Ambition Helvetia Group's ambition is to sustainably strengthen its attractive business portfolio. The merger with Nationale Suisse will give us a leading position in the domestic Swiss market, enviable positions in selected European markets and – with the specialty lines – strong potential for international growth. We will also strive to gradually strengthen our market position and continuously expand our market share. In doing so, a practical geographic diversification and a harmonious balance between the profitable non-life business, the highpotential pensions business and the promising international specialty lines business are of the utmost importance.
Price of Helvetia registered shares at the reporting date in CHF 474.0 447.5 5.9 % 40
Market capitalisation at the reporting date in CHF million 4 687.6 3 872.2 21.1 % 60 in CHF million in Group currency
IFRS earnings of the Group after tax 393.3 363.8 8.1 % 91 of which investment result from Group financial assets and investment property 1 275.4 1 156.8 10.3 % 97
Company profile 18 Group strategy 24 The Helvetia brand 25 Business activities and country markets 29 Group structure 30 Employees 32 Customers and sales 36 New products and innovations 38 Corporate responsibility 40 Investor information 43 Risk and investment management 49 Board of Directors 55 Executive Management 59 Corporate governance 74 Compensation report
Financial report 108 Consolidated financial statements Helvetia Group 225 Financial statements of Helvetia Holding AG
Service 238 Glossary 241 Contacts and financial calendar 242 Multi-year overview 243 Imprint
in the profitable non-life business (in original currency)1 to CHF 2,789 million. The two acquisitions in the largest country markets of Switzerland and Austria boosted growth considerably, and premium volumes in the non-life business increased by 14.5 % and 23.5 %.
CHF 58 million or around 16 % more than in the previous year. Earnings were driven by the profitable non-life business, where profit increased by around 33 % to
ratio at the end of 2014 is expected to be between 150 and 200 % even after the acquisitions.
Even in the business world, light and shadow are often found close together. At the end of a very successful financial year, the long-standing Chairman of the Board of Directors, Erich Walser, died unexpectedly on 30 December 2014. Erich Walser shaped the continous development of Helvetia
On the business side, Helvetia Group can look back at a very successful 2014 reporting year.
The improvement comes from the non-life business and is based on a 33.3 % increase in underlying earnings to CHF 255.4 million (previous year: CHF 191.7 million). The reason for this is an organically better technical result, additionally supported by the two acquisitions. The net combined ratio improved to 93.1 % (previous year: 93.6 %). In addition to a habitually strong Swiss home market, all the European country markets also realised a combined ratio of below 100 % and overall an increased contribution to earnings. The underlying earnings for the life business remained largely stable in a difficult capital market environment at CHF 151.2 million (previous year: CHF 152.9 million).
In 2014, the volume of business grew 4.4 % in original currency to CHF 7,766.6 million (previous year: CHF 7,476.8 million). Basler Austria and Nationale Suisse delivered their first contribution to growth of CHF 328.1 million; both the life and non-life business benefited from the acquisitions.
October 2014 and gave it a stable outlook. The attractive dividend policy will now be continued: we will propose a 2.9 % increase in the dividend to CHF 18.00 per share at the Shareholders’ Meeting.
We would like to thank you, our valued shareholders, for your confidence in Helvetia.
Chief Executive Officer 1 Direct yield and investment performance weighted as a result of acquisitions during the year.
His exceptional capabilities and tremendous experience were recognised widely – both inside and outside of Helvetia – whether by the Swiss Insurance Association, the University of St Gall or in
SMEs and in social institutions; they all benefited from his creative energy. In all his spheres of activity, he used his comprehensive knowledge and his determined and, at the same time, accessible manner, to develop lasting conditions for success and viable relationships for the good of the company and society in general.
Austria by more than 50 %, and, with a premium volume of approximately EUR 400 million, puts
Board team was also reorganised. It now consists of members from both companies thus giving it the best start for integration on an equal footing.
Markets”, the new Group has combined the strengths of both companies and created the best conditions for continued healthy performance.
– The “France” market unit will continue its development as a focused transport insurance specialist.
Helvetia Group, representatives of both companies are working from now on to ensure a successful path for the new company. Details of this can be found in the “Board of Directors” and “Executive Management” chapters from pages 49 and 55 of this report.
The implementation for Switzerland will take place on 1 May 2015, the operational merger for the foreign units, which is being carried out in accordance with local legal and regulatory requirements, will also take place during 2015.
Read more on the integration in the following interview with CEO Stefan Loacker from page 12.
Definitive final result on the takeover of Nationale Suisse (96.29 %)
4. How do you deal with the responsibility of successfully combining the two companies and of fulfilling all expectations in doing so – those of employees, customers and the public?
5. Helvetia and Nationale Suisse are two companies with their own strong, historically evolved cultures. How can and should the integration of Nationale Suisse influence
Stefan Loacker: We can look back on what has happened since 7 July 2014 with great satisfaction. We initially started discussing important topics in a small group of people and also clarifying the legal framework and management
Announcement: Helvetia dramatically increases sales network issues, principles of the integration work, important milestones and critical processes, etc. However, we were only permitted an actual exchange of information after the completion of the transaction. Meanwhile, we have worked out the future structure and responsibilities for all market areas across the group, the so called “Target
A joint range of products and services will be offered under a single brand and management from this time onwards. The necessary infrastructure for this will be prepared in the next few months. The existing, successful Helvetia products will be supplemented by innovative products from Nationale Suisse. smile.direct from
Nationale Suisse adds an additional, successful sales channel. Via this platform, customers are served via the Internet and by phone – in the spirit of “digital insurance”. Abroad, the integration work also concentrates on the joint management organisation and the sales launch as well as the legal merger, while taking account of the different legal and regulatory requirements of the individual markets.
Our investors Helvetia reduces risks for investors and customers through its long-term focus and using efficient risk and investment management, while growing consistently, maintaining sustainable profitability and minimising earnings volatility.
Helvetia pursues a sustainable dividend policy and its primary aim is to pay out increasing dividends each year.
Our services / product portfolio Helvetia is a quality-oriented all-lines insurer with over 150 years of experience. Whether private or occupational pension, whether non-life insurance or mortgage, with an extensive product range, Helvetia is a one-stop shop for private individuals and SMEs. Read more about this on page 36.
Our risk management Risk management ensures that sufficient risk-bearing capital is available at all times to cover the risks assumed. Read more about this on page 43.
Our investment management Using a sustainable investment policy tailored to its liabilities, Helvetia generates attractive investment returns with limited risk. Read more about this on page 48.
Business activities and country markets 29 Group structure 30 Employees 32 Customers and sales
2014 was characterised by a tentative economic recovery in our core markets, whereby the economic environment remained challenging. It is against this backdrop that our strategy “Helvetia 2015+” was once again proven. Helvetia was able to achieve respectable successes in terms of inorganic growth in all three strategic fields of growth, profitability and customer loyalty.
Helvetia the capability to increase premiums by more than 50 % and become one of the top 10 insurance companies in Austria with a premium volume of EUR 400 million. In the financial year 2014, business volume rose by 18 % due to the acquisition, and Basler Austria has been included in the consolidated report since 28 August 2014.
In the non-life business the increase was even higher at 23.5 %. The largest share of the acquired business portfolio was in the high yielding non-life business, and Helvetia has thus been able to create an ideal balance between the business areas. The expanded sales network
strategy in what continues to be a challenging environment in many respects. We are convinced that in future we will continue to be able to create the greatest added value for our customers, employees and shareholders by continuing our profitable growth strategy.
Strategic ambition Helvetia Group’s ambition is to dynamically and sustainably strengthen the value of our attractive business portfolio in selected European markets.
We want to be one of the leading providers in our domestic market of Switzerland and further develop our positions in the attractive regions of
Central and Southern Europe. In doing so, we place great value on a practical geographic diversification as well as achieving a harmonious balance between the profitable non-life business, the high-potential pensions business and the cyclical reinsurance business. In addition to this, we will continue to actively and systematically seek targeted acquisitions and strategic collaborations.
Our ambition will be implemented based on organic growth supplemented by selected, targeted acquisitions with a focus on further developing our retail and SME business. With our innovative and tailor-made customer solutions, accompanied by a consistent further development of our sales reach, we see great potential for the future. We see ourselves as a quality provider and aim to be the “Swiss insurer”. Customer orientation is deeply anchored in our core
Switzerland. The takeover also enabled us to improve our positions in our foreign core markets.
The new business in single premiums in individual life experienced a significant decline, especially in our largest country market of Switzerland, on account of the low interest environment.
This makes it possible for us to carry out valueenhancing transactions, although our focus for the coming financial year lies clearly on ensuring a smooth integration process.
Helvetia has been able to achieve satisfying growth in underlying earnings (i.e. the underlying profit from the businesses of Helvetia,
Basler Austria. The net combined ratio improved from 93.6 % in 2013 to 93.1 %. We are still committed to achieving a systematic and sustained improvement to our cost base over time.
1 In percent of earnings from operations 2 Proposal to the Annual General Meeting
This will be further emphasised by the realisation of the synergy effects that we are aiming for within the scope of both transactions.
Helvetia business portfolio up until now. These include, among others, health and accident insurance in Switzerland and also art insurance.
Company profile Group strategy with attractive and stable flows of dividends. It is the primary aim to pay out dividends to the shareholders, which increase each year, whereby the payout ratio will move within a range of 30 and 50 %. Thanks to the satisfying rise in earnings, an increase in the dividend to
and a dividend yield of 3.8 %, Helvetia is sustainably continuing its shareholder-friendly distribution policy.
Our financial objectives One of the ways we measure the success of our strategy is with medium-term financial objectives.
The continuing challenging economic environment has made it harder to achieve the objectives for some of the “Helvetia 2015+” strategy criteria. The return on equity achieved in 2014 was 9.6 %1, therefore within the expected range of between 8 and 10 %. With a Solvency I ratio of 216 %, Helvetia continues to have very good capital strength. Helvetia is sustainably continuing its shareholder-friendly distribution policy
Helvetia. Both brands enjoy a strategic position and have a good reputation in their specific market segments.
– are personally sponsored. Helvetia is present at numerous world-class events in skiing as principal sponsor. The two most important contracts
“Personality and partnership” shape the profile of the Helvetia brand Helvetia uses unified brand positioning to address all stakeholders, making it possible to present the company and its offers in a more plausible and consistent way. The terms “personality”
Pursuing the single brand strategy Nationale Suisse has been part of Helvetia
Group since October 2014. The plan is to fully integrate Nationale Suisse into Helvetia. The business models of both companies are suited in many respects; two strong partners with a proud history and similar corporate values are coming together. The new insurance group will appear under the brand “Helvetia” and continue its single brand strategy. The “new Helvetia” will
Helvetia is a successful insurance group, active throughout Europe. Alongside the home market of Switzerland, Helvetia has operations in
Germany, Austria, Spain, Italy and France and organises parts of its investment and financing activities through subsidiaries and fund companies in Luxembourg and Jersey. The Group Head
Office is located in Swiss St Gall. Helvetia is active in life insurance, non-life insurance and reinsurance and its approximately 7,000 full-time equivalent employees provide services for more than 4.7 million customers. Nationale Suisse has been part of the Helvetia Group since October 2014. Nationale Suisse is an innovative and international Swiss insurance group, which offers attractive risk and pension solutions in the areas of non-life – especially in tailor-made specialty lines coverage – and in life insurance.
Life insurance The home market of Switzerland is the most important market in life business with 74 % of the business. Helvetia also provides life insurance in
Investment-linked Insurance policies with interest risk either with policyholder, at Helvetia with appropriate risk hedging or with an external partner
Business volume life 2014 Share in % | in CHF million
In the current investment environment, we see a strong need for products with guarantees, which also have greater flexibility and participation in returns. Helvetia therefore focuses increasingly on modern products with dynamic, individual guarantee concepts. The guarantees included in the products are partially provided by renowned third-party providers.
Full insurance solutions via Helvetia Collective Foundation All risks and benefits in occupational pension plans are assured and guaranteed by Helvetia Insurance. Assumption of complete administration. Package for companies and independent charitable organisations.
Swisscanto Foundations As a joint venture of Helvetia Insurance and the Association of Swiss Cantonal Banks, the Swisscanto Collective Foundations offer products and services for occupational pension plans and supplemental provision. Savings investment via the cantonal banks; insuring against the risks of death and invalidity with Helvetia. Sales via cantonal banks and brokers. The Swisscanto Vested Benefits Foundation manages vested benefits accounts for customers of the cantonal banks who do not operate their own vested benefits foundation. Helvetia manages the branch offices of all three foundations.
Risk insurance Risk insurance and blanket risk contracts for semi-autonomous occupational pension foundations, assumption of complete administration.
Non-life business increased from 34 % in 2013 to 36 % of the total volume. In the clearly focussed specialty lines of engineering, marine, art and travel, Nationale Suisse has also established itself as a professional niche provider.
Alongside the domestic market of Switzerland, Helvetia also offers its non-life services in
Germany, Italy, Spain and Austria. In Austria, we significantly strengthened our position in 2014 by acquiring Basler Austria. In France, Helvetia has already established itself as the top 2 provider in the marine and transport insurance business. Through the Specialty Markets division,
Profitability and efficiency Helvetia Group pursues a disciplined underwriting strategy in order to ensure portfolio quality, and only underwrites larger business risks selectively. We work together with renowned reinsurers to hedge against major loss events. Profitability also depends on portfolio composition, premium and cost performance as well as claims.
Profitability can be measured with the combined ratio, which has on average been below 95 % at
Business volume non-life 2014 Share in % | in CHF million
Management culture The corporate culture of Helvetia is based on performance and trust. Mutual respect, acting as a role model and close cooperation are firmly anchored in the principles of Helvetia Group. This policy has continued to prevail at Helvetia with the integration of the new companies acquired in 2014. A total of around 2,000 new employees of the Nationale Suisse Group and Basler Austria have been incorporated throughout the whole
Helvetia Group. A key factor in the successful integration of the employees is a mutual integration culture – which also forms the foundation for a common approach to management. With this in mind, the integration was launched with project teams made up from both companies, so as to establish a joint integration culture right from the start. The integration of the new companies has followed Group-wide principles that take into account the management culture at Helvetia and has also been supported by suitable HR
measures such as management seminars and team-building events, which have helped to support the process of change.
Helvetia firmly believes in a culture of cooperation, and the company encourages regular feedback, which is the key to maximising the potential of the individual and ensuring the successful development of the company. The dialogue between employees and Helvetia is supported by national committees that also represent the interests and rights of the employees. As an international Group, Helvetia also encourages regular cross-border dialogue between the Group
Executive Management and the national employee representatives, which promotes mutual understanding and solidarity.
Employee satisfaction Helvetia aims to provide its employees with an environment that promotes their well-being and allows them to maximise their performance.
Helvetia has a positive, value-based corporate and management culture, a transparent and target-orientated compensation system that rewards performance and personal responsibility.
A standardised objective setting system is used throughout the Group to help us accomplish this.
As part of the “Commit” survey, employee satisfaction is regularly measured by an independent institute. The most recent survey was in 2013 and all Helvetia employees had the opportunity to anonymously express their thoughts concerning their working environment. In total 85 %
of employees took part in the survey (2010: 84 %). The results, with 78 of 100 total possible points (2010: 77 points), indicated a strong connection with Helvetia, and, when compared with the benchmark of other financial service providers, remains well above the average. The next
Company profile Employees under 30 30–39 40–49 50–59 60 and over
St Gall. Helvetia also fosters the international transfer of knowledge and Group-wide collaboration by means of an inpat / expat programme for specialists and managers. In addition, the annual management forum provides a platform for managers from all country markets to exchange information about a current, strategicallyrelevant management issue within the Group. In 2014, this focused entirely on the integration.
Nationale Suisse Group (1) and Basler Austria (2). 3 Definition of key figures comply with the Global Reporting Initiative (GRI) and include all employees (permanent and temporary). The employees in training were not included but disclosed in a separate figure.
Sales structures optimised for specific countries Helvetia also aims to grow through the expansion of its distribution capabilities. For this reason, interaction with customers through a wide range of channels is very important. Customer needs are at the heart of our sales activities. And our decentralised distribution is set up to meet the specific needs of the local country markets.
After the takeover of Nationale Suisse, with the merging of the two sales forces, Helvetia has substantially increased its network of branch offices in the most important country market of
Switzerland X X Raiffeisen, Notenstein, Vontobel, Association of Swiss Cantonal Banks
Spain X X Product-specific partnerships (e.g. Carrefour for household and funeral costs insurance, household, Alcampo for funeral costs insurance)
Switzerland Comparis Vehicle insurance Good overall mark (5.2) and top rating for claims settlement and customer service
Service quality for life insurance broker 1 place Versicherungsmagazin / ServiceValue GmbH, 2014
Service quality for property insurance brokers 6th place Versicherungsmagazin / ServiceValue GmbH, 2014
German-speaking Helvetia markets. Helvetia achieved very good results in terms of service orientation and customer satisfaction. The details can be found in the table below:
Ylenia Mazzariello apprentice at head office in St Gall is sure that the merger of Helvetia and
Nationale Suisse will provide an interesting company for jobseekers in Switzerland: “I hope that the ‘new Helvetia’ will be a fair and attractive employer, will continue to care about the welfare of its employees and that Helvetia will continue to be dedicated to its junior staff and support them.”
Tania Furler apprentice in sales support General Agency in Lucerne heard about the merger just before she started her apprenticeship at Nationale Suisse.
Helvetia blog Since the launch of the Helvetia blog in Switzerland in November 2012, the Helvetia country markets of Germany, Austria, Spain and Italy went on to develop their own blogs during 2013.
