Wholly Owned Subsidiary of Credit Suisse Group
Incorporated: 1875 as Schweizerische Unfallversicherungs-Actiengesellschaft (Swiss Accident Insurance Joint-Stock Company)
Sales: $25.56 billion (2003)
NAIC: 524114 Direct Health and Medical Insurance Carriers; 524126 Direct Property and Casualty Insurance Carriers
Winterthur Group is the largest life and nonlife insurance company in Switzerland, selling a broad range of insurance products. The company operates on a worldwide basis, selling life, pension, property, vehicle, disability, and numerous other types of insurance in more than 20 countries in Europe, North America, Asia, and South America.
19th Century Origins
The company takes its name from Winterthur, the industrial town in the Swiss canton of Zürich known not only as an important center of the engineering industry but also as the home of several major art collections. The founders of the company were well-known entrepreneurs and businessmen, responding to a need created by the increased risk of workplace accidents that had accompanied the industrialization process. The pattern for the company had been set principally by the workmen's compensation insurance available in Germany since the early 1870s. The founders were encouraged by the fact that Switzerland was about to introduce regulations, on the German model, governing legal liability for risks to railway and factory workers.
The man who took the initiative was Colonel Heinrich Rieter, member of the Swiss parliament and owner of the Winterthur spinning mill and engineering works Johann Jakob Rieter & Co. This company had pioneered the industrialization of Switzerland, equipping its factory, around 1800, with the first spinning plant in the country. Napoleon's continental blockade of English imports favored domestic Swiss production. Soon the mill acquired its own repair shop, which before long also was producing new machines. In 1832 Johann Jakob Rieter & Co. dispatched a complete set of spinning machinery to Austria. In due course the engineering works would include railway carriages and weaponry among its products.
On February 10, 1875, under the chairmanship of Heinrich Rieter, the heads of Winterthur's leading enterprises met to discuss the possibility of founding a Swiss accident insurance company. They agreed that such a company was needed, and as the result of Rieter's efforts the founding meeting of the Schweizerische Unfallversicherungs-Actiengesellschaft (Swiss Accident Insurance Joint-Stock Company) took place in Winterthur on March 2, 1875. The share capital, fixed at CHF 5 million, was subscribed by Swiss industrialists and businessmen, most from Winterthur. Three thousand shares were issued first, each with a nominal value of CHF 1,000, for a down payment of 20 percent; the remaining 2,000 shares were deferred to 1880, with a premium payable by other buyers.
From the outset Heinrich Rieter was the venture's driving force. He had made a close study of the problems of insurance and of the Swiss industry's need for Swiss insurance cover. Salomon Volkart and Heinrich Sulzer-Steiner also played leading roles in the founding of the company. In 1851 Salomon Volkart, together with his brother Johann Georg Volkart, had created the Winterthur firm Gebrüder Volkart (Volkart Brothers), producing Indian raw cotton and European manufactured goods. Heinrich Sulzer-Steiner was the true founder of Switzerland's engineering industry. In 1860 he had gone into the Winterthur engineering firm Gebrüder Sulzer (Sulzer Brothers) founded by his father Johann Jakob Sulzer and his uncle Salomon Sulzer. In 1856, with the English engineer Charles Brown, Sulzer-Steiner had developed the valve steam engine, and in 1866 he had introduced steam central heating. Heinrich Rieter was the first president of the Winterthur advisory board, with Salomon Volkart as vice-president. From 1884 until his death in 1906, Heinrich Sulzer-Steiner headed the body later designated the supervisory board. On many occasions members of the well-known industrialist family of Sulzer, serving on board and committee, have had a decisive influence on Winterthur's development.
The company's statutes had to be approved by the cantonal government of Zürich. The charter, dated March 27, 1875, bears the signature of the famous Swiss writer Gottfried Keller, who as clerk to the canton of Zürich drew up official documents. This document authorized the company to begin supplying individual and collective accident insurance. Around the same time, the firm later to be known as the Zürich Insurance Company, which had been founded in 1872 under the name of the Versicherungs-Verein to offer reinsurance and marine insurance, extended its activities to include accident insurance.
