Consolidated equity per share in CHF 515.4 528.5 – 2.5 %
Forward-looking strategy Strengthening of core business, new business models, targeted innovations
Non-life Property insurance in CH and Europe Special coverage in selected niches worldwide Active reinsurance worldwide
Life Individual life insurance in CH and Europe Group life insurance (occupational pensions, pillar 2) in CH
Customer access and services Omni-channel approach: strong agent networks including partners and B2B2C access, direct insurer Smile, simple and good products and services
Share price Good share price performance over the past five years
Company Carbon-neutral company Partnerships for philanthropic and social commitments Fulfilment of sustainability requirements and simultaneous interaction with various target groups
Capital markets Volatile capital markets, especially share prices, real estate prices and spreads, persistently low interest rate environment
The shares of Helvetia Holding AG are traded on SIX Swiss Exchange.
S tr e n g th e n in g o f b u si n e ss m o d e l
Fi t fo r th e f u tu re helvetia 20.20 strategy
% n e w b u si n e ss m a rg in
Doris Russi Schurter and Dr Philipp Gmür look back on the past year and explain where their focus will lie in 2019. Both believe Helvetia is on course with the implementation of its strategy.
Philipp Gmür, when you look back at 2018, what were your highlights?
Mrs Russi Schurter, where do you believe your role lies with respect to the implementation of helvetia 20.20 ? I contributed to the development of the current strategy. The defined strategic objectives still apply even if the environment has changed in some respects in the meantime. We need to remain focussed on these goals and implement the relevant projects. Here, it is very important to me to provide active support to the CEO and the Executive Management in their efforts to make Helvetia even more successful. In accordance with its strategic tasks and areas of expertise, the Board of Directors always wants to provide its own impetus.
“At the 2018 SM, we elected additional know-how to the BoD.”
“I would like us to adopt even more of an external approach.”
The advertising for the sales organisation got a new look in 2018. Helvetia presents itself as an attractive employer with its current “&Go.” campaign. The Life, Non-Life, Occupational Pensions and Specialty Markets businesses benefited from wide-ranging media appearances as well as traditional and new sponsorship commitments. For example, Helvetia has close links to skiing. In addition to the Swiss-Ski association, individual athletes from the European country markets are supported. Helvetia’s involvement in football as the title sponsor of the Helvetia Swiss Cup also attracted great attention.
 TV commercials and radio advertisements  Print / advertisements with and without images  Posters / external advertising  External advertising, SBB locomotive  Marketing documentation  Online and social media  Sales advertising  Campaigns / mailings  Sponsorship and commitments  Employer campaign  Corporate film
Urs Lehmann: Our link to Helvetia is far more than a classic sponsorship commitment. A real partnership has developed over the years. Helvetia lives out this commitment with the highest level of professionalism, showing a great deal of passion in the process. It has thus firmly anchored itself in the Swiss snow sport family and the hearts of its members.
Why is it important to also support the Swiss-Ski association as well as top athletes? Helvetia has adopted our vision: We need young talented individuals and skiers now in order to ensure we can also win medals in the future, for example at the Alpine World Ski Championships in Crans-Montana in 2025.
We ask ourselves each and every day how we can inspire our customers.
Customer focus is an important part of the helvetia 20.20 strategy.
Can you give us specific examples of customer focus at Helvetia? We make it as easy as possible for customers to contact us or obtain our services. With respect to customer access, we adopt an omni-channelling approach. For example, our customers can get advice via video. It is also possible to conclude agreements with us online. And finally, we make targeted use of chatbots at the customer interface. For instance, as part of a pilot project for contract extensions or the reporting of bicycle thefts. The level of acceptance for such innovations is very high and we have received a great deal of positive feedback. We are exploring further opportunities to deploy this approach.
Existing products are likewise being made simpler on an ongoing basis. In the area of occupational pension plans, for instance, we have developed possible improvements for the semi-autonomous collective foundation Helvetia BVG Invest as part of a design-thinking project together with customers.
With all of these efforts, we are transforming ourselves from a pure seller of products into a competent provider of solutions.
How do you ensure that this customer focus is also implemented by employees? We collect customer feedback on a systematic basis, allowing us to ascertain in a very timely manner how well our offers and services are perceived and accepted. We also involve customer groups and employees from different areas in design-thinking projects in order to develop customer-oriented solutions together. Customers greatly appreciate this interaction and are usually prepared to invest the required time. For employees, the work with customers is rewarding and motivating.
Helvetia is a successful, internationally active Swiss insurance group. With 6,624 full-time equivalent employees, Helvetia provides services for more than five million customers. Helvetia is active in the life, non-life and reinsurance sectors. Helvetia divides its business activities into the three market areas of Switzerland, Europe and Specialty Markets. Its business activities in its home Swiss market are bundled in the Switzerland market area. The Europe market area covers the country markets of Germany, Austria, Spain and Italy. In the Specialty Markets area, Helvetia offers tailor-made cover in the specialty lines marine /transport, art and engineering insurance. With its Specialty Markets segment, Helvetia not only has a local presence in Switzerland, France and the Principality of Liechtenstein, but also in Miami for Latin America as well as in Singapore and Malaysia. Its active reinsurance business is also assigned to this market area. The reinsurance business focuses on the well-diversified non-life business. In this niche area, Helvetia stands out thanks to its sustainable and long-standing business relationships and strict underwriting policy.
The 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 net combined ratio, which has on average been below 92.5 % at Helvetia over the past three years. In 2018 financial year, the net combined ratio was 91.0 %, which reflects the portfolio quality.
In the non-life business, digitalisation is opening up new opportunities. Helvetia is placing an emphasis on organic growth with retail customers, small and medium-sized companies and larger businesses. Here, we are making use of the opportunities arising from digitalisation to make our offers and business processes simpler, more customer-friendly, more digital and more efficient – by combining our traditional strengths with new possibilities. Find out more in this regard on the following pages.
With the rising level of digitalisation, the risk of a cyber attack is also increasing for SMEs. The cyber insurance for SMEs provides protection against damage arising from attacks on data, software and IT systems.
Corporate Customers Switzerland, explains in an interview. For SMEs, Helvetia offers tailored solutions that allow for all material risks to be insured simply.
Helvetia is also pressing ahead with the process of automation in Switzerland and Europe. The objective here is, among other things, to reduce processing times and improve the customer experience.
What does Helvetia offer SME customers and how does Helvetia stand out from its competitors?
In addition to the development of technical risk, the profitability of the life business is particularly influenced by the investment and savings result and thus by the performance of the financial markets. The investment result plays an important role in generating the income required to ensure that the long-term insurance obligations can be met. In the past, Helvetia has always succeeded in achieving attractive returns with the capital employed. In 2018, despite the low interest rate environment, we again managed to generate stable interest margins between current income and the guarantees given, from which customers and shareholders benefit. With flexible life insurance solutions, Helvetia offers financial security at every stage of life. This allows our customers to turn their plans into reality and ensure they are prepared for the unexpected.
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 disability 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.
Traditional • • • • • Risk insurance and savings, financial and pension solutions with interest rate guarantees from Helvetia
Investment-linked • • • • • Insurance policies with investment risk either with the policyholder, with Helvetia with appropriate risk hedging or with an external partner
Reto Keller, Helvetia is now also providing customers with additional services such as asset management expertise. What exactly are you doing in this area? We have launched our own funds with different risk profiles and equity allocations. The funds are managed by Helvetia Asset Management. This allows retail customers to benefit from our 160 years of investment expertise. Until now, this had only been available to institutional customers.
In Spain, burial insurance, i.e. protection for the costs incurred in the event of death, is an important part of life insurance. Here, Helvetia is now utilising a virtual insurance agent which answers customer queries about the product and calculates the premiums. The chatbot uses artificial intelligence, has been trained to respond to potential questions and learns each time it interacts with a customer. It can communicate with customers both via voice and text messages. The feedback on the new advisory offers has been extremely positive.
Helvetia is Switzerland’s leading Swiss all-lines insurer. The stable and profitable home market provides a sound basis for the further development of the Group. Helvetia offers insurance services to retail customers as well as small and medium-sized corporate customers. We have a broad network comprising strong partners. With Smile, we have a well-established online insurer. MoneyPark, Switzerland’s biggest independent mortgage broker, is another subsidiary. Helvetia is a key partner for companies in Switzerland; for example we cooperate with Swisscanto, a major occupational pension plan (BVG) provider, in group life business. Thanks to our good market position in the life business and in the area of property insurance, we are a strong partner for both retail customers and corporate customers. With our broad offering, we want to place a new emphasis, in particular, on the business with SMEs.
Helvetia also has a consistent positioning in the Europe segment and has a cross-border brand presence. As is the case in Switzerland, focus is placed on the business with retail customers as well as small and medium-sized companies. In the Europe segment, Helvetia also offers the full range of non-life products, while in the life business Helvetia is placing an emphasis on the marketing of capital-efficient products in light of the low-interest rate environment. The business in the European countries is profitable. The Europe segment contributes to regional diversification by reducing the level of dependency on the Swiss home market.
Total EU Total * includes loss in Corporate of CHF 42 million ** Helvetia Spain has 12 banking partners, of which 3 have a substantial volume
Own field sales force • Agents • • • • Brokers • • • •
What does the cooperation within Europe look like? We work together on various issues. One example is the further advancement of skills in the areas of pricing, portfolio management and fraud prevention. We use artificial intelligence here, for instance. Where it makes sense, we also adopt a common product development approach and “multiply” products that have been successful in one country in another. This allows us to benefit from synergies in a targeted manner and to continue to follow our “Helvetia way” adapted to local market conditions in a systematic manner.
How are you progressing with the implementation of the strategy abroad? The implementation of the helvetia 20.20 strategy is progressing successfully. In Spain, for example, we recently strengthened our core business thanks to a distribution partnership with a broker that specialises in motorbikes. In Germany and Austria, we have also entered into a closer cooperation with aggregators such as Check24.de and Durchblicker.at. With our online products, we are thus able to serve the B2B/B2B2C area, which is very important for us. Innovation is an important element of our Europe strategy: for example, our customers in Spain can take out burial insurance via a chatbot (further information in this regard can be found in the section “Life insurance”). In Italy, customers can obtain niche products such as travel or ski insurance on demand via an app in just a few steps.
France  around 23,000 customers: Retail customers, corporate customers, SMEs and industry
 efficient sales network with 11 regional and local sales agencies
 around 300 customers  comprehensive business relationships, very good quality of reinsured business decisive
Helvetia launched a cyber insurance policy in 2018. What exactly does
The insurance sector has been accused of only reacting hesitantly to the challenges posed by cybercrime. What are the difficulties in constructing such insurance products? The requirements and needs in the area of cyber insurance are something new relative to classic insurance solutions. There is also the fact that risks in the cyber sector are changing continuously. The constant evolution of these risks, combined with rapidly changing framework conditions in the area of data protection and the relevant technology, thus necessitates new products adapted to the prevailing conditions. Only in this way can we meet the insurance needs of our customers.
A cyber attack can cause wide-ranging damage. The risk for insurance companies is therefore difficult to assess. How does Helvetia deal with this? We have developed an approach based on scenarios in order to evaluate potential cumulative damage and to reinsure ourselves accordingly. Our forecasts are, however, still subject to corresponding uncertainty. This is primarily due to rapid technological developments, the dynamic growth in cybercrime as well as the continuously changing risk awareness of potential victims. This poses a significant challenge for Helvetia and the entire insurance industry. However, we are tackling this in a committed and decisive manner in the interest of our customers.
How is corporate responsibility organised at Helvetia? What role does the CR Advisory Board play in the implementation of corporate responsibility? The members of this interdisciplinary body originate from all of Helvetia’s country markets and represent different business areas. They thus ensure close coordination and the quick handling of corporate responsibility issues. In their role as representatives of the Executive
The development of corporate responsibility is a demanding process, but one that is implemented in an agile manner. Helvetia wants to create sustainable value for its customers, shareholders and employees, while at the same time making a contribution to the environment and society. In 2018, Helvetia achieved a great deal, as Kristine Schulze, Head of Corporate Responsibility, reports in the following interview.
With respect to its CR commitment, Helvetia is classified as a “solid performer” and continues to be represented in the FTSE4Good Global Index and FTSE4Good Europe Index.
Helvetia becomes carbon neutral and invests in selected climate protection projects that meet globally recognised standards in order to compensate for unavoidable CO2 emissions.
Management of the respective countries and as experienced management figures, they are familiar with the local conditions and provide support to the CR team with their knowledge and experience. This enables us to ensure that the CR objectives are connected to Helvetia’s core business. Furthermore, all countries can benefit from the further development of ideas on sustainable business.
conservation projects that Helvetia and previously Nationale Suisse have conducted together with partners such as the Beyeler Foundation, Kunsthaus Zurich and the Museum of Art Lucerne.
Each of the projects will be concluded with an exhibition of the digitised works. The first exhibitions will be opened this year at the Museum of Art Lucerne and the Kirchner Museum in Davos. Fanni Fetzer, Director of the Museum of Art Lucerne, is already looking back at the innovative project. “The fact that a rather unusual and avant-garde project is being supported with the digitalisation of our media collection speaks volumes for Helvetia.” Dolores Mark, Director of the Kirchner Museum in Davos, highlights a fundamental benefit of digitised works: “The digitalisation project supported by Helvetia opens up completely new opportunities for experiencing art in a differentiated manner and in every corner of the globe. In the case of Kirchner’s sketchbooks, the digitalisation process has a particularly striking effect. Until now, analogue observation and museum presentation have meant that only the two open pages of a book can be viewed at any one time. Visitors can now browse through the entire book in a virtual fashion”.
Kirchner Digital Ernst Ludwig Kirchner’s sketchbooks from the Kirchner Museum in Davos
In the exhibitions with the digital copies, visitors can not only marvel at the works themselves, but also experience a new form of presentation. However, this also raises new questions, as Fanni Fetzer explains: “How will video art be displayed when the charming cathode-ray screens no longer work? And if the noise of the player disappears, do we become nostalgic, do we then artificially add the rattling and flickering or do we simply do without it?”
The cover image “KLEINOLGA” of the artist Olga Titus The artist Olga Titus (*1977), who originates from Eastern Switzerland, lives and works in Winterthur. Her world is colourful and shrill. Against the multicultural background of her Swiss-Indian-Malaysian biography, her work revolves around the questions of identity and cultural background. As a “digital magpie”, she roams the Internet and creates a dazzling mix of pictures in her photo montages made up of images from the worlds of folklore, Bollywood exoticism, advertising and computer game aesthetics. In doing so, she joyfully juggles the conventions of self-portrayal and develops an almost limitless cosmos of images reminiscent of Oriental ornamentation. www.olgatitus.com 43Helvetia company brochure 2018
What does the Helvetia culture of the future look like? What are the next steps? As our company progresses, our thoughts and actions must also develop with it. During the Helvetia Future Days in March 2018, some 2,000 employees held intensive discussions on Helvetia’s identity – both now and in the future. These discussions addressed what agility, innovation and customer focus mean during daily business and how we can try out new things. In small experiments, we have already made behavioural patterns visible and thus brought about a change of thinking in various areas. Furthermore, employees have repeatedly expressed the desire to experience Helvetia from different perspectives. With the “Change of perspective” format, our Head of Distribution and member of the Executive Management Ralph Jeitziner did just this in autumn 2018: for a period of two months, he moved his workplace to
Average age up to 30 from 60 the Helvetia Service Center. To make the change process a success, we need each and every employee – and we are providing the right platforms and tools for this purpose.
