Accumulation risk

Risk that arises when a large number of individual risks are correlated such that a single event will affect many or all of these risks.

Acquisition costs

That portion of an insurance premium which represents the cost of obtaining the insurance business: it includes the intermediaries’ commission, the company’s sales expense and other related expenses.

Admin Re®

Business Unit through which 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.

Asset-backed security

Securities backed by notes or receivables against assets such as auto loans, credit cards, royalties, student loans and insurance.

Asset-liability management (ALM)

Management of a business in a way that coordinates decisions on assets and liabilities. Specifically, the ongoing process of formulating, implementing, monitoring and revising strategies related to assets and liabilities in an attempt to achieve financial objectives for a given set of risk tolerances and constraints.

Aviation insurance

Insurance of accident and liability risks, as well as hull damage, connected with the operation of aircraft.

Book value per share

The ratio of ordinary shareholders’ equity to the number of common shares entitled to dividend.

Business interruption

Insurance covering the loss of earnings resulting from, and occurring after, destruction of property; also known as “loss of profits” or “business income protection insurance”.


Maximum amount of risk that can be accepted in insurance. Capacity also refers to the amount of insurance coverage allocated to a particular policyholder or in the marketplace in general.

Casualty insurance

Branch of insurance – mainly comprising accident and liability business – which is separate from property, engineering and life insurance.

Catastrophe bonds

Risk-based securities that allow insurance and reinsurance companies to transfer peak insurance risks, including natural catastrophes, to institutional investors in the form of bonds. Catastrophe bonds help to spread peak exposures (see insurance-linked securities).


Insurance that is reinsured: the passing of the insurer’s risks to the reinsurer against payment of a premium. The insurer is referred to as the ceding company or cedent.


Demand by an insured for indemnity under an insurance contract.

Claims handling

Activities in connection with the investigation, settlement and payment of claims from the time of their occurrence until settlement.

Claims incurred and claim adjustment expenses

All claims payments plus the adjustment in the outstanding claims provision of a business year and claim adjustment expenses.

Claims ratio

Sum of claims paid, change in the provisions for unpaid claims and claim adjustment expenses in relation to premiums earned.


Arrangement by which a number of insurers and/or reinsurers share a risk.

Combined ratio

The ratio is a combination of the non-life claims ratio and the expense ratio.


Remuneration paid by the insurer to its agents, brokers or intermediaries, or by the reinsurer to the insurer, for costs in connection with the acquisition and administration of insurance business.


The termination of a reinsurance contract by agreement of the parties on the basis of one or more lump sum payments by the reinsurer which extinguish its liability under the contract. The payment made by the reinsurer commonly relates to incurred losses under the contract.


Insurance and reinsurance protection of one or more specific risk exposures based on a contractual agreement.

Credit insurance

Insurance against financial losses sustained through the failure, for commercial reasons, of policyholders’ clients to pay for goods or services supplied to them.

Credit spreads

Applies to derivative products. Difference in the value of two options, when the value of the one sold exceeds the value of the one bought.

Directors’ and officers’ liability insurance (D&O)

Liability insurance for directors and officers of an entity, providing cover for their personal legal liability towards shareholders, creditors, employees and others arising from wrongful acts such as errors and omissions.

Disability insurance

Insurance against the incapacity to exercise a profession as a result of sickness or other infirmity.

Earnings per share (EPS)

Portion of a company’s profit allocated to each outstanding share of common stock. Earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period.

Expense ratio

Sum of acquisition costs and other operating costs and expenses, in relation to premiums earned.

Guaranteed minimum death benefit (GMDB)

A feature of variable annuity business. The benefit is a predetermined minimum amount that the beneficiary will receive upon the death of the insured.


Globally Systemically Important Insurers.

Health insurance

Generic term applying to all types of insurance indemnifying or reimbursing for losses caused by bodily injury or sickness or for expenses of medical treatment necessitated by sickness or accidental bodily injury.

Incurred but not reported (IBNR)

Provision for claims incurred but not reported by the balance sheet date. In other words, it is anticipated that an event will affect a number of policies, although no claims have been made so far, and is therefore likely to result in liability for the insurer.

