This document may contain projections or other forward-looking statements related to Helvetia Patria Group which by their very nature, involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other outcomes described or implied in forward-looking statements will not be achieved. We caution you that a number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements.
Helvetia Patria 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.
Page 86 At the lake basin in Lucerne, view from “Kultur- und Kongresszentrum (KKL)” (Culture and Congress Center)
Result after taxation and minority interests 133.1 161.1 100.6 –362.0 92.4 158.7
Net change in actuarial reserves 1080.0 855.6 1135.2 1529.2 1055.5 107.6
Net earned premiums: Gross written premiums 2269312 2596720 Premiums ceded to reinsurers –284208 –269958 Net written premiums 1985104 2326762 Gross change in reserves for unearned premiums –20319 –73524 Reinsurers’ share of gross change in reserves for unearned premiums 3411 –1777 Net change in reserves for unearned premiums –16908 –75301 Net earned premiums 1968196 2251461 14.4% Net interest income assigned to non-life activities 130099 124890 –4.0% Net claims paid: Claims paid: – Gross –1363182 –1361476 – Reinsurers’ share 151237 126259 – Net –1211945 –1235217 Change in reserves for claims outstanding: – Gross –85618 –228131 – Reinsurers’ share –11429 –19110 – Net –97047 –247241 Net claims paid –1308992 –1482458 13.3% Net change in other underwriting reserves –530 643 –221.3% Net expenditure on results-linked and non-results-linked policyholders’ dividends –1273 –665 –47.8% Net change in equalisation reserve –17425 –35263 102.4% Net underwriting expenses: Gross underwriting expenses –670109 –743920 11.0% Commissions and profit share received from reinsurers 54862 50343 Net underwriting expenses –615247 –693577 12.7% Other net underwriting expenditure –22749 –22184 –2.5% Result from non-life underwriting activities 132079 142847 8.2%
Investments for unit-linked life insurance policies 607930 700179 15.2% Deposits from reinsurance assumed 73846 105104 42.3% Receivables from underwriting activities: From policyholders 273081 276659 From agents and brokers 91765 80880 From insurance companies 165606 186810 Receivables from underwriting activities 530452 544349 2.6% Other receivables: From affiliates and associated companies 1390 592 From others 145989 143257 Other receivables 147379 143849 –2.4% Tangible fixed assets 46887 23998 –48.8% Liquid assets 162560 159839 –1.7%
Shareholders’ equity: Share capital 62930 86529 Capital reserve 269449 613737 Own-shares reserve of prior year/Own shares 83741 –58191 Retained earnings and revaluation reserves 644480 613829 Result for the year 92396 158724 Shareholders’ equity excluding minority interests 1152996 1414628 22.7% Minority interest in shareholders’ equity 2257 2481 9.9% Shareholders’ equity including minority interests 1155253 1417109 22.7% Reserve for unearned premiums Gross 725100 687068 Reinsurers’ share –23918 –36186
Net equalisation reserve 280191 346174 23.5% Reserves for unit-linked life insurance policies 592725 675124 13.9% Other net underwriting reserves 51766 76719 48.2% Other reserves: Reserves for pensions and similar obligations 115348 121916 Reserves for current taxes 34009 39879 Reserves for deferred taxes 381644 241257 Miscellaneous reserves 225192 113078 Other reserves 756193 516130 –31.7% Reinsurance deposit liabilities 184477 179177 –2.9% Bonds and convertible bonds 150000 350000 133.3% Other insurance liabilities: Towards affiliated or associated companies 0 7134 Premium deposits/prepaid premiums 690398 645277 Credited results-linked and non-results-linked policyholders’ dividends 1037655 988401 Towards agents and brokers 44904 31638 Towards insurance companies 78067 64041 Other insurance liabilities 1851024 1736491 –6.2% Other liabilities: Towards affiliates and associated companies 2666 2552 Towards other creditors 106324 123068
Accrued liabilities 154866 124136 –19.8% Total liabilities and shareholders’ equity 27721302 28406967 2.5%
Patria Group contain the annual accounts at 31.12.2004 of Helvetia Patria Holding and all those companies in which the holding company controls, directly or indirectly, more than 50 per cent of voting rights (the
In 2004, the share capital of Patria Leben, Basel, and of Helvetia International, Frankfurt, were increased by
The holding in Der ANKER, Vienna, was increased from 99.99 to 100 per cent during 2004.
Income and expense denominated in foreign currencies in the accounts of individual Group companies are recorded at the actual rates ruling on the transaction date; foreign-currency balance sheet positions for such companies are translated at the rate ruling on the balance sheet date. The resulting foreign-currency exchange differences are shown in the profit and loss accounts.
Switzerland are translated into Swiss francs at the rate ruling at the end of the year. Any differences arising from translation are recorded directly in retained earnings as part of shareholders’ equity, with no impact on results for the year.
The consolidated financial statements for 2003 and 2004 of the Helvetia Patria Group have been compiled in accordance with the valuation and accounting methods of Swiss GAAP ARR. The reporting sometimes requires estimates and assumptions to be made which may later differ from the actual results. Matters that are subject to estimates and assumptions that may have an impact on the results are described below.
The allowed treatment of deferring unrealised losses on securities has not been applied (ARR 14).
ARR 23 are reported in the non-underwriting account under the position “Other extraordinary profit from other business operations”.
Real estate is shown at market value. The valuation is based on independent estimates or on a valuation model with the rates of return applied that are customary in the individual country and market. In 2004, the valuation method used for Swiss real estate was changed. The resulting valuation difference, less than 1 per cent of the market value in Switzerland, was directly charged to the net revaluation reserve.
