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Financial Report

financial report

Legal Basis

The essential accounting requirements for SERV are formulated in the SERV Act (SERVG) and in the SERV Ordinance (SERV-V). SERV must keep its own accounts, be economically viable as an insurance company and manage risks for public and private debtors separately. To meet these requirements, SERV prepares financial statements on the closing date (cf. Financial Report, pp. 48–66), consisting of income statement, balance sheet, cash flow statement, proof of economic viability, segment accounting and notes.

In accordance with Art. 29 SERVG, SERV must present its assets, finance and income situation in the form of segment accounting. This includes an income statement and balance sheet structured in the three segments “public debtors”, “private debtors without del credere” and “private debtors with del credere”.

In addition, the rendering of accounts observes the general principles of materiality, comprehensibility, continuity and gross reporting and is oriented to generally acknowledged standards (Art. 29 para. 3 SERVG).

In the Notes on the Financial Statements, SERV publishes a summary of its accounting principles (AP) in accordance with Art. 29 para. 4 SERVG and provides proof of capital. The minimum requirements for the accounting principles are regarded as the corresponding Federal budget provisions (Art. 21 para. 1 SERV-V). In the corporate governance section, SERV reports on the remuneration paid to the members of the Board of Directors (BoD) and the Executive Board.

Individual items of the income statement, the balance sheet and segment accounting are explained in more detail in the Notes. Items shown net in the financial statements are broken down in the Notes, which renders the calculation of net results transparent. This is significant particularly in the case of claims from losses, claims from restructuring, credit balances from debt rescheduling agreements and loss provisions, as these are valued in accordance with the accounting principles (AP) and reported on a net basis.

Income Statement

SERV closed its 14th financial year with negative net income (NI) of CHF –81.5 million (previous year: CHF 55.4 million), posting an operating loss of the same amount.

The delayed impact of the COVID-19 pandemic on premium income (CHF 71.6 million) made itself felt from August onwards. 92 per cent of the premium income was from the first seven months of the financial year. In comparison to previous years, this was a slightly below-average financial year in terms of premiums. The average income from premiums amounted to CHF 77.2 million. At CHF 89.8 million, SERV achieved the second-highest result in its history in terms of earned premiums. Only in 2018, a year that broke all records, was this value higher at CHF 94.5 million. In contrast to the 2018 financial year, more earned premiums were released (CHF 73.5 million) than established (CHF 55.3 million) in the current financial year. This means that SERV benefited in the 2020 financial year from premium reserves that it had managed to establish in previous years through high premium income. The accounting principles (AP) provide for the creation of an unearned premium reserve amounting to 80 per cent for the invoicing of premiums.

earned premiums

in CHF million


The downward trend in interest income from debt rescheduling agreements continued. This was due to the planned decrease in receivables from debt rescheduling in previous years. Argentina, Cuba and Pakistan were unable to meet their payment obligations in 2020, due in part to the COVID-19 pandemic. Those countries that did meet their payment obligations were those with lower interest-bearing debts, as a result of which interest income from debt rescheduling was at an all-time low of CHF 1.3 million (previous year CHF 15.1 million).

The 2020 financial year was characterised by high loss expenses from the first quarter onwards. At CHF 167.9 million, this was by far the highest level of loss expenses SERV has reported since its formation. Loss expenses had previously been in the triple-digit millions in the 2011 (CHF 123.3 million) and 2018 (CHF 104.5 million) financial years. Despite these three exceptionally costly years, SERV has reported average loss expenses of CHF 52.0 million since its formation. The definitive write-offs of receivables totalling CHF 11.8 million related to risks in Ecuador, France, Italy, Oman, Paraguay, Spain, Switzerland and Turkey. Other loss expenses included costs for recovery measures amounting to CHF 1.2 million.

The debt rescheduling results of CHF 11.9 million resulted from the revision of the country risk category (CRC) for Serbia (CHF 4.8 million) and the release of obsolete value adjustments (CHF 7.1 million) for the agreements with Bangladesh, Cameroon, Indonesia and Iraq.

The increase in personnel expenses (CHF 13.0 million) compared to the previous year (CHF 12.0 million) is attributable to the expansion of the workforce. Non-personnel expenses of CHF 6.7 million again included costs for the Transformation SERV (TRS) project, which also explains the bulk of the difference compared to the previous year (CHF 5.2 million). The project was launched following the analysis of business processes carried out in 2018 and aims to replace the core IT system and optimise SERV’s business processes.

Financial income mainly comprises foreign currency differences and was negative in 2020 at CHF –0.3 million. As in the previous year, the result was only marginally affected by negative interest rates on bank account balances. The fact that SERV is only permitted to invest with the Federal Treasury means that it has generated no return on its capital since 2017, which currently stands at CHF 2.970 billion. The loss of interest income from cash investments is a significant factor, having amounted to CHF 29.0 million in 2007, the year in which SERV was founded, and an average of CHF 18.3 million until 2016.

The fact that SERV is only permitted to invest with the Federal Treasury means that it has generated no return on its capital since 2017, which currently stands at CHF 2.970 billion.

Balance Sheet

On the assets side, cash in hand & at bank increased by CHF 23.5 million compared to 2019. SERV tries to keep the balance on the current account low in order to minimise the amount of negative interest payable.

