We can look back on a successful financial year with satisfaction and say: we delivered what we promised. That applies particularly to the business result, which exceeded CHF 0.5 billion for the first time. We also gained significant momentum from the consistent implementation of the strategy helvetia 20.20, thus enabling us to add new impetus to the insurance market.
We successfully concluded the integration of Nationale Suisse and Basler Austria, which were acquired in 2014. The underlying earnings include realised pre-tax synergies of CHF 137.3 million (2016: CHF 118.3 million). As a result, we were able to exceed the original synergy target of CHF 100 to 130 million.
We are not only pleased about the results, we are also progressing well with the implementation of our strategy helvetia 20.20, through which Helvetia strengthens its traditional insurance business, gains access to new income sources and promotes innovation in a targeted way. We also focus more on the wishes and needs of the customer. Digitalisation offers us many new opportunities in this regard, enabling the customer to decide how, when and where to contact us.
The already extensive selection of advice and sales channels in Switzerland was expanded. Customers who like to conduct their insurance business online are targeted through smile.direct, the leading Internet insurer. For “hybrid” customers, i.e. people who are interested in both online and personal interaction to conclude insurance policies, we have again improved the digital customer access channels through new tariff calculators. Finally, Helvetia has also expanded its network of specialist retailers through which the customer can conclude customised insurance solutions digitally. This is known as the B2B2C channel. Outside Switzerland, in the Europe Segment, we are also focused on omni-channelling: for example, Helvetia Germany’s digital platform serves all the customer segments – from the intermediary, merchant, producer to the end customer. The success of this approach is evidenced by Helvetia Germany having digitally concluded over 270,000 policies in 2017, either directly with the end customer or via specialist retailers in the B2B2C area.
We are also breaking new ground with respect to claims handling and testing innovative ideas that are only possible thanks to digitisation: for example, Helvetia customers in Switzerland have been able to report bike thefts via a chatbot using Facebook Messenger since the end of 2017. In other words our customers can register their claims with a computer programme via text message. The programme tells them what information is needed and manages the entire claims settlement. The handling of the claims, including the payment of the sum insured, takes only around 90 seconds. Helvetia is one of the first insurance companies in Europe to offer this form of customer interaction.
Dr. Pierin Vincenz stepped down as Chairman of the Board of Directors shortly before Christmas 2017. This was in response to his being the subject of an investigation by FINMA related to his previous role as CEO of Raiffeisen. We thank Pierin Vincenz most sincerely for his 17 years of service. He made a significant contribution to shaping Helvetia, initiated important changes and prepared Helvetia for the future. There will be a number of staff changes with regard to the next Shareholders’ Meeting: the Board of Directors will propose Doris Russi Schurter as the new Chairwoman of the Board of Directors. Doris Russi has been on the Board since 2008 and is very familiar with our business and its associated challenges from her longstanding service as Vice- Chairwoman. Beat Fellmann, Dr. Thomas Schmuckli and Regula Wallimann, three established persons with extensive management experience in national and international companies and valuable specialist expertise will be put forward as new members of the Board of Directors. Dr. Patrik Gisel will not stand for re-election. We would also like to thank him most sincerely for his substantial contribution to Helvetia’s positive development in recent years.
Underlying earnings other activities – 54.2 – 22.2 – 144.4 %
1 Based on the underlying earnings per share (including interest on preferred securities through profit and loss) divided by the average shareholder capital (equity before preferred securities).
Non-life growth: 4.3 % (in OC) Modern life products: 14.1 % (in OC)
In financial year 2017, Helvetia generated business volumes at Group level of CHF 8,641.3 million, which corresponds to modest year-onyear growth of 0.7 % in currency-adjusted terms. Although this was mainly due to the nonlife business, the life business also posted pleasing growth for the non-traditional capitalefficient products.
Thanks to the solid business performance and the realised synergies, the Board of Directors is proposing to the Shareholders’ Meeting to increase the dividend by 10 % from CHF 21.00 per share in the previous year to CHF 23.00 per share. The payout ratio based on the underlying earnings is thus 47 %, or 59 % based on the IFRS earnings after taxes.
Thanks to the successful integration of Nationale Suisse and Basler Austria acquired in 2014, Helvetia had generated recurring pre-tax synergies in the amount of CHF 137 million at the end of 2017 and thus exceeded the original synergy goal of CHF 100 million to 130 million.
Helvetia posted impressive underlying earnings of CHF 502.4 million after taxes, an increase of 2.2 % on the previous year. Besides solid technical results once again, this improvement was largely due to the substantially higher investment performance compared with the previous year.
+ 0.6 % percentage points The new business margin for the life business improved from 1.2 % in the previous year to 1.8 %. This improvement was driven by changes to traditional products as well as, in particular, the volume of modern, capital-efficient insurance solutions, which increased by 14.1 %.
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 2017. 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.
Price of Helvetia registered shares at the reporting date in CHF 548.5 548.5 0.0 %
Market capitalisation at the reporting date in CHF million 5 454.9 5 454.9 0.0 %
IFRS earnings of the Group after tax 402.9 376.6 7.0 %
of which investment result from Group financial assets and investment property 1 348.7 1 144.4 17.9 %
Consolidated equity (without preferred securities) 5 229.4 4 812.6 8.7 %
The central risk controlling role “Group Risk Management” is responsible for the improvement and development of the risk management system as well as for monitoring risks and controlling measures, and serves as a competence centre for the Group’s risk management. The Risk Committee is supported by specialised risk-controlling functions, such as the Group actuarial office and risk controlling in asset management. The internal auditor independently monitors the efficiency of the risk management system.
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. A detailed portrayal of the risks resulting from financial instruments and insurance contracts is provided in section 16 (from page 155) of the Annual Report.
In our business activities, we are exposed to numerous risks that are included in the Group’s risk management process. Market risks arise, in particular, from interest rate changes, fluctuations in share prices, real estate prices, or exchange rates which influence the value of the Group’s investments and technical liabilities. Liquidity risk generally refers to the risk of being unable to provide an unexpected cash outflow in a timely manner. Counterparty or credit risk is the risk of a contractual counterparty being unable to pay or of a change in the counterparty’s creditworthiness. The technical risks of life and non-life belong to the traditional risks of an insurance company. They are consciously accepted as part of the chosen business strategy. Operational risk represents the risk of losses due to errors or the failure of internal processes, employees or systems, or as a result of external events whereby operational risks are also taken into consideration. Reputational risks can also arise in connection with strategic and emerging risks. Strategic risks include the risk of not achieving business targets due to the inadequate alignment of a company’s business activities to the market and in the market environment.
Investment strategy and risk management are designed to ensure the Group’s long-term solvency and optimise the impact of volatile markets on the annual result.
Proven asset liability management – tried-and-tested investment strategy The investment strategy of Helvetia 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.
Changes to the core shareholder base At the end of 2017, Helvetia’s core shareholder Patria Genossenschaft still held 34.1 % of the share capital. Raiffeisen Schweiz sold its 4.0 % share to institutional investors in September 2017. Accordingly, the free float increased slightly over the previous year (61.9 %) to 65.9 %. As of 31 December 2017, the following important shareholders were entered in the share register of Helvetia Holding: – Patria Genossenschaft 34.1 %
insurance companies 45.6 % Other institutional investors 29.5 % Private individuals
Following the now concluded integration of Schweizerische National-Versicherungs-Gesellschaft AG (“Nationale Suisse”), the corporate structure was further optimised and simplified in 2017 by the merger of Helvetia Beteiligungen AG – an intermediate holding company for the holding of various investments in subsidiaries – and Schweizerische Versicherungsgesellschaft AG as well as the intra-Group sale of Helvetia Schweizerische Lebensversicherungsgesellschaft to the parent company. Helvetia Finance Ltd., Jersey, which had been almost inactive for years and was no longer required, was liquidated in 2017.
The complete list of Group companies, including investments, is shown from page 183.
Helvetia Holding AG has its head office in St Gall and is listed on the SIX Swiss Exchange in Zurich: security number / ticker 1227168 / HELN. Key data for investors is given on pages 8 to 9 under “Share and bonds”. Following the delisting of Nationale Suisse in 2015, Helvetia Holding AG is now the only listed company within the Group. The Group’s subsidiaries included in the scope of consolidation are listed on pages 183 and 184. Reports on the main subsidiaries – Helvetia Schweizerische Versicherungsgesellschaft AG, St Gall (Helvetia Versicherungen), and Helvetia Schweizerische Lebensversicherungsgesellschaft AG, Basel (Helvetia Leben) – can be found in the Notes from page 190.
1.2 Major shareholders We maintain an open and shareholder-friendly strategy in an effort to build up a widely diversified and informed shareholder base. We have a long-term and, in view of the positive development of the Group, very successful relationship with our most important shareholder Patria Genossenschaft (founding partner). On the reporting date, 16,297 (previous year: 14,625) shareholders were registered in the share register of Helvetia Holding. This renewed year-on-year increase in the number of registered shareholders underscores the attractiveness of our stock.
At the end of 2017, only Blackrock with a share of 3.21 % exceeded the reporting threshold of 3 %. All Helvetia’s notices on share transactions exceeding the reporting threshold can be viewed at home/publications/significant-shareholders.htmlhttps /Emittent:Helvetia Holding AG.
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 2017, Helvetia held 46,363 treasury sha2.
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 Incorporation (https:// www.helvetia.com/content/dam/os/corporate/ web/en/home/investor-relations/overview/publications /business-publications/articles-of-association_2017.
Appointments at other companies Four appointments, in particular President of the Board of Directors of Patria Genossenschaft, Basel; President of the Board of Directors of LZ Medien Holding, Lucerne; and Member of the Board of Directors of Swiss International Air Lines, Basel
Appointments at other companies Six appointments at non-listed companies, in particular President of the Board of Directors of Hälg Holding AG, St Gall, and MediDataAG, Root; Member of the Board of Directors of SWICA healthcare organisation, Winterthur, and Adcubum AG, St Gall
Pro bono appointments Four appointments, in particular President of the National Committee of UNICEF Switzerland and on the Board of Pro Infirmis
Appointments at listed companies Member of the Board of Directors of Julius Baer Group Ltd.
Appointments at other companies Seven appointments, in particular Vice-Chairman of the Board of Directors of Sanitas Health Insurance
Pro bono appointments Member of the Board of Trustees of the Foundation for Children in Switzerland
Christoph Lechner Prof. and doctor of economics HSG (Prof. Dr oec.), Swiss and German citizenship, Hettlingen, 1967
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, doctorate and habilitation, guest professor in the USA (Wharton and Connecticut) as well as South America (IAE Argentina); since 2004 Professor of Strategic Management at the University of St. Gallen and also Chairman of the Board at the Institute of Management (IfB)
Appointments at listed companies Vice-President of the Board of Directors of Hügli Holding AG, Steinach
Appointments at listed companies Member of the Board of Directors of Novartis AG, Basel
Appointments at other companies Seven appointments, in particular Chairman of the Board of Directors of HSBC Private Bank (Switzerland) SA, Geneva; President of the Regulatory Board of SIX Swiss Exchange (previously registration office of SWX Swiss Exchange); Member of the Board of Directors of Raymond Weil SA, Lancy
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 President of acbe – Association of Compen- sation and Benefits and member of various advisory bodies
3.3 Statutory rules regarding the number of activities allowed pursuant to Art. 12 para. 1 (1) VegüV According to Art. 32 (mandates outside the Group) of the Articles of Incorporation ( vetia.com/content/dam/os/corporate/web/en/ home/investor-relations/overview/publications/ business-publications/articles-of-association_2017.
This restriction does not apply to: a) Mandates with companies that are controlled by the company directly or indirectly or in joint agreement with third parties or which control the company directly or indirectly or in joint agreement with third parties; The Members of the Board of Directors of Helvetia Holding AG are identical to the Boards of Directors of the two subsidiaries, Helvetia Schweizerische Versicherungsgesellschaft AG and Helvetia Schweizerische Lebensversicherungsgesellschaft AG. All the members of the Board of Directors have experience and knowledge of a wide variety of fields. They have the requisite expertise to represent their personal opinion in discussions with the Executive Management. Since the Helvetia Group conducts a significant proportion of its business abroad, the Board of Directors also includes citizens of different countries and members who have extensive international experience. Members of the Board of Directors should possess strong personal values (including integrity), specialised financial, business and insurance knowledge, experience in strategic and executive management, the ability to think in a visionary manner, social skills and a belief in sustainability. They must also have the necessary amount of time at their disposal for the efficient and proper performance of a director’s term of office. As far as the independence of Board members is concerned, we follow the requirements of the Swiss Code of Best Practice for Corporate Governance and also Circular 2017 / 2 Corporate Governance – Insurers issued by FINMA on 17 December 2016. For example, the Board consists only of members whose personal and business skills enable them to form an independent opinion and take decisions that are in the best interests of the company. Its committees consist of non-executive members. The members of the Nomination and Compensation Committee and the Audit Committee have never been members of the Executive Management. The members of the Nomination and Compensation Committee have neither personal relationships with Helvetia or any business relationships through the companies and organisations represented by them; nor do they have any cross-involvements. Anti-conflict of interest rules are consistently applied by all committees.
Financial report Corporate governance 3.5 Internal organisation Corporate governance at Helvetia is based on the relevant legal provisions (in particular company law and stock market legislation) and on internal directives and regulations. The diagram on page 13 shows the tasks that were delegated to the committees by the Board of Directors. The figure shows the constitution of the Board of Directors as at 31 December 2017. The Board of Directors appoints the Vice-Chairmen, the Chairman and members of the various committees (exception: the members of the Nomination and Compensation Committee) as well as the secretary of the Board of Directors.
pdf) and the composition of each committee is presented on page 13.
(SGC) prepares the resolutions to be passed by the Board of Directors in the event of a change or redefinition of strategy, monitors the strategic risks within the framework of the defined strategy and the related measures, 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 Chairman that are not reserved for the full Board of Directors in accordance with the law, the Articles of Inb ) Mandates accepted by a member of the Board of Directors on instructions of the company or companies directly or indirectly controlled by the company. Members of the Board of Directors may not hold more than ten such mandates; and c) Mandates with associations, charitable organisations, foundations and staff pension funds. Members of the Board of Directors may not hold more than ten such mandates.
A list of such mandates of the individual Board members is provided on pages 14 to 18.
