Helvetia Group with headquarters in Switzerland has grown over the past 150 years to become a successful international insurance group. Alongside its home market of Switzerland, its core geographic markets also include Germany, Italy, Austria and Spain, which form the “Europe” market area. Helvetia is active in the life and non-life business in these markets. In addition to these markets, Helvetia also offers tailored specialty lines coverage and reinsurance via the “Specialty Markets” market area in France and through selected destinations worldwide. It has 6,675 employees providing services for more than 4.7 million customers and achieved a business volume of more than CHF 8.2 billion for the 2015 financial year. Helvetia attaches great importance to a practical geographic diversification and a good balance between the profitable non-life business, the high-potential life and pensions business and the promising international specialty lines business. The registered shares of Helvetia Holding AG are traded on the SIX Swiss Exchange.
The image of the tree on the cover illustrates how Helvetia and Nationale Suisse have grown together. Two have become one. Helvetia is now deeply rooted, receptive and open to future challenges.
Group underlying earnings per share in CHF 42.1 46.2 – 8.9 % 40
Price of Helvetia registered shares at the reporting date in CHF 566.0 474.0 19.4 % 40
IFRS earnings of the Group after tax 309.5 393.3 – 21.3 % 90 of which investment result from Group financial assets and investment property 1 105.6 1 275.4 – 13.3 % 97
Consolidated equity (without preferred securities) 4 655.3 4 963.1 – 6.2 % 108
Provisions for insurance and investment contracts (net) 41 143.0 41 275.0 – 0.3 % –
Employees 1 Based on the underlying earnings per share (including interest on preferred securities through profit and loss) divided by the average shareholder capital
Contents 5 Key messages 6 Letter to Shareholders 8 Business model 10 Integration of Nationale Suisse
Service 236 Glossary 239 Contacts and financial calendar 240 Multi-year overview 241 Imprint
Helvetia Group showed convincing underlying earnings of CHF 439 million after taxes, an increase of 4.1 % on the previous year. Earnings were driven by the technically strong non-life business which posted a profit increase of around 22 %. The life insurance business also improved its earnings by 16 % year-on-year. Although exchange rate effects burdened the result for Europe, all market areas contributed to this earnings growth, which was supported by the recent acquisitions.
In the reporting year 2015, Helvetia generated business volumes at Group level of CHF 8,235 million, which equals an increase of 11 % in original currency1. The positive effects of the acquisitions left their mark on the profitable non-life business: premium volumes rose by around 35 %, and in Switzerland by as much as 73 %. The European units and Specialty Markets also boasted double-digit growth rates. In the life business, Helvetia improved its sales of modern products by around 5 %, but sales of traditional products were curtailed.
The IFRS result, which is temporarily distorted by the accounting effects of the acquisitions, was CHF 309.5 million (2014: CHF 393.3 million).
Thanks to this good performance, Helvetia can continue its attractive dividend policy. The Board of Directors is proposing that the Shareholders’ Meeting increase the dividend to CHF 19.00 per share, almost 6 percent more than in the previous year.
Helvetia is active in the life, non-life and reinsurance sectors, with some 6,675 employees providing services for more than 4.7 million customers. With a business volume of more than CHF 8.2 billion, Helvetia generated a net profit of CHF 439.0 million in financial year 2015.
Our employees Helvetia considers dedicated employees who are well trained and competent to be key factors in its success. Read more about this on page 28.
Our investors It reduces the risks for investors and customers with its long-term focus and efficient risk and investment management processes, while growing consistently, maintaining sustainable profitability and minimising earnings volatility. Helvetia pursues a sustainable dividend policy and its primary aim is to pay out increasing dividends every year. Read more about this on page 38.
Our risk management Risk management ensures that sufficient risk-bearing capital is available at all times to cover the risks assumed. Read more about this on page 41.
Our corporate governance principles Helvetia considers good corporate governance to be very important. It is systematically geared to the Group’s strategy and positioning and integrated into day-to-day work. Read more about this on page 57.
Legal merger ES December 2015Group-wide rebranding completed to a large extent December 2015
In summer 2014, the core team prepared the basic structure of the integration project, and once the offer was accepted, the target organisation was defined. In 2015, the focus initially fell on the future positioning, product range and operations of Helvetia as well as integration planning and synergies. Helvetia reached an important milestone in April 2015 when it acquired control of 100 % of the shares of Nationale Suisse. The group units of Nationale Suisse in Switzerland were then merged with the Helvetia companies. Once the legal transaction was finalised, the new structure was implemented in Switzerland and the new sales organisation and integrated product range were launched. The consolidation of the organisation is still ongoing.
There were quite a few obstacles to negotiate with the merging of the organisation and before the sales launch of the integrated product range. For example, one of our objectives was to make sure that our customers were not affected by the internal changes at Helvetia, but continued to enjoy the usual quality of services. The heavy workloads that employees had to shoulder throughout the year should also not be underestimated, and some other projects suffered from resource shortages as a result of the integration.
We managed to successfully master these challenges, among other things because of the experience gained with similar projects, such as the integrations of Alba, Phenix and SEV and the merger with Patria. Speed is always one of the success factors: the future aspects should be clarified as soon as possible for all areas, for example management structure, processes, product range and naturally also with employees. In managing the integration project, I placed particular emphasis on the interconnectedness of the different sub-project managers.
Thanks to this step taken in 2015, Helvetia has an excellent position in the Swiss market. We substantially improved our market presence, not only with a bigger sales force but also with the new online channel smile.direct. Our customers also benefit from a broader range of products. Here I am thinking specifically of art insurance and accident and sickness daily benefits insurance for corporate customers.
Business activities and market areas 28 Employees 30 Customers and sales
Risk and investment management 47 Board of Directors 53 Executive Management 57 Corporate governance 72 Compensation report
The Helvetia Group has been synonymous with reliable insurance services for more than 150 years. Our success is based on our combination of selected markets, attractive insurance solutions and the pursuit of sustainable growth. Our technical discipline, cost consciousness and prudent investment strategy have proven their worth. This is all supported by a solid capital base.
Life: Improve capital efficiency and increase profit contribution of foreign markets
Growth Strengthen market position further Thanks to the successful implementation of our growth ambition, we increased our business volume by 34 % in OC from 2010 to 2015. This volume growth was not only supported by our own successful marketing activities, but also boosted considerably by acquisitions. Following the acquisitions of Nationale Suisse and Basler Austria, our business volume increased by 6 % on the previous year in 2015 alone. However, this growth was hampered by the excessive strengthening of the Swiss franc following the scrapping of the euro floor by the Swiss National Bank in January 2015. Adjusted for currency effects, business volume therefore actually increased by 11 %.
With our active M&A strategy we considerably strengthened our market position in all country markets since 2010. This was supplemented by organic growth.
Building on its current strong position, the Helvetia Group wants to be actively involved in shaping change in the Swiss and European insurance markets. In future, Helvetia Group will strengthen its customer focus and make use of the opportunities afforded by digitisation.
This leading position in the domestic market represents the achievement of a strategic objective. This primarily benefits our customers: They get an expanded offer and a closer-linked sales network. I also notice that public perception has changed. More notice is taken of Helvetia these days. The takeover of Nationale Suisse also improved our position in the European markets and the international specialty business.
The insurance market is in flux. The current stability of the general economy is creating an intact environment for healthy growth in the non-life business.
In the life business, the persistent low interest rate environment is triggering strategic adjustments. Customer behaviour is also changing, and technology is creating new opportunities.
We are using this strength as part of the helvetia 20.20 strategy to systematically renew and modernise the company. Helvetia is becoming more innovative, more digital and more agile. Digitisation in particular offers many opportunities. It allows us to focus more on the individual customer. We will re-
In this interview, Helvetia CEO Stefan Loacker gives some initial insight into the helvetia 20.20 strategy.
Stefan Loacker Chief Executive Officer main true to our traditional strengths, maintain our healthy capital base, and – something that is very important to me personally – meet our promises to the customers.
The insurance industry is facing further consolidation. What role will Helvetia play in this?
Implementation of the strategy helvetia 20.20 to be guided by “integrate, innovate, increase”
Powerful expansion of new online concepts in all country markets Digitisation with focus on smart data and process automation
Consistent development in non-life, adaptation of life insurance to low interest rate environment
Increase in profits and dividends through technical discipline, cost synergies and healthy growth
Strengthen Helvetia brand and improve attractiveness as preferred employer for best Swiss and foreign talents
Helvetia gets fit for the future, while remaining personal and reliable!
Support of the arts offers new opportunities Helvetia will continue in its support of the arts following the merger with Nationale Suisse. The collections of contemporary Swiss art from both companies have now been combined, with the prize for promoting young artists now awarded as the Helvetia Art Prize. Helvetia also opened a public art exhibition at its own premises for the very first time in 2015, entitled “All-Risk”. This commitment is complemented by selected partnerships. These include collaborations in the field of conservation and restoration initiated by Nationale Suisse, as well as art education with the Kunstmuseum Luzern and Kunsthaus Zürich (both until 2016). Additionally, Helvetia also entered into a partnership with the Museums-PASS-Musées organisation in 2015, which runs until 2017 and provides access to over 320 museums, castles and gardens across Switzerland, Germany and France.
“Personality and partnership” shape the profile of the Helvetia brand Helvetia uses unified brand positioning to address all stakeholders. The terms “personality” and “partnership ” are the focal points. Customer needs and collaboration based on trust are the most important factors. Our brand promises of “tailor-made solutions ”, “reliability” and “fairness” bring life to the brand. A flexible advertising concept allows us to adapt to the customer needs of the country markets. The heart of our advertising campaign is dialogue with our customers and how we support their individual and varied requirements with our products: “Whatever your plans, we’re there for you.” With the claim “Your Swiss insurer.”, we express both our origins and our ties with traditional Swiss values, not to mention our ambition to focus our efforts on each individual customer and to be a reliable partner in the area of insurance and pensions. Brand awareness and its perception are polled in regular surveys of retail customers and brokers in all markets. In the annual ratings published by the agency Interbrand, Helvetia was among the top 50 most valuable brands in Switzerland.
Non-life business In addition to traditional indemnity (motor vehicle, property, liability) and personal (accident and health) insurance cover, Helvetia’s Swiss and European non-life product portfolio also includes special insurance policies such as transport insurance, engineering insurance and art insurance. These are consolidated together with the active reinsurance business in the Specialty Lines market area.
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 2015, the net combined ratio was 92.1 %, which reflects the portfolio quality.
Full insurance solutions via Helvetia Collective Foundation 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.
Management pension scheme Additional and separate pension solutions, which go beyond the mandatory requirements.
Risk insurance Risk insurance and blanket risk contracts for semi-autonomous occupational pension foundations. Assumption of complete administration.
Traditional 2015 business volume by product Premiums by segment life volume, the occupational pension plans for SMEs represent one of the most important insurance business lines. At 97 %, this business is generated almost exclusively in Switzerland, where Helvetia has established itself as one of the top 3 providers of BVG (Swiss occupational pension system) insurance solutions.
In addition to the development of technical risk, the profitability of the life business is especially influenced by the investment and savings result and thus by the performance of the financial markets. The investment result plays an important role in generating the income required to ensure that the long-term insurance commitments can be met. In the past, Helvetia has always succeeded in achieving attractive returns with the capital employed. Despite the low interest-rate environment, in 2015 we again managed to generate stable interest margins between current income and the guarantees given, from which customers and shareholders benefit.
(g re a tly s im p li fi e d )
Helvetia also encourages its employees to openly express themselves. The opinions of the employees were also important for Executive Management during the integration process. For example, surveys on integration were carried out among all employees in Switzerland and Austria – the market units most significantly affected by the acquisitions. The results of the surveys showed that employee motivation and satisfaction are pleasingly high, despite the additional stresses associated with the integration.
• • – Product-specific partnerships (e.g. Carrefour for household and burial costs insurance, Alcampo for funeral costs insurance)
• – Yacht insurance with Société Générale, bank partner with Caisses Régionales and access to the GAN agents network for transport insurance
Sales structures optimised for individual countries Helvetia also aims to grow through the expansion of its distribution capabilities. And our decentralised distribution is set up to meet the specific needs of the local country markets. This allows us to quickly recognise and react to shifts in demand. Helvetia pursues a multi-channelling approach, i.e. accessing customers through various sales channels. In addition, we work with renowned distribution partners. With smile.direct we also have an online sales platform in Switzerland that is already very well placed on the market and repeatedly achieves top results in terms of quality, service and quotes in neutral comparison tests.
Regular surveys every two years Broker, retail customers, business customers, assessment of products and advisory quality
Planned collaborations: – BVG: First place – Private pensions: Third place – NL1 retail customers: Second place – NL business customers: Second place
High level of customer satisfaction 1 NL = non-life This list is not exhaustive
New products in the 2015 financial year Helvetia provides tailor-made insurance solutions to help support its customers in managing risks and making financial provision for a secure future. We continually adapt our product portfolios to keep up with ever-changing requirements. Current product solutions are optimised and new products launched. The following provides an overview of the new products launched in the 2015 financial year.
Helvetia BusinessLine − Business liability insurance − Business contents and buildings insurance − Photovoltaic insurance − Global electronics cover − Global machine cover for stationary and mobile machines − Smart&Easy: all-round insurance cover for small enterprises − Gastro: all-round insurance cover for hotels and restaurants − Pharma: all-round insurance cover for pharmacies − Medico: all-round insurance cover for doctors
− Product includes optional automatic financial services: profit consolidation system and stop-loss system
− Music instrument insurance for collectors, musicians, music ensembles and orchestras
Helvetia “Obras de Arte” − Exclusive all-risk cover for art works, including during transport
Helvetia “Compromiso” − Insurance solutions geared to meet the needs of people with disabilities
Austria Life Helvetia Collateral Account − This has the flexibility of a fund but offers the security traditionally provided by collateral
− An account for investing, switching or hedging funds temporarily without any price fluctuations – whatever the customer’s needs
− Staggered profit participation from the first month content/de/privatkunden/ lebensversicherungvorsorge/ fondsgebundene-lebensversicherung/ sicherungskonto.html
CleVesto Titan − Professional asset management with individual additional functions for automatically managing the contract for the entire duration
Christoph Guntersweiler and Kurt Schläfli are now members of the Specialty Lines Technical Insurance team. Their first major joint challenge was the launch of sales under the Helvetia brand on 1 May 2015, which the two colleagues tackled in a proactive manner. “By setting an example for collaboration, we were able to watch our co-workers in Engineering Switzerland come together as a unit in a short amount of time.” The balanced mix of Nationale Suisse and Helvetia employees quickly fostered a sense of cooperation, enabling the Technical Insurance team to successfully execute the sales launch. Christoph Guntersweiler is certain: “We’re in an excellent position and are extremely confident about the future. We’re convinced that we can make a key contribution to the successful development of Helvetia.”
We approached one another in an open and solution-oriented manner from the outset.
Responsible conduct that serves the best interests of the environment, society, its shareholders and employees is absolutely natural to Helvetia. This is a prerequisite for business success and safeguards the long-term survival of the insurance group. Corporate responsibility not only refers to Helvetia’s approach to doing business, but also reflects the changes affecting society and the environment. In the past year, the insurance industry operated in an environment shaped by a number of different challenges. When dealing with far-reaching developments such as climate change, demographic trends and digitalisation, Helvetia is committed to acting responsibly and sustainably.
Input from stakeholders and experts In autumn 2015, Helvetia opened a dialogue with selected stakeholder groups to discuss the new developments, trends and other topics likely to affect the different corporate responsibility dimensions, i.e. core business, environment, society and Helvetia as an employer. Discussions were held, among others, with representatives of investors, the supervisory authorities, the scientific and political sectors, NGOs and competitors as well as our employees and customers. The results from this stakeholder dialogue will be incorporated into the revised materiality matrix and the programme plans for 2016 – 2020. The exchange helps Helvetia to better weigh strategic decisions on sustainability and to emphasise the relevant corporate responsibility activities.
