Group profit for the period per share in CHF 10.5 8.4 25.6 %
In our business activities, Helvetia is exposed to numerous risks that are included in the Group’s risk management process. Market risks arise, in particular, from interest rate changes, fluctuations in share prices, real estate prices, or exchange rates which influence the value of the Group’s investments and technical liabilities. Liquidity risk generally refers to the risk of being unable to provide an unexpected cash outflow in a timely manner.
Methods for measuring capital The measurement of capitalisation is carried out both at Group and local level, i.e. at the level of the individual legal entities. At the local level, the country-specific regulatory and commercial law requirements are key. At Group level, capital is measured on the basis of the consolidated balance sheet. In doing so, the capital requirements are measured against the capital models that are relevant to the Helvetia Group: Swiss Solvency Test and Standard & Poor’s. When measuring the capitalisation of the Group’s legal entities, the applicable solvency rules are applied (Swiss Solvency Test in Switzerland and Solvency II in the EU).
Successful Shareholders’ Meeting in 2019 The Helvetia Group once again presented a very good annual result to the 2,053 shareholders with voting rights attending the ordinary Shareholders’ Meeting on 3 May 2019. The Shareholders’ Meeting took note of the strong operating performance in challenging market conditions and subsequently approved the annual report, financial statements and consolidated financial statements for 2018. Furthermore, in accordance with the Articles of Association and in line with the Ordinance Against Excessive Compensation in Swiss Listed
SGC Strategy and Governance Committee NCC Nomination and Compensation Committee IRC Investment and Risk Committee AC Audit Committee • •• • Chairperson •• Member
Financial report Corporate governance 3.2 Other activities and interests Information on the activities and interests of the members of the Board of Directors is provided on pages 14 to 18.
As a general rule, meetings are attended by all Board members and, in an advisory capacity, also some of the members of the Executive Management. Meetings are generally organised as follows: the meeting starts as a closed meeting of the Board of Directors for discussing internal topics. The meeting is then continued in the presence of the CEO and, depending on the topic, some or all of the members of the Executive Management.
Pro bono appointments Chairman of the Funding Association and member of the Executive Committee of the I. VW Institute of Insurance Economics, St. Gallen; Vice-President of the Executive Committee of the Europa Forum, Lucerne, and two Board of Trustees appointments 4.1 Members of the Executive Management
The delineation of powers for compensation matters is defined in Appendix I of the organisational regulations: ( content/dam/os/corporate/web/documents/ investor-relations/business-publications/ organisationsreglement.pdf). For details on compensation, please refer to the compensation report on pages 41 to 45.
It monitors and assesses their activities. This supervision is predominantly carried out by means of the external auditors’ reports on audit results, the reporting process, decisions, for example on IFRS issues, and statements in the local audits. Important findings are summarised in a management letter.
Investment-linked insurance solutions CHF 954.3 million + 9.8 % in OC
In the business area life insurance, Helvetia posted a 51.7 % increase in IFRS profit after tax to CHF 224.4 million (2018: CHF 147.9 million). The following factors contributed to the development of earnings: Increase in margin after costs driven by the favourable influence of fluctuations in the valuation of options for investment-linked products and a positive development of the cost result: – Slightly lower savings result, mainly due to declining investment returns while interest expenses for retirement assets in Swiss group life remained unchanged
In Switzerland, Helvetia was able to achieve a business volume of CHF 5,123.6 million. This represents an increase of 1.0 %. The earnings side also developed positively. A stronger investment result, a higher margin after costs in life insurance and a one-off tax effect resulting from national and various cantonal tax reforms had a positive effect. The IFRS result after tax amounted to CHF 427.5 million (2018: CHF 320.9 million), an increase of 33.2 %.
Helvetia’s non-life business increased its premium volume by 0.8 % (in OC) to CHF 1,482.7 million (2018: CHF 1,471.8 million).
Significantly better investment results due to the favourable performance of the equity markets
Spain CHF 149.4 million + 9.8 % in OC – Growth driven by investment-linked products and burial insurance 62 Helvetia Financial Report 2019
In the business area life the IFRS net income after tax remained at CHF 28.8 million (2018: CHF 29.0 million) almost at the level of the previous year.
Diluted earnings per share (in CHF) 11.5 10.52 8.371 1 A five-for-one share split was implemented on 10.5.2019. The figures have been adjusted retrospectively.
Realised gains and losses on financial instruments and investment property – 287.7 47.5
Sale of shares, investment funds and alternative investments 1 272.6 1 498.8
The liability recognised on 1 January 2019 can be reconciled with the information already disclosed under IAS 17 on lease liabilities as follows: in CHF million
2.8 Leasing When a contract comes into force, an assessment is made as to whether it establishes or includes a lease. A contract is or contains a lease if it conveys the right to control the use of an asset for a period of time in exchange for a consideration. Helvetia applies the guidance in IFRS 16 to determine whether a contract establishes or includes a lease.
Financial report Summary of siginificant accounting policies 2.15.1 Non-life business The technical items in non-life business are established Group-wide on the same principles. All nonlife insurance products of Helvetia Group contain significant technical risks and are recognised as insurance contracts.
2.18 Receivables Receivables from the insurance business and other receivables are carried at amortised cost. In general, this corresponds to the nominal value of the receivables. Permanent impairment is recognised through profit or loss. The impairment loss is reported under “Other expenses” in the income statement.