Tele1 A new development in the financial year 2014 was the collaboration with the TV channel Tele1 in Switzerland. Together with Raffeisen Switzerland, Helvetia is a partner of the “Geld” programme, which broadcasts interesting information about the world of money. Every two weeks, a representative of Helvetia visits the Tele1 studio to answer questions concerning current insurance topics. The programme is watched by up to 250,000 viewers in Central Switzerland.
Helvetia app The free Helvetia app has been available for smartphones and mobile devices in Spain since the financial year 2014. Among other features, it offers customers the option to access their personal data or policies and also use the Helvetia location search.
HelvetiaNet gives brokers a detailed insight into customer, contract and claims data. One of the features enables brokers to process claims notifications and remuneration settlements online. By using a claims tracking tool, the broker can inform its customers about the processing status of their claims notification at any time.
We continually adapt our product portfolios so as to keep up with the ever-changing requirements. Existing product solutions are optimised and new products launched.
IndiCa – Cooperation with Notenstein in the area of non-mandatory management pension schemes
– Personalised investment strategies for the pension fund assets of members of management pension schemes
Earthquake insurance – Cooperation with the Basellandschaftliche Kantonalbank (BLKB) with Helvetia Versicherungen, Basler Versicherungen, HIS Solutions and Swiss Re
– Automatic earthquake insurance with a mortgage with the BLKB – Buildings and floor ownership sections up to a building insurance value of
– Financial benefits to cover the ongoing consequences of an accident – Life-long annuity from 50 % invalidity www.helvetia.com/de/content/de/ privatkunden/unfall/unfallrente.html
AutoCare – Cover for parking damage and roof avalanches – Discount protection as well as reimbursement of the purchase price of a new car after a total write-off or theft www.helvetia.com/de/content/de/ privatkunden/fahrzeug/ kfz-versicherung-autocare.html
CargoArt – Insurance protection for art exhibitions and art transportation – Insuring exhibitions against damage and loss – Co-insurance of exhibitions which are being stored temporarily by a haulage company – International validity
– Completely revised household insurance with forty new coverage points – Offered in three variants: classic, enhanced, exclusive – New: the Helvetia consolation; one-off compensation after burglary or robbery – New additional module: increase in gross negligence www.helvetia.com/at/content/de/ privatkunden/haushaltversicherung. html
including financial services providers, investors, research organisations and the public sector –
“socially responsible investments” and benefit from collaboration with universities. The prime aim is to hold specialist discussions with other investors regarding the integration of environmental, social and governance criteria.
asks the largest listed companies throughout the world to publish their greenhouse gas emissions.
which has awarded 96 out of a maximum of 100 points (2013: 82 points).
With a total of 130,000 tree donations, Helvetia is supporting mountain forests which offer protection from rock fall, landslides and the formation of avalanches above villages, roads and railways. The initiative, which has been conducted together with forest organisations, perfectly suits a comprehensive risk management with a combined involvement in prevention through to repairing damage. A variety of existing initiatives concerning demographic change, science and education as well as social and cultural projects in all country markets are continuing successfully.
For detailed information about the initiative to protect forests, the commitment of the Helvetia country markets and the CR milestones, refer to en/about-us/commitment/corporate-responsibility /protection-forest.html
Energy mix of Helvetia Group in % | in kWh electricity from fossil energies air transport fossil fuels electricity from renewable energies electricity from atomic energy electricity from market mixes train journeys district heating electricity from other sources road transport electricity en/about-us/commitment/corporate-responsibility. html en/about-us/commitment/corporate-responsibility /milestones.html www.helvetia.ch/jeunesse
Stable core shareholder base Compared to the end of 2013 there was no change in the composition of the core shareholder base. Due to the acquisition of Nationale
The allocation of newly issued shares as part of the takeover offer to the former Nationale Suisse shareholders markedly increased the number of shareholders as of the end of 2014 by around 2014 was a good year overall for Swiss shares.
The continuing aggressive monetary policy by central banks, the low interest rates and the good shape of companies created good fertile ground for securities. This particularly applies to insurance shares too, which rose in value not only on solid technical results, but also attractive dividends. Compared to the market as a whole, the insurance segment achieved a satisfying outperformance. The Helvetia share achieved a total return of 10.2 %, which was partly due to price gains (6.3 percentage points) and partly to the earnings distribution of CHF 17.50 in 2014 (3.9 percentage points). This performance meant the share was slightly behind the relevant reference levels of the Swiss and European market. Taking account of the capital increase and bond issues for financing the acquisition of Nationale Suisse, it is nevertheless possible to speak of a good result, which proves investors’ great confidence in
Helvetia’s business model in general and the merger with Nationale Suisse in particular.
At the end of the year, the employees held 1.4 %
The majority of registered shareholders are based in Switzerland. Of the institutional shareholders – excluding the above core shareholders
The average volume of Helvetia shares traded each day in 2014 was nearly CHF 8.6 million, representing a year-on-year increase of nearly 25 %. This represents a higher than average increase in comparison with the respective trading volume on the Swiss Exchange.
Meeting. The Shareholders’ Meeting took note of the strong operating performance in challenging market conditions and approved the annual report, financial statements and consolidated financial statements for 2013. Furthermore, in accordance with the adjusted articles of incorporation and in line with the Minder initiative, all members of the Board of Directors were proposed individually for re-election and reappointed for a further term in office.
An extraordinary Shareholders’ Meeting took place in September 2014 within the framework of the Nationale Suisse takeover. Here, the establishment of approved capital for the takeover offer and the election of four members of the Board of Directors as well as the CEO of Nationale
Suisse to the Board of Directors of Helvetia were approved. Due to a statutory upper limit for members of the Board of Directors, Mrs Paola Ghillani decided to withdraw from her office at the end of 2014.
Dividend policy Helvetia strives to generate an attractive return on invested capital for its shareholders, and pursues an income-oriented, sustainable distribution policy that allows the company to maintain its solid capital base. As a result of the strong 2014 annual results, the Board of Directors is proposing to further raise the dividend to CHF 18.00 per share (previous year: CHF 17.50).
Dividend history Dividend per share (in CHF) | Dividend yield at year-end price | Payout ratio
In addition, a CHF 150 million bond placed in 2013 (coupon: 1.125 %) and a CHF 300 million subordinated, perpetual bond (coupon: 4.75 %) are in circulation. Further information on our bonds can be found on our website in the
USA. In addition, we held group and individual discussions with investors and take part in selected conferences hosted by various financial institutions. All registered shareholders receive a shareholders’ letter with a brief overview of business operations every six months. The annual report and financial report are sent to shareholders on request. All publications and a wealth of information for shareholders, analysts and media representatives are available online in the
Payout ratio on the basis of underlying earnings 44 % 43 %
Payout ratio on the basis of IFRS2 47 % 43 %
Risk management Comprehensive risk management is a top priority and integral to the way Helvetia Group man ages its business. This is particularly the case in light of the 2014 takeover of the Nationale Suisse
Various risk observers assess the risks entered into by Helvetia Group irrespective of an operational responsibility. The Risk Committee coordinates the collaboration between the risk observers and the risk takers and advises the
Board of Directors and Executive Management in their decisions. The central risk controlling role
“Risk & Capital Management” is responsible for the growth and development of the risk management system as well as for monitoring risks and controlling measures, and serves as a competence centre for the Group’s risk management. It is supported by specialised risk controlling functions, such as the Group actuarial office and asset management. The internal auditor independently monitors the efficiency of the risk management system.
Bruno Rohner Head of Business Services, Specialty Lines & Foreign Countries is aware of the difficulties they face: “The integration of two companies poses a tremendous challenge for all – as a participant and as an affected party. It is only with the mutual respect and trust of the employees that we can build on the strengths of both companies and therefore shape a successful future for customers, employees and shareholders alike.”
Company profile Risk and investment management failure of internal processes, employees or systems, or as a result of external events whereby operational risks are taken also into consideration. Strategic risks include the risk of not achieving business targets due to the inadequate alignment of a company’s business activities on the market and in the market environment. Emerging risks are risks that have not yet been realised as actual risks, but are already in existence and have a high potential for large claims. A detailed portrayal of the risks resulting from financial instruments and insurance contracts is provided in
Methods for risk analysis and control The diverse risk environment requires the use of differing methods of risk analysis. Helvetia
Risk management process and risk environment The key components of Helvetia Group risk management process include the identification, analysis and management of risks, the monitoring of the success, effectiveness and appropriateness of the risk management measures, and reporting and communication. The risk management processes ensure that sufficient risk-bearing capital is available at any time to cover the risks assumed in accordance with the chosen risk tolerance.
Counterparty or credit risk is the risk of a contractual counterparty being unable to pay or of a change in the counterparty’s creditworthiness.
The insurance technical risks of life and non-life belong to the traditional risks of insurance company and are consciously entered into as part of the chosen business strategy. Operational risk represents the risk of losses due to errors or the
& Poor’s, and is aligned with the corporate strategy using multi-year capital planning. At an operational level, the capital management process incorporates the financing within the Group as well as the safeguarding of adequate capitalisation of the individual legal entities of the Group.
In this process, the capitalisation is closely monitored and optimised according to internally defined thresholds.
requirements will see the application of a riskbased supervisory instrument in the introduction phase in the EU. With its EU-based business units, Helvetia Group is also directly affected by
Proven asset liability management The investment strategy of Helvetia is based on a time-tested asset liability concept. First, a strategic asset allocation for each business unit is derived on the basis of a careful analysis of the liabilities. This satisfies the high security requirements of the insurance business while at the same time meeting the requirements for returns of each of the individual stakeholder groups. Moreover, the asset liability management ensures that there is always enough capital available for the ongoing strategic development of the Group and that the increasing regulatory requirements are taken into consideration. In doing so, the regulatory solvency requirements must be fulfilled at all times.
The introduction of the Swiss Solvency Test made it possible to gradually and noticeably extend the duration of the fixed-income products in the life business. Due to the long maturities of the assets, the period of very low interest rates is only gradually having an effect on direct returns.
At the same time, the reduction in the guaranteed interest rates included in life insurance policies also helps balance out this effect.
Broadly diversified investment portfolio The Helvetia investment portfolio is broadly diversified. The balanced distribution of the portfolio applies both between and within the individual asset classes. In order to avoid cluster risks, absolute exposure limits apply to the individual counterparties, depending on their creditworthiness. Moreover, Helvetia places high demands on the quality of the counterparties. Our internal investment guidelines dictate that new investments may only be made with borrowers whose credit rating is investment grade. However, the amount available for investment in the BBB segment is limited. At the end of the year, around 70 % of the bond portfolio had at least an AA rating. In addition, the proportion of government se-
The Board of Directors of Helvetia Holding AG is the highest management body of the company. It is responsible for the overall management and the strategic direction of the Group and it also appoints and monitors the Executive Management. As a result of the merger with Nationale
Suisse and the unexpected death of its long-serving chairman, Erich Walser, at the end of December 2014, the Board of Directors currently consists of twelve members. The office of Chairman of the Board of Directors will be exercised by the vice-chairwoman Mrs Doris Russi Schurter until the end of the 2015 Shareholders’ Meeting.
(Vice-Chairwoman, manages the official duties of the Board of Directors until the end of the Shareholders’ Meeting 2015)
Four appointments, in particular Member of the Board and in the National Committee of
institutions: Member of the Board of Directors of Patria Genossenschaft; Member of the Board of Directors of Forces motrices de la Gougra
SA, Sierre, and Grande Dixence SA, Sion; Senior Advisor of Credit Suisse SA; Vice
Four appointments at non-listed companies, in particular member of the Board of SWICA
Winterthur Versicherungen, including: Head of Development of Group Strategy and Market
Professional background, exercising operational executive functions 1987 – 1995 various positions at Deutsche
Bank, including: Corporate Banking and Assistant to the Management (Germany); Corporate
Business Banking; 2009 founding and management of the UBS Business University for the entire Group; since 2012 Head of Training and Member of the Executive Management of the Swiss Finance Institute, also owner of the consulting company, PAYERPARTNER, for strategic business development.
Essen, Frankfurt, New York, Milan and Geneva; 1999 – 2000 Head of Private Banking International and from 2001 Chief Executive Officer at Deutsche Bank (Schweiz) AG; 2002 – 2011
Four appointments at non-listed companies, in particular Director of the Association of
United Kingdom and in Brazil; 1981 Treasurer in the Brazilian affiliate of Ciba-Geigy; Treasurer Ciba-Geigy AG, Basel (head office ); 1996 – 2007 Head of the Novartis Group
and American Express; 1993 – 2012 numerous management roles with the UBS AG; including: 1999 set-up and management of UBS E-Banking; 2005 worldwide management of Human
Professional background, exercising operational executive functions 1979 – 1982 Schweizerische Treuhandgesellschaft, St Gall; 1986 – 1990 Swiss Bank
Finance Department; since 1999 Chairman of Executive Management of the Raiffeisen
Bankers’ Association, Basel; President of the Board of Directors of the Aduno Group,
Glattbrugg; President of the Board of Directors of Notenstein Privatbank AG, St Gall; President of the Board of Directors of TCMG
Eight appointments, in particular Member of the Board of Directors of Raymond Weil SA,
Lancy; President of the Board of Directors of Clinique Générale-Beaulieu SA, Geneva and
HSBC Private Bank (Swiss) SA, Geneva; President of the Regulatory Board of SIX Swiss
Changes to the Group Executive Management Wolfram Wrabetz retired from the Helvetia
Group Executive Management as at 31 December 2014, having been a member for many years. Wolfram Wrabetz served Helvetia for a total of 33 years, the last 20 of which as CEO for
Italy and Spain as well as the Group-wide functions of Corporate IT and Corporate Operations.
With the acquisition of Nationale Suisse, as of 1 January 2015 David Ribeaud was appointed
Head of Specialty Lines & Foreign Countries. In this new role, Mr Ribeaud will be responsible for managing and developing the business lines of engineering, marine and art “Switzerland and
The Group Executive Management will continue with six members. The other responsibilities within the Executive Management remain unchanged.
Changes to subsidiaries Switzerland From Nationale Suisse, Ralph A. Jeitziner and
Uwe Bartsch, who will be heading up the company development area.
Austria The Executive Management Austria has been headed up since 1 October 2014 by Otmar
joined the existing management team in Austria on 1 October 2014, as CFO.
Suisse Spain, joined the Helvetia Spain Executive Management on 1 January 2015 acting as the Head of the area Specialty Lines and Sales
Details concerning the curricula vitae of the new members of the Executive Management can be found in the appropriate media releases under content/en/media-relations/media-releases.html
Assistant, Institute for Insurance Studies, University of St Gall; 1990 joined Helvetia Insurance; Head of various departments in the non-life business in
Executive Management of Helvetia Switzerland: Head of IT; 2006 Member of the Executive
Management in today’s role with various appointments with subsidiaries of Helvetia Group in
In particular an appointment as a Chairman and as a member of the Board of Directors at an unlisted company and a Board of Trustees appointment.
Professional background 1994 – 1997 Pensions lawyer / Swiss Life: involved in Group planning projects; 1997 joined Helvetia: Assistant to Head of Staff
Professional background 1983 – 1992 Price Waterhouse, London; 1992 – 1994 Revisuisse Price Waterhouse,
Zurich; 1994 – 1996 Price Waterhouse, London; 1996 – 1999 Zurich Financial Services (ZFS),
Versicherungen: Head of Corporate Development and Capital Management; 2007: since 1 July 2007 in his current position; Member of
Group Executive Management with various appointments at the subsidiaries of Helvetia
Professional background 1988 – 1990 worked in various courts, administration and law firms; 1991 – 1993
Court Clerk at the High Court of Lucerne; 1993 joined Helvetia: Head of regional office in Lucerne; 2000 Member of the Management
Committee of the Swiss Insurance Association; Member of the Board of Trustees of the pension funds of Helvetia Insurance; Vice-Chairman of the Helvetia Patria Jeunesse Foundation; Vice-Chairman of the Swisscanto Vested Benefits foundation of the Cantonal Banks; Member of the Board of Directors of Schweizerische
Rechts schutz AG, Aarau; Member of the Board of Directors of Prevo AG, Basel, and three other board member appointments for nonlisted companies and three board of trustee appointments.
Executive Management in his current position with various appointments at foreign subsidiaries of Helvetia Group.
Helvetia is committed to meeting the high legal and ethical expectations of its shareholders and all other stakeholder groups to the best of its knowledge and in good faith. This applies in particular with respect to comprehensive, transparent reporting and responsible, value-oriented corporate governance. The main aims here are to further strengthen confidence in Helvetia
Group, to safeguard the interests of our customers, and thus ultimately to ensure and sustainably enhance the value of the Group, while also taking account of the best interests of the public. We successfully ensure that the principles of good corporate governance are consistently implemented and continually improved throughout the
Management and all employees of Helvetia, corporate governance is a continuous process that is periodically reviewed and used to integrate new developments, findings and requirements directly into our day-to-day work and responsibilities. Good corporate governance can only be truly dynamic and effective if it is consistently aligned with the Group’s strategy and positioning. For more information, please refer to pages 18 et seq.
Listed Companies (VegüV) of 20 November 2013. Information on Helvetia’s compensation system and the compensation paid to the Board of Directors and Group Executive Management is now contained in a new compensation report that forms part of the Annual Report (see page 74 et seq. below). If relevant information is provided elsewhere in the Annual Report or in other documents, reference is made to the location or document concerned. Important documents such as the articles of incorporation and the organisation rules with appendices are also available on our website at www.helvetia.com/en/gruppe/
1. Group structure and shareholder base 1.1 Group structure Helvetia is an international Swiss all-lines insurance group that focuses primarily on central and southern Europe. The parent company, Helvetia
Swiss law. The management structure is shown on page 56. These structures are intended to create the best possible legal, financial, controlling and regulatory framework and to ensure smooth, efficient and flexible business operations.
St Gall and is listed on the SIX Swiss Exchange in Zurich: security no. / ticker 1 227 168 / HELN.