The non-profit organisation CDP (formerly the Carbon Disclosure Project) once again gave Helvetia a mark of 96 out of 100 points (2014: 96 points) for the transparency of its environmental management reporting. As a non-profit organisation, every year
Sustainability as a unifying element In order to create lasting values through its social engagement, Helvetia supports joint projects focusing on just a few central topics. For the Group, this holds the promise of more effective measures, valuable incentives for the employees, and a positive retroactive effect on the insurance business.
The Helvetia Patria Jeunesse Foundation supports children and young people in Switzerland. The Foundation focuses on innovation and sustainability in its promotion of individual projects.
For more information on the initiative to protect forests, the commitment of the Helvetia country markets and the CR milestones, refer to: www.helvetia.com/protection-forest www.helvetia.com/cr-e www.helvetia.ch/milestones
Stable core shareholder base There were no changes to the core shareholder base since 2014, and the free float is still 61.9 %. As of 31 December 2015, the following important shareholders were entered in the share register of Helvetia Holding: Shareholders as at 31 December 2015 – Patria Genossenschaft 30.1 % – Vontobel Group 4.0 % – Raiffeisen Switzerland 4.0 %
In line with the trend of the past few years, the number of shareholders increased by more than 10 % to 13,203 shareholders on 31 December 2015. At the end of the year, the employees held 1.2 % of the registered share capital, around 0.14 % of which was held by members of the Board of Directors and Executive Management of the Helvetia Group.
The majority of registered shareholders are based in Switzerland. Of the institutional shareholders – excluding the above core shareholders – 53.97 % have their registered office in Switzerland (previous year: 51.83 %), and 46.03 % (previous year: 48.17 %) are based abroad. Shares pending registration declined slightly year-on-year, ending the year at 20.96 %.
Successful Shareholders’ Meeting in 2015 The Helvetia Group once again presented a very good annual result to the 2,220 shareholders with voting rights attending the Shareholders’ Meeting. The Shareholders’ Meeting took note of the strong operating performance in challenging market conditions and approved the annual report, financial statements and consolidated financial statements for 2014. After the unexpected death of Erich Walser, Pierin Vincenz was elected as Chairman of the Board of Directors and assumed this office on 1 October 2015. Until this date, Doris Russi Schurter acted as the interim chair of the Board of Directors. Patrik Gisel was elected to the Board of Directors to replace Pierin Vincenz. Furthermore, in accordance with the amended articles of incorporation and in line with the Minder initiative, all other members of the Board of Directors were proposed individually for re-election and reappointed for a further term in office.
Dividend policy Helvetia strives to generate an attractive return on invested capital for its shareholders, and pursues an income-oriented, sustainable distribution policy that allows the company to maintain its solid capital base. As a result of the strong 2015 annual results, the Board of Directors is proposing to further raise the dividend to CHF 19.00 per share (previous year: CHF 18.00).
Retail investors 1 Based on underlying earnings 2 Proposal to the Shareholders’ Meeting
Dividend history Dividend per share (in CHF) | dividend yield at year-end price | pay-out ratio1
Profit for the period per share in IFRS in CHF 29.0 43.0
Payout ratio on the basis of underlying earnings 45 % 44 %
Payout ratio on the basis of IFRS 66 % 47 %
Risk management 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.
The numerous risks to which the Helvetia Group is exposed in its business activities are included in the Group’s risk management process. Market risks
Specialised risk controlling functions (e.g. Group Actuarial Departments Life / Non-Life,
Roman Schillig: “We benefited from Adrian’s knowledge of Nationale Suisse and his network of relationships with Basel, in particular during the challenging integration phase. Thanks to his technical expertise, he is enhancing the quality of our reports, and his sense of humour improves the mood in the office.”
The requirements for financial reporting increased as a result of the merger.
Company profile Risk and investment management have a high potential for large claims. Concentration risks (also known as cluster risks) can arise from risk exposure to a single counterparty or from parallel risk positions that are vulnerable to a mutual risk factor. A detailed portrayal of the risks resulting from financial instruments and insurance contracts is provided in Note 16 (from page 189) of the Financial Report.
Methods for risk analysis and control The diverse risk environment requires the use of various methods of risk analysis. Among other things, the Helvetia Group uses the Swiss Solvency Test from the Swiss supervisory authorities as an instrument for analysing and quantifying market, counterparty and technical risks. The company applies internal models, among others for the areas of market risk and technical risk. Risks are controlled and limited by means of hedging instruments, specific product design, reinsurance cover, limit systems (including exposure control and loss limits ), diversification strategies, process optimisation and other risk reduction measures.
Counterparty or credit risk is the risk of a contractual counterparty being unable to pay or of a change in the counterparty’s creditworthiness. The technical risks of life and non-life belong to the traditional risks of an insurance company and are consciously accepted as part of the chosen business strategy. Operational risk represents the risk of losses due to errors or the failure of internal processes, employees or systems, or as a result of external events, whereby the impact of reputational risks is also taken into consideration. Reputational risks can also arise in connection with strategic and emerging risks. Strategic risks include the risk of not achieving business targets due to the inadequate alignment of a company’s business activities to the market and in the market environment. Emergent risks are risks that have not yet manifested as actual risks, but are already in existence and
Capital management Capital management is an essential pillar for achieving the Helvetia Group’s long-term growth targets aimed at profitability. The optimisation of capital allocation and income flows has the following objectives: – ensuring compliance with supervisory capital requirements at all times; – securing the capital required to underwrite new business; – optimising the earning power of its equity; – supporting strategic growth; – optimising financial flexibility.
Capital management process Helvetia applies an integrated approach to capital management. At the strategic level, the capitalisation and risk profile of business units are managed in terms of profitability and growth potential and therefore the strategic Group targets. Capital is managed integrally in accordance with a defined capitalisation target under the Swiss Solvency Test and Standard & Poor’s, and is aligned with the corporate strategy using multi-year capital planning. At an operational level, the capital management process incorporates financing within the Group as well as the safeguarding of the adequate capitalisation of the individual legal entities of the Group. In this process, capitalisation is closely monitored and optimised according to internally defined thresholds.
Outlook The supervisory requirements for risk and capital management remain subject to major changes. The partially revised Supervision Ordinance entered into force in Switzerland on 1 July 2015. In the EU, Solvency II entered into force fully on 1 January 2016. With its EU-based business units, the Helvetia Group is directly affected by the Solvency II requirements. Helvetia has duly implemented the new requirements and is well prepared for any future developments.
Prudent investment strategy and timely risk management The investment strategy is defined in detail and imp lemented as part of the annual review of the investment policy. Adjustments are made to take advantage of new opportunities arising from shortterm market developments, while remaining within the tactical ranges established by the management.
Investment management 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 customers and shareholders and to make a reliable contribution to the Group result.
Proven asset liability management The investment strategy of Helvetia is based on a time-tested asset liability concept. First, a strategic asset allocation for each business unit is derived from a careful analysis of the liabilities. This satisfies the high security requirements of the insurance business while at the same time meeting the yield requirements of each of the individual stakeholder groups. Moreover, asset liability management ensures that there is always enough capital available for the ongoing strategic development of the Group and that the increasing regulatory requirements are taken into consideration. In doing so, the supervisory solvency requirements must be fulfilled at all times. The introduction of the Swiss Solvency Test made it possible to gradually and noticeably extend the duration of fixed-income products in the life business. Due to the long maturities of the assets, the current phase of very low interest rates is only gradually affecting direct yields. At the same time, the reduction in the guaranteed interest rates included in life insurance policies also helps balance out this effect.
The balanced distribution of the portfolio applies both between and within the individual asset classes. Moreover, Helvetia places 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 70 % 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 69 %.
Various committees have been formed 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: www. helvetia.com/en/gruppe/governance.
The Board of Directors of Helvetia Holding AG 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. As a result of the merger with Nationale Suisse, the Board of Directors currently consists of 13 members. In accordance with the elections at the Shareholders ’ Meeting in 2015, the office of Chairman of the Board of Directors was exercised by Mrs Doris Russi Schurter on an interim basis until 30 September 2015 following the unexpected death of long- serving chairman, Erich Walser. Dr Pierin Vincenz has been the new Chairman of the Board of Directors since 1 October 2015.
Professional background, exercising operational executive functions Until 2005 partner at KPMG Switzerland, including 1994 – 2005 Managing Partner at KPMG Lucerne.
Appointments at listed companies Member of the Board of Directors of Lucerne cantonal bank, Lucerne.
Pro bono appointments Seven appointments, in particular President of the Association of Swiss Companies in Germany, VSUD, Basel, and several commitments at the University of Applied Sciences and University of Lucerne.
From left to right: Herbert J. Scheidt, Dr Patrik Gisel, Jean-René Fournier, Doris Russi Schurter, John Martin Manser,
Appointments at listed companies Member of the Board of Directors of St Gall cantonal bank, St Gall.
Appointments at other companies Four appointments at non-listed companies, in particular Member of the Board of SWICA healthcare organisation, Winterthur.
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- Gesell schaft AG, Basel; since 1 January 2015 Vice-President of the Board of Directors of Helvetia Insurance.
Professional background, exercising operational executive functions Management positions at UBS; 1997 – 2009 State Council of the canton of Valais; since 2007 Senate of the canton of Valais; 2011 – 2013 President of the Finance Commission of the Senate.
Pro bono appointments President of the Board of Trustees of the Disability Foundation Valais de Cœur.
Professional background, exercising operational executive functions 1987 – 1999 various managerial positions in international and national business of Winterthur Versicherungen, including: Head of Development of Group Strategy and Market Development in Europe; 2000 – 2004 CEO of the Swiss export promotion organisation, Osec; since 2004 partner of the law firm MME Legal AG, Zurich and Zug.
Professional background, exercising operational executive functions Commercial banking in Switzerland, in the United Kingdom and in Brazil; 1981 Treasurer in the Brazilian affiliate of Ciba-Geigy; 1988 – 1990 Head of Finance and 1990 – 1996 Treasurer Ciba-Geigy AG, Basel (head office); 1996 – 2007 Head of the Novartis Group Treasury: Novartis International AG, Basel.
Appointments at listed companies Member of the Board of Hiag Immobilien AG, Basel.
Pro bono appointments Member of the Investment Commission at the University of Basel.
Professional background, exercising operational executive functions Until 1993 responsible for marketing at IBM and American Express; 1993 – 2012 numerous management roles with UBS AG; including: 1999 set-up and management of UBS e-banking; 2005 worldwide management of Human Resources Wealth Management & Business Banking; 2009 founding and management of the UBS Business University for the entire Group; since 2012 Head of Training and Member of the Executive Management of the Swiss Finance Institute, also owner of the consulting company, PAYERPARTNER, for strategic business development.
No appointments at listed companies, other companies or pro bono appointments
Appointments at listed companies President of the Board of Directors of Vontobel Holding AG and Vice-President of the Board of Directors of HERO AG, Lenzburg.
Appointments at other companies Four appointments at non-listed companies, in particular Director of the Association of Swiss Asset and Wealth Management Banks (VAV); Member of the Board of Directors of the SIX Group AG, Zurich; Member of the Board of Directors of the Swiss Bankers’ Association.
Professional background, exercising operational executive functions Since 1983 law firm Lenz & Staehelin, Geneva; partner since 1988.
Secretary of the Board of Directors: Christophe Niquille, doctorate in economics (Dr oec. HSG)
Italy Fabio Carniol joined the Executive Management of Italy on 1 September 2015. He is responsible for Life / Bank Insurance. Fabio Carniol has many years’ experience in the fields of insurance and financial services.
From left to right: David Ribeaud, Ralph Honegger, Philipp Gmür, Stefan Loacker, Paul Norton, Markus Gemperle
Professional background 1986 – 1988 Legal Counsel Claims Department, Helvetia Feuer, St Gall; 1988 – 1990 Academic Assistant, Institute of Insurance Economics, University of St Gall; 1990 joined Helvetia Insurance: Head of various departments in the non-life business in Switzerland; 2002 Head of Corporate Centre Helvetia Patria Group; 2004 Member of the Executive Management of Helvetia Switzerland: Head of IT; 2006 Member of the Executive Management of Helvetia Switzerland: Head of Operations & Partners; 2008 Member of the Group Executive Management: Head of Strategy & Operations; 2015 Member of the Group Executive Management in his current position with various appointments with subsidiaries of the Helvetia Group in Switzerland and abroad; Member of the Executive Management of Schweizerische National-Versicherungs- Gesellschaft AG, Basel, until the merger.
Appointments Member of the Economic and Financial Affairs Committee of the Swiss Insurance Association, Zurich.
Professional background 1988 – 1990 worked in various courts, administration and law firms; 1991 – 1993 Court Clerk at the High Court of Lucerne; 1993 joined Helvetia: Head of regional office in Lucerne; 2000 Member of the Executive Management of Helvetia Switzerland: Head of Sales; 2003 Member of the Group Executive Management in his current position with various appointments at the Swiss subsidiaries of the Helvetia Group.
Appointments In particular, Board of Trustees of the pension funds at Helvetia Insurance; Head of the Investment Commission of the Raiffeisen Pension Fund; Honorary Consul General for Austria in Basel; Vice-Chairman, Member of the Board of Directors of Allreal Group, Zurich.
This website also contains plenty of additional interesting and up-to-date information.
The complete list of Group companies, including investments, is shown from page 218.
Helvetia Holding AG has its head office in St Gall and is listed on the SIX Swiss Exchange in Zurich: security no. / ticker 1 227 168 / HELN. Key data for investors is given on pages 38 to 40 under “Investor information”. Following the planned delisting of Nationale Suisse in 2015, Helvetia Holding AG is now the only listed company within the Group. The Group’s subsidiaries included in the scope of consolidation are listed on pages 218 to 220.
1.2 Major shareholders In addition to a strong, long-term and, in view of the positive development of the Group, very successful relationship with our major pool of shareholders, Patria Genossenschaft (founding partner), Raiffeisen and Vontobel (cooperation partners), we maintain an open and shareholder-friendly strategy in an effort to build up a widely diversified and informed shareholder base. On the reporting date, 13,203 (previous year: 11,991) shareholders were registered in the share register of Helvetia Holding. This renewed year-on-year increase in the number of registered shareholders underscores the attractiveness of our stock. It is also the result of the share exchange carried out at the beginning of the year in connection with the takeover of Nationale Suisse.
1.3 Cross-holdings There are no cross-holdings that exceed 3.0 % of the capital or voting rights.
2. Capital structure 2.1 Share capital Helvetia Holding AG has a share capital of CHF 994,513.70, consisting of 9,945,137 registered shares with a par value of CHF 0.10 each. At the year-end price of CHF 566.00 per share, this equals a market capitalisation of CHF 5,628.9 million.
2.4 Contingent 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.
– Conditional share capital was created in 2007: see section 2.4.
2.6 / 2.7 Shares, participation certificates and dividend right certificates The share capital comprises 9,945,137 fully paid-up registered shares with voting and dividend rights with a par value of CHF 0.10 each. There are no preferential rights, participation certificates or dividend right certificates. For more details concerning Helvetia shares, please refer to pages 38 to 40.
As part of the reorganisation of Group Reinsurance, Celia Rung, a former Nationale Suisse employee, assumed responsibility for France as well as marine and art within the Specialty Markets area. Laurent Fauré, who was formerly responsible for France, now works on Group Contracts, Switzerland and Spain. The transfer of responsibility enabled both employees to gain deeper insight into their counterpart’s organisations. Their work was enriched by new ideas and alternating between the St Gall and Basel sites. Celia Rung and Laurent Fauré quickly came together as a team: “Our collaboration during a joint trip to Helvetia France laid the foundation for successfully renewing the reinsurance contracts.”