Board of Directors has delegated this task to it. The IRC determines the applicable risk limits, and monitors all non-strategic and non-operational risks as well as the related risk management measures and compliance with limits. It convenes as often as business requires. The CEO, CFO, CIO and the Head of Risk Management attend its meetings in an advisory capacity. In 2017, they attended all meetings. In order to deal with specific issues, the Committee may call on internal or external specialists to attend its meetings, which is regularly the case. The IRC met four times in 2017. One of the Board members was absent from one of the meetings. Most of the meetings lasted half a day.
d) The Audit Committee (AC) assists the Board of Directors in its duties with regard to overall supervision and financial control. It examines the accounts from the perspective of completeness, integrity and transparency, and verifies their compliance with applicable accounting standards and external reporting requirements. It assesses risk governance and risk organisation, and monitors the functional capacity and effectiveness of the internal control systems (ICS). The AC monitors the operational risks and related risk management measures and verifies the independence and quality of the audits by the internal and external auditors. It ensures optimum cooperation between internal and external control units, the AC, the Chairman and the Executive Management. The AC approves the internal audit plan and assists with the development of external audit plans, examines the results of audits, comments on them for the attention of the Board of Directors, and may, if necessary, award special audit assignments. The AC prepares the election of the statutory auditors, and submits the necessary proposals to the Board of Directors. It verifies the consistency of auditing activities with any existing consulting mandates and examines the overall fee structure. The Chairman may, at his own request, take part in the meetings in an advisory capacity. The CEO, CFO, representatives of the external auditors and the head of Internal Audit attend its meetings in an advisory capacity. The attendance rate was corporation or Group regulations, and discusses important and urgent issues. 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 2017, the SGC had three meetings, all of which were attended by all its members. Most of the meetings lasted half a day.
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. The NCC convenes as often as business requires. In order to deal with specific issues, the Committee may call on internal or external specialists to attend its meetings, which is regularly the case. The CEO takes part in an advisory capacity where topics that affect the Executive Management are concerned. In 2017, the NCC had five meetings, all of which were attended by all its members.
The full Board of Directors The Board of Directors convenes as often as business requires, as a rule five to six times a year. Most of its meetings, which usually last half a day, are held at the Group head office in St Gall, and the executive seminar, which usually lasts two days, is generally held at 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 once in 2017.
In the reporting year, four half-day meetings were held as well as a two-day seminar, three times in the absence of one member of the Board of Directors and once in the absence of two members of the Board of Directors. In order to deal with specific issues, it may call on specialists to attend its meetings, which is regularly the case. Members of the Board of Directors and all executive bodies are obliged to abstain if business is being dealt with that involves their own interests or the interests of related parties (natural persons or legal entities).
3.6 Delineation of powers The Board of Directors possesses the following powers based on its inalienable and non-transferable duties stipulated in the provisions of Swiss company law, the Articles of Incorporation and the internal organisational regulations of the Helvetia Group: – overall management of the Group; – definition of the organisational principles; – definition of the structure and principles of accounting, financial control and financial planning; – appointment and dismissal of members of the Executive Management;
Appendix I of the organisational regulations contains a detailed description of the division of powers between the Board of Directors, the Board committees and the Executive Management: (https:// www.helvetia.com/content/dam/os/corporate/ web/en/home/investor-relations/overview/publications /business-publications/organisational-regulation. pdf).
Every month, the members of the Board of Directors receive key data concerning the course of business. They also periodically receive reports on current issues relating to governance as well as selected analyses and situation reports concerning market trends, market players and noteworthy occurrences. The regular reports submitted to the Board of Directors and its committees are listed in Appendix II of the organisational regulations ( porate/web/en/home/investor-relations/overview /publications/business-publications/organisational -regulation.pdf).
New established Executive Management As at 1 January 2017, Helvetia established a new Executive Management structure and Group Executive Management was merged with key parts of Executive Management Switzerland. The integrated corporate structure with clearly focussed segment tasks allows for a greater focus on the market and our customers. In addition to the already existing Europe and Specialty Markets segments, the Switzerland segment was supplemented by the Non-Life, Individual Life, Group Life and Sales market areas. This structure ensures that all the major business areas focusing on growth and income are represented in the Executive Management and that the latter is brought closer to market developments.
The already existing Finance and Investments functions continue to be represented as before in the new Executive Management.
Helvetia is well positioned. With helvetia 20.20 and the new corporate structure, the course is set for continued success.
Appointments at other companies Member of the Board Committee of the Swiss Insurance Association (SVV); Member of the Board of Directors of Coop Rechtsschutz AG, Aarau; Member of the Board of Directors at two other non-listed companies
Markus Gemperle Doctorate in Law from the University of St. Gallen
Appointments at other companies Chairman and Member of the Board of Directors at unlisted companies
Appointments at listed companies Vice-Chairman of the Board of Directors of Allreal Group, Zurich
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 Board of Directors of Coop Rechtsschutz AG, Aarau; Chairman of the Board of Directors of Medicall AG, Brüttisellen; Member of the Board of Trustees of Sanitas Health Insurance, Zurich, and Chairman of the Employers’ Association of Basel-Stadt.
Appointments at other companies Member of the Claim Committee of the Swiss Insurance Association, Zurich
Beat Müller Degree in Actuarial Science (dipl. phil. II) from the
Professional background 1983 – 1992 Price Waterhouse, London; 1992 – 1994 Revisuisse Price Waterhouse, Zurich; 1994 – 1996 Price Waterhouse, London; 1996 – 1999 Zurich Financial Services (ZFS), Centre Solutions, Head of Transaction Tax and Accounting Europe; 1999 – 2002 ZFS: Head of External Reporting; 2002 – 2007 Winterthur Insurance: Head of Corporate Development and Capital Management; 2007: since 1 July 2007 in his current position; Member of the Group Executive Management with various appointments at the subsidiaries of the Helvetia Group in Switzerland and abroad
Professional background Joined Swiss Re in 1995, last working as Senior Underwriter Property & Casualty; 2001 moved to Zurich Global Corporate Switzerland as actuary head; 2005 Chief Pricing Actuary Europe General Insurance; 2009 – 2011 Chief Underwriting Officer at Zurich Italy; 2012 joined executive management at Nationale Suisse as head of Customer Service & Non-Life Switzerland and from 2013 as Head of Specialty Lines & Foreign Countries; since 1 January 2015 Member of Group Executive Management in current position
5. Compensation, shares and loans 5.1 Contents and method for determining compensation and participation programmes and rules regarding voting on compensation by the Shareholders ’ Meeting According to the VegüV, the Board of Directors is also in charge of general compensation issues and compensation models. It is supported in its work by the Nomination and Compensation Committee, which provides advice to the Board of Directors in the decision-making process in accordance with the internal organisational regulations and has final decision-making power in some areas. 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 and variable compensation of the Board of Directors and the Executive Management to the Shareholders ’ Meeting for approval. No payment / share allocations may take place before the final approval of the compensation for the Board of Directors and the Executive Management by the Shareholders ’ Meeting.
4.3 Statutory rules regarding the number of activities allowed pursuant to Art. 12 para. 1 (1) VegüV According to Art. 32 (mandates outside the Group) of the Articles of Incorporation ( vetia.com/content/dam/os/corporate/web/en/ home/investor-relations/overview/publications/ business-publications/articles-of-association_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).
Mandates include mandates in the most senior governing or managing body of a legal entity that is obliged to register with the Commercial Register or a similar foreign register. Mandates with different legal entities controlled by the same company or beneficial owner count as a single mandate.
Compensation is paid in the form of cash, shares, options, similar instruments or units, benefits in kind or services. The Board of Directors or, if the matter has been delegated to it, the Compensation Committee determines the conditions and deadlines for allocation, exercise and transfer as well as the vesting periods and conditions of expiry, if any. The Board may decide that conditions and deadlines for exercise and transfer as well as vesting periods are shortened or cancelled, payments are made under the assumption that the target values are reached or payments are cancelled if specific events defined in advance should occur, such as a change in control or the termination of an employment or mandate relationship. In doing so, the Board of Directors takes account of the company’s ability to recruit suitable employees on the labour market and to retain these employees ( corporate/web/en/home/investor-relations/overview /publications/business-publications/organisational -regulation.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 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 co-
The 2018 Shareholders’ Meeting therefore has the following powers in matters concerning compensation: – As regards the general report on business performance: review of the compensation report and thus the principles and conditions under which the compensation for the members of the Board of Directors and the Executive Management are determined.
The delineation of powers for compensation matters is defined in Appendix I of the organisational regulations: ( dam/os/corporate/web/en/home/investor-relations /overview/publications/business-publications /organisational-regulation.pdf). For details on compensation, please refer to the compensation report on pages 41 to 46.
Shareholders who possess voting rights but who do not attend the Shareholders’ Meeting may assign their voting rights to a third party (who does not necessarily have to be a shareholder) by means of a written power of attorney. However, he or she may only represent the voting rights of third parties if, together with his or her own shares, they do not exceed 10 % of the total share capital. Here, too, shareholders who are connected to each other by way of capital or votes or by united management or in any other form count as one shareholder.
6.2 Statutory quorum The Shareholders’ Meeting is quorate regardless of the number of shareholders in attendance and votes represented by proxy. Unless stipulated otherwise by legal provisions or the Articles of Incorporation, the Shareholders’ Meeting passes resolutions by an absolute majority of the votes cast. In addition to the resolutions cited in Art. 704, para. 1 of the Swiss Code of Obligations, a twothirds majority of represented votes is required for amendments to the Articles of Incorporation, the premature termination of office of more than one member of the Board of Directors, and the liquidation of the company. The exceptions for Patria Genossenschaft as individual shareholder mentioned in section 6.1 also apply here.
As a rule, the Ordinary Shareholders’ Meeting is held in April / May, but at the latest within six months after the end of the financial year. Extraordinary Shareholders’ Meetings take place if the Board of Directors or the statutory auditors consider it necessary, if this is passed by a Shareholders ’ Meeting or if shareholders who represent at
Financial report Corporate governance least 10 % of the share capital jointly request in writing an Extraordinary Shareholders’ Meeting, whilst stating the items on the agenda and the motions to be put forward and choosing the names of the proposed candidates.
Each shareholder receives a personal invitation no later than 20 days before the meeting, including a detailed agenda, a brief explanation of the motions to be put forward, plus other explanations concerning significant occurrences in the reporting year. The invitation and agenda are also published in the “Schweizerischen Handelsamtsblatt ”.
7. Change in control and protection measures 7.1 Obligation to announce takeover bids Art. 26 of the Articles of Incorporation (https:// www.helvetia.com/content/dam/os/corporate/ web/en/home/investor-relations/overview/publications /business-publications/articles-of-association_2017. pdf) states that the obligation to announce a takeover bid in accordance with Art. 32 of the Stock Market Act (BEHG) only applies if a shareholder acquires 40 % or more of the voting rights.
9. Information policy Helvetia communicates with shareholders, potential investors, retail investors and the general public comprehensively and on a regular basis. Shareholders receive a short Letter to Shareholders about the previous business year and most important key figures along with the invitation to the Shareholders’ Meeting. The annual report in spring and the interim report in autumn are both made available to the general public. Both documents are available on the website ( tia.com/corporate/web/en/home/investor-relations /auf-einen-blick/publikationen/jahresabschluss.
html and en/home/investor-relations/auf-einen-blick/publikationen /halbjahres-abschluss.html). Upon request the documents can also be sent to investors or interested parties free of charge. Other current and archived information on the Helvetia Group is available on our website corporate/web/en/home.html. Topics include corporate governance, strategy, employees, charitable activities and history as well as investor interests such as the key figures, equity story, bonds, rating, annual and interim results and information about the stock including the current share price performance. In addition, further publications, media releases and important dates can be found here. Interested parties may also register online to receive the latest information on the company directly and to request particular publications. The following link can be used for this: helvetia.com/corporate/web/en/home/mediaand -stories/overview/news-subscription.html.
Board of Directors: uniform basic remuneration (exception: Chairwoman of the Board of Directors) with allowances for committees and committee chairpersons (cash)
Various documents are used as the basis for ensuring that the fixed compensation components are appropriate and in line with the market. For example, renowned, independent institutes are commissioned from time to time to prepare comparative studies that can serve as a benchmark. The compensation reports of comparable competitors are also analysed. Publications by different interest groups such as “Ethos”, information obtained from advisors specialising in personnel issues, and articles that appear in the media also provide an important basis for comparison.
Change to the variable compensation component for the Board of Directors To adjust the compensation system to those that are usual in the market, the BoD will no longer be paid any prospective variable compensation from the 2018 SM.
Thirty percent of the total compensation calculated in this manner will be paid out in the form of shares that are blocked for at least three years (standard solution). The members of the BoD can apply for an extension to the vesting period for each generation of shares. There is a claw-back option (return of the blocked shares if the business performance is bad during the vesting period, the reasons for which lie in gross mistakes made by the BoD during the reference year (analogous to the LTC rule in the compensation regulations for the EM).
The remaining 70 % of the total compensation is paid out in cash.
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 BoD is also compensated for the use of an external infrastructure.
a) Fixed compensation Every BoD member receives a fixed basic fee determined in advance, which is generally the same for all members of the BoD. Differences arise from the allowances that are paid to the Vice-Chairmen and the members and chairmen of the committees. These payments take account of the responsibility and specific functions of each of the individual BoD members. The higher total compensation paid to the Chairwoman takes into account her greater involvement in the company’s management and operational activities.
The Board of Directors can approve different rules on an ad hoc basis.
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 frozen custody account. After three years the exact same number of shares deposited in this frozen 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 member, and not the company, has 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).
Executive Management boards of the market units The Executive Management abroad is compensated according to the local market conditions governing the compensation systems. The local compensation systems can include fixed and variable salary components. At Group level, members of the local Executive Management abroad are also paid a results-based Group bonus in the form of shares, based on a reference figure of 10 % of the local basic compensation. The reference figure is also multiplied by the LTC percentage of target achieved. This Group bonus has been designed to promote a sense of belonging to the Group of the Executive Management teams abroad.
c) Expenses and benefits in kind The reimbursement of expenses is governed by written regulations. The EM members are entitled to a Helvetia company car which they may also use for private purposes for a fixed fee. The employer does not grant any other benefits in kind.
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 2017 financial year.
Ivo Furrer (Member) (since Shareholders’ Meeting 28.4.2017) 104 783 0 21 534 0 126 317 0
During the reporting year, EM members received non-monetary benefits as part of the company car programme valued at CHF 34,867 (previous year: CHF 17,317). 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.
Salaries and other short-term benefits: – Fixed compensation (incl. expense allowances, child / education allowances, long-service awards, company car) 6 405 563 4 171 789
Financial report Compensation report the chapter on “Corporate governance”). Within the limits of these rules and in compliance with the approved maximum amounts, the following amounts will be paid to the new members of the Executive Management in addition to the fixed compensation already approved for the period from 1 July 2016 to 30 June 2017. These amounts were disclosed in the 2016 compensation report (see table below).
Payments to former EM members In the context of his notice period (until 31 August 2017), Stefan Loacker was paid the contractually agreed amounts as follows: fixed CHF 698,511, variable CHF 544,551, plus the related payments to the pension fund of CHF 174,563.
