In 2007 the Group has charged expenses of CHF 31 million against the provision for Insurance Solution activities and CHF 46 million for the existing Swiss Re activities.
2007 CHF millions
Property
& Casualty
Life
& Health
Financial
Markets Total
Balance as of 1 January 99 30 38 167
Increase in provision 5 1 1 7
Release of provision –3 –6 –1 –10
Costs incurred –55 –14 –8 –77
Effect of foreign currency translation –3 –1 –2 –6
Balance as of 31 December 43 10 28 81
Financial statements Notes to the Group financial statements
18 Changes to Group presentation and disclosure
In 2007, the Group changed the organisational structure resulting in a more complete integra-tion of Financial Services business within Swiss Re. Following the new structure, the Group presents three operating business segments – Property & Casualty, Life & Health and Financial Markets. Items not allocated to these three business segments are included in the “Group items” column.
The operating segments are determined by the organisational structure and by the way in which management reviews the operating result of the Group.
The Property & Casualty segment consists of the following sub-segments: Property traditional, Casualty traditional, Specialty traditional and non-traditional business. The Specialty tradition-al sub-segment includes certain parts of the former Credit Solutions business; Credit Reinsur-ance, Financial Guaranty business, Bank Trade Finance and Credit securitisations.
Certain parts of the former Capital Management and Advisory business are now included in the Property & Casualty business segment, including revenues and expenses related to Property & Casualty insurance-linked securities.
The Life & Health segment continues to consist of the following sub-segments: Life traditional, Health traditional and Admin Re.
Certain parts of the former Capital Management and Advisory business are now included in the Life & Health business segment, including variable annuity business.
The Financial Markets business segment consists of the following sub-segments: Credit and Rates, Equities and Alternative Investments and Other.
The Financial Markets business segment includes proprietary returns on the Group’s invested fixed income securities, equity securities and alternative investments. Third-party asset man-agement is included in Credit and Rates.
The sub-segment Other includes mark-to-market gains/losses on structured credit products.
Group items include certain costs of corporate centre functions not allocated to the business segments, certain foreign exchange items, interest expenses on operating and financial debt (except for directly allocated interest expenses to the segments) and other items not consid-ered for the performance of the operating segments.
With the new segment structure, the allocation of investment results has been revised. Certain investment results, including investment income and realised gains on unit-linked business, with-profit business and reinsurance derivatives are excluded from the performance of the Financial Markets business segment and directly allocated to the Property & Casualty and Life & Health business segments.
Proprietary return reported in Financial Markets is allocated to the Property & Casualty or Life
& Health business segments. The allocation is now based on technical reserves and other in-formation, including duration of the underlying liabilities.
The investment result of the Other sub-segment in Financial Markets is not allocated to the Property & Casualty or Life & Health segments.
Segment disclosure
Allocated investment return
Financial statements Notes to the Group financial statements
The “Allocation” column eliminates Financial Markets investment result as well as other reve-nues and/or expenses directly allocated to either the Property & Casualty or the Life & Health business segments.
As a consequence of the integration of Financial Services within the Group Structure business segment, Financial Services assets and Financial Services liabilities are no longer disclosed separately in the balance sheet. The respective positions have been incorporated within exist-ing balance sheet line items. The information on the fundexist-ing business is still available (see note 6).
The following table shows the result of the integration as of 31 December 2006:
As of 31 December 2006 CHF millions
Before change in
Group structure Reclassifications
After change in Group structure Assets
Fixed income securities, trading 22 622 22 040 44 662
Equity securities, trading 20 828 1674 22 502
Policy loans, mortgages and other loans 7 058 1 016 8 074
Short-term investments 9 464 293 9 757
Other invested assets 4 336 6 708 11 044
Accrued investment income 1 782 184 1 966
Premiums and other receivables 14 726 45 14 771
Other assets 5 045 392 5 437
Financial Services assets – fixed income securities,
trading 23 714 –23 714 0
Other Financial Services assets 8 638 –8 638 0
Assets not affected by the reclassifications1 173 087 0 173 087
Total assets 291 300 0 291 300
Liabilities
Short-term debt 1 917 7 201 9 118
Accrued expenses and other liabilities 6 470 18 407 24 877
Long-term debt 7 973 6 765 14 738
Financial Services liabilities – short-term debt 7 201 –7 201 0 Financial Services liabilities – long-term debt 6 765 –6 765 0
Other Financial Services liabilities 18 407 –18 407 0
Liabilities not affected by the reclassifications1 211 683 0 211 683
Total liabilities 260 416 0 260 416
Total shareholders’ equity 30 884 0 30 884
Total liabilities and shareholders’ equity 291 300 0 291 300
¹ Other assets and other liabilities in this overview include all assets and liabilities that are not subject to reclassifications.
Financial Services assets and liabilities
Financial statements Notes to the Group financial statements
Amounts allocated to other invested assets include securities purchased under agreement to resell, derivative financial instruments according to FAS 133, and other investments. Amounts allocated to accrued expenses and other liabilities include repurchase agreements, derivative financial instruments according to FAS 133, securities sold short, and other creditors.
Trading revenues were generated by the trading activities of the Financial Services business segment. Trading revenues have been allocated to the respective line items in the Group’s in-come statement to be consistent with the change in the Group’s organisational structure and to reflect the new balance sheet structure.
Trading revenues generated from Financial Services assets and liabilities are reported in net investment income, net realised gains/losses and interest expenses lines depending on the nature of the revenue and/or expense.
For the year ended 31 December 2006 CHF millions
Before change in
Group structure Reclassifications
After change in Group structure
Net investment income 6 990 1 001 7 991
Net realised gains/losses 1 948 158 2 106
Trading revenues 654 –654 0
Revenues not affected by the reclassifications2 30 674 0 30 674
Total revenues 40 266 505 40 771
Expenses
Interest expenses –521 –505 –1 026
Expenses not affected by the reclassifications2 –33 889 0 –33 889
Total expenses –34 410 –505 –34 915
Income before income tax expenses 5 856 0 5 856
Income tax expenses –1 296 0 –1 296
Net income 4 560 0 4 560
² These categories summarise revenues and expenses in the Groups’ income statement not affected by the reclassifications.
In accordance with the changes in the balance sheet and the income statement, the cash flow line items changed. Cash flows originated from financial service assets and liabilities are real-located according to the origin of the cash flow (operating/investing/financing).
Trading revenues
Cash flow statement
Financial statements Notes to the Group financial statements
Financial statements Notes to the Group financial statements