Their work was rounded out by new ideas and they benefited from their flexibility.
3. Board of Directors See also the diagram and information provided on pages 47 to 52.
3.1 Members of the Board of Directors As of the end of financial year 2015, the Board of Directors of Helvetia Holding AG consists of 13 members. Dr Pierin Vincenz has been the Chairman of the Board of Directors since 1 October 2015. The Board of Directors of Helvetia Holding AG is identical to the Boards of Directors of the two subsidiaries, Helvetia Leben and Helvetia Versicherungen. All the members of the Board of Directors have experience and knowledge of a wide variety of fields. They have the requisite expertise to represent their personal opinion in discussions with the Executive Management. Since the Helvetia Group conducts a significant proportion of its business abroad, the Board of Directors also includes citizens of different countries and members who have extensive international experience. Members of the Board of Directors should possess strong personal values (including integrity), specialised financial, business and insurance knowledge, experience in strategic and executive management, the ability to think in a visionary manner, social skills and a belief in sustainability. They must also have the necessary amount of time at their disposal for the efficient and proper performance of a director’s term of office. As far as the independence of Board members is concerned, Helvetia follows the requirements of the Swiss Code of Best Practice for Corporate Governance. For example, the Board consists only of members whose personal and business skills enable them to form an independent opinion and take decisions that are in the best interests of the company. Its committees consist of non-executive members. The members of the Nomination and Compensation Committee and the Audit Committee have never been members of the Executive Management. The members of the Nomination and Compensation Committee have neither personal relationships with Helvetia nor any business relationships through the companies and organisations represented by them; nor do they have any cross-involvements. Anti- conflict of interest rules are consistently applied by all committees. Every year, the Board of Directors assesses the level of compliance with these require-
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 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, and the composition of each committee is presented on page 47.
The cooperation agreement between the Raiffeisen Group and the Vontobel Group has been terminated with effect from the end of June 2017. Until it expires, the interests of the Raiffeisen Group will be represented on the Board of Directors of the Vontobel Group by a person who has no relation - ship with Helvetia. Andreas von Planta, Philipp Gmür, Balz Hösly and Stefan Loacker were members of the Board of Directors of Nationale Suisse until the delisting of Nationale Suisse in the spring of 2015. Andreas von Planta and Balz Hösly were also on the Board of Directors of Helvetia and Philipp Gmür and Stefan Loacker were part of Helvetia’s Group Executive Management at the time. There are no further interlocking directorates within the Boards of Directors of listed companies.
3.4 Election and term of office All Board members, the Chairman and the members of the Nomination and Compensation Committee are individually elected at the Shareholders’ Meeting each year. Re-election of existing Board members is possible. The option of re-election ends at the latest with the Ordinary Shareholders’ Meeting in the year in which a Board member turns 70. No Board member will reach the statutory age limit of 70 before or after the 2016 Shareholders’ Meeting.
which were attended by all its members. Most of the meetings lasted half a day.
c) The Investment and Risk Committee (IRC) formulates the investment concept, basic guidelines and investment strategy, proposes the strategic ranges of asset allocation, approves the investment strategy, supervises the investment activities of the Helvetia Group and decides on investments to the extent that the Board of Directors has delegated this task to it. It determines the most important risk strategies, the risk tolerance, risk appetite and applicable risk limits, and monitors all non-strategic and non-operational risks as well as the related risk management measures and compliance with limits.
It convenes as often as business requires. The CEO, CFO, CIO as well as the Head of Risk Management attend the meetings in an advisory capacity; in 2015, they attended all meetings. In order to deal with specific issues, the Committee may call on in-
Company profile Corporate governance seminar, two in the absence of two directors. All the members of the Executive Management attended all meetings. In order to deal with specific issues, it may call on specialists to attend its meetings, which is regularly the case. Members of the Board of Directors and all executive bodies are obliged to abstain if business is being dealt with that involves their own interests or the interests of related parties (natural persons or legal entities).
3.6 Delineation of powers The Board of Directors possesses the following powers based on its inalienable and non-transferable duties stipulated in the provisions of Swiss company law, the articles of incorporation and the internal organisational regulations of the Helvetia Group: – overall management of the Group; – definition of the organisational principles; – definition of the structure and principles of accounting, financial control and financial planning; – appointment and dismissal of members of the Group 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.
Chairman of the Board of Directors The Chairman heads the Board of Directors. He convenes the meetings of the Board, prepares the agenda for the Board meetings and chairs these meetings.
He prepares the Shareholders’ Meeting and the invitation to the Shareholders’ Meeting, and also chairs this meeting. He draws up the strategic objectives that are discussed by the Board of Directors and represents the shareholders in important strategic projects in consultation with the CEO. He ensures that shareholders receive timely and correct information on the Group’s business operations and nurtures relationships with major investors. Together with the other executive bodies of the Group, the Chairman ensures good corporate governance and an effective internal control system. He serves as line manager to the CEO and acts in consultation with the CEO whenever possible. He and the CEO prepare the CEO’s annual agreement on objectives, and he assesses the CEO’s performance every year. The Chairman may take part in important meetings of the Executive Management as a guest; to this end he receives the agenda and accompanying documents for all meetings. He manages the Group’s internal audit team as well as the head of the secretariat, assesses requests for information, meetings or inspection of documents from members of the Board of Directors as well as their acceptance of new Board or similar mandates (the Nomination and Compensation Committee decides on such mandates of the Chairman), signs Commercial Register applications and handles other tasks delegated to him by the Board of Directors. He may inspect any and all documents at all times.
Company profile Corporate governance may ask the Executive Management to provide information about the general course of business or the course of specific business cases, and / or may inspect any business documents as required. The Board of Directors also has the Internal Audit unit at its disposal as an auditing and supervisory body that monitors compliance with legal and regulatory provisions, internal guidelines and directives systematically, purposefully and in a risk-oriented manner. It also receives reports concerning the general development and specific activities of Helvetia in the areas of corporate governance and compliance.
4.1 Members of the Executive Management The members of the Executive Management are presented on page 55 et seq. The Executive Management at the Helvetia Group has been chaired by Stefan Loacker since 1 September 2007. Together with division heads at Group level and the management boards of the country markets, he is responsible for the operational management of the Group. Further information is available on pages 53 and 54.
4.3 Management contracts There are no management contracts with external parties that have to be disclosed.
3.7 Information tools and control instruments regarding the Executive Management 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 national 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.
5.1 Voting right restrictions and proxy voting Certain restrictions on voting rights that are identical to the restrictions relating to the transferability of registered shares of Helvetia Holding AG are described in section 2 above.
The Board of Directors specifies the rules that govern participation in the Shareholders’ Meeting and the determination of voting rights. For representatives of executive bodies, independent voting rights and custody proxies (who do not necessarily have to be shareholders themselves), it may stipulate regulations that deviate from the restriction of proxy voting to 10 % of the share capital. At the 2015 Shareholders’ Meeting, no individual shareholder or group of shareholders consisting of pool members with voting rights represented more than 10 % of the voting rights, except for Patria Genossenschaft. No specific exceptions with respect to voting right restrictions or proxy voting were granted in the reporting year. Shareholders who possess voting rights but who do not attend the Shareholders’ Meeting may assign their voting rights to a third party (who does not necessarily have to be a shareholder) by means of a written power of attorney. However, he or she may only represent the voting rights of third parties if, together with his or her own shares, they do not exceed 10 % of the total share capital. Here, too, shareholders who are connected to each other by way of capital or votes or by united management or in any other form count as one shareholder.
7. Statutory auditors 7.1 Term of office and tenure of office of lead auditor The independent auditors KPMG AG, Zurich, have served as the auditors of Helvetia Holding AG and its consolidated subsidiaries since 2005. The statutory auditors’ term of office must be renewed by the Shareholders’ Meeting every year. The KPMG AG audit team for the financial year 2015 consisted of: – Bill Schiller (since 2014), ACA, Partner Audit
7.3 Fees for additional consultancy services CHF 63,501.00. These fees covered legal and tax advisory services.
Prior to the Shareholders’ Meeting, shareholders have the option of paperless communication with the share register of Helvetia. Services such as ordering admission cards, notices to Helvetia, valid issuance of proxies, voting instructions to independent proxies and corrections of data can be processed online. Access is via www.shapp.ch. Instructions regarding initial registration are included in the invitation to the Shareholders’ Meeting. Shareholders who are already registered are issued with the respective documentation electronically until further notice.
Thomas Bachmann and Christoph Fuhrimann are new colleagues in the IT de par t - ment. The strengthening of the IT architecture was an important first joint step in the wake of the merger. In the process, Christoph Fuhrimann and Thomas Bachmann relied on their own positive experiences in their respective companies. “As the individuals responsible for the IT architecture in the Switzerland country market and at Group level, it is our job to drive the development of the IT landscape forward. However, with regard to the acquisition of Nationale Suisse by Helvetia, we are pleased to look back and celebrate how quickly the cultures of the two companies have merged.” It has been quite some time since they have felt in their daily routines as though they came from two different companies. Both are convinced that the merger has given way to a new Helvetia that will position itself in the market even more strongly in future. “We are pleased to play an active role in this.”
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 (Board of Directors and Group Executive Management ). 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 Board of Directors and Group Executive Management 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
The delineation of powers for compensation matters is defined in Appendix I of the organisational regulations: www.helvetia.com/en/gruppe/governance.
Fixed compensation components The Nomination and Compensation Committee defines the principles on which compensation decisions are based. With regard to the Shareholders’ Meeting that takes place in April / May and the subsequent compensation period (Board of Directors: Shareholders’ Meeting to Shareholders’ Meeting; Group Executive Management: 1 July to 30 June), the compensation concepts are reviewed by the Nomination and Compensation Committee to ensure that they are still appropriate and in line with the market; a proposal for appropriate adjustments to the total sum is then submitted to the Board of Directors and subsequently to the Shareholders’ Meeting at which final approval will be granted.
Various documents are used as the basis for ensuring that the fixed compensation components are appropriate and in line with the market. For example, renowned independent institutes are commissioned from time to time to prepare comparative studies that can serve as a benchmark. The compensation reports of comparable competitors are also analysed. Publications by different interest groups such as “Ethos”, information obtained from advisors specialising in personnel issues, and articles that appear in the media also provide an important basis for comparison.
Variable compensation components The variable compensation components for members of the Board of Directors and the Group Executive Management – 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 Board of Directors for final approval by the Shareholders’ Meeting (total amounts for the Board of Directors and Group Executive Management). The Nomination and Compensation Committee uses a criteria matrix to assess the results-based target achievement; this matrix is discussed in detail below in conjunction with the long-term compensation component (LTC) that has been in force since 2010. When discussing a variable compensation component for the Board of Directors, the competent committee decided that the provision of some incentive to the Board of Directors is not detrimental to the company’s healthy and successful development and that the scope and calculation of the variable
d) Expenses The members of the Board of Directors receive lumpsum expense allowances of CHF 10,000 per member as part of their fixed compensation for each term of office. This lump-sum expense allowance covers minor expenditures and travel expenses for the members of the Board of Directors within Switzerland. Costs for accommodation at the place where a meeting takes place and for foreign trips are paid by the company.
Other compensation components Helvetia also offers employee benefits packages, which are attractive in a market comparison, to all its employees and managerial staff. The employee benefits insurance provides employees and their dependants with the assurance that they will be financially secure on retirement or in the event of illness, the incapacity to work or death, in a way befitting employees who work for a leading insurance company.
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. As a rule, Board members also do not benefit from the discounts (premium discounts, etc.) that are offered to Helvetia employees (for 2015, individual discounts were granted for the Board members who transferred from Nationale Suisse to the Board of Directors of Helvetia).
2. Compensation for the Group Executive Management The compensation of the members of the Group Executive Management comprises the components described below: a) Fixed compensation The members of the Group Executive Management 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 Shareholders’ Meeting. 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 Executive Management 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 Shareholders’ Meeting 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 Executive Management member in cash. The individual targets of a member of Executive Management can include quantitative and / or qualitative components and depend on his or her operational responsibility. Compensation for individual target achievement is
On the date of allocation, the company and the Shareholders’ Meeting approving these payments are fully aware of the cost of these LTC. The company buys the corresponding number of shares on the allocation date and transfers these shares to a frozen custody account. After three years the exact same number of shares deposited in this frozen custody account is transferred to the ownership of the member of the Board of Directors / Executive Management. Helvetia does not incur any additional costs at this time. The price may change in the period between the allocation of deferred shares and the transfer of the shares to the ownership of the member of the Board of Directors / Executive Management. The member of the Board of Directors / Executive Management, and not the company, has exposure to price change risk (both positive and negative developments). In contrast with other systems, the number of shares allocated per financial year does not change over time if business is good. However, if business is bad, the member of the Board of Directors / Executive Management can lose out after three years (claw-back).
– Shareholder value: The reference figure is the overall performance (total return; share performance incl. dividends) of the Helvetia registered share compared with the performance of the
Stoxx Europe 600 Insurance index (index of comparable European insurance stocks).
For the LTC (Group Executive Management, Switzerland, and Board of Directors), 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 Board of Directors, 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 Group Executive Management and Executive Management Switzerland. These variable compensation components (individual, results-based and LTC) 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.
d) Shares and options The members of the Group Executive Management 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 the discount of 16.038 % that is granted because these shares are blocked for three years. There have not been any share option programmes since 2003.
This section provides information on the compensation, shares and loans granted to the members of the Board of Directors and the Executive Management of the Helvetia Group in the 2015 financial year.
1. Compensation paid to the Board of Directors In the reporting year, the members of the Board of Directors received fixed compensation of CHF 2,512,526. 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). A variable payment (including AHV / IV / EO) of CHF 391,112 in the form of a total of 680 deferred shares at a stock exchange price of CHF 547.00 on 7 March 2016 was granted to the Board of Directors. This is subject to approval by the Shareholders’ Meeting. These shares will pass to the ownership of the beneficiaries in three years. In the previous year, the members of the Board of Directors received fixed remuneration of CHF 2,292,622 and variable remuneration of CHF 417,835 paid in the form of a total of 814 deferred shares at a stock exchange price of CHF 480.50. 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 2.0 %. There are no other insurance contracts, loans or guarantees.
Hans Künzle (Vice-Chairman since 1.1.2015)3 198 734 0 28 183 0 226 917 0
Nationale Suisse of CHF 132,500 for 2014 and CHF 177,000 for 2015 (A. von Planta) and CHF 52,000 for 2014 and CHF 69,000 for 2015 (B. Hösly). 2 In deferred LTC shares 3 Includes discounts on insurance products for the former Board of Directors of Nationale Suisse amounting to CHF 4,000.
Company profile Compensation report 2. Compensation paid to the Group Executive Management In the reporting year, the members of the Group Executive Management received fixed remuneration of CHF 4,781,450. The fixed remuneration includes all scheduled allowances, meeting attendance fees and expenses. Variable remuneration of CHF 3,358,127 was granted to the Executive Management. This is subject to approval by the Shareholders’ Meeting. In the previous year the members of the Executive Management received fixed remuneration of CHF 4,755,224 and variable remuneration of CHF 3,095,672. As part of this variable remuneration the Executive Management was allocated LTC shares of CHF 1.44 million (previous year: CHF 1.25 million). This consisted of 2,635 shares at a price of CHF 547.00 on 7 March 2016 (previous year: 2,599 shares at CHF 480.50).
3. Highest individual compensation The highest individual amount paid out in the reporting year was paid to Stefan Loacker (CEO). Subject to approval by the Shareholder’s Meeting, the total amount is CHF 1,952,416 (previous year: CHF 1,758,678), comprising the following: cash payment of CHF 1,339,112 (fixed CHF 946,410, variable CHF 392,702), share-based payments of CHF 411,891 in the form of deferred shares and employer contributions to pension funds of CHF 201,413.