Within the new organisation of the Group management introduced on 1 January 2017, which has chiefly seen the consolidation of the management bodies at Group level and in the Switzerland market unit, four members of the former Executive Management Switzerland team switched to the Executive Management as at 1 January 2017. On 1 April 2017, Adrian Kollegger and Achim Baumstark, who had both previously worked outside the company, were also appointed to the Executive Management as Head of Non-Life Switzerland and Chief Technology Officer, respectively.
In accordance with Art. 29 of the articles of incorporation, should there be changes within the Executive Management during the course of the year, each member who joins the Executive Management or is promoted within the Executive Management following the granting of approval by the Shareholders’ Meeting for the proposed compensation can be paid an additional amount for this period if the compensation already approved by the Shareholders’ Meeting is not sufficient to cover his or her compensation. The additional amount for each new member of the Executive Management may not exceed 25 % and for a new CEO (promoted or new employee) 40 % of the most recently approved total amount for the maximum compensation to be paid to the EM (see also the explanations to Art. 5.2 from page 31 in
Additional amounts for the fixed compensation of new EM members for the 2016 / 2017 period in accordance with Art. 19 VegüV / Art. 29 Articles of Incorporation of Helvetia
Achim Baumstark (1 April – 30 June 2017) Head of IT / CTO 110 000 23 072 133 072 Donald Desax (1.1. – 30.6.2017) Head of Occupational Pensions CH 217 500 51 163 268 663
Under the VegüV and the Articles of Incorporation, the SM must approve the following compensation for the BoD and the EM: – Total amount of the fixed compensation for the
– Total amount of the fixed compensation for the EM for the period from 1 July 2018 to 30 June 2019
– Total amount of variable compensation for the EM for the past financial year 2017
As regards fixed compensation, these total amounts refer to different time periods in comparison to the figures given in section II and in reference to financial year 2017: SM to SM or 1 July to 30 June, respectively, of the year following the SM. These figures are therefore not directly comparable. To provide the reader with a comparison, however, the amounts to be approved are compared to the figures from the same period of the previous year (the amounts approved by the SM and actually paid out).
Allocation to the pension fund for Hans Künzle 210 000 1
Total variable compensation Board of Directors 3 100 000 2 649 000 3 010 000 – 12.0 % 1 Allocation to the pension fund for Hans Künzle in connection with his retirement as CEO of Nationale Suisse as at 1 July 2016 to be approved retroactively
Total fixed compensation Executive Management for the period 1 July – 30 June
– Employer contributions to pension funds with respect to the fixed compensation 2 200 000 2 108 451 2 300 000
Financial report Compensation report 1. Approval of the total amount of fixed compensation for the Board of Directors for the period from the 2018 Shareholders’ Meeting to the 2019 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 2018 / 2019 period.
In addition, parts of the previous variable compensation for the BoD were converted into a fixed component and added to the fixed basic compensation.
The changes to the fixed total compensation proposed to the Shareholders’ Meeting thus include the additions referring to the former variable compensation as well as the personnel changes on the Board of Directors.
The Board of Directors requests approval from the Shareholders’ Meeting for fixed compensation for the Board of Directors in the total maximum amount of CHF 3,100,000 for the period from the Shareholders’ Meeting 2018 to the Shareholders’ Meeting 2019.
2. Approval of the total amount of fixed compensation for the Executive Management for the period from 1 July 2018 to 30 June 2019 The fixed compensation for the Executive Management up to 1 July 2018 has been reviewed and no function-related adjustments are to be made. The introduction of the new Helvetia Group structure, which will now include 11 Executive Management members, as of 1 September 2016 (change of CEO) / 1 January 2017 does, however, give rise to significant changes to the proposed total amount.
Within the framework of the new Group structure (change in CEO and new Executive Management members) and mostly assuming no other changes in the fixed payments, the following total amount for fixed compensation for the Executive Management for the 2018 / 2019 period will be proposed: The Board of Directors requests approval from the Shareholders’ Meeting for the fixed compensation for the Executive Management in the total maximum amount of CHF 8,200,000 for the period from 1 July 2018 to 30 June 2019.
4. Approval of the total amount of variable compensation for the Executive Management for the past financial year 2017 The variable compensation components of the Executive Management 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 2017. The resulting differences between 2016 and 2017 arose solely from changes in the extent of target achievement and the already mentioned changes to the Executive Management on 1 January 2017. The method of calculation and the reference figures did not change.
Total variable compensation Board of Directors 700 0001 544 4212 547 000 – 0.5 % 1 fixed compensation incl. additional amount for period from 1 January 2018 to SM (April 2018) 2 2016 retrospective variable compensation
Employer contributions to pension funds with respect to the variable compensation (incl. AHV / IV / EO) 700 000 308 367 310 000 1 Comprises the value of the deferred shares allocated as part of the LTC
The markets in which Helvetia is active generate a volume of USD 760 billion, representing around 16 % of the global market1.
1 Sources: Sigma 3 / 2017, Swiss Re and Helvetia estimates
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 is active throughout Europe. Helvetia is one of the top-three all-line insurers in the Swiss insurance market. Helvetia is also well positioned in other key European markets. Some of the biggest insurance markets by volume include Switzerland,
Germany, Italy and Spain with global market shares of 1.2 %, 4.5 %, 3.4 % and 1.5 %1. Helvetia is among the top-ten insurance companies in Austria. Because of the smaller market shares in Germany, Italy and Spain (see chart), Helvetia sees significant growth opportunities in these countries.
With the Specialty Markets segment, which comprises engineering insurance, transport, art and Active Reinsurance, Helvetia is further expanding its expertise as a specialty insurer.
Global market conditions improved during the past financial year. While persistently low interest rates also presented insurers with challenges last year, GDP growth increased both in the eurozone and the US and according to forecasts is likely to total around 2 % for 2017. The global insurance market posted a moderate increase in premium income with strong growth rates, especially in emerging markets. Thanks to the global economic growth, the non-life business posted premium growth of around 3 %, thus outstripping the corresponding figure for the previous year. In the industrialised countries, inflation-adjusted premium volumes increased by approximately 2 %. In the western European countries, the upturn was primarily due to the growth of the motor vehicle insurance business in Germany, France, Spain and the United Kingdom. The Italian insurance market, however, continued to be characterised by weak growth due to the low price level in the motor vehicle business. In contrast, premium volumes developed very positively in the Spanish non-life business, which advanced more strongly than the overall economy with growth of 3.9 %3. This can be attributed to booming economic developments and the recovering labour market. At 1.7 %, premium income in Switzerland in the non-life insurance business also increased during 2017 more than in the previous year according to projections of the Swiss Insurance Association4. The large mo-
Underwriting profitability in Europe remained stable during the past year. In general, the insurance industry benefited from the relatively low impact from natural catastrophes. In contrast, the motor vehicle insurance business line once again exhibited a trend towards slightly rising claims costs. However, the combined ratios of the insurance industry in Europe remained stable on the whole. In Switzerland, the claims experience was slightly higher than in recent years due to severe weather and hail events4.
In the past financial year, the life insurance business was also dominated by conditions on the capital markets. The greatest challenges for life insurers were the low interest-rate environment and new regulatory requirements, including the Solvency II regime.
Growth in the life insurance market stagnated in the continental European markets compared to 2016. In Germany, premium volumes declined slightly due to the somewhat weaker revenues from single premiums. Following extraordinarily strong growth in the previous year, the Spanish life insurance market also experienced a decline of almost – 6 %3. The Swiss Insurance Association projects that premiums in the Swiss life insurance business will decline by – 3.8 % in 20174. However, relative to the previous year (– 6 %), the decline is not as marked.
Market environment in the European capital markets 2017 was an outstanding year for equities, with almost all markets around the world generating double-digit performance figures. The global index (MSCI World) advanced by around 20 %, with the US market posting an overall performance – measured by the Dow Jones Index – of approximately 25 %. While the European markets, including Switzerland, were unable to fully keep pace with this performance, they did record attractive returns that far exceeded those of the previous year.
The robust state of the economy, rising economic growth and improved labour markets were responsible for this pleasing development. They boosted confidence in a sustainable economic upswing. At the same time, monetary framework conditions remained favourable, accompanied by an extremely low level of inflation. Although the central banks moved to slowly prepare the markets for the end of their ultra-expansive monetary policy, demonstrating great sensitivity in the process, they only implemented countermeasures on a controlled basis and with caution. The US Federal Reserve hiked key interest rates on a total of three occasions by 0.25 % and from October began to reduce its balance sheet in small steps. This led to a flattening of the yield curve, in particular due to an increase in short-term rates. The European Central Bank persisted with its expansive policy, but from October halved its monthly asset purchases from the original figure of EUR 60 billion to EUR 30 billion. At the same time, it announced the extension of the purchase programme until September 2018. Due to the exchange rate, the Swiss National Bank was left with little room for manoeuvre in this environment. It maintained its negative interest rates. Nevertheless, the pressure on the Swiss franc subsided at the end of the year and the overvaluation weakened somewhat. Long-term interest rates, however, remained at a low level.
The promising economic climate combined with the prudent actions of the central banks bred confidence among investors. This was reflected in 1 Source: sigma 3 / 2017, Swiss Re 2 Source: Swiss Re Institute, Global insurance review 2017 and outlook 2018 / 2019 3 Versicherungswirtschaft heute (Insurance Studies Today), http:// versicherungswirtschaft-heute.de/ maerkte-vertrieb/spanien-kfz-policen -legen-zu-leben-verliert-massiv/
record low equity market volatility and in narrowing credit spreads. Potential risks, be they political, economic or structural in nature, were largely set aside.
Preliminary remark In the 2014 financial year, Helvetia acquired the Nationale Suisse Group and Basler Austria.
Please note: Sums in this section are based on unrounded figures and may not add up due to rounding differences. Likewise, year-on-year changes are calculated on the basis of unrounded figures.
Details of the business performance at Group level are provided below: The business volume amounted to CHF 8,641.3 million (financial year 2016: CHF 8,512.7 million). In currency-adjusted terms, this was an increase of 0.7 %. Expressed in Swiss francs, on the other hand, the business volume increased by 1.5 % thanks to positive exchange rate effects. In the non-life business, Helvetia posted satisfying currency-adjusted growth of 4.3 %. In the life business, the investment-linked business enjoyed very pleasing growth of 14.1 %. Due to the reduction of the traditional individual life business and a special effect in the Swiss group life business in the prior-year period, total life volume, however, declined by a total of 2.4 %.
Group underlying earnings after taxes* 502.4 491.8 2.2 of which: life 193.1 173.5 11.3 of which: non-life 363.5 340.5 6.7 of which: Other activities – 54.2 – 22.2 n / a
IFRS Group profit for the period 402.9 376.6 7.0 * Underlying earnings include: Pre-tax synergies, CHF million 137.3 118.3
Pre-tax financing costs, CHF million 13.3 13.3 1 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. “Underlying earnings” is not an IFRS key figure, and therefore was not audited by the Helvetia Group’s statutory auditor. Nonetheless, it is derived from the audited IFRS figures.
The segments also largely performed well. In Switzerland and Europe, we improved our results relative to the previous year by 11.9 % and 5.4 %, respectively. The Specialty Markets segment remained behind the previous year’s result. In particular, claims arising from Hurricanes Harvey, Irma and Maria effected the result. The Corporate segment also lagged behind the previous year, a result that can be attributed to the aforementioned higher financing costs and the lack of the extraordinary positive tax effect included in the previous year. As intended, planned project costs were also higher than in the previous year. Detailed comments on the results of the respective business areas and the segments can be found on the following pages.
In contrast, the cost ratio increased by 0.6 percentage points to 29.7 %. While we were able to slightly reduce the cost ratio in the Europe segment, the cost ratios in Switzerland and the Speciality Markets segment increased by 0.6 and 1.4 percentage points, respectively, on a year-on-year basis. Details in this regard are described under the Switzerland and Specialty Markets segments.
The Helvetia Group’s profit for the period reported under IFRS was CHF 402.9 million for financial year 2017 – compared to CHF 376.6 million in the previous year, which represents a 7.0 % increase. The IFRS profit for the period was significantly influenced by acquisition effects. These include in particular – integration costs of CHF 40.2 million, – planned amortisation of intangible assets and – additional depreciation totalling CHF 91.2 million owing to the revaluation of interest-bearing securities.
Helvetia still has a strong capital base. The SST ratio as at the end of June 2017 was within the target range of 140 % to 180 %. With the first-time publication of the newly recquired “Financial Condition Report” on 30 April 2018, Helvetia will publish a concrete SST ratio. Equity2 increased from CHF 4,812.6 million at the end of 2016 to CHF 5,229.4 million. This increase can chiefly be attributed to retained earnings, currency effects from the translation of the equity of the European units into the Group's currency of Swiss francs and the revaluation of benefit obligations in accordance with IAS 19. An opposite effect came from the distribution of the dividend. The return on equity based on underlying earnings remained at the level of the previous year in 2017 at 9.8 % (financial year 2016: 9.7 %).
In the reporting period, Helvetia generated non-life premiums of CHF 4,093.8 million (financial year 2016: CHF 3,877.7 million).
In currency-adjusted terms, this is 4.3 % more than in the previous year. The growth rate in Swiss francs was thus higher at 5.6 % due to positive exchange rate effects.
Viewed by segment and line of business, our premiums developed as follows: Development by segment
– Main growth drivers: health / accident business, property insurance and motor vehicle business
– Increase in business volume due to growth in the Specialty Lines CH / International (+ 26.5 % in OC due to one-time special effect) and
Transport CHF 319.9 million, – 1.8 % in OC as a result of portfolio optimisation measures in Germany and France to increase profitability
Non-life business volume by business line in financial year 2017 Share in % | in CHF million
Despite a significantly greater burden from natural catastrophes / major claims relative to the previous year, the net combined ratio in financial year 2017 of 91.8 % remained at the prior-year level (financial year 2016: 91.6 %). The main reasons are: Improvement in claims ratio (0.4 percentage points) to 62.1 % – Significant improvement in the claims ratio in Europe thanks to successful portfolio optimisation measures; Europe was thus able to compensate for the greater burden from natural catastrophes in the Speciality Markets segment
Increase in expense ratio (0.6 percentage points) to 29.7 % – Higher premium volumes offset by growth-related higher costs and smaller one-time effects – Synergies used to finance projects
Our portfolio optimisation measures in the Europe segment are especially noteworthy. By taking these measures, Helvetia has succeeded in improving its portfolio quality and significantly increasing profitability. This is reflected, in particular, in the very good gross claims ratio in Europe of 62.4 %. However, we were also successful on the cost side: relative to the previous year, the cost ratio in Europe fell by 0.2 percentage points to 30.8 %. Our objective is to also achieve a cost ratio in Europe of under 30 % in the medium term.