A further major HR issue is the implementation of a KPI dashboard. Can you enlighten us a little more here? In the HR KPI dashboard, the strategic focus areas and long-term objectives that have been defined in the HR strategy and in the employer positioning are made measurable. Using the dashboard, it should be possible to make management-relevant statements on HR work.
What is the impact of the low interest rates at present? The persistently low interest rates pose a major challenge for the life insurance business, in particular. In order to avoid negative interest rates on Swiss franc bonds to the greatest extent possible, Helvetia has further diversified its bond portfolio and increasingly invested in higher return fixed-income euro and US dollar bonds. The foreign currency risks are hedged to a high degree. Furthermore, we have opened up the investment spectrum and expanded our exposure to corporate bonds. Here, we place high requirements on the quality of the
What impact would a rate hike have on Helvetia’s investment activities? A rate hike would not have a major impact on Helvetia’s investment behaviour. As already explained, our investments are coordinated with our liabilities from the insurance business as part of the asset liability process. This applies to both phases of low and high interest rates. Under the applicable IFRS accounting standards, however, a rate hike would have a negative effect from an accounting perspective in the short term. As the long-term liabilities and interest rate guarantees of the life insurance business mean that the vast majority of fixed-income securities are held to maturity, these are temporary effects that are relativised over time. At the same time, higher interest rates would also lead to rising investment returns and increase the attractiveness of the insurance business.
Imprint The 2018 Helvetia Group company brochure is available in German, English, French, Italian and Spanish.
Production (offset printing) Die Medienmacher AG, Muttenz Printed on Blue Angel-certified 100 % recycled paper.
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 it is possible 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; 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 publication 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 2018. This document does not constitute an offer or a solicitation to exchange, buy or subscribe to 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 in the future carry out one or more capital increases, investors should make their decision to buy or to subscribe to new shares or other securities solely based on the relevant offering circular.
Helvetia reported an IFRS result after tax of CHF 431.0 million in 2018. Although this exceeded the previous year’s figure of CHF 402.9 million, it fell below the underlying earnings of CHF 502.4 million generated in 2017. The amortisation of bonds to par referred to above reduced the result by CHF 16.4 million (after tax and policyholder participation). As a result, non-life and life business remained below underlying earnings of the previous year, while the Other Activities segment posted an improved result. The significantly lower investment results in the non-life and life result were due to the unfavourable development of the capital markets.
Our shareholders should also benefit from Helvetia’s annual results. The Board of Directors therefore proposes another dividend increase, by CHF 1.00 to CHF 24.00, corresponding to a dividend yield of 4.2 % of the year-end price. The Board of Directors also proposes a share split at a ratio of 1 to 5. This should take account of the strong price development over recent years as well as the high price level and ensure the share remains accessible to a broad group of investors as an attractive investment.
In the life business, Helvetia is strengthening its core business with, among other things, newly launched own funds. These stand out thanks to their transparent cost structure and low management fees. With the funds, retail customers can benefit from Helvetia’s 160 years of investment experience.
We also made progress in expanding our “Home” ecosystem. MoneyPark, Switzerland’s biggest independent mortgage broker, forms the central anchor here. Two further partners have been acquired with the start-ups PriceHubble and Immoledo. Within the “Home” ecosystem, PriceHubble supports potential buyers with real estate valuations. With a comprehensive status analysis, Immoledo offers a useful tool for homeowners to preserve the value of their property.
How Helvetia makes targeted use of innovations can be seen by the utilisation of INZMO in the B2B2C channel. INZMO is an Estonian insurtech company in which the Helvetia Venture Fund is invested. Via INZMO, specialist retailers can quickly and simply offer appropriate insurance coverage for their products.
Helvetia is also making targeted use of new ways of interacting with customers. For example, socalled chatbots are used in Switzerland for the reporting of bike thefts and in Spain for the sale of burial insurance.
1 From the 2018 financial year, Helvetia will only report in accordance with IFRS and no longer report underlying earnings. With the exception of the ongoing amortisation of bonds in the amount of CHF 16.4 million (after tax and policyholder participation), the interim financial statements no longer include any acquisition effects. To allow for a better assessment of the operating performance, however, underlying earnings adjusted for all acquisition effects are used for the prior year.
CHF 24.00 The Board of Directors will propose an increase in the dividend to the Shareholders’ Meeting in May. It is to be increased by CHF 1.00 to CHF 24.00. The dividend yield is a good 4.2 % and the distribution ratio is 58 % based on the IFRS result.
Doris Oberhänsli Share register P.O. Box, CH-9001 St Gall www.helvetia.com doris.oberhaensli@helvetia.ch
You can find further information on the 2018 financial year at www.helvetia.com/annual-results. Helvetia SMIM Swiss Insurance Price Index STOXX Europe 600 Insurance Index
Price of Helvetia registered shares at the reporting date in CHF 574.5 548.5 4.7 %
Risk, capital and investment management 8 Share and bonds 10 Corporate governance 13 Board of Directors 24 Executive Management 35 Compensation report 48 Business performance 67 Financial statements 192 Embedded Value 195 Service
Risk management organisation The organisational structure of the Helvetia Group ensures a standardised application of the Groupwide risk management standard. In doing so, roles and responsibilities in the business units comply with the risk management organisation of the Group. This is based on a governance model that differentiates between the three basic functions of risk owner, risk observer and risk taker.
The risk takers control and manage risks in an operational context. They are responsible for complying with / observing the guidelines and policies for risk management within the scope of their operating activities in the respective business areas and processes.
Specialised risk controlling functions (e.g. Group Actuarial Departments Life / Non-Life, Asset Management)
Emerging risks are risks that have not yet manifested as actual risks, but are already in existence and have a high potential for large claims. Concentration risks (also known as cluster risks) can arise from risk exposure to a single counterparty or from parallel risk positions that are vulnerable to a mutual risk factor.
Our capital management is an essential pillar for achieving the Helvetia Group’s long-term growth targets aimed at profitability. The optimisation of capital allocation and income flows has the following objectives: – to ensure compliance with supervisory capital requirements at all times; – securing the capital required to underwrite new business; – optimising the earning power of its equity and the associated dividend potential; – to support strategic growth; – to optimise financial flexibility.
Capital management process Helvetia applies an integrated approach to capital management. At the strategic level, we manage the capitalisation and risk profile of business units in terms of profitability and growth potential and therefore the strategic Group targets. Capital is managed integrally in accordance with a defined capitalisation target under the relevant capital models, and is aligned with the corporate strategy using multi-year capital planning. At an operational level, the capital management process incorporates the financing of the Group as a whole as well as the safeguarding of the adequate and efficient capitalisation of the individual legal entities of the Group. In this process, capitalisation is closely monitored and optimised according to internally defined thresholds. This management also takes account of liquidity requirements.
Prudent investment strategy and timely risk management The investment strategy is defined in detail and implemented as part of the annual review of the investment policy. We make adjustments to take advantage of new opportunities arising from shortterm market developments, while remaining within the tactical ranges established by the management.
The investment strategy is always supported by timely risk management. The objective of the risk-controlling measures is to protect the balance sheet and income statement from excessive losses in value. This applies both to exposures in foreign currency which are constantly and to a large degree hedged by futures, and to equities. In addition, we subject counterparty risks to ongoing analysis and control using various criteria such as ratings, credit quality and the development of interest spreads. In order to avoid cluster risks, absolute exposure limits apply to the individual counterparties, depending on their quality.
Proven asset liability management – tried-and-tested investment strategy Helvetia’s investment strategy is based on a time-tested asset liability concept. First, we derive a strategic asset allocation for each business unit from a careful analysis of the liabilities. This satisfies the high security requirements of the insurance business while at the same time meeting the yield requirements of each of the individual stakeholder groups. Moreover, our 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 supervisory solvency requirements must be fulfilled at all times. In the life business, the terms of fixed-income securities and liabilities are aligned with one another. Due to the long maturities of the assets, the current phase of very low interest rates is only gradually affecting direct yields. At the same time, the reduction in the guaranteed interest rates included in life insurance policies also helps balance out this effect.
The balanced distribution of the portfolio applies both between and within the individual asset classes. Moreover, we place 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 exposure to the BBB segment is limited. At the end of the year, around 65 % of the bond portfolio had at least an AA rating. In addition, the proportion of government securities and collateralised bonds is above average at around 65 %.
2018 was a poor year for equities. Following an excellent start during the first weeks of trading, the flourishing economy soon gave rise to fears of inflation and rate hikes, leading the markets to tumble. While strong company accounts temporarily led to calm, the escalating trade conflict between the US and China, Italy’s budget dispute with the EU and emerging economic fears resulted in significant price slumps worldwide. Measured by the Mid Cap Index, the Swiss equity market lost 18.1 %. Swiss insurance stocks were able to escape this negative trend and posted a total return of 4.9 %. At 8.8 %, the Helvetia share generated a pleasing outperformance.
insurance companies 46.5 % Other institutional investors 28.9 % Private individuals
Subordinated bond EUR 500 million 3.375 % until 2027, subsequently variable
Payout ratio on the basis of IFRS 58 % 59 %
Dividend history Dividend per share (in CHF) | dividend yield at year-end price | payout ratio1
For more information, please refer to pages 18 ff in the company brochure.
This strategic focus expresses Helvetia’s commitment to comply as fully as possible with the applicable standards of the “Swiss Code of Best Practice for Corporate Governance”, which was issued in 2002 by economiesuisse and updated in 2016, the Corporate Governance Guidelines (RLCG) of SIX Swiss Exchange AG in the version of 20 March 2018, the Circular “Corporate Governance – Insurers ” of the Swiss Financial Market Supervisory Authority (FINMA) of 7 December 2016, the Ordinance Against Excessive Compensation in Swiss Listed Companies (VegüV) of 20 November 2013 (as at 1 January 2014) and the FINMA Circular 2010 / 1 “Compensation Systems” in the version of 22 September 2016. The compensation report included in the Annual Report (from page 35 ff.) provides details of our compensation system and the compensation paid to the Board of Directors and the Executive Management. If relevant information is provided elsewhere in the Financial report or in other documents, reference is made to the location or document concerned. Important documents such as the Articles of Association ( porate/web/de/home/investor-relations/auf-einen -blick/publikationen/unternehmenspublikationen /statuten_2017.pdf) and the organisational rules with appendices ( content/dam/os/corporate/web/en/home/investor -relations/overview/publications/business-publications /organisational-regulation.pdf) are also available on our website at com/corporate/web/de/home/investor-relations/ auf-einen-blick/publikationen/unternehmenspublikationen.
1.1.1 Operational Group structure The management structure is shown on pages 13 of the company brochure. This structure is intended to create the best possible legal, financial, fiscal and regulatory framework and to ensure smooth, efficient and flexible business operations.
Financial report Corporate governance 1.1.3 Non-listed companies The Group’s subsidiaries included in the scope of consolidation are listed on pages 177 and 178. Reports on the main subsidiaries – Helvetia Schweizerische Versicherungsgesellschaft AG, St. Gallen (Helvetia Versicherungen), and Helvetia Schweizerische Lebensversicherungsgesellschaft AG, Basel (Helvetia Leben) – can be found in the Notes from page 184.
The complete list of Group companies, including investments, is shown from page 177.
At the end of 2018, no shareholder exceeded the reporting threshold of 3 %. All Helvetia’s notices on share transactions exceeding the reporting threshold can be viewed at change-regulation.com/en/home/publications/ significant-shareholders.html (Issuer: Helvetia Holding AG). Further information on the shareholder structure is given on page 8 under “Share and bonds”.
2. Capital structure 2.1 Capital Helvetia Holding AG has share capital of CHF 994,513.70, consisting of 9,945,137 registered shares with a nominal value of CHF 0.10 each. At the year-end price of CHF 574.50 per share, this equals a market capitalisation of CHF 5,713.5 million.
2.2 Authorised and conditional capital Authorised capital: Helvetia currently has no authorised capital.
2.4 Shares and participation certificates The share capital comprises 9,945,137 fully paidup registered shares with voting and dividend rights with a nominal value of CHF 0.10 each. There are no preferential rights or participation certificates. For more details concerning Helvetia shares, please refer to pages 8 to 9. On 31 December 2018, Helvetia held 56,134 treasury shares (0.56 %).
Private individuals who do not declare in the application for registration that they have acquired the shares on their own behalf (= nominees) will only be entered in the share register for a maximum of 3 % of the total share capital. The registration regulations are described in detail in Art. 7 and 8 of the Articles of Association https:// www.helvetia.com/content/dam/os/corporate/ web/de/home/investor-relations/auf-einen-blick/ publikationen/unternehmenspublikationen/statuten_2017.
The following table contains information on the composition of the Board of Directors, the Board committees and the first time each Board member was elected.
Professional background, exercising operational executive functions Until 1989 at Bülach District Court; 1989 – 2004 various managing roles at Winterthur Versicherungen, including CEO of Winterthur operations in the Czech Republic and Head of Mergers & Acquisitions at group level; 2004 – 2014 CEO of the Schweizerische National-Versicherungs -Gesellschaft AG, Basel; since 1 January 2015 Vice-President of the Board of Directors of Helvetia Insurance
Appointments at other companies Three appointments: Member of the Board of Directors of CSS Versicherung, Lucerne, Canopius Holding, Zurich, and Canopius Re, Zurich
Appointments at listed companies Chairwoman of the Board of Directors of Luzerner Kantonalbank
Appointments at other companies Member of the Board of Directors of Swiss International Airlines, Basel
Pro bono appointments Three appointments, in particular President of the Association of Swiss Companies in Germany, VSUD, Basel 3.1 Members of the Board of Directors
Professional background, exercising operational executive functions Joined Zurich Insurance in 1977, various managerial positions, including: 1993 Member of the Executive Management of Zurich Switzerland, 2001 – 2005 CEO Zurich Switzerland, 2001 – 2004 Member of the Extended Group Executive Board of the ZFS Group; 2002 – 2005 Vice-President of the Swiss Insurance Association (SIA); 2001 – 2005 Member of the Management Board and Vice-President of the Fördergesellschaft I. VW.
