“We see each individual relationship with a client as a personal partnership that thrives on mutual trust and understanding.”
H e l v e t i a P a t r i a H o l d i n g
Profit after taxation and minority interests (CHF million) 100.6 161.1 - 37.6%
Consolidated shareholders’ equity before appropriation of profit (CHF million) 1 519.7 2661.8 - 42.9%
Consolidated shareholders’ equity per Helvetia Patria Holding share (CHF) 2.) 230.3 403.5 - 42.9%
Share price at end of year (CHF) 3.) 253.0 1684.0 n.a.
Market capitalisation at end of year (CHF million) 3.) 1 669.1 2 777.4 - 39.9%
1.) Based on 6 597 192 Helvetia Patria Holding shares minus own holdings 2.) Based on 6 597 192 Helvetia Patria Holding shares 3.) In 2001: Repayment of nominal value of CHF 10.00 per share and subsequent stock split in the ratio of 1 : 4 (2000: 1649 298 shares)
The Group organisation 8 Corporate governance and control 10 Environmental policy 13 Personnel management 14 Information for investors 16
Consolidated financial statements 2001 40 for the Helvetia Patria Group Financial statements 2001 for the Helvetia Patria Holding 52
Key events of the last insurance business year were the unstoppable and steep decline of the financial markets and the terror attacks in the United States. Thanks to its regional orientation and the customer segments served our Group was not affected by the terrible events in the US. The increasing need for security and risk coverage will result – with a time delay – in stronger volume growth but also in higher premium rates.
The consolidated premium volume experienced again an above-market average growth rate. Gross premiums written amounted to
The acquisition of the Norwich Union Vita in Italy last year was an important step towards the transformation from being an insurer with activities limited mostly to the non-life business to a full service insurance company. Thanks to this acquisition we managed to win over an Italian bank as co-operation partner for the distribution of our products and services. Our partner will enable us to not only gain access to an attractive customer segment but also to sell mortgage products.
(2000: CHF 1.24 billion) a significant decline as a result of the adverse stock market trend requiring high value adjustments and hedging costs on our share portfolio.
Group result due to the declined investment performance. The Board of Directors will nevertheless recommend to the Shareholders ’ Meeting to leave the dividend of CHF
Group profit and thus provides an attractive dividend yield of 3.5 per cent on the basis of the year-end price.
We are therefore confident that we continue achieving substantial premium growth and generating adequate profit by following a clear strategy, persistently focussing on our core competencies and by optimally organizing our procedures for the long-term. The restructured Board of Directors with several new members resumed its work without a hitch and under the realm of continuity for the Group and is continuing it in a very constructive atmosphere.
Group, however, would be impossible without the dedication of our employees. On behalf of the Board of Directors and the
Management we extend our warmest thanks to each and everyone. Equal thanks are due to our clients and partners for their loyalty and to our shareholders for their trust they are placing in our Group with their financial commitment. In times when the financial services industry globally undergoes fast and dramatic changes, we appreciate your support even more.
When he started out twenty years ago, Joachim Kieninger had nothing.
Determined, Joachim Kieninger seems to have pedalled into the right direction. His art and passion to sell insurance policies left and right brought him to the top in Oberndorf, in the Neckar valley.
Wide steps are leading up to the new representative Helvetia House, where the visitor feels welcome, with coffee, competent advice and an infrastructure to find simple answers for complex questions. A man like Kieninger should be cloned, so goes the saying. “Please no”, are shouting the six ladies in his office, “then he wouldn’t be our Mr. Kieninger anymore. ”
That he looks like an “insurer” should look like doesn’t harm either. If somebody like him doesn’t stand for protection, then who does? Broad and strong like a bodyguard, solid like a safe, he has all the right to recommend himself as “Your reliable partner for more than 20 years”.
“Fewer but happy customers and more turnover then vice versa,” he says is one of them, slips into his leather jacket and goes hunting, in his car for clients. But as we all know, hunting has a lot to do with care and preservation. You have to make appointments with people who own something they consider worth insuring well. We are crossing the Neckar, driving up and down the streets, timber-framed houses on both sides, shops left and right, and this one is a Helvetia house, full of doctors from top to bottom, and that delicatessen shop is a Helvetia business, with life insurance policies and pension plans for him and her and the adult children as well, and in the suburbs the outdoor swimming pool, the restaurant “Bundeskegelbahnen” (bowling alleys) and just around the corner “Braun-Tiles, Natural
Given his level of integration, he must be a native. He was born in Oberndorf, attended school here and is a member of the local clubs. Handball, tennis, table tennis, bowling and shooting, Kieninger is everywhere a member, even in the German shepherd breeder association. He plays soccer in the senior league where he has just the right age with his forty-four years. He is a people’s person and likes getting in touch with people, everywhere, while working or relaxing. To be one of them is one of the secrets behind his success. Especially in rural areas, trusting the agent is sometimes more important than trusting the insurance company behind him. This is why the agent “sells himself more often than the product”. Staying on the ball is important, says the soccer player, even if he has to run a bit further to shoot a goal. Giving the royal treatment to the customers is vital. That starts with the phone. When you call the Helvetia, you never get a machine; you always talk to a real person, from eight in the morning to six in the evening.
