The 2004 Annual Report of Helvetia Patria Holding is available in German, French and English.
Cautionary statement regarding forward-looking information This document is made by Helvetia Patria Group and may not be copied, altered, offered, sold or otherwise distributed to any other person by any recipient without the consent of Helvetia Patria Group. Although all reasonable effort has been made to ensure the facts stated herein are accurate and that the opinions contained herein are fair and reasonable, this document is selective in nature and is intended to provide an introduction to, and overview of, the business of Helvetia Patria Group.
Where any information and statistics are quoted from any external source, such information or statistics should not be interpreted as having been adopted or endorsed by Helvetia Patria Group as being accurate.
Neither Helvetia Patria Group nor any of its directors, officers, employees and advisors nor any other person shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this information. The facts and information contained herein are as up to date as is reasonably possible and may be subject to revision in the future. Neither Helvetia Patria Group nor any of its directors, officers, employees or advisors nor any other person makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this document.
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 Patria Group on the date of its posting and Helvetia Patria Group assumes no obligation to update such statements unless otherwise required by applicable law.
The purpose of this document is to inform Helvetia Patria Group’s shareholders and the public of Helvetia Patria Group’s business activities for the year ended December 31, 2004. 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 SWX Swiss Exchange. Should
Page 4 At the “Poly Ball” in Zurich (Poly = nickname of “Swiss Federal Institute of Technology”)
Page 74 Top of Europe, between Jungfraujoch and the “Mönchsjoch” hut
Result from non-life underwriting activities 23.0 34.3 81.4 95.8 132.1 142.8
Net expenditure on results-linked and non-results-linked policyholders’ dividends 305.0 254.5 145.8 9.9 103.4 124.3 Result from life underwriting activities 43.8 59.1 17.8 –87.2 29.6 38.4
Income from real estate 192350 191833 –0.3% Income from non-consolidated holdings 404 11 –97.3% Income from other investments: From shares, other non-fixed-interest-rate securities and investment funds 55546 49977 From fixed-interest-rate securities 526156 512150 From promissory loans 32760 34260 From mortgages 108538 97883 From policy loans 7035 5936 From fixed-term deposits and similar 10377 8765 Income from other investments 740412 708971 –4.2% Interest on deposits 1223 3149 157.5% Gross realized gains on investments 358116 468962 31.0% Gross unrealized gains on investments 100058 73766 –26.3% Other interest income 8331 8735 4.8% Expenditure on investments and interest costs: Investment administration costs –20019 –20966 Realized losses on investments, including hedging expenses –189469 –252357 Depreciation of investments –118291 –220680 Interest payments on reinsured business and other interest costs –62156 –55794 Expenditure on investments and interest costs –389935 –549797 41.0% Interest assigned to life- and non-life underwriting activities –920715 –926557 0.6% Other extraordinary profit from other business operations 0 53490 100.0% Other income from ordinary business operations 5804 53790 826.8% Other expenditure on ordinary business operations –19638 –59308 202.0% Result from non-underwriting activities 76410 27045 –64.6%
Result from non-life underwriting activities 132079 142847 8.2% Result from life underwriting activities 29562 38367 29.8% Result from non-underwriting activities 76410 27045 –64.6% Amortization of goodwill –90779 –3776 –95.8% Result before taxation 147272 204483 38.8% Taxation –54756 –45815 –16.3% Minority interests –120 56 –146.7% Result after taxation and minority interests 92396 158724 71.8%
Cash flow from operations Consolidated annual profit 92396 158724 71.8% Expenditure not affecting the flow of funds: Increase in underwriting reserves 1346379 433121 Increase in reserves for unit-linked life insurance policies 77488 83285 Change in results-linked and non-results-linked policyholders’ dividends 83167 295500 Depreciation of intangible assets 95105 7563 Depreciation of investments 152071 171483 Depreciation of tangible fixed and other assets 20445 15397 Change in non-actuarial reserves and other 118977 –264714 Total expenditure not affecting the flow of funds 1893632 741635 –60.8% Income not affecting the flow of funds: Income from value readjustments –102954 –68902 Profit from revaluation of investments and other assets –120995 –41783 Total income not affecting the flow of funds –223949 –110685 –50.6% Cash inflow before changes in working capital: Increase in receivables –3917 –10367 Change in other assets –18714 6734 Increase in prepaid expenses –35110 –82553 Change in liabilities 170662 –149273 Change in accrued liabilities 57780 –30730 Payments from reserves –323026 –242327 Total cash inflow before changes in working capital –152325 –508516 233.8% Total cash flow from operations 1609754 281158 –82.5% Cash flow from investments: Increase in own shares 0 –13647 Increase in intangible assets –607 –3819 Decrease in non-consolidated holdings 10 9546 Change in real estate –183713 2156 Increase in other investments –1441735 –630812 Increase in investments for unit-linked life insurance policies –59134 –71026 Increase in deposits receivable for assumed insurance business –3714 –31259 Total cash flow from investments –1688893 –738861 –56.3% Cash flow from financing activities: Change in reinsurance deposit liabilities 10877 –5301 Capital increase of Helvetia Patria Holding net of expenses 0 284146 Issue of bonds and convertible bonds 0 200000 Change in minority interest in shareholders’ equity 392 223 Payments from shareholders’ equity –12080 –24086 Total cash flow from financing activities –811 454982 – Net cash flow –79950 –2721 –96.6% Cash and cash equivalents at January 1 242510 162560 –33.0% Cash and cash equivalents at December 31 162560 159839 –1.7%
Helvetia CVN, Madrid, transferred its assets and liabilities into Helvetia Previsión, Seville, as a result of their merger. The subsidiary Orfila Inversiones SA,
The Anglo-Saxon capital consolidation method is applied. Minority interests in shareholders’ equity and profit are disclosed separately in the balance sheet and the profit and loss account.