Professional background, exercising operational executive functions Credit Suisse: 1993 – 1998 Various management roles in the Legal department of the Leu Group, 1998 – 2000 Member of a credit recovery task force, 2005 – 2007 Head of Legal & Compliance Corporate & Institutional Clients, 2007 – 2013 Head of Legal & Compliance Asset Management Switzerland; Zuger Kantonalbank: 2000 – 2005 Member of the Extended Executive Management (product, project and process management); independent member of the Board of Directors since 2014
Professional background, exercising operational executive functions Management positions at UBS; 1997 – 2009 State Council of the canton of Valais; since 2007 Senate of the canton of Valais; 2011 – 2013 President of the Finance Commission of the Council of States, Vice-Chairman of the Council of States 2017 / 2018; Chairman of the Council of States 2018 / 2019; President of the Finance Delegation of the Federal Assembly
Appointments at other companies Five appointments at non-listed companies / institutions: Vice-Chairman of the Board of Directors of Patria Genossenschaft, Basel; Member of the Board of Directors of Forces motrices de la Gougra SA, Sierre, and Grande Dixence SA, Sion; Chairman of the Board of Directors of Immobilien Gletsch AG, Obergesteln; Chairman of the Board of Directors of Loterie Romande
Pro bono appointments President of the Board of Trustees of the Disability Foundation Valais de Cœur
Professional background, exercising operational executive functions 1987 – 1995 various positions at Deutsche Bank, including: Corporate Banking and Assistant to the Management (Germany); Corporate Finance (Singapore); 1995 – 2004 University of St. Gallen, promotion and habilitation, guest professor in the US (Wharton and Connecticut) as well as South America (IAE Argentina); since 2004 Professor of Strategic Management at the University of St. Gallen; Director at the Institute of Management (IfB)
Appointments at other companies Four appointments, in particular member of the Liechtenstein Financial Market Authority (FMA), Vaduz, member of the Board of Directors of inventx AG, Chur
Professional background, exercising operational executive functions Until 1993 responsible for marketing at IBM and American Express; 1993 – 2012 numerous management roles with UBS AG; including: 1999 set-up and management of UBS e-banking; 2005 worldwide management of Human Resources Wealth Management & Business Banking; 2009 founding and management of the UBS Business University for the entire Group; from 2012 – 2017 Head of Training and member of the Executive Management of the Swiss Finance Institute; since 2012 also owner of the consulting company, PAYERPARTNER, for strategic business
Appointments at other companies Two appointments: Vice-Chairwoman of the Board of Directors of the Upper Engadine Healthcare Foundation (SGO), Samedan, and Vice-Chairwoman of Sygnum Ltd, Zurich and Singapore
Appointments at listed companies Member of the Board of Directors of Straumann Holding AG, Basel; Member of the Board of Directors of Adecco Group AG, Zurich
Appointments at other companies Member of the Board of Directors of Swissgrid Ltd, Laufenburg; Member of the Supervisory Board of the Institute for Accounting, Controlling and Auditing (ACA) of the University of St. Gallen (HSG)
Corporate Secretary of the Board of Directors: Christophe Niquille, doctorate in economics (University of St. Gallen)
3.4 Election and term of office All Board members, the Chairwoman and the members of the Nomination and Compensation Committee are individually elected at the Shareholders ’ Meeting each year in accordance with the provisions of the VegüV. Re-election of existing Board members is possible. The option of re-election ends at the latest with the Ordinary Shareholders’ Meeting in the year in which a Board member turns 70. Prior to the 2019 Shareholders ' Meeting, Hans-Jürg Bernet will reach the statutory age limit of 70 and will therefore not stand for re-election. In his place, Regula Wallimann will be proposed for election to the Nomination and Compensation Committee at the next Shareholders’ Meeting. The other Board members and the members of the Nomination and Compensation Committee will stand for re-election.
Financial report Corporate governance a) The Strategy and Governance Committee (SGC) prepares the resolutions to be passed by the Board of Directors in the event of a change or redefinition of strategy, controls in particular the implementation of the strategy, deals with mergers, acquisitions and disposals of companies or major portfolios, and prepares the required resolutions by the full Board of Directors. It also ensures good corporate governance within the Helvetia Group. The SGC assumes duties and powers that have been assigned to it by the Board of Directors, deals with issues entrusted to it by the Chairwoman that are not reserved for the full Board of Directors in accordance with the law, the Articles of Association or Group regulations, and discusses important and urgent issues.
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 the compensation of the members of the Executive Management, and submits proposals on the fixed and variable salaries and remuneration of the members of the Executive Management to the Shareholders’ Meeting. The NCC approves the concept and strategy of the employee pension funds in Switzerland on behalf of the employer and takes note of their annual financial statements. It prepares the resolutions by the Shareholders’ Meeting regarding the appointment and dismissal of members of the Board of Directors. The NCC also puts forward proposals regarding personnel decisions and appointments and dismissals of members of the Executive Management, handles the appointment and dismissal of the Chief Executive Officers of all market units, and periodically reviews plans and measures to retain and promote senior managers.
c) The Investment and Risk Committee (IRC) formulates the investment concept, basic guidelines and investment strategy. It proposes the strategic ranges of asset allocation, approves the investment strategy, supervises the investment activities of the Helvetia Group and decides on investments to the extent that the Board of Directors has delegated this task to it. The IRC determines the applicable risk limits, and monitors all risks (including the strategic risks and operational risks relevant to the whole company) as well as the related risk management measures and compliance with limits.
3.5.3 Modus operandi of the Board of Directors and its committees 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. Gallen, and the executive seminar, which usually lasts two days, is generally held at external premises. 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. Resolutions may also be passed by circular letter, which was the case twice in 2018.
As a general rule, meetings are attended by all Board members and, in an advisory capacity, also some of the members of the Executive Management. Meetings are organised as follows: the meeting starts as a closed meeting of the Board of Directors for discussing internal topics. The meet-
Financial report Corporate governance ing is then continued in the presence of the CEO and, depending on the topic, some or all of the members of the Executive Management.
The SGC convenes as often as business requires. In order to deal with specific issues, it may call on internal or external specialists to attend its meetings, which is regularly the case. The CEO participates in an advisory capacity. In 2018, the SGC had five meetings, all of which were attended by all its members. Most of the meetings lasted half a day.
The IRC convenes as often as business requires. The CEO, CFO, CIO and the Head of Risk Management attend its meetings in an advisory capacity.
The Chairwoman may, at her own request, take part in the meetings of the NCC, IRC and AC in an advisory capacity.
In 2018, the Chairwoman of the Board of Directors met regularly with the CEO in order to exchange information as well as with other members of the Executive Management outside of the regular meetings.
André Keller will become a new member of the Executive Management on 1 April 2019. He will take over from Ralph-Thomas Honegger as Chief Investment Officer. Ralph-Thomas Honegger is to retire.
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 Executive Management of Helvetia Switzerland: Head of Sales; 2003 Member of the Group Executive Management and CEO Switzerland; in his current position since 1 September 2016
Appointments at other companies Member of the Board Committee of the Swiss Insurance Association (SIA); Member of the Board of Directors of economiesuisse; Member of the Board of Trustees of Avenir Suisse; Member of the Board of Directors at two other non-listed companies.
Pro bono appointments Chairman of the Funding Association and member of the Executive Committee of the I. VW Institute of Insurance Economics, St. Gallen and two Board of Trustees appointments 4.1 Members of the Executive Management
Ralph-Thomas Honegger Doctorate from the University of Basel (Dr rer. pol.)
Appointments at other companies Head of the Investment Commission of the Raiffeisen Pension Fund; Chairman of the Investment Committee of the Swiss Insurance Association (SIA); Honorary Consul General for Austria in Basel
Professional background 1985 – 1995 Basler Versicherungen: various functions at the head office and agencies; Coop Life/ Coop Versicherungen AG, Basel: 1995 – 1999 Head of Sales Switzerland; 1999 – 2001 Member of the Executive Management, Head of Marketing & Sales; Nationale Suisse: 2001 – 2005 Member of the Extended Executive Management Switzerland, Head of Market Region Mittelland; 2005 Member of the Executive Management; 2005 – 2010 Head of Customer Service Non-Life & Sales; 2010 – 2014 Head of Multi-Channel Sales Switzerland; 2015 joined Helvetia Insurance: Member of the Executive Management of Helvetia Switzerland; 2015 – 2016 Head of Sales Switzerland; Member of the Executive Management in his current role since 1 January 2017
Appointments at other companies Chairman of the BoD of Coop Rechtsschutz AG, Aarau; Chairman of the BoD of Medicall AG, Brüttisellen; Member of the Board of Trustees of Sanitas Health Insurance, Zurich, Member of the BoD of Helsana Rechtsschutz AG; Chairman of the Employers’ Association of Basel-Stadt
Professional background 1985 – 1989 various positions at a pension fund advisory office and at IBM; 1990 joined Helvetia Insurance: 1990 – 2007 Actuary and Chief Actuary Life Insurance, from 2003 also Head of Actuarial Services Life Helvetia Group; 2007 Head of Actuarial Services/ALM and Member of the Executive Management of Helvetia Switzerland; Member of the Executive Management in his current role since 1 January 2017
Appointments at other companies Vice-President of the Swiss Association of Actuaries; Member of the Strategy and Governance Committee of the Swisscanto Collective Foundation of the Cantonal Banks
Paul Norton B.A. in history (University of Reading/UK); Chartered Accountant, British and Swiss national, Zurich, b. 1961
Financial report Corporate governance 4.4 Management contracts There are no management contracts with external parties that have to be disclosed.
4.3 Statutory rules regarding the number of activities allowed pursuant to Art. 12 para. 1 (1) VegüV According to Art. 32 (mandates outside the Group) of the Articles of Association ( tia.com/content/dam/os/corporate/web/de/ home/investor-relations/auf-einen-blick/publikationen /unternehmenspublikationen/statuten_2017.
pdf) , members of the Executive Management may not hold more than five additional mandates with listed companies and ten additional mandates with non-listed companies. In practice, this rule is interpreted considerably more restrictively for members of the Executive Management as it is assumed that full-time members of the Executive Management have to invest their time at work primarily in the interests of the company and that external mandates should only be approved by way of exception (e.g. family companies or in order to gain additional experience by being a member of the board of another company).
Compensation can be paid by the company or by a company controlled by it (Art. 30 of the Articles of Association, dam/os/corporate/web/de/home/investor-relations /auf-einen-blick/publikationen/unternehmenspublikationen /statuten_2017.pdf). If there are any changes to the Executive Management during the course of a year, the company or the companies controlled by it are authorised to pay an additional amount for this period to each member of the Executive Management who joins the Executive Management or is promoted on the Executive Management after the date on which the Shareholders ’ Meeting approved the compensation if the amount that was already approved is not sufficient to cover their compensation. The additional amount per compensation period may not exceed 40 % for the Chief Executive Officer and 25 % for the other positions on the Executive Management of the total maximum amount of compensation that was most recently approved for the Executive Management (Art. 29 of the Articles of Association, dam/os/corporate/web/en/home/investor-relations /overview/publications/business-publications /articles-of-association_2017.pdf).
5.2.3 Statutory rules regarding voting on compensation by the Shareholders’ Meeting Pursuant to the Ordinance Against Excessive Compensation in Swiss Listed Companies (VegüV), the Board of Directors compiles a yearly compensation report submitting the total amounts of fixed 5.2 Details on issuers subject to the Ordinance Against Excessive Compensation in Swiss Listed Companies (VegüV)
Financial report Corporate governance compensation of the Board of Directors and fixed and variable compensation of the Executive Management to the Shareholders’ Meeting for approval.
The Board of Directors specifies the rules that govern participation in the Shareholders’ Meeting and the determination of voting rights. For representatives of executive bodies, independent voting rights and custody proxies (who do not necessarily have to be shareholders themselves), it may stipulate regulations that deviate from the restriction of proxy voting to 10 % of the share capital. At the 2018 Shareholders’ Meeting, no individual shareholder with voting rights represented more than 10 % of the voting rights, with the exception of Patria Genossenschaft as individual shareholder and founding member of Helvetia in its current form. No specific exceptions with respect to voting rights restrictions or proxy voting were granted in the reporting year.
6.3 Convening the Shareholders' Meeting The Shareholders’ Meeting is convened by the Board of Directors, or, if necessary, by the statutory auditors. Liquidators and representatives of creditors also have the right to call a meeting.
8. Statutory auditors 8.1 Term of office and tenure of office of the lead auditor The independent auditors KPMG AG, Zurich, have served as the auditors of Helvetia Holding AG and its consolidated subsidiaries since 2005. The statutory auditors’ term of office must be renewed by the Shareholders’ Meeting every year. The KPMG AG audit team for the 2018 financial year consisted of: – Bill Schiller (since 2014), ACA, Partner Financial Services; lead auditor.
8.2 Audit fees In the reporting year, the fees charged by the auditors amounted to: CHF 3,484,885.00.
8.3 Fees for additional consultancy services CHF 101,713.00. These fees covered legal and tax advisory services.
8.4 Information tools of the external auditors The Audit Committee prepares the election of the statutory auditors. It monitors and assesses their activities. This supervision is predominantly carried out by means of the external auditors’ reports on audit results, the reporting process, decisions, for example on IFRS issues, and statements in the local audits. Important findings are summarised in a management letter.
Board of Directors: uniform basic remuneration (exception: Chairman of the Board of Directors) with allowances for committees and committee chairpersons (cash)
The Shareholders’ Meeting (SM) therefore has the following powers in matters concerning compensation: a) As regards the general report on business performance: review of the compensation report and thus the principles and conditions under which the compensation for the members of the BoD and the EM are determined.
b) Variable compensation The BoD has not received any variable compensation components since the 2018 SM.
d) Expenses The members of the BoD receive lump-sum expense allowances of CHF 10,000 per Director as part of their total fixed compensation for each term of office. This lump-sum expense allowance covers minor expenditures and travel expenses for the members of the BoD within Switzerland. Other expenses can – provided they are not covered directly by the company – be billed. The Chairwoman of the Board of Directors is also compensated for the use of external infrastructure.
On the date of allocation, the company and the SM approving these payments are fully aware of the cost of these LTC. Helvetia buys the corresponding number of shares on the allocation date and transfers these shares to a vested custody account. After three years the exact same number of shares deposited in this vested custody account is transferred to the ownership of the EM members. Helvetia does not incur any additional costs at this time. The price may change in the period between the allocation of deferred shares and the transfer of the shares to the ownership of the EM member. The EM members, and not the company, have exposure to price change risk (both positive and negative developments). In contrast with other systems, the number of shares allocated per financial year does not change over time if business is good. However, if business is bad, the EM member can lose out after three years (claw-back).
The extent to which strategic objectives have been achieved (ranging from 0 % to 125 %) is fixed annually during the first quarter following the end of a financial year by the Nomination and Compensation Committee of the BoD on the basis of the criteria below. The Committee has additional room for discretion, allowing it to take additional criteria and an overall assessment into account, while remaining within the established upper limit of 125 %: – Profit: The reference figure is the annually reported Group profit for the period relative to the previous year.
– Growth: The reference figure is the growth in business volume in the active business sectors relative to the relevant market segment achieved in the financial year.
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 BoD, taking account of the financial results and the functions of the employees concerned. The purchase price is calculated on the basis of the average stock market price during the five trading days following the publication of the financial results.
f) Pension benefits The benefits to which EM members are entitled under occupational pension plans are in line with the model for internal pension regulations applicable to all employees. The employer pays the standard contribution. The employer also finances the option for EM members to retire from the age of 60. These additional contributions are presented as part of the overall pension contributions made to EM members. No extraordinary benefits are paid.