When they were children, they played soccer together, then they lost touch when Berthold Polte lived in London for a couple of years. Once he returned to Oberndorf, his choice was obvious: If he becomes an entrepreneur one day, he will work with
Holding is identical with the ones of both subsidiaries, Patria Leben and Helvetia
Vesicherungen. The opposite table gives you information about its composition and its committees.
Dr. Hans-Rudolf Merz and Erich Walser have been elected as new Board members.
Dr. Hans-Rudolf Merz became Chairman of the Board of Directors whereas Erich Walser will continue as new Delegate of the Board to also lead the Group in the function of CEO
Dr. Hans-Dieter Vontobel has announced his retirement for the date of the 2002 Shareholders’ Meeting. He was elected to the Board of Directors of Patria Leben in 1981 and also became a member of the Helvetia Patria Holding Board when it was founded in 1996. His analytical thinking and concise evaluation capabilities were underscored by his broad entrepreneurial experience. He put all three qualities to excellent
Left to right: Paul Müller, Wolfram Wrabetz, Tjarko Ullings, Roland Geissmann, Markus Isenrich, Erich Walser
Human Resources and Services Markus Isenrich lic. oec. HSG, lic. iur.
T h e H e l v e t i a P a t r i a G r o u p
use in the Board of Directors at large as well as in the Investment Committee. Contributing his personality’s strengths he played a lasting role in the development of Patria and later of the Holding. The Helvetia Patria warmly thanks Dr. Vontobel for his enormous commitment.
The Group Executive Board stays unchanged under the leadership of Erich Walser, Delegate of the Board. Together with the division managers on the Group level as well as the management of the country markets he is responsible for the operative management of the Group.
María de León Molinari as Director General of our subsidiary Previsión Española by Jan-
We would like to take this opportunity to again congratulate all newly elected or appointed members of the directorate or management and wish them continuous success.
1.) Before 1996: Date of joining the Board of the former companies Helvetia or Patria MoB: Member of the Board •• Chair 2.) Until Shareholders’ Meeting 2002
The Board of Directors of the Helvetia Patria Holding Name / Town / Current term Chairman’s Investment Audit Title / Mandates / Political function / Nationality Office Born in Joined 1.) expires Com. Com. Com.
Hans-Rudolf Merz, Herisau Chairman 1942 2001 2004 •• Dr. rer. publ.; MoB Huber & Suhner AG, Herisau; States Council AR; Swiss
John Martin Manser, Riehen Member 1947 1993 2003 •• MBA; MoB Wander AG, MoB Ciba-Vision AG; Swiss
Olivier Vodoz, Geneva Member 1943 2001 2002 • Lawyer; Member Int. Committee for the Red Cross; Swiss
Holding feels strongly about adhering to a responsible and value-oriented corporate governance and control, which in turn should be able to justify the confidence conveyed by the shareholders, customers, employees, business partners and the public and also capable of strengthening this trust.
The decision-making processes should be accordingly considerate of the minority shareholders’ protection.
The Board of Directors meets at least five times per year for its ordinary meetings.
The members of the Board and of all executive bodies are obliged to excuse themselves whenever business affairs are dealt with affecting their own interests or those of natural persons or legal entities close to them.
Board of Directors reports on corporate governance and control. Shareholders’ interests are protected at Helvetia Patria Holding.
We have a balanced subscription policy that is risk-conscious. We prefer longterm profitability to short-term volume increase.
Board Members have many years of experience abroad. The Board of Directors of the
All employees working in the offices and being employed for an indefinite time by the
The Board of Directors has internally established the following committees, which analyze certain subject or personnel areas in depth and report to the Board of Directors in preparation for its decision making or for maintaining its control function.
Committee may order special audits if they see it fit and assist in defining main areas in the audit program of the external audit. This committee prepares the election of the statutory auditors and auditing company and it meets as often as business requires but at least twice a year. The Delegate, the
CFO, a representative of the external auditors and as a rule the Head of the internal auditing are taking part in the meeting in an advisory capacity.
members of the Board of Directors and the Group Executive Board
received in the business year 2001 a total of CHF 862 600.00 in directors’ fees (including meeting attendance fees) and CHF
By the end of 2001 the non-executive Board members owned a total of 836 Helvetia
The six members of the Group Executive Board (including the Delegate)
received in 2001 a total of CHF 2 440 000.00 in fixed remuneration and CHF 917 900.00 in variable compensation (like all other employees either in cash or in options at the same terms). They belong, like all employees and the management, to the pension plan and the complementary insurance. The six members of the Group Executive Board owned at the end of 2001 a total of 1 476 Helvetia
Patria Holding registered shares as well as a total of 16 376 options to purchase 6 549 registered shares.
