You will find all the key data on the following pages. So we will just comment briefly on the results: one reason for the good result is that Helvetia again strengthened the profitability of its non-life and life business. This is demonstrated, for example, by the outstanding combined ratio (91.8 percent ) and the major improvement in the profitability of new life business (new business margin: 1.8 percent). Business volume also increased again, rising by 0.7 percent to CHF 8,641 million. The growth of our non-life business was markedly higher with a currency-adjusted premium increase of 4.3 percent. In life business, we achieved a substantial increase in the sale of capital-efficient, modern insurance solutions (+ 14.1 percent in original currency). The strategic reduction in traditional insurance solutions in individual life business and a positive special effect in the Swiss group life business in the prior year resulted in a 2.4 percent decrease in overall life business volume (in original currency).
You, as shareholders, should also benefit from this. The Board of Directors will therefore propose to the Shareholders’ Meeting a dividend increase from CHF 21.00 per share to CHF 23.00. This equates to an increase of about ten percent over the previous year.
As a result, one of our key implementation areas in the past financial year was to strengthen our core business, traditional insurance, along the various touchpoints between Helvetia and the customer and to enrich those touchpoints through innovation. A customer’s first touchpoint with Helvetia is advice and conclusion of insurance, then comes contract administration and finally the customer contacts us in the event of a claim. Helvetia has focused on expanding the scope for digital interaction across these touchpoints. We are thus accelerating our omni-channelling approach, i.e. that the customer consistently receives the same service through the different channels. We are therefore available for him and offer our expertise personally through advisors, by telephone, online or through a partner.
Helvetia also started to offer digital customer administration in 2017. The new online customer portal offers private customers and insured pension fund members access to all their insurance documents as well as some additional services. Insured pension fund members, for example, can access three simulation calculators for buying a home, early retirement and buying into the pension fund.
Ultimately, we want to expand our core business on a selective basis and innovate by investing in business expansion and new business models. An example of that is the development of a “home” ecosystem. The system is based on MoneyPark, Switzerland’s biggest mortgage broker, and positions itself as an expert and independent advisor for all issues relating to housing and real estate. The “home” ecosystem integrates additional services of partner companies; these include an online real estate valuation service based on machine learning of the start-up PriceHubble, which we invested in via Venture Fund in 2017. With the expansion of the “home” ecosystem, Helvetia will gain access to new customer groups and additional sources of income.
Since the launch of the helvetia 20.20 strategy, Helvetia has already become considerably more agile, innovative and customer-centric. The key is now to proceed along the established path and thus create value for customers and employees – and naturally for you, dear shareholders. We would like to thank you most sincerely for accompanying us along this path and for your trust.
Group profit for the period (IFRS) per share in CHF 39.1 36.1 8.4 %
Provisions for insurance and investment contracts (net) 44 385.5 42 315.3 4.9 %
Employees of which segments Switzerland and Corporate 3 499 3 376 3.6 %
+ 0.2 % percentage points The pleasing net combined ratio reflects a persistently healthy portfolio. Thanks to the considerable improvement in the Europe segment, Helvetia was able to offset the greater burden from natural catastrophes (Hurricanes Harvey, Irma and Maria) in the Specialty Markets segment.
Contacts Helvetia Group Susanne Tengler Head of Investor Relations P.O. Box, CH-9011 St Gall www.helvetia.com susanne.tengler@helvetia.ch
Doris Oberhänsli Share register P.O. Box, CH-9011 St Gall www.helvetia.com doris.oberhaensli@helvetia.ch
Important dates 20 April 2018: Ordinary Shareholders’ Meeting in St Gall 4 September 2018: Publication of half-year financial results for 2018 6 March 2019: Publication of financial results 2018
This document is made by Helvetia Group and may not be copied, altered, offered, sold or otherwise distributed to any other person by any recipient without the consent of Helvetia Group. Although all reasonable effort has been made to ensure the facts stated herein are accurate and that the opinions contained herein are fair and reasonable, this document is selective in nature and is intended to provide an introduction to, and overview of, the business of Helvetia Group. Where any information and statistics are quoted from any external source, such information or statistics should not be interpreted as having been adopted or endorsed by Helvetia Group as being accurate. Neither Helvetia Group nor any of its directors, officers, employees and advisors nor any other person shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this information. The facts and information contained herein are as up-to-date as is reasonably possible and may be subject to revision in the future. Neither Helvetia Group nor any of its directors, officers, employees or advisors nor any other person make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this document.
This document is also available in German and French. The German version is legally binding.
huber.huber: Habitat, 2017 Collage and acrylic spray on cardboard, 70 x 54.2 cm (image section) The Zurich-based artist duo huber. huber, who are represented with several works in the Helvetia art collection, presented the solo exhibition «Save Our Souls» during 2017 / 2018 at the Helvetia Art Foyer in Basel.
Group underlying earnings per share in CHF 49.2 47.7 3.0 %
Underlying earnings of the Group after tax 502.4 491.8 2.2 %
Risk, capital and investment management 8 Share and bonds 10 Corporate governance 13 Board of Directors 24 Executive Management 35 Compensation report 49 Business performance 69 Financial statements 197 Embedded Value 199 Service
In the current challenging economic environment, comprehensive risk management is a top priority and integral to the way the Helvetia Group manages its business.
A primary objective of risk management is the sustained, proactive safeguarding of the capital base as well as the reputation of the Helvetia Group and its Group companies.
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.
These objectives are kept in balance by taking account of risk capacity and cost / benefit arguments. Furthermore, as part of our capital management, we pursue the goal of an interactive rating of financial strength of at least “A–” at Group level.
In these capital models, the IFRS equity forms the basis for establishing the available capital. 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.
Outlook The supervisory requirements for risk and capital management remain subject to major changes. The Swiss insurance supervisory authorities aim to standardise the Swiss Solvency Test models of insurance companies. Helvetia is involved in this process and continually ensures proper implementation of the new requirements. Furthermore, Helvetia is well prepared to integrate potential new developments into its capital management.
Prudent investment strategy and timely risk management The investment strategy is defined in detail and implemented as part of the annual review of the investment policy. We make adjustments to take advantage of new opportunities arising from shortterm market developments, while remaining within the tactical ranges established by the management. 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, we subject counterparty risks 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.
The Helvetia Group pursues a sustainable investment policy tailored to the liabilities arising from the insurance business. The objective is to generate attractive medium- and long-term returns for our customers and shareholders and to make a reliable contribution to the Group result.
The balanced distribution of the portfolio applies both between and within the individual asset classes. Moreover, we place high demands on the quality of the counterparties. Our internal investment guidelines dictate that new investments may only be made with borrowers whose credit rating is investment grade. However, the exposure to the BBB segment is limited. At the end of the year, around 65 % of the bond portfolio had at least an AA rating. In addition, the proportion of government securities and collateralised bonds is above average at around 66 %.
The majority of registered shareholders are based in Switzerland. Among the institutional shareholders – excluding the above core shareholder – 47.1 % of the shares are held by investors who have their registered office in Switzerland (previous year: 47.7 %). 52.9 % (previous year: 52.3 %) are held by foreign investors. Shares pending registration increased slightly year-on-year, ending the year at 23.0 %. The average volume of Helvetia shares traded each day in 2017 was CHF 10.3 million, representing a year-on-year increase of around 45 %. In particular, this is due to the increased free float following the sale of the share package by Raiffeisen Schweiz and the resulting increase in the average number of Helvetia shares traded, which rose by some 38 % to 18,890 shares per day in 2017. Compared to the previous year, the structure of the types of investors has shifted slightly from banks and insurance companies to private individuals.
Bonds in circulation In 2017, the Helvetia Group placed a subordinated undated bond for CHF 500 million (coupon 3.375 %) on the Swiss capital market.
2017 was an excellent year for equities, with markets all over the world posting pleasing gains. Measured by the Swiss Performance Index, Swiss equities generated a total return of nearly 20 %. As a result, they clearly outperformed the eurozone and slightly underperformed the US market. The emerging markets posted a particularly strong result, gaining more than 30 % owing to the favourable global economic environment, persistently low interest rates and strong corporate earnings.
Swiss insurance shares were not quite able to keep pace with the overall market, but nevertheless achieved a solid performance of just under 10 %. The Helvetia share fell somewhat short of the industry average with just below 4 %.
Subordinate bond EUR 500 million 3.375 % until 2027, subsequently variable
Successful Shareholders’ Meeting in 2017 The Helvetia Group once again presented a very good annual result to the 1,668 shareholders with voting rights attending the ordinary Shareholders’ Meeting. The Shareholders’ Meeting took note of the strong operating performance in challenging market conditions and approved the annual report, financial statements and consolidated financial statements for 2016. Furthermore, in accordance with the articles of incorporation and in line with the Ordinance Against Excessive Compensation in Swiss Listed Companies (VegüV), all members of the Board of Directors were proposed for re-election and reappointed individually for a further term in office. Dr Ivo Furrer was elected as a new member of the Board of Directors.
IFRS earnings for the period per share in CHF 39.1 36.1
Payout ratio on the basis of underlying earnings 47 % 44 %
1 Based on year-end price 2 Proposal to the Shareholder’s Meeting 1 Based on underlying earnings 2 Proposal to the Shareholders’ Meeting
Dividend history Dividend per share (in CHF) | dividend yield at year-end price | payout ratio 1
Helvetia is committed to meeting the high legal and ethical expectations of its shareholders and all other stakeholder groups to the best of its knowledge 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, the Executive Management and all employees of Helvetia, corporate governance is an ongoing process that is regularly reviewed. During this process, new developments, findings and needs are immediately integrated into daily tasks and responsibilities. Good corporate governance can only be truly effective if it is constantly aligned to the Group’s strategy and positioning. For more information, please refer to pages 14 ff in the company brochure.
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”, which was issued in 2002 by economiesuisse and updated in 2016, the Corporate Governance Guidelines (RLCG) of SIX Swiss Exchange in the version of 13 December 2016, the Circular “Corporate governance - insurers” of the Swiss Financial Market Supervisory Authority (FINMA) of 7 December 2016, the Ordinance Against Excessive Compensation in Swiss Listed Companies (VegüV) of 20 November 2013 and the FINMA Circular 2010 / 1 in the version of 22 September 2016. The compensation report included in the Annual Report (from page 35) provides details of our compensation system and the compensation paid to the Board of Directors and the Executive Management. If relevant information is provided elsewhere in the Financial Report or in other documents, reference is made to the location or document concerned. Important documents such as the Articles of Incorporation ( porate/web/en/home/investor-relations/overview /publications/business-publications/articlesof -association_2017.pdf) and the organisational rules with appendices ( content/dam/os/corporate/web/en/home/investor -relations/overview/publications/business-publications /organisational-regulation.pdf) are also available on our website at com/corporate/web/en/home/investor-relations/ overview/publications/business-publications.html. This website also contains plenty of additional interesting and up-to-date information.
1. Corporate structure and shareholders 1.1 Corporate 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 13 of the company brochure. This structure is intended to create the best possible legal, financial, fiscal and regulatory framework and to ensure smooth, efficient and flexible business operations.
The shareholder pool was dissolved with the sale of the Raiffeisen Schweiz AG holding on 15 September 2017 Patria Genossenschaft, Basel, remains the largest shareholder with 34.1 %.
Conditional capital: The share capital can be increased by a maximum of CHF 129,793.20 by issuing a maximum of 1,297,932 fully paid-up registered shares with a par value of CHF 0.10 each. The conditions for this are set out in Art. 4 of the Articles of Incorporation ( com/content/dam/os/corporate/web/en/home/ investor-relations/overview/publications/businesspublications /articles-of-association_2017.pdf).
2.3 Changes in capital – 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 nominal 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 nominal value of CHF 0.10 each. The remaining authorised capital of a maximum of CHF 773.80 that could be created by issuing 7,738 fully paid-up registered shares with a par value of CHF 0.10 each expired on 17 September 2016.
2.6 Restriction on transferability and nominee registrations The Board of Directors may refuse to approve registration with voting rights if, in particular, 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).
pdf). Any amendment by the Shareholders ’ Meeting to the statutory restriction of transferability referred to above requires a two-thirds majority of votes represented.
Financial report Board of Directors changes and prepared Helvetia for the future. The Board of Directors appointed Vice-Chairwoman Doris Russi as the new Chairwoman. She will manage the official duties of the Board of Directors until the Shareholders’ Meeting in April 2018.
Helvetia has formed various committees in order to make good use of individual member expertise in the decision-making processes. With the Strategy and Governance Committee, the Nomination and Compensation Committee, the Audit Committee as well as the Investment and Risk Committee, Helvetia has four Board committees that ensure the effective control and monitoring of the company. The tasks of the committees are of an essentially preparatory nature. The cases in which their decision-making powers are used are listed in the Notes to the organisational regulations: rate/web/en/home/investor-relations/overview/ publications/business-publications/organisationalregulation.
3. Board of Directors The Board of Directors (BoD) of the Helvetia Group is the highest management body of the company. It is responsible for the overall management and the strategic direction of the Group and it also appoints and monitors the Executive Management (EM). The Board of Directors has nine members. Dr Pierin Vincenz was re-elected as Chairman at the 2017 Shareholders’ Meeting (SM) and Dr Ivo Furrer was elected as a new member. Dr Herbert Scheidt did not stand for re-election at the 2017 Shareholder’s Meeting.
On 18 December 2017, Dr Pierin Vincenz opted to stand down as Chairman with immediate effect, as the ongoing investigation of the Swiss Financial Market Supervisory Authority FINMA into him relating to his previous role at Raiffeisen Switzerland will not be completed prior to the 2018 Shareholders’ Meeting. The Board of Directors regrets this decision. Pierin Vincenz had been a member of the Board of Directors since 2000 and had served as Chairman since October 2015. During this period, he made a significant contribution to shaping Helvetia, initiated important
Doris Russi Schurter Law degree (lic. iur.) (University of Fribourg), lawyer
Professional background, exercising operational executive functions 1980 – 1982 Swiss Bank Corporation, Basel; 1983 – 1991 various management positions at Fides Treuhandgesellschaft, Basel and Lucerne; 1992 – 2005 various management positions as a partner at KPMG Switzerland, including 1994 – 2005 Managing Partner at KPMG Lucerne
Appointments at listed companies Chairwoman of the Board of Directors of Luzerner Kantonalbank (since 12 April 2017)
Swiss, Niederteufen, 1956 Chairman of the Board of Directors until 3.1 Members of the Board of Directors
Professional background, exercising operational executive functions Joined Zurich Insurance 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 Swiss Insurance Association (SVV); 2001 – 2005 Member of the Management Board and Vice-President of the Fördergesellschaft I.VW
Appointments at listed companies Member of the Board of Directors of St. Galler Kantonalbank, St Gall
Professional background, exercising operational executive functions Until 1989 at Bülach District Court; 1989 – 2004 various managing roles at Winterthur Versicherungen, including CEO of Winterthur operations in the Czech Republic and Head of Mergers & Acquisitions at group level; 2004 – 2014 CEO of the Schweizerische National-Versicherungs-Gesellschaft AG, Basel; since 1 January 2015 VicePresident of the Board of Directors of Helvetia Insurance
Appointments at other companies Two appointments: Member of the Board of Directors of CSS Versicherung, Lucerne, and of Sompo Canopius Holding, Zurich
Appointments at other companies Six appointments at non-listed companies / institutions: Vice-Chairman of the Board of Directors of Patria Genossenschaft, Basel; Member of the Board of Directors of Forces motrices de la Gougra SA, Sierre, and Grande Dixence SA, Sion; Chairman of the Board of Directors of Immobilien Gletsch AG, Obergesteln; 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. Gallen; 1987 – 1993 Project and Group Manager for “IT Development Finance”; Swiss Bank Corporation, Zurich; 1993 – 1994 consultant for banks and insurance at The Boston Consulting Group, Zurich; 1994 – 1999 Managing Director 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 Corporate 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 Eight appointments at non-listed companies, in particular Chairman of the Board of Directors of Notenstein La Roche Privatbank AG, St Gall; Vice-Chairman of the Board of Directors of Pfandbriefbank schweizerischer Hypothekarinstitute AG, Zurich; Member of the Board of Directors of ARIZON Sourcing AG, St Gall, SIX Group AG, Zurich, and the Swiss Bankers Association (SwissBanking), Basel
Professional background, exercising operational executive functions Since 1983 law firm Lenz & Staehelin, Geneva; partner since 1988
Appointments at listed companies Member of the Board of Directors of VP Bank AG, Liechtenstein
Board member belonged to the Executive Management of the Helvetia Group or any of its Group companies in the financial years preceding the reporting period. No member of the Board of Directors has any significant business relationships with Helvetia other than as a policyholder.
