Swiss Re is one of the leading global players in the market. The company has a strong history of profitability that was only affected by the claims related to 9/1l. The company is in the expansion spree in Asia particularly in China, India and Japan. It has a liaison office in all these countries and has got a branch license in china and Japan. Swiss Re is currently lobbying for obtaining a branch license in India as well. After starting of business, the countries will get access to the global capitaland for Swiss Re it’s a new market added with diversification of risks.
Swiss Re was founded in 1863 at Zurich, It is one c f the leading reinsurers of the world. Currently, it does business from over 70 offices in more than 30 countries and has on its rolls around 8,100 employees. The company provides risk transfer, risk management, alternative risk transfer (ART) and asset management services to its global clients through its three business groups — property and casualty; life and health; and financial services. The gross premiums written by the company in the financial year 2002 amounted to CHF 32.7 billion. The rating of Swiss Re from Standard & Poor’s is AA, Moody’s is Aal, and AM Best is A+ (superior). It is a public listed company and the shares are being traded in the Swiss exchange.
insurance cover among the households was highlighted at that point of time provide more effective means of coping with the risks posed by such
developed the Helvetia General Insurance Company in St. Gall, the
Schweizt Kreditanstalt (Credit Suisse) in Zurich and the Basler Handeisbank founded the Swiss Reinsurance Company in Zurich with a capital of six Swiss Francs. The fire also happened to be the motivation behind the
company ‘s fast growth in the initial years after its formation. Initially Swiss Re offered fire, marine reinsurance and later on added life insurance after two years business in 1880.
In 1906, the company suffered one of its biggest losses after the earthquake San Francisco. Swiss Re opened its overseas branch in the United States in its first step to overseas business. The company was also affected by the Titanic on 14/15 April 1912. It acquired major shareholding in Mercantile General in 1916 and acquired Bavarian Re in 1923. After the World War II was a season of economic boom. During the period, lot of developments took with regard to Swiss Re. In the same period Swiss Re’s business
presence increased in the United States, Canada, South Africa and Australia.
An advisory committee called, Swiss Re Advisers Limited was found in Hong Kong. In 1959, the corn premium income crossed one billion mark with 1,043 million Swiss Francs.
In 1977, Swiss Re acquired 94% shares of Switzerland General Insurance Company Ltd, Zurich. Swiss Re started selling its majority shareholdings in insurance companies from 1994. It merged with Union Re in 1998 of which it acquired majority stake holding in 1988. In 2001, Bavarian Re was made as Swiss Re Germany and Swiss Re restructured itself in making three
Swiss Re and the Impact of September 11
Swiss Re resulted in loss for the first time in its history of 138 years of profitability in 2001. This was mainly due to the impact of huge payouts of September attacks. Where the firm reported profit of 2.97 billion CHF in 2000, it reported loss of 165 million CHF in 2001 and 9l million in 2002.
The payouts arising from September 11 attacks amounted to CHF 2.95 billion. Chief executive Walter Kielholz said in an interview, “Despite the worst year ever for insured losses, Swiss Re strengthened its position during 2001 and is now well placed to capitalize on improving markets and achieve superior results in the coming years.” At the end of 2001, Swiss Re’s
shareholders’ equity amounted to CHF 22.6 billion (USD 13.6 billion) and the total balance sheet stood at CHF 170 billion (USD 02.4 billion).
In the first-half of 2002, Swiss Re profits came down to £50.91 million from
£582 million corresponding to the previous year. On this Mr. Kielholz said,
“however, in tough times experience tells us the opportunities are greatest for the strongest players. I believe this remains so now for Swiss Re.”
Expansion in Asian Countries
Swiss Re has been eying Asian market for long, specifically Japan, China and India and has taken significant steps to pursue the same. It has got entry into Chinese and Japanese market and is lobbying for an entry through branch network in India. In early 2002, Swiss Re relocated its Asian head
and future requirements of the Asian insurance industry. We chose Hong Kong as our Asian huh because it, has a strong infrastructure, is the gateway to China, is located centrally within Asia, and is already home to a number of other Swiss Re operations. There is also the availability of insurance and other financial professionals here,” he added.
