On the coming pages you will meet people in words and images that interact and engage in a dialogue with one another. They trust one another and are confident of their abilities. Everyday personal encounters demonstrate our promise. It is the result of a long process of personal and professional interaction.
Mandates in particular Vice-Chairwoman, from May 2011 Chairwoman of the board of directors of Patria Genossenschaft, Basel; member of the boards of directors of Lucerne Cantonal Bank in Lucerne, LZ Medien Holding, Lucerne, and swissgrid ag, Laufenburg; one board member mandate at a non-listed company and three board of trustee mandates; General Manager of the ART MENTOR FOUNDATION LUCERNE (until the end of October 2011); Chairwoman of the Arbitration Commission of the Central Switzerland Chamber of Commerce, and various commitments at the University of Lucerne and the Lucerne University of Applied Sciences.
Professional background, executive responsibilities Commercial banking in Switzerland, the UK and Brazil; 1981 treasurer at the Brazilian subsidiary of Ciba-Geigy; 1988 – 1990 CFO and 1990–1996 treasurer at Ciba-Geigy AG, Basel (head office); 1996–2007 Head of Novartis Group Treasury: Novartis International AG, Basel. Mandates in particular member of the board of directors of Union Bancaire Privée, Geneva; member of the Investment Commission of the University of Basel.
(from 2011 Shareholders‘ Meeting) Herbert J. Scheidt Commercial diploma and master degrees from the Universities of Sussex and New York Swiss and German citizen, Zurich, 1951
Professional background, executive responsibilities Various managerial positions with Deutsche Bank in Essen, Frankfurt, New York, Milan and Geneva; 1999 – 2000 Head of Private Banking International and from 2001 Chief Executive Officer of Deutsche Bank (Schweiz) AG; 2002 – 2011 CEO of Vontobel Group; since May 2011 Chairman of the board of directors of Vontobel Holding AG and Bank Vontobel AG, Zurich. Mandates in particular member of the board of directors of the Association of Swiss Commercial and Investment Banks; member of the board of directors of SIX Group AG, Zurich; Vice-Chairman of the board of directors of HERO AG, Lenzburg; member of the board of directors of the Swiss Bankers Association and member of the board of the German Council on Foreign Relations.
Germany Helvetia operates in Germany through a branch office and two subsidiaries as a property, accident and life insurer, covering almost all private and commercial insurance requirements. Two thirds of new business is generated by brokers and the remaining third comes in through agents who work only on behalf of Helvetia. The sales network of Helvetia Germany consists of a total of 7,000 brokers and 350 independent general agents. The new non-life insurance sales channel “Assekuranz -Vertrieb” is gaining in importance. With this sales channel, Helvetia products are taken on by other insurance companies who sell them through their own sales force organisations.
Navarre. During the new strategy period a marketing campaign focusing on three areas, Catalonia, the Basque region and the Madrid conurbation, will be launched to expand business to additional core regions.
Life activities Growth and the pursuit of efficiency characterise the life business of Helvetia. To support these objectives, the business units have been strengthened by a joint centre of competence. In the 2011 financial year, Helvetia Switzerland and Helvetia Spain launched the first multi-market product developed by this Life Centre. Modern, standardised but, nevertheless, tailor-made solutions that are based on a centralised prod-
Under the SST, all assets and liabilities are measured at market price for the calculation of the available capital.
2.2 Treasury shares Helvetia held 36,193 treasury shares (0.42%) on 31 December 2011.
3. Board of Directors Also see the diagram and information provided on pages 8 to 11.
3.1 Members of the Board of Directors The Board of Directors of Helvetia Holding AG consists of nine members. It is identical to the Boards of Directors of the two subsidiaries, Helvetia Leben and Helvetia Versicherungen. Members of the Board of Directors are required to possess experience and know-how about a wide variety of fields. They should have the requisite expertise to represent their personal opinion in discussions with the Executive Management. Since Helvetia Group conducts a significant proportion of its business abroad, the Board of Directors also includes citizens of different countries and members who have extensive international experience. Members of the Board of Directors should possess strong personal values (including integrity), specialised financial, business and insurance knowledge, experience in strategic and executive management, the ability to think in a visionary manner, social skills and a belief in sustainability. They must also have the necessary amount of time at their disposal for the efficient and proper performance of a director’s mandate. As far as the independence of the of which the share capital increased from CHF 62,930,000 to CHF 86,528,750.