In addition, there are the following business relationships with companies represented by members of the Board of Directors: – Doris Russi Schurter and Jean-René Fournier represent Patria Genossenschaft. Dr Patrik Gisel represents the Raiffeisen Group as a cooperation partner.
All Board members are non-executive directors. With the exception of Hans Künzle (CEO of Nationale Suisse until 31 December 2014), no
Board committees In order to employ the broad business experience of its individual members in its decision-making processes and to meet its supervisory reporting obligations, the Board of Directors has formed the following special committees from among its own members to assist the Board in close cooperation with the Executive Management in its management and control activities: the Strategy and Governance Committee, the Nomination and Compensation Committee, the Investment and Risk Committee, and the Audit Committee. The duties and powers of these committees are described in detail in the organisational regulations ( helvetia.com/content/dam/os/corporate/web/en/ home/investor-relations/overview/publications/ business-publications/organisational-regulation.
The table on page 13 contains information on the first time each member of the Board of Directors of Helvetia Holding AG was elected to that body.
Financial report Corporate governance 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 five times in 2017. One member was absent from two of the meetings. Most of the meetings lasted half a day.
If the office of Chairman is vacant, the Board of Directors appoints a Chairman from among its own members until the conclusion of the next Ordinary Shareholders’ Meeting.
As a general rule, meetings are attended by all Board members and, in an advisory capacity, also some of the members of the Executive Management. Meetings are organised as follows: the meeting starts as a closed meeting of the Board of Directors for discussing internal topics. The meeting is then continued in the presence of the CEO and, depending on the topic, some or all of the members of the Executive Management.
– overall supervision of the management of the Group’s business activities; – preparation of the business and compensation report; – preparation of the Shareholders’ Meeting; – implementation of its resolutions; and – approval of major legal transactions.
The Board of Directors is kept up-to-date in a variety of ways concerning the activities of Helvetia, its course of business and trends in the market. At its meetings, it requests information concerning: – content and outcome of matters dealt with by the various Board Committees, including all resolutions and proposals – all committees are required to submit copies of their minutes without delay; – course of business and market trends, to be provided by the CEO and the individual country managers and division heads, as well as the main projects, to be provided by the persons responsible, as necessary; – status of compliance with budget and other annual objectives as well as strategic plan values for several years; – results and findings of the audits conducted by the external and internal auditors which are in particular discussed by the Audit Committee and recorded in its minutes; – the most important strategic, financial and operational risks, any changes to them and risk management measures that have been taken or are planned; – compliance with legal and regulatory provisions and internal regulations; – significant developments and events that could influence the interests of stakeholders, spontaneously on the occurrence of special events, otherwise in a detailed annual report and a condensed interim report.
A new Actuarial Services area was also created at Group level. IT is also to be strengthened and its growing importance for digitisation reflected with the establishment of its own Group division.
Support functions Three support functions will now report directly to the CEO. The new organisational unit Corporate Development supports the Executive Management with issues relating to the company’s further development. Among others, the tasks of corporate communication, branding, legal and compliance and sustainability management are based in the Corporate Centre. The Head of Human Resources also reports directly to the CEO.
A detailed organisational chart can be found in our company brochure on page 13.
Philipp Gmür Doctorate in Law (University of Fribourg), lawyer, LL.M. (Duke Law School), Swiss, Lucerne, 1963
Appointments at other companies Member of the Federal Occupational Benefit Plan Commission; Member of the Life Committee of the Swiss Insurance Association; Vice-President of the Swisscanto Vested Benefits Foundation of the Cantonal Banks; Member of the Strategy and Governance Committee of the Swisscanto Collective Foundation of the Cantonal Banks; Member of the Board of Prevo AG, Basel, and Chairman of the Helvetia Investment Foundation
Professional background 1987 joined Patria: various management positions, including: Head of Portfolio Strategy and Portfolio Management; 1997 Member of the Executive Management of Helvetia Switzerland: initially Head of Investment Clients, then Head of Individual Life; 2002 Member of the Group Executive Management in his current position with various appointments at foreign subsidiaries of the Helvetia Group
Appointments at other companies Head of the Investment Commission of the Raiffeisen Pension Fund; Chairman of the Investment Committee of the Swiss Insurance Association; Honorary Consul General for Austria in Basel
Professional background 1987 – 1992 Andersen Consulting (Accenture): Senior Consultant; 1992 – 1997 Texas Instruments Software (James Martin Associates): Senior Consultant; 1997 – 1998 Information Builders: Head of Services for French-speaking Switzerland ; Providentia (Mobiliar Group): 1998 – 2000 Management of project portfolio, application architecture and Web group; 2001 – 2003 Head of Customer Service and Member of Senior Management; Phenix Versicherung (Allianz Group): 2004 – 2007 Head of Life Insurance and Member of the Executive Management; 2008 – 2011 CEO and Delegate to the Board of Directors; joined Helvetia Insurance: 2011 Member of the Executive Management of Helvetia Switzerland and Head of Private Pensions; Member of the Executive Management in his current role since 1 January 2017
Professional background 1985 – 1989 various positions at a pension fund advisory office and at IBM; 1990 joined Helvetia Insurance: 1990 – 2007 Actuary and Chief Actuary Life Insurance, from 2003 also Head of Actuarial Services Life Helvetia Group; 2007 Head of Actuarial Services / ALM and member of the Executive Management of Helvetia Switzerland; Member of the Executive Management in his current role since 1 January 2017
Paul Norton B.A. History (University of Reading / UK); Chartered Accountant, British and Swiss national, Zurich, 1961,
Appointments at other companies Member of the Finance and Regulation Committee of the Swiss Insurance Association, Zurich
Note: The CVs of the new members of the Executive Management from 1 January 2017 are available on the Internet at tent/en/ueber-uns/unternehmensfuehrung/geschaeftsleitung /geschaeftsleitungsmitglieder.html.
With retroactive effect from 2017, the Board of Directors will only be granted fixed compensation, in which components of previously paid variable long-term compensation will be integrated. In the changeover year, retroactive approval for fixed compensation for the Board of Directors is still required at the 2018 Shareholders’ Meeting. In future (from the 2018 Shareholders’ Meeting), it will then only be necessary to vote prospectively on the total amount of fixed compensation for the Board of Directors.
Financial report Corporate governance possible. The function and level of responsibility of the recipient of the variable compensation should be taken into account when formulating the performance objectives. The Board of Directors or, if the matter has been delegated to it, the Compensation Committee determines the weighting of the performance objectives and the target values and reports on these in the compensation report. In an amendment to this statutory option, the Board of Directors decided in 2017 to only pay itself fixed compensation, but in an adjusted amount, as of the 2018 Shareholders’ Meeting. A member must obtain at least 30 % of this fixed compensation in the form of blocked shares.
Compensation can be paid by the company or by a company controlled by it (Art. 30 of the Articles of Incorporation, com/content/dam/os/corporate/web/en/home/ investor-relations/overview/publications/businesspublications /articles-of-association_2017.pdf).
– Approval of the following total amounts by way of individual voting: a) fixed compensation of the Board of Directors for the period from the current Shareholders’ Meeting to the next Shareholders’ Meeting (prospective); b) fixed compensation of the Executive Management for the period from 1 July following the current Shareholders’ Meeting to 30 June of the next year (prospective); c) fixed (retroactive) compensation to the Board of Directors for the past financial year from the conversion of the variable compensation (retrospective ); d) variable compensation of the Executive Management for the past financial year (retrospective ).
5.2 Statutory rules regarding principles of long-term and performance-related compensation and additional amount for new Executive Management members
In addition to their fixed compensation, the members of the Board of Directors and the Executive Management can also be paid variable compensation that is based on the achievement of specific performance objectives. The variable compensation should target the business performance. The performance objectives can include personal objectives, Group objectives and division-specific objectives.
Objectives that are related to the market, other companies or similar benchmarks are also
Financial report Corporate governance ver their compensation. The additional amount per compensation period may not exceed 40 % for the Chief Executive Officer and 25 % for the other positions on the Executive Management of the total maximum amount of compensation that was most recently approved for the Executive Management (Art. 29 of the Articles of Incorporation, https://
5.3 Statutory rules for loans, credits and pension benefits to members of the Board of Directors and the Executive Management Loans may only be granted to the members of the Board of Directors at market conditions and to the members of the Executive Management at the usual employee conditions. Loans may only be granted for as long as the total amount of all outstanding loans to members of the Board of Directors and the Executive Management, including the new loans, is not more than twice the total amount of compensation that was most recently approved by the Shareholders’ Meeting (Art. 33 of the Articles of Incorporation, tent/dam/os/corporate/web/en/home/investor-relations /overview/publications/business-publications /articles-of-association_2017.pdf).
The Board of Directors specifies the rules that govern participation in the Shareholders’ Meeting and the determination of voting rights. For representatives of executive bodies, independent voting rights and custody proxies (who do not necessarily have to be shareholders themselves), it may stipulate regulations that deviate from the restriction of proxy voting to 10 % of the share capital. At the 2017 Shareholders’ Meeting, no individual shareholder with voting rights represented more than 10 % of the voting rights, with the exception of Patria Genossenschaft as individual shareholder and founding member of Helvetia in its current form – still as a pool member at this time. No specific exceptions with respect to voting rights restrictions or proxy voting were granted in the reporting year.
6.5 Registration of shares The right to attend the Shareholders’ Meeting (20 April 2018) and exercise voting rights is reserved for persons who were registered in the share register as shareholders with voting rights as of the cut-off date (10 April 2018) specified by the Board of Directors and announced in the “Schweizerischen Handelsamtsblatt”. In exceptional cases, guest tickets for the Shareholders’ Meeting may be issued, but holders of such tickets do not have any voting rights. Every share registered in the register entitles the holder to cast one vote.
8.2 Audit fees In the reporting year, the fees charged by the auditors amounted to: CHF 3,785,386.00.
Representatives of the external auditors 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, five meetings were held and the external auditors attended all five meetings. Discussions between the external auditors, the Chairwoman 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, Group 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.
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 on page 203 of this financial report as well as on our website.
The first section of the compensation report of the Helvetia Group 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 on Group level and the teams in the respective market units. 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. The application of the general principles in the financial year and the specific payments as well as the relevant information for the vote on compensation are then – unless explicitly mentioned – only presented in a second and third part for the Board of Directors (BoD) and the Executive Management (EM), which must be reported pursuant to the Ordinance Against Excessive Compensation in Swiss Listed Companies (VegüV). All sections comply with the “Swiss Code of Best Practice for Corporate Governance” issued by economiesuisse in 2002 and updated in 2016, the Corporate Governance Guidelines (RLCG) of the SIX Swiss Exchange of 13 December 2016, Circular 2010 / 1 “Compensation Systems” by the Swiss Financial Market Supervisory Authority FINMA of 7 December 2016, 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.
The Helvetia Group applies a multi-level and yet simple and transparent compensation system for all employees in Switzerland as well as for its governing and executive bodies with a reporting duty (BoD and EM). As shown below, this system is composed of fixed and variable compensation components. At Helvetia, compensation is deliberately fixed so that: – it is transparent, fair and appropriate for the members of the BoD and EM and for all managers and employees. Those who do good work should also be paid well; – it takes account of the responsibility carried by the function holder, the quality of his or her work and the effort and time involved in carrying out the work; – there is an appropriate relationship between the fixed and variable compensation components to ensure that the variable compensation is not so high that it has a negative impact on employees’ risk tolerance and motivates them to focus on short-term criteria only; – it is function-appropriate and shaped to a considerable extent by individual targets and the overall result of the company; – it is reasonable and competitive compared to the salaries paid by other companies in the same labour market and business sector; and
b) Approval of the following total amounts by way of individual voting: – fixed compensation of the BoD for the period from the current SM to the next SM (prospective ); – fixed compensation of the EM for the period from 1 July following the current SM to 30 June of the next year (prospective); – variable compensation of the BoD for the past financial year (retrospective); this will no longer apply after the 2019 SM because of the cancellation of the variable compensation for the BoD; in 2018, the SM will vote retroactively on fixed compensation for the BoD in compensation of the previous variable compensation; – total variable compensation of the EM for the past financial year (retrospective).
The delineation of powers for compensation matters is defined in Appendix I of the organisational regulations: dam/os/corporate/web/en/home/investor-relations /overview/publications/business-publications /organisational-regulation.pdf.
Variable compensation components of the Executive Management The variable compensation components for members of the EM – and all Helvetia employees in Switzerland – are determined by the Nomination and Compensation Committee during the first quarter of every year once the key figures for the past financial year and the individual target achievement results are available to the BoD for final approval by the Shareholders’ Meeting. The Nomination and Compensation Committee uses a cri-
– A new fixed total amount for the 2017 financial year and the period from 1 January 2018 to the 2018 SM (April 2018) for the BoD equalling the original variable compensation will be proposed to the SM 2018 for approval.
– For the period from the SM 2018 to the SM 2019, the SM will only vote on a total amount for fixed compensation in accordance with the above rule (change from retrospective to prospective compensation).
When a Director leaves the BoD, the total 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 BoD will no longer receive any variable compensation components from the 2018 SM.
1. Compensation for the Board of Directors The compensation principles relevant for the BoD 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 BoD.
This change is applied retroactively to 2017 in accordance with the following method:
Financial report Compensation report nal responsibility. Compensation for individual target achievement is due to the EM member regardless of the general business result.
Long-term results-based compensation component (LTC up to no more than 40 % of fixed compensation ): This compensation component with a longerterm orientation is multiplied by the percentage of the strategic target achieved. In contrast to the regular results-based compensation component, the amount calculated in this way is granted to the EM member in the form of a deferred claim to a certain number of shares. The relevant share price is calculated on the basis of the closing price on the date of the meeting of the Nomination and Compensation Committee at which the extent of target achievement is determined. The relevant number of shares is transferred to the ownership of the EM 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 EM member in question. If the person in question leaves the EM, 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 EM and the longterm 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.
f) Severance pay, loans and discounts 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 market conditions. BoD members also do not benefit from any discounts (premium discounts, etc.) that are offered to the EM and the Helvetia employees.
2. Compensation for the Executive Management The compensation of the members of the EM comprises the components described below: a) Fixed compensation The members of the EM are paid a fixed compensation in cash which is determined every year by the Nomination and Compensation Committee for the period from 1 July to 30 June of the following year and the total amount of which is approved by the SM. This is determined individually using a valuation system applied by the Hay Group, a company specialising in compensation issues, and takes account of the function and responsibility assumed by each EM member as well as the compensation paid by the Group’s competitors. It also includes all child or education allowances and long-service bonuses.
b) Variable compensation The final amount of the variable compensation, the total amount of which must also be approved by the SM before it is paid out, is dependent on the following three factors: Individual target achievement (20 % of fixed compensation ): This reference value is multiplied by the degree of achievement of the personal targets agreed with the line manager in advance. The result of this multiplication is paid out to the EM member in cash. The individual targets of an EM member include quantitative and / or qualitative components and depend on his or her operatio-
For the LTC, there is an additional restriction in that no deferred shares are allocated if the Group as a whole reports a loss, and / or the solvency figures are insufficient. The percentage of target achieved (LTC, results-based component), as calculated by the Nomination and Compensation Committee of the BoD, is multiplied by the respective target figure (percentage of the fixed compensation ). The results-based component calculated in this way and the result of the individual target achievement together comprise the total variable compensation of the employees and the EM. These variable compensation components (individual, results-based and LTC for the EM) are an important feature of Helvetia’s performance culture, under which every individual employee is compensated according to the quality and quantity of his or her work as well as his or her responsibility and workload and also the result achieved by the company as a whole. The variable compensation components are paid out in cash and only the LTC is paid in the form of deferred shares after three years or in the equivalent amount in cash, if desired.