Insurance-linked securities (ILS)

Bonds for which the payment of interest and/or principal depends on the occurrence or severity of an insurance event. The underlying risk of the bond is a peak or volume insurance risk.


Section of cover in a non-proportional reinsurance programme in which total coverage is divided into a number of consecutive layers starting at the retention or attachment point of the ceding company up to the maximum limit of indemnity. Individual layers may be placed with different insurers or reinsurers.

Liability insurance

Insurance for damages that a policyholder is obliged to pay because of bodily injury or property damage caused to another person or entity based on negligence, strict liability or contractual liability.

Life insurance

Insurance that provides for the payment of a sum of money upon the death of the insured, or upon the insured surviving a given number of years, depending on the terms of the policy. In addition, life insurance can be used as a means of investment or saving.

Longevity risk

The risk to which a pension fund or life insurance company could be exposed as a result of higher-than-expected payout ratios. Increasing life expectancy trends among policyholders and pensioners can result in payout levels that are higher than originally accounted for.

Marine insurance

Line of insurance which includes coverage for property in transit (cargo), means of transportation (except aircraft and motor vehicles), offshore installations and valuables, as well as liabilities associated with marine risks and professions.


Adjustment of the book value or collateral value of a security, portfolio or account that reflects its current market value.

Motor insurance

Line of insurance which offers coverage for property, accident and liability losses involving motor vehicles.

Net reinsurance assets

Receivables related to deposit accounting contracts (contracts which do not meet risk transfer requirements) less payables related to deposit contracts.

Non-life insurance

All classes of insurance business excluding life insurance.

Non-proportional reinsurance

Form of reinsurance in which coverage is not in direct proportion to the original insurer’s loss; instead the reinsurer is liable for a specified amount which exceeds the insurer’s retention; also known as “excess of loss reinsurance”.

Operating margin ratio

The operating margin is calculated as operating result divided by total operating revenues. The operating result is before interest expenses, taxes and net realised gains/losses.

Operating revenues

Premiums earned plus net investment income plus other revenues.

Operational risk

Risk arising from failure of operational processes, internal procedures and controls leading to financial loss.


The payment, or one of the periodical payments, a policyholder agrees to make for an insurance policy.

Premiums earned

Premiums an insurance company has recorded as revenues during a specific accounting period.

Premiums written

Premiums for all policies sold during a specific accounting period.

Product liability insurance

Insurance covering the liability of the manufacturer or supplier of goods for damage caused by their products.

Professional indemnity insurance

Liability insurance cover which protects professional specialists such as physicians, architects, engineers, lawyers, accountants and others against third-party claims arising from activities in their professional field; policies and conditions vary according to profession.

Property insurance

Collective term for fire and business interruption insurance as well as burglary, fidelity guarantee and allied lines.

Proportional reinsurance

Form of reinsurance arrangement in which the premiums earned and the claims incurred of the cedent are shared proportionally by the cedent and the reinsurer.

Present value of future profits (PVFP)

Intangible asset primarily arising from the purchase of life and health insurance companies or portfolios.

Quota share reinsurance

Form of proportional reinsurance in which a defined percentage of the premiums earned and the claims incurred by the cedent in a specific line is reinsured for a given period. Quota share reinsurance arrangements represent a sharing of business in a fixed ratio or proportion.


Insurance which lowers the risk carried by primary insurance companies. Reinsurance includes various forms such as facultative, financial, non-proportional, proportional, quota share, surplus and treaty reinsurance.


Amount required to be carried as a liability in the financial statements of an insurer or reinsurer to provide for future commitments under outstanding policies and contracts.


Amount of risk which the policyholder or insurer does not insure or reinsure but keeps for its own account.


Amount of the risk accepted by the reinsurer which is then passed on to other reinsurance companies.

Return on equity

Net income as a percentage of time-weighted shareholders’ equity.

Return on investments

Operating income as a percentage of average invested assets. Invested assets include investments, cash and cash equivalents, securities in transit, financial liabilities and exclude policy loans and certain Group items.


