Result from non-life underwriting activities 43.9 23.0 34.3 81.4 95.8 132.1
Net expenditure on results-linked and non-results-linked policyholders’ dividends 303.8 305.0 254.5 145.8 9.9 103.4 Result from life underwriting activities 28.2 43.8 59.1 17.8 –87.2 29.6
Swiss Talents The flexibility of the small combined with thoroughness and reliability. Those qualities have made our small country big. We attach great importance to personalised service because everybody knows almost everybody in a small environment.
Limitations have advantages, too. They are making us leave our valleys to experience the world. But we wouldn’t be Swiss if we didn’t know that only the tension between openness and the tradition of our roots in narrowness might entice the spark of innovation to fly. What ever profession is touched by the young Swiss’ energy and impulse does not emerge untouched by their distinct characteristics. In our Annual Report 2003 we are portraying fourteen talents on their career paths in various fields. Some are ahead of others just starting out and nobody knows for sure who might become a world star or a Nobel Prize winner.
Gross written premiums (CHF million) 5144.9 5392.6 4.8% Income from investments (CHF million) –67.2 1083.6 1712.8% Result before taxation (CHF million) –350.6 147.3 142.0% Result after taxation and minority interests (CHF million) –362.0 92.4 125.5% Post-tax result per Helvetia Patria Holding share (CHF) –60.3 15.4 125.5% Investments at market value (CHF million) 23793.8 25491.2 7.1% Net underwriting reserves (CHF million) 21815.2 23360.5 7.1% Consolidated shareholders’ equity before appropriation of profit (CHF million) 1046.5 1153.0 10.2% Consolidated shareholders’ equity per Helvetia Patria Holding share (CHF) 166.3 183.2 10.2% Number of employees 4825 4788 –0.8%
CHF 4.00 per registered share will be submitted to the Shareholders’ Meeting.
Premium income increased by 5 per cent and amounted to CHF 5 393 million. Life business was impacted by our deliberately cautious underwriting policy in the
Corporate efforts have been made on all levels to achieve the high objectives set last year for the
Our Chairman of the Board, Hans-Rudolf Merz, was elected last December to become a Member of the
Executive Federal Council of Switzerland. The Board of Directors decided to combine both functions in one person until a new CEO has been nominated and appointed me as its new Chairman. Continuously ensuring good corporate governance was the reason for creating the new position of the Lead Director in
The fundamentals for the insurance industry are increasingly improving and a recovery of the worldwide economy is possible. We expect for the life insurance sector a moderate but sustainable expansion of the business volume. Individual life products will continue to play an important part in the old-age benefits planning and, as far as the regulatory framework allows it,
Capital protection continues to be a priority for the investments. Although the environment on the stock market has improved, we will continue to pursue our conservative risk- and asset-liability approach.
The development in the interest rate area as well as in the foreign exchange risks will probably pose particular challenges.
Patria, the discussion on the occupational benefit plans dominated the agenda of the insurance industry and prompted the persons responsible in the political field to adjust certain parameters in the second pillar.
German Ministry of Finance to decide at the beginning of 2004 to reduce the minimum interest rate for lifeand pension insurance contracts from an annual rate of 3.25 per cent to 2.75 per cent.
The past investment year was marked by economic uncertainties. Massive capital losses on share positions had still to be accepted in the first quarter and the interest rates reached a new low. The reduced interest rate level enabled price gains to be made on bonds but those gains were unable to fully compensate for the decrease in value of shares. With the quick ending of the Iraq war finally came the long-awaited recovery. Within a few weeks double-digit percentage price gains were reported. The second quarter saw the beginning of an overall positive development of the stock market with share prices rallying. The rising stock prices caused the fixed-interest-rate securities, however, to loose ground.
The trends on the currency markets were also anything but less volatile. While the US Dollar and the British
The situation for major damages and elementary losses has considerably eased and we were able to report a loss experience without any special major damages.
Nevertheless, natural disasters remain a risk factor as the extraordinary heat wave past summer proved true.
Natural disasters and their effects will have far reaching consequences in the future. Based on economic, demographic and geographic factors the reinsured losses have increased exponentially in the last 30 years. A report by the “United Nations Finance
Initiative” states that the economic losses caused by natural disasters double about every 10 years. The progressing climate change is not helping either. If this development continues, climate changes will become one of the biggest challenges to the insurance industry.
Against this backdrop the Group and its local business units were challenged to develop a strategy fit to react more efficiently, more actively and more rapidly to the changes taking place at an ever quickening path.
Even if this strategy is fundamentally an update of the current strategic direction, the following factors will together have a positive impact on the earnings power: a strengthened market presence, a selective underwriting policy as well as the reduction of the share volatility.
The Helvetia Patria foreign business units – small on an international platform – have the opportunity to stand their ground in certain market niches but they also run the risk of getting caught up in too many business areas. Consistently concentrating on the core competencies in the insurance- and pension plan segments for private and commercial clients and focussing to a larger extent on interesting business areas, on the distinction in quality and service as well as on the Swiss identity will all help in responding to the above risk. Additionally, the local positioning gains in taking shape.
In Switzerland, a stronger differentiation strategy and a strict focus on profitable segments should help to strengthen the already good position as integrated insurance service provider for private clients and smaller and medium-size commercial customers.
the performance of the business units should be measured to a larger extent using financial benchmarks. What are the actual target figures?
Besides being a very good claims year it was certainly also the recovery of the financial markets which contributed to the good result. We have also achieved operating improvements which further increased the profitability of the whole Group.
Austria and Spain used to be problem markets in the previous years. What is the current situation?
We had two different companies in the past in Spain: Previsión Española in the South and Helvetia CVN in
After the reorganization and other measures we are convinced that we will achieve again an appropriate profit at our subsidiary, Der ANKER.
The framework in the Swiss group insurance has improved. Is it possible to do this business profitably again?
Federal Council last December. Are there conflicts of interests with you having this mandate and being Chief
The Board of Directors of Helvetia Patria is the highest supervisory body of the company.
Each year a third of the mandates is up for election.
The Board of Directors of Helvetia Patria Holding is the highest supervisory body of the company. It is in charge of the overall control and the strategic direction of the Group and it appoints and supervises the
Members stands election or re-election. The term of office is set for each Member at the time of election and cannot exceed three years but includes the option of being re-elected. At last year’s Shareholders’
Shareholders’ Meeting 2004. Both have offered to be candidates for a further three-year term of office.
After the Chairman of the Board, Hans Rudolf Merz, was elected in December 2003 to become a Member of the Executive Federal Council of Switzerland, he resigned on December 12, 2003, from his office. The
From left to right: Silvio Borner, John Martin Manser, Pierin Vincenz, Ueli Forster, Erich Walser, Marguerite Florio, Peter Wagner, Olivier Vodoz
Erich Walser (1947) Chairman 2001 2004 •• + • + a Rehetobel, Swiss and b lic. oec. HSG, lic. iur. CEO c Chairman of the Board of Directors and Chief Executive Officer of Helvetia Patria Group; Head of the country markets Italy and Spain; President of various Personnel Welfare Institutions of Helvetia Patria Versicherungen; 1979 Joint Helvetia: various managing positions; 1991 Chief Executive Officer Helvetia Versicherungen; 1994 Chief Executive Officer Helvetia Patria Group; 2001 Delegate of the Board of Directors, since 12.12.2003 in the current function; d MoB Swiss Insurance Association, Zurich; President of the Non-profit Developer Association of the Institute of Insurance Economics at the University of St.Gallen; Deputy Board Chairman of Allreal Holding, Baar; MoB Nouvelle Compagnie de Réassurances, Genève.
Silvio Borner (1941) Deputy 1983 2005 • •• • a Basel, Swiss Chairman b Prof. Dr. oec.
Marguerite Florio (1944) Member 2001 2006 • a Lausanne, Swiss b Dr. iur., Lawyer c Lawyer; d Board Deputy Chairperson Patria Genossenschaft, Basel.
John Martin Manser (1947) Member 1993 2006 • •• a Riehen, Swiss b MBA c Treasurer at Novartis International AG, Basel; d Board Chairman Ciba-Vision AG, Embrach ZH; MoB of Trustees CS-Anlagestiftung (Investment Found.).
Olivier Vodoz (1943) Member 2001 2005 • • a Geneva, Swiss b lic. iur., Lawyer; c Member of the Governing Council of the Canton Geneva (1989–1997), as its President (1994/95); d MoB and President of the Delegate Conference of Patria Genossenschaft, Basel; Member International
Peter Wagner (1946) Member 2002 2004 •• a Feusisberg, Swiss b Business training, certified accountant, certified controller; c Danzas Holding AG (last: Chief Executive Officer of the Group); Member of the Managing Board
• IRC = Investment- and Risk Committee • AC = Audit Committee •••• Chair * May join meetings at own request and with decisionmaking power + May join meetings at own request and in advisory capacity
The Group Executive Management under the leadership of Erich Walser is the top managing body of
Human Resources and Services as well as Reinsurance, the local Managements of the country markets
The Corporate Center supports the CEO in areas such as strategy implementation, corporate development, project control and management of the country markets
A high level of consistency is one of the characteristics of Helvetia Patria Group management. There are no changes to report in the Group Management or in the local business units so that experienced Members of the Management are ensuring the success of our company also in the future.