3. Helvetia employees in Switzerland: share purchase plan In Switzerland there is an employee share purchase plan that allows employees to participate in the performance of Helvetia and thus strengthens 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 BoD, 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 EM members can also take part in this programme, but the BoD members may not. The employee share purchase plan is also not available abroad. The costs associated with the share purchase plan in 2017 were recognised in the income statement at CHF 1.4 million (previous year: CHF 1.4 million).
d) Shares and options The EM members can, on a voluntary basis, acquire the maximum number of shares available to them under the employee share purchase plan. The same conditions apply as for all other employees of Helvetia in Switzerland (see para 3). They therefore also benefit from a tax discount of 16.038 % that is granted because these shares are blocked for three years.
f) Pension benefits The benefits to which EM members are entitled under occupational pension plans are in line with the model for internal pension regulations applicable to all employees. The employer pays the standard joint contribution. The employer also finances the option for EM members to retire from the age of 60. These additional contributions are presented as part of the overall pension contributions made to EM members. No extraordinary benefits are paid.
II. Compensation paid to the Board of Directors and the Executive Management in 2017
1. Compensation paid to the Board of Directors In the reporting year, the members of the Board of Directors received fixed compensation totalling CHF 2,623,000. The fixed compensation includes all allowances and expenses set out in the compensation regulations as well as the contributions to social insurance schemes (employer contributions AHV / IV / EO). The members of the Board of Directors received additional fixed compensation of CHF 494,085 transferred in the form of a total of 826 shares blocked for three years at a stock exchange price of CHF 569.00 (28 February 2018). This is subject to approval by the Shareholders ’ Meeting. In the previous year, the members of the Board of Directors received fixed remuneration of CHF 2,859,502 and variable remuneration of CHF 543,939 paid in the form of a total of 903 deferred shares at a stock exchange price of CHF 573.00.
At the reporting date, a mortgage loan had been granted to Jean-René Fournier for CHF 765,000 (previous year: CHF 765,000). In the reporting year, the loan, a fixed mortgage at normal customer conditions, had an interest rate of 1.57 % (previous year: 2.0 %). There are no other insurance contracts, loans or guarantees.
Fixed compensation Variable compensation1 Total compensation in CHF, incl. AHV / IV / EO employer contributions
Doris Russi Schurter (Chairwoman) (since 18.12.2017) 267 556 254 052 31 703 32 528 299 259 286 580
Peter Kaemmerer (until Shareholders’ Meeting 22.4.2016) 0 33 290 0 9 638 0 42 928
John Martin Manser (until Shareholders’ Meeting 22.4.2016) 0 61 323 0 9 638 0 70 961
Herbert J. Scheidt (Member) (until Shareholders’ Meeting 28.4.2017) 73 417 199 738 10 767 32 528 84 184 232 266 1 As of 2017, shares blocked for a minimum of three years; 2016 in prospective shares 2 Includes the additional payment in 2016 to the pension fund of CHF 210,000 owed under the former employment contract
Financial report Compensation report 2. Compensation paid to the Executive Management In the reporting year, the members of the EM received fixed compensation totalling CHF 8,031,894. The fixed compensation includes all scheduled allowances, meeting attendance fees and expenses. Variable compensation of CHF 4,668,248 was granted to the EM. This is subject to approval by the SM. In the previous year, the members of the EM received fixed remuneration of CHF 5,143,105 and variable remuneration of CHF 3,595,186.
As part of this variable compensation, the EM was allocated LTC shares of CHF 1,523,782 million (previous year: CHF 1.56 million). This corresponds to 2,678 shares at a price of CHF 569.00 as of reference date 28 February 2018 (previous year: 2,730 shares at CHF 573.00).
EM members may conclude insurance contracts, loans and other services under the terms and conditions currently in effect for employees. At the reporting date, five mortgage loans had been granted to Philipp Gmür (CHF 1,000,000 [previous year: CHF 1,000,000]), Reto Keller (CHF 620,000 [previous year: CHF 0]), Beat Müller (CHF 1,170,000 [previous year: CHF 0]), Paul Norton (CHF 500,000 [previous year: CHF 0]) and David Ribeaud (CHF 1,015,000 [previous year: CHF 1,015,000]). In the reporting year the loan to Philipp Gmür, which is a fixed mortgage at normal employee conditions, had an interest rate of 0.95 % (previous year: 0.95 %). The loan to Reto Keller of CHF 500,000 was subject to interest of 1.38 % in 2017, the extra mortgage of CHF 120,000 was subject to interest of 2.39 %. The loan to Beat Müller of CHF 986,000 was subject to interest of 1.40 % in 2017, the extra mortgage of CHF 184,000 was subject to interest of 1.34 %. The loan to Paul Norton of CHF 500,000 was subject to interest of 0.98 % in 2017. The loan to David Ribeaud of CHF 595,000 was subject to interest of 0.89 % in 2017 (previous year: 0.89 %), the extra mortgage of CHF 420,000 was subject to interest of 0.95 % (previous year: 0.95 %). There are no other loans or guarantees.
– Employer contributions to pension funds with respect to the fixed compensation 1 626 331 971 316
Total fixed compensation paid out 8 031 894 5 143 105
– Share-based compensation in the form of deferred shares acquired during the financial year (LTC)2 1 523 782 1 564 290
– Employer contributions to pension funds with respect to the variable compensation 548 826 308 367 1 Total bonus amount based on personal and results-based target achievement 2Comprises the value of the deferred shares allocated as part of the LTC
3. Highest individual compensation The highest individual amount paid out in the reporting year was paid to Philipp Gmür (CEO). Subject to approval by the Shareholders’ Meeting, this amounted to CHF 1,860,221 in total (2016 Stefan Loacker: CHF 2,116,820), comprising the following: cash remuneration of CHF 1,346,628 (fixed component CHF 955,226, variable component CHF 391,402), share-based payments of CHF 266,292 in the form of deferred shares, and employer contributions to pension funds of CHF 247,301.
Ralph Jeitziner (1.1. – 30.6.2017) Head of Sales CH 217 500 46 016 263 516 Reto Keller (1.1. – 30.6.2017) Head of Private Pensions CH 200 000 45 119 245 119 Adrian Kollegger (1.4. – 30.6.2017) Head of Non-Life CH 115 000 14 578 129 578 Beat Müller (1.1. – 30.6.2017) Head of Actuarial Services 200 000 45 119 245 119
III. Compensation for the Board of Directors and the Executive Management to be approved by the 2018 Shareholders’ Meeting
BoD for the period from the 2018 SM to the 2019 SM
Salaries and other short-term benefits: – Fixed compensation (incl. expenses allowances child / education, allowances, long-service awards, company car) 6 000 000 6 184 389 6 100 000
Total fixed compensation Executive Management 8 200 000 8 292 840 8 400 000 – 1.3 %
Financial report Compensation report 3. Approval of the total compensation for the Board of Directors for 2017 for the retroactive fixed compensation components The amounts involved in the conversion of the former variable compensation of the Board of Directors into a fixed component were disclosed in para. 1a) and in section II. Because of this change from retrospective variable compensation to prospective fixed compensation, the Shareholders’ Meeting still has to approve this compensation retroactively for the period from 1 January 2017 to the 2018 Shareholders’ Meeting. In terms of the amount, it equals the former variable compensation (30 % of the basic fee) calculated on the basis of an extent of target achievement of 100 %. This retroactive approval will not be needed from the 2018 Shareholders’ Meeting (in future, only prospective approval of the total fixed compensation for the Board of Directors).
The Board of Directors requests approval from the Shareholders’ Meeting for additional fixed compensation for the Board of Directors in the amount of CHF 700,000 for the past financial year 2017 until the SM 2018.
The Board of Directors requests approval from the Shareholders’ Meeting for total variable compensation for the Executive Management in the amount of CHF 5,500,000 for the past financial year 2017.
Total additional compensation Board of Directors, retrospective financial year – SM 2018
Employer contributions AHV / IV / EO 100 000 26 541 27 000 –
Market positions of country markets as at the end of 2016
tor vehicle insurance (+ 0.3 %) and property insurance (+ 0.5 %) business lines also contributed to this growth.
Until 2017, the global reinsurance market was characterised by a low price level, which was attributable to favourable claims developments and the increasing overcapacities of the reinsurance sector. In 2017, the sector was then confronted with an extraordinarily large burden from natural catastrophes, such as hurricanes Harvey, Irma and Maria, the earthquake in Mexico and forest fires in southern Europe and California. The combined ratio in the Property & Casualty segment for last year is thus estimated to be over 110 %. The claims burden caused by the storms absorbed a considerable share of the alternative reinsurance capital and also reduced the overcapacities in the traditional reinsurance sector. Increasing prices are therefore expected for the coming contract renewal rounds, especially in the case of portfolios affected by large claims. Global premium volumes in the area of non-life reinsurance increased by around 3 % in 2017, driven by increasing cessions from the emerging markets.
The behaviour of the central banks is likely to be decisive for further developments. In view of the tensions between economic growth, booming labour markets and rising investment expectations, monetary policy will play a key role. Finding a balance between the long overdue departure from the unconventional monetary policy and lending support to the economic upturn is likely to require all the tricks of central bank policy.
The IFRS profit for the period for Helvetia after the acquisitions is temporarily significantly impacted by special effects. These special effects include integration costs, planned amortisation of intangible assets and additional planned writedowns due to the revaluation of interest-bearing securities to fair value, resulting from the specific IFRS accounting requirements for acquisitions.
Up to the end of the 2017 financial year, Helvetia will therefore be emphasising the “underlying earnings”, which eliminates these temporary effects and better reflects the operating performance of the new Helvetia Group. From 2018, we will once again focus on the IFRS result.
2017 was once again a successful financial year for Helvetia. Following the completion of the integration of Nationale Suisse and Basler Austria, which were acquired in 2014, we increased our profit for the past financial year to above the CHF 500 million mark (CHF 502.4 million). The result was supported by strong technical results as well as very good developments on the capital markets. The share of consolidated earnings accounted for by the non-life business has increased from 56 % in financial year 2013 to more than 70 % in financial year 2017. Helvetia is thus less dependent on developments on the capital markets. In financial year 2017, Helvetia also recorded a slight increase in terms of business volume.
Underlying earnings after taxes1 amounted to CHF 502.4 million, up 2.2 % on the previous year (financial year 2016: CHF 491.8 million). Both the life and non-life businesses contributed to this increase in earnings. Underlying earnings in the life business amounted to CHF 193.1 million, up 11.3 % on the previous year. In the non-life business, Helvetia produced earnings
Additional depreciation due to revaluation at market values – 32.6 – 37.2
Business volume by segment in financial year 2017 Share in % | in CHF million
of CHF 363.5 million, an increase of 6.7 % on the corresponding reporting period of the previous year. Both business areas impressed with improved technical results and also benefited from the good performance on the capital markets. However, a further increase in the tax ratio relative to the previous year in both business areas had the opposite effect. Underlying earnings for the Other Activities business area stood at CHF – 54.2 million in financial year 2017 (financial year 2016: CHF – 22.2 million). The reasons for this decline in earnings – despite at the same time a significant improvement in the technical result for Group reinsurance – are higher costs due to the new hybrid bond issued in spring 2017, a lower investment result, the effect of the acquisition of MoneyPark and DL (Defferrard & Lanz), the lack of the positive tax effects as seen in the prior year and higher costs due to planned strategic investments.
At 91.8 %, the net combined ratio at Group level remained almost stable at the prior-year level (financial year 2016: 91.6 %) despite the greater claims burden owing to natural catastrophes (especially Hurricanes Harvey, Irma and Maria in the Specialty Markets segment). The claims ratio improved by 0.4 percentage points to 62.1 %. The Europe segment made a key contribution here. Here, the claims ratio declined by 1.6 percentage points relative to the previous year, a development that can primarily be attributed to the successful portfolio optimisation measures. However, the claims ratio also improved in Switzerland by 0.5 percentage points. Overall, thanks to the good performance in Europe, Helvetia succeeded in offsetting the increased claims burden in the Specialty Markets segment.
Thanks to the successful integration of Nationale Suisse and Basler Austria acquired in 2014, underlying earnings included pretax synergies of CHF 137.3 million (financial year 2016: CHF 118.3 million). CHF 92.8 million of this was attributed to savings on personnel expenses and CHF 44.5 million to other cost reductions.
The non-life business posted a pleasing performance in financial year 2017; premium volumes and underlying earnings improved compared to the previous year. The net combined ratio remained stable at the level of the previous year despite an increase in the claims burden owing to natural catastrophes.
– Europe once again with growth driven by Spain, Austria and Germany
Underlying earnings after taxes amounted to CHF 363.5 million, up by 6.7 % on the prior year (financial year 2016: CHF 340.5 million). This once again confirms that the non-life business is the Group’s driver of profitability. The following factors contributed to the good earnings trend: Higher investment results owing to good capital market developments and the larger investment portfolio, as the investments of Helvetia Beteiligungen were transferred to the Non-Life segment following the merger of Helvetia Beteiligungen AG, St Gall, with Helvetia Schweizerische Versicherungsgesellschaft AG, St Gall.
Slightly higher technical result due to higher premium volume and improved claims ratio
Higher taxes, as the previous year was positively influenced by special effects
Helvetia also posted a solid business performance for the life business. We were able to further increase profitability, partly thanks to the good performance recorded for new business.
– Planned decline in traditional individual life business (– 12.3 %)
Investment-linked insurance solutions CHF 809.9 million, + 14.1 % in OC
– Italy was the major growth driver (+ 39.3 %) – Switzerland and Germany also with double-digit growth – Good performance in Spain
Life business volume by business line in financial year 2017 Share in % | in CHF million
Slightly higher expenses for strengthening of reserves Higher tax rate (previous year was positively influenced by special effect)
The profit for the period under IFRS was CHF 173.4 million (financial year 2016: CHF 150.6 million). The IFRS result in particular includes integration costs, depreciation due to the revaluation of interest-bearing securities under IFRS acquisition accounting, and the corresponding customer shares and taxes.
In 2017, the new business margin improved considerably and stood at 1.8 % (previous year: 1.3 %). One driver was the higher volume of new business in capital-efficient, investment-linked insurance solutions for both the individual life and the group life business. Additionally higher interest rate assumptions and especially the changes made to traditional savings products as well as the push in sales of capital-efficient products had a positive effect on the new business margin.
As at 31 December 2017, the Helvetia Group’s embedded value was CHF 3,790.1 million. The Helvetia Group’s embedded value thus increased by CHF 525.9 million or 16.1 % since the beginning of the year (see page 197). This growth is in large part due to changes in the model, which mean, for example, that hybrid capital is now attributed to solvency costs and valuation reserves are measured with their specific yield assumptions. However, in addition to the expected changes (roll-forward), contributions to this increase came from positive economic differences, the increase of value of new business and currency gains, which were offset by movements of capital from dividend payments.
Higher costs due to new hybrid bond issued in spring 2017 Lower investment result, as the investments of Helvetia Beteiligungen were transferred to the non-life segment following the merger of Helvetia Beteiligungen AG, St Gall, with Helvetia Schweizerische Versicherungsgesellschaft AG, St Gall
The IFRS profit for the period was CHF – 60.5 million (financial year 2016: CHF − 25.2 million).
Helvetia generated an investment result recognised in the income statement of CHF 1.35 billion on its financial assets and real estate – an increase of more than CHF 200 million relative to 2016. Current income totalled slightly more than CHF 1 billion. In particular, it was possible to increase rental income on real estate, while income on financial assets fell slightly as a result of persistently low interest rates. For retained absolute earnings, the direct return fell as expected from 2.2 % to 2.1 %.
