2 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 presents four core operating business segments: Property & Casualty Reinsurance, Life & Health Reinsurance, Corporate Solutions and Admin Re^®. 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 is 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. Interest expense is based on the segment’s capital funding position. The tax impact of a segment is derived from the legal entity tax obligations and the segmentation of the pre-tax result. While most of the tax items can be directly attributed to individual segments, the tax which impacts two or more segments is allocated to the segments on a reasonable basis. Property & Casualty Reinsurance and Life & Health Reinsurance share the same year-to-date effective tax rate as both business segments belong to the Reinsurance Business Unit.

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).

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 stock and mutual insurance companies as well as public sector and governmental entities. In addition to traditional reinsurance solutions, Reinsurance 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 lines of business.

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 52 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 50 blocks of business spanning a range of product types. It currently operates in the UK, US and the Netherlands.

In the fourth quarter of 2014, the Group entered into an agreement to sell Aurora National Life Assurance Company (Aurora), a US subsidiary, to Reinsurance Group of America, Incorporated (RGA). The sale was completed in the second quarter of 2015. For more details on the transaction and its impact on the Swiss Re Group financial statements, please refer to Note 10.

During 2015, a new Business Unit, Life Capital, was announced. This Business Unit includes the existing Admin Re^® segment and will manage closed and open life and health insurance books. The change in segmentation is effective from 1 January 2016. The Group financial statements and related notes presented in this report are not impacted. For more details, please refer to the Q3 2015 news release of 29 October 2015 and the Investors’ Day presentation of 8 December 2015.

Group items

Items not allocated to the business segments are included in the “Group items” column, which encompasses Swiss Re Ltd, the Groups’ ultimate parent company, the former Legacy business in run-off, Principal Investments and certain Treasury units. Swiss Re Ltd charges trademark licence fees to the business 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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2014 USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Admin Re^®	Group items	Consolidation	Total
Revenues
Premiums earned	15 598	11 212	3 444	502			30 756
Fee income from policyholders		53		453			506
Net investment income – non-participating business	1 076	1 544	94	1 256	115	18	4 103
Net realised investment gains/losses – non-participating business	699	–255	168	–114	69		567
Net investment result – unit-linked and with-profit business		75		1 306			1 381
Other revenues	69		3	1	340	–379	34
Total revenues	17 442	12 629	3 709	3 404	524	–361	37 347

Expenses
Claims and claim adjustment expenses	–8 493		–2 054		–32	2	–10 577
Life and health benefits		–9 194		–1 415		–2	–10 611
Return credited to policyholders		–99		–1 442			–1 541
Acquisition costs	–3 382	–2 489	–463	–181			–6 515
Other expenses	–1 175	–885	–687	–359	–384	335	–3 155
Interest expenses	–255	–438	–8	–25	–21	26	–721
Total expenses	–13 305	–13 105	–3 212	–3 422	–437	361	–33 120

Income/loss before income tax expense	4 137	–476	497	–18	87	0	4 227
Income tax expense/benefit	–552	63	–179	52	–42		–658
Net income/loss before attribution of non-controlling interests	3 585	–413	318	34	45	0	3 569

Income/loss attributable to non-controlling interests	–1		1				0
Net income/loss after attribution of non-controlling interests	3 584	–413	319	34	45	0	3 569

Interest on contingent capital instruments	–20	–49					–69
Net income/loss attributable to common shareholders	3 564	–462	319	34	45	0	3 500

Claims ratio in %	54.5		59.6				55.4
Expense ratio in %	29.2		33.4				30.0
Combined ratio in %	83.7		93.0				85.4
Management expense ratio in %		6.9
Operating margin in %		2.6

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2015 USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Admin Re^®	Group items	Consolidation	Total
Revenues
Premiums earned	15 090	10 914	3 379	368			29 751
Fee income from policyholders		49		414			463
Net investment income – non-participating business	1 097	1 331	135	938	–70	5	3 436
Net realised investment gains/losses – non-participating business	445	310	142	275	34		1 206
Net investment result – unit-linked and with-profit business		42		772			814
Other revenues	45	5	9		332	–347	44
Total revenues	16 677	12 651	3 665	2 767	296	–342	35 714

Expenses
Claims and claim adjustment expenses	–7 892		–1 955		–1		–9 848
Life and health benefits		–8 290		–790			–9 080
Return credited to policyholders		–60		–1 106			–1 166
Acquisition costs	–3 836	–1 986	–459	–138			–6 419
Other expenses	–1 247	–903	–756	–320	–395	318	–3 303
Interest expenses	–262	–278	–24	–16	–23	24	–579
Total expenses	–13 237	–11 517	–3 194	–2 370	–419	342	–30 395

