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 Life Capital. 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 50 offices worldwide.

Life Capital

Life Capital manages Swiss Re’s primary life and health business. It encompasses the closed and open life and health insurance books, including the ReAssure business and the primary life and health insurance business comprising elipsLife and iptiQ. Through ReAssure, Swiss Re acquires closed blocks of inforce 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. In the open books business, elipsLife, the Group life and health insurance business, offers solutions to pension funds, corporates and affinity groups through an intermediated business to business (“B2B”) model. The iptiQ business, primarily the individual life and health business, partners with distributors and enables individuals to address their protection needs on a white labelled basis.

Group items

Items not allocated to the business segments are included in the “Group items” column, which encompasses Swiss Re Ltd, the Group’s 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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2016 USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Life Capital	Group items	Consolidation	Total
Revenues
Gross premiums written	18 149	12 801	4 155	1 489		–972	35 622
Net premiums written	17 768	11 459	3 662	681			33 570
Change in unearned premiums	–760	27	–159	13			–879
Premiums earned	17 008	11 486	3 503	694			32 691
Fee income from policyholders		41		499			540
Net investment income – non-participating business	985	1 279	138	1 256	101	–98	3 661
Net realised investment gains/losses – non-participating business	770	232	51	503	–72		1 484
Net investment result – unit-linked and with-profit business		15		5 367			5 382
Other revenues	37	5	5	1	346	–366	28
Total revenues	18 800	13 058	3 697	8 320	375	–464	43 786

Expenses
Claims and claim adjustment expenses	–10 301		–2 263				–12 564
Life and health benefits		–8 963		–1 896			–10 859
Return credited to policyholders		–39		–5 060			–5 099
Acquisition costs	–4 405	–1 943	–517	–63			–6 928
Operating expenses	–1 204	–763	–760	–503	–473	345	–3 358
Total expenses before interest expenses	–15 910	–11 708	–3 540	–7 522	–473	345	–38 808

Income/loss before interest and income tax expense/benefit	2 890	1 350	157	798	–98	–119	4 978
Interest expenses	–293	–301	–23	–29	–79	119	–606
Income/loss before income tax expense/benefit	2 597	1 049	134	769	–177	0	4 372
Income tax expense/benefit	–479	–193	–1	–131	55		–749
Net income/loss before attribution of non-controlling interests	2 118	856	133	638	–122	0	3 623

Income/loss attributable to non-controlling interests	1		2				3
Net income/loss after attribution of non-controlling interests	2 119	856	135	638	–122	0	3 626

Interest on contingent capital instruments, net of tax	–19	–49					–68
Net income/loss attributable to common shareholders	2 100	807	135	638	–122	0	3 558

Claims ratio in %	60.5		64.6				61.2
Expense ratio in %	33.0		36.5				33.6
Combined ratio in %	93.5		101.1				94.8
Management expense ratio in %		6.0
Net operating margin in %	15.4	10.4	4.2	27.0	–26.1		13.0

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2017 USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Life Capital	Group items	Consolidation	Total
Revenues
Gross premiums written	16 544	13 313	4 193	1 761		–1 036	34 775
Net premiums written	16 031	11 826	3 600	859			32 316
Change in unearned premiums	636	25	51	91			803
Premiums earned	16 667	11 851	3 651	950			33 119
Fee income from policyholders		129		457			586
Net investment income – non-participating business	1 017	1 308	161	1 193	184	–155	3 708
Net realised investment gains – non-participating business	613	591	128	133	262		1 727
Net investment result – unit-linked and with-profit business		81		3 234			3 315
Other revenues	48	3	5	2	359	–385	32
Total revenues	18 345	13 963	3 945	5 969	805	–540	42 487

Expenses
Claims and claim adjustment expenses	–13 172		–3 558				–16 730
Life and health benefits		–9 211		–1 872			–11 083
Return credited to policyholders		–119		–3 179			–3 298
Acquisition costs	–4 253	–2 064	–554	–106			–6 977
Operating expenses	–1 159	–754	–759	–514	–474	352	–3 308
Total expenses before interest expenses	–18 584	–12 148	–4 871	–5 671	–474	352	–41 396

Income/loss before interest and income tax expense/benefit	–239	1 815	–926	298	331	–188	1 091
Interest expenses	–280	–315	–23	–35	–101	188	–566
Income/loss before income tax expense/benefit	–519	1 500	–949	263	230	0	525
Income tax expense/benefit	125	–360	203	–102	2		–132
Net income/loss before attribution of non-controlling interests	–394	1 140	–746	161	232	0	393

Income/loss attributable to non-controlling interests			5				5
Net income/loss after attribution of non-controlling interests	–394	1 140	–741	161	232	0	398

Interest on contingent capital instruments, net of tax	–19	–48					–67
Net income/loss attributable to common shareholders	–413	1 092	–741	161	232	0	331