Severance pay will not be provided for the Board of Directors or for the members of the Group Executive Board.
Meeting, the Helvetia Patria Group is also provided with an internal auditing department which reports its results to the Group
Patria Group incorporates the ecological principles into the Group strategy. The call for our commitment to the environment is part of our Company Policy, which requests: “We want to develop and provide our services in harmony with our environment and taking into account the interests of the public. ” Standing by this belief our Group wants to accept its responsibility towards the society and to contribute to a healthy environment.
The environmental policy defines the importance of sustainable development in the Helvetia Patria Group as well as its binding principles. To enhance the communication with the public in this field we will publish our first report for the business year 2001 documenting our commitment to the environment. The report, which can be ordered with the included card, will not only inform about strengths and weaknesses but will also point out where and how we can make further improvements.
A noticeable reduction of our environmental impact can only be attained if all employees’
The Helvetia Patria Group stands by the long-lasting protection of the natural environment and is aware of its responsibility to future generations. We consider ecological action to be an important investment in the future.
First environmental report in 2001. Our environmental guidelines are leading our activities: We consider the ecological responsibility to be an integral part of our company policy and we are committed to environmental protection according to the principle of sustainable development.
We put environmental protection into action with tangible goals and a code of conduct.
We make sparing use of scarce and ecologically questionable resources and include our partners in our efforts.
We inform our employees about environmental issues and integrate the protection of the environment into our training programs.
We periodically monitor the sustainable development in our company and strive for continuous improvements.
We communicate openly about environmental issues and work on them together with authorities, associations and other institutions.
The project “Areas of Human Resource activities in Switzerland” had two purposes: To analyze the various needs of the HRclients by those responsible for Human
Resources as well as to lay the foundation for a strategic focus of their activities. The basic elements were the mission statement, the
Similar comprehensive efforts have been made for establishing the personnel controlling allowing for measurability and control of the HR-activities.
Besides taking care of the management development we also focus on securing and improving of the personnel procedures.
Bolstering the identity and sense of unity within the company is equally significant. To that purpose we followed a unique path in Switzerland: All employees met at one central location in autumn of 2001 for a day of gathering under the motto “Towards new shores” to get to know each other better.
(work-life balance). The Human Resources department is very aware of that development and continually strives to create favourable conditions.
I n fo rma t ion fo r inves to r s
Market capitalisation at end of year (CHF million)1.) 1 669.1 2 777.4
The Helvetia Patria Holding took various capital market measures during last year to make the share even more interesting to potential investors. In addition to specifically increasing the free float, a decrease of the nominal value by CHF 10.00 per share has been carried out, which is very beneficial to private shareholders for tax purposes.
The purchase price per share was decreased as a result of the subsequent stock split in the ratio of 1:4 (the investors now own 4 shares with a nominal value of CHF 10.00 instead of one share with the nominal value of CHF
Leipziger Life Insurance from the shareholder pool and the inclusion of a new pool member (see table on page 17): T h e H e l v e t i a P a t r i a G r o u p
Shareholders increased in 2001. A total of 3 449 registered shareholders were entered in the share register on March 31, 2002, compared to 2 743 for the previous year. Helvetia Patria Holding shares are held by the following shareholder groups: 10.37% by private individuals 34.57% by banks and insurance companies 54.96% by other institutional investors 0.10% by public authorities.
Total shareholders’ equity 544 423 1.) 4.9 % of it in securities lending 1.) 4.9 % of it in securities lending vinced that the Holding share shows an interesting potential for the value to increase thanks to its appealing profit trend and the continuing growth of the Group. It goes without saying that the stock market environment for insurance shares has to see an improvement as well. We will keep on putting the emphasis on the market and the customers for the benefit of a sustained profit policy in the long-term.
Whenever an emergency calls a helicopter up into the mountains, help is near and so is danger.
Hans Luggauer in Untervaz, and is trying to strike a balance between self-defence and heroism before taking off.
Wearing his corduroy trousers and his cardigan, his glasses sitting low on his nose, he rather looks like an accountant of a statistical office coming to work in the morning. He steadfastly puts in his time here in the more or less cosy lounge of the
into today’s paper. Yesterday, a veterinarian, coming from a farm visit, underestimated the icy road in a curve and his car slid off the road into the precipice; an elderly man had to be flown to the hospital in Chur after suffering a cerebral haemorrhage on the slopes and a child sustained an open fracture in
Sports people, construction workers, woodsmen, farmers, paraplegics, intensive care unit patients, premature babies on hospital transfers, but also people like you and me, or injured livestock, and, lately, ice climbers. They are hanging in pairs on frozen ropes, which got hard and brittle like a pole, and they are always stranded on vertical rock faces, of course.