5.1 Voting right restrictions and proxy voting Certain restrictions on voting rights that are identical to restrictions relating to the transferability of registered shares of Helvetia Holding AG are described in section 2 above. The Board of Directors specifies the rules that govern participation in the Shareholders’ Meeting and the determination of voting rights. For representatives of executive bodies, independent voting rights and custody proxies (who do not necessarily have to be shareholders themselves), it may stipulate regulations that deviate from the restriction of proxy voting to 10% of the share capital. At the 2011 Shareholders’ Meeting, no individual shareholder or group of shareholders consisting of pool members with voting rights represented more than 10% of the voting rights, except for Patria Genossenschaft. No specific exceptions with respect to voting right restrictions or proxy voting were granted in the year under review. Shareholders who possess voting rights but who do not attend the Shareholders’ Meeting may assign their voting rights to a third party (who does not necessarily have to be a shareholder ) by means of a written power of attorney. However, he or she may only represent the voting rights of third parties if, together with his or her own shares, they do not exceed 10% of the total share capital. Here, too, shareholders who are connected to each other by way of capital or votes or by united management or in any other form count as one shareholder.
The Group Executive Management was streamlined in the reporting year and Human Resources & Services was transferred to the country market Switzerland.‹
6. Change in control, protection measures 6.1 Obligation to announce takeover bids Art. 26 of the articles of incorporation states that the obligation to announce a takeover bid in accordance with Art. 32 of the Stock Market Act only applies if a shareholder acquires 40% or more of the voting rights.
c) External and internal auditors Representatives of the external auditors and the Head of Internal Audit attend meetings of the Audit Committee in an advisory capacity. Copies of the minutes are sent to all the 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 year under review, 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 ex-
The Vice-Chairman and the chairmen and members of the committees also receive an allowance in addition to their basic salary. These payments take account of the responsibility and workload of each of the individual Board members. The compensation for every individual Board member calculated in this way is paid out in cash. When a director leaves the Board, compensation is paid on a pro rata basis up to the end of the month in which he or she leaves the Board of Directors. The fee for a new Board member is also calculated pro rata.
d) Expenses The members of the Board of Directors do not receive any lump-sum expenses allowances. Costs for accommodation at the place where a meeting takes place and for foreign trips are paid by the company.
Robust investment result At CHF 878.4 million, the Group’s investment result was made up of current income of CHF 938.9 million and gains and losses of minus CHF 60.5 million.
Life business exceeds three billion franc threshold In the life business, Helvetia Switzerland again delivered strong growth. For the first time, volumes exceeded the three billion franc threshold and grew by 16.8% to CHF 3,308.5 million. Acquired volumes from the former Phénix contributed, especially regular premiums in the individual life business. Regular premiums in the group life business totalled CHF 1,040.8 million, achieving impressive growth of 8.6% compared to the previous year. Single premiums, which also include the contribution to actuarial reserves of new customers, increased by 27.1% to CHF 1,442.3 million. These strong figures are evidence of the excellent reputation Helvetia enjoys and confirm the chosen strategy of a consistent focus on small and medium-sized enterprises, participation in the Generali Employee Benefit Programme and the cooperation agreement with the Association of Swiss Cantonal Banks.
Switzerland The home market continues to be a solid pillar for our business even in difficult times. Overall, gross premiums improved to CHF 4,110.1 million, which means that the country market of Switzerland exceeded the four billion franc threshold for the first time. This strong growth of 18.4% was driven by the acquisition of the insurance companies Alba and Phénix as well as by sustained organic growth. At CHF 260.6 million, the result is significantly better than in the previous year, despite the decline in investment income. This is largely due to exceptional
The net combined ratio improved by 1.5 percentage points year-on-year, primarily owing to a 3.1 percentage point reduction in the cost ratio. The cost ratio fell due to operational progress and an increase in motor vehicle business subject to lower commission rates, while the claims ratio rose moderately due to a shift in the product mix. The overall net combined ratio was 98.4%.
The structure of the types of investors has barely changed since the previous year. The structure as of 31 December 2011 was as follows: Successful Shareholders’ Meeting 2011 Helvetia Group announced a good annual result to the 1,408 shareholders in attendance – around 100 more than in the previous year. The Shareholders ’ Meeting approved the annual report, financial statements and consolidated financial statements for 2010. Chairman of the Board Erich Walser thanked the two long-standing directors
From the point of view of the issuer, the amendments address the accounting for rights issues (rights, options or warrants) to acquire a fixed number of own equity instruments for a fixed price stated in a currency other than the issuer’s functional currency. Such rights that are issued at a fixed price in another currency now have to be reported as equity instruments and no longer as liabilities.
