Service 240 Glossary 243 Contacts and financial calendar 244 Multi-year overview 245 Imprint
Underlying earnings of the Group after tax 491.8 439.0 12.0 % 98
30.8.2016 Former Federal Councillor Adolf Ogi receives the 2016 Erich Walser Generations Prize at the 10th World
The app provides valuable support “I have been insured with several policies with Helvetia since 2001. When I saw the Helvetia advertisement for the new ‘Good Driver’ app, I was immediately enthusiastic. I liked the idea of combining technology and a routine everyday task such as driving your car in order to improve your personal driving performance. I have been using the app regularly since I installed it, and find that it provides valuable support in helping me to optimise my style of driving.”
The significant changes in the insurance market provide opportunities: We are taking advantage of the mostly stable economic environment as well as digitalisation in the non-life business to generate healthy growth, while aligning the life business to more modern and capital-efficient products. We aim to continue expanding our customer base helvetia 20.20
Exploiting above-average potential By 2020, we aim to employ a growth strategy to drastically increase our business volume and thus substantially improve our market position in the European markets. We are actively looking for acquisition opportunities in the profitable non-life business. We are also consistently pushing ahead with our digital transformation in Europe. The first digitalisation projects have already been successfully implemented in Germany, such as pet health insurance, Smart & Easy for small companies and VIVA Household insurance for online-oriented customers. “Annex ” distribution is another innovation in the field of “digital insurance”, i.e. the distribution of an insurance product together with another product or service, such as eyeglass insurance that has been sold through www.brillen.de since August 2016.
Members of the Executive Management 1 Reports to the Chairman of the Board of Directors * As of 1 April 2017 ** Ad interim until 31 March 2017
Life business Helvetia offers life insurance in Switzerland, Italy, Germany, Spain and Austria. The home market of Switzerland is the most important market with 79 % of the business. In addition to individual life products, the product range also includes group life insurance policies. At around 60 % of the Group’s to-
Swiss Cantonal Banks – sanitas / innova and Solida – SEV
Planned collaborations: – Occupational pensions: Second place – Private pensions: First place – NL1 retail customers: First place – NL business customers: First place – Accident insurance: First place – Daily allowance: First place
Non-profit Recognition as a partner of the non-profit organisation Elkarkide, which focusses on the integration of disadvantaged people
Helvetia’s social activities include donations, voluntary and honorary employee engagement, the initiative to protect forests and the Helvetia Patria Jeunesse Foundation. With the initiative to protect
Public Disclosure (D– and D) Awareness (C– and C) Active Management (B– and B) Leadership (A– and A)
Dividend history Dividend per share (in CHF) | dividend yield at year-end price | payout ratio 1 45.6 % Other institutional investors
Josef Gutschik left Helvetia as the member of Executive Management for Finance on 30 September 2016. His area and the Life department of Jürgen Horstmann were taken on by Andreas Bayerle as at 1 October 2016. As a former Board member in the area of finance at various insurance companies, Andreas Bayerle has the ideal specialist qualifications for this enlarged department.
They must also have the necessary amount of time at their disposal for the efficient and proper performance of a director’s term of office. As far as the independence of Board members is concerned, we follow the requirements of the Swiss Code of Best Practice for Corporate Governance and most recently also Circular 2017 / 2 Corporate Governance – Insurers issued by FINMA on 17 December 2016.
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.
4.3 Statutory rules regarding the number of activities allowed pursuant to Art. 12 para. 1 (1) VegüV According to Art. 32 (mandates outside the Group) of the articles of incorporation ( helvetia.com/corporate/content/dam/helvetia/ corporate/en/about-us/documents/statuten.pdf), members of the Executive Management may not hold more than five additional mandates with listed companies and ten additional mandates with non-listed companies. In practice, this rule is interpreted considerably more restrictively for members of the Executive Management as it is assumed that full-time members of the Executive Management have to invest their time at work primarily in the interests of the company and that external mandates should only be approved by way of exception (e.g. family companies or in order to gain additional experience by being a member of the board of another company).