The unrealised gains recognised in equity changed only marginally. The slight decline experienced for fixed-income securities was practically offset by the growth in equities classified as AFS. The portfolio posted a performance of an attractive 2.8 %.
Despite the favourable market developments, the equity and foreign currency exposures remained largely hedged throughout the entire year in order to cushion the impact of any adverse market developments on the income statement and balance sheet. Although the economic framework conditions are intact and the economy is gaining momentum worldwide, the tried-and-tested hedging policy will also be continued in the current year. In light of the high valuation level of many investment markets, the cautious and timely management of investment risks remains imperative.
Investment structure 2017 financial year Share in % | in CHF million securities property
Change in unrealised gains and losses recognised in equity – 37.9 4.2
In contrast, underlying earnings improved by 11.9 % to CHF 409.7 million.
In the life business, the business volume amounted to CHF 3,512.7 million and was thus down on the prior-year figure of CHF 3,662.4 million.
The premiums by line of business changed as follows: Non-life business volume by line of business
– Satisfying performance by capital-efficient Swisscanto solutions, 5.8 % policy growth, 15.9 % policy growth in new business
Helvetia’s underlying earnings in the life business in the past financial year amounted to CHF 157.9 million (financial year 2016: CHF 134.4 million), representing an increase on the previous year of 17.5 %.
The following factors influenced the earnings trend in the non-life and life businesses: Non-life earnings trend
Substantially better investment results owing to good market developments and a larger investment portfolio, as the investments of Helvetia Beteiligungen were transferred to the Swiss non-life segment following the merger of Helvetia Beteiligungen AG, St Gall, with Helvetia Schweizerische Versicherungsgesellschaft AG, St Gall.
Higher savings result due to a reduction in the minimum interest rate in the Swiss group life business in both the mandatory and non-mandatory area
Helvetia posted further profitable growth in the Europe segment during the 2017 financial year: The business volume rose to CHF 2,763.9 million and was up 2.4 % on the previous year in currency-adjusted terms. In Swiss francs, the Group currency, the volume of business rose by 4.9 %, owing to positive exchange rate effects. The company generated underlying earnings of CHF 119.5 million in financial year 2017, which represented a pleasing increase of 5.4 % over the previous year (financial year 2016: CHF 113.4 million). Particularly pleasing is also the fact that Europe now contributes almost a quarter of the Group’s total profit.
In financial year 2017, Helvetia generated non-life premiums of CHF 1,729.1 million (financial year 2016: CHF 1,662.4 million) in Europe. This represents a 1.5 % increase (in OC) over the previous year.
Italy CHF 498.0, – 1.6 % in OC – Property / liability and transport insurance grew – Health / accident insurance stable – Motor vehicle insurance posted market-wide decline
Austria CHF 324.5 million, + 4.0 % in OC – All lines of business with pleasing growth, health / accident, motor vehicle and property insurance as the main growth drivers
Spain CHF 317.2 million, + 4.8 % in OC – All lines of business posted positive growth
Italy CHF 395.7 million, + 4.6 % in OC – Good performance of investment-linked insurance solutions
Germany CHF 276.9 million, + 6.7 % in OC – Main growth drivers were investment-linked insurance solutions (+ 15.7 % in OC); traditional insurance contracted as planned
Motor vehicle CHF 648.3 million, + 0.6 % in OC (Italy with market-wide contraction in motor vehicle business, all other country markets grew)
Health / accident CHF 180.1 million, + 2.8 % in OC
Investment-linked insurance solutions CHF 519.0 million, + 14.9 % in OC
Helvetia’s underlying earnings in the life business in the past financial year amounted to CHF 35.2 million (financial year 2016: CHF 39.1 million).
Higher taxes, as the previous year was also positively influenced by special effect
In financial year 2017, Helvetia substantially increased the profitability of the business written in the Europe segment.
An improved cost ratio (– 0.2 %) thanks to further synergies
All units reported a net combined ratio of below 100 %.
Active Reinsurance (Hurricanes Harvey, Irma and Maria) and the adjustment of the Ogden discount rates in the United Kingdom
– the negative impact on the Specialty Lines CH / International likewise caused by natural catastrophes (Hurricanes Harvey, Irma and Maria)
– with a simultaneous improvement in the claims ratio in France higher cost ratio due to – the one-time impact of a special effect in the previous year – underwriting of quota share treaties with higher commissions for Active Reinsurance as well as impact from the reinsurance structure
In addition to the financing companies and the holding company, the Corporate segment comprises the Corporate Centre and Group reinsurance. The underlying earnings of this segment totalled CHF – 43.4 million, thus falling below the prior-year figure of CHF – 23.6 million. Despite a significantly improved technical result for Group reinsurance, the decline can primarily be attributed to financing costs for the newly issued hybrid bond, the loss of the one-time positive tax effects included in the previous year and the planned higher project costs.
Net cost ratio 2017 Net cost ratio 2016 68 Helvetia Annual Report 2017
Summary of significant accounting policies 93 Segment information 105 Foreign currency translation
Income investments with market risk for the policyholder 7.1.5 159.5 66.4
Claims and benefits paid (life) – 3 631.4 – 3 531.6
Income attributable to deposits for investment contracts – 34.2 – 23.8
Net benefits to policyholders and claims – 7 155.0 – 7 160.4
Earnings per share: Basic earnings per share (in CHF) 11.5 39.12 36.07
Share of associates´ net profit recognised in other comprehensive income – – 0.5
Valuation reserves for contracts with participation features 11.2.5 1 337.5 1 278.7
Income and expense that will not be reclassified to income – – – – 0.1 – 17.3 7.6 24.8 – 0.1 24.7 – 24.7
Transfer from / to retained earnings – – – – 0.4 – – 15.1 – 2.8 – 18.3 0.0 – 18.3 18.3 0.0
Realised gains and losses on property, equipment and intangible assets – 0.8 – 8.9
Realised gains and losses on sale of subsidiaries and associated companies – 0.2 – 1.1
Depreciation / amortisation of property, equipment and intangible assets 118.3 110.2
Unrealised gains and losses on investment property – 25.5 – 10.5
Changes in other operating assets and liabilities – 123.3 – 241.4
Sale of shares, investment funds and alternative investments 917.5 1 018.9
Purchase of money market instruments – 3 156.3 – 3 322.3
Purchase of investments in subsidiaries, net of cash and cash equivalents – 60.0 – 106.4
Sale of investments to former subsidiaries, net of cash and cash equivalents – 12.3
Effect of exchange rate differences on cash and cash equivalents 45.0 – 7.7
Cash and cash equivalents as of 31 December 1 260.3 942.7
Interest paid 34.4 20.4 1 “Other income and expenses not affecting cash” primarily contains the change to interest-accruing profit participation of owners of contracts with discretionary participation features.
2.1 Standards applied for the first time in the reporting year The following published sector-relevant standards (IAS / IFRS), interpretations (IFRIC) and amendments to the standards were applied by the Group for the first time in the reporting year: – IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses – Disclosure initiative – Amendments to IAS 7 – Annual improvements to IFRS (cycle 2014 – 2016) − amendments to IFRS 12
2.2 Standards not yet applied in the reporting year Due to their effective dates, the following published sector-relevant standards, interpretations and amendments to standards were not applied to the 2017 consolidated financial statements: Changes in accounting policies to be applied for annual periods beginning on / after: IFRS 15: Revenue from Contracts with Customers 01/01/2018
IFRS 19: Remeasurement at a plan amendment, curtailment or settlement 01/01/2019
The other amendments are not expected to have any material impact on the financial statements.
2.3.1 Subsidiaries The consolidated financial statements include the financial statements of Helvetia Holding AG, its subsidiaries and its own investment funds. Consolidation applies when Helvetia Holding AG exercises indirect or direct control over the company's operations. Subsidiaries acquired during the course of the financial year are included in the consolidated financial statements from the date on which Helvetia Group took effective control. Acquisitions of companies are recorded using the purchase method. Intergroup transactions and balance sheet items are eliminated.
Any changes in Helvetia Group's percentage of shares held in a subsidiary, without losing control, are treated as transactions among shareholders. The adjustments of minority interests are based on the proportional net assets of the subsidiary. Goodwill is not adjusted and no gains or losses are recognised in the income statement.
2.3.2 Associates Associates of Helvetia Group are accounted for using the equity method if significant influence is exercised by Helvetia Group. The book value of all investments is tested for impairment if there is objective and substantial evidence for impairment at the balance sheet date. Associates of Helvetia Group are listed together with the fully consolidated subsidiaries from the table in section 18.3 (from page 183).
2.4.1 Translation of financial statements prepared in foreign currency 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 differ- ences are recorded in “Reserve for foreign currency translation differences” in equity, not affecting profit or loss. Upon (partial) disposal of a subsidiary, these currency differences, attributable to the subsidiary in question and accumulated in equity, are released through income. The rates applied in these financial statements are given in section 4.1 (page 105).
Foreign currency translation differences are generally recognised in the income statement. For non-monetary financial assets classified as available-for-sale investments, such as shares and shares in investment funds, the unrealised foreign currency result is recognised in equity without affecting the income statement until the financial instrument is sold.
2.5 Estimate uncertainties and key assumptions 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 ex-
Financial report Summary of siginificant accounting policies perience 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.
Financial instruments measured at the prices quoted on an active market belong to the “Level 1” category of valuation methods. Quoted in an “active market” means that the prices are made avail- able regularly, either by a stock exchange, a broker or a pricing service, and that these prices represent regular market transactions.
Financial instruments for which the model assumptions are based on observable market data are allocated to the “Level 2” 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.
– Derivative financial instruments: The fair value of equity and currency options is determined using option price models (Black-Scholes option pricing), while the fair value of forward exchange rate agreements is determined on the basis of the forward exchange rate on the reporting date. The fair value of interest rate swaps is calculated using the present value of future payments.
– Minority interests in own funds and deposits for investment contracts: The fair value is derived from the fair values of the underlying assets.
The “Level” categories relate to the observability of prices and valuation factors and are not an indication of the quality of a financial instrument.
2.5.2 Impairment of available-for-sale investments 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 Group, instruments are considered impaired if their fair value remains below cost for longer than nine months or falls 20 % or more below cost irrespective of the period of time. In addition, ratings and analyst reports can serve as an indication
2.5.4 Insurance-specific estimate uncertainties The uncertainties regarding estimates in the area of technical results are explained in section 2.15 (from page 88). Any material change to the parameters used for the calculation of the provisions is commented on in sections 9.3 from page 130 (non-life business) and 9.4 on page 132 (life business).
2.5.5 Impairment of goodwill Capitalised goodwill is tested annually for impairment. The method is described in section 2.10 (page 84). The calculation of the recoverable amount is based on a number of assumptions, which are detailed in section 6 (from page 108).
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 loans as well as provisions for insurance and investment contracts is described in section 16.5 (from page 170) as part of the risk assessment process.
Land is not depreciated. Useful life is adjusted if the pattern of consumption of the economic benefit has changed. Value-adding investments are added to the current book value in the period and are depreciated over the entire term if an increase in the economic benefit is expected from the investment and reliable estimates exist for the cost. Depreciation is recognised in the income statement under “Operating and administrative expenses”. Repairs and maintenance are charged to the income statement as incurred. Tangible assets are regularly tested for impairment (see section 2.10, page 84).
Included in the other intangible assets are brands acquired through acquisitions. These are amortised in accordance with their useful life.
The other intangible assets also include intangible assets developed by the company, principally proprietary software that is recorded at cost and amortised on a straight-line basis from the time of commissioning. Depreciation is recognised in the income statement under “Operating and administrative expenses”. The useful life is usually between three and ten years.
A positive balance is accounted for as goodwill. If the value of the acquired entity's net assets exceeds the acquisition costs at the purchase date, this surplus is immediately recognised in the income
2.10 Impairment of tangible assets, goodwill and other intangible assets The carrying value of tangible assets or an intangible asset amortised using the straight-line method is tested for impairment if there is evidence for impairment. Goodwill and intangible assets with an indefinite useful life are reviewed for impairment annually in the second half of the year. They are also tested for impairment again if there is evidence of impairment.
Financial report Summary of siginificant accounting policies 2.11 Investments At Helvetia Group, investments comprise investments in associates, investment property and financial assets (securities, derivative financial assets, loans and money market instruments). The treatment of investments in associates is described in section 2.3.2 (page 80), as part of “Consolidation principles”.
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. For monetary AFS financial assets, such as bonds, the impairment is reversed through profit or loss if the circumstances causing the impairment cease to apply.
2.12 Financial derivatives Derivative financial instruments are classified as “Financial assets held for trading” and are shown in the item “Financial assets at fair value through profit or loss” or are carried as “Derivatives for hedge accounting”. The hedging strategies used by Helvetia Group for risk management purposes are described in section 16 (from page 155).
Those financial liabilities that are 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 2.15, page 88) 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 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.
2.15.1 Non-life business The technical items in non-life business are established Group-wide on the same principles. All nonlife insurance products of Helvetia Group contain significant technical risks and are recognised as insurance contracts.
Premiums are booked at the beginning of the contract period. Earned premiums are calculated pro rata per individual contract and recorded as income for the relevant risk periods. Premium proportions relating to future business periods are accounted for as unearned premium reserves. The cost of claims is assigned to the relevant period.
Financial report Summary of siginificant accounting policies tuarial 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.
Policyholders with contracts containing discretionary participation features may have the right to participate in local investment returns on capital or local company results under local statutory or contractual regulations. Provisions set up for that purpose in accordance with local accounting principles are not changed under IFRS rules and are included under “Provision for future policyholder participation” or under “Actuarial reserve” in the balance sheet.
2.17 Receivables Receivables from the insurance business and other receivables are carried at amortised cost. In general, this corresponds to the nominal value of the receivables. Permanent impairment is recognised through profit or loss. The impairment loss is reported under “Other expenses” in the income statement.
2.19 Cash and cash equivalents 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.
Post-employment benefits pertain to defined contribution plans and defined benefit plans. The amount of the employers' contributions for defined contribution plans depends on the employee services rendered during the reporting period and is charged directly to the income statement. For defined benefit plans, pension obligations and related past service cost are calculated at each balance sheet date by a qualified actuary, using the projected unit credit method. The actuarial assumptions applied to the calculations consider the regulations of the respective countries and Group companies. Changes in the assumptions, 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.
Financial report Summary of siginificant accounting policies 2.23 Share-based payment Share-based payment transactions include all compensation agreements under which employees receive shares, options or similar equity instruments or the granting Group company assumes obligations that depend on the price of its shares. All share-based payment transactions with employees are recognised at fair value.
The segment “Switzerland” comprises the Swiss country market and the financial intermediaries MoneyPark and Defferrard & Lanz. The “Europe” segment comprises the country markets of Germany, Italy, Spain and Austria. The “Specialty Markets” segment includes transport, art and engineering insurance policies in the Switzerland / International and France market units, as well as the global Active Reinsurance business. The segment “Corporate” includes all Group activities, the Group’s own fund companies, Group reinsurance and Helvetia Holding AG.
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. The non-life business also includes Active Reinsurance.