CEO Erich Walser Switzerland Philipp Gmür Germany Wolfram Wrabetz Austria Tjarko Ullings
Erich Walser (1947) a Rehetobel, Swiss b lic. oec. HSG, lic. iur. c Chairman of the Board of Directors and Chief Executive Officer of Helvetia Patria
Group, Head of the country markets Italy and Spain, President of various Personnel Welfare Institutions of Helvetia Patria Versicherungen; d Various functions at Schweizerische Bankgesellschaft and Schweizerische Volksbank, 1979 Joint Helvetia: various managing positions, 1991 Chief Executive Officer Helvetia Versicherungen, 1994 Chief Executive Officer Helvetia Patria Group, 2001 Delegate of the Board of Directors, Since 12.12.2003 in the current function; e MoB Swiss Insurance Association, Zurich, President of the Non-profit Developer Association of the Institute of Insurance Economics at the University of St.Gallen, Board Deputy Chairman of Allreal Holding, Baar, MoB Nouvelle Compagnie de Réassurances, Genève.
c CEO of Helvetia Patria Switzerland; d Upper Court Canton Lucerne, 1993 Joint Helvetia: general agent in Lucerne, 2000 Member of the Management Switzerland: Head of Sales Management, 2003 Member of the Group Executive Board in the current function; e MoB of Trustees of various Personnel Welfare Institutions of the Servisa Group, MoB Servisa Verwaltungs-AG.
Patria Investment Foundation; d 1987 Joint Patria: various managing positions such as Head of the Portfoliostrategy and -management, 1997 Member of the Management Switzerland: first as Head of “Investment Clients“ and then as Head of “Private Pension“ Division, 2002 Member of the Group Executive Board in the current position; e Honorary consul general for Austria in Basel.
Wolfram Wrabetz (1950) a D-Bad Soden, German b Prof. Dr. iur., Dipl. Betriebswirt c CEO Germany; d Various positions in the Gerling Group, 1981 Joint Helvetia Germany: various managing functions, 1995 “Hauptbevollmächtigter“ (Principal representative) for Germany and Chairman of the Managing Board Helvetia Leben und Helvetia International, Frankfurt/Main, 1998 Joint Helvetia Patria Group in his current function; e Member of the Advisory Council of the “Bundesanstalt für Finanzdienstleistungen”, D-Bonn, Member of the Chairman- and Professional Committees for indemnity insurance and Chairman of the Legal Committee of the “The German Insurance Association”, D-Berlin, Honorary Consul of the Republic of Ecuador in D-Frankfurt/Main.
Steven Hayes Film Director, Zurich – The daily grind of Ernst and Edna Meyer’s life is so boring, even more than one had feared it would. If “Meyers” is nominated now for the Swiss Film Award in the category “Best short film”, it says something about the screenplay and direction by Steven Hayes. His masters’ thesis at the “Hochschule für Gestaltung und Kunst“ (School for Design and Art) in Zurich made him within twelve minutes a shooting star in the industry. But that talent didn’t appear from nowhere. Steven Hayes is shooting films since he was seventeen. Soon also longer ones.
Helvetia Patria intends to meet to the best of its knowledge and belief the high legal and ethical demands of all its stakeholders also with regard to an understandable and transparent reporting as well as to responsible and value-oriented corporate governance and control.
This should help to further strengthen the trust into the economy in general and in Helvetia Patria Group in particular, to protect the interests of the shareholders and to increase the market value of our company. We will ensure that the focus on corporate governance will be Group-wide and consistently implemented.
Exchange on July, 1, 2002. Our comments on our corporate governance principles thus correspond in content to the above mentioned guideline. Reference is made to other sections of the Annual Report or other documents to address the information required. The
As already noticed on page 14, Dr. Hans-Rudolf Merz has resigned as Chairman and Member of the Board of
Directors of Helvetia Patria as a result of his election into the Executive Federal Council of Switzerland on
Out of respect for the principles of good corporate governance and in accordance with the “Swiss Code of
gr-corporategovernance”. Since the “old rules” were still in effect for the year under review, reference will be made, where necessary, to the regulations in force at that point in time.
The controlled opening of the Helvetia Patria Holding shareholder structure, initiated in 2000, has been continued in 2002 by regrouping the shareholder pool that had been reduced to 45 per cent. This is also reflective of our efforts to increase the portion of the free float in an orderly manner so that other long-termoriented investors have the opportunity of taking a significant interest in Helvetia Patria Holding. The
Helvetia Patria Holding share register shows the following important holdings at the balance-sheet date: a) The shareholder pool holds 45 per cent and consists of
Vontobel Beteiligungen AG, Zurich, with 3.2 per cent as well as
Group in their capacity as strategy-oriented shareholders investing for the long-term and interested in the goal that the Helvetia Patria Holding remains independent and self-supporting in both its relationships, to third-parties and to the individual pool members, and also has the opportunity, within its strategic framework, to further develop with purpose and a view to the future but without unwelcome elements of interference. The purpose of this agreement is also to strengthen and support Helvetia Patria’s strategically important focus on co-operations in areas that are not part of its core operations in the insurance business.
Patria shares with the permission of the other pool members who are granted a pre-emptive right at market conditions.
Patria has the right under certain conditions either to purchase all or some of those shares at market conditions or to designate a third-party purchaser.
At the Shareholders’ Meeting on May 9, 2003, the resolution for an approved capital increase was accepted with the purpose that Helvetia Patria is able to finance organic growth with profitable business while maintaining its strategic room to manoeuvre, to take advantage of external acquisition opportunities at home and abroad and in the case of a stock market slump to adjust the capital protection accordingly. The Board of
Directors is authorized to increase the share capital by a maximum of CHF 31465000 by issuing a maximum of 3146500 registered shares, fully paid at subscription, with a nominal value of CHF 10.00 per share until May 9, 2005, the latest. An increase in partial amounts is permitted.
In 2000, the capital was reduced by CHF 16492980 to CHF 65971920 by decreasing the nominal value per share from CHF 50.00 to CHF 40.00 with a subsequent stock split in a ratio of 1:4 resulting in a nominal value of CHF 10.00 per share. In 2001, the share capital was decreased by 4.61 per cent by repurchasing and destroying shares with a value of CHF 3041920 to reach the current amount of CHF 62930000. The changes in the total shareholders’ equity are described in detail on page 89, those for the business year 2001 are included in last year’s Annual Report on page 79.
The share capital consists of 6293000 fully paid-in registered shares entitled to dividends and eligible to vote with a nominal value of CHF 10.00. Preferential rights and participating certificates do not exist.
Pages 66/67 give more detailed information on the Helvetia Patria shares.
The Board of Directors can refuse its approval for registering voting shareholders especially in the case of a single person acquiring more than 5 per cent of the voting rights of the aggregate share capital as registered in the Commercial Register. Acquirers of shares who are affiliated through capital or voting-rights or otherwise, or who are under common management are to be considered as one person. The restriction shall also apply in case of an acquisition of shares by the exercise of subscription or conversion rights which are connected with rights issued by the Corporation or third parties.
Shareholders’ Meeting is needed to change the transferability, restricted by the Articles of Incorporation.
2.7. Convertible bond and options a) Convertible bond: The Helvetia Patria Group has the following convertible bond outstanding, issued by the finance company Helvetia Finance Ltd., Jersey, and guaranteed by the Helvetia Patria Holding (conversion price CHF 331.30, adjusted on 16.06.2003): b) Options: The Helvetia Patria Group has not issued options.
Year of Number of Exercise- Maturity Exercise issue options price (CHF) ratio to the first trading day in November
3. The Board of Directors 3.1. Members of the Board of Directors
The Board of Directors of the Helvetia Patria Holding is identical with the ones of both subsidiaries, Patria
The composition of the Board of Directors is shown on the chart on page 15.
Board of Directors of the Vontobel Holding AG and of the Helvetia Patria Holding. Other reciprocal memberships of listed companies do not exist.
Member was elected for the first time and on their remaining term of office.
Chairmen and the Members of the various Committees as well as the Secretary of the Board.
The Board of Directors has internally established special committees for the purpose of supporting the
Committee. Since February 20, 2004, the number has increased to four to ensure good corporate governance: the Strategy- and Governance Committee, the Nomination - and Compensation Committee, the Investmentand Risk Committee as well as the Audit Committee.