Salaries and other short-term benefits: – Fixed remuneration (incl. expenses allowances, child /
education allowances, long-service awards, company car) 3 874 299 3 745 927
– Employer contributions to pension funds with respect to the fixed compensation (incl. AHV / IV / EO) 907 151 1 009 297
– Share-based compensation in the form of deferred shares acquired during the financial year (LTC)3 1 441 345 1 248 820
– Total amount of variable compensation for the Group Executive Management for the past financial year 2015
1. Approval of the total amount of fixed compensation for the Board of Directors for the period from the 2016 Shareholders’ Meeting to the 2017 Shareholders ’ Meeting The Board of Directors reviewed its fixed compensation and decided to adjust the rates for the basic and additional payments for the 2016 / 2017 period to take account of the takeover of Nationale Suisse and the changed framework conditions in the general market environment. This means that the changes in the total fixed compensation submitted to the Shareholders’ Meeting for approval refer to these changes as well as personnel changes on the Board of Directors (interim Chairman and new Chairman 2015, new entries 2015, planned resignations 2016). An amount for CHF 100,000 is included for special mandates given to individual Board members for which extra compensation in addition to the regular Board mandate is paid.
Total fixed compensation amount Board of Directors 2 740 000 2 419 740 2 513 000 13.2 %
Total fixed compensation amount Executive Management for the period from 1 July to 30 June
– Total amount of the fixed compensation for the Group Executive Management for the period from 1 July 2016 to 30 June 2017
The Board of Directors requests approval from the Shareholders’ Meeting for the fixed remuneration for the Group Executive Management in the total maximum amount of CHF 5,061,000 for the period from 1 July 2016 to 30 June 2017.
3. Approval of the total amount of variable compensation for the Board of Directors for the past financial year 2015 The calculation of the variable compensation of the Board of Directors was described in para. 2 and the amounts were disclosed in section II. The resulting differences between 2014 and 2015 arose from changes in the extent of target achievement and the Board of Directors’ composition (interim Chairman without any separate variable compensation, new entry on 1 October 2015). The method of calculation and the reference figures did not change.
The Board of Directors requests approval from the Shareholders’ Meeting for total variable compensation for the Board of Directors in the maximum amount of CHF 392,000 for the past financial year 2015.
Employer contributions paid to pension funds with respect to the variable compensation (incl. AHV / IV / EO) 323 000 276 471 277 000 1 Comprises the value of the deferred shares allocated as part of the LTC
Natalie Abegg now provides sales support at the Helvetia general agency in Baden, which is quite a bit larger than the previous Nationale Suisse general agency. The back-office processes in the life insurance business of the two companies differ significantly. “Giovanna Serratore trained me extensively in the new life insurance procedures and processes. I benefited a great deal from her sound knowledge when I first started.” Giovanna Serratore: “Despite the uniform product range, the life insurance systems have not yet been merged. This means we are still operating as though we work for two companies. Thanks to proactive communication, we are able to address problems together and find suitable solutions. This keeps our work diverse and interesting. In addition, spending our lunch breaks together has made us friends outside of work.”
We have audited the remuneration report dated 9 March 2016 of Helvetia Holding AG for the year ended 31 December 2015. The audit was limited to the information according to articles 14 – 16 of the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (the Ordinance) contained in section II on pages 78 and 79 of the compensation report.
Responsibility of the Board of Directors The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report in accordance with Swiss law and the Ordinance against Excessive Compensation in Stock Exchange Listed Companies. The Board of Directors is also responsible for designing the remuneration system and defining individual remuneration packages.
Auditor’s Responsibility Our responsibility is to express an opinion on the accompanying remuneration report. We conducted our audit in accordance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the remuneration report complies with Swiss law and articles 14 – 16 of the Ordinance.
B u si n e ss d e v e lo p m e n t
Market positions of country markets as at the end of 2014 (FR as at the end
Thanks to the acquisition of Basler Austria, Helvetia ranks among the top ten insurance companies in Austria. Germany, Italy and Spain are among the highest volume insurance markets in the world, with over 5 %, 4 % and 1.5 % of global market share, respectively1. As Helvetia’s market share in these markets is lower (see figure), we expect further growth in these markets. We utilise this growth potential by focusing on the needs of our customers and sales partners, for whom we are a good match due to our size, sales structures and geographical scope.
The current market conditions2 in the European markets continued to present a number of challenges to insurers in 2015. As a result of the economic recovery, the global insurance market once again grew at a faster rate in the past financial year. The growth of the global economy was driven primarily by the USA, while recovery in the European markets tended to be slow in comparison. Market conditions in the insurance sector remained challenging in 2015 due to persistently low interest rates and conditions worsened in Switzerland, for example, owing to the introduction of negative interest rates.
unternehmen/spanische-assekuranzschafft -2015-den-turnaround 5 Source: ICEA Market figures Q4 6 Source: Swiss Insurance Association
In the last financial year, the central banks – in particular the Swiss National Bank – once again set the course for the capital markets. The SNB reacted to the European Central Bank’s announcement that it would further expand its bond-purchasing programme by unexpectedly scrapping the euro peg on 15 January. The euro and the Swiss equity market collapsed as a result, losing more than 15 % of their value. Although equities managed to recover relatively quickly by early summer in the slipstream of the European markets, the Swiss franc remained significantly overvalued compared to the euro all year, even despite a slight decline.
However, even more serious for investors than the trends in exchange rates and equity markets were negative interest rates, which were introduced by the National Bank to control the strength of the franc. They not only impacted short-term interest rates, but long-term rates also took deeper root in negative territory. European interest rates increased gradually in the wake of the crisis in Greece, which flared up again over the course of the summer. As a result of the European Central Bank’s quantitative easing programme, European interest rates nevertheless remained at an historically low level – with slightly higher interest spreads. The European equity markets started off the year with a pleasing performance. However, political and economic uncertainty in Greece quickly caused price gains to evaporate. In autumn, economic fears, weak growth in China and the high level of indebtedness of the emerging markets weighed heavily on the equity markets. The rising level of uncertainty caused most markets to trend sideways over the course of the year. Despite attractive valuation levels and slightly rising vacancy rates in the commercial sector, the real estate markets proved to be stable, not only in Switzerland but also in many other parts of Europe.
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 write-downs due to the revaluation of interest-bearing securities to fair value resulting from the specific IFRS accounting requirements for acquisitions. Up until the end of financial year 2017, Helvetia is therefore putting emphasis on “underlying earnings ”, which eliminate these temporary effects and therefore reflect the operating performance of the new Helvetia Group. Helvetia also changed its segment reporting structure under IFRS as from 1 January 2015. The operating segments of Helvetia Group now consist of: “Switzerland”, “Europe”, “Specialty Markets” and “Corporate”.
The “Switzerland” segment comprises the market area of Switzerland. The former segments of Germany, Italy and Spain were merged with Austria to form the new “Europe” segment. The “Specialty Markets” segment comprises transport, art and technical insurance in the Specialty Lines Switzerland / International and France market units as well as the global active reinsurance business. The “Corporate” segment includes all Group activities, the financing companies, Group Reinsurance and Helvetia Holding AG. In its 2015 Annual Report, Helvetia reports on these segments and on the development of the “Non-life”, “Life” and “Other activities” business areas. Unlike in the previous year, “Non-life” now also comprises active reinsurance, which was formerly included in “Other activities”.
Business development Helvetia Group’s performance 1 Original currency is abbreviated to OC in the following.
Business performance of Helvetia Group Overview Helvetia is looking back on a successful year 2015. Thanks to its well-balanced business mix, Helvetia was once again able to grow profitably. The framework conditions remained extremely challenging in 2015. The scrapping of the franc’s peg to the euro, the persistently low interest rate environment along with the introduction of negative interest rates in Switzerland, and volatile equity markets impacted the business environment. In view of this difficult environment, the positive business result can also be significantly attributed to the acquisition of Nationale Suisse and Basler Austria in 2014. The integration of these two companies has largely been completed and the joint management organisation is in place in all market units. Helvetia completed the legal and financial acquisition of Nationale Suisse in the second quarter and the operating legal units in Switzerland were merged in May. The merger of Helvetia and Basler in Austria took place in August 2015 and regulatory approval was granted in Spain at the end of the year; the operating units in Germany and Italy will be merged by the end of 2016 and the merger of the life units in Italy is expected to be completed in 2017. The integrated and expanded product range with attractive insurance and pension solutions was introduced in Switzerland under the Helvetia brand on 1 May 2015. And the first major step was taken towards migrating the customer portfolios with the successful transfer of household, personal liability and motor vehicle insurance into the systems of Helvetia in Switzerland at the end of September. Helvetia also offers a harmonised product range from a single brand in its foreign units. Thanks to the rapid progress of the integration, Helvetia is also on track with its synergy targets: annual savings of CHF 45 million were generated in the 2015 financial year.
(in OC) thanks to acquisitions, currency effects hinder growth in the foreign units in CHF
In financial year 2015, Helvetia Group generated a business volume of CHF 8,235.3 million compared to the previous year (financial year 2014: CHF 7,766.6 million), which represented an increase of CHF 468.7 million or 11.1 % in the original currency 1. Growth was mainly driven by Nationale Suisse and Basler Austria, which were acquired in financial year 2014. By business area, Non-life premiums rose by 34.7 % (in OC). In the Life segment, the volume of investment-linked insurance solutions and deposits increased by 4.9 % (in OC) overall, while traditional insurance solutions declined. The development of the premium volume in the non-life and life segments is described in detail on pages 91 to 93.
Group underlying earnings: Improved result thanks to the non-life business, better result in the life business in a difficult, volatile capital market environment
Viewed by business area, there was an increase in both the Non-life result (+CHF 59.3 million or 21.8 %) and the Life result (+CHF 24.5 million or 16.1 %) compared to the previous year. Both segments benefited from the acquisitions and the improved results at Group level were mainly driven by the technically strong non-life business. In contrast, the result in the Other activities segment declined. Viewed by segment, underlying earnings in Switzerland improved by CHF 80.8 million or 28.4 %. In local currency, the result in Europe improved by 10.3 %, while exchange rate effects significantly impacted the result in CHF – it was 3.2 % below the previous year’s figure. The result for Specialty Markets improved by CHF 4.4 million or 11.3 % compared to the previous year. The Corporate segment’s result fell short of the previous year – in part due to extraordinary charges.
Thanks to the successful implementation of the integration, underlying earnings include realised synergies of CHF 45.3 million. Of this amount, CHF 27.2 million is attributable to reduced personnel expenses and CHF 18.1 million to other cost reductions.
Underlying earnings is not an IFRS key figure, and therefore was not audited by Helvetia Group’s statutory auditor. Nonetheless, it is derived from the audited IFRS figures.
Helvetia still maintains a strong capital base. As at 31 December 2015, the Solvency I ratio was 205 %. The SST ratio after the first half of 2015 was within the 150 – 200 % range. Equity 3 decreased from CHF 4,963.1 million at the end of 2014 to CHF 4,655.3 million. This was due to a reduction in unrealised gains and losses recognised in equity, currency effects from the conversion of the equity of European market units into Swiss francs and the change in benefit obligations in Switzerland as a result of the reduction in the discount rate. The return on equity calculated on the basis of underlying earnings is 8.9 %.
In the Non-life business area, the premium volume in financial year 2015 increased, mainly due to the two acquisitions, to CHF 3,776.2 million (financial year 2014: CHF 2,999.1 million). Compared to the previous year, this represents an increase of CHF 777.1 million or 34.7 % (in OC). Expressed in CHF, the rate of growth fell by 8.8 percentage points due to negative exchange rate effects in the foreign units. By segment, the increase of CHF 605.3 million or 72.9 % in Switzerland was the greatest, owing to the acquisitions. Compared to financial year 2014, Europe booked CHF 65.0 million or 18.6 % (in OW) more in premiums; all market units contributed to this increase. Austria generated the highest growth rate thanks to the acquisition of Basler Austria. Premiums in the Specialty Markets segment rose by CHF 125.4 million or 28.7 % compared to the previous year, with the largest contribution to growth coming from the Specialty Lines Switzerland / International market unit.
Viewed by lines of business, the increase in premiums was mainly attributable to the major business lines of property (+CHF 271.9 million or +34.2 % [in OC]) and motor vehicle insurance (+CHF 268.3 million or 37.2 % [in OC]). The accident / health insurance business of Helvetia also generated CHF 136.6 million or 90.4 % (in OC) more in premiums during financial year 2015 than in the previous year. This increase is largely due to the accident / health insurance portfolio acquired from Nationale Suisse.
Net combined ratio: The net combined ratio again clearly beats the Group target range
The net combined ratio improved from 93.5 % in financial year 2014 to 92.1 % in financial year 2015. Thanks to favourable claims development – supported by the reinsurance structure – the claims ratio fell from 62.9 % in financial year 2014 to 62.7 % in the year under review. The cost ratio was 29.4 %, compared to 30.6 % in the previous year. This was due, among other things, to the realisation of already marked synergies, and enabled Helvetia once again to considerably surpass the target range of a combined ratio of between 94 % and 96 %.
At Group level, the volume of the Life business area decreased by CHF 308.4 million or 3.7 % (in OC) to CHF 4,459.1 million (financial year 2014: CHF 4,767.5 million). Expressed in CHF, this was a decline of 6.5 % due to negative exchange rate effects. Helvetia is focused on selling modern, capital- efficient products while reducing the sales of traditional products with interest rate guarantees. Modern, investment-linked products developed well during the period under review. Premiums from traditional insurance solutions decreased compared to the previous year – this decline could not be fully compensated for despite the strong performance of the modern products. By segment, the business volume in the Switzerland market area remained stable at CHF 3,517.3 million (financial year 2014: CHF 3,538.7 million) in an environment of persistently low interest rates. In contrast, and despite very good demand for investment-linked insurance solutions (+ CHF 8.7 million or 18.4 % in OC) and deposits (+ CHF 25.9 million or 45.7 %) – the volume in the Europe
Underlying earnings in the Life segment were CHF 175.7 million, which corresponds to an increase of CHF 24.5 million or 16.1 % compared to the previous year. An analysis by profit source shows that the risk result posted a pleasing increase of 9.5 %, while the savings and investment result for account to the shareholders declined due to the performance of the capital markets. Further drivers of the growth in profits included the reduction in Switzerland and Spain of the costs of interest-related reserves compared to the previous year. The profit for the period reported in accordance with IFRS was CHF 149.8 million (financial year 2014: CHF 115.0 million). The IFRS result includes integration costs as well as planned write-downs due to the revaluation of interest-bearing securities under acquisition accounting.
At the end of 2015, the embedded value of Helvetia Group amounted to CHF 3,195.7 million, which represents an increase of CHF 216.4 million or 7.3 % compared to December 2014, or an increase of CHF 7.6 million or 0.2 % compared to the adjusted embedded value as at 1 January 2015. It was necessary to adjust the embedded value as the life units of Nationale Suisse in Switzerland and Italy acquired in the second half of the previous year and the life business of the former Basler Austria could only be reported at their respective adjusted shareholders’
in CHF million 1 The Belgium insurance business was sold in 2015.
Helvetia Italy not only benefited from the merger through an expanded product portfolio, but also a consolidation of the sales network. The optimisation of the IT structure can be seen as a further opportunity.
Piero Martini, COO Nationale Suisse Italy, and Roberto Lecciso, COO Helvetia Italy, knew one another before the acquisition of Nationale Suisse and went from being competitors to colleagues. “Even though we had common interests when it came to IT, we were still competitors in the insurance market.” Since the founding of GE.SI.Ass., a joint IT services company, 30 years ago, Helvetia and Nationale Suisse have been exploiting the benefits of shared systems. Forward-looking decisions in the IT architecture became increasingly complex over time due to the differing interests of the two companies. The merger served to increase independence, the speed of decision-making and efficiency. Roberto Lecciso believes that: “New energy has been generated since the merger – together with Piero, we are shaping the future of IT services at Helvetia Italy.”