Amendments to IFRS 7: Disclosure – transfers of financial assets 1.7.2011
Contributions to loss prevention costs are now reported as claims incurred. This takes account of the special nature of these expenses and improves the presentation of the income statement. This results in the reclassification of the prior-year figures of CHF 9.6 million from “Other expenses ” to “Claims incurred including claims handling costs (non-life)” and CHF 0.4 million from “Other income” to “Reinsurers’ share of benefits and claims”.
Associated companies of Helvetia Group are accounted for using the equity method if significant influence is exercised by Helvetia Group. Significant influence is assumed when the Group controls 20% to 50% of the voting rights. The goodwill resulting from the equity valuation is recognised in “Investments in associates”. The carrying value of all investments is tested for impairment if there is objective and substantial evidence for impairment at the balance sheet date.
Policyholders with contracts containing discretionary participation features may have the right to participate in local investment returns on capital or local company results under statutory or contractual regulations. Provisions set up for that purpose in ac2.
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. Gallen.
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. A long-term salary component (LTC) for the Board of Directors and the Executive Management was introduced as part of the variable salary. This consists of Helvetia Holding AG shares allocated prospectively over three years. The objective is to promote a longer-term business perspective. This payment is recognised proportionally in the income statement every year until ownership to the shares is transferred. Equity instruments granted to employees through employee share purchase plans represent compensation for services already rendered for which compensation expenses arise in the granting company. The amount of the compensation expenses is based on the fair value of the equity instruments at the grant date and is expensed over the vesting period.
The accounting policies that apply to the segment reporting are the same as those described in the summary of significant accounting policies. Inter-segmental services and transfers of assets and liabilities are made on an arm’s length basis. Investments in other companies and investment and interest income from subsidiaries between the segments are eliminated within the respective segment. All other inter-segmental relations and revenues within the Group are eliminated in full.
Reinsurers’ share of benefits and claims1 26.1 32.5 89.5 27.7 46.7 44.4 27.1 13.0 57.7 86.4 - - – 143.8 – 71.4 103.3 132.6
Acquisition of owner-occupied property, equipment and intangible assets 1.7 160.2 1.6 2.0 8.3 13.3 4.3 22.9 3.9 2.4 0.9 2.7 - - 20.7 203.5
Change in scope of consolidation - - - 18.2 - - - - - 18.2
Current income on financial assets (gross) 762.2 764.4 8.9 18.7 771.1 783.1
Investment management expenses on financial assets – 6.4 – 19.5 - - – 6.4 – 19.5
Financial report › Investments 7.2 Financial assets by class as of 31.12.2011 Notes Group investments Unit-linked investments Total in CHF million
At the reporting date, securities with a fair value of CHF 0.0 million (previous year: CHF 32.2 million) were committed to securities lending by the Group.
Insurance conditions and risks in non-life business are described in Note 17.2 (from page 172). The following table sets out the development of loss reserves for the previous ten years.
Estimated claims after year of loss occurence 1 425.9 1 284.1 1 375.3 1 509.8 1 371.5 1 542.4 1 510.1 1 618.0 1 626.1 1 800.3
Actual income taxes 70.3 62.2 1 Reallocation to items "Back taxes" and "Tax elements related to other periods" due to new definition of content.
Temporary differences on investments in subsidiaries do not lead to the recognition of deferred tax liabilities, as either a reversal of the differences through realisation (divided payment or sale of subsidiaries) cannot be expected in the near future, or the gains are not subject to taxation.
Accumulated non-distributed earnings of Helvetia Group are recognised in the balance sheet as “Retained earnings”. Besides freely disposable funds, they also comprise statutory reserves and reserves bound by the articles of incorporation which are sustained by the net profit for the year and subject to restrictions on distributions.
For the first five years the bond will pay an annual interest of 4.75%. The interest is recognised directly in equity. Helvetia can suspend interest payments as it sees fit, insofar as Helvetia Holding does not pay any dividends. However, the suspended interest payments do not lapse.
Earnings per share without minority interests 280 527 385 338 930 178
All insurance units of Helvetia Group must meet minimum solvency margins (so-called Solvency I), calculated in accordance with Art. 24 et seq. of the Swiss Supervision Ordinance (AVO) for life insurance and Art. 27 et seq. AVO for non-life insurance.
