The European Insurance and Occupational Pensions Authority (EIOPA) has implemented a review process to determine the capitalisation under Solvency II. Helvetia is following these developments as well and is in a position to adapt changes in the calculation logic and reflect them in its capital management in a timely (appropriate) manner.
Attractive, stable investment income We generate attractive investment income for our customers and shareholders, through the careful combination of low-risk assets, such as high-quality bonds and mortgages and instruments with higher returns such as real estate, equities, foreign currency bonds and corporate bonds, combined with controlled investment risk. The income gained from bonds, mortgages and real estate ensures sustained and stable investment income, while gains in value from the equities create interesting medium-term yield potential. Helvetia's high-quality property portfolio is an excellent fit with the liabilities from the insurance business, not only because of the long-term stable and attractive rental income, but also due to the stable values of the assets.
Payout ratio on the basis of IFRS 59 % 58 %
Professional background, exercising operational executive functions Management positions at UBS; 1997 – 2009 State Council of the canton of Valais; since 2007 Senate of the canton of Valais; 2011 – 2013 President of the Finance Commission of the Council of States, Vice-Chairman of the Council of States 2017 / 2018
Chairman of the Board of Directors The Chairman heads the Board of Directors. He convenes the meetings of the Board, prepares the agenda for the Board meetings and chairs these meetings. He prepares the Shareholders’ Meeting and the invitation to the Shareholders’ Meeting, and also chairs this meeting. He draws up the strategic objectives that are discussed by the Board of Directors and represents the shareholders in important strategic projects in consultation with the CEO. He ensures that shareholders receive timely and correct information on the Group’s business operations and nurtures relationships with major investors. Together with the other executive bodies of the Group, the Chairman ensures good corporate governance and an effective internal control system. He serves as line manager to the CEO and acts in consultation with the CEO whenever possible. He and the CEO prepare the CEO’s annual agreement on objectives, and he assesses the CEO’s performance every year. The Chairman may take part in important meetings of the Executive Management as a guest; to this end he receives the agenda and accompanying documents for all meetings. He manages the Group’s internal audit team as well as the head of the secretariat, assesses requests for information, meetings or inspection of documents from members of the Board of Directors as well as their acceptance of new Board or similar mandates (the Nomination and Compensation Committee decides on such mandates of the Chairman), signs Commercial Register applications and handles other tasks delegated to him by the Board of Directors. He may inspect any and all documents at all times.
Professional background 1986 – 1990 Corporate Advisor in relation to the Swiss Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans at Patria Insurance; 1990 – 1995 Department Head and Managing Director at Servisa; 1996 joined Helvetia Insurance: Member of the Executive Management of Helvetia Switzerland; 1996 – 2001 Head of Companies client area; 2001 – 2016 Head of Business Benefit division; Member of the Executive Management in his current role since 1 January 2017
Professional background 1988 – 1990 Academic Assistant, Institute of Insurance Economics, University of St. Gallen; 1990 joined Helvetia Insurance: Head of various departments in the non-life business in Switzerland; 2002 Head of Corporate Centre Helvetia Group; 2004 Member of the Executive Management of Helvetia Switzerland: Head of IT; 2006 Member of the Executive Management of Helvetia Switzerland: Head of Operations & Partners; 2008 Member of the Group Executive Management: Head of Strategy & Operations; 2015 Member of the Group Executive Management in his current position
8. Statutory auditors 8.1 Term of office and tenure of office of lead auditor The independent auditors KPMG AG, Zurich, have served as the auditors of Helvetia Holding AG and its consolidated subsidiaries since 2005. The statutory auditors’ term of office must be renewed by the Shareholders’ Meeting every year. The KPMG AG audit team for the 2017 financial year consisted of: – Bill Schiller (since 2014), ACA, Partner Financial
8.3 Fees for additional consultancy services CHF 75,519.00. These fees covered legal and tax advisory services.
EM and employees: fixed salary based on individual function (position, skills, responsibility, etc.) incl. fringe benefits (cash)
teria matrix to assess the results-based target achievement; this matrix is discussed in detail below in conjunction with the long-term compensation component (LTC).
e) Shares and options Members of the BoD receive part of their fixed remuneration in the form of shares (see a). They do not participate in any employee share purchase plans. They also did not participate in any previous share option programmes.
The extent to which strategic objectives have been achieved (ranging from 0 to 125 %) is fixed annually during the first quarter following the end of a financial year by the Nomination and Compensation Committee of the BoD on the basis of the criteria below. The Committee has additional room for discretion, allowing it to take additional criteria and an overall assessment into account, while remaining within the established upper limit of 125 %: – Profit: The reference figure is the annually reported Group profit for the period relative to the previous year.
