The merger has given way to predominantly positive aspects. The willingness of all em- ployees to accept the new and unknown has been rewarded. Teams have come together, productive discussions have taken place, strengths have been pooled, new friendships and valuable networks have emerged, the product range has been supplemented in a practical manner, new values have been jointly defined and knowledge has been shared. These stories are supported symbolically with pictures from nature. The symbolism underscores the convergence and growing together of two elements into one interwoven entity. This benefits everyone involved – employees, customers and shareholders.
Helvetia can now move boldly into the future – with the knowledge of this capable, growing partnership.
Group profit for the period per share according to IFRS in CHF 29.0 43.0 – 32.6 % 40
Consolidated equity per share in CHF 470.4 503.2 – 6.5 % 40
Market capitalisation at the reporting date in CHF million 5 628.9 4 687.6 20.1 % 40 in CHF million in Group currency
Underlying earnings Other activities – 68.5 – 2.0 n. a. 90
Underlying earnings of the Group after tax 439.0 421.7 4.1 % 90
of which Group financial assets and investment property 45 036.3 44 843.4 0.4 % –
Company profile 14 Group strategy 22 The Helvetia brand 23 Business activities and market areas 28 Employees 30 Customers and sales 32 New products and innovations 36 Corporate responsibility 38 Investor information 41 Risk and investment management 47 Board of Directors 53 Executive Management 57 Corporate governance 72 Compensation report 84 Report of the Statutory Auditor
Financial report 104 Consolidated financial statements Helvetia Group 223 Financial statements of Helvetia Holding AG
Thanks to the solid business performance, the Board of Directors is proposing to the Shareholders’ Meeting to increase the dividend to CHF 19.00, which is almost 6 % more than in the previous year. The payout ratio based on the underlying earnings is 45 %, or 66 % based on the IFRS earnings after taxes.
The net combined ratio improved to 92.1 %, once again exceeding the Group’s target of 94 % to 96 %.
For the Helvetia Group, the 2015 financial year was dominated by the integration of Nationale Suisse and Basler Austria. We are proud of what the company has achieved in the past few months, as by now we have passed all important milestones and are already operating almost fully as the strengthened “new” Helvetia. We are actually ahead of schedule with the achievement of our synergy objectives: we have already realised synergies of CHF 45 million on both acquisitions through savings on personnel and non-personnel costs. We therefore clearly outstripped the target for the first year of our new, integrated Group.
In operational terms, too, Helvetia posted a convincing business performance in 2015, supported by the successful acquisitions of the previous year.
Underlying earnings improved by 4 percent on 2014 to CHF 439 million. Earnings were driven by the technically strong non-life business which posted a profit increase of 22 percent to CHF 332 million. This increase results from an improved technical result as well as the volumes contributed by the acquisitions. The net combined ratio improved to 92.1 percent, once again clearly exceeding the target of 94 percent to 96 percent. The life insurance result also increased by 16 percent to CHF 176 million. At CHF − 69 million, the result for other activities, however, was down on the previous year. This is largely due to the lower technical result in the Group reinsurance caused by the unfavourable claims experience of the foreign portfolios of the former Nationale Suisse (on Group reinsurance). We are currently adjusting our reinsurance structure and are consistently cleaning up these portfolios.
In 2015, Helvetia generated business volume of CHF 8,235 million, which equals an increase of 11 percent in original currency (OC). The profitable non-life business showed the impact of the acquisitions: premium volume rose by 35 percent to CHF 3,776 million, and in Switzerland by as much as 73 percent. Because of the curtailment of sales of traditional products, the sales volume of CHF 4,459 million in life business was around 4 percent (in OC) less than in the previous year. Helvetia posted growth for the modern products.
Helvetia is in a position of strength. With the new helvetia 20.20 strategy we are addressing the challenges of our time and making use of our opportunities. Helvetia is becoming more modern, more digital and more agile. We will systematically continue to develop the Group and create added value for our customers, employees and shareholders. Fit for the future, while remaining reliable and predictable – this is the position we are targeting with the new strategy.
Our markets / segments In addition to its very strong Swiss home market, which is a segment in its own right, Helvetia continues to focus on the European country markets in Germany, Austria, Spain and Italy (Europe segment). The third segment is our global specialty market niche business (France, Active Reinsurance, Specialty Lines Switzerland / International). Read more about this on page 23.
Our services / product portfolio Helvetia is a quality-oriented all-lines insurer with over 150 years of experience. Whether the need is for private or occupational pension plans, non-life insurance or mortgages: Helvetia offers a comprehensive range of products from a single source for private individuals and SMEs. Read more about this from page 24.
Our sales channels / our partners Helvetia’s sales structures are optimised for specific countries. It has numerous strong sales partnerships which it has been able to continuously expand in recent years. The multi-channel approach will be further expanded in all country markets in the coming years. Read more about this on page 30.
Our customers We see every customer relationship as a personal partnership, sustained by professionalism, understanding and mutual trust. Read more about this on page 30.
Our environment Helvetia has a voluntary and broadly diversified engagement in the areas of culture, society, education, recreation, the environment and the economy. Read more about this on page 36.
Our investment management Using a sustainable investment policy tailored to its liabilities, Helvetia generates attractive investment returns with limited risk exposure. Read more about this on page 46.
Completion of merger of life units in Italy Scheduled in 2017
Integrated product launch under the brand Helvetia CH as of 1 May 2015
Integrated organisational model in place in CH as of 1 May 2015
I am very happy looking back on 2015: we have done much with the help of many motivated colleagues in Switzerland and abroad and are well on course with the integration of Nationale Suisse. It is difficult to limit this discussion to just a few highlights! We worked in four country markets and on all Group functions at the same time and every integration sub-project focused on its own area. For me, the dependencies were very important. Every time a new and critical dependency came up, such as the need to coordinate merger dates and adjustments to IT systems, we had to bring together representatives from many different areas and develop, prioritise and adopt mutual solutions. Finding a good balance between the milestones set by the Group and local conditions was of central importance, as the legal framework conditions in Switzerland are very different from those in the European markets. In addition to technical issues such as objectives, milestones, clear-cut project structures and the strong involvement of top management, I tried from the outset to create a constructive work atmosphere for the international core team. With this foundation, we mastered many difficult situations.
The integration of Nationale Suisse went ahead at full speed in 2015. Marc von Wartburg, Group Project Manager, and
We are also consistently implementing the merger in the European units. The integration has been successfully finalised in Germany and met with very good market reception. In Spain we implemented important legal and operational mergers a few weeks ago. We are also on track in Italy and will almost fully implement the merger in 2016. Only the merger of the life entities will take place in 2017. Product ranges and distribution partnerships were expanded in all markets to focus on growth and earnings.
Much has been achieved with the integration of Nationale Suisse in the past year. We reached the biggest achievement on 1 May with the launch of joint sales of the integrated product range. Everybody in Switzerland watched the changing of the neon signs, billboards and all the other logo elements. We reached another milestone in autumn with the IT migration of the non-life retail business.
With the launch of joint sales, the new organisational charts for the sales force and office staff also entered into force. The organisation proved to be very stable on the whole. The employees in Switzerland have been growing into the new structures and changed environment since May last year. As the Swiss project manager I am especially pleased that everybody is handling the situation in a constructive manner. I have noticed this positive approach and willingness to create something new since the beginning of the integration project.
The “Helvetia 2015+” strategy was successful Since the beginning of the “Helvetia 2015+” strategy period in 2010, we were confronted by market distortions and economic challenges in an environment overshadowed by the financial and sovereign debt crisis. To counter these problems, the central banks applied, and are still applying, expansive monetary policy, resulting in persistent and to some extent accentuated low interest rates. At the same time, we are beginning to see a tentative but sustained economic recovery in the markets in which we operate: all our core markets reported positive economic growth for the first time again in 2015. Looking back, we successfully implemented our strategy in this challenging climate and managed to achieve our goals in each of the three strategic fields of growth, profitability and customer loyalty.
“Helvetia 2015+” strategic ambition Helvetia defines its strategy for five years at a time. The “Helvetia 2015+” strategy period thus ended at the end of the 2015 financial year. The “Helvetia 2015+” strategic ambition aimed to dynamically and sustainably strengthen the value of our business portfolio in selected European markets. We underlined our ambition with the guiding principle: “First in growth, profitability and customer loyalty”.
During the strategy period, the life business was shaped by the – sometimes very pronounced – effects of the low interest rate environment. As a result, growth of 13 % was lower than in the non-life business. The product focus shifted to the sale of modern, capital-efficient insurance solutions. These include investment-linked products with the investment risk borne by the policyholder as well as products where Helvetia assumes the customer’s investment risk but hedges the risk through a third-party guarantee. The volume for these products increased by 15 % in OC from 2010 to 2015.
Profitability Sustainably enhance profitability Looking back on the results for the past five years, proof of the successful implementation of the “Helvetia 2015+” strategy can be seen with regard to profitability. Underlying earnings improved by around 30 % from 2010. In addition to good technical results, these earnings were boosted in particular by the acquisitions of Nationale Suisse and Basler Austria in 2014. The satisfying improvement in profitability was also driven by the productive non-life business. The Group’s average net combined ratio was 94 %, and in 2015 the net combined ratio was even better at 92.1 %. The positive development of the life business, even in times of strong financial market volatility and persistently low interest rates, shows our good risk results. We also kept the interest margins relatively stable with good asset liability management. The increase in the Helvetia Group’s earning power is underscored by the increase in the dividend from CHF 14.50 in 2010 to as much as CHF 19.002 per share in 2015.
Customer loyalty Improve customer benefits in line with needs We focus on retail and SME customers, placing customer benefits and customer satisfaction at the centre of everything we do. In our core markets we implemented many measures designed to retain existing customers and gain new ones. In doing so, we offer our customers real added value with tailor-made products and insurance solutions. Since the launch of “Helvetia 2015+” we constantly increased the number of our customers, and by the 2015 financial year some 4.7 million customers relied on our insurance solutions. We see this as confirmation that we managed to further strengthen the image of the Helvetia brand. It is also a sign of a high level of customer satisfaction, a fact which is confirmed by many rankings and serves to motivate us to constantly review and improve our customer focus.
Return on equity (ROE) temporarily just under 10 % due to interest rate environment
Improved cost-efficiency 1 Based on underlying earnings 2 Proposal to the Shareholders’ Meeting
With the integration of Nationale Suisse, the Helvetia Group has moved into the top three in the Swiss insurance market.
Helvetia successfully concluded the strategy period from 2010 to 2015. How are you using this strength?
Everybody is talking about digitisation – is this just a buzzword?
helvetia 20.20 targets healthy growth. Combined with synergies from takeovers and our persistent technical discipline, the strategy will lead to substantial profit growth. We will also maintain our high distribution ratio.
Helvetia will continue to pursue an active M&A strategy. The insurance market is in a structural phase of consolidation. Regulatory oversight and capital adequacy requirements are increasing. We are seeing that increasing numbers of healthy and innovative companies are looking for a new home because they do not have the critical mass needed for long-term success. With our strong capital base and profitable home market, we are very well positioned to take decisions quickly and exploit opportunities. On the one hand, we are interested in profitable growth, and on the other we are looking for additional know-how that we can use in other parts of the Group.
You mention systematic renewal and digitisation. This sounds like big challenges for your employees.
Added value for customers by combining our traditional strengths with new opportunities created by technology
Successful completion of the integration of Nationale Suisse and Basler Austria
Targeted innovation of business model with new partnerships and corporate ventures
Product value Use of smart data in the non-life business as well as modern product and guarantee concepts in the life business
H e lv e ti a a rt c o ll e c ti o n
Together with their colleagues in the Real Estate Projects Switzerland department, Michelangelo Ribaudo and Roland Weiss oversee the real estate projects for the life insurance business and pension fund.
With an investment volume of around CHF 6.4 billion, Helvetia is now one of the largest real estate investors in Switzerland. For Roland Weiss, who joined the Helvetia team from Nationale Suisse, this represents an investment volume that has increased five-fold as well as an exciting challenge. At Helvetia, he has taken over responsibility for maintenance and repair work on portfolio properties. “I’m pleased to share my many years of experience in the area of extended-cycle complete renovations with my team colleagues.” Michelangelo Ribaudo develops marketable real estate products and effectively transforms them into new construction projects by efficiently managing external planning teams, construction companies, the authorities and administrative bodies. He greatly values the intense level of communication with his new colleague. With dedication they implement the real estate and acquisition strategy of the ever-growing real estate portfolio, generating a sustainable yield. This productive collaboration also benefits the construction teams, not least due to the expanded network and depth of professional and life experience.
Continuity strengthens identification Helvetia has been involved in skiing sponsorships since the 2005 / 2006 season and is committed to long-term partnerships. This continuity means we are paving the way for successful athletes and thus strengthening identification with the Helvetia brand. 30 athletes from Switzerland, Germany, Italy and Austria – including four Olympic champions, Dario Cologna, Simon Ammann, Sandro Viletta and Victoria Rebensburg – are personally sponsored. The contract with the Swiss-Ski Federation runs until the end of the 2016 / 2017 season. Discussions on extending the contract are ongoing.
Nationale Suisse now part of Helvetia The new insurance group also appears under the brand “Helvetia” and continues its single brand strategy following the acquisition of Nationale Suisse. Operations in the home Swiss market were unified under the Helvetia brand name on 1 May 2015. The rebranding process in the other European markets will gradually follow by the end of 2016. “European travel insurance” and the online insurer “smile.direct” will continue as independent brands within the scope of the defined brand architecture of Helvetia. Both brands enjoy a strong, independent position in their specific market segments.
Helvetia is a successful, internationally active Swiss insurance group. With around 6,675 full-time equivalent employees, Helvetia provides services for more than 4.7 million customers. Helvetia is active in the life, non-life and reinsurance sectors. Helvetia divides its business activities into the three market areas of Switzerland, Europe and Specialty Markets: Its business activities in its home Swiss market are bundled in the Switzerland market area. The Europe market area covers the country markets of Germany, Austria, Spain and Italy.
Life business Helvetia offers life insurance in Switzerland, Italy, Germany, Spain and Austria. The home market of Switzerland is the most important market with 79 % of the business. In addition to individual life insurance, the product offering also includes group life insurance. At around 59 % of the Group’s total
Helvetia BVG Invest Covers the risks of death and invalidity by means of insurance contracts with Helvetia. Assumes the complete administration. Manages the investments through the Helvetia Investment Foundation. Appropriate pension plans with return opportunities.
Swisscanto Foundations As a joint venture of Helvetia Insurance and the Association of Swiss Cantonal Banks, the Swisscanto Collective Foundations offer products and services for occupational pension plans and supplemental provision. Savings investment via the cantonal banks; insuring against the risks of death and disability with Helvetia. Sales via cantonal banks and brokers. The Swisscanto Vested Benefits Foundation manages vested benefits accounts for customers of the cantonal banks who do not operate their own vested benefits foundation. Helvetia manages the branch offices of all three foundations.
Helvetia Consulta AG Draws up analyses and expert opinions, IAS19 calculations. Assumes the technical administration. Comprehensive consultation and services for occupational pension funds foundations.
Company profile Employees 2015 was marked by the integration of the new employees from Nationale Suisse Group and Basler Austria, both of which were taken over in the previous year. These new employees were successfully incorporated into Helvetia thanks to a comprehensive change management programme.
Management culture The corporate culture of Helvetia is based on trust and performance. Mutual respect, model conduct and close cooperation are firmly anchored in the principles of the Helvetia Group. Helvetia also remained true to this policy when integrating the new employees. Following the integration, Helvetia will continue to focus on its values of trust, dynamism and enthusiasm and will promote the value-based common corporate and management culture.
Helvetia firmly believes in a culture of dialogue and encourages regular feedback, which is the key to maximising the potential of the individual and ensuring the successful development of the company. The dialogue between employees and Helvetia is supported by national committees that also represent the interests and rights of the employees. Furthermore, a cross-border dialogue takes place between the Group Executive Management and the national employee representatives, which promotes mutual understanding and solidarity.
As part of annual talks, the topic of integration was actively pursued and dialogue was sought with the affected employees. The goal here was to assess how the employees were feeling personally in terms of the integration process and to give them the necessary support in completing their integration work.
Employee satisfaction Helvetia has a transparent and target-oriented compensation system that rewards performance and personal responsibility. A standardised objective setting system is used throughout the Group to help us accomplish this. Helvetia attaches great importance to giving all of its employees the same chances and opportunities, while still taking into account the needs of each individual.
In addition to regular surveys in the individual market units, the satisfaction of all employees is measured every three years by an independent institute. The last Group-wide survey was carried out in 2013. Preparations are already being made for the next employee survey in 2016. The high participation rates seen in past surveys (2013: 85 %) show that open, constructive feedback is an important part of the corporate culture at Helvetia. Based on the survey results, measures are derived to then further increase the commitment, satisfaction and customer-oriented behaviour of the employees, together with their feeling of well-being within the company. Helvetia also promotes its corporate appeal through Group-wide employer branding that gives the strategic framework for all personnel marketing measures.