Compensation can be paid by the company or by a company controlled by it (Art. 30 of the articles of incorporation, content/dam/helvetia/corporate/en/about-us/documents /statuten.pdf).
5. Compensation, shares and loans 5.1 Contents and method for determining compensation and participation program- mes and rules regarding voting on compensation by the Shareholders’ Meeting According to the VegüV, the Board of Directors is also in charge of general compensation issues and compensation models. It is supported in its work by the Nomination and Compensation Committee, which provides advice to the Board of Directors in the decision-making process in accordance with the internal organisational regulations and has final decision-making power in some areas.
The Shareholders’ Meeting therefore has the following powers in matters concerning compensation: – As regards the general report on business performance: review of the compensation report and thus the principles and conditions under which the compensation for the members of the Board of Directors and the Executive Management are determined.
6.2 Statutory quorum The Shareholders’ Meeting is quorate regardless of the number of shareholders in attendance and votes represented by proxy. Unless stipulated otherwise by legal provisions or the articles of incorporation, the Shareholders’ Meeting passes resolutions by an absolute majority of the votes cast. In addition to the resolutions cited in Art. 704, para. 1 of the Swiss Code of Obligations, a two-thirds majority of represented votes is required for amendments to the articles of incorporation, the premature termination of office of more than one member of the Board of Directors, and the liquidation of the company. The exceptions for Patria Genossenschaft as individual shareholder and for the group of pool members mentioned in section 6.1 also apply here.
6.1 Voting rights restrictions and proxy voting Certain restrictions on voting rights that are identical to the restrictions relating to the transferability of registered shares of Helvetia Holding AG are described in section 2 above.
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 2016 financial year consisted of: – Bill Schiller (since 2014), ACA, Partner Audit Financial Services; lead auditor.
Representatives of the external auditors attend meetings of the Audit Committee in an advisory capacity. Copies of the minutes are sent to all members of the Board of Directors. Reports on the activities of the Audit Committee are provided at the meetings of the full Board of Directors. In the reporting year, three meetings were held and the external auditors attended all three meetings. Discussions between the external auditors, the Chairman of the Board of Directors, the Chairman of the Audit Committee, the CEO and the CFO take place annually. Meetings or an exchange of experience with specialists from the areas of Group finance, corporate finance and risk management, legal and compliance, general secretariat and corporate governance are held periodically. The external and internal audit teams also liaise frequently regarding issues such as audit planning, audits and results as well as current issues.
The delineation of powers for compensation matters is defined in Appendix I of the organisational regulations: content/dam/helvetia/corporate/en/about-us/documents /organisationsreglement.pdf.
d) Shares and options The members of the Executive Management can, on a voluntary basis, acquire the maximum number of shares available to them under the employee share purchase plan. The same conditions apply as for all other employees of Helvetia in Switzerland (see para 3). They therefore also benefit from the discount of 16.038 % that is granted because these shares are blocked for three years.
III. Compensation for the Board of Directors and the Executive Management to be approved by the 2017 Shareholders’ Meeting
– Total amount of the fixed compensation for the Executive Management for the period from 1 July 2017 to 30 June 2018
– Total amount of variable compensation for the Board of Directors for the past financial year 2016
Employer contributions to pension funds with respect to the fixed compensation of new
Over almost 160 years, the Helvetia Group has grown from individual Swiss and foreign insurance companies into a successful insurance group that is active throughout Europe. Helvetia is one of the top-three all-line insurers in the Swiss insurance market. Helvetia is also well positioned in other key European markets. Some of the biggest insurance markets include Switzerland, Germany, Italy and
Europe was mainly untouched by major storms and natural catastrophes last year2. Nevertheless, the Elvira and Friederike storms in Germany and France led to considerable weather-related claims, which caused the combined ratios of the insurance industries in these countries to increase by two percentage points and one percentage point, res- pectively. Due to the low level of market penetration of earthquake cover in Italy, only a small proportion of the costs of a series of earthquakes in that country were borne by the insurance industry.
