Contact Helvetia Group Investor Relations P.O. Box, CH -9001 St Gallen www.helvetia.com
Various European countries make up the market in which Helvetia Group operates. Despite the cultural diversity, we can clearly state that the principle of a functioning company is the same everywhere. It is the social ties between individuals and their needs and intentions that are woven into a close network. Whether in Switzerland, Germany, Italy, Spain, Austria or France, everyone is included in this network. Networking within society has never been as pronounced as now, while at the same time demand for personal freedom – and individuality – has never been as great.
Imprint The Annual Report 2012 of the Helvetia Group is available in English, German and French.
Photos Board of Directors, Group Executive Management: Klaus Andorfer, Zurich Dr. Prof. Franz Schultheis: Leo Boesinger, St Gallen
Ambition Helvetia Group’s ambition is to sustainably strengthen its attractive business portfolio in its current markets. We want to be one of the leading providers in our domestic market of Switzerland. We aim to gradually strengthen our position in the country markets of Italy, Germany, Spain, Austria and France and continuously increase our market share. In doing so, we place great value on a practical geographic diversification as well as achieving a harmonious balance between the profitable non-life business, the fast-growing pensions business and the cyclical reinsurance business.
Consolidated equity per share in CHF 441.3 392.0 12.6%  92
Price of Helvetia registered shares at the reporting date in CHF 346.5 295.0 17.5%  80
Market capitalisation at the reporting date in CHF million 2 998.2 2 552.6 17.5%  43 in CHF million in Group currency
Consolidated equity (without preferred securities) 3 800.3 3 377.9 12.5%  63
Provisions for insurance and investment contracts (net) 32 786.4 30 125.5 8.8%  143 of which Group financial assets and investment property 35 729.2 32 978.0 8.3% –
We almost maintained the previous year’s business volume despite difficult market conditions. The non-life business produced a convincing combined ratio of 93.5% and the life business continued to achieve stable margins between current income and average interest guarantees. Following the weak performance in the previous year, foreign markets also delivered significantly higher results again.
This strong capital base is reflected directly in the strong Solvency I ratio of 229%. Helvetia is also able to show a comfortable capital position under the Swiss Solvency
Test, the new Swiss solvency regime. Due to the naturally high volatility of this figure, however, coverage is subject to greater fluctuation. Helvetia’s Group SST ratio lies within a range of a very solid 150% and 200%.
Based on this positive overall development, the Shareholders’ Meeting will be asked to approve a resolution for a dividend of CHF 17.00 per share, higher than for the previous year. Thanks to a payout ratio of 44%, you, as shareholders of our company, will thus directly benefit from the positive course of the company’s business.
Added value, customer satisfaction and profitability are central components of the success of any listed company. The special character of the insurance business lies in the fact that our added value is based at the same time on the basic principle of solidarity. This balance between customer solidarity on the one hand and shareholder profits on the other may sometimes be perceived as an area of tension. We at Helvetia attach great importance to taking full social responsibility and to remaining successful in the long run by striking an appropriate balance. You can read more about this in this Annual Report. With this in mind, we would like to once again take the opportunity to express our gratitude to all of our customers, employees and shareholders for their trust and support.
Where do social bonds come into play in the insurance business? Schultheis: It is the potential for people to be affected as individuals that awakens their awareness of the need for solidarity. And insurance represents one of the various forms of solidarity. It strengthens the social bonds between people and only functions via interaction: people pay an insurance premium knowing that they can benefit in the event of loss. But those who only take and do not give back act selfishly.
You are talking about ethical responsibility. Schultheis: An insurance company must also act in an ethical manner. It does not operate with machines but rather with the fate of human beings.
What does this mean when applied to an insurance company? Schultheis: Solidarity is the best insurance against the intricacies of life. Therefore, insurance companies are a fantastic invention of historic dimension: practically everything that can be calculated as risk can be insured against.
Which is also necessary as the risks that we are exposed to are considerable. Schultheis: Every individual is always exposed to a number of risks. We live in a society of mult iple risks. Each of us could suffer a large financial or personal loss at any moment.
Where do you see the notion of solidarity here? Schultheis: In the fact that people stand together and cope with a situation together. That which falls on many shoulders cannot crush the individual. On the other hand, that which burdens the shoulder of only one person can destroy someone.
14 Group Executive Management 18 Group strategy 23 The Helvetia brand 24 Group structure 25 Country markets 28 Business activities 30 Risk and investment management 34 Corporate responsibility
Elections The terms of office of the individual Board members have been coordinated to ensure that one third of the seats are up for election or re-election every year. The term of office of each individual member is determined on election and may not exceed three years. Re-election is possible. Elections and re-elections take place separately.
Please consult the table below for the complete composition of the Board of Directors.
Doris Russi Schurter lic. iur., lawyer (with her own law firm) Swiss, Lucerne, 1956
(from left to right) Hans-Jürg Bernet, Doris Russi Schurter, Pierin Vincenz, Erich Walser, Jean-René Fournier
(from left to right) Christoph Lechner, Herbert J. Scheidt, John Martin Manser, Paola Ghillani
Professional background, executive responsibilities At Ciba / Novartis as consumer health analyst and product manager as well as marketing director for Benelux, international marketing director at Bernafon International Ltd; from 1999 to 2005 CEO of Max Havelaar Foundation, Switz erland; currently the owner of her own company focusing on strategic planning and management consulting in Zurich.
Jean-René Fournier lic. oec. publ. from the University of Freiburg Swiss, Sion, 1957
Professional background, executive responsibilities Managerial positions with UBS; 1997 – 2009 State Council of the Canton of Valais; since 2007 representative of the Canton of Valais in the Council of States; since 2001 Chairman of the Finance Commission of the Council of States.
Paul Norton B.A. History (University of Reading / UK); Chartered Accountant British citizen, Zurich, 1961 Head of Finance at Helvetia Group (CFO)
Wolfram Wrabetz Prof. Dr iur., Certified Business Administrator German citizen, Bad Soden, 1950 Chief Executive Officer of Helvetia Germany
Philipp Gmür Dr iur., lawyer, LL.M. Swiss, Lucerne, 1963 Chief Executive Officer of Helvetia Switzerland
The Helvetia 2015+ strategy has proved its worth despite a challenging market environment. Helvetia made further progress in the three central strategic pillars of growth, profitability and customer loyalty.
Important measures were taken in the non­ life business as well in order to stabilise margins in light of declining demand and a high level of competition. For example, the “non­life margin management” initiative was established as a Group function in order to further develop actu­ arial methods in the non­life business Group­ wide. In addition to the constant optimisation of actuarial practice, we are also implementing various local initiatives to further lower costs. Helvetia’s programme to improve results in Germany was especially successful. Thanks to the consistent execution of a strict underwriting policy, the German unit was back to being profit able in 2012 following the disappointing result in 2011.
members, and thereby provides us a new inter­ esting affinity group in the home market.
Company Profile › Group strategy cusing on dialogue, quality and service are successful was again proven by independent customer surveys in 2012. In the Italian market, for example, Helvetia was recognised as having the highest customer satisfaction levels in motor vehicle insurance, and Helvetia Austria was awarded three podium finishes for its products in an independent customer survey. According to a broker survey, Helvetia, with its life insurance services, is among the top companies in Germany as well. We are especially pleased that our new internet presence was ranked as number 1 by the Swiss business magazine “Bilanz”, where our use of social media received positive remarks.
Our strategic priorities Our strategic initiatives Our achievements 2012 Outlook 2013
Strengthen our market position even further We are confident about the geographic configuration and growth potential of our portfolio. Innovative products, the systematic expansion of our sales network and targeted acquisitions and cooperation programmes in our existing markets form the mainstay of our growth ambition. As we particularly want to grow by expanding our sales reach, it is very important for us to be able to interact with our customers via a wide variety of channels. We will also boost the expansion of our life and employee benefits insurance businesses in our foreign markets.
Sustainably enhance our profitability Efficiency improvements lay the foundation for sustainably increasing our productivity. In this regard it is very important to establish interaction between local and cross-Group measures that target the achievement of our objectives. Both in the life and non-life business sectors we are doing everything we can to define and exploit the Group-wide potential for synergies. In addition, financial optimisation is essential in a changing regulatory environment if we wish to safeguard the interests of our shareholders.
Improve customer benefits in line with customer needs At Helvetia, customer relationship management refers to an indepth knowledge of the needs of our insured and partners. CRM aims to offer the best quality and to ensure a high degree of customer retention. To reach this objective, the focus must be on the customer in all areas and phases of life. This ensures a high level of efficiency of sales activities and a targeted approach to customers. This process is supported by strengthening the Helvetia brand.
– Integration of newly acquired units and further review of targeted acquisitions
– Optimisation of the financial structure in line with the supervisory requirements (Swiss Solvency Test / Solvency II)
– Programme to improve results in Germany on track to increase profitability
– Consistent implementation of local measures to ensure volumes and profitability
– CRM Group approach in the roll-out phase: productive in Switzerland and Spain
– Brand campaign with a new claim “Your Swiss insurer” and advertising campaign established in all country markets
– New internet presence implemented and Helvetia blog launched in Switzerland
– Implementation of the CRM Group approach in additional foreign markets
Our financial objectives We measure the success of our strategy by longterm financial objectives – our Ambition 2015+. When the strategy was developed about three years ago, the financial objectives were established such that they are both ambitious yet attainable.
In the current difficult macroeconomic environment, however, attaining the individual sub-objectives is becoming more and more challenging. This is the case especially with measurement parameters that are heavily dependent on the development of interest rates, such as new business margin and return on equity. Towards the end of financial year 2012, the interest rates on the 10-year Swiss government bonds reached a record low of 0.5%, while they were still at 1.7% at the beginning of the strategy period. This development implies lower attainable returns on equity, especially in view of the increase in equity, which reflects the higher market value of our bond portfolio. Consequently, it is to be assumed that in the current low interest rate environment, the goal of a ROE of just under 10% is realistic. As part of our Ambition 2015+, however, we continue to strive to attain a return on equity (ROE) of 10 – 12% in the medium term.
Our shareholders can participate in the increased consolidated profit and strong capital base of the Group as an increased dividend of CHF 17.00 per share will be proposed to the Shareholders’ Meeting. The payout ratio of 44% is in the upper target range.
Return on equity (ROE) temporarily slightly below 10% due to low interest environment 10% – 12% 9.2%
Helvetia blog enhances the brand profile and fosters dialogue The new brand and marketing campaign is based on a dialogue with our customers. This dialogue establishes trust, creates interest and builds the basis for a solid partnership. We created the Helvetia blog with the aim of further establishing an open organisation that promotes dialogue with its stakeholders.
It was initially launched in Switzerland in 2012 at www.helvetia.ch but, starting in 2013, it will gradually go online in the European markets as well. The Helvetia blog documents the company’s competences and positions Helvetia as an opinion leader in the insurance industry. The blog facilitates an uncomplicated, emotional introduction to the topic of insurance and a needs-based access to Helvetia, its products and services. It is embedded in the company’s brand strategy and strengthens identification with the brand.
The Helvetia brand is managed centrally, but market campaigns are mainly handled by the country units, which have the required local market knowledge. Helvetia further improved its image as a Swiss insurance company over the past three years. Progress was made in all country markets, especially on issues of quality and trust.
With its new brand and marketing campaign, Helvetia communicates for the first time a service promise that is identical across all markets. The focus is on the terms “personality” and “partnership ”, such that customer needs and cooperation based on trust with all stakeholders enjoy the highest priority. Helvetia promises tailor-made solutions, reliability and fairness to its customers. At the heart of the new marketing campaign is the dialogue triggered by the demand for bold actions or inspiring acts in the life of our customers. The answer to these questions is as individual as our customers themselves whose endeavours we support with our products: “Whatever you want to do, we are there for you.”
Chiara Vita Milan 1 Helvetia Holding AG, listed on the SIX Swiss Exchange 2 Direct subsidiaries of Helvetia Holding AG 3 Indirect subsidiaries of Helvetia Holding AG 4 Operational facilities of Helvetia Versicherungen, St Gallen
Germany In the German market Helvetia offers a wide spectrum of claims, accident and life insurance products to its private and corporate customers. The most important distribution channels include 320 exclusive agents and several thousand independent brokers. The broker sales channel makes up almost two-thirds of new business. Agents and brokers on site are supported by eight of the branch offices dispersed throughout the country. To ensure streamlined and fast claims handling, Helvetia implemented a professional and central claims service at the branch office in Frankfurt.
Thanks to the acquisition of Chiara Assicurazioni in 2012, which is expected to be finalised in the first quarter of 2013, Helvetia will have the opportunity to offer non-life products within the existing network of Banco di Desio and its partner banks as well, in addition to life products.
Austria Helvetia is among the top 12 insurance companies in Austria. It serves the Austrian market through Helvetia Versicherungen in all life and property/accident insurance lines. With the branch office for Austria, it also specialises in transport insurance. Half of all new business is generated by its own sales force and half by independent agents. A total of approximately 390 employees provide support to regional customers. Since 2010, the distribution network has been strengthened by independent but exclusive agents. The new “bank and cooperation ” sales channel was launched at the beginning of 2012.
You are never alone and will not be left high and dry either.” No one acts recklessly or even un scrupulously.
Financial products with low insurance risk exposure are managed as deposits on behalf of the insured. With a share of around 55%, company pension schemes for SMEs represent the most important segment in the insurance business. Virtually 95% of this business is generated in Switzerland where Helvetia has become the third-largest provider.
Despite the great demand for single-premium policies in this segment, we have been consciously much more selective in issuing them in 2012 than we have in the preceding strong-growth periods. This is in view of the low prevailing interest rates and the wish to diversify. Under current market conditions, the demand for individual life insurance policies is falling. To counter this trend, we are taking advantage of existing market potential by developing limited product tranches. We were particularly successful in Switzerland in 2012 with Helvetia Value Trend: this generated an amount underwritten of 140 million; and in Spain, where we succeeded in launching unit-linked ranges of products under extremely difficult market conditions.
Helvetia offers tailor-made insurance solutions to support its customers in dealing with all aspects of risk and making financial provision for a secure future. The prudent management of assets and efficient processing of claims form the core of our business activities.
Non-life activities In the non-life business, Helvetia focuses on service quality, sustainable rates and the cultivation of new sales channels. The acquisition of Chiara Assicurazioni at the end of 2012, for example, opens up Italian banks as a new distribution channel for non-life business. The recessionary conditions, particularly in Spain and Italy, are one of the greatest challenges. The broad scope of distribution has, however, meant that so far we have always managed to achieve profitable growth, mostly above average, even under difficult market conditions – the total growth was 0.7% in financial year 2012.
Specialised risk controlling units (e.g. Group Actuarial Departments Life/Non­Life, Asset Management)
Risk management Against the background of today’s challenging economic environment and changing regulatory requirements, a comprehensive risk management system takes first priority for the Helvetia Group and is an integral component of its corporate governance. The primary goal of our risk man­ agement is the sustained protection of the cap ital base and reputation of the Helvetia Group and its Group companies.
Risk management organisation The organisational structure of the Helvetia Group ensures a uniform application of Group­ wide risk management standards. Roles and re­ sponsibilities in the business units are aligned with the risk management organisation of the
The Board of Directors of Helvetia Holding (in particular the Investment and Risk Committee, the Audit Committee and the Strategy and Govern­ ance Committee) and Group Executive Manage­ ment are the ultimate risk owners of the Helvetia Group. These bodies carry the core responsibil­ ity for risk management and define the desired level of risk tolerance of the Group and the indi­ vidual business units.