Personnel development In a demanding, intensely competitive market environment that is changing considerably due to globalisation, regulation and digitisation, well-educated, dedicated and competent employees are among our most important resources. With a systematic and proactive personnel planning and development programme, Helvetia is paying great attention to these challenges. Personnel planning concentrates on acquiring new employees and on the systematic identification and development of their potential. The further development of the Group-wide talent management system will also take sustainable personnel planning into account. Additionally, Helvetia aims to promote diversity among the employees and address the changes noted above and future demographic challenges through different views, ways of thinking and backgrounds. Helvetia fosters the international transfer of knowledge within the Group for the benefit of Groupwide projects and initiatives. The annual management forum provides an important platform for managers from all country markets to exchange information about a current, strategically relevant management issue within the Group. In 2015, this forum was dominated by the subject of innovation and digitisation. Helvetia is also paying the necessary attention to these topics in terms of its management culture. The topic of leadership will remain in the spotlight in the new “helvetia 20.20” strategy in order to support agility, customer orientation and innovation. In 2015, Management Development of the Group carried out leadership training in all market units affected by the integration. This training prepared managers for the management challenges and changes associated with the integration. To take into consideration the different local requirements and characteristics, this training package was supplemented in each case with specific local modules. It is part of the proven Group modular international management training programme, in which the top managers regularly participate. To ensure that the contents are up-to-date, Helvetia works closely with renowned educational institutions. The managers taken on from the integrated companies will participate in the basic module from this programme in 2016. 1 The definition of key figures complies with the Global Reporting Initiative (GRI) and includes all employees (permanent and temporary). The employees in training were not included but are disclosed in a separate figure.
• • – Raiffeisen, Notenstein, Vontobel, Association of Swiss Cantonal Banks
Overall image: Third place among insurers Helvetia sets benchmarks in terms of: – Service quality: First place – Good advisors: First place – Innovative pension solutions: Second place – Commitment to customers: First place amPuls benchmarking study
Innovations smile.direct Following the merger of Helvetia and Nationale Suisse, smile.direct is now also part of the Helvetia Group. The business model of smile.direct is focused exclusively on the online channel. In order to continue to develop in this dynamic market and to live up to the needs and demands of its online customers, Switzerland’s most direct insurance company has been offering a chat function since 2015. Visitors to the website can establish direct contact with smile.direct via this additional digital communication channel. Visitors receive direct and professional support during the purchase process without needing to make a phone call.
“Best Practice” award for sample calculation The opportunity for returns is an important argument in favour of unit-linked retirement products. In making their decision, customers need the most realistic assessment possible of the opportunities and risks associated with their chosen investment. With the aim of increasing the credibility and informative value of sample calculations for unitlinked life insurance products, Helvetia mandated the Institute of Insurance Economics at the University of St Gall in 2015 to carry out a comprehensive review of and obtain certification for its calculation methods. This gives Helvetia’s customers the certainty that their sample calculations are based on a well-founded, reliable assessment of current market trends.
CleVesto Select − Unit-linked annuity insurance with a broad investment spectrum www.helvetia.com/de/content/de/ privatkunden/leben-alter/ fondsgebundene-versicherungen/ helvetia-clevesto-select.html
Helvetia Artas art insurance − All-risk insurance for art works owned by private collectors or in commercial collections content/de/privatkunden/ kunstversicherung.html
Helvetia ClassicCar − Insurance for vintage vehicles with special cover for cars, motorbikes and tractors content/de/privatkunden/fahrzeug/ classic-car.html
Italy Life Multiflex − Personalised investment product to meet a specific risk profile, based on an adaptable combination of a traditional component (max. 60 % of the premium) and six different investment funds
− The rate includes three ready-made investment concepts with different levels of risk tolerance that can be adjusted individually at any time content/de/privatkunden/ lebensversicherungvorsorge/ fondsgebundene- lebensversicherung/ guarantee-fund2.html
Specialty lines 3D printer insurance − Sold under cooperation agreements with sellers of 3D printers as well as through traditional sales channels and the Internet
− All 3D printer technologies can be insured − All-risk insurance; restoration of the 3D printer or 3D scanner to its pre-claim condition − The damaged, unusable printed matter and the raw materials are also insured − The additional costs, business interruption costs and financial loss caused by insured damage to the printer or a power failure are also insured content/de/geschaeftskunden/ geschaeftsversicherungen/ versicherungsangebote/ spezialprodukte/3d-drucker.
The merger also brought staff changes in the area of Engineering Switzerland, where Kurt Schläfli and his colleagues joined Christoph Guntersweiler’s team at Helvetia. It was very important to both of them to work together in an open and solution-oriented manner from the outset.
For detailed information about the corporate responsibility strategy and key topics, refer to: www.helvetia.com/cr-strategy www.helvetia.com/materiality-matrix
Core business measures In carrying out its core business, Helvetia applies sustainability criteria to the entire value chain. Helvetia’s portfolio comprises products and services in the field of renewable energy and mobility that protect investments in climate-friendly technologies and provide incentives for reducing our negative impact on the environment. A considerable percentage of Helvetia’s investments in equities, government and corporate bonds and real estate meet acknowledged sustainability standards. As a founding member of Swiss Sustainable Finance, Helvetia collaborates on the workstream for institutional investors. This workstream aims to support the technical discussion concerning the integration into investment management of environmental, social and governance criteria.
Progress in environmental management Helvetia has reached an important milestone with regard to its “ecological footprint”, which expresses the immediate impact of its business activities on the environment. At the end of 2015, the cross-country Corporate Responsibility Advisory Board adopted CO2 reduction targets for the Helvetia Group. The goal is a reduction in the absolute greenhouse gas emissions of at least two percent per year from 2016 to 2020 plus an annual savings target of three percent per employee (full-time equivalent). These savings are to be realised by implementing measures from energy efficiency audits and by buying electricity from renewable sources from 2015.
CDP asks the largest listed companies throughout the world to publish their greenhouse gas emissions. In 2015, Helvetia’s environmental performance was in line with the sector average for the first time.
With the initiative to protect forests, which has by now been expanded to include not only Switzerland, but also Germany, Austria, and Italy (see map), Helvetia is working to ensure that people can live and work safely in the Alpine region. Since 2011, Helvetia has donated almost 200,000 trees to support intact mountain forests. Serving as a green insurance umbrella over towns, streets and railway tracks, these forests provide protection against falling rocks, landslides and avalanches. Helvetia employees make a personal contribution at all company locations. They raise donations and work for a good cause by engaging in sport initiatives such as the bike-to-work campaign or charity runs.
Swiss equities trended sideways in 2015. The market initially dropped by more than 15 % following the decision of the Swiss National Bank to scrap the euro peg, but recovered comparatively quickly in the slipstream of European equities. Soon, however, the renewed flare-up of the political and economic crisis in Greece, weak global growth and high debt levels, particular in the emerging markets, led to new setbacks. In this environment, insurance stocks did considerably better than the overall market. The Swiss Insurance Index posted a performance of − 0.3 % and the EuroStoxx Insurance 600 reported 18.4 %. The Helvetia share posted a total return of 23.6 %, thus outperforming both its Swiss and European benchmarks. This proves investors’ great confidence, not only in Helvetia as a Group, but also in the implementation in conformity with the objectives of measures to ensure the successful integration of Nationale Suisse, which was acquired in 2014.
Bonds in circulation In the 2015 reporting year, the Helvetia Group issued a subordinated undated bond for CHF 300 million. In the first seven years and two months, the bond pays a fixed interest of 3 % p.a. Thereafter, the new fixed interest rate will be based on the five-year CHF mid-swap rate and the initial margin.
Active capital market communication Helvetia communicates with shareholders, potential investors, financial analysts, retail investors 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 2015 reporting year, our road shows took us to Zurich, Geneva, Lugano, Paris, Frankfurt, London, Dublin, Edinburgh, Milan, Scandinavia, Benelux and the USA. We also hold group and individual discussions with investors and take part in selected conferences hosted by various financial institutions.
All registered shareholders receive a shareholders’ letter with a brief overview of business operations every six months. The Annual Report and Financial Report are sent to shareholders on request. All publications and a wealth of information for shareholders, analysts and media representatives are available online in the “Investors” section at www.helvetia.com.
Risk management organisation The organisational structure of the Helvetia Group ensures a standardised application of the Groupwide risk management standard. In doing so, roles and responsibilities in the business units comply with the risk management organisation of the Group. This is based on a governance model that differentiates between the three basic roles of risk owner, risk observer and risk taker.
Various risk observers assess the risks assumed by the Helvetia Group, independently of any operational responsibility. The Risk Committee coordinates the collaboration between the risk observers and the risk takers and advises the Board of Directors and Executive Management in their decisions. The central risk controlling role “Group Risk Management ” is responsible for the improvement and development of the risk management system as well as for monitoring risks and controlling measures, and serves as a competence centre for the Group’s risk management. It is supported by specialised risk controlling functions, such as the Group functions and risk controlling in asset management. The internal auditor independently monitors the efficiency of the risk management system.
Risk management process and risk environment The key components of the Helvetia Group risk management process include the identification, analysis and management of risks, the monitoring of the success, effectiveness and appropriateness of the risk management measures, and reporting and communication. The risk management process ensures that sufficient risk-bearing capital is available at any time to cover the risks assumed in accordance with the chosen risk tolerance.
“Going back to my roots” is how the former Nationale Suisse employee Adrian Dubach describes his return to eastern Switzerland, where he was born.
Dubach used to work in the Finance department of Nationale Suisse in Basel. Today, he supports Group Controlling at the head office in St Gall. The requirements for financial reporting increased as a result of the merger between the two companies. Adrian Dubach took advantage of the merger with Helvetia to return to his roots and moved back to the St Gall area with his family. He was received with open arms by his new colleagues Stephan Zeller and
arise, in particular, from interest rate changes, fluctuations in share prices, real estate prices, or exchange rates which influence the value of the Group’s investments and technical liabilities. Liquidity risk generally refers to the risk of being unable to provide an unexpected cash outflow in a timely manner.
Methods for measuring capital The measurement of capitalisation is carried out both at Group and local level, i.e. at the level of the individual legal entities. At the local level, the country -specific regulatory and commercial law requirements are key. At Group Ievel, capital is measured on the basis of the consolidated balance sheet. In doing so, the capital requirements are measured against the capital models that are relevant to the Helvetia Group: Swiss Solvency Test and Standard & Poor’s. When measuring the capitalisation of the Group’s legal entities, the applicable solvency rules are applied (Swiss Solvency Test in Switzerland and Solvency II in the EU). In these capital models, the available capital is determined on the basis of the IFRS equity. Depending on the model, additional capital is added and other components, such as planned dividend payments and intangible assets, are deducted. As for Solvency II, albeit not in an identical manner, the Swiss Solvency Test involves measuring all assets and liabilities at market prices in order to calculate the available capital. Under Standard & Poor’s, the Swiss Solvency Test and Solvency II, the required capital is calculated using a risk-based method. In the Swiss Solvency Test, the effects of risks on the available capital are determined by means of scenario simulations and statistical methods, and quantified taking into consideration dependencies and diversification effects in the form of a risk-based capital requirement.
Attractive, stable investment income We generate attractive investment income for our customers and shareholders. Through the careful combination of low-risk assets, such as high-quality bonds and mortgages and instruments with higher returns such as real estate, equities, foreign currency bonds and corporate bonds, together with controlled investment risk. The income gained from bonds, mortgages and real estate ensures sustained and stable investment income, while gains in value from the equities create interesting medium-term yield potential. Helvetia’s high-quality property portfolio is an excellent fit with the liabilities from the insurance business, not only because of the longterm stable and attractive rental income, but also due to the stable values of the assets.
The investment strategy is always supported by timely risk management. The objective of the risk-controlling measures is to protect the balance sheet and income statement from excessive losses in value. This applies both to exposures in foreign currency, which are constantly and to a large degree hedged by futures, and to equities. In addition, counterparty risks are subjected to ongoing analysis and control using various criteria such as ratings, credit quality and the development of interest spreads. In order to avoid cluster risks, absolute exposure limits apply to the individual counterparties, depending on their quality.
Company profile Board of Directors 1 The duties of the Board of Directors were managed by Vice-Chairwoman Doris Russi Schurter until the end of the Shareholders’
The composition of the Board of Directors as at January 2016 is shown in the following table.
Professional background, exercising operational executive functions Since 1 October 2015 Chairman of the Board of Directors; 1979 – 1982 Schweizerische Treuhandgesellschaft, St Gall; 1986 – 1990 Swiss Bank Corporation Global Treasury at the head office in Zurich, as well as Vice-Director at Swiss Bank Corporation O’Conner Services L.P. Chicago; 1991 – 1996 Hunter Douglas, Lucerne, Vice-President and Treasurer; 1996 – 1999 Raiffeisen Group, St Gall: Member of Executive Management and Head of the Finance Department; from 1999 until September 2015 Chairman of Executive Management of the Raiffeisen Group, St Gall.
Appointments at listed companies Vice-President of the Board of Directors of Leonteq Securities AG, Zurich.
Appointments at other companies Four appointments, in particular President of the Board of Directors of Patria Genossenschaft, Basel; Vice-President of the Board of Directors Swissgrid AG, Laufenburg; and Member of the Board of the LZ Medien Holding, Lucerne.
Professional background, exercising operational executive functions Joined the Zurich Insurance Group in 1977, various managerial positions, including: 1993 Member of the Executive Management of Zurich Switzerland, 2001 – 2005 CEO Zurich Switzerland, 2001 – 2004 Member of the Extended Group Executive Board of the ZFS Group; 2002 – 2005 Vice-President of the SVV (Swiss Insurance Association); 2001 – 2005 Member of the Management Board and Vice-President of the Fördergesellschaft I.VW.
Appointments at other companies Two appointments: Member of the Board of Directors of CSS Versicherung, Lucerne, and of Sompo Japan Canopius Reinsurance AG, Zurich.
Pro bono appointments Four appointments, in particular Member of the Board and in the National Committee of UNICEF Switzerland and on the Board of Pro Infirmis.
From left to right: Dr Hans-Jürg Bernet, Dr Andreas von Planta, Dr Gabriela Maria Payer, Dr Pierin Vincenz,
Bachelor’s degree in economics from the University of Fribourg (lic. oec. publ.),
Appointments at other companies Six appointments at non-listed companies / institutions: Member of the Board of Directors of Patria Genossenschaft; Member of the Board of Directors of Forces motrices de la Gougra SA, Sierre, and Grande Dixence SA, Sion; Senior Advisor of Credit Suisse SA; Vice-President of the Swiss Trade Association and President of the Union valaisanne des arts métiers.
Professional background, exercising operational executive functions 1987 – 1993 research assistant and lecturer at the University of St Gall; 1987 – 1993 Project and Group Manager in the IT Development Finance Department, Swiss Bank Corporation, Zurich; 1993 – 1994 consultant for banks and insurance at The Boston Consulting Group, Zurich; 1994 – 1999 head of department at a Managing Director level in IT at the SBC (later UBS), Swiss Bank Corporation / UBS AG, Zurich; 2000 Raiffeisen Group, St Gall: since 2000 Member of the Executive Management, until 2004 Head IT Finance and Business Development and CFO, from 2002 – 2015 Deputy Chief Executive Officer, from 2005 – 2015 Head of Market Department, since 1 October 2015 Chief Executive Officer at Raiffeisen Switzerland.
Appointments at other companies Ten appointments at non-listed companies: Chairman of the Board of Directors of Vescore AG, St Gall; Member of the Board of Directors of ARIZON Sourcing AG, St Gall; Member of the Board of Directors of SIX Group AG, Zurich; Vice-Chairman of the Board of Directors of Pfandbriefbank schweizerischer Hypothekarinstitute AG, Zurich; Member of the Board of the Swiss Bankers Association (SwissBanking), Basel; Member of the Executive Board of the Swiss Banks’ and Securities Dealers’ Depositor Protection Association (esisuisse), Basel; Member of the Board of the Unico Banking Group Brussels; Member of the Board of Directors of Ergis AG, Wald AR.
Doctorate in law (University of Zurich), lawyer, specialist lawyer SAV, law of inheritance, mediator SAV, Swiss, Zurich, 1958
Appointments at other companies Three appointments, particularly President of the Board of Directors of the regional marketing agency, Greater Zurich Area AG, Zurich, and President of the Board of Directors of AG Hallenstadion, Zurich.
Appointments at other companies Member of the Board of Directors of Union Bancaire Privée, Geneva.
Professional background, exercising operational executive functions Numerous managerial functions in Asia and the USA in Landesbank Baden-Württemberg (LBBW), most recently as Member of the Board in Stuttgart, responsible for international business. Since 2011, CEO of DKSH Japan in Tokyo.