Current investment income amounted to CHF 988.4 million, which was down CHF 5 million on the previous year owing to falling interest rates
Result from financial assets and Group investment property (net) 1 105.6 1 275.4
Change in the unrealised gains / losses recognised in equity – 370.6 1 677.0
All asset classes made a positive contribution. With a total return of 4.6 %, real estate delivered the best result, followed by equities with 4.5 %. In the wake of the extraordinary, interest-driven increase in the previous year, unrealised gains in equity declined by CHF 370.6 million. The decrease was mainly due to slightly higher interest spreads and, once again, the weaker euro.
Non-life: Acquisition of Nationale Suisse as key growth driver (+72.9 %)
In the profitable non-life business, the anticipated positive volume effects of the acquisition of Nationale Suisse was noticeable in 2015: Premiums increased by CHF 605.3 million or 72.9 % compared to the previous year. Growth was driven in particular by motor vehicle (+CHF 258.3 million or 82.6 %) and property insurance (+CHF 165.5 million or 42.0 %) as well as the new accident / sickness daily allowance portfolio (+CHF 135.7 million). All sales channels contributed to this growth. The most important sales channel in Switzerland in 2015 was once again Helvetia’s own sales force. However, Helvetia was also able to generate pleasing growth in the online sales channel through smile.direct. smile.direct once again earned top marks in customer satisfaction surveys in financial year 2015, which means it is already very well positioned in the strategically significant online segment. The net combined ratio of 85.2 % (financial year 2014: 85.1 %) remained very strong. As a result of the changed portfolio structure following the acquisition of Nationale Suisse, the claims ratio increased from the previous year to 59.6 % (financial year 2014: 56.8 %). This is in particular due to the integration of the accident / sickness daily allowance portfolio, which accounts for a substantial share of the volume of the overall portfolio and also has a higher claims ratio than the rest of the portfolio. The accident / sickness daily allowance portfolio is currently being optimised and the efforts will continue over the coming quarters. In contrast, the cost ratio fell to 25.6 % from 28.3 % in the previous year, mainly owing to synergies that have been realised. As a result of the integration, Helvetia also sees additional opportunities for measures to improve efficiency with the potential to achieve corresponding cost reductions.
Non-life: Acquisition of Nationale Suisse as key growth driver (+18.6 %)
The non-life premium income generated in the Europe segment increased to CHF 1,664.7 million (financial year 2014: CHF 1,599.7 million). The pleasing growth of CHF 65.0 million or 18.6 % (in OC) was mainly the result of the acquisitions of Nationale Suisse and Basler Austria. All market units allocated to this segment generated pleasing double-digit growth rates in the original currency. The Austrian subsidiary posted the greatest gains. Here, Helvetia was able to increase the premium volume in the non-life business thanks to the acquisition of Basler Austria by CHF 56.4 million or 41.5 % (in OC) to CHF 289.6 million.
The net combined ratio of the Europe segment improved from 97.7 % in the previous year to 97.1, with both the claims and cost ratios improving. The main reason for the improvement in the claims ratio was the reinsurance structure; the decrease in the cost ratio is largely due to realised synergies. All market units generated net combined ratios under 100 % and improved compared to the previous year. Only in Italy did the net combined ratio increase slightly year over year, mainly due to the portfolio of the former Nationale Suisse.
Specialty Markets The premium volume generated in the Specialty Markets segment rose from CHF 550.0 million in financial year 2014 to CHF 675.4 million in the reporting period, which corresponds to an increase of CHF 125.4 million or 28.7 % (in OC). The Specialty Lines Switzerland / International market unit, into which the specialty lines business in Switzerland and international markets is bundled, made the greatest contribution to growth as a result of the full-year consolidation of the business of Nationale Suisse. In France, Helvetia generated slightly fewer premiums than in the previous year due to portfolio optimisations in the original currency. With a premium volume of CHF 243.5 million (financial year 2014: CHF 209.9 million), active reinsurance posted an increase of CHF 33.6 million or 16.0 %. This growth is the result of targeted diversification by region and business line as well as the selected expansion of existing business relationships. Helvetia pursues an income-oriented underwriting policy in the Specialty Markets segment.
The net combined ratio was 95.9 % (financial year 2014: 95.6 %). France and active reinsurance improved their combined ratios by 2.0 and 1.2 percentage points, respectively. This positive development is due to the decreased claims ratio year over year and also, in France, to the improved cost ratio. Specialty Lines Switzerland / International increased its net combined ratio. This was due to the fact that the Engineering Large and Special Risks business, which has a higher combined ratio, was only included for three months of the previous year and additionally benefited from a very favourable claims experience. Helvetia has been restructuring this business since mid-2015.
Provisions and other commitments 180 Employee benefits 185 Share-based payments 186 Related party transactions 189 Risk management 214 Events after the reporting date 215 Scope of consolidation
Income attributable to deposits for investment contracts – 43.7 – 73.8
Net benefits to policyholders and claims – 6 884.4 – 6 944.8
Diluted earnings per share (in CHF) 11.5 28.98 42.98 1 Change in presentation (see section 2.3 on page 114)
Investments with market risk for the policyholder 7.2 2 885.6 3 134.7
Income and expense that may be reclassified to income – – – 117.9
Income and expense that will not be reclassified to income – – – – 0.3
Realised gains and losses on financial instruments and investment property – 258.2 – 213.0
Unrealised gains and losses on investments in associates – 0.1 – 0.5
Unrealised gains and losses on investment property – 44.5 – 2.5
Purchase of shares, investment funds and alternative investments – 1 347.2 – 979.4
Purchase of investments in subsidiaries, net of cash and cash equivalents – – 603.5
Sale of investments to former subsidiaries, net of cash and cash equivalents 7.8 –
Effect of exchange rate differences on cash and cash equivalents – 61.4 – 7.4
Cash and cash equivalents as of 1 January 2 090.4 1 708.1
Other cash equivalents with a maturity of less than three months 39.4 114.7
Interest paid 21.8 10.5 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 Change in presentation (see section 2.3 on page 114)
Helvetia Holding AG, with headquarters in St Gall, is a Swiss public limited company listed on the SIX Swiss Exchange.
Malaysia and representative offices in Liechtenstein, the USA and Turkey. Some of
Helvetia’s investment and financing activities are managed through subsidiaries and fund com panies in Luxembourg, Ireland and Jersey.
Due to their effective dates, the following published sector-relevant standards, interpretations and amendments to standards were not applied to the 2015 consolidated financial statements: Changes in accounting policies to be applied for annual periods beginning on / after: Annual improvements to IFRS (2012 – 2014) 1.1.2016
Disclosure initiative – Amendments to IAS 1: Presentation of financial statements 1.1.2016
IAS 12: Recognition of deferred tax assets for unrealised losses 1.1.2017
In connection with the planned amendment to IFRS 4: Insurance contracts, IFRS 9 is first expected to become binding for insurance companies as of 1 January 2021. Helvetia is looking at a coordinated introduction of IFRS 9 and IFRS 4.
2.1 Standards applied for the first time in the reporting year 2.2 Standards not yet applied in the reporting year 2. Summary of significant accounting policies
A terminal bonus participation refers to the participation of a policyholder in the free reserves that have been formed over the term of a contract and that are credited to the policyholder upon the contract expiring.
Current annuity insurance policies sometimes receive a supplementary pension as a bonus, the amount of which is not guaranteed. A reserve must be formed for this constant surplus annuity.
Holding AG, its subsidiaries and its own investment funds. Consolidation applies when
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.
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 139).
Foreign currency transactions in the individual entities are accounted for using the exchange rate on the date of the transaction.
2.5 Foreign currency translation 2.5.1 Translation of financial statements prepared in foreign currency 2.5.2 Translation of foreign currency transactions 2.6 Estimate uncertainties and key assumptions
If the range of possible fair values is very large and reliable estimates cannot be made, the financial instrument is measured at cost, less any value adjustments (impairment ).
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 that a company ’s circumstances have changed with respect to technology, the market, economy or law, to such an extent that the cost can probably no longer be recovered. In these cases, the need for impairment is examined and – if justified – recorded.
The uncertainties regarding estimates in the area of technical results are explained in section 2.16 (from page 122). Any material change to the parameters used for the calculation of the provisions is documented in sections 9.3 from page 164 (non-life business) and 9.4 on page 166 (life business).
Acquired intangible assets are recognised at cost and amortised over their useful life. If a portfolio of insurance contracts or investment contracts is acquired, an intangible asset is recognised for an amount that equals the present value of all expected future gains minus the solvency costs included in the acquired contracts. This item includes the present value for the income across the whole contract period, even if the premiums have not yet been billed. The so-called “present value of future profit” (PVFP) is amortised in proportion to the gross gains or gross margins over the actual term of the acquired contracts. This term is usually between one and ten years. Helvetia has capitalised PVFP in respect of both the life business and non-life business. This is tested for impairment every year.
The other intangible assets also include intangible assets developed by the com pany, 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.
Intangible assets with an indefinite useful life are not amortised, but are reviewed annually for impairment (see section 2.11). Goodwill is recognised as of the acquisition date and comprises the fair value purchase price plus the amount of any non-controlling interest in the acquired company and, in a business combination achieved in stages, the acquisition date fair value of the acquisitor’s previously held equity interest in the acquired company, minus the net of the acquisition date fair value of the identifiable assets, liabilities and contingent liabilities of the acquired company.
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 statement. Goodwill acquired in a business combination is recognised at cost, net of accumulated impairment loss, and is tested annually for impairment. It is carried as an asset in the local currency of the acquired entity and translated at the applicable closing rate on each balance sheet date.
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 2.4.2
The aim of the investment property portfolio is to earn rental income or achieve longterm capital appreciation. Property held for investment purposes includes both land and buildings and is carried at fair value.
2.11 Impairment of tangible assets, goodwill and other intangible assets 2.12 Investments 2.12.1 Investment property
(loans and receivables, LAR), “held-to-maturity” (HTM), “at fair value through profit or loss”, “available-for-sale” (AFS) and “derivatives for hedge accounting”.
Group records all acquisitions and disposals of financial instruments at the trade date.
This usually happens when contractually agreed interest or redemption payments are stopped or are in arrears, if the debtor suffers from serious financial difficulties and / or if the rating falls below a specific threshold value. If, in order to avoid impairment, new conditions are negotiated for mortgages or loans, the mortgages or loans in question continue to be recognised in the balance sheet at amortised cost.
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 189).
For hedges of currency gains and losses on investments in subsidiaries with a foreign reporting currency, the hedge-effective portion of the gain or loss on the valuation of the hedging instrument is recognised in equity, while the ineffective portion is recognised directly in the income statement.
Those financial liabilities not held for trading and also not designated as at fair value through profit or loss are recognised at amortised cost. Interest expenses for financial liabilities that are used for financing purposes are recognised in the income statement as “Financing costs”. Depreciation and appreciation resulting from the amortised cost method are offset against interest expenses in the income statement.
IFRS, discretionary participation features are contractual benefits where, in addition to the guaranteed benefit, the policyholder has a claim to the realised or unrealised investment returns on certain assets or to a share of the insurance company’s profit or loss.
Actuarial methods that take account of uncertainties are applied to determine the amount of reserves. Reserves are not discounted, except for those provisions for claims for which there are payment arrangements.
A Liability Adequacy Test (LAT) is carried out on every reporting date to determine whether, taking into consideration expected future cash flows, the existing liabilities of each sector (property, motor vehicle, liability, transport and accident / health insurance)
Helvetia Group classifies all life products containing significant technical risk as insurance contracts.
The technical items in life business are determined in accordance with the local valuation and accounting principles for the respective companies. The assumptions made in setting the reserves are based on best estimate principles that, firstly, take account of the business-specific situation, such as existing investments and the market situation, as well as, for example, possible yields from reinvestments, and secondly, local actuarial bases of calculation (e.g. interest rates, mortality). The assumptions vary according to country, product and year of acceptance, and take account of countryspecific experiences.
Indirect business accepted from another insurance company is called active reinsurance. As in primary insurance business, technical provisions are included in the respective technical items on the liabilities side, and are similarly estimated as realistically as possible using mathematical-statistical models and the most up-to-date information available. They also reflect uncertainties. Non-traditional insurance contracts are treated as financial instruments and are reported under “Reinsurance assets” or “Financial liabilities from insurance business” if no significant insurance risks have been transferred. Net commission is reported directly in the income statement.
Receivables from insurance business and other receivables are carried at amortised cost, which is, in general, the nominal value of the receivables. Permanent impairment is recognised in the income statement. The impairment loss is reported under “Other expenses ” in the income statement.
Post-employment benefits pertain to defined contribution plans and defined benefit plans. The amount of the employers’ contributions for defined contribution plans depends on the employee services rendered during the reporting period and is charged directly to the income statement. For defined benefit plans, pension obligations and related 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.
Holding AG shares allocated prospectively over three years. The objective is to promote a longer-term business perspective. This payment is recognised proportionally in the income statement every year until ownership to the shares is transferred.
2.23 Employee benefits 2.24 Share-based payments 2.25 Other liabilities 2.26 Offsetting of assets and liabilities
The Helvetia Group redefined its operating segments on 1 January 2015. The Group now has the following segments: “Switzerland”, “Europe”, “Specialty Markets” and
The “Switzerland” segment comprises the country market Switzerland. The former segments Germany, Italy and Spain were merged with Austria to form the “Europe” segment. The “Specialty Markets” segment comprises transport, art and technical insurance in the Switzerland / International and France market units as well as the global active reinsurance business. “Corporate” is a separate reporting segment and includes all
In life business, the Helvetia Group offers various product lines, such as life insurance, pension plans and annuity insurance.
Income investments with market risk for the policyholder – 3.0 73.2 81.9 127.3
Total revenues from external customers 5 751.9 5 263.1 2 805.3 3 139.0
Claims and benefits paid (life) – 2 556.4 – 3 419.2 – 733.7 – 718.7
Income attributable to deposits for investment contracts – 2.4 – 6.3 – 41.3 – 67.5
Net benefits to policyholders and claims – 4 530.9 – 4 298.6 – 1 780.5 – 2 214.4
Profit or loss for the period 279.2 211.8 64.6 60.5 1 Change in presentation (see section 2.3 on page 114)
Net change in unearned premium reserve – 5.2 3.3 7.0 5.4
Change in actuarial reserves1 – 147.0 – 201.4 45.8 – 221.5
Net benefits to policyholders and claims – 599.2 – 679.1 – 638.9 – 932.3
Profit or loss for the period 18.0 14.1 10.3 3.0 1 Change in presentation (see section 2.3 on page 114)
Gains and losses on Group investments (net) 90.3 98.3 39.4 83.8
Income investments with market risk for the policyholder 78.9 200.5 – –
Claims incurred including claims handling costs (non-life) – – – 2 404.6 – 1 937.5
Claims and benefits paid (life) – 3 290.1 – 4 140.7 0.0 – 1.7
Financial report Segment information 3.3 Additional information by segment: Switzerland Europe
Cash flow from investing activities (net) 20.3 342.1 – 37.5 – 139.7 – 12.7 32.8
Impairment of tangible and intangible assets affecting income 0.0 – – 1.5 – 27.1 – 0.1 0.0
Share-based payment transaction costs – 2.1 – 1.2 – – – –
Acquisition of owner-occupied property, equipment and intangible assets 0.2 37.2 40.5 1 179.2
Reversal of impairment losses on tangible and intangible assets affecting income – – – –
Financial report Segment information 3.4 Gross premiums by segment and business area
Investment-linked life insurance 434.5 448.8 – 3.2 4.1 3.5 Gross premiums by business line
Deposits received from investment contracts life1 148.0 153.0 – 3.3 7.5
Gross premiums and deposits received life 4 459.1 4 767.5 – 6.5 – 3.7
Gross premiums and deposits received 8 235.3 7 766.6 6.0 11.1 1 Currently, all deposits from investment contracts life relate to the country markets Italy and Switzerland.
