EVM financial information

EVM income statement

For the years ended 31 December

USD millions, unless otherwise stated	2016	2017

Underwriting result
Gross premiums and fees	47 235	41 846
Gross premiums and fees growth rate, %	15.3	–11.4
Premiums and fees	46 566	40 796
Premiums and fees retention rate, %	98.6	97.5
Premiums and fees growth rate, %	14.8	–12.4
Claims and benefits	–31 668	–30 017
Commissions	–8 492	–7 413
Other	–240	136
Gross underwriting result – new business	6 166	3 502
Expenses	–3 314	–3 390
Net underwriting result – new business	2 852	112
Taxes	–744	18
Capital costs	–1 224	–1 475
EVM profit – new business	884	–1 345
EVM profit – previous years’ business	–579	–148
EVM profit – underwriting	305	–1 493
Investment result
Mark-to-market investment result	7 500	5 132
Benchmark investment result	–4 266	–1 761
Gross outperformance (underperformance)	3 234	3 371
Other	121	125
Expenses	–274	–253
Net outperformance (underperformance)	3 081	3 243
Taxes	–743	–747
Capital costs	–1 244	–1 012
EVM profit – investments	1 094	1 484
EVM profit	1 399	–9
Cost of debt	–461	–626
Release of current year capital costs	2 778	2 792
Additional taxes	515	–290
Total contribution to ENW	4 231	1 867

Profit margin – new business, %	3.1	–4.1
Profit margin – previous years’ business, %	–2.9	–0.8
Profit margin – investments, %	12.0	16.5

EVM balance sheet

As of 31 December

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USD millions	2016	2017
Assets
Investments	164 314	162 873
Cash and cash equivalents	9 007	6 467
In-force business assets	197 647	224 231
Retrocession assets	24 457	25 000
Other assets	3 017	3 998
Total assets	398 442	422 569

Liabilities
In-force business liabilities	304 359	331 288
Retrocession liabilities	19 663	19 835
Provision for capital costs	9 260	9 034
Future income tax liabilities	4 606	4 914
Debt	14 199	13 095
Other liabilities	9 707	6 736
Total liabilities	361 794	384 902
Economic net worth	36 648	37 667
Total liabilities and economic net worth	398 442	422 569

Statement of economic net worth

For the years ended 31 December

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USD millions	2016	2017

Economic net worth as of 1 January	37 358	36 648
Change in EVM methodology	–1 699
Adjusted economic net worth as of 1 January	35 659	36 648
Total contribution to ENW	4 231	1 867
Dividends and share buy-back	–2 662	–2 629
Other, including foreign exchange on economic net worth	–580	1 781
Economic net worth as of 31 December	36 648	37 667
Common shares outstanding as of 31 December	325 978 727	314 585 765
Economic net worth per share in USD as of 31 December	112.42	119.74

Business segments – EVM income statement

For the years ended 31 December

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USD millions, unless otherwise stated

Property & Casualty Reinsurance

Life & Health Reinsurance

Corporate Solutions

Life Capital

Group items

Total

¹	The overall previous years’ business profit margin for the Business Unit Reinsurance was –1.1%.

2016

Underwriting result

Gross premiums and fees

18 493

23 796

4 067

879

47 235

Gross premiums and fees growth rate, %

–1.7

34.7

8.7

17.2

15.3

Premiums and fees

18 440

24 060

3 708

358

46 566

Premiums and fees retention rate, %

99.7

101.1

91.2

40.7

98.6

Premiums and fees growth rate, %

–1.4

33.9

4.5

0.6

14.8

Claims and benefits

–11 539

–17 748

–2 092

–289

–31 668

Commissions

–4 308

–3 609

–570

–5

–8 492

Other

–34

–57

–137

–5

–7

–240

Gross underwriting result – new business

2 559

2 646

909

–7

6 166

Expenses

–1 335

–862

–842

–188

–87

–3 314

Net underwriting result – new business

1 224

1 784

–129

–94

2 852

Taxes

–346

–408

–68

–744

Capital costs

–598

–281

–143

–49

–153

–1 224

EVM profit – new business

280

1 095

–144

–163

–184

884

EVM profit – previous years’ business

311

–494

–26

–406

–579

EVM profit – underwriting

591

601

–170

–569

–148

305

Investment result

Mark-to-market investment result

1 626

2 317

261

3 211

7 500

Benchmark investment result

–1 073

–1 086

–100

–1 960

–47

–4 266

Gross outperformance (underperformance)

553

1 231

161

1 251

3 234

Other

121

Expenses

–88

–69

–19

–52

–46

–274

Net outperformance (underperformance)

518

1 185

150

1 236

–8

3 081

Taxes

–124

–289

–36

–296

–743

Capital costs

–423

–300

–55

–256

–210

–1 244

EVM profit – investments

–29

596

684

–216

1 094

EVM profit

562

1 197

–111

115

–364

1 399

Cost of debt

–212

–154

–14

–63

–18

–461

Release of current year capital costs

1 008

757

202

426

385

2 778

Additional taxes

231

116

121

–16

515

Total contribution to ENW

1 589

1 916

140

599

–13

4 231

Profit margin – new business, %

1.9

11.0

–4.2

−

3.1

Profit margin – previous years’ business, %¹

5.1

–4.7

–2.1

–17.8

–2.9

Profit margin – investments, %

–1.0

14.7

10.9

–15.7

12.0

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USD millions, unless otherwise stated

Property & Casualty Reinsurance

Life & Health Reinsurance

Corporate Solutions

Life Capital

Group items

Total

¹	The overall previous years’ business profit margin for the Business Unit Reinsurance was 0.8%.