Professional background, exercising operational executive functions 1987 – 1995 various positions at Deutsche Bank, including: Corporate Banking and Assistant to the Management (Germany); Corporate Finance (Singapore); 1995 – 2004 University of St Gall, promotion and habilitation, guest professor in the USA (Wharton and Connecticut) as well as South America (IAE Argentina); 2004 to present, professor of Strategic Management at the University of St Gall and also Chairman of the Board at the Institute of Management (IfB).
Appointments at listed companies Member of the Board of Directors of Hügli Holding AG, Steinach.
Appointments at other companies Eight appointments, in particular Member of the Board of Directors of Raymond Weil SA, Lancy; President of the Board of Directors of Clinique Générale-Beaulieu SA, Geneva, and HSBC Private Bank (Swiss) SA, Geneva; President of the Regulatory Board of SIX Swiss Exchange (previously registration office of SWX Swiss Exchange).
The Executive Management is the highest executive body of the Helvetia Group and is responsible for implementing the strategy adopted by the Board of Directors. The organisational structure of the Executive Management is aligned with the value chain as well as the management of the operating business units. Key functions such as the management of financial operations and information technology, the investment business, group reinsurance and parts of risk and personnel management are centralised, making it easier to pool knowledge and resources. The management structure with cross-border, functional responsibilities is very efficient, enables rapid decision-making, enhances transparency and avoids duplication. There were no changes to the Group Executive Management in the reporting period. The Group Executive Management still consists of six members. The other responsibilities within the Executive Management remain the same.
Changes to subsidiaries Germany In Germany, Werner Bauer joined the Executive Management on 1 August 2015 and took over the Sales / Marketing department from Thomas Primnitz. Werner Bauer worked as insurance manager for the former Nationale Suisse. Prior to this he held a number of sales and actuarial positions with different companies. Thomas Primnitz took on a new task within the organisation.
France On the Executive Management of Helvetia France, Pierre-François Breuneval, who is in charge of IT, also took over the Human Resources department from Jeanne Castaing on 17 July 2015. Jeanne Castaing left the company on this date.
Details concerning the curricula vitae of the new members of the Executive Management can be found in the relevant media releases at https:// www.helvetia.com/corporate/content/en/media- relations/media-releases.html
Support functions * CEOs of the country markets ** Reports to the Chairman of the Board of Directors
Professional background 1994 – 1997 Rentenanstalt / Swiss Life: Involved in Group planning projects; 1997 joined Helvetia: Assistant to Head of Staff Executive Management, Business Development; Head of Staff Group Executive Management; 2000 Head of Business Development; Director; 2002 ANKER, Vienna: Head of Finance and IT; Member of Executive Board; 2005 ANKER, Vienna: Chief Executive Officer; 2007, since 1 September in his current position.
Appointments In particular, Member of the Board of the Swiss I nsurance Association, Zurich; Member of the Executive Committee and Chairman of the Funding Association of the Institute of Insurance Economics at the University of St Gall.
B.A. History (University of Reading / UK); Chartered Accountant, British and
Professional background Joined Swiss Re in 1995, last position as Senior Underwriter Property & Casualty; 2001 moved to Zurich Global Corporate Switzerland as Head of Actuarial Department; 2005 Chief Pricing Actuary Europe General Insurance; 2009 – 2011 Chief Underwriting Officer at Zurich Italy; 2012 joined Executive Management at Nationale Suisse as Head of Customer Service & Non-Life Switzerland and from 2013 as Head of Specialty Lines & Foreign Countries; since 1 January 2015 Member of the Group Executive Management in his current position with an appointment at one foreign Helvetia subsidiary.
Appointments In particular, Chairman of the Campaign Committee of the Swiss Insurance Association; Member of the Board of Trustees of the pension funds of Helvetia Insurance; Vice-Chairman of the Helvetia Patria Jeunesse Foundation; Vice-Chairman of the Swisscanto Vested Benefits Foundation of the Cantonal Banks; Member of the Board of Directors of Coop Rechtsschutz AG, Aarau; Member of the Board of Directors of Prevo AG, Basel, and three other board member appointments for non-listed companies and three board of trustee appointments.
Helvetia is committed to meeting the high legal and ethical expectations of its shareholders and all other stakeholder groups to the best of its know ledge and in good faith. This applies in particular with respect to comprehensive, transparent reporting and responsible, value-oriented corporate governance.
The main objectives are to further strengthen confidence in the Helvetia Group, to safeguard the interests of our customers, and thus ultimately to ensure and sustainably enhance the value of the Group, while also taking account of the best interests of the public. We successfully ensure that the principles of good corporate governance are consistently implemented and continually optimised throughout the Group. For the Board of Directors, Executive Management and all employees of Helvetia, corporate governance is an ongoing process that is periodically reviewed and used to integrate new developments, findings and requirements into daily professional life and responsibility structures.
This strategic focus expresses Helvetia’s commitment to comply as fully as possible with the applicable standards of the “Swiss Code of Best Practice for Corporate Governance” of the SIX Swiss Exchange Corporate Governance Guidelines of 28 August 2014, and the Ordinance Against Excessive Compensation in Swiss Listed Companies (VegüV) of 20 November 2013. Information on Helvetia’s compensation system and the compensation paid to the Board of Directors and Group Executive Management is again contained in a compensation report that forms part of the Annual Report (see page 72 et seq. below). If relevant information is provided elsewhere in the Annual Report or in other documents, reference is made to the location or document concerned. Important documents such as the articles of incorporation and the organisation rules with appendices are also available on our website at www.helvetia.com/en/gruppe/governance.
1. Group structure and shareholder base 1.1 Group structure Helvetia is an international Swiss all-lines insurance group. The parent company, Helvetia Holding AG, is organised in accordance with Swiss law. The management structure is shown on page 54. This structure is intended to create the best possible legal, financial, fiscal and regulatory framework and to ensure smooth, efficient and flexible business operations.
On 20 October 2014, as part of a public purchase and exchange offer, Helvetia acquired 96.29 % of the registered shares of Schweizerische National- Versicherungs-Gesellschaft AG (“Nationale Suisse”) and integrated the company as a subsidiary into the Group. The legally prescribed process to acquire 100 % ownership and to delist Nationale Suisse from the SIX Swiss Exchange was successfully concluded in the first half of 2015. Since then, Helvetia has finalised the merger of Nationale Suisse (the former parent company of the Nationale Suisse Group) and Nationale Leben with its counterparties, thus laying the foundation for the focused and consistent future growth of the business combination by exploiting the considerable synergies arising from the merger. In other countries, the substantially smaller local Nationale Suisse offices will be merged with Helvetia’s offices in 2016.
Reports on the main subsidiaries – Helvetia Schweizerische Versicherungsgesellschaft AG, St Gall (Helvetia Versicherungen), and Helvetia Schweizerische Lebensversicherungsgesellschaft AG, Basel (Helvetia Leben) – can be found in the Notes on page 225.
As regards our shareholder base, the holdings of the pool are worthy of special mention. The pool still holds a combined stake of 38.1 % of Helvetia Holding’s equity and comprises the following three partners: – Patria Genossenschaft, Basel, with 30.1 % – Vontobel Beteiligungen AG, Zurich, 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 oriented, long-term 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 members, who also enjoy 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 –
2.2 Treasury shares On 31 December 2015, Helvetia held 47,951 treasury shares (0.48 %).
2.3 Authorised capital The option to create authorised capital pursuant to Art. 3 of the articles of incorporation was exercised with the takeover of Nationale Suisse. The share capital therefore increased year-on-year by 55,606 shares or CHF 5,560.60.
Company profile Corporate governance 2.8 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 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 and 8 of the articles of incorporation. Any amendment by the Shareholders’ Meeting to the statutory restriction of transferability referred to above requires a twothirds majority of votes represented.
2.9 Convertible bonds and options a) Convertible bonds No convertible bonds have been issued since 2004.
2.5 Changes in capital – In December 2004, an authorised share capital increase of CHF 23,598,750 was carried out by issuing 2,359,875 registered shares with a par 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 par 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 par value dividend.
– At the Extraordinary Shareholders’ Meeting in September 2014, for the partial financing of the takeover of Nationale Suisse, authorised capital of a maximum of CHF 130,000 was created by issuing a maximum of 1,300,000 registered shares with a par value of CHF 0.10 each, which must be fully paid up. Of this authorised capital, 1,236,656 fully paid up registered shares were issued in October 2014 and 55,606 in March 2015 with a par value of CHF 0.10 each or CHF 129,226.20 in total. The share capital of Helvetia Holding AG thereby increased to CHF 994,513.70, consisting of 9,945,137 registered shares with a par value of CHF 0.10 each. As at 31 December 2015, the remaining authorised capital amounted to CHF 773.80 or 7,738 fully paid-up registered shares with a par value of CHF 0.10 each.
Celia Rung has an experienced colleague in Group Reinsurance by her side in Laurent Fauré. He has been working for Helvetia for 15 years. He gained a new colleague with the acquisition of Nationale Suisse, and his responsibilities also changed.
3.2 Other activities and interests The following business relationships exist with companies represented by members of the Board of Directors: – In the shareholder pool, Doris Russi Schurter and Jean-René Fournier represent Patria Genossenschaft; Dr Patrik Gisel represents the Raiffeisen Group; and Herbert J. Scheidt represents the Vontobel Group.
Company profile Corporate governance 3.5 Internal organisation Corporate governance at Helvetia is based on the relevant legal provisions (in particular company law and stock market legislation) and on internal directives and regulations. The functions intended to be carried out by the Board of Directors and the allocation of duties are set out on page 47. The Board of Directors appoints the Vice-Chairmen, the Chairman and members of the various committees (exception: the members of the Nomination and Compensation Committee) as well as the secretary of the Board of Directors.
To implement the reduction in the number of Board members decided previously, Messrs Balz Hösly, Peter Kaemmerer and John Martin Manser will resign from the Board of Directors at the 2016 Shareholders’ Meeting. The other Board members, the Chairman and the other members of the Nomination and Compensation Committee will stand for re-election. Andreas von Planta is proposed as a new member of the Nomination and Compensation Committee to the 2016 Shareholders’ Meeting. The table on page 47 contains information on the first time each member of the Board of Directors of Helvetia Holding AG was elected to that body.
Company profile Corporate governance ternal or external specialists to attend its meetings, which is regularly the case. The IRC met four times in 2015. One of the Board members was absent from one of the meetings. Most of the meetings lasted half a day.
d) The Audit Committee (AC) assists the Board of Directors in its duties with regard to overall supervision and financial control. It examines the accounts from the perspective of completeness, integrity and transparency, and verifies their compliance with applicable accounting standards and external reporting requirements, assesses risk governance and risk organisation, and monitors the functional capacity and effectiveness of the internal control systems (ICS). It monitors the operational risks and related risk management measures and verifies the independence and quality of the audits by the internal and external auditors. It ensures optimal cooperation between internal and external control units, the AC, the Chairman and the Executive Management.
The AC approves the internal audit plan and assists with the development of external audit plans, examines the results of audits, comments on them for the attention of the Board of Directors, and may, if necessary, award special audit assignments. It also prepares the election of the statutory auditors, and submits the necessary proposals to the Board of Directors. It verifies the consistency of auditing activities with any existing consulting mandates and examines the overall fee structure. The Chairman may, at his own request, take part in the meetings in an advisory capacity. The CEO, CFO, representatives of the external auditors and the head of Internal Audit attend its meetings in an advisory capacity. The attendance rate was 100 % at meetings held to discuss the financial statements. In order to deal with specific issues, the Committee may call on internal or external specialists to attend its meetings, which is regularly the case. The AC met four times in 2015. One member was absent from two of the meetings. Most of the meetings lasted half a day.
b) The Nomination and Compensation Committee (NCC) puts forward proposals regarding the structure of the compensation system that applies to the members of the Board of Directors and to the salaries and compensation of the members of Group Executive Management, and submits proposals on the fixed and variable salaries and remuneration of the members of the Executive Management to the Shareholders’ Meeting. It approves the concept and strategy of the employee pension funds in Switzerland on behalf of the employer and takes note of their annual financial statements. It prepares the resolutions by the Shareholders’ Meeting regarding the appointment and dismissal of members of the Board of Directors, 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 market Executive Management boards, and periodically reviews plans and measures to retain and promote senior managers. The NCC convenes as often as business requires. In order to deal with specific issues, the Committee may call on internal or external specialists to attend its meetings, which is regularly the case. The CEO takes part in an advisory capacity where topics that affect the Executive Management are concerned. The NCC met five times in 2015. One member was absent from one of the meetings. Most of the meetings lasted half a day.
Appendix I of the organisational regulations contains a detailed description of the division of powers between the Board of Directors, the Board Committees and the Executive Management: www. helvetia.com/en/gruppe/governance.
Full Board of Directors The Board of Directors convenes as often as business requires, as a rule five to six times a year. Most of its meetings, which usually last half a day, are held at the Group head office in St Gall, and the executive seminar, which usually lasts two days, is generally held at external premises. The Board of Directors is quorate if the majority of its members are present. Its resolutions are carried with a majority of the votes of the members in attendance. Resolutions may also be passed by circular letter, which was the case eight times in 2015. As a rule, all members of the Board of Directors and (in an advisory capacity) all members of the Executive Management attend its meetings. In the reporting year, four half-day meetings were held as well as a two-day
Every month, the members of the Board of Directors receive key data concerning the course of business. They also periodically receive reports on current issues relating to governance as well as selected analyses and situation reports concerning market trends, market players and noteworthy occurrences. The regular reports submitted to the Board of Directors and its committees are listed in Appendix II of the organisational regulations: www.helvetia. com/en/gruppe/governance.
Company profile Corporate governance shareholder and for the group of pool members mentioned in section 5.1 also apply here.
5.3 Convening the Shareholders’ Meeting The Shareholders’ Meeting is convened by the Board of Directors, or, if necessary, by the statutory auditors. Liquidators and representatives of creditors also have the right to call a meeting.
As a rule, the Ordinary Shareholders’ Meeting is held in April / May, but at the latest within six months after the end of the financial year. Extraordinary Shareholders’ Meetings take place if the Board of Directors or the statutory auditors consider it necessary, if this is passed by a Shareholders’ Meeting or if shareholders who represent at least 10 % of the share capital jointly request in writing an Extraordinary Shareholders’ Meeting, whilst stating the items on the agenda and the motions to be put forward and choosing the names of the proposed candidates.
Each shareholder receives a personal invitation no later than 20 days before the meeting, including a detailed agenda, a brief explanation of the motions to be put forward, plus other explanations concerning significant occurrences in the reporting year. The invitation and agenda are also published in the “Schweizerischen Handelsamtsblatt”.
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, para. 1 of the Swiss Code of Obligations, a two-thirds majority of represented votes is required for amendments to the articles of incorporation, the premature termination of office of more than one member of the Board of Directors, and the liquidation of the company. The exceptions for Patria Genossenschaft as individual
Company profile Corporate governance 7.4 Supervision and control of the audit a) External auditors The Audit Committee prepares the election of the statutory auditors. It monitors and assesses their activities. This supervision is predominantly carried out by means of the external auditors’ reports on audit results, the reporting process, decisions, for example on IFRS issues, and statements in the local audits. Important findings are summarised in a management letter.
b) Internal auditors In addition to an external auditor, the Helvetia Group has an internal auditing department that reports its audit results 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 ensures the independence of the internal auditors.
c) External and internal auditors Representatives of the external auditors and the Head of Internal Audit attend meetings of the Audit Committee in an advisory capacity. Copies of the minutes are sent to all members of the Board of Directors. Reports on the activities of the Audit Committee are provided at the meetings of the full Board of Directors. In the reporting year, four meetings were held and the external auditors attended all four meetings. Discussions between the external auditors, the Chairman of the Board of Directors, the Chairman of the Audit Committee, the CEO and the CFO take place annually. Meetings or an exchange of experience with specialists from the areas of Group finance, corporate finance and risk management, legal and compliance, general secretariat and corporate governance are held periodically. The external and internal audit teams also liaise frequently regarding issues such as audit planning, audits and results as well as current problems.
7.2 Audit fees In the reporting year, the fees charged by the auditors amounted to: CHF 3,793,179.00.
Helvetia periodically meets with institutional investors and presents the published financial results at special roadshows. Our Investor Relations team will be pleased to assist with any personal enquiries; contact details are provided at the end of this report as well as on our website.
8. Information policy Helvetia communicates with shareholders, potential investors, retail investors and the general public comprehensively and on a regular basis. Shareholders receive a short information brochure about the previous business year and most important key figures along with the invitation to the Shareholders ’ Meeting. The Annual Report and the interim report are both made available to the general public. Both documents are available on the website. Upon request the documents can also be sent to investors or interested parties free of charge. Other current and archived information on the Helvetia Group is available on our website www.helvetia.com/en. Topics include corporate governance, Group structure and strategy, employees, charitable activities and history as well investor interests such as the key figures, equity story, bonds, rating, annual and interim results and information about the stock including the current share price performance. In addition, further publications, media releases and important dates can be found here. Interested parties may also register online to receive the latest information on the company directly and to request particular publications.