Inter-company receivables and liabilities have been set off, as have all inter-company income and expenditure. All intermediate profits resulting from intercompany asset sales have been eliminated.
Helvetia Schweizerische Versicherungsgesellschaft, St.Gallen (CHF) 77.5 100.00% Patria Schweizerische Lebensversicherungs-Gesellschaft, Basel (CHF) 50.0 100.00% Helvetia Beteiligungen, St.Gallen (CHF) 225.7 100.00% Helvetia Finance Ltd., Jersey (CHF) 0.1 100.00% Helvetia Europe S.A., Luxembourg (EUR) 11.5 100.00% Helvetia International Versicherungs-AG, Frankfurt am Main (EUR) 8.0 100.00% Helvetia Schweizerische Lebensversicherungs-AG, Frankfurt am Main (EUR) 6.5 100.00% Der ANKER Vermögensverwaltung GmbH, Frankfurt am Main (EUR) 0.0 100.00% Helvetia Vermittlungs- und Grundstückverwaltungs GmbH & Co. KG, Frankfurt (EUR) 8.3 100.00% Helvetia Grundstückverwaltungs GmbH, Frankfurt am Main (EUR) 0.0 100.00% Der ANKER, Allgemeine Versicherungs-Aktiengesellschaft, Vienna (EUR) 12.7 100.00% Römertor Versicherungsmakler, Immobilien- und Baugesellschaft mbH, Vienna (EUR) 0.0 100.00% Marc Aurel Liegenschaftsverwaltungsgesellschaft mbH, Vienna (EUR) 0.0 100.00% Helvetia Vita Compagnia Italo Svizzera di Assicurazioni sulla Vita, Milan (EUR) 13.4 100.00% Helvetia Life S.p.A., Milan (EUR) 6.8 100.00% Helvetia Patria Holding España S.A., Madrid (EUR) 90.3 100.00% Helvetia Previsión, Sociedad Anónima de Seguros y Reaseguros, Seville (EUR) 21.4 98.67%
The determination of the value is based on estimates and assumptions by the management. The actually attained values may therefore differ significantly from those estimates.
The new Swiss GAAP ARR-Standards 23 (financial reserves) and 24 (shareholders’ equity and own shares)
came into effect in the year under review and were applied for the first time. The introduction of the legal quote for the Swiss group business requires the related revaluation reserves – of those business units whose life business are subject to the legal quote to be reclassified from shareholders’ equity to liabilities.
The impact of these new regulations with regard to the legal quote and of ARR 24 is shown in the Notes 7.6 and 7.7. The effects of the first-time application of
Up to and including the business year 2003, the underwriting business of the assumed reinsurance within Helvetia Versicherungen, St.Gallen, was recorded with one year in arrears. This process was adjusted to include an estimate for the current year in 2004, as a result the year under review reports two underwriting years (2003 and 2004).
In individual countries the lower-of-cost or marketvalue principle has been alleviated in the accounts of individual companies according to legal provisions, the investments in shares and investment funds are shown at cost value or at the prior year’s book value. The difference to market value is charged or credited to the consolidated profit and loss account in accordance with Group accounting policies (Swiss GAAP ARR
Taxes on income are calculated based on the profits reported by the Group’s companies. Deferred tax liabilities and claims are reported on the basis of the difference between balance-sheet book values and the corresponding tax rates for assets and liabilities according to the tax rates currently in effect. Deferred tax credits are only recognized if setting them off against future tax liabilities is probable.
Notes 87 6. Notes to the profit and loss account 6.1 Gross written premiums by country and segment 5. Foreign-currency translations
Key foreign currencies for the Helvetia Patria Group were translated into Swiss francs at the following year-end rates: Currency translation rates
Tangible fixed assets/other assets 186.1 –1.7 14.3 –8.4 4.9 0.0 195.3 167.8 27.5 49.6 6.4 Personnel costs
Current tax 48.1 42.7 Deferred tax 6.7 3.1 6.2 Interest income from life and non-life underwriting activities
The CHF 4.4 billion (2003: CHF 4.5 billion) market value of real estate as stated on the consolidated balance sheet compares with a total book value of
Patria Group increased by a total of CHF 261.8 million in 2004 (increase in 2003: CHF 106.9 million).