Risk environment the risk that business goals will not be achieved due to insufficient orientation of our own business activities in the market or the market environment. Latent risks refer to a range of risks which have not yet been realised as an actual risk but they do exist in real terms and have a considerable potential to cause major damage. An extensive overview of the risks arising from financial instruments and insurance contracts is provided in chapter 17 (from page 172) of the Financial Report.
Methods of risk analysis and risk management The varied risk environment requires the deployment of a range of methods of risk analysis. The Helvetia Group uses the Swiss Solvency Test (SST) of the Swiss Financial Market Supervisory Authority as the primary tool to analyse and quantify market, counterparty and insurance risks. We also use internal models to assess market risks and insurance risks. Management and limitation of risks are effected using hedging instruments, specific product design, reinsurance cover, limit systems (including exposure management and loss limits), diversification strategies, process optimisation and other risk management measures.
Capital management Capital management is an important cornerstone in achieving the long-term growth targets of Helvetia, which are focused on profitability. Capital allocation and income streams are optimised with an emphasis on the following objectives: – ensuring compliance with regulatory supervisory requirements at all times; – securing the capital required to underwrite new business; – optimising the earning power of our equity; – supporting strategic growth; – optimising financial flexibility.
These objectives are defined by taking account of risk capacity and cost/benefit arguments. Therefore, as part of its capital management activities, the Helvetia Group targets an interactive financial strength rating of at least “A–”.
Methods of capital calculation and capital management Capitalisation is calculated at both Group and local levels, i.e. at the level of the individual legal entities.
Solvency requirements The regulatory supervisory requirements for risk and capital management are currently changing drastically. After a multi-year introduction phase, SST was enforced as the capital requirement standard for the Helvetia Group and its Swiss units on 1 January 2011. The EU has a similar supervisory tool in the form of Solvency II, which is currently in the introduction stage and is expected to be applied on 1 January 2016. Through its EU business units, the Helvetia Group is also directly affected by Solvency II. Thanks to its long-standing experience in risk management and the SST, Helvetia is well prepared for the new challenges and is dedicated to implementing the new requirements in good time. You can find more details about capital management on page 158 of the Notes to the consolidated financial statements.
Helvetia manages its capital requirements through the use of capital models, such as Solvency I, the Swiss Solvency Test and Standard & Poor’s.
Attractive, stable investment income A skilful combination of low-risk investments such as bonds and mortgages, which represent almost 70% of the portfolio, with high-yielding instruments such as real estate and equities is used to generate an attractive investment return for our customers and shareholders with a controlled investment risk. The interest income generated by bonds, mortgages and real estate serves as the basis for the sustainable stability of the investment income while the equity investments expose the portfolio to valuation gains over the medium term, adding attractive income potential. Helvetia’s top-quality property portfolio provides an excellent match for the liabilities arising from its insurance business, not only because of the long-term stable and attractive rental income but also because of the high degree to which these investments retain their value.
The investment policy is always supported by real-time risk management. The objective of the risk-managing measures is to protect the balance sheet and the income statement against excessive valuation losses. This applies both to exposure in foreign currencies and equities where, depending on market developments, options and futures are used for hedging purposes. In addition, counterparty risk is subjected to on-going analysis and controlling with the aid of various criteria, such as ratings, credit quality and developments in interestrate spreads. To avoid cluster risks, maximum limits based on debtor quality also apply. The investment tactics and risk management are geared towards safeguarding the long-term solvency of the Group and optimising the impact of volatile markets on the overall result.
Investment management The Helvetia Group pursues a sustainable investment policy that focuses on the liabilities of the insurance business and aims to generate an attractive return over the medium and long term for its customers and shareholders, while making a reliable contribution to the Group result.
Broadly diversified investment portfolio Helvetia has a broadly diversified investment portfolio.
A balanced allocation of investments in the portfolio is maintained between and within the individual asset classes. The high degree of diversification ensures that a default by individual counterparties is quite manageable. Furthermore, Helvetia applies quality criteria for selecting its counterparties. At year end, approximately 80% of the bond portfolio had a minimum rating of AA or higher. In addition, about 76.5% of the investments in interestbearing securities is made up of bonds issued by governments and government-oriented companies (42.9%) and by guaranteed or state-guaranteed financial institutions (33.6%), which is above average.
Information on the current investment result and new investments can be found on page 65.
Social responsibility For many years Helvetia Group has dedicated part of its profits to charitable projects to promote environmental, cultural and sports initiatives.
Committed to society on many levels With its diversified commitment in the areas of education, culture and community, Helvetia contributes to a lively local economic and social environment. Based on Group-wide priorities, the country markets add their own local touches. Thus, Helvetia also supports the Swiss SME Day, the University of St Gallen, the Vocational Training Academy of the School for Economics and Law of Berlin (Berufsakademie der Hochschule für Recht und Wirtschaft in Berlin) and the Sir Karl Popper Schools in Vienna. Traditionally, cultural commitment has been especially important for Helvetia. Both the interest in and the exchange of new ideas and art forms, such as organising the Sala Helvetia in Seville, and local events such as the German Opera Ball in Frankfurt or the St Gallen festivals, are promoted. With its Helvetia Patria Jeunesse foundation, Helvetia supports projects in youth work and welfare. In 2012, the annual donation was given to the “Powerlungs for young asthmatics” association, which promotes the comprehensive training and improvement of the well-being of young asthmatics by means of rowing.
Responsibility in procurement Helvetia has a fair relationship with its suppliers that is based on partnership and aims at longterm relationships. In order to keep emissions caused by transportation as low as possible, procurement is generally carried out at the Helvetia locations. At the same time, preference is given suppliers whose operations are compatible with Helvetia’s values and are part of our own clientele.
Employees Helvetia sees its relationship with its employees as a long­term and fair partnership based on mu­ tual trust and respect.
For employee satisfaction As at 31 December 2012, Helvetia Group had a to­ tal of 5,215 employees, of which 36% were women and 64% men. As at 31 December 2012, the number of part­time workers was 745. In financial year 2012, 193 apprentices and eleven university graduates were trained within the Group as part of the Helvetia Trainee Programme. Helvetia strives to offer its employees an environ­ ment that promotes their well­being. To that end, it fo­ cuses on a positive, value­based corporate and man­ agement structure, a transparent compensation sys­ tem, rewarding performance and self­responsibility and its employee health management. Work­life bal­ ance is supported with flexible working time models, by providing maternity and paternity leave and care services for the employees’ children. Various meas­ ures were implemented at country level in 2012. Helvetia Italy, for example, was given an award for its efforts regarding equal opportunity as part of the “GenerAzione” project of the Italian association of insurers.
In 2012, a survey was conducted in Switzer­ land for the first time on the topic of “work & care”, which provided information about work­ care balance. The results show that about one third of the participating employees were in the past or are presently involved with taking care of family members. In addition, one fifth of those surveyed expect to provide care services to family members in the near future. Based on the survey results, measures will be taken in 2013 to help the employees concerned to balance the various care­related challenges with their work.
dition, Helvetia continues to invest in its central personnel development instruments and promotes Groupwide knowledge transfer with an intra-Group exchange programme for skilled specialists and managers.
“The possibility of being affected personally makes people show solidarity. There is no society without solidarity.”
The Spaniard was bitten by the travel bug as a child.
As at the end of the year, Helvetia Group had 9,512 shareholders, which means that 827 more investors place their trust in Helvetia every day compared to 2011.
Helvetia Group reports in detail on the compensation paid to the members of the Board of Directors and the Group Executive Management. This compensation report consists of two parts, both of which are integrated in this Annual Report. This report comprises: – Part I “General compensation principles” on pages 53 et seq. and – Part II in Note 16 on pages 168 et seq. with the relevant figures for financial year 2012.
Helvetia’s compensation principles and policy are simple, transparent, state-of-the-art and – in particular when compared to the principles applied by our most important competitors – wellbalanced.
1.2 Major shareholders In addition to a strong, long-term and, in view of the positive development of the Group, very successful relationship with our major pool shareholders the Patria Genossenschaft (founding partner), Raiffeisen and Vontobel (cooperation partners), we apply an open and shareholderfriendly strategy in an effort to build up a widely diversified and informed shareholder base. On the balance sheet date, 9,512 shareholders were registered in the share register of Helvetia Holding. This renewed year-on-year increase in the number of registered shareholders emphasises the attraction of our shares, despite all the turbulence in the financial sector. In this regard, our shareholder base is worthy of special mention: With a combined equity stake of 38.1% in Helvetia Holding, it comprises the following three partners: – Patria Genossenschaft, Basel, with 30.1%; – Vontobel Beteiligungen AG, Zurich, with 4.0% and – Raiffeisen Switzerland, St Gallen, with 4.0%.
The pool agreement strengthens and promotes Helvetia’s strategic focus on cooperation in areas outside its core business (insurance), and supports the activities of the Group in crucial areas such as sales. It unites the cooperation partners of the Helvetia Group in their capacity as strategically orientated, long-term investing shareholders who are interested in the successful development of the company. Pool members may only sell their Helvetia shares with the consent of the other pool members, who also have a right of first refusal at market conditions. Beyond the scope of normal cooperation activities relating to consulting and the sale of financial, insurance and fund management products and services – in each case at market conditions – there are no significant business relationships between pool members and Helvetia Group.
Governance › Corporate governance 2.5/2.6 Shares, participation certificates and dividend-right certificates The share capital comprises 8,652,875 fully paid-up registered shares with voting and dividend rights with a nominal value of CHF 0.10 each. There are no preferential rights, participation certificates or dividend-right certificates. For more details concerning Helvetia shares, please refer to pages 80 to 83.
2.7 Restriction on transferability and nominee registrations The Board of Directors may refuse to approve registration with voting rights if an individual would then own more than 5% of the voting rights of the entire share capital recorded with the Commercial Register. Here the term “individual” also includes buyers of shares who are connected to each other either by way of capital or votes, or by united management, or in any other form. This restriction also applies if, for example, shares were subscribed or acquired by means of convertible rights that are associated with instruments issued by the company or third parties. In the reporting year, no new exceptions were declared regarding the restriction of transferability (for major shareholders: see section 1.2). 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 of the articles of incorporation. Any amendment by the Shareholders’ Meeting to the statutory restriction of transferability referred to above requires a two-thirds majority of votes represented.
2.2 Treasury shares Helvetia held 40,436 treasury shares (0.47%) on 31 December 2012.
– In 2002, the share capital was reduced by 4.61% to CHF 62,930,000 by means of a share buyback programme and the cancellation of shares amounting to CHF 3,041,920.
– In December 2004, an approved share capital increase of CHF 23,598,750 was carried out by issuing 2,359,875 registered shares with a nominal value of CHF 10.00 each, as a result of which the share capital increased from CHF 62,930,000 to CHF 86,528,750.
– Helvetia celebrated its 150th anniversary in 2008. To celebrate this event and recognise the confidence in and loyalty of the shareholders to Helvetia and at the same time to optimise the capital structure of the company, Helvetia reduced the nominal value of the registered shares from CHF 10.00 to CHF 0.10 and paid out the difference of CHF 9.90 to its shareholders in the form of a nominal value dividend.
– As the share capital did not change in 2012, the share capital values set out in sections 2.1 to 2.3, valid from 25 July 2008, and the information on the conditional share capital are still correct.
The share capital consisting of 8,652,875 fully paid registered shares remained unchanged in reporting year 2012.
None of the members of the Board of Directors holds any executive functions or – except for Erich Walser (until 1 September 2007) – belonged to the Group Executive Management of Helvetia or any of its Group companies during the financial years preceding the reporting year. None of the members of the Board of Directors has any significant business relationships with Helvetia other than as policyholders at standard conditions.
Until recently, there existed a cross-involvement between two of Helvetia’s shareholders via a cooperation agreement between the Raiffeisen and the Vontobel Group and the seats held by two of the members of the Board of Directors, Pierin Vincenz and Herbert J. Scheidt, on the board of directors of the Vontobel Group. Pierin Vincenz 3. Board of Directors See also the diagram and information provided on pages 10 to 13.
Helvetia complies with the Swiss Code of Best Practice for Corporate Governance with regard to the independence of its Board members. ‹
Board committees In order to use the broad business experience of its individual members in its decision-making processes and to meet its supervisory reporting obligations, the Board of Directors has formed special committees from among its own members to assist the Board and the Group Executive Management in its management and control activities: the Strategy and Governance Committee, the Compensation Committee, the Investment and Risk Committee, and the Audit Committee. The duties and powers of these committees are described in detail in the organisational regulations, and the composition of each committee is presented on page 10.
a) The Strategy and Governance Committee (SGC) prepares the resolutions to be passed by the Board of Directors in the event of a change or redefinition of strategy, monitors the strategic risks within the framework of the defined strat egy and the related measures, deals with mergers, take-overs and disposals of companies or major portfolios, and prepares the required resolutions by the full Board of Directors. It prepared up to the end of 2012 the resolutions by the Shareholders ’ Meeting regarding the appointment and dismissal of members of the Board of Directors, puts forward proposals regarding personnel decisions and appointments and dismissals of members of the Group Executive Management, handles the appointment and dismissal of the country CEOs and other members of the country boards, and periodically reviews plans and measures to retain and promote senior managers. These powers to take and prepare decisions on personnel matters were delegated to the Compensation Committee on 1 January 2013. Under these newly defined powers, the SGC secures good corporate governance within the Helvetia Group, assumes duties and powers that have been assigned to the SGC 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 incorporation 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, resigned from the board of directors of the Vontobel Group on 24 April 2012, but the cooperation agreement between the Raiffeisen and the Vontobel Group continues in unchanged form. The interests of the Raiffeisen Group on the board of directors of the Vontobel Group are now represented by a person who has no relationship with Helvetia. There are no other cross-ties with the boards of directors of listed companies.
which is regularly the case. The CEO participates in an advisory capacity. The SGC met three times in 2012. At one meeting, a Board member was absent due to illness. Most of the meetings lasted approximately half a day.
The Compensation Committee is also reassuming the powers involved in nominating members of the Board of Directors and the Group Executive Management.
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 Group Executive Management; – overall supervision of the management of the Group’s business activities; – preparation of the Annual Report; – preparation of the Shareholders’ Meeting; – implementation of its resolutions; and – approval of major legal transactions.
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 Group Executive Management: www.helvetia.com/en/gruppe/governance.
Full Board of Directors The Board of Directors convenes as often as business requires, though as a rule five to six times a year. Most of its meetings, which usually last half a day, are held at the Group head office in St Gallen and the executive seminar, which usually lasts two days, is generally held at the premises of a subsidiary abroad. The Board of Directors is quorate if the majority of its members are present. Its resolutions are carried with a majority of the votes of the members in attendance. Resolutions
The Chairman of the Board ensures good corporate governance and an effective internal control system.
ation concerning all matters pertaining to the Group. Outside of meetings, every member of the Board of Directors may ask the Group Executive Management to provide information about the general course of business or the course of specific business cases, and / or may inspect any business documents as required. The Board of Directors also has the Internal Audit unit at its disposal as an auditing and supervisory body that monitors compliance with legal and regulatory provisions, internal guidelines and directives systematically, purposefully and in a risk-oriented manner. It also receives reports concerning the general development and specific activities of Helvetia in the areas of corporate governance and compliance.
4.1 Members of the Group Executive Management The members of the Group Executive Management are presented on pages 16 and 17. The Group Executive Management of the Helvetia Group has been chaired by Stefan Loacker since 1 September 2007. Together with division heads at Group level and the management boards of the country markets, he is responsible for the operational management of the Group. For further details, please refer to pages 14 and 15.