The first section of the compensation report of Helvetia Holding AG sets out the general principles, main components and criteria regarding the compensation concept and participation rights as well as the loan and credit terms and conditions for members of the Board of Directors and the 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 executive levels. Unless stated otherwise, the implementation of the general principles in the financial year, the specific payments and the information relevant to the vote on compensation, which must be disclosed pursuant to the VegüV, are presented in the second and third sections for the Board of Directors and the Group Executive Management only. All sections comply with the Corporate Governance Guidelines (RLCG) of SIX, the “Swiss Code of Best Practice for
Corporate Governance” as amended on 28 August 2014, Circular 2010 / 1 “Compensation Systems” by the Swiss Financial Market Supervisory Authority FINMA, the Swiss Code of Obligations and the Ordinance Against Excessive Compensation in Swiss Listed Companies (VegüV) of 20 November 2013, which entered into force on 1 January 2014.
Base salary / basic remuneration Long-term compensation component (LTC) as % of base salary / basic remuneration
The Board of Directors continues to be in charge of general compensation issues and compensation models. It is supported in its work by the Nomination and Compensation Committee, which provides assistance to the Board of Directors in the decision -making process in accordance with the internal organisational regulations and has final decision -making power in some areas. Pursuant to the Ordinance Against Excessive Compensation in Swiss Listed Companies (VegüV), the Board of Directors compiles a yearly compensation report submitting the total amounts of fixed and variable compensation of the Board of Directors and the Group Executive Management to the Shareholders’ Meeting for approval. No payment / share allocations may take place before the final approval of the compensation for the Board of Directors and the Executive Management by the Shareholders’ Meeting.
b) Approval of the following total amounts by way of individual voting: – fixed compensation of the Board of Directors for the period from the current Shareholders’ Meeting to the next Shareholders’ Meeting (prospective ); – fixed compensation of the Group Executive Management for the period from 1 July following the current Shareholders’ Meeting to 30 June of the next year (prospective); – variable compensation of the Board of Directors for the past financial year (retrospective); – variable compensation of the Group Executive Management for the past financial year (retrospective ).
Company profile Compensation report is paid out in cash. When a Director leaves the Board, the fixed compensation is paid on a pro rata basis up to the end of the month in which he or she leaves the Board of Directors.
b) Variable compensation The variable compensation paid to a Board member is calculated based on a reference value of 30 percent of the fixed compensation. This reference value is multiplied by the extent of target achievement that applies to the LTC (for the calculation of the percentage of target achieved, 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 stock exchange price for the Helvetia Holding share 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 calculated on a pro rata basis up to the end of the month in which he or she leaves the Board of Directors. The deferred allocation of LTC shares applicable to each member of the Board of Directors takes place only after the approval of the total amount by the Shareholders’ Meeting (retrospective determination).
compensation (which, depending on business performance, can range from CHF 0 to a maximum of CHF 30,000 per Board member or CHF 225,000 for the Chairman of the Board of Directors and is paid in shares that are only transferred three years later in full knowledge of the longer-term business performance ) will not serve as a false incentive.
1. Compensation for the Board of Directors The compensation principles relevant for the Board of Directors and individual components of the compensation concept as well as the procedure used for determining performance-related payments are set out in the compensation regulations approved by the full Board of Directors.
The compensation paid to the members of the Board of Directors consists of the following components, whereby the fixed cash component is the largest component by far.
Company profile Compensation report due to the Executive Management member regardless of the general business result.
Long-term results-based compensation component (LTC, maximum of 40 % of fixed compensation): This compensation component with a longer-term orientation is multiplied by the percentage of strategic target achievement. In contrast to the regular results-based compensation component, the amount calculated in this way is not paid out to the Executive Management member in cash, but in the form of a deferred claim to a certain number of shares. The relevant share price is calculated as 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. The relevant number of shares is transferred to the ownership of the Executive Management member after three years either in the form of shares or as a cash payment based on the share price at that time, provided that there were no negative developments in this period that were triggered in the reporting year and can be attributed to the conduct of the Executive Management member in question. If the person in question leaves the Executive Management, his or her deferred claim lapses as follows: cancellation of all claims for the year in which notice of termination was given, cancellation of one half of the claims in the first preceding year, and no cancellation of any claims from the second preceding year. This concept establishes a direct link between the members of the Executive Management and the long-term development of the company in two ways: positive or negative share price trends over the three-year period, and the possibility that the number of allocated shares can be reduced retroactively.
3. Helvetia employees in Switzerland: share purchase plan In 2005, an employee share purchase plan was introduced in Switzerland to allow employees to participate in the performance of Helvetia and thus to strengthen their personal ties to the company. Employees can purchase registered shares of Helvetia Holding AG at reduced prices. The number of available shares is specified by the 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 Group Executive Management can also take part in this programme, but the members of the Board of Directors may not. The share purchase plan is not open to employees abroad. The costs associated with the share purchase plan in 2015 were recognised in the income statement at CHF 0.9 million (previous year: CHF 0.9 million).
c) Expenses and benefits in kind The reimbursement of expenses is governed by written regulations. The members of the Group Executive Management are entitled to a Helvetia company car which they may also use for private purposes for a fixed fee. The employer does not grant any other benefits in kind.
e) Severance pay and loans No provision is made for severance payments, and no such payments were made or promised in the past or in the reporting year. Loans are granted at usual employee conditions.
f) Pension benefits The benefits to which members of the Executive Management are entitled under occupational pension plans are in line with the model for the internal pension regulations that apply to all employees. The employer pays the standard joint contribution. The employer also finances the option for members of the Executive Management to retire from the age of 60. These additional contributions are presented as part of the overall pension contributions made to members of the Executive Management. No extraordinary benefits are paid.
II. Compensation paid to the Board of Directors and the Group Executive Management in 2015
All compensation and fees paid to the Board of Directors are shown in the above table. Resigning Board members did not receive any payments.
Gabriela Maria Payer (Member since 20.10.2014)3 126 180 23 659 28 183 6 568 154 363 30 227
Andreas von Planta (Member since 20.10.2014)1 / 3 321 512 162 983 28 183 6 568 349 695 169 551 1 Additionally contains the fees paid to Mr A. von Planta and B. Hösly from 1.1.2015 until end of April for remaining on the Board of Directors of
Members of the Group Executive Management may conclude insurance contracts, loans and other services under the terms and conditions currently in effect for employees. At the reporting date two mortgage loans had been granted to Philipp Gmür for CHF 1,000,000 (previous year: CHF 1,000,000) and David Ribeaud (CHF 595,000). In the reporting year, the loan to Philipp Gmür, which is a fixed mortgage at normal customer conditions, had an interest rate of 1.65 % (previous year: 1.65 %) and the loan to David Ribeaud had an interest rate of 0.89 %. There are no other insurance contracts, loans or guarantees.
During the reporting year, members of the Group Executive Management received non-monetary benefits as part of the company car programme valued at CHF 25,910 (previous year: CHF 22,158). All other benefits that the members of the Executive Management receive as employees (e.g. discounts on insurance products, etc.) are included in the fixed remuneration listed above. They did not receive additional benefits in kind or bill the company for any additional services.
Total fixed salaries paid out 4 781 450 4 755 224
The Board of Directors requests approval from the Shareholders’ Meeting for fixed remuneration for the Board of Directors in the total maximum amount of CHF 2,740,000 for the period from the Shareholders’ Meeting 2016 to the Shareholders’ Meeting 2017.
Employer contributions AHV / IV / EO 130 000 118 240 123 000
Salaries and other short-term benefits: – Fixed remuneration (incl. expenses allowances child / education allowances long-service awards company
– Employer contribution to pension funds with respect to the fixed compensation (incl. AHV / IV / EO) 966 000 961 100 911 000
III. Compensation for the Board of Directors and the Group Executive Management to be approved by the 2016 Shareholders’ Meeting
Under the VegüV and the articles of incorporation, the Shareholders’ Meeting must approve the following compensation for the Board of Directors and the Group Executive Management: – Total amount of the fixed compensation for the Board of Directors for the period from the 2016 Shareholders’ Meeting to the 2017 Shareholders’ Meeting
– Total amount of variable compensation for the Board of Directors for the past financial year 2015
Company profile Compensation report 2. Approval of the total amount of fixed compensation for the Group Executive Management for the period from 1 July 2016 to 30 June 2017 The fixed remuneration of the Group Executive Management was reviewed as from 1 July 2016, and function-related adjustments will be made. Provided that there are no personnel changes, this adjustment results in an increase of the total fixed compensation amount of the Group Executive Management of 0.6 % compared to the previous period.
Employer contributions AHV / IV / EO 20 000 20 461 21 000
The Board of Directors requests approval from the Shareholders’ Meeting for variable compensation for the Group Executive Management in the total amount of CHF 3,359,000 for the past financial year 2015.
Although the systems for concluding life insurance policies are currently still operating in parallel, which makes day-to-day work more cumbersome, the team at the general agency in Baden has coalesced quickly.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration report with regard to compensation, loans and credits in accordance with articles 14 – 16 of the Ordinance. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatements in the remuneration report, whether due to fraud or error. This audit also includes evaluating the reasonableness of the methods applied to value components of remuneration, as well as assessing the overall presentation of the remuneration report.
Opinion In our opinion, the remuneration report for the year ended 31 December 2015 of Helvetia Holding AG complies with Swiss law and articles 14 – 16 of the Ordinance.
Strong potential for growth based on room for growth in market positions abroad
The markets in which Helvetia is active generate a volume of EUR 672 billion, representing 18.4 % of the global market1.
In over 150 years, Helvetia Group has grown from a number of Swiss and foreign insurance companies into a successful insurance group that conducts business across Europe. With the integration of Nationale Suisse, Helvetia has been able to strengthen its top 3 position as a leading all-lines insurer in the Swiss insurance market. With the Specialty Markets market area, which includes engineering, transport, art and active reinsurance, Helvetia is further developing its competence as a specialty insurer.
Business development Market environment 1 Source: sigma 4 / 2015, Swiss Re 2 Source: Swiss Re, Economic
Research & Consulting, Global insurance review 2015 and outlook 3 Source: Swiss Re, Economic
Research & Consulting, Global insurance review 2015 and outlook 4 Versicherungswirtschaft heute
Moreover, natural catastrophes in 2015 presented the fewest claims in a decade, keeping pressure on the providers of reinsurance solutions high. However, low margins and the maturity of the market led to a decline in premium rebates in many areas – despite overcapacity and few claims. Leading reinsurers believe that this trend is starting to bottom out, the market will stabilise at a low level and there will continue to be numerous mergers and takeovers. Furthermore, the demand for capital-efficient reinsurance solutions will be stimulated thanks to the introduction of and changes in solvency requirements and will present new business opportunities for reinsurers.
Preliminary remark: Helvetia acquired the Nationale Suisse Group in financial year 2014. It was fully consolidated as at 20 October 2014. Therefore, Nationale Suisse is taken into account as of that date in the 2014 Group financial statements. Basler Austria was also acquired and is included in Helvetia Group financial statements as from 28 August 2014. The comparative figures for the 2014 financial year therefore include the Nationale Suisse Group and Basler Austria from their respective dates of initial consolidation.
The positive performance resulted in underlying earnings 2 of CHF 439.0 million after taxes. This corresponds to an increase of CHF 17.3 million or 4.1 % compared to the previous year (financial year 2014: CHF 421.7 million).
The developments in the individual Life, Nonlife and Other activities business areas as well as the IFRS segments of Switzerland, Europe, Specialty Markets and Corporate are described in detail on the following pages.
Around 330 employees left the company as at 31 December 2015. The staff reduction was mainly achieved through natural fluctuation. Helvetia Group’s profit for the period reported in accordance with IFRS for financial year 2015 is CHF 309.5 million – compared to CHF 393.3 million in the previous year. The profit reported in accordance with IFRS was primarily influenced by acquisition effects: It comprises integration costs of CHF 74.8 million, amortisation of intangible assets and other planned write-downs due to the revaluation of interest-bearing securities in the total amount of CHF 102.3 million.
Additional write-downs due to revaluation at fair value – 42.5 – 13.0
IFRS profit for the period 309.5 393.3 − 21.3 * Underlying earnings include: –
2 Underlying earnings are adjusted for integration costs as well as amortisation of intangible assets, additional planned amortisation due to revaluation of interest-bearing securities at market value and other one-off effects of the acquisitions.
Non-life business volume: Strong growth thanks to acquisitions (+ approx. 35 % in OC), growth driven by the insurance lines of motor vehicle, property and accident / health insurance
Underlying earnings: Increase in earnings of 21.8 % thanks to improved technical results and the acquisitions
Underlying earnings in the non-life segment amounted to CHF 331.8 million (financial year 2014: CHF 272.5 million). The increase in earnings of CHF 59.3 million or 21.8 % is the result of an improved technical result and the volume contributions of the two acquisitions. Exchange rate effects had a negative effect and curbed earnings growth in CHF.
The profit for the period reported in accordance with IFRS was CHF 240.3 million (financial year 2014: CHF 193.0 million). The difference from underlying earnings is due to the planned amortisation of intangible assets and interest-bearing securities required under IFRS acquisition accounting as well as integration costs.
Life business volume: Positive developments for investment-linked products and deposits, slowdown in the traditional business
Business development Development of business areas segment of Helvetia declined overall, in particular due to the slowdown in traditional business in Italy and Germany.
By lines of business, the group life business posted a moderate decline compared to the previous year (− 3.1 % in OC). As a result of prudent underwriting policies, which Helvetia pursues in the Swiss occupational pension business in view of the low interest rate environment, single premiums fell by 8.1 %. However, recurring premiums, which are important for evaluating the business, rose by 2.7 % in financial year 2015. The volume in the individual life insurance business also fell short of the previous year’s figure (−4.6 % in OC). The business in traditional insurance solutions declined, in particular in Italy. In contrast, investment-linked products and deposits generated an overall gain of 4.9 % (in OC), but were nevertheless only able to compensate for part of the decline in the traditional business.
Other activities Alongside Corporate (financing companies, the Corporate Centre, the centrally managed investments [funds] and Group reinsurance), “Other activities” also includes various immaterial foreign service companies that cannot be allocated to the Life or Non-life business areas. At CHF − 68.5 million, the underlying earnings of “Other activities” were below that of the previous year’s figure of CHF − 2.0 million, largely due to the lower technical result of Group reinsurance. In addition to bad weather events, this was in particular impacted by an unfavourable claims history in the foreign portfolios of the former Nationale Suisse, which ceded many claims to Group reinsurance due to the reinsurance structure. As a result of the current restructuring of these claims-heavy portfolios and the completed and planned adjustments to the reinsurance structure, it can be expected that Group reinsurance will not be impacted to the same extent in future. Alongside the decline in the technical result of Group reinsurance, gains and losses on investments (net) also decreased compared to the previous year, in particular in the wake of the SNB’s decision in January 2015. Furthermore, the result in the “Other activities” segment also for the first time includes financing costs for an entire year for debt instruments related to the acquisition of Nationale Suisse. Finally, Nationale Suisse did not pay a dividend in the reporting year due to the full takeover. The decline is therefore also in part due to extraordinary circumstances which Helvetia assumes will not have the same impact in future. The profit for the period reported in accordance with IFRS was CHF − 80.6 million (financial year 2014: CHF 85.3 million).
Investments Despite net new investment needs of CHF 1.5 billion net, which mainly originated in the group life business of the Swiss business unit, the investment volume of CHF 48 billion remained practically unchanged from the previous year. This is due to the devaluation of the euro following the scrapping of the peg by the Swiss National Bank. The insurance reserves of the European business units outside Switzerland, which are essentially invested in matching currencies, were consequently reported in the Swiss-franc-denominated consolidated balance sheet at lower values. Fixed-income securities were the most important asset class, amounting to a volume of CHF 28.7 billion and a share of 60 % of total investments. Mortgages, which increased by some CHF 300 million compared to the previous year due to the favourable market situation for insurance companies in Switzerland, increased their weighting by one percentage point to 9 % at the expense of fixed-income products. Loans maintained their 3-percent share, while money market instruments posted slight gains due to the illiquid investment markets at year-end. Investments in nominal assets once again accounted for around three quarters of the total volume. Real assets were dominated by the volume of investment properties, which amounted to CHF 6.5 billion or 13 % of the portfolio, followed by equities, investment funds and alternative investments with just under CHF 3 billion and a total weighting of 6 %. Financial assets, which were held for the risk and return of policyholders, amounted to CHF 2.9 billion or 6 %.
Total result from financial assets and investment property of the Group 735.0 2 952.4
Business development Development of business segments and the weaker euro. The attractive real estate class made a disproportionately high contribution to the result in the amount of CHF 237.1 million. The performance of 1.6 % was in line with the market and generated a current investment result of CHF 1.1 billion.