This section provides information on the compensation, shares and loans granted to the BoD members and EM members with a reporting duty of the Helvetia Group in the 2018 financial year.
All compensation and fees paid to the BoD members are shown in the table below. No payments were or are made to BoD members who have left.
Fixed compensation1 Additional fixed compensation2 Total compensation in CHF, incl. AHV / IV / EO
Thomas Schmuckli (Vice-Chairman/member since Shareholders’ Meeting 2018) 158 675 0 0 0 158 675 0
Regula Wallimann (member since Shareholders’ Meeting 2018) 127 599 0 0 0 127 599 0
Herbert J. Scheidt (member) (until Shareholders’ Meeting 28.4.2017) 0 73 417 0 10 767 0 84 184
Total compensation of the Board of Directors 2 685 734 2 623 000 0 494 085 2 685 734 3 117 085 1 Since 1 January 2018, 30 % of the fixed remuneration will be paid in shares blocked for a minimum of three years. 2 2017, shares blocked for a minimum of three years
As part of this variable compensation, the EM was allocated LTC shares of CHF 1,693,800 (previous year: CHF 1.52 million). This corresponds to 2,823 shares at a price of CHF 600.00 as of reference date 4.3.2019 (previous year: 2,678 shares at CHF 569.00).
Total fixed compensation paid out 8 168 521 8 031 894
III. Compensation for the Board of Directors and the Executive Management to be approved by the 2019 Shareholders ’ Meeting
BoD for the period from the 2019 SM to the 2020 SM
in 2018 as in the previous year. The loan to David Ribeaud of CHF 595,000 earned interest at 0.89 % in 2018 (previous year: 0.89 %), the extra mortgage of CHF 420,000 earned interest at 0.95 % (previous year: 0.95 %). There are no other loans or guarantees.
During the reporting year, EM members received non-monetary benefits as part of the company car programme valued at CHF 32,634 (previous year: CHF 34,867). All other benefits that the EM members have received as employees (e.g. discounts on insurance products) are included in the fixed remuneration listed above. They did not receive additional benefits in kind or bill the company for any additional services.
Payments to former EM members No payments were made to former EM members in 2018.
3. Highest individual compensation The highest individual amount paid out in the reporting year was paid to CEO Philipp Gmür. Subject to approval by the SM, this amounted to CHF 2,192,749 in total (2017: CHF 1,860,221), comprising the following: cash remuneration of CHF 1,485,405 incl. long-service award (fixed component CHF 1,110,045, variable component CHF 375,360), share-based payments of CHF 367,200 in the form of deferred shares, and employer contributions to pension funds of CHF 340,144.
Financial report Compensation report 1. Approval of the total amount of fixed compensation for the Board of Directors for the period from the 2019 Shareholders’ Meeting to the 2020 Shareholders’ Meeting The Board of Directors reviewed its fixed compensation and decided not to adjust the rates for the basic and various additional payments for the 2019 / 2020 period.
The changes to the fixed total compensation proposed to the SM thus relate exclusively to the personnel changes in the BoD (resignation of Dr Hans-Jürg Bernet as of the 2019 SM) and the changes in the composition of the committees.
The Board of Directors requests approval from the Shareholders’ Meeting for fixed remuneration for the Board of Directors in the total maximum amount of CHF 3,000,000 for the period from the Shareholders’ Meeting 2019 to the Shareholders’ Meeting 2020.
Total fixed compensation incl. employer contributions (AHV / IV / EO) 3 000 000 2 990 425 3 100 000
Total variable compensation Board of Directors 3 000 000 2 990 425 3 100 000 – 3.5 %
Total fixed compensation Executive Management for the period 1.7. – 30.6.
– Employer contributions to pension funds with respect to the fixed compensation 2 200 000 2 185 2121 2 200 000
Total fixed compensation Executive Management 8 300 000 8 110 232 8 200 000 – 1.1 % 1 Details of the earnings of the new CIO from 1 April 2019 to 30 June 2019 will be reported in the 2019 Annual Report.
3. Approval of the total amount of variable compensation for the Executive Management for the past financial year 2018 The variable compensation components of the EM and their calculation were described in para. 2 and the amounts were disclosed in section II. Due to the retrospective definition and approval of the variable compensation, these amounts here also correspond to the amounts already stated in the report for the financial year 2018. The resulting differences between 2017 and 2018 arose solely from changes in the extent of target achievement. The method of calculation and the reference figures did not change.
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. The Board of Directors is also responsible for designing the remuneration system and defining individual remuneration packages.
In our opinion, the remuneration report for the year ended 31 December 2018 of Helvetia Holding AG complies with Swiss law and articles 14 – 16 of the Ordinance.
KPMG AG is a subsidiary of KPMG Holding AG, which is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved.
Our market position in competitive markets Over 160 years, the Helvetia Group has grown from individual Swiss and foreign insurance companies into a successful insurance group that operates throughout Europe. Helvetia is the number three all-line insurer in the Swiss insurance market. Helvetia is also well positioned in other key European markets. The Group is one of the top-eight insurance companies in Austria and is ranked 15th in the Italian non-life business. Because of the smaller market shares in Germany and Spain (see chart), Helvetia sees growth opportunities in these countries. The countries in which Helvetia operates are among the biggest insurance markets by volume worldwide: Switzerland, Germany, Italy and Spain have global market shares of 1.2 %, 4.6 %, 3.2 % and 1.4 %, respectively.1
Strong potential for growth based on room to expand market positions abroad
Premium volumes of country markets for financial year 2018 *Preliminary figures as of 2018
In the past financial year, the life insurance business was also dominated by conditions on the capital markets. Although some central banks are starting to tighten their monetary policy somewhat, interest rates remained at a very low level. This once again held back premium growth in the life insurance business in 2018, especially in the developed markets. Worldwide, the life insurance premium volume increased by an estimated 1.6 %. In the European industrialised countries, slight premium growth of around 0.8 % was recorded. Following a decline in the two previous years, the SIA expects premium growth of 0.6 % for the life insurance business in 2018.5 On the one hand, this growth can be attributed to the group life business line (+ 0.7 %) for which there is unbroken demand from companies for securities of life insurers.
The global reinsurance market has been characterised by a low price level and an inflow of alternative reinsurance capital in recent years. Despite higher claims from natural catastrophes in the previous year, prices only recovered slightly in the contract renewal rounds in 2018 and this recovery was limited to individual business lines and regions. The expectation that investors would withdraw owing to the losses from the alternative reinsurance market did not happen. In the past financial year, however, natural catastrophes such as Hurricanes Florence and Michael, Typhoons Jebi and Trami and the forest fires in California also weighed on performance. From 1 January 2019, prices in some areas also increased, especially in the global specialty business as well as, in some cases, in the US. On the other hand, there was no clear sign of this positive trend in Europe, meaning that a reduced level of price quality remains expected for the European business.
Market environment in the European capital markets The investment markets were predominantly subject to major fluctuations and tended to be weak viewed over the year as a whole. The flourishing global economy initially provided a friendly market environment and a favourable tailwind for equities.
However, the strong economy soon gave rise to fears of inflation and rate hikes, which led to initial setbacks. Monetary stimuli were largely absent. The Federal Reserve hiked key interest rates in several steps by 100 basis points and took further measures aimed at normalising its monetary policy. In contrast, the European Central Bank and the Swiss National Bank persisted with their zero and negative interest rate policies, meaning capital market interest rates remained at a low level. There was almost no change in yields on 10-year government bonds in Europe, while an increase of 30 basis points was recorded in the US.
There was a considerable increase in political risks during the course of the year, a development that weighed on the markets. First and foremost, the escalating trade conflict between the US and China gave rise to increasing uncertainty. Italy’s budget dispute with the European Union also brought about additional fears and the unresolved Brexit process heightened the pressure on the European markets.
In this environment, the equity markets plummeted after a mixed year and closed 2018 with significant losses. Despite a decline of almost 10 %, the US market held up relatively well, while the European and Asian markets suffered double- digit percentage losses.
6 S&P, Global Reinsurance Highlights 2018, https:// www.spratings.com/documents /20184/1581657/ Global+Reinsurance+Highlights +2018/98dc8810-eead-8ff0- 3f07-9889caaab0b0
As was also the case in previous years, the Swiss real estate market proved to be a reliable source of income. Despite slightly rising vacancy rates, it once again delivered attractive total returns that were generated both from direct income and valuations.
– Helvetia increased its business volume to CHF 9,073.3 million, representing a pleasing 3.9 % rise in original currency, mostly driven by the non-life business, which generated currency-adjusted growth of 5.8 %.
– The Board of Directors will propose to the Shareholders’ Meeting that the dividend per share be increased by CHF 1.00 to CHF 24.00.
By reporting segments, Helvetia significantly improved its result in the Specialty Markets segment and recorded a slight increase in the Corporate segment. In the Europe segment, the result remained at a similar level to that posted in the previous year with a decline of CHF 2.2 million. In contrast, the already mentioned lower investment income led to a lower result in the Switzerland segment compared to the previous year.
1 OC = original currency 2 Underlying earnings are adjusted for integration costs as well as amortisation of intangible assets, additional depreciation due to the revaluation of interest-bearing securities at market value, and other one-off effects of the acquisitions.
The low net combined ratio at Group level of 91.0 % (previous year: 91.8 %) reflects the good portfolio quality. At 91.0 %, it once again meets the financial targets communicated for the helvetia 20.20 strategy.
Helvetia still continues to have a strong capital base. The definitive SST ratio will be published with the Financial Condition Report at the end of April 2019. As at 1 January 2019, the SST ratio was in excess of 200 %. Equity3 went down from CHF 5,229.4 million at the end of 2017 to CHF 5,097.1 million. This decline can primarily be attributed to the decrease in unrealised gains and losses recognised in equity as well as negative currency effects from the translation of the equity of the European units into the Group’s currency of Swiss francs. The return on equity was 8.1 %.
In the reporting period, Helvetia generated non-life premiums CHF 4,396.1 million (financial year 2017: CHF 4,093.8 million ).
In currency-adjusted terms, this is 5.8 % more than in the previous year. Due to positive exchange rate effects, the growth rate in Swiss francs was considerably higher at 7.4 %. Viewed by segment and line of business, our premiums developed as follows: Development by segment
– Main growth drivers: Liability, health / accident and motor vehicle businesses. Property business contracted following an adjustment to premium recognition in the reporting period; growth of 3.5 % without this effect
The IFRS result after tax was CHF 332.0 million (underlying earnings after tax for financial year 2017: CHF 363.5 million).
The details of the business performance are as follows: Significantly improved technical results thanks to considerably better claims environment in the second half of the year and a higher volume
Considerably lower investment results due to weaker performance of the equity markets Ongoing amortisation of bonds to par (CHF 4.4 million after tax)
Increase in the expense ratio (0.3 percentage points) to 30.0 % – Higher distribution cost ratio due to new cooperations – Lower administration cost ratio 55Helvetia Financial Report 2018
Helvetia also reported pleasing volume growth for the life business. This development was primarily driven by the investment-linked insurance solutions in the individual life business as well as the regular premiums in the group life business in Switzerland. Due to the ongoing bond amortisation at par, lower technical results as well as considerably lower gains and losses on investments, the result nevertheless lagged behind the figure of the previous year. This was compensated by lower expenses for the interestrelated strengthening of reserves in Switzerland and Europe as well as lower policyholder participation.
The life business volume was CHF 4,677.2 million, up 2.1 % (in OC) on the prior-year period (financial year 2017: CHF 4,547.5 million). Expressed in Swiss francs, the increase was 2.9 %, owing to the positive currency effects mentioned above.
Viewed by segment and line of business, business developed as follows in 2018: Development by segment
– Italy also with growth (+ 4.4 % in OC) – Contraction in Austria (– 9.0 % in OC) because of planned decline in traditional products and lower volumes for large contracts with single premiums as expected
– Switzerland with continued good growth (+ 26.1 %) – Europe (– 2.8 % in OC), growth in Germany (+ 8.8 %), but decline overall mainly because of lower volumes for large contracts with single premiums in Austria as expected
– Growth drivers for Swiss group life business: growth in regular premiums due to positive changes within full-insurance portfolio. Successful new business with capital-efficient insurance products (Swisscanto foundations, BVG Invest)
Life business volume by business line in financial year 2018 Share in % | in CHF million 56 Helvetia Financial Report 2018
Fluctuations as part of the valuation of options for index -linked products
Compensating effects: Lower expenses for interest-related strengthening of reserves in Switzerland and Europe Lower expenses for policyholder participation
The new business margin remained stable at 1.7 % (financial year 2017: 1.8 %). Due to increased shareholder expectations, the discount rates had to be increased, which reduced the new business margin. Due to product measures and thanks to improved assumptions with respect to the future development of new business, the impact of the adjustment to the discount rates could, however, be offset to a large extent. Further progress was also made here with the switch from traditional savings products with interest guarantees toward modern capital-efficient products.
The investment structure only underwent marginal changes. Interest-bearing securities remain the dominant asset class, followed by real estate and mortgages. The allocations of the other categories are each considerably under 10 %. Investments with market risk borne by the policyholder remained stable at 7 % despite adverse market conditions.
The investment performance, which in addition to current income also includes value changes in the portfolio, closed in positive territory with 0.3 %. This performance was supported, in particular, by the investment property, which generated a total return of 4.7 % with moderate revaluation gains, and mortgages with 1.7 %. Equities weighed on the result with a market-related negative performance of 7.8 %, while interest-bearing securities made neither a positive nor a negative contribution with a result of close to zero.
Investment result from Group financial assets and investment property (net) 794.4 1,348.7
Throughout the entire year, challenging market developments necessitated the full attention of risk management. The equities and currencies were hedged to a large degree at all times with put options and futures. It was thus possible to effectively cushion the unfavourable market developments at the end of the year and limit the losses.
We will continue our cautious investment policy during the current year. In light of the wide-ranging political and economic risks, timely and systematic risk management is essential. The objective remains to ensure sustainably attractive returns for both our insurance customers and our shareholders with a moderate level of risk.
In Switzerland, Helvetia can once again look back on a positive business performance. Business volume improved by 1.9 % to CHF 5,074.6 million. The IFRS result after tax was CHF 320.9 million (underlying earnings after tax for financial year 2017: CHF 409.7 million). This includes the aforementioned CHF 14.4 million (after tax and policyholder participation) for the ongoing bond amortisation at par which was not included in the after-tax underlying earnings adjusted for acquisition effects for the previous year. The technical results in the non-life business developed very positively. The weak performance of the equity markets weighed on the investment result in the non-life and life businesses, however.
– Mainly because of adjustment to premium recognition (without this effect: + 3.5 %)
– Good performance by “Helvetia Guarantee Plan” and “Helvetia Payment Plan” products
At CHF 209.7 million, the IFRS result after tax for non-life was down on the previous year (underlying earnings after tax for financial year 2017: CHF 263.4 million).
Helvetia’s IFRS result after tax for the life business in the past financial year amounted to CHF 118.9 million (underlying earnings after tax for financial year 2017: CHF 157.9 million).
