1. ANNUAL REPORT 1998/1999

2. CHF
SHARE PERFORMANCE
350
300
250
200
150
100
Credit Suisse Group
Swiss Market Index
1996 1997 1998 3/1999
MARKET CAPITALISATION
as at 31 December
60
50
40
30
20
10
0
90 91 92 93 94 95 96 97 98
CHF bn
Financial Calendar
1999 Annual General Meeting Friday 28 May 1999
First-half results for 1999 Wednesday 8 September 1999
Media conference for 1999 results Tuesday 14 March 2000
2000 Annual General Meeting Friday 26 May 2000

3. FINANCIAL HIGHLIGHTS 1998
1998 1997 Change REVENUE COMPOSITION 1998
Consolidated income statement in CHF m in CHF m +/-%
Revenue 21,700 21,010 3
Gross operating profit 6,641 7,100 –6 25%
25%
Net profit 3,068 397 –
Cash flow 6,066 6,026 1
11%
ROE in % in %
Credit Suisse Group 11.7 1.7 –
39%
Banking business 10.0 0.5 –
Balance sheet business
Insurance business 10.3 10.1 2 Commission and service fees
Trading
Insurance
Change
Consolidated balance sheet 31 Dec. 1998 31 Dec. 1997 +/-%
Total assets (CHF m) 652,437 689,568 –5
Total shareholders’ equity (CHF m) 28,162 25,651 10
– of which minority interests (CHF m) 2,325 2,005 16
Total assets under management (CHF bn) 934 863 8
– of which advisory (CHF bn) 523 496 5
– of which discretionary (CHF bn) 411 367 12
Change
BIS ratios in % in % +/-%
BIS tier 1 ratio
Credit Suisse 7.1 6.6 7
Credit Suisse First Boston 8.4 8.5 –1
Credit Suisse Group 12.0 10.9 10
BIS total capital ratio Credit Suisse Group 17.8 16.8 6
Change
Human resources at year-end 1998 1997 +/-%
Total staff 62,296 62,242 0
– of which in Switzerland banking business 20,795 21,442 –3
insurance business 7,146 7,108 1
– of which outside Switzerland banking business 15,980 13,235 21
insurance business 18,375 20,457 –10
Change
Share data 1998 1997 +/-%
Number of shares issued at year-end 269,086,369 266,128,097 1
Shares ranking for dividend at year-end 269,086,369 265,750,460 1
Average 267,542,466 262,952,238 2
Market capitalisation (CHF m) at year-end 57,854 60,060 –4
Earnings per share (CHF) 11.5 1.5 –
Share price (CHF)
at year-end 215 226 –5
for inclusion in Swiss tax returns 214 224 –4
year high 382 238 61
year low 149.5 133.75 12
Dividend (CHF) 5* 5 0
* proposal of the Board of Directors to AGM on 28 May 1999
1

4. TO OUR SHAREHOLDERS
RAINER E. GUT, CHAIRMAN OF THE BOARD
OF DIRECTORS (RIGHT), AND
LUKAS MÜHLEMANN, CHIEF EXECUTIVE
OFFICER
Dear shareholder
The international financial markets were distinguished by two main trends in 1998. On
the one hand the year saw considerable market volatility: massive price rises, especially
on the European and North American stock markets, in the first half were followed by a
sharp global financial crisis triggered by the collapse of the Russian market in August.
At the same time, the ongoing consolidation process in the financial services industry
gathered pace, with a move towards ever larger financial services companies as well as
combined banking and insurance providers.
Against this eventful background, Credit Suisse Group achieved a satisfactory
result. The foundation of the Group on four banking businesses and a strong insurance
business, Winterthur, has proved its worth. Our Group not only has the required strength
to expand its market position against ever larger competitors, but also the necessary
breadth to successfully hold its ground in difficult markets.
Four of our five business units – Credit Suisse, Credit Suisse Private Banking,
Credit Suisse Asset Management and Winterthur – posted very good results in 1998.
Credit Suisse First Boston’s performance was impacted by the collapse of the Russian
market, although in most other areas the business unit achieved good results.
Net operating income of Credit Suisse Group increased slightly to CHF 21.7 bn.
Net profit rose substantially to CHF 3.1 bn. Consolidated ROE amounted to 11.7%,
while earnings per share were CHF 11.50. The Board of Directors of Credit Suisse
Group proposes to the Annual General Meeting an unchanged dividend of CHF 5.
With respect to the results of the individual business units: in 1998 Credit Suisse
successfully completed the restructuring process launched almost three years ago and
also achieved an impressive improvement in results. Revenue increased by 18% or
CHF 479 m, with net profit at CHF 205 m. Credit Suisse Private Banking achieved
another substantial improvement in its results in 1998, with revenue increasing by 18%
to CHF 4.3 bn and net profit by 27% to CHF 1.7 bn. Assets under management rose
by CHF 27 bn to CHF 403 bn. Credit Suisse Asset Management also performed well,
with revenue up 21% at CHF 852 m and net profit up 58% to CHF 223 m. Total assets
under management increased by 13% to CHF 297 bn.
2

5. Premium volume in non-life business at Winterthur increased by 6% to CHF 13.8 bn
and in life business by 23% to CHF 14.8 bn. Net profit was up by more than 31%
at CHF 884 m. For Credit Suisse First Boston 1998 was a year of sharp contrasts.
After the excellent performance in the first half, pre-tax profit fell to an unsatisfactory
CHF 116 m, owing primarily to the virtual total collapse of the Russian market. The
unprecedented severity of Russia’s collapse resulted in net provisions and depreciation
at Credit Suisse First Boston of a total of CHF 1.86 bn. Despite achieving satisfactory
results and strengthening its position in most other markets, Credit Suisse First Boston
posted a loss after tax of CHF 221 m.
The projects which were initiated in 1997 as part of the merger of Credit Suisse
Group and Winterthur with a view to generating cost savings and enhancing revenues
were successfully concluded in 1998. By the end of the year 2000, synergies of
CHF 280 m per year will be captured; a further CHF 60-70 m are expected over the
next few years. Strategies are currently being implemented for Europe with the aim of
strengthening collaboration between Winterthur, Credit Suisse Private Banking and
Credit Suisse Asset Management. In Switzerland the Group will continue to pursue the
mutual sale of banking and insurance products through the banking and insurance dis-
tribution channels, which will collaborate closely to serve their clients.
An important project for the Group is the preparation for the new millennium. By
the end of June 1999, all IT systems are to be year-2000 compliant; at the end of
February 1999, 93% of all business-critical systems had already been remediated.
All business units have had a very good start to the current business year. Given
the situation on the international financial markets, the Group anticipates a generally
volatile and challenging operating environment in which it plans to achieve further sub-
stantial progress in reaching its performance targets.
We would like to thank our staff for their hard work, professionalism and commit-
ment in what was once again a demanding year. We also thank our customers and
shareholders for the trust they have placed in us and for their valuable support.
Rainer E. Gut Lukas Mühlemann
Chairman of the Board of Directors Chief Executive Officer
3