Chairman/CEO which are not reserved for the Board of Directors according to the law, the Articles of Incorporations or the Organisation Regulations and also discusses important matters of urgency. The Strategyand Governance Committee meets as often as the affairs require it. Specialists are invited to attend a meeting if specific topics are being worked on.
b) The Nomination- and Compensation Committee prepares the resolutions to be brought before the Shareholders ’ Meeting with regard to electing and dismissing Members of the Board; prepares the personnel decisions to be made by the Board of Directors, such as for human resources planning, appointment and dismissal of Members of the Executive Board and for the system of their compensation and remuneration; nominates and dismisses the chairpersons and the other members of the management of all country markets; proposes adjustments in the compensation structure for the Board of Directors; determines fixed and variable compensations and remuneration for the Members of the Executive Board; periodically reviews the measures taken to retain and promote top management as well as approves for the employer’s side the concept and the strategy of the personnel welfare plan in Switzerland and receives its year-end financial statement for information purposes. The Chairman and CEO cannot be a
Committee during the year under review met six times last year (including once with passing of the resolutions by telephone) with all Members being present every time.
c) The Investment- and Risk Committee prepares the investment concept, the fundamental guidelines and the investment strategy; proposes the strategic ranges for the asset allocation; approves the investment tactics and supervises the investment activities of the Helvetia
Patria Group; decides on specific investments in the investment sector to the extent as the Board of Directors delegates this authority to it; supervises the operating aspects of the financial risks (risk management), including reporting. It meets as often as the affairs require it. In the year under review the Committee met twice with all Members being present both times. The
Director and the Management. The Audit Committee approves the auditing program of the internal auditing and helps setting up those for the external auditing, examines the audit results and brings its comments to the attention of the Board of Directors and may order special audits if deemed necessary. It prepares the election of the statutory and group auditors and proposes the corresponding motions to the Board of Directors and it examines the compatibility of the auditing work with possible consulting mandates and reviews the overall compensation. During the year under review, the Audit Committee met four times with all Members attending each time. The Chairman and CEO, the Head of the Finance Division, a representative of the external auditors and the Head of the internal auditing all take part in the meetings in an advisory capacity. Specialists are invited to attend a meeting if specific topics are being worked on.
The entire Board of Directors meets as often as the affairs require it but generally at least six times per year. The majority of the half-day meetings is taking place at the Group headquarters in St.Gallen, one meeting is held at the headquarters of the Helvetia
In the past year, attendance of the Board Members was 98 per cent (only one Member was unable to attend one meeting). Specialists are invited to attend a meeting if specific topics are being worked on. The Members of the Board and of all executive bodies are obliged to excuse themselves whenever business affairs are being dealt with affecting their own interests or those of natural persons or legal entities close to them.
The following is a list of the Board’s most important responsibilities which have been established by the
Swiss stock law stipulating that those duties can neither be suspended nor transferred, as well as by the Articles of Incorporation and by the internal Organisation
Regulations of the Helvetia Patria Holding: Providing the ultimate leadership of the corporation,
The Board of Directors meets at least six times per year.
The Lead Director may inspect all books and records at any time.
Christoph Gantenbein, Emanuel Christ Architects, Basel – It needed chutzpah to participate as young architects in the competition for the extension of the “Schweizerisches Landesmuesum“ (Swiss National Museum) in Zurich. To win it “a few” skills were needed, too. It was a masterpiece that propelled Emanuel Christ and his partner Christoph Gantenbein to join the celebrity ranks of their profession in 2002. Their audacity to convert the timehonoured, palatial patrimony in Switzerland into a total artwork will be challenging both at least until 2013. And without doubt Christ and Gantenbein will discover until then many more national shrines to scratch on.
Appendix I of the Organisation Regulations is detailing the different areas of responsibilities of the Board of Directors, of its Committees and of the Group
The Members of the Board of Directors receive weekly the most important newspaper articles on topics related to corporate governance, control and the insurance industry; monthly the most important business figures and quarterly selected analysis and status reports regarding market trends, market participants and special events. Appendix II of the Organisation
Outside of the meetings, each Board Member is entitled to ask the Executive Management for information regarding the course of business or individual business incidents and/or has the right to examine business documents.
The internal Auditing is also available to the Board of Directors as an inspection and control instrument supervising the compliance with legal requirements as well as with internal regulations and directives.
Group level as well as the management of the country markets he is responsible for the operative management of the Group.
The amounts of fixed annual remuneration, meeting attendance fees and expenses for the Directors are
according to his employment contract. He does not receive additional remuneration for chairing Board
Group’s financial performance and the Manager’s achievement level of the personal objectives agreed upon with him or her. It falls to the Nomination- and
Compensation Committee to decide both elements: the first in general, the second individually for each person concerned. Severance pay will generally not be provided. The Nomination- and Compensation
Chairman of the Board and CEO from December 12, 2003, on.
The Members of the Group Executive Board (including the Delegate of the Board/current Chairman and CEO)
(including the Delegate of the Board/current Chairman and CEO) nor non-executive Members of the Board nor persons close to them were allocated shares during the year under review.
At the cut-off date the following total number of shares were held by the Members of the Group Executive Board (including the Delegate of the Board/current Chairman and CEO) and by persons close to them: 1557, the non-executive Members of the Board of
Directors: During the year 2002 no options were awarded to the
During the year under review, none of the officers or persons close to them charged the company relevant fees or other compensations for additional services.
At the reporting date, mortgage loans to seven Members of the Executive Board (including the Chairman and CEO) in a total amount of CHF 8317540. During the year under review, the loans, which have been granted as fixed or variable mortgages at regular interest rate conditions, bore interest in the range of 2.2 to 4.65 per cent.
In 2003, the Delegate of the Board (currently Chairman and CEO) did not receive any remuneration or compensation for being a Member of the Board; the terms of his employment contract were applied to set his salary.
Helvetia Patria is committed to the non-discrimination clause of all shareholders, from institutional to small investors.
The Board of Directors gives the necessary instructions for the attendance of the Shareholders’ Meeting and the determination of the voting rights. The Board may issue rules which differ from the restrictions on share representations limited to 10 per cent of the aggregate share capital and which apply to non-corporate, proxyand deposit representatives who need not be shareholders.
“Important shareholders”), the corporate representative substituted for more than 14 per cent of the voting shares due to the proxy of a large shareholder at the Shareholders’ Meeting in 2003. No other specific exceptions regarding restrictions or representations of voting rights were granted in the year under review.
A shareholder with voting rights who does not personally attend the Shareholders’ Meeting is entitled to transfer his voting rights by written proxy to another person who need not be a shareholder. A shareholder with voting rights, however, is only authorized to represent shares of third parties inasmuch as all these shares
regardless of the number of present shareholders and represented votes. Unless otherwise provided by law or by the Articles of Incorporation, the Shareholders’
Articles of Incorporation, the premature recall of more than one Member of the Board of Directors and the liquidation of the Corporation also require a resolution passed by a two-thirds majority of the represented votes.
The Shareholders’ Meeting is convened by the Board of Directors and, if necessary, by the Auditors. The liquidators as well as representatives of bond obligees are also entitled to convene a Shareholders’ Meeting.
Shareholders with voting rights who represent at least 10 per cent of the share capital may request a
Any person registered in the shareholders’ register as a shareholder with voting rights at the date, set by the
Gazette of Commerce” and in various newspapers, is entitled to attend the Shareholders’ Meeting and to exercise the voting rights.
7. Changes of control and defensive measures 7.1. Duty of offer
8.Auditing company 8.1. Duration of assignment and term of office of the auditor in charge
All shareholders receive the Annual Report. All interested may order the Environmental Report, published every other year, and a short portrait of Helvetia Patria in Switzerland. Our website on the internet, http://
Gabriela Krapf Singer and Songwriter, Zurich – She started deep in the underground. First came her album “Five Feet Underground” (2001) then “Panorama” (2003). In the meantime, Gabriela Krapf’s voice is not just heard in her home land, the Appenzellerland. It needs a lot of hard work until such a mix of “easy listening”, Latin jazz and Pop is sung with such a titillating voice. Her studies in Amsterdam and Vienna gave her the skills. So, prick up your ears. Maybe soon she will be captivating the public for good together with her favourite band Lobith.
Switzerland – a social phenomenon of substantial economic and operational relevance. In fact it endangers the basic principle of the insurance industry which is based on solidarity and mutual trust.
Precise statements on the financial magnitude are not possible. This comes with the territory. Estimates and projections though allow the conclusion that in
Switzerland at least 10 per cent of the claim payments were obtained by fraudulent means. This means for the insurers – and for all honest insured – that they are cheated out of about CHF one billion every year. For
Helvetia Patria Switzerland’s non-life business alone the amount is estimated to exceed CHF 30 million per year. The life business is affected as well, especially the disability segment. Those dimensions are not acceptable.
Helvetia Patria Switzerland as well has recognized the necessity for selective action. Internal – but also external – measures were taken: Stricter risk selection and acceptance guidelines in those segments especially at risk; products and advertising with a higher level of fraud resistance; training- and awareness programs for the employees especially for the claims organisation; employment of fraud specialists with criminal investigation know-how. The Insurance Association has developed a concept to fight against insurance fraud. It has created a platform with the purpose of coordinating the fraud fight activities, collecting and distributing information, conducting opinion polls, being in touch with authorities and organisations at home and abroad and of maintaining a centralised data collection subject to the required data protection. Helvetia Patria Switzerland is actively participating in the work of the relevant
Fighting insurance fraud also means for the insurers walking a tightrope. There is, after all, the bond of trust between the insurer and the insured. The employees cannot consider every policyholder a potential swindler
In Switzerland, 10 per cent of the claim payments were fraudulently obtained.