2017

Underwriting result

Gross premiums and fees

17 668

18 923

4 088

1 167

41 846

Gross premiums and fees growth rate, %

–4.5

–20.5

0.5

32.8

–11.4

Premiums and fees

17 495

18 974

3 685

642

40 796

Premiums and fees retention rate, %

99.0

100.3

90.1

55.0

97.5

Premiums and fees growth rate, %

–5.1

–21.1

–0.6

79.3

–12.4

Claims and benefits

–13 253

–13 330

–2 929

–505

–30 017

Commissions

–4 156

–2 628

–561

–68

–7 413

Other

–47

–37

–92

309

136

Gross underwriting result – new business

2 979

103

378

3 502

Expenses

–1 320

–909

–843

–203

–115

–3 390

Net underwriting result – new business

–1 281

2 070

–740

175

–112

112

Taxes

172

–369

129

Capital costs

–384

–714

–128

–65

–184

–1 475

EVM profit – new business

–1 493

987

–739

132

–232

–1 345

EVM profit – previous years’ business

120

–257

–42

–148

EVM profit – underwriting

–1 373

998

–996

152

–274

–1 493

Investment result

Mark-to-market investment result

1 287

1 912

273

1 099

561

5 132

Benchmark investment result

–542

–757

–116

–295

–51

–1 761

Gross outperformance (underperformance)

745

1 155

157

804

510

3 371

Other

125

Expenses

–87

–63

–14

–38

–51

–253

Net outperformance (underperformance)

716

1 118

152

798

459

3 243

Taxes

–162

–260

–35

–184

–106

–747

Capital costs

–342

–231

–38

–194

–207

–1 012

EVM profit – investments

212

627

420

146

1 484

EVM profit

–1 161

1 625

–917

572

–128

–9

Cost of debt

–352

–170

–39

–40

–25

–626

Release of current year capital costs

881

871

186

382

472

2 792

Additional taxes

–322

–146

–290

Total contribution to ENW

–954

2 180

–750

987

404

1 867

Profit margin – new business, %

–10.2

8.6

–21.2

4.3

–4.1

Profit margin – previous years’ business, %¹

1.9

0.1

–18.3

1.0

–0.8

Profit margin – investments, %

7.2

16.0

14.6

11.0

16.5

Business segments – EVM balance sheet

As of 31 December

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USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Life Capital	Group items	Consolidation	Total

2016
Assets
Investments	51 155	37 082	8 252	68 155	6 420	–6 750	164 314
Cash and cash equivalents	4 922	410	469	2 636	570		9 007
In-force business assets	14 725	177 930	2 891	10 003		–7 902	197 647
Retrocession assets	2 640	18 541	4 697	9 021		–10 442	24 457
Other assets	5 631	1 258	401	438	955	–5 666	3 017
Total assets	79 073	235 221	16 710	90 253	7 945	–30 760	398 442

Liabilities
In-force business liabilities	48 803	180 098	11 170	74 072	658	–10 442	304 359
Retrocession liabilities	472	18 520	983	7 590		–7 902	19 663
Provision for capital costs	212	7 033	214	1 801			9 260
Future income tax liabilities	1 541	2 574	317	251	–77		4 606
Debt	5 111	12 536	497	1 590	513	–6 048	14 199
Other liabilities	8 655	3 708	721	1 148	1 841	–6 366	9 707
Total liabilities	64 794	224 469	13 902	86 452	2 935	–30 758	361 794
Economic net worth	14 279	10 752	2 808	3 801	5 010	–2	36 648
Total liabilities and economic net worth	79 073	235 221	16 710	90 253	7 945	–30 760	398 442

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USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Life Capital	Group items	Consolidation	Total

2017
Assets
Investments	54 625	38 384	9 323	64 776	6 284	–10 519	162 873
Cash and cash equivalents	1 335	1 595	651	2 623	263		6 467
In-force business assets	16 446	223 346	2 962	32 100	3	–50 626	224 231
Retrocession assets	2 776	35 944	4 637	25 378		–43 735	25 000
Other assets	6 675	652	485	1 657	1 651	–7 122	3 998
Total assets	81 857	299 921	18 058	126 534	8 201	–112 002	422 569

