–833

Total expenses before interest expenses

–6 808

–2 870

–9 678

Operating income

415

470

885

Net realised investment gains/losses – non-participating and excluding insurance-related derivatives

709

Interest expenses

–586

Income before income tax expenses

1 008

Management expense ratio in %

8.6

6.6

7.9

Benefit ratio¹ in %

75.7

75.2

75.5

d) Net premiums earned and fee income from policyholders by geography

Net premiums earned and fee income from policyholders by regions for the years ended 31 December

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USD millions	2011	2012
Europe (including Middle East and Africa)	8 613	10 686
Americas	9 275	9 579
Asia-Pacific	4 288	5 181
Total	22 176	25 446

Net premiums earned and fee income from policyholders by country for the years ended 31 December

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USD millions	2011	2012
United States	7 205	7 493
United Kingdom	2 925	3 316
France	770	2 110
China	1 383	1 880
Australia	1 511	1 705
Canada	1 237	1 196
Germany	1 109	1 063
Japan	643	714
Ireland	244	591
Netherlands	458	448
Italy	504	439
Other	4 187	4 491
Total	22 176	25 446

Net premiums earned and fee income from policyholders are allocated by country based on the underlying contract.

Note 17 Information on business segments

Property & Casualty Reinsurance and Life & Health Reinsurance

Corporate Solutions

Admin Re®

Group items

Consolidation

a) Business segments – income statement

Business segments – balance sheet

b) Property & Casualty Reinsurance business segment – by line of business

c) Life & Health Reinsurance business segment – by line of business

d) Net premiums earned and fee income from policyholders by geography

Admin Re^®