The Board of Directors is kept up to date on a regular basis concerning the activities of Helvetia, its course of business and trends in the market.
5.1 Voting right restrictions and proxy voting Certain restrictions on voting rights that are identical to restrictions relating to the transferability of registered shares of Helvetia Holding AG are described in section 2 above. The Board of Directors specifies the rules that govern participation in the Shareholders’ Meeting and the determination of voting rights. For representatives of executive bodies, independent voting rights and custody proxies (who do not necessarily have to be shareholders themselves), it may stipulate regulations that deviate from the restriction of proxy voting to 10% of the share capital. At the 2012 Shareholders’ Meeting, no individual shareholder or group of shareholders consisting of pool members with voting rights represented more than 10% of the voting rights, except for the Patria Genossenschaft. No specific exceptions with respect to voting right restrictions or proxy voting were granted in the reporting year.
5.2 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 par. 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 the
7.4 Supervision and control of audit a) External auditors The Audit Committee prepares the election of the statutory auditors. It supervises and assesses their activities, predominantly by means of the external auditors’ reports on audit results, the reporting process, decisions, for example on IFRS issues, and statements in the local audits. Important findings are summarised in a management letter.
b) Internal auditors In addition to an external auditor, the Helvetia Group has an internal auditing department that reports directly to the Audit Committee and the Chairman of the Board of Directors. The Head of Internal Audit reports directly to the Chairman of the Board of Directors. This reinforces the independence of the internal auditors.
7.3 Fees for additional consultancy services CHF 132,803.00. These fees primarily concern services associated with legal and tax consultancy.
In reporting year 2012, KPMG acted as the external auditor with a new lead auditor.
Governance › Corporate governance 8. Information policy As a rule, Helvetia provides its shareholders with information twice a year as part of the periodic reporting on annual and interim results in the form of a detailed letter to the shareholders. This letter deals with a variety of current issues, including strategy, market positioning and business policy. Furthermore, our website (www. helvetia.com) contains additional current and archived information about the Helvetia Group, on topics such as corporate governance, Group structure and strategy, employees, sponsorship and history as well as investor information, such as key figures, equity story, bonds, rating, annual and interim reports and Helvetia shares including current share price trends. In addition, further publications, media releases and important dates can be found here. Those interested have the opportunity to register online to receive the latest information on the company and to request particular publications. Helvetia periodically meets with institutional investors and presents the published financial results at special road shows. Our Investor Relations team will be pleased to assist with any personal enquiries (contact details are indicated at the end of this report as well as on our homepage ).
Services prior to the Shareholders’ Meeting can now be processed by shareholders via the Internet.
The compensation report for the shareholders of Helvetia Holding AG and interested third parties consists of two parts. This section describes the general principles and essential features and criteria of the compensation concept and participation rights as well as the loan terms and conditions for members of the Board of Directors and the Group and Switzerland Executive Management teams. It provides an overview of the philosophy, guiding principles and processes pertaining to the compensation paid by Helvetia that apply to all operational and management levels for performance-related pay. This represents part I of the compensation report. The application of the general principles in the financial year and the specific compensation are set out in the Financial Report under section 14 (page 166) “Share-based compensation” and section 16 “Compensation paid to the Board of Directors and the Group Executive Management” from page 168 et seq. This represents part II of the compensation report. Both parts comply with the requirements of the Corporate Governance Guidelines, the Swiss Code of Best Practice for Corporate Governance, the FINMA (Swiss Financial Market Supervisory Authority) Circular 2010/1 on Remuneration Schemes and the Swiss Code of Obligations.
The Board of Directors is in charge of general compensation issues and compensation models. It is supported in its work by the Compensation Committee. The delineation of powers for compensation questions is defined in Appendix I of the organisational regulations: www.helvetia. com/en/gruppe/governance.
Helvetia’s compensation systems as well as the employee benefits programmes, some of which can be optimised at an individual level, have proved themselves; they are correct and fair, balanced and competitive, and the amounts that are paid can be justified at all times.
1. Board of Directors The compensation principles and individual components of the compensation concept as well as the procedure used for determining performance -related compensation are set out in the compensation regulations issued by the full Board of Directors.
b) Variable compensation The definitive amount of the variable compensation is dependent on the following three factors: Individual objective attainment (20% of fixed compensation ): This reference figure is multiplied by the degree of attainment of the personal objectives agreed with the line manager in advance. The result of this multiplication is paid out to the member of Group Executive Management in cash. The individual objectives of a member of Group Executive Management can include quantitative and / or qualitative components and depend on his or her operational responsibility.
Compensation for individual objective attainment is due to the Group Executive Management member regardless of the general business result.
b) Variable compensation The variable compensation paid to a Board member is calculated based on a reference value of 30% of the fixed compensation. This reference figure is multiplied by the degree of objective attainment that applies to the LTC (for the calculation of the degree of objective attainment, see the explanations on the LTC below). The Board member is then allocated a prospective number of shares (deferred shares) for this amount. The relevant share price is calculated as the average of the stock exchange prices for Helvetia Holding shares for five consecutive trading days from the day on which the business result is announced. Ownership of the resulting number of shares is transferred after three years. When a director leaves the Board, the LTC is paid on a pro rata basis up to the end of the month in which he or she leaves the Board of Directors.
e) Shares and options The variable compensation is paid to the members of the Board of Directors in the form of shares (see b). Board members do not participate in any employee share purchase plans and also did not participate in any previous share option programmes.
The Group Executive Management compensation consists of a fixed compensation component and a performance-based variable compensation component.
f) Pension benefits The employer’s annual contributions to pension funds are governed by the pension fund regulations. No extraordinary benefits were paid.
Local Executive Managements Analogous compensation regulations apply as described above for the Executive Management Switzerland as for Group Executive Management. 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, the members of the local Executive Management abroad are also paid a results-based bonus in the form of shares, based on a reference figure of 10% of the local basic salary. The reference figure is also multiplied by the LTC degree of objective attainment. This Group bonus has been designed to promote the sense of belonging to the Group of the Executive Management teams abroad.
3. Helvetia employees in Switzerland: share purchase plan In 2005, an employee share purchase plan was introduced in Switzerland to allow employees to participate in the performance of Helvetia and thus to strengthen their personal ties to the company. Employees can purchase registered shares of the Helvetia Holding AG at reduced prices. The number of available shares is specified by the Board of Directors, taking account of the financial results and the functions of the employees concerned. The purchase price is calculated on the basis of the average stock market price during the five trading days following the publication of the financial results. Participation in this scheme is voluntary. As these shares are subject to a mandatory vesting period of three years, they can be sold by the company at a tax-exempt discount of 16.038%. The members of the Executive Management can also take part in this programme, but the members of the Board of Directors may not. The share purchase plan is not open to employees abroad.
“Solidarity means standing up for each other when a claim is made. But solidarity also means being tolerant of different ways of life.”
ing and intense time. Many long­term decisions had to be made within a short period of time“, said Rolf
ket research company. The father of two likes things to be uncomplicated and individualised. Just like most of his neighbours. For three years, Rolf Abel­
mann has known the importance and value of good neighbourly relations built on tolerance. “Knowing you can count on the solidarity of your neighbours as well as tailor­made financial insurance protection gives you comfort.“
Group result At CHF 342.2 million, Helvetia’s annual result improved markedly by 18.0%. In a difficult market environment, where Spain and then Italy slipped into a recession, all units delivered solid contributions. In particular the foreign markets showed significantly higher results again. Thanks to a very positive net com bined ratio of 93.5%, improved compared to the previous year, the non-life business was able to increase by 33.4% to CHF 180.6 million. The marked increase in earnings gained additional momentum through the financial markets, which also had a positive effect in the life insurance sector and allowed for an increase in the share of profit participation. However, low interest rates required additional increases in life insurance reserves. Thus, reported life earnings of CHF 139.5 million were 10.1% lower than in the previous year. The marked improvement in earnings under «Other activities» is attributable, in addition to the better technical performance in the reinsurance business, primarily to the absence of negative foreign currency effects on the investment funds. Supported by good results and driven by the increase in unrealised profits, equity also rose by 11.5% and increased the Solvency I ratio to 229%. With this financial strength, Helvetia is well equipped to continue to cope with the ongoing difficult market environment and stay on its European growth path.
Helvetia Group is pleased to present a solid performance report for financial year 2012. Foreign markets once again made higher contributions and, thanks to these, profits increased by a strong 18.0%; financial investments delivered solid results; and business volume proved to be robust at some CHF 7.0 billion.
duced promptly to enhance profitability. Reinsurance, which comes under “Other activities”, also contributed to the improvement of the overall result, thanks to a better technical performance. Helvetia Group’s investment result taken to profit or loss rose by almost CHF 300 million to CHF 1,177.8 million. The direct yield on the investment portfolio continued to be stable with slightly increased current income despite the effect of low interest rates and dropped only slightly compared to the previous year to 2.8%. At 5.5%, the overall investment performance achieved was significantly better than in the previous year and is attributable particularly to the positive market developments in the second half of the year.
the accident and health insurance business portfolio arising from the acquisition of Alba and Phenix, which did not fit in our strategy, this was the only business line that had negative growth rates. Motor vehicle insurance rose by 2.4% despite the recession and portfolio cleansing in certain markets, while the second largest business line, property insurance, increased by 1.4%, liability insurance by 1.0% and transport insurance by 11.7%. In assumed reinsurance, which pursues an exclusively income-oriented policy, we reported a selective decline of 2.5%. Compared to 2011, which was characterised by strong growth in the non-life business due to the acquired companies Alba and Phenix, reported growth in the reporting year was primarily due to organic growth. Gan Eurocourtage, the transport portfolio acquired in France towards the end of the reporting year, was only reflected in the non-life growth to a negligible extent. This acquisition, together with the majority interest acquired in Italy’s Chiara Assicurazioni at the end of 2012, will also be noticeable at Group level in 2013. The effect of SEV Versicherungen acquired in Switzerland on the overall growth of the life business is also marginal. However, it improved the Swiss regular individual life business in financial year 2012 by 2.4% and, due to access to a new customer segment, opens up future potential for growth.
The life business continues to put in a robust performance, which is reflected in the embedded value. At CHF 2,647.5 million, this is significantly higher than in the previous year and generated a return of 16.2% (previous year: 2.8%), driven by positive economic variations. The embedded value calculation is discussed in detail on pages 212 to 214 of the Annual Report.
Business activities Life business affected by low interest rates The growth in the life insurance business in 2012 was shaped by the effects of the financial crisis, in part as a result of shifts in demand and in part as a result of strategic decisions. In the Swiss market, in addition to a strong increase of 11.4% in the individual life business and 14.5% in the unit-linked business, there was an 8.9% decline in the group life business; this is attributable to the deliberate show-down in acquiring new employee benefits business due to the low interest rates. Accordingly, a net decline of only 3.8% was reported for Switzerland. Italy, as the second most important life market for Helvetia, achieved a growth of 23.1% in the traditional individual business. By contrast, demand for deposits from investment contracts fell by 41.4% as a result of uncertain market conditions. Germany had still benefitted from strong single premium products in 2011 but this no longer appeared to be the case in 2012: there was a 4.1% decline despite the continued positively performing unitlinked products. In Spain, funeral expenses insurance continued to grow and unit-linked volume increased significantly. However, this did not completely compensate for the decline in traditional life insurance driven by economic factors and resulted in a total decline of 1.7%. Austria increased its volume by 10.4% – a significantly higher figure than general market growth – particularly through substantially higher sales of unit-linked products.
Real-time risk management The continuing uncertainty posed great challenges for risk management throughout the entire year. Our measures were focused on hedging of equity and foreign currency exposures and the monitoring of counterparty risks, in particular in the investment portfolios of our Italian and Spanish companies that were exposed to the bonds of their governments to cover business liabilities. The exposure to Spanish government bonds was further reduced to the volumes that were commercially necessary. This leaves us with about CHF 900 million Italian and CHF 180 million Spanish government bonds. Investment in other European peripheral states was practically reduced to nil.
Our bond portfolio maintained its high quality in spite of extensive downgrading waves by rating agencies. As a result of the downgrading of the Republic of Italy, the portion of bonds with an A rating decreased slightly. Nevertheless, 90% of the bonds in the portfolio have an A rating and 78% have an AA rating or higher. The high quality of our portfolio is reflected in our equity as well. In 2012, unrealised market gains rose by CHF 679.8 million to CHF 1,349.1 million, with interest-bearing securities making the biggest contribution by far to this result. Equities and foreign currencies remained hedged to a large degree with put options and fu-
Group level in the previous year, thanks to tight cost management, was at the same level in the reporting year at 28.7%. Overall, this resulted in a very positive combined ratio of 93.5% (previous year: 95.6%).
Lower currency effects under “Other activities” The “Other activities” business area also comprises, in addition to Helvetia holding- and the financing companies, the Corporate Centre, the Group’s investment funds and the reinsurance business. The increase in income in this area to CHF 22.1 million is attributable, in addition to better technical performance in the reinsurance business, primarily to the lack of the negative foreign currency effects on the investment funds that were reported in 2011. Further details on the country results and their premium, claims and cost developments will be explained in the subsequent pages.
Attractive performance With our prudent investment policy, we were able to benefit from the favourable market developments in the fourth quarter and attain investment performance for Helvetia Group, including unrealised gains, in the amount of CHF 1,857.6 million. The performance of the portfolio reached a strong 5.5%, which is significantly higher than in the previous year. Despite marked ly lower market interest rates, the direct yield of 2.8% represented a drop of only 0.1 percentage point compared to the previous year. This stability is in particular a result of the long duration of our bonds and the stable return on our real estate portfolio. Despite the low interest rate environment, it was possible to invest or reinvest money very well in 2012 – with an average interest rate of 2.6%. We will continue with our tried-and-tested investment policy and proven risk management in the current financial year.
Investment result from Group financial assets and investment property (net) 1 177.8 878.4
Change in unrealised gains and losses recognised in equity 679.8 292.5
Solid life business The life business was marked by a solid portfolio development and good technical results. In addition to our own sales force, Raiffeisen and selected brokers particularly contributed to the business expansion. In the individual life business, Helvetia Switzerland achieved a premium volume of CHF 847.8 million and reported an 11.4% growth compared to the previous year. With the acquisition of the portfolio of SEV Versicherungen (SEVV) regular premiums increased by 2.4% in this business line. Thanks to the Value Trend II tranche product, there was a further surge in growth in the single premium business; an underwriting volume of over CHF 140 million was generated within a short period. Solid growth was reported also in unit-linked insurance thanks to the Helvetia guarantee plan. In the single premium business premiums increased overall by 21.9%, regular premiums increased by 2.5% in total.
Business units All the business units of Helvetia Group posted robust results in financial year 2012. The insurance technical results of the units were consistently sound. The foreign units made a significantly higher contribution to the consolidated result despite the current difficult economic environment in the individ ual country markets, resulting in an 18% increase in profit.
The performance of the euro had an impact again in the reporting year. In 2012, the impact of exchange rates again muted growth of the foreign units when reported in Swiss francs by about 2%. Unless otherwise stated, the growth rates provided reflect growth in local currency, while volumes are reported in CHF. A Group-wide improvement in the practice of calculating reserves to cover uncertainties in claims development was implemented, as previously planned, in 2012. The combined ratios reported for financial years 2011 and 2012 were calculated according to the new method with only a minor impact on the key figures. See 2.3 concerning this on page 98.