Profit or loss before tax 426.0 332.7 130.0 104.2 13.4 33.0 – 56.0 – 42.1 0.0 0.0 513.4 427.8
Current income on Group investments (net) 769.6 753.5 206.3 211.3 22.2 22.5 19.0 16.0 – 15.7 – 3.7 1 001.4 999.6
Income investments with market risk for the policyholder 38.2 8.0 121.3 58.4 – – – – – – 159.5 66.4
Net change in unearned premium reserve – 0.2 0.7 1.9 – 1.0 – 10.6 2.4 – 0.7 1.3 0.0 0.0 – 9.6 3.4
Income investments with market risk for the policyholder 48.2 24.1 32.4 21.9 4.7 1.8 36.0 10.6 – – 121.3 58.4
Share of profit or loss of associates – – – – 0.6 0.5 0.1 – 0.2 – – 0.7 0.3 of which transactions between geographical segments 1.5 0.8 – – – – – 1.5 – 0.8 175.0 218.3 175.0 218.3
Claims and benefits paid (life) – 154.5 – 144.2 – 202.2 – 250.2 – 81.0 – 80.6 – 135.9 – 140.0 – – – 573.6 – 615.0
Net benefits to policyholders and claims – 692.2 – 622.6 – 601.1 – 603.2 – 305.8 – 293.7 – 415.4 – 374.7 – – – 2 014.5 – 1 894.2
Profit or loss from operating activities 36.5 21.3 27.6 26.2 42.2 38.5 26.7 18.2 0.0 0.0 133.0 104.2
Gains and losses on Group investments (net) 38.5 29.7 25.7 21.8 3.1 4.3 19.8 16.5 – – 87.1 72.3
Total revenues from external customers 963.1 855.0 838.9 834.6 454.5 435.7 559.0 516.9 175.0 218.3 2 990.5 2 860.5
Claims incurred including claims handling costs (non-life) – 356.7 – 356.0 – 299.2 – 326.2 – 218.9 – 215.7 – 198.8 – 188.7 1.3 0.2 – 1 072.3 – 1 086.4
Current income on Group investments (net) 864.7 868.9 138.4 122.5 19.6 16.7 – 21.3 – 8.5 1 001.4 999.6
Share of profit or loss of associates 0.0 0.0 5.2 2.0 – – – – 5.2 2.0
Profit or loss from operating activities 220.0 176.2 375.0 293.4 – 3.9 – 8.6 – 12.5 0.0 578.6 461.0
Profit or loss for the period 173.4 150.6 290.0 251.2 – 60.5 – 25.2 0.0 0.0 402.9 376.6
Claims incurred including claims handling costs (non-life) – – – 2 390.1 – 2 304.3 – 146.9 – 151.3 147.5 145.9 – 2 389.5 – 2 309.7
Claims and benefits paid (life) – 3 631.4 – 3 531.8 – – – 9.7 – 12.2 9.7 12.4 – 3 631.4 – 3 531.6
Net benefits to policyholders and claims – 4 868.6 – 4 903.1 – 2 227.2 – 2 134.2 – 56.3 – 120.4 – 2.9 – 2.7 – 7 155.0 – 7 160.4
Profit or loss before tax 209.7 176.2 372.8 293.4 – 69.1 – 41.8 0.0 0.0 513.4 427.8
Cash flow from investing activities (net) – 260.8 – 89.9 – 126.2 – 14.6 – 11.8 – 5.6 269.4 – 10.8 – 1.0 – 3.5 – 130.4 – 124.4
Cash flow from financing activities (net) 302.7 – 422.7 55.0 8.5 – 47.3 405.7 44.4 – 156.1 – 4.7 0.0 350.1 – 164.6
Acquisition of owner-occupied property, equipment and intangible assets 95.7 122.4 25.2 23.7 2.6 0.7 2.2 12.7 – – 125.7 159.5
Depreciation and amortisation on tangible and intangible assets – 6.8 – 8.8 – 83.9 – 82.8 – 28.1 – 18.7 – – – 118.8 – 110.3
Jan–Dec Jan–Dec 4.2 Foreign exchange gains and losses The foreign exchange results in the consolidated income statement in the reporting year show a loss of CHF 0.4 million (previous year: CHF 57.2 million profit).
Other foreign currency translation gains and losses are reported under the items “Other expenses ” and “Other income”.
Revaluation gains on transfers to investment property – – – 0.0 – – – – – 0.0
Change in scope of consolidation – – 4.9 – – 0.2 – 0.2 – – 0.2 – 5.1
Impairment – – – – – – – – – –
Book value as of 31 December 1 134.9 1 077.1 90.4 140.9 1 225.3 1 218.0 Book value as of 1 January 1 077.1 991.4 140.9 185.5 1 218.0 1 176.9
Helvetia Group’s “Other intangible assets” mainly comprise the value of the acquired insurance business (present value of future payment flows from the acquisition of long-term insurance or investment contracts) and the purchased and internally developed software.
The goodwill impairment test was based on the following growth and discount rates, assuming a perpetuity: as of 31.12.2017 Goodwill Growth rate
Investment result from Group financial assets and investment property 1 348.7 1 144.4
Share of profit or loss of associates 5.2 2.0 7.1.1 Current income from investments by class
Current income on financial assets (net) 759.8 763.3 14.9 14.2 774.7 777.5
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 3.9 million in the reporting year (previous year: CHF 4.3 million).
Based on notice periods, tenancies generated operating lease receivables for the Helvetia Group of CHF 70.0 million (previous year: CHF 73.2 million) due in less than one year, CHF 153.1 million (previous year: CHF 153.1 million) due between one and five years and CHF 39.7 million (previous year: CHF 40.4 million) due in more than five years.
Interest income from investments at fair value through profit or loss stood at CHF 18.1 million (previous year: CHF 21.1 million).
Total direct yield of interest-rate-sensitive financial assets 1.8 1.9 7.1.3 Gains and losses on investments
Financial report Investments 7.1.4 Gains and losses on financial assets by category in CHF million
Realised and book gains and losses on financial assets held for trading – 178.8 – 195.5
The table above includes increases in impairment losses on financial assets of CHF 3.2 million (previous year: CHF 49.8 million) as well as impairment loss reversals on financial assets of CHF 3.8 million (previous year: CHF 26.9 million).
Financial report Investments 7.2 Investments by class as of 31.12.2017 Notes Group investments
Investments with market risk for the policyholder Total in CHF million
Money market instruments 788.5 5.1 793.6 as of 31.12.2016 Notes Group investments
Financial report Investments 7.3 Investments by business area as of 31.12.2017 Notes Life Non-life Other and elimination Total in CHF million
Money market instruments 542.0 251.6 – 793.6 as of 31.12.2016 Notes Life Non–life Other and elimination Total in CHF million
Investments in associates accounted for under the equity method are listed in the table in section 18.3 (from page 183).
7.4.2 Aggregated financial data on associates The table below shows an aggregated balance sheet and income statement for the investments that are accounted for under the equity method.
Transfer from / to property and equipment – 6.9 – 3.6 – 10.5 – 1.5
The fair value of “Investment property” in the portfolio of the Swiss, Austrian and German Group companies is calculated using a generally accepted discounted cash flow method. The method is described in section 2.11.1 (page 85).
In the reporting year, the discounted cash flow method was based on discount rates ranging from 3.0 % to 6.0 % (previous year: 3.1 % to 7.5 %). If the discount rates were increased by 10 basis points, the value would be reduced by CHF 176.0 million. If the rental income that can be earned in the long term were reduced by 5 %, there would be a negative effect of CHF 455.5 million.
Investments with market risk for the policyholder 3 579.3 3 037.1 3 217.0 2 677.2 3 579.3 3 037.1 3 044.0 2 565.2 535.2 471.8 0.1 0.1
Investment funds – interest-bearing securities 36.1 83.2 34.8 82.0 1.3 1.2 36.1 83.2 36.1 83.2 – – – –
Total “available-for-sale” (AFS) 26 238.7 25 201.2 24 168.1 23 091.5 2 070.6 2 109.7 26 238.7 25 201.2 10 858.3 9 886.9 15 361.9 15 300.9 18.5 13.4
Total “loans and receivables” (LAR)1 9 159.4 8 956.1 9 159.4 8 956.1 9 770.2 9 726.2 52.6 52.6 9 717.6 9 673.6 – –
Financial assets at fair value: At fair value through profit and loss (held for trading)
Investment funds – interest-bearing securities 60.4 21.8 40.9 32.9 60.4 21.8 60.4 21.8 – – – –
Helvetia recognises transfers between the valuation method levels at the end of the reporting period in which the changes occurred.
In 2016, Helvetia applied revised criteria for classification by valuation method. In doing so, it introduced a higher threshold for the fulfilment of the “Level 1” criterion for interest-bearing securities and the main trading sites for our securities were systematically redefined. Owing to the introduction of these changes, investments in the previous year in the amount of CHF 16,748.6 million were reclassified from “Level 1” to “Level 2”, while investments totalling CHF 4.9 million were reclassified from “Level 1” to “Level 3”.
In the reporting period CHF 2.9 million of the previous year’s “Level 3” investments of CHF 19.6 million were reclassified to “Level 1”, respectively, while “Level 2” investments of CHF 2.4 million (previous year: CHF 4.9 million) were assigned to “Level 3”.
Other changes in the “Level 3” total result from sales in the amount of CHF 2.0 million (previous year: CHF 31.0 million) and acquisitions in the amount of CHF 156.6 million (previous year: CHF 3.8 million).
The replacement of one or more assumptions by plausible alternatives would not have any material impact on the valuation of the “Level 3” investments.
Total equity- and equity-index instruments 1 605.5 534.6 727.2 2 867.3 2 508.7 87.8 66.0
Financial report Investments 7.8 Maturity dates and impairment of financial assets 7.8.1 Analysis of past due financial assets without impairment in CHF million
Total past due financial assets without impairment 24.0 11.9 7.3 7.2 5.5 10.5 6.6 10.0
Total individual impaired financial assets at amor7. 8.3 Change in the impairment of financial assets at amortised cost
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 135).
Total financial liabilities at amortised cost 1 342.1 765.6 1 342.1 765.6 1 443.4 816.9
Minority interests in own funds 274.1 212.8 195.4 164.8 274.1 212.8
In 2017, Helvetia issued a subordinated hybrid bond totalling EUR 500 million in liabilities maturing in 2047 through its subsidiary Helvetia Schweizerische Versicherungsgesellschaft AG. The first optional repayment date is 2027. The bond has a fixed coupon of 3.375 % p.a.
The bonds in liabilities are measured at amortised cost. The interest expense from bonds treated as liabilities is reported in the income statement at CHF 29.7 million (previous year: CHF 15.0 million) under “Financing costs”. The interest expense from bonds in equity is recognised as a dividend distribution in equity.
Value changes / interest accruals 1.0 0.4 – – 35.5 18.2
Helvetia Holding AG CHF 150 Mio. 1.125 % 2 013 08.04.2019 1.17 % 149.9 149.9
Helvetia Schweizerische Versicherungsgesellschaft AG CHF 150 Mio. 1.50 % 2014 28.04.2025 1.55 % 149.5 149.4
Total bonds in equity 700.0 700.0 1 The effective interest rate quantifies the actual cost of loans (taking account of the transaction rate, premium / discount, transaction costs, payment dates, repayment etc.) 2 First call date for the issuer 17.10.2024 3 First call date for the issuer 29.9.2027 4 First call date for the issuer 17.4.2020 5 First call date for the issuer 23.11.2022
Total as of 31.12. < 1 year 1 – 5 years > 5 years 2017 2016 in CHF million
Upon the acquisition of MoneyPark in 2016, the minority shareholders were granted the option to sell their shares to Helvetia at 95 % of the fair value. The options can be exercised in 2020 (minor shareholders only), 2022 and 2027. In 2017, Helvetia granted the minority shareholders of INZMO the option of selling their shares at fair value to Helvetia in 2022.
Total reserves for insurance business 46 073.8 43 864.1 506.4 495.9 45 567.4 43 368.2 9. Insurance business
Provision for policyholder participation – non-life contracts 58.6 58.9 – – 58.6 58.9
Reserves for non-life insurance contracts 6 174.8 5 800.3 424.5 402.5 5 750.3 5 397.8
Provision for policyholder participation – investment contracts 146.8 157.0 – – 146.8 157.0
Further details on technical reserves for the life and non-life business can be found in the following tables. A maturity schedule of the reserves for insurance contracts and investment contracts is provided in section 16.5 (page 170).
Financial report Insurance business 9.2 Changes in reserves for insurance business
The Liability Adequacy Test (LAT) for non-life business resulted in an additional increase in loss reserves of CHF 45.0 million as of 31 December 2017 (previous year: CHF 48.1 million).
Insurance conditions and risks in the non-life business are described in section 16.2 (from page 157). The following table sets out the development of loss reserves for the previous ten years.
Across the Group the LAT required an allocation of additional actuarial reserves of CHF 19.9 million as of 31 December 2017 (previous year: CHF 19.6 million).
Insurance conditions and risks in the life business are described in section 16.3 (from page 159). Sensitivities of actuarial reserves are outlined in section 16.3.3 (from page 160).
Investments with market risk for the policyholder 3 651.1 3 089.7
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 Test on every reporting date. The share of “Deferred acquisition costs” classified as short-term is CHF 169.7 million (previous year: CHF 154.3 million).
Due from / due to policyholders 547.3 603.2 1 415.1 1 547.4
9.7.1 Analysis of past due receivables without individual impairment in CHF million
Due from agents and brokers 5.3 3.8 5.4 4.1 3.9 2.8 14.7 6.2
Due from agents and brokers 7.8 9.6 7.3 8.9 0.5 0.7
Financial report Insurance business 9.8 Total financial liabilities from insurance business
Amounts paid into or from these deposits do not affect revenues and are not recorded in the income statement, but are offset against the deposit. The features of these products are very similar to those of insurance contracts, apart from the fact that there is hardly any insurance technical risk. Insurance conditions and risks are described in section 16 (from page 155).
Balance as of 31 December 788.6 740.7 10.3 Expected and actual income taxes in CHF million
Increase / reduction in taxes resulting from: tax-exempt income or income taxed at a reduced rate – 7.2 – 17.0 non-deductible expenses 8.4 4.5
Total that may be reclassified to income 171.6 18.2 – 1.6 – 6.1 170.0 12.1
Change in liabilities for contracts with participation features – 12.0 – 4.3 2.5 0.9 – 9.5 – 3.4
Total that will not be reclassified to income 94.2 31.0 – 19.6 – 6.3 74.6 24.7 10.5 Deferred tax assets and liabilities
Tax assets from losses carried forward 10.6.1 23.2 20.9 – –
Valuation differences on shares in subsidiaries of CHF 3 405.3 million (previous year: 3 816.7 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.
10.6 Losses carried forward 10.6.1 Net tax assets from losses carried forward in CHF million
11.2.2 Retained earnings Accumulated non-distributed earnings of Helvetia Group are recognised in the balance sheet as “Retained earnings”. Besides freely disposable funds, retained earnings also comprise the revaluation of benefit obligations and statutory reserves and reserves bound by the articles of incorporation which are sustained by the profit for the year and subject to restrictions on distributions.
The reserve is adjusted at the reporting date by the portion relating to contracts with participation features and deferred taxes. The portion reserved for the owners of contracts with participation features is transferred to “Liabilities”. This item plus foreign exchange influences amounts to CHF – 65.3 million (previous year: CHF − 41.7 million). The remaining portion regarding contracts is allocated to the “Valuation reserve for contracts with participation features in equity” (see section 11.2.5, page 142).
During the reporting year, a transfer of CHF − 0.3 million was made (previous year: CHF − 0.2 million ) to retained earnings as a consequence of disposals of owner-occupied properties transferred to investment property.
Fair value revaluation incl. foreign currency translation differences 109.0 174.3 – – 0.5 1.1 – 0.2 110.1 173.6
Valuation reserves for contracts with participation features in ’Equity’ (gross) 11.2.5 – 652.6 – 645.8
Gains reclassified to the retained earnings due to disposals – – – – – 0.3 – 0.2 – 0.3 – 0.2
Total retained earnings as of 31 December 3 278.4 3 091.6
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 2.15.2, from page 88).
Valuation reserves for contracts with participation features as of 31 December 1 337.5 1 278.7
Profit or loss for the period 402 900 245 376 591 156
Earnings for shareholders and non-controlling interests 384 624 776 356 995 634
Earnings for shareholders without non-controlling interests 387 023 689 357 005 568
Weighted average number of shares outstanding 9 894 493 9 896 447
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.
Helvetia Group manages its invested capital in accordance with the IFRS. Helvetia Group’s capital management strategy is unchanged from the prior year and focuses on the following objectives: – Ensuring compliance with regulatory capital requirements at all times – Securing the capital required to underwrite new business – Optimising the earning power of its equity – Supporting the planned strategic growth – Optimising the Group’s financial flexibility
Helvetia Group met all capital adequacy requirements on 31 December 2017.
