Market Overview 2007 confirms robust situation of insurers

The main purpose of supervision is to protect policyholders against the insolvency risk of insurance undertakings. FOPI fulfils this mandate by way of integrated supervision. Integrated supervision consists of a traditional part, which covers Solvency I (volume- based simplified capital requirements), technical provisions, and tied assets; a quantitative part, which covers the economic capital model Swiss Solvency Test (SST) in particular; and qualitative supervision, which primarily verifies implementation of action goals in the areas of corporate governance, risk management, and the internal control system.

The Market Overview compiled by FOPI describes the state of the Swiss insurance industry with respect to Solvency I and summarises the SST results for 2007.

The most important results of individual supervision

Solvency I. In the reporting year, insurance companies clearly more than fulfilled the legal requirements for solvency, although the solvency ratio of life insurers and especially of non-life insurers declined.

Provisions. In 2007, non-life insurers increased their total claims provisions in comparison with the previous year. In contrast, life insurance companies recorded a slight decrease of technical provisions overall; the decrease in individual endowment insurance was significantly more striking than in the other classes of life insurance.

Capital investments. The share of equity and other non-fixed-interest assets is steadily increasing among both life and non-life insurers, but is still far lower than the equity shares in 2000 and 2001, some of which were twice as high, especially among life insurers.

Premium income. After a striking decline in gross premiums earned in the 2006 business year, direct life insurance again recorded a significant increase. In the direct non- life insurance business, however, gross premiums earned declined overall. It can be expected that the tighter competition among suppliers led to lower premium income.

Risk-based supervision (SST). The solvency situation of the supervised companies improved significantly between 2006 and 2007: While 8 of 44 insurance undertakings (18%) failed to reach their target capital in 2006, only 4 of 56 (7%) failed to do so in the reporting year.

The situation of insurance groups and conglomerates in 2007

Solvency I. As in individual supervision, the verification of capital adequacy by way of group-wide supervision constitutes an essential element of the assessment of solvency. All 9 insurance groups and conglomerates subject to supervision clearly met the solvency requirements in the reporting year.

Premium income. Despite the emerging price competition in non-life insurance, the business volume (gross premiums) remained relatively stable. In life insurance, most groups even recorded an increase of gross premiums.

Separate Market Overview

Unlike previous years, the FOPI Annual Report 2007 appears in two parts: The first part was presented as an activity report at the annual media conference on 17 April 2008. The second (numerical) part published today is based on the 2007 reporting of the supervised insurance undertakings and groups.

While the Market Overview until now has relied on provisional data obtained through surveys, the figures for individual undertakings published today are based on the final reports for the 2007 business year to be submitted by 30 April 2008 pursuant to the Insurance Supervision Act (ISA). The data on the insurance groups were compiled by way of a separate survey and are largely based on the published business reports. Insurance undertakings only providing reinsurance must submit their business reports by 30 June 2008 pursuant to the ISA. The figures of the reinsurers are thus not included in this report.

The figures providing the basis for the Market Overview, together with the reporting by the reinsurers, provide the basis for the detailed statistics that will be published on the FOPI website in autumn of this year.

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  Staatssekretariat für Wirtschaft SECO (company entry)