ZURICH, Switzerland, June 23, 2003 (PRIMEZONE) -- Credit Suisse Group (NYSE:CSR) (Other OTC:CSGKF): Winterthur has developed a new model for its collective foundations that is more closely aligned with the current business environment and developments in life expectancy.
This model places employee benefits for all members on a more sustainable footing. The key elements of the Winterthur model comprise a separation of the insurance and pensions relationships -- bringing about partial independence and a strengthening of collective foundations -- and a distinction between mandatory and extra-mandatory employee benefits. The Winterthur model will be introduced on January 1, 2004. In addition, Winterthur will adjust the risk premium and cost loading.
The environment surrounding employee benefits in Switzerland is proving to be very challenging for pension funds, collective foundations and companies. Against this background, Winterthur has developed a new model, which has been approved by the supervisory authorities of the Federal government.
The Winterthur model places employee benefits for all involved parties on a sustainable footing and thereby helps to secure the Swiss pension system in the long term. At the same time, introducing the new model brings with it several unavoidable adjustments to benefits. The changes center on the BVG/LPP minimum interest rate, which is set by the government and currently cannot be achieved by means of risk-free investments, and the current annuity conversion rate, which is no longer realistic in view of increased life expectancy.
The key features of the Winterthur model are the far-reaching separation of the pensions and insurance relationships, and the resulting partial independence and strengthening of collective foundations. The model provides these collective foundations with increased flexibility in financing regulatory benefits and ensures more transparency in their decision-making. Furthermore, in the future there will be a distinction between mandatory and extra-mandatory insurance, and the foundation's board of trustees will be expanded to include employer and employee representatives in addition to those of Winterthur Life.
Details on how the Winterthur model works:
Insurance relationship: Winterthur guarantees the collective foundation an adequate interest rate based on economic criteria Winterthur will continue to offer collective foundations an adequate interest rate on its insured's retirement assets. However, this interest rate will no longer necessarily be identical with the BVG/LPP minimum interest rate. Winterthur will set the corresponding interest rate annually on the basis of returns from risk-free investments; for 2004 this interest rate will be 2%, which corresponds to the BVG/LPP rate proposed by the Federal Council. If Winterthur realizes higher returns on investments, a large part of the surpluses will, as in the past, be passed on to the collective foundations.
Pensions relationship: the collective foundation distinguishes between mandatory and extra-mandatory benefits The collective foundation will continue to grant all the retirement benefits specified in its regulations. Additionally, mandatory benefits will be governed by the provisions set forth by the Federal Council in the future.
In the extra-mandatory domain, the collective foundation will make use of its flexibility and set terms on an annual basis. For 2004, the rate of interest on retirement assets will be in line with the economic environment and set at 2%, plus any surplus income from investments; the conversion rate will be lowered from 7.2% to 5.454% for women, and to 5.835% for men. Current retirement pensions will not be affected by these changes.
Temporary cover shortfall by the collective foundation is permitted The collective foundation's goal is to use the guaranteed interest rate (reinsurance) offered by Winterthur, plus any surplus income earned from investments, in order to achieve at least the statutory BVG/LPP minimum interest rate. If this is temporarily not possible, the collective foundation will now be permitted to operate with a certain cover shortfall without immediately having to request additional contributions from the company or the insured.
The Winterthur model mainly affects the collective foundations of Winterthur-Columna and will be introduced as of January 1, 2004. The full scope of the changes will impact only those customers whose policies are due for renewal on January 1, 2004.
Increase in disability cases leads to higher premiums Due to the significant increase in the number of disability cases over the past few years, Winterthur will, independent of the implementation of the new model, raise the risk premium by 30% on average and the cost loading by 15% on average as of January 1, 2004. This will mean an average increase of 8% in total contributions (savings, risk and cost portions). As a rule, employer and employee will each pay half of these contributions.
Ruedi Hefti, Head of Winterthur Life Switzerland says, "We are convinced that we have developed a workable model for employee benefits insurance that reflects the economic and political environment. The Winterthur model offers companies and insured a sustainable and comprehensive employee benefits solution that is reliable and financially viable. With this offer, Winterthur aims to continue to be an attractive partner in providing Pillar 2 benefits."
Note for the editorial offices Winterthur Life will disclose information on the "Winterthur model for employee benefits" at today's press conference. The press conference is scheduled for 11:30 in Winterthur (invitation enclosed).
Inquiries Winterthur, Media Relations Switzerland Tel. +41 52 261 59 47 Tel. +41 52 261 60 10 Credit Suisse Group, Investor Relations Tel. +41 1 333 45 70
Internet The media release and a comprehensive information kit are available at: www.winterthur-life.ch
Winterthur Life Switzerland Winterthur Life, which belongs to Credit Suisse Group, is the second largest life insurer in Switzerland with a twenty-five percent market share. Winterthur Life offers innovative and comprehensive solutions in employee benefits to individuals, companies and associations. Winterthur Life offers its products and services through its own sales channels, Credit Suisse Group banks, and third-party distribution partners. In Switzerland, Winterthur Life employs a staff of approximately 1,100. A diversified sales network of 48 general agencies and 380 field staff are responsible for serving the market. Winterthur Life's direct premium volume in 2002 was CHF 8.9 billion (individual life business CHF 1.9 billion, and group life business CHF 7.0 billion).
Winterthur Group
Winterthur Group is a leading Swiss insurance company with its head office in Winterthur and, as an international company, ranks among the top six providers of primary insurance in Europe. The Group provides a broad range of property and liability insurance products, as well as insurance solutions in life and pensions that are tailored to the individual needs of private and corporate clients. With approximately 32,000 employees worldwide, Winterthur Group achieved a premium volume of CHF 37.4 billion in 2002 and reported assets under management of CHF 142.7 billion as of March 31, 2003.
Credit Suisse Group
Credit Suisse Group is a leading global financial services company headquartered in Zurich, Switzerland. Credit Suisse Financial Services offers comprehensive financial advice, banking products as well as Winterthur pension and insurance solutions to private clients and small and medium-sized enterprises. The Credit Suisse First Boston business unit, an investment bank, acts as a financial intermediary and provides support to global companies, institutions, state bodies and private clients. Credit Suisse Group registered shares (CSGN) are listed in Switzerland and Frankfurt, and in the form of American Depositary Shares (CSR) in New York. The Group employs approximately 73,000 staff worldwide. Assets under management as at March 31, 2003 amounted to CHF 1,160.5 billion.
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Press Release including invitation and a list of Winterthur buildings can be downloaded on the following link below as PDF: http://reports.huginonline.com/908716/119701.pdf