6. THE STRUCTURE OF CREDIT SUISSE GROUP
Credit Suisse Group is a global financial services company, providing a
comprehensive range of banking and insurance products. Active on every
continent and in all major financial centres, Credit Suisse Group comprises
five business units, each geared to the requirements of specific customer
groups and markets:
Credit Suisse: corporate and individual customers
in Switzerland
Credit Suisse Private Banking: services for private investors in Switzerland
and abroad
Credit Suisse First Boston: global investment banking
Credit Suisse Asset Management: services for institutional and mutual fund
investors worldwide
Winterthur: insurance for private and corporate
customers worldwide
CREDIT SUISSE CREDIT SUISSE FIRST BOSTON WINTERTHUR
241 locations in Switzerland 50 locations in Switzerland 3 locations in Switzerland 7 locations in Switzerland about 700 locations in
35 locations internationally 58 locations internationally 23 locations internationally Switzerland
present in over 30 countries
Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries
Neue Aargauer Bank Bank Leu* Credit Suisse Credit Suisse Trust Winterthur Life
(98.6%)* Financial Products and Banking
Credit Suisse Fides* Winterthur International
Credit Suisse Immobilien Clariden Bank* DBV-Winterthur Holding
Leasing
Bank Hofmann* Winterthur Holding Italia
Bank für Handel & Hispanowin S.A.
Effekten
Winterthur-Europe
Credit Suisse Trust* Assurances
Winterthur (UK) Holdings
Winterthur U.S. Holdings
* direct holding of Credit Suisse Group
4

7. THE FIVE BUSINESS UNITS OF CREDIT SUISSE GROUP
CREDIT SUISSE
Credit Suisse serves corporate and Thanks to an innovative range of products
individual customers in Switzerland through and services, especially in direct and
a multichannel strategy and an efficient internet banking, it ranks among the
branch network covering all major locations. market leaders in its segment.
CREDIT SUISSE PRIVATE BANKING
Credit Suisse Private Banking is one of providing personal investment counselling
the world’s largest private banks and has and professional asset management for a
a strong presence in both the Swiss and sophisticated international clientele.
international markets. It specialises in
CREDIT SUISSE FIRST BOSTON
Credit Suisse First Boston is a leading financial products for users and suppliers
global investment banking firm, providing of capital around the world.
financial advisory, capital raising and
CREDIT SUISSE ASSET MANAGEMENT
Credit Suisse Asset Management is a providing first-class international
leading global asset manager focusing on management through domestic operations.
institutional and mutual fund investors,
WINTERTHUR
Winterthur Group is one of the leading and corporate customers tailor-made
insurance companies in Europe and one of insurance and pension solutions at the
the largest internationally active insurance local and international level.
companies in the world. It offers private
5

8. CREDIT SUISSE GROUP BUSINESS REVIEW AND CONSOLIDATED RESULTS
In 1998 Credit Suisse Group posted a net profit of CHF 3.1 bn. Four
of the Group’s five business units – Credit Suisse, Credit Suisse
Private Banking, Credit Suisse Asset Management and Winterthur –
recorded very good results. Credit Suisse improved its result by almost
CHF 500 m, returning to a net profit of CHF 205 m. Credit Suisse
First Boston announced a disappointing result, owing primarily to the
collapse of the Russian market. In view of the turbulence on the
international financial markets, the Group’s result is satisfactory.
Credit Suisse Group’s net operating income rose by 3% compared with 1997 to
CHF 21.7 bn. Net interest income, which rose by 13%, contributed CHF 5.2 bn to this
amount, with commission and service fee activities contributing CHF 8.3 bn (up 26%),
trading CHF 2.4 bn (down 55%) and insurance operations CHF 5.4 bn (up 12%).
Total operating expenses increased by 8% to CHF 15.1 bn, with personnel
expenses increasing by 7% to CHF 10.6 bn owing largely to business expansion and
acquisitions by Credit Suisse First Boston. By contrast, bonus payments were slightly
lower than in the previous year, despite higher performance-based incentive payments
at all business units except Credit Suisse First Boston. Overall, Credit Suisse Group
showed a gross operating profit of CHF 6.6 bn, 6% lower than in the previous year.
Depreciation, valuation adjustments and losses increased from CHF 3.2 bn to CHF 3.8 bn,
including credit provisions of CHF 2.6 bn.
Extraordinary income of CHF 1.6 bn includes CHF 101 m from the sale of
Winterthur’s participation in HIH (Australia) and CHF 442 m from the sale of Winterthur’s
active reinsurance business to PartnerRe. It also includes a release from the reserves
for general banking risks of CHF 933 m. Of this sum, CHF 381 m were applied for the
settlement of the Holocaust class actions in respect of World War II, and CHF 552 m
to create provisions for credit risks. At CHF 573 m, 1998 extraordinary expenses were
substantially lower than 1997 extraordinary charges. After deducting tax of CHF 575 m
and minority interests of CHF 147 m, Credit Suisse Group posted a net profit of CHF
3.1 bn. Consolidated return on equity amounted to 11.7%. Total assets under manage-
ment rose by CHF 71 bn to CHF 934 bn. Earnings per share were CHF 11.50 and
year-end book value rose 8% to CHF 96 per share. At the Annual General Meeting on
28 May 1999 the Board of Directors proposes an unchanged dividend of CHF 5 per
Credit Suisse Group registered share.
6

9. Four out of five business units announce very good results In 1998 Credit Suisse
achieved a net profit of CHF 205 m. Revenue rose by 18% compared with 1997, an
increase of CHF 479 m to CHF 3.2 bn. Personnel and other operating expenses
remained stable as planned, despite substantially higher incentive payments in line with
improved performance. The cost/income ratio improved significantly once again, decreas-
ing from 85% to 71%. The risk structure of the credit portfolio also developed favourably.
As well as producing an improved financial result, Credit Suisse also brought its
restructuring process to a close.
Despite financial market turbulence, Credit Suisse Private Banking repeated
the first half’s very good results in the second half of the year. Revenues rose by 18%
and net profit increased by 27% to CHF 1,671 m. Assets under management increased
by CHF 27 bn to CHF 403 bn (adjusted for divestments and intra-Group transfer of
clients). CHF 17 bn of the increase is attributable to a net inflow of new assets. The
cost/income ratio declined from 50.6% to 46.8%, despite substantially higher incentive
payments reflecting improved performance.
For Credit Suisse First Boston 1998 was a year of marked contrasts. Pre-tax
profit declined to USD 82 m (CHF 116 m) after record results in the first half of the
year. This disappointing result was due primarily to the collapse of the Russian market.
Credit Suisse First Boston had, in line with its business strategy, built a leading market
position in Russia, the world’s 12th largest economy in 1997 and a country granted full
G7 membership status as of May 1998.
The crisis which erupted in August 1998 was characterised by a massive devalua-
tion, a moratorium on all local currency public debt with unconscionable discrimination
against foreign creditors, a breakdown of the banking system and a political leadership
vacuum. Such a combination of factors is unprecedented in the world financial markets.
Consequently, value declines of some 95% in Russian government bonds (GKOs)
and 85% in equities, as well as heavy provisioning against counterparty default on loans
and forward foreign exchange contracts, resulted in provisions and net write-offs of
USD 1.3 bn (CHF 1.86 bn). As a result, in 1998 Credit Suisse First Boston reported a
net loss of USD 154 m (CHF 221 m) after tax.
In other emerging markets as well as in most other business areas Credit Suisse
First Boston posted good results. The revenue split between Americas (44%), Europe
(47%) and Asia Pacific (9%) highlights Credit Suisse First Boston’s global balance.
Credit Suisse First Boston’s financial results contrast sharply with gains in market
share and major advances in terms of strategic positioning. As a result of substantial
investments to achieve organic growth, the seamless and successful integration of the
businesses acquired from BZW and of Garantia, a reduced risk profile and improved
risk management, Credit Suisse First Boston is well positioned to confirm its place
among the leading global investment banks. It is expected to again make a substantial
contribution to the Group’s results in 1999.
7