The profit for the period under IFRS was CHF 290.0 million (financial year 2016: CHF 251.2 million). The difference to underlying earnings is due to the amortisation of intangible assets and the depreciation of interest-bearing securities required under IFRS acquisition accounting as well as the integration costs and corresponding taxes.
The life business volume was CHF 4,547.5 million. This equates to a currency-adjusted decline, in line with our strategy, of 2.4 % relative to the previous year (financial year 2016: CHF 4,635.0 million), although the previous year also benefited from a special effect in the Swiss group life business. Expressed in Swiss francs, the decline was 1.9 %, owing to the positive currency effects mentioned above.
Viewed by segment and line of business, our business developed as follows in 2017: Business performance Business areas
– Growth driven by Germany (+ 6.7 % in OC), – Italy (+ 4.6 % in OC) and Spain (+ 4.5 % in OC) due to good performance of investment-linked products – Austria with slight decline (– 0.9 % in OC) due to planned decline in traditional products and large contracts with single premiums in the previous year
Traditional insurance solutions CHF 1,065.3 million, – 10.3 % in OC due to planned reduction
Group life business CHF 2,672.3 million, – 3.2 % in OC due to lower volumes in the Swiss group life business (full insurance) due to a special effect in the prior year, despite very good growth in capital-efficient products (Swisscanto, details on page 62).
Helvetia’s underlying earnings in the life business in the past financial year amounted to CHF 193.1 million (financial year 2016: CHF 173.5 million). The following factors made a contribution: Higher savings result due to a reduction in the minimum interest rate in the Swiss group life business in both the mandatory and non-mandatory area
Stable risk result Normal valuation fluctuations as part of the valuation of customer options for index-linked products as well as positive special effects
Higher expenses for policyholder participation as a result of the improved investment performance
In addition to the Corporate segment (financing companies, Corporate Centre, centrally managed investments (funds) and Group reinsurance), “Other activities” also include various foreign service companies that cannot be allocated to life or non-life business.
Underlying earnings for the Other activities business area stood at CHF – 54.2 million in financial year 2017 (financial year 2016: CHF − 22.2 million). The following factors made a contribution: Improved technical result for Group reinsurance, which was boosted by the good performance of the direct business
Relative to the previous year, the investment volume increased by more than CHF 2.5 billion, totalling CHF 52.3 billion. This increase can be attributed to the new money inflow from the insurance business and unrealised price gains, especially on the equity holdings.
Helvetia continued its investment strategy in the year under review on the basis of the proven asset-liability model. New investments were primarily focussed on fixed-income securities, chiefly denominated in euros, US dollars and Swiss francs. Supported by the favourable market conditions for institutional investors, we expanded the mortgage portfolio in Switzerland by around CHF 600 million, chiefly with long-term loans. In the real estate area, funds primarily flowed into the expansion and renewal of the portfolio. The equity portfolio was only expanded slightly and chiefly benefited from the good markets. Overall, the asset allocation remained almost constant.
Investment funds, alternative investments, derivatives borne by policyholder5 % | 2 615.7 Equities 2 % | 814.3 Money market instruments, associated companies 60 Helvetia Annual Report 2017
Investment result from Group financial assets and investment property (net) 1 348.7 1 144.4
Total profit from Group financial assets and investment property 1 310.8 1 148.6
In financial year 2017, the Swiss home market further cemented its role as the cornerstone of the Helvetia Group. The business volume amounted to CHF 4,977.6 million and was thus slightly down on the previous year (– 2.5 %), primarily due to a special effect in the group life business.
In financial year 2017, Helvetia generated non-life premiums in Switzerland of CHF 1,464.9 million (financial year 2016: CHF 1,444.2 million). This is 1.4 % more than in the previous year.
– Decline in single premiums (– 7.2 %) in full insurance because of a special effect in the previous year (transfer of surpluses to retirement assets booked as premiums; without this special effect the business would have grown), with a simultaneous increase of 0.8 % in regular premiums
Underlying earnings after taxes for non-life amounted to CHF 263.4 million, up 13.8 % on the prior year (financial year 2016: CHF 231.5 million).
Slight improvement in the technical result due to higher premium volumes
At 83.1 %, Switzerland still has an outstanding net combined ratio in line with the level of the previous year (financial year 2016: 82.9 %). There are several reasons for this: Improved claims ratio (0.5 percentage points) Increase in the cost ratio (0.6 percentage points) – Higher volume offset by growth-related higher costs – Realised synergies used to finance projects
The profit for the period for the Switzerland segment under IFRS was CHF 342.3 million (financial year 2016: CHF 285.7 million). The IFRS result in particular includes integration costs, depreciation due to the revaluation of interest-bearing securities under IFRS acquisition accounting, and the corresponding taxes.
The life business volume was CHF 1,034.8 million and thus grew by 3.9 % compared to the previous year (in OC).
Austria CHF 226.3 million, – 0.9 % in OC – Slight growth for investment-linked insurance products, as previous year was positively impacted by additional large contracts; traditional insurance contracted as planned
Transport CHF 88.5 million, – 5.1 % in OC (due to portfolio adjustments in Germany)
– Italy was the main growth driver (+ 39.3 %) – Germany and Spain also generated good growth rates – Austria grew slightly, as previous year positively influenced by large contracts
Traditional insurance solutions CHF 434.7 million, – 7.1 % in OC
– Targeted curtailment of sales of traditional guarantee products in all country markets
Underlying earnings after taxes in the non-life business amounted to CHF 83.5 million, up 13.4 % on the previous year (financial year 2016: CHF 73.7 million).
The good earnings trend in the non-life and life businesses can be attributed to the following factors: Non-life earnings trend
Higher technical result thanks to successful portfolio optimisation measures and good gross claims experience
Higher non-technical costs due to loss of positive special effects included in the previous year
Weaker savings result because of the slight decline in the interest margin
Higher expenses for strengthening of reserves Higher expenses for policyholder participation due to higher gains on investments
The net combined ratio improved considerably from 97.1 % in financial year 2016 to 95.4 % in financial year 2017. The following factors contributed to the improvement in the net combined ratio: A significant improvement in the claims ratio (1.6 percentage points) to 64.6 % thanks to successful portfolio optimisation measures and a better gross claims experience
The IFRS result for the period reported for the Europe segment was CHF 98.8 million, which was 18.7 % up on the previous year’s figure (financial year 2016: CHF 83.2 million). The IFRS result in particular includes integration costs, depreciation due to the revaluation of interest-bearing securities under IFRS acquisition accounting, and the corresponding taxes.
During the past financial year, Helvetia also grew further in the Specialty Markets segment. Nevertheless, natural catastrophes weighed on the result of the Active Reinsurance assigned in this segment, even if the impact was much lower than that experienced by some competitors. Overall, the result posted by the Specialty Markets segment thus declined relative to the previous year.
In financial year 2017, the Specialty Markets segment generated premiums in the amount of CHF 899.8 million (financial year 2016: CHF 771.1 million), representing a 15.9 % increase (in OC).
The lines of business assigned in this segment performed as follows: – Active Reinsurance CHF 415.3 million, + 21.8 % due to planned diversification of business – Specialty Lines CH / International CHF 273.4 million, + 26.5 % (in OC); strong growth primarily driven by a one-time special effect in the recognition of premiums; adjusted growth was low single digit; expansion of business in the engineering and art / transport areas
– France CHF 211.1 million (– 4.2 % in OC) due to portfolio optimisation measures aimed at improving profitability
Underlying earnings amounted to CHF 16.6 million, down from CHF 35.9 million in financial year 2016. The following factors influenced the earnings trend: Higher investment result
The net combined ratio was 100.1 % (financial year 2016: 96.9 %). The following factors made a contribution: Increase in claims ratio due to – the negative impact of natural catastrophes on
The IFRS result for the period for the Specialty Markets segment was CHF 11.5 million.
Goodwill and other intangible assets 110 Investments 123 Financial liabilities 126 Insurance business 136 Income taxes 139 Equity
Claims incurred including claims handling costs (non-life) – 2 389.5 – 2 309.7
Change in unrealised gains and losses on investments – 39.0 4.4
Purchase of treasury shares – – – 11.0 – – – – – 11.0 – – 11.0 – – 11.0
Unrealised gains and losses on investments in associates – 4.0 – 0.9
Other income and expenses not affecting cash1 – 14.7 – 182.3
Cash and cash equivalents as of 1 January 942.7 1 503.0
Other cash equivalents with a maturity of less than three months 111.9 25.0
Other disclosures on cash flow from operating activities: Interest received 776.5 801.4
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 Gall, is a Swiss public limited company listed on the SIX Swiss Exchange.
Through branch offices and subsidiaries, the Group operates in the insurance markets of Switzerland, Germany, Austria, Spain, Italy and France, and worldwide in the Active Reinsurance business. Helvetia also has branches in Singapore and Malaysia and representative offices in Liechtenstein, the USA and Turkey. Some of Helvetia’s investment and financing activities are managed through subsidiaries and fund companies in Luxembourg.
The Board of Directors approved the consolidated financial statements and released them for publication at its meeting on 1 March 2018. The financial statements will be submitted to the shareholders for approval at the Shareholders’ Meeting on 20 April 2018.
IFRS 4: Application of IFRS 9 “Financial Instruments” with IFRS 4 “Insurance Contracts” 01/01/2018
IFRS 2: Clarifications of Classification and Measurement of Share Based Payment Transactions 01/01/2018
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 2021 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.
At present, it is not yet possible to definitively assess the impact of IFRS 9 and IFRS 17 on the financial statements of the Helvetia Group from 2021.
2.4 Foreign currency translation The reporting currency of Helvetia Group is the Swiss franc (CHF).
Financial report Summary of siginificant accounting policies 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.
2.5.3 Fair value of investment property In Switzerland, Germany and Austria, investment properties are valued in accordance with the discounted cash flow (DCF) method. The method is described in section 2.11.1 (page 85).
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 117).
2.7 Property and equipment Property and equipment are carried at cost less accumulated depreciation and accrued impairment. Depreciation is normally calculated using the straight-line method over the estimated useful life as follows: Furniture 4 – 15 years
The following rates of depreciation apply to owner-occupied property: Supporting structure 1.0 – 3.5%
2.9 Goodwill and other intangible assets Acquired intangible assets are recognised at cost and amortised over their useful life. If a portfolio of insurance contracts or investment contracts is acquired, an intangible as set is recognised for an amount that equals the present value of all expected future gains minus the solvency costs included in the acquired contracts. This item includes the present value for the income across the whole contract period, even if the premiums have not yet been billed. The so-called “present value of future profit” (PVFP) is amortised in proportion to the gross gains or gross margins over the actual term of the acquired contracts. This term is usually between one and ten years. Helvetia has capitalised PVFP in respect of both the life business and non-life business. This is tested for impairment every year.
Intangible assets with an indefinite useful life are not amortised, but are reviewed annually for impairment (see section 2.10, page 84). Goodwill is recognised as of the acquisition date and comprises the fair value purchase price plus the amount of any non-controlling interest in the acquired company and, in a business combination achieved in stages, the acquisition date fair value of the acquisitor's previously held equity interest in the acquired company, minus the net of the acquisition date fair value of the identifiable assets, liabilities and contingent liabilities of the acquired company.
For the purpose of impairment testing, goodwill is allocated at the time of acquisition to those cash-generating units (CGU) that are expected to benefit from the synergies generated by the company merger. To calculate any impairment loss, the value in use of the CGU is determined and compared to the carrying value. The value in use is determined using the discounted cash flow method, with future operating cash flows less necessary operating investments (free cash flows) being included. Alternatively, the fair value less cost to sell is used for impairment testing. If an impairment loss arises, the goodwill is adjusted accordingly. An impairment loss for goodwill cannot be reversed.
2.11.1 Investment property The aim of the investment property portfolio is to earn rental income or achieve long term capital appreciation. Property held for investment purposes includes both land and buildings and is carried at fair value.
Financial assets are initially recognised at fair value. Directly attributable transaction costs are capitalised with the exception of financial assets at fair value through profit or loss, for which the transaction costs are charged to the income statement. 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.
Interest income is recognised on an accruals basis subject to the asset's effective rate of interest (including “Financial assets at fair value through profit or loss”). Dividends are recorded when a legal right arises. Depreciation and appreciation resulting from the amortised cost method are included in interest income in the income statement. Interest and dividend income from Group financial assets that are designated as “at fair value through profit or loss” are included in the item “Current income on Group investments (net)”.
2.11.3 Impairment of financial assets The carrying values of financial assets that are not classified as “at fair value through profit or loss” (LAR, HTM, AFS) are regularly reviewed for impairment. If objective and substantial evidence indicates permanent impairment at the reporting date, the difference between cost and the recoverable amount is recognised as an impairment through profit or loss. An equity instrument is impaired if its fair value is considerably or constantly below cost (see also section 2.5, page 80). Debt instruments are impaired or sold if it is probable that not all amounts due under the contractual terms will be collectible. This usually happens when contractually agreed interest or redemption payments are stopped or are in arrears, if the debtor suffers from serious financial difficulties and / or if the rating falls below a specific threshold value. If, in order to avoid impairment, new conditions are negotiated for mortgages or loans, the mortgages or loans in question continue to be recognised in the balance sheet at amortised cost.
Financial report Summary of siginificant accounting policies 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.
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.
Financial report Summary of siginificant accounting policies 2.15 Insurance business Direct business comprises assumed primary business and business ceded to reinsurers. Indirect business consists of Active Reinsurance business and business retroceded to reinsurers. The technical items are described as “gross” before deduction of ceded business and as “net” after the deduction.
Contracts that are considered insurance products in the formal sense of the law and mainly carry financial risk rather than any significant technical risk are not insurance contracts but are treated as financial instruments, unless they carry a discretionary participation feature (DPF), in which case they are classified as insurance contracts. Under IFRS, discretionary participation features are contractual benefits where, in addition to the guaranteed benefit, the policyholder has a claim to the realised or unrealised investment returns on certain assets or to a share of the insurance company’s profit or loss. This additional benefit must form a significant proportion of the overall contractual benefit, and its amount or timing must be at the insurance company's discretion.
Unearned premium reserves and actuarial reserves are calculated using local methods. Zillmerisation is not applied to actuarial reserves in any country market apart from Germany and Austria. All Group companies defer acquisition costs under local accounting rules. Depending on the country, either the effectively incurred acquisition costs or acquisition cost surcharges included in the premium are deferred in part.
2.16 Income taxes Actual income tax assets and liabilities are calculated using the currently applicable tax rates. Income tax assets and liabilities are only recognised if a reimbursement or payment is expected.