No significant new provisions were raised in the reporting year. The “non-technical reserves ” item primarily consists of provisions for liabilities due to authorities, provisions arising from other tax obligations, provisions for restructuring expenses and liabilities due to agents. The share of provisions classified as current is CHF 95.2 million (previous year: CHF 91.1 million).
Unrecognised actuarial gains (+) or losses (–) – 219.0 – 112.7
Experience adjustments on plan assets – 16.3 2.3 43.2 – 168.0 – 27.1 13.3.7 Long-term target plan asset allocation 13.3.8 Multi-year overview of defined benefit plans
Salaries and other short-term employee benefits: – fixed salaries (incl. expenses allowances, child/education allowances, long service awards, company car) 3 742 188 3 827 139
In summary, there is a wide range of various and product-specific risks in life insurance, which Helvetia Group monitors using a number of actuarial methods and then offsets where necessary with an appropriate increase in reserves. In compliance with IFRS 4, Helvetia Group also has free reserves at its disposal for future policyholder profit participation. These reserves can also be used to cover insurance risks.
As with most investments, the value of Helvetia Group’s liabilities depends on interest rate levels. Generally speaking, the higher the interest rate, the lower the present value of assets and liabilities. The extent of this change in values depends, among other things, on the time pattern of cash flows. To manage the volatility of net positions (assets – net liabilities, i.e. AL mismatch), the Group compares the maturities of cash flows arising from liabilities with those resulting from assets, and analyses them for maturity matching. The derived risk is managed as part of the asset and liability management process. Risk capacity, on one side, and the capacity to finance guaranteed benefits or to generate surpluses, on the other, are balanced.
A statement on the ALM situation of a portfolio can be made by comparing the guaranteed interest rates with yields. Aggregated information on interest guarantees is given in the following diagram. The interest guarantees range from 1% to 6%. Less than 0.5% (previous year: 0.8%) of Helvetia Group’s actuarial reserves carry an interest guarantee of more than 4%.
A “reasonable possible change” in the risk factors affecting the sensitivity analysis is defined as every bracket that covers a range of possible interest rate 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.
Investments for unit-linked contracts 815.4 936.9 112.1 21.7 1 886.1 as of 31.12.2010 CHF EUR USD Others Total in CHF million
Verwaltungsgesellschaft mbH & Co. KG, Frankfurt a.M., from 38.33% to 14.55%. As a result its share in this company’s wholly owned subsidiary DFV Deutsche Familienversicherung AG, Frankfurt a.M., was also reduced from 38.33% to 14.55%. The shares were sold at the carrying value of the investments without affecting profit. Helvetia Group now no longer exercises significant control over these two companies. They are no longer reported as associates but are treated as financial instruments.
– On 1 November 2010 Helvetia Schweizerische Versicherungsgesellschaft AG, St. Gallen acquired 100% of the shares of each of the following companies: Alba Allgemeine Versicherungs-Gesellschaft AG (Alba), Phénix Versicherungsgesellschaft AG (Phénix) and Phénix Lebensversicherungsgesellschaft AG (Phénix Life). The purchase price for these three companies was CHF 302.0 million in cash. For the 2010 financial year, Alba contributed a result of CHF –6.3 million, Phénix CHF –1.8 million and Phénix Life CHF –1.7 million to the Group. If the acquisitions had been finalised on 1 January 2010, the Group’s gross premiums for the 2010 financial year would have totalled CHF 6,684.5 million and the consolidated net profit CHF 355.1 million. When calculating these amounts it was assumed that the fair value adjustments calculated as of the acquisition date would also have applied to an acquisition on 1 January 2010.
In accordance with article 728a, par. 1, item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial statements according to the instructions of the Board of Directors.
–10% change to fair value of equities – 2.5% – 4.4%
Annual Premium Equivalent (APE): 100% annual new business premium +10% single new business premium. PVNBP: Present value of new business premium.
Technical reserves Total amount of reserves for unearned premiums, reserves for claims outstanding, actuarial reserves, reserves for future policyholder dividends and other technical reserves that appear under liabilities on the balance sheet.
Broker Center French-speaking Switzerland Route du Mont-Carmel 2, 1762 Givisiez 058 280 72 84
Group profit for the period after tax 402.0 230.5 326.8 341.5 288.7 of which investment result from Group financial assets and