Switzerland The Swiss business again showed itself to be a solid pillar of the Helvetia Group in 2012. Thus, thanks to continued robust technical results and solid investment returns, the profit amounted to CHF 237.5 million, corresponding to an 8.9% decline primarily attributable to strengthened reserves in the life business.
Successful acquisitions The integration of Alba and Phenix acquired in 2010 was concluded in 2012. With the acquisition of the portfolio of SEVV, Helvetia not only had a surge in growth in the individual life business but at the same time, with about 45,000 members of the “SEV Transport Workers’ Union” (Gewerkschaft des Verkehrspersonals), also gained access to potential in terms of cross-selling opportunities for non-life products. The product range should be developed and renewed both in the property and life insurance business.
Growth in life business down due to market circumstances The trend in the life business was subdued in 2012. Total business volume at CHF 253.6 million declined by 4.1% in local currency (in CHF: –6.3%). This is due on the one hand to the good end-of-year led to a total decrease in volume of almost 9% in the group life business which, however, was almost completely compensated by successful sales in the individual life business. Thanks to our prudent investment and underwriting policy, the technical and investment results had a pleasing development across the board. In light of the continued low interest rates and demographic developments, this allowed us once again to strengthen our reserves.
In addition, investment in the training of our sales force and in external distribution channels had increasingly positive effects. The net combined ratio of Switzerland is at an outstanding level again. At 85.0%, it was, despite hailstorms and individual large claims, one percentage point lower than in the previous year. The cost ratio increased slightly from 27.4% to 28.3% as a result of the discontinuation of the accident / health insurance business with generally lower cost ratios. The Helvetia youth insurance for people between 14 and 25 years of age launched in April 2011 had a gratifying development as it was in high demand and, as intended, contributed to rejuvenating Helvetia’s customer base.
business in 2011 in the area of single premiums, which gave rise, as expected, to a downturn in demand at the beginning of the year. On the other hand, we took a deliberately cautious approach to the acceptance of larger single premiums in view of the tense capital market situation and in particular the low interest rate for low-risk investments. Single premiums therefore fell by 32.9%. Regular premiums, on the other hand, rose – above the stagnating market – by 4.0% compared to the previous year. The 4.4% increase in the area of unit-linked contracts, the most significant portfolio of the German life business, is gratifying. Extraordinary charges due to recent case law and the statutorily required formation of additional interest rate reserves due to the continued low interest rates were fully compensated for thanks to the positive development of investment income.
Rising premiums in the non-life business In the non-life business, the volume of business increased markedly by 7.7% in local currency (in CHF: 5.3%). This corresponds to a volume of CHF 556.8 million. All business lines contributed to this positive development. At 15.3% the motor vehicle business reported the largest growth despite the first terminations in the fleet business due to restructuring. In addition to new rates, the successful sales cooperation with ARAG SE in Germany also contributed to this. Given the stable domestic econo my, the corporate and the transport business, which recently received an award, also enjoyed good growth again. Thus, in a survey by “expertennetzwerk ”, independent agents chose the Helvetia transport insurance as number 1 of the most important business partners. The long-term focus of the product range again continued to be on managing the earnings-related growth of Helvetia Germany in 2012. New private products with a focus on young families were introduced to support growth in this low-risk area. Due to our earnings-related restructuring measures and disciplined underwriting policy, slower growth but better profitability is expected in 2013. The first fruits of our efforts are already reflected in the most important profitability indicator in the non-life business, the combined ratio, for financial year 2012. The claims experience was marked by an intensive cold period in February and very few large risk events. At 67.1%, the net claims ratio is significantly below the figure reported in the previous year, by a total of 8.7 percentage points. Developments in the cost area continue to be pleasing. The administra-
Life business on track Compared to the market, for which a double-digit decline is expected for financial year 2012, Helvetia held its ground well with a reduction in volume of only 2.0% (in CHF: –4.2%) to CHF 675.4 million. The premium trends thus improved slightly again towards the first half of the year. The increase in demand for traditional insurance solutions across the board is reflected in the roughly 18% increase. The successful placement of two index-linked tranche products sold through the bank distribution channel of Banco di Desio generated additional growth momentum in 2012. Owing to the capital market turbulence, the demand for insurance s olutions where the customer bears the entire investment risk is falling sharply. Accordingly, deposits from investment contracts fell significantly by about 40%. The renewed upturn in the investment result and cost-saving measures each contributed to a positive overall profit trend in the life business. Initiatives to improve profitability in the life-business continue to be given priority.
By contrast, the claims situation was positive. Thanks to selective underwriting and pricing measures, at 71.7% the claims ratio is around the previous year’s level despite heavy snowfall at the beginning of the year and the earthquake in Northern Italy. The efficient reinsurance coverage, a low attritional loss and positive margin developments in the pricing of motor vehicle insurance contributed significantly to its stabilisation. Consequently, the net combined ratio is quite stable at 98.7%. It is only 0.3 percentage points above the previous year’s level. This is attributable to a slight increase in the cost ratio.
Further development of the sales network The distribution agreement with Banco Desio, which has been in effect since 2008, was extended for an additional ten years. At the same time, Helvetia increased its interest in Chiara Vita from 70% to 100%. As a result of the acquisition of Chiara Assicurazioni, from 2013, Helvetia will also gain access in the non-life business to the sales network of Banco di Desio and its partner banks with over 1,000 bank branches in Northern and Central Italy. This will expand Helvetia’s sales capacity, with a strong banking sales network for the sale of property insurance. The development of a specialised life sales team planned for 2013 will complete our distribution channels. The number of agencies should also be selectively developed after the slowdown in growth in 2012. There is support for the aim to grow profitably by focusing on good relationships with customers and distribution partners as well as measures to increase efficiency.
Life business proceeding well Thanks to the successful launch of attractive tranche products, unit-linked insurance solutions improved strongly. This partially compensated for the decline in risk and traditional life products in the individual insurance business, which are competing with savings accounts. Thanks to our varied sales channels and the double-digit increase in sales in funeral expenses insurance, the group business continues to be a solid growth driver. With a total volume of CHF 125.6 million, the life business reported only a slight decline of 1.7% (in CHF: –3.9%) compared to the previous year. In addition to better investment income, the good portfolio mix, consisting of savings and risk products, as well as improvements in efficiency, contributed to a positive development in the life business. Driven by demand for solvent and safe savings and pension solutions, we will be able to continue to benefit from our excellent reputation as a reliable Swiss insurance company.
Non-life business remains profitable The Spanish non-life business is suffering particularly as a result of the country’s economic difficulties which is reflected in the 4.8% decline in volume (in CHF: –6.9%) to CHF 276.2 million. The decline in purchasing power was noticeable especially in transactions with business customers and the motor vehicle insurance business where, besides strong
Business development › Business units competition, lower average premiums also left their mark. The only business line that avoided the negative trend was property insurance thanks to the positive developments in private customer business and the double-digit growth rates of our niche product in agriculture. The claims ratio declined by 2.1% to 67.9% compared to the previous year especially as a result of the decline in general claims frequency and the lack of large risks, while the cost ratio remained stable despite lower premium volumes. Overall, at 92.9% the net combined ratio is below the previous year’s level of 95.0%.
France In France, Helvetia specialises in transport insurance and has to date provided traditional transport and accidental damage insurance for utility vehicles.
Market trends in 2013 The 2013 renewal was marked by a lower number of severe natural catastrophes, the occurrence of additional reinsurance capacity and a record-high equity capital base for primary and reinsurance companies. Along with slow economic growth and continued low interest rates, this resulted in disciplined, technical underwriting with largely stable prices and conditions. Significant rate increases occurred only in regions and business lines that had a deficit in the previous year due to high claims intensity for reinsurance. As part of this renewal we recorded a partially deliberate decline in volume. The majority of the disposals are attributable to higher retentions by assignors, increased centralisation of reinsurance cessions by larger, international assignors and the restructuring of programmes. In addition, we deliberately parted with business relationships that did not meet our profitability expectations. We were able to compensate for this with interesting new business. This renewal did not significantly change the composition of our portfolio either in terms of business lines or regions.
The burden of claims for natural disasters was significantly lower than in the previous year thanks to our very restrictive underwriting policy in the USA. The burden of claims caused by the earthquakes in Northern Italy affected us marginally with a maximum of one percent of our loss ratio. The cost of larger individual claims was slightly higher than in the previous year but was compensated through our effective retrocession cover. To-
“There is no added value without solidarity and there is no solidarity without added value.”
The attraction of equities is that they enable people to choose a company they are confident of in a targeted manner. With a dividend of CHF 17.00, the Helvetia share is proving to be more reliable and also paid higher dividends in 2012.
Helvetia Holding AG DJ EuroStoxx Insurance Index SMI Swiss Insurance Index
Investor information for several years. The Swiss Market Index (SMI) closed with a gain of 14.9%.
Insurance stocks also benefited from these market conditions. The European insurance index gained 34.1% and the Swiss one 23.0%. After a good start in the first quarter, Helvetia shares followed the markets down, hitting a low of CHF 259.00 by mid-year. Following a strong year-end rally, Helvetia outperformed the Swiss market as a whole, gaining 17.5%. However, it somewhat underperformed industry-specific benchmarks.
The debt crisis, fears of recession and the central banks’ determined low-interest and liquidity policies were the major features affecting stock market activity in 2012. The first quarter was buoyant with corresponding performance figures. This was of particular benefit to financial stocks. Fears about the euro then flared up again briefly in April, after which a mood of crisis took the upper hand. Most of the stock markets then had to give up the initial gains they had made and entered negative territory. Upon the announcement by the European Central Bank that in the third quarter it was ready to do whatever it took to preserve the euro, shares rocketed back. Not even an economic slowdown in China, geopolitical tensions and discussions related to the fiscal cliff in the US succeeded in slowing down the upward trend. By year-end many markets hit highs they had not seen
There were 9,512 registered shareholders on 31 December 2012. At the end of 2012, the employees held 1.5% of the share capital, around 0.1% of which was held by the members of the Board of Directors and Group Executive Management of the Helvetia Group. The majority of registered shareholders are based in Switzerland.
Of the institutional shareholders – excluding the above core shareholders – 68.5% have their registered office in Switzerland (previous year: 60.6%) and 31.5% are based abroad (previous year: 39.4%). Shares pending registration rose slightly year-on-year, ending the year at 20.6%. The free float is unchanged at 61.9%. An annual average of 12,400 shares were traded per trading day. With a drop of some 8% compared to the trading volume on the Swiss Exchange, the volume of Helvetia shares held up well against the market.
The structure of the types of investors – excluding the above core shareholders – has barely changed since the previous year. The structure as of 31 December 2012 was as follows: Successful Shareholders’ Meeting 2012 The Helvetia Group once again presented a good annual result to the 1,497 shareholders with voting rights in attending the Shareholders’ Meeting. The Shareholders’ Meeting took note of the strong operating performance in challenging market conditions and approved the annual report, financial statements and consolidated financial statements for 2011. The terms of office of members of the Board of Directors Hans-Jürg Bernet, John Martin Manser and Pierin Vincenz expired and they were reappointed for a further term in office of three years.
Bonds in circulation The Helvetia Group placed two bonds on the Swiss capital market in 2010. Helvetia Holding has a bond with a face value of CHF 150 million and a coupon of 1.75% in circulation, which falls due for redemption in financial year 2013. In addition, there is a CHF 300 million subordinated perpetual bond issued by Helvetia Schweizerische Versicherungsgesellschaft in circulation, which pays annual interest of 4.75% for the first five years. The first termination date on which Helvetia has the right, but not the duty, to redeem the bond is 30 November 2015. Further information on our bonds can be downloaded from our website under “Investor Relations / Debt information”.
Active capital market communication Helvetia communicates with shareholders, potential investors, financial analysts and the general public comprehensively and on a regular basis. We communicate financial results at analysts’, media and telephone conferences. All publications are made publicly available at the same time. We engage in regular dialogue with our investors and visit them in the most important financial centres. In the reporting year, our road shows took us to Zurich, Frankfurt, London, Edinburgh, Dublin, Geneva and Scandinavia. In addition, we hold group and individual discussions with investors and take part in selected conferences hosted by financial institutions. All registered shareholders receive a shareholders’ letter with a brief overview of business operations every six months. The annual report and financial report are sent to shareholders on request. All publications and a wealth of information for shareholders, analysts and media representatives are available in the “Investor Relations” section at www.helvetia.com.
1 Based on year-end price 2 Proposal to the Shareholders’ meeting
“Solidarity is the social bond between people who don’t know each other but are exposed to a variety of risks.”
Celina Baumann likes to be active in her spare time and especially enjoys dancing and swimming. She likes to go to open-air swimming with her friends during the summer months. The girls swap secrets, but like to romp around madly just as much. But things can also go wrong at any time. “As a mother, you are always concerned about that. The girls are exposed to many dangers in the pool. I like to see the older children showing consideration or even helping the younger ones.” And should anything happen, Ms Baumann knows that at least she does not need to worry about material damage as it is insurable.
Claims and benefits paid (life) – 2 803.0 – 2 868.0
Net insurance benefits and claims – 6 243.3 – 5 984.7
Earnings per share: Basic earnings per share (in CHF)1 11.5 38.12 32.69
Diluted earnings per share (in CHF)1 11.5 38.12 32.69 1 Adjustments of prior-year figures, see section 2.3 on page 98.
Change in liabilities for contracts with participation features – 361.7 – 230.1
Investments for unit-linked contracts 7.2 1 955.5 1 812.3 1 886.1
Accrued investment income 351.5 339.6 325.4 1 Adjustments of prior-year figures, see section 2.3 on page 98.
Equity of Helvetia Holding AG shareholders 3 760.7 3 350.0 3 148.9
Other liabilities and accruals 176.4 188.5 151.0 1 Adjustments of prior-year figures, see section 2.3 on page 98.
Purchase of treasury shares – – – 5.8 – – – – – 5.8 – – 5.8 – – 5.8
Balance as at 1 January 2012 restated 0.9 316.6 – 8.4 106.1 – 299.8 2 473.7 760.9 3 350.0 27.9 3 377.9 300.0 3 677.9
Change from net investment hedge – – – – 2.4 – – 2.4 – 2.4 – 2.4
Transfer from / to retained earnings – – – – 0.3 – – 13.1 2.2 – 11.2 – – 11.2 11.2 0.0
Allocation of shareholders’ contributions – – 42.0 – – – – – – 42.0 – – 42.0 – – 42.0 1 See section 2.3 on page 98.
Preferred securities Total equity in CHF million adjusted adjusted adjusted adjusted adjusted
Balance as of 1 January 2011 restated 0.9 385.0 – 6.9 86.9 – 296.3 2 325.2 654.1 3 148.9 32.1 3 181.0 300.0 3 481.0
Share capital increase – – – – – – – – 3.5 3.5 – 3.5
Balance as of 1 January 2012 restated 0.9 316.6 – 8.4 106.1 – 299.8 2 473.7 760.9 3 350.0 27.9 3 377.9 300.0 3 677.9
Realised gains and losses on property, equipment and intangible assets – 5.4 0.0
Realised gains and losses on financial instruments and investment property – 41.5 – 28.4
Unrealised gains and losses on investments in associates 0.5 – 0.3
Sale of shares, investment funds and alternative investments 1 232.6 1 308.3
Purchase of money market instruments – 22 773.3 – 39 941.8
Cash and cash equivalents as at 1 January 1 250.5 942.0
Cash and cash equivalents as at 31 December 1 565.2 1 250.5
Other cash equivalents with a maturity of less than three months 14.1 7.3
Interest paid 6.4 7.1 1 Adjustments of prior-year figures, see section 2.3 on page 98. 2 “Other income and expenses not affecting cash” primarily contains the change to interest-accruing profit participation of owners of contracts with discretionary participation features.