Shares were largely hedged with put options throughout the whole year, which enabled their volatility to be cushioned to the desired extent.
Negative interest rates present a major challenge for the reinvestment of new funds. In order to generate the required minimum returns, somewhat higher credit, currency or liquidity risks have to be assumed on individual investments. However, these additional risks can be well absorbed within the context of the entire portfolio by taking account of diversification effects and applying consistent risk management.
In 2015, the domestic market once again emerged as the solid foundation of the Group. Helvetia grew profitably and further solidified its position as the strong number three in the market. Business volume grew to a pleasing CHF 4,953.4 million, which corresponds to an increase of 13.4 %. Premiums in the non-life business increased by CHF 605.3 million or 72.9 %. This rise is mainly due to the acquisition of Nationale Suisse, which was for the first time fully consolidated for an entire year in 2015. The volume in the life business remained stable in a persistently difficult interest rate environment. Underlying earnings amounted to CHF 364.9 million, which was CHF 80.8 million or 28.4 % above the previous year’s figure. This, too, reflected the success of the acquisition of Nationale Suisse. Both the life and, in particular, the non-life business contributed to this pleasing result. The improved result in the non-life business was mainly the result of increased volume from the acquisition. The life result improved compared to the previous year owing to a positive development in the risk result, reduced expenses for reserve strengthening and higher investment income. This compensated for the impact of lower interest rates on net savings. Despite integration costs and the charging of acquisition effects (amortisation of intangible assets, additional planned write-downs due to the
Business development Development of business segments revaluation of interest-bearing securities to fair value) and other one-off effects, the recorded profit for the period according to IFRS for the country market of Switzerland increased by CHF 67.4 million or 31.8 % to CHF 279.2 million (financial year 2014: CHF 211.8 million).
Persistently low interest rates, the introduction of negative interest rates in Switzerland, volatile equity markets and the difficult investment environment shaped the conditions in the life business in 2015. Against this background, Helvetia was able to further solidify its market position and maintain a consistent business volume. The volume in the group life business was CHF 84.3 million or 3.2 % below that of financial year 2014. Helvetia continued to pursue its full-range strategy in 2015. Although the demand for full insurance solutions remained high, single premiums fell as Helvetia is selectively underwriting new business in the current low interest rate environment. On the other hand, regular premiums, which are important for assessing business performance, increased by CHF 32.1 million or 2.7 % due to an increase in aggregate wages.
Helvetia Switzerland generated growth of CHF 63.0 million or 7.1 % in the individual life insurance business. This growth was driven by traditional life insurance policies from the portfolio of the former Nationale Suisse.
The guarantee plan developed well as part of the sale of modern insurance solutions. However, overall Helvetia was not able to achieve the growth from prior periods. Extraordinarily low interest rates made it practically impossible to create products for customers that were as attractive as they had been in previous years. Although sales of the tranche product issued in autumn were strong, they were not able to compensate for the shortfall in the first half of the year.
As expected, the Europe segment also benefited from the acquisitions in financial year 2015: The business volume in original currency rose by 5.1 % to CHF 2,606.5 million, with the non-life business serving as the key driver of growth. Negative exchange rate effects caused the business volume expressed in CHF to decrease by 7.7 % compared to the previous year. Underlying earnings of CHF 98.4 million in the original currency represented an increase compared to the previous year of 10.3 % (financial year 2014: CHF 101.6 million). Expressed in Swiss francs, the result was 3.2 % below the previous year’s figure, due to negative exchange rate effects. Viewed by business area, the non-life result amounted to CHF 64.3 million (financial year 2014: CHF 71.4 million). The decline was solely due to exchange rate effects; in the original currency the result improved by 2.6 %. The gains are due to the earnings contribution of Basler Austria and the reinsurance structure. The life result amounted to CHF 34.2 million, which was CHF 4.3 million or 14.4 % above the previous year’s figure (financial year 2014: CHF 29.9 million), mainly because of improved risk results. Viewed by market unit, nearly all units contributed to the earnings growth of the Europe segment in the original currency. Only in Italy did the result decrease compared to the previous year, which is due to the non-life business of the former Nationale Suisse, the restructuring of which has already begun. The recorded profit for the period according to IFRS for the Europe segment was CHF 64.6 million and therefore 6.7 % higher than in the previous year (financial year 2014: CHF 60.5 million).
Viewed by lines of business, the increase was mainly driven by the major business lines of motor vehicle (+CHF 22.5 million or 18.1 % [in OC]), property (+CHF 19.6 million or 17.8 % [in OC]) and transport insurance (+CHF 15.9 million or 34.5 % [in OC]). The growth in motor vehicle insurance in Germany was supported by increases in portfolio rates and increasing business resulting from a major account. The motor vehicle insurance business in Austria also turned in a pleasing performance. The market in Italy experienced a tough price war and low volume market-wide. Helvetia achieved a higher premium volume thanks to its acquisitions. All market units contributed to the positive development in the property insurance business.
Life: Individual life declined due to interest rate environment, good growth in deposits, decrease in traditional insurance solutions only partially compensated for
The business volume in the life insurance area decreased by CHF 283.7 million or 12.4 % (in OC) from CHF 1 225.5 million in the previous year to CHF 941.8 million. The main reason for this decline by market unit was a reduction in the volume of traditional life insurance products in Italy and Germany, which could not be fully compensated for by the improved performance of modern insurance solutions. All other market units were able to increase, or at least maintain, their business volume from the previous year. Viewed by lines of business, capital-efficient investment -linked insurance products and deposits generated pleasing growth of 26.4 % (in OC) overall. The gains were supported by higher premiums from unit-linked life insurance policies in Germany, Austria and Spain and the successful marketing of burial insurance in Spain. In Italy, deposits increased significantly compared to the previous year. The traditional individual life business declined due to the reduction in volume in Italy and Germany mentioned above.
Goodwill and other intangible assets 144 Investments 157 Financial liabilities 160 Insurance business 170 Income taxes 173 Equity
Claims and benefits paid (life) – 3 290.1 – 4 142.4
Change in unrealised gains and losses on investments – 370.1 1 669.5
Change in liabilities for contracts with participation features 161.8 – 989.0
Valuation reserves for contracts with participation features 11.2.5 1 215.8 1 261.1
Income and expense that may be reclassified to income – – – – 89.6
Consolidated financial statements of Helvetia Group 2015 in CHF million reclassified
Realised gains and losses on property, equipment and intangible assets – 1.2 – 1.0
Realised gains and losses on sale of affiliated and associated companies – 7.6 –
Depreciation / amortisation of property, equipment and intangible assets 128.5 114.3
Sale of shares, investment funds and alternative investments 1 289.1 1 084.1
Purchase of money market instruments – 4 292.0 – 4 094.5
Other disclosures on cash flow from operating activities: Interest received 847.8 755.7
The Helvetia Group is an all-lines insurance group which operates in many sectors of the life and non-life insurance business as well as in reinsurance. The holding company,
Through branch offices and subsidiaries, the Group operates in the insurance markets of Switzerland, Germany, Austria, Spain, Italy and France, and worldwide in the active reinsurance business. Helvetia also has branches in Singapore and
The Board of Directors approved the consolidated financial statements and released them for publication at its meeting on 9 March 2016. The financial statements will be submitted to the shareholders for approval at the Shareholders’ Meeting on 22 April 2016.
The consolidated financial statements of Helvetia Group were prepared in accordance with the International Financial Reporting Standards (IFRS) and under the historical cost convention with the exception of adjustments resulting from the IFRS requirement to recognise investments at fair value. Fair value measurement methods are explained in section 2.6 (page 115).
and amendments to the standards were applied by the Group for the first time in the reporting year: – Changes to IAS 19: Employee benefits: Defined benefit plans: Employee contributions
The adoption of these amendments did not have any material impact on Helvetia Group’s asset, financial and income situation.
Provisions for future terminal bonus participations and constant surplus annuities are now no longer included in the actuarial reserve and are instead reported under “Provision for future policyholder participation”.
As according to actuarial expertise both positions have the character of a participation feature, it was decided to reclassify these positions from the actuarial reserve to the participation feature in order to improve the quality of presentation.
Earlier reporting periods have been adjusted accordingly. The following table summarises the effects on the consolidated balance sheet and income statement: 2.3 Change in presentation
Helvetia Group redefined its operating segments on 1 January 2015 (see section 3, page 127 in this regard).
Items included in the financial statements of such 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 “Reserve for foreign currency translation differences” in equity, not affecting profit or loss. Upon (partial)
Preparing the financial statements in accordance with IFRS requires Group management to make assumptions and estimates that affect the reported amounts of assets and liabilities for the ongoing financial year. All estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual figures and estimates may differ as a result. The following information conveys which of the assumptions needed for the preparation of the financial statements require particular management judgement.
valuation category. This category includes comparisons with current market transactions, references to transactions with similar instruments, and option price models. This concerns the following items, in particular: – Mortgages and loans: The fair value of mortgages and borrower’s note loans is determined on the basis of discounted cash flows. Mortgages are measured by applying the current interest rates of Helvetia Group for comparable mortgages that have been granted. The Swiss franc swap curve is used to measure borrower’s note loans.
– Money market instruments: The fair value is based on rates set by brokers or banks or determined by means of the discounted cash flow method.
The judgement as to whether an equity instrument classified as available-for-sale is subject to impairment depends on the existence of objective indications. One decisive criterion is a constant or considerable decrease in the value of an instrument: at Helvetia
2.6.1 Fair value of financial assets and financial liabilities 2.6.2 Impairment of available-for-sale investments
In Switzerland and Austria, investment properties are valued in accordance with the discounted cash flow (DCF) method. The method is described in section 2.12.1 (page 119).
The choice of the discount rate plays an important role in the DCF valuation method.
Capitalised goodwill is tested annually for impairment. The method is described in section 2.11 (page 119). The recoverable amount is calculated on the basis of several assumptions, which are disclosed in section 6 (from page 142).
Assets and liabilities are classified as current if they are expected to be realised or settled within twelve months after the reporting date. All other assets and liabilities are considered to be non-current.
All other items are of a mixed nature. The differentiation between the current and non-current balances of relevant items is explained in the Notes. The maturity schedule of financial assets, financial liabilities and provisions for insurance and investment contracts is described in section 16.4 (from page 199) as part of the risk assessment process.
Property and equipment are carried at cost less accumulated depreciation and accrued impairment. Depreciation is normally calculated using the straight-line method over the estimated useful life as follows: Furniture 4 – 15 years
The following rates of depreciation apply to owner-occupied property: 2.6.3 Fair value of investment property 2.6.4 Insurance-specific estimate uncertainties 2.6.5 Impairment of goodwill 2.7 Current and non-current distinction 2.8 Property and equipment
Helvetia Group, the lease is classified and treated as a finance lease. The finance lease agreements of Helvetia Group are limited to lessee agreements. At inception of the lease agreement, recognition occurs at the lower of the present value of the minimum lease payments and the fair value of the lease object. The leasing liability is recognised in the same amount. The leasing instalment is broken down into an amortisation component and a financing component. Financing costs are apportioned over the term so as to achieve a constant rate of interest on the remaining balance of the liability. The depreciation of the asset follows the rules for depreciating tangible assets. All other lease agreements are classified as operating leases. Payments – less any reductions – made under operating lease agreements are charged to the income statement on a straightline basis over the term of the lease.
The carrying value of tangible assets or an intangible asset amortised using the straightline method is tested for impairment if there is evidence for impairment. Goodwill and intangible assets with an indefinite useful life are reviewed for impairment annually in the second half of the year. They are also tested for impairment again if there is evidence of impairment.
An intangible asset is impaired if its carrying value exceeds its recoverable amount.
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 carrying value. The value in use is calculated by applying the discounted cash flow method, with future operating cash flows less necessary operating investments (free cash flows) being included. Alternatively, the fair value less cost to sell is used for impairment testing. If an impairment loss arises, the goodwill is adjusted accordingly. An impairment loss for goodwill cannot be reversed.
The DCF valuation method is a two-tier gross rental method based on the principle that the value of a property equals the total of future earnings on the property. In the first phase, the individual annual cash flows for a property over the next ten years are calculated and discounted as of the valuation date. In the second phase, the unlimited capitalised income value for the time following the first ten years is calculated and also discounted as of the valuation date. The risk-adjusted discounted rates used for the DCF
Derecognition of a financial investment occurs on expiry of the contract or at disposal if all risks and control have been transferred and if no rights to cash flows from the investment are retained.
Interest income is recognised on an accruals basis subject to the asset’s effective rate of interest (including “Financial assets at fair value through profit or loss”). Dividends are recorded when a legal right arises. Depreciation and appreciation resulting from the amortised cost method are included in interest income in the income statement. Interest and dividend income from Group financial assets that are designated as “at fair value through profit or loss” are included in the item “Current income on Group investments
The carrying values of financial assets that are not classified as “at fair value through profit or loss” (LAR, HTM, AFS) are regularly reviewed for impairment. If objective and substantial evidence indicates permanent impairment at the reporting date, the difference between cost and the recoverable amount is recognised as an impairment through profit or loss. An equity instrument is impaired if its fair value is considerably or constantly below cost (see also section 2.6, page 115). Debt instruments are impaired or sold if it is probable that not all amounts due under the contractual terms will be collectible.
For AFS financial assets, the recoverable amount at the reporting date equals the fair value. For non-monetary AFS financial assets, such as shares and investment fund units, any additional impairment loss after the initial impairment is immediately recognised in the income statement. The impairment is not reversed, even if the circumstances causing the impairment cease to apply. Valuation gains are recognised in equity until disposal.
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 section 2.16) 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 comprises assumed primary business and business ceded to reinsurers.
Loss reserves are set aside for all claims incurred by the end of the accounting period. The reserves also include provisions for claims incurred but not yet reported.
A Liability Adequacy Test (LAT) is applied at each reporting date to examine whether existing reserves are sufficient to cover expected future needs. The reserve increases that are shown by the LAT to be necessary are calculated Group-wide according to standard principles. The LAT is based on actuarial principles using best estimate assumptions. The estimate of expected needs is calculated by using the difference between the present value of the benefits (including expected administration costs and expected policyholder dividends) and the present value of expected gross premiums. If expected needs exceed existing reserves (less deferred acquisition costs not included in the actuarial reserve), the actuarial reserve is increased to the required level through profit or loss – without prior amortisation of the deferred acquisition costs. If existing reserves exceed expected needs, the strengthened reserves are reduced again through profit or loss.
Bonuses already assigned which accrued interest are allocated to the deposits of policyholders and are contained in the balance sheet item “Financial liabilities from insurance business”.
Financial derivatives embedded in insurance contracts that are not closely related to the host contract are recognised at fair value. Option pricing techniques are used to assess embedded derivatives. Such embedded derivatives are accounted for under
Actual income tax assets and liabilities are calculated using the currently applicable tax rates. Income tax assets and liabilities are only recognised if a reimbursement or payment is expected.
Cash and cash equivalents consist of cash on hand, demand deposits and short-term liquid investments with a maturity of not more than three months from the date of acquisition.
Treasury shares are recorded at cost, including transaction costs, and reported as a deduction from equity. In case of a sale, the difference between cost and sale price is recorded as a change in capital reserves, with no impact on profit or loss. Treasury shares are exclusively shares of Helvetia Holding AG, St Gall.
Any current obligations with a low probability of an outflow of assets or the extent of which cannot be reliably estimated are reported under contingent liabilities.
Changes in the assumptions, experience adjustments and differences between the expected and actual return from the plan’s assets are actuarial gains and losses. These are recognised as revaluations in comprehensive income with no effect on the income statement. Net interest income from plan assets to be recognised in the income statement is calculated using the same interest rate applied to the calculation of interest on defined benefit obligations.
A long-term compensation component (LTC) for the Board of Directors and the Executive Management was introduced as part of the variable salary. This consists of Helvetia
Assets and liabilities are netted in the balance sheet when there is a legal right to offset the recognised amounts and only the net position has actually been reported.
For additional information, the Helvetia Group classifies its activities as life business, non-life business and other activities.
The non-life business provides property, motor vehicle, liability, transport, health and accident insurance. Non-life business now also includes active reinsurance, which was previously allocated to other activities.
Units without any technical business that can be directly classed as “life” or “nonlife ” business are presented in the respective segment. All other units are classed as
The accounting principles used for segment reporting correspond to the significant accounting policies for the financial statements. The Helvetia Group treats services and the transfer of assets and liabilities between segments like transactions with third parties. Investments in other companies and dividend income from associated companies between segments are eliminated in the respective segment. All other cross-segment relationships and revenues within the Group are eliminated entirely.
The allocation of the individual Group companies to the regions and segments is set out in section 18 (from page 215).