Key data for investors is given on pages 40 to 42 under “Investor information”. After the intended delisting of Nationale Suisse in 2015, Helvetia
1.2 Major shareholders In addition to a strong, long-term and, in view of the positive development of the Group, very successful relationship with our major pool of shareholders, the Patria Genossenschaft (founding partner), Raiffeisen and Vontobel (cooperation partners), we maintain an open and share holderfriendly strategy in an effort to build up a widely diversified and informed shareholder base. At the balance sheet date, 11,991 shareholders were registered in the share register of Helvetia
The following three partners hold a combined equity stake of 38.1 % in Helvetia Holding: – Patria Genossenschaft, Basel, with 30.1 %
Helvetia shares with the consent of the other pool members, who also have a right of first refusal at market conditions. Beyond the scope of normal cooperation activities relating to consulting and the sale of financial, insurance and fund management products and services – in each case at market conditions – there are no significant business relationships between pool members and
1.3 Cross-holdings There are no cross-holdings that exceed 3,0 % of the capital or voting rights.
2. Capital structure 2.1 Share capital Helvetia Holding AG has a share capital of
CHF 988,953.10, consisting of 9,889,531 registered shares with a nominal value of CHF 0.10 each. At the year-end price of CHF 474.00 per share, this equals a market capitalisation of
2.3 Authorised capital The share capital can be increased by a maximum of CHF 6,334.40 by issuing a maximum of 63,344 registered shares with a nominal value of CHF 0.10 each, which must be fully paid up.
The conditions for this are set out in Art. 3 of the articles of incorporation.
– Helvetia celebrated its 150th anniversary in 2008. To celebrate this event and recognise the confidence in and loyalty of the shareholders to Helvetia and at the same time to optimise the capital structure of the company,
– At the Extraordinary Shareholders’ Meeting in September 2014, for the partial financing of the takeover of Nationale Suisse, authorised capital of a maximum of CHF 130,000 was created by issuing a maximum of 1,300,000 registered shares with a nominal value of CHF 0.10 each, which must be fully paid up. Of this authorised capital, in October 2014, 1,236,656 fully paid up registered shares having a nominal value of CHF 0.10 each or CHF 123,665.60 were acquired. The share capital of Helvetia Holding AG thereby increased to CHF 988,953.10, consisting of 9,889,531 registered shares with a nominal value of CHF 0.10 each. As per 31 December 2014, the remaining authorised capital amounted to CHF 6,334.40 respectively by issuing a maximum of 63,344 registered shares with a nominal value of CHF 0.10 each, which must be fully paid up.
Ernst Koller CEO of Nationale Suisse, Co-Project Manager of Integration was initially surprised at the announcement, but does see that the merger will offer great potential for new developments: “Just like that, we’ve been sold! – but at least we’ve been sold to the best possible partner. The new Helvetia is significantly more than just the sum total of Helvetia and Nationale
Company profile Corporate governance members whose personal and business skills enable them to form an independent opinion and take decisions that are in the best interests of the company. Members of its committees are non-executive. The members of the Nomination and
The composition of the Board of Directors is shown on pages 49 to 54. None of the members of the Board of Directors holds any executive function, or – with the exception of Hans Künzle
Helvetia Group or any of its affiliated companies in the financial years preceding the reporting period. No member of the Board of Directors has any significant business relationships with
3.2 Other activities and interests The following business relationships exist with companies represented by members of the Board of Directors: – In the shareholder pool, Doris Russi Schurter and Jean-René Fournier represent the Patria
Genossenschaft; Pierin Vincenz represents the Raiffeisen Group; and Herbert J. Scheidt represents the Vontobel Group.
3. Board of Directors See also the diagram and information provided on pages 49 to 54.
The Board of Directors of Helvetia Holding AG 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 have experience and knowledge of a wide variety of fields. They should have the requisite expertise to represent their personal opinion in discussions with the Executive
Code of Best Practice for Corporate Governance. For example, the Board consists only of
Company profile Corporate governance 3.5 Internal organisation The governance at Helvetia is based on the relevant legal provisions (in particular company law and stock market legislation) and on internal directives and regulations. The functions intended to be carried out by the Board of Directors and the allocation of duties are set out on page 49. The Board of Directors appoints the vice chairmen, the chairman and members of the various committees (exception: the members of the Nomination and Compensation Committee)
Committee. The duties and powers of these committees are described in detail in the organisational regulations, and the composition of each committee is presented on page 49.
Group and Vontobel Group has been terminated with effect from the end of June 2017. Until it expires, the interests of the Raiffeisen Group will be represented on the Board of Directors of the
Gmür, Balz Hösly and Stefan Loacker are represented in the Board of Directors of Nationale
Committee are individually elected at the Shareholders ’ Meeting each year. Re-election of existing Board members is possible. The option of a re-election ends at the latest with the ordinary
Board member turns 70. None of the members of the Board will have reached the statutory age limit of 70 before the 2015 Shareholders’ Meeting, and all of the members are eligible for re-election.
Board of Directors with effect from 31 December 2014. There are no plans for a by-election. The table on page 49 contains information on the first time each member of the Board of Directors of
Directors in its duties with regard to overall supervision and financial control. It examines the accounts from the perspective of completeness, integrity and transparency, verifies their compliance with applicable accounting standards and external reporting requirements, assesses risk governance and risk organisation, and monitors the functional capacity and effectiveness of the internal control systems (ICS). It monitors the operational risks and related risk management measures and verifies the independence and quality of the audits by the internal and external auditors. It ensures optimal cooperation between internal and external control units, the AC, the Chairman and the Executive Management. The AC approves the internal audit plan and assists with the compilation of external audit plans, examines the results of audits, comments on them for the attention of the Board of Directors, and may, if necessary, award special audit assignments. It also prepares the election of the statutory auditors, and submits the necessary proposals to the Board of Directors. It verifies the consistency of auditing activities with any existing consulting mandates and examines the overall fee structure. The Chairman may, at his own request, take part in the meetings in an advisory capacity. The CEO,
CFO, representatives of the external auditors and the head of Internal Audit attend its meetings in an advisory capacity. The attendance rate was 100 % at meetings held to discuss the financial statements. In order to deal with specific issues, the Committee may call on internal or external specialists to attend its meetings, which is regularly the case. The AC met three times in 2014.
b) The Nomination and Compensation Committee (NCC) puts forward proposals regarding the structure of the compensation system that applies to the members of the Board of Directors and to the salaries and compensation of the members of
Management, handles the appointment and dismissal of the country CEOs and other members of the country market Executive Management boards, and periodically reviews plans and measures to retain and promote senior managers. The NCC convenes as often as business requires. In order to deal with specific issues, the
Committee may call on internal or external specialists to attend its meetings, which is regularly the case. The CEO takes part in an advisory capacity where topics that affect the
c) The Investment and Risk Committee (IRC) formulates the investment concept, basic guidelines and investment strategy, proposes the strategic bandwidths of asset allocation, approves the investment strategy and supervises the investment activities of Helvetia Group. It determines the most important risk strategies, the risk tolerance, risk appetite and applicable risk limits, and monitors all non-strategic and non-operational risks as well as the related risk management measures and compliance with limits. It convenes as often
Management attend its meetings. In the reporting year, half-day meetings were held as well as a two-day seminar, two in the absence of one director and two more in the absence of two directors. All the members of the Executive Management attended all meetings. In order to deal with specific issues, it may call on specialists to attend its meetings, which is regularly the case. Members of the Board of Directors and all executive bodies are obliged to abstain if business is being dealt with that involves their own interests or the interests of related parties (natural persons or legal entities).
Swiss company law, the articles of incorporation and the internal organisational regulations of
Helvetia Group: – overall management of the Group; – definition of the organisational principles; – definition of the structure and principles of accounting, financial control and financial planning; – appointment and dismissal of members of the Group Executive Management
– overall supervision of the management of the Group’s business activities; – preparation of the business and compensation report; – preparation of the Shareholders’ Meeting; – implementation of its resolutions; and
Appendix I of the organisational regulations contains a detailed description of the division of powers between the Board of Directors, the Board Committees and the Executive
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 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
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 in hierarchical as well as practical terms, assesses requests for information, meetings or inspection of documents from members of the Board of
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 at all times inspect any and all documents.
Full Board of Directors The Board of Directors convenes as often as business requires, as a rule five to six times a year.
Most of its meetings, which usually last half a day, are held at the Group head office in St Gall and the executive seminar, which usually lasts two days, is generally held at the premises of a subsidiary abroad. The Board of Directors is quorate if the majority of its members are present. Its resolutions are carried with a majority of the votes of the members in attendance. Resolu-
Outside of meetings, every member of the Board of Directors may ask the Executive Management to provide information about the general course of business or the course of specific business cases, and / or may inspect any business documents as required. The Board of Directors also has the Internal Audit unit at its disposal as an auditing and supervisory body that monitors compliance with legal and regulatory provisions, internal guidelines and directives systematically, purposefully and in a risk-oriented manner. It also receives reports concerning the general development and specific activities of Helvetia in the areas of corporate governance and compliance.
4.1 Members of the Executive Management The members of the Executive Management are presented on page 57 et seq. The Executive
Nationale Suisse Executive Management. Further information is available on pages 55 and 56.
Directors receive key data concerning the course of business. They also periodically receive reports on current issues relating to governance as well as selected analyses and situation reports concerning market trends, market players and noteworthy occurrences. The regular reports submitted to the Board of Directors and its committees are listed in Appendix I of the organisational regulations: www.helvetia.com/
Each shareholder receives a personal invitation no later than 20 days before the meeting, including a detailed agenda, a brief explanation of the motions to be put forward, plus other explanations concerning significant occurrences in the reporting year. The items on the agenda are also published in various Swiss newspapers and in the electronic media.
5.1 Voting rights 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.
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.
7.2 Audit fees In the reporting year, the fees charged by the auditors amounted to: CHF 4,094,202.00.
Group has an internal auditing department that reports directly to the Audit Committee and the
5.5 Registration of shares The right to attend the Shareholders’ Meeting
6. Change in control and 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.
Relations team will be pleased to assist with any personal enquiries (contact details are indicated at the end of this report as well as on our website).
Helvetia, valid issuance of proxies and voting instructions to independent representatives and corrections of data can be processed online.
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.
Shareholders thus receive a short information brochure about the previous business year and most important key figures along with the invitation to the Annual General Meeting. The annual report and the interim report are both made available to the general public. Both documents are available on the website. Upon request the documents can also be sent to investors or interested parties free of charge. Other current and archived information on Helvetia Group is available on our website www.helvetia.com/en.
Topics include corporate governance, Group structure and strategy, employees, charitable activities and history as well investor interests such as the key figures, equity story, bonds, rating, annual and interim results and information about the share including the current share price performance. In addition, further publications, media releases and important dates can
Cornelia J. Braun-Schoeffel Head of Organisation Development sees the role of the Executive Management as directive and decisive in the integration process: “I think it is a matter of ‘movement’, one of the key words – movement for everyone. Generating positive movement is one of the most significant tasks of the coming months, particularly for the
Simone Lazarus Head of Human Resources and Organisation Development experiences the changes in the human resources area on a day-to-day basis: “I think one of the challenges lies in the fact that the respective company cultures differ from one another more than originally assumed – this can cause uncertainties. Each manager now has the job of reducing these concerns, providing clarity as quickly as possible and promoting mutual trust.”
Governance” as amended on 26 September 2014, Circular 2010/1 “Compensation Systems”
by the Swiss financial markets supervisory authority FINMA, the Swiss Code of Obligations and the Ordinance Against Excessive Compensation in Swiss Listed Companies (VegüV) dated 20 November 2013, which went into effect 1 January 2014. The Helvetia Holding AG
articles of incorporation were already fully aligned with the regulations at the 2014 Shareholders ’ Meeting.
Helvetia Group applies a multi-level and yet simple and transparent compensation system for all employees in Switzerland as well as for its governing and executive bodies with a reporting duty (Board of Directors and Group Executive
Management). As shown below, this system is composed of fixed and variable compensation components. At Helvetia, compensation is deliberately fixed so that: – it is simple, transparent and comprehensible, and fair and appropriate for the members of the Board of Directors and Group Executive
Base salary / basic remuneration Long-term salary component (LTC) as % of base salary / basic remuneration
Long-term investment instrument (Executive Management: basis of calculation: shares; transfer of ownership in shares or in cash / Board of Directors: transfer of ownership in shares only)
Board of Directors and the Executive Management by the Shareholders’ Meeting.
Meeting has the following competencies in matters concerning compensation: a) Review of the compensation report and thus the principles and conditions under which the compensation for the members of the Board of
The delineation of powers for compensation matters is defined in Appendix I of the organisational regulations: www.helvetia.com/en/gruppe/
Fixed compensation components The Nomination and Compensation Committee defines the principles on which compensation decisions are based. With regard to the Shareholders ’ Meeting that takes place in April / May and the compensation periods beginning subsequently (Board of Directors: Shareholders’ Meeting to
Shareholders’ Meeting; Group Executive Management: 1 July to 30 June), the compensation concepts are reviewed by the Nomination and
Various documents are used as the basis for ensuring that the fixed compensation components are appropriate and in line with the market. For example, renowned independent institutes are commissioned from time to time to prepare comparative studies that can serve as a benchmark. The compensation reports of comparable competitors are also analysed. Publications by different interest groups such as “Ethos”, information obtained from advisors specialising in personnel issues and audits, and articles that appear in the media also provide an important basis for comparison.
Variable compensation components The variable compensation components for members of the Board of Directors and the Group
Executive Management – and all Helvetia employees in Switzerland – are determined by the Nomination and Compensation Committee during the first quarter of every year once the key figures for the past financial year and the individual target achievement results are available to
The members of the Board of Directors receive lump-sum expense allowances of CHF 10,000 per member as part of their fixed compensation for each term of office. This lump-sum expense allowance covers minor expenditures and travel expenses for the members of the Board of Directors within Switzerland. Costs for accommodation at the place where a meeting takes place and for foreign trips are paid by the company.
the Board of Directors for the final approval of the Shareholders’ Meeting (total amounts Board of Directors and Group Executive Management).
Board of Directors and individual components of the compensation concept as well as the procedure used for determining performance-related payments are set out in the compensation regulations approved by the full Board of Directors.
In special circumstances (extraordinary projects, special work load), the Board of Directors may grant to members of the Group Executive
No severance payments are granted. Loans are granted at usual market conditions. Board members do not benefit from any discounts (premium discounts, etc.) that are offered to Helvetia employees.
2. Group Executive Management The compensation of the members of the Group
Shareholders’ Meeting. This compensation is determined on an individual basis in accordance with the aforementioned criteria and takes account of the function and level of responsibility of the individual member of Executive Management. It also includes all child or education allowances and long service bonuses.
Company profile Compensation report reporting year and can be attributed to the conduct of the Executive Management member in question. If the person in question leaves the
Board of Directors 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.
Switzerland, and Board of Directors), there is an additional restriction in that no deferred shares are allocated if the Group as a whole reports a loss, and / or the solvency figures are insufficient.
The percentage of target achieved (LTC, results -based component), as calculated by the
Local Executive Management Boards Analogous compensation regulations apply as described above for the Executive Management
3. Helvetia employees in Switzerland: share purchase plan In 2005, an employee share purchase plan was introduced in Switzerland to allow employees to participate in the performance of Helvetia and thus to strengthen their personal ties to the company. Employees can purchase registered shares of Helvetia Holding AG at reduced prices. The number of available shares is specified by the
Executive Management can also take part in this programme, but the members of the Board of
Directors may not. The share purchase plan is not open to employees abroad. The costs associated with the share purchase plan in 2014 were recognised in the income statement at CHF 0.9 million (previous year: CHF 0.5 million).
No severance payments are granted. Loans are granted at usual employee conditions.
II Compensation paid to the Board of Directors and the Group Executive Management
This section provides information on the compensation, shares and loans granted to the members of the Board of Directors and the Executive Management of Helvetia Group.
1. Compensation paid to the Board of Directors In the reporting year, the members of the
At the reporting date, a mortgage loan had been granted to Jean-René Fournier for a total of
CHF 765,000 (previous year: CHF 765,000). In the reporting year the loan, a fixed mortgage at normal customer conditions, had an interest rate of 2 %. There are no other insurance contracts, loans or guarantees.
Doris Russi Schurter (Vice-Chairwoman) 205 043 195 000 25 262 24 142 230 305 219 142
Andreas von Planta (Member since 20.10.2014)2 162 983 0 6 568 0 169 551 0 1 In deferred LTC shares 2 Additionally contains the fees paid to Mr A. von Planta and B. Hösly between 20 October 2014 and 31 December 2014 for remaining on the Board of Directors of National Suisse of CHF 132,500 (A. von Planta) and CHF 52,000 (B. Hösly).
Company profile Compensation report 2. Compensation paid to the Group Executive Management In the reporting year, the members of the Group
CHF 4,755,224. The fixed salary includes all scheduled allowances, meeting attendance fees and expenses. Variable remuneration of
Shareholders’ Meeting. In the previous year the members of the Executive Management received fixed salaries of CHF 4,461,206 and variable remuneration of CHF 2,724,749.
Executive Management was allocated LTC shares of CHF 1.25 million (previous year: CHF 1.23 million). This corresponds to 2,599 shares at a share price of CHF 480.50 per reporting date of 25 February 2015 (previous year: 2,698 shares at CHF 455.50).