The foreign exchange loss from financial investments is included in “Gains and losses on Group investments” in the consolidated income statement and amounts to
Other foreign currency translation gains and losses are reported under the items
4.1 Exchange rates 4.2 Foreign exchange gains and losses 4. Foreign currency translation
Revaluation gains on transfers to investment property – – 0.8 7.6 – –
Change in the scope of consolidation – – – 0.1 – – 0.1 –
Goodwill is tested annually for impairment (see section 2.11, from page 119).
As part of the new segmentation (see section 3, page 127) introduced in 2015, goodwill of CHF 15.0 million previously allocated to the Switzerland non-life cashgenerating unit was shifted to the new Specialty Lines Switzerland / International cash-generating unit.
The goodwill impairment test was based on the following growth and discount rates, assuming a perpetuity: as of 31.12.2015 Goodwill Growth rate
The impairment test carried out in 2015 did not result in any impairment requirement.
Income investments with market risk for the policyholder 7.1.5 78.9 200.5
Share of profit or loss of associates 0.9 1.0 1 Includes a one-time gain of CHF 108.9 million from the revaluation of the Nationale Suisse shares that were already held by Helvetia before the acquisition of the company.
7.1 Investment income 7. Investments 7.1.1 Current income from investments by class
Current income from financial assets (net) 751.3 783.9 19.2 27.6 770.5 811.5
Investment management expenses on property – 75.9 – 67.5 – – – 75.9 – 67.5
Helvetia Group of CHF 68.7 million (previous year: CHF 65.1 million) due in less than one year, CHF 152.0 million (previous year: CHF 146.0 million) due between one and five years, and CHF 34.6 million (previous year: CHF 38.5 million) due in more than five years.
Interest income from investments at fair value through profit or loss stood at CHF 24.3 million (previous year: CHF 32.2 million).
Gains and losses on financial assets (net) 61.0 279.7 59.7 172.9 120.7 452.6
Gains and losses on investments (net) 117.2 282.5 59.7 172.9 176.9 455.4
“Derivatives” comprises gains and losses on derivative financial assets and derivative financial liabilities, of which CHF 4.6 million (previous year: CHF 2.3 million) represents a loss on the ineffective portion of the currency hedges to protect net investment in the
Results from investments with market risk for the policyholder 78.9 200.5 7.1.5 Result from investments with market risk for the policyholder
Derivative financial assets 143.6 5.2 – 148.8 as of 31.12.2014 Notes Life Non-life
Investments in associates accounted for under the equity method are listed in the table in section 18 (from page 215).
Total liabilities and equity 117.9 204.1 7.4 Investments in associates 7.4.1 Development of investments in associates 7.4.2 Aggregated financial data on associates
Transfer from / to property and equipment 14.4 8.2 22.6 10.5
The fair value of “Investment property” in the portfolio of the Swiss and Austrian Group companies is calculated using a generally accepted discounted cash flow method. The method is described in section 2.12.1 (page 119).
In the reporting year, the discounted cash flow method was based on discount rates ranging from 2.4 % to 5.9 % (previous year: 3.4 % to 5.5 %). If the discount rates were increased by 10 basis points, the value would be reduced by CHF 158.7 million. If the rental income that can be earned in the long term was reduced by 5 %, there would be a negative effect of CHF 289.8 million.
Total “loans and receivables” (LAR)1 9 281.9 9 017.4 9 281.9 9 017.4
Investments with market risk for the policyholder 56.4 77.8 51.0 64.8
Total “at fair value through profit and loss” 5 678.3 5 489.9 5 103.0 4 820.1
Total “available-for-sale” (AFS) 23 738.4 24 030.7 21 633.1 21 555.3
Total financial assets at fair value 29 420.4 29 521.1 26 736.1 26 375.4 1 Excl. receivables from insurance business and reinsurance.
In the reporting year, investments of CHF 5.4 million (previous year: CHF 106.7 million)
Of previous year’s CHF 68.7 million total “Level 3” investments, investments of CHF
CHF 7.4 million (previous year: CHF 0.1 million) were bought. In addition, “Level 2” investments of CHF 4.9 million (previous year: none) were transferred to the “Level 3” investments.
A total loss of CHF 6.4 million was recorded for the “Level 3” investments (loss in previous year: CHF 1.9 million). This was reported as a loss of CHF 1.9 million under “Gains and losses on financial assets” in the income statement, and CHF 4.5 million was recognised as “Change in unrealised gains and losses on financial assets” in the statement of comprehensive income. The valuation loss on the “Level 3” investment portfolio on the reporting date therefore amounts to CHF 6.4 million (previous year: CHF 1.7 million). The “Level 3” portfolio was worth CHF 71.1 million at the end of the year.
Helvetia recognises transfers between levels at the end of the reporting period in which the changes occurred.
Total equity- and equity-index instruments 1 340.5 358.2 683.4 2 382.1 2 589.9 72.8 97.7
Total derivatives for hedge accounting 348.3 – – 348.3 240.5 3.7 0.5 7.7.1 Derivative financial assets
Maturity profile of contract values Contract value Fair value as of 31.12. < 1 year 1–5 years > 5 years 2015 2014 2015 2014 in CHF million
Gains and losses reclassified to the income statement – 0.2 –
Financial report Investments 7.8 Maturity dates and impairment of financial assets 7.8.1 Analysis of past due financial assets without impairment
Foreign currency translation differences – – – 0.1 0.0 – 0.1 0.0 7.8.2 Analysis of individual impaired financial assets at amortised cost 7.8.3 Change in the impairment of financial assets at amortised cost
The valuation methods used to calculate the fair value of financial liabilities belong to the “Level 2” category. Section 16.4.1 (page 200) contains a maturity schedule of loans and financial liabilities.
Total financial liabilities at amortised cost 767.7 771.5 767.7 771.5 817.6 809.0
Total financial liabilities at fair value 167.5 142.3 133.8 110.8 167.5 142.3
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 15.0 million (previous year: CHF 4.3 million) under “Financing costs”. The interest expense from bonds in equity is recognised as a dividend distribution in equity.
Liabilities from finance leases include a debt that arose under a financing agreement regarding the acquisition of a property for own use. The interest expense under this agreement amounts to CHF 0.1 million (previous year: CHF 0.2 million) and is recognised in the income statement under “Financing costs”.
Helvetia Holding AG CHF 150 Mio. 1.125 % 2013 08.04.2019 1.17 % 149.8 149.7
Present value liabilities from finance lease 2.3 9.2 9.4 20.9 25.1
With the acquisition of Chiara Assicurazioni in 2013, the seller was granted the option of selling a further 25 % of the shares to Helvetia in 2017, provided that the contractually agreed premium volumes are exceeded. “Financial liabilities at fair value”
Actuarial reserves for insurance contracts life1 31 497.4 30 869.2 61.4 71.5 31 436.0 30 797.7
Provision for policyholder participation – life contracts1 1 688.4 1 860.0 – – 1 688.4 1 860.0
Loss reserves for insurance contracts non-life 9.3.1 4 616.0 4 863.9 389.7 432.1 4 226.3 4 431.8
Provision for policyholder participation – non-life contracts 60.9 74.4 – – 60.9 74.4
Total liabilities from non-life insurance contracts 5 770.3 6 155.8 439.2 501.8 5 331.1 5 654.0
Actuarial reserves for investment contracts with descretionary participation features 2 305.2 2 551.7 – – 2 305.2 2 551.7
Provision for policyholder participation – investment contracts 176.4 200.9 – – 176.4 200.9
Total liabilities from insurance business 42 712.0 43 199.5 505.9 579.8 42 206.1 42 619.7 1 Change in presentation (see section 2.3 on page 114)
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 16.4.1 (page 200).
Financial report Insurance business 9.2 Change in the reserves for insurance contracts and investment contracts
Total liabilities from insurance business 1 Change in presentation (see section 2.3 on page 114)
Loss reserves are determined using actuarial methods based on many years of claims experience. The assumptions used in determining the loss reserves have not changed materially in this reporting year.
Accumulated claims paid as of 31 December – 1 737.2 – 1 916.1
The actuarial reserve is normally calculated in a three-step process. In a first step, the actuarial reserve is computed based on local standards. These include applicable local parameters such as interest rates, mortality, surrender rates, expenses and additional biometric parameters which are usually set at the time of contract conclusion and vary by country, year of issuance and product. If the reserves prove to be insufficient from a local point of view, they are increased in most countries in a second step. A required reserve increase may be spread over several years in the local financial statements, depending on local requirements and circumstances. In a third step, the Liability
Adequacy Test (LAT) finally applies Group-wide uniform standards to test whether the actuarial reserves included in the local financial statements (including additional reserve increases less local deferred acquisition costs) are sufficient. Across the Group the
Insurance conditions and risks in life business are described in section 16.3 (from page 194). Sensitivities of actuarial reserves are outlined in section 16.3.3 (from page 196).
Total assets with market risk for the policyholder 2 912.9 3 157.2
9.4 Life business 9.4.1 Assets and liabilities with market risk for the policyholder 9.5 Reinsurance assets
Test on every reporting date. The share of “Deferred acquisition costs” classified as short-term is CHF 151.6 million (previous year: CHF 159.9 million).
Due from / due to policyholders 486.8 502.1 1 443.5 1 546.1
The receivables and liabilities from insurance business are primarily short-term. A maturity schedule of the liabilities is provided in section 16.4.1 (page 200). The amortised cost of the receivables usually equals the fair value. The method used for determining the fair value is allocated to the “Level 2” category.
Due from agents and brokers 6.9 11.6 3.1 3.4 1.4 1.4 7.1 15.1
The analysis of past due receivables contains all past due receivables that were not impaired as well as portfolio allowances.
9.7 Receivables and liabilities from insurance business 9.7.1 Analysis of past due receivables without individual impairment
Due from agents and brokers 13.9 17.9 13.1 17.5 0.8 0.4 9.7.2 Change in the allowance accounts for receivables 9.7.3 Analysis of individually impaired receivables
Deposit liabilities for credited policyholder profit participation include interest-bearing credit balances already contractually allocated to the holders of individual life insurance policies and policyholder dividends from group life insurance business that are either available early or only when the insurance benefits fall due, depending on the applicable insurance terms and conditions.
Deposits for investment contracts come from insurance contracts without significant insurance technical risk and without discretionary participation features. With these contracts, the policyholder participates directly in the performance of an external fund or external index. The change in fair value is solely due to changes in the performance of the underlying investment fund or index.
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 189).
The expected tax rate applicable to the Helvetia Group was 21.2 % for 2015 (previous year: 18.1 %). This rate is derived from the weighted average of expected tax rates in the individual countries where the Group operates.
10.1 Current and deferred income taxes 10.2 Change in deferred tax assets and liabilities (net)
Financial report Income taxes before tax deferred taxes after tax in CHF million
Share of associates’ net profit recognised directly in equity 1.0 – 0.5 – 0.1 0.1 0.9 – 0.4
Change in liabilities for contracts with participation features 161.8 – 989.0 64.5 244.3 226.3 – 744.7
Revaluation from reclassification of property and equipment – 0.5 7.5 0.8 – 2.0 0.3 5.5
Change in liabilities for contracts with participation features 20.4 35.1 – 4.0 – 8.2 16.4 26.9
Tax assets from losses carried forward 10.6.1 13.7 24.7 – –
These loss carryforwards do not have an expiry date. The tax rates applicable to material loss carryforwards for which no tax assets were recognised range between 10.6 Losses carried forward 10.6.1 Net tax assets from losses carried forward 10.6.2 Losses carried forward without tax assets recognised
(up to 15 % of shares issued) were offered to the shareholders of Nationale Suisse in exchange for their shares. On 20 October 2014, a share capital increase of
In the reporting year, Patria Genossenschaft paid CHF 45.0 million into the bonus reserves of Helvetia Schweizerische Lebensversicherungsgesellschaft AG (previous year: CHF 45.0 million). This was credited to equity without affecting profit or loss and allocated in total to “Provision for future policyholder participation” under liabilities in accordance with its objective.
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 for “Unrealised gains and losses” includes fair value changes of avail ablefor -sale investments (AFS), the portion of unrealised gains and losses of associates, as well as value changes resulting from the transfer of owner-occupied property.
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 − 161.8 million (previous year: CHF 989.0 million).
These arise because the policyholder also participates in valuation differences that result from the differences between local and IFRS accounting.
Balance as of 31 December 639.9 718.0 less: Deferred taxes – 145.3 – 164.3
Valuation reserves for contracts with participation features as of 31 December 1 215.8 1 261.1
To refinance this bond, Helvetia Schweizerische Versicherungsgesellschaft AG issued a subordinated perpetual bond of CHF 300 million in 2015. This bond will pay interest at 3.00 % per year until 2022. The interest, as with the previous bond, is recognised directly as charge to equity. Helvetia can suspend interest payments at its discretion only when Helvetia Holding does not pay any dividends and if certain other conditions are fulfilled. However, the suspended interest payments do not lapse. This bond meets all solvency requirements and is allocated to equity.
The first call date on which Helvetia has the right, but not the obligation, to repay the bond is 23 October 2022. After this date, the interest rate will be set for five years at a time based on the five-year CHF swap rate and the initial margin of 302.5 basis points.
In 2014, Helvetia Schweizerische Versicherungsgesellschaft AG issued a subordinated perpetual bond for CHF 400 million. This bond meets all solvency requirements and is classified as equity.
Helvetia Holding does not pay any dividends and certain other conditions are fulfilled.
Earnings per share incl. minority interests 287 931 309 382 098 773
The Board of Directors will submit a proposal to the Shareholders’ Meeting of 22 April 2016 to pay a dividend per share of CHF 19.00 (previous year: CHF 18.00)
Helvetia Holding AG and its subsidiaries are subject to a range of restrictions under company law and supervisory regulations with regard to the dividends that may be distributed to the parent company, i.e. the owner.
Authority (FINMA) in Switzerland. FINMA also acts as the European Group Supervisor of Helvetia Group. The Group is also subject to supervisory requirements in the form of minimum solvency margins, compliance with which can lead to restrictions with regard to the dividends of Helvetia Holding AG.
The supervisory authority’s capital adequacy requirement for Helvetia Group is calculated in accordance with the rules of the Swiss Solvency Test. In addition, the capital adequacy requirements of Solvency I must be observed until the middle of the reporting period. Solvency I ceased to be valid with the entry into force of the partially revised
Supervision Ordinance (AVO) on 1 July 2015, and its capital adequacy requirements will no longer apply to Helvetia Group in future.
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.
“Non-technical provisions” primarily consists of provisions for liabilities resulting from official regulation, provisions arising from other tax obligations, provisions for restructuring expenses and liabilities due to agents. The share of provisions classified as current is CHF 149.1 million (previous year: CHF 160.3 million).
(previous year: CHF 90.6 million). These relate to financial assets and other assets pledged to cover liabilities arising from the insurance business.
At the reporting date, CHF 23.5 million (previous year: CHF 18.5 million) were recognised for other contingent liabilities.
13.1 Personnel costs 13.2 Employee benefit receivables and obligations 13. Employee benefits
The employees of the Helvetia Group are covered under several pension plans in
Spain and France. The accumulated pension obligations are recorded as pension liabilities in the balance sheet of the employer. These pension plans cover benefits for retirement, death, disability or termination of the employment contract with consideration given to local labour laws and social legislation in the individual countries. The benefits are fully financed by the employer.