One of the most important ones is a professional approach to fighting the fraud.
Center Switzerland and the emphasis of its activities lies on solving actual fraud cases. The team in that office is very successful. During the last three years the office has recognized claims in the amount of more than CHF 4 million per year as being fraudulent and rejected them. Support is also coming from the employees in the non-life division and the legal services.
Maintaining and expanding networks with police departments, investigating authorities, private investigators and equivalent offices of competitors are other duties.
Helvetia Patria is deeply committed to the fight against fraud. We are taking it very seriously and are implementing it professionally – in the interest of the large majority of honest customers. Swindlers will fall on harder times. The honest insured, however, are the real winners.
The supervisory authorities have taken this into account by trying to put the regulatory environment in
Helvetia Patria Group responds to those developments by adapting its risk concept. The current volumegoverned strategy will be replaced in the future by a consistent emphasis on profit in relation to the risk equity capital committed by the business. This alignment is aiming to provide qualitative growth (risk as opportunity), to prevent putting inordinate strain on the existing equity capital and to lastingly ensure the existence of Helvetia Patria (risk as threat). The graph below illustrates this relationship.
Deriving from it are the equity capital requirements necessary to carry the financial risks incurring from the insurance business within the scope of the strategy
The investment strategy is always risk-minimising, i.e. matched – as defined by the Asset-Liability
Management (ALM). It may, however, incur additional risks within the scope of the risk capacity of the equity capital surplus (equity capital allocated to investments ). The investment strategy basically derives from the latter (asset allocation).
Completely implementing this concept will take at least two years. However, we are striving for making rapid progress, especially with regard to the most important risks and the protection of the existence.
R is k -b e a ri n g in v e st m e n ts
R is k -m in im is in g i n v e st m e n ts
Tranquillo Barnetta Goal getter, St.Gallen – The contest for first place is tougher in sports than anywhere else. Tranquillo Barnetta is playing already in the highest soccer league (National Player U 21), even before he has completed his business apprenticeship. “Mid-field” is just the name of his position he is playing. As goal getter of the soccer club St.Gallen he shot six dreamlike goals in 21 games. His future will be as dreamlike. This summer he will join as youngest Swiss the German National Soccer League. And the soccer club “Bayern Leverkusen“ is quite in the Champion League.
Members of the upper management and specialists are benefiting from a specific procedure for systematic
Potential Assessment and Retention (PEP). Their performance and their leadership skills are evaluated in the annual review session using three competence areas
“management competence” – in two different sessions with one being with the immediate supervisor and a second one with another senior staff member. This helps to either deepen and/or broaden the results. All
PEP-results are then evaluated by a PEP-Committee and individual development measures are discussed.
Strong emphasis is also put on the strategically relevant development of the Group executive personnel
Team has developed and implemented the “International Executive Program” that is customized for our company and was completed in co-operation with two
The participants rated the achieved knowledge transfer, the focus on actual strategic issues, the practical use and the intense knowledge exchange from the three four-day-long program modules as positive or very positive. Every third attendee saw his or her expectations exceeded by far. Working with a special e-learning tool or using a specifically designed website at one’s convenience help reinforcing and expanding the acquired knowledge. Furthermore, the participants at the Management Forum, where once a year all
The average age of our employees in Switzerland was 42 years at the end of December. The strongly represented group of employees above 40 is well balanced by the group of employees between the ages
The fluctuation rate slightly declined in 2003 but remained within the industry average. 10.4 per cent overall gave notice last year with the ratio being higher among the sales force than among office workers, also an industry-known fact. Contributing to this result was the difficult situation on the labour market but especially the overall high job satisfaction and the sense of belonging to Helvetia Patria. These are the
poll were developed in workshops and will be implemented this year. In-between the major job satisfaction polls, which are carried out every two to three years, the employees have the possibility every month to voice their opinion regarding their work and their job satisfaction in the so-called “barometer of opinion”
Key elements for the success of our insurance business in Germany are the employees in the sales and administrative departments whose qualifications are continuously increased through various training programs with the focus being on improved consumer relations in particular. For years Helvetia Germany has been committed to the responsible promotion of vocational training for qualified young people in the insurance industry. Although the economic conditions remain unfavourable we have increased again the training quota reaching with 8.4 per cent an above-marketaverage level. We consider this our contribution to lessen the high youth unemployment in Germany. The number of employees remained largely unchanged last year with an average length of employment of 13.7 years versus 11.8 years in the industry as a whole.
Know-how and the familiarity with modern systems are the key elements to increase the value creation per employee. Our Austrian subsidiary Der ANKER has for example optimized the sales department in the headquarters and given it a new direction with regard to sales control and -support. News is also coming from the training of the sales force: The basic training was updated and supplemented with topics from the investment - and financial consulting area. Training programs focussing on target groups of experienced sales force employees are launched in 2004.
A very important contribution to this good result was made by the investment business which took advantage of the significantly improved environment in the capital markets as well as of the Euro’s development.
Expenditure for results-linked and non-results-linked policyholders’ dividends amounted to CHF 103.4 million. Taking into consideration the deliberately slowed growth in the Swiss group life business due to the prevailing conditions the underwriting account of the overall life business finished the year again on a positive note. The measures initiated in Switzerland during the year under review and the renewed decrease of the minimum interest rate in the group life business on
The underwriting result of the non-life business further strengthened thanks to both, the good loss experience in all country markets and the tight cost management.
Gross premiums written in CHF million Change in original 2002 2003 Change currency
This trend applies mostly to the property insurance business in all countries, which was largely spared damage from the elements, and also to the motor vehicle business in the majority of the countries. The declining premium volume reflects the continuous selective underwriting policy of our companies which correspondingly led to a decrease of the proportion of total non-life business accounted for by the motor vehicle sector from 34.9 per cent to 34.0 per cent.
The expense ratio already being on a low level receded further despite extraordinary expenses –
(remaining depreciation of a formerly acquired insurance portfolio) and at Der ANKER in Austria. The net combined ratio (sum of claims ratio and expense ratio) with inclusion of the equalization reserves continued to decline largely as a consequence of the lower claims burden and stands now at 98.4 per cent
CHF 55 million in view of the high gross claims burden could again be endowed by an amount of
The underwriting results improved in all countries with the exception of Der Anker whose underwriting accounts were burdened with extraordinary expenses for IT-migration costs. Improvements were also experienced by the Assumed Reinsurance and by the
Group Reinsurance which oversees Helvetia Patria’s entire procurement of reinsurance. The goals set for the underwriting profitability were overall surpassed.
Swiss economy and the continuously little profitable group business the growth rate in Switzerland, where more than 85 per cent of the total life premiums are generated, reached only 1.9 per cent. As a result of the slowed-down underwriting policy in the occupational benefit plans segment, the group life business grew only slightly. Abroad, especially in Spain, Italy and
Austria, the premium growth rates remained in the negative, especially for the individual life sector, primarily as a result of the declining unit-linked business. The renewed rising demand for traditional life insurance products with interest rate guarantees and policyholders’ dividends could only partially compensate for it.
Thanks to the investment income reaching again normal levels and as a result of the adjustments made to premiums, guarantees and dividends in Switzerland the life underwriting result improved significantly.
The slight decline of the corresponding balance sheet position shows, however, that the amount in dividends paid to the policyholders was indeed higher and this happened despite the additional allocation of
Helvetia Patria experienced in 2003 a high inflow of new funds in the sum of CHF 1.7 billion which was mainly invested in fixed-interest-rate securities – in line with our investment strategy – in the respective local currency of the business unit. Funds under management amounted to CHF 25.5 billion at the end of last year and grew by 7.1 per cent compared to December 2002.
The volatile development of the stock- and currency markets required a comprehensive and up-to-the minute risk management during the entire year. The hedging policy took its directions from the accounts’
The risk of share price losses was met with put options whose premium was partially financed by selling call option when the market environment was favourable to do so. The hedging measures kept the net equity allocation within a narrow range of three to four per cent during the entire year. The only limited assignment of the share holdings allowed nevertheless benefiting from the stock markets’ recovery.
Real estate 4642.7 4512.0 –2.8% Investments in affiliates 14.5 14.7 1.4% Investments in associated companies 2.0 4.3 115.0%
The direct investment income grew by CHF 19 million to CHF 933 million on the previous year. This increase is attributed to the expanding bond portfolio. In line with the premium income from the insurance business, which mostly occurs at the beginning of the year, the investments had to be effected when interest rates were falling. The volume increase managed, however, to more than compensate for the price impact. In addition to this, the appreciation of the Euro positively influenced the ordinary investment income of the foreign business units. The direct return of the investment portfolio was 4.1 per cent applying to the average investment portfolio at book values while the performance of the investments reached 3.5 per cent applying to the average volume of assets invested at market values.
The performance increases to 4.7 per cent excluding the revaluation of the real estate portfolio, whose earnings were capitalized at rates adjusted to market conditions with rising interest rates.
Patria’s investment strategy will continue to focus on bringing the investment income in line with the needs of the insurance business by applying the asset-liability management and thus on keeping the investment risks low.