10. Credit Suisse Asset Management can look back on a successful business year in
1998. Restated for a change in the revenue sharing agreement with the other business
units, revenue grew by 21% to CHF 852 m and net profit rose by 58% to CHF 223 m.
Discretionary assets under management increased by 20% to CHF 212 bn; total
assets under management increased by 13.4% to 297 bn. The growth of equity funds
under management and the growth in retail distribution led to improved pre-tax margins
consistent with the strategic business plan. The acquisition of Warburg Pincus Asset
Management announced in February 1999 will considerably strengthen Credit Suisse
Asset Management’s position in the US market.
In 1998 Winterthur recorded strong growth in its life business, where premium
volume increased 23% to CHF 14.8 bn. Non-life business increased by 6% to
CHF 13.8 bn, adjusted for the divestment of the Australian HIH and the reinsurance
business. Net profit increased by 31% from CHF 674 m to CHF 884 m. Equity after
minority interests grew by 18% to CHF 9.4 bn. In Switzerland, Winterthur further
consolidated its position as market leader. Outside Switzerland, Winterthur is focusing
on further expanding its position in the European Union, eastern Europe and Asia.
Bancassurance strategy: focus on Europe The projects which were initiated in
1997 as part of the merger of Credit Suisse Group and Winterthur with a view to gen-
erating cost savings and enhancing revenues were successfully concluded in mid-1998.
As a result, synergies of CHF 280 m per annum were identified and will be fully captured
by 2000; a further CHF 60–70 m are expected over the next few years.
Strategies are currently being implemented for Europe with the aim of strengthening
collaboration between Winterthur, Credit Suisse Private Banking and Credit Suisse
Asset Management. Over the course of the next few months all retail-oriented European
activities outside Switzerland of Credit Suisse Private Banking and Credit Suisse Asset
Management will be combined in a new “Personal Financial Services Europe” unit
reporting to Thomas Wellauer, Chief Executive Officer of Winterthur. It will work closely
with existing European insurance operations. The new unit will be fully operational in
Italy in April 1999 with other countries to follow.
In Switzerland the Group will continue to pursue the mutual sale of banking and
insurance products through the banking and insurance distribution channels, which will
collaborate closely to serve their clients.
8

11. Repurchase of Swiss Re’s 20% stake in Credit Suisse Financial Products
Consistent with the organisational changes at Credit Suisse First Boston combining the
Fixed Income division and Credit Suisse Financial Products into a new entity, Credit
Suisse Group repurchased Swiss Re’s 20% minority position in Credit Suisse Financial
Products. The organisational change allows for the reduction of overlapping risk categories,
offers potential synergies in the support area and optimises the deployment of capital at
Credit Suisse First Boston.
As a result of the transaction, Swiss Re increased its holding in Credit Suisse
Group and holds just below 5% of Credit Suisse Group shares. Credit Suisse Group’s
holding in Swiss Re amounts to approximately 9%.
Business unit financial statements The business unit financial statements reflect
the organisational structure during 1998 and show the results of all business units as if
they were legal entities operating independently.
Financial information for the Corporate Centre includes income and expenses for
the Corporate Centre as well as all consolidation adjustments. Corporate Centre costs
attributable to operating business have been allocated to the respective business units.
The business unit financial results include operating financial information only. For
further explanation refer to the relevant sections.
Changes compared to previous year 1997 accounting figures have not been restated
for the transfer of Bank Leu’s retail operations from the Credit Suisse Private Banking
business unit to Credit Suisse effective 1 January 1998 as the impact on the business
units’ results is immaterial.
Trade finance business was transferred from Credit Suisse First Boston to
Credit Suisse effective 1 July 1998. The 1997 figures were not restated.
Credit Suisse Asset Management’s 1997 income statement and key performance
indicators have been adjusted to reflect the revised mutual funds commissions revenue
sharing agreements between Credit Suisse Asset Management and the other business
units. The 1997 accounting figures of other business units affected by this change have
not been adjusted.
9

12. OVERVIEW OF BUSINESS UNIT RESULTS
Credit Credit Credit Adjustments
Suisse Suisse Suisse including Credit
1998 Credit Private First Asset Winterthur Winterthur Corporate Suisse
in CHF m Suisse Banking Boston Management Non-life Life Centre Group
REVENUE 3,209 4,275 9,600 852 3,113 2) 1,364 2) – 713 21,700
Personnel expenses 1,412 1,250 5,332 329 1,321 560 382 10,586
Other operating expenses 842 712 2,307 257 802 374 – 821 4,473
TOTAL OPERATING EXPENSES 2,254 1,962 7,639 586 2,123 934 – 439 15,059
GROSS OPERATING PROFIT 955 2,313 1,961 266 990 430 – 274 6,641
Depreciation and write-offs on non-current assets 30 39 279 12 90 0 207 657
Valuation adjustments, provisions and losses1) 666 177 1,566 0 0 0 766 3,175
PROFIT BEFORE EXTRAORDINARY ITEMS/TAXES 259 2,097 116 254 900 430 –1,247 2,809
1)
Extraordinary income 36 60 15 0 0 1,443 1 554 5)
Extraordinary expenses 51 35 81 1 28 3) 377 573
Taxes 43 435 221 30 307 – 461 575 5)
NET PROFIT BEFORE MINORITY INTERESTS 201 1,687 –171 223 995 280 3,215
– of which minority interests –4 16 50 0 111 – 26 147
NET PROFIT (after minority interests) 205 1,671 – 221 223 884 4) 306 3,068
Average allocated equity capital 4,230 2,596 10,176 180 8,641
Return on average equity capital 4.8% n/a –1.7% n/a 10.3%
Equity capital allocation as of 1 January 1999 4,450 2,200 9,340 170 9,358
1) net of release of reserves for general banking risks 11 25 306
2) defined as premiums earned (net), less claims incurred and expenses for processing claims as well as actuarial provisions, less commissions (net), plus investment
income from insurance business; expenses due to the handling of both claims and investments are allocated to revenue: personnel expenses non-life: CHF 334 m,
life: CHF 176 m, other operating expenses non-life: CHF 206 m, life: CHF 115 m
3) mainly interest expenses not allocated to one of the two insurance divisions
4) excludes after-tax profit of CHF 479 m from the sale of HIH (Australia) and the reinsurance business
5) details from gain in 4) above (gross: CHF 543 m, tax: CHF 64 m, net of tax: CHF 479 m)
BUSINESS UNIT ACCOUNTING PRINCIPLES
Unless stated below, Group accounting and valuation principles apply.
INCOME STATEMENT
General To reconcile business unit accounts with legal entity accounts certain adjust-
ments were made in the Corporate Centre (included in the column “Adjustments including
Corporate Centre”).
Extraordinary items such as the settlement of the US class action lawsuits related
to World War II or restructuring costs are reflected in the Corporate Centre only. Extra-
ordinary income and valuation adjustments, provisions and losses are shown net of
release of reserves for general banking risks.
10