The Consolidated financial statements of Helvetia Group were prepared in accordance with the International Financial Reporting Standards (IFRS) and under the historical cost convention with the exception of adjustments resulting from the IFRS requirement to recognise investments at fair value. Fair value measurement methods are explained in Note 2.6 (page 100).
The amendments to IAS 12 concern the fact that the estimation of deferred taxes depends on whether the book value of an asset is realised through use or disposal. The improvement to IAS 12 introduces the assumption that investment property is normally realised through disposal. This assumption can be refuted for depreciable investment property.
As previously, the tax rate for amortised acquisition costs is used to calculate the deferred taxes, and, for this reason, he amendments to IAS 12 have no effect on the tax rate used to calculate deferred taxes on investment property.
Amendments to IAS 12: Deferred taxes – recovery of underlying assets 2. Summary of significant accounting policies
Amendments to IFRS 7: Disclosures netting of financial assets and financial liabilities 1.1.2013
– All past service cost must be recognised in the period of the plan amendment and can no longer be allocated over the period until the benefits become vested.
– Net interest may in future only be determined by applying the discount rate to the net defined benefit asset. This is expected to lead to an increased P&L charge, as the expected return on assets is usually estimated to be higher than the discount rate.
A decrease in equity to the value of CHF 144.1 million is expected in Switzerland in 2013 in connection with the introduction of IAS 19 and the new generation tables as well as the amendment to the pension and supplementary fund regulations.
2.2 Standards not yet ap­ plied in the reporting year 2.3 Voluntary changes to accounting and valu­ ation principles
The table below summarises the effects of the amendments on the consolidated balance sheet and income statement: Initially reported Adjustments
Claims incurred including claims handling costs (non-life) – 1 688.3 1.8 – 1 686.5
For corporate acquisitions, Helvetia Group carries the non-controlling interests (minority interests) in the acquired companies at fair value.
Associated companies of Helvetia Group are accounted for using the equity method if significant influence is exercised by Helvetia Group. Significant influence is assumed when the Group controls 20% to 50% of the voting rights. The goodwill resulting from the equity valuation is recognised in “Investments in associates”. The book value of all investments is tested for impairment if there is objective and substantial evidence for impairment at the balance sheet date.
The reporting currency of the Helvetia Group is the Swiss franc (CHF).
Items included in the financial statements of those entities that do not have the Swiss franc as their functional currency were translated using the applicable closing rate. Items in the income statement are translated at the average exchange rates for the reporting period. The resulting translation differences are recorded in “Foreign currency translation differences ” in equity, not affecting profit or loss. Upon (partial) disposal of a subsidiary, these currency differences, attributable to the subsidiary in question and accumulated in equity, are released through income. The rates applied in these financial statements are given in Note 4.1 (page 121).
The individual entities translate balance sheet items denominated in foreign currencies as follows: monetary and non-monetary balance sheet items recorded at fair value, at closing rates, and non-monetary balance sheet items recorded at cost, at historical rates. “Monetary items” include cash and cash equivalents, assets and liabilities for which Helvetia Group either receives or pays a fixed or determinable amount of money.
Preparing the financial statements in accordance with IFRS requires Group management to make assumptions and estimates that affect the reported amounts of assets and liabilities for the ongoing financial year. All estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual figures and estimates may differ as a result. Management judgement is, in particular, required in the following assumptions relevant to the preparation of the financial statements.
The fair value of a financial instrument is the quoted market price for which an asset could be exchanged in an active market between knowledgeable, willing parties in an arm’s length transaction. “In an active market” means that the prices are made available regularly, either by a stock exchange, a broker or a pricing service, and that these prices represent current and regular market transactions. For financial assets, the fair value is the quoted bid price, and for financial liabilities it is the quoted ask price. Financial instruments measured at the prices listed on an active market belong to the “Level 1” category of valuation methods.
If no market value in an active market is available, the fair value is determined using valuation methods. Such methods are considerably influenced by assumptions, which can lead to varying fair value estimates. Financial instruments for which the model assumptions are based on observable market data are allocated to the “Level 2” valuation category.
2.5 Foreign currency translation 2.5.1 Translation of financial statements prepared in foreign currencies 2.5.2 Translation of foreign currency transactions 2.6 Accounting estimates and key assumptions 2.6.1 Fair value of financial assets and liabilities
The choice of the discount rate plays an important role in the DCF valuation method used in Switzerland. The discount rates are based on a long-term, risk-free average rate plus a premium for market risk plus regional and property-related surcharges and discounts based on the current condition and location of the property in question. The discount rates applied in the reporting period are set out in Note 7.5 (page 133). The portfolio is regularly reviewed and appraisal reports are prepared by independent experts. All other countries use independent experts to determine market estimates at intervals of three years, at the most.
The estimated uncertainties in actuarial practice are explained in Note 2.16 (from page 106). Any material change to the parameters used for the calculation of the provisions is documented in Notes 9.3 from page 146 (non-life business) and 9.4 on page 148 (life business).
The following items are fundamentally classified as non-current: “Property and equipment ”, “Goodwill and other intangible assets”, “Investments in associates”, “Investment property” and “Deferred tax assets and liabilities”.
Acquired intangible assets are recognised at cost and amortised over their useful life. If a portfolio of insurance contracts or investment contracts is acquired, an intangible asset is recognised for an amount that equals the present value of all future gains minus the solvency costs included in the acquired contracts. This “value in force” (VIF) is amortised in proportion to the gross gains or gross margins over the actual term of the acquired contracts. This term is usually between three and ten years. Helvetia has only capitalised VIF in respect of the life business. This is tested for impairment every year. The intangible assets also include acquired distribution agreements. The value of an acquired distribution agreement equals the present value of all expected future gains. The distribution agreements are depreciated in proportion to the expected gross gains or gross margins over the term of the future contracts. This term is usually between five and fifteen years. Other intangible assets also include intangible assets developed by the company, principally internally developed software that is recorded at cost and amortised on a straight-line basis from the date on which it enters service. Depreciation is recognised in the income statement under “Operating and administrative expenses”. The useful life is usually between three and ten years.
The book value of property and equipment or an intangible asset amortised using the straight- line method is tested for impairment if there is evidence for impairment. Goodwill and intangible assets with an indefinite useful life are reviewed for impairment annually in the second half of the year. They are also tested for impairment if there is evidence of impairment.
A reversal of the impairment loss is recognised if there has been a change in the estimates used to determine the recoverable amount since the impairment loss was accounted for. If the new circumstances result in a decreased impairment loss, the reversal impairment is reported up to the maximum of the historical cost and recorded in the income statement in “Other expenses”.
2.10 Goodwill and other intangible assets 2.11 Impairment of property and equipment, goodwill and other intangible assets
For the purpose of impairment testing, goodwill is allocated at the time of acquisition to those cash generating units (CGU) that are expected to benefit from the business combination. To calculate any impairment loss, the value in use of the CGU is determined and compared to the book value. The value in use is calculated by applying the discounted cash flow (DCF) 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.
The aim of the investment property portfolio is to earn rentals or achieve long-term capital appreciation. Property held for investment purposes includes both land and buildings and is carried at fair value.
The recognition and measurement of financial assets follow the IFRS categories: “loans” (loans and receivables, LAR), “held-to-maturity” (HTM), “at fair value through profit or loss”, “available-for-sale” (AFS) and “derivatives for hedge accounting”.
Loans (LAR) and financial assets that the Group has the intention and ability to hold to maturity (HTM) are carried at amortised cost (AC). LAR loans are not traded on an active market. Helvetia Group usually generates them by directly providing funds to a debtor.
“Financial assets at fair value through profit or loss” comprise “financial assets held for trading” and “financial assets designated as at fair value through profit or loss”. An instrument is classified as “held for trading” if it is held with the aim of making short-term gains from market price fluctuations and dealer margins. Upon initial recognition, financial investments are irrevocably classified as “designated as at fair value” only if they are a component of a particular group of financial assets that, according to a documented investment strategy, are managed on a fair value basis, or their recognition as at fair value serves to compensate for market value fluctuations of liabilities due to policyholders. The value fluctuations that result from the fair value valuation are directly recognised 2.12 Investments 2.12.1 Investment property 2.12.2 Financial assets
in the income statement and for Group investments are reported separately from current income in the item “Gains and losses on Group investments (net)”.
The carrying amounts 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 considered impaired if its fair value falls considerably or constantly below cost (see also Note 2.6, page 100). 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 are still recognised in the balance sheet at amortised cost. For LAR and HTM financial investments, the recoverable amount at the reporting date is equivalent to the present value of estimated future cash flows discounted at the original interest rate. Impairments are booked using an allowance account. The impairment is reversed through profit or loss if a subsequent event causes a decrease in the impairment loss.
Those financial liabilities that are either held for trading or are irrevocably classified upon initial recognition as “designated as at fair value through profit or loss” are recognised at fair value. The latter classification is given to deposits if they are associated with investment funds or products for which the policyholder benefit is almost identical with the investment return. For these deposits for investment contracts without a discretionary participation feature (see Note 2.16, below) only the withdrawals and allocations that are part of the operating result are recorded in the income statement. The risk and cost portions of premiums from policyholders are recognised in the income statement and recorded in the item “Other income”. The policyholder’s deposit is directly credited or debited with the investment portion of the premium.
Direct business includes assumed primary business and business ceded to reinsurers. Indirect business consists of assumed reinsurance business and business retroceded to reinsurers. The actuarial items are described as “gross” before deduction of ceded business and as “net” after the deduction.
A Liability Adequacy Test (LAT) is carried out on every reporting date to determine whether, taking into consideration expected future cash flows, the existing liabilities of each business line (property, motor vehicle, liability, transport and accident / health insurance ) at all Group companies are adequately covered up to the reporting date in order to ensure a loss-free valuation. Expected future premium income is compared to expected claims expenses, expected administration and acquisition costs and expected policyholder dividends. If the expected costs exceed the expected premium income, the loss reserves are increased.
Assets from ceded reinsurance business are regularly reviewed for potential impairment and uncollectibility. If there is objective and substantial evidence of permanent impairment at the balance sheet date, the difference between the carrying amount and estimated recoverable amount is recognised in the income statement as an impairment loss.
Indirect business accepted from another insurance company is called assumed reinsurance. As in primary insurance business, technical reserves are included in the respective actuarial items on the liabilities side, and are similarly estimated using mathematical-statistical models and the most up-to-date information available. They also reflect uncertainties. Non-traditional insurance contracts are treated as financial instruments and are reported under “Reinsurance assets” or “Financial liabilities from insurance business” if no significant insurance risks have been transferred. Net commission is reported directly in the income statement.
Indirect business ceded to insurance companies outside the Group is reported as retrocession. The principles of ceded business apply in this instance.
Receivables from insurance business and other receivables are carried at amortised cost which is, in general, the nominal value of the receivables. Impairment is recognised in the income statement. The impairment loss is reported under “Other expenses” in the income statement.
Post-employment benefits pertain to defined contribution plans and defined benefit plans. The amount of the employers’ contributions for defined contribution plans depends on the employee services rendered during the reporting period and is charged directly to the income statement. For defined benefit plans, pension obligations and related expenses are calculated at each balance sheet date by a qualified actuary, using the projected unit credit method. The actuarial assumptions applied to the calculations consider the regulations of the respective countries and Group companies. Changes in the assumptions or differences between the expected and actual return from the plan’s assets are actuarial gains and losses. Actuarial gains and losses to be depreciated in the income statement are recorded for each individual plan using the “corridor method”, under which recognition is only required if the balance of the accumulated, unrecognised actuarial gains and losses exceeds the greater of 10% of the present value of the defined benefit obligations and 10% of the fair value of plan assets at the end of the previous reporting period. The portion of actuarial gains and losses outside the 10% corridor is recognised in the income statement over the expected average remaining working lives of the employees participating in the plans.
A long-term salary component (LTC) for the Board of Directors and the Group Executive Management was introduced as part of the variable salary. This consists of Helvetia Holding AG shares allocated prospectively over three years. The objective is to promote a longer-term business perspective. This compensation is recognised proportionally in the income statement every year until ownership to the shares is transferred.
The management structure of Helvetia Group is primarily based on country markets. Each country has its own management team which is in charge of the operational management of all local business units and carries responsibility for the legal entities. With the exception of the reinsurance business, segmentation is based on the country markets where all service-rendering activities occur. These country markets also reflect the locations where customers of Helvetia Group reside. The operating segments of Helvetia Group derived from this structure comprise the country markets “Switzerland”, “Germany”, “Italy”, “Spain” and “Other insurance units”, including Austria, France and the global reinsurance business. The “Corporate” segment is a separate reporting segment and includes all Group activities as well as the financing companies and Helvetia Holding AG.
Switzerland Germany Italy Spain Other insurance units Corporate Elimination Total in CHF million adjusted adjusted adjusted adjusted adjusted adjusted adjusted
Income from unit-linked investments 40.2 – 20.2 36.2 – 21.9 55.3 – 5.1 2.8 0.1 2.8 0.5 0.0 – – – 137.3 – 46.6
Claims and benefits paid (life) – 2 239.2 – 2 179.4 – 119.9 – 123.9 – 235.7 – 330.4 – 89.7 – 84.3 – 130.8 – 158.4 – – 12.3 8.4 – 2 803.0 – 2 868.0
Profit or loss from operating activities 285.1 311.9 32.3 – 25.1 34.9 15.1 29.1 31.3 50.9 51.6 6.0 – 20.5 0.0 0.0 438.3 364.3
Profit or loss before tax 285.1 311.9 32.3 – 25.1 34.5 14.5 29.1 31.3 50.9 51.6 – 2.6 – 23.4 0.0 0.0 429.3 360.8
Profit or loss for the period 237.5 260.7 26.8 – 18.1 17.4 5.2 20.7 23.8 41.7 41.3 – 1.9 – 23.0 0.0 0.0 342.2 289.9 1 Adjustments of prior-year figures, see section 2.3 on page 98.
Gains and losses on Group investments (net) 95.6 11.5 28.3 – 4.3 55.7 – 37.1 2.4 – 3.6 29.7 – 14.3 6.2 – 12.7 – – 217.9 – 60.5
Net change in unearned premium reserve – 1.0 – 3.9 29.7 – 22.2 – 1.1 – 6.3 0.4 0.8 28.0 – 31.6
Gains and losses on Group investments (net) 186.8 – 47.2 29.3 6.4 1.8 – 19.7 – – 217.9 – 60.5
Claims and benefits paid (life) – 2 796.6 – 2 862.6 – – – 19.5 – 14.1 13.1 8.7 – 2 803.0 – 2 868.0
Reinsurers’ share of benefits and claims1 28.3 26.4 144.3 180.2 84.5 43.9 – 126.3 – 147.2 130.8 103.3
Profit or loss before tax 174.3 195.0 233.0 164.1 22.0 1.7 0.0 0.0 429.3 360.8
Financial report › Segment information 3.3 Additional information by segment: Switzerland Germany Italy Spain Other insurance units Corporate Elimination Total in CHF million adjusted adjusted adjusted adjusted adjusted adjusted adjusted of which investments in associates 46.3 46.7 – – – – 2.2 2.0 0.0 0.0 – – – – 48.5 48.7 of which technical provisions (gross) 24 861.6 23 147.0 2 375.1 2 184.2 2 999.5 2 535.4 852.3 857.3 2 280.9 1 950.2 – – – 203.6 – 195.6 33 165.8 30 478.5
Cash flow from operating activities (net) 223.2 201.5 – 34.9 11.5 137.7 122.0 27.4 47.0 91.8 16.5 – 162.9 57.3 4.4 – 13.1 286.7 442.7
Acquisition of owner-occupied property, equipment and intangible assets 4.8 1.7 1.6 1.6 9.2 8.3 3.8 4.3 81.4 3.9 4.0 0.9 – – 104.8 20.7
Depreciation and amortisation on tangible and intangible assets – 6.3 – 7.4 – 2.5 – 2.6 – 8.8 – 7.8 – 5.4 – 5.2 – 3.8 – 3.6 – 3.7 – 5.0 – – – 30.5 – 31.6
Share-based compensation transaction costs – 1.0 – 1.0 – – – – – – – – – 0.7 – 0.5 – – – 1.7 – 1.5 by business activity: Life Non-life Other activities Elimination Total in CHF million adjusted adjusted adjusted
Reversal of impairment losses on property, equipment and intangible assets taken through profit or loss – – – – – – – – – –
Deposits received from investment contracts life1 149.8 261.2 – 42.7 – 41.4
Gross premiums and deposits received 6 978.5 7 172.1 – 2.7 – 1.8 1 Currently, all deposits from investment contracts life relate to the country market Italy.