Investment income by asset type (without value adjustments and readjustments as recorded in the books) in CHF million
Investments in affiliates and associated companies 0.4 0.4 0.0% 0.3 0.0 –100.0% Shares, other non-fixed-interest-rate securities, investment funds and derivatives 59.0 55.5 –5.9% –127.2 –18.7 –85.3%
Katrin Fuhrer Physicist and entrepreneur, Thun – TOF doesn’t mean much to the uninitiated. But the Bernese physicist uses it to analyse substances within fractions of a second. As President of Tofwerk AG in Thun she has developed with her business partner Marc Gonin “Time-of-Flight Mass Spectrometers (TOFs)” which are exact enough to determine the composition of material and fast enough to control the fuel ignition of a NASA Space Shuttle at take-off. It was almost as fast that Katrin Fuhrer won the highest endowed award in Switzerland for start-ups in 2003.
Council has thus set the minimum interest rate, applied to the accrued savings capital, at 3.25 per cent for 2003 and at 2.25 per cent for 2004. The Swiss Parliament passed then an amendment providing for a gradual reduction of the conversion rate from 7.2 to 6.8 per cent over a period of ten years. The revised “BVG-Law”
Furthermore, reason took over with the realization that risk-matching rates are essential to avoid additional losses as suffered for example in the motor vehicle segment.
Helvetia Patria stood its ground in this environment and consistently pursued its strategy: We want to focus on our core competencies in the insurance and pension plan business and selectively expand them.
The premium growth in the life sector largely met our expectations. Individual life policies with single premiums grew again (+0.7 per cent) thus surpassing last year’s very high growth rate while the segment with periodic premiums experienced gains as well
(+1.7 per cent). We are considering this to be a reflection not only of a continuing interest in private pension planning, of the recognition of our marketable products
The occupational benefit plans occupied politicians and the insurance industry alike.
Gross premiums in 2003 from direct non-life business in Switzerland in CHF million
Gross premiums in 2003 from direct life business in Switzerland in CHF million
We, however, found ourselves constraint as well to adjust downwards the guarantees and the forecasts for policyholders’ dividends. This decision led the growth rate to strongly level off in the second half of the year.
We deliberately slowed down the Swiss group life business after the strong expansion in the previous years. While the mortality result keeps generating a favourable profit contribution the disability result, on the other hand, is far from being satisfactory. We were able to partially compensate this deficit with a strict cost management. The amount of CHF 93.1 million was removed from the reserve for results-linked and non-results-linked policyholders’ dividends for distribution to our customers and CHF 67 million were allocated at the same time.
It paid off to put our emphasis on selected distribution partners as addition to our own sales force which remains our most important distribution channel. The portion of the business volume generated by brokers has further increased and the Raiffeisen Banks contributed 13.7 per cent of new business of the individual life segment in the past year. The development in the occupational benefits plans did not stop for the
Unfortunately, the fund business was not able to meet our expectations which we are attributing to the current risk aversion of the customers.
Our project to increase quality and service, which we started in 2002, was advancing on schedule. In summer of 2003 the Swiss Association for Quality SAQ granted us the award “Commitment to excellence” which is a first milestone. The survey on customer satisfaction revealed with only few exceptions a very pleasing outcome. Our customers especially like our insurance and pension consulting by our own sales force and the claims settlement. The claims department of our
Indemnity Insurance Division worked last year on 125000 claims and earned high marks in the survey for its excellent performance. On a scale from 1 to 10 the claims settlement scored slightly below a nine from our customers. This is the highest mark received among all functions surveyed in the country market Switzerland.
The appropriate measures have been already initiated for those areas with room for improvement.
Together with our customers we have celebrated the 125th anniversary of Patria Genossenschaft at thirteen events all in all. Under the theme of “125 Jahre mehr vom Leben” the Basel Chamber Orchestra and Ensemble 676 Nuevo Tango were leading the visitors through the history of the tango whose origins in Argentina go back to the same period of time as the “Sterbe- und
We have launched various initiatives for the interesting customer segment of wealthier private clients. A
The low guaranteed interest rates, which are related to the capital markets and the reduced policyholders’
dividends will have a negative impact on the growth rate. We intend to keep adhering to our cautious but reliable policy with regard to the allocation of policyholders ’ dividends.
Our companies in the German country market have well stood their ground. As expected we are back on the familiar winning track with the non-life business. We are closing in on the goals of our strategic realignment: strengthening the business with private and commercial customers to secure profitability and putting emphasis on both profitable customer relations and segments in the major-customer business. With a slight premium growth of about one per cent in all segments the business year was marked by a normal loss experience without exceptional large loss events. We were fortunate to be spared flood disasters and above-average strong storms unlike the previous year. The claims ratio decreased again to the good levels of the previous years and testifies to the sound portfolio quality. Our continuous cost management resulted in a decline of the cost burden by half a per cent. With its significantly lower gross combined ratio of 95 per cent (sum of claims ratio and expense ratio) Helvetia Patria ranks among the best insurance companies in a comparable market environment. The net combined ratio, however, remained almost unchanged at 100.9 per cent due to the substantially higher reinsurance expenses.
The new generation of unit-linked premium rates of our product line “CleVesto”, which can be individually customized to the needs of the customers at any time, made a successful entry into the market mid-2003.
During the last months of the year under review a third of the new business was generated by those products.
Our support system in the sales area was expanded and includes offer preparation, electronic data transfer and thus facilitates a much quicker policy delivery. Furthermore, the range of services for our brokers on the internet, the “HelvetiaNet”, was greatly expanded in functionality, content and clarity. Among many other possibilities it enables, for example, our brokers to have access to the electronic customer files, to comprehensively handle and settle contracts and claims and to
Gross premiums in 2003 from direct non-life business in Germany in EUR million
Both the economic institutes and the German government assess the chances as being much higher this year than in the previous year that the economy will recover. We are therefore assuming that the economic fundamentals and thus also the environment for the
German insurance industry will improve. We are optimistic to continue on our earnings-oriented growth path on a high level despite the persistent crowding-out competition in the non-life business.
The life business will be marked by a variety of future developments. With regard to the tax reform concerning the expenses for and the income from pension plans the German government intends to drop the current tax incentives for endowment- and annuity premiums for new business on 1.1.2005 and to limit them to “Riester-contracts” and to annuity products to be newly created. Accepting this amendment would cause significant upheavals in the premium setting and maybe also to new business. The interest rate development on the capital market led the German Ministry of
Finance to decide at the beginning of 2004 to reduce the actuarial minimum interest rate for life- and pension insurance contracts from an annual rate of 3.25 to 2.75 per cent. The customers have to accept a lower guaranteed return for new contracts. It is even more important to provide our customers with sound pension benefits concepts given the demographic trends in
Austria experienced again a weak economic development. The real gross domestic product grew by a mere 0.7 per cent in 2003. Positive news is coming from the inflation front where the rate settled again on a low level.
The long-term economic goal of consolidating the budget was not let out of sight despite the current unfavourable economic cycle. Political emotions were running high when the pension reform was approved last year which gives a greater emphasis to private pension plans as a supplement to the public old-age pension benefits.
A strong sign of life is coming from the life insurance business with periodic premium payments. The single premium sector, however, took a noticeably negative course. Effects from the new-policy-withdrawal regulations and the pension plans with regular premium payments were only weakly felt.
Der ANKER is positioned as a medium-size composite insurer and a distinct alternative to the “Large” ones.
The strategy of focussing on the selective target groups of private customers and small companies will be continued in the long-term. The noticeable quality- and service profile, which Der ANKER offers as Austrian member of a Swiss insurance Group, goes hand in hand with the price–performance position in the upper middle field of the market.
Gross premiums in 2003 from direct non-life business in Austria in EUR million
Gross premiums in 2003 from direct life business in Austria in EUR million
ANKER focussed in the non-life sector consistently on the strategic target groups of private customers and small companies. Business with large customers is no longer underwritten. Premium income followed a good course in the target segments during the last year.
Especially pleasing are the growth rates in the property - and the motor vehicle sectors.
reductions in the overall costs of claims, in the longtail claims burden and in the claims frequency.
Contributing to this trend were besides the positive weather-induced effects also a consistent underwriting policy and the strict rate management.
The financial result has returned in the past business year into the zone of the usual expectations after the exceptionally unpleasant investment years of 2001 and 2002. Extraordinary value adjustments have noticeably declined on the previous years and were more than compensated by the realized gains. Using an active asset management approach achieved a substantially positive profit contribution which also enabled the forward-looking strengthening of the asset-side of the balance sheet.
Direktion für Österreich, is underwriting transport insurance. The company’s focus on customer- and service needs in combination with innovative products resulted again in an extraordinary premium growth during the last year. Successful co-operation management makes the distribution network increasingly stronger. The solid underwriting policy again ensured a very pleasing operating result.
Life Periodic premiums 71.3 68.5 –3.9% Single premiums 16.2 15.6 –3.7%
Sharpening the profile in the market and increasing the internal value creation will clearly take precedence.