2.24 Other liabilities Other liabilities are carried at amortised cost, which is generally equal to the nominal value. Offsetting of assets and liabilities 2.25 Offsetting of assets and liabilities Assets and liabilities are netted in the balance sheet when there is a legal right to offset the recognised amounts and only the net position has actually been reported.
The allocation of the individual Group companies to the regions and segments is set out in section 18.3 (from page 183).
Net change in unearned premium reserve 6.9 0.2 – 9.6 3.4 – 58.7 – 34.8 1.9 13.0 0.1 – 0.7 – 59.4 – 18.9
Claims incurred including claims handling costs (non-life) – 755.8 – 774.7 – 1 072.3 – 1 086.4 – 560.8 – 442.9 – 146.8 – 151.3 146.2 145.6 – 2 389.5 – 2 309.7
Net benefits to policyholders and claims – 4 586.0 – 4 706.5 – 2 014.5 – 1 894.2 – 495.4 – 436.5 – 56.2 – 120.4 – 2.9 – 2.8 – 7 155.0 – 7 160.4
Reinsurers´ share of acquisition costs 35.5 40.9 72.9 81.7 12.8 11.0 48.7 44.2 – 92.5 – 99.4 77.4 78.4
Gains and losses on Group investments (net) 177.1 58.2 87.1 72.3 7.4 0.3 75.7 14.0 – – 347.3 144.8
Total revenues from external customers 5 954.3 5 869.4 2 990.5 2 860.5 844.3 741.2 – 94.5 – 114.8 – 0.3 – 1.3 9 694.3 9 355.0
Reinsurers´ share of benefits and claims 5.1 25.0 114.9 157.1 73.6 8.9 96.5 35.7 – 154.8 – 153.4 135.3 73.3
Income attributable to deposits for investment contracts – 1.9 – 1.8 – 32.3 – 22.0 – – – – – – – 34.2 – 23.8
Profit or loss from operating activities 435.5 332.7 133.0 104.2 13.4 33.0 9.2 – 8.9 – 12.5 0.0 578.6 461.0
Profit or loss for the period 342.3 285.7 98.8 83.2 11.5 33.2 – 49.7 – 25.5 0.0 0.0 402.9 376.6
Current income on Group investments (net) 63.5 64.4 85.1 86.8 19.3 20.9 38.4 39.2 – – 206.3 211.3
Income attributable to deposits for investment contracts – – – 32.3 – 22.0 – – – – – – – 32.3 – 22.0
Profit or loss before tax 36.1 21.3 25.0 26.2 42.2 38.5 26.7 18.2 0.0 0.0 130.0 104.2
Profit or loss for the period 25.0 18.4 20.4 21.4 32.7 28.4 20.7 15.0 0.0 0.0 98.8 83.2
Net change in unearned premium reserve 6.7 2.5 – 68.1 – 33.7 1.9 13.0 0.1 – 0.7 – 59.4 – 18.9
Gains and losses on Group investments (net) 216.7 111.5 54.5 19.0 76.1 14.3 – – 347.3 144.8
Income investments with market risk for the policyholder 159.5 66.4 – – – – – – 159.5 66.4
Reinsurers´ share of benefits and claims 21.5 14.6 173.4 176.6 96.5 35.7 – 156.1 – 153.6 135.3 73.3
Income attributable to deposits for investment contracts – 34.2 – 23.8 – – – – – – – 34.2 – 23.8
– financial assets with market risk for the policyholder 1 120.3 1 051.8 2 530.8 2 037.9 – – – – – – 3 651.1 3 089.7 of which technical provisions (gross) 32 889.6 32 264.3 10 377.4 9 162.5 1 621.2 1 379.4 449.3 467.1 – 445.6 – 462.1 44 891.9 42 811.2
Cash flow from operating activities (net) 379.1 349.3 75.7 – 23.1 92.0 – 438.4 – 499.6 – 154.9 5.7 3.5 52.9 – 263.6
Depreciation and amortisation on tangible and intangible assets – 75.0 – 60.5 – 34.4 – 41.3 – 2.5 – 2.4 – 6.9 – 6.1 – – – 118.8 – 110.3
Reversal of impairment losses on tangible and intangible assets affecting income – – 0.8 0.2 – 0.0 – – – – 0.8 0.2
Reversal of impairment losses on tangible and intangible assets affecting income – – 0.8 0.2 – – – – 0.8 0.2
Impairment of tangible and intangible assets affecting income – – – – – 0.3 – 0.1 – – – – – 0.3 – 0.1
Acquisition of owner-occupied property, equipment and intangible assets 16.8 0.4 55.7 22.9 53.2 136.2 – – 125.7 159.5
Impairment of tangible and intangible assets affecting income – – – 0.3 – 0.1 – – – – – 0.3 – 0.1
Share-based payment transaction costs – 0.9 – 0.7 – 1.2 – 1.1 – 2.6 – 1.5 – – – 4.7 – 3.3
Gross premiums and deposits received life 4 547.5 4 635.0 – 1.9 – 2.4
Gross premiums and deposits received 8 641.3 8 512.7 1.5 0.7 1 Currently, all deposits from investment contracts life relate to the country markets Italy and Switzerland.
Financial report Foreign currency translation 4.1 Exchange rates The euro, Swiss franc, British pound and US dollar are the functional currencies in the individual business units of Helvetia Group. The following exchange rates apply to the translation of these financial statements and foreign currency transactions: Exchange rate at reporting date 31.12.2017 31.12.2016
Book value as of 31 December 9.7 12.3 446.2 405.4 51.5 50.2 17.0 19.2 524.4 487.1 of which assets under finance lease – – 32.7 31.1 – – – – 32.7 31.1
Book value as of 1 January 12.3 17.2 405.4 422.1 50.2 44.7 19.2 11.9 487.1 495.9
Change in the scope of consolidation 36.9 89.1 6.9 23.2 43.8 112.3
Goodwill of CHF 36.9 million was recorded in 2017 in connection with the takeover of the mortgage broker Defferrard & Lanz SA. Goodwill of CHF 89.1 million was recorded in 2016 in connection with the takeover of MoneyPark AG, (see section 18, page 179).
Goodwill is tested annually for impairment (see section 2.10, from page 84).
The impairment test carried out in 2017 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.
Stress tests show that any reasonable change in any of the key assumptions used to determine the recoverable amount does not result in any impairment.
Investment result from financial assets and investment property 1 508.2 1 210.8
Current income on financial assets (gross) 771.1 772.6 14.9 14.2 786.0 786.8
Investment management expenses on financial assets – 11.3 – 9.3 – – – 11.3 – 9.3
Investment management expenses on property – 84.9 – 81.4 – – – 84.9 – 81.4
FX effects from loans to subsidiaries 40.4 – 1.8 – – 40.4 – 1.8
Gains and losses on financial assets (net) 314.3 131.5 144.6 52.2 458.9 183.7
“Derivatives” comprises gains and losses on derivative financial assets and derivative financial liabilities, of which CHF 0.5 million (previous year: CHF 4.0 million profit) represents a loss on the ineffective portion of the currency hedges to protect net investment in the Group’s own fund companies (net investment hedge).
The gains and losses reported for the HTM class also contain book gains and losses from foreign currency translations.
Financial report Investments 7.4 Investments in associates Dividend income from associates totalled CHF 1.1 million (previous year: CHF 1.1 million). The gain from the disposal of the investment in the associated company fvv-Vorarlberger Versicherungsmakler GmbH, Götzis, was CHF 0.1 million.
Accumulated impairment losses as of 31 December 0.0 0.0 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 37.4 million (previous year: CHF 34.4 million). Helvetia did not have any share in the contingent liabilities of associates (previous year: none).
Foreign currency translation differences – 46.8 46.8 – 7.3 1 Recognised in the income statement as ”Gains and losses on Group investments (net)”.
Investments with market risk for the policyholder 71.8 52.6 52.8 51.1 71.8 52.6 13.2 8.6 58.6 44.0 – –
Total “at fair value through profit and loss” 7 370.2 6 181.2 6 393.3 5 545.4 7 370.2 6 181.2 5 064.0 4 432.6 2 153.5 1 742.4 152.7 6.2
Total financial assets at amortised cost 11 596.1 11 469.5 11 596.1 11 469.5 12 745.7 12 831.7 284.0 218.5 12 461.7 12 613.2 – –
Total financial assets at fair value 33 610.6 31 389.6 30 561.4 28 636.9 2 070.6 2 109.7 33 610.6 31 389.6 15 922.3 14 319.5 17 517.1 17 050.5 171.2 19.6 1 Excl. assets receivables from insurance business and reinsurance.
A loss of CHF 3.9 million was reported under “Gains and losses on financial instruments” in the income statement and a gain of CHF 1.4 million was recorded under “Change in unrealised gains and losses on financial instruments” in the statement of comprehensive income. Overall, this resulted in a loss of CHF 2.5 million for the “Level 3” investments (previous year: loss of CHF 6.2 million). The valuation loss on the “Level 3” investments held on the reporting date was CHF 1.8 million (previous year: CHF 0.4 million). The “Level 3” portfolio was worth CHF 171.2 million at the end of the year.
Total derivatives for hedge accounting 480.0 – – 480.0 343.3 1.7 7.2
Total equity- and equity-index instruments – 510.1 723.1 1 233.2 1 032.9 50.4 27.7
Total derivatives for hedge accounting 470.8 – – 470.8 340.5 28.6 20.7 7.7.3 Derivatives for hedge accounting
Outstanding amounts are collected in the course of the normal debt collection procedures and impaired if necessary (see section 2.11.3, page 86). Information on the collateral held by Helvetia Group is provided in section 16.6 (from page 173).
The Helvetia Group applies the usual financial covenants to its financial liabilities but these are not expected to have any material impact on the contractual conditions (e.g. due date, interest rate, collateral, currency).
Section 16.5 (page 170) contains a maturity schedule of loans and financial liabilities.
Total financial liabilities at fair value 274.1 212.8 195.4 164.8 274.1 212.8
Total financial liabilities from financing activities 1 616.2 978.4 1 537.5 930.4 1 717.5 1 029.7
Helvetia Schweizerische Versicherungsgesellschaft AG CHF 225 Mio. 0.75 % 2014 28.10.2020 0.85 % 224.4 224.2
The expected purchase price of these shares at CHF 45.3 million (previous year: CHF 43.6 million ) is included under “Financial liabilities at fair value”. The valuation method used for the calculation of the liabilities belongs to the “Level 3” category.
Other financial liabilities in the amount of CHF 133.4 million (previous year: CHF 125.0 million) were evaluated using “Level 2” valuation methods.
Actuarial reserves for insurance contracts life 33 897.1 32 564.6 76.9 88.6 33 820.2 32 476.0
Provision for policyholder participation – life contracts 1 745.6 1 692.3 – – 1 745.6 1 692.3
Unearned premium reserve for insurance contracts life 202.5 207.3 5.0 4.8 197.5 202.5
Reserves for life insurance contracts 35 845.2 34 464.2 81.9 93.4 35 763.3 34 370.8
Loss reserves for insurance contracts non-life 9.3.1 4 874.1 4 630.8 370.3 354.5 4 503.8 4 276.3
Total reserves for insurance contracts 42 020.0 40 264.5 506.4 495.9 41 513.6 39 768.6
Reserves for investment contracts with descretionary participation features 2 871.9 2 546.7 – – 2 871.9 2 546.7
Total reserves for investment contracts 4 053.8 3 599.6 – – 4 053.8 3 599.6
Total reserves for insurance business 46 073.8 43 864.1 506.4 495.9 45 567.4 43 368.2
Accumulated claims paid as of 31 December – 1 962.0 – 2 044.8 – 2 092.2 – 2 325.2 – 2 444.7 – 2 409.0 – 2 045.0 – 2 185.5 – 1 831.1 – 1 213.0
Estimated loss reserves as of 31 December 813.7 96.4 125.8 117.4 199.0 186.0 233.0 390.5 546.5 753.2 1 479.4 4 940.9
Loss reserves as of 31 December 4 874.1 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.
Year of loss occurrence before 2008 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total in CHF million
Estimated claims after year of loss occurence 2 058.4 2 170.6 2 209.6 2 524.2 2 630.7 2 642.0 2 435.5 2 732.0 2 584.3 2 692.4
– Sufficient provisions are raised at an early stage to cover all existing technical liabilities. – The fluctuation of the annual claims incurred is small overall for the well-diversified portfolio even before reinsurance.
Due from / due to agents and brokers 150.2 128.3 159.5 149.2
Due from / due to insurance companies 501.1 482.8 208.0 140.3
The receivables and liabilities from insurance business are primarily short-term. A maturity schedule of the liabilities is provided in the table in section 16.5 (page 170). The amortised cost of the receivables usually equals the fair value. The method used for determining the fair value is allocated to the “Level 2” category.
Financial report Insurance business 9.7.2 Change in the provisions against receivables
Deposit liabilities from reinsurance contracts 69.4 68.4 69.4 68.4 69.4 68.4
Total financial liabilities at amortised cost 597.7 640.2 597.7 640.2 597.7 640.2
Total financial liabilities at fair value 1 181.9 1 052.9 1 181.9 1 052.9 1 181.9 1 052.9
Total financial liabilities from insurance business 1 779.6 1 693.1 1 779.6 1 693.1 1 779.6 1 693.1
The income earned from the management of deposits for investment contracts is included in “Other income” and amounted to CHF 2.7 million in the reporting year (previous year: CHF 1.6 million).
Total income taxes 110.5 51.2 10.2 Change in deferred tax assets and liabilities (net)
The expected tax rate applicable to the Helvetia Group was 22.5 % for 2017 (previous year: 22.3 %). This rate is derived from the weighted average of expected tax rates in the individual countries where the Group operates.
Change in unrealised gains and losses on investments – 39.0 4.4 31.2 – 9.5 – 7.8 – 5.1
Share of associates’ net profit recognised in other comprehensive income – – 0.5 – 0.1 – – 0.4
Change from net investment hedge – 17.8 18.1 – – – 17.8 18.1
Change in liabilities for contracts with participation features 65.3 41.7 – 32.8 3.3 32.5 45.0
Net tax assets from losses carried forward 23.2 20.9 10.6.2 Losses carried forward without tax assets recognised As at 31 December 2017, no tax assets were recognised for losses carried forward of CHF 93.9 million (previous year: CHF 104.9 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 24.0 % and 27.8 % (previous year: 24.0 % to 30.0 %).
The purchase of Helvetia Holding AG registered shares is not subject to any restrictions. Shareholders who purchase the shares in their own name and on their own behalf are entered in the share register with voting rights for a maximum of 5 % of the issued registered shares. Individuals who do not explicitly certify in the registration application that they acquired the shares on their own behalf are entered in the share register for a maximum of 3 %.