13. Inter-business unit revenue splits Responsibility for all products is allocated to one
business unit. When business units contribute to the success of another, revenue alloca-
tions have been established to compensate such efforts. Revenue allocations are shown
in the relevant income statement line.
Inter-business unit cost allocations Certain administration and IT tasks (“services”)
are concentrated in one business unit, which acts as a provider for the other business
units. Such services are compensated on the basis of service level agreements and
transfer payments (which include personnel and other operating expenses). These are
reflected in the income statement line “Other operating expenses”.
Real estate used by the bank All real estate in Switzerland, mainly bank premises, is
managed centrally. The costs reflect market rent and an additional charge if actual cost
exceeds market rent. They are included in “Other operating expenses”.
Provisions for credit risk Actual credit provisions exceeding the anticipated credit
provisions have been reversed against the reserves for general banking risks held on
Group level and netted in the business unit income statement line “Valuation adjust-
ments, provisions and losses”.
Taxes Taxes are calculated for individual business units based on average tax rates
reflecting their geographical diversity. The difference between these and actual tax
expenses has been adjusted in the Corporate Centre.
BALANCE SHEET
General The balance sheets of the banking business units include the appropriate
proportion of bank premises occupied in Switzerland and abroad.
Equity allocation The available equity is allocated to the business units based on
average regulatory capital required during the period.
KEY PERFORMANCE INDICATORS
Ratios per head have not been calculated as some Group-wide services are provided
centrally by one of the business units and required staffing for services received is not
reflected in the recipient business unit’s headcount.
11

14. ASSETS UNDER MANAGEMENT
Assets under management include client-related on and off-balance sheet assets.
Where two business units share responsibility for managing funds (such as investment
funds), the assets under management are included in both business units.
12

15. REPORT OF THE GROUP’S AUDITORS ON THE BUSINESS UNIT FINANCIAL STATEMENTS
We have performed certain procedures enumerated below in relation to the 1998
business unit financial statements of Credit Suisse Group and its subsidiary under-
takings (“the business unit financial statements”) for which the Directors of Credit Suisse
Group are solely responsible. The business unit financial statements, which have been
prepared for illustrative purposes only, are set out on pages 14 – 29 of the annual report.
We have performed limited review procedures with regard to the business unit financial
statements as follows:
– Reviewed the methodology for preparation of the business unit financial statements
as described therein and their proper application;
– Given the methodology for preparation, reviewed the consistent application of the
accounting policies; and
– Reviewed the reconciliation between the business unit financial statements and the
consolidated Group results presented in the audited financial statements for the
year.
Nothing has come to our attention as a result of the foregoing limited review procedures
that would lead us to believe that the business unit financial statements have not been
properly compiled on the basis of the preparation set out therein or are materially mis-
stated.
KPMG Klynveld Peat Marwick Goerdeler SA
Brendan R. Nelson Peter Hanimann
Chartered Accountant Certified Accountant
Auditors in Charge
Zurich, 15 March 1999
13

16. CORPORATE AND INDIVIDUAL CUSTOMERS IN SWITZERLAND
Credit Suisse performed very well in 1998. At CHF 3.2 bn, revenue was
up CHF 479 m or 18% on the previous year. Staff costs and other operating
expenses were maintained at a stable level as planned. The cost/income
ratio was further improved, falling from 85% to 71%. With net profit of
CHF 205 m, the business unit posted positive results for the first time
since the restructuring of 1996.
Credit Suisse completed its final restructuring projects in 1998. Fifteen service and
production centres were concentrated into four service centres in Zurich, Berne, Geneva
and Mendrisio. The integration of both Bank Leu’s corporate and individual customer
business and Credit Suisse First Boston’s Swiss trade finance business was implemented
smoothly. The business unit progressed further down the path to profitable expansion.
The Mix mortgage, launched mid-year, was very well received. Over 2,000 transactions,
with a volume of just under CHF 1 bn, were effected. The joint venture with American
Express is a central element in the business unit’s growth strategy. Credit Suisse is the
only Swiss bank to offer all three major credit cards – American Express, Visa and Eurocard.
Credit Suisse is continuing to implement the bancassurance strategy in the
individual customer segment. Winterthur and Credit Suisse operations have been
combined under one roof in 80 locations. The increased sale of investment and insurance
products continued in 1998.
KEY PERFORMANCE INDICATORS 1998 1997
Average allocated equity capital CHF m 4,230 4,175
Allocated equity capital
CHF m at 1 January 1999/98 4,450 4,150
Cost/income ratio 71.2% 84.9%
Return on average equity capital 4.8% – 6.6%
Number of employees at 31 December 11,729 12,540
Pre-tax margin 7.6% –11.9%
Staff expenses/total operating expenses 62.6% 69.3%
Staff expenses/total income 44% 56.6%
Number of branches at 31 December 241 244
Net interest margin 2.21% 1.95%
Loan growth 10.4% – 0.18%
Deposit/loan ratio 71.8% 77.8%
Assets under management
CHF bn at 31 December 120 111
14

17. In particular, sales of single premium annuity policies via the Credit Suisse banking
channel performed very well. Fund holdings increased by 25%, significantly ahead of
market development. The volume of funds held in the Credit Suisse safekeeping
accounts for vested pension benefits Mixta BVG and Mixta BVG Defensiv has more
than doubled since the end of 1997.
Corporate banking earnings improved for both on and off-balance sheet busi-
ness. New customer acquisitions contributed significantly to this performance. The new
risk-adjusted pricing structure introduced last year was applied extensively. In this con-
text, the credit evaluation procedure was made transparent for clients. The introduction
of the euro was accompanied by an active customer information campaign and the
launch of an attractive product range.
Direct banking channels (telephone and internet) continued to perform very well.
In October 1998 the independent Lafferty Information and Research Group named
Credit Suisse the best internet bank in Europe. Over 90,000 customers have signed
online contracts with Credit Suisse thus far. In 1998, 1.74 m logins resulted in 6.52 m
transactions. Credit Suisse now receives around 15% of all its securities orders via the
internet.
INCOME STATEMENT 1998
in CHF m
1997
in CHF m
Change
in %
Net interest income 2,096 1,875 12
Net commission and service fee income 845 609 39
Net trading income 220 188 17
Other ordinary income 48 58 –17
REVENUE 3,209 2,730 18
Personnel expenses 1,412 1,544 –9
Other operating expenses 842 685 23
TOTAL OPERATING EXPENSES 2,254 2,229 1
GROSS OPERATING PROFIT 955 501 91
Depreciation and write-offs on non-current assets 30 90 – 67
Valuation adjustments, provisions and losses* 666 707 –6
PROFIT BEFORE EXTRAORDINARY ITEMS AND TAXES 259 – 296 188
Extraordinary income* 36 17 112
Extraordinary expenses 51 46 11
Taxes 43 –48 190
NET PROFIT 201 – 277 173
– of which minority interests –4 1 – 500
NET PROFIT (after minority interests) 205 – 278 174
* net of release of reserves for general banking risks 11 1,108
15