– Total amount of the fixed compensation for the BoD for the past financial year 2017 and the period from 1 January 2018 to the 2018 SM
Germany CHF 589.4, + 1.2 % in OC – Motor vehicle insurance, health / accident insurance, liability insurance and property insurance grew – Transport insurance declined due to latest acquisitionrelated optimisation measures
Spain CHF 135.9 million, + 4.5 % in OC – Main growth drivers were investment-linked insurance solutions, a successful placement of a tranche product, good growth in burial insurance; traditional insurance contracted as planned
A clear shift in new business from traditional products to capital -efficient products was evident in all countries.
Lower technical result – Negative impact of natural catastrophes on Active Reinsurance (mainly Hurricanes Harvey, Irma and Maria) and strengthening of reserves owing to the adjustment of the Ogden discount rates in the United Kingdom – Greater burden from natural catastrophes on the Specialty Lines CH / International
Income and expense that may be reclassified to income – – – 18.7 145.2 – 6.0 169.9 0.1 170.0 – 170.0
Realised gains and losses on financial instruments and investment property – 17.6 – 136.0
Purchase of shares, investment funds and alternative investments – 1 413.0 – 1 479.6
2.20 Treasury shares Treasury shares are recorded at cost, including transaction costs, and reported as a deduction from equity. In case of a sale, the difference between cost and sale price is recorded as a change in capital reserves, with no impact on profit or loss. Treasury shares are exclusively shares of Helvetia Holding AG, St Gall.
Reinsurers´ share of benefits and claims 16.3 38.4 32.4 55.2 13.4 11.0 54.1 52.7 – 1.3 – 0.2 114.9 157.1
Reinsurers´ share of acquisition costs 14.6 30.6 21.5 19.8 5.1 5.1 31.8 26.2 – 0.1 0.0 72.9 81.7
Reinsurers´ share of acquisition costs 17.5 25.7 103.7 107.9 48.7 44.2 – 92.5 – 99.4 77.4 78.4
Share-based payment transaction costs – 2.1 – 1.8 – – – – – 2.6 – 1.5 – – – 4.7 – 3.3 by business activity: Life Non-life Other activities Elimination Total in CHF million
The foreign exchange gain from financial investments is included in “Gains and losses on Group investments” in the income statement and amounts to CHF 85.0 million (previous year: CHF 51.6 million ), excluding foreign currency translation differences from investments at fair value through profit and loss and non-monetary positions.
Realised gains and losses on disposals of loans (LAR) including foreign currency gains and losses
Realised and book gains and losses on financial assets designated as at fair value through profit or loss 394.0 130.9
Derivative financial assets for hedge accounting 1.7 7.2 – – 1.7 7.2 – – 1.7 7.2 – –
Present value liabilities from finance lease 2.5 10.3 4.9 17.7 18.4 8.2 Other financial liabilities
Unearned premium reserve for insurance contracts non-life 1 242.1 1 110.6 54.2 48.0 1 187.9 1 062.6
Actuarial reserves for investment contracts with descretionary participation features 2 725.1 2 389.7 – – 2 725.1 2 389.7
Financial report Income taxes 10.4 Tax on expenses and income recognised in other comprehensive income before tax deferred taxes after tax in CHF million
Foreign currency translation differences 163.1 – 45.5 – – 163.1 – 45.5
Revaluation from reclassification of property and equipment 1.1 – 0.2 0.1 0.0 1.2 – 0.2
11.3 Preferred securities In 2015, Helvetia Schweizerische Versicherungsgesellschaft AG issued a subordinated perpetual bond of CHF 300 million. This bond will pay interest at 3.00 % per year until 2022. The interest is charged directly to equity. Helvetia can suspend interest payments at its discretion only when Helvetia Holding does not pay any dividends and if certain other conditions are fulfilled. However, the suspended interest payments do not lapse. This bond meets all solvency requirements and is allocated to equity.
Net liability1 for defined benefit plans 564.5 708.2 1 The “Net liabilities” position does not contain any reimbursement rights
As at 31 December 2017, 89.5 % (previous year: 89.8 %) of the pension obligations resulted from pension plans in Switzerland.
Helvetia Group has designed its business process in accordance with the principle of commercial prudence. This assumes that the risks are adequately identified, assessed, monitored and controlled and can be duly taken into account for the assessment of the capital requirements. The Group addresses prospective and retrospective risks with actuarial controls, adequate reserves and diversification. Helvetia Group’s consistent focus on a portfolio that is well diversified geographically and across sectors encourages risk-balancing and reduces the risks described above. Helvetia Group controls the technical risks through a risk-adjusted rate schedule, selective underwriting, proactive claims settlement and a prudent reinsurance policy. The underwriting ensures that the risks entered into meet the necessary quality criteria in terms of type, exposure, customer segment and location. In order to cover existing liabilities that are still to be claimed by policyholders, Helvetia establishes incurred but not reported reserves. These are calculated using actuarial methods on the basis of many years of claims experience, taking into account current developments and existing uncertainties.