Gains and losses on Group investments (net) 82.8 82.3 56.3 77.8
Policyholder dividends and bonuses1 – 121.1 – 94.1 – 4.8 – 14.5
Operating and administrative expenses – 291.3 – 233.5 – 172.4 – 181.2
Gains and losses on Group investments (net) 17.3 20.5 20.2 26.7
Income investments with market risk for the policyholder 34.4 37.9 41.2 67.8
Claims incurred including claims handling costs (non-life) – 417.9 – 379.7 – 334.4 – 329.9
Claims and benefits paid (life) – 132.1 – 138.8 – 384.5 – 369.0
Policyholder dividends and bonuses1 – 14.2 – 11.6 – 0.3 – 3.3
Income attributable to deposits for investment contracts – – – 41.3 – 67.5
Operating and administrative expenses – 53.6 – 52.7 – 63.3 – 67.8
Net change in unearned premium reserve – 0.3 – 6.9 15.1 129.9
Share of profit or loss of associates – 0.1 0.2 1.0 0.8
Policyholder dividends and bonuses1 – 128.7 – 106.4 1.2 – 2.7
Net benefits to policyholders and claims – 4 623.0 – 5 114.0 – 2 070.5 – 1 743.6
Operating and administrative expenses – 193.2 – 179.9 – 334.2 – 273.6
Profit or loss for the period 149.8 115.0 240.3 193.0 1 Change in presentation (see section 2.3 on page 114)
– financial assets with market risk for the policyholder 1 029.3 993.0 1 856.3 2 141.7 – –
Cash flow from operating activities (net) – 124.9 1 108.4 – 32.4 47.3 27.0 – 29.0
Cash flow from financing activities (net) 85.5 – 4.7 46.7 126.9 – 20.3 56.4
Acquisition of owner-occupied property, equipment and intangible assets – 5.0 971.0 43.7 230.2 15.7 18.0
Depreciation and amortisation on tangible and intangible assets – 79.0 – 41.2 – 39.0 – 37.9 – 2.8 – 4.3
Depreciation and amortisation on tangible and intangible assets – 9.4 – 11.4 – 101.3 – 62.4
Impairment of tangible and intangible assets affecting income – – 27.1 – 1.6 0.0
Share-based payment transaction costs – 1.1 – 0.6 – 1.0 – 0.6
The euro, Swiss franc, British pound and US dollar are the functional currencies in the individual business units of the Helvetia Group. The following exchange rates applied to the translation of these financial statements and foreign currency transactions: Exchange rate at reporting date 31.12.2015 31.12.2014
The foreign exchange results in the 2015 consolidated income statement show a loss of
CHF 159.3 million (previous year: gain of CHF 29.4 million), excluding foreign currency translation differences from investments at fair value through profit and loss and non-monetary positions.
Change in scope of consolidation – – 0.0 146.3 – 0.3 34.8
Foreign currency translation differences – – – 10.8 – 2.1 – 5.4 – 1.0
Book value as of 31 December 17.2 8.2 422.1 475.0 44.7 58.5 of which assets under finance lease – – 32.7 38.1 – –
Book value as of 1 January 8.2 2.6 475.0 344.9 58.5 20.6
Book value as of 31 December 991.4 1 015.9 185.5 257.3 1 176.9 1 273.2 Book value as of 1 January 1 015.9 260.3 257.3 74.8 1 273.2 335.1 6. Goodwill and other intangible assets
In the previous year, the impairment test resulted in an impairment requirement in the cash-generating unit Chiara Vita. The goodwill in the amount of CHF 27.1 million was completely written off.
The impairment test compares the recoverable amount to the carrying value. The recoverable amount is determined by calculating the value in use. This calculation requires management to make estimates of expected cash flows to be derived from the asset.
These free cash flows are usually considered for a period of three to five years and are based on the budget and the strategic plans approved by management. The growth rate is set by management and is based on past experience and future expectations. The applied discount rates are pre-tax rates and reflect the risks attached to the business units in question.
Stress tests show that any reasonable change in any of the key assumptions used to determine the recoverable amount of the individual cash-generating units does not result in any impairment.
Investment result from Group financial assets and investment property 1 105.6 1 275.4
Current income on financial assets (gross) 762.3 792.9 19.2 27.6 781.5 820.5
Investment management expenses on financial assets – 11.0 – 9.0 – – – 11.0 – 9.0
Current income from investment property (net) 237.1 209.0 – – 237.1 209.0
Current income from investments (net) 988.4 992.9 19.2 27.6 1 007.6 1 020.5 1 Derivatives comprise current income on derivative financial assets and derivative financial liabilities.
Asset management expenses on property include all maintenance and repair costs as well as the operating expenses for property that did not generate rental income during the reporting year. The latter amounted to CHF 3.2 million in the reporting year (previous year: CHF 2.6 million).
Based on notice periods, tenancies generated operating lease receivables for the
7.1.2 Direct yield from interest-rate sensitive financial assets 7.1.3 Gains and losses on investments
Realised gains and losses on loans (LAR) incl. money market instruments 37.0 6.7
Realised gains and losses on HTM investments – 8.7 – 0.8
The table above includes increases in impairment losses on financial assets of
CHF 34.2 million (previous year: CHF 8.1 million) as well as impairment loss reversals on financial assets of CHF 6.9 million (previous year: CHF 0.8 million).
Financial report Investments 7.2 Investments by class as of 31.12.2015 Notes
Financial report Investments 7.3 Investments by business area as of 31.12.2015 Notes Life Non-life
Dividend income from associates totalled CHF 0.7 million (previous year: CHF 0.5 million ). The gain from the disposal of the investment in the associated company Sersanet
S.A., Madrid, was CHF 0.2 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 of 31 December 0.0 0.4 1 Details on additions and disposals of associates are provided in Note 18, “Scope of consolidation”.
The Helvetia Group’s share in the liabilities of associates amounted to CHF 32.1 million
(previous year: CHF 29.2 million). Helvetia did not have any share in the contingent liabilities of associates (previous year: none).
Foreign currency translation differences – – 44.0 – 44.0 – 8.0 1 Recognised in the income statement as “Gains and losses on Group investments (net)”.
Total financial assets at amortised cost 12 072.4 12 139.2 12 072.4 12 139.2
Investments with market risk for the policyholder 2 829.2 3 056.9 2 486.6 2 672.6
3.5 million were sold (previous year: CHF 2.1 million) and new “Level 3” investments of
Total equity- and equity-index instruments1 37.0 237.1 676.7 950.8 779.0 24.1 26.6
Outstanding amounts are collected in the course of the normal debt collection procedures and impaired if necessary (see section 2.12.3, page 121). Information on the collateral held by the Helvetia Group is provided in section 16.5 (from page 209).
The Helvetia Group classifies financial liabilities according to their origin as financial liabilities from financing activities, financial liabilities from insurance business and other financial liabilities. Financial liabilities from insurance business are reported as a component of the insurance business in section 9.8 (page 169).
Minority interests in own funds 167.5 142.3 133.8 110.8 167.5 142.3
Total financial liabilities from financing activities 935.2 913.8 901.5 882.3 985.1 951.3
Helvetia Schweizerische Versicherungsgesellschaft AG CHF 225 Mio. 0.75 % 2014 28.10.2020 0.85 % 223.9 223.8
Helvetia Schweizerische Versicherungsgesellschaft AG CHF 150 Mio. 1.50 % 2014 28.04.2025 1.55 % 149.4 149.3
Total bonds in equity 700.0 700.0 1 Repayment was made on 30.11.2015.
2 First call date for the issuer 17.04.2020 3 First call date for the issuer 23.11.2022 4 The effective interest rate quantifies the actual cost of loans
(taking account of the transaction rate, premium / discount, transaction costs, interest payment dates, repayments, etc.).
The line item “Other” at amortised cost also contains the collateral received for ongoing derivatives transactions.
includes a provision for this purchase in the amount of CHF 11.1 million (previous year: CHF 11.3 million).
Reinsurance assets Net in CHF million reclassified reclassified reclassified 1 Change in presentation (see section 2.3, page 114)
Total liabilities from life insurance contracts 33 397.0 32 946.4 66.7 78.0 33 330.3 32 868.4
Unearned premium reserve for insurance contracts non-life 1 093.4 1 217.5 49.5 69.7 1 043.9 1 147.8
Total liabilities from insurance contracts 39 167.3 39 102.2 505.9 579.8 38 661.4 38 522.4
Total liabilities from investment contracts with descretionary participation features 2 481.6 2 752.6 – – 2 481.6 2 752.6
Total liabilities from investment contracts 3 544.7 4 097.3 – – 3 544.7 4 097.3
Foreign currency translation differences – 242.2 – 44.6 – 19.2 – 2.3
Insurance conditions and risks in non-life business are described in section 16.2
(from page 191). The following table sets out the development of loss reserves for the previous ten years.
Loss reserves as of 31 December 1 Effects of the acquisition of Nationale Suisse and Basler Austria in 2014 2 Effects from the acquisition of the French transport insurance business of Gan Eurocourtage in 2012 3 Effects from the acquisition of Alba Allgemeine Versicherungsgesellschaft AG and Phenix Versicherungsgesellschaft AG
– Sufficient provisions are raised at an early stage to cover all existing technical liabilities.
LAT required an allocation of additional actuarial reserves of CHF 19.4 million as of 31 December 2015 (previous year: CHF 107.6 million).
In the Swiss life business, the actuarial reserves increased by CHF 60.9 million due to changes to local actuarial assumptions, in particular assumptions regarding mortality, expected claims for disability and the maximum interest rate for reserves, within the framework of the standard periodic review.
Total liabilities with market risk for the policyholder 2 912.9 3 157.2 as of 31.12. Notes 2015 2014 in CHF million
The Helvetia Group defers acquisition costs in non-life and individual life business. The deferred acquisition costs are tested for impairment as part of the Liability Adequacy
Due from / due to agents and brokers 217.7 222.1 224.1 200.4
Due from / due to insurance companies 611.5 557.3 307.6 293.9
Total past due receivables from insurance business without individual impairment 166.6 181.8 29.6 24.8 10.5 9.3 33.6 51.6
Change in the scope of consolidation – 2.9 – 1.7 12.8 – 1.7 15.7
Deposit liabilities for credited policyholder profit participation 771.3 801.7 771.3 801.7 771.3 801.7
Deposit liabilities from reinsurance contracts 74.6 93.9 74.6 93.9 74.6 93.9
Total financial liabilities at amortised cost 845.9 895.6 845.9 895.6 845.9 895.6
Total financial liabilities at fair value 1 063.1 1 344.7 1 063.1 1 344.7 1 063.1 1 344.7
Total financial liabilities from insurance business 1 909.0 2 240.3 1 909.0 2 240.3 1 909.0 2 240.3
The income earned from the management of deposits for investment contracts is included in “Other income” and amounted to CHF 3.4 million in the reporting year
Increase / reduction in taxes resulting from: tax-exempt income or income taxed at a reduced rate – 21.2 – 13.7 non-deductible expenses 13.4 13.2
Change in unrealised gains and losses on investments – 370.1 1 669.5 – 9.5 – 415.5 – 379.6 1 254.0
Change from net investment hedge 28.2 – 35.7 – – 28.2 – 35.7
Total that may be reclassified to income – 345.3 661.1 55.7 – 171.9 – 289.6 489.2
Total that will not be reclassified to income – 137.8 – 171.3 28.9 43.2 – 108.9 – 128.1
Valuation differences on shares in subsidiaries of CHF 3,732.8 million (previous year: CHF 4,478.2 million) did not lead to the recognition of deferred tax liabilities, as either a reversal of the differences through realisation (dividend payment or sale of subsidiaries ) is unlikely in the near future, or the gains are not subject to taxation.
CHF 108.5 million (previous year: CHF 174.0 million), as the related tax benefits are unlikely to be realised through the current earnings situation of the relevant companies.
The fully paid up registered shares of Helvetia Holding AG have a par value of CHF 0.10
At the Extraordinary Shareholders’ Meeting on 17 September 2014, the shareholders of Helvetia Holding AG approved the establishment of approved share capital
(required for the takeover of Nationale Suisse) with a par value of up to CHF 130,000 excluding the subscription rights of the previous shareholders. Within the scope of the public purchase and exchange offer, these additional maximum 1.3 million shares
CHF 123,665.60 was carried out by issuing 1,236,656 new shares. On 25 February 2015, a further share capital increase of CHF 5,560.60 was carried out by issuing 55,606 new shares.
The treasury stock increased by 21,663 shares in the reporting year. Therefore the number of treasury shares is now 47,951. The treasury shares that were granted to
Helvetia Group employees at favourable terms under the Helvetia employee share purchase plan did not come from the company’s own stock but were acquired on the market. This resulted in a loss of CHF 1.1 million (previous year: CHF 0.9 million), which was charged to the capital reserve without affecting profit or loss. This amount represents the difference between the market purchase price and the reduced price for employees.
The reserve for “Foreign currency translation differences” results from the translation of financial statements prepared in foreign currency into the Group’s reporting currency
(Swiss franc) as well as the effective portion of the net investment hedge for foreign exchange gains and losses on investments in subsidiaries with a foreign reporting currency.
The remaining portion regarding contracts is allocated to the “Valuation reserve for contracts with participation features in equity” (see section 11.2.5, page 176).
Unrealised gains and losses (net) as of 31 December 11.2.1 Capital reserves 11.2.2 Retained earnings 11.2.3 Reserve for foreign currency translation differences 11.2.4 Reserve for unrealised gains and losses
Total retained earnings as of 31 December 2 994.7 2 997.6
The valuation reserve for contracts with participation features comprises the share of unrealised gains and losses on investments relating to contracts with profit participation recognised directly in equity, and the portion from retained earnings arising from valuation differences. The use of the reserves is at the insurer’s discretion (see section 2.16.2, from page 123).
Reclassification of retained earnings on contracts with discretionary participation features is required under local regulations for the appropriation of profit in Italy. The amounts are transferred to retained earnings.
Development of valuation reserve for contracts with participation features 11.3 Preferred securities
The bond will pay an annual interest of 3.50 % until 2020. The interest is recognised directly in equity. Helvetia can suspend interest payments at its discretion, provided that
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 and the revaluation of benefit obligations. On the reporting date, they amounted to a total of CHF 136.4 million (previous year: CHF 220.2 million).
Profit or loss for the period 309 466 934 393 309 398
Earnings per share without minority interests 286 188 932 380 502 367
with the total payout amounting to CHF 189.00 million (previous year: CHF 179.00 million). The proposed dividend will not be distributed before it has been approved by the Ordinary Shareholders’ Meeting. The dividend distribution is only recognised when approved by the Shareholders’ Meeting.
For the Swiss Solvency Test, the available capital is calculated on the basis of the
IFRS equity. Taking account of the market value of the assets and liabilities, additional valuation components are added or deducted from the available capital.
The calculation of the capital adequacy requirement in accordance with the Swiss
These objectives are kept in balance by taking account of risk capacity and cost benefit arguments. Helvetia Group applies an integrated approach to capital management.
Based on the IFRS equity, the capital is managed integrally on the basis of an internally defined capitalisation target under the Swiss Solvency Test and the rating, and is brought into line with the corporate strategy with the help of multi-year capital plans.
The capitalisation of the individual legal entities of Helvetia Group is also monitored closely and optimised according to internally defined threshold values.
Helvetia Group met all capital adequacy requirements on 31 December 2015.
The following contingent liabilities are not recognised in the balance sheet: At the reporting date, there were financial commitments for the future acquisition of financial investments and fixed assets in the amount of CHF 74.0 million (previous year: CHF 30.4 million).
The Helvetia Group has pledged assets of CHF 48.5 million as security for liabilities
The Helvetia Group is a lessee in a number of operating leases. As a result, future lease liabilities will amount to CHF 5.5 million (previous year: CHF 7.7 million) due in less than one year, CHF 25.5 million (previous year: CHF 24.6 million) due between one and five years, and CHF 0.9 million (previous year: CHF 6.5 million) due in more than five years.
The Helvetia Group had 6,675 employees as at 31 December 2015 (previous year: 7,012). Total personnel costs are shown in the table below.
Retirement, Survivors’ and Disability Pension Plans (BVG). The benefits provided by the pension fund meet at least the statutory minimum required by the BVG. Contributions to the pension fund are set as a percentage of the employee’s pensionable annual salary, deducted from the salary by the employer and transferred every month to the pension fund, together with the employer’s contributions. In the reporting year there were no significant transactions between the pension fund and the Helvetia Group that are not directly related to employee benefits.
In addition, unfunded defined benefit plans are in place in Germany, Austria, Italy,
The management of the pension funds is under the supervision of the respective boards of trustees. Their responsibilities are set out in the respective pension fund regulations.
The pension plans are answerable to the respective local supervisory authorities. In accordance with local regulations, some of these are defined contribution plans, so the benefits do not depend on the final salary. Nevertheless, these plans are also deemed to be defined benefit plans under IFRS, as in cases in which the plan assets no longer cover the pension obligations in accordance with local accounting standards – a so-called funding deficiency of an employee pension plan – restructuring contributions may be levied from the employer.