18. 1998 results The corporate and individual customer operations of Bank Leu were
incorporated into Credit Suisse effective 1 January 1998. The business unit also acquired
the trade finance activities of Credit Suisse First Boston effective 1 July 1998. As a
result of these two transactions, Credit Suisse has CHF 6.1 bn higher lendings, CHF 2 bn
higher customer deposits and CHF 1.2 bn higher safekeeping assets. Neither the balance
sheet nor the income statement was restated.
At CHF 93 bn, total assets were down 3% on the previous year due to the planned
reduction in interbank and money market activities. Lendings to customers increased by
approximately 9.5% to CHF 84.8 bn. Customer deposits increased by 1% to CHF 60.9 bn.
Assets under management rose 8% to CHF 120 bn.
The positive earnings trend witnessed in the first six months of 1998 continued in
the second half. This can be largely attributed to improved interest margins, positive
developments in the recovery of past due interest, sales of single premium annuity poli-
cies prior to the introduction of stamp duty on new life insurance policies, and increased
investment fund sales. Costs developed as planned and gross operating profit rose a
significant 91% to CHF 955 m. The cost/income ratio improved substantially, falling
from 85% to 71%. Valuation adjustments, provisions and losses amounted to CHF 666 m.
This figure comprises CHF 650 m in respect of the statistically calculated credit risk
costs and CHF 16 m in respect of other provisions. Actual valuation adjustments were
CHF 11 m above the statistically projected level. The overall risk structure of the lending
portfolio continued to improve.
With a net profit of CHF 205 m in 1998, Credit Suisse posted positive results for
the first time since the restructuring. Credit Suisse will continue to make steady progress
in reaching its growth and profitability targets.
16

19. BALANCE SHEET 31 Dec. 1998
in CHF m
31 Dec. 1997
in CHF m
Change
in %
Cash and other liquid assets 869 993 –12
Money market claims 563 7,116 – 92
Due from banks 633 309 105
Due from other business units 1,187 3,139 – 62
Due from customers 26,245 22,855 15
Mortgages 58,596 54,631 7
Securities and precious metals trading portfolio 54 100 – 46
Financial investments 1,873 2,364 – 21
Participations 49 51 –4
Tangible fixed assets 2,278 2,377 –4
Accrued income and prepaid expenses 194 476 – 59
Other assets 894 1,986 – 55
TOTAL ASSETS 93,435 96,397 –3
Due to banks 1,888 586 222
Due to other business units 13,101 16,971 – 23
Due to customers in savings and investment accounts 37,429 37,149 1
Due to customers, other 23,517 23,117 2
Medium-term notes 5,841 6,708 –13
Bonds and mortgage-backed bonds 5,399 5,595 –4
Accrued expenses and deferred income 548 820 – 33
Other liabilities 903 1,046 –14
Valuation adjustments and provisions 169 354 – 52
Capital 4,640 4,051 15
– of which minority interests 10 10 0
TOTAL LIABILITIES 93,435 96,397 –3
17

20. SERVICES FOR PRIVATE INVESTORS IN SWITZERLAND AND ABROAD
1998 was a very successful business year for Credit Suisse Private Banking.
Net profit before minority interests grew 28% to CHF 1,687 m and assets
under management increased by 6% to CHF 403 bn due to a substantial
net inflow of new business. Credit Suisse Private Banking was able to further
consolidate its strong position as one of the world’s leading private banking
operations.
A new market-oriented management structure, together with the expansion of compre-
hensive financial advisory services and the creation of the Special Services support unit
to develop tailor-made product solutions, enabled Credit Suisse Private Banking to meet
the differing needs of its clients even more effectively. In a concurrent move, relationship
managers were equipped with state-of-the-art advisory and communication tools. Further-
more, the internet will be increasingly used in future as a distribution channel to make
products and services available to private banking clients.
Credit Suisse Private Banking has repositioned its international operations. Private
banking operations in North America were sold as the units were not of sufficient size
to achieve adequate levels of profitability. In contrast, European operations were actively
expanded. The creation of Credit Suisse (Italy) SpA enabled the business unit to tap
new distribution channels and increase its share of the Italian market. New representa-
tive offices in Athens and Istanbul enhanced the bank’s presence in Greece and Turkey.
Post-restructuring, Credit Suisse Private Banking is now represented in 50 locations in
Switzerland and 35 locations worldwide.
The private banks within Credit Suisse Private Banking were regrouped. In the
second half of the year Affida Bank was integrated into Bank Leu and Bank Heusser into
Clariden Bank.
These various restructuring and expansion moves implemented during 1998 are
an integral part of Credit Suisse Private Banking’s medium-term plan.
KEY PERFORMANCE INDICATORS 1998 1997
Average allocated equity capital CHF m 2,596 n/a
Allocated equity capital
CHF m at 1 January 1999/98 2,200 1,900
Cost/income ratio 46.8% 50.6%
Number of employees at 31 December 8,635 8,464
Pre-tax margin 49.6% 46.0%
Fee income/total income 63.5% 64.5%
Fee income/total operating expenses 138.3% 131.5%
Assets under management
CHF bn at 31 December 403 381
After-tax profit/average AUM 42 bp 37 bp
18

21. 1998 results Despite widespread market turbulence, the very good performance of
the first six months was repeated in the second half of the year. Credit Suisse Private
Banking posted excellent results for 1998, with net profit before minority interests of
CHF 1,687 m (up 28%). After allowing for the transfer of assets to other Credit Suisse
Group business units and the sale of North American operations, adjusted assets under
management increased by a total of CHF 27 bn to CHF 403 bn. CHF 17 bn was net
new business.
At CHF 4,275 m, total revenue grew at a higher rate (18%) than total operating
expenses (11%). This resulted in a marked improvement in the cost/income ratio from
50.6% to 46.8%. Staff costs rose due to the expansion of investment advisory services
in Switzerland and internationally, the creation of the business unit’s own service centre
and performance-related remuneration. At CHF 712 m, other operating expenses were
11% lower than in 1997. Valuation adjustments, provisions and losses of CHF 177 m
reflect the revaluation of credit positions and increased provisions for operational risks.
The substantial fall in mortgage holdings resulted
from the transfer of Bank Leu’s retail operations to
BALANCE SHEET INFORMATION
Credit Suisse.
31 Dec. 1998 31 Dec. 1997
in CHF m in CHF m
Total assets 83,913 81,349
Due from customers 22,544 25,406
– of which secured by mortgages 6,505 9,815
– of which secured by other collateral 14,042 12,187
INCOME STATEMENT 1998 1997 Change
in CHF m in CHF m in %
Net interest income 852 792 8
Net commission and service fee income 2,713 2,328 17
Net trading income 551 389 42
Other ordinary income 159 101 57
REVENUE 4,275 3,610 18
Personnel expenses 1,250 970 29
Other operating expenses 712 800 –11
TOTAL OPERATING EXPENSES 1,962 1,770 11
GROSS OPERATING PROFIT 2,313 1,840 26
Depreciation and write-offs on non-current assets 39 55 – 29
Valuation adjustments, provisions and losses* 177 113 57
PROFIT BEFORE EXTRAORDINARY ITEMS AND TAXES 2,097 1,672 25
Extraordinary income* 60 36 67
Extraordinary expenses 35 46 – 24
Taxes 435 341 28
NET PROFIT 1,687 1,321 28
– of which minority interests 16 7 129
NET PROFIT (after minority interests) 1,671 1,314 27
* net of release of reserves for general banking risks 25 56
19