Winterthur's practical organization and its charges and conditions were taken in their essentials from those current in neighboring Germany. Accordingly the company chose as its first head not someone specializing in insurance, but the Winterthur town notary Friedrich Gysler, a distinguished lawyer and an acquaintance of the founders. He held office for only a year. In 1876 he was succeeded by C. Widmer-Kappeler of Zürich. The first people to be insured were the employees of the town of Winterthur's large industrial firms. From the beginning, a chain of agencies was built up in the individual Swiss cantons. When the Swiss Factory Act came into force in 1878 the company began selling liability insurance, and it promptly availed itself of the opportunities for foreign business provided by the regulations. This tendency to seek business abroad was shared by the Zürich Insurance Company. Both firms took the idea of accident and liability insurance from Germany, first introducing the two types of cover into Switzerland and then selling them worldwide. In 1875 Winterthur set up branches in Germany, Austria-Hungary, Belgium, Holland, Luxembourg, Denmark, and Norway. A year later it opened a general agency in Paris for France and the French colonies; it even established itself in Finland.
The rapid and large-scale spread of the company network in Switzerland and Austria entailed heavy expenses that could not at first be met by the volume of business achieved. In addition, premiums were clearly too low in some countries—tariffs cannot simply be transferred indiscriminately from one state to another—and liability insurance was hit by several exceptionally heavy compensation payments. The annual report for 1891 speaks of a marked disparity between premium income and the total disbursed in settlement of claims. In both the following years the figures were even worse, and in 1883 the managing director, C. Widmer-Kappeler, fled abroad. At the general meeting there was a proposal, later withdrawn, that the company go into liquidation. Under new management, however, the firm made a recovery without having to cut benefits. Premium rates were adjusted to actual costs, types of cover not in demand were withdrawn, and expenses were reduced by the adoption of appropriate economies.
Gradually the firm got back on an even keel. It owes its successful development from the dawn of the 20th century onward chiefly to the personality of Gottfried Bosshard. He came to Winterthur from the judiciary in 1898 and served the firm from then until 1940, ending up as delegate to the board of directors. It is in large part thanks to Bosshard that the company achieved its fine reputation. In a wider sphere, he played a major part in the evolution of insurance law in Switzerland; the University of Zürich recognized this achievement in 1929 by making him an honorary doctor of law.
At the same time that it was increasing its geographical spread—moving into Spain, for example, in 1910—the company was also anxious to introduce new lines of insurance and types of cover. In the field of accident insurance, provision was now offered against death from acute infectious illness; in liability insurance, cover for material damage was added to that hitherto available only for personal damage. Finally, Winterthur started offering burglary-and-guarantee insurance and, following a decision of the general meeting of 1900, extended its activities to the whole area of material damage insurance. With so much of its business in Switzerland, Winterthur suffered considerable losses as a result of the legal transfer, effective from April 1, 1918, of workmen's accident insurance into the Swiss state accident insurance scheme. The company was forced to rechannel its activities into individual accident and liability insurance and foreign business.
The balance was redressed mainly by the introduction of motor insurance. In 1918, when it took over the portfolio of the German firm of Agrippina, Winterthur started selling comprehensive motor insurance, which had been initiated by Agrippina in 1901. To this was added motor vehicle third-party insurance, which had been obligatory in some Swiss cantons since before World War I. In the 1920s Winterthur expanded considerably in this area, which today constitutes a basic component of its income.
The goal of Winterthur is to set the European benchmark for profitability, productivity and quality. Operational efficiency and client service are the most important priorities in this regard. The prospects are good, based on the company's excellent employees and strong brand. Premium growth is therefore not an immediate priority for Winterthur Group. Winterthur Group will focus more on markets where it has a strong position or can take advantage of opportunities for growth. The aim is to put a sustainable business model in place in all markets, one that promises to achieve a positive result.