The merger of the Employee Benefits Fund of Nationale Suisse with the Pension Fund of Helvetia Insurance is planned for 1 January 2016. The regulations are being harmonised to ensure that all pensioners of the merged pension funds receive the same treatment. This resulted in a reduction in the pension costs of CHF 23.9 million in the reporting year.
Fair value of plan assets – 2 573.8 – 2 672.9
Net liability1 for defined benefit plans 737.8 606.8 1 The “Net liabilities” position does not contain any reimbursement rights.
Defined benefit obligation as of 31 December 3 303.3 3 269.2
As at 31 December 2015, 90 % of the pension obligations resulted from defined benefit plans in Switzerland.
As at 31 December 2015, 99.2 % of the plan assets related to defined benefit plans in
“Operating and administrative expenses”. Expected employer contributions toward defined benefit plans for the next year amount to CHF 55.4 million.
Revaluations of benefit obligations are recognised in the consolidated statement of comprehensive income.
Duration of the defined benefit liability (in years) 15.3 14.9 17.8 17.9
Salary increases − 50 bp – 31.5 – 0.7 13.3.4 Net pension costs 13.3.5 Revaluation of benefit obligations 13.3.6 Actuarial assumptions 13.3.7 Sensitivity analysis
Switzerland focus on total returns. The strategic goal is to optimise rates of return on plan assets, benefit costs and the funding ratio of benefit plans with a diversified mix of shares, bonds, real estate and other investments.
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 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 extent of target achievement 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 a deferred payment after three years. The extent of target achievement used to calculate the LTC for all members of the Executive Management and Board of Directors is based on four criteria: profit, growth, shareholder value and risk-adjusted return.
The relevant figure for converting the salary component into a specific number of deferred shares is the average of the stock exchange prices for the Helvetia Holding share for five consecutive trading days from the day on which the business result is announced.
A variable payment of CHF 0.4 million was calculated for the Board of Directors for the 2015 financial year (previous year: CHF 0.4 million). This is subject to approval by the
The Board of Directors determines the extent of target achievement for the long-term compensation component (LTC). The reference figure, which is multiplied by the extent of target achievement, is a percentage of up to 40 % of the fixed salary component. The LTC
This amount represents 3,847 shares at a price of CHF 547.00 on the reference date of 7 March 2016 (previous year: 3,856 shares at CHF 480.50). This payment is recognised proportionally in the income statement every year until ownership of the shares is transferred and amounted to CHF 0.6 million for 2015 (previous year: CHF 1.4 million).
The members of the Executive Management teams of the foreign subsidiaries receive a variable salary component which is calculated by multiplying the extent of target achievement by a reference figure equalling 10 % of the basic salary. This results-based component is paid out in full in the form of shares without any option. The conversion price per share is calculated as described in section 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 payments for the 2015 financial year amounted to CHF 0.5 million (previous year: CHF 0.4 million).
14.1 Employees of the Helvetia Group in Switzerland 14.2 Members of the Board of Directors 14.3 Members of the Executive Manage- ment of the Group and Switzerland 14.4 Members of the Executive Management teams of the foreign subsidiaries 14. Share-based payments
The shareholder pool with a combined equity stake of 38.1 % in Helvetia Holding consists of the following shareholders: – Patria Genossenschaft, Basel, with 30.1 %,
Salaries and other short-term employee benefits 7 857 854 7 490 860
Employer contributions to pension funds 1 372 060 1 425 357 1 Subject to approval by the Shareholders’ Meeting.
CHF 1,000,000 (previous year: CHF 1,000,000). In the reporting year the loan, a fixed mortgage at employee conditions, earned interest at 1.65 % (previous year: 1.65 %).
A new mortgage loan was granted to David Ribeaud for CHF 595,000. In the reporting year the loan, a fixed mortgage at employee conditions, earned interest at 0.89 %.
The shares held by the members of the Board of Directors and persons closely related to them as of the end of the year are listed in the following table: Number of shares
Wolfram Wrabetz1 – 300 1 The composition of the Executive Management changed on 1 January 2015.
In addition to the ownership of shares as set out here, the active members of the Board of Directors have deferred claims to a total of 1,056 shares acquired under the LTC
The Board of Directors of Helvetia Holding AG and the Group Executive Management are the supreme risk owners of Helvetia Group. The Board of Directors of Helvetia
Helvetia Group; – set risk tolerance limits and monitor the risk profile of the Group and the individual business units; – 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 Group Executive Management; – ensure appropriate monitoring of the effectiveness of internal control systems by
The strategic risks are monitored by the Strategy and Governance Committee.
Financial Officer (CFO), Head of Capital Management, Head of Risk and Capital
Reporting department, which reports to the CRO, ensures that there is sufficient risk and capital transparency: – The Own Risk and Solvency Assessment (ORSA) informs Group Executive Management and the Board of Directors of the capitalisation and key risks that affect Helvetia
The risk management process includes all activities related to the systematic assessment of risks at Helvetia Group. The essential components of this process include the identification, analysis and management of risks, the operational monitoring of the success of the risk management measures, the monitoring of the efficiency and appropriateness of the risk management measures, and reporting and communication. Helvetia Group distinguishes between the following types of risk that are included in the Group’s risk management process: technical risks, market risks (including equity price risk, real estate price risk, interest rate risk, currency risk and long-term liquidity risk), medium- and shortterm liquidity risks, counterparty risks, operational risks, strategic and emerging risks.
The market, counterparty and technical risks belong to the traditional risks of an insurance company and are consciously entered into as part of the chosen business strategy. They tie up risk capital in an operational context and can be influenced through the use of hedging instruments, product design, reinsurance cover and other risk management measures. Based on the overall risk profile it is ensured that these risks are constantly covered by the risk-bearing capital. In this regard, the amount of the capital required depends on the risk tolerance limits chosen.
Long-term liquidity risks are considered market risks and treated accordingly. Some risks arising from the lack of liquidity of the assets are, where appropriate, taken into account in market price models. Short-term liquidity risks are managed as part of the cash management process. Non-probabilistic methods are used to analyse medium-term liquid ity risks.
Traditionally, Helvetia Group also owns a small, active reinsurance portfolio. Since 2015, the “Specialty Markets” operating segment has included the globally active reinsurance business, the international and Swiss transport, art and technical insurance business and the France country market, which is also focused on the transport business.
“Switzerland” and “Europe” segments are defined geographically. The share of gross premiums per country market is as follows: Switzerland 38.0 % (previous year reclassified: 27.7 %), Germany 15.3 % (previous year reclassified: 18.8 %), Italy 13.3 % (previous year reclassified: 16.9 %), Spain 7.8 % (previous year reclassified: 9.8 %), Austria 7.7 % (previous year reclassified: 7.8 %). The share of the “Specialty Markets” segment is 17.9 % (previous year reclassified: 18.3 %) with 5.7 % (previous year reclassified: 8.4 %) attributable to the France country market and 6.5 % (previous year reclassified 7.0 %) to active reinsurance.
Helvetia Group’s consistent focus on a portfolio that is well diversified geographically and across sectors encourages risk-balancing and reduces the risk that the cost of future covered claims arising from existing contracts will be higher than expected (prospective risks). As a result, a change in the net claims ratio of +/– 5 percentage points would have a positive or negative effect of CHF 165.0 million (previous year reclassified: CHF 138.7 million) on the income statement (not taking deferred taxes into account ). For claims already incurred there is a risk that the level of existing commitments exceeds expectations and the provisions established to cover future claim payments are insufficient (retrospective risks).
(previous year reclassified: 11.9 %) of the premiums written in the non-life business were ceded to reinsurers. Of these, 76.3 % were ceded to Group Reinsurance and the rest to external reinsurance companies. 40.5 % of the premiums written by Group Reinsurance were retroceded.
Risk is controlled by risk-oriented, selective underwriting, a risk-adjusted rate schedule, proactive claims settlement and a prudent reinsurance policy.
Property insurance operations are mainly in Europe, with the exception of active r einsurance, Helvetia International and a small portion of the property insurance business of Helvetia Switzerland. Due to the merger with Nationale Suisse, Asian and
Latin American markets were opened up, where specific risks concerning technical exposure are assumed (project insurance and location risks). The technical risks are geographic ally well diversified, and the relationship between business and residential customers in the overall portfolio is balanced. The scope of technical insurance was also expanded as a result of the Nationale Suisse merger.
The property insurance portfolio is exposed to natural disasters such as floods, earthquakes, wind storms and hail. Large claims and man-made disasters can also lead to high claims costs. Examples of this include explosions, fire and terrorism. Helvetia Group protects itself against these catastrophe claims through selective underwriting practices and a multi-level reinsurance programme.
For the majority of claims, settlement takes place in the year the claim is made or in the following year. In terms of large risks or in specific business lines (e.g. technical insurance ), the uncertainty in estimating future claim payments is slightly higher as it can take a long time to process such claims.
(geographically and by insurance segment), leads to a balanced reinsurance portfolio free of major risk clusters.
Uncertainties in the estimation of future claim payments 16.2.3 Transport and art insurance 16.2.4 Active reinsurance
OECD countries. There is a management information system for large claims. In addition to controlling risk exposure, cumulative risks from natural hazards are quantified, monitored and protected with retro cover.
For more information about the quality of reinsurance and claims settlement, please see sections 16.5 “Counterparty risks” (from page 209) and 9 “Insurance business”
Helvetia Group offers a comprehensive range of life insurance products. These include risk and pension solutions and are aimed at private persons (individual life) and companies (group life insurance). The risks associated with these products are presented in detail in subsequent sections. There is also a small portfolio from the active reinsurance business, which is currently in run-off and due to its size will not be discussed further in the following description. The life insurance business operates primarily in
Switzerland, which accounts for 80.9 % (previous year: 75.4 %) of the gross premium volume in the life business of Helvetia Group. The following table shows the breakdown of gross premium income by sectors and countries. A total of 1.5 % (previous year: 1.4 %)
of the premiums written in the life business were ceded to reinsurers in 2015. Of these, 25.7 % were ceded to Group Reinsurance and the rest to external reinsurance com panies. 64.0 % of the premiums written by Group Reinsurance were retroceded.
For private persons, Helvetia Group offers pure risk insurance, savings insurance and endowment insurance, annuity insurance, as well as investment-linked products.
Peak risks at the level of individual policyholders are transferred to various reinsurers, with the retained amount varying by country. In addition, Helvetia Switzerland,
For the majority of the products there is no guaranteed rate for the risk premiums for death and disability or for the cost of premiums. These premiums may therefore be adjusted annually by Helvetia Switzerland. Upon the occurrence of an insured event, the resulting benefits are guaranteed up to the agreed expiry date or for life.
The interest rate set by Helvetia Group for the non-mandatory component was 1.0 %
in 2012 and 2013. The rate was raised to 1.25 % for 2014 and 2015. The rate was reduced to 0.5 % for the coming year.
For the mandatory component of the insurance policy, it is forbidden to exclude someone from a company’s insurance on account of ill health. However, certain benefits may be excluded in the non-mandatory part, or a premium for the increased risk may be required. However, there is no obligation to insure a company. On the basis of benefits previously claimed by the company and based on estimates of future claims potential, it is therefore established during the underwriting process whether and under what conditions the company will be insured.
If the assumptions are changed, the reserves are increased or decreased accordingly.
The sensitivity analysis assesses the deflection effects of mortality, invalidity, reactivation rate, interest, costs and cancellation rate parameters on the reserves. If the deflection of a parameter necessitates a lower reserving requirement, then the reductions in reserves are assessed at the discretion of the responsible actuary, who, alongside the sensitivity analyses, also takes into consideration long-term developments in their decisions, and always acts with due care. Conversely, if one of the fundamental parameters in the local reserves already has sufficient safety margins, then a change in this parameter will not require a reinforcement of reserves. It should be noted, however, that sensitivities do not normally exhibit linear behaviour, so extrapolations are not possible.
If, in the portfolios exposed to longevity, policyholders live longer than expected, this could result in losses for the shareholders. As life expectancy is continuously rising, when setting up reserves, the current mortality rate as well as expected trends of the increase in life expectancy are taken into account. These reserves of portfolios exposed to longevity are very sensitive to assumed life expectancies and assumed interest rates.
Referring to the overall portfolio, an increase in mortality by 10 % across all Helvetia
Group companies would have no great effect. However, a 10 % reduction in mortality would lead to a reserve increase with a negative impact on the income statement of
Losses for the shareholders may arise if more active members than expected become disabled or fewer disabled policyholders than expected are able to return to work and the participation feature is not sufficient to absorb such deviations. Here, the param eters of disability and reactivation rate are analysed in detail. For example, a 10 % increase in the disability rate would require a reinforcement of reserves with a negative effect on the income statement of CHF 0.1 million (previous year: CHF 0.1 million), while a decrease in the reactivation rate would have a negative effect of CHF 1.4 million
EUR and 3.5 % in CHF. Rising interest rates could cause a greater number of endowment contracts to be cancelled. However, as in most countries premature contract terminations are associated with significant tax consequences and products with high interest rate sensitivity are usually subject to a deduction to take account of lower fair values of the underlying investments when the contract is terminated, this risk can be considered low.
These product components are to be separated as embedded derivatives and are accounted for at fair value. The majority of these guarantees and index-dependent payouts are assumed by external partners. In Switzerland, there are only a few products for which this is not the case and for which Helvetia Group thus assumes the risk, and adequate provisions exist for these cases. The amount of these provisions is primarily dependent on the volatility of the underlying investments and the level of risk-free interest rates. A change in the provision is recognised in profit and loss and cannot be offset with a profit participation.
In summary, it can be stated that although there is a variety of different product-specific risks in life insurance, these risks are controlled by Helvetia Group using a number of actuarial methods and, where necessary, with an appropriate increase in reserves. In addition, through its compliance with IFRS 4, Helvetia Group has a free, non-linked provision for future profit-sharing. This can be used to cover insurance risks.
As at 31 December 2015, Helvetia Group managed investments totalling CHF 47.9 billion (previous year: CHF 48.0 billion).
Group is oriented towards both accounting, in particular the protection of the income statement and balance sheet, and fair value considerations on risk limitation. Besides matching the investment strategy to liabilities, targeted use is made of derivatives. Foreign currency risks are currently hedged in this way and the risk of losses on equity investments controlled. In Helvetia’s internal funds, the balance sheet currency exposure is hedged by a net investment hedge. The risk of loss on shares is kept under control by hedging with options. The foreign currency exposure is largely hedged by forward contracts. More information can be found in tables 7.7.1 “Derivative financial assets” (page 154) and 7.7.2 “Derivative financial liabilities” (page 155).
Helvetia Group has sufficient liquid assets to meet unanticipated cash outflows at any time. Liquid assets (cash, premiums to be invested, liquid equities and interest-bearing securities) exceed the volume of annual net cash flows many times. In addition, the
Provision for future policyholder participation 176.8 82.1 27.9 40.3 1 598.6 1 925.7
Total reserves for insurance and investment contracts (gross) 6 619.5 12 073.7 8 019.8 13 255.6 1 680.3 41 648.9
Total reserves for insurance and investment contracts (net) 6 459.1 11 838.7 7 974.1 13 216.8 1 654.3 41 143.0 as of 31.12.2014 < 1 year 1–5 years 5–10 years > 10 years
Total reserves for insurance and investment contracts (net) 6 817.7 11 665.8 7 950.2 12 797.8 2 043.5 41 275.0
Financial liabilities from financing activities – 17.0 441.4 431.8 – 167.5 1 057.7
Other financial and other liabilities 0.6 142.9 – – – 0.2 143.7
Financial liabilities from financing activities – 16.0 218.9 520.7 152.3 142.3 1 050.2
Total financial and other liabilities 2 576.5 1 849.8 228.7 530.5 159.0 193.1 5 537.6
Fair value Maturity of non-discounted cash flows as of 31.12.2015 < 1 year 1–5 years 5–10 years > 10 years in CHF million
Fair value Maturity of non-discounted cash flows as of 31.12.2014 < 1 year 1–5 years 5–10 years > 10 years in CHF million
Helvetia Group’s earnings are influenced by changes in interest rates. A prolonged period of low interest rates reduces the return on fixed-income investments in securities and mortgages. Conversely, returns increase when interest rates rise. Information on current investment returns is provided in section 7.1 (from page 144).
Held-to-maturity investments (HTM) 193.4 564.7 485.9 1 546.5 – 2 790.5
Only 0.4 % (previous year: 0.6 %) are subject to guarantees above 4 %.
Actuarial reserves for insurance and investment contracts with positive interest guarantee 25 979.4 130.7 5 252.4 –
Gross, not taking into account the latency calculation and derivatives – 184.2 139.2 – 162.6 152.3
Gross, not taking into account shadow accounting and derivatives 246.8 – 240.1 245.4 – 242.5
The above table analyses the impact of a change in the share price on Helvetia Group’s equity and income statement, taking into account deferred taxes and the legal quota.