12.2 Contingent liabilities and other commitments The following contingent liabilities are not recognised in the balance sheet: Capital commitments At the reporting date, there were financial commitments for the future acquisition of financial investments and fixed assets in the amount of CHF 333.7 million (previous year: CHF 85.6 million).
Assets pledged or assigned The Helvetia Group has pledged assets of CHF 197.4 million as security for liabilities (previous year: CHF 169.0 million). These relate to financial investments and other assets pledged to cover liabilities arising from the insurance business.
Operating lease liabilities The Helvetia Group is a lessee in a number of operating leases. As a result, it has future lease liabilities amounting to CHF 12.3 million (previous year: CHF 5.2 million) due in less than one year, CHF 38.4 million (previous year: CHF 25.7 million) due between one and five years and CHF 6.4 million (previous year: CHF 0.6 million) due in more than five years.
Helvetia Group had 6 592 full-time equivalent employees as at 31 December 2017 (previous year: 6 481). Total personnel costs are shown in the table below.
Total personnel costs 868.2 894.9 13.2 Employee benefit receivables and obligations
Financial report Employee benefits 13.3 Defined benefit plans The employees of the Helvetia Group are covered under several pension plans in Switzerland and abroad.
The defined benefit plans include actuarial risks, particularly investment risks, longevity and interest rate risks.
The regulations of the pension fund and supplementary funds in Switzerland were amended with effect from 1 January 2018. This results in a negative past service cost of CHF 36.6 million.
Defined benefit obligation as of 1 January 3 379.8 3 303.3
Fair value of plan assets as of 1 January 2 679.9 2 573.8
Fair value of plan assets as of 31 December 2 885.7 2 679.9 1 This item includes paid-in and withdrawn vested benefits as well as pensions and annuities.
Employer contributions contain a financial contribution by Helvetia to compensate the plan changes introduced in 2018.
Expenses for defined benefit plans are recognised in the income statement under “Operating and administrative expenses”. Expected employer contributions toward defined benefit plans for the next year amount to CHF 63.4 million.
Return on plan assets excluding interest income – 159.0 – 110.4
Duration of the defined benefit liability (in years) 15.1 15.4 16.1 16.8
14.3 Members of the Executive Management The members of the Executive Management receive as part of their variable compensation a long-term compensation component (LTC). The Board of Directors determines the extent of target achievement for the LTC. The percentage of LTC target achieved LTC for all Executive Management members is based on four criteria: profit, growth, shareholder value and risk-adjusted return. 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 is converted into a specific number of shares that are allocated to the Executive Management member as a deferred payment after three years. The conversion price per share is the closing stock exchange price for the Helvetia Holding share on the date the extent of target achievement is set by the Nomination and Compensation Committee. For the 2017 financial year, LTC shares to the value of CHF 1.5 million were allocated (previous year: CHF 1.6 million). For the Executive Management of the Group this is subject to approval by the Shareholders’ Meeting. This corresponds to 2 678 shares at a price of CHF 569.00 as of reference date 28 February 2018 (previous year 2 730 shares at CHF 573.00). This payment is recognised proportionally in the income statement every year until ownership of the shares is transferred and amounted to CHF 1.0 million for 2017 (previous year: CHF 1.0 million).
14.4 Members of the Executive Management teams of the foreign subsidiaries The members of the Executive Management teams of the foreign subsidiaries receive a variable salary component from the Group in addition to the local compensation 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 the form of 1 141 shares (previous year: 1 127). The conversion price per share is calculated as described in section 14.3. 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 2017 financial year amounted to CHF 0.5 million (previous year: CHF 0.5 million).
Financial report Related party transactions 15.1 Transactions with related companies “Related companies” are the cooperation partner represented on the Board of Directors of Helvetia Group, i.e. Patria Genossenschaft and the pension funds and all associates of Helvetia Group. The latter two are discussed in section 13.3 “Defined benefit plans” (page 147) and section 7.4 “Investments in associates” (page 116).
Helvetia Schweizerische Lebensversicherungsgesellschaft AG and Patria Genossenschaft have concluded agreements for capital support. Each of these agreements refer to a specific financial year. Two such agreements entered into force on the reporting date 31 December 2017. Under one agreement, Patria Genossenschaft undertakes to contribute regulatory capital of up to CHF 100 million to Helvetia Schweizerische Lebensversicherungsgesellschaft AG until 30 June 2019 should certain adverse scenarios arise in the 2018 financial year. Under the other agreement, Patria Genossenschaft undertakes to contribute regulatory capital of up to CHF 100 million to Helvetia Schweizerische Lebensversicherungsgesellschaft AG until 30 June 2018 should certain adverse scenarios arise in the 2017 financial year. The agreements will, if needed, be executed at normal market conditions.
At the reporting date there was a loan from Helvetia Schweizerische Versicherungsgesellschaft AG to Patria Genossenschaft of CHF 16.0 million that will be fully amortised in 2021 at the latest. The interest rate is 0.75 %.
Salaries and other short-term employee benefits 12 118 288 8 414 651
CHF 986 000 earned interest at 1.40 % in 2017, the extra mortgage of CHF 184 000 earned in-
– to Paul Norton at a sum of CHF 500 000 (previous year: –). The loan to Paul Norton of CHF 500 000 earned interest at 0.98 % in 2017.
– to David Ribeaud at a total sum of CHF 1 015 000 (previous year: CHF 1 015 000). In the reporting year, the loans earned interest as follows: CHF 595 000 at 0.89 % (previous year: 0.89 %) and CHF 420 000 at 0.95 % (previous year: 0.95 %).
1 Joined the Helvetia Executive Management as of 1 January 2017. 2 Joined the Helvetia Executive Management as of 1 April 2017.
In addition to the ownership of shares as reported, the active members of the Group Executive Management have deferred claims to a total of 7 540 shares acquired under the LTC programme.
15.2.4 Shares of Board of Directors 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.
Andreas von Planta (member) 660 660 1 Stood down from the Board of Directors of Helvetia with effect from 18 December 2017. 2 Joined the Helvetia Board of Directors as of 28 April 2017.
Financial report Risk management 16.1 Principles of risk management The integrated risk management of Helvetia Group ensures that all material risks are identified, collected, evaluated and controlled in good time and managed and monitored appropriately. The risks are managed in accordance with the requirements of the relevant stakeholders, upon which the concepts and methods of risk identification, management and analysis are also based.
16.1.1 Risk management organisation The Board of Directors of Helvetia Holding AG and the Executive Management are the supreme risk owners of Helvetia Group. The Board of Directors of Helvetia Holding AG is responsible for establishing and maintaining appropriate internal controls and the risk management organisation of Helvetia Group. It is the Board’s responsibility in particular to: – set risk policy principles that support the development of risk awareness and a risk and control culture in the Group companies; – define a risk strategy / partial risk strategies that cover the risk management objectives of all essential business activities and are aligned with the business strategy of 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 the Executive Management; – ensure appropriate monitoring of the effectiveness of internal control systems by the Executive Management.
The internal audit unit, an independent in-house team reporting directly to the Chairman of the Board of Directors, monitors the course of operations and business, the internal control system and the effi16. Risk management
16.1.2 Risk management process The risk management process includes all activities related to the systematic assessment of risks at Helvetia Group. The key components of this 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. 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 longterm liquidity risk), medium- and short-term liquidity risks, counterparty risks, operational risks, strategic and emerging risks. Reputation risks are not recorded as a separate risk category; instead, their impact is accounted for under operational, strategic and emerging risks.
Financial report Risk management 16.2 Non-life technical risks The most important non-life segments of Helvetia Group are property (including technical insurance), casualty (liability, accident, motor vehicle) and transport insurance. Motor vehicle insurance policies represent the largest proportion of casualty insurance policies. The “Specialty Markets” operating segment includes 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. This segment is also responsible for the representative offices in Istanbul and Miami, the branches in Singapore and Kuala Lumpur and Helvetia Liechtenstein. In contrast, the segments “Switzerland” and “Europe” are defined geographically. The share of the gross premiums per country market is as follows: Switzerland 35.8 % (previous year: 37.2 %), Germany 14.4 % (previous year: 14.7 %), Italy 12.2 % (previous year: 12.7 %), Spain 7.7 % (previous year: 7.6 %), Austria 7.9 % (previous year: 7.9 %). The share of the “Specialty Markets” segment is 22.0 % (previous year: 19.9 %), of which 5.2 % (previous year: 5.5 %) attributable to the French country market and 10.1 % (previous year: 8.8 %) to Active Reinsurance.
Gross premiums by sector and country in the non-life business as of 31.12.2017 Switzerland Europe Specialty Markets Total in CHF million Germany Italy Spain Austria
Active Reinsurance 415.3 415.3 as of 31.12.2016 Switzerland Europe Specialty Markets Total in CHF million Germany Italy Spain Austria
In addition to the prospective risk of a risk premium being too low, there is also the risk of inadequate provision for known losses or lack of reserves for losses that have occurred but are not yet known. In terms of large risks, there is more uncertainty associated with estimating future claims payments as it can take a longer time to process such claims. In the case of sectors such as liability, a longer period of time can also pass between the occurrence of a loss and its becoming known. The change in such losses can have a major impact on the technical result. For example, a change in the net claims ratio of + / – 5 percentage points would have a positive or negative effect of CHF 179.4 million (previous year: CHF 170.9 million) on the income statement (without taking account of tax effects).
Despite the balancing of risks through diversification, individual risk clusters (e.g. in the form of individual large risks) or risk accumulations (e.g. via cross-portfolio exposure to natural disasters) may occur. These types of potential risks are monitored throughout the Group and hedged in a coordinated manner by means of treaty reinsurance contracts. Facultative reinsurance contracts are taken out for individual large risks not covered under the treaty reinsurance contract. Treaty reinsurance contracts are coordinated by the Group Reinsurance business unit as part of Helvetia Schweizerische Versicherungsgesellschaft AG and usually centrally placed in the reinsurance market. In its role as Group reinsurer, Group Reinsurance ensures that the individual primary insurance units have the appropriate treaty reinsurance protection and transfers the risks assumed, taking account of diversification, in the reinsurance market. This centralisation leads to the application of uniform Group-wide reinsurance standards, particularly in relation to the hedging level, as well as synergies in the reinsurance process. Based on the Group’s risk appetite and the state of the reinsurance markets, Group reinsurance ensures efficient use of existing risk capacity at Group level and provides optimal management of the purchase of reinsurance protection.
Active Reinsurance considers itself as a “follower” and usually holds smaller parts of reinsurance contracts. This policy of small holdings, combined with broad diversification (geographically and by insurance segment), leads to a balanced reinsurance portfolio free of major risk clusters.
Group-wide, the technical risks in the non-life business are dominated by natural hazards. Except in very rare cases, the reinsurance protection limits the claims remaining from a natural disaster or individual risk in the direct business at Group level to a maximum of CHF 35 million (previous year: CHF 35 million). The reinsurance is incremental per risk and event by means of a proportional and non-proportional reinsurance. For more information about the quality of reinsurance and claims settlement, please see sections 16.6 “Counterparty risks” (from page 173) and 9 “Insurance business” (from page 126). In the current year 10.7 % (previous year: 11.0 %) of the premiums written in the non-life business were ceded to reinsurers. Of these 67.6 % (previous year: 70.4 %) were ceded to Group reinsurance and the rest to external reinsurance companies. 59.9 % (previous year: 46.5 %) of the premiums written by Group reinsurance were retroceded.
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. Interest is credited annually on the savings premiums; the interest rate for the mandatory savings component is established by the Federal Council, while Helvetia Group itself can set the rate for the non-mandatory savings component. The mandatory interest rate for 2016 was 1.25 %. This rate was reduced to 1.00 % for 2017 and will remain at that level for the coming year. The interest rate set by Helvetia Group for the non-mandatory component was 0.5 % in 2016. This rate was reduced to 0.25 % for 2017 and will remain at that level for the coming year.
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. If the deflection of a parameter necessitates a higher reserving requirement, but one of the fundamental parameters in the local reserves already has sufficient safety margins, then a change in this parameter will not require a further reinforcement of reserves. It should be noted, however, that sensitivities do not normally exhibit linear behaviour, so extrapolations are not possible. Various influencing factors and sensitivities are presented separately below.
Mortality and longevity risks In order to analyse in more detail the effect of a change in mortality rates, the portfolio is divided into contracts which are exposed to greater mortality rates and those which are exposed to longevity. The first group includes, for example, risk or capital life insurances, while the second group includes annuity insurance.
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 CHF 57.4 million (previous year: CHF 63.2 million).
Cost risk If the costs included in the premiums and provisions are insufficient to cover rising costs, this could result in losses for shareholders. An increase in the cost ratio by 10 % would cause an increase in reserves and a negative effect on the income statement in the amount of CHF 35.3 million (previous year: CHF 25.0 million).
Interest rate risk Shareholders may have to bear losses if the guaranteed interest included in premiums and reserves cannot be generated. This could happen if, for example, interest rates remain very low in the long term. To counteract such developments, both the technical interest rate for new contracts in individual insurance and the BVG minimum interest rate for new and existing contracts are adjusted to the new interest rate. At the end of 2017, the highest guaranteed interest rate in individual insurance was in Spain, where older policies still include a guaranteed minimum interest rate of up to 6 %. These guarantees are partially covered by corresponding assets and the residual risk is covered by supplementary reserves. In the other countries the maximum guaranteed return is 4.0 % in 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.
16.4.1 Interest rate risk 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 110).
Loans (LAR) incl. money market instruments 1 194.3 2 275.3 3 246.6 1 788.7 451.2 8 956.1
Held-to-maturity investments (HTM) 95.5 531.1 438.6 1 448.2 – 2 513.4
Available-for-sale investments (AFS) 1 088.9 5 103.4 8 405.4 9 244.9 1 358.5 25 201.1
A statement on the ALM situation of a portfolio can be made by comparing the guaranteed interest rates with yields. The following illustration shows aggregate data on the average interest rates that Helvetia has to earn on its reserves in order to be able to provide the guaranteed benefits. The interest rate guarantees range from 0.05 % to 6 %. Only 0.3 % (previous year: 0.3 %) of the actuarial reserve of Helvetia Group has an interest rate above 4 %.
Actuarial reserves for insurance and investment contracts: – excluding interest guarantee 891.8 – 1 142.6 –
Average interest guarantee in per cent 1.23 2.53 2.20 0.00 1 Prior-year figures adjusted
Gross, not taking into account the latency calculation and derivatives – 205.7 203.8 – 199.0 199.8
Market risks are mitigated through hedging strategies. Out-of-the-money put options are largely used to comply with internal loss limits. Direct investments in equities represent 6.3 % (before hedging) of the Group’s financial assets (excluding investments from life insurance policies with the market risk borne by the customers). A substantial portion is hedged against the risk of significant losses.
Financial liabilities from financing activities 747.6 704.0 131.5 33.1 1 616.2
Investments with market risk for the policyholder 1 060.7 1 792.8 210.3 25.9 3 089.7
Current income tax assets 7.1 15.2 0.1 – 22.4 as of 31.12.2016 CHF EUR USD Others Total in CHF million
Financial liabilities from insurance business 641.3 1 050.5 1.2 0.1 1 693.1
Unearned premium reserve (gross) 1 317.9 – – – – 1 317.9
Total reserves for insurance and investment contracts (gross) 6 914.5 12 048.4 8 121.4 14 124.1 1 602.8 42 811.2
Total reserves for insurance and investment contracts (net) 6 698.4 11 920.9 8 053.7 14 065.9 1 576.4 42 315.3
Financial liabilities from insurance business 1 710.2 22.0 12.3 10.8 6.4 17.9 1 779.6
Total financial and other liabilities 2 167.2 1 514.0 568.4 1 067.7 6.4 294.3 5 618.0 as of 31.12.2016 Callable at any time < 1 year 1 – 5 years 5 – 10 years > 10 years Without maturity Total in CHF million
Financial liabilities from insurance business 1 624.6 12.2 9.6 9.0 5.4 32.3 1 693.1
Other financial and other liabilities 0.7 150.1 – – – 0.2 151.0
Total financial and other liabilities 2 095.8 1 543.8 447.5 427.1 5.4 247.1 4 766.7
Fair Value Maturity of non-discounted flows of funds as of 31.12.2016 < 3 months 3 – 6 months 6 – 12 months > 1 year in CHF million
– Counterparty risks associated with loans and mortgages: The largest items in the asset class of loan form the promissory note loans (92.6 %), as well as policy loans (5.6 %). 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.