An experienced pilot like Luggauer keeps his cool; he knows what he can and can’t do, how far he can go if he wants to see his wife and children tonight. But after the fact, when the lifeline did not get tangled in a tree on this small, windy clearing, when the rotor did not touch the rock face or when Luggauer did escape a wind gust during a sudden weather change, then he shakes out his hands just like he did when he was a pupil practising neat handwriting.
Luggauer wants to spend his life outdoors. One would hardly attribute to him moribund tendencies or suspect him of having a “knight in shining armour” syndrome. As a rescue pilot he simply found a job many can only dream of. There is nothing more exhilarating for a copter pilot of an air transport company to scour the Alps and service the huts of the Swiss
109 K 2 model with two turbines with 770 HP each came out on top in the evaluation process. This one has its boundaries, too. High altitudes, for example, set the limit because the combustion chambers require more juice and tend to overheat, especially on warm days. In downward currents on the lee side of ridges you are happy about any reserve power available to safely reach a higher altitude. That’s why you have to be particularly on your toes during afternoon foehn storms on the
In winter, the helicopter is sometimes the pilot’s worst enemy. Whiteout. In the Bernina area, this particular condition recently claimed a victim. It’s the nightmare of every pilot. Although he is aware that the rotor might raise some snow as the helicopter is landing, and he also knows that, in diffuse light, the billions of snow crystals transfer the visibility into a blinding white. A dizzy spell might cause left and right, below and above to become one big blur, and only a reference point for the eye, such as a small tree, a rock or a member of the ski patrol at the accident scene, might prevent the pilot from losing all orientation. That’s also part of the rescuer ’s risk, says Luggauer, but because he is aware of it and always identified and managed this danger when it occurred, he lives to tell about it. 20
Paraplegic Centre. Before flying back home, Luggauer likes to visit with some former passengers. He remembers one especially vividly: A young farmer from the Appenzell, who had fallen off the ladder when he pruned the elder bushes for his wife. Just being lifted on the stretcher and put into the passenger hold, he shouted: “Vreni, now you have a cripple as a husband. ” She was standing on the meadow with her children, who were waving to the helicopter until it turned away over the flank.
Team of Untervaz jump into their overalls. There is tension in the air, the three men suddenly put on very serious faces, each flight is unique, even if the sky is violet-blue like today. As long as they haven’t jumped into their special trousers, they all disappear into the bathroom; you never know, the cold up there might affect the bladder. Luggauer grabs the hot dogs, hoping the mission does not get as hot as they are. Just three minutes into the emergency call and after take-off, you can see the end of the hot dog still sticking out of his mouth.
The bear market also left its visible tracks on the revaluation reserves and thus on the shareholders’ equity. The shareholders ’ equity reached approximately the 1996 level. Due to the strong weight carried by the investments in the life business, Switzerland is more heavily affected by the decrease in revaluation reserves than other countries.
Overall, the Helvetia Patria Group can look back on a growth year with improved cost relations and a strongly increased profitability in the non-life business. Despite all what happened in that extraordinary year, it was again possible to maintain our conservative policy regarding the allocation of underwriting reserves. This is even more substantiated by the nearly unchanged ratio of the underwriting reserves to net premiums earned.
The effects from the noticeable cost reductions, achieved in the life and non-life business and especially in Switzerland, have been reinforced by the premium growth in
Francs and even 7.2 per cent in local currency. Norwich Union Vita, acquired in Italy during the year under review, contributed 0.8 per cent to the increase. The premium growth rate for existing Group business in local currency experienced with 6.3 percentage points a significant acceleration on the previous year (2000: 2.2 per cent).