“look through” principle was used for significant holdings in balanced funds. In 2015, the effects of share price changes on impairments were considered for the first time.
Helvetia Group is analysed, taking into account deferred taxes and the legal quota. In accordance with IFRS requirements, only the monetary financial instruments and insurance liabilities in non-functional currencies and derivative financial instruments were included in the evaluation.
A “reasonable possible change” in the risk factors affecting the sensitivity analysis is defined as every symmetrical bracket that covers a range of possible changes in exchange rates where the probability of its occurring over a period of one year is between 10 % and 90 %. Sensitivities are shown for the limits of the chosen interval that meets these conditions.
Financial report Risk management as of 31.12.2015 CHF EUR USD Others Total in CHF million
Investments with market risk for the policyholder 1 024.8 1 649.8 177.5 33.5 2 885.6
Current income tax assets 6.0 19.1 – – 25.1 as of 31.12.2015 CHF EUR USD Others Total in CHF million
Provision for future policyholder participation 1 501.3 424.4 – – 1 925.7
Financial liabilities from insurance business 830.6 1 077.4 0.9 0.1 1 909.0
Helvetia Group is mainly exposed to counterparty risk in the following areas: – Counterparty risks arising from interest-bearing securities and money market instruments.
The policy loans are secured through life insurance policies. Since only a certain percentage of accumulated capital (<100 %) is invested, this asset class can be classified “fully secured”. Gross exposure (without taking account of collateral) is of relatively little significance when assessing the counterparty risks from the mortgage business: mortgages are secured by an encumbrance, and a part of the mortgage is often additionally secured by a pledged life insurance policy, resulting in a correspondingly low loss ratio. Against this background, the counterparty risk from mortgages can be assumed to be low.
Group remains liable for the reinsured receivables. Therefore, the Group periodically reviews the creditworthiness of its reinsurers. To reduce dependence on a single reinsurer, the Group places its reinsurance contracts with a number of top companies.
(policyholders, insurance agents, insurance companies) may lead to a loss of receivables from the insurance business. On the balance sheet, the maximum gross exposure would correspond to the items shown in section 9.7 (from page 167) “Receivables from policyholders, insurance agents and insurance companies” (after deducting receivables from the reinsurance business recognised under “Credit risk exposure from ceded reinsurance”). However, these receivables are largely of a short-term nature. In addition, the receivables from policyholders represent the largest group in this class. Because of the prepayment of premiums and the fact that the insurance cover is linked to the performance of contractual obligations by customers, the counterparty risk from the insurance business both in the non-life and life business plays a secondary role.
– Counterparty risks from financial guarantees and loan commitments: detailed information on contingent obligations can be found in section 12 (from page 179).
The information relevant for setting the level of the counterparty risk exposure includes information on balance-sheet netting and on existing netting agreements regarding financial assets and liabilities. The relevant information is summarised in the table below.
as of 31.12.2015 AAA AA A BBB BB and lower Not rated Total in CHF million
Derivative financial assets (incl. hedge accounting) 0.4 – 66.2 12.1 – 62.5 141.2 as of 31.12.2014 AAA AA A BBB BB and lower Not rated Total in CHF million
Derivative financial assets (incl. hedge accounting) 4.5 3.2 87.9 11.4 – 55.3 162.3 as of 31.12.2015 AAA AA A BBB BB and lower Not rated Total in CHF million as of 31.12.2014 AAA AA A BBB BB and lower Not rated Total in CHF million 16.5.2 Credit quality of exposures and credit risk concentrations
Credit quality of debt instruments, loans and derivative financial instruments by asset class
Financial report Risk management as of 31.12.2015 Exposure Share in %
Mortgage Bond Bank of the Swiss Mortgage Institution AAA 1 294.9 1 294.9
No important events occurred before or on 9 March 2016, the date on which these consolidated financial statements were completed, that are likely to have a material impact on the financial statements as a whole.
– On 6 January 2015, the branch office Helvetia Swiss Insurance Company Ltd was established in Singapore.
– The name of Swiss National Insurance Company Ltd, Kuala Lumpur, changed to
– Helvetia Vita S.p.A., Milan, and Chiara Vita S.p.A., Milan, merged on 1 June 2015.
The merged unit operates on the market as Helvetia Vita S.p.A., Milan.
– Helvetia sold the travel insurance portfolio of its Belgian subsidiary Compagnie
Européenne d’Assurance des Marchandises et des Bagages S.A. to Mapfre Asistencia on 19 June 2015. The disposal gain of CHF 0.5 million was recognised in other income.
– In the reporting period, Compagnie Européenne d’Assurance des Marchandises et des Bagages S.A. made capital repayments totalling CHF 8.7 million to Helvetia
– The French subsidiary SAS Saint Cloud, Paris, was liquidated on 24 November 2015.
– Helvetia sold its shares in the associated company Sersanet, Red de Servicios
– In the reporting period, the Group increased its investment in the associated company fvv-Vorarlberger Versicherungsmakler GmbH, Götzis, from 26 % to 30 %.
Luxembourg, is no longer included in the financial statements as an associated company, but is recognised as a financial asset.
18.1 Events in the reporting year 18. Scope of consolidated financial statements
The following events in the previous year led to changes in the scope of the consolidated financial statements: – On 20 January 2014, Padana Assicurazioni S.p.A., Milan, was renamed Helvetia
– The real estate company Société Immobilière Joseph II SA, Brussels, was founded on 29 December 2014 in Belgium.
– In the financial year 2014, the stake in Helvetia Compañía Suiza, Seville, was increased from 98.97 % to 98.99 % by way of gradual acquisition.
Assistance Beteiligungs-GesmbH, Vienna, to 24 %. The company was therefore reclassified as an associated company.
– As part of a public purchase and exchange offer, Helvetia Holding AG, St Gall, paid
October 2014. Helvetia Group thus increased its investment in the Nationale Suisse
CHF 81.444 and recognised under IFRS as a component of the purchase price for
CHF 246.1 million. This resulted in a gain of CHF 108.9 million. In the period from 21 October 2014 to the end of 2014 Helvetia increased its stake in Nationale Suisse through share purchases to 98.5 %.
In connection with the acquisitions, costs of CHF 6.9 million were charged for broker fees, legal and tax consultancy and auditing in 2014. These costs were recorded as
Suisse, of which CHF 13.3 million was classified as potentially irrecoverable. For Basler
Austria, the gross receivables from insurance business amounted to CHF 32.4 million, of which CHF 1.9 million was classified as potentially irrecoverable.
(CHF 24.7 million). The goodwill represents the expected potential for added value and synergies arising from the combination of the two groups.
Helvetia Schweizerische Versicherungsgesellschaft AG, Direktion für Deutschland, Frankfurt a.M.1 Non-life 100.00 full EUR
Helvetia Compagnia Svizzera d’Assicurazioni S.A., Rappresentanza Generale e Direzione per l’Italia, Milan1 Non-life 100.00 full EUR
Nacional Suiza Compañía de Seguros y Reaseguros S.A., Barcelona Non-life 100.00 full EUR 18.0
Helvetia Swiss Insurance Company Ltd., Kuala Lumpur1 Non-life 100.00 full USD –
Report of the Statutory Auditor to the General Meeting of Shareholders of Helvetia Holding
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, 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 consolidated financial statements 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 consolidated financial statements. 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
The 2015 financial statements of Helvetia Holding AG were prepared for the first time in accordance with the new provisions of the Swiss Code of Obligations (CO) (chapter 32 of the Swiss Code of Obligations). To ensure comparability, the prior-year figures in the balance sheet and income statement were restated to comply with the new classification requirements. The applied valuation principles comply with the law. The material valuation principles that are not prescribed by law are discussed below.
Measurement is done in accordance with uniform criteria. Assets and liabilities are measured on an individual basis. Subsequent to initial recognition, assets are measured at amortised cost. Liabilities are stated at par value.
Helvetia Schweizerische Versicherungs- gesellschaft AG, St Gall 77.5 100.00 % 77.5 100.00 %
Financial report Holding in CHF million up to 1 year 0.4 0.4
The share capital of CHF 994,513.70 consists of 9,945,137 registered shares with a par value of CHF 0.10.
On 20 October 2014, Helvetia Holding AG carried out an approved share capital increase of CHF 123,665.60. 1,236,656 new shares with a par value of CHF 0.10 were issued.
Versicherungsgesellschaft AG and Helvetia Schweizerische Lebensversicherungsgesellschaft AG from their respective net profits for 2015.
CHF 1.0 billion (two unsecured senior bonds at CHF 225.0 million and
CHF 150.0 million, and two unsecured junior bonds at CHF 400.0 million and
– Raiffeisen Schweiz Genossenschaft, St Gall, with 4.00 % (previous year: 4.00 %)
– BlackRock AG, Zurich, with 5.28 %, of which 4.67 % is held indirectly (previous year: 4.97 %, of which 4.32 % was held indirectly).
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial statements according to the instructions of the Board of
We further confirm that the proposed appropriation of available earnings complies with
The intense familiarisation period and shared lunch breaks laid the foundation for a trusting, successful collaboration. “Helvetia not only benefits from the expertise and experience of its new employees, but also from the expanded product range that we are able to offer our customers and partners.” According to David Monod, the greatest challenge was training the new employees: “It was important to rapidly familiarise them with our IT infrastructure in order to ensure that they could soon work independently. This intensive phase saw an active exchange of knowledge and experience. And all partners were able to benefit from other working methods.”
Embedded value measures the shareholder value of the life insurance portfolio and consists of – the adjusted equity; – plus the value of the insurance portfolio; – less the solvency costs.
The adjusted equity comprises the statutory equity and the shareholders’ interest in the valuation and fluctuation reserves as well as their interest in the dissolution of the free part of the surplus fund. The value of the insurance portfolio corresponds to the present value of all expected future statutory earnings after tax from the life insurance portfolio as at the reporting date. Solvency costs are the costs of the solvency capital provided by the shareholder and are deducted from the embedded value. In order to calculate embedded value, various best estimate assumptions are made, notably concerning return on investments, costs, claims development and policyholder profit participation. The key assumptions are listed in the following table. These also include the risk discount rates that are established separately for each country market. Given the high levels of volatility, these rates are partly based on average interest rates, while future bond yields continue to be calculated as of the reference date. The amount of the embedded value heavily depends on the assumptions made. The scope of these dependencies is explained in the “Sensitivities” table.
Suisse Belgium was also not included. In the reporting year, the portfolios of the former Nationale Suisse and Basler Austria were modelled and included with all components in the 2015 embedded value. In addition, all burial expenses policies in Spain are now allocated to the life business, which is consistent with the practice of IFRS and the various solvency metrics. All of these adjustments increased the embedded value by CHF 208.8 million as at 1 January 2015. KPMG reviewed the guidelines used by Helvetia Group as well as the assumptions underlying the calculation of the embedded value at 31 December 2015. KPMG has carried out a review of the embedded value presented below by the Helvetia Group on the basis of the relevant assumptions. Nothing has come to the attention of KPMG that causes it to believe that the assumptions used and the calculated embedded value do not comply with the Helvetia guidelines.
reduce its sales of full insurance solutions for occupational pensions, and in the foreign markets, new business volume was mostly down for capital -intensive traditional savings products.
The value of the new business written in 2015 declined from CHF 26.3 million in the previous year to CHF 23.5 million because of the smaller volume of new business and, in Switzerland, the considerably lower interest rates on new investments relative to 2014. In the foreign markets, however, the value of new business rose year-on-year in spite of the lower volume of new business. The first-time inclusion of the profitable burial expenses policies in Spain also contributed to this development. As a consequence, the profitability of the Helvetia Group’s new business, arising from the development of new business volume and value, improved slightly from 0.8 % in the previous year to 0.9 % in the reporting year. Thus the negative impact of an even more difficult economic environment in Switzerland could be compensated by the foreign units.
Economic changes, including changes to unrealised gains and losses on investments (equity and real estate) – 169.4 – 467.1
Embedded value as of 31 December 3 195.7 2 979.3 1 Includes all first-time components from acquisitions and burial insurance Spain as at 1.1.2015 in %
+1 % change to risk discount rate – 9.4 % – 9.3 %
− 10 % change to fair value of real estate – 10.6 % – 9.9 %
Present value of new business premiums (PVNBP) 1 800.1 2 133.4
Value of new business in % APE 8.3 % 8.1 %
Actuarial reserve Technical life insurance reserve calculated in compliance with official guidelines and which, in conjunction with future premiums, secures claim payments.
Collateral Assets (generally securities) which are deposited or pledged as a financial surety.
Deferred acquisition costs Costs which arise in connection with the conclusion of new or the extension of existing insurance contracts. They are taken into account in the balance sheet as assets, distributed across the contract period and recorded in the income statement as expenditure.
Provisions Amounts set aside in the balance sheet to meet likely future commitments.
Helvetia Group Susanne Tengler P.O. Box, CH-9011 St Gall Tel. +41 58 280 57 79 www.helvetia.com investor.relations@helvetia.ch
changes in laws and regulations, including accounting policies or practices; (6) risks associated with implementing our business strategies; (7) the frequency, magnitude and general development of insured claim events; (8) the mortality and morbidity experience; (9) policy renewal and lapse rates. We caution you that the foregoing list of important factors is not exclusive; when evaluating forward-looking statements, you should carefully consider the foregoing factors and other uncertainties. All forward -looking statements are based on information available to Helvetia Group on the date of its posting and Helvetia Group assumes no obligation to update such statements unless otherwise required by applicable law.
Consolidated equity per share in CHF 392.0 435.4 445.0 503.2 470.4
Group profit for the period after tax 289.9 333.1 363.8 393.3 309.5 of which investment result from Group financial assets and investment
Reserve to premium ratio non-life1 132.9 % 151.2 % 153.1 % 193.2 % 154.4 %
Photos Board of Directors, Executive Management and individual portraits: Daniel Ammann, Herisau
In 2015, Helvetia generated business volume of CHF 8,235 million, which equals an increase of 11 percent in original currency. The profitable non-life business showed the impact of the acquisitions: premium volume rose by around 35 percent to CHF 3,776 million, and in Switzerland by as much as 73 percent. Because of the curtailment of sales of traditional products, the sales volume of CHF 4,459 million was around 4 percent in original currency less than in the previous year. Helvetia posted growth for the modern products.
Helvetia still has a strong capital base: on 31 December 2015, the Solvency I ratio was 205 percent, while the SST ratio for the first half of 2015 was within the target range of 150 to 200 percent. The return on equity calculated on the basis of underlying earnings is 8.9 percent.
The employees are the key to the successful implementation of helvetia 20.20. We would like to thank them, not only for their great dedication in the past, but also for the enthusiasm and drive with which they are tackling the upcoming tasks. We thank our customers for their loyalty and you, dear shareholders, for your consistent trust in Helvetia.
Group underlying earnings per share in CHF 42.1 46.2 – 8.9 %
Underlying earnings of the Group after tax 439.0 421.7 4.1 %
of which investment result from Group financial assets and investment property 1 105.6 1 275.4 – 13.3 %
of which Group financial assets and investment property 45 036.3 44 843.4 0.4 %
Employees 1 Based on the underlying earnings per share (including interest on preferred securities through profit and loss) divided by the average shareholder capital (equity before preferred securities).
STRONG PROFIT GROWTH IN THE CORE BUSINESS AREAS OF NON-LIFE AND LIFE INSURANCE
Thanks to the solid business performance, the Board of Directors is proposing to the Shareholders’ Meeting to increase the dividend to CHF 19,00, which is almost 6 % more than in the previous year. The payout ratio based on the underlying earnings is 45 %, or 66 % based on the IFRS earnings after taxes.
In the reporting year 2015, Helvetia generated business volumes at Group level of CHF 8,235 million, which equals an increase of 11 % in original currency. The positive effects of the acquisitions left their mark on the profitable non-life business: premium volumes rose by around 35 %, and in Switzerland by as much as 73 %. The European units and Specialty Markets also boasted double-digit growth rates. In the life business, Helvetia improved its sales of modern products by around 5 %, but sales of traditional products were curtailed.The net combined ratio improved to 92.1 %, once again exceeding the Group’s target of 94 to 96 %.
This document may contain projections or other forward- looking statements related to Helvetia Group which by their very nature, involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other outcomes described or implied in forward- looking statements will not be achieved. We caution you that a number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include (1) changes in general economic conditions, in particular in the markets in which we operate; (2) the performance of financial markets; (3) changes in interest rates; (4) changes in currency exchange rates; (5) changes in laws and regulations, including accounting policies or practices; (6) risks associated with implementing our business strategies; (7) the frequency, magnitude and general development of insured claim events; (8) the mortality and morbidity experience; (9) policy renewal and lapse rates. We caution you that the foregoing list of important factors is not exclusive; when evaluating forward-looking statements, you should carefully consider the foregoing factors and other uncertainties. All forward-looking statements are based on information available to Helvetia Group on the date of its posting and Helvetia Group assumes no obligation to update such statements unless otherwise required by applicable law.