CHF 340,194 in the form of deferred shares, and employer contributions to pension funds of
As regards fixed compensation, these total amounts refer to different time periods in comparison to the figures given in part II and in reference to financial year 2014: Shareholders’
Shareholders’ Meeting. These figures are therefore not directly comparable. To provide to the reader with a comparison, however, the amounts to be approved are respectively contrasted with the figures from the comparison period of the previous year (or to the amounts approved by the
The Board of Directors has reviewed its fixed compensation and decided not to change this for the 2015/2016 period. At the 2014 Extraordinary Shareholders’ Meeting, an additional amount of CHF 335,000 in addition to the original total compensation of CHF 1,905,000 (2014
The Board of Directors shall apply for approval from the Shareholders’ Meeting for fixed salaries for the Board of Directors in the total amount of CHF 2,513,000 for the period between the Shareholders’ Meeting 2015 and the Shareholders’ Meeting 2016.
Under VegüV and the articles of incorporation, the Shareholders’ Meeting needs to approve the following compensation for the Board of Directors and the Group Executive Management: – Total amount of the fixed compensation for the Board of Directors for the period from the 2015 Shareholders’ Meeting to the 2016
Total fixed compensation amount for the Board of Directors prospective Shareholders’ Meeting to Shareholders’ Meeting prospective 2015/2016 effective 2014/2015 approved 2014/2015 Change
Total fixed compensation amount Board of Directors 2 513 000 2 008 333 2 240 000 25.13 %
Total fixed compensation amount Executive Management for the period between 1 July and 30 June prospective 2015/2016 effective 2014/20152/3 approved 2014/2015 Change
Salaries and other short-term benefits: – Fixed remuneration (incl. expenses allowances, child / education allowances, long service awards, company car) 4 217 000 3 700 927 4 632 000 13.9 %
– Employer contribution to pension funds with respect to the fixed compensation 911 000 783 023 – 16.3 %
1 With respect to the fixed compensation paid in 2014/2015, the employer paid additional AHV/IV/EO contributions of CHF 103,429 2 Incl. D. Ribeaud, new member of Group ExM /excl. W. Wrabetz as of 1 January 2015 3 With respect to the fixed compensation paid in 2014/2015, the employer paid additional AHV/IV/EO contributions of CHF 184,113
Company profile Compensation Report 2. Approval of the total amount of the fixed compensation for the Group Executive Management for the period between 1 July 2015 and 30 June
The fixed salaries of the Group Executive Management were reviewed for 1 June 2015, and function-related adjustments were carried out. In addition, the employer’s AHV/IV/EO contributions were newly included for the 2015/2016 period. This adjustment results in an increase of the total fixed compensation amount of the Group
The Board of Directors shall apply for approval from the Shareholders’ Meeting for the fixed salaries for the Group Executive Management in the amount of CHF 5,128,000 for the period between 1 July 2015 to 30 June 2016.
The calculation of the variable compensation of the Board of Directors was described in section 2 and the amounts were disclosed in part II. The resulting differences between 2013 and 2014 simply arose from changes in the degree of target attainment and changes in the Board of
4. Approval of the total amount of variable compensation for the Group Executive Management for the past financial year 2014
Total sum variable compensation Board of Directors retrospective financial year retrospective paid out 2014 for 2013 approved for 2013 Change
Total sum variable compensation Board of Directors 419 000 374 000 375 000 12.03 %
Andreas Gronbach Head of Portfolio Controlling & Administration is convinced that the merger will bring about potential for a strong new company, even if a lot of things will change: “I’m hoping that the ‚new Helvetia’ will become a company that can operate independently and successfully for many decades to come in a fiercely competitive insurance market.”
Renate Schabus Head of Asset Management has experienced in several takeovers and has had a lot of positive experiences.
Compensation in Stock Exchange Listed Companies contained in section II on pages 80 and 81 of the compensation report.
Responsibility of the Board of Directors The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report in accordance with Swiss law and the Ordinance against Excessive compensation in Stock Exchange Listed Companies
Auditor’s Responsibility Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit in accordance with Swiss
Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the remuneration report complies with Swiss law and articles 14 – 16 of the Or-dinance.
Opinion In our opinion, the remuneration report for the year ended 31 December 2014 of Helvetia
In over 150 years, Helvetia Group has grown from a number of Swiss and foreign insurance companies into a successful insurance group that conducts business across Europe. With the integration of Nationale Suisse, Helvetia has been able to strengthen its position as a leading alllines insurer in the top 3 of the Swiss insurance market. With the market area “Specialty
Markets”, which includes engineering, transport and art, Helvetia is further developing its competence as a specialty insurer. Thanks to the acquisition of Basler Austria, Helvetia ranks among the top 10 insurance companies in Austria.
The markets in which Helvetia is active generate a volume of
1 Source: sigma 3/2014, Swiss Re 2 Source: Swiss Re, Economic
Insurance Review 2014 and Outlook 2015/2016, November 2014 3 Insurance Journal, 16 October 2014; www.insurancejournal.com/
Helvetia Group’s performance Helvetia was able to impress once again in the financial year 2014 with a very good business performance. The acquisitions of Nationale
Suisse and Basler Austria saw Helvetia take significant steps in the Swiss and Austrian markets.
Group was CHF 7,766.6 million, representing an increase compared to the previous year – especially thanks to the acquisitions – of 4.4 % in original currency. The two companies acquired in 2014, Nationale Suisse and Basler Austria, made their first contribution to growth with
CHF 328.1 million. Both of the acquired companies were consolidated pro rata in the consolidated financial statements 2014 and will show the full impact of their contributions in 2015. The organic growth recorded amounted to 0.3 % (in
The net combined ratio of 93.1 % was once again very good, and above the target of 94 to 96 %. Capitalisation remained strong as well: Solvency I came to 216 % (2013: 218 %). Our SST
IFRS figures. 2 As in the previous year no significant special effects from acquisitions were reported, thus the previous year’s earnings have not been adjusted.
Direct business volume by country Share in % | in CHF million
There were no great surprises with exchange rates. The economic recovery in the USA and the impending end of the QE programme strengthened the US dollar. The Swiss franc remained closely tied to the euro due to the minimum exchange rate established by the National Bank.
Group achieved a business volume of CHF 7,766.6 million. Compared with the previous year
(CHF 7,476.8 million), this represents an increase of 4.4 % (in OC). At a volume of CHF 328.1 million recorded on a pro rata basis, the two companies acquired in financial year 2014,
CHF 84.9 million, amortisation of intangible assets, further planned write-downs of CHF 83.1
IFRS profit for the period 393.3 363.8 8.1 * Including Nationale Suisse and Basler Austria on a pro rata basis ** Underlying earnings does not yet include any synergies in financial year 2014, but does include financing costs of CHF 2.6 million.
3 As the previous year reported no significant special effects from acquisitions, the previous year’s earnings have not been adjusted.
Business development Development of business activities million due to the revaluation of interest-bearing securities as well as valuation gains of
CHF 108.9 million on Nationale Suisse shares which were already owned by Helvetia before the acquisi tion.
CHF 3,831.2 million to CHF 4,963.1 million. The higher profit contributed to the increase. In addition, CHF 535 million was attributable to the capital increase during the course of the
Spain, initial growth effects from the acquisition in Austria, sustained demand for Swiss group insurance
The business volume in the life business of the new Helvetia Group grew to CHF 4,767.5 million and therefore by 1.1 % (in OC) compared to the previous year. The two acquired companies,
By country, the foreign subsidiaries experienced a further growth in business activities. The performance of the Spanish subsidiary with an increase of 9.7 % (in OC), which was particularly due to a considerable demand for profitable investment-linked products, was pleasing. Austria was also able to significantly increase its premiums on account of the acquisition. As the Italian insurance market remained dominated by a
Life business volume by sector Share in % | in CHF million
Group life 4 Equity excluding preferred stock 5 In percent of underlying earnings
[in OC]) generated by Helvetia Italy was attributable to traditional business with single premiums. Germany also reported a slight increase of 1.1 % (in OC). However, the home market of
Switzerland recorded a decline, as the growing group life business was not able to fully compensate for the decline in the individual life business.
The profit for the period reported in accordance with IFRS was CHF 115 million (2013: CHF 152.9 million). The decline is mainly attributable to the write off of goodwill for Chiara Vita in Italy. For more details, refer to the country contribution of
In the non-life business segment Helvetia generated a premium volume of CHF 2,789.2 million (2013: 2,550.9 million) in the financial year 2014, representing an increase compared to the previous year of 10.3 % (in OC). The two acquisitions, Nationale Suisse and Basler
In terms of lines of business, the increase was primarily driven by the large insurance lines of property insurance (+12.7 % [in OC]), motor vehicle insurance (+9.3 % [in OC]) and liability
Suisse and Basler Austria contributed significantly to the premium increase. But also in the accident and health business, Helvetia generated 22.7 % higher premiums (in OC) in 2014 than in the previous year. This growth originates largely from the health and accident insurance portfolio taken over from Nationale Suisse. In contrast, the organic growth was particularly emphasised in the large business lines of motor vehicle (+3.3 %
[in OC]) and property (+0.8 % [in OC]) but also in the health and accident business (+5.5 % [in
Switzerland and Austria. Spain also recorded a pleasing performance: the continuing economic recovery had a positive effect on the Spanish non-life business. In conjunction with Nationale
Suisse’s contribution to growth, this led to a volume increase of 8.8 % (in OC).
Thanks to Nationale Suisse, the Italian subsidiary also recorded 6.2 % (in OC) higher premiums. The motor vehicle and property businesses of Nationale Suisse in particular supported this growth. Only France remained behind the previous year’s result. Alongside the lagging economic recovery, the portfolio adjustments in the transport business also had a negative effect on the premium volume.
The underlying earnings in the non-life business was CHF 255.4 million (2013: CHF 191.7 million). The 33.3 % increase in these earnings was attributable to an organically improved technical result with additional support from the two acquisitions.
Non-life business volume by sector Share in % | in CHF million
The profit for the period reported in accordance with IFRS was CHF 176 million (2013: CHF 191.7 million). The decline is mainly attributable to the restructuring provisions as a result of the acquisitions of Nationale Suisse and Basler
Other activities Alongside the financing companies and the holding company, “Other activities” includes the
Reinsurance, which pursues an income-oriented policy, recorded an increase in business volume of 7.8 %. At CHF 15.1 million, the contribution to underlying earnings of “Other activities” was below that of the previous year of CHF 19.2 million despite an improved reinsurance performance. The decline was mainly due to a lower investment result from the Group’s internal funds as well as increased costs. The profit for the period reported in accordance with IFRS was
Suisse, the Nationale Suisse shares which were already owned by Helvetia at the date of the acquisition were revalued at the offer price of
CHF 81.44. This resulted in a profit of CHF 108.9 million.
Fixed-income securities amounted to CHF 29.3 billion or 61 % of total investments and remained the most important asset class. Together with mortgages amounting to CHF 4.0 billion or a share of 8 %, loans amounting to CHF 1.4 billion or 3 % and money market instruments amounting to CHF 877 million or 2 %, interest bearing investments represented nearly three quarters of the total investment volume. Real estate investments of CHF 6.3 billion as well as exposures of almost CHF 3 billion in shares, investment funds and alternative investment volumes amounted to 19 %. The remaining 7 % was attributable to financial assets where the market risk lies with the policyholder.
Bank retained the minimum exchange rate to the euro, and both the dollar and the pound appreciated.
6 Direct yield and investment performance weighted due to acquisitions in the course of the year.
Result from financial assets and Group investment property (net) 1 275.4 1 156.8
Change in the unrealised gains / losses recognised in equity 1 677.0 − 527.9
Average Group investment portfolio 39 286.0 35 806.4 * Weighted due to acquisitions in the course of the year
“new Helvetia” right from the start: “We are all working hard to ensure that the two companies can make use of the opportunities that the merger provides and that the new Helvetia becomes a reality – for shareholders, for customers and for employees.”
Swiss all-lines insurance company in Switzerland, with a solid place among the top 3. The business volume of the new Helvetia rose from
Suisse showed organic growth and gained market share in the non-life business and further expanded their positions in the life market.
However, the growth in the non-life business was not able to compensate fully for the decline in the life business.
Nationale Suisse. The solid result in life business enabled reserves to be strengthened so as to take the low interest rate environment into account.
CHF 221.1 million and therefore 11.8 % lower than in the previous year. The decline is fully attributable to the restructuring provisions and integration costs recognised during the acquisition of Nationale Suisse.
Life: sustained group life business, individual life decreased because of interest rate environment, as the good growth in the deposits only partially compensated for the decrease in the investment-linked insurance
In the group life business (occupational pensions business), a sustained demand for full insurance solutions still prevails in the Swiss market. Helvetia has also profited from this and, in the financial year 2014, was again able to slightly increase volumes (+0.8 %). With the important regular premiums, Helvetia even achieved growth of 6.1 %, which was significantly above the market, which grew 3.5 % according to the estimates of the Swiss Insurance Association
However, the individual life business recorded a decline compared with the previous year. While the volume of traditional life insurance reduced as planned, as a result of the difficult capital market environment Helvetia was unable to continue the successful growth of the previous year in investment-linked insurance. The single premium deposits did increase significantly thanks to the sustained high demand for the
Non-life: acquisition of Nationale Suisse as a key growth driver (+14.5 %), organic business performance in all lines across the market
Suisse, which contributed CHF 95.3 million to premiums on a pro-rata basis. The property and motor vehicle business of Nationale Suisse supported the growth. The property business increased 17.1 % and the motor vehicle business increased 8.6 % as a result of the acquisition. The transport business experienced a significant increase (+25.6 %) for the first time again, to which
The net combined ratio at 85.4 % remains at a very good level. Both the cost ratio and also the claims ratio increased slightly compared with the previous year on account of the acquisition of
Helvetia also sees additional opportunities to improve efficiency by the use of appropriate cost reduction potential. Without the acquisition, both the claims ratio and the cost ratio would have improved further.
OC). At CHF 14.5 million, the underlying earnings of the German subsidiary were below those of the previous year, which was due to a weaker investment result in the life business together with fewer claims ceded to reinsurance in the non-life business and more claims in the industrial business.
The IFRS profit for the period was CHF 14.1 million compared to CHF 24.2 million in the previous year. The decline is attributable to the effects described. Integration costs reported due to the acquisition of Nationale Suisse had only a marginal influence on the profit for the period in 2014.
Helvetia Germany in the life business increased by 1.1 % (in OC) compared to the previous year
Non-life: growth in all insurance lines, positive effect of the portfolio restructuring in the previous year
Nationale Suisse contributed CHF 15.5 million in premiums towards this growth. All insurance lines added their part to achieve the higher volume.
CHF 1,148.8 million in financial year 2014, an increase of 7.8 % (in OC) (2013: CHF 1,079.9 million). With a pro rata volume of CHF 48.7 million, Nationale Suisse made a considerable contribution. Both the life and the non-life business supported this growth. However, Helvetia
Nationale Suisse contributed to the growth with premiums amounting to CHF 18.5 million.
(in OC) on account of the acquisitions, organically stable business, development better than the market
Nationale Suisse portfolio played a significant role. Overall, Nationale Suisse contributed to the non-life business with premiums amounting to
Life: in line with strategy, good development of investment-linked life insurance
In the life business, the premium volumes increased 9.7 % (in OC) to CHF 141.1 million
Non-life: acquisition-related increase in the business volume of 8.8 % (in OC) but also a pleasing organic growth of 2.1 % (in OC)
In the non-life business, the positive performance already seen in the first half of the year continued.
reported substantial increases; Nationale Suisse also contributed towards what was, in any case, pleasing growth here. Thanks to the newly established distribution partnership with Helvetia
The net combined ratio increased from 94.1 % in the previous year to 97.0 % in the reporting year. As a result of the economic recovery in Spain, the frequency of claims particularly in the motor vehicle business increased again.
in CHF million * Including Nationale Suisse on a pro rata basis 9 Source: ICEA Market figures,
“Other insurance units” The segment “Other insurance units” consists of the countries of Austria and France and also Reinsurance. The business volume achieved in this segment was CHF 866.2 million. The country market of Belgium, the representative office in
Singapore and Kuala Lumpur are also allocated to this segment. The underlying earnings amounted to CHF 63.6 million and the IFRS result was
Austria Due to the acquisition of Basler Austria, Helvetia now ranks among the top 10 Austrian insurance companies. Thanks to the acquisition, premium volumes increased by 18.5 % (in OC) from
Austria contributed CHF 53.6 million to this on a pro rata basis over 4 months. However, the
Helvetia portfolio also performed well organically and increased by 1.6 % (in OC) compared with the previous year.
At CHF 142.5 million, the premium volumes reported in the life business were 11.2 % (in OC)
The net combined ratio also improved from 99.7 % in financial year 2013 to 96.9 % in the reporting year. As significantly fewer weatherrelated claims were reported in the past financ ial year, the claims ratio was a very good 63 %.
Portfolio structure of active reinsurance by insurance line 2014 Share in % | in CHF million
The active reinsurance is still oriented primarily towards the profitability of the portfolio. Therefore the focus is on underwriting in contract business based on longer-term relationships in the non-life business (property, casualty and specialty ). In financial year 2014, active reinsurance increased its premium volume by 7.8 % from
CHF 194.8 million to CHF 209.9 million. The growth is attributable to both new business and increases in shares from existing business relationships. The portfolio is well diversified with appropriate new business from the USA,
Latin America, Turkey and Asia that is written via representative offices in Istanbul and Miami and via branches in Singapore and Kuala Lumpur.