22. GLOBAL INVESTMENT BANKING
1998 was a year of sharp contrasts for Credit Suisse First Boston. As a
result of the Russian collapse, the firm reported pre-tax profit of just
USD 82 m (CHF 116 m). However, contrasting these disappointing
financial results were important advances in market share and strategic
positioning. The substantial investments made in 1997 and 1998, together
with successful organic development, position Credit Suisse First Boston
well for 1999 and beyond.
Excluding Russia, Credit Suisse First Boston’s pre-tax profits in 1998 were USD 1,384 m
(CHF 1,979 m). In response to market turbulence, risk mitigation efforts reduced the
balance sheet by 19% or USD 68 bn since June to USD 291 bn (CHF 400 bn). Capital
ratios for the bank Credit Suisse First Boston actually strengthened during the year, with
a BIS ratio of 15.4% overall (tier 1: 8.4%) at year-end, among the strongest of any
international peer.
Russia The global financial crisis, triggered by the unprecedented severity of Russia’s
collapse, had a major negative effect on Credit Suisse First Boston’s 1998 profit. Since
the fall of communism, Credit Suisse First Boston had profitably built leading market
shares in the Russian financial markets. Value declines of some 95% in GKOs, 85% in
equities and heavy provisioning against counterparty default on loans and forward foreign
exchange contracts, resulted in very large losses from Russia overall. Simply put, an impor-
tant market for Credit Suisse First Boston suffered from unprecedented economic collapse.
Further improvements are being implemented with respect to the firm’s risk man-
agement and risk diversification. In addition to specific risk reduction, Credit Suisse First
Boston has combined its Fixed Income and Derivatives businesses. This will simplify risk
aggregation across related areas, produce cost and revenue synergies and more
focused management. In this context Swiss Re’s 20% minority interest in Credit Suisse
Financial Products has been repurchased by Credit Suisse Group. The firm’s independent
risk functions have been strengthened with the creation of a new Strategic Risk Man-
agement Group.
KEY PERFORMANCE INDICATORS 1998 1997
Average allocated equity capital CHF m 10,176 9,661
Allocated equity capital
CHF m at 1 January 1999/98 9,340 9,900
BIS tier 1 ratio* 8.4% 8.5%
Cost/income ratio 82.5% 69.1%
Return on average equity capital – 2% 18%
Number of employees at 31 December 14,126 11,863
Pre-tax margin 0.5% 24.9%
Staff expenses/total operating expenses 69.8% 73.2%
Staff expenses/total income 55.5% 49.1%
* applies to the bank Credit Suisse First Boston
20

23. Strategic developments 1998 was also a year of substantial achievement for Credit
Suisse First Boston. The firm took a major step forward in implementing its strategy of
investing to expand its customer businesses and global reach. The acquisition of BZW’s
business in Europe was successfully completed and integrated, giving Credit Suisse
First Boston a significant boost to its leadership in Europe and underlining its unique
transatlantic positioning. An important new “home market” position in the UK was also
gained. The combined businesses are already operating better than originally planned,
with results ahead of schedule and strong gains in market share.
Credit Suisse First Boston’s growing business in Asia was substantially strengthened
by the acquisitions of BZW’s Asian businesses and the 100% control of Credit Suisse
First Boston’s affiliates in Australasia: First Pacific Group and First NZ Capital.
The acquisition of Garantia in Brazil for USD 675 m (CHF 965 m), completed in
August, fills an important strategic gap and results in a unique leadership position in
Latin America. Despite hostile market conditions and a sharp reduction in risk positions,
Credit Suisse First Boston Garantia has operated ahead of plan with good profitability
since the acquisition – both in 1998 and 1999 to date.
Credit Suisse First Boston also expanded organically, adding some 935 people in
1998 (8% of total employment) including over 150 technology bankers and research
analysts. This latter move underpins the firm’s commitment to strengthen its business
and is already providing impressive results.
INCOME STATEMENT 1998
in CHF m
1997
in CHF m
Change
in %
1998
in USD m
1997
in USD m
Change
in %
Fixed Income 2,489 4,866 – 49 1,740 3,379 – 49
Equities 2,038 1,745 17 1,425 1,212 18
Credit Suisse Financial Products 1,538 1,742 –12 1,075 1,210 –11
Corporate and Investment Banking 2,560 2,130 20 1,790 1,479 21
Private Equity and other 975 –157 721 683 – 109 727
REVENUE 9,600 10,326 –7 6,713 7,171 –6
Personnel expenses 5,332 5,074 5 3,728 3,523 6
Other operating expenses 2,307 1,853 25 1,613 1,287 25
TOTAL OPERATING EXPENSES 7,639 6,927 10 5,341 4,810 11
GROSS OPERATING PROFIT 1,961 3,399 – 42 1,372 2,361 – 42
Depreciation and write-offs on non-current assets 279 213 31 195 148 32
Valuation adjustments, provisions and losses* 1,566 555 182 1,095 385 184
PROFIT BEFORE
EXTRAORDINARY ITEMS AND TAXES 116 2,631 – 96 82 1,828 – 96
Extraordinary income* 15 51 – 71 11 35 – 69
Extraordinary expenses 81 114 – 29 57 79 – 28
Taxes 221 872 – 75 155 606 – 74
NET LOSS/PROFIT –171 1,696 –110 – 119 1,178 –110
– of which minority interests 50 123 – 59 35 85 – 59
NET LOSS/PROFIT (AFTER MINORITY INTERESTS) – 221 1,573 –114 – 154 1,093 –114
* net of release of reserves for general banking risks 306 22 214 15
The business unit income statement differs from the Group’s legal accounts in presenting brokerage, execution and clearing expenses as part of operating expenses
in common with US competitors, rather than netted against revenues.
21