Better technical result thanks to considerably better claims environment in the second half of the year and a higher volume
Considerably lower investment result due to poorer performance of the equity markets
Lower savings result driven by Swiss group life business because interest on retirement savings was the same as in 2017 while market yields declined
Lower risk result, also mainly driven by Swiss group life business due to a lower mortality result in the first half of the year; positive one-off effects in individual life in the previous year
At 82.7 %, Switzerland still boasts a very good net combined ratio (financial year 2017: 83.1 %). The following factors impacted the net combined ratio: Improved claims ratio (1.1 percentage points) – Good attritional claims development Increase in the cost ratio (0.7 percentage points)
The life business volume was CHF 1,074.4 million and thus grew by 0.7 % compared to the previous year (in OC).
Details of the performance generated by the non-life and life businesses according to country and line of business can be found below: Development of non-life business volume: By country
Germany CHF 658.3 million, + 8.3 % in OC – All sectors were stable with some posting pronounced year-on-year growth; the main growth drivers were motor vehicle (owing to the higher online share and the selective expansion of the fleet and dealer business) and property insurance
Italy CHF 548.2 million, + 6.7 % in OC – Growth in all sectors, greatest increase in property, liability and motor vehicle – Growth impetus from new products, adjusted fees and the successful expansion of the distribution network
Germany CHF 295.3 million, + 3.4 % in OC – Main growth drivers: investment-linked insurance solutions
Health / accident CHF 192.2 million, + 3.5 % in OC
Investment-linked insurance solutions CHF 520.4 million, – 2.8 % in OC
– Good development in Germany cannot fully compensate for the contraction in Austria (expected lower volume for large contracts with single premiums), Italy and Spain (market-related lower volume for the tranche product relative to the previous year)
– Targeted curtailment of sales of traditional guarantee products in all country markets except Italy
The IFRS result after tax for non-life was CHF 87.6 million (underlying earnings after tax for financial year 2017: CHF 83.5 million).
Helvetia’s IFRS result after tax for the life business in the past financial year amounted to CHF 29.0 million (underlying earnings after tax for financial year 2017: CHF 35.2 million).
The earnings development in the non-life and life businesses can be attributed to the following factors: Non-life earnings trend
Lower expenses for policyholder participation mainly due to lower gains on investments 63Helvetia Financial Report 2018
Financial year 2018 (IFRS) Financial year 2017 Underlying earnings after tax
In financial year 2018, the Specialty Markets segment earned premiums of CHF 1,019.5 million (financial year 2017: CHF 899.8 million), which is 12.3 % (in OC) more than in the previous year.
The IFRS result after tax was CHF 34.8 million (underlying earnings after tax for financial year 2017: CHF 16.6 million).
In addition to the financing companies and the holding company, the corporate segment comprises the Corporate Centre and Group reinsurance. At CHF – 42.0 million, the IFRS result after tax for this segment is slightly above the underlying earnings after tax of CHF – 43.4 million recorded in the previous year. The improvement resulted from positive consolidation effects from the funds assigned to this segment.
Summary of accounting policies 89 Segment information 101 Foreign currency translation
Claims incurred including claims handling costs (non-life) – 2 562.4 – 2 389.5
Net benefits to policyholders and claims – 6 734.7 – 7 155.0
Change in unrealised gains and losses on investments – 646.3 – 39.0
Change in liabilities for contracts with participation features 0.4 – 12.0
Profit or loss for the period – – – – – 365.2 40.1 405.3 – 2.4 402.9 – 402.9
Acquisition of subsidiaries – – – – – – 2.0 – – 2.0 2.0 – – –
Purchase of treasury shares – – – 11.6 – – – – – 11.6 – – 11.6 – – 11.6
Allocation of shareholders´ contributions – – 40.0 – – – – – – 40.0 – – 40.0 – – 40.0
Purchase of treasury shares – – – 14.9 – – – – – 14.9 – – 14.9 – – 14.9
Allocation of shareholders´ contributions – – 45.0 – – – – – – 45.0 – – 45.0 – – 45.0
Realised gains and losses on sale of subsidiaries and associated companies 0.0 – 0.2
Depreciation / amortisation of property, equipment and intangible assets 55.8 118.3
Unrealised gains and losses on investments in associates – 0.2 – 4.0
Purchase of shares, investment funds and alternative investments – 1 966.9 – 1 417.1
Sale of shares, investment funds and alternative investments 1 498.8 918.0
Effect of exchange rate differences on cash and cash equivalents – 17.7 45.0
Cash and cash equivalents as of 1 January 1 260.3 942.7
Cash and cash equivalents as of 31 December 1 238.4 1 260.3
Other disclosures on cash flow from operating activities: Interest received 746.2 776.5
Helvetia Group is an all-lines insurance group which operates in many sectors of the life and non-life insurance business as well as in reinsurance. The holding company, Helvetia Holding AG, with headquarters in St. Gallen, is a Swiss public limited company listed on the SIX Swiss Exchange.
The amendment to IFRS 4, which was published in September 2016, provides companies that are primarily active in the insurance business with the option to postpone the introduction of IFRS 9 until 1 January 20211 at the latest. Helvetia will exercise this option. It qualifies for this postponement option, as the liabilities arising from the insurance business on the relevant reporting date, 31 December 2015, accounted for over 90 % of the Helvetia Group’s total balance sheet liabilities. Helvetia is thus primarily active in the insurance business.
The adoption of these other amendments did not have any material impact on Helvetia Group’s asset, financial and income situation.
Amendments to IAS 19 – Plan Amendment, Curtailment or Settlement 1 January 2019
Annual improvements to IFRS (cycle 2015 − 2017) 1 January 2019
IFRS 17 – Insurance Contracts 1 January 20211 1 In November 2018, the IASB provisionally decided to defer the coming into force of IFRS 17 from 1 January 2021 to 1 January 2022 and to extend the option for deferring the introduction of IFRS 9 also to 1 January 2022.
Non-controlling interests (minority interests) are valued at the time of acquisition with their proportionate share of the identifiable net assets of the company.
Financial report Summary of siginificant accounting policies investment funds, the unrealised foreign currency result is recognised in equity without affecting the income statement until the financial instrument is sold.
2.5 Estimate uncertainties and key assumptions 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 particular management judgement.
2.5.1 Fair value of financial assets and financial liabilities The fair value of financial assets is equal to the price at which an asset could be sold on the valuation date in a normal business transaction between market participants.
If the range of possible fair values is very large and reliable estimates cannot be made, the financial instrument is measured at cost, less any value adjustments (impairment).
The market value of private equity investments is calculated via the discounted cash flow (DCF) method. This is done by applying the internal rate of return (IRR).
Financial report Summary of siginificant accounting policies 2.5.2 Impairment of available-for-sale investments The judgement as to whether an equity instrument classified as available-for-sale is subject to impairment depends on the existence of objective indications. One decisive criterion is a constant or considerable decrease in the value of an instrument: at Helvetia Group, instruments are considered impaired if their fair value remains below cost for longer than nine months or falls 20 % or more below cost irrespective of the period of time. In addition, ratings and analyst reports can serve as an indication that a company’s circumstances have changed with respect to technology, the market, economy or law, to such an extent that the cost can probably no longer be recovered. In these cases, the need for impairment is examined and – if justified – recorded.
The choice of the discount rate plays an important role in the DCF valuation method. 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, use and location of the property in question. The discount rates applied in the reporting period are set out in section 7.5 (page 115).
The following items are fundamentally classified as current: “Current income tax assets and liabilities ”, “Accrued financial assets” and “Cash and cash equivalents”.
All other items are of a mixed nature. The differentiation between the current and non-current balances of relevant items is explained in the Notes. The maturity schedule of financial assets, financial liabilities and provisions for insurance and investment contracts is described in section 16.5 (from page 165) as part of the risk assessment process.
2.8 Leasing If a lease agreement transfers all risks and rewards incidental to the ownership to 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. The leasing liability is recognised in the same amount. The leasing instalment is broken down into an amortisation component and a financing component. Financing costs are apportioned over the term 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.
Financial report Summary of siginificant accounting policies 2.10 Impairment of tangible assets, goodwill and other intangible assets The carrying 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.
2.11 Investments At Helvetia Group, investments comprise investments in associates, investment property and financial assets (securities, derivative financial assets, loans and money market instruments). The treatment of investments in associates is described in section 2.3.2 (page 78) as part of “Consolidation principles”.
Financial assets are initially recognised at fair value including directly attributable transaction costs. Helvetia Group records all acquisitions and disposals of financial instruments at the trade date. Derecognition of a financial investment occurs on expiry of the contract or at disposal if all risks and control have been transferred and if no rights to cash flows from the investment are retained.
“Financial assets at fair value through profit or loss” comprise “financial assets held for trading” and “financial assets designated as at fair value through profit or loss”. An instrument is classified as “held for trading” if it is held with the aim of making short-term gains from market price fluctuations and dealer margins. Upon initial recognition, financial investments are irrevocably classified as “designated as at fair value” only if they are a component of a particular group of financial assets that, according to a documented investment strategy, are managed on a fair value basis, or their recognition as at fair value serves to compensate for market value fluctuations of liabilities due to policyholders. The value fluctuations that result from the fair value valuation are directly recognised in the income statement and for Group investments are reported separately from current income in the item “Gains and losses on Group investments (net)”.
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 requirement.
2.12 Financial derivatives Derivative financial instruments are classified as “Financial assets held for trading” and are shown in the item “Financial assets at fair value through profit or loss” or are carried as “Derivatives for hedge accounting”. The hedging strategies used by Helvetia Group for risk management purposes are described in section 16 (from page 150).
2.13 Net investment hedge For hedges of currency gains and losses on investments in subsidiaries with a foreign reporting currency, the hedge-effective portion of the gain or loss on the valuation of the hedging instrument is recognised in equity, while the ineffective portion is recognised directly in the income statement.
Those financial liabilities that are held for trading or are irrevocably classified upon initial recognition as “designated as at fair value through profit or loss” are recognised at fair value. The latter classification is given to deposits if they are associated with investment funds or products for which the policyholder benefit is almost identical with the investment return. For these deposits for investment contracts without a discretionary participation feature (see section 2.15, page 84) only the withdrawals and allocations that are part of the operating result are recorded in the income statement. The risk and cost portions of premiums are recognised in the income statement and recorded in the item “Other income”. The policyholder’s deposit is directly credited or debited with the investment portion of the premium.
Written put options on shares in subsidiaries are reported under IFRS as financial liabilities in the amount of the present value of the overall purchase price. These options are recognised in equity with no impact on profit or loss. Helvetia also offsets value changes against equity with no effect on the income statement. Those financial liabilities not held for trading and also not designated as at fair value through profit or loss are recognised at amortised cost. Interest expenses for financial liabilities that are used for financing purposes are recognised in the income statement as “Financing costs”. Depreciation and appreciation resulting from the amortised cost method are offset against interest expenses in the income statement.
2.19 Accrued financial assets Interest income on interest-bearing financial investments and loans that must be allocated to the reporting year are accrued or deferred under financial assets.
2.21 Treasury shares Treasury shares are recorded at cost, including transaction costs, and reported as a deduction from equity. In case of a sale, the difference between cost and sale price is recorded as a change in capital reserves, with no impact on profit or loss. Treasury shares are exclusively shares of Helvetia Holding AG, St. Gallen.
Any current obligations for which an outflow of assets is unlikely or the extent of which cannot be reliably estimated are reported under contingent liabilities.
2.23 Employee benefits Employee benefits include short-term employee benefits, post-employment benefits, other long-term employee benefits and termination benefits.
Equity instruments granted to employees through employee share purchase plans represent compensation for services already rendered for which compensation expenses arise in the granting company. The amount of the compensation expenses is based on the fair value of the equity instruments at the grant date and is expensed over the vesting period.
2.25 Other liabilities Other liabilities are carried at amortised cost, which is generally equal to the nominal value.
The segment “Switzerland” comprises the Swiss country market and the financial intermediaries MoneyPark, Defferrard & Lanz and Finovo. The “Europe” segment comprises the country markets of Germany, Italy, Spain and Austria. The “Specialty Markets” segment includes transport, art and engineering insurance policies in the Switzerland / International and France market units, as well as the global active reinsurance business. The segment “Corporate” includes all Group activities, the Group’s own fund companies, Group reinsurance and Helvetia Holding AG.
The allocation of the individual Group companies to the regions and segments is set out in section 18.3 (from page 177).
Net change in unearned premium reserve 7.1 6.9 – 20.7 – 9.6 – 28.4 – 58.7 – 0.5 1.9 0.3 0.1 – 42.2 – 59.4
Claims incurred including claims handling costs (non-life) – 791.0 – 755.8 – 1 176.4 – 1 072.3 – 599.7 – 560.8 – 133.8 – 146.8 138.5 146.2 – 2 562.4 – 2 389.5
Net benefits to policyholders and claims – 4 298.8 – 4 586.0 – 1 794.5 – 2 014.5 – 569.7 – 495.4 – 68.8 – 56.2 – 2.9 – 2.9 – 6 734.7 – 7 155.0
Reinsurers´ share of acquisition costs 25.8 35.5 76.8 72.9 16.2 12.8 50.9 48.7 – 93.0 – 92.5 76.7 77.4
Current income on Group investments (net) 755.1 769.6 209.2 206.3 20.7 22.2 22.6 19.0 – 20.3 – 15.7 987.3 1 001.4
Reinsurers´ share of benefits and claims 48.9 5.1 134.9 114.9 37.8 73.6 72.6 96.5 – 149.4 – 154.8 144.8 135.3
Gains and losses on Group investments (net) 22.8 38.5 1.9 25.7 2.4 3.1 4.5 19.8 – – 31.6 87.1
Income investments with market risk for the policyholder – 78.6 48.2 – 31.0 32.4 – 6.4 4.7 – 54.5 36.0 – – – 170.5 121.3
Share of profit or loss of associates – – – – 0.6 0.6 0.0 0.1 – – 0.6 0.7 of which transactions between geographical segments 2.0 1.5 – – – – – 2.0 – 1.5 188.8 175.0 188.8 175.0
Net change in unearned premium reserve – 1.1 – 0.2 – 14.3 1.9 – 3.9 – 10.6 – 1.4 – 0.7 0.0 0.0 – 20.7 – 9.6
Total revenues from external customers 904.5 963.1 812.5 838.9 480.3 454.5 463.8 559.0 188.8 175.0 2 849.9 2 990.5
Income attributable to deposits for investment contracts – – 31.0 – 32.3 – – – – – – 31.0 – 32.3
Profit or loss before tax 27.9 36.1 37.3 25.0 44.7 42.2 39.4 26.7 – – 149.3 130.0
Net change in unearned premium reserve 6.6 6.7 – 48.6 – 68.1 – 0.5 1.9 0.3 0.1 – 42.2 – 59.4
Current income on Group investments (net) 851.0 864.7 138.2 138.4 23.3 19.6 – 25.2 – 21.3 987.3 1 001.4
Income investments with market risk for the policyholder – 220.6 159.5 – – 4.9 – – – – 215.7 159.5
Claims incurred including claims handling costs (non-life) – – – 2 568.6 – 2 390.1 – 133.8 – 146.9 140.0 147.5 – 2 562.4 – 2 389.5
Net benefits to policyholders and claims – 4 283.1 – 4 868.6 – 2 379.9 – 2 227.2 – 68.8 – 56.3 – 2.9 – 2.9 – 6 734.7 – 7 155.0
Reinsurers´ share of acquisition costs 19.6 17.5 99.2 103.7 50.9 48.7 – 93.0 – 92.5 76.7 77.4
Profit or loss from operating activities 197.7 220.0 420.5 375.0 – 43.2 – 3.9 – 17.0 – 12.5 558.0 578.6
Cash flow from financing activities (net) 99.0 302.7 – 48.6 55.0 – 116.9 – 47.3 – 133.4 44.4 0.0 – 4.7 – 199.9 350.1
Depreciation and amortisation on tangible and intangible assets – 6.9 – 6.8 – 26.8 – 83.9 – 18.6 – 28.1 – – – 52.3 – 118.8
Financial report Segment information 3.3 Additional information by segment: Switzerland Europe Specialty Markets Corporate Elimination Total in CHF million - financial assets with market risk for the policyholder 1 080.6 1 120.3 2 438.8 2 530.8 – – – 132.3 – – – 3 387.1 3 651.1 of which technical provisions (gross) 33 082.0 32 889.6 10 028.1 10 377.4 1 768.1 1 621.2 401.5 449.3 – 402.4 – 445.6 44 877.3 44 891.9
Impairment of tangible and intangible assets affecting income – – – 3.3 – – 0.4 – 0.3 – – – – – 3.7 – 0.3
Share-based payment transaction costs – 1.1 – 2.1 – – – – – 0.6 – 2.6 – – – 1.7 – 4.7 by business activity: Life Non-life Other activities Elimination Total in CHF million
Reversal of impairment losses on tangible and intangible assets affecting income – – 0.2 0.8 – – – – 0.2 0.8
Gross premiums and deposits received life 4 677.2 4 547.5 2.9 2.1
Jan–Dec Jan–Dec 4.2 Foreign exchange gains and losses The foreign exchange results in the consolidated income statement in the reporting year show a loss of CHF 99.9 million (previous year: loss of CHF 0.4 million).