Under Heinrich Fehlmann, who succeeded Bosshart, first in 1918 as director and then in 1921 as chairman of the board, the firm continued to grow and prosper. Premium income rose from CHF 4 million in 1890 to CHF 30 million in 1930 and CHF 69 million in 1940. When inflation brought about the decline of the German currency, German insurance companies—which at the time occupied an important position in the Swiss market—could no longer meet their commitments in Swiss francs and had to give up business. The resulting gaps in the market made way for the establishment of life insurance companies in Switzerland, notably, in 1923, the Winterthur Lebensversicherungs-Gesellschaft (Winterthur Life Assurance Company). Like its parent company, Winterthur Life soon turned its attention abroad, starting with Belgium, Germany, and France. It was now the second largest life assurance company in Switzerland.
The growth of the two companies found visible expression in new head office buildings, completed in 1931 and now quite a feature of the Winterthur scene. The most striking impact made by the complex on the townspeople was reflected in its nickname, "Accident Tower."
Post-World War II Expansion
Immediately after the end of World War II, Winterthur set about rebuilding its extensive foreign business. There were branches in most of the countries of Western Europe; to these were added property and life insurance acquisitions, beginning with Europeia in Portugal in 1958, followed by Union et Prévoyance of Belgium in 1964, and Heimat of Austria in 1966. In 1962 Winterthur had succeeded in taking over the Eidgenössische Versicherungs-Aktien-Gesellschaft (Federal Insurance Company Ltd.) of Zürich, founded in 1891 and steeped in Swiss tradition. In the same period Winterthur extended its own activities to include many new types of business, particularly in the area of engineering insurance. This process of expansion was taken into account in 1975, the year the company celebrated the centenary of its founding, when it changed its name to Winterthur Schweizerische Versicherungs-Gesellschaft (Winterthur Swiss Insurance Company). In 1978 the Winterthur Rechtsschutz-Versicherungs-Gesellschaft (Winterthur Legal Insurance Company) came into being.
During the 1970s and 1980s, under the leadership of Hans Braunschweiler, the Winterthur insurance group kept up and intensified its postwar policy of expansion through the purchase of other companies. In two decades these acquisitions led to an eightfold increase in Winterthur's gross premium income, which rose from CHF 1.3 billion in 1968 to CHF 10.4 billion in 1988. Two-thirds of these premiums came from foreign business, concentrated mainly in Western Europe and North America.
Winterthur already had explored the possibility of trading in the United States in the 19th century, but had been put off by the distance involved and the $100,000 security required. After much reflection and investigation, Winterthur opened a New York City branch in 1936. In 1950 Winterthur bought the American Casualty Company, to which it handed over its own existing U.S. insurance clientèle. After the sale of this company to the present Continental National American, Winterthur in the United States was left with only reinsurance. It came back into the U.S. direct insurance business in 1982, when it acquired the important, long-established Republic Insurance group of Dallas, Texas. In 1988 the Southern Guaranty Companies of Montgomery, Alabama, joined Winterthur, followed in 1990 by the General Casualty Group of Sun Prairie, Wisconsin. Its Canadian activities began with the acquisition of two companies now doing business under the name of Citadel General, Toronto.
At home in Switzerland, in 1987 Winterthur bought a majority holding in the Neuenberger Versicherungs-Gruppe (Neuchatel Insurance Group), founded in 1869. Winterthur always laid emphasis on its trade in Germany, centered in large part on insurance for the medical profession. In 1987 Winterthur took on a minority holding in the Nordstern insurance group. The Transatlantische Gruppe (Transatlantic), acquired in 1989, confined itself mainly to brokerage and direct marketing of motor insurance. In the United Kingdom, Winterthur sold life insurance through Provident Life, founded in 1877. In 1989 the Churchill Insurance Company Ltd., specializing in telephone sales of car insurance, started up. The acquisition of the Inter-continentale insurance group in 1988 tripled Winterthur's share of the Italian insurance market and secured its position there.