16.4 Market risks As at 31 December 2017, Helvetia Group managed investments totalling CHF 52.3 billion (previous year: CHF 49.6 billion).
Derivative financial assets for hedge accounting 1.7 – – – – 1.7 as of 31.12.2016 < 1 year 1 – 5 years 5 – 10 years > 10 years Without maturity Total in CHF million
Gross, not taking into account the latency calculation and derivatives 304.3 – 296.3 260.0 – 251.4
Goodwill and other intangible assets 919.9 305.4 0.0 – 1 225.3
Consolidated foreign currency balance sheet 2016 as of 31.12.2016 CHF EUR USD Others Total in CHF million
– Counterparty risks from the insurance business: the default of other counterparties (policyholders, insurance agents, insurance companies) may lead to a loss of receivables from the insurance business. On the balance sheet, the maximum gross exposure would correspond to the items shown in section 9.7 (from page 133) “Receivables from policyholders, insurance agents and insurance companies ” (after deducting receivables from the reinsurance business recognised under “Credit risk exposure from ceded reinsurance”). However, these receivables are largely of a short-term nature. In addition, the receivables from policyholders represent the largest group in this class. Since the insurance cover is linked to the fulfilment of the contractual obligations on the part of the customer, the resulting risk is relatively low for the insurance company.
– In reporting period2016, there was a merger between Helvetia Financial Services GmbH, Swoboda & Kafka Gesellschaft m.b.H. and protecta.at Finanz- und Versicherungsservice GmbH, all with head offices in Vienna. The merged entity operates as protecta.at Finanz- und Versicherungsservice GmbH, Vienna.
Patria Schweizerische Lebensversicherungs-Gesellschaft AG, St Gall Life 100.00 full CHF 0.1
Helvetia Vita - Compagnia Italo Svizzera di Assicurazioni sulla Vita S.p.A., Milan Life 100.00 full EUR 47.6
3. Other information 3.1 Full-time equivalents Helvetia Holding AG does not have any employees.
Present value of new business premiums (PVNBP) 1 688.6 1 729.0
Value of new business in % PVNBP 2.1 % 1.2 %
Consolidated equity per share in CHF 445.0 503.2 470.4 486.3 528.5
Nevertheless, customers are still being provided with complicated general terms and conditions of insurance and product brochures. Why is this? Even we would not yet be able to introduce contracts without accompanying general terms and conditions of insurance. However, we translate the insurance world into the language of our customers and make it tangible and understandable. For example, customers should decide for themselves how they wish to be advised, conclude an insurance policy, change their cover or renew their contracts.
Value for shareholders  Continuous increase in profit and dividend potential
Ensure efficient claims settlements or take out insurance products online with just a few clicks of the mouse. We make it as simple as possible for our customers.
P eople are living ever longer and can afford a more fulfilled life. At the same time, state pension systems are no longer consistently able to satisfy the desire for a secure income. Private pension cover is thus becoming more important. Nevertheless, low interest rates and a growing level of regulation are making it difficult to offer guaranteed benefits with attractive returns. The modern life insurance business finds itself operating in this area of conflict.
Andrea Hand not only feels that comprehensive insurance for SMEs is strong in terms of the personal service and individual structure it provides, but also that it is simple in terms of contact: For example, she can report claims to Helvetia online and is then contacted by “her” claims expert for the next steps. This brings our brand promise “simple. clear. helvetia.” to life. www.hand.ch
The product portfolios in the individual countries are considerably smaller than those in Switzerland. Where and how does Helvetia want to grow in Europe? In our European country markets, we offer our customers a broad sales network with wide-ranging access to our products for private individuals and SMEs. This provides a solid base for profitable growth. Here, we focus on so-called hybrid customers, i.e. customers who are both active online and also desire personal advice. The European markets also offer us potential for acquisition-related growth. Following the purchases in Italy and Austria, we have placed our focus on the Germany and Spain country markets in order to further strengthen our position here.
 around 43,000 customers  leading position in Switzerland, support of global expansion of our Swiss customers, international footprint, several overseas offices
November Launch of the international forest protection initiative with the provision of support for reforestation in Germany and Austria
A further focus area in 2018 will be the topic of “employer benefits aligned to specific life stages”. In future, we want to provide employees with the opportunity to put together their individual benefits package – based on their current stage of life. To this end, we are scrutinising all of our existing benefits models and comparing them to the needs of current and future employees.