The IFRS profit for the period for Helvetia after the acquisitions is temporarily significantly impacted by special effects. These special effects include integration costs, planned amortisation of intan- gible assets and additional planned write-downs due to the revaluation of interest-bearing securities to fair value, resulting from the specific IFRS accounting requirements for acquisitions.
Change in unrealised gains and losses recognised in equity 4.2 – 370.6
Corporate The Corporate segment comprises the Corporate Centre and Group reinsurance, in addition to the financing companies and the holding company. At CHF – 23.6 million, the contribution to underlying earnings of this segment is considerably better than the previous year’s contribution of CHF – 67.8 million. This came from the substantially improved result for Group reinsurance. The previous year was also burdened by higher exchange rate losses following the scrapping of the euro peg in January 2015.
Income and expense that may be reclassified to income – – – – 89.6 – 135.8 – – 62.4 – 287.8 – 1.8 – 289.6 – – 289.6
Profit or loss for the period – – – – – 330.5 46.1 376.6 0.0 376.6 – 376.6
Realised gains and losses on property, equipment and intangible assets – 8.9 – 1.2
2.12 Financial derivatives Derivative financial instruments are classified as “Financial assets held for trading” and are shown in the item “Financial assets at fair value through profit or loss” or are carried as “Derivatives for hedge accounting ”. The hedging strategies used by Helvetia Group for risk management purposes are described in section 16 (from page 195).
Assets from ceded reinsurance business are regularly reviewed for potential impairment and uncollectibility. If there is objective and substantial evidence of permanent impairment at the balance sheet date, the difference between the carrying value and estimated recoverable amount is recognised in the income statement as an impairment loss.
2.23 Share-based payment Share-based payment transactions include all compensation agreements under which employees receive shares, options or similar equity instruments or the granting Group company assumes obligations that depend on the price of its shares. All share-based payment transactions with employees are recognised at fair value.
Share of profit or loss of associates 1.7 0.4 0.3 0.5 – – – – – – 2.0 0.9 of which transactions between geographical segments 80.8 92.1 218.3 276.5 28.5 28.7 – 332.6 – 414.5 5.0 17.2 – –
Income attributable to deposits for investment contracts – – – 22.0 – 41.3 – – – – – – – 22.0 – 41.3
Claims and benefits paid (life) – 144.2 – 132.1 – 250.2 – 384.5 – 80.6 – 82.5 – 140.0 – 134.6 – – – 615.0 – 733.7
Net benefits to policyholders and claims – 4 903.1 – 4 623.0 – 2 134.2 – 2 070.5 – 120.4 – 188.3 – 2.7 – 2.6 – 7 160.4 – 6 884.4
Gross premiums and deposits received life 4 635.0 4 459.1 3.9 3.4
Asset management expenses on property include all maintenance and repair costs as well as the operating expenses for property that did not generate rental income during the reporting year. The latter amounted to CHF 4.3 million in the reporting year (previous year: CHF 3.2 million).
Gains and losses on financial assets (net) 131.5 61.0 52.2 59.7 183.7 120.7
Realised gains and losses on loans (LAR) incl. money market instruments 4.8 37.0
The valuation method used for the calculation of the liability of CHF 43.6 million belongs to the “Level 3” category (previous year: none). Other financial liabilities of CHF 125.0 million (previous year: CHF 138.6 million) were valued using “Level 2” valuation methods.
Due from / due to agents and brokers 128.3 217.7 149.2 224.1
Deposit liabilities for credited policyholder profit participation 571.8 771.3 571.8 771.3 571.8 771.3
Total income taxes 51.2 86.5 10.2 Change in deferred tax assets and liabilities (net)
There are several foundations in Switzerland designed to provide benefits to employees upon retirement and in the event of disability as well as after their death to their surviving dependants in accordance with the Swiss Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans (BVG). The benefits provided by the pension fund meet at least the statutory minimum required by the BVG. Contributions to the pension fund are set as a percentage of the employee’s pensionable annual salary, deducted from the salary by the employer and transferred every month to the pension fund, together with the employer ’s contributions. In the reporting year there were no significant transactions between the pension fund and the Helvetia Group that are not directly related to employee benefits.