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 31.12.2012 31.12.2011
Change in scope of consolidation – – 12.7 – 0.4 – – – 13.1 –
Reversal of impairment losses – – – – – – – – – –
Book value as at 31 December 2.6 5.2 345.0 342.0 19.6 21.4 1.1 0.3 368.3 368.9 of which assets under finance lease – – 40.8 42.4 – – – – 40.8 42.4
Book value as at 1 January 5.2 5.2 342.0 352.6 21.4 23.9 0.3 0.1 368.9 381.8
Change in the scope of consolidation 57.8 – 8.7 – 66.5 –
Book value as at 31 December 252.4 194.9 84.3 89.6 336.7 284.5 Book value as at 1 January 194.9 197.0 89.6 106.8 284.5 303.8 6. Goodwill and other intangible assets
Goodwill is tested annually for impairment in accordance with Note 2.11 (from page 103).
as at 31.12.2011 Goodwill Growth rate Applied discount rate in CHF million in % in %
Investment result from Group financial assets and investment property 1 177.8 878.4
Investment result from financial assets and investment property 1 315.1 831.8
Investment income (net) 1 315.3 832.9 7.1 Investment income 7.1.1 Current income from investments by class
Current income on financial assets (net) 761.9 755.8 12.0 8.9 773.9 764.7
Realised gains and losses on HTM investments – 1.9 – 8.2
Realised and book gains and losses on financial assets held for trading including foreign currency gains and losses
Realised and book gains and losses on financial assets held for trading – 34.4 – 5.5
Realised and book gains and losses on financial assets designated as at fair value through profit or loss including foreign currency gains and losses
Realised and book gains and losses on financial assets designated as at fair value through profit or loss 283.7 – 231.4
HTM class securities were sold due to the serious deterioration in the credit rating. This resulted in a loss of CHF 0.4 million. The gains and losses reported for the HTM class also contain book losses from foreign currency translations.
Dividend income from associates totalled CHF 0.5 million (previous year: CHF 0.6 million ). Income and expenses in respect of associates are reported in the income statement under “Share of profit or loss of associates”.
Accumulated impairment losses as at 31 December 7.7 7.7 1 Details on additions and disposals for associates are provided in Note 19, “Scope of consolidation”
Helvetia Group’s share in the liabilities of associates amounted to CHF 54.8 million (previous year: CHF 50.1 million) and its share in the contingent liabilities amounted to CHF 54.4 million (previous year: CHF 30.1 million).
Financial report › Investments 7.6 Financial assets by category and class
Total “available-for-sale” (AFS) 15 998.3 13 380.9 14 659.8 12 721.8 1 338.5 659.1 15 998.3 13 380.9
Total financial assets at amortised cost 12 464.3 12 538.6 12 464.3 12 538.6 13 473.6 13 207.9
Total “at fair value through profit and loss” 4 325.6 4 107.3 4 162.3 4 221.5 4 325.6 4 107.3
Total equity and equity-index instruments 999.3 450.9 388.3 1 838.5 1 679.2 45.2 35.3
Total derivatives for hedge accounting 173.9 – – 173.9 – 3.2 –
Total fair value in CHF million Level 1 Level 2 Level 3
Total “available-for-sale” (AFS) 15 806.1 13 262.7 188.8 115.0 3.4 3.2 15 998.3 13 380.9
A total loss of CHF 0.1 million was realised on the Level 3 investments (gain in previous year: CHF 0.3 million). This loss of CHF 0.3 million was reported under “Gains and losses on financial instruments” in the income statement and CHF 0.2 million was reported under “Change in unrealised gains and losses on financial instruments” in the statement of comprehensive income. The valuation loss on the Level 3 investment portfolio at the end of the year therefore amounts to CHF 0.1 million (gain in the previous year: CHF 0.3 million). The Level 3 portfolio was worth CHF 12.2 million at the end of the year.
Change in the scope of conslidation – – 0.2 – – – 0.2 –
Liabilities from finance leases include a debt that arose under a financing agreement regarding the acquisition of a property for own use. The interest costs under this agreement amount to CHF 0.4 million (previous year: CHF 0.6 million) and are recognised in the income statement under “Finance costs”.
Total financial liabilities at amortised cost 872.4 840.5 872.4 840.5 872.4 840.5
Total financial liabilities at fair value 1 431.0 1 465.6 1 431.0 1 465.6 1 431.0 1 465.6
Deposit liabilities for credited policyholder profit participation include interest-bearing credit balances already contractually allocated to the holders of individual life insurance policies and policyholder dividends from the group life insurance business that are either available early or only when the insurance benefits fall due, depending on the applicable insurance terms and conditions.
Deposit liabilities from reinsurance contracts consist of reserves for unearned premiums, future loss payments and actuarial reserves for direct (ceded) and indirect (retroceded) business.
Amounts paid into or from these deposits do not affect revenues and are not entered in the income statement, but are offset against the deposit. The features of these products are very similar to those of insurance contracts, apart from the fact that there is hardly any insurance risk. Insurance conditions and risks are described in Note 17 (from page 172).
The income earned from the management of deposits for investment contracts is included in “Other income” and amounted to CHF 6.4 million in the reporting year (previous year: CHF 10.7 million).
The carrying amount equals the fair value. The line item “Other” at amortised cost also contains the collateral received for ongoing derivatives transactions.
Total equity and equity-index instruments1 – – – – 46.3 – 1.3
9. Insurance business 9.1 Provisions for insurance contracts and investment contracts with discretionary participation features
Actuarial reserves for insurance contracts life 25 866.4 24 163.4 74.7 81.7 25 791.7 24 081.7
Provision for policyholder participation – life contracts 1 180.0 922.8 – – 1 180.0 922.8
Reserves for insurance and investment contracts 33 165.8 30 478.5 379.4 353.0 32 786.4 30 125.5
Reinsurance deposit receivables are classified as “Loans and receivables” (LAR). They include deposits held by the ceding direct insurer in respect of unearned premiums, future loss payments and actuarial reserves for assumed indirect business. The fair value at the reporting date equals the reported carrying amounts. There was no impairment of deposit receivables.
Further details on actuarial reserves for the life and the non-life business can be found in the following tables. A maturity analysis of the reserves for insurance contracts and investment contracts is provided in Note 17.5.1 (page 182).
Change in the scope of consolidation – – – – – – – –
The Liability Adequacy Test (LAT) for non-life business resulted in an additional increase in loss reserves of CHF 14.6 million as at 31 December 2012 (previous year: CHF 14.1 million).
Insurance conditions and risks in non-life business are described in Note 17.2 (from page 174). The following table sets out the development of loss reserves for the prev ious ten years.
Accumulated claims paid as at 31 December – 1 312.4 – 1 299.1 – 1 514.9 – 1 369.9 – 1 521.3 – 1 468.9 – 1 454.0 – 1 407.1 – 1 390.3 – 893.8
Estimated loss reserves as at 31 December 238.7 56.7 145.2 58.4 104.5 113.9 170.9 262.8 309.1 572.6 1 033.7 3 066.5
The actuarial reserve is normally calculated in a three-step process. In a first step, the actuarial reserve is computed based on local standards. These include applicable local parameters such as interest rates, mortality, surrender rates, expenses and additional biometric parameters which are usually set at the time of contract conclusion and vary by country, year of issuance and product. If the reserves prove to be insufficient from a local point of view, they are increased in most countries in a second step. A required reserve increase may be spread over several years in the local financial statements, depending on local requirements and circumstances. In a third step, the Liability Adequacy Test (LAT) finally applies Group-wide uniform standards to test whether the actuarial reserves included in the local financial statements (including additional reserve increases less local deferred acquisition costs) are sufficient. Across the Group the LAT required an allocation of additional actuarial reserves of CHF 34.6 million as at 31 December 2012 (previous year: CHF 25.3 million).
Due from / due to policyholders 488.6 517.6 1 160.6 1 084.9
Due from / due to insurance companies 427.7 433.9 199.0 138.9
9.4 Life business 9.5 Deferred acquisition costs 9.6 Receivables and liabilities from insurance business
Total past due receivables from insurance business without individual impairment 129.8 142.2 29.2 32.5 12.8 13.7 32.0 35.3
Due from agents and brokers 14.7 11.0 14.7 10.7 0.0 0.3 9.6.2 Change in the allowance accounts for receivables 9.6.3 Analysis of individually impaired receivables
Balance as at 31 December 540.9 462.0 in CHF million adjusted
Tax assets from losses carried forward 10.6.1 1.9 1.0 – –
Before tax Deferred taxes After tax in CHF million adjusted adjusted
Change from net investment hedge 2.4 3.8 – – 2.4 3.8
Foreign currency translation differences – 9.7 – 8.6 – – – 9.7 – 8.6
Change in liabilities for contracts with participation features – 361.7 – 230.1 100.0 46.2 – 261.7 – 183.9
10.6 Losses carried forward 10.6.1 Net tax assets from losses carried forward 10.6.2 No tax assets for losses carried forward
The fully paid up registered shares of Helvetia Holding AG have a nominal value of CHF 0.10 (previous year: CHF 0.10).
In the reporting year, 4,243 treasury shares were bought. Therefore the number of treasury shares is now 40,436. 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 0.7 million (previous year: CHF 0.7 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.
Shares outstanding 11.1 Share capital and treasury shares 11.1 Share capital and treasury shares
Revaluation from reclassification of property and equipment – – – – 0.4 0.0 0.4 0.0
Gains reclassified to the retained earnings due to disposals – – – – – 0.1 – – 0.1 –
Gains reclassified to the income statement due to disposals – 67.0 – 85.9 – – – – – 67.0 – 85.9
Valuation reserves for contracts with participation features in “Equity” (gross) 11.2.5 – 324.6 – 141.0
Unrealised gains and losses (net) as at 31 December 226.7 106.1
Impairment losses reclassified to the income statement 1.1 – 23.3 – – – – 1.1 – 23.3 less: Obligations for contracts with participation features in “Liabilities” – 739.2 – 402.2
The valuation reserves for contracts with participation features comprise the share of unrealised gains and losses on investments relating to contracts with profit participation recognised directly in equity, and portions from retained earnings arising from valu ation differences. The use of the reserves is at the insurer’s discretion (see Note 2.16.2, from page 107).
Valuation reserves for contracts with participation features as at 31 December 895.4 760.9
Deferred taxes recognised directly in equity arise from valuation differences that primarily result from the fair value valuation of AFS financial assets and value changes related to the transfer of property. On the reporting date, they amounted to a total of CHF 132.8 million (previous year: CHF 53.1 million).
Earnings per share incl. minority interests 330 993 920 283 355 469
Earnings per share without minority interests 328 359 657 281 693 973
All insurance units of Helvetia Group must meet minimum solvency margins (so-called Solvency I), calculated in accordance with Art. 24 et seq. of the Swiss Supervision Ordinance (AVO) for life insurance and Art. 27 et seq. AVO for non-life insurance. Helvetia Group is required to report to the Swiss Financial Market Supervisory Authority (FINMA) in Switzerland. FINMA also acts as the European Group Supervisor of Helvetia Group.
Helvetia Group is subject to minimum supervisory requirements to ensure that it has sufficient risk-based capital to finance its obligations. These capital adequacy requirements have been implemented to protect the policyholders. These requirements are supplemented by internal capital adequacy guidelines. The supervisory authority’s equity requirement for Helvetia Group is calculated in accordance with Solvency I, and from 1 January 2011 also in accordance with the rules of the Swiss Solvency Test.
While the amount of capital required under Solvency I is basically calculated as a function of business volume, a risk-based calculation method is applied to calculate the capital required under the Swiss Solvency Test.
The regulatory coverage ratio under Solvency I reported at Group level is in line with the strategic objectives described above. The available capital under Solvency I as at 31 December 2012 was CHF 3,682.4 million (previous year: CHF 3,353.4 million), and the required capital was CHF 1,608.0 million (previous year: CHF 1,518.5 million). As at 31 December 2012, the available capital covered 229.0% of the required capital (previous year adjusted: 220.8%).
Helvetia Group met all capital adequacy requirements on 31 December 2012.
Helvetia Group had 5,215 employees as at 31 December 2012 (previous year: 4,909). Total personnel costs are shown in the table below.
The employees of Helvetia Group are covered under several pension plans in Switzerland and abroad.
Net liability1 for defined benefit plans 194.1 188.1 1 The “Net liabilities” position does not contain any reimbursement rights.
Defined benefit obligation as at 31 December 1 711.2 1 690.6 in CHF million
Fair value of plan assets as at 1 January 1 386.6 1 400.2
Fair value of plan assets as at 31 December 1 449.5 1 386.6
Net pension costs for defined benefit plans are recognised in the income statement under “Operating and administrative expenses”. Expected employer contributions toward defined benefit plans for the next year amount to CHF 68.3 million.
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 2012 were recognised in the income statement at CHF 0.7 million (previous year: CHF 0.7 million).
The variable component of the salary which is dependent on the business results is calculated for the members of the Board of Directors on the basis of the degree of objective attainment multiplied by a reference figure of 30% of the basic salary which is converted into shares. As part of a long-term compensation concept (LTC) for the Board of Directors and the Group and Switzerland Executive Management teams, shares are allocated as deferred compensation for three years hence. The degree of objective attainment used to calculate the LTC for all members of the Executive Management and the Board of Directors is based on four criteria: profit, growth, shareholder value and riskadjusted return. The relevant figure for converting the salary component into a specific number of deferred shares is the average of the stock exchange prices for the Helvetia Holding share for five consecutive trading days from the day on which the business result is announced. Variable compensation of CHF 0.3 million (previous year: CHF 0.3 million) was calculated for the Board of Directors for financial year 2012. This represents 694 shares at a price of CHF 377.50 on the reference date of 4 March 2013. This compensation is recognised proportionally in the income statement every year until ownership to the shares is transferred and amounted to CHF 0.2 million for 2012 (previous year: CHF 0.1 million)
The members of the Executive Management teams of the foreign subsidiaries receive a variable salary component that is calculated by multiplying the degree of objective attainment by a reference figure equalling 10% of the basic salary. This results-based component is paid out in full in the form of shares without any option. The conversion price per share is calculated as described in Note 14.2. All shares acquired in this manner are transferred to the ownership of the Executive Management member upon receipt and are subject to a mandatory vesting period of three years. The share-based compensation for financial year 2012 amounted to CHF 0.4 million (previous year: 0.5 million).