US Dollar resulted in a decline of the foreign demand by one per cent. It is interesting to note that the employment rate almost parallels the growth of the gross domestic product since the introduction of the
Euro. The employment rate increased by about 0.8 per cent compared to 1.1 per cent in the last year.
September figures. It was the life insurance sector which was once more the engine of growth (+15 per cent). Compared to 2002, however, we saw a noticeable shift to traditional life insurance policies. The non-life business grew as well albeit at a more modest rate
The composition of both portfolios, non-life and life activities, significantly improved in 2003. The share of the motor-vehicle liability insurance declined from 51.6 per cent to 50.1 per cent. An adjusted, highly customized rate policy in this business segment led to lower new business (–18 per cent) but contributed to the improvement of the portfolio’s composition. We have reduced the portion of the index- and unit-linked policies in favour of the traditional products with periodic premium and single premium payments.
Non-Life/Helvetia Vita, 14 have exclusively Non-Life and 81 only Helvetia Vita. During the year, 26 were closed for various reasons (age of the agent, qualitatively insufficient portfolio, productivity too low) and 12 agencies were newly opened. We have ongoing relationships with 126 brokers. In 2003, Helvetia-Life concluded cooperation agreements with two distribution networks of financial institutions – the banking group Credito Emiliano and Banque Cortal. Direct sales by banks remained unchanged on the previous year: nine regional banks with 80 branches.
Helvetia Life cooperates with the distribution networks of two financial institutions.
Gross premiums in 2003 from direct non-life business in Italy in EUR million
The claims burden in the non-life sector significantly improved on the previous year. Some major damages, however, put a strain on last year. The motor vehicle sector saw its claims burden deteriorate –
contrary to the market trend. A reduction of the claims frequency by 6.5 per cent compared to an increase by 12.4 per cent of the average claims size. The net combined ratio (sum of claims ratio and expense ratio)
declined from 94.9 to 92.4 per cent – an extraordinary good value which will be a great challenge to maintain.
The Spanish gross domestic product (GDP) grew with 2.7 percentage points even stronger than in the previous year. This good result has been achieved thanks to the good condition of the real estate market as well as the high level of the private consumption.
By applying a risk-adjusted rate setting as well as strict underwriting policy we are striving for an actuarially healthy growth ensured by the current quality of
Gross premiums in 2003 from direct non-life business in Spain in EUR million
Helvetia CVN and Previsión Española achieved an increase in their premium volumes, the development of the life- and the motor vehicle sectors are attracting attention. Both companies were surpassing the market average in the life business thanks to the strong upturn of certain products, risk policies in particular. The motor vehicle segment experienced a flat rate for the premium growth on the previous year since the selective underwriting policy has deliberately slowed down the new business acquisition.
The strengths of Helvetia France are in its decentralised organisation and thus in its closeness to customers and partners which allows short reaction times and a high level of flexibility.
After having gone through two years of strong growth which resulted from both – the integration of the Royal
& Sun portfolio and the organic development of our own portfolio – Helvetia France consolidated its sales in 2003. The premium volume decreased by 6.2 per cent caused by the deliberately restrictive risk selection and also by the negative impact of the currency fluctuations. Thanks to an active management of our customer portfolio we succeeded in maintaining the gross claims ratio at 61.5 per cent. The net combined ratio (sum of claims ratio and expense ratio) stands at an excellent 98.6 per cent. This positive result confirms the quality of our business activities and allows for an optimistic outlook for the current year.
The final version of the accounts of our direct insurers can only be forwarded to the reinsurers after the closure of the business year, it is therefore always the prior-year results which are reported in the following fiscal year. The following remarks are thus covering the developments and the business transactions of the calendar year 2002 for the Assumed Reinsurance.
The initial situation for the year 2002/2003 under review was still marked by the terror attacks on the
World Trade Center in New York on September 11, 2001. It caused the situation to change dramatically for the reinsurers and reinforced the hardening process of the reinsurance market which was already increasing before the attacks and reached afterwards a level never seen in the past. The year 2002 burdened the non-life insurers globally with about USD 13.5 billion related to natural disasters and man-made damages. This is a distinct reduction on the previous year with property damages amounting to USD 35 billion.
The major loss burden for the reinsurers in the business year 2002 was related to storm events. In the year under review damages arising from storms amounted to USD 6.7 billion and accounted for more than half of all damages caused by natural disasters. Flood damages took second place with a global sum of
Europe while the Group Reinsurance was able to take advantage of the lack of larger loss events within the
Underwriting a global Assumed Reinsurance account creates significant and cost-efficient synergy effects for the internal Group insurance by revealing their helpfulness when optimal coverage concepts at optimal pricing are structured and actuarially simulated.
Furthermore, specialised resources, such as IT and cost accounting, are put to an efficient use to prepare for the changeover to IFRS. Thanks to this dual function –
assumed and outwards reinsurance within one organizational unit – we are provided with background knowledge on the needs of a reinsurance purchaser but are also intimately familiar with the concerns of our reinsurers.
Synergies between assumed and outwards reinsurance are put to good use.
The registered Helvetia Patria Holding share held its own very well in this positive market environment.
Patria’s operating strength which in turn makes our company an interesting long-term investment as well.
Board of Directors to increase the share capital by a maximum of 50 per cent within a period of two years to retain the company’s room to manoeuvre for future growth- and acquisition opportunities. The Board though has not used this possibility last year. The share capital remains unchanged at CHF 62.9 million
Helvetia Patria Group Consolidated shareholders’ equity before appropriation of profit (in CHF million) 1046.5 1153.0 Consolidated equity per share (in CHF) 166.3 183.2 Profit after taxation per share (in CHF) –60.3 15.4 Return on consolidated shareholders’ equity –28.2% 8.4% Return on consolidated shareholders’ equity (excluding revaluation reserve) –50.5% 18.8%
Market capitalisation at end of year (in CHF million) 962.8 1334.1 Average trading volume (number of shares) 2458 2436 Beta versus Swiss Performance Index 1.19 0.53 Ratio of market capitalisation to consolidated shareholders’ equity 92% 116% Ratio of market capitalisation to gross premiums earned 19% 25% Dividend per share (in CHF) 2.00 4.00 1
Holding is not subject to restrictions. Shareholders, who purchase the shares in their own name and interest, will be entered in the share register with up to a maximum of 5 per cent of the issued registered shares with voting rights.
The Helvetia Patria Group implemented its environmental policy in 2002 and fully supports the lasting preservation of the natural environment. It is conscious of its responsibility to future generations and considers acting ecologically as important investment in the future. The environmental policy which has been passed by the Management is available on the internet and demonstrates our understanding of a sustainable development.
“Trash to treasures” (Einfälle statt Abfälle!). The fundamental principles of disposal are “Avoid, Prevent and Reuse” (Vermeiden, Verhindern, Verwerten). This is the reason why Helvetia has taken charge of reusing the worn plastic banners (touchline advertising at sporting events) and has converted them into modern, hand-made, water-proof bags.
Helvetia Patria supported for the first time last year the WWF Project “The Green Branch” as exclusive partner. Private persons but also associations and school classes were allowed to submit ecologically sustainable projects which were evaluated by a jury made up of authorities in this field. After much deliberation the jury chose three ideas which were outstanding from the ecological point of view and convincing in their uniqueness and effect.
Total business transportation of all Helvetia Patria employees in Switzerland in 2003 accounted for about 1 million kilometres, i.e. 891 per person which are 7 kilometres less per person than in 2002. The principal share falls with 639 kilometres per employee to the railways. Parking spaces at the headquarters are at the owner’s expense. Anyone renting a parking space looses the right to receive an expense contribution for using public transportation on the commute to work.
This is a way to reward employees for switching to public transportation.
The energy consumption experienced strong fluctuations. The reason for them was the use of other office space with a different heating system that had to be temporarily rented during the renovation and expansion of the headquarters in Frankfurt. Another strong impact on the energy consumption was felt by the above-average cold winter months when the heating needed to be turned higher.
The paper consumption in Germany decreased by an average of 5 per cent. An environmentally cautious use of paper and the introduction of Lotus Notes have contributed as well. The software is used as internal means of communication and reduces the exchange of written material.
Most of the grants are awarded to charitable and social institutions. Projects supporting young people and the arts are also very close to our hearts. In addition to this, many of our employees are politically active and take on responsibilities in trade associations.
The foundation “Patria Jeunesse” was established in 1978 at the occasion of Patria’s hundredth anniversary.
during its realignment. It will mainly focus on supporting youth groups, associations and youth projects –
Within the scope of its youth support in the eastern part of Switzerland Helvetia Patria awards every year the “Helvetia Patria-Prize” for outstanding individual or group achievements in school-, music- or charitable activities. Raising the interest level of young people of the ages between 16 and 20 in the cultural activities of the “Stadttheater St.Gallen” is the purpose of the
Helvetia Patria-Paul Bürgi-Foundation which annually provides the amount of CHF 30000.
Helvetia Patria is taking this cultural obligation in the public interest very seriously. The Arts Commission was specifically established for the purpose of promoting the fine arts in particular. During the past year this
Commission has selected and purchased three new pictures by a promising young talent as well as six drawings to complement an existing group of works of art we already own. With our commitment we support young, still unknown artists and we make these works of art more accessible to our guests and employees by placing them in open areas such as the reception, personnel restaurants and conference rooms.
