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 to consumer (“B2B2C”) 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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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/losses – 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			2.8

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2018 USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Life Capital	Group items	Consolidation	Total
Revenues
Gross premiums written	16 545	14 527	4 694	2 739		–2 099	36 406
Net premiums written	16 098	12 647	4 122	1 175			34 042
Change in unearned premiums	–3	36	–197	–3			–167
Premiums earned	16 095	12 683	3 925	1 172			33 875
Fee income from policyholders		152		434			586
Net investment income – non-participating business	1 380	1 305	207	1 256	262	–335	4 075
Net realised investment gains – non-participating business	–16	347	16	66	–348		65
Net investment result – unit-linked and with-profit business		–33		–1 560			–1 593
Other revenues	36	1	3		353	–354	39
Total revenues	17 495	14 455	4 151	1 368	267	–689	37 047

Expenses
Claims and claim adjustment expenses	–11 614		–3 241				–14 855
Life and health benefits		–10 280		–1 489			–11 769
Return credited to policyholders		–5		1 038			1 033
Acquisition costs	–4 012	–2 045	–607	–255			–6 919
Operating expenses	–1 114	–758	–763	–549	–599	351	–3 432
Total expenses before interest expenses	–16 740	–13 088	–4 611	–1 255	–599	351	–35 942

Income/loss before interest and income tax expense/benefit	755	1 367	–460	113	–332	–338	1 105
Interest expenses	–313	–410	–24	–41	–105	338	–555
Income/loss before income tax expense/benefit	442	957	–484	72	–437	0	550
Income tax expense/benefit	–72	–155	75	–26	109		–69
Net income/loss before attribution of non-controlling interests	370	802	–409	46	–328	0	481

Income/loss attributable to non-controlling interests			4	–23			–19
Net income/loss after attribution of non-controlling interests	370	802	–405	23	–328	0	462

Interest on contingent capital instruments, net of tax		–41					–41
Net income/loss attributable to common shareholders	370	761	–405	23	–328	0	421

Claims ratio in %	72.2		82.6				74.2
Expense ratio in %	31.8		34.9				32.4
Combined ratio in %	104.0		117.5				106.6
Management expense ratio in %		5.4
Net operating margin in %	4.3	9.4	–11.1	3.9			2.9

Business segments – balance sheet

As of 31 December

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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

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2018 USD millions	Property & Casualty Reinsurance	Life & Health Reinsurance	Corporate Solutions	Life Capital	Group items	Consolidation	Total
Assets
Fixed income securities	35 968	29 158	8 157	22 637	32		95 952
Equity securities	1 776	670	180	69	341		3 036
Other investments	13 298	3 200	132	2 550	6 447	–12 276	13 351
Short-term investments	2 547	1 174	451	1 207	38		5 417
Investments for unit-linked and with-profit business		424		29 122			29 546
Cash and cash equivalents	1 651	1 705	796	1 605	228		5 985
Deferred acquisition costs	2 156	4 784	488	789			8 217
Acquired present value of future profits		804		1 014			1 818
Reinsurance recoverable	2 345	4 359	5 486	4 914		–10 046	7 058
Other reinsurance assets	9 715	9 304	2 461	6 859		–5 541	22 798
Goodwill	1 908	1 823	206	134			4 071
Other	8 798	4 169	2 108	1 823	1 752	–8 329	10 321
Total assets	80 162	61 574	20 465	72 723	8 838	–36 192	207 570

Liabilities
Unpaid claims and claim adjustment expenses	45 659	12 192	11 929	2 601	1	–4 936	67 446
Liabilities for life and health policy benefits		17 888	501	26 314		–5 110	39 593
Policyholder account balances		1 356		30 582			31 938
Other reinsurance liabilities	10 331	4 162	3 816	3 365	3	–5 812	15 865
Short-term debt	2 735	5 075		238		–6 415	1 633
Long-term debt	2 402	7 749	798	1 515	552	–4 514	8 502
Other	9 551	6 878	1 483	2 342	3 017	–9 405	13 866
Total liabilities	70 678	55 300	18 527	66 957	3 573	–36 192	178 843

Shareholders’ equity	9 483	6 274	1 795	5 113	5 265	0	27 930

Non-controlling interests	1		143	653			797
Total equity	9 484	6 274	1 938	5 766	5 265	0	28 727

Total liabilities and equity	80 162	61 574	20 465	72 723	8 838	–36 192	207 570

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

For the year ended 31 December

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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

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2018 USD millions	Property	Casualty	Specialty	Unallocated	Total
Revenues
Gross premiums written	6 403	7 595	2 547		16 545
Net premiums written	6 047	7 548	2 503		16 098
Change in unearned premiums	–18	116	–101		–3
Premiums earned	6 029	7 664	2 402		16 095
Net investment income				1 380	1 380
Net realised investment gains/losses				–16	–16
Other revenues				36	36
Total revenues	6 029	7 664	2 402	1 400	17 495

Expenses
Claims and claim adjustment expenses	–4 284	–5 860	–1 470		–11 614
Acquisition costs	–1 189	–2 228	–595		–4 012
Operating expenses	–547	–388	–179		–1 114
Total expenses before interest expenses	–6 020	–8 476	–2 244	0	–16 740

Income/loss before interest and income tax expense	9	–812	158	1 400	755
Interest expenses				–313	–313
Income/loss before income tax expense	9	–812	158	1 087	442

Claims ratio in %	71.1	76.5	61.2		72.2
Expense ratio in %	28.8	34.1	32.2		31.8
Combined ratio in %	99.9	110.6	93.4		104.0

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

For the year ended 31 December

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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

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2018
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

10 356

4 171

14 527

Net premiums written

8 606

4 041

12 647

Change in unearned premiums

Premiums earned

8 635

4 048

12 683

Fee income from policyholders

152

Net investment income – non-participating business

1 001

304

1 305

Net realised investment gains/losses – non-participating business

–4

292

347

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

–33

Other revenues

Total revenues

9 815

4 348

292

14 455

Expenses

Life and health benefits

–7 128

–3 152

–10 280

Return credited to policyholders

–5

Acquisition costs

–1 449

–596

–2 045

Operating expenses

–513

–245

–758

Total expenses before interest expenses

–9 095

–3 993

–13 088

Income before interest and income tax expense

720

355

292

1 367

Interest expenses

–410

Income/loss before income tax expense

720

355

–118

957

Management expense ratio in %

5.2

5.6

5.4

Net operating margin¹ in %

7.3

8.2

9.4

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	2017	2018
Americas	16 101	16 075
Europe (including Middle East and Africa)	10 546	11 044
Asia-Pacific	7 058	7 342
Total	33 705	34 461

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

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USD millions	2017	2018
United States	13 509	13 519
United Kingdom	3 382	3 487
Australia	2 095	2 061
China	1 933	1 644
Japan	1 168	1 426
Germany	1 258	1 226
Canada	1 137	1 209
Switzerland	886	952
Netherlands	502	837
France	730	789
Ireland	673	685
Other	6 432	6 626
Total	33 705	34 461

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