Income/loss before income tax expense	3 440	1 134	471	397	–123	0	5 319
Income tax expense/benefit	–443	–146	–129	25	42		–651
Net income/loss before attribution of non-controlling interests	2 997	988	342	422	–81	0	4 668

Income attributable to non-controlling interests	–1		–2				–3
Net income/loss after attribution of non-controlling interests	2 996	988	340	422	–81	0	4 665

Interest on contingent capital instruments	–19	–49					–68
Net income/loss attributable to common shareholders	2 977	939	340	422	–81	0	4 597

Claims ratio in %	52.3		57.8				53.3
Expense ratio in %	33.7		36.0				34.1
Combined ratio in %	86.0		93.8				87.4
Management expense ratio in %		7.3
Operating margin in %		9.9

Business segments – balance sheet

As of 31 December

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2014 USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Admin Re^®	Group items	Consolidation	Total
Assets
Fixed income securities	31 853	29 073	5 148	20 566	29		86 669
Equity securities	1 497	965	732		895		4 089
Other investments	9 185	1 814	47	1 769	7 037	–6 075	13 777
Short-term investments	6 397	3 725	2 348	1 400	257		14 127
Investments for unit-linked and with-profit business		894		24 431			25 325
Cash and cash equivalents	5 069	574	737	1 029	62		7 471
Deferred acquisition costs	1 756	2 723	360	1			4 840
Acquired present value of future profits		1 294		2 003			3 297
Reinsurance recoverable	3 648	1 689	7 674	281		–6 342	6 950
Other reinsurance assets	10 500	8 424	2 662	3 595	1	–1 695	23 487
Goodwill	1 950	1 966	109				4 025
Other	8 890	3 980	958	1 065	516	–5 005	10 404
Total assets	80 745	57 121	20 775	56 140	8 797	–19 117	204 461

Liabilities
Unpaid claims and claim adjustment expenses	41 233	10 177	11 720	1 132	38	–6 346	57 954
Liabilities for life and health policy benefits		16 442	241	16 922			33 605
Policyholder account balances		1 473		27 769			29 242
Other reinsurance liabilities	10 893	1 968	4 733	526	9	–2 053	16 076
Short-term debt	503	4 530			544	–3 876	1 701
Long-term debt	4 494	6 779	496	855		–9	12 615
Other	9 389	8 836	1 162	2 548	2 121	–6 829	17 227
Total liabilities	66 512	50 205	18 352	49 752	2 712	–19 113	168 420

Shareholders’ equity	14 211	6 916	2 334	6 388	6 085	–4	35 930

Non-controlling interests	22		89				111
Total equity	14 233	6 916	2 423	6 388	6 085	–4	36 041

Total liabilities and equity	80 745	57 121	20 775	56 140	8 797	–19 117	204 461

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2015 USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Admin Re^®	Group items	Consolidation	Total
Assets
Fixed income securities	32 146	28 976	5 888	15 303	18		82 331
Equity securities	2 231	921	935		700		4 787
Other investments	12 105	1 976	162	1 524	6 077	–6 798	15 046
Short-term investments	3 458	1 069	1 256	571	1 051		7 405
Investments for unit-linked and with-profit business		818		27 423			28 241
Cash and cash equivalents	4 282	433	680	1 433	1 376		8 204
Deferred acquisition costs	2 051	3 032	387	1			5 471
Acquired present value of future profits		1 134		1 830			2 964
Reinsurance recoverable	2 872	1 652	6 438	895		–5 279	6 578
Other reinsurance assets	8 879	8 057	2 296	3 479	3	–1 135	21 579
Goodwill	1 873	1 883	106				3 862
Other	8 279	5 752	917	1 023	397	–6 701	9 667
Total assets	78 176	55 703	19 065	53 482	9 622	–19 913	196 135

Liabilities
Unpaid claims and claim adjustment expenses	39 366	9 653	10 619	1 022		–5 142	55 518
Liabilities for life and health policy benefits		15 472	257	14 408		–6	30 131
Policyholder account balances		1 368		30 187		–133	31 422
Other reinsurance liabilities	10 597	2 342	4 178	433	3	–1 436	16 117
Short-term debt	1 001	2 612			515	–2 294	1 834
Long-term debt	4 074	8 770	496	808		–3 170	10 978
Other	9 799	8 936	1 187	1 684	2 652	–7 729	16 529
Total liabilities	64 837	49 153	16 737	48 542	3 170	–19 910	162 529