“Jazz a de Uni” (Jazz at the University), lectures and exhibitions. For three years now we are supporting this project with a yearly contribution of CHF 10000 as well as with free logistical services.
Besides the activities in the Swiss country market also the business units abroad are taking their social responsibility very serious by supporting projects and events, assuming patronages, bestowing awards or by giving financial assistance.
Being part of the overall economy the insurance industry has a fundamental interest in Germany expanding as scientific research site. Especially in view of the demographic changes investments in this area are urgently needed. Helvetia Germany, for example, is a Member of the “Stifterverband”
(Donors’ association for the promotion of the sciences and humanities in Germany) which works under the auspices of the German President.
Remo Bischofberger Plasterer, Obfelden – 665 young trade’s people from five continents were competing against each other in forty disciplines in St.Gallen in summer 2003. Remo Bischofberger won a gold medal at the “Trade’s World Championship”. And that brought him behind bars. After lining the surfaces of a bank area with water-thin plaster he is designing the lounge of a prison, but not for long. His gold medal gained him a training program in Canada. Afterwards he will take over the family business. Also smaller and mid-size business with tradition and know-how are giving the economy impulses.
Net earned premiums: Gross written premiums 2066673 2269312 Premiums ceded to reinsurers –244830 –284208 Net written premiums 1821843 1985104 Gross change in reserves for unearned premiums –11454 –20319 Reinsurers’ share of gross change in reserves for unearned premiums 23 3411 Net change in reserves for unearned premiums –11431 –16908 Net earned premiums 1810412 1968196 8.7% Net interest income assigned to non-life activities 122613 130099 6.1% Net claims paid: Claims paid: – Gross –1291932 –1363182 – Reinsurers’ share 123774 151237 – Net –1168158 –1211945 Change in reserves for claims outstanding: – Gross –182907 –85618 – Reinsurers’ share 59481 –11429 – Net –123426 –97047 Net claims paid –1291584 –1308992 1.3% Net change in other underwriting reserves 54 –530 –1081.5% Net expenditure on results-linked and non-results-linked policyholders’ dividends –1030 –1273 23.6% Net change in equalisation reserve 55000 –17425 –131.7% Net underwriting expenses: Gross underwriting expenses –622814 –670109 7.6% Commissions and profit share received from reinsurers 46696 54862 Net underwriting expenses –576118 –615247 6.8% Other net underwriting expenditure –23520 –22749 –3.3% Result from non-life underwriting activities 95827 132079 37.8%
Income from real estate 193117 192350 –0.4% Income from investments in affiliates and associated companies 439 404 –8.0% Income from other investments: From shares, other non-fixed-interest-rate securities and investment funds 59008 55546 From fixed-interest-rate securities 477633 526156 From promissory loans 34554 32760 From mortgages 120857 108538 From policy loans 7905 7035 From fixed-term deposits and similar 20737 10377 Income from other investments 720694 740412 2.7% Interest on deposits 1751 1223 –30.2% Gross realized gains on investments 382832 358116 –6.5% Gross unrealized gains on investments 100116 100058 –0.1% Other interest income 6806 8331 22.4% Expenditure on investments and interest costs: Investment administration costs –15397 –20019 Realized losses on investments, including hedging expenses –429333 –189469 Depreciation of investments –1035052 –118291 Interest payments on reinsured business and other interest costs –72515 –62156 Expenditure on investments and interest costs –1552297 –389935 –74.9% Interest assigned to life- and non-life underwriting activities –623477 –920715 47.7% Other extraordinary income from other business operations 410210 0 –100.0% Other income from ordinary business operations 20198 5804 –71.3% Other expenditure on ordinary business operations –3524 –19638 457.3% Result from non-underwriting activities –343135 76410 –122.3%
Investments for unit-linked life insurance policies 514163 607930 18.2% Deposits from reinsurance assumed 70132 73846 5.3% Receivables from underwriting activities: From policyholders 292388 273081 From agents and brokers 88910 91765 From insurance companies 128050 165606 Receivables from underwriting activities 509348 530452 4.1% Other Receivables: From affiliates and associated companies 525 1390 From others 164041 145989 Other receivables 164566 147379 –10.4% Tangible fixed assets 48390 46887 –3.1% Liquid assets 242510 162560 –33.0% Other assets 2988 2760 Prepaid expenses: Interest and rents 279602 286557
Grundstückverwaltungs GmbH and Helvetia Vermittlungs - und Grundstückverwaltungs GmbH & Co.
Deferred taxation has been applied based on local income tax rates for all revalued items.
Notes to the consolidated f inancial statements of the Helvetia Patria Group
Switzerland are translated into Swiss francs at the rate ruling at the end of the year. Any differences arising from translation are taken straight to Group reserves, with no impact on results for the year.
The allowed treatment of deferring losses on securities has not been applied (ARR 14).
Real estate is shown at market value, based on its capitalised rental income at the interest rates applied in the countries and markets concerned. Deferred taxes are shown on the balance sheet under “Reserves for taxes”.
Non-consolidated investment in associated companies are recorded at cost or, if applicable, at the lower equity value (minimal value principle).
Fixed-interest-rate securities are recorded at amortised cost, with the difference between the purchase and redemption price spread over the remaining duration. Supplementary depreciation is effected to cover credit risks.
All depreciation on investments is charged to the consolidated profit and loss account based on economic principles and requirements.
The difference to market value is charged or credited to the consolidated profit and loss account in accordance with Group accounting policies (Swiss GAAP ARR 14)
All calculations of underwriting reserves comply with the rules and requirements of local regulatory authorities. All such calculations are based on assumed liabilities towards claimants and policyholders.
The deferred acquisition costs of Swiss individual life business, approved by the Federal Office of Private
Other balance sheet items are shown using those valuation methods applied to individual company accounts.
Key foreign currencies for the Helvetia Patria Group were translated into Swiss francs at the following year-end rates: 6. Notes to the profit and loss account 6.1. Gross premiums written by country and sector
Net interest income assigned to non-life business derives from the interest earned on premium income and from the interest earned on the average levels of the reserves for claims outstanding, the equalisation reserves and other underwriting reserves.
Expenditure on commissions and personnel is as follows: 6.5. Tax expenditure
Salaries/commissions 694.4 751.1 Social welfare expenditure 55.6 57.3 Pension plan expenditure 38.3 35.5 Other expenditure on personnel 8.3 8.1 Total expenditure on personnel 796.6 852.0
Fixed asset movements in CH million Acquistion costs (incl. change in revaluation) Value adjust- Net book Net book Portfolio Currency Book Revaluation Portfolio ments value value 1.1.2003 impact Additions Disposals transfers changes 31.12.2003 31.12.2003 31.12.2003 1.1.2003
Investments: Shares, derivatives, other non-fixed-interest-rate securities and investment funds 4594.4 50.2 960.9 – 2207.6 –29.7 289.3 3657.5 812.6 2844.9 3295.1
Investments for unit-linked life insurance policies 553.8 6.0 23.4 –11.3 42.1 0.0 613.9 6.0 607.9 514.2
Tangible fixed assets/other assets 179.9 11.6 17.8 –23.2 0.0 0.0 186.1 136.5 49.6 51.4
In the year under review, fixed asset movements are shown gross, i.e. with cumulative acquisition costs and with cumulative value adjustments.
Tangible fixed assets/other assets 128.5 8.3 –20.7 0.0 20.4 0.0 136.5
Retained earnings 398.0 –374.1 –0.5 23.4 Results for the year –362.0 362.0 92.4 92.4
The share capital consists of 6293000 registered shares with a nominal value of CHF 10.00.
The Board of Directors is authorized – based on the resolution passed by the Shareholders’ Meeting on May 9, 2003 – to increase the share capital by a maximum of CHF 31465000 by issuing a maximum of 3146500 registered shares. Please refer to pages 20 ff “The corporate governance and control” in this Annual Report for more details on the approved capital increase.
Shares, derivatives, other non-fixed-interest-rate securities and investment funds were valued at an aggregate CHF 2.4 billion (2002: CHF 3.1 billion)
The market value of fixed-interest-rate securities, which are shown at amortized cost, amounted to
CHF 13.5 billion (2002: CHF 11.7 billion). The valuation margin that is not included in the revaluation reserves (shareholders’ equity) amounts to
Patria Group increased by a total of CHF 106.5 million in 2003 (decrease in 2002: CHF 473.2 million).
Patria Holding. In the year 2003, the conversion price was reduced from CHF 381.00 to CHF 331.50
Switzerland, in addition to the mandatory plan there is a defined contribution plan with benefits that exceed the legal minimum; in the branches and subsidiaries abroad, there are a number of pension plans which may be either defined benefits or defined contribution plans. The reserves for pension obligations are set up following local laws and regulations.
The employer’s contribution reserve in a welfare foundation amounts to CHF 21.8 million
Capital commitments for the future acquisition of investments amount to CHF 153.1 million at the balance sheet date (2002: CHF 204.7 million).