Claims ratio in %	79.0		97.4				82.3
Expense ratio in %	32.5		36.0				33.1
Combined ratio in %	111.5		133.4				115.4
Management expense ratio in %		5.7
Net operating margin in %	–1.3	13.1	–23.5	10.9	41.1		2.8

Business segments – balance sheet

As of 31 December

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2016 USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Life Capital	Group items	Consolidation	Total
Assets
Fixed income securities	31 574	29 980	6 361	25 350	11		93 276
Equity securities	1 292	867	539		737		3 435
Other investments	11 962	3 355	141	2 421	4 785	–7 446	15 218
Short-term investments	4 672	2 558	1 272	1 456	951		10 909
Investments for unit-linked and with-profit business		548		31 630			32 178
Cash and cash equivalents	4 922	410	472	2 636	571		9 011
Deferred acquisition costs	2 280	3 465	444	11			6 200
Acquired present value of future profits		966		1 037			2 003
Reinsurance recoverable	2 449	1 580	5 698	2 210		–4 476	7 461
Other reinsurance assets	9 620	6 369	2 616	3 949	4	–1 104	21 454
Goodwill	1 852	1 810	173	130			3 965
Other	8 640	4 049	1 279	1 470	1 181	–6 664	9 955
Total assets	79 263	55 957	18 995	72 300	8 240	–19 690	215 065

Liabilities
Unpaid claims and claim adjustment expenses	39 753	10 288	10 271	1 498		–4 455	57 355
Liabilities for life and health policy benefits		15 431	268	25 499		–22	41 176
Policyholder account balances		1 566		32 788			34 354
Other reinsurance liabilities	10 816	1 709	4 310	684	2	–1 435	16 086
Short-term debt	1 202	5 221		80	431	–5 370	1 564
Long-term debt	3 307	5 074	497	1 465	80	–636	9 787
Other	11 124	9 106	1 370	3 014	2 183	–7 770	19 027
Total liabilities	66 202	48 395	16 716	65 028	2 696	–19 688	179 349

Shareholders’ equity	13 040	7 562	2 218	7 272	5 544	–2	35 634

Non-controlling interests	21		61				82
Total equity	13 061	7 562	2 279	7 272	5 544	–2	35 716

Total liabilities and equity	79 263	55 957	18 995	72 300	8 240	–19 690	215 065

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2017 USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Life Capital	Group items	Consolidation	Total
Assets
Fixed income securities	34 189	32 642	8 356	26 528	71		101 786
Equity securities	1 893	945	455	32	540		3 865
Other investments	14 460	3 212	191	2 697	5 530	–9 856	16 234
Short-term investments	1 608	996	482	1 711	49		4 846
Investments for unit-linked and with-profit business		585		34 581			35 166
Cash and cash equivalents	1 334	1 595	654	2 959	264		6 806
Deferred acquisition costs	2 146	4 234	454	37			6 871
Acquired present value of future profits		921		1 068			1 989
Reinsurance recoverable	2 541	4 638	5 737	5 200		–10 174	7 942
Other reinsurance assets	10 293	10 669	2 477	7 666	2	–8 118	22 989
Goodwill	1 944	1 873	213	142			4 172
Other	10 067	2 249	1 717	2 100	1 819	–8 092	9 860
Total assets	80 475	64 559	20 736	84 721	8 275	–36 240	222 526

Liabilities
Unpaid claims and claim adjustment expenses	45 276	12 129	11 818	2 308		–4 736	66 795
Liabilities for life and health policy benefits		18 230	279	29 491		–5 439	42 561
Policyholder account balances		1 574		35 963			37 537
Other reinsurance liabilities	10 245	5 528	4 177	4 410	2	–8 448	15 914
Short-term debt	807	4 766		904	60	–6 104	433
Long-term debt	3 500	6 914	497	1 603		–2 366	10 148
Other	9 891	7 197	1 411	2 954	2 538	–9 147	14 844
Total liabilities	69 719	56 338	18 182	77 633	2 600	–36 240	188 232

Shareholders’ equity	10 755	8 221	2 385	7 088	5 675	0	34 124

Non-controlling interests	1		169				170
Total equity	10 756	8 221	2 554	7 088	5 675	0	34 294

Total liabilities and equity	80 475	64 559	20 736	84 721	8 275	–36 240	222 526

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

For the year ended 31 December

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2016 USD millions	Property	Casualty	Specialty	Unallocated	Total
Revenues
Gross premiums written	6 794	8 874	2 481		18 149
Net premiums written	6 499	8 833	2 436		17 768
Change in unearned premiums	153	–830	–83		–760
Premiums earned	6 652	8 003	2 353		17 008
Net investment income				985	985
Net realised investment gains/losses				770	770
Other revenues				37	37
Total revenues	6 652	8 003	2 353	1 792	18 800