Claims incurred including claims handling costs (non-life) – 433.2 – 417.1 – 323.3 – 316.2 – 240.0 – 244.1 – 213.9 – 200.5 1.5 1.5 – 1 208.9 – 1 176.4
Profit or loss before tax 200.2 183.8 467.4 417.4 – 102.8 – 53.3 0.0 0.0 564.8 547.9
Depreciation and amortisation on tangible and intangible assets – 7.4 – 6.9 – 43.3 – 26.8 – 17.0 – 18.6 – – – 67.7 – 52.3
The goodwill impairment test was based on the following growth and discount rates, assuming a perpetuity: as of 31.12.2019 Goodwill Growth rate
Financial report Investments 7.2 Investments by class as of 31.12.2019 Notes Group investments
Total “at fair value through profit and loss” 8 664.7 7 403.8 7 428.8 6 976.8 8 664.7 7 403.8 5 533.5 4 960.8 2 449.8 1 914.9 681.4 528.1
Total financial liabilities at amortised cost 1 205.1 1 318.9 1 205.1 1 318.9 1 326.7 1 354.9
Total financial liabilities from financing activities 1 533.7 1 577.2 1 422.6 1 528.6 1 655.3 1 613.2
Provision for policyholder participation – non-life contracts 57.2 57.7 – – 57.2 57.7
Total financial liabilities at amortised cost 516.1 554.5 516.1 554.5 516.1 554.5
Tax assets Tax liabilities as of 31.12.2018 Total Total in CHF million
Total retained earnings as of 31 December 3 505.5 3 441.8
Balance as of 31 December 955.3 472.5 less: Deferred taxes – 176.0 – 102.8
Earnings per share 10.52 8.37 1 A five-for-one share split was implemented on 10.5.2019. The figures have been adjusted retrospectively.
Assets pledged or assigned The Helvetia Group has pledged assets of CHF 78.8 million as security for liabilities (previous year: CHF 43.4 million). These relate to financial investments and other assets pledged to cover liabilities arising from the insurance business.
Patria Genossenschaft, Basel, directly holds 34.1 % of the capital of Helvetia Holding AG. Helvetia Schweizerische Lebensversicherungsgesellschaft AG and Patria Genossenschaft have concluded renewable agreements for capital support. Each of these agreements refer to a specific financial year and they document an undertaking by Patria Genossenschaft to contribute regulatory capital of up to CHF 100 million (previous year: CHF 100.0 million) to Helvetia Schweizerische Lebensversicherungsgesellschaft AG should certain adverse scenarios arise. The agreements will, if needed, be executed at normal market conditions.
At the reporting date there was a loan from Helvetia Schweizerische Versicherungsgesellschaft AG to Patria Genossenschaft of CHF 8.0 million (previous year: CHF 12 million) that will be fully amortised by 2021 at the latest. The interest rate is 0.75 %.
16.2 Non-life technical risks The most important non-life segments of Helvetia Group are property (including technical insurance), casualty (liability, accident, motor vehicle) and transport insurance. Motor vehicle insurance policies represent the largest proportion of casualty insurance policies. The “Specialty Markets” operating segment includes the globally active reinsurance business, the international and Swiss transport, art and technical insurance business and the France country market, which is also focused on the transport business. This segment is also responsible for the representative office in Miami, the branches in Singapore and Kuala Lumpur and Helvetia Liechtenstein. In contrast, the segments “Switzerland” and “Europe” are defined geographically. The share of the gross premiums per country market is as follows: Switzerland 31.7 % (previous year: 33.5 %), Germany 14.3 % (previous year: 15.0 %), Italy 12.1 % (previous year: 12.5 %), Spain 7.5 % (previous year: 7.8 %), Austria 7.8 % (previous year: 8.1 %). The share of the “Specialty Markets” segment is 26.6 % (previous year: 23.1 %), of which 6.2 % (previous year: 5.3 %) attributable to the French country market and 13.0 % (previous year: 11.8 %) to active reinsurance.
Helvetia Group establishes reserves for its life insurance business to cover expected payouts. The amount of life insurance reserves depends on the interest rates applied, actuarial parameters and other influencing factors. In addition, the Liability Adequacy Test (LAT) is used to review whether the provisions together with the expected premiums are sufficient to finance future benefits. If this is not the case, the reserves are increased accordingly.
Average technical interest rate in per cent 0.97 2.45 1.69 0.00
In our opinion the consolidated financial statements (pages 68 to 178) give a true and fair view of the consolidated financial position of the Group as at 31 December 2019, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.
Helvetia Holding AG, St. Gallen Report on the Audit of the
–1 % change to new money rate – 14.5 % – 16.7 %
Deferred taxes Deferred taxes arise due to temporary taxable differences between the local tax balance and the IFRS balance. They are established for each balance sheet item and are, when considered from the reporting date, either future tax liabilities or tax credits.
SPPI financial instruments Financial instruments where the contractual payment flows fall due at specific times and solely comprise repayment of principal and interest on the amount outstanding.
Group profit for the period after tax 309.5 376.6 402.9 431.0 538.1 of which investment result from Group financial assets and investment property 1 105.6 1 144.4 1 348.7 794.4 1 402.7
Reserve to premium ratio non-life 154.4 % 152.2 % 156.3 % 145.0 % 145.3 %