Investments in affiliated companies that are immaterial for the consolidation and in minority holdings of the Helvetia Patria Group are shown at cost less required depreciation.
Fixed interest rate securities are recorded at amortised cost, with the difference between the purchase and redemption price spread over the remaining duration. Supplementary depreciation is effected to cover credit risks.
The valuation of promissory loans, mortgages, policy loans and other loan amounts is based on their redemption value. Additional depreciation is effected to cover credit risks.
Valuation differences between the market value of shares, other non-fixed interest rate securities and investment funds as shown in the consolidated financial statements and their book value as stated in individual company accounts are recorded in the revaluation reserve, which forms part of shareholders’ equity, after the deduction of any deferred taxation amounts.
In consideration of the implementation of IFRS for the business year 2005 the current underwriting reserves were subjected to a liability adequacy test and increased as appropriate. Based on an internal model the reserves were further strengthened by
The deferred acquisition costs of Swiss individual life business were re-assessed at the balance sheet date.
The amount totals CHF 205.9 million (previous year: CHF 208.4 million) at the end of 2004. This amount is included in the balance sheet under “Other prepaid expenses”. Acquisition costs of life business of other entities are written off in the consolidated financial statements.
At 31.12.2004, Helvetia Beteiligungen, St.Gallen, has a tax loss carry forward of CHF 47.6 million
No deferred tax asset has been recognised for this loss carry forward.
Fixed assets are valued at cost less cumulative depreciation and cumulative impairments of value. Depreciation is carried out using the straight-line method and is based on the estimated useful economic life – with the exception of Switzerland where fixed assets are written off in the year of acquisition.
Holdings of own shares are deducted at their average cost from the shareholders’ equity in the consolidated financial statements in accordance with ARR 24.
The result from purchases or sales of own shares is recorded in the capital reserves.
Fixed asset movements in CHF million Acquistion costs (incl. change in revaluation) Value adjust- Net book Net book Portfolio Currency Book Revaluation Portfolio ments value value 1.1.2004 impact Additions Disposals transfers changes 31.12.2004 31.12.2004 31.12.2004 1.1.2004
Investments for unit-linked life insurance policies 613.9 –1.0 85.5 –22.7 17.2 0.0 692.9 –7.3 700.2 607.9
Expenditure on commissions and personnel is as follows: 6.5 Tax expenditure
Salaries/commissions 751.1 765.7 Social welfare 57.3 57.2 Pension plan 35.5 35.3
A total of CHF 124.3 million (2003: CHF 103.4 million ) was charged to the life underwriting profit and loss account for results-linked and non-results-linked dividends to be distributed to policyholders.
CHF 3.6 billion (2003: CHF 3.7 billion) based on individual company accounts.
The decrease by CHF 0.7 million is mainly due to foreign currency effects and depreciation.
Shares, other non-fixed-interest-rate securities and investment funds recorded at the lower-of-cost or market value in individual companies’ accounts were valued in aggregate at CHF 1.9 billion
The market value of fixed-interest rate securities, which are shown at amortized cost, amounted to
CHF 14.1 billion (2003: CHF 13.5 billion). The gross valuation margin that is not included in the revaluation reserves (shareholders’ equity) amounts to
CHF 86528750 on December 13, 2004, by issuing 2359875 registered shares with a nominal value of
Subsidiaries of Helvetia Patria Holding owned 400312 registered Helvetia Patria Holding shares at the balancesheet date (prior year: 291136 registered Helvetia Patria
Holding and the subsequently adjusted conversion terms for the outstanding convertible bond. Theses shares are held in a deposit for the 2 per cent convertible bond issued by Helvetia Finance Ltd., Jersey.
Reserve Re- Cumulative Share Capital Own for valuation currency Retained Result Minor.
capital reserve shares own shares reserves differences earnings for the year shareholders Total
In 2004, Helvetia Patria Holding, St.Gallen, issued a bond in the amount of CHF 200 million.
At Currency Book At 1.1.2004 impact transfers Use Release Allocation 31.12.2004
Reserves for unit-linked life insurance policies 592.7 –0.9 0.0 0.0 1.0 84.3 675.1
(2003: CHF 1109.9 million) were committed to securities lending transactions at the balance sheet date.
Derivatives and other financial instruments are used to limit the risks associated with certain assets, liabilities and fixed commitments and obligations. Profits or losses from derivatives and other financial instruments are taken straight to the profit and loss account together with the realized or unrealized loss or gain on the position to which they refer.
Capital commitments for the future acquisition of investments amount to CHF 96.3 million at the balance sheet date (2003: CHF 153.1 million).
In the prior year, given the prudence concept applied and the assessment of the carrying value of goodwill, a charge for impairment of CHF 74.5 million – in addition to the ordinary straight-line depreciations of
Helvetia Schweizerische Versicherungsgesellschaft, St.Gallen 77.5 75.30% Patria Schweizerische Lebensversicherungs -Gesellschaft, Basel 50.0 100.00%
Helvetia Patria Holding under the non-cash contribution agreement of June 3, 1996, and the public takeover offer of June 10, 1996 (see also Articles 26 to 29 of the Articles of Incorporation).
The income shown for Helvetia Patria Holding corresponds to the dividend that will be simultaneously paid to Helvetia Patria Holding by its subsidiaries, Helvetia
Holding shares (2003: 291 136 such shares). The increase of the holdings of own shares results from the capital increase of Helvetia Patria Holding and the subsequently adjusted conversion terms for the outstanding convertible bond. These shares are held in a deposit for the 2 per cent convertible bond issued by Helvetia
We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.