The treasury stock increased by 1 703 shares in the reporting year. Therefore the number of treasury shares is now 51 341. 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 1.4 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.
In the reporting year, Patria Genossenschaft paid CHF 40.0 million into the bonus reserves of Helvetia Schweizerische Lebensversicherungsgesellschaft AG (previous year: CHF 45.0 million). This was credited to equity without affecting profit or loss and allocated in total to “Provision for future policyholder participation” under liabilities in accordance with its objective.
Unrealised gains and losses (net) as of 31 December 283.9 264.4
Revaluation from reclassification of property and equipment – – – – – 0.0 – 0.0
Gains reclassified to the income statement due to disposals – 152.7 – 175.5 – – – – – 152.7 – 175.5
Losses reclassified to the income statement due to disposals 4.6 8.3 – – – – 4.6 8.3
Impairment losses reclassified to the income statement 0.0 – 2.7 – – – – 0.0 – 2.7 less: Obligations for contracts with participation features in ’Liabilities’ – 1 075.9 – 1 141.2
Change in liabilities for contracts with participation features – 12.0 – 4.3
Balance as of 31 December 652.6 645.8 less: Deferred taxes – 144.5 – 143.7
Deferred taxes on revaluation of benefit obligations – 4.1 – 2.3
The first call date on which Helvetia has the right, but not the obligation, to repay the bond is 23 November 2022. After this date, the interest rate will be set for five years at a time based on the fiveyear CHF swap rate and the initial margin of 302.5 basis points. In 2014, Helvetia Schweizerische Versicherungsgesellschaft AG issued a subordinated perpetual bond for CHF 400 million. This bond meets all solvency requirements and is allocated to equity.
This bond will pay interest at 3.50 % per year until 2020. The interest is charged directly to equity. Helvetia can suspend interest payments at its discretion only when Helvetia Holding does not pay any dividends and if certain other conditions are fulfilled. However, the suspended interest payments do not lapse.
11.4 Deferred taxes recognised in other comprehensive income Deferred taxes recognised directly in other comprehensive income arise from valuation differences that primarily result from the fair value valuation of AFS financial assets and the revaluation of benefit obligations. On the reporting date, they amounted to a total of CHF 169.8 million (previous year: CHF 148.6 million).
Financial report Equity 11.6 Dividends The Board of Directors will submit a proposal to the Shareholders’ Meeting of 20 April 2018 to pay a dividend of 23.00 per share (previous year: CHF 21.00) with the total payout amounting to CHF 228.7 million (previous year: CHF 208.8 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.
The calculation of the capital adequacy requirement in accordance with the Swiss Solvency Test is risk-based. In addition, the effects of risks on the risk-bearing capital are determined by means of scenario simulations and statistical methods, and quantified taking into consideration dependencies and diversification effects in the form of a risk-based capital requirement.
These objectives are kept in balance by taking account of risk capacity and cost / benefit arguments. Helvetia Group applies an integrated approach to capital management. Based on the IFRS equity, the capital is managed integrally on the basis of an internally defined capitalisation target under the Swiss Solvency Test and the rating, and is brought into line with the corporate strategy with the help of multi -year capital plans. The capitalisation of the individual legal entities of Helvetia Group is also monitored closely and optimised according to internally defined threshold values.
“Non-technical provisions” primarily consists of provisions for liabilities resulting from official regulation, provisions arising from other tax obligations, provisions for restructuring expenses and liabilities due to agents. The share of provisions classified as current is CHF 137.8 million (previous year: CHF 136.9 million).
Other contingent liabilities At the reporting date, there was CHF 25.0 million (previous year: CHF 21.7 million) in other contingent liabilities.
The Group investments included in the plan assets are set out in section 13.3.8 (page 150). There are other funded defined benefit plans in place in Germany.
Fair value of plan assets (–) – 2 885.7 – 2 679.9
Defined benefit obligation as of 31 December 3 441.9 3 379.8
As at 31 December 2016, 99.3 % (previous year: 99.3 %) of the plan assets related to pension plans in Switzerland.
Helvetia based its life expectancy assumption on the BVG 2015 generation tables.
13.3.7 Sensitivity analysis The sensitivity analysis takes into account the change to benefit obligations and the current service cost when there is a change of 50 basis points to the actuarial assumptions. Only one parameter is adjusted in each case; the other assumptions remain unchanged.
As at 31 December 2017, plan assets include shares issued by Helvetia Holding AG with a fair value of CHF 28.0 million (previous year: CHF 94.0 million). Plan assets do not include any of the Group’s owner-occupied properties.
Financial report Share-based compensations 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 2017 were recognised in the income statement at CHF 1.4 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 shares blocked for a minimum of three years. This procedure already applies mutatis mutandis to the compensation for the Board of Directors in 2017. Instead of variable compensation, they receive a fixed sum in the form of blocked shares. For the 2017 financial year, the Board of Directors – subject to the approval of the General Meeting – will receive an amount of CHF 0.5 million in blocked shares. This corresponds to 826 shares at a price of CHF 569.00 as of reference date 28 February 2018. The Board of Directors received variable compensation in the form of deferred shares in the amount of CHF 0.5 million in the previous year. The compensation entered proportionally into the income statement in 2016 came to CHF 0.1 million.
The pool agreement between Patria Genossenschaft and Raiffeisen was terminated with effect from 15 September 2017. Patria Genossenschaft, Basel, now directly holds 34.1 % of the capital of Helvetia Holding AG.
15.2 Transactions with related persons “Related persons” include the members of the Board of Directors and Executive Management of Helvetia Group as well as their close family members (partners and financially dependent children).
15.2.1 Compensation Members of the Board of Directors and the Group Executive Management or persons closely related to them do not have any significant personal business relationships with Helvetia Group and also did not bill the Group for any significant fees or remuneration relating to additional services. Where such additional services are compensated, they form an integral part of the total remuneration stated below.
Employer contributions to pension funds 2 175 157 1 645 369 1 Subject to approval by the Shareholders’ Meeting.
At the reporting date a mortgage loan had been granted to the following members of the Executive Management: – to Philipp Gmür for CHF 1 000 000 (previous year: CHF 1 000 000). In the reporting year the loan earned interest at 0.95 % (previous year: 0.95 %). – to Reto Keller at a total sum of CHF 620 000 (previous year: –). The loan of CHF 500 000 earned interest at 1.38 % in 2017, the extra mortgage of CHF 120 000 earned interest at 2.39 %. – to Beat Müller at a total sum of CHF 1 170 000 (previous year: –). The loan to Beat Müller of
Members of the Board of Directors have no claim to employee conditions. At the reporting date, a mortgage loan had been granted to Jean-René Fournier for CHF 765 000 (previous year: CHF 765 000). In the reporting year, the loan, a fixed mortgage at normal customer conditions, earned interest at 1.57 % (previous year: 2 %).
Financial report Related party transactions 15.2.3 Shares of 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
In addition to the ownership of shares as set out here, the active members of the Board of Directors have deferred claims to a total of 1 ,714 shares acquired under the LTC programme.
Financial report Risk management ciency of the risk management system of the Group. While the risk controlling functions are responsible for the ongoing monitoring of the Group’s risk management system, the internal audit unit monitors the effectiveness, appropriateness and efficiency of the risk management measures at irregular intervals and identifies weaknesses.
This table was created using principles on which the segment reporting in section 3 (from page 93) 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 internally in the form of reinsurance to the “Corporate” segment so that a centralised transfer can then be made to the reinsurance market.
Financial report Risk management 16.3 Life technical risks Helvetia Group offers a comprehensive range of life insurance products. These include risk and pension solutions and are aimed at private persons (individual life) and companies (group life insurance). The risks associated with these products are presented in detail in subsequent sections. There is also a small portfolio from the Active Reinsurance business, which is currently in run-off and due to its size will not be discussed further in the following description. The life insurance business operates primarily in Switzerland, which accounts for 79.5 % (previous year: 80.6 %) of the gross premium volume in the life business of Helvetia Group. The following table shows the breakdown of gross premium income by sectors and countries. A total of 1.4 % (previous year: 1.4 %) of the premiums written in the life business in 2017 were ceded to reinsurers. Of these 26.8 % were ceded to Group reinsurance and the rest to external reinsurance companies. 67.3 % (previous year 66.0 %) of the premiums written by Group Reinsurance were retroceded.
Gross premiums by business activities and region in the life business as of 31.12.2017 Switzerland Europe Total in CHF million Germany Italy Spain Austria as of 31.12.2016 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 24.3 % (previous year: 26.0 %) of the gross premium volume of the life business of Helvetia Group, with 59.2 % of the premiums (previous year: 61.1 %) coming from Switzerland. Investment-linked life insurance (index and unit-linked products ) contributes 14.8 % to the life business of the Helvetia Group (previous year: 13.0 %). 41.0 % of the premiums (previous year: 41.6 %) from the investment-linked life business originate in Switzerland.
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 therefore established during the underwriting process whether and under what conditions the company will be insured.
Cancellation risk Depending on the nature of the contract, higher or lower cancellation rates can cause losses for shareholders. Overall, the basis of calculation at all Helvetia Group life insurance units apply sufficient safety margins so that a change in the cancellation rate would not have a major impact on the amount of reserves. For example, a 10 % decrease in the cancellation rate would require a reinforcement of reserves with a negative effect on the income statement of CHF 5.6 million (previous year: CHF 4.7 million).
Please see section 16.4.1 (from page 163) on the effect of a change in interest rates on equity and the income statement.
The main market risks to which the Group is exposed are interest rate risk, exchange rate risk and equity price risk. The Group is also exposed to the real estate market through a significant portion of real estate in its investment portfolio. Market risks affect the income statement and both the asset and the liability side of the balance sheet. The Group largely manages its real estate, mortgages and securities itself. External providers mainly manage assets invested in convertible bonds and private debt. Savings accumulated in unit-linked policies are invested in a wide range of funds, equities and bonds and are managed by third parties. The market risks associated with these funds lie with Helvetia Group’s insurance customers.
Helvetia Group has established a process to ensure that all assets are invested in accordance with the principle of commercial prudence. This means that Helvetia Group only invests in assets and instruments whose risks can be properly assessed, evaluated, monitored and controlled. Market risks are controlled via the investment strategy and, if necessary, reduced by the use of derivative hedging instruments. Foreign currency risks are currently hedged in this way and the risk of losses on equity investments controlled. In Helvetia’s internal funds, the balance sheet currency exposure is hedged by a net investment hedge. The risk of loss on shares is kept under control by hedging with options. The foreign currency exposure is largely hedged by forward contracts. More information can be found in tables 7.7.1 “Derivative financial assets” (page 120) and 7.7.2 “Derivative financial liabilities” (page 121).
Both the amount of the technical reserves and the value of most investments of Helvetia Group depend on interest rate levels. In general, the higher the interest rate, the lower the present value of assets and liabilities. The extent of this change in values depends, among other things, on the time pattern of cash flows. To manage the volatility of the net positions (difference between assets and liabilities, i. e. “AL mismatch”), the Group compares the maturities of cash flows arising from liabilities with those arising from assets, and analyses them to ensure that the maturities are matched. The risk derived from this is managed as part of the ALM process. To this end, the risk capacity on the one hand and the ability to fund the guaranteed benefits or to generate surpluses on the other hand are brought into balance.
Maturity schedule of financial assets as of 31.12.2017 < 1 year 1 – 5 years 5 – 10 years > 10 years Without maturity Total in CHF million
Held-to-maturity investments (HTM) 119.4 442.0 515.7 1 359.6 – 2 436.7
Available-for-sale investments (AFS) 709.8 5 416.3 9 073.8 9 528.9 1 509.9 26 238.7
Derivative financial assets for hedge accounting 7.2 – – – – 7.2
Interest rate level 2017 Interest rate level 2016 as of 31.12. + 10 bp – 10 bp + 10 bp – 10 bp in CHF million
The above table analyses the impact of a change in interest rate on Helvetia Group’s equity and income statement, taking account of deferred taxes and the legal quota. The analysis also includes investments at fair value through profit and loss, fixed-income available-for-sale financial assets, derivatives, technical reserves in the life business (the actuarial reserve, deposits for investment contracts) and interest on floating -rate financial assets. The “look through” principle was used for significant holdings in mixed funds.
16.4.2 Share price risk Investments in equities are used to generate long-term surpluses. Investments are made primarily in large-caps traded on the major stock exchanges. Helvetia Group holds a well-diversified portfolio (mainly stocks traded on the exchanges in Switzerland, Europe and the USA). The share of each item of the total portfolio (direct investment) is generally below 6 %. An exception to this are holdings in the diversified real estate investment company “Allreal” (10.1 % of total direct investment in equities). The market risk of the equity portfolio is constantly monitored and, if necessary, reduced by sales or the use of hedging instruments in order to meet the strict internal requirements for risk capacity.
Exchange rate EUR / CHF Exchange rate USD / CHF Exchange rate GBP / CHF
Investments with market risk for the policyholder 1 130.5 2 202.8 267.5 50.3 3 651.1
Goodwill and other intangible assets 927.0 291.0 0.0 – 1 218.0
Provision for future policyholder participation 1 491.8 416.4 – – 1 908.2
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 31.12.2016 < 1 year 1 – 5 years 5 – 10 years > 10 years Without maturity Total in CHF million
Provision for future policyholder participation 183.6 76.9 27.5 40.8 1 579.4 1 908.2
The above tables show the expected maturity of the amounts recognised in the balance sheet.
as of 31.12.2017 Callable at any time < 1 year 1 – 5 years 5 – 10 years > 10 years Without maturity Total in CHF million
Financial liabilities from financing activities – 36.0 510.8 1 056.9 – 274.2 1 877.9
Financial liabilities from financing activities – 16.9 437.9 418.1 – 212.8 1 085.7
The above figures may differ from the amounts reported in the balance sheet, as these represent undiscounted cash flows. These were allocated to the category “callable at any time” based on the counterparty ’s contractual cancellation right. The majority of these contracts can be terminated both in life and in non-life business within one year at the latest.
Fair Value Maturity of non-discounted flows of funds as of 31.12.2017 < 3 months 3 – 6 months 6 – 12 months > 1 year in CHF million
Financial report Risk management 16.6 Counterparty risks Counterparty risks include default risks and risks of changes in value. The default risk refers to the possibility of the insolvency of a counterparty, while the risk of changes in value represents the possibility of a financial loss due to a change in the creditworthiness of a counterparty or a change in credit spreads in general. The risk of counterparties failing to meet their obligations is continuously monitored. To minimise counterparty risk, Helvetia defines lower limits with regard to the creditworthiness of the counterparty and limits the exposure per counterparty.