14.1 Employees of Helvetia Group in Switzerland 14.2 Members of the Board of Directors 14.3 Members of the Executive Management of the Group and Switzerland 14.4 Members of the Exec utive Management teams of the foreign subsidiaries 14. Share-based compensation
Helvetia Group does not have any other cross ties or board mandates with the boards of directors of listed companies. With the exception of Patria Genossenschaft (the Patria cooperative society), transactions with cooperation partners are not material for Helvetia Group either as a single transaction or overall. The dividend payment of CHF 41.7 million (previous year: CHF 41.7 million) to Genossenschaft and the contribution of CHF 42.0 million (previous year: CHF 42.0 million) to Helvetia Schweizerische Lebensversicherungsgesellschaft AG were the only significant transactions in the reporting period.
Board members 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 fees or remuneration relating to additional services.
This section provides information on the compensation, shares and loans granted to the members of the Board of Directors and the Executive Management of Helvetia Group. The key elements of the compensation system are set out in the compensation report (from page 53). Both parts comply with the requirements of the Swiss Code of Best Practice for Corporate Governance and with the Swiss Code of Obligations. Together, these sections comprise the compensation report of Helvetia Holding AG.
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 2%. There are no other insurance contracts, loans or guarantees.
Salaries and other short-term employee benefits: – fixed salaries (incl. expenses allowances, child / education allowances, long service awards, company car) 3 560 278 3 742 188
In addition to the ownership of shares as set out here, the active members of the Group Executive Management have deferred claims to a total of 4,208 shares acquired under the LTC programme.
16.2 Compensation paid to Group Executive Management 16.2.1 Shares16.2.1 Shares 16.2.2 Insurance contracts, loans, guarantees
Financial report Compensation paid to the Board of Directors and the Group Executive Management ‹
Prospective share-based compensation (LTC) acquired in the reporting year 1 102 300 1 053 843
Within the stipulated parameters, the Board of Directors delegates operational aspects of risk management. For example, monitoring of the Group’s risk profile and, in par­ ticular, monitoring of the market, liquidity, counterparty and insurance risks are delegat­ ed to the Investment and Risk Committee (IRC). The structural aspects of risk manage­ ment (structure of the risk management organisation and the internal control system) and monitoring of operational risks in particular are delegated to the Audit Committee. The strategic risks are monitored by the Strategy and Governance Committee.
controlling functions are responsible for the ongoing monitoring of the Group’s risk man­ agement system, the internal audit unit monitors the effectiveness, appropriateness and efficiency of the risk management measures at irregular intervals and identifies weak­ nesses.
The risk management process includes all activities related to the systematic processing of risks at Helvetia Group. The essential components of this process include the identifi­ cation, analysis and management of risks, the operational monitoring of the success of the risk management measures, the monitoring of the efficiency and appropriateness of the risk management measures, and reporting and communication. Helvetia Group dis­ tinguishes between the following types of risk that are included in the Group’s risk man­ agement process: insurance risks, market risks (including the share price, real estate price, interest and currency risks, as well as long­term liquidity risks), medium­ and short­ term liquidity risks, counterparty risks, operational risks (including reputational risks as an impacting dimension), strategic and latent risks.
The market, counterparty and insurance risks belong to the traditional risks of an insurance company and are consciously accepted as part of the selected business model. They tie up risk capital in an operational context and can be influenced through hedging instruments, product design, reinsurance cover and other risk management measures. Taking account of the overall risk profile, it is ensured that these risks are always covered by the Group’s risk­bearing capital. In this regard, the capital adequacy requirement depends on the risk tolerance limits chosen.
Helvetia Group controls the life and non­life insurance risks with a number of actuar­ ial methods, risk­appropriate rates, a selective underwriting approach, pro­active claims settlement and a prudent reinsurance policy.
Helvetia Group manages market risks using the ALM process, which enables the com­ pany to control the manifold impact of market risks in an integrated way and which de­ fines both the investment strategy and the hedging policy. The following points of view are taken into account: – local statutory accounting policies in order to comply with local regulatory require­
ments; – consolidated IFRS accounting to ensure that the entire Group meets all regulatory re­
Counterparty risks are managed via the investment and reinsurance policies and are monitored on the basis of exposure analyses. Counterparty risk is minimised by invest­ ing in a range of creditworthy counterparties who are continuously monitored and who are subject to a strict limit system for managing risk clusters.
The random occurrence of an insured event and uncertainty about the amount of the re­ sulting liability create insurance risks in non­life business. The most important non­life lines of business of Helvetia Group are property, transport and casualty insurance (liability, accident, collision). Motor vehicle insurance (liability and collision) makes up the largest portion of casualty insurance. In 2012, 67.0% (previous year: 67.0%) of Helvetia Group’s direct non­life business was generated outside of Switzerland. The business segments accounted for the following percentages of gross premiums written: Switzerland 33.0% (previous year: 33.0%), Germany 23.1% (previous year: 21.7%), Italy 20.2% (previous year: 21.3%), Spain 11.4% (previous year: 12.2%), Austria 7.7% (previous year: 7.6%), France 4.6% (previous year: 4.2%).
From a Group perspective, the insurance risks in the non­life business are dominat­ ed by natural hazards. Reinsurance cover reduces the residual claims from a natural dis­ aster or individual risk at Group level to a maximum of CHF 25.0 million (previous year: 17.2 Insurance risks non-life
Helvetia Group underwrites liability cover for individual customers, motor vehicles and companies. Collision cover is also underwritten within the motor vehicle insurance sec­ tor. The volume of accident insurance business at Group level is small.
Helvetia Group controls the insurance risks to which it is exposed through risk­appropri­ ate rates, selective underwriting, pro­active claims settlement and a prudent reinsurance policy. The underwriting process ensures that the assumed risks in terms of type, expo­ sure, customer segment and location meet the necessary quality criteria.
The main portfolio is well diversified in Europe with a bigger exposure to Switzerland. Large risks are usually hedged through non­proportional treaty reinsurance.
In the liability business in particular, quite some time can pass between the occurrence and the reporting of a claim. In order to cover existing liabilities not yet asserted by pol­ icyholders, Helvetia Group sets up incurred but not reported reserves. These are deter­ mined with actuarial methods on the basis of many years of claims experience and with consideration to current developments and given uncertainties.
Property insurance contracts cover damage to or the loss of the property of the insured through insured events or damage to or loss of third­party property as a result of negli­ gent actions or neglect by policyholders.
Risk­oriented underwriting provides additional risk control while reinsurance contracts set out the general conditions under which the newly underwritten risks will be covered by the specific reinsurance contract. Individual large risks that are not covered by the corresponding treaty reinsurance are reinsured on an facultative basis. Large risks are generally underwritten only with appropriate reinsurance cover.
Helvetia Group offers private individuals term insurance, endowment and annuity insur­ ance as well as index­linked and unit­linked products. Depending on the product, pre­ miums are paid as single or regular premiums. Most of the products include a discretion­ ary participation feature for which regulations in certain countries stipulate the minimum amount of profit participation to be paid out to policyholders. Individual life insurance accounts for 38.0% (previous year: 33.9%) of the Group’s gross premium volume in the life insurance sector, with 53.1% (previous year: 52.8%) generated in Switzerland. The share of unit­linked life insurance of the Group’s gross premium volume amounts to 5.2% (previous year: 4.7%). 33.4% of the premiums (previous year: 32.2%) were generated in Switzerland.
Most of the products include a premium guarantee which means that the assumptions on mortality, disability, interest rates and expenses used to calculate the premiums are guar­ anteed. These fundamentals are therefore set prudently at the time the contract is under­ written. If the contract develops better than expected, profits accrue which are paid out in part to the policyholder in the form of policyholder dividends. There are two important exceptions to note with regard to the guaranteed assumptions. Firstly, there are no inter­ est rate guarantees for unit­linked insurance, however, some products may guarantee a minimum benefit payout on maturity. Secondly, premiums in Switzerland for disability benefit policies concluded after mid­1997 are not guaranteed and may be adjusted.
An insurance policy covering death or disability may only be taken out at regular terms and conditions if the insured is in good health. Compliance with this condition is checked during verification of the application. The check is based on the answers to the health questionnaire and, from a specific insured risk amount, a medical examination is re­ quired.
Group life insurance accounts for 56.8% (previous year: 61.4%) of the Group’s gross premium volume in the life insurance sector, with 94.8% (previous year: 94.9%) gener­ ated in Switzerland. Outside of Switzerland and in a small run­off portfolio within Switz­ erland, group life insurance products are very similar to individual insurance policies. For this reason we focus only on business with employee benefit plans in Switzerland when referring to group life insurance below. In Switzerland, companies are required under the Swiss Federal Law on Occupational Retirement, Survivors’ and Disability Pen­ sion Plans (BVG) to insure their employees against the risks of death and disability, and for retirement benefits. Helvetia Switzerland offers products that cover these risks. The majority of these products include a discretionary participation feature with the mini­ mum amount being stipulated by law or by contract.
Rate guarantees do not apply to the risk premiums for death and disability and to the expense loadings for most of these products. These premiums may therefore be adjust­ ed annually by Helvetia Switzerland. After an insured event has occurred, the benefits that fall due are either guaranteed until the agreed expiry date or for life.
Annual interest is credited to the investment portion of the premiums. The interest rate on the mandatory savings portion is set by the Swiss Federal Council, while the interest rate on the extra­mandatory portion is determined by Helvetia Group. The mandatory interest rate was 2% since 2009 and has been reduced to 1.5% from 2012 onwards.
On retirement, a policyholder may choose to have the retirement capital paid out as a lump sum or converted into a retirement pension. The conversion of the mandatory sav­ ings capital follows the BVG conversion rate set by the government, while Helvetia Group determines the conversion rate for the extra­mandatory capital. After conversion, retirement pensions and any survivors’ benefits are guaranteed for life.
Helvetia Group employs a wide range of actuarial methods to monitor existing and new products with regard to underwriting policy, the setting of the necessary reserves and risk­appropriate pricing. Retrospective methods compare original expectations with actual developments. Prospective methods allow early recognition and analysis of the impact of new trends. Most of these calculations use parameter sensitivities to monitor the impact of unfavourable developments in investment returns, mortality, lapse rates and other parameters. All tools combined allow the Group to respond early and actively to adverse trends. If a certain risk takes a worse than expected course, the profit partici­ pation is usually the first to be reduced in most of the products. If a product shows evi­ dence of an insufficient security margin, the premiums are adjusted, either for new busi­ ness only or, if permissiable, also for the existing portfolio.
Therefore, a 10% increase in mortality at all companies of Helvetia Group would have no impact on the reserves. A reduction in mortality by 10%, however, would have an impact on the reserves for annuity insurance. This scenario would lead to a reserve reinforcement that would burden the income statement by CHF 51.7 million (previous year: CHF 42.6 million). A 10% increase in the disability rate, however, would have no impact. This is due to the sufficient security margins. A 10% drop in the disability rate would also not lead to a change in the reserves. However, it should be noted that these sensitivities are usually non­linear, so that extrapolation is not possible. See Note 17.5.2 (from page 185) for the impact of an interest rate change on equity and the income state­ ment.
In addition to these considerations, which also apply to group life insurance, the high statutory BVG conversion rate results in expected losses in the group life sector that are built into reserves at the expense of policyholders’ profit participation. Besides reacting to interest rates and life expectancy, these reserves are also particularly sensitive to the assumed number of policyholders choosing a pension over a lump­sum payment on re­ tirement.
Losses may occur for shareholders if the number of active policyholders becoming dis­ abled exceeds expectations or if fewer disabled policyholders than expected recover and the profit participation system is insufficient to cushion the impact of these variances. As disability benefit policies are almost exclusively taken out in Switzerland and premi­ ums in the group life sector and individual life business may be adjusted for disability benefit contracts sold after mid­1997, the risk in Switzerland is limited to disability bene­ fit policies sold before mid­1997. Here, the portfolio losses that are expected to occur are covered in full by local reserve reinforcements. These reserves are sensitive to the assumed expected loss burden in particular.
The return for policyholders of index­linked insurance contracts depends on an external index. Unit­linked insurance products may include a guaranteed survival benefit. These product components must be separated as embedded derivatives and recognised at fair value. The majority of these guarantees and index­dependent payouts are serviced by and at the risk of external partners. There are only a few products in Switzerland where this does not apply and the risk is assumed by Helvetia Group, but these are covered by appropriate reserves. Their amount is determined especially by the volatility of the un­ derlying assets as well as by the level of the risk­free interest rate. A change in the re­ serve is charged to profit and loss and cannot be compensated by a profit participation component.
The small size of the assumed reinsurance portfolio allows for detailed tracking of cus­ tomer relations and the strict control of risks and commitments from business written. An actuarial department specialising in reinsurance handles price and reserve calculations.
The assumed reinsurance business is geographically dominated by companies located in the OECD area. A management information system has been set up to manage major claims. Besides managing risk exposure, cumulative risks arising from natural disasters are monitored and quantified using actuarial methods, and are also covered by retro insurance.
Notes 17.6 “Counterparty risks” (from page 190) and 9 “Insurance business” (from page 143) provide more information about the quality of reinsurance and claims management.
As at 31 December 2012, Helvetia Group managed assets of CHF 37.7 billion (previous year: CHF 34.8 billion).
The most important market risks to which the Group is exposed are interest rate risks, exchange rate risks and share price risks. The Group is also exposed to the real estate market through a significant portion of real estate in its investment portfolio. Market risks influence the income statement as well as the balance sheet. The Group manages its real estate, mortgages and securities in­house. Smaller shares of the portfolio are invested in convertible bonds and are managed by external asset managers. Savings accumulat­ ed in unit­linked 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 are borne by Helvetia’s insurance customers.
Total reserves for insurance and investment contracts (gross) 5 498.2 10 222.2 6 519.6 9 811.3 1 114.5 33 165.8
Total reserves for insurance and investment contracts (net) 5 347.7 10 103.5 6 470.3 9 780.1 1 084.8 32 786.4 as at 31.12.2011 < 1 year 1 – 5 years 5 – 10 years > 10 years Without maturity Total in CHF million adjusted adjusted adjusted adjusted adjusted adjusted
Provision for future policyholder participation 146.6 24.3 – – 728.8 899.7
Total reserves for insurance and investment contracts (gross) 5 013.1 9 446.1 5 798.3 9 492.2 728.8 30 478.5
Total reserves for insurance and investment contracts (net) 4 904.0 9 323.1 5 738.5 9 461.1 698.8 30 125.5
The above tables show the expected maturity of the amounts reported in the balance sheet.