Liabilities
In-force business liabilities	54 174	218 935	12 608	88 590	717	–43 736	331 288
Retrocession liabilities	537	40 151	912	28 861		–50 626	19 835
Provision for capital costs	97	7 179	198	1 560			9 034
Future income tax liabilities	1 513	3 259	79	239	–176		4 914
Debt	4 697	14 071	526	2 246	60	–8 505	13 095
Other liabilities	8 429	3 245	817	1 060	2 315	–9 130	6 736
Total liabilities	69 447	286 840	15 140	122 556	2 916	–111 997	384 902
Economic net worth	12 410	13 081	2 918	3 978	5 285	–5	37 667
Total liabilities and economic net worth	81 857	299 921	18 058	126 534	8 201	–112 002	422 569

Business segments – Statement of economic net worth

For the years ended 31 December

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USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Life Capital	Group items	Consolidation	Total

2017
Economic net worth as of 1 January	14 279	10 752	2 808	3 801	5 010	–2	36 648
Total contribution to ENW	–954	2 180	–750	987	404		1 867
Dividends and share buy-back	–1 950	–650	–150	–1 058	1 179		–2 629
Other, including foreign exchange on economic net worth	1 035	799	1 010	248	–1 308	–3	1 781
Economic net worth as of 31 December	12 410	13 081	2 918	3 978	5 285	–5	37 667

Comparison of EVM and US GAAP

The most significant differences between EVM and US GAAP are as follows:

Discounting: For EVM, all future expected cash flows are discounted using risk-free interest rates. Under US GAAP, most property and casualty reserves are undiscounted (except for reserves acquired in business combinations), whereas life and health reserves are usually discounted based on locked-in interest rate assumptions.
Investments and debt: For EVM, all investments and debt positions are carried at fair value. Under US GAAP, different treatment applies for certain investments (eg real estate is held at depreciated cost) and debt is carried at amortised cost rather than at fair value.
Reserving basis: For EVM, best estimate current assumptions are used for all re/insurance reserves. Under US GAAP, life and health assumptions are usually locked-in and can include a provision for adverse deviation.
Recognition differences: EVM considers the economic value related to annual management charges on unit-linked funds and adjusts for counterparty credit risk in the valuation of insurance related net assets. In addition, EVM does not show minority interests on the balance sheet, but consolidates assets and liabilities based on the proportion of the interest held by Swiss Re.
Goodwill and other intangibles: EVM excludes the recognition of potential future new business activities, including potential renewals. As a result, no goodwill or intangible assets are carried in the EVM balance sheet.
Taxes: For EVM, deferred tax assets and liabilities are recognised for temporary differences between US GAAP and EVM.
Capital costs: EVM recognises opportunity costs for shareholders’ capital. The present value of capital costs allocated to existing contracts are recognised in the EVM balance sheet.

Business segments – Reconciliation US GAAP

As of 31 December

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USD billions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Life Capital	Group items	Total

2016
US GAAP shareholders’ equity	13.0	7.6	2.2	7.3	5.5	35.6
Discounting	4.1	–0.4	0.2	–3.8	0.0	0.1
Investments and debt	1.3	–2.1	0.0	0.0	0.4	–0.4
Reserving basis
GAAP margins	0.0	15.2	0.0	2.8	0.0	18.0
Other	–0.3	–0.2	1.0	–0.6	–0.6	–0.7
Recognition differences	–0.1	0.1	0.0	–0.7	0.0	–0.7
Goodwill and other intangibles	–2.0	–1.8	–0.3	–0.1	–0.5	–4.7
Taxes	–1.5	–0.5	–0.3	0.6	0.1	–1.6
Capital costs	0.2	–7.1	–0.1	–1.7	–0.1	–8.8
Other	–0.5	0.0	0.1	0.0	0.2	–0.2
Total EVM valuation adjustments	1.2	3.2	0.6	–3.5	–0.5	1.0
Economic net worth	14.2	10.8	2.8	3.8	5.0	36.6

2017
US GAAP shareholders’ equity	10.7	8.2	2.4	7.1	5.7	34.1
Discounting	4.4	–0.3	0.4	–4.2	0.0	0.3
Investments and debt	1.8	–2.3	0.0	0.0	0.5	0.0
Reserving basis
GAAP margins	0.0	17.3	0.0	3.3	0.0	20.6
Other	–0.1	0.1	1.0	–0.5	–0.7	–0.2
Recognition differences	0.0	0.0	–0.1	–0.5	0.0	–0.6
Goodwill and other intangibles	–2.0	–1.9	–0.4	–0.2	–0.5	–5.0
Taxes	–2.0	–0.9	–0.3	0.6	0.1	–2.5
Capital costs	0.0	–7.1	–0.2	–1.6	0.0	–8.9
Other	–0.4	0.0	0.1	0.0	0.2	–0.1
Total EVM valuation adjustments	1.7	4.9	0.5	–3.1	–0.4	3.6
Economic net worth	12.4	13.1	2.9	4.0	5.3	37.7