In addition to these successful exercises in partnership, since the beginning of the 1970s Winterthur has been arranging cooperation deals with well-known insurance companies for the purpose of protecting its clients' interests in areas where it had no branches or subsidiaries of its own. It was this kind of cooperation that led in 1976 to the establishment of the Norwich Winterthur Group, in which Winterthur and the U.K. firm Norwich Union each held 48.5 percent, and the Japanese Chiyoda Fire and Marine, the remaining 3 percent. The Norwich Winterthur Reinsurance Corporation Ltd., of Norwich, formed part of this cooperative venture. In 1979 Itaú Winterthur Seguradura S.A. (Itaú Winterthur Insurance Company Ltd.) was set up in Sao Paolo, Brazil, as a base from which to cover South America.
With its tight trading network Winterthur controlled a large share of the Swiss insurance market. In the 14 most important countries where it operated, it did so directly through its own branches and subsidiaries. In addition, cooperative ventures were opening up new insurance markets in the Middle and Far East and in Africa, Australia, and South America. With an eye to the European Common Market, Union et Prévoyance was re-christened Winterthur-Europe Assurance in 1989 and in 1990 provided with branches in four more countries; in addition, Winterthur-Europe Vie (Winterthur-Europe Life Assurance) was set up. These companies allowed Winterthur to extend its protection right across the frontiers of the European Community.
- The founding meeting of Schweizerische Unfallversicherungs-Actiengesellschaft (Swiss Accident Insurance Joint-Stock Company) is held in Winterthur, Switzerland.
- Gottfried Bosshard, arguably the company's most influential leader, begins a career at Winterthur that will last until 1940.
- Winterthur begins selling automobile insurance.
- Winterthur's first office in the United States is opened in New York.
- The company changes its name to Winterthur Schweizerische Versicherungs-Gesellschaft (Winterthur Swiss Insurance Company).
- Winterthur and Credit Suisse Group merge.
- Winterthur International is sold to XL Capital Ltd.
- Winterthur acquires Luxembourg-based Premier Life.
Winterthur and Credit Suisse in the 1990s
The 1990s was a decade of profound change for Winterthur. The agent of change was a corporate financier named Martin Ebner, whose interest in the company triggered a reaction that reverberated throughout the European financial community. Ebner, through his investment company, BK Vision, began building a stake in Winterthur during the mid-1990s, when the company ranked as the second largest insurer in Switzerland and the fourth largest insurer in Europe. Winterthur was a worthy investment in Ebner's mind, prompting him eventually to acquire a 30 percent interest in the company. When he revealed to the Swiss business press that he might support a foreign takeover of Winterthur, the news set in motion events that inaugurated a new era of existence for the company.
In 1996, Switzerland's oldest bank, Credit Suisse Group, formed a joint venture with Winterthur. The partnership sparked rumors of a potential merger, but such speculation was brushed aside by Credit Suisse's chief executive officer, Lukas Muhlemann. "If you only need a glass of milk," Muhlemann remarked in an August 16, 1997 interview with the Economist (US), "why buy the cow?" Despite assurances to the contrary, Credit Suisse and Winterthur were holding secret talks about a merger—discussions codenamed "Project Dupont"—but Ebner's pronouncement forced the two companies to make their plans public and greatly accelerate merger discussions. "Somebody tried to steal the cow," Muhlemann explained, describing Credit Suisse's defensive posture. In August 1997, Credit Suisse acquired Winterthur in an all-stock transaction. The combination created a company with $465 billion in assets, 15 million clients, and a payroll of 60,000. Credit Suisse, with Winterthur operating as a fully autonomous subsidiary, turned into a financial giant overnight, ranking as one of the top ten financial companies in the world.