Shareholders’ equity	13 316	6 550	2 262	4 940	6 452	–3	33 517

Non-controlling interests	23		66				89
Total equity	13 339	6 550	2 328	4 940	6 452	–3	33 606

Total liabilities and equity	78 176	55 703	19 065	53 482	9 622	–19 913	196 135

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

For the year ended 31 December

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2014 USD millions	Property	Casualty	Specialty	Total
Premiums earned	6 783	6 437	2 378	15 598

Expenses
Claims and claim adjustment expenses	–3 013	–4 513	–967	–8 493
Acquisition costs	–1 049	–1 831	–502	–3 382
Other expenses	–669	–355	–151	–1 175
Total expenses before interest expenses	–4 731	–6 699	–1 620	–13 050

Underwriting result	2 052	–262	758	2 548

Net investment income				1 076
Net realised investment gains/losses				699
Other revenues				69
Interest expenses				–255
Income before income tax expense				4 137

Claims ratio in %	44.4	70.1	40.6	54.5
Expense ratio in %	25.3	34.0	27.5	29.2
Combined ratio in %	69.7	104.1	68.1	83.7

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2015 USD millions	Property	Casualty	Specialty	Total
Premiums earned	6 092	6 602	2 396	15 090

Expenses
Claims and claim adjustment expenses	–2 567	–4 139	–1 186	–7 892
Acquisition costs	–1 198	–2 053	–585	–3 836
Other expenses	–689	–401	–157	–1 247
Total expenses before interest expenses	–4 454	–6 593	–1 928	–12 975

Underwriting result	1 638	9	468	2 115

Net investment income				1 097
Net realised investment gains/losses				445
Other revenues				45
Interest expenses				–262
Income before income tax expense				3 440

Claims ratio in %	42.1	62.7	49.5	52.3
Expense ratio in %	31.0	37.2	31.0	33.7
Combined ratio in %	73.1	99.9	80.5	86.0

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

For the year ended 31 December

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2014
USD millions

Life

Health

Total

¹	Operating margin is calculated as operating income divided by total operating revenues. Total operating revenues are total revenues excluding unit-linked and with-profit revenues.

Revenues

Premiums earned

7 166

4 046

11 212

Fee income from policyholders

Net investment income – non-participating business

944

600

1 544

Net investment income – unit-linked and with-profit business

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

Net realised investment gains/losses – insurance-related derivatives

121

–7

114

Total revenues before non-participating realised gains/losses

8 359

4 639

12 998

Expenses

Life and health benefits

–5 890

–3 304

–9 194

Return credited to policyholders

–99

Acquisition costs

–1 808

–681

–2 489

Other expenses

–628

–257

–885

Total expenses before interest expenses

–8 425

–4 242

–12 667

Operating income/loss

–66

397

331

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

–369

Interest expenses

–438

Loss before income tax benefit

–476

Management expense ratio in %

7.7

5.5

6.9

Operating margin¹ in %

–0.8

8.6

2.6

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2015
USD millions

Life

Health

Total

¹	Operating margin is calculated as operating income divided by total operating revenues. Total operating revenues are total revenues excluding unit-linked and with-profit revenues.

Revenues

Premiums earned

7 114

3 800

10 914

Fee income from policyholders

Net investment income – non-participating business

866

465

1 331

Net investment income – unit-linked and with-profit business

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

Net realised investment gains/losses – insurance-related derivatives

132

Other revenues

Total revenues before non-participating realised gains/losses

8 164

4 309

12 473

Expenses

Life and health benefits

–5 563

–2 727

–8 290

Return credited to policyholders

–60

Acquisition costs

–1 258

–728

–1 986

Other expenses

–642

–261

–903

Total expenses before interest expenses

–7 523

–3 716

–11 239

Operating income

641

593

1 234

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

178

Interest expenses

–278

Income before income tax expense

1 134

Management expense ratio in %

8.0

6.1

7.3

Operating margin¹ in %

7.9

13.8

9.9

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	2014	2015
Americas	12 199	13 230
Europe (including Middle East and Africa)	11 316	10 333
Asia-Pacific	7 747	6 651
Total	31 262	30 214

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

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USD millions	2014	2015
United States	9 422	10 259
United Kingdom	3 620	3 516
China	3 059	2 516
Australia	2 132	1 639
Germany	1 429	1 217
Canada	1 383	1 190
Japan	1 034	960
Ireland	903	782
France	948	755
Switzerland	743	745
Republic of Korea	436	466
Other	6 153	6 169
Total	31 262	30 214

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

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2 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

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2 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

DISCLAIMER & CAUTIONARY STATEMENT

Admin Re^®