Condition in which there is a possibility of injury or loss; also used by insurance practitioners to indicate the property insured or the peril insured against.

Risk management

Management tool for the comprehensive identification and assessment of risks based on knowledge and experience in the fields of natural sciences, technology, economics and statistics.

Running yield

Net investment income on fixed income positions, including coupon income and amortisation, as a percentage of the cost of the securities.


Financial transaction in which future cash flows from assets (or insurable risks) are pooled, converted into tradable securities and transferred to capital market investors. The assets are commonly sold to a special-purpose entity, which purchases them with cash raised through the issuance of beneficial interests (usually debt instruments) to third-party investors.

Solvency II

New regulatory framework for EU re/insurance solvency rules scheduled to replace the current Solvency I regime. Introducing a comprehensive, economic and risk-based regulation, Solvency II includes prudential requirements on solvency capital, risk modelling, supervisory control and disclosure.

Stop-loss reinsurance

Form of reinsurance that protects the ceding insurer against an aggregate amount of claims over a period, in excess of either a stated amount or a specified percentage of estimated benefit costs. An example of this is employer stop-loss (ESL) coverage, which is used by US companies to cap losses on self-funded group health benefit programmes. The stop-loss can apply to specific conditions or aggregate losses.

Surety insurance

Sureties and guarantees issued to third parties for the fulfilment of contractual liabilities.

Surplus reinsurance

Form of proportional reinsurance in which risks are reinsured above a specified amount.

Swiss Solvency Test (SST)

Switzerland already introduced an economic and risk-based insurance regulation, similar to the objectives of the Solvency II project in the EU. Since 2008, all insurance and reinsurance companies writing business in Switzerland have had to implement the SST, and since 1 January 2011, the SST-based target capital requirement is in force and companies must achieve economic solvency.

Tail VaR

See “Value at risk”.

Total return on investments

Operating income plus net unrealised gains/losses on available-for-sale securities as a percentage of average invested assets. Invested assets include investments, cash and cash equivalents, securities in transit, financial liabilities and exclude policy loans and certain Group items.

Treaty reinsurance

Participation of the reinsurer in certain sections of the insurer’s business as agreed by treaty, as opposed to single risks.

Underwriting result

Premiums earned less the sum of claims paid, change in the provision for unpaid claims and claim adjustment expenses and expenses (acquisition costs and other operating costs and expenses).

Unearned premium

Part of written premium (paid or owed) which relates to future coverage and for which services have not yet been provided; this is carried in an unearned premium reserve and may be refundable if the contract is cancelled before expiry.

Unit-linked policy

A life insurance contract which provides policyholder funds which are linked to an underlying investment product or fund. The performance of the policyholder funds is borne by the policyholder.


United States Generally Accepted Accounting Principles are the accounting rules, as issued by the Financial Accounting Standards Board (FASB), its predecessors and other bodies, used to prepare financial statements for publicly traded companies in the United States.

US XXX term insurance

Traditional US life business subject to the NAIC Valuation of Life Insurance Model Regulation or New York Regulation 147 (collectively: ‘Regulation XXX’). Regulation XXX states that business retained in the US does not require collateral, provided the reinsurer is licensed in the state of the company ceding business; however, business retroceded to a foreign reinsurer is subject to collateral (apart from funds withheld).

Value at risk (VaR)

Maximum possible loss in market value of an asset portfolio within a given time span and at a given confidence level. 99% VaR measures the level of loss likely to be exceeded in only one year out of a hundred, while 99.5% VaR measures the loss likely to be exceeded in only one year out of two hundred. 99% Tail VaR estimates the average annual loss likely to occur with a frequency of less than once in one hundred years.

With-profit policy

An insurance contract that has additional amounts added to the sum insured, or paid/credited separately to the policyholder as a bonus, which result from a share of the profit generated by the with-profits insurance funds, including these funds’ interests in other blocks of business.

Some of the terms included in the glossary are explained in more detail in Note 1 to the Group financial statements.

Swiss Re uses some of the term definitions provided by the glossary of the International Association of Insurance Supervisors (IAIS).