Revaluation gains on transfers to investment property – – 7.6 – – – – – 7.6 –
Change in the scope of consolidation 3.4 36.9 0.9 6.9 4.3 43.8
Book value as of 31 December 1 129.1 1 134.9 134.7 90.4 1 263.8 1 225.3 Book value as of 1 January 1 134.9 1 077.1 90.4 140.9 1 225.3 1 218.0
Goodwill of CHF 3.4 million was recognised in 2018 through the acquisition of Finovo AG and allocated to the cash generating unit “Intermediary and advisory business”. Goodwill of CHF 36.9 million was recorded in 2017 in connection with the acquisition of the mortgage broker Defferrard & Lanz SA (see section 18, page 175).
The impairment test carried out in 2018 did not result in any impairment requirement. The impairment test compares the recoverable amount to the carrying value. The recoverable amount is determined by calculating the value in use. This calculation requires management to make estimates of expected cash flows to be derived from the asset. These free cash flows are considered for a period of three to five years and are based on the budget and the strategic plans approved by management. The growth rate is set by management and is based on past experience and future expectations. The applied discount rates are pre-tax rates and take account of the risks attached to the business units in question.
Gains and losses on Group investments (net) 7.1.3 – 192.9 347.3
Investment result from Group financial assets and investment property 794.4 1 348.7
Investment income (net) 580.1 1 513.4 7.1.1 Current income from investments by class
Current income on financial assets (gross) 758.0 771.1 14.0 14.9 772.0 786.0
Current income on financial assets (net) 744.6 759.8 14.0 14.9 758.6 774.7
Current income from investment property (net) 242.7 241.6 – – 242.7 241.6
FX effects from loans to subsidiaries – 29.3 40.4 – – – 29.3 40.4
Gains and losses on financial assets (net) – 281.3 314.3 – 229.7 144.6 – 511.0 458.9
The gains and losses reported for the HTM category also contain book gains and losses from foreign currency translations.
The table above includes increases in impairment losses on financial assets of CHF 15.8 million (previous year: CHF 3.2 million) as well as impairment loss reversals on financial assets of CHF 2.6 million (previous year: CHF 3.8 million).
Result from investments with market risk for the policyholder – 215.7 159.5
Derivative financial assets 182.4 54.9 237.3 as of 31.12.2017 Notes Group investments
Financial report Investments 7.3 Investments by business area as of 31.12.2018 Notes Life Non-life Other and elimination Total in CHF million
Financial assets by class 7.6 as of 31.12.2017 Notes Life Non-life Other and elimination Total in CHF million
Investments in associates accounted for under the equity method are listed in the table in section 18.3 (from page 177).
Book value as of 31 December 26.9 25.8 1 Details on additions and disposals for associates are provided in Note 18, “Scope of consolidation”.
Helvetia Group’s share in the liabilities of associates amounted to CHF 42.2 million (previous year: CHF 37.4 million). Helvetia did not have any share in the contingent liabilities of associates (previous year: none).
Foreign currency translation differences – – 22.2 – 22.2 46.8 1 Recognised in the income statement as ”Gains and losses on Group investments (net)”.
In the reporting year, the discounted cash flow method was based on discount rates ranging from 3.2 % to 6.5 % (previous year: 3.0 % to 6.0 %). If the discount rates were increased by 10 basis points, the value would be reduced by CHF 187.6 million. If the rental income that can be earned in the long term were reduced by 5 %, there would be a negative effect of CHF 474.4 million.
For all other portfolios, measurement is based on valuation reports by independent experts. Both valuation methods are allocated to the “Level 3” category.
Total “loans and receivables” (LAR)1 9 181.2 9 159.4 9 181.2 9 159.4 9 697.9 9 770.2 53.4 52.6 9 642.5 9 717.6 2.0 –
Total financial assets at fair value 33 075.3 33 610.6 31 210.1 30 561.4 1 424.4 2 070.6 33 075.3 33 610.6 17 584.8 15 922.3 14 949.0 17 517.1 541.5 171.2 1 Excl. assets receivables from insurance business and reinsurance.
Helvetia recognises transfers between the valuation category levels at the end of the reporting period in which the changes occurred. Financial investments of CHF 11.1 million were transferred from “Level 3” to “Level 2” (previous year: CHF 2.4 million from “Level 2” to “Level 3” and CHF 2.9 million from “Level 3” to “Level 1”).
Other changes in the “Level 3” total result from sales in the amount of CHF 16.9 million (previous year: CHF 2.0 million) and acquisitions in the amount of CHF 372.3 million (previous year: CHF 156.6 million).
The replacement of one or more measurement assumptions by plausible alternatives would not have any material impact on the measurement of the “Level 3” investments.
Maturity profile of contract values Contract value Fair value as of 31.12. < 1 year 1–5 years > 5 years 2018 2017 2018 2017 in CHF million
Total derivatives for hedge accounting 383.4 – – 383.4 480.0 13.8 1.7
Change in the scope of consolidation – – – – – –
Reversal of impairment losses – 2.6 – 3.8 – – – 2.6 – 3.8
7.9 Fair value of SPPI financial instruments Helvetia exercised the option1 to postpone the introduction of IFRS 9.
The Helvetia Group classifies financial liabilities according to their origin as financial liabilities from financing activities, financial liabilities from insurance business and other financial liabilities. Financial liabilities from insurance business are reported as a component of the insurance business in section 9.8 (page 131).
Section 16.5 (page 165) contains a maturity profile of loans and financial liabilities.
Total financial liabilities at amortised cost 1 318.9 1 342.1 1 318.9 1 342.1 1 354.9 1 443.4
Total financial liabilities at fair value 258.3 274.1 209.7 195.4 258.3 274.1
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 34.6 million (previous year: CHF 29.7 million) under “Financing costs”. The interest expense from bonds in equity is recognised as a dividend distribution in equity.
Minority interests in own funds include the investments of the Helvetia pension and supplementary funds in Helvetia I Funds.
Helvetia Holding AG CHF 150 Mio. 1.125 % 2 013 08.04.2019 1.17 % 150.0 149.9
Present value liabilities from finance lease 2.4 9.9 2.3 14.6 17.7 8.2 Other financial liabilities
The carrying amounts equal the fair value. The line item “Other” at amortised cost also contains the collateral received for ongoing derivatives transactions.
Total reserves for insurance business 46 033.2 46 073.8 458.8 506.4 45 574.4 45 567.4 9. Insurance business
Financial report Insurance business 9.1.1 Reserves for insurance business by business area
Actuarial reserves for insurance contracts life 34 187.7 33 897.1 59.6 76.9 34 128.1 33 820.2
Reserves for life insurance contracts 35 924.2 35 845.2 63.9 81.9 35 860.3 35 763.3
Provision for policyholder participation – non-life contracts 57.7 58.6 – – 57.7 58.6
Total reserves for insurance contracts 42 087.7 42 020.0 458.8 506.4 41 628.9 41 513.6
Reserves for investment contracts with descretionary participation features 2 789.6 2 871.9 – – 2 789.6 2 871.9
Total reserves for investment contracts 3 945.5 4 053.8 – – 3 945.5 4 053.8
The Liability Adequacy Test (LAT) for non-life business resulted in an additional increase in loss reserves of CHF 46.6 million as of 31 December 2018 (previous year: CHF 45.0 million).
Insurance conditions and risks in the non-life business are described in section 16.2 (from page 152). The following table sets out the development of loss reserves for the previous ten years.
Year of loss occurrence before 2009 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total in CHF million
Estimated claims after year of loss occurence 2 094.7 2 143.3 2 437.7 2 554.2 2 546.4 2 321.8 2 752.4 2 437.7 2 803.6 2 677.6
Accumulated claims paid as of 31 December – 2 010.9 – 2 060.0 – 2 292.6 – 2 430.7 – 2 388.3 – 2 058.0 – 2 229.6 – 1 980.2 – 1 948.0 – 1 252.6
Loss reserves as of 31 December 4 846.7 1 Effects of the acquisition of Nationale Suisse and Basler Austria in 2014 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 in 2010 4 Due to the demarcation effect for contracts on an underwriting year basis (active reinsurance, parts of the transport business), the claims cost increased in the second insurance year.
Across the Group the LAT required an allocation of additional actuarial reserves of CHF 17.1 million as of 31 December 2018 (previous year: CHF 19.9 million).
In the Swiss life business, the actuarial reserves increased by CHF 49.4 million due to changes to local actuarial assumptions, in particular assumptions regarding mortality, expected claims for disability and the maximum interest rate for reserves, within the framework of the standard periodic review. Furthermore, the “Teuerungsfonds” (cost of living adjustment fund) set up by Swiss companies to finance adjustments in current disability and surviving dependants’ pensions had to be dissolved in 2018 and replaced by proprietary reserves. This led to a one-off reduction in reserves held by Helvetia Leben of CHF 124.5 million, part of which was again used to strengthen the reserves and the remaining part added to the bonus reserves.
Investments with market risk for the policyholder 3 519.4 3 651.1
Total liabilities with market risk for the policyholder 3 570.6 3 689.0
Financial report Insurance business 9.5 Reinsurance assets as of 31.12. Notes 2018 2017 in CHF million
Due from / due to policyholders 640.3 547.3 1 598.5 1 415.1
Financial report Insurance business 9.7.1 Analysis of past due receivables without individual impairment in CHF million
The analysis of past due receivables contains all past due receivables that were not impaired individually or on a portfolio basis.
Total financial liabilities from insurance business 1 710.4 1 779.6 1 710.4 1 779.6 1 710.4 1 779.6
Financial report Income taxes 10.1 Current and deferred income taxes in CHF million
The expected tax rate applicable to the Helvetia Group was 22.1 % for 2018 (previous year: 22.5 %). This rate is derived from the weighted average of expected tax rates in the individual countries where the Group operates.
Financial report Income taxes 10.4 Taxes on expenses and income recognised in other comprehensive income before tax deferred taxes after tax in CHF million
Change in unrealised gains and losses on investments – 646.3 – 39.0 155.0 31.2 – 491.3 – 7.8
Change from net investment hedge 7.6 – 17.8 – – 7.6 – 17.8
Change in liabilities for contracts with participation features 0.4 – 12.0 0.0 2.5 0.4 – 9.5
Valuation differences on shares in subsidiaries of CHF 3,276.5 million (previous year: CHF 3,405.3 million) did not lead to the recognition of deferred tax liabilities, as either a reversal of the differences through realisation (dividend payment or sale of subsidiaries) is unlikely in the near future, or the gains are not subject to taxation.
Net tax assets from losses carried forward 22.3 23.2 10.6.2 Losses carried forward without tax assets recognised As at 31 December 2018, no tax assets were recognised for losses carried forward of CHF 95.1 million (previous year: CHF 93.9 million), as the related tax benefits cannot be expected to be realised with the current earnings situation of the respective companies. These loss carryforwards do not have an expiry date. The tax rates applicable to material losses carried forward for which no tax assets were recognised range between 17.0 % and 28.9 % (previous year: 24.0 % to 27.8 %).
The treasury shares that were granted to Helvetia Group employees at favourable terms under the Helvetia employee share purchase plan did not come from the company’s own stock but were acquired on the market. This resulted in a loss of CHF 1.5 million (previous year: CHF 1.4 million), which was charged to the capital reserve without affecting profit or loss. This amount represents the difference between the market purchase price and the reduced price for employees.
The reserve is adjusted at the reporting date by the portion relating to contracts with participation features and deferred taxes. The portion reserved for the owners of contracts with participation features is transferred to “Liabilities”. This item plus foreign exchange influences amounts to CHF – 313.5 million (previous year: CHF − 65.3 million). The remaining portion regarding contracts is allocated to the "Valuation reserve for contracts with participation features in equity" (see section 11.2.5, page 138).
During the reporting year, a transfer of CHF − 0.1 million was made (previous year: CHF − 0.3 million ) to retained earnings as a consequence of disposals of owner-occupied properties transferred to investment property.
Fair value revaluation incl. foreign currency translation differences – 440.6 109.0 – – – 0.6 1.1 – 441.2 110.1
Gains reclassified to the income statement due to disposals – 176.2 – 152.7 – – – – – 176.2 – 152.7
Financial report Equity 11.2 Reserves 11.2.1 Capital reserves The capital reserve consists of assets paid in by third parties. The capital reserve primarily comprises the share premium of shares issued by Helvetia Holding AG and the preferred securities of Helvetia Group as well as the result from treasury share transactions.
Revaluation from reclassification of property and equipment – – – – 7.6 – 7.6 –
Total retained earnings as of 31 December 3 441.8 3 278.4
The valuation reserve for contracts with participation features comprises the share of unrealised gains and losses on investments relating to contracts with profit participation recognised directly in equity, and the portion from retained earnings arising from valuation differences. The use of the reserves is at the insurer's discretion (see section 2.15.2, from page 85).