The absence of major repayments from debt rescheduling agreements (in particular from Argentina and Pakistan) resulted in a decrease in cash investments of CHF 10.0 million in the year under review, in contrast to the increases of previous years. These funds were used for the disbursement of claims. Claims from debt rescheduling agreements were down by only CHF 18.2 million in the year under review (previous year: CHF 64.7 million).

The liabilities side was dominated by loss provisions. Compared to the previous year, the loss provisions increased by CHF 100.2 million from CHF 133.4 million to CHF 233.6 million. The largest loss provisions related to risks in Argentina, Australia, Azerbaijan, Brazil, Cuba, Cyprus, Italy, Saudi Arabia, Switzerland, the United Arab Emirates and Zambia.

As of 31 December 2020, capital totalled CHF 2.744 billion, CHF 81.5 million less than the previous year.

The total of risk-bearing capital (RBC) plus core capital (CCap), CHF 1.519 billion, fell by CHF 128.4 million (8%) year-on-year. The decrease is due to the composition of the portfolio and the foreign currency effects, in particular the depreciation of the BRL and USD against the CHF. The compensation reserve (CR) increased by CHF 183.8 million to CHF 1.307 billion (16%). The CR allows SERV to manage the major volatility it is exposed to through country and debtor downgrades and elevated losses as a result of political and economic crises. This reserve also allows SERV to continue covering risks for export transactions.

All in all, SERV has a solid capital base for fulfilling its legal mission of promoting the Swiss export industry by providing effective insurance solutions, even in periods with an uncertain economic outlook. At the same time, SERV is able to soften the impact of any deterioration in risk ratings for countries and enterprises and has the buffer necessary to deal with any type of crisis.


“The compensation reserve of CHF 1.3 billion can cushion years with high loss expenses while allowing SERV to continue to hedge risks for Swiss export transactions.”

Lars Ponterlitschek

Chief Financial Officer

Cash Flow Statement

SERV’s 2020 cash flow statement (cf. p. 50) posted a net increase of CHF 13.5 million (2019: CHF 134.4 million). In previous years, SERV generated an average cash flow of CHF 130.7 million. SERV continues to have excellent liquidity with CHF 3.002 billion consisting of cash in hand & at bank and time deposits.

The cash flow from business operations was negative at CHF 13.3 million. Compared to the previous year, CHF 19.0 million more was paid out in claims and CHF 0.2 million more for personnel and operating costs in the 2020 financial year. At the same time, premium payments decreased by CHF 5.5 million and loss provisions by CHF 7.1 million.

Cash flow from investment activities includes both regular and unscheduled early repayments from credit balances from debt rescheduling agreements plus the corresponding interest. At CHF 28.2 million, this item was at its lowest level since SERV was established. This was due to missed payments resulting from pandemic-related deferral requests (Cameroon and Pakistan) and requests to renegotiate existing debt rescheduling agreements (Argentina and Cuba). Cash flow for this area in previous years averaged CHF 114.6 million. Compared to 2007, the year in which SERV was founded, it was striking to note that interest payments from debt rescheduling agreements have halved. Project costs for the TRS transformation project were capitalised under intangible assets in the amount of CHF 3.3 million for the first time in the 2020 financial year. The cash outflow relating to this capitalisation amounted to CHF 3.2 million.

In the financial activities, a partial repayment of CHF 1.4 million for a cash deposit was made due to a changed risk situation in connection with existing counter guarantees.

Proof of Economic Viability

In 2020, SERV showed positive loading in all segments. This means that earned premiums exceeded the actuarial risk, i.e. the average expected annual loss, which is the theoretical probability-weighted average potential loss calculated for an annual reporting period. The calculation is based on the loss probabilities and assumed recovery ratios.

For 2020, all segments with the exception of the “private debtors without del credere” segment had surplus cover on an operational level (economic viability 1). As a result of the general interest rate situation, there has been no interest income at all from cash investments since 2017, for which reason the figures for economic viability 1 and 2 are identical. No substantial contributions from cash investments are expected for the foreseeable future. Despite the deficient cover in the “private debtors without del credere” segment for economic viability 1 and 2, SERV overall was able to post significant surplus cover of CHF 34.0 million across all grades.

Since SERV was founded, the average surplus cover of economic viability 1 for the primary segment “public debtors” has been CHF 5.9 million, and CHF 9.3 million for the primary segment “private debtors”. This means that economic viability 1 has so far been significantly exceeded for the primary segments. If economic viability on an operational level (economic viability 1) is positive, so is economic viability 2, unless SERV’s capital is burdened with negative interest rates.

Segment Accounting

In the income statement by segment, items that are not directly related to an insurance transaction in a segment are distributed across the three segments using an allocation formula (cf. PDF, Notes regarding the Income Statement by Segment 12–18, p. 60). Items are not broken down into segments on the balance sheet where doing so has only limited indicative value.

In the income statement, the two segments “private debtors with del credere” and “public debtors” closed the year with a negative result. This was largely down to the loss expenses resulting from the formation of provisions and value adjustments. The successful performance of the “private debtors without del credere” division was not able to compensate for the losses of the other two segments. Experience shows that the annual results for segment accounting are influenced to a large extent by the loss expenses incurred and are thus very volatile.

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