Volume development influenced by portfolio adjustments, improvement in the combined ratio to 97.1 %
In France, Helvetia achieved a premium volume of CHF 252.1 million in the financial year 2014, compared with CHF 261.1 million in the previous year. The reason for the decline was partly port-
Income investments with market risk for the policyholder1 7.1.5 200.5 160.2
Claims and benefits paid (life) – 4 142.4 – 2 932.4
Net benefits to policyholders and claims – 6 944.8 – 6 685.5
Change in unrealised gains and losses on investments 1 669.5 – 532.6
Investments with market risk for the policyholder1 7.2 3 134.7 2 837.5
Income and expense that may be reclassified to income – – – – 35.1
Income and expense that will not be reclassified to income – – – 5.4
Realised gains and losses on property, equipment and intangible assets – 1.0 – 3.7
Realised gains and losses on sale of affiliated and associated companies – – 14.7
Depreciation / amortisation of property, equipment and intangible assets 114.3 42.6
Realised gains and losses on financial instruments and investment property – 213.0 – 21.5
Unrealised gains and losses on investments in associates – 0.5 0.0
Unrealised gains and losses on financial instruments – 148.3 – 277.2
Effect of exchange rate differences on cash and cash equivalents – 7.4 8.6
Other disclosures on cash flow from operating activities: Interest received 755.7 786.6
Holding AG, with headquarters in St. Gallen, is a Swiss public limited company listed on the SIX Swiss Exchange. Through branch offices and subsidiaries, the Group operates in the insurance markets of Switzerland, Germany, Austria, Spain, Italy and France, and worldwide in the active reinsurance business. Parts of its investment and financing activities are managed through subsidiaries and funds in Luxembourg, Ireland and
The Board of Directors approved the consolidated financial statements and released them for publication at its meeting of 11 March 2015. The financial statements will be submitted to the shareholders for approval at the Shareholders’ Meeting on 24 April 2015.
The consolidated financial statements of Helvetia Group were prepared in accordance with the International Financial Reporting Standards (IFRS) and under the historical cost convention with the exception of adjustments resulting from the IFRS requirement to recognise investments at fair value. Fair value measurement methods are explained in section 2.6 (page 119).
and amendments to the standards were applied by the Group for the first time in the reporting year: – Amendments to IAS 32: Offsetting financial assets and financial liabilities
– Amendments to IAS 39 / IFRS 9: Financial instruments: Recognition and measurement: Novation of derivatives and continuation of hedge accounting
Due to their effective dates, the following published sector-relevant standards, interpretations and amendments to standards were not applied to the 2014 consolidated financial statements: Changes in accounting policies to be applied for annual periods beginning on / after: Amendments to IAS 19: Employee benefits – defined benefit plans: employee contributions 1.7.2014
In addition, in order to improve presentation, since 1 January 2014 Helvetia Group now presents the earnings attributable to the holders of deposits for investment contracts separately.
Earlier reporting periods have been adjusted accordingly. The following table summarises the effects on the consolidated balance sheet and income statement: All the material companies included in the consolidation have the same reporting periods. Smaller Group companies with different financial years prepare interim financial statements as of the reporting date of 31 December.
Investments with market risk for the policyholder1 2 124.8 712.7 2 837.5
Gains and losses on Group investments (net) 226.6 – 36.8 189.8
Income investments with market risk for the policyholder1 104.7 55.5 160.2
Income attributable to deposits for investment contracts – – 87.4 – 87.4
Preparing the financial statements in accordance with IFRS requires Group management to make assumptions and estimates that affect the reported amounts of assets and liabilities for the ongoing financial year. All estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual figures and estimates may differ as a result. The following information conveys which of the assumptions needed for the preparation of the financial statements require par t ic ular management judgement.
– Interest-bearing securities without an active market, including own bonds: The fair value is based on rates set by brokers or banks, which are validated through comparison with current market transactions and in consideration of transactions with similar instruments, or determined by means of the discounted cash flow (DCF)
The discount rates are based on a long-term, risk-free average rate plus a premium for market risk plus regional and property-related surcharges and discounts based on the current condition and location of the property in question. The discount rates applied in the reporting period are set out in section 7.5 (page 153). The portfolio is regularly reviewed and appraisal reports are prepared by independent experts. All other countries use independent experts to determine market estimates at intervals of no more than three years.
The following items are basically classified as non-current: “Property and equipment ”, “Goodwill and other intangible assets”, “Investments in associates”, “Investment property” and “Deferred tax assets and liabilities”.
The following items are fundamentally classified as current: “Current income tax assets and liabilities”, “Accrued financial assets” and “Cash and cash equivalents”.
The following rates of depreciation apply to owner-occupied property: Land is not depreciated. Useful life is adjusted if the pattern of consumption of the economic benefit has changed. Value-adding investments are added to the current book value in the period and are depreciated over the entire term if an increase in the economic benefit is expected from the investment and reliable estimates exist for the cost. Depreciation is recognised in the income statement under “Operating and administrative expenses”. Repairs and maintenance are charged to the income statement as incurred. Tangible assets are regularly tested for impairment (see section 2.11, page 122).
Helvetia Group, the lease is classified and treated as a finance lease. The finance lease agreements of Helvetia Group are limited to lessee agreements. At inception of the lease agreement, recognition occurs at the lower of the present value of the minimum lease payments and the fair value of the lease object. A finance lease obligation of the same amount is recorded as a liability. Lease payments are apportioned between the finance charge and reduction of the outstanding liability so as to achieve a constant rate of interest on the remaining balance of the liability. The depreciation of the asset follows the rules for depreciating tangible assets. All other lease agreements are classified as operating leases. Payments – less any reductions – made under operating lease agreements are charged to the income statement on a straight-line basis over the term of the lease.
Acquired intangible assets are recognised at cost and amortised over their useful life. If a portfolio of insurance contracts or investment contracts is acquired, an intangible asset is recognised for an amount that equals the present value of all future gains minus the solvency costs included in the acquired contracts. This item includes the present value for the income across the whole contract period, even if the premiums have not yet been billed. The so-called “present value of future profit” (PVFP) is amortised in proportion to the gross gains or gross margins over the actual term of the acquired contracts. This term is usually between one and ten years. Helvetia has only capitalised PVFP in respect of the life business. This is tested for impairment every year.
Included in the other intangible assets are purchased distribution agreements. Their value corresponds to the present value of all expected future profit. The distribution agreements are amortised in proportion to the gross gains or gross margins over the actual term of the future contracts. The term is usually between five and fifteen years.
Intangible assets with an indefinite useful life are not amortised, but are reviewed annually for impairment (see section 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 acquisitor’s previously held equity interest in the acquired company, minus the net of the acquisition date fair value of the identifiable assets, liabilities and contingent liabilities of the acquired company.
The book value of tangible assets or an intangible asset amortised using the straight-line method is tested for impairment if there is evidence for impairment. Goodwill and intangible assets with an indefinite useful life are reviewed for impairment annually in the second half of the year. They are also tested for impairment again if there is evidence of impairment.
The recoverable amount is measured as the higher of fair value less cost to sell and value in use. Fair value less cost to sell is the amount obtainable from the sale of an asset at current market conditions after deducting any direct disposal costs. Value in use is the present value of estimated future cash flows expected to be generated from the continuing use of an asset and from its disposal at the end of its useful life. For the purpose of impairment testing, the value in use is measured under realistic conditions, with consideration given to planned activities and their resulting cash in and outflows. If the recoverable amount is less than the carrying value, the difference is charged to the income statement as an impairment loss. This is reported in the position “Other expenses”.
For the purpose of impairment testing, goodwill is allocated at the time of acquisition to those cash-generating units (CGU) that are expected to benefit from the business combination. To calculate any impairment loss, the value in use of the CGU is determined and compared to the book value. The value in use is calculated by applying the discounted cash flow method, with future operating cash flows less necessary operating investments (free cash flows) being included. Alternatively, the fair value less cost to sell is used for impairment testing. If an impairment loss arises, the goodwill is adjusted accordingly. An impairment loss for goodwill cannot be reversed.
valuation are based on the current condition and location of the property in question.
Helvetia Group does not capitalise properties where it acts as tenant in an operating lease relationship. Rental income is recognised on a straight-line basis over the lease term.
The carrying values of financial assets that are not classified as “at fair value through profit or loss” (LAR, HTM, AFS) are regularly reviewed for impairment. If objective and substantial evidence indicates permanent impairment at the reporting date, the difference between cost and the recoverable amount is recognised as an impairment through profit or loss. An equity instrument is impaired if its fair value is considerably or constantly below cost (see also section 2.6, page 119). Debt instruments are impaired or sold if it is probable that not all amounts due under the contractual terms will be collectible.
For LAR and HTM financial assets, the recoverable amount at the reporting date is equivalent to the present value of estimated future cash flows discounted at the original interest rate. Impairments are booked using an allowance account. The impairment is reversed through profit or loss if a subsequent event causes a decrease in the impairment loss.
For monetary AFS financial assets, such as bonds, the impairment is reversed through profit or loss if the circumstances causing the impairment cease to apply.
Financial liabilities are initially recognised at fair value. Directly attributable transaction costs are offset, except in the case of financial liabilities at fair value through profit or loss. After initial recognition, financial liabilities are carried at fair value or amortised cost (AC). The financial liability is derecognised when the obligation has been discharged.
Loss reserves are set aside for all claims incurred by the end of the accounting period.
The reserves also include provisions for claims incurred but not yet reported. Actuarial methods that take account of uncertainties are applied to determine the amount of reserves. Reserves are not discounted, except for those provisions for claims for which there are payment arrangements.
Helvetia Group defers acquisition costs. These are calculated from the commission that was paid and are depreciated over the term of the contracts or, if shorter, the premium payment period.
Receivables from insurance business and other receivables are carried at amortised cost, which is, in general, the nominal value of the receivables. Impairment is recognised in the income statement. The impairment loss is reported under “Other expenses” in the income statement.
2.19 Accrued financial assets 2.20 Cash and cash equivalents 2.21 Treasury shares 2.22 Non-technical provisions and contingent liabilities 2.23 Employee benefits
Executive Management was introduced as part of the variable salary. This consists of
Helvetia Group is managed primarily by country markets. Each country has its own
The accounting principles used for segment reporting correspond to the significant policies for the financial statements. Helvetia Group treats services and the transfer of assets and liabilities between the segments like transactions with third parties. Investments and dividend income from subsidiaries between segments are eliminated in the segment in question. All other cross-segment relationships and revenues within the
Net change in unearned premium reserve 112.1 – 0.3 3.3 – 0.1 5.4 15.1
Current income on Group investments (net)1 723.8 704.5 72.7 73.8 93.6 88.4
Gains and losses on Group investments (net)1 82.3 91.9 20.5 41.2 26.7 13.0
Share of profit or loss of associates 1.0 14.8 – – 0.0 –
Total revenues from external customers 5 354.9 5 146.3 983.2 979.9 1 220.8 1 101.0
Claims incurred including claims handling costs (non-life) – 550.7 – 416.1 – 379.7 – 366.5 – 329.9 – 347.5
Claims and benefits paid (life) – 3 419.2 – 2 340.8 – 138.8 – 130.9 – 369.0 – 274.3
Profit or loss from operating activities 267.6 303.4 20.0 35.7 21.7 34.9
Profit or loss before tax 267.6 303.4 20.0 35.7 21.6 34.7
Profit or loss for the period 221.1 250.8 14.1 24.2 3.0 20.6 1 Voluntary change in presentation (see section 2.3 on page 117)
Net change in unearned premium reserve – 6.9 – 3.7 134.1 22.2
Change in actuarial reserves – 822.7 – 1 895.0 – –
Policyholder dividends and bonuses – 106.5 – 159.9 – 2.7 0.3
Net benefits to policyholders and claims – 5 114.0 – 5 042.8 – 1 607.9 – 1 400.0
Profit or loss for the period 115.0 152.9 176.0 191.7 1 Voluntary change in presentation (see section 2.3 on page 117)
Acquisition of owner-occupied property, equipment and intangible assets 986.0 1.0 38.7 4.2 48.2 27.0
Depreciation and amortisation on tangible and intangible assets – 41.2 – 8.6 – 3.9 – 3.0 – 20.5 – 18.1
Reversal of impairment losses on tangible and intangible assets affecting income – – – – – –
Gross premiums and deposits received life 4 767.5 4 731.1 0.8 1.1
The euro, Swiss franc, British pound and US dollar are the functional currencies in the individual business units of Helvetia Group. The following exchange rates apply to the translation of these financial statements and foreign currency transactions: Exchange rate at reporting date 31.12.2014 31.12.2013
Revaluation gains on transfers to investment property – – 7.6 4.6 – –
Change in the scope of consolidation 786.2 5.91 224.6 4.9 1 010.8 10.8
Book value as of 31 December 1 015.9 260.3 257.3 74.8 1 273.2 335.1 Book value as of 1 January 260.3 252.4 74.8 84.3 335.1 336.7 1 Contains purchase price adjustments from earlier acquisitions of CHF 4.3 million.
AG in Austria, goodwill of CHF 786.2 million was recorded. The goodwill represents expected synergies and efficiency gains.
“Germany non-life” (CHF 30.2 million), “Italy non-life” (CHF 27.8 million) and “Spain”
Details on the 2014 takeover can be seen in section 18 (from page 217).
The goodwill impairment test was based on the following growth and discount rates, assuming cash flows in perpetuity: as of 31.12.2014 Goodwill Growth rate
CHF 27.1 million in the cash-generating unit Chiara Vita S.p.A. The difficult general economic situation in Italy and the current very low interest rate environment had a negative impact on the life business in Italy. In addition, market-wide shifts in the product mix have been seen in the recent years from modern products to the traditional, less profitable insurance solutions. This was the main reason for the assumption of lower cash flows in the Italian life business over the selected planning horizon of three years. The goodwill from the acquisition of Chiara Vita S.p.A., which was allocated to the “Italy”
segment, was therefore completely written off. The recoverable amount for Chiara Vita
Stress tests show that any reasonable change in any of the key assumptions used to determine the recoverable amount of the individual cash-generating units will result in the book value exceeding the recoverable amount of the cash-generating unit “Austria”.
Investment result from financial assets and investment property 1 475.9 1 317.0
Current income on financial assets (gross) 792.9 768.5 27.6 30.6 820.5 799.1
Investment management expenses on financial assets – 9.0 – 6.1 – – – 9.0 – 6.1
Investment management expenses on property – 67.5 – 61.3 – – – 67.5 – 61.3
The gains and losses on Group investments include a one-time gain of CHF 108.9 million from the realisation of the Nationale Suisse shares that were already held by
“Derivatives” comprises gains and losses on derivative financial assets and derivative financial liabilities, of which CHF 2.3 million (previous year: CHF 0.5 million) represent a loss on the ineffective portion of the currency hedges to protect net investment in the
Realised gains and losses on loans (LAR) incl. money market instruments 6.7 10.1
Realised and book gains and losses on financial assets designated as at fair value through profit or loss 285.1 286.2
The gains and losses reported for the HTM class also contain book gains from foreign currency translations.
The above table includes increases in impairment losses on financial assets of
Policy loans 78.9 – 78.9 1 Voluntary change in presentation (see section 2.3 on page 117)
Financial report Investments 7.3 Investments by segments as of 31.12.2014 Notes Life Non-life
Policy loans 83.4 – – 83.4 as of 31.12.2013 Notes Life Non-life
1 Details on additions and disposals for associates are provided in Note 18, “Scope of consolidation”.
Total liabilities and equity 204.1 10.0 7.4 Investments in associates 7.4.1 Development of investments in associates 7.4.2 Aggregated financial data on associates
Helvetia Group’s share in the liabilities of associates amounted to CHF 29.2 million
(previous year: CHF 0.7 million). Helvetia did not have any share in the contingent liabilities of associates (previous year: none).
Transfer from / to property and equipment – 0.4 10.9 10.5 – 2.9
Foreign currency translation differences – – 8.0 – 8.0 5.1 1 Recognised in the income statement as “Gains and losses on Group investments (net)”.
The fair value of “investment property” in the portfolio of the Swiss and Austrian Group companies is calculated using a generally accepted discounted cash flow method. The method is described in section 2.12.1 (page 123).
For all other portfolios, measurement is based on valuation reports by independent experts. Both valuation methods are allocated to the “Level 3”category.
Total financial assets at amortised cost 12 139.2 12 680.8 12 139.2 12 680.8
Investments with market risk for the policyholder2 3 056.9 2 772.8 2 672.6 2 593.4
Total “available-for-sale” (AFS) 24 030.7 17 020.0 21 555.3 16 214.1
Total financial assets at fair value 29 521.1 21 833.6 26 375.4 20 645.0 1 Excl. assets receivables from insurance business and reinsurance. 2 Voluntary change in presentation (see section 2.3 on page 117)
to “Level 2”, as there was no longer an active market for these assets.
A total loss of CHF 1.9 million was realised on the Level 3 assets (gain in previous year: CHF 2.9 million). This loss was reported under “Gains and losses on financial assets ” in the income statement as a loss of CHF 2.1 million and CHF 0.2 million was reported under “Change in unrealised gains and losses on financial assets” in the statement of comprehensive income. The valuation loss on the Level 3 assets held at the reporting date therefore amounts to CHF 1.7 million (previous year: CHF 0.6 million).
The Level 3 assets held as at year end amounted to CHF 68.7 million.
Maturity profile of contract values Contract value Fair value as of 31.12. < 1 year 1 – 5 years > 5 years 2014 2013 2014 2013 in CHF million
Total equity and equity-index instruments 1 607.0 319.0 663.9 2 589.9 2 338.6 97.7 68.0
Total derivatives for hedge accounting 240.5 – – 240.5 446.5 0.5 7.1 7.6.1 Derivatives financial assets
The amounts transferred to the income statement are reported in “Gains and losses on
Total past due financial assets without impairment 11.7 15.9 9.6 4.1 3.1 4.8 6.7 3.1
Outstanding amounts are collected in the course of the normal reminder procedure and impaired if necessary (see section 2.12.3, page 124). Information on the collateral held by Helvetia Group is provided in section 16.6 (from page 210).
Change in the scope of consolidation 0.1 – 1.2 – 1.3 –
7.7.3 Change in the impairment of financial assets at amortised cost
The valuation methods used to calculate the fair value for financial liabilities belong to the “Level 2” category. Section 16.5.1 (page 201) contains a maturity schedule of loans and financial liabilities.
