Financial Report

SERV closed its 18th financial year with a positive net income of CHF 98.9 million thanks to below-average loss expenditure.

The essential accounting requirements for SERV are formulated in the SERV Act (SERVG) and 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 as at the closing date (cf. PDF Financial Statements, p. 54), consisting of the income statement, balance sheet, cash flow statement, proof of economic viability, segment accounting and notes.

Individual income statement, balance sheet and segment accounting items 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 18th financial year with a positive net income (NI) of CHF 98.9 million. This is the fourth-best result in the history of SERV.

The bleak overall economic situation is reflected in premium income, which fell from CHF 88.1 million in the previous year to CHF 78.9 million. The issuance of insurance policies was delayed, especially for large projects, leading to lower premiums. On the other hand, the release of unearned premium reserves, which is defined by the expiry profile of the multi-year insurance policies, made a positive contribution to earned premiums. The outcome was a result of CHF 90.3 million, which is slightly higher than the average for SERV since its inception.

Interest income of CHF 4.4 million from debt rescheduling agreements is at a normal level. The last payments from Serbia and Montenegro were made in 2024, enabling these debt rescheduling agreements to be concluded. Furthermore, smaller interest payments were received from various other countries.

Following the extraordinarily high loss expenses in the previous year, there were no major material losses in 2024. This resulted in very low loss expenses of CHF 15.5 million, which include provisions for reported claims, as well as income from successful recoveries.

The debt rescheduling results of CHF 26.0 million resulted from the reversal of value adjustments due to payments made.

Personnel expenses were slightly down from the previous year (CHF 17.3 million), as the extra IT jobs and the filling of vacant positions scheduled for 2024 were postponed.

Financial income mainly comprises foreign currency differences and was positive in 2024 at CHF 1.8 million thanks to the strong Swiss franc. Interest income from financial investments, particularly with the Swiss Federal Treasury, totalled CHF 19.6 million for the reporting year, a drop of CHF 13.9 million as against the previous year, owing to the repeated reductions in the key interest rate by the Swiss National Bank.

“SERV posted the fourth-best annual results in its 18-year history – primarily thanks to below-average loss expenses.”

Yvonne Pusch

Chief Financial Officer

Balance Sheet

On the assets side, cash in hand & at bank increased by CHF 78.5 million over 2023 and is at a significantly higher level than in previous years. The inflow is founded mainly on larger repayments from the very successful recovery efforts.

Credit balances from debt rescheduling agreements decreased by CHF 19.8 million in the year under review due to repayments. On the liabilities side, the reduction in loss provisions of CHF –58.5 million, particularly due to indemnity payments and the resulting conversions into claims, and unearned premiums of CHF –11.4 million were the main drivers.

As of 31 December 2024, capital totalled CHF 2.991 billion. It was CHF 98.9 million higher than the previous year. Due to the adjusted calculation parameters for RBC and core capital (CCap), these figures were substantially lower at CHF 1.399 billion (–28.0 per cent) in 2024. The compensation reserve (CR) increased accordingly by CHF 556.2 million to CHF 1.493 billion. The CR allows SERV to manage the major volatility to which it is exposed through country and debtor downgrades and elevated losses as a result of political and economic crises.

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.

Cash Flow Statement

SERV’s 2024 cash flow statement (cf. Cash Flow Statement, p. 56) posted a net increase of CHF 96.8 million in 2024 (2023: CHF 64.6 million), which is within the average range. SERV continues to have excellent liquidity with CHF 3.349 billion, consisting of cash in hand & at bank and time deposits.

The cash flow from business operations was positive in the year under review at CHF 23.0 million. The very high premium payments (CHF 108.0 million) were partly based on transactions from 2023. They almost entirely offset the high indemnity payments of CHF 109.6 million. Loss repayments increased by CHF 16.5 million to CHF 47.1 million, which had an extremely positive impact on the cash flow statement. The payments for personnel and operating costs remained stable compared to the previous year at CHF 22.5 million.

Cash flow from investment activities includes both repayments of credit balances from debt rescheduling agreements plus the corresponding interest, investments in intangible assets for IT project costs and interest income from investments. At CHF 67.0 million, this value was CHF –12.6 million down on the previous year, which is mainly due to the lower interest income from cash investments (CHF –14.0 million).

Proof of Economic Viability

In 2024, 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.

In 2024, the segments “public debtors” and “private debtors with del credere” plus “private debtors without del credere” posted a combined surplus cover of CHF 19.6 million on an operational level (economic viability 1). Due to the interest income from cash investments, SERV posted significant surplus cover of CHF 39.2 million for economic viability 2 for all segments.

Since SERV was founded, the average surplus cover for economic viability 1 for the primary segment “public debtors” has been CHF 10.4 million and CHF 13.1 million for the primary segment “private debtors”. This means that economic viability 1 has so far been fulfilled 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. Notes regarding the income statement, Comments 12–18, p. 66). Items are not broken down into segments on the balance sheet where doing so has only limited indicative value.

All segments in the income statement closed in positive territory. 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.

PDF Financial Statements