24. We estimate that without the investment components of these acquisitions and strategic
personnel additions, Credit Suisse First Boston would have reported additional pre-tax
profits of at least USD 200 m (CHF 286 m) in 1998 and 3% higher operating margins.
However, we are confident that they will produce attractive benefits over the next three
years both financially and strategically, accelerating the firm’s rebalancing towards cus-
tomer business and closing selected market share gaps where important. One of the
best indications of shared confidence in Credit Suisse First Boston’s business health is
the significantly lower staff turnover, despite the tensions of 1998.
1998 results 1998 was a successful year financially for many of Credit Suisse First
Boston’s businesses. Total revenue, excluding Russia, increased 11% compared with
1997 (percentages refer to the dollar-based figures). On the same basis, the revenue split
was 44% Americas, 47% Europe and 9% Asia Pacific, highlighting the firm’s unique
global balance.
Equities Excluding Russia, revenue increased 52% and ROE was around 15%.
US and European cash businesses and equity derivatives showed particularly strong
advances. Good market share gains were achieved across the board in capital markets,
secondary sales, trading and research. Excluding Russia, gross equities revenues,
including those booked in Corporate and Investment Banking and CSFP, were USD
2,055 m (CHF 2,939 m).
Corporate and Investment Banking Revenue increased 21%. This reflects
market share advances in all products offset by lower net interest income (7% of the
total) as the developed markets loan book continued to shrink and with equity capital
supporting it reduced to USD 700 m (CHF 1 bn). Revenue from M&A and equity capi-
tal markets increased 45% compared with 1997. Profitability, though still modest, is
improving, impacted by the heavy investments in progress.
Fixed Income Excluding Russia, revenues declined 28% with profitability little
better than breakeven due to second half losses in distressed debt/high yield and other
credit-sensitive areas. However, money markets, foreign exchange and government
bond trading increased profits. Emerging markets business was profitable outside eastern
Europe. Debt capital markets global underwriting share increased substantially on volume,
which doubled compared with 1997.
Credit Suisse Financial Products Excluding Russia, revenue declined 4%.
Customer business in derivatives was up on 1997 and despite trading losses (including
Russia and Long Term Capital Management), CSFP maintained an ROE of 14% overall
and over 25% excluding Russia.
22

25. Private Equity The firm now manages over USD 2.9 bn (CHF 4 bn) in several funds
globally and is well positioned to grow further. Significant gains from the partial sale of
past strategic and merchant banking investments of Credit Suisse Group and the former
CS First Boston were taken in 1998. Credit Suisse Group has approximately USD 1.2
bn (CHF 1.7 bn) invested at cost in private investments with an equal amount of
unfunded commitments to this asset class.
BALANCE SHEET 31 Dec. 1998
in CHF m
31 Dec. 1997
in CHF m
Change
in %
Cash 1,175 2,021 – 42
Money market claims 18,860 16,119 17
Due from banks 138,726 138,351 0
– of which securities lending and
reverse repurchase agreements 78,303 103,288 – 24
Due from other business units 1,894 5,933 – 68
Due from customers 61,522 103,993 – 41
– of which securities lending and
reverse repurchase agreements 28,634 62,030 – 54
Mortgages 7,178 7,157 0
Securities and precious metals trading portfolio 100,963 102,385 –1
Financial investments 10,072 9,343 8
Participations 436 262 66
Tangible fixed assets 1,947 1,837 6
Goodwill 535 0 –
Accrued income and prepaid expenses 6,845 5,817 18
Other assets 49,555 53,690 –8
– of which replacement value of derivatives 46,347 50,934 –9
TOTAL ASSETS 399,708 446,908 –11
Liabilities in respect of money market paper 19,923 17,719 12
Due to banks 185,335 183,043 1
– of which securities borrowing and repurchase agreements 74,915 84,817 –12
Due to other business units 16,350 39,677 – 59
Due to customers, in savings and investment deposits 180 463 – 61
Due to customers, other 71,157 97,374 – 27
– of which securities borrowing and repurchase agreements 22,714 56,797 – 60
Bonds and mortgage-backed bonds 33,464 33,551 0
Accrued expenses and deferred income 8,844 8,025 10
Other liabilities 53,007 53,875 –2
– of which replacement value of derivatives 49,481 50,635 –2
Valuation adjustments and provisions 1,638 2,706 – 39
Capital 9,810 10,475 –6
– of which minority interests 1,743 1,201 45
TOTAL LIABILITIES 399,708 446,908 – 11
23

26. SERVICES FOR INSTITUTIONAL AND MUTUAL FUND INVESTORS WORLDWIDE
Credit Suisse Asset Management enjoyed another strong year of
revenue growth (up 21%) and growth in discretionary assets under
management (up 20%). With the organisation now in place, Credit Suisse
Asset Management is focusing on expanding the business through
organic growth and acquisitions.
During 1998 a number of actions were taken to improve third-party distribution and to
strengthen core domestic businesses and broaden global capabilities. In Europe a
new platform was developed for selling offshore funds, and in Australia a retail effort
was initiated. The retail distribution efforts in Japan have made Credit Suisse Asset
Management a leader in distributing products through the new bank channels which
opened in December of 1998. Acquisition initiatives in 1998 include the purchase of
Groupe Cristal in France and the business of RMB in Australia. In February 1999,
Credit Suisse Asset Management announced the purchase of Warburg Pincus Asset
Management in the USA, thereby considerably strengthening its position in the US market.
KEY PERFORMANCE INDICATORS 1998 1997
Average allocated equity capital CHF m 180 n/a
Allocated equity capital
CHF m at 1 January 1999/98 170 130
Cost/income ratio 70.2% 72.9%
After-tax profit/average AUM 7.9 bp 5.8 bp
Number of employees at 31 December 1,577 1,393
Pre-tax margin 29.7% 25.1%
Staff expenses/total operating expenses 56.1% 57.2%
Staff expenses/total income 38.6% 40.5%
Total assets under management CHF bn 297 262
Total discretionary funds CHF bn 212 177
Total mutual funds distributed CHF bn 74 63
Total advisory assets CHF bn 85 85
Growth in assets under management 13.4% 18.6%
Growth in discretionary
assets under management 20% 17.5%
– of which volume 14% 6%
– of which performance 6% 11.5%
24

27. 1998 results Discretionary assets under management grew by 19.7% compared with
1997; 12.4% from net new business, 1.1% from assets through acquisitions and 6.2%
from market movements. Most of the asset growth was achieved in the targeted areas
of equity and balanced products (60% of total net new business). The success in asset
growth and the improved asset mix are reflected in the revenue growth of 21%, which,
together with a controlled expense increase of 17%, has improved further the ratio of
after-tax profit to average assets under management.
The business unit’s results for 1997 have been restated to reflect changes in the
revenue sharing for mutual fund products between the business units.
INCOME STATEMENT 1998
in CHF m
1997*
in CHF m
Change
in %
Management and advisory fees 595 479 24
Net mutual fund fees 206 185 11
Other revenues 51 42 21
REVENUE 852 706 21
Personnel expenses 329 286 15
Other operating expenses 257 214 20
TOTAL OPERATING EXPENSES 586 500 17
GROSS OPERATING PROFIT 266 206 29
Depreciation and write-offs on non-current assets 12 15 – 20
Valuation adjustments, provisions and losses 0 0 0
PROFIT BEFORE EXTRAORDINARY ITEMS AND TAXES 254 191 33
Extraordinary income 0 9 –100
Extraordinary expenses 1 23 – 96
Taxes 30 36 –17
NET PROFIT 223 141 58
– of which minority interests 0 0 0
NET PROFIT (after minority interests) 223 141 58
* adjusted to reflect revised revenue sharing between business units in respect of mutual fund commissions implemented at 1 January 1998
25

