Fate that first and foremost affects individuals. Are solidarity and individualism mutually exclusive?
“Solidarity and added value – isn’t that a contradiction in terms? Every company must add value for its customers, employees and shareholders. Adding value implies that financial value is acquired and distributed. Solidarity, on the other hand, makes you think of public spirit or even welfare. Yet, nevertheless, the two terms added value and solidarity are not mutually exclusive. Because in the insurance business there is no added value without solidarity. And vice versa, added value makes a vital contribution to solidarity.”
Professional background, executive responsibilities until 2005 Partner at KPMG Switzerland, 1994 – 2005 managing partner of KPMG Lucerne.
– Implementation of the first phase of the corporate responsibility strategy
Italy Helvetia is one of the top 20 companies in the Italian insurance market. It operates as an all-line insurer primarily in the economically interesting northern regions of the country. The Group companies sell Helvetia products through more than 400 multi-company agents and exclusively via the Insurance Corners in the operational facilities of their cooperation partners, such as ENI Group.
France Helvetia specialises in transport insurance in France. In 2012 Helvetia Assurances acquired the transport insurance portfolio of Gan Eurocourtage, a subsidiary of Groupama SA, and thus climbed to the number two spot in the French transport insurance business. This is the second expansion step in the French market in quick succession. In addition to goods, transporter liability and accidental damage insurance, the products we offer are enhanced by maritime transport insurance as well. Transport and hull business is managed centrally from Paris and Le Havre. A countrywide network of brokers organised through five central offices is responsible for sales.
Ester Neff is passionate about marathons. “I find it exciting to test my limits. A marathon makes me feel happy.” Her insurance protects her against any potential misfortune. But Ester Neff does not think of that when she is running. She is fascinated by the sense of community. “Even though all runners are actually competitors, there is solidarity among them.
Product portfolio The service spectrum includes term insurance, traditional pension solutions as well as unit- and indexlinked products where the insured themselves to some extent assume the investment opportunities and risks. Helvetia directly grants most of the guarantees in the products, but reputable third parties assume some of the risks in innovative insurance solutions.
At the local level, country-specific regulatory requirements and requirements relating to commercial law form the basis of the capital calculation. At Group level, capital calculation is carried out on the basis of the consolidated balance sheet. In this process, capital requirements are calculated according to the capital models relevant to the Helvetia Group, namely Solvency I, SST and Standard & Poor’s. In these capital models, the available capital is calculated on the basis of the IFRS equity. Depending on the model, additional capital is added and other components such as planned dividend payments and intangible assets are deducted. Under the Swiss Solvency Test, all assets and liabilities are measured at market price for the calculation of the available capital. While the amount of capital required under Solvency I is basically calculated as a function of business volume, a risk-based calculation method is applied to calculate the capital required under the Standard & Poor’s model and the Swiss Solvency Test. In SST, the effects of risk on the available capital are determined with different scenario simulations and statistical methods, while dependencies and diversification effects are quantified as a riskbased capital requirement.
Tried-and-tested asset liability management Helvetia’s investment strategy is based on an asset liability concept that has been tried and tested over many years. The starting point is a meticulous analysis of the liabilities that then forms the basis for a strategic asset allocation which is defined for each business unit. The strategic asset allocation must meet the high security requirements of the insurance business, on the one hand, and the yield expectations of the individual stakeholder groups on the other. Asset liability management also ensures that the Group always has sufficient capital for its strategic development projects while taking account of the growing regulatory requirements. In addition, the regulatory supervisory solvency requirements, which include both the Solvency I regime and now also the Swiss Solvency Test, must be fulfilled at all times. The increase in solvency requirements has gradually led to a longer duration for the interestbearing securities in the life business. The assets’ long maturities mean that the current phase of extremely low interest rates only gradually affects the direct yield. At the same time, lowering the interest rates guaranteed in life insurance policies compensates for this trend.
Living corporate responsibility has ensured Helvetia’s stability for more than 150 years. It establishes identity and trust with employees, customers and all other stakeholders, especially during challenging economic times. Corporate responsibility is, however, primarily an investment in the company. This is what the corporate responsibility initiative launched last year is based on. Its objective is to further strengthen corporate responsibility and to establish a closer tie between sustainability issues and Helvetia Group’s long-term business policy objectives. The Groupwide approach focuses on the proven three-pillar model of sustainable development in the areas of the economy, environment and society.
Core business Sustainability as part of business understanding characterises our claim to meet customer needs and take into account corporate responsibility aspects in risk and investment management.
2.4 Changes in capital – In 2001, the share capital was reduced by
Any new members will complete the term of office of retiring members. The terms of office are coordinated in such a way as to ensure that, every year, one third of the members of the Board of Directors is available for election or re- election. Re-election is possible. Every member of the Board of Directors has to be elected by the shareholders. For information concerning the first-time election to the Board of Helvetia Holding AG and the remaining term of office of the members of the Board of Directors, please refer to the table on page 10.