– Counterparty risk from transactions with derivative financial instruments: refer to section 16.6.2 (page 175) 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 54.0 million. Existing netting agreements are also relevant. Refer to the table for detailed information about derivative financial instruments.
– Counterparty risks from financial guarantees and loan commitments: Detailed information on contingent obligations can be found in section 12 (page 145).
Gross and net amounts of financial instruments in the balance sheet Offsettable, non-netted amounts as of 31.12.2016 Financial instruments Cash collaterals Net amount in CHF million
Financial report Risk management 16.6.2 Credit quality of exposures and credit risk concentrations The following analyses show the gross exposure to interest rate instruments, loans and derivative financial instruments, excluding collateral. They do not include investments where the credit risk is borne by the holders of life insurance policies. The securities and issuer ratings of recognised rating agencies were used to show credit quality.
Credit quality of debt instruments, loans and derivative financial instruments by asset class as of 31.12.2017 AAA AA A BBB BB and lower Not rated Total in CHF million as of 31.12.2016 AAA AA A BBB BB and lower Not rated Total in CHF million
Credit quality of debt instruments, loans and derivative financial instruments by sector as of 31.12.2017 AAA AA A BBB BB and lower Not rated Total in CHF million as of 31.12.2016 AAA AA A BBB BB and lower Not rated Total in CHF million
Not rated 36.9 5.2 as of 31.12.2016 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 31.12.2016 AAA AA A BBB Not rated in CHF million
United States of America AAA 1 520.2 1 520.2 – – – – – – – –
United States of America AAA 1 383.0 1 383.0 – – – – – – – –
No important events occurred before or on 1 March 2018, the date on which these consolidated financial statements were completed, that are likely to have a material impact on the financial statements as a whole.
The following overview shows the assets and liabilities at fair value acquired as part of the acquisition of IFANG and Defferrard & Lanz: IFANG Defferrard &
The other assets contain receivables from intermediary business amounting to CHF 0.4 million gross, which are all classified as potentially recoverable.
IFANG generated a profit of CHF 0.5 million in the reporting period. In the reporting period, Defferrard & Lanz contributed a loss of CHF 5.2 million to the Group’s results. This relates to writedowns on intangible assets capitalised as part of the acquisition. If the acquisition of Defferrard & Lanz had been completed on 1 January 2017, the consolidated net profit in the reporting period would have been CHF 405.3 million. These pro forma values are based on unaudited financial statements in accordance with local accounting principles and assump18. Scope of consolidation
The following events in the reporting period led to a change in the scope of consolidation of Helvetia Group: – On 9 February 2017, Helvetia founded the Swiss Cap Private Debt Fund, Luxembourg. – Helvetia Venture Fund S.A., SICAR, Luxembourg, was established on 31 March 2017. – Helvetia Vita Compagnia Italo Svizzera di Assicurazioni sulla Vita S.p.A., Milan, and Nationale Suisse
– Helvetia Finance Ltd., St Helier, was liquidated with effect from 7 July 2017. – On 24 July 2017, the equity capital of Helvetia Vermögens- und Grundstücksverwaltung GmbH,
– During the period under review, the investment in the associated company Gesnorte S.A., Madrid, was increased from 26 % to 27.7 %.
18.2 Events in the previous period – The Belgian subsidiary Société Immobilière Joseph II SA, Brussels, was sold on 1 March 2016. The profit from the sale of CHF 1.1 million was recognised in other income. – Since 31 August 2016, Helvetia has held 50 % of the associated real estate company Pilatus Arena AG, Lucerne.
– On 24 December 2016, Helvetia acquired the remaining 47 % of the shares in Chiara Assicurazioni S.p.A. for CHF 21.6 million. Helvetia now holds 100 % of the company. – On 16 December 2016, Helvetia Schweizerische Versicherungsgesellschaft AG, St Gall, took a 70.416 % holding in MoneyPark AG, Wollerau. With this investment the insurance company is investing in a new business model and thereby opening up not only a completely new source of income, but also new access to customers and a wider range of products. MoneyPark AG will continue to operate as an independent company and therefore will be able to carry out its role as an independent intermediary in the mortgage business and the business with tailor-made pension solutions. The purchase price was CHF 107.5 million in cash.
The goodwill represents earnings potential by expanding the existing Helvetia portfolio through a new, independent business model as an intermediary in the mortgage business and the business with tailor-made pension solutions, as well as the potential for expansion towards real-estate-related property insurance. In addition, Helvetia expects to gain a stimulus and synergies in the area of digitalisation. The goodwill will be assigned to the “Switzerland” segment and is not expected to be deductible for tax purposes.
In the previous period, MoneyPark contributed an expense of CHF 1.1 million to the Group’s results. This relates to writedowns on intangible assets capitalised as part of the acquisition.
If the acquisition had been completed on 1 January 2016, the consolidated net profit in the previous period would have been CHF 373.0 million. These pro forma values are based on unaudited financial statements in accordance with local accounting principles and assumptions regarding the impact of the special effects of the transaction. The acquisition would have had no impact on the Group’s gross premiums.
In the previous period the following mergers took place: – Nacional Suiza Compañía de Seguros y Reaseguros S.A., Barcelona, and Helvetia Compañía
Helvetia Schweizerische Versicherungsgesellschaft AG, St Gall Non-life 100.00 full CHF 77.5
Helvetia Vermögens- und Grundstücksverwaltung GmbH & Co. KG, Frankfurt a.M. Life 100.00 full EUR 52.2
Helvetia Compagnia Svizzera d’Assicurazioni S.A., Rappresentanza Generale e Direzione per l’Italia, Milan 1 Non-life 100.00 full EUR
GE.SI.ASS Società Consortile a R.L., Milan Other 100.00 full EUR 0.0
Financial report Scope of consolidation as at 31 December 2017 Business activities Holding in %
Previsur Agencia de Seguros S.L., Seville Other 100.00 full EUR 0.0
Profit carried forward to new account 893.8 116.4 1 2017: CHF 23.00 per registered share 2016: CHF 21.00 per registered share
Financial report Helvetia Holding 1. Principles 1.1 General The 2017 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.
Treasury shares are charged to equity in the balance sheet at purchase cost as of the acquisition date. In case of a sale at a later date, the gain or loss is recognised without affecting profit or loss.
2. Notes on balance sheet and income statement items 2.1 Shareholdings On the reporting date, Helvetia Holding AG owned the following direct investment: Reported company capital Holding as of
Helvetia Schweizerische Lebensversicherungsgesellschaft AG, Basel 0.0 0.00 % 50.0 100.00 %
2.5 Treasury shares On 31 December 2017, Helvetia Holding AG and its subsidiaries held 51,341 shares (CHF 9.4 million ) of Helvetia Holding AG (previous year: 49,638 shares, CHF 8.0 million).
Low in CHF High in CHF Average price in CHF Number 2.6 Dividend income The reported dividend income of Helvetia Holding AG represents the dividend paid simultaneously to Helvetia Holding AG by the subsidiary Helvetia Schweizerische Versicherungsgesellschaft AG from its net profits for 2017.
3.2 Guarantee and contingent liabilities Helvetia Holding AG belongs to the Helvetia VAT group and is therefore jointly and severally liable for VAT debts.
Helvetia Holding AG has issued subordinate and unsecured guarantees of CHF 1.3 billion vis-àvis the bond creditors of Helvetia Schweizerische Versicherungsgesellschaft AG. This is associated with (i) the subordinated bond issued in September 2015 as well as (ii) a subordinated bond issued in October 2014 in the amount of CHF 1 billion (two unsecured senior bonds at CHF 225.0 million and CHF 150.0 million, and two unsecured junior bonds at CHF 400.0 million and CHF 225.0 million).
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 2017: – Patria Genossenschaft, Basel, with 34.09 % (previous year: 34.09 %) – Chase Nominees Ltd., London, with 5.05 % (previous year: 2.91 %) – Raiffeisen Schweiz Genossenschaft, St Gall, with 0.00 % (previous year: 4.00 %) – BlackRock AG, Zurich, with 3.21 %, of which 2.56 % are held indirectly (previous year: 2.91 %, of which 2.32 % 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 2017 consolidated financial statements of the Helvetia Group under chapter 15.
3.5 Ownership interests of members of the Board of Directors and employees
Embedded Value as of 31 December 3 790.1 3 264.1 in %
+1 % change to risk discount rate – 8.1 % – 9.7 %
–1 % change to risk discount rate 9.9 % 11.9 %
+1 % change to new money rate 9.5 % 11.2 %
–1 % change to new money rate – 18.4 % – 17.5 %
Value of new business in % APE 17.5 % 13.4 %
Value of new business in % PVNBP 1.7 % 1.3 %
Value of new business in % APE 17.4 % 12.0 %
Present value of new business premiums (PVNBP) 2 638.4 2 531.8
Value of new business in % PVNBP 1.8 % 1.3 %
Annual Premium Equivalent (APE): 100 % annual premium for new business +10 % of single premium of new business
Direct business All insurance policies concluded by Helvetia with customers who are not insurers themselves.
Impairment Impairment is deemed to be the amount by which the net carrying value of an asset permanently exceeds its recoverable amount (the higher of its net selling price and the net present value of cash flows which are expected to be generated from the use of the asset).
Plan assets Assets that serve to cover employee benefits by means of a long-term fund.
Zillmering Balancing of an account with part of the unamortised acquisition costs taken into consideration.
Solvency, Solvency I, Swiss Solvency Test The term “solvency” refers to the minimum supervisory capital adequacy requirements that must be met by an insurance company. To calculate this, the available capital is compared to the required capital, with the available capital being the equity that is available to cover the required capital. The required capital is the minimum amount of capital funds which an insurance company needs to ensure that it can always meet its liabilities from insurance policies. Currently, insurance groups domiciled in Switzerland are subject to two different solvency systems. While the “Solvency I” system, which has been in force for many years, requires sufficient volume-based capital to cover the insurance obligations, the required capital is calculated on a risk basis for the “Swiss Solvency Test” (SST) which entered into force on 1 January 2011.
Helvetia Holding AG Dufourstrasse 40 CH-9001 St Gall Phone +41 58 280 50 00 www.helvetia.com info@helvetia.com
Helvetia Group Doris Oberhänsli P. O. Box, CH-9001 St Gall Phone +41 58 280 55 83 www.helvetia.com doris.oberhaensli@helvetia.ch
Important dates 20 April 2018 Ordinary Shareholders’ Meeting in St Gall 4 September 2018 Publication of half-year financial results for 2018 6 March 2019 Publication of financial results 2018 mailto:info%40helvetia.com?subject=
Group profit for the period per share in CHF 40.9 43.0 29.0 36.1 39.1
Price of Helvetia registered shares at the reporting date in CHF 447.5 474.0 566.0 548.5 548.5
Market capitalisation at the reporting date in CHF million 3 872.2 4 687.6 5 628.9 5 454.9 5 454.9 in CHF million
Provisions for insurance and investment contracts (net) 34 518.7 41 275.0 41 143.0 42 315.3 44 385.5 of which Group financial assets and investment property 36 736.7 44 843.4 45 036.3 46 471.6 48 629.2
Contacts Helvetia Group Susanne Tengler Head of Investor Relations P. O. Box, CH -9011 St Gall www.helvetia.com susanne.tengler@helvetia.ch mailto:alessandra.albisetti@helvetia.ch mailto:susanne.tengler@helvetia.ch
Over 6 500 employees serve over five million customers daily. Besides owned sales organisations and direct sales, numerous networks and partners, including brokers and banks, provide us with customer access across the entire life and demand cycle. Solid technical results – coupled with a proven asset-liability approach to steer our CHF 58 billion balance sheet – guarantee sustainable profit development. Our brand promise applies for customers, shareholders and employees: simple. clear. Helvetia.
Younger target groups too? Yes. We are continuously looking at new dialogue channels for Generations Y and Z. For example, the option to extend your contract or report bicycle thefts via text message.
Secondly, digitisation is helping us to automate many processes even more quickly. And thirdly, it will ultimately enable us to link available data even more intelligently and thus allow us to gain important knowledge, for example relating to risk selection and pricing.
S ince the beginning of November 2017, Helvetia has been operating under a new brand image – initially only in Switzerland, but now also in all country markets since the start of this year. The new branding is simple and striking – and so it should be: clear keywords in black and white evoke images among their audience. The campaign is integrated within the helvetia 20.20 corporate strategy and translates its core elements into a new brand experience: Helvetia wants to act in an agile, innovative and customer-focussed manner – in other words, it wants to offer simple and clear solutions. Or as Helvetia now puts it: “simple. clear. helvetia.”
The new brand image places a focus on one of the key services of an insurance company: offering simple solutions for complex protection needs and being able to explain them to customers. Helvetia stands for comprehensive expertise and is Switzerland’s leading all-lines provider. From private and occupational pension plans to liability, vehicle and transport insurance and property insurance, we cover the entire spectrum for retail and corporate customers. Our customers can obtain comprehensive protection with us and feel secure. Accessing Helvetia is easy for customers: thanks to Helvetia’s extensive expertise, customers have access to contacts for all insurance matters under a single roof. They also have the option to reach Helvetia simply and easily via various channels. Our employees work to ensure that customers are handled in a transparent and fair manner. Every time we come into contact with customers, our objective is to demonstrate simplicity and clarity: from our advisory services, which offer customers relevant information in a transparent fashion, to an uncomplicated claims settlement process.
The new brand image also embodies an attitude. This reflects the requirement to make things simpler every day or to explain them. We are also pursuing this objective with the helvetia 20.20 strategy.
Members of the Executive Management 1 Reports to the Chairman of the Board of Directors * Until 2018 Shareholders’ Meeting (proposed as Chairwoman of the Board of Directors)
The following persons will be proposed for election to the Board of Directors at the Shareholders’ Meeting of 20 April 2018: Dr Thomas Schmuckli, Beat Fellmann and Regula Wallimann.
Dr Patrik Gisel will step down from the Board of Directors at the Shareholders’ Meeting.
Targeted innovations / prototyping  Corporate venturing  Corporate incubation  Partnering helvetia 20.20 creates value …
What does this mean exactly? We systematically place our customers at the heart of our actions and thoughts. In doing so, we are building on existing strengths and making targeted use of innovation. In terms of how it is perceived externally, fit means that our products and services are made accessible to our customers via modern interaction points. Internally, it means that our processes will become simpler and more efficient. This will enable us to create value for customers, employees and shareholders.
How do you want to implement this? We are combining transformation with innovation: we are systematically strengthening our core business and supplementing it in a targeted manner with innovative business models such as the “home” ecosystem or fully digitised insurance processing via INZMO, in which we have recently acquired a holding.