Maturity schedule of financial and other liabilities (without derivative financial instruments)
Financial liabilities from insurance business 2 182.6 42.8 10.0 8.0 10.7 49.3 2 303.4
Total financial and other liabilities 2 557.7 1 343.1 19.8 25.8 10.7 126.9 4 084.0 as at 31.12.2011 Callable at any time < 1 year 1 – 5 years 5 – 10 years > 10 years Without maturity Total in CHF million
Fair value Maturity of non­discounted flows of funds as at 31.12.2011 < 1 year 1 – 5 years 5 – 10 years > 10 years in CHF million
Helvetia Group’s results are affected by changes in interest rates. A prolonged period of low interest rates reduces the return on fixed­income investments in bonds and mort­ gages. On the other hand, return increases with rising interest rates. Information on cur­ rent investment returns can be found in Note 7.1 (from page 126).
as at 31.12.2012 < 1 year 1 – 5 years 5 – 10 years > 10 years Without maturity Total in CHF million
Loans (LAR) incl. money market instruments 1 404.7 2 782.7 2 015.3 2 279.9 332.4 8 815.0
Available­for­sale investments (AFS) 724.6 4 267.8 3 541.6 4 119.2 727.7 13 380.9
Financial assets at fair value through profit or loss 378.3 976.4 85.9 96.8 2 569.9 4 107.3
Derivative financial assets for hedge accounting – – – – – –
Actuarial reserves for insurance and investment contracts excluding interest guarantee 817.8 – 371.0 –
Actuarial reserves for insurance and investment contracts with 0% interest guarantee 354.2 – 189.7 16.0
Gross, not taking into account the latency calculation and derivatives – 115.0 105.4 – 88.3 86.3
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 takes account of the investments at fair value through profit and loss, fixed­ interest available­for­sale investments, derivatives, the actuarial reserve, deposits for in­ vestment contracts and the interest earned on variable­rate investments. The “look through” principle was used for significant shares in mixed funds. The impact of a change in interest rate on impairments was not analysed.
A “reasonable possible change” in the risk factors affecting the sensitivity analysis is defined as every symmetrical bracket that covers a range of possible interest rate changes where the probability of its occurring over a period of one year is between 10% and 90%. Sensitivities are shown for the borders of the chosen bracket that meets these conditions.
Investments in equities are used to generate long­term surpluses. Funds are mostly invest­ ed in large caps traded on the major stock exchanges. Helvetia Group holds a well­di­ versified portfolio (mainly stocks traded on the exchanges in Switzerland, Europe and the USA). The share of each individual position is less than 6% of the total equity port­ folio (direct investments), with the exception of Allreal, a highly diversified real estate company which accounts for 14.3% of the total exposure to direct investments in equi­ ties. The market risk of the equity portfolio is constantly monitored and, if necessary, re­ duced through sales or the use of hedging instruments in order to meet the strict internal requirements on risk capacity.
Market risks are reduced through hedging strategies. Out­of­the­money put options are largely used to comply with internal loss limits. Direct investments in equities consti­ tute 5.1% (before hedging) of the Group’s investments (without investments for account and risk of life policyholders). A substantial proportion is hedged against the risk of sig­ nificant losses.
Gross, not taking into account the latency calculation and derivatives 164.8 – 163.4 146.2 – 146.1
A “reasonable possible change” in the risk factors affecting the sensitivity analysis is de­ fined as every symmetrical bracket that covers a range of possible exchange rate changes where the probability of its occurring over a period of one year is between 10% and 90%. Sen­ sitivities are shown for the borders of the chosen bracket that meets these conditions.
Current income tax assets 0.1 17.8 – – 17.9 as at 31.12.2012 CHF EUR USD Others Total in CHF million
as at 31.12.2011 CHF EUR USD Others Total in CHF million adjusted adjusted
Helvetia Group is exposed to counterparty risk in the following areas in particular: – Counterparty risks from bonds and money market instruments.
– Counterparty risk from granted loans and mortgages: The largest positions in the loans asset class consist of borrower’s note loans and policy loans. Policy loans are hedged through life insurance policies. As a loan is only granted against a certain percentage of the accumulated savings capital (<100%), this asset class can be qual­ ified as “fully secured”. The significance of the gross exposure (without taking ac­ count of collateral) for the valuation of counterparty risk from the mortgage business is also relatively small: mortgages are secured by a real estate lien and are often also partly secured by a pledged life insurance policy, with the result that the loss rate is correspondingly low. Against this background the counterparty risk from mort­ gages must be described as small.
– counterparty risk from insurance business: The default of other counterparties (po­ licyholders, agents and brokers, insurance companies) can lead to the loss of receiv­ ables from insurance business. On the balance sheet, the maximum gross exposure would correspond to the items shown in Note 9 “Receivables due from policyhold­ ers, agents and brokers, and insurance companies” (after deduction of receivables due from reinsurance companies recognised under “Credit risk exposure from ceded reinsurance”). These receivables, however, are usually mostly short­term. On the other hand, receivables due from policyholders is the largest item in this category. As policyholders pay their premiums in advance and insurance cover is directly dependent on customers’ fulfilment of their contractual obligations, counterparty risk from both the non­life and life insurance business plays a minor role.
– counterparty risk from financial guarantees and credit approval: Detailed informa­ tion on contingent liabilities is provided in Note 12 (page 159).
Derivative financial assets (incl. hedge accounting) 0.5 8.7 21.6 4.2 – 24.0 59.0
The above analysis shows the gross exposure to interest rate instruments, loans and de­ rivative financial instruments, without taking account of collateral. Capital investments for the account and risk of life policyholders are not included. The credit quality ana­ lysis uses the securities and issuer ratings of Standard & Poor’s, Moody’s and Fitch. The issuer rating of Fedafin is also used for the analysis of Swiss municipalities and cantons, and the cantonal banks.
Mortgage Bond Bank of the Swiss Mortgage Institution AAA 956.2 956.2 – – – – – – – –
European Investment Bank AAA 535.9 535.9 – – – – – – – –
AG, Basel, acquired the insurance company SEV Versicherungen Genossenschaft (SEVV). This includes individual life insurance policies for the members of the Gewerk­ schaft des Verkehrspersonals (Transport Workers’ Union). Helvetia thus continues to pursue its strategy of targeted acquisitions in the existing country markets.
The acquisitions made in the reporting year were not individually significant and are therefore presented in summary. The following table presents an overview of the acquired assets and liabilities: in CHF million
The receivables from the insurance business amounted to CHF 68.6 million gross, of which CHF 4.0 million were classified as potentially irrecoverable. The tax assets amounting to a total of CHF 1.9 million gross can probably be claimed in full.
Since acquired insurance portfolios are recorded directly in the company to be acquired at the time of the acquisition and are not shown separately, it is not possible to reliably determine the contribution of the newly acquired insurance business to the Group’s reported results.
Other events have led to changes in the scope of consolidation in the reporting year: – In the reporting period, the Group increased its investment in the associated compa­
– In connection with the acquisition of the French transport insurance business of Gan Eurocourtage, the share capital of Helvetia Assurances S.A., Paris, increased by EUR 62.0 million on 18 October 2012.
– On 29 November 2012, the German company DeAM Fonds DFD 1 (Europa) was liquidated.
Gesellschaft AG and Phenix Versicherungsgesellschaft AG were merged with their parent company Helvetia Schweizerische Versicherungsgesellschaft AG, St Gallen, and the Group company Phenix Lebensversicherungsgesellschaft AG was merged with Helvetia Schweizerische Lebensversicherungsgesellschaft AG, Basel.
– In financial year 2011, the share capital of Helvetia Vermögens­ und Grundstücks­ verwaltung GmbH & Co. KG, Frankfurt am Main, was increased by EUR 2.0 million.
– The investment in Helvetia Compañía Suiza, Seville, was increased from 98.95% to 98.97% through successive share purchases during financial year 2011.
Helvetia Schweizerische Versicherungsgesellschaft AG, Headquarters for Austria, Vienna2 Non­life 100.00 full EUR
Helvetia Schweizerische Versicherungsgesellschaft AG, Reinsurance, St Gallen2 Other 100.00 full CHF
1 Group costs are included in the “Corporate” segment. 2 Branches.
Report of the Statutory Auditor on the Consolidated Financial Statement to the General Meeting of Shareholders of Helvetia Holding AG, St Gallen.
The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statement in accordance with the International Financial Report­ ing Standards (IFRS) and the requirements of Swiss law. This responsibility includes de­ signing, implementing and maintaining an internal control system relevant to the pre­ paration and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.
In our opinion, the consolidated financial statements for the year ended 31 December 2012 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.
Profit carried forward to new account 258.5 138.3 1 2012: CHF 17.00, of which CHF 14.00 represents a payout exempt of withholding tax from the reserve from capital contributions / 2011: CHF 16.00, of which CHF 8.00 represents a payout exempt of withholding tax from the reserve from capital contributions
On the balance sheet date, Helvetia Holding AG owned the following direct invest­ ments: Reported com­ pany capital Holding as of
The reported dividend income of Helvetia Holding AG represents the dividend paid simultaneously to Helvetia Holding AG by the subsidiaries Helvetia Schweizerische Versicherungsgesellschaft AG and Helvetia Schweizerische Lebensversicherungsgesell­ schaft AG from their respective net profits for 2012.
On the balance sheet date, subsidiaries of Helvetia Holding AG held 40,436 registered shares of Helvetia Holding AG (previous year: 36,193).
Helvetia distinguishes between the following types of risk that are included in the risk management process: market risks (including the interest rate and currency risks associated with the liabilities and long-term liquidity risks), medium- and short-term liquidity risks, counterparty risks, insurance risks, operational risks, strategic and latent risks. The risk management process also puts particular emphasis on the operational risks, which are defined as the risk of losses resulting from the inappropriateness or failure of internal procedures, people and systems, or from external events. Operational risk includes the impact of reputational risks.
The risk management process is carried out by Helvetia Group’s risk management organisation.
The Board of Directors of Helvetia Holding AG and the Executive Management are the supreme risk owners of Helvetia Group and its Group companies. The Board of Directors of Helvetia Holding AG is responsible for establishing and maintaining appropriate internal controls and the risk management organisation of Helvetia Group and its Group companies. It is the Board’s responsibility in particular to: – set risk policy principles that support the development of risk awareness and a risk and control culture in the Group companies; – ensure appropriate monitoring of the effectiveness of the internal control systems by the Group Executive Management; – ensure the implementation and application of a comprehensive risk management approach, including an internal control system, that guarantees the efficient allocation of risk capital and systematic control of risks by the Executive Management; – determine a risk strategy / partial risk strategies that cover the risk management objectives of all essential business activities; – set risk tolerance limits and monitor the risk profile of the Group and the individual business units.
As statutory auditors, we have audited the financial statement given on pages 201 to 204 of Helvetia Holding AG, which comprises the income statement, balance sheet and notes for the financial year ended 31 December 2012.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statement. The procedures selected depend on the auditor ’s judgement, including the assessment of the risks of material misstatement of the financial statement, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial statement in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company’s articles of incorporation. We recommend that the financial statement submitted to you be approved.
Milanese Carlotta Foiani uses her car every day. Her four-year old son relies on his mother being able to pick him up from pre-school on time. On the way home, she also goes shopping and carries out other errands. In addition, they both rely on her car on their numerous trips to Piedmont, where Carlotta
Foiani owns a small house and enjoys spending the weekends with her son, out in the fresh air. “It’s so nice to be able to rely on each other. We make a strong team, both in everyday life and on holiday.”
And because Carlotta finds her car is indispensible for getting around, she is also glad to have a good car insurance policy. Reliability and support form the necessary framework for both family and social life.
The development of Helvetia Group’s life business continues to be positive in light of the continuing difficult economic environ­ ment. The value of the portfolio increased markedly, while new business volume and new business margin declined slightly.
was softened by the adjustment to the risk dis­ count rates. Overall, new business profitability of 0.9%, which is derived from the changes in new business volume and value, is down slightly com­ pared to the previous year. Against the back­ ground of the continuing difficult economic cli­ mate, Helvetia Group‘s life business continues to perform well.
Economic changes, including changes to unrealised gains and losses on investments (equity and real estate) 148.4 – 150.5
–10% change to fair value of equities – 2.2% – 2.5%
–10% change to fair value of real estate – 9.4% – 11.1%
Present value of new business premiums (PVNBP) 3 096.5 3 211.9
Embedded value Embedded value measures the shareholder value of the life insurance portfolio and is made up of – the adjusted equity; – plus the value of the insurance portfolio; – less the solvency costs.
Combined ratio The sum of the net expense ratio and the claims ratio is used to evaluate the profitability of non­life insurance busi­ ness before underwriting interest income is taken into con­ sideration.
Hedge accounting A special IFRS balance sheet practice for hedging trans­ actions which aims to present hedging instruments and underlying transactions using the same valuation methods in order to reduce the potential volatility of results.
Impairment Impairment is deemed to be the amount by which the net carrying value of an asset permanently exceeds its re­ coverable 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).
Index-linked products Endowment life insurance policies which are linked to stock market indices (e.g. the Swiss Market Index) or to a securities portfolio. The insurance benefits are increased by a bonus, the amount of which is dependent on the per­ formance of the index.
Loss reserves Since not all claims will be settled by the end of the finan­ cial year in which they arise, provisions must be made in the balance sheet for these outstanding claims or claims likely to be incurred but not yet notified. Such provisions are known as loss reserves or reserves for claims outstand­ ing. Changes to the loss reserves are shown in the income statement.
Service › Glossary capital to cover the insurance obligations, the required capital is calculated on a risk basis for the “Swiss Solv­ ency Test” (SST) which entered into force on 1 January 2011.
Unearned premium reserve In many cases, the insurance period for which a premium is paid in advance and during which the insurance com­ pany bears the risk does not correspond with the finan­ cial year. The part of the premium relating to the insurance period falling in the next financial year has not been earned by the end of the current year, and must be trans­ ferred to reserves at the end of the financial year. This is the unearned premium reserve which appears in the bal­ ance sheet under technical reserves. Changes to the un­ earned premium reserve are shown in the income state­ ment.
Tel. 058 280 10 00 (24h), Fax 058 280 10 01, www.helvetia.ch, info@helvetia.ch
Horgen / Knonaueramt Dammstrasse 12, 8810 Horgen 058 280 81 11 Sascha Vollenweider
Männedorf / ZH­Oberland Alte Landstrasse 260, 8708 Männedorf 058 280 81 55 Stefan Bösiger
Reinach (BL) Hauptstrasse 15, 4153 Reinach 058 280 80 11 André von Allmen
Rheintal ri.nova impulszentrum, 9445 Rebstein 058 280 63 11 Jürg Schwarber
Riviera / Chablais Rue Igor­Stravinsky 2, 1820 Montreux 058 280 82 44 François Schopfer
St Gallen­Appenzell Rosenbergstrasse 20, 9000 St. Gallen 058 280 44 11 Ulrich Bänziger
Broker Centre German­speaking Switzerland Hohlstrasse 560, 8048 Zürich 058 280 83 33
Broker Centre French­speaking Switzerland Route du Mont­Carmel 2, 1762 Givisiez 058 280 72 84
Consolidated equity per share in CHF 323.2 372.2 366.3 392.0 441.3
Market capitalisation at the reporting date in CHF million 1 980.6 2 775.4 3 110.7 2 552.6 2 998.2 in CHF million
Consolidated equity (without preferred securities) 2 773.7 3 208.4 3 157.6 3 377.9 3 800.3
Important dates 19 April 2013 Ordinary Shareholders’ Meeting in St Gallen 2 September 2013 Publication of half­year financial results for 2013 10 March 2014 Publication of financial results 2013
Disclaimer regarding forward-looking information This document is made by Helvetia Group and may not be copied, altered, offered, sold or otherwise distributed to any other person by any recipient without the consent of Helvetia Group. Although all reasonable effort has been made to en­ sure the facts stated herein are accurate and that the opinions contained herein are fair and reasonable, this document is selective in nature and is intended to provide an introduction to, and overview of, the business of Helvetia Group. Where any information and statistics are quoted from any external source, such information or statistics should not be interpreted as having been adopted or endorsed by Helvetia Group as being accurate. Neither Helvetia Group nor any of its direct­ ors, officers, employees and advisors nor any other person shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this information. The facts and information contained herein are as up to date as is reasonably possible and may be subject to revision in the future. Neither Helvetia Group nor any of its directors, officers, employees or advisors nor any other person make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this document.