28. INSURANCE FOR PRIVATE AND CORPORATE CUSTOMERS WORLDWIDE
Winterthur Group posted very good results in 1998. It also focused on its
new business strategy: the concentration of efforts on increasing value
over the long-term, sharper focus on core business and core markets
and the exploitation of potential in the field of bancassurance. Winterthur
finished the 1998 business year on a high note. Net operating profit rose
by 31% (1997: 31%) to CHF 884 m. An additional gain of CHF 479 m was
made on the sale of reinsurance operations and the holding in HIH
(Australia). Annual profit of CHF 1,363 m was recorded. Shareholders’
equity grew 18% to CHF 9.4 bn.
New strategy In 1998 Winterthur reviewed and reformulated its business strategy.
The company’s primary goal is to be a leading retail insurer and bancassurance provider
in Europe, focusing particularly on the Swiss, German, Italian, Spanish and Belgian
markets. In addition, Winterthur intends to further reinforce its good foundation in Europe
by strengthening its position in the other European markets and by implementing cross-
border product initiatives. Second, it aims to become the market leader in selected mar-
kets in eastern Europe and Asia. The largest opportunities for growth are to be found in
asset gathering business. Winterthur’s pension funds in the growth markets of eastern
Europe and its units in Asia mean it is particularly well placed to achieve this goal.
Third, Winterthur wants to be a leading provider of global insurance and group life solu-
tions. Fourth, an attractive return on shareholders’ equity is to be achieved in all other
markets and areas of business, e.g. in North America. Expansion at Winterthur is to be
carefully targeted, encompassing both organic growth and acquisitions and partner-
ships.
Systematic implementation Winterthur Group implemented two key strategic deci-
sions in 1998 – the sale of its 51% holding in the Australian HIH and of its active rein-
surance operations. The resources freed up through the sales will be used to further
strengthen Winterthur’s positions in Europe and for targeted expansion in eastern
Europe and Asia. The creation of the Individual and Group Life product centre is a fur-
ther step in the implementation of the bancassurance strategy within Credit Suisse
Group. This division, the leading bancassurance provider in Switzerland when it was
formed in the first half of 1998, has already seen its share of the Swiss life insurance
market increase considerably. The expansion of individual and group life activities into
Europe is planned. Finally, the partnership between Winterthur International and the
US-based Travelers Property Casualty has opened up new opportunities for global
insurance activities with corporates.
26

29. Very good year for operational business Despite a further intensification of com-
petition in the global insurance markets and turbulence on the financial markets, most
of Winterthur’s divisions were able to improve both their results and their competitive
positions. In Switzerland, Winterthur further strengthened its position as the market
leader. The integration of the legal costs insurer ARAG Schweiz into Winterthur-ARAG
is now complete. Life operations experienced a boom.
DBV Winterthur again saw a sharp rise in profits for 1998. The stock exchange
between Commerzbank and the Generali Group resulted in the termination of the ten-
year partnership between Commerzbank and Winterthur (effective at the beginning of
the year 2000) and opens up new bancassurance options for Credit Suisse Group.
Winterthur underpinned its position as one of the leading insurers in Italy. Spanish auto
operations posted a loss for 1998 after many years of good results due to the adverse
development of claims. First successes were registered in the implementation of the
bancassurance strategy in a number of European countries, Spain included. Of particu-
lar note is Winterthur’s strong position in the growth markets of central Europe:
Hungary, Poland and the Czech Republic. In south-east Asia and the Pacific Rim,
Winterthur’s activities focused on life business and joint activities with Credit Suisse
Group banking units.
1998 results Net operating profit after tax and minority interests was 31.2% higher at
CHF 884 m. An additional CHF 479 m (after tax) in extraordinary profit was made on
the sale of reinsurance operations and HIH (Australia). Annual profit (after tax and minoritiy
interests) was CHF 1,363 m. Gross premiums for Winterthur Group rose by 13.9% to
CHF 28.6 bn. These figures have been restated for the sale of HIH (Australia) and
reinsurance operations. Recording 22.7% growth, life business showed substantially
greater expansion than non-life business, which grew 5.8%. Investments, which make up
around 91% of total assets, increased by 11.1% to CHF 111.5 bn. Shareholders’ equity
rose by CHF 1.5 bn (18.1%) from CHF 7.9 bn to CHF 9.4 bn. This increase reflects the
excellent operational results, favourable stock market developments and an appropriate
investment strategy. Technical provisions rose by 9.9% to CHF 96.7 bn.
FINANCIAL HIGHLIGHTS 1998 1997 * Change
in CHF m in CHF m in %
Gross premiums 28,620 25,123 14
Net investment income 8,019 7,138 12
Net operating profit (after minority interests) 884 674 31
Annual profit 1,363 318 329
1998 1997 Change
in CHF m in CHF m in %
Investments 111,505 100,387 11
Technical provisions 96,652 87,938 10
Debentures outstanding 465 807 – 42
Shareholders’ equity (excl. minority interests) 9,358 7,924 18
31 Dec. 1998 31 Dec. 1997
Employees 25,521 25,062 2
* restated for the sale of HIH (Australia) and the reinsurance business
27

30. 1998 results for non-life business Despite the adverse development of claims in
the Spanish motor business and the introduction of new accounting practices in Italy
and Spain, resulting in an increase in technical provisions, the key performance bench-
mark in insurance business, the combined ratio (sum total of claims ratio, expense ratio
and dividends to policyholders incurred) improved from 110.1% to 109.2%. The tech-
nical provisions ratio (ratio of technical provisions to premiums) remained virtually
unchanged compared with 1997 at 182%. Net investment income increased by 6.5%
compared with the previous year. Overall, the result in non-life business (before extra-
ordinary items, tax and minority interests) amounted to CHF 900 m.
1998 results for life business Gross premiums rose by 22.7% to CHF 14.8 bn.
The expense ratio fell further to 9.3% compared with 10.5% in 1997. Claims incurred,
which rose 13.4%, grew at a lower rate. The change in the actuarial provision, up by
31 Dec. 1998 31 Dec. 1997 Change
BALANCE SHEET in CHF m in CHF m in %
Investments 111,505 102,119 9
– non-life 27,327 28,122 –3
– life 79,587 71,242 12
– life business where the investment risk
is borne by policyholders 4,591 2,755 67
Policy loans 878 902 –3
Deposits with reinsured companies 697 337 107
Cash at banks and in hand 258 770 – 66
Receivables from insurance companies 1,181 833 42
Receivables from agents and policyholders 2,811 2,775 1
Sundry debtors 1,915 1,514 26
Accrued income and prepaid expenses 2,287 2,314 –1
Office and EDP equipment 243 345 – 30
Other assets 680 1,178 – 42
TOTAL ASSETS 122,455 113,087 8
Technical provisions 96,652 91,228 6
– non-life 21,463 24,205 –11
– life 70,535 64,177 10
– life business where the investment risk
is borne by policyholders 4,654 2,846 64
Deposits received from reinsurance ceded 1,253 750 67
Convertible bond and warrant issues 465 922 – 50
Payables to insurance companies 1,271 707 80
Payables to agents and policyholders 3,468 2,280 52
Sundry creditors 2,420 2,319 4
Accrued expenses and deferred income 1,497 1,771 –15
Other liabilities 4,104 3,623 13
Shareholders’ equity 11,325 9,487 19
Minority interests 1,967 1,563 26
Shareholders’ equity after minority interests 9,358 7,924 18
TOTAL LIABILITIES 122,455 113,087 8
28