In the wake of this massive merger, Winterthur retained a separate identity from Credit Suisse, with little substantive change affecting the company. "Apart from the name of the shares, practically nothing changes," a Winterthur executive said in the August 16, 1997 issue of the Economist (US). As the company entered the 21st century, its progress was highlighted by divestitures and acquisitions, as it stripped away parts of itself and expanded its holdings in other areas. In 2001, the company sold Winterthur International, a subsidiary with offices in 27 countries that sold primarily liability and property and fire insurance, to Bermuda-based XL Capital Ltd. The deal was valued at $405 million. In 2002, Winterthur acquired Premier Life, a life insurance company based in Luxembourg. Although some of Winterthur's business potentially was subject to change pending Credit Suisse's worldwide review of its operations midway through the decade, the Swiss insurer's ironclad foundation appeared immutable as it prepared for the future.
Winterthur Life (Switzerland); Wincare Zusatzversicherungen (Switzerland); Winterthur-ARAG Legal Assistance (Switzerland); Credit Suisse Life & Pensions AG (Liechtenstein); Winterthur Beteiligungsgesellschaft GmbH (Germany); Medvantis Holding (Germany); Winterthur Insurance Health & Accident (Germany); Hispanowin S.A. (Spain); Winterthur-Europe Assurances (Belgium); Credit Suisse Life & Pensions (Luxembourg) S.A.; Winterthur-Europe Vie (Luxembourg); Winterthur (UK) Holdings Ltd.; Credit Suisse Life & Pensions Management GmbH (Austria); Rhodia Assurances (France); Credit Suisse Life & Pensions poistovna a.s. (Czech Republic; 65.1%); Credit Suisse Life & Pensions penzijini fond a.s. (Czech Republic; 79.97%); Credit Suisse Life & Pensions poistovna, a.s. (Slovakia); Credit Suisse Life & Pensions Slovensko (Slovakia; 50.99%); Credit Suisse Life & Pensions Pénztárszolgáltató Rt. (Hungary; 65%); Credit Suisse Life & Pensions, Biztositó Rt. (Hungary; 65%); Towarzystwo Ubezpieczeniowe Winterthur S.A. (Poland); Winterthur U.S. Holdings; Winterthur Canada Financial; Winterthur Holdings Australia; Winterthur Insurance Services Asia Ltd. (Hong Kong); PT. Credit Suisse Life Insurance Co. Ltd. (Japan); Credit Suisse Life & Pensions (Bermuda) Ltd.; Harrington International Insurance Ltd. (Bermuda); Winterthur Atlantic Ltd. (Bermuda); Winterthur Capital Ltd. (Bermuda); Winterthur Integra Ltd. (Bermuda); SRS Holdings Ltd. (Cayman Islands).
AXA; Swiss Life Holding; Zurich Financial Services.
Howard, Lisa S., "Winterthur, Credit Suisse to Join," National Underwriter Property & Casualty-Risk & Benefits Management, August 18, 1997, p. 3.
"In the Land of Milk and Honey," Economist (US), August 16, 1997, p. 54.
"It's Got to Fit Somehow," Economist (US), August 16, 1997, p. 53.
Koch, Peter, "Der schweizerische Beitrag zur Entwicklung des Versicherungswesens," Schweizerische Versicherungs-Zeitschrift, 1985.
——, "Versicherer aus aller Welt in Deutschland," Versicherungskaufmann, July 1987.
Markun, Sylvia, ed., Facetten Europas—100 Jahre Winterthur-Unfall, 50 Jahre Winterthur-Leben, Mitteillungen Jubilee Edition, Winterthur: Winterthur Schweizerische Versicherungs-Gesellschaft, 1975.
Parry, John, "Credit Suisse Insures Itself with Winterthur," The European, August 14, 1997, p. 28.
Souter, Gavin, "XL Expands Business," Business Insurance, February 19, 2001, p. 1.
Von Winterthur in alle Welt, Winterthur: Winterthur Schweizerische Versicherungs-Gesellschaft, 1990.
"Winterthur Buys Luxembourg Company Premier Life," European Report, June 12, 2002, p. 600.
"Winterthur Future in Doubt Over Credit Suisse Review," Money Marketing, March 6, 2003, p. 5.
Translated from the German by
—update: Jeffrey L. Covell