Expenses
Claims and claim adjustment expenses	–3 745	–5 466	–1 090		–10 301
Acquisition costs	–1 351	–2 468	–586		–4 405
Operating expenses	–665	–385	–154		–1 204
Total expenses before interest expenses	–5 761	–8 319	–1 830	0	–15 910

Income/loss before interest and income tax expense	891	–316	523	1 792	2 890
Interest expenses				–293	–293
Income/loss before income tax expense	891	–316	523	1 499	2 597

Claims ratio in %	56.3	68.3	46.4		60.5
Expense ratio in %	30.3	35.6	31.4		33.0
Combined ratio in %	86.6	103.9	77.8		93.5

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2017 USD millions	Property	Casualty	Specialty	Unallocated	Total
Revenues
Gross premiums written	6 505	7 715	2 324		16 544
Net premiums written	6 115	7 665	2 251		16 031
Change in unearned premiums	140	435	61		636
Premiums earned	6 255	8 100	2 312		16 667
Net investment income				1 017	1 017
Net realised investment gains/losses				613	613
Other revenues				48	48
Total revenues	6 255	8 100	2 312	1 678	18 345

Expenses
Claims and claim adjustment expenses	–5 635	–6 041	–1 496		–13 172
Acquisition costs	–1 228	–2 414	–611		–4 253
Operating expenses	–636	–356	–167		–1 159
Total expenses before interest expenses	–7 499	–8 811	–2 274	0	–18 584

Income/loss before interest and income tax expense	–1 244	–711	38	1 678	–239
Interest expenses				–280	–280
Income/loss before income tax expense	–1 244	–711	38	1 398	–519

Claims ratio in %	90.1	74.6	64.7		79.0
Expense ratio in %	29.8	34.2	33.7		32.5
Combined ratio in %	119.9	108.8	98.4		111.5

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

For the year ended 31 December

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2016
USD millions

Life

Health

Unallocated

Total

¹	The Group revised the methodology for allocating investment return to lines of business. Comparative information for 2016 has been adjusted accordingly.
²	Net operating margin is calculated as "Income before interest and income tax expense" divided by "Total revenues" excluding "Net investment result – unit-linked and with-profit business".

Revenues

Gross premiums written

9 026

3 775

12 801

Net premiums written

7 773

3 686

11 459

Change in unearned premiums

Premiums earned

7 778

3 708

11 486

Fee income from policyholders

Net investment income – non-participating business¹

912

367

1 279

Net realised investment gains/losses – non-participating business

–4

215

232

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

Other revenues

Total revenues

8 772

4 071

215

13 058

Expenses

Life and health benefits

–6 093

–2 870

–8 963

Return credited to policyholders

–39

Acquisition costs

–1 237

–706

–1 943

Operating expenses

–536

–227

–763

Total expenses before interest expenses

–7 905

–3 803

–11 708

Income before interest and income tax expense

867

268

215

1 350

Interest expenses

–301

Income/loss before income tax expense

867

268

–86

1 049

Management expense ratio in %

6.1

5.6

6.0

Net operating margin² in %

9.9

6.6

10.4

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2017
USD millions

Life

Health

Unallocated

Total

¹	Net operating margin is calculated as "Income before interest and income tax expense" divided by "Total revenues" excluding "Net investment result – unit-linked and with-profit business".

Revenues

Gross premiums written

9 525

3 788

13 313

Net premiums written

8 138

3 688

11 826

Change in unearned premiums

–54

Premiums earned

8 217

3 634

11 851

Fee income from policyholders

129

Net investment income – non-participating business

1 023

285

1 308

Net realised investment gains/losses – non-participating business

–1

535

591

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

Other revenues

Total revenues

9 510

3 918

535

13 963

Expenses

Life and health benefits

–6 491

–2 720

–9 211

Return credited to policyholders

–119

Acquisition costs

–1 432

–632

–2 064

Operating expenses

–533

–221

–754

Total expenses before interest expenses

–8 575

–3 573

–12 148

Income before interest and income tax expense

935

345

535

1 815

Interest expenses

–315

Income before income tax expense

935

345

220

1 500

Management expense ratio in %

5.7

5.6

5.7

Net operating margin¹ in %

9.9

8.8

13.1

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

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

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USD millions	2016	2017
Americas	15 102	16 101
Europe (including Middle East and Africa)	10 928	10 546
Asia-Pacific	7 201	7 058
Total	33 231	33 705

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

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USD millions	2016	2017
United States	12 401	13 509
United Kingdom	3 759	3 382
Australia	1 919	2 095
China	2 425	1 933
Germany	1 200	1 258
Japan	1 105	1 168
Canada	1 107	1 137
Switzerland	902	886
France	733	730
Ireland	754	673
Spain	472	524
Other	6 454	6 410
Total	33 231	33 705

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