plished a growth rate of 9.2 per cent. Converting the advance into Swiss currency slightly trims it to 7.8 percentage points due to the currency effects. The indirect business
The direct business grew specifically in the life sector achieving an increase of 12.5 per cent in local currency (11.9 per cent in
Switzerland with a rise of 14.2 per cent, followed by Austria and Italy (acquisitionrelated ). By achieving 4.9 percentage in local currency (2.5. per cent in Swiss Francs)
As a result of the drive in the Swiss life business, the proportion of the total direct business volume, generated outside Switzerland, decreased from 41.7 per cent to 39.8 per cent.22
Unlike last year, the individual business attained in 2001 an above-average growth rate, supported by the single premium policies (pensions and traditional products). The increase in the group business is also substantial and was divided by about half coming from single premium and the other half from periodic premium policies. Italy managed not only to compensate but exceed the stock-market-related decline of the index-/
Norwich Union Vita and also to increase its market share. In Austria, the premium growth rate in the life sector with emphasis on the periodic premium policies turned out to be substantial, but was not quite capable to follow the market as a consequence of the cautious sentiment versus single premium policies. Spain suffered from the effects of a market-wide strong decline in the unit-
Gross premiums written Change 2001 2000 Change in original in CHFmillion in CHFmillion in CHF currency
Indirect business 7.1% Austria 2.5% Indirect business 8.4% Spain 1.1% France 13.8% Germany 58.7% Switzerland
Compared to the year 2000, which was strongly marked in the non-life business by the first-time consolidation of Previsión
Española, the premium volume increase took a more tempered course this year. Nevertheless, the premium volume for existing business experienced with 4.9 per cent in local currency a higher advance on the previous year (2000: 3.2 per cent). Especially Germany reported a growth acceleration, which clearly exceeded the market. It was carried in particular by the motor vehicle insurance encountering a more receptive market to price adjustments, and by the transport sector experiencing a reorganization-related volume increase. Switzerland, as well, could shake of the stagnation of the past year, but did not manage to fully get in step with the market. It was, however, specifically successful in stopping the decline in the property business. The transport insurance sectors in France and Austria managed to distinctly strengthen their market shares with rises of 16.9 per cent and 8.9 per cent, respectively. An above-market average rate of 9.9 per cent in premium growth marked
Italy’s last year. Almost all sectors reported significant advances. On the other hand, Der
The underwriting result in the life business fell clearly short of last year’s result and was marked by the consequences of the significantly lower financial result regarding underwriting interest and reserves for poli-
The biggest stride with improved results was made in Switzerland. The transport insurance sectors (France and Austria) as well as
Gross premiums from direct non-life business Change 2001 2000 Change in original in CHF million in CHF million in CHF currency
The Helvetia Patria Group did not sit around doing nothing against the continuous value erosion of its stock portfolio. Taking the progressively worsening prospects at the financial markets into account, equities have been sold at regular intervals until the beginning of September and the allocation of shares has been selectively reduced. The effects of the terror attacks in the United States forced us to strengthen the risk management since it was unknown how the global economy would react to a mounting terrorist wave and the military-led war on terrorism.
Fixed-interest-rate securities 19.4% Shares, other nonfixed -interest-rate securities and investment funds
G r o u p b u s i n e s s d e v e l o p m e n t s
equity positions: The equity allocation has been substantially reduced in favour of fixed-interest-rate securities as well as of real estate holdings. This allocation shift also expresses the broad reduction of the valuation margin for shares and investment funds.
It was for all but Switzerland that enormous downward corrections had to be reported already for the second year in a row. It is thus not surprising that those adverse conditions dramatically cut the flow of the sources for our very high extraordinary net investment income of the previous years. The balance of profits and losses realized on investment disposal including hedging costs was considerably reduced while the depreciation of investments noticeably increased partly as a result of the currency exchange rate of the
Swiss Franc versus the Euro. While we participated with a reduced equity allocation at the recovery of the financial markets in the last quarter, we had to charge the profit and loss account with the substantial hedging expenses to protect our balance sheet.
Investments by national market Balance-sheet Balance-sheet in CHF million in CHF million Change
Shares, other non-fixed-interest-rate securities and investment funds 4 554.7 7 007.1 - 35.0%
Danger, the roads could be wet when it rains. Temperatures below freezing could lead to icy roads. You enter the pool area at your own risk, the pool could be filled with water and the lifeguard could be distracted. Caution, dear readers, life is dangerous, even very dangerous. You live it at your own risk.
Thus, watch out. Recognize dangers, avoid risks. Caution. Automatic doors. Ouch, it already happened. This grandma’s little cur of a dog has bitten you into the leg because you stepped on his paws. See what did I tell you? Paying too much attention makes you clumsy. Tripping over your own feet makes you slip.
The matches’ manufacturer is to blame for it. He owes you a new, bigger more beautiful house. Product liability. That’s why all over the world everybody is diligently warning everybody against everything to avoid being caught in the product liability trap. But product liability could also be your chance. Become a victim.
There is no victim without an offender. Causeeffect -principle. Go all out if you have an opportunity to suffer from any harm without prior warning. And then sue. Dead or alive.
These were the good old days when giving in was the smart thing to do. But who wants to be smart nowadays if stupidity pays off. But beware, the “track through the institutions ” could turn out to be long and bumpy. But who cares. The main thing is that you win at the end. The bigger the right the larger the sum.
Stupid instructions offer new and unexpected benef its to the attentive observer.
It was primarily the financial markets which impacted past year’s business trends even twice: first through the investment performance and second through the customers’
The Swiss non-life market is still marked by a highly competitive battle that is mostly fought over pricing, especially in the two segments of the motor vehicle and the commercial property insurance. The life insurance business in Switzerland keeps still growing faster than the gross domestic product (GDP). The demand for private pensions, increasingly as an integrated part of an overall financial planning, is rising for both, private and corporate customers.
The total premium income in 2001 from direct business of the Helvetia Patria
After having generally restructured our pension plan products in particular in the past couple of years, our range of retirement plans has become very competitive in both sectors, the private and the commercial one.