Within its regular business activities the Group concluded an outsourcing contract in Switzerland with the following fixed commitments for the next three years: At 31 December 2003: in CHF million
As auditors of the Group, we have audited the consolidated financial statements (profit and loss account, balance sheet, cash flow statement and notes pages 74 to 87 of Helvetia Patria Group for the year ended
The goodwill qualified to be capitalized is calculated and capitalized following Group-wide accounting principles. Until now a straight-line method of depreciation was applied over 10 years.
– in addition to the ordinary straight-line depreciations of CHF 16.3 million – is considered economically justified based on the strategic plans carried out. The remainder of capitalized goodwill amounts to
The transactions carried out with Members of the Board of Directors and the Group Management are described on pages 20 ff “Corporate governance and control”
in this Annual Report. The Patria Genossenschaft, the largest shareholder of the Helvetia Patria Holding, deposited the amount CHF 25.0 million
(2002: CHF 15.0 million) into the reserve for policyholders ’ dividends of Patria Leben.
Steven Hayes (1973), Filmregisseur, Zürich — Die Alltagsroutine von Ernst und Edna Meyer nach dreissig Ehejahren ist eher noch langweiliger, als man befürchtet. Wenn «Meyers» nun für den Schweizer Filmpreis 2004 in der Kategorie Bester Kurzfilm nominiert ist, spricht das für Drehbuch und Regie von Steven Hayes. Seine Diplomarbeit an der Hochschule für Gestaltung und Kunst in Zürich machte ihn in zwölf Minuten zum Shooting Star in der Branche. Aber auch dieses Talent ist nicht vom Himmel gefallen. Steven Hayes dreht seit seinem 17. Altersjahr Filme. Demnächst auch Längere.
Assets: Liabilities: Shareholders’ equity before appropriation of profit: Share capital 62930 62930 Reserve for own-shares 83741 83741 Other statutory reserve 269449 269449 Profit carried forward 15906 3076 Net result for the year –244 24116 Shareholders’ equity before appropriation of profit 431782 443312 2.7% Liabilities toward Group companies 113046 101503 Accrued liabilities 182 195
Result after taxation –244 24116 Balance carried forward 15906 3076 Profit available for distribution 15662 27192 Dividend (2002: CHF 2.00; 2003: CHF 4.00 per registered share) 12586 25172 Profit carried forward 3076 2020
Gesellschaft itself holds a 24.7 per cent equity stake in Helvetia Schweizerische Versicherungsgesellschaft.
May 9, 2003 – to increase the share capital by a maximum of CHF 31465000 by issuing a maximum of 3146500 registered shares. Please refer to pages 20 ff
Helvetia Patria Holding has undertaken to guarantee the 2% convertible bond, issued by Helvetia Finance
Ltd., Jersey, up to the amount of the face value that has not yet been converted, including outstanding interest payments. The outstanding face value stands at
Two shareholders were entered in the share register as owning more than 5% of the share capital on
Available solvency (solvability) Capital resources available to cover the required solvability ratio (see below).
Benchmark index An index used as a point of reference to measure the performance of a particular portfolio.
Benefit Amount paid by the insurer to the insuree in life insurance if the insured event occurs.
Convertible bond A fixed-interest security whose bonds are convertible into Helvetia Patria Holding shares according to pre-set conditions and terms.
Dread Disease Insurance A Dread Disease Insurance policy will pay the benefits insured in case of a severe, precisely defined illness of the person insured (such as heart attack, stroke, cancer, bypass surgery, etc.). The compensation can be used at will, for example to pay for expensive treatments, to sustain the standard of living, to pay off a mortgage, etc.
Equalisation reserve Underwriting reserves designed to balance out extremes in annual claims payments. Additions to and withdrawals from the equalisation reserve are based on mathematical models stipulated by the relevant supervisory authorities.
Fixed-interest-rate securities Securities (such as bonds) on which a fixed and constant interest is paid for their entire duration.
Net expense ratio The ratio of net underwriting expenditure to net premiums written.
Net premiums earned The net premiums earned from total business (i.e. gross premiums less premiums ceded to reinsurers) within a financial year, with due regard to changes in the reserves for unearned premiums.
Net premiums from total business If a risk is reinsured, the reinsurer will receive a part of the gross premium in proportion to the extent of total risk assumed. Net premiums from total business thus correspond to gross premiums written less the premiums ceded to reinsurers in exchange for their bearing part of the overall risk.
Reinsurance deposits Original insurers always retain part of the reinsurance premium as a security for any claims they may themselves need to make. Since Helvetia Patria both assumes and cedes reinsurance, these items appear on the balance sheet under both assets and liabilities.
Reinsurance premium Amount paid by an insurer to a reinsurer in exchange for the latter’s assumption of part of a policy’s risk.
Reserves for claims outstanding Since not all claims will be settled by the end of the financial year in which they arise, provisions must be made on the balance sheet for the amounts these claims (or claims likely to be incurred but not yet received) may require. This item is known as the reserves for claims outstanding. Changes to the reserves for claims outstanding are shown in the profit and loss account.
Return on equity (excluding revaluation reserve) Profit/loss after taxation and minority interests as a proportion of shareholders’ equity as shown on the consolidated balance sheet, excluding changes to the revaluation reserve.
Zillmering Balancing of an account with part of the unamortized acquisition costs taken into consideration.
Group Head Office Helvetia Patria Holding, Dufourstrasse 40, CH-9001 St.Gallen Phone +41 71 493 5111, Fax +41 71 493 51 00, www.helvetiapatria.com, info@helvetiapatria.com
Group Executive Board Erich Walser Chairman of the Board of Directors
Chief Executive Officer Group Roland Geissmann Deputy CEO, Chief Financial Officer Philipp Gmür Chief Executive Officer Switzerland Ralph-Thomas Honegger Chief Investment Officer Markus Isenrich Head of Human Resources and Services Tjarko Ullings Chief Executive Officer Austria Wolfram Wrabetz Chief Executive Officer Germany
Subsidiaries Helvetia schweizerische Wolfram Wrabetz Berliner Strasse 56–58 Lebensversicherungs-AG Vorstandsvorsitzender DE-60311 Frankfurt a.M. Helvetia International Wolfram Wrabetz Berliner Strasse 56–58 Versicherungs-AG Vorstandsvorsitzender DE-60311 Frankfurt a.M. Der ANKER Tjarko Ullings Treustrasse 35–43 Allgemeine Versicherungs-AG Vorstandsvorsitzender AT-1200 Wien Helvetia Vita Compagnia Italo Franco Armeni Via G.B. Cassinis 21 Svizzera di assicurazioni sulla Vita S.p.A. Direttore Generale IT-20139 Milano Helvetia Life Compagnia Italo Franco Armeni Via G.B. Cassinis 21 Svizzera di assicurazioni sulla Vita S.p.A. Direttore Generale IT-20139 Milano Helvetia Previsión Sociedad Anónima Jozef M. Paagman Paseo Cristóbal Colón, 26 de Seguros y Reaseguros* Director General ES-41001 Sevilla Helvetia Europe S.A. 22, parc d’Activité Syrdall
LU-5365 Münsbach Helvetia Finance Le Gallais Chambers 54, Bath Street, St.Helier, Jersey * Situation after the merger of the two subsidiaries of the Helvetia Patria Group in Spain – Helvetia Cervantes Vasco Navarra Sociedad Anónima de Seguros y Reaseguros and Previsión Española Sociedad Anónima de Seguros y Reaseguros – is completed during the year 2004.
Head office for Switzerland Helvetia Patria Versicherungen, St.Alban-Anlage 26, CH-4002 Basel, Phone 0848 80 10 20, Fax 0848 80 10 21, www.helvetiapatria.ch, info@helvetiapatria.ch
Executive Management Switzerland Philipp Gmür Chief Executive Officer Switzerland Donald Desax Head of the “Group Life” Division Hans Peter Haller Head of “Brand & Partnering” Division René Stocker Head of “Helvetia Patria Sales Management” Hermann Sutter Head of the “Indemnity Insurance” Division Angela Winkelmann Head of the “Individual Life” Division
(sold 1997), the Netherlands (sold 1995) and Canada (sold 1999) 1974 Merger of “Helvetia Feuer” and “Helvetia Allgemeine”, St.Gallen 1986–1988 Further Helvetia subsidiaries established in Spain, Italy and Germany 1992 Start of partnership between Helvetia and Patria 1996 Founding of Helvetia Patria Holding in St.Gallen, Switzerland 1998 Acquisition of La Vasco Navarra (Spain); Acquisition of the portfolio of NCD (Italy) 1999 Merger between the companies La Vasco Navarra and Cervantes Helvetia to Helvetia CVN, Madrid/Pamplona 2000 Acquisition of the Spanish insurer Previsión Española, Seville 2001 Acquisition of Norwich Union Vita, Milan; renamed in Helvetia Life 2002 Acquisition of Royal & Sun Alliance’s transport insurance portfolio in France 2004 Merger of subsidiaries Previsión Española and Helvetia CVN with headquarters in Seville, Spain