Defined benefit obligation as of 1 January 3 269.2 1 822.6
Fair value of plan assets as of 1 January 2 672.9 1 581.0
Fair value of plan assets as of 31 December 2 573.8 2 672.9 1 This item includes paid-in and withdrawn vested benefits as well as pensions and annuities.
Expenses for defined benefit plans are recognised in the income statement under
The sensitivity analysis takes into account the change to benefit obligations and the current service cost when there is a change of 50 basis points to the actuarial assumptions.
Only one parameter is adjusted in each case, the other assumptions remain unchanged.
As far as investment policy and strategy are concerned, employee benefit plans in
The investment risk is monitored through the periodic review of assets and liabilities as well as quarterly reviews of the investment portfolio.
The plan assets largely consist of the following financial assets: in CHF million
As at 31 December 2015, plan assets include shares issued by Helvetia Holding AG
with a fair value of CHF 105.7 million (previous year: CHF 89.7 million). Plan assets do not include any of the Group’s owner-occupied properties.
The costs associated with the share purchase plan in 2015 were recognised in the income statement at CHF 1.1 million (previous year: CHF 0.9 million).
Shareholders’ Meeting. This amount represents 680 shares at a price of CHF 547.00 on the reference date of 7 March 2016. This payment is recognised proportionally in the income statement every year until ownership of the shares is transferred and amounted to CHF 0.1 million for 2015 (previous year: CHF 0.3 million).
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 calculated as described in section 14.2. For the 2015 financial year, LTC shares to the value of CHF 2.1 million were allocated (previous year: CHF 1.9 million). For the Executive Management of the Group this is subject to approval by the Shareholders’ Meeting.
Beteiligungen AG and Raiffeisen Switzerland as well as the pension funds and all associates of Helvetia Group. The latter two are discussed in section 13.3 “Defined benefit plans” (page 181) and section 7.4 “Investments in associates” (page 150).
Helvetia has normal business relationships with the members of the shareholder pool in the areas of advisory services, the sale of financial and insurance services and asset management services. All transactions are executed at normal market conditions. There are no other material business relationships apart from these regular cooperation activities.
Helvetia Group does not have interlocking directorates in the boards of directors of listed companies. With the exception of Patria Genossenschaft, transactions with cooperation partners are not material for Helvetia Group, either as a single transaction or overall. The dividend payment of CHF 53.9 million (previous year: CHF 45.6 million) to
Patria Genossenschaft and the contribution of CHF 45.0 million (previous year: CHF 45.0 million) by Patria Genossenschaft to Helvetia Schweizerische Lebensversicherungsgesellschaft AG were the only significant transactions in the reporting period.
The total compensation paid to the members of the Board of Directors and the Group
(previous year: CHF 765,000). In the reporting year the loan, a fixed mortgage at normal customer conditions, earned interest at 2 % (previous year: 2 %).
Directors have deferred claims to a total of 6,296 shares acquired under the LTC
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
Within the stipulated parameters, the Board of Directors delegates operational aspects of risk management. For example, the monitoring of the Group’s risk profile and in particular the monitoring of the market, liquidity, counterparty and technical risks are delegated to the Investment and Risk Committee (IRC). The structural aspects of risk management (structure of the risk management organisation and the internal control system) and the monitoring of operational risks in particular are delegated to the Audit Committee.
Group Executive Management is responsible for implementing and complying with the strategies, business principles and risk limits defined by the Board of Directors, analysing the risk position of Helvetia Group, capital planning, defining the corresponding control measures and ensuring the necessary external transparency. The topics of risk and capital management are addressed directly in Group Executive Management meetings under the direction of the Chief Risk Officer (CRO). The Risk Committee, which is also headed by the CRO, advises Group Executive Management and coordinates, monitors and assesses the risk decisions and financing and hedging measures of all business units. Other permanent members of the Risk Committee at Group level are the Chief
Head of Group Underwriting Non-Life. Other specialists can be invited to attend a meeting when required and depending on the topic. The entire committee meets at least quarterly and it holds regular discussions at monthly meetings. The Risk and Capital 16.1 Principles of risk management 16.1.1 Risk management organisation
Reputation risks are not recorded as a separate risk category; instead, their impact is accounted for under operational, strategic and emerging risks.
Life and non-life technical risks are controlled by a number of actuarial methods, a risk-adjusted rate schedule, selective underwriting, proactive claims handling and a prudent reinsurance policy.
The market risks of Helvetia Group are controlled by means of the Asset Liability
Management (ALM) process. This enables the company to manage the various impacts of market risks in a integrated manner and defines both the investment strategy and hedging policy. Among other things, the following considerations are taken into account: – local statutory accounting policies to ensure compliance with local regulatory requirements; – consolidated IFRS accounting policies to ensure compliance with Group-wide regulatory requirements; – fair value approach to ensure compliance with regulatory requirements arising from the Swiss Solvency Test (SST) and Solvency II, as well as taking into account economic considerations.
Counterparty risks are managed via the investment and reinsurance policy and monitored on the basis of exposure analyses. Counterparty risk is minimised by investing in different counterparties with good credit ratings, who are continuously monitored and are subject to a strict limit system for managing risk clusters.
Technical risks in non-life result from the random nature of occurrences of an insured event and the uncertainty regarding the amount of the resulting obligations. 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.
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
This table was created using principles on which the segment reporting in section 3 (from page 127) is based.
The Group addresses prospective and retrospective risks with actuarial controls, adequate reserves and diversification. 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. Compulsory reinsurance contracts are coordinated by the Group Reinsurance business unit and centrally placed in the reinsurance market. In its role as Group reinsurer, Group
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.
CHF 35.0 million (previous year: CHF 25.0 million for Helvetia companies and an additional CHF 10.0 million for Nationale Suisse companies). For more information about the quality of reinsurance and claims settlement, please see sections 16.5 “Counterparty risk” (from page 209) and 9 “Insurance business” (from page 160). In 2015, 13.0 %
Helvetia Group underwrites liability insurance policies for private individuals, companies and motor vehicles. Comprehensive cover is also underwritten as part of motor vehicle insurance. The volume of accident insurance business has increased due to the merger with Nationale Suisse.
Helvetia Group controls the technical risks to which it is subjected through a risk-adjusted rate schedule, selective underwriting, proactive claims settlement and a prudent reinsurance policy. The underwriting ensures that the risks entered into meet the necessary quality criteria in terms of type, exposure, customer segment and location.
The portfolio is well diversified in Europe, with an increased concentration in Switzerland. Large risks are hedged through proportional and non-proportional contractual reinsurance.
Property insurance contracts cover claims for the loss of property of the insured arising from insured risks as well as from resulting consequential damages due to operation interruptions and additional costs.
Helvetia Group operates the transport insurance business in France and, to a lesser extent, in Germany, Switzerland, Italy, Austria and Spain. Helvetia is mainly active in marine hull insurance and goods in transit. The risk exposure is primarily limited through local underwriting guidelines. Due to the merger with Nationale Suisse, the Group has obtained a distinctive profile in transport insurance and has further developed the goods in transport business in particular. The volume of art insurance has also increased owing to the acquisition of Nationale Suisse; however, within the context of the entire non-life business, its significance remains relatively small.
Active reinsurance considers itself as a “follower” and usually holds smaller parts of reinsurance contracts. This policy of small holdings, combined with broad diversification
Gross premiums by business activities and region in the life business as of 31.12.2015 Switzerland Europe Corporate Total in CHF million Germany Italy Spain Austria as of 31.12.2014 Switzerland Europe Corporate Total in CHF million Germany Italy Spain Austria
(previous year: 50.1 %) from the investment-linked life business originate in Switzerland.
Most of the products include a premium guarantee, which means that the bases for mortality, disability, interest rates and costs used in the premium calculation are guaranteed.
An insurance policy which includes death or morbidity risk may under normal conditions be underwritten only on the condition of good health. The review of the application includes confirming that this condition has been met. The review uses a health questionnaire, and from a certain level of risk, is supplemented by a medical examination.
Helvetia Spain and, for some specific risks, Helvetia Italy are reinsured against catastrophic events that may concurrently cause several casualties and claim several lives.
Group life insurance accounts for 61.0 % (previous year: 59.0 %) of the gross premium volume of the life business of Helvetia Group, with 97.5 % of the premiums (previous year: 97.3 %) coming from Switzerland. Outside of Switzerland and in a small run-off portfolio within Switzerland, the characteristics of the group life insurance products are very similar to individual insurance. Only occupational pension plans in Switzerland will therefore be addressed below under group life insurance. In Switzerland, under the
Occupational Pensions Act (BVG) companies are obliged to insure their employees against the following risks: death, disability and age. Helvetia Switzerland offers products that cover these risks. Most of these products include a discretionary participation feature whose minimum amount is statutorily or contractually prescribed.
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 rate was 1.5 % in 2012 and 2013 and was increased to 1.75 % for 2014 and 2015. This rate was reduced to 1.25 % for the coming year.
Peak risks at the level of individual policyholders are transferred to various reinsurers via aggregate excess of loss reinsurance. The catastrophe reinsurance mentioned in 16.3.1 (page 195) also covers the group life business.
Helvetia Group uses a variety of actuarial methods to monitor existing and new products with regard to underwriting policy, reservation, and risk-adjusted pricing. Retrospective methods compare initial expectations with actual developments. Prospective methods allow the impact of new trends to be recognised and analysed early on. Most of those calculations integrate the analysis of parameter sensitivities in order to monitor the effects of adverse developments in investment returns, mortality, cancellation rates and other parameters. Taken together, they therefore provide an effective set of instruments with which to address developments actively and in good time. If a certain risk takes a worse than expected course, the participation feature is usually the first to be reduced in most of the products. If it appears that a product no longer has a sufficient safety margin, the premiums are adjusted for new business or, if allowed, for the existing policies.
Underwriting and reinsurance 16.3.3 Risks arising from trend changes and sensitivity analysis
A decrease in reserves flows largely back to the insured as a result of the discretionary participation feature. If it is necessary to increase reserves, the first step is to reduce the participation feature. If this is not sufficient, the rest of the increase is borne by the shareholders. In the local balance sheet, reserve reinforcements recognised as necessary may be spread over several years and, if possible, compensated by gradually decreasing the allocation of the provisions for future profit participation or by releasing hidden reserves on investments. In contrast, the necessary reserve reinforcements must be recognised immediately in profit or loss in the consolidated financial statements. However, for contracts with a participation feature, it is permitted to offset other valuation differences on the local balance sheet (in particular for investments) before deferred profit participation at Group level.
Various influencing factors and sensitivities are presented separately below. Please see section 16.4.2 (from page 203) on the effect of a change in interest rates on equity and the income statement.
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 25.7 million (previous year: CHF 15.9 million).
Depending on the nature of the contract, higher or lower cancellation rates can cause losses for shareholders. Overall, the basis of calculation at all Helvetia Group life insurance units apply sufficient safety margins so that a change in the cancellation rate would not have a major impact on the amount of reserves. For example, a 10 % decrease in the cancellation rate would require a reinforcement of reserves with a negative effect on the income statement of CHF 4.4 million (previous year: CHF 0.2 million).
In group life insurance, there are long-term interest rate guarantees on provisions for current benefits. The BVG minimum interest rate on the mandatory savings of policyholders is set annually by the Swiss Federal Council. Rising interest rates may also lead to increased policy cancellations in group insurance and thus to losses. Since 2004, no deductions can be made from nominally defined surrender values to take into account the fact that the fair value of the corresponding fixed-income investments may be below the (local) carrying value for contracts that have been part of the insurance portfolio of
For index-linked life insurance, the policyholder’s returns are linked to an external index.
The main market risks to which the Group is exposed are interest rate risk, exchange rate risk and equity price risk. The Group is also exposed to the real estate market through a significant portion of real estate in its investment portfolio. Market risks affect the income statement and both the asset and the liability side of the balance sheet. The
Group largely manages its real estate, mortgages and securities itself. External providers mainly manage assets invested in convertible bonds. Savings accumulated in unitlinked policies are invested in a wide range of funds, equities and bonds and are managed by third parties. The market risks associated with these funds lie with Helvetia’s insurance customers.
Asset Liability Management (ALM, see also section 16.1.2, page 190) at Helvetia
Group manages assets and liabilities in terms of their liquidity. On the liabilities side of the balance sheet, there are no significant individual positions with liquidity risk. A portion of the Group’s investment portfolio is composed of investments with no liquid markets such as real estate and mortgages. These investments can only be realised over an extended period of time.
Provision for future policyholder participation 208.8 88.8 30.2 36.2 1 771.3 2 135.3
Total financial and other liabilities 2 308.6 1 670.6 451.7 440.9 5.6 208.2 5 085.6 as of 31.12.2014
Callable at any time < 1 year 1–5 years 5–10 years > 10 years
The above figures may differ from the amounts reported in the balance sheet, as these represent undiscounted cash flows. These were allocated to the category “callable at any time” based on the counterparty’s contractual cancellation right. The majority of these contracts can be terminated both in life and in non-life business within one year at the latest.
Derivative financial assets for hedge accounting 3.7 – – – – 3.7 as of 31.12.2014 < 1 year 1–5 years 5–10 years > 10 years
Available-for-sale investments (AFS) 1 300.8 5 777.5 6 899.0 8 758.5 1 294.9 24 030.7
Derivative financial assets for hedge accounting 0.5 – – – – 0.5
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 0.25 % to 6 %.
Actuarial reserves for insurance and investment contracts excluding interest guarantee 885.5 – 548.4 –
Actuarial reserves for insurance and investment contracts excluding interest guarantee 1 022.0 – 610.5 –
Actuarial reserves for insurance and investment contracts with positive interest guarantee 24 863.6 141.3 5 869.2 4.2
Interest rate level 2015 Interest rate level 2014 as of 31.12. + 10 bp − 10 bp + 10 bp − 10 bp in CHF million
The above table analyses the impact of a change in interest rate on Helvetia Group’s equity and income statement, taking account of deferred taxes and the legal quota. The analysis also includes investments at fair value through profit and loss, fixed-income available-for-sale financial assets, derivatives, technical reserves in the life business (the actuarial reserve, deposits for investment contracts) and interest on floating-rate financial assets. The “look through” principle was used for significant holdings in balanced funds.
Investments in equities are used to generate long-term surpluses. Investments are made primarily in large-caps traded on the major stock exchanges. Helvetia Group holds a well-diversified portfolio (mainly stocks traded on the exchanges in Switzerland, Europe and the USA). The share of each item of the total portfolio (direct investment) is generally below 6 %. An exception to this are holdings in the diversified real estate investment company “Allreal” (9.8 % of total direct investment in equities). The market risk of the equity portfolio is constantly monitored and, if necessary, reduced by sales or the use of hedging instruments in order to meet the strict internal requirements for risk capacity.
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 5.6 % (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.
The analysis covers direct equity investments (with the exception of the real estate investment company “Allreal”), derivatives, equity funds and part of the mixed funds. The
Most of the Group’s assets, including its investments, as well as most of its liabilities, are denominated in CHF and EUR. Except for the Swiss business, liabilities are largely hedged through investments in matching currencies. For return and liquidity reasons, investments in the Swiss business are made both in CHF-denominated and foreign-currency -denominated assets in order to cover the CHF 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.
In the table above, the impact of changes in exchange rates on the income statement of
Financial report Risk management as of 31.12.2014 CHF EUR USD Others Total in CHF million
Current income tax assets 8.0 20.6 – – 28.6 as of 31.12.2014 CHF EUR USD Others Total in CHF million reclassified reclassified reclassified
Provision for future policyholder participation 1 604.2 531.1 – – 2 135.3
Counterparty risks include default risks and risks of changes in value. The default risk refers to the possibility of the insolvency of a counterparty, while the risk of changes in value represents the possibility of a financial loss due to a change in the creditworthiness of a counterparty or a change in credit spreads in general. The risk of counterparties failing to meet their obligations is continuously monitored. To minimise counterparty risk, Helvetia defines lower limits with regard to the creditworthiness of the counterparty and limits the exposure per counterparty.