Change in valuation reserve for contracts with participation features in CHF million
Balance as of 31 December 472.5 652.6 less: Deferred taxes – 102.8 – 144.5
11.3 Preferred securities In 2015, Helvetia Schweizerische Versicherungsgesellschaft AG issued a subordinated perpetual bond for CHF 300 million. This bond meets all solvency requirements and is allocated to equity.
11.5 Earnings per share 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 including 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.
Profit or loss for the period 431 011 515 402 900 245
Earnings for shareholders and non-controlling interests 412 678 546 384 624 776
Earnings per share 41.87 39.12 11.6 Dividends The Board of Directors will submit a proposal to the Shareholders’ Meeting of 3 May 2019 to pay a dividend of 24.00 per share (previous year: CHF 23.00) with the total payout amounting to CHF 238.7 million (previous year: CHF 228.7 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.
Financial report Provisions and other commitments 12.1 Non-technical provisions in CHF million
Operating lease liabilities The Helvetia Group is a lessee in a number of operating leases. As a result, it has future lease liabilities amounting to CHF 12.5 million (previous year: CHF 12.3 million) due in less than one year, CHF 25.9 million (previous year: CHF 38.4 million) due between one and five years and CHF 17.6 million (previous year: CHF 6.4 million) due in more than five years.
Total personnel costs 933.4 868.2 13.2 Employee benefit receivables and obligations
There are several foundations in Switzerland designed to provide benefits to employees upon retirement and in the event of disability as well as after their death to their surviving dependants in accordance with the Swiss Federal Law on Occupational Retirement, Survivors’ and Disability Pension Plans (BVG). The benefits provided by the pension fund meet at least the statutory minimum required by the BVG. Contributions to the pension fund are set as a percentage of the employee’s pensionable annual salary, deducted from the salary by the employer and transferred every month to the pension fund, together with the employer’s contributions. In the reporting year there were no significant transactions between the pension fund and the Helvetia Group that are not directly related to employee benefits.
Fair value of plan assets (–) – 2 837.3 – 2 885.7
Defined benefit obligation as of 1 January 3 441.9 3 379.8
As at 31 December 2018, 89.8 % (previous year: 89.5 %) of the pension obligations resulted from pension plans in Switzerland.
Fair value of plan assets as of 1 January 2 885.7 2 679.9
Fair value of plan assets as of 31 December 2 837.3 2 885.7 1 This item includes paid-in and withdrawn vested benefits as well as pensions and annuities.
Employer contributions in 2017 contain a financial contribution by Helvetia to compensate for the plan changes introduced in 2018.
Duration of the defined benefit liability (in years) 14.7 15.1 15.9 16.1
Financial report Share-based payments 14.1 Employees of the Helvetia Group in Switzerland The Helvetia employee share purchase plan enables employees to acquire registered Helvetia Holding AG shares. With this plan, employees can directly and voluntarily participate in the added value created by the Group at preferential conditions. All employees of Helvetia in Switzerland are eligible if they are in regular employment (not on notice) and entitled to variable compensation. The number of available shares is specified by the Board of Directors, taking account of the functions of the employees concerned. All shares acquired in this manner are transferred to the ownership of the employee upon receipt and are subject to a mandatory vesting period of three years. The costs associated with the share purchase plan in 2018 were recognised in the income statement at CHF 1.5 million (previous year: CHF 1.4 million).
14.2 Members of the Board of Directors On 1 January 2018, the Board of Directors amended the compensation regulations so that the Board of Directors would no longer receive any variable compensation. The Board of Directors will now receive 30 % of fixed compensation – converted at the closing price on the evening of the meeting of the Nomination and Compensation Committee before the Group media conference – in sharesblocked for a minimum of three years. This procedure already applied mutatis mutandis to the compensation for the Board of Directors in 2017. Instead of variable compensation, they received a fixed sum in the form of blocked shares.
For the 2018 financial year, the Board of Directors received an amount of CHF 0.7 million in blocked shares (previous year: CHF 0.5 million). This corresponds to 1 166 shares at a price of CHF 600.00 as of reference date 4 March 2019 (previous year: 826 shares at CHF 569.00).
14.3 Members of the Executive Management The members of the Executive Management receive as part of their variable compensation a long-term compensation component (LTC). The Board of Directors determines the extent of target achievement for the LTC. The percentage of LTC target achieved for all Executive Management members is based on four criteria: profit, growth, shareholder value and risk-adjusted return. The reference figure, which is multiplied by the extent of target achievement, is a percentage of up to 40 % of the fixed salary component. The LTC is converted into a specific number of shares that are allocated to the Executive Management member as a deferred payment after three years. The conversion price per share is the closing stock exchange price for the Helvetia Holding share on the date the extent of target achievement is set by the Nomination and Compensation Committee. For the 2018 financial year, LTC shares to the value of CHF 1.7 million were allocated (previous year: CHF 1.5 million). This corresponds to 2,823 shares at a price of CHF 600.00 as of reference date 4 March 2019 (previous year: 2,678 shares at CHF 569.00). This payment is recognised proportionally in the income statement every year until ownership of the shares is transferred and amounted to CHF 1.0 million for 2018 (previous year: CHF 1.0 million).
14.4 Members of the Executive Management teams of the foreign subsidiaries
The members of the Executive Management teams of the foreign subsidiaries receive a variable salary component from the Group in addition to the local compensation which is calculated by multiplying the extent of target achievement by a reference figure equalling 10 % of the basic salary. This results -based component is paid out in the form of 1,030 shares (previous year: 1,141). The conversion price per share is calculated as described in section 14.3. All shares acquired in this manner are transferred to the ownership of the Executive Management members upon receipt and are subject to a mandatory vesting period of three years. The share-based payments for the 2018 financial year amounted to CHF 0.6 million (previous year: CHF 0.5 million).
Financial report Related party transactions 15.1 Transactions with related companies “Related companies” are the cooperation partners represented on the Board of Directors of Helvetia Group, i.e. Patria Genossenschaft and the pension funds and all associates of Helvetia Group. The latter two are discussed in section 13.3 “Defined benefit plans” (page 142) and section 7.4 “Investments in associates” (page 112).
Helvetia Schweizerische Lebensversicherungsgesellschaft AG and Patria Genossenschaft have concluded agreements for capital support. Each of these agreements refer to a specific financial year. Two such agreements entered into force on the reporting date 31 December 2018. Under one agreement, Patria Genossenschaft undertakes to contribute regulatory capital of up to CHF 100 million to Helvetia Schweizerische Lebensversicherungsgesellschaft AG until 30 June 2020 should certain adverse scenarios arise in the 2019 financial year. Under the other agreement, Patria Genossenschaft undertakes to contribute regulatory capital of up to CHF 100 million to Helvetia Schweizerische Lebensversicherungsgesellschaft AG until 30 June 2019 should certain adverse scenarios arise in the 2018 financial year. The agreements will, if needed, be executed at normal market conditions.
Helvetia Group does not have interlocking directorates or cross-involvement in the boards of directors of listed companies. With the exception of Patria Genossenschaft, transactions with cooperation partners are within the extent usual for Helvetia Group, either as a single transaction or overall. The dividend payment to Patria Genossenschaft in the amount of CHF 78.0 million (previous year: CHF 71.2 million) and the contribution of CHF 45 million (previous year: CHF 40 million) from Patria Genossenschaft to Helvetia Schweizerische Lebensversicherungsgesellschaft AG were the only significant transactions in the reporting period.
The total compensation paid to the members of the Board of Directors and the Group Executive Management comprises: in CHF
Salaries and other short-term employee benefits 10 934 810 12 118 288
Employer contributions to pension funds 2 758 313 2 175 157 1 Subject to approval by the Shareholders’ Meeting.
– to Beat Müller at a total sum of CHF 1,170,000 (previous year: 1,170,000). The loan to Beat Müller of CHF 986,000 earned interest at 1.40 % (previous year: 1.40 %), the extra mortgage of CHF 184,000 at 1.34 % (previous year: 1.34 %).
– to Paul Norton at a sum of CHF 500,000 (previous year: CHF 500,000). The loan earned interest at 0.98 % (previous year: 0.98 %).
Financial report Related party transactions 15.2.3 Shares of Group Executive Management The shares held by the members of the Executive Management and persons closely related to them as of the end of the year are listed in the following table: Number of shares
Regula Wallimann (member)1 50 1 Joined the Helvetia Board of Directors as of 20. April 2018 2 Stood down from the Board of Directors of Helvetia with effect from 20 April 2018
In addition to the ownership of shares as reported, the active members of the Board of Directors have deferred claims to a total of 721 shares acquired under the LTC programme.
Active Reinsurance 521.6 521.6 as of 31.12.2017 Switzerland Europe Specialty Markets Total in CHF million Germany Italy Spain Austria
This table was created using principles on which the segment reporting in section 3 (from page 89) is based. Group reinsurance is included in the “Corporate” segment and in the “Other activities” business area. Information on gross premiums and cessions in these segments can be found in section 3. The role of Group Reinsurance is shown in the following sections. The description below of the risks is also relevant for the Group Reinsurance business as some of the risks of the non-life business are transferred in the form of reinsurance to the “Corporate” segment so that a centralised transfer can then be made to the reinsurance market.
Reinsurance Despite the balancing of risks through diversification, individual risk clusters (e.g. in the form of individual large risks) or risk accumulations (e.g. via cross-portfolio exposure to natural disasters) may occur.
Active reinsurance considers itself as a “follower” and usually holds smaller parts of reinsurance contracts. This policy of small holdings, combined with broad diversification (geographically and by insurance segment), leads to a balanced reinsurance portfolio free of major risk clusters.
Gross premiums by business activities and region in the life business as of 31.12.2018 Switzerland Europe Total in CHF million Germany Italy Spain Austria as of 31.12.2017 Switzerland Europe Total in CHF million Germany Italy Spain Austria 16.3.1 Traditional individual life insurance and investment-linked life insurance For private persons, Helvetia Group offers pure risk insurance, savings insurance and endowment insurance, annuity insurance, as well as investment-linked products. Depending on the product, premiums are paid as single or regular premiums. Most of the products include a discretionary participation feature, although some countries regulate the minimum amount of profit participation to be credited to the customer. Traditional individual life insurance accounts for 23.3 % (previous year: 24.3 %) of the gross premium volume of the life business of Helvetia Group, with 55.7 % of the premiums (previous year: 59.2 %) coming from Switzerland. Investment-linked life insurance (index and unit-linked products) contributes 15.4 % to the life business of the Helvetia Group (previous year: 14.8 %). 43.9 % of the premiums (previous year: 41.0 %) from the investment-linked life business originate in Switzerland.
Financial report Risk management 16.3.2 Group life insurance Group life insurance accounts for 61.3 % (previous year: 60.9 %) of the gross premium volume of the life business of Helvetia Group, with 96.7 % of the premiums (previous year: 97.0 %) coming from Switzerland. In future, group life insurance will only refer to occupational pension plans in Switzerland, as the characteristics of the other group life insurance products are very similar to individual insurance. In Switzerland, under the Occupational Pensions Act (BVG) companies are obliged to insure their employees against the following risks: death, disability and age. Helvetia Switzerland offers products that cover these risks. Most of these products include a discretionary participation feature whose minimum amount is statutorily or contractually prescribed.
Statutory regulations stipulate for the majority of products that a minimum of 90 % of revenue must be used for the benefit of the customer. For example, a portion of the capital gains above the guaranteed minimum interest rate must be returned to the customer in the form of policyholder dividends. For most products for which this statutory provision does not apply there are similar provisions in the contractual agreements with customers.
16.3.3 Risk management and sensitivity analysis Helvetia Group has designed its business processes in accordance with the principle of entrepreneurial caution. This assumes that the risks can be adequately assessed, evaluated, monitored and controlled.
In individual life, an insurance policy which includes death or morbidity risk may under normal conditions be underwritten only on the condition of good health. The review of the application includes confirming that this condition has been met. The review uses a health questionnaire, and from a certain level of risk, is supplemented by a medical examination.
For the mandatory component of the insurance policy, it is forbidden to exclude someone from a company ’s insurance on account of ill health. However, certain benefits may be excluded in the non-mandatory part, or a premium for the increased risk may be required. However, there is no obligation to insure a company. On the basis of benefits previously claimed by the company and based on estimates of future claims potential, it is 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, with the retained amount varying by country. In addition, Helvetia Switzerland, Helvetia Spain and, for some specific risks, Helvetia Italy are reinsured against catastrophic events that may concurrently cause several casualties or claim several lives.
Pension options with guarantees, partially also mandatory conversion rates, included in the products represent an additional risk. In particular, the high mandatory BVG conversion rate in the group life insurance in Switzerland had brought about expected losses for which reserves were used at the expense of the profit participation of the policyholders. The proportion of policyholders who receive a pension at retirement and do not withdraw the capital as well as the conversion rates are monitored and the reserves kept at a sufficient level by means of possible reserve increases.
The table below shows how changed parameters have an effect on the income statement. Referring to the overall portfolio, an increase in mortality by 10 % across all Helvetia Group companies would have no great effect. A 10 % reduction in mortality would lead to a reserve increase with a corresponding impact on the income statement.
Interest rate risk 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 2018, 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 4.0 % in EUR and 3.5 % in CHF. Rising interest rates could cause a greater number of endowment contracts to be cancelled. However, as in most countries premature contract terminations are associated with significant tax consequences and products with high interest rate sensitivity are usually subject to a deduction to take account of lower fair values of the underlying investments when the contract is terminated, this risk can be considered low.
16.4 Market risks As at 31 December 2018, Helvetia Group managed investments totalling CHF 52.0 billion (previous year: CHF 52.3 billion).
Derivative financial assets for hedge accounting 13.8 – – – – 13.8 as of 31.12.2017 < 1 year 1–5 years 5–10 years > 10 years Without maturity Total in CHF million
Loans (LAR) incl. money market instruments 1 079.0 2 571.6 3 496.4 1 798.3 214.1 9 159.4
Actuarial reserves for insurance and investment contracts: Average technical interest rate in per cent 1.13 2.46 1.86 0.00
Actuarial reserves for insurance and investment contracts: – excluding interest guarantee 925.7 – 1 532.0 –
Interest rate level 2018 Interest rate level 2017 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 – 194.7 195.2 – 205.7 203.8
Market risks are mitigated through hedging strategies. Out-of-the-money put options are largely used to comply with internal loss limits. Direct investments in equities represent 5.5 % (before hedging) of the Group's financial assets (excluding investments from life insurance policies with the market risk borne by the customers). A substantial portion is hedged against the risk of significant losses.
In the table above, the impact of changes in exchange rates on the income statement of Helvetia Group is analysed, taking into account deferred taxes and the legal quota. In accordance with IFRS requirements, only the monetary financial instruments and insurance liabilities in non-functional currencies and derivative financial instruments were included in the evaluation.