– Counterparty risks from ceded reinsurance: Helvetia Group transfers part of its risk exposure to other companies via ceded reinsurance. If the reinsurer defaults, the 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.
Mortgage Bond Bank of the Swiss Mortgage Institution AAA 1 555.0 1 555.0 – – – – – – – –
European Investment Bank AAA 705.6 705.6 – – – – – – – –
Credit risk from ceded reinsurance as of 31.12.2017 Exposure Share in %
Cantonal Bank of Zurich AAA 565.5 464.1 – – – – 89.7 11.7 – –
European Investment Bank AAA 712.0 712.0 – – – – – – – –
Cantonal Bank of Zurich AAA 540.3 471.4 – – – – 47.9 21.0 – –
Financial report Scope of consolidation 18.1 Events in the reporting year Company acquisitions: – On 1 January 2017, Helvetia Schweizerische Lebensversicherungsgesellschaft AG, Basel, fully acquired IFANG Park AG, Schwerzenbach. The company’s purpose lies in the development, acquisition and management of real estate. The purchase price was CHF 21.3 million, of which CHF 19.2 million was paid in cash at the purchase date. A further CHF 2.1 million is subject to a purchase price retention arrangement. No goodwill was recognised in connection with this transaction.
Financial report Scope of consolidation tions regarding the impact of the special effects of the transaction. The acquisition would have had no impact on the Group’s gross premiums.
– Helvetia Beteiligungen AG, St Gall, merged with Helvetia Schweizerische Versicherungsgesellschaft AG, St Gall, on 16 June 2017. The merged entity operates as Helvetia Schweizerische Versicherungsgesellschaft AG, St Gall.
Helvetia holds 52 % of the company. The joint venture is evaluated using the equity method. – The 30 % share in fvv-Voralberger Versicherungsmakler GmbH, Götzis, was sold with effect from
As part of this capital increase, Helvetia’s holding in MoneyPark increased to 77.27 %. – Nationale Suisse Servizi Assicurativi S.R. L., San Donato Milanese, was liquidated at the end of 2017.
The following overview shows the assets and liabilities at fair value acquired as part of the acquisition of MoneyPark: MoneyPark in CHF million
Suiza, Sociedad Anónima de Seguros y Reaseguros, Seville, merged on 18 March 2016. The merged entity operates on the market as Helvetia Compañia Suiza, Sociedad Anónima de Seguros y Reaseguros, Seville.
– Helvetia International Versicherungs-AG, Frankfurt, and “Schweizer-National” Insurance-AG, Frankfurt, merged on 27 July 2016. The merged unit operates on the market as Helvetia Versicherungen AG, Frankfurt.
Financial report Scope of consolidation 18.3 Complete list of Group companies as of 31.12.2017 Business activities Holding in %
Helvetia Versicherungen AG, Vienna Life and non-life 100.00 full EUR 12.7
Helvetia Compagnie Suisse d’Assurances S.A., Direction pour la France, Paris1 Non-life 100.00 full EUR
Compagnie Européenne d’Assurance des Marchandises et des Bagages S.A., Bruxelles Non-life 100.00 full EUR 1.8
VP SICAV Helvetia Fund European Equity Other 100.00 full EUR –
VP SICAV Helvetia Fund International Equity Other 100.00 full EUR –
Helvetia Swiss Insurance Company Ltd., Singapore1 Non-life 100.00 full USD –
Helvetia Schweizerische Versicherungsgesellschaft AG, Rückversicherung, St Gall2 Non-life 100.00 full CHF
1.2 Valuation principles 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. Investments in other companies are recognised at purchase cost less impairment. Loans are reported at par value less impairment.
Helvetia Schweizerische Versicherungsgesellschaft AG, St Gall 77.5 100.00 % 77.5 100.00 %
The interest in Helvetia Schweizerische Lebensversicherungsgesellschafts AG was sold to Helvetia Schweizerische Versicherungsgesellschaft AG on 15 September 2017. Helvetia Finance Ltd. was liquidated on 25 July 2017.
2.2 Bond On 8 April 2013, Helvetia Holding AG issued a 1.125 % bond 2013 – 2019 with a par value of CHF 150.0 million. The bond was subscribed and paid on 8 April 2013 and must be repaid at par value on 8 April 2019. The bond has a coupon rate of 1.125 % p.a., which will be paid annually on 8 April.
Financial report Helvetia Holding 2.3 Maturity structure of interest-bearing liabilities in CHF million up to 1 year 0.0 0.4
The sales price for the shares of Helvetia Schweizerische Lebensversicherungsgesellschaft AG was set off against loans. The residual balance is now reported as a loan granted to Helvetia Schweizerische Versicherungsgesellschaft AG.
2.4 Share capital and authorised capital The share capital of CHF 994,513.70 consists of 9,945,137 registered shares with a par value of CHF 0.10.
On 30 March 2017, Helvetia Schweizerische Versicherungsgesellschaft AG floated a subordinated hybrid bond totalling EUR 500.0 million maturing in 2047 on the euro capital market. The first optional repayment date is September 2027. The bond is guaranteed by Helvetia Holding AG.
Information on the allocation of ownership interests to the members of the Board of Directors and the Executive Management is provided in the Notes to the 2017 consolidated financial statements of the Helvetia Group under chapter 15.
3.6 Material events after the reporting date There were no material events after the reporting date that would have an impact on the carrying values of the reported assets or liabilities or that would need to be disclosed here.
Embedded Value after tax of which value of insurance portfolio 1 946.6 1 758.4 of which adjusted equity 2 327.3 2 082.1 of which solvency costs – 1 071.9 – 1 052.4 of which value of insurance portfolio 360.9 261.9 of which adjusted equity 370.2 341.5 of which solvency costs – 143.0 – 127.4 of which value of insurance portfolio 2 307.5 2 020.3 of which adjusted equity 2 697.5 2 423.6 of which solvency costs – 1 214.9 – 1 179.8 1 of which minority interests CHF 2.0 million as of 31.12.2017
Economic changes, including changes to unrealised gains and losses on investments (equity and real estate) 79.9 – 45.9
–10 % change to fair value of equities – 3.5 % – 2.9 %
–10 % change to fair value of real estate – 12.2 % – 12.0 %
Value of new business in % APE 17.3 % 9.7 %
Deposits from investment contracts The amounts paid in during the reporting year from contracts without a significant insurance risk.
Cash-generating unit The smallest identifiable group of a company’s assets that generates cash inflows that are largely independent of cash flows from other assets.
Hedge accounting A special IFRS balance sheet practice for hedging transactions, which aims to present hedging instruments and underlying transactions using the same valuation methods in order to reduce the potential volatility of results.
Insurance benefits Amounts paid by the insurer in the financial year for claims incurred in respect of insured events.
Helvetia Group Susanne Tengler P. O. Box, CH-9001 St Gall Phone +41 58 280 57 79 www.helvetia.com investor.relations@helvetia.ch
Helvetia Group Claudia Sauter P. O. Box, CH-9001 St Gall Phone +41 58 280 50 33 www.helvetia.com media.relations@helvetia.ch
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 forwardlooking 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.
Group profit for the period after tax 363.8 393.3 309.5 376.6 402.9 of which investment result from Group financial assets and investment property 1 156.8 1 275.4 1 105.6 1 144.4 1 348.7
Consolidated equity (without preferred securities) 3 831.2 4 963.1 4 655.3 4 812.6 5 229.4
Employees2 of which segments Switzerland and Corporate 2 369 3 752 3 478 3 376 3 499 1 Adjustment for new segmentation (Active Reinsurance now in non-life) 2 Adjustment of the number of employees 2013 / 2014 on a full-time basis (per capita up to 2012)
Imprint The Financial Report 2017 of Helvetia Group is available in English and German.
Group profit for the period per share according to IFRS in CHF 39.1 36.1 8.4 %
of which Group financial assets and investment property 48 629.2 46 471.3 4.6 %
H elvetia Versicherungen, with headquarters in St Gall, has grown over the past 160 years to become a successful international insurance group. Today we are Switzerland’s leading Swiss all-lines insurer. In Europe, Helvetia has profitable market positions with above-average growth in Germany, Austria, Italy and Spain. In the Specialty Markets segment, Helvetia offers tailored specialty lines coverage and reinsurance solutions in selected niches available worldwide.
Our success is based on proven diversification between life and non-life business and between a strong domestic market and a profitable footprint in European countries. Our focus is on private customers and SME business. Moreover, our expertise in transport, engineering and art insurance and Active Reinsurance opens up promising opportunities beyond our core markets.
The registered shares of Helvetia Holding AG are traded on the SIX Swiss Exchange.
S o ci a l re sp o n si b il it y
A tt ra ct iv e e m p lo y e r Positioning as
P a rk h o m e e co sy st e m
Our promise to those on the outside is, above all, a challenge for us working on the inside: to do everything in our power to ensure our customers can access our services in as simple a manner as possible. For example, they can report claims directly via our website or conclude insurance policies directly online. We provide our customers with individual and personal support – via all channels, making life as simple as possible for the customer in question.
What does your strategy mean specifically? Our customers are mobile and want to have access to quick service at all times. We want to be present when and where our customers have insurance-related needs: at the point of sale of goods and services and when important events occur during their lives. Simplicity means that we are on hand to offer support at these decisive
The 2017 reporting year was highly successful for the Helvetia Group. The helvetia 20.20 strategy is bearing fruit. The centrepiece here is a new brand promise: simple – clear. CEO Philipp Gmür explains in an interview what it is all about.
Why has Helvetia been successful for 160 years? Helvetia combines tradition and innovation. We have succeeded time and again in grasping new opportunities without getting carried away in the process. Periods of expansion around the world have been followed by decades of focus on European markets. Today, we are one of the leading insurance companies in our home markets with promising positions in western Europe and in specialty business lines such as Active Reinsurance as well as transport, engineering and art insurance. The healthy diversification between the life and non-life businesses, between the retail and corporate customer businesses and between Switzerland and abroad makes us robust and provides impetus for further development.
So, you want to be one of the market champions? How do you plan to achieve this? By always looking at things from the perspective of our customers. We are also specifically on the lookout for innovation opportunities, for example relating to the manner of customer access or the structure of our services. To do so, we need to become more agile. It represents a major challenge to remain flexible in a longterm business and be able to adjust to shortterm developments. The process of digitisation, in particular, is forcing us to scrutinise our business model on an ongoing basis and, where necessary, make changes.
Speaking of digital technologies: what role do they play in your business model? Digitisation provides multi-layered opportunities: Firstly, thanks to digital technology, we are even closer to our customers and can reach them more quickly. In this respect, in particular, we can learn from insurtech companies and start-ups. They deviate from familiar patterns and transform fresh ideas into innovative business models. We are therefore participating in start-ups and are working to merge the “old” world with the “new” world.
Where will Helvetia be in ten years? From today’s perspective, we will still be one of Switzerland’s leading all-lines insurers in 10 years’ time. In the retail business, we have expanded our positions in our home market and in Europe thanks to multiple new customers. In the corporate customer business, we are benefiting from globalisation and our expertise in selected sectors, meaning that the Group remains robust and is well diversified.
Helvetia presented its new brand image at the beginning of November 2017. This places an emphasis on the following promise: “simple – clear”. No easy undertaking for an insurance company operating in what is generally deemed to be a complicated sector.
As a modern Swiss insurance company, in addition to traditional Swiss values such as expertise and reliability, we also put our faith in attributes of the new generation and thus act innovatively, dynamically and progressively.
The branding is being implemented by means of a written three-pronge approach that impresses thanks to its simplicity. The form the message takes is also part of the message. At the same time, the three-pronged approach places an emphasis on our services. Those who are not yet customers of Helvetia should get to know its protection and pension solutions and its above-average level of service – and do so in a simple manner.
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Volume CHF 10 billion (ambition) Non-life Net CR < 93 % Life NBM > 1 % Synergies (pre-tax) > CHF 130 million Return on equity 8 – 11 % Dividend (5 years) > CHF 1 billion
The helvetia 20.20 strategy aims to make Helvetia fit for the future.
You talk about additions to the business, such as the development of the “home” ecosystem and targeted innovations: What exactly is it all about? By investing in new additions to our business, we want to expand our core business on a selective basis and innovate. We are the majority shareholder of MoneyPark, the leading mortgage broker in Switzerland. With the “home”
ecosystem, which is based on MoneyPark, we are positioning ourselves as an expert advisor for all issues relating to real estate and housing. We want to provide our customers with comprehensive advice, from the point at which they set out in search of a flat or a house right through to the mortgage financing stage and questions relating to their pension cover. Here, customers should be supported throughout their whole customer journey and be provided with all necessary services from a single source. We therefore also work with external service providers in which we, in some cases, also hold a share ourselves, such as PriceHubble for real estate valuations.
Commission as Europe’s best fintech company. It operates on a fully digitised platform, which covers the offer and contract conclusion stages right through to collections, portfolio management and claims handling. We use this capability in a targeted manner in cooperation with partners and in the area of direct insurance. Taking out insurance cover in the standard business is as simple as downloading an app via your iPhone.
 25 branches across the entire country  130 employees  Merger with French-speaking Switzerland’s industry leader Defferrard & Lanz (DL) in July 2017  Annually brokered mortgage volume of more than CHF 2 billion  Management of a mortgage portfolio worth more than
CHF 8 billion  Develop B2B business through acquisition of finovo AG
Home ecosystem – everything from a single source process purchase, build
That makes it important to have a partner we know personally and trust.”
“Helvetia has always been fair when something has happened. We would recommend
“We have always greatly appreciated having a direct contact partner.” Dr med. Nathalie Berzins,
Business activities and segments Helvetia is a successful, internationally active Swiss insurance group. With 6,592 full-time equivalent employees, Helvetia provides services for more than five 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. In the Specialty Markets area, Helvetia offers tailor-made cover in the specialty lines marine / transport, art and engineering insurance. With its Specialty Markets segment, Helvetia not only has a local presence in Switzerland, France and the Principality of Liechtenstein, but also in Turkey and Miami for Latin America as well as in Singapore and Malaysia. Its Active Reinsurance business is also assigned to this market area. The reinsurance business focuses on the well-diversified non-life business. In this niche area, Helvetia stands out thanks to its sustainable and long-standing business relationships and strict underwriting policy.
The Helvetia Group pursues a disciplined underwriting strategy in order to ensure portfolio quality, and only underwrites larger business risks selectively. We work together with renowned reinsurers to hedge against major loss events. Profitability also depends on portfolio composition, premium and cost performance as well as claims. Profitability can be measured with the net combined ratio, which has on average been below 95 % at Helvetia in recent years. Also in financial year 2017, the net combined ratio was 91.8 %, which reflects the portfolio quality.
In the non-life business, digitisation is opening up new opportunities. Helvetia is placing an emphasis on organic growth with retail customers, small and medium-sized companies and larger businesses. Here, we are making use of the opportunities arising from digitisation to make our offers and business processes simpler, more customer friendly, more digital and more efficient – by combining our traditional strengths with new possibilities. For example, customers can report claims in a very simple manner directly via our website or select and take out insurance policies directly online with our online calculator. Find out more in this regard on the following pages.
When her car suffered damage, Helvetia customer Karin Anderegg tried out the network of bodywork and paintwork businesses that we have developed in cooperation with the repair network Repanet Suisse. She arranged for her car to be repaired by a Helvetia service partner of her choice – and was positively surprised.
For some repair work, I was recommended the Helvetia partner and bodywork specialist Kriesbach GmbH in Dübendorf.