We have been insuring risks for 160 years and this will remain our focus in future. However, technological change is opening up additional opportunities for us that we want to systematically explore and consistently exploit. For instance, we are providing our customers with new means of accessing our services. One example here are digital insurance solutions, which we offer in Switzerland (smile.direct) and also, for example, in Germany and Spain. Since 2017, we have also been offering advice in Switzerland via video chats. We are also one of the first insurers in Europe to allow customers to extend their contracts and report claims through a so-called chatbot using text messages or facebook messenger.
Furthermore, we possess large volumes of data, which we structure and utilise in a targeted manner in order to allow us to address customers individually and offer tailored solutions (“smart data”). We are also piloting text and speech recognition solutions in order to improve the efficiency and availability of services processes, for example in the area of contract management or complaints management.
Every year, our Venture Fund team evaluates around 400 start-ups in the insuretech and proptech sectors. From this large number of new companies and ideas, we invested in initial companies in 2017, including the aforementioned PriceHubble and INZMO. In May 2017, the latter was recognised by the European
And finally, with our own incubator, which develops start-ups internally, we offer an interesting environment for young, clever minds who want to courageously try out something and free themselves from existing processes and structures.
“With the implementation of helvetia 20.20, we are combining transformation with innovation.”
Our vision  Emphasis placed on customers and their core needs regarding their home  Offers from various partners are networked across sectors (from a procedural and IT technical perspective)
Current implementation status search, view inform 16 Helvetia company brochure 2017
 Largest independent mortgage broker  Combines personal advice with the most technologically advanced platform for mortgages and pension products
 Offers a maximum selection thanks to a partner network comprising more than 90 banks, insurance companies and pension funds
“Despite the large size of the company, we also receive personal advice at Helvetia from ‘our’
We also benefit from insurance cover that is specially adjusted to our products.”
An experience report from Switzerland: a claim with a surprising outcome
To enable us to further optimise this service, we regularly assess the dialogues with our online customers. This allows us to improve our website’s information content and simplify its use. This strengthens the trust in our work, which is reflected by the extremely positive response from our customers. Following the introduction of “Helvetia VIVA motor vehicle insurance”, we were able to conclude more than 10,000 new online policies by the end of the year.
Back in 2016, Helvetia Germany launched the first online premium calculator for private liability, pet health, household, Smart & Easy and photovoltaic insurance. Helvetia thus has a broad digital range of insurance products that is well received by our target group. This has now been supplemented by an additional component.
Germany: take out motor vehicle insurance simply online simple. clear. – we keep our word in non-life business
If Helvetia customers in Switzerland arrange for repair work to be carried out by a Helvetia partner business, they benefit from various advantages: the collection and return of the vehicle is free of charge and they can remain mobile with a replacement car. Furthermore, there is no bonus loss and the contractually agreed deductible is reduced.
In autumn 2017, Helvetia Switzerland introduced the new “Repair Plus” product component in individual motor insurance. Should customers opt for this solution, they undertake to have all damage suffered by their own vehicle repaired by a Helvetia partner business. In return, they enjoy additional benefits, for example a reduction in their deductible or the waiving of the deductible completely.
Helvetia offers life insurance in Switzerland, Italy, Germany, Spain and Austria. The home market of Switzerland is the most important market with 77.2 % of the business. The product range includes individual products and group life insurance policies. At around 59 % of the Group’s total life volume, occupational pension plans for SMEs represent one of the most important insurance business lines. At 97 %, this business is generated almost exclusively in Switzerland, where Helvetia has established itself as one of the top 3 providers of BVG (Swiss occupational pension system) insurance solutions.
In addition to the development of technical risk, the profitability of the life business is especially 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 2017, 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.
In Switzerland, we offer a modular investment concept with a transparent separation between guarantee and opportunity with the Helvetia guarantee plan. Here, customers decide themselves how they balance security and the opportunity to generate additional returns. For the guarantee part of this product, Helvetia works together with Raiffeisen Schweiz Genossenschaft and Leonteq Securities AG.
Awards “Switzerland’s best life insurer” (London-based magazine Global Banking & Finance Review, autumn 2017). The analysts, editorial team and the magazine ’s publishers assessed Helvetia and the other candidates using a variety of criteria such as business performance, strategic positioning and innovation potential.
Helvetia Austria: AssCompact Awards 2017, first prize for CleVesto in the category “unit-linked life insurance ”. The sector and customers especially value our large fund selection and the capital-managing additional functions.
In Italy, our customers also benefit from flexible hybrid products with corresponding participation options. Helvetia Vita was recently recognised as the “best asset manager” for index-linked products.
Increasing flexibility “There is great demand for private pension products”, explains Reto Keller, Head of Private Pensions Helvetia Switzerland. The need for security is high. To ensure that customers and their relatives are able to maintain their standard of living, Helvetia offers well-conceived solutions for incapacity to work, disability and death and combines these with a long-term savings process. Only insurers do this in the area of pension provision, setting apart their products from those of the banks. Here, Helvetia is increasingly focussing on new life insurance models that can be adjusted flexibly to personal requirements and at the same time follow modern guarantee concepts. With a market-dynamic life insurance policy, customers can benefit from the development of the financial markets – in contrast to traditional products. Helvetia offers modern products such as these in all countries. To this end, we work in Switzerland, for example, with third-party providers as guarantors or allow our customers to participate directly in the capital market via individual product components.
Total CH Total * includes loss in Corporate of CHF 43.4 million 28 Helvetia company brochure 2017
As a provider of heavy construction machinery and equipment, HAND Baumaschinen AG was on the lookout for a strong insurance partner. Many years ago, the family company found exactly this in the form of the insurance company Alba. HAND Baumaschinen AG insured various pieces of machinery for earth moving, structural engineering, civil engineering, garden maintenance and demolition with Alba. Andrea Hand, owner of the 40-year-old company, enjoyed the personal and individual advisory services provided by the small insurance company.
Together with their advisor, Urs and Susanna Klaus regularly assess their risk situation. They value the quick and uncomplicated handling of claims and the provision of advice by phone. “Helvetia has always been fair when something has happened. We would recommend Helvetia to anyone”, says Urs Klaus.
“We believe there are attractive growth opportunities in the SME area – thanks to our market position, our sales channels and our products. Our simple insurance solutions offer a high degree of relevance and greater convenience for customers. As an example, read the customer stories of the floor layer
AT • • • 3 banking partners DE • • ARAG •
IT • • 25 worksite marketing partners 22 banking partners with 1,500 branches 5,000 financial advisors
Our segments * includes loss in Corporate of CHF 43.4 million 30 Helvetia company brochure 2017
Europe is also an important source for the Group dividend: in the 2017 financial year, we distributed 56 % of IFRS earnings from Europe as a dividend to the holding company. Within the country markets, we maintain similar structures to those in Switzerland. This facilitates the transfer of knowledge and the exploitation of synergies between Europe and the Group.
As a niche provider for Active Reinsurance, we want to remain profitable and generate sustainable growth in individual selected markets and business lines. This includes expert underwriting, professional actuarial services and efficient technical accounting. Our customers include locally and regionally active as well as selected global primary insurers. They should perceive us as a strong partner and a specialty reinsurer.
At the end of 2017, Helvetia had a premium volume of CHF 415 million. Is this enough to play a key role in the reinsurance market? We stand out from the big companies in that we offer our capacity as a niche provider and focus on long-term partnerships. Based on our pure investment strategy, we do not have to finance any cost-intensive management tasks such as contractual negotiations or the quoting of alternatives. We also do not require any inhouse, highly-qualified claims handling or legal experts. It is also easier to grow in the global treaty reinsurance market with an approximate share of 0.4 %. And finally, we apply selective, disciplined and profit-oriented underwriting.
How intensively do you want to grow in future? This depends on the attractiveness of the markets.
Damage – whether caused with malicious intent, due to insufficient care or a lack of caution or owing to the actions of the owner him- or herself – can be insured with us via all-risk cover. And because a piece of art also always represents an asset, we also provide for
compensation in the event of any loss in value following a restoration.
Helvetia not only insures art, but has also devoted itself to art by other means: for more than 70 years, Helvetia has been collecting contemporary Swiss art. With the Helvetia Art Prize, we also want to support young artists at the beginning of their career. Helvetia is also supporting four Swiss museums with the digitisation of parts of their collections.
H elvetia must still be in a position to keep its promises to customers in 20 years’ time. For this reason, our corporate governance is characterised by far-sighted risk management and the creation of long-term value. To this end, we have developed corresponding systems and processes over the past five years. These place environmental protection, social responsibility and exemplary management at the heart of our activities.
The effects of climate change impact Helvetia directly as an insurer. Changes in climate patterns and extreme weather events cause damage to buildings and infrastructures. Just how great the costs of climate change will ultimately prove to be will depend on the prevention and adaptation measures taken. We are therefore looking at the consequences of climate change in detail: Helvetia offers product solutions for environmentally-friendly technologies, supports intact mountain forests and is reducing its own CO2 emissions. The switch to fully renewable electricity plays a key role in this regard. In 2018, Helvetia will offset its ecological footprint for the first time with investments in climate protection projects.
Politicians and society are demanding ever more transparency from companies such as Helvetia as regards how our activities impact people and the environment. This can be seen, for example, in the new EU reporting guidelines on corporate responsibility. Helvetia is responding to this development with transparent and honest communication. At the end of April 2018, we will publish our first Group-wide sustainability report with important key figures on environmental and social aspects. Helvetia views the expectations of its diverse stakeholder groups as an opportunity to enter into active dialogue with them and address future challenges in a forward-looking manner.
Summary after five years of sustainability management Corporate responsibility is a key issue for Helvetia. We can look back on fantastic achievements here thanks to the corporate responsibility we have taken over many years. Our business model is closely linked to social and environmental developments.
Implementation of the restructuring of the “Helvetia Patria Jeunesse Foundation” for the benefit of children and young people at Helvetia Italy
April Voluntary participation in the climate compatibility test for insurance companies and pension funds of the Swiss Federal Office for the Environment
August Board membership of öbu, the Swiss association for sustainable companies
September Publication of sustainability rating for the financial investment portfolio as part of the interim report
Start of a multi-year cooperation between the “Helvetia Patria Jeunesse” foundation and the CompiSternli association as part of the digitisation funding priority
Co-foundation of Swiss Sustainable Finance, the new platform for the promotion of sustainable financial investments in Switzerland
Partner of the Alpine Protection Forest Award presented by the Consortium of
April Member of the new working group for institutional asset owners of Swiss Sustainable Finance
September Switch of energy procurement for the entire Group to 100 % electricity from renewable energies
November Helvetia joins the RE100 initiative at the climate change conference in Marrakesh. The members want to cover their energy consumption with 100 % “green” electricity at a time of their choosing.
December Start of regular monitoring of financial investments as regards the sustainability of the held securities and the CO2 emissions associated with the investments
December Publication of a sustainability report in accordance with the new G4 guidelines of the Global Reporting Initiative – the first
T he award, which was launched in 2004 in order to promote young artists, is aimed at graduates who have studied the visual arts and media art at a Swiss art school and underlines Helvetia’s long-standing commitment to Swiss art. While the focus of the company’s own collection of Swiss contemporary art, which is deemed to be one of the most important of its kind, is primarily placed on painting, drawing and photography, the prize to promote young artists is deliberately made more open. By doing so, we want to promote new ideas and art forms among the next generation of artists. The Art Prize includes prize money of CHF 15,000 and a solo presentation at the international LISTE Art Fair Basel exhibition.
In 2017, the Helvetia Art Prize was awarded to Andriu Deplazes. He paints plants, people and animals with brilliant oil paints on home-made canvases. The faces of the bald-headed people seem bloodless, their bodies’ skin colour is pale. All the more striking are the colours of their surroundings, representing heavenly or apocalyptic landscapes. “Today we have to compete with the strong colours on mobile phones and computers, which come at us like a bolt of lightning”, says Andriu Deplazes in explaining his surprising contrasts.
T he ambition of the helvetia 20.20 strategy is to become more agile, innovative and customer -centric. This ambition is also setting the tone within the recruitment process and with respect to the handling of employees. At Helvetia, there is a clear focus on employees and their development. The new tool implemented in 2017 aimed at ensuring transparent talent and succession management provides us with significant support in promoting the development of individual employees in a targeted manner – not only in Switzerland, but across the entire Helvetia Group. Helvetia is very much on course to achieve its employee-related objectives, as highlighted by two recently received rewards.
Helvetia Live Jobs With “Helvetia Live Jobs”, we developed a completely new form of recruitment in 2017 which sees us link job advertisements with live streams. In these live streams, the manager and team of the advertised positions introduce themselves and answer the questions of potential applicants live. In recognition of the new format, Helvetia won the HR Excellence Award for the HR Innovation of the Year.
In addition to the traditional technical risks, interest rate fluctuations, share price fluctuations and exchange rate fluctuations are the biggest challenges for insurance companies. How do you tackle these challenges? We pursue a sustainable investment policy tailored to the liabilities arising from the insurance business (asset-liability matching or ALM). The objective is to generate attractive medium- to longterm returns for our customers and shareholders. Our successful ALM is reflected in the fact that assets and liabilities are largely matched. In the life business, we also manage the interest rate risk via the product side. Here, we in some cases work together with third-party providers, who take on the interest rate risk for us. Or our
Furthermore, as part of our capital management, we pursue the goal of an interactive rating of financial strength of at least “A–” at Group level.
Shareholder base Helvetia is aware of the responsibility that it has towards its investors and focuses its shareholder policy on long-term investor relationships. We act reliably, sustainably and seriously and always communicate in an open, understandable and timely manner. To guarantee the liquidity of the shares on the capital market, we target a free float of in excess of 60 %. As core shareholder, Patria Genossenschaft (34.1 %) provides stability and ensures that Helvetia has strategic room for manoeuvre. The free float stands at 65.9 %. As at 31 December 2017, Helvetia had 16,297 shareholders. At the end of the year, the employees held 1.34 % of the registered share capital, around 0.15 % of which was held by members of the Board of Directors and Executive Management of Helvetia.
Subordinate bond EUR 500 million 3.375 % until 2027, subsequently variable 1 Proposal to the Shareholders’ Meeting 2 Based on underlying earnings 3 Based on the IFRS result
Cautionary note regarding forward-looking information This document is made by Helvetia Group and may not be copied, altered, offered, sold or otherwise distributed to any other person by any recipient without the consent of Helvetia Group. 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, however, based on a selection as it is designed simply to provide an introduction to, and overview of, Helvetia Group’s business operations. Where any information and statistics are quoted from any external source, such information or statistics should not be interpreted as having been adopted or endorsed by Helvetia Group as being accurate.
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; 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
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.
Helvetia Group Alessandra Albisetti Szalay Investor Relations Coordinator P. O. Box, CH-9001 St Gall www.helvetia.com alessandra.albisetti@helvetia.ch