The Employee Benefits Fund of Nationale Suisse was merged with the Pension Fund of Helvetia Insurance on 1 January 2016. The regulations were harmonised to ensure that all pensioners of the merged pension funds receive the same treatment. The resulting reduction in the pension costs of CHF 23.9 million was already booked in the previous year.
Total compensation 1 Subject to approval by the Shareholders’ Meeting 15.2.2 Loans and guarantees Members of the Group Executive Management may conclude insurance contracts, loans and other ser- vices under the terms and conditions currently in effect for employees.
Group Executive Management is responsible for implementing and complying with the strategies, business principles and risk limits defined by the Board of Directors, analysing the risk position of Helvetia Group, capital planning, defining the corresponding control measures and ensuring the necessary external transparency. The topics of risk and capital management are addressed directly in Group Executive Management meetings under the direction of the Chief Risk Officer (CRO). The Risk Committee, which is also headed by the CRO, advises Group Executive Management and coordinates, monitors and assesses the risk decisions and financing and hedging measures of all business units. Other permanent members of the Risk Committee at Group level are the Chief Financial Officer (CFO), Head of Capital Management, Head of Risk and Capital Reporting, Head of Actuarial Life, Head of Portfolio Strategy and Risk Management and Head of Group Underwriting Non-Life, Head of Compliance Group and the Head of Risk Management Switzerland as a permanent guest. Other specialists can be invited to attend a meeting when required and depending on the topic. The entire committee meets at least quarterly and it holds regular discussions at monthly meetings. The Risk and Capital Reporting department, which reports to the CRO, ensures that there is sufficient risk and capital transparency: – The Own Risk and Solvency Assessment (ORSA) informs Group Executive Management and the Board of Directors of the capitalisation and key risks that affect Helvetia Group (including the risk strategy and management).
Most of the products include a premium guarantee, which means that the bases for mortality, disability, interest rates and costs used in the premium calculation are guaranteed. These bases are therefore carefully fixed at the time the insurance policy is concluded. If later developments are better than expected, profits accrue which are partially returned to the customer in the form of a participation feature. The following two important exceptions apply to the guaranteed bases: first, no interest guarantees exist for the unit-linked insurance policies. However, there may be some products that guarantee the payment of a minimum survival benefit. Secondly, in Switzerland, premiums for insurance policies for disability pensions are not guaranteed for policies underwritten since mid-1997, and may be adjusted.
Financial report Risk management 16.4.1 Liquidity risk Helvetia Group has sufficient liquid assets to meet unanticipated cash outflows at any time. Liquid assets (cash, premiums to be invested, liquid equities and interest-bearing securities) exceed the volume of annual net cash flows many times. In addition, the Group manages assets and liabilities in terms of their liquidity.
Total reserves for insurance and investment contracts (net) 6 698.4 11 920.9 8 053.7 14 065.9 1 576.4 42 315.3 as of 31.12.2015 < 1 year 1 – 5 years 5 – 10 years > 10 years Without maturity Total in CHF million
1.2 Valuation principles Measurement is done in accordance with uniform criteria. Assets and liabilities are measured on an individual basis. Subsequent to initial recognition, assets are measured at amortised cost. Liabilities are stated at par value.
1.3 No need to include cash flow statement and management report As Helvetia Group prepares consolidated financial statements in accordance with a recognised accounting standard (IFRS), in accordance with the statutory provisions it therefore does not have to include a management report and statement of cash flow in these financial statements.
As at 1 January 2015 26 288 Registered shares 8 .2
Helvetia Group Doris Oberhänsli P.O. Box, CH-9001 St Gall Phone +41 58 280 55 83 www.helvetia.com doris.oberhaensli@helvetia.ch
Helvetia’s capital base remains strong. The SST ratio at the end of June 2016 was in the range of 140 % to 180 %, which corresponds to the new target range defined in the financial objectives a year ago. The return on equity calculated on the basis of underlying earnings increased from 8.9 % in the 2015 financial year to 9.7 % in the year under review.
The complete Annual Report 2016 of Helvetia can be ordered at corporate/content/en/publications/order-form. html