At the meetings, every member of the Board of Directors may ask other members and members of the Group Executive Management for inform-
5.5 Registration of shares The right to attend the Shareholders’ Meeting (19 April 2013) and exercise voting rights is reserved for persons who were registered in the share register as shareholders with voting rights as of the cut-off date (9 April 2013) specified by the Board of Directors and announced in the Swiss Commercial Gazette and various other newspapers. In exceptional cases, guest tickets for the Shareholders’ Meeting may be issued, but holders of such tickets do not have any voting rights. Every share registered in the register entitles the holder to cast one vote.
Total profit from Group financial assets and investment property 1 857.6 1 170.9
Italy In view of the difficult economic climate, the result achieved by Helvetia’s Italian business units is certainly pleasing. The changed demand behaviour of customers is reflected both in the life and non-life business. Compared to the heavily declining market volumes, however, Helvetia succeeded in holding its ground well. At CHF 1,161.8 million, the exchange -rate-adjusted business volume is 2.9% below (in CHF due to exchange rate differences: –5.0%) the previous year. The strong increase in profit to CHF 17.4 million compared to CHF 5.2 million in the previous year is especially gratifying. This is attributable primarily to a better investment result. In financial year 2012, we took further important strategic steps with the acquisition of majority interest in Chiara Assicurazioni and the acquisition of the remaining 30% interest in Chiara Vita.
Record-high unemployment figures, declining purchasing power and consumption place a particular burden on the premium volume in the non-life business. Compared to the overall market and in light of these difficult conditions, Helvetia Spain did well overall, but nevertheless reported a 3.9% decrease in premiums (in CHF due to exchange rate differences: –6.0%). Thanks to the positive claims experience in the non-life area and the consistent implementation of our strategic initiatives, the net combined ratio improved compared to the previous year. The overall solid technical development and the once again higher investment result, however, did not fully compensate for the depreciation of the property portfolio in the amount of EUR 13.7 million. The overall result in 2012 is CHF 20.7 million, and thus 13.0% below the previous year’s result.
Counteracting general market trends with innovation in the life business The life insurance premium volume reported very gratifying growth of 10.4% (in CHF: 8.0%) to CHF 113.7 million in 2012. Helvetia thus defied the general trend of the Austrian life insurance market that was already significantly declining for the second year and proved that growth is possible with innovative products and sales dynamics even during difficult economic times. The significant drivers of this growth were, in addition to the successful single premium business, primarily the fund savings plan (up 56.3%), which had already stimulated
Bad weather and major events conceal solid development in non-life In 2012, the non-life business grew by 2.3% (in CHF: 0.0%) with a business volume of CHF 184.6 million. The refocused sales strategy in force for some years now resulted in a 2.6% increase in the property insurance business and a 4.7% increase in the accident/health insurance business. In the highly competitive motor vehicle insurance business we successfully combined focus on income and restructuring measures with 2.2% growth.
aging Director of a French luxury shoe manufacturer, he is constantly involved with company data. “We have 200 employees and our activities require a sig­
Increase in the dividend Helvetia strives to generate an attractive return on invested capital for its shareholders and pursues an income-oriented, continuous distribution policy that allows the company to maintain its solid capital base. Despite the challenges associated with on-going low interest rates and difficult economic conditions, Helvetia achieved a good result for 2012. The Group’s capital base also continues to be solid with a Solvency I figure of 229%. Our strong balance sheet and improved profitability allow the Board of Directors to propose an increase of around 6% in the dividend to the Shareholders’ Meeting. This is equivalent to a dividend of CHF 17.00 per share. Half of each of the last two dividends was distributed from capital contribution reserves arising from share pre-
Profit or loss for the period – – – – – 314.9 24.7 339.6 2.6 342.2 – 342.2
For non-monetary items classified as available-for-sale investments, such as shares and shares in investment funds, the unrealised foreign currency gain is recognised in equity without affecting the income statement until the financial instrument is sold. However, for monetary items such as bonds and loans, the unrealised foreign currency gain is immediately recognised in the income statement.
2.7 The current, non­ current distinction 2.8 Property and equipment 2.9 Leasing
Intangible assets with an indefinite useful life are not amortised, but are reviewed annually for impairment (see Note 2.11, below). Goodwill is recognised as of the acquisition date and comprises the fair value purchase price plus the amount of any non- controlling interest in the acquired company and, in a business combination achieved in stages, the acquisition-date fair value of the acquirer’s previously held equity interest in the acquired company, minus the net of the acquisition date amounts of the identifiable assets, liabilities and contingent liabilities of the acquired company.
Changes in fair value are recognised in the income statement. Companies in Switzerland calculate fair value using a generally accepted discounted cash flow (DCF) valuation method. The portfolio is regularly reviewed and appraisal reports are prepared by independent experts. All other countries use independent experts to determine market estimates at least every three years. These estimates are updated between valuation dates.
Contracts that are considered insurance products in the formal sense of the law and mainly carry financial risk rather than any significant insurance risk are not insurance contracts but are treated as financial instruments unless they carry a discretionary participation feature (DPF), in which case they are classified as insurance contracts. Under IFRS, discretionary participation features are contractual benefits where, in addition to the guaranteed benefit, the policyholder has a claim to the realised or unrealised investment returns on certain assets or to a share of the insurance company’s profit or loss.