China
Swiss Re opened its representative offices in Beijing and Shanghai in 1996 and 1997 respectively. In August 2002, Swiss Re received an authorization from China Insurance Regulatory Commission (CIRC) for operating a branch for both property! casualty as well as life reinsurance. According to Swiss Re officials, this is a step towards obtaining a full license and will enable them to establish local services within China in order to support and contribute to the growth of country’s insurance and reinsurance industry and economy per Se. Insurance market in China steadily growing and the growth in premium income has been 23.6% over the 10 years. Foreign insurance companies have increased from two in 1992 to date.
Commenting on this important approval, Mr. Pierre Ozendo, chief executive Swiss Re’s Asia Division, said “Swiss Re’s close relationship to the China insurance industry is an excellent foundation upon which to build as China to meet the growing needs of its economy and its people in protecting live property as well as business and asset growth.”
Swiss Re also believes in tile social growth of the Chinese economy and mat’. of fact it has set up a research center on natural catastrophe exposure insurance risks together with the Beijing Normal University in Beijing in
data, developing risk measures and maintaining close ties to other research Institutions and state organizations of interest. The main objective lies in developments of models for assessing risks and respective economic and insurance. models
On December 19, 2003, Swiss Re officially opened the branch office in Beijing “The Chinese insurance market today is demonstrating exciting growth. I delighted that Swiss Re has received authorization to open this branch and now participate directly in tile development of the market,” said Swiss Re CEOJohn Coomber, on the occasion.
Japan
December 2003, Swiss Re received a branch license to provide reinsurance service in Japan for both property/casualty as well as life and health
domains. Swiss happens to be the first leading global reinsurance player to obtain a full license to run a branch in Japan. “We are delighted to receive approval for our branch license Japan which will strengthen our ability to service our portfolio of valued clients Japan,” stated Swiss Re CEO, John Coomber on this occasion.Company’s relationship with Japan dates back to 1913 according to Swiss Re officials. The company runs a services company in Japan since 1999 in order to provide global business expertise to local players. Apart from this, the company was holding a representative office in Japan since 1972. Swiss Re though received non-life insurance license
risk management services, international technical expertise and other support services. It also has a wholly-owned subsidiary in India, Swiss Re Shared Services (India) Private Limited incorporated in 2000 for providing back office administration support. The center will handle contract administration, claims administration and reinsurance accounting support for all Swiss Re offices in Asia.
Indian regulations allow foreign reinsurers to set up a reinsurance company with an Indian partner and minimum capital of Rs. 200 crore where foreign participation is restricted to 26%. Swiss Re has been urging Indian regulator for de-linking reinsurance from direct insurance regulations and allowing reinsurance branching. Calling for an end to the joint venture requirements currently imposed on foreign reinsurers. Mr. Davinder Rajpal, Swiss Re Head of India, Turkey and Middle-East, pointed out the key benefits available from allowing wholly-owned reinsurance branches:
• A full range of technology know-how and services, available locally to serve India’s increasingly complex risk landscape;
• Local insurers can access reinsurer’s global balance sheet;
• Increased security and reduced credit risk due to the regulator’s direct supervision of reinsurance branches; and
• Encourages more foreign direct investment to India.
Swiss Re expects Asian market to grow substantially in the coming years and says, “In Asia, sound economic fundamentals will continue to support robust insurance business growth in 2004. Life insurance will in particular benefit from increasing affluence and rising risk awareness. Compared to
more mature markets, emerging Asia, in particular China and India, will remain highly attractive international insurers.”
Future Outlook
Swiss Re has been the first entrant in all the three emerging markets of Asia.
The company is backed by strong fundamentals, financials and global expertise. It possesses all the prerequisites to be a market leader in these countries. The presence of Swiss Re has been long in these nations and the representative offices had been opened at the right time. The major
challenge for Swiss Re as of now especially in India is the regulatory barrier.
So far Swiss Re is the first and only global player involved in reinsurance services in all the three markets. The company has already proven its
expertise for long in the global market and the presence has to be increased in these liberalized markets only by the passage of time.