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Annual Report 2017

Life & Health Reinsurance

Net income was USD 1.1 billion for 2017, a significant increase from the previous year’s net income of USD 807 million, mainly due to higher realised gains from sales of equity securities and stable underwriting performance. The underwriting result in the current year reflected the transactions closed and continued growth in the US and Asian markets and net positive valuation updates, partly impacted by adverse claims experience in the US individual life and UK critical illness portfolios. The return on equity was 15.3%, compared to 12.8% reported for 2016.

Life & Health results


USD millions



Change in %





Gross premiums written

12 801

13 313


Net premiums written

11 459

11 826


Change in unearned premiums




Premiums earned

11 486

11 851


Fee income from policyholders



Net investment income – non-participating business

1 279

1 308


Net realised investment gains/losses – non-participating business




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



Other revenues




Total revenues

13 058

13 963










Life and health benefits

–8 963

–9 211


Return credited to policyholders



Acquisition costs

–1 943

–2 064


Operating expenses




Total expenses before interest expenses

–11 708

–12 148






Income before interest and income tax expense

1 350

1 815


Interest expenses




Income before income tax expense

1 049

1 500


Income tax expense




Net income before attribution of non-controlling interests


1 140






Income/loss attributable to non-controlling interests




Net income after attribution of non-controlling interests


1 140






Interest on contingent capital instruments, net of tax




Net income attributable to common shareholders


1 092






Management expense ratio in %




Net operating margin in %





Premiums earned by line of business, 2017

Total: USD 11.9 billion

Life & Health Reinsurance – Premiums earned by line of business, 2017 (bar chart)

Net premiums earned and fee income in 2017 increased by 3.9% to USD 12.0 billion compared to USD 11.5 billion for the prior year. Gross premiums written increased by 4.0% to USD 13.3 billion compared to USD 12.8 billion for the prior year. The increase in premiums was mainly due to new business wins and growth in the US and Asia.

Net operating margin

The net operating margin for 2017 was 13.1%, increasing significantly from 10.4% in 2016 mainly due to higher realised gains.

Management expense ratio

The management expense ratio was 5.7%, a slight decrease from 6.0% in 2016.

Lines of business

Income before interest and income tax expense (EBIT) for the Life segment increased to USD 935 million for 2017, from USD 867 million in the prior year. The results in 2017 reflected the new business wins and growth across markets, supported by a higher investment income allocation. In addition, the experience in the US individual life portfolio was less unfavourable in the current year.

EBIT for the Health segment increased to USD 345 million for 2017 from USD 268 million in the prior year. The current year reflected the significant growth in the health portfolio in Asia and net favourable valuation updates. This was partly offset by the adverse performance in the UK critical illness business and a lower investment income allocation.

Investment result

The return on investments for 2017 was 4.3%, compared to 3.6% in 2016, reflecting an increase in the investment result of USD 280 million.

Net investment income increased slightly by USD 5 million to USD 1 105 million in 2017. The fixed income running yield for 2017 was 3.3%.

Net realised gains were USD 459 million in 2017, compared to USD 184 million for the prior year, reflecting additional gains from sales of equity securities and corporate bonds.

Insurance-related investment results as well as foreign exchange gains/losses are not included in the figures above.

Shareholders’ equity

Common shareholders’ equity increased to USD 7.5 billion as of 31 December 2017 from USD 6.8 billion as of 31 December 2016. The movement of USD 659 million in equity reflected the net income increase and changes in net unrealised gains, partly offset by dividends of USD 650 million paid to the Group.

Return on equity was strong at 15.3% in 2017, compared to 12.8% in 2016. The increase was due to a higher net income in 2017, partly offset by a higher average equity balance.


We expect life and health reinsurance business to be relatively flat in mature markets and to increase in high-growth markets. In mature markets, the prolonged low interest rate environment continues to have an unfavourable impact on long-term life business. Cession rates in the US have decreased in recent years as primary insurers retain more risk, but have now generally levelled off. However, we see a strong focus on capital, risk and balance sheet optimisation in mature markets, leading to opportunities for large transactions. High-growth markets are expected to see strong increases in primary life and health volumes and cession rates are expected to be stable.

We will continue to pursue growth opportunities in high-growth markets and in large transactions, including longevity deals. We are responding to the expanding need for health protection driven by ageing societies and we will apply our risk knowledge experience to help reduce the protection gap in all regions.