The cost–performance ratio is very attractive and so is the flexible use of the products within a comprehensive consulting and financial planning concept. Our new nonlife product line for businesses “claro commercio ” has been well received. In 2001, we have introduced new target-group specific services for metal construction companies and businesses in the food industry. The services found good market acceptance.
We have strengthened our training efforts for both, our sales force and our employees and management in the offices. Our goal is to have happy customers and happy employees.
This is the only way that our good product range will also lead to sustainable success by the Helvetia Patria in the years to come. The demands on our employees are high and will continue to increase. The first thirty members of the sales force have earned the certificate to sell also mutual funds. Some selected non-life insurance specialists have received training in risk management. They are available for customers and members of the sales force as expert support. We are convinced that good qualifications and training are the prerequisites for good underwriting results in the continuously more deregulated market of the future.
Direct life business generated a premium volume of CHF 2 171 million in 2001, a 14.2 per cent increase on the previous year. Both, single-premium policies with 21.2 percentage points and periodic-premium polices with 7.0 per cent played a vital part in the volume expansion. We consider the advance of 21.2 per cent in the individual life insurance to be especially pleasing since we were able to more than compensate last year’s decline.
Als fortschrittliche Versicherung behalten wir die Zukunft im Auge. Damit Ihre Pläne und Träume auch Wirklichkeit werden können.
The cost trends for the life insurance have also significantly improved as a consequence of the overall lower costs.
The claims trend in the non-life insurance was helped further along by the lack of large natural disasters. Liability risk in the motor vehicle insurance still gives cause for worrying although the result has improved on the previous year.
(BVG). To ensure the future of this social security program, that is so vital for Switzerland, the reduction of the Pension conversion rate is a must.
The German insurance market is characterized by continuing fierce predatory pricing policy for private and commercial contracts given the current subdued economic environment. It seems, however, that the premium rates have bottomed out in the industrial and transport sectors and are rebounding. The market participants moved on to reorganize their portfolios and to charge premium rates doing more justice to the risks covered.
In our traditionally strong non-life business we are able to report a growth rate which lies significantly above the market average. The motor vehicle sector in particular played a vital role since we have received a twofold strong premium volume increase: from an overall premium rate adjustment and from the introduction of new combination products for automobile-related businesses.
The expense ratio underwent again a noticeable reduction despite high special expenses in connection with the Euro-changeover at the end of the year as well as extensive investments into the technical and organizational infrastructure of our sales organization.
Both underwriting results, gross and net after equalisation and impending loss reserves, turned positive. The profit and loss account closed again with a profit before taxation. Considering the overall picture we are able to look back on positive results for the year.
High premium growth and good profitability trend in the non-life business. Continuing consolidation in the life insurance.
Gross premiums in 2001 from direct life business in Germany (in EUR million)
The growth in the market was once again determined by the life insurance business with single-premium policies enjoying great popularity. The tide is turning for the nonlife business. After several years of declining premium volume, a slight increase can be reported for the year under review with the motor vehicle insurance playing a vital role in the changing trend. Shocked by the extremely bad results, all market participants have started re-adjusting the premium rate policy to the given actuarial facts.
The price adjustments taken in the motor vehicle sector resulted in a significant growth rate. Der ANKER took resolute action regarding unprofitable business segments with no prospects of fast turnaround.
This is the reason why the other non-life insurance sectors were stagnating. The above described portfolio streamlining is part of the new strategy which includes for example the plan to focus on selected customer segments promising to be successful and profitable.
Life pational pension systems, which had been planned by the government but was postponed several times. We managed to considerably reduce the net expense ratio of the overall Austrian business. The overall result remained below the previous years despite improved actuarial ratios. Declining interest rates and the negative stock market situation led to both, lower investment earnings and higher depreciation requirements. A new and promising IT solution is being introduced.
The Austrian office of the Helvetia Versicherungen, the Direktion für Österreich, successfully manages the transport insurance business. A small, highly qualified team develops customized solutions to the problems of their clientele from a wide range of industries. They are consistently seeing to it that they offer favourable but risk-adjusted conditions to the customers. This cautious and selective business policy results again and again in very good results. The Helvetia also succeeded in establishing on the Austrian insurance market an excellent reputation for being a specialist in transport insurance. The Helvetia Versicherungen is very active in seeking out co-operations and is a reliable and welcome partner for other companies that are not in that line of business. This was also another reason for the growth rate to be much higher than the market level.
Sea gypsies nabbed my sea container with embroidered silk from Manila, just twenty miles outside Hong Kong.
B: Just look around on the Kowloon night market, then you know. (Ball goes rather aimlessly back and forth.)
A: You call that “luck” if your stores are having sales on the black market even before the season has started.
B: You have more chance to hold the referee responsible for a wrong decision.And besides that, the plastic wrapping should have kept the water out. (Blue is in front of the Red’s goal.)
Multic... (A Blue striker is running alone to the front of the Red goal. Noise in the stadium.)