Profit or loss from operating activities 174.3 195.0 233.4 164.7 30.6 4.6 0.0 0.0 438.3 364.3
Share-based compensation transaction costs – 0.5 – 0.5 – 0.5 – 0.5 – 0.7 – 0.5 – – – 1.7 – 1.5 1 Adjustments of prior-year figures, see section 2.3 on page 98.
In accordance with the accounting policies used, deposits from investment contracts are not recognised in the income statement.
The impairment test carried out in 2012 did not result in any impairment loss. The recoverable amount was determined by calculating the value in use. This calculation required management to make estimates of expected cash flows to be derived from the assets. These free cash flows are usually considered for a period of three to five years and are based on the budget approved by management and the strategic planning. The growth rate was set by management and is based on past experience and future expectations. The applied discount rates are pre-tax rates and relate to the risks allocated to the business units in question. Management believes that any reasonable change in any of the key assumptions used to determine the recoverable amount of the individual segments will not result in impairment.
7.1.2 Direct yield from interestrate -sensitive investments 7.1.3 Gains and losses on investments
Investments in associates accounted for under the equity method are listed in the table in Note 19 (from page 195).
Change in the scope of consolidation – – 227.9 – 48.9 – 276.8 –
Increase / reduction in taxes resulting from: tax-exempt income or income taxed at a reduced rate1 – 6.6 – 5.3 non-deductible expenses 1.6 11.8
The first termination date on which Helvetia has the right, but not the obligation, to repay the bond is 30 November 2015. After this date the bond will earn a floating interest based on the three-month CHF LIBOR rate plus 359.6 basis points.
Fair value of plan assets (+) 1 449.5 1 386.6 1 400.2 1 372.2 1 295.7
The property insurance portfolio is exposed to natural disasters, such as flooding, earth­ quakes, wind storms and hail. Major events and man­made disasters may also result in large total losses. Examples include explosions, fire and terrorism. Helvetia Group ef­ fectively guards against catastrophe losses through a selective underwriting policy and a multi­level reinsurance programme.
Helvetia Group offers a comprehensive range of life insurance products. They include risk and pension solutions and are aimed at private individuals (individual life insurance) and companies (group life insurance). The risks associated with these products are ex­ plained in detail in the following notes. There is also a small assumed reinsurance port­ folio that is no longer included in the following description due to its lack of size. Life insurance is mostly operated from Switzerland, where 75.8% (previous year: 77.7%) of the Group’s gross premium volume in the life insurance sector is generated. The follow­ ing table shows the distribution of gross premium income by business line and region. In total, 1.5% (previous year: 1.4%) of the life premiums written was ceded to reinsurers in 2012.
The interest rate for the extra­mandatory cover determined by Helvetia Group was also 2% for 2009 and 2010 and was reduced to 1.5% for 2011. It has been reduced further to 1.0% for 2012.
Within the reinsurance segment, Group Reinsurance serves as the Group reinsurer. It en­ sures that individual business units receive appropriate contractual reinsurance cover, and transfers the assumed risks to the reinsurance market, taking account of risk cor­ relation and diversification. This centralisation process ensures that uniform reinsurance standards are applied on a Group­wide basis, in particular as regards the hedging level, and also leads to synergies in the reinsurance process. Based on the Group’s risk appetite and conditions on the reinsurance markets, Group Reinsurance ensures efficient use of the risk capacity available at Group level and optimally manages purchases of reinsurance cover.
Provision for future policyholder participation 138.2 25.9 – – 1 106.2 1 270.3
as at 31.12.2012 Callable at any time < 1 year 1 – 5 years 5 – 10 years > 10 years Without maturity Total in CHF million
Fair value Maturity of non­discounted flows of funds as at 31.12.2012 < 1 year 1 – 5 years 5 – 10 years > 10 years in CHF million
A “reasonable possible change” in the risk factors affecting the sensitivity analysis is defined as every symmetrical bracket that covers a range of possible share price changes where the probability of its occurring over a period of one year is between 10% and 90%. Sensitivities are shown for the borders of the chosen bracket that meets these conditions.
The above table analyses the impact of an exchange rate change on Helvetia Group’s income statement, taking account of deferred taxes and the legal quota. In accordance with the IFRS, only monetary financial instruments and insurance liabilities in non­func­ tional currencies and derivative financial instruments were included in the analysis.
as at 31.12.2012 CHF EUR USD Others Total in CHF million
Provision for future policyholder participation 1 049.2 221.1 – – 1 270.3
Not rated 28.0 5.1 as at 31.12.2011 Exposure Share in %
On 19 April 2010, Helvetia Holding AG issued a 1.75% bond 2010 – 2013 with a nominal value of CHF 150 million. The bond was subscribed and paid on 19 April 2010 and has to be repaid at nominal value on 19 April 2013. The bond has a coupon rate of 1.75%, which will be paid annually on 19 April.
Lucerne, Ob­ / Nidwalden Brünigstrasse 20, 6002 Luzern 058 280 77 11 Jörg Riebli