Minority interests in own funds 142.3 101.0 110.8 77.5 142.3 101.0
Total financial liabilities at fair value 142.3 101.0 110.8 77.5 142.3 101.0
The bonds in liabilities are measured at amortised cost. The interest expense from bonds treated as liabilities is reported in the income statement at CHF 4.3 million (previous year: CHF 2.1 million) in the item “financing costs”. The interest expense from bonds in equity is recognised as a dividend distribution in equity.
Liabilities from finance leases include a debt that arose under a financing agreement regarding the acquisition of a property for own use. The interest costs under this agreement amount to CHF 0.2 million (previous year: CHF 0.2 million) and are recognised in the income statement under “Financing costs”.
Helvetia Schweizerische Versicherungsgesellschaft AG CHF 225 Mio. 0.75 % 2014 28.10.2020 0.85 % 223.8 –
CHF 400 Mio. Subordinate bond then variable 2014 perpetual1 400.0 –
Total as of 31.12. < 1 year 1 – 5 years > 5 years 2014 2013 in CHF million
Deposit liabilities from reinsurance contracts 93.9 106.9 93.9 106.9 93.9 106.9
Total financial liabilities at amortised cost 895.6 832.9 895.6 832.9 895.6 832.9
Total financial liabilities from insurance business 2 240.3 2 173.2 2 240.3 2 173.2 2 240.3 2 173.2
Deposits for investment contracts come from insurance contracts without significant technical risk and without discretionary participation features. With these contracts, the policyholder participates directly in the performance of an external fund or external index. The change in fair value is solely due to changes in the performance of the underlying investment fund or index.
Total equity- and equity-index instruments1 – 146.0 633.0 779.0 – 26.6 –
Actuarial reserves for insurance contracts life 30 978.6 27 596.3 71.5 70.0 30 907.1 27 526.3
Actuarial reserves for investment contracts 2 551.7 2 219.3 – – 2 551.7 2 219.3
Provision for policyholder participation – non-life contracts 74.4 33.1 – – 74.4 33.1
Provision for policyholder participation – life contracts 1 750.6 845.6 – – 1 750.6 845.6
Total provision for future policyholder participation 2 025.9 937.1 – – 2 025.9 937.1
9. Insurance business 9.1 Reserves for insurance contracts and investment contracts with discretionary participation features
Change in the scope of consolidation 2 895.3 – 61.5 –
Insurance conditions and risks in non-life business are described in section 16.2 (from page 193). The following table sets out the development of loss reserves for the previous ten years.
Year of loss occurrence before 2005 2005 2006 in CHF million
Estimated claims after year of loss occurrence 2 133.2 1 978.2
Loss reserves as of 31 December 1 Effects of the acquisition of Nationale Suisse and Basler Austria in 2014 on estimated loss reserves: 573.4 506.1 2 Effects from the acquisition of the French transport insurance business of Gan Eurocourtage in 2012 3 Effects from the acquisition of Alba Allgemeine Versicherungsgesellschaft AG and Phenix Versicherungsgesellschaft AG
– All existing actuarial liabilities are covered at an early stage by sufficient reserves.
– The fluctuation of the annual claims incurred is small overall for the well-diversified portfolio even before reinsurance.
The actuarial reserve is normally calculated in a three-step process. In a first step, the actuarial reserve is computed based on local standards. These include applicable local parameters such as interest rates, mortality, surrender rates, expenses and additional biometric parameters which are usually set at the time of contract conclusion and vary by country, year of issuance and product. If the reserves prove to be insufficient from a local point of view, they are increased in most countries in a second step. A required reserve increase may be spread over several years in the local financial statements, depending on local requirements and circumstances. In a third step, the Liability Adequacy Test (LAT) finally applies Group-wide uniform standards to test whether the actuarial reserves included in the local financial statements (including additional reserve increases less local deferred acquisition costs) are sufficient. Across the Group the LAT required an allocation of additional actuarial reserves of CHF 107.6 million as of 31 December 2014 (previous year: CHF 31.7 million).
In connection with the strategic realignment of the Swisscanto Collective Foundation, the longevity risk will, in future, be borne by the foundation itself. This applies both to new pensions and to pensions that are already in place. The longevity risk was previously reinsured at Helvetia.
Due to this realignment, retirement pensions and survivors’ pensions that originated after retirement age were transferred from Helvetia to Swisscanto on 1 January 2014.
Insurance conditions and risks in life business are described in section 16.3 (from page 195). Sensitivities of actuarial reserves are outlined in section 16.3.3 (from page 197).
Helvetia Group defers acquisition costs in non-life and individual life business. The deferred acquisition costs are tested for impairment as part of the Liability Adequacy Test on every balance sheet date. The share of “Deferred acquisition costs” classified as short-term is CHF 159.9 million (previous year: CHF 116.8 million).
9.5 Deferred acquisition costs 9.6 Receivables and liabilities from insurance business
Past due receivables from policyholders are usually impaired on a collective basis.
9.6.1 Analysis of past due financial assets without impairment 9.6.2 Change in the allowance accounts for receivables
Due from agents and brokers 17.9 16.6 17.5 16.6 0.4 0.0 9.6.3 Analysis of individually impaired receivables
Increase / reduction in taxes resulting from: tax-exempt income or income taxed at a reduced rate – 13.7 – 4.5 non-deductible expenses 13.2 0.9
The expected tax rate applicable to Helvetia Group was 18.1 % for 2014 (previous year: 22.7 %). This rate is derived from the weighted average of expected tax rates in the individual countries where the Group operates.
Share of associates’ net profit recognised directly in equity – 0.5 – 0.1 – – 0.4 –
Tax assets from losses carried forward 10.6.1 24.7 8.5 – –
Valuation differences on shares in subsidiaries of CHF 4,478.2 million (previous year: CHF 3,342.1 million) did not lead to the recognition of deferred tax liabilities, as either a reversal of the differences through realisation (divided payment or sale of subsid iaries)
10.5 Deferred tax assets and liabilities 10.4 Tax on expenses and income recognised directly in equity
CHF 174.0 million (previous year: CHF 101.3 million), as the related tax benefits cannot be expected to be realised with the current earnings situation of the respective companies. These do not have an expiry date. The tax rates applicable to material losses carried forward for which no tax assets were recognised range between 28.0 % and 10.6 Losses carried forward 10.6.1 Net tax assets from losses carried forward 10.6.2 Losses carried forward without tax assets recognised
The reserve for “Unrealised gains and losses” includes fair value changes of available -for-sale financial assets (AFS), the portion of unrealised gains and losses of associates, as well as value changes resulting from the transfer of owner-occupied property.
The reserve is adjusted at the balance sheet date by the portion relating to contracts with policyholder bonus funds and deferred taxes. The portion reserved for the owners of contracts with policyholder bonus funds is transferred to “Liabilities”. This item plus foreign exchange influences amounts to CHF 989.0 million (previous year: CHF 395.6 million). The remaining portion regarding these contracts is allocated to the “Valuation reserves for contracts with policyholder bonus funds” (see section 11.2.5, page 178).
Unrealised gains and losses (net) as of 31 December 11.2 Reserves 11.2.1 Capital reserve 11.2.2 Retained earnings 11.2.3 Reserve for “Foreign currency translation differences”
Change in liabilities for contracts with participation features 35.1 – 11.1
Surpluses from insurance and investment contracts beyond the country-defined “legal quotas” are recognised in the valuation reserve for contracts with participation features.
Valuation reserves for contracts with participation features as of 31 December 1 261.1 863.5
The bond will pay an annual interest of 3.50 % until 2020. The interest is recognised directly in equity. Helvetia can suspend interest payments as it sees fit, providing that
Helvetia Holding does not pay any dividends and other conditions are fulfilled. However, the suspended interest payments do not lapse.
Basic earnings per share (EPS) are calculated on the weighted average number of shares outstanding of Helvetia Holding AG and the portion of the Group’s profit for the year attributable to shareholders plus the interest on the preferred securities recognised directly in equity. Diluted earnings for both reporting periods correspond to the basic earnings, as no convertible instruments or options that could have a dilutive effect are outstanding.
Earnings per share incl. minority interests 382 098 773 352 592 462
The Board of Directors will submit a proposal to the Shareholders’ Meeting of 24 April 2015 to pay a dividend per share of CHF 18.00 (previous year: CHF 17.50) with the total payout amounting to CHF 179.0 million (previous year: CHF 151.4 million). The proposed dividend will not be distributed before it has been approved by the ordinary
Shareholders’ Meeting. The dividend distribution is only recognised when approved by the Shareholders’ Meeting.
Helvetia Holding AG and its subsidiaries are subject to a range of restrictions in the stock corporation and supervisory regulations with regard to the dividends that may be distributed to the parent company, respectively owners.
Helvetia Group manages its invested capital in accordance with the IFRS. Helvetia
Group’s capital management strategy is unchanged from the prior year and focuses on the following objectives: – ensuring compliance with regulatory capital requirements at all times; – securing the capital required to underwrite new business; – optimising the earning power of its equity; – supporting the planned strategic growth; – optimising the Group’s financial flexibility.
These objectives are kept in balance by taking account of risk capacity and cost-benefit arguments. Helvetia Group applies an integrated approach to capital management.
Based on the IFRS equity, the capital is managed integrally on the basis of an internally defined capitalisation target under the Swiss Solvency Test, Solvency I and the rating, and is brought into line with the corporate strategy with the help of multi-year capital plans. The risk profile underlying the Swiss Solvency Test is used as the basis for the actual risk management process. The capitalisation of the individual legal entities of
Helvetia Group is also monitored closely and optimised according to internally defined threshold values.
Helvetia Group met all capital adequacy requirements on 31 December 2014.
The “non-technical reserves” item primarily consists of provisions for liabilities resulting from official regulation, provisions arising from other tax obligations, provisions for restructuring expenses and liabilities due to agents. In the reporting period, CHF 72.3 million was recognised for integration and restructuring provisions. The share of provisions classified as current is CHF 160.3 million (previous year: CHF 83.4 million).
The following contingent liabilities are not recognised in the balance sheet: At the balance sheet date, there were financial commitments for the future acquisition of investments in the amount of CHF 30.4 million (previous year: none).
Helvetia Group has pledged assets of CHF 90.6 million as security for liabilities (previous year: CHF 51.7 million). These relate to financial assets and other assets pledged to cover liabilities arising from the underwriting business.
Helvetia Group is a lessee in a number of operating leases. As a result, future lease liabilities will amount to CHF 7.7 million (previous year: CHF 4.0 million) due in less than one year, CHF 24.6 million (previous year: CHF 17.0 million) due between one and five years, and CHF 6.5 million (previous year: CHF 0.0 million) due in more than five years.
At the reporting date, CHF 18.5 million (previous year: CHF 20.8 million) were recognised for other contingent liabilities.
Helvetia Group had 7,012 employees as at 31 December 2014 (previous year: 5,037).
The Group investments included in the plan assets are set out in section 13.3.8 (page 185). There are other funded defined benefit plans in place in Germany.
Fair value of plan assets (–) – 2 672.9 – 1 581.0
Defined benefit obligation as of 1 January 1 822.6 1 702.7
As at 31 December 2014, 88.8 % of the pension obligations resulted from defined benefit plans in Switzerland.
13.3.2 Movement in the defined benefit obligation 13.3.3 Movement in the fair value of plan assets 13.3.4 Net pension costs
The Helvetia employee share purchase plan enables employees to acquire registered
The costs associated with the share purchase plan in 2014 were recognised in the income statement at CHF 0.9 million (previous year: CHF 0.5 million).
Directors and the Group and Switzerland Executive Management teams, shares are allocated as a deferred payment for three years hence. The extent of target achievement used to calculate the LTC for all members of the Executive Management and the Board of Directors is based on four criteria: profit, growth, shareholder value and risk-ad justed return. The relevant figure for converting the salary component into a specific number of deferred shares is the average of the stock exchange prices for the Helvetia Holding share for five consecutive trading days from the day on which the business result is announced. A variable payment of CHF 0.4 million was calculated for the Board of
The amount represents 3,856 shares at a price of CHF 480.50 on the reference date of 25.2.2015 (previous year: 4,011 shares at CHF 455.50). This payment is recognised proportionally in the income statement every year until ownership of the shares is transferred and amounted to CHF 1.4 million for 2014 (previous year: CHF 1.2 million).
The shareholder pool with a combined equity stake of 37.6 % in Helvetia Holding holds the following investments: – Patria Genossenschaft, Basel, with 30.1 %
Helvetia Schweizerische Lebensversicherungsgesellschaft AG and Patria Genossenschaft have an agreement for capital support which can be renewed annually under certain conditions. Under this agreement Patria Genossenschaft undertakes to contribute regulatory capital of up to CHF 100 million to Helvetia Schweizerische Lebensversicherungsgesellschaft AG until 30 June 2015 if certain adverse scenarios as defined should arise. The agreement is executed at normal market conditions.
CHF 45.6 million (previous year: CHF 44.3 million) and the contribution of CHF 45.0 million of Patria Genossenschaft to Helvetia Schweizerische Lebensversicherungsgesellschaft AG (previous year: CHF 42.0 million) were the only significant transactions in the reporting period.
Board members and the Group Executive Management or persons closely related to them do not have any significant personal business relationships with Helvetia Group and also did not bill the Group for any relevant fees or remuneration relating to additional services.
15.1 Transactions with related companies 15.2 Transactions with related persons 15.2.1 Compensation 15. Related party transactions
Employer contributions to pension funds 1425 357 877 676 1 Subject to approval by the Shareholders’ Meeting.
In addition to the ownership of shares as set out, the active members of the Board of
Directors have deferred claims to a total of 7,142 shares acquired under the LTC program.
Within the stipulated parameters, the Board of Directors delegates operational aspects of risk management. For example, the monitoring of the Group’s risk profile and in particular the monitoring of the market, liquidity, counterparty and insurance technical risks is delegated to the Investment and Risk Committee (IRC). The structural aspects of risk management (structure of the risk management organisation and the internal control system) and the monitoring of operational risks in particular are delegated to the
Audit Committee. The strategic risks are monitored by the Strategy and Governance
Strategy, and the Group actuaries for life and non-life. Other specialists can be invited to attend a meeting when required and depending on the topic. The “Risk & Capital
Management” department, which reports to the CFO and exercises the Group’s risk monitoring function, ensures the necessary risk transparency: – The risk map informs the Executive Management and the Board of Directors of the most important risks, any changes thereto and risk management strategies.
The risk management process includes all activities related to the systematic assessment of risks at Helvetia Group. The essential components of this process include the identification, analysis and management of risks, the operational monitoring of the success of the risk management measures, the monitoring of the efficiency and appropriateness of the risk management measures, and reporting and communication. Helvetia Group distinguishes between the following types of risk that are included in the Group’s risk management process: insurance technical risks, market risks (including equity price risk, real estate price risk, interest rate risk, currency risk and long-term liquidity risk), mediumand short-term liquidity risks, counterparty risks, operational risks (including the impact of reputational risks), strategic and emerging risks.
The market, counterparty and insurance technical risks belong to the traditional risks of an insurance company and are consciously entered into as part of the chosen business strategy. They tie up risk capital in an operational context and can be influenced through the use of hedging instruments, product design, reinsurance cover and other risk management measures. Based on the overall risk profile it is ensured that these risks are constantly covered by the risk-bearing capital. In this regard, the amount of the capital required depends on the risk tolerance limits chosen.
Insurance technical risks life and non-life are controlled by a number of actuarial methods, a risk-adjusted rate schedule, selective underwriting, proactive claims handling and a prudent reinsurance policy.
SST and Solvency II, as well as taking into account economic considerations.
Long-term liquidity risks are considered market risks and treated accordingly. Some risks arising from the lack of liquidity of the assets are, where appropriate, taken into account in market price models. Short-term liquidity risks are managed as part of the cash management process. Non-probabilistic methods are used to analyse medium-term liquidity risks.
Italy 18.2 % (previous year: 19.0 %), Spain 10.6 % (previous year: 10.8 %), Austria 8.4 %
Asia that is written via representative offices in Istanbul and Miami and via branches in
This table was created using principles on which the segment reporting in section 3 is based.
Group-wide, the insurance technical risks in the non-life business are dominated by natural hazards. Except in very rare cases, the approach to reinsurance reduces the claims remaining from a natural event or individual risk at Group level to a maximum of
Financial reportFinancial report Risk management the quality of reinsurance and claims settlement, please see sections 16.6 “Counterparty risk” (from page 210) and 9 “Insurance business” (from page 163). In 2014, 12.5 %
Helvetia Group underwrites liability insurance policies for private individuals, motor vehicles and companies. Comprehensive cover is also underwritten as part of motor vehicle insurance. At Group level, the volume of accident insurance business has increased due to the merger with Nationale Suisse.
Helvetia Group controls the insurance technical risks to which it is subjected 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.
The portfolio is well diversified in Europe, with an increased concentration in Switzerland. With the inclusion of Nationale Suisse companies, the new Group has gained a broader geographical diversification, particularly in Asia and Latin America. Large risks are usually hedged through non-proportional contractual reinsurance.
Property insurance contracts cover claims for the loss of property of the insured arising from insured risks or damage to or losses of third-party property caused by negligent acts or omissions of the policyholder as well as from resulting consequential damages due to operation interruptions and additional costs.
Property insurance operations are mainly in Europe – with the exception of active reinsurance –, Helvetia International and a small portion of the property insurance business of Helvetia Switzerland. Due to the merger with Nationale Suisse, Asian and Latin
American markets were also opened up, where specific risks concerning technical exposure are assumed (project insurance and location risks). The technical risks are geographically well diversified, and the relationship between business and residential customers in the overall portfolio is balanced. The scope of the engineering business was also developed during the course of the Nationale Suisse merger.