B: Multicargo insurance from Helvetia protects you better from losses than any goalie. It doesn’t matter what happens, a production facility in France is all you need for a multicargo transport insurance from Helvetia. Everything is bundled in one policy, on land, at sea and in the air: transportation of merchandises, baggage of employees, exhibits, just everything ... (Wild scene in front of the Blue goal.)
B: Everywhere. Just like the penalty rule. Lump-sum compensation for indirect and intangible damages for up to thirty per cent of the invoice ...
After a short recovery in 2000 the Italian economic growth slightly slowed down again. Italy was not fully able to avoid the developments in other economies. The inflation rate has moderately risen but is still within the range of that in other European countries. The insurance market in the nonlife business was characterized by the turbulence in the motor vehicle insurance in the beginning of the year. The rate freeze, imposed by the government, expired in
March. Most of the insurers returned then to rates, which are doing better justice to the risks covered, causing riotous protests in several cities in southern Italy. The government plans to reform the motor vehicle insurance with special emphasis on regulating it to a greater extent. It remains to be seen if the regulations will be compatible with current EU-laws.
Direct insurers (telephone and internet marketing) managed to up their share of the market but remain insignificant compared with the total volume. The banks continue being on the advance as distribution channels.
The life insurance business suffered twice from the adverse development at the stock and capital markets. First, investment earnings declined and high depreciation requirements arose. Secondly, the population’s interest in fund- and index-linked policies slackened. New products with a guaranteed return provided at least for some growth rate
Helvetia Italy had an enormously successful year in the non-life business. Premium income managed to considerably exceed the market average in the year under review. The trend is all the more pleasing since the environment is growing ever more difficult. Helvetia did noticeably increase the motor vehicle premium rates as well after the rate freeze had expired but the growth rate in the other sectors turned out to be higher than the one in the motor vehicle segment. We consider this fact as being especially positive since it reduces the impact of the somewhat problematic motor vehicle segment on the overall result.
Both, a cautious and selective underwriting policy, supported also by the intermediaries, as well as the absence of major damages have led to a significant improvement of net claims paid. Those circumstances as well as the reduced expense ratio, which holds up as well when compared to the market, resulted in a very pleasing underwriting result. The improved underwriting outcome was able to more than compensate the mentioned losses of investment income.
Only towards the end of the year, we were able to successfully issue two new tranches.
It was, however, too late to fully compensate for the decline on the previous year.
After the successful integration of Cervantes and La Vasco Navarra the past business year was a period of consolidation and targeted profitability improvement for the Helvetia
The intense and focussed training of the intermediaries and also of the office employees will contribute to help the range of provident insurance products to succeed. Training and continuous education are permanent tasks which the Helvetia has taken on for a long time and with growing accomplishment. Only those who recognize customer needs early and who are able to offer comprehensive problem solutions to new and existing clients will be able to pass the test in this fast changing environment and against growing competitors coming also from abroad. Management, employees and intermediaries of the Helvetia Italy are aware of that and are working single-minded on those tasks. This is the key to a positive development also in the future.
The premium volume experienced a considerable advance thanks to the contribution of all regional units as well as to two important major customers which they managed to win over. The two-digit growth increase stood considerably above the comparable growth rate of the market in the non-life business.
The strong increase in premium volume has helped the underwriting result to considerably improve again on the previous year.
The centralised organizational structure and the rationalisation measures initiated proved to be beneficial. The switch to the
The reorganization of the motor vehicle insurance portfolio brought noticeable and continuous progress to the claims ratio during the year under review. The down side of this program was the impact on the premium volume underwritten in the non-life business resulting in a slight decline. As far as the life business is concerned the goals set during the integration period of the two companies are being met step by step. Reshaping the product range as well as the training programs for insurance advisors led to premium volume growth excelling the market average.
New elements will distinguish the Spanish insurance market in the year 2002. The improvement in the underwriting results of the motor vehicle business will continue and will allow the non-life insurers to make lasting progress in their earnings fundamentals.
Reaching those goals and continuing a healthy underwriting policy are key to take advantage of the positive prospects for the
Gross premiums from direct business in France in EUR in EUR
pictured myself already sitting at Hawelka’s and enjoying a coffee and strudel. But Caroline. She was whining about her expensive silk dress and the huge amount of work she needed to sew all those sequins again onto the tulle.
Of course, we went and sat again at that boring table with the Cziezleks. If Caroline hadn’t cried her heart out, I
Your Franz ear Yasmin! They say it is the mother of all balls; but this time, even on the day before the Opera Ball, things were really happening. Train rides are supposed to be safe, at least that’s what we thought, but, my Dear, not from Bludenz to Vienna.
Tell me, who would think of taking the suitcases along to the restaurant car? Next time, we are wiser! You should have seen our faces! Everything was gone, including the coats on the hook and Caroline’s pink shawl, in this cold weather. Just between you and me ... I was kind of glad ... privately. To get rid of my tailcoat, carrying the sweaty smell of about fifty stuffy nights, was kind of a relief. And all that “Enchanted to meet you, Madame”. You know me. After our luggage was stolen, I
L a s t p a g e e-mail from Vienna.