Although I have a main garage with my car’s dealership, I opted to follow up on this recommendation. The lifetime guarantee for the work performed appealed to me a lot. Previously, I had assumed that only my main garage would grant me such a guarantee. Shortly after confirming that I would be taking up the recommendation, I got a call from Marc Zimmermann, the manager of Kriesbach GmbH, and agreed a suitable appointment. Mr Zimmermann picked up my damaged vehicle and provided me with an appropriate replacement car. Three days
A t the end of July 2017, Helvetia Germany added the “VIVA motor vehicle insurance” policy to its online offering. With just a few clicks of the mouse, visitors can find out more about its benefits and take out motor vehicle insurance directly. Helvetia VIVA stands out thanks to its simple menu navigation, clear product structure and quick, individual premium calculations. Upon request, our customer service experts are on hand to support visitors with digital advisory functions, live chats or telephone consultations. They answer questions relating to the product and help with the calculation of premiums. The tariff calculator of the new motor vehicle insurance can be found on helvetia. de and on comparison portals such as check24.de. All processes run in the background on an automated basis. This means that customers receive quick and competent support.
Invoice processing for bodywork damage is now performed fully automatically. This allows customers and Helvetia to benefit from efficient claims handling, while the bodywork businesses enjoy quick and simple communication.
later, my car was back in front of my home almost “as good as new”: flawlessly repaired and freshly cleaned. I was so im- pressed by the exemplary service of Kriesbach GmbH that I am now letting them take care of my car service and tyre change.
All risks and benefits in occupational pension plans are insured and guaranteed by Helvetia Insurance. Assumption of complete administration. Package for companies and independent charitable organisations.
Additional and separate pension solutions, which go beyond the mandatory requirements.
Needs-oriented occupational pension plans with earnings prospects. Covers the risks of death and disability by means of insurance contracts with Helvetia. Assumes the complete administration. Investments are managed by Helvetia Investment Foundation.
Risk insurance and blanket risk contracts for semi-autonomous occupational pension foundations. Assumption of complete administration.
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 supplementary 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.
Security at every stage of life Security is key for people – at every stage of life. For this reason, we support our customers in protecting themselves against the unforeseeable and help them to define their financial objectives.
In Germany and Austria, Helvetia distributes unit-linked products with individual scope in terms of structure in the form of the CleVesto product line. These solutions adjust to the customer’s personal circumstances and offer a variety of investment opportunities.
Helvetia Germany: The rating agency Franke & Bornberg awarded its highest rating "FFF” – i.e. “outstanding” – for the quality of the unit-linked annuity insurance CleVesto Allcase.
Remaining a complete provider Traditional life insurance products continue to round off the offering. Nevertheless, we are also adjusting the guarantee concepts to the market environment here. “Helvetia will continue to position itself as a complete provider in the life business, but our focus here will be firmly directed towards modern products”, clarified Keller. He also indicated that Helvetia offers modern products for companies and their employees in area of occupational pension plans. Life insurance remains strategically important for Helvetia. After all, we see it as our task to enable our customers to enjoy a self-determined, independent and worry-free life into their old age with tailored products.
Read why pension products need to become more flexible. An interview with Kai-Peer Diener, Head of Product Development and Marketing for Helvetia’s private pension products.
Helvetia is Switzerland’s leading Swiss all-lines insurer. The stable and profitable home market provides a sound basis for the further development of the Group. Here, we will exploit the synergies from completed acquisitions and thus increase the area’s contribution to Group profit on a sustainable basis. We also put our faith in our strong partners. With smile.direct, we have a well-established online insurer. MoneyPark, Switzerland’s biggest independent mortgage broker, is another subsidiary. Helvetia is a key partner for companies in Switzerland; for example we cooperate with Swisscanto, a major occupational pension plan (BVG) provider, in group life business. Thanks to our good market position in life business and in the area of property insurance, we are a strong partner for both retail customers and corporate customers. With our broad offering, we want to place a new emphasis, in particular, on the business with SMEs.
Helvetia acquired Alba in 2010. Andrea Hand was positively surprised by the number three on the Swiss insurance market. “Despite the large size of the company, we are also provided with personal advice at Helvetia by ’our’ customer advisor: he knows us and our history. We also benefit from insurance solutions that are specially adjusted to our products.”
Floor layer Urs Klaus knows what the people want: “Oak parquet is currently the most popular product.” This hasn’t always been the case. When Urs Klaus took the decision to go self-employed in 1981, it was carpets that were particularly in demand. Since this time, it is not only the taste of his customers that has changed, but also his insurer.
Thanks to the good advice provided by Mario Kümin, Urs Klaus decided to switch to Helvetia. He values the broad offering of the all-lines insurer Helvetia. In addition to his SME business insurance, comprising public liability, property and car insurance, he is also privately insured with Helvetia and places part of his pension cover with the company. “For SMEs, the transition between business and private considerations is fluid. It is therefore helpful for me if my advisor knows our overall situation”, says a convinced Urs Klaus.
Helvetia also has a consistent positioning in the Europe segment. Helvetia has a cross-border brand presence. As is the case in Switzerland, focus is placed on the business with retail customers as well as small and medium-sized companies. In the Europe segment, Helvetia also offers the full range of non-life products, while in the life business Helvetia is placing an emphasis on the marketing of capital-efficient products in light of the low interest rate environment. The business in the European countries is profitable. The Europe segment contributes to regional diversification by reducing the level of dependency on the Swiss home market.
What role does Europe play for the Helvetia Group? The Europe segment represents a key second pillar of Helvetia and contributes significantly to the diversification of the portfolio. Europe already accounts for 42 % of total premiums in the non-life business area. The markets are profitable in a challenging environment and make a significant earnings contribution of almost a quarter.
Can you provide examples of this? In all markets, we pursue the same strategic principles and put our faith in business models with similar objectives. There are various approaches for sharing knowledge within Europe and the Group and exploiting synergies. Here, we focus on issues close to the market such as omni-channel management, market development, product development, handling processes and their IT-side support. As a Group, we promote innovations relating to digitisation, data and its analysis. We ensure methodological expertise in, for example, the area of risk management or pricing and utilise economies of scale for investments and IT. We also structure the reinsurance programmes for the entire Group. Here, we work closely with the market units in order to meet the local level of risk appetite with an ideal structure.
There are various approaches for sharing knowledge within Europe and the Group
Product development The development of new products is expensive and necessitates experience, expertise and time. To enable Austria to act quicker and in a more cost-efficient manner, the unit-linked CIeVesto life product, which was developed in Germany, was transferred to Austria and adapted in line with local requirements. The product was recognised with an award in both countries and is being sold successfully. We offer the PetCare non-life product online via pet communities and traditional sales partners with equal success.
Pricing An outstanding pricing structure is key for profitable growth in hotly contested markets. In order to guarantee a certain level of quality across the Group, we have strengthened this technical expertise in all country markets. To this end, we have introduced a joint method, made available a uniform pricing tool and provided our employees with training as part of intensive further training courses.
Total *Specialty Markets * includes loss in Corporate of CHF 43.4 million 32 Helvetia company brochure 2017
 around 300 customers  comprehensive relationships, overall excellence of reinsured business decisive
Which strategy are you pursuing in the area of Active Reinsurance?
We have identified three focus areas for the implementation of our strategy. Firstly, we are moderately expanding existing business relationships. Secondly, we are diversifying the business line mix and the geographic origin of our business. And finally, we are professionalising specialist business lines such as aviation and agricultural reinsurance.
We definitely want to roll out our European business model in other global regions and increasingly position ourselves as a global specialty reinsurer. We are also continuing to keep a close eye on costs. We will invest in customers for whom we represent a solid, reliable and long-term partner.
S witzerland has a high density of museums and invaluable art collections are concealed behind many a wrought-iron garden gate. Any significant art collection starts with the great passion of the collector him- or herself. On an increasingly frequent basis, collectors are wanting to share these collections with museums in the form of loans or donations. In such cases, the art collection must be adequately protected. Our 12-person art insurance department takes on this task with a high degree of professionalism and commitment. Our customers can rest assured that their art collections are comprehensively protected – including their personal data.
Helvetia is not only renowned as an art insurer, but also possesses its own remarkable art collection and is a committed art patron.
In the event of a claim, our internal art experts from the claims department can provide assistance with the recovery of an artwork. Working in close cooperation with the Art Loss Register, the world’s biggest private database for stolen art, Helvetia last year succeeded in recovering a bronze sculpture that had been stolen from a Swiss museum 30 years ago and offered it to the original customer for repurchase.
Our corporate responsibility strategy substantiates out the Group strategy relating to sustainability issues and combines economic and social progress. The strategy has emerged from the expectations of our stakeholder groups and is based on expert knowledge. In dialogue with our stakeholders and corporate responsibility network, we have identified three key action areas: reducing the impact of climate change, integrating sustainability in our core business and creating maximum transparency in this regard.
In our core business, we fulfil our corporate responsibility through the provision of advice that is in our customers’ best interests, the integration of sustainability aspects in our underwriting activities and when investing policyholder funds as well as through fair and transparent claims handling. Helvetia also tracks risks and opportunities that are not reflected in current market prices through its corporate responsibility management. This strengthens our core business and has a positive impact for customers, employees, shareholders, suppliers and the company in general. For example, in 2017 we introduced monitoring activities to observe the sustainability of our financial investments, created a low-barrier website and revised our principles for environmentally and socially sustainable procurement. Responsible sales practices, transparency and the guaranteeing of data protection and privacy are further cornerstones of our sustainability considerations in our core business.
Corporate Responsibility Report. This will in future be replaced by a Group report on the sustainability performance of all countries of the Helvetia Group.
Helvetia becomes a member of the newly founded Climate and Energy working group of the Swiss Insurance Association.
Initial “B” ranking in the CDP Climate Report for climate change management and CO2 reduction in own business operations
Establishment of a specialist Corporate Responsibility Management (CR Management ) unit for sustainability and responsible corporate governance
Development of the first multi-year sustainability strategy with measures for the core business, environment and society
October Convocation of the CR Advisory Board from the country Executive Management teams as an advisory body for the further development of the CR programme and CR strategy
Recognition as the “Best Improver” in the DACH region (Germany, Austria and Switzerland ) from the Carbon Disclosure Project (CDP), the world’s biggest investor initiative for climate change
The Helvetia Art Prize is only one facet of our wide-ranging commitment to art. At the Helvetia Art Foyer in Basel, the company’s own publicly accessible exhibition space, we present four solo presentations or thematic exhibitions each year, which also include works from our collection. Helvetia is also supporting various digitisation projects at Swiss museums.
In 2016, the young artist STELLA won the Helvetia Art prize with her work “American Dream”. In her award-winning installation, she presented the dream factories of Hollywood and Las Vegas as large-scale silk paintings and as surfaces onto which to project her dreams and aspirations. The expert jury of the Helvetia Art Prize was surprised and fascinated by STELLA’s work, which together with her other pieces – installations, clothes, accessories, painting and photographs – forms a large universe. “STELLA reinterprets pop art and blurs the boundaries between life and art”, explains Andreas Karcher, Head of the Helvetia Specialist Art Unit.
STELLA’s degree of recognition has increased significantly since being awarded the Helvetia Art Prize.
Helvetia is an attractive employer that supports its employees in their development thanks to a Group-wide talent and succession management programme. In future, we also want to stand out with employer benefits aligned to specific life stages.
Full time 1 The definition of key figures complies with the Global Reporting Initiative (GRI) and includes all employees (permanent and temporary contracts). The employees in training were not included but are disclosed in a separate figure.
What significance does risk management have for Helvetia and how do you analyse and manage risks? In the current challenging economic environment, comprehensive risk management is a top priority and integral to the way that we manage our business. Our risk management aims to ensure that the capital base as well as the reputation of the Helvetia Group and its Group companies are protected in a sustainable and proactive manner. The diverse risk environment requires the use of differing methods of risk analysis. For example, we therefore use risk models as an instrument for the analysis and quantification of market risks, counterparty risks and technical risks. These risks belong to the traditional risks of an insurance company and are consciously entered into as part of the chosen business strategy. We are able to influence them by means of hedging instruments, product design, reinsurance cover or other risk reduction measures. Overall, however, we must ensure that these risks are constantly covered by sufficient capital.
The handling of risks is a classic component of an insurance company ’s business model. As an all-lines insurer, Helvetia not only takes on various risks for its customers, but is also exposed to risks itself that it has to keep an eye on and monitor. In the following interview, Paul Norton, member of the Executive Management and CFO of the Helvetia Group, provides information on risk management, the handling of volatile capital markets and capital management.
customers assume the risk themselves, but in return also have a corresponding participation option. We keep equity price fluctuations and the risk of loss on shares under control by hedging. Most of the Helvetia Group’s assets and liabilities are denominated in CHF and EUR. The liabilities are largely hedged through investments in matching currencies. For return and liquidity reasons, we also hold investments in the Swiss business denominated in foreign currencies such as USD in order to cover the liabilities. The resulting exchange rate risk is generally largely hedged within the internally defined limits. This is carried out via foreign exchange forward contracts for EUR, USD, GBP and CAD against the Swiss franc.
One further question about capital management: how do you ensure that you are always sufficiently capitalised? Our capital management is an essential pillar for achieving our long-term growth targets aimed at profitability. We optimise the capital allocation on an ongoing basis in order to meet the following objectives: – to ensure compliance with supervisory capital requirements at all times; – to secure the capital required to underwrite new business; – to optimise the earning power of its equity and the associated dividend potential; – to support strategic growth; – to optimise financial flexibility.
In doing so, the capital requirements relevant for capital management are measured against the capital models that are relevant to the Helvetia Group: Swiss Solvency Test (SST) and Standard & Poor’s. When measuring the capitalisation of the
Return on equity legal entities, the applicable solvency rules are applied – Swiss Solvency Test in Switzerland and Solvency II in the EU. Capital management is ultimately performed taking account of strategic and operational considerations. At a strategic level, we manage the capital for our business units integrally in accordance with a defined capitalisation target under the relevant capital models, and it is aligned with the corporate strategy using multi-year capital planning. At an operational level, the capital management process incorporates the financing of the Group as a whole as well as the safeguarding of the adequate and efficient capitalisation of the individual legal entities. In this process, capitalisation is closely monitored and optimised according to internally defined thresholds. This management also takes account of liquidity requirements.
“Efficient and well-implemented risk and capital management helps us to remain on course when faced with challenging framework conditions.”
Dividend policy Helvetia is sustainably continuing its shareholder-friendly distribution policy with attractive and stable dividends. We optimise risks for investors and customers through our long-term focus and using efficient risk management, while growing consistently, maintaining sustainable profitability and minimising earnings volatility. It is the primary aim to pay out sustainable dividends to the shareholders, which increase in absolute terms each year, whereby the payout ratio should move within a range of 40 % to 50 %. Over the current strategy period, a cumulative total of more than CHF 1 billion should be distributed to shareholders.
Imprint The Helvetia Group company brochure 2017 is available in German, English, French, Italian and Spanish.
Cover Collage and acrylic spray on cardboard, 70 × 54.2 cm (cutout) The Zurich artist duo huber.huber, a number of whose works feature in Helvetia’s art collection, held a solo exhibition in the Helvetia Art Foyer entitled “Save Our Souls” in 2017/2018.
Production (offset printing) Schwabe AG, Basel Printed on Blue Angel-certified 100 % recycled paper.
Neither Helvetia Group nor any of its directors, officers, employees and advisors nor any other persons shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this information. The facts and information contained herein are as up-to-date as is reasonably possible and may be subject to revision in the future.
Neither Helvetia Group nor any of its directors, officers, employees or advisors nor any other person make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this document.
Helvetia Group assumes no obligation to update such statements unless otherwise required by applicable law.
The purpose of this document is to inform Helvetia Group’s shareholders and the public of Helvetia Group’s business activities for the year ended 31 December 2017. This document does not constitute an offer or a solicitation to exchange, buy or subscribe for securities and it does not constitute an offering circular within the meaning of Art. 652a of the
This document is also available in English, French, Italian and Spanish.
Contacts Helvetia Group Susanne Tengler Head of Investor Relations P. O. Box, CH-9001 St Gall www.helvetia.com susanne.tengler@helvetia.ch