The property insurance portfolio is exposed to natural disasters such as floods, earthquakes, wind storms and hail. Large claims and man-made disasters can also lead to high claims costs. Examples of this include explosions, fire and terrorism. Helvetia Group protects itself very effectively against catastrophe claims through selective underwriting practices and a multi-level reinsurance program.
For the majority of claims, settlement takes place in the year the claim is made or in the following year. In terms of large risks or in specific business lines (e.g. accident insurance or engineering), the uncertainty in estimating future claim payments is slightly higher as it can take a long time to process such claims.
Helvetia Group operates the transport insurance business in France and to a lesser extent in Germany, Switzerland, Spain and Austria. Helvetia Group is mainly active in marine hull insurance and goods in transit. The risk exposure is primarily limited through local underwriting guidelines. Due to the merger with Nationale Suisse, the Group has obtained a distinctive profile in transport insurance and can further develop the goods in transport business in particular.
Helvetia Group offers a comprehensive range of life insurance products. These include risk and pension solutions and are aimed at private persons (individual life) and companies (group life insurance). The risks associated with these products are presented in detail in subsequent sections. There is also a small portfolio from the active reinsurance business – which is currently being processed and due to its size will not be discussed further in the following description. The life insurance business operates primarily in
Switzerland, which accounts for 75.4 % (previous year: 78.1 %) of the gross premium volume of the Helvetia Group life business. The following table shows the breakdown of gross premium income by sectors and countries. Overall, in 2014, 1.4 % (previous year: 1.4 %) of the premiums written in the life business were ceded to reinsurers.
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 impor16. 2.3 Transport insurance 16.3 Insurance technical risks life
Gross premiums by business activities and region in the life business 16.3.1 Traditional individual life insurance and investmentlinked life insurance
Peak risks at the level of individual policyholders are transferred to various reinsurers, with the deductible varying by country. In addition, Helvetia Switzerland, Helvetia
The interest rate set by Helvetia Group for the non-mandatory component was also 2.0 % in 2009 and 2010. For 2011, it was lowered to 1.5 % and from 2012 it was further reduced to 1.0 %. For 2014, this rate is being raised to 1.25 %.
Financial reportFinancial report Risk management it is therefore established during the underwriting process whether and under what conditions the company will be insured.
Peak risks at the level of individual policyholders are transferred to various reinsurers via aggregate excess of loss reinsurance. The catastrophe reinsurance mentioned in 16.3.1 also covers the group life business.
If the assumptions are changed, the reserves are increased or decreased accordingly. A decrease in reserves flows largely back to the insured as a result of the discretionary participation feature. If it is necessary to increase reserves, the first step is to reduce the participation feature. If this is not sufficient, the rest of the increase is borne by the shareholders. In the local balance sheet, reserve reinforcements recognised as necessary may be spread over several years and, if possible, compensated by gradually decreasing the allocation of the provisions for future profit participation or by releasing hidden reserves on investments. In contrast, the necessary reserve reinforcements must be recognised immediately in profit or loss in the consolidated financial statements.
The sensitivity analysis assesses the deflection effects of mortality, invalidity, reactivation rate, interest, costs and surrender rates parameters on the reserves. If the deflection of a parameter necessitates a lower reserving requirement, then the reductions in reserves are assessed at the discretion of the responsible actuary, who, alongside the sensitivity analyses, also takes into consideration long-term developments in their decisions, and always act with due care. Conversely, if one of the fundamental parameters in the local reserves already has sufficient safety margins, then a deflection of this parameter will not require a reinforcement of reserves. It should be noted, however, that sensitivities do not normally exhibit linear behaviour, so extrapolations are not possible.
In order to analyse in more detail the effect of a change in mortality rates, the portfolio is divided into contracts which are exposed to greater mortality rates and those which are exposed to longevity. The first group includes, for example, risk or capital life insurances, while the second group includes annuity insurance.
Group companies would have no great effect. However, a reduction in mortality by 10 %
would have a negative impact on the income statement of CHF 52.4 million (previous year: CHF 47.6 million).
If the costs included in the premiums and provisions are insufficient to cover rising costs, this could result in losses for shareholders. An increase in the cost ratio by 10 % would cause an increase in reserves and a negative effect on the income statement in the amount of CHF 15.9 million.
Shareholders may have to bear losses if the guaranteed interest included in premiums and reserves cannot be generated. This could happen if, for example, interest rates remain very low in the long term. To counteract such developments, both the technical interest rate for new contracts in individual insurance and the BVG minimum interest rate for new and existing contracts are adjusted to the new interest rate. At the end of 2014, the highest guaranteed interest rate in individual insurance was in Spain, where older policies still include a guaranteed minimum interest rate of up to 6 %. These guarantees are partially covered by corresponding assets and the residual risk is covered by supplementary reserves. In the other countries the maximum guaranteed return is 4.75 % in
In group life insurance, there are long-term interest rate guarantees on provisions for current benefits. The BVG minimum interest rate on the mandatory savings of policyholders is established annually by the Swiss Federal Council. Rising interest rates may also lead to increased policy cancellations in group insurance and thus to losses. Since 2004, no deductions can be made from nominally defined surrender values to take into account the fact that the fair value of the corresponding fixed-income investments may be below the (local) carrying value for contracts that have been part of the insurance portfolio of Helvetia Group for more than five years.
Traditionally, Helvetia Group owns a small active reinsurance portfolio, which is limited in the context of business strategy. The active reinsurance is operated by Helvetia
In the insurance business, active reinsurance is considered a “follower” and usually holds smaller parts of reinsurance contracts. This policy of small holdings, combined with broad diversification (geographical and by insurance segment), leads to a balanced reinsurance portfolio free of major risk clusters.
Financial reportFinancial report Risk management 2014 Non-Life Life in CHF million
Geographically, the active reinsurance business is dominated by companies from OECD
countries. There is a management information system for large claims. In addition to controlling risk exposure, cumulative risks from natural hazards are monitored and quantified using actuarial methods, and protected with retro cover.
As at 31 December 2014, Helvetia Group managed investments totalling CHF 48.0 billion (previous year: CHF 39.6 billion).
Savings accumulated in unit-linked policies are invested in a wide range of funds, equities and bonds and are managed by third parties. The market risks associated with these funds lie with Helvetia’s insurance customers.
Risks arising from clusters, accumulations and trend changes 16.5 Market risks and ALM
Helvetia Group has sufficient liquid assets to meet unanticipated cash outflows at any time. The proportion of liquid assets (cash, premiums to be invested, liquid equities and interest-bearing securities) exceeds the volume of annual net cash flows many times. In addition, the Group manages assets and liabilities in terms of their liquidity. On the liabilities side of the balance sheet, there are no significant individual positions with liquidity risk. A portion of the investment portfolio of the Group is composed of investments whose trading is not liquid, such as real estate and mortgages. These investments can only be realised over an extended period of time.
Provision for future policyholder participation 197.7 52.3 4.2 0.4 1 771.3 2 025.9
Unearned premium reserve (gross) 1 434.7 – – – – 1 434.7
Total reserves for insurance and investment contracts (gross) 7 078.0 11 848.8 8 009.7 12 838.9 2 079.4 41 854.8
Unearned premium reserve (gross) 1 053.5 – – – – 1 053.5
Financial liabilities from insurance business 2 146.3 22.9 9.8 9.8 6.7 44.8 2 240.3
Other financial and other liabilities 0.8 120.0 – – – 0.2 121.0
The majority of these contracts can be terminated both in life and in non-life business within one year at the latest.
Fair Value Maturity of non-discounted flows of funds as of 31.12.2014 < 1 year 1 – 5 years 5 – 10 years > 10 years in CHF million
Fair Value Maturity of non-discounted flows of funds as of 31.12.2013 < 1 year 1 – 5 years 5 – 10 years > 10 years in CHF million
Helvetia Group’s earnings are influenced by changes in interest rates. A prolonged period of low interest rates reduces the return on fixed-income investments in securities and mortgages. Conversely, returns increase when interest rates rise. Information on current investment returns is provided in section 7.1 (from page 146).
As with most investments, the value of Helvetia Group’s liabilities depends on interest rate levels. In general, 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 the net positions (difference between assets and liabilities, i.e. “AL mismatch”), the Group compares the maturities of cash flows arising from liabilities with those arising from assets, and analyses them to ensure that the maturities are matched. The risk derived from this is managed as part of the asset liability management process. To this end, the risk capacity on the one hand and the ability to fund the guaranteed benefits or to generate surpluses on the other hand are brought into balance.
Loans (LAR) incl. money market instruments 1 367.8 2 248.1 3 044.5 2 132.8 224.2 9 017.4
Derivative financial assets for hedge accounting 0.5 – – – – 0.5 as of 31.12.2013 < 1 year 1 – 5 years 5 – 10 years > 10 years
Derivative financial assets for hedge accounting 7.1 – – – – 7.1
A statement on the ALM situation of a portfolio can be made by comparing the guaranteed interest rates with yields. The following illustration shows aggregate data on the average interest rates that Helvetia has to earn on its reserves in order to be able to provide the guaranteed benefits. The interest rate guarantees range from 0.5 % to 6 %.
Only 0.6 % (previous year: 0.5 %) of the actuarial reserve of Helvetia Group has an interest rate above 4 %.
Actuarial reserves for insurance and investment contracts with 0 % interest guarantee 386.5 0.0 514.3 9.3
Actuarial reserves for insurance and investment contracts excluding interest guarantee 837.3 – 450.6 –
Actuarial reserves for insurance and investment contracts with 0 % interest guarantee 378.5 0.0 322.8 8.5
Interest rate level 2014 Interest rate level 2013 as of 31.12. + 10 bp − 10 bp + 10 bp − 10 bp in CHF million
Gross, not taking into account the latency calculation and derivatives – 162.6 152.3 – 118.1 113.3
Investments in equities are used to generate long-term surpluses. Investments are made primarily in large-caps traded on the major stock exchanges. Helvetia Group holds a well-diversified portfolio (mainly stocks traded on the exchanges in Switzerland, Europe and the USA). The share of each item of the total portfolio (direct investment) is generally below 6 %. An exception to this are holdings in the diversified real estate investment company “Allreal” (9.5 % of total direct investment in equities). The market risk of the
Financial report Risk management equity portfolio is constantly monitored and, if necessary, reduced by sales or the use of hedging instruments in order to meet the strict internal requirements for risk capacity.
Gross, not taking into account the latency calculation and derivatives 245.4 – 242.5 228.3 – 225.4
Most of the Group’s assets, including its investments, as well as most of its liabilities, are denominated in CHF and EUR. Except for the Swiss business, liabilities are largely hedged through investments in matching currencies. For return and liquidity reasons, investments in the Swiss business are made both in CHF-denominated and foreign-currency -denominated assets in order to cover the CHF liabilities. The resulting currency risk is generally largely hedged within the internally defined limits. This is carried out via foreign exchange forward contracts for EUR, USD, GBP and CAD against the Swiss franc.
When setting the hedging level, it had already been assumed that the Swiss National
Bank’s decision of 15 January 2015 to end the minimum rate of the euro of CHF 1.20, losses occurred that had already been taken into account within the loss limit concept.
In addition, the losses were more than compensated for by the increase in value of fixed-income investments that occurred due to the same event. The net effect on the profit and loss statement in 2015 is not significant from today’s point of view.
Goodwill and other intangible assets 919.9 353.2 0.1 – 1 273.2
Investments with market risk for the policyholder 988.9 1 955.7 176.5 13.6 3 134.7
Current income tax assets 8.0 20.6 – – 28.6 as of 31.12.2014 CHF EUR USD Others Total in CHF million
Financial liabilities from insurance business 827.5 1 412.0 0.8 0.0 2 240.3
Current income tax assets – 17.8 – – 17.8 as of 31.12.2013 CHF EUR USD Others Total in CHF million reclassified reclassified reclassified
Counterparty risks include default risks and risks of changes in value. The default risk refers to the possibility of the insolvency of a counterparty, while the risk of changes in value represents the possibility of a financial loss due to a change in the creditworthiness of a counterparty or a change in credit spreads in general. The risk of counterparties failing to meet their obligations is continuously monitored. To minimise counterparty risk, Helvetia defines lower limits for insurance policies with regard to the creditworthiness of the counterparty and limits the exposure per counterparty (see table on page 212 on credit quality).
– Counterparty risks from loans and mortgages granted: the largest positions in the asset class of loans consists of borrower’s note loans and policy loans. The policy loans are secured through life insurance policies. Since only a certain percentage of accumulated capital (<100 %) is invested, this asset class can be classified “fully secured”. Gross exposure (without taking account of collateral) is of relatively little significance when assessing the counterparty risks from the mortgage business: mortgages are secured by an encumbrance, and a part of the mortgage is often additionally secured by a pledged life insurance policy, resulting in a correspondingly low loss ratio. Against this background, the counterparty risk from mortgages can be assumed to be low.
– Counterparty risk from transactions with derivative financial instruments: refer to section 16.6.2 for the amount of gross counterparty risk exposure in conjunction with the derivative financial instruments. A small part of the derivative instruments is traded on a stock exchange, so there are no counterparty risks. The scope of the hedging with cash collateral is CHF 34.2 million. The existing netting agreements are also relevant. Refer to the table below for detailed information about derivative financial instruments.
– Counterparty risks from ceded reinsurance: Helvetia Group transfers part of its risk exposure to other companies via ceded reinsurance. If the reinsurer defaults, the
– Counterparty risks from financial guarantees and loan commitments: detailed information on contingent obligations can be found in section 12 (page 181).
Gross and net amounts of financial instruments in the balance sheet Offsettable, non-netted amounts Net amount
Derivative financial assets (incl. hedge accounting) 3.8 6.4 80.8 10.8 – 47.7 149.5
Policy and other loans – – – – – 81.0 81.0 as of 31.12.2014 AAA AA A BBB BB and lower Not rated Total in CHF million as of 31.12.2013 AAA AA A BBB BB and lower Not rated Total in CHF million 16.6.2. Credit quality of exposures and credit risk concentrations
Not rated 43.0 5.7 as of 31.12.2013 Exposure Share in %
“Credit quality of debt instruments, loans and derivative financial instruments” and
Mortgage Bond Bank of the Swiss Mortgage Institution AAA 938.3 938.3
Central Mortgage Bond Institution of the Swiss Cantonal Banks AAA 728.6 728.6
No important events occurred before or on 11 march 2015, the date on which these consolidated financial statements were completed, that are likely to have a material impact on the financial statements as a whole.
The following events in the reporting period led to a change in the scope of consolidation for Helvetia Group: – On 20 January 2014, Padana Assicurazioni S.p.A., Milan, was renamed Helvetia
– In the reporting period, the Group increased its investment in Sersanet, Red de
– On 8 August, the holdings in Chiara Assicurazioni S.p.A., Milan, increased to 53 %
– The real estate company, Société Immobilière Joseph II SA, Bruxelles, was founded on 29 December in Belgium.
– In the financial year 2014, the level of participation in the Helvetia Compañia Suiza,
– On 28 August, Helvetia in Austria purchased 100 % of the Basler Versicherungs-
– The acquisition of Basler Versicherungs-Aktiengesellschaft increases the share of the
Assistance Beteiligungs-GesmbH, Vienna, by 24 %. This means that the company is now classified as an associated company.
– As part of a public purchase and exchange offer, on 20 October 2014, Helvetia
Holding AG, St Gall, paid CHF 52.00 in cash and offered 0.0680 registered shares of Helvetia Holding AG per Nationale Suisse share, obtaining 82.6 % of the
The new Group combines the strengths of both companies, offering considerable potential to increase values and synergies. With a premium volume of over CHF 5 billion, the home market of Switzerland remains the main pillar of the merged Group.
The receivables from the insurance business amounted to CHF 388.0 million for
Nationale Suisse, of which CHF 13.3 million was classified as potentially irrecoverable.
For Basler Austria, the receivables from the insurance business amounted to gross
The goodwill of CHF 70.2 million from the acquisition of Basler Austria represents expected synergies and future growth potential. It is allocated entirely to the cash-generating unit “Austria”.
(CHF 24.7 million). The goodwill represents the expected potential for adding value and for synergies arising from the combination of the two groups.
If the acquisition had been completed on 1 January 2014, the Group ś gross premiums in the reporting period would have totalled CHF 8,869.5 million and the consolidated net profit would have totalled CHF 444.9 million. These pro forma figures are based on unaudited financial statements prepared in accordance with the accounting principles of the previous owner and assumptions regarding the impact of the extraordinary effects of the transaction, and, in the management’s view, do not give any indication of Helvetia Group ś future income or dividends.
CHF 66.2 million in 2013 to CHF 220.4 million in the reporting year.
The following events in the previous year led to changes in the scope of consolidation: – The Group increased its share in the subsidiary Chiara Vita S.p.A., Milan, from 70 %
Assicurazioni, Milan. The price paid for Chiara Assicurazioni was CHF 23.1 million in cash. The purchase price may increase further depending on the technical result by 2017. Furthermore, a purchase price reduction has been agreed in the event that the premium volumes decline. No purchase price adjustments are currently anticipated. In 2017, if contractually agreed premium volumes are exceeded, the seller can sell a further 25 % of the shares to Helvetia Group. Other financial liabilities of CHF 11.3 million, without affecting profit or loss, have been recognised in connection with this transaction.