The share capital consists of 8652875 registered shares with a nominal value of CHF 10.00.
The Board of Directors is authorized until May 9, 2005 – based on the resolution passed by the Shareholders ’ Meeting on May 9, 2003 –, to increase the share capital by a maximum of CHF 31465000 by issuing a maximum of 3146500 registered shares.
Holding shares). The increase of own-shares holdings results from the capital increase of Helvetia Patria
Shareholders’ equity at 1.1.2004 after restatement 62.9 353.2 –44.5 0.0 621.1 4.4 19.0 92.4 2.3 1110.8
Change in scope of consolidation 0.5 0.3 0.8 1 Based on first-time application of ARR 24
The position “Other reserves” of CHF 113.0 million at 31.12.2004 includes financial reserves unrelated to the insurance business, such as vacation and overtime reserves and other accrued liabilities.
The following bonds of the Helvetia Patria Group are outstanding: The Helvetia Patria Group has a convertible bond outstanding, issued by the finance company Helvetia
Patria Holding. In the year 2004, the conversion price was reduced from CHF 331.50 to CHF 319.90 as a result of the capital increase of Helvetia Patria
Switzerland, in addition to the mandatory plan there is a defined contribution plan with benefits that exceed the legal minimum; in the subsidiaries abroad, there are a number of pension plans which may be either defined benefits or defined contribution plans. The reserves for pension obligations are set up following local laws and regulations.
At Currency Book At 1.1.2004 impact transfers1 Use Release Allocation 31.12.2004
Reserves for pensions and similar obligations 115.3 –1.0 0.0 7.1 0.2 14.9 121.9 1 Impact from first-time application of ARR 23
Within its regular business activities the Group concluded an outsourcing contract in Switzerland with the following fixed commitments: 7.13 Goodwill
The goodwill qualified to be capitalized is calculated and capitalized following Group-wide accounting principles. The period of depreciation does not exceed
CHF 31.2 million (prior year: CHF 30.6 million) were pledged to cover liabilities of the underwriting business.
Please consult item 5 in the Notes to the financial statements of Helvetia Patria Holding for more details.
Gross positive Gross negative Gross positive Gross negative Contractual repurchase repurchase Contractual repurchase repurchase value at value at value at value at value at value at
Report of the Group Auditors 93 8. Transactions with affiliated persons
All transactions with affiliated persons are carried out at market-conform conditions. The pension fund of
Helvetia Patria Versicherungen owns at the balance sheet date 383664 Helvetia Patria Holding shares
During the year under review a Group company sold real estate with a value of CHF 150.6 million to the pension fund of Helvetia Patria Versicherungen.
In our opinion, the consolidated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance with the Accounting and Reporting Recommendations
Dividend income 24149 56665 Services received from affiliates –34 –16 Services rendered to affiliates 393 386 Interest paid on loans –413 –4216 Interest received on loans 147 1273 Fees and expenses 0 –1670 Result before taxation 24242 52422 116.2% Taxation –126 –71 Result after taxation 24116 52351 117.1%
Assets: Loans to Group companies 0 200000 Other receivables from Group companies 0 63888 Other assets 0 2
Liabilities: Shareholders’ equity before appropriation of profit: Share capital 62930 86529 Own-shares reserve 83741 97388 Other statutory reserve 269449 516349 Profit carried forward 3076 2020 Net result for the year 24116 52351 Shareholders’ equity before appropriation of profit 443312 754637 70.2%
Result after taxation 24116 52351 Balance brought forward 3076 2020 Available earnings 27192 54371 Dividend (2003: CHF 4.00; 2004: CHF 5.50 per registered share) 25172 47590 Balance carried forward 2020 6781
Helvetia Patria Holding held direct investments in the following companies on the balance sheet date: The investments in Helvetia Schweizerische Versicherungsgesellschaft and in Patria Schweizerische
CHF 150 million consisting of CHF 25.9 million to add to the share capital and CHF 124.1 million as deposit in the reserves. This increase was fully paid at subscription by Helvetia Patria Holding.
Helvetia Patria Holding has undertaken to guarantee the 2 per cent convertible bond, issued by Helvetia
Finance Ltd., Jersey, up to the amount of the face value that has not yet been converted, including outstanding interest payments. The outstanding face value stands at
Two shareholders were entered in the share register as owning more than five per cent of the share capital on
and Münchener Rück Group (7.62% registered at 31.12.2004 of the total of 8.16%).
Meeting on May 9, 2003 –, to increase the share capital by a maximum of CHF 31 465 000 by issuing a maximum of 3146500 registered shares.
CHF 10.00. The other statutory reserves were credited with the premium.
Report of the statutory auditors 97 to the Shareholders’ Meeting of
As statutory auditors, we have audited the accounting records and the financial statements (profit and loss account, balance sheet and notes pages 95/96) of