Current income tax assets 4.8 15.2 – – 20.0 as of 31.12.2018 CHF EUR USD Others Total in CHF million
Consolidated foreign currency balance sheet 2017 as of 31.12.2017 CHF EUR USD Others Total in CHF million
Provision for future policyholder participation 1 562.3 388.7 – – 1 951.0
Financial report Risk management 16.5 Liquidity risk Helvetia Group has sufficient liquid assets to meet unanticipated cash outflows at any time. Liquid assets (cash, premiums to be invested, liquid equities and interest-bearing securities) exceed the volume of annual net cash flows many times. In addition, the Group manages assets and liabilities in terms of their liquidity. On the liabilities side of the balance sheet, there are no significant individual positions with liquidity risk. A portion of the Group’s investment portfolio is composed of investments with no liquid markets such as real estate and mortgages. These investments can only be realised over an extended period of time.
Unearned premium reserve (gross) 1 453.5 – – – – 1 453.5
Total reserves for insurance and investment conas of 31.12.2017 < 1 year 1–5 years 5–10 years > 10 years Without maturity Total in CHF million
Provision for future policyholder participation 169.9 81.3 30.5 48.4 1 620.9 1 951.0
Total reserves for insurance and investment contracts (net) 6 630.9 12 318.6 8 363.6 15 457.8 1 614.6 44 385.5
as of 31.12.2018 Callable at any time < 1 year 1–5 years 5–10 years > 10 years Without maturity Total in CHF million
Other financial and other liabilities 0.9 225.2 48.0 – – – 274.1
– Counterparty risks associated with loans and mortgages: The largest items in the asset class of loan form the promissory note loans (92.9 %), as well as policy loans (5.3 %). 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 (page 170) for the amount of gross counterparty risk exposure in connection with derivative financial instruments. A small part of the derivative instruments is traded on a stock exchange, so there are no counterparty risks. Most of the outstanding receivables from the OTC derivatives are covered by collateral. The scope of the hedging with cash collateral is CHF 138.9 million (previous year: CHF 54.0 million). Existing netting agreements are also relevant. Refer to the table for detailed information about derivative financial instruments.
– Counterparty risks from the insurance business: the default of other counterparties (policyholders, insurance agents, insurance companies) may lead to a loss of receivables from the insurance business. On the balance sheet, the maximum gross exposure would correspond to the items shown in section 9.7 (from page 129) “Receivables from policyholders, insurance agents and insurance companies ” (after deducting receivables from the reinsurance business recognised under “Credit risk exposure from ceded reinsurance”). However, these receivables are largely of a short-term nature. In addition, the receivables from policyholders represent the largest group in this class. Since the insurance cover is linked to the fulfilment of the contractual obligations on the part of the customer, the resulting risk is relatively low for the insurance company.
Gross and net amounts of financial instruments in the balance sheet Offsettable, non-netted amounts as of 31.12.2018 Financial instruments Cash collaterals Net amount in CHF million
Gross and net amounts of financial instruments in the balance sheet Offsettable, non-netted amounts as of 31.12.2017 Financial instruments Cash collaterals Net amount in CHF million
Not rated 11.7 1.8 as of 31.12.2017 Exposure Share in %
Issuer rating Book value total Securities rating Bonds Money market instruments Derivative financial assets Borrower's note loans Other loans as of 31.12.2018 AAA AA A BBB and lower Not rated in CHF million
United States of America (Govt) AAA 511.4 511.4 – – – – – – – –
European Union AAA 474.3 474.3 – – – – – – – –
France (Govt) AA 814.4 – 804.2 10.2 – – – – – –
1 Measured by the cretit risk exposure shown in the tables “Credit quality of debt instruments” and “Credit risk from ceded reinsurance”
No additional important events occurred before or on 5 March 2019, 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.
Financial report Scope of consolidation 18.1 Events in the reporting year In the reporting period, the following events led to a change in the scope of consolidation for Helvetia Group: – Liquidation of Previsur Agencia de Seguros S.L., Seville, on 8 February 2018.
– On 14 February 2018, MoneyPark AG acquired 100 % of Finovo AG, Opfikon. Finovo AG markets, grants and manages mortgage loans and also provides advisory services for the finance and real estate sector, primarily in Switzerland. The purchase price was CHF 3.9 million in cash paid on the purchase date. Goodwill of CHF 3.4 million was recognised in connection with this transaction. The goodwill represents future return potential from supplementing the existing MoneyPark portfolio. It is assigned to the “Switzerland” segment and is not expected to be deductible for tax purposes.
Frankfurt a.M., was increased by EUR 17.0 million. – On 26 November 2018, Helvetia Marine Services Ltd., London, was founded. – In 2018, the holding in INZMO UG, Berlin, was reduced from 54.67 % to 50.60 %. – In 2018, the holding in Helvetia Venture Fund S.A. was increased from 98.00 % to 98.21 %.
18.2 Events in the previous period – On 1 January 2017, Helvetia Schweizerische Lebensversicherungsgesellschaft AG, fully acquired IFANG
– On 10 July 2017, MoneyPark AG acquired 100 % of the mortgage broker Defferrard & Lanz SA based in Lausanne. The merger will allow MoneyPark to tap into the strategically important market in French-speaking Switzerland in a quick and comprehensive manner. The purchase price was CHF 45.5 million, consisting of CHF 43.5 million paid in cash and a purchase price retention arrangement of CHF 2.0 million, due within the next two years, connected to the retention of the key employees in the company.
The following overview shows the assets and liabilities at fair value acquired as part of the acquisition of IFANG and Defferrard & Lanz: IFANG Defferrard & Lanz in CHF million
– Helvetia Beteiligungen AG, St. Gallen, merged with Helvetia Schweizerische Versicherungsgesellschaft AG, St. Gallen, on 16 June 2017. The merged entity operates as Helvetia Schweizerische Versicherungsgesellschaft AG, St. Gallen.
– Helvetia Venture Fund acquired 54.7 % in INZMO UG, Berlin with effect from 25 November 2017.
The company will be managed as an equity holding. – MoneyPark AG, Wollerau, completed a capital increase of CHF 47.5 million on 4 December 2017.
– During the period under review, the investment in the associated company Gesnorte S.A., Madrid, was increased from 26.0 % to 27.7 %.
Medicall AG, Brüttisellen Non-life 79.78 full CHF 0.9 smile.direct Versicherungen, Wallisellen1 Non-life 100.00 full CHF –
Helvetia Vermögens- und Grundstücksverwaltung GmbH & Co. KG, Frankfurt a.M. Life 100.00 full EUR 69.2
Smart Insurance & IT Solutions GmbH, Vienna2 Other 100.00 full EUR 0.0 protecta.at Finanz- und Versicherungsservice GmbH, Vienna Other 100.00 full EUR 0.0
Helvetia Compagnie Suisse d'Assurances S.A., Direction pour la France, Le Havre1 Non-life 100.00 full EUR
Compagnie Européenne d'Assurance des Marchandises et des Bagages S.A., Bruxelles Non-life 100.00 full EUR 1.8
1 Branches 2 RZD Datenverarbeitungsgesellschaft GmbH was renamed Smart Insurance & IT Solutions GmbH with effect from 1 August 2018.
We have audited the consolidated financial statements of Helvetia Holding AG and its subsidiaries (the Group), which comprise the consolidated balance sheet as at 31 December 2018 and the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion the consolidated financial statements (pages 68 to 178) give a true and fair view of the consolidated financial position of the Group as at 31 December 2018, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.
When valuing life reserves, management makes assumptions on future events (death, disability, longevity). In particular, this applies to the estimated value of benefits that will have to be paid out in the future as well as the settlement costs arising from these insurance contracts.
 Testing of the operating effectiveness of selected key controls regarding the calculation of the life reserves and the integrity of the data used in the actuarial calculation.
 Critically assessing the methodology used by the Group to calculate the reserves.
 Evaluating the reasonableness of the assumptions used, such as reserving interest rate, mortality, cancellation rate, disability, expenses and expected rate of return on capital investments.
For further information on the valuation of the life reserves refer to the following: Valuation of loss reserves
Reserves have been established for claims incurred (both incurred and reported and incurred but not reported claims) up to the end of the business year. These include the costs of claims expected to be paid as well as the costs of handling claims. The reserves are calculated using actuarial methods and assumptions. Determining these assumptions involves significant judgment, and even small changes in the assumptions may have a material impact on the value of the reserves.
 Independently recalculating the reserves of the most important business lines as well as reconciling and assessing the reasonableness of the reserves recorded by the Group.
The value in use is calculated using the discounted cash flow (DCF) method, which is in particular influenced by expected future cash flows, the applied discount rates as well as the growth rates. Therefore, the calculation of the value in use involves elements of uncertainty and is subject to management’s judgment.
 Appraising the model used by management to calculate the discount rates.
 Comparing the growth rates applied with the inflation rates expected in the long term.
Helvetia Holding AG, St. Gallen Report on the Audit of the Consolidated
The Board of Directors is responsible for the other information in the annual report. The other information comprises all information included in the annual report, but does not include the consolidated financial statements, the stand-alone financial statements of the company, the remuneration report and our auditor’s reports thereon.
As part of an audit in accordance with Swiss law, ISAs and Swiss Auditing Standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:  Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
 Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Legal retained earnings - General legal retained earnings 86.1 86.1 - Reserve for treasury shares 11.8 8.9
At the disposal of the Shareholders' Meeting 1 133.9 1 122.5
Profit carried forward to new account 895.2 893.8 1 2018: CHF 24.00 per registered share 2017: CHF 23.00 per registered share
186 Financial statements of Helvetia Holding 2018 1. Principles 1.1 General The 2018 financial statements of Helvetia Holding AG were prepared in accordance with the provisions of Swiss accounting law (chapter 32 of the Swiss Code of Obligations). The applied valuation principles comply with the law. The material valuation principles that are not prescribed by law are discussed below.
2. Notes on balance sheet and income statement items 2.1 Prepaid expenses and deferred charges The dividend of the subsidiary Helvetia Schweizerische Versicherungsgesellschaft AG distributed from its net profits for 2018 is paid simultaneously to Helvetia Holding AG and thus recognised on a transitory basis under “Prepaid expenses and deferred charges”. The item in the amount of CHF 240.2 million exists vis-à-vis Group companies. The reporting was changed in 2018 due to the FTA communication. In the previous year, the simultaneously realised dividends were reported under “Current receivables from shareholdings”.
2.2 Shareholdings On the reporting date, Helvetia Holding AG owned the following direct investment: Reported company capital Holding as of
187Financial statements of Helvetia Holding 2018 2.3 Bond On 8 April 2013, Helvetia Holding AG issued a 1.125 % bond 2013 – 2019 with a par value of CHF 150.0 million. The bond was subscribed and paid on 8 April 2013 and must be repaid at par value on 8 April 2019. The bond has a coupon rate of 1.125 % p.a., which is paid annually on 8 April.
2.4 Maturity structure of interest-bearing liabilities in CHF million up to 1 year 150.0 0.0
More than 5 years 0.0 0.0 2.5 Share capital and authorised capital The share capital of CHF 994,513.70 consists of 9,945,137 registered shares with a par value of CHF 0.10.
Low in CHF High in CHF Average price in CHF Number
188 Financial statements of Helvetia Holding 2018 2.8 Auditors’ fees in CHF
3.3 Shareholders with interests of more than 3.00 % The following shareholders were entered in the share register on the reporting date of 31 December 2018: – Patria Genossenschaft, Basel, with 34.09 % (previous year: 34.09 %). – Chase Nominees Ltd., London, with 4.25 % (previous year: 5.05 %) – BlackRock AG, Zurich, with 2.98 %, of which 2.36 % are held indirectly (previous year: 3.21 %, of which 2.56 % were held indirectly).
3.4 Additional information for companies listed on the stock exchange The information on investments of the members of the Board of Directors and the Executive Management required under Art. 663c para. 3 of the Swiss Code of Obligations is provided in the Notes to the 2018 consolidated financial statements of the Helvetia Group under chapter 15.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. We have determined that there are no key audit matters to communicate in our report.
As part of an audit in accordance with Swiss law and Swiss Auditing Standards, we exercise professional judgment and maintain professional skepticism throughout the audit.
 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made.
Bill Schiller Andrea Bischof Licensed Licensed Audit Expert Auditor in Charge
Embedded Value after tax of which value of insurance portfolio 1 877.4 1 946.6 of which adjusted equity 2 351.2 2 327.3 of which solvency costs – 1 187.8 – 1 071.9 of which value of insurance portfolio 407.8 360.9 of which adjusted equity 367.6 370.2 of which solvency costs – 169.0 – 143.0 of which value of insurance portfolio 2 285.2 2 307.5 of which adjusted equity 2 718.8 2 697.5 of which solvency costs – 1 356.8 – 1 214.9 1 of which minority interests CHF 2.1 million as of 31.12.2018
Economic changes, including changes to unrealised gains and losses on investments (equity and real estate) – 346.8 79.9
Embedded Value as of 31 December 3 647.2 3 790.1 in %
+1 % change to risk discount rate – 8.0 % – 8.1 %
–1 % change to risk discount rate 9.7 % 9.9 %
–10 % change to fair value of real estate – 13.4 % – 12.2 %
Value of new business in % APE 15.1 % 17.5 %
Present value of new business premiums (PVNBP) 1 716.9 1 688.6
Value of new business in % APE 16.2 % 17.4 %
Value of new business in % PVNBP 1.7 % 1.8 %
Emerging risks Unexpected and newly emerging or qualitatively changing risks resulting from the combination of different factors.
Business volume Sum of the gross premiums written and deposits from investment contracts in the reporting year.
Premium Amount to be paid by the policyholder to the insurer for the provision of insurance cover.
Helvetia Holding AG Dufourstrasse 40 CH-9001 St. Gallen Phone +41 58 280 50 00 www.helvetia.com info@helvetia.com
Helvetia Group Susanne Tengler P. O. Box, CH-9001 St. Gallen Phone +41 58 280 57 79 www.helvetia.com investor.relations@helvetia.ch
Helvetia Group Kristine Schulze P. O. Box, CH-4002 Basel Phone +41 58 280 53 49 www.helvetia.com cr@helvetia.ch
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 2018. 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.
Important dates 3 May 2019 Ordinary Shareholders’ Meeting in St. Gallen 29 August 2019 Publication of half-year financial results for 2019 4 March 2020 Publication of financial results 2019 mailto:info%40helvetia.com?subject=
Consolidated equity (without preferred securities) 4 963.1 4 655.3 4 812.6 5 229.4 5 097.1
Provisions for insurance and investment contracts (net) 41 275.0 41 143.0 42 315.3 44 385.5 44 418.5 of which Group financial assets and investment property 44 843.4 45 036.3 46 471.6 48 629.2 48 583.5
Reserve to premium ratio non-life 193.2 % 154.4 % 152.2 % 156.3 % 145.0 %
Consolidated equity per share in CHF 503.2 470.4 486.3 528.5 515.4
Employees of which segments Switzerland and Corporate 3 752 3 478 3 376 3 499 3 542
Helvetia Group Alessandra Albisetti Szalay Investor Relations Coordinator P. O. Box, CH -9001 St. Gallen www.helvetia.com alessandra.albisetti@helvetia.ch
Contacts Helvetia Group Susanne Tengler Head of Investor Relations P. O. Box, CH -9001 St. Gallen www.helvetia.com susanne.tengler@helvetia.ch mailto:alessandra.albisetti@helvetia.ch mailto:susanne.tengler@helvetia.ch