– Counterparty risks from loans and mortgages granted: the largest positions in the asset class of loans consist of borrower’s note loans (93.7 %) and policy loans (6.1 %).
– Counterparty risk from transactions with derivative financial instruments: refer to section 16.5.2 (page 211) for the amount of gross counterparty risk exposure in connection with derivative financial instruments. A small part of the derivative instruments is traded on a stock exchange, so there are no counterparty risks. The scope of the hedging with cash collateral is CHF 36.6 million. Existing netting agreements are also relevant. Refer to the table below for detailed information about derivative financial instruments.
Master Agreements for OTC derivatives transactions. In the event of insolvency or if one of the parties does not fulfil its contractual obligations, there is a mutual right to close the current derivatives contracts and to offset outstanding receivables with liabilities and collateral received within the netting agreement.
Gross and net amounts of financial instruments in the balance sheet
The following analyses show the gross exposure to interest rate instruments, loans and derivative financial instruments, excluding collateral. They do not include investments where the credit risk is borne by the holders of life insurance policies. The securities and issuer ratings of recognised rating agencies were used to show credit quality. In addition, the issuer rating of Fedafin is used in the evaluation of Swiss municipalities, cantons and cantonal banks.
Not rated 40.1 6.7 as of 31.12.2014 Exposure Share in %
Central Mortgage Bond Institution of the Swiss Cantonal Banks AAA 1 190.7 1 190.7
Mortgage Bond Bank of the Swiss Mortgage Institution AAA 1 320.2 1 320.2
The following events in the reporting period led to a change in the scope of the consolidated financial statements of Helvetia Group: – In the reporting period, the Group increased its investment in the Nationale Suisse
Nationale-Versicherungs-Gesellschaft AG, Basel, merged on 30 April 2015. The merged unit operates on the market as Helvetia Schweizerische Versicherungsgesellschaft AG, St Gall.
Helvetia Swiss Insurance Company Ltd and the name of Nationale Suisse Latin
America LLC, Miami, changed to Helvetia Latin America LLC on 1 May 2015.
Schweizerische Nationale Leben AG, Bottmingen, merged on 4 May 2015. The merged unit operates on the market as Helvetia Schweizerische Lebensversicherungsgesellschaft AG, Basel.
Vienna merged on 28 August 2015. The merged unit operates on the market as
– The sale of the Belgian subsidiary Nationale Suisse Assurances and its two underwriting agencies Vander Haegen & Co. S.A. and ARENA S.A. to the Enstar Group was settled on 13 November 2015. The disposal gain of CHF 3.8 million was recognised in other income.
– In the 2014 financial year, the Group increased its investment in Sersanet, Red de
– On 8 August 2014, the stake in Chiara Assicurazioni S.p.A., Milan, was increased to 53 % by a purchase of additional shares.
– In the 2014 financial year, Helvetia Versicherungen AG, Vienna, purchased 26 % of fvv – Vorarlberger Versicherungsmakler GmbH, Götzis.
Nationale Suisse share and obtained 82.6 % of Nationale Suisse AG, Basel, on 20
Group to 96.3 %. The purchase price was CHF 1,727.3 million. The cash component of the purchase price was CHF 945.7 million. The exchange component, based on the final stock exchange price of the Helvetia share on 20 October 2014 of CHF 433 per share, amounted to CHF 535.5 million. At the time of the takeover offer, Helvetia already held Nationale Suisse shares. These were valued at the takeover price of
New acquisitions contributed CHF − 28.3 million to the Group’s result in the 2014 financial year. These earnings comprise gains on ordinary business operations of CHF 19.5 million at Nationale Suisse and CHF 2.6 million at Basler Austria, plus the negative accounting effects in connection with an acquisition under IFRS. This includes, in particular, integration costs and the amortisation of intangible assets capitalised as part of the acquisition. In management’s view, the information on ordinary business operations gives little indication of future earnings.
If the acquisition had been completed on 1 January 2014, the Group’s gross premiums for the 2014 financial year would have totalled CHF 8,869.5 million and the consolidated net profit would have amounted to CHF 444.9 million. These pro forma figures are based on unaudited financial statements prepared in accordance with the accounting principles of the previous owner and assumptions regarding the impact of the extraordinary effects of the transactions, and, in management’s view, do not give any indication of Helvetia Group’s future income or dividends.
The receivables from insurance business amounted to CHF 388.0 million for Nationale
The goodwill of CHF 70.2 million from the acquisition of Basler Austria represents expected synergies and future growth potential. It is allocated in full to the cashgenerating unit “Austria”.
The goodwill from the acquisition of Nationale Suisse of CHF 716.0 million is allocated to the cash-generating units “Switzerland non-life” (CHF 633.3 million),
It is assumed that the goodwill will not be deductible for tax purposes.
Financial report Scope of consolidation 18.3 Complete list of Group companies as of 31.12.2015
Medicall AG, Brüttisellen Non-life 74.32 full CHF 0.9 smile.direct Versicherungen, Wallisellen1 Non-life 100.00 full CHF –
Helvetia Vermögens- und Grundstücksverwaltung GmbH & Co. KG, Frankfurt a.M. Life 100.00 full EUR 41.2
Nationale Suisse Compagnia Italiana di Assicurazioni S.p.A., San Donato Milanese Non-life 100.00 full EUR 12.0
Nationale Suisse Servizi Assicurativi S.R.L., San Donato Milanese Non-life 100.00 full EUR 0.0
Helvetia Schweizerische Versicherungsgesellschaft AG, Direktion für Österreich, Vienna1 Non-life 100.00 full EUR
1 Group costs are included in the “Corporate” segment. 2 Branches as at 31.12.2015
As statutory auditor, we have audited the consolidated financial statements on pages 104 to 220 of Helvetia Holding AG, which comprise the income statement, statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes for the year ended 31 December 2015.
The Board of Directors is responsible for the preparation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) and the requirements of Swiss law. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In our opinion, the consolidated financial statements for the year ended 31 December 2015 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of consolidated financial statements according to the instructions of the
Investments in other companies are recognised at purchase cost less impairment.
As Helvetia Holding AG prepares consolidated financial statements in accordance with a recognised accounting standard (IFRS), in accordance with the statutory provisions it therefore does not have to include a management report and statement of cash flow in these financial statements.
On the reporting date, Helvetia Holding AG owned the following direct investments: Company
Schweizerische National-Versicherungs- Gesellschaft AG, Basel 0.0 0.00 % 8.8 84.80 %
On 8 April 2013, Helvetia Holding AG issued a 1.125 % bond 2013 – 2019 with a par value of CHF 150 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.
1. Principles 1.1 General 1.2 Valuation principles 1.3 No need to include cash flow statement and management report 2. Notes on balance sheet and income statement items 2.1 Investments in other companies 2.2 Bond
(CHF 6.5 million) of Helvetia Holding AG (previous year: 26,288 shares, CHF 8.2 million).
As at 31 December 2014 26 288 registered shares 8.2 purchases 59 956 registered shares 2.3 sales –38 293 registered shares − 4.0
2.3 Maturity structure of interest-bearing liabilities 2.4 Share capital and authorised capital 2.5 Treasury shares
The audit fees include the fees for mandates connected directly or indirectly to an existing or future audit mandate as well as the fees for audit-related activities (including questions concerning the accounts, support in regulatory matters and statutory special audits).
Helvetia Holding AG belongs to the VAT group of Helvetia Schweizerische Lebensversicherungsgesellschaft AG and is therefore jointly and severally liable for VAT debts.
The subordinated and unsecured guarantee of CHF 300.0 million vis-à-vis the bond creditors of Helvetia Schweizerische Versicherungsgesellschaft AG, which was related to a subordinated bond issued in November 2010, was repaid in November 2015.
The following shareholders were entered in the share register on the reporting date of 31 December 2015: – Patria Genossenschaft, Basel, with 30.09 % (previous year: 30.12 %)
– Vontobel Beteiligungen AG, Zurich, with 4.00 % (previous year: 4.00 %)
The information on investments of the members of the Board of Directors and the Executive Management required under Art. 663c par. 3 of the Swiss Code of Obligations is provided in the Notes to the 2015 consolidated financial statements of the Helvetia
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 2015 consolidated financial statements of the Helvetia Group under chapter 15.
2.7 Auditors’ fees 3. Other information 3.1 Full-time equivalents 3.2 Guarantee and contingent liabilities 3.3 Shareholders with interests of more than 3.00 %
3.4 Additional information for companies listed on the stock exchange 3.5 Ownership interests of members of the Board of Directors and employees 3.6 Material events after the reporting date
As statutory auditor, we have audited the financial statements on pages 223 to 227 of
Helvetia Holding AG, which comprise the income statement, balance sheet and notes for the year ended 31 December 2015.
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards.
Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
Swiss law and the company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.
The transport insurance team in French-speaking Switzerland expanded as a result of the merger. Since then, Stefan Minder, a former Nationale Suisse employee, and David Monod have become new colleagues and are already a well-integrated team.
The embedded value published here by Helvetia was calculated in accordance with the traditional method, which delivers values and sensitivities that differ from the market-consistent embedded value according to the CFO Forum, and also reacts differently to economic changes.
The life units of Nationale Suisse in Switzerland and Italy acquired in the second half of the previous year and the life business of the former Basler Austria were only reported at their respective adjusted net asset value as of the end of 2014, without the value of the insurance portfolio or the solvency costs. In view of the planned sale at the beginning of 2015, the life business of Nationale
At the end of 2015, the embedded value of the Helvetia Group amounted to CHF 3,195.7 million, which represents an increase of CHF 216.4 million or 7.3 % compared to December 2014, or an increase of CHF 7.6 million or 0.2 % compared to the adjusted embedded value as at 1 January 2015. The analysis of change shows that this mainly derives from economic factors, as the decision by the Swiss National Bank to scrap the euro peg resulted in a sharp decline in investment yields in Switzerland and negative exchange rate differences with the EU units. Dividend payments in the first half of the year also reduced the shareholder value of the life insurance portfolio. In contrast, operating profit improved due to more favourable cost assumptions and a positive contribution by new business. Patria Genossenschaft makes an annual contribution to promoting the interests of Helvetia’s life policyholders, which is added to the policyholder reserves. In the reporting year the contribution amounted to CHF 45.0 million.
New business volume was down in 2015. In Switzerland, Helvetia took a conscious decision to
− 1 % change to risk discount rate 11.6 % 11.5 %
− 10 % change to fair value of equities – 2.7 % – 2.9 %
+1 % change to new money rate 11.7 % 11.1 %
− 1 % change to new money rate – 27.4 % – 24.9 %
Value of new business in % APE 7.1 % 9.3 %
Value of new business in % APE 10.5 % 6.2 %
Value of new business in % PVNBP 1.3 % 0.7 %
Present value of new business premiums (PVNBP) 2 611.6 3 177.8
Value of new business in % PVNBP 0.9 % 0.8 %
Embedded value Embedded value measures the shareholder value of the life insurance portfolio and is made up of – the adjusted equity – plus the value of the insurance portfolio – less the solvency costs.
Equity valuation Balance sheet practice for measurement of holdings in associated companies. The valuation of the holding in the balance sheet corresponds to the shareholders’ equity in this company held by the Group. In the context of ongoing evaluation, this valuation is projected forward to take account of changes in proportional shareholders ’ equity, while allocating the proportional annual earnings to the Group results.
Amortised cost The amortised cost value of an investment is the amount at which the asset is first valued, less any impairments and plus or minus the difference between the original cost price and the redemption amount on maturity (premium / discount), with the difference being amortised over the term.
Loss reserves Since not all claims will be settled by the end of the financial year in which they arise, provisions must be made in the balance sheet for these outstanding claims or claims likely to be incurred but not yet notified. Such provisions are known as loss reserves or reserves for claims outstanding. Changes to the loss reserves are shown in the income statement.
Net insurance benefits and claims Total of all benefits paid in the financial year and all changes to technical reserves, less benefits covered by reinsurers.
Net premiums written If a risk is reinsured, the reinsurer will receive a part of the gross premium in proportion to the risk assumed. The other part is used to finance the risk that remains for the primary insurer. Net premiums thus correspond to gross premiums from total business less the premiums ceded proportionally to reinsurers.
Helvetia Group Martin Nellen P.O. Box, CH-9011 St Gall Tel. +41 58 280 56 88 www.helvetia.com prinfo@helvetia.ch
Helvetia Group Doris Oberhänsli P.O. Box, CH-9011 St Gall Tel. +41 58 280 55 83 www.helvetia.com doris.oberhaensli@helvetia.ch
Helvetia Group Kristine Schulze P.O. Box, CH-9011 St Gall www.helvetia.com cr@helvetia.ch
This document is also available in German. The German version is legally binding.
Important dates 22 April 2016 Ordinary Shareholders’ Meeting in St Gall 5 September 2016 Publication of half-year financial results for 2016 13 March 2017 Publication of financial results 2016
Group profit for the period per share in CHF 32.7 37.1 40.9 43.0 29.0
Price of Helvetia registered shares at the reporting date in CHF 295.0 346.5 447.5 474.0 566.0
Market capitalisation at the reporting date in CHF million 2 552.6 2 998.2 3 872.2 4 687.6 5 628.9 in CHF million
Consolidated equity (without preferred securities) 3 377.9 3 750.2 3 831.2 4 963.1 4 655.3
Provisions for insurance and investment contracts (net) 30 125.5 32 765.7 34 518.7 41 275.0 41 143.0 of which Group financial assets and investment property 32 155.9 34 938.0 36 736.7 44 843.4 45 036.3
Employees2 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)
Underlying earnings improved by 4 percent on 2014 to CHF 439 million. Earnings were driven by the technically strong non-life business which posted a profit increase of 22 percent to CHF 332 million. This increase results from an improved technical result as well as the volumes contributed by the acquisitions. The net combined ratio improved to 92.1 percent, once again clearly exceeding the target of 94 to 96 percent. The life insurance result also increased by 16 percent to CHF 176 million. At CHF − 69 million, the result for other activities, however, was down on the previous year. This is largely due to the lower technical result in the Group reinsurance caused by the unfavourable claims experience of the foreign portfolios of the former Nationale Suisse. We are currently adjusting our reinsurance structure and are consistently cleaning up these portfolios.
Thanks to this good performance, Helvetia can continue its attractive dividend policy. The Board of Directors is proposing that the Shareholders’ Meeting increase the dividend to CHF 19,00 per share, almost 6 percent more than in the previous year.
The strategy period for “Helvetia 2015+”, which we implemented successfully over the past five years, ended with the 2015 financial year. We noticeably expanded our market position and generated currency -adjusted growth of more than 30 percent. The bigger non-life component contributes to an optimised business mix. We also grew our earnings by almost 30 percent and the dividend by 31 percent, and further improved value for our customers.
Price of Helvetia registered shares at the reporting date in CHF 566.0 474.0 19.4 %
Provisions for insurance and investment contracts (net) 41 143.0 41 275.0 – 0.3 %
Important dates 22 April 2016: Ordinary Shareholders’ Meeting in St Gall 5 September 2016: Publication of half-year financial results for 2016 13 March 2017: Publication of financial results 2016
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 2015. This document does not constitute an offer or a solicitation to exchange, buy or subscribe for securities and it does not constitute an offering circular within the meaning of Art. 652a of the Swiss Code of Obligations or a listing prospectus within the meaning of the listing rules of SIX Swiss Exchange. Should Helvetia Group make in the future one or more capital increases, investors should make their decision to buy or to subscribe for new shares or other securities solely based on the relevant offering circular. This document is also available in German. The German version is legally binding.