Helvetia Schweizerische Versicherungsgesellschaft AG, St Gall1 Non-life 100.00 full CHF 77.5
Swiss Cap PRO Orange Fund, Dublin Life 100.00 full USD –
Helvetia Versicherungs- u. Finanzdienstleistungsvermittlung GmbH, Frankfurt a.M. Other 100.00 full EUR 0.0
Nationale Suisse Vita Compagnia Italiana di Assicurazioni S.p.A., San Donato Milanese Life 100.00 full EUR 11.0
Devrientgasse 4 Projektentwicklungs- und Verwertungs GmbH, Vienna Other 100.00 full EUR 0.0
Helvetia Compagnie Suisse d’Assurances S.A., Direction pour la France, Paris2 Non-life 100.00 full EUR
Nationale Suisse Assurances S.A., Bruxelles Life and non-life 100.00 full EUR 48.2
Compagnie Européenne d’Assurance des Marchandises et des Bagages S.A., Bruxelles Non-life 100.00 full EUR 26.5
Swiss National Insurance Company Ltd., Kuala Lumpur2 Non-life 98.51 full USD –
Swiss National Insurance Company Ltd., Singapore2 Non-life 98.51 full USD –
Nationale Suisse Latin America LLC, Miami Non-life 100.00 full USD 0.1
4IP European Real Estate Fund of Funds, Luxembourg 20.96 equity USD –
The Board of Directors is responsible for the preparation of the consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS)
and the requirements of Swiss law. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. The board of directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss
Auditing Standards as well as International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.
In our opinion, the consolidated financial statements for the year ended 31 December 2014 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.
Financial statements of Helvetia Holding AG 2014 225 in CHF million
Profit carried forward to new account 146.3 190.5 1 2014: CHF 18.00 per registered share / 2013: CHF 17.50 per registered share
On 20 October 2014, Helvetia Holding carried out an approved share capital increase of CHF 123,665.60. 1,236,656 new shares with a nominal value of CHF 0.10 were issued.
On 8 April 2013, Helvetia Holding AG issued a 1.125 % bond 2013 – 2019 with a nominal value of CHF 150 million. The bond was subscribed and paid on 8 April 2013 and must be repaid at nominal value on 8 April 2019. The bond has a coupon rate of 1.125 % p.a., which will be paid annually on 8 April.
On the balance sheet date, subsidiaries of Helvetia Holding AG held 26 288 registered shares of Helvetia Holding AG (previous year: 44 255).
Reserve for treasury shares in CHF 8 228 329 11 307 058
On the balance sheet date on 31 December 2014, the following shareholders owning more than 3 % of the share capital were recorded in the share register: Patria
AG with 4.0 % (previous year: 4.0 %) and Raiffeisen Switzerland with 4.0 % (previous
Against Excessive Compensation in Swiss Listed Companies (VegüV) is provided in the notes to the consolidated financial statements 2014 of Helvetia Group under chapter 15
Change in year under review 6. Shareholders with interests of more than 3 %
Helvetia distinguishes between the following types of risk that are included in the risk management process: market risks (including the interest rate and currency risks associated with the liabilities and long-term liquidity risks), medium- and short-term liquidity risks, counterparty risks, technical risks, operational risks, strategic and emerging risks.
The Board of Directors of Helvetia Holding AG and the Executive Management are the supreme risk owners of Helvetia Group and its Group companies. The Board of
Directors of Helvetia Holding AG is responsible for establishing and maintaining appropriate internal controls and the risk management organisation of Helvetia Group and its
Group companies. It is the Board’s responsibility in particular to: – set risk policy principles that support the development of risk awareness and a risk and control culture in the Group companies; – ensure appropriate monitoring of the effectiveness of the internal control systems by the Group Executive Management; – ensure the implementation and application of a comprehensive risk management approach, including an internal control system that guarantees the efficient allocation of risk capital and systematic control of risks by the Executive Management; – determine a risk strategy / partial risk strategies that cover the risk management objectives of all essential business activities; – set risk tolerance limits and monitor the risk profile of the Group and the individual business units.
Within the stipulated parameters, the Board of Directors delegates operational aspects of risk management. For example, the monitoring of the Group’s risk profile and in particular the monitoring of the market, liquidity, counterparty and insurance technical risks is delegated to the Investment and Risk Committee. The structural aspects of risk management (structure of the risk management organisation and the internal control system)
The Executive Management of Helvetia Group is responsible for implementing and complying with the strategies, business principles and risk limits determined by the Board of
Portfolio Strategy, and the Group actuaries for life and non-life. Other specialists can be invited to attend a meeting when required and depending on the topic. The Risk &
The risk management process and risk management organisation at Group level are copied at the level of the individual business units. Responsibility for the implementation of and compliance with the strategies, business principles and risk limits at business unit level is delegated by the Group Executive Management to the local Executive Management teams.
Report of the statutory auditor to the General Meeting of Shareholders of Helvetia
As statutory auditor, we have audited the financial statements of Helvetia Holding AG
shown on pages 225 to 229, comprising the income statement, balance sheet and notes for the year ended 31 December 2014.
Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.
In accordance with article 728a, paragraph 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.
Uwe Bartsch Head of Operations & Development considers the measures taken so far to be a positive start to the integration process: “Operatively speaking, we have come together in the integration sub-projects and workstreams very quickly. The desire for everyone to participate in shaping the ‘new Helvetia’ is evident everywhere.
Embedded value measures the shareholder value of the life insurance portfolio and consists of
Solvency costs are the costs of the solvency capital provided by the shareholder and are deducted from the embedded value.
Spain due to the change in local economic conditions. The amount of the embedded value heavily depends on the assumptions made. The scope of these dependencies is explained in the “Sensitivities ” table. The embedded value published here by Helvetia was calculated in accordance with the traditional method, which delivers values and sensitivities that vary from the market consistent embedded value according to the
Helvetia Group as well as the assumptions applied to the calculation of the embedded value as at 31 December 2014.
Helvetia Group amounted to CHF 2,979.3 million, which represents an increase of CHF 56.7 million or 1.9 % compared to December 2013, or a decrease of CHF 225.4 million or 7.7 % excluding the new acquisitions. The adjusted net asset value increased primarily because of the new acquisitions but also due to the increase in value of the shareholder ś interest in the valuation reserves above expectations. In contrast, the value of the in force portfolio fell and solvency costs rose as a result of the sharp decrease in interest rates.
The analysis of change shows that embedded value would have fallen without the new acquisitions, primarily because the economic variances were significantly worse than planned due to falling interest rates. In contrast, operating profit improved considerably due to more favourable mortality and cost assumptions and a positive contribution by new business in all countries. The
Embedded value after tax of which value of insurance portfolio 1 624.9 1 740.5 of which adjusted equity 1 855.5 1 485.1 of which solvency costs – 922.5 – 717.0 of which value of insurance portfolio 208.4 237.1 of which adjusted equity 334.0 295.0 of which solvency costs – 121.0 – 118.1 of which value of insurance portfolio 1 833.3 1 977.6 of which adjusted equity 2 189.5 1 780.1 of which solvency costs – 1 043.5 – 835.1 1 of which minority interests CHF 11.0 million as of 31.12.2014
Patria Genossenschaft makes an annual contribution to promoting the interests of Helvetia ś
life policyholders, which is added to the policyholder reserves. In the reporting year the contribution amounted to CHF 45.0 million.
The volume of new business fell compared to the previous year because, for capital market reasons, it was not possible to launch index-linked tranche products in the Swiss individual life business to the desired extent and it was thus no longer possible to build on the exceptionally successful previous year. In occupational pension plans in Switzerland, the record premiums of the previous year were not reached again. The main reason was that the pensions of the major customer Swisscanto Collective Foundation previously paid by Helvetia have been borne by the customer itself since 1 January 2014. After foreign markets had suffered in the previous year due to the difficult economic environment, the volume of new business rose again in this area. The value of the new business written in 2014 fell significantly from CHF 53.4 million to CHF 26.3 million. This is due to the decrease in the volume of new business and the slightly higher risk discount rate in Switzerland and particularly to the lower interest rates on new investments in all countries.
Group ś new business arising from the development of new business volume and value fell to 0.8 %. Overall, the difficult market environment is thus also apparent in Helvetia Group ś life business.
+1 % change to new money rate 11.1 % 8.3 %
− 1 % change to new money rate – 24.9 % – 8.1 %
Value of new business in % APE 9.3 % 20.3 %
Value of new business in % PVNBP 0.9 % 1.9 %
Value of new business in % APE 8.1 % 15.9 %
Present value of new business premiums (PVNBP) 3 177.8 3 314.8
Value of new business in % PVNBP 0.8 % 1.6 %
Annual premium equivalent (APE): 100 % annual premium for new business +10 % of single premium of new business
Equity valuation Balance sheet practice for measurement of holdings in associated companies. The valuation of the holding in the balance sheet corresponds to the shareholders’ equity in this company held by the Group. In the context of ongoing evaluation, this valuation is projected forward to take account of changes in proportional shareholders’ equity, while allocating the proportional annual earnings to the
FTE “Full-Time Equivalent” is the common unit of measurement for the number of full-time employees when converting all the part-time positions into full-time positions. FTE therefore expresses the fair value of a full-time employee within a comparable period of time.
They are established for each balance sheet item and are, when considered from the reporting date, either future tax liabilities or tax credits.
Regular premiums Amount paid for the provision of insurance cover, in the form of recurring payments.
(including interest on preferred securities through profit and loss) divided by the average shareholder capital
Helvetia Holding AG Dufourstrasse 40 CH-9001 St Gall Tel. +41 58 280 50 00 www.helvetia.com info@helvetia.com
Helvetia Group Doris Oberhänsli P.O. Box, CH-9001 St Gall Tel. +41 58 280 55 83 www.helvetia.com doris.oberhaensli@helvetia.ch
Helvetia Group Kristine Schulze P.O. Box, CH-9001 St Gall Tel. +41 58 280 53 49 www.helvetia.com cr@helvetia.ch
Neither Helvetia Group nor any of its direct ors, officers, employees and advisors nor any other person shall have any liability whatso ever for loss howsoever arising, directly or indirectly, from any use of this information. The facts and information contained herein are as up to date as is reasonably possible and may be subject to revision in the future. Neither Helvetia Group nor any of its directors, officers, employees or advisors nor any other person make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this document.
This document may contain projections or other forward-looking statements related to Helvetia Group which by their very nature, involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other outcomes described or implied in forward-looking statements will not be achieved. We caution you that a number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include (1) changes in general economic conditions, in particular in the markets in which we operate; (2) the performance of financial markets; (3) changes in interest rates; (4) changes in currency exchange rates; (5) changes in laws and regulations, including accounting policies or practices; (6) risks associated with implementing our business strategies; (7) the frequency, magnitude and general development of insured claim events; (8) the mortality and morbidity experience; (9) policy renewal and lapse rates. We caution you that the foregoing list of important factors is not exclusive; when evaluating forward-looking statements, you should carefully consider the foregoing factors and other uncertainties. All forward-looking statements are based on information available to
The purpose of this document is to inform Helvetia Group’s shareholders and the public of Helvetia Group’s business activities for the year ended 31 December 2014. This document does not constitute an offer or a solicitation to exchange, buy or subscribe for securities and it does not constitute an offering circular within the meaning of Art.
652a of the Swiss Code of Obligations or a listing prospectus within the meaning of the listing rules of SIX Swiss Exchange. Should Helvetia
Group make in the future one or more capital increases, investors should make their decision to buy or to subscribe for new shares or other securities solely based on the relevant offering circular.
Group profit for the period per share in CHF 39.3 32.7 37.1 40.9 43.0
Consolidated equity per share in CHF 366.3 392.0 435.4 445.0 503.2
Price of Helvetia registered share at the reporting date in CHF 359.5 295.0 346.5 447.5 474.0
Provisions for insurance and investment contracts (net) 28 571.3 30 125.5 32 765.7 34 518.7 41 275.0 of which Group financial assets and investment property 30 729.8 32 155.9 34 938.0 36 736.7 44 843.4
Reserve to premium ratio non-life 140.5 % 132.9 % 142.0 % 142.3 % 187.2 %
Employees1 1 Adjustment of the number of employees 2013/2014 on a full -time basis (per capita up to 2012).
Imprint The Annual Report 2014 of Helvetia Group is available in English, German and French.
Photos Board of Directors, Executive Management and individual portraits: Klaus Andorfer, Zurich
On the business side, Helvetia Group can look back at a very successful 2014 reporting year. Strategically, we were able to take a major step forward with the acquisitions of Nationale Suisse and Basler Austria. The “new Helvetia” is now in the top three in Switzerland, will strengthen its market position in Europe and combines the existing strengths of both groups with the new market area “Specialty Markets”. The operational performance was also convincing with a very good development of the business and further increased profits.
The improvement comes from the non-life business and is based on a 33.3 % increase in earnings from business activities to CHF 255.4 million (previous year: CHF 191.7 million) The reason for this is an organically better technical result, additionally supported by the two acquisitions. The net combined ratio improved to 93.1 % (previous year: 93.6 %). In addition to a habitually strong Swiss home market, all the European country markets also realised a combined ratio of below 100 % and overall an increased contribution to earnings. The underlying earnings for the life business remained largely stable in a difficult capital market environment at CHF 151.2 million (previous year: CHF 152.9 million).
In 2014, the volume of business grew 4.4 % in original currency to CHF 7,766.6 million (previous year: CHF 7,476.8 million). Basler Austria and Nationale Suisse delivered their first contribution to growth of CHF 328.1 million; both the life and non-life business benefited from the acquisitions. The consolidation of the new companies took place in the 2014 financial statements and will be fully reflected in the 2015 financial year. Organically, the volume of business increased by 0.3 % (in original currency). The non-life business grew by 1.4 %, whereas the life business was intentionally curtailed.
The integration of the two companies is going according to plan. The management, target organisations and a harmonised range of products have been defined in all the country markets for the “new Helvetia”. The company acquired in Austria is now also using the brand name “Helvetia”. The new business organisation has already started to sell the unified product range in life insurance there. The joint sales launch of the extended network of offices under the Helvetia branch in Switzerland is planned as of 1 May 2015 as part of the integration of Nationale Suisse; the country markets of Germany, Spain and Italy will gradually follow from mid-2015. In Belgium, the process of strategic review already initialised by Nationale Suisse was concluded with the sale of Nationale Suisse Belgium.
Chief Executive Officer 1 Direct yield and investment performance measured as a result of interim acquisitions.
Market capitalisation at the reporting date in CHF million 4 687.6 3 872.2 21.1 %
Underlying earnings of the Group after tax1 421.7 363.8 15.9 %
Consolidated equity (without preferred securities) 4 963.1 3 831.2 29.5 %
Provisions for insurance and investment contracts (net) 41 275.0 34 518.7 19.6 %
of which Group financial assets and investment property 44 843.4 36 736.7 22.1 %
Helvetia Group generated underlying earnings of CHF 422 million in the 2014 financial year. This was CHF 58 million or around 16 % more than in the previous year. Earnings were driven by the profitable non-life business, where profit increased by around 33 % to CHF 255 million. Of this, the two companies acquired – Nationale Suisse and Basler Austria – contributed around CHF 22 million. The profit in the life business remained stable in a difficult capital market environment.
The capital base remains extremely solid, even after the acquisitions, with a Solvency I ratio of 216 %. The SST ratio at the end of 2014 is expected to be between 150 and 200 % even after the acquisitions.
Thanks to the low claims ratio in a financial year that had few major claim events, the net combined ratio improved to 93.1 %, once again exceeding the Group’s target range of 94 % to 96 %.
Contacts Helvetia Group Susanne Tengler Investor Relations P.O. Box, CH-9001 St Gall www.helvetia.com susanne.tengler@helvetia.ch
Doris Oberhänsli Share register P.O. Box, CH-9001 St Gall Phone +41 58 280 55 83 Fax +41 58 280 55 89 www.helvetia.com doris.oberhaensli@helvetia.ch
Cautionary note regarding forward-looking information This document is made by Helvetia Group and may not be copied, altered, offered, sold or otherwise distributed to any other person by any recipient without the consent of Helvetia Group. Although all reasonable effort has been made to ensure the facts stated herein are accurate and that the opinions contained herein are fair and reasonable, this document is selective in nature and is intended to provide an introduction to, and overview of, the business of Helvetia Group. Where any information and statistics are quoted from any external source, such information or statistics should not be interpreted as having been adopted or endorsed by Helvetia Group as being accurate. Neither Helvetia Group nor any of its direct ors, officers, employees and advisors nor any other person shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this information.
The facts and information contained herein are as up to date as is reasonably possible and may be subject to r evision in the future. Neither Helvetia Group nor any of its directors, officers, employees or advisors nor any other person make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this document. This document may contain projections or other forward -looking statements related to Helvetia Group which by their very nature, involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other outcomes described or implied in forward-looking statements will not be achieved. We caution you that a number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward -looking statements. These factors include (1) changes in general economic conditions, in particular in the markets in which we operate; (2) the performance of financial markets; (3) changes in interest rates; (4) changes in currency exchange rates; (5) changes in laws and regulations, including accounting policies or practices; (6) risks associated with implementing our business strategies; (7) the frequency, magnitude and general development of insured claim events; (8) the mortality and morbidity experience; (9) policy renewal and lapse rates. We caution you that the foregoing list of important factors is not exclusive; when evaluating forward -looking statements, you should carefully consider the foregoing factors and other uncertainties. All forward-looking statements are based on information available to Helvetia Group on the date of its posting and Helvetia Group assumes no obligation to update such statements unless otherwise required by applicable law. The purpose of this document is to inform Helvetia Group’s shareholders and the public of Helvetia Group’s business activities for the year ended 31 December 2014. This document does not constitute an offer or a solicitation to exchange, buy or subscribe for securities and it does not constitute an offering circular within the meaning of Art. 652a of the Swiss Code of Obligations or a listing prospectus within the meaning of the listing rules of SIX Swiss Exchange. Should Helvetia Group make in the future one or more capital increases, investors should make their decision to buy or to subscribe for new shares or other securities solely based on the relevant offering circular. This document is also available in German and French. The German version is legally binding.
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