Conso l ida ted f inanc ia l s ta temen t s fo r the He lve t ia Pa t r ia Group
N o n - l i f e u n d e r w r i t i n g in CHF thousand inCHF thousand
Reinsurers’ share of gross change in reserves for unearned premiums 15 647 6 203
Net change in reserves for unearned premiums - 3 714 506
Commissions and profit shares received from reinsurers 49 831 51 215
Gross change in reserves for unearned premiums - 4 217 - 3 621
Reinsurers’ share of gross change in reserves for unearned premiums 1062 93
Net change in reserves for unearned premiums - 3 155 - 3 528
Net interest income assigned to life activities 452 512 832 682 -45.7%
Net expenditure on results-linked and non-results-linked policyholders’ dividends - 145 806 - 254 454 - 42.7%
From shares, other non-fixed-interest-rate securities and investment funds 77 884 97 839
Profits realized on investment disposals 1160 425 1196 457 - 3.0%
Realized losses on investments, including hedging expenses - 554 385 - 270 415
Interest payments on reinsured business and other interest costs - 81 289 - 78 533
Interest assigned to life and non-life underwriting activities - 580 400 - 967 013 - 40.0%
Other income from ordinary business operations 28 432 5 951 377.8%
Other expenditure on ordinary business operations - 40 647 - 53 580 -24.1%
Shares, other non-fixed-interest-rate securities and investment funds 4554722 7 007 083
Minority interest in shareholders’ equity 2 035 2 540 - 19.9%
Reserves for unit-linked life insurance policies 464 777 356 808 30.3%
L i a b i l i t i e s a n d s h a r e h o l d e r s ’ e q u i t y
Increase in reserves for unit-linked life insurance policies 107969 100 602
Expenditure for revalorization of investments and other assets 224547 315 397
Cash and cash equivalents at January 1 212519 267 565 - 20.6%
method is applied. Minority interests in shareholders’ equity and profit are disclosed separately in the balance sheet and the profit and loss account. In the case of companies consolidated for the first time, any goodwill is capitalized and depreciated in the profit and loss account over its economic life.
Intercompany receivables and liabilities have been set off, as have all intercompany income and expenditure. All intermediate profits resulting from intercompany asset sales have been eliminated.
Deferred taxation has been effected based on local income tax rates for all revalued items.
Patria Holding and all those companies in which the holding company controls, directly or indirectly, more than 50% of voting rights (the “subsidiaries”). Consolidated subsidiaries of Helvetia Patria Holding are listed in detail in the table above.
Milan, (former Norwich Union Vita) has been acquired on June 30, 2001.
FER. Relief measures for the securities valuation have not been used.
Previsión Española Sociedad Anónima de Seguros y Reaseguros, Seville (ESP) 1 861.9 99.06%
Sur Sociedad Anónima de Seguros y Reaseguros, Seville (ESP) 510.0 100.00%
6. Notes to the profit and loss account 6.1 Gross premiums written by country and sector
For details of gross premiums written by national market and insurance sector and type, please see pages 22 to 37.
Investments in affiliated companies too insignificant to be included in the consolidation and in minority holdings of the Helvetia Patria Group are shown at purchase price less depreciation based on economic principles and requirements.
The valuation of promissory loans, mortgages, policy loans and other loan amounts is based on their redemption value. Depreciations are effected to cover any 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 (based on the lower-of-cost-or-market-value principle) as stated in individual company accounts are taken straight to the revaluation reserve, which forms part of shareholders’ equity, after the deduction of any deferred taxation amounts. Any differences between the market value and purchase price of real-estate assets held are similarly treated. All other valuation differences between the consolidated financial statements and the accounts of individual companies are charged or credited in the profit and loss account. All depreciation on investments is charged to the consolidated profit and loss account based on economic principles and requirements.
In individual countries the lower-ofcost -or-market-value principle has been alleviated according to new legal provisions and the shareholdings and investment funds are shown at cost value or at last year’s book value. The difference to market value is charged or credited to the consolidated profit and loss account based on Swiss GAAP/
Patria Group were translated into Swiss francs at the following year-end rates: A n n e x t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s o f t h e H e l v e t i a P a t r i a G r o u p
A n n e x t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s o f t h e H e l v e t i a P a t r i a G r o u p 7.2 Real estate
The position “Investments in associated companies” has increased by CHF 15.0 million mainly due to the sale of the Alte
Shares, other non-fixed-interest-rate securities and investment funds were valued at an aggregate CHF 4.3 billion (2000: CHF 4.9 billion) in individual companies’ accounts, where they are shown at the lower of cost or market value.
Helvetia Patria Group decreased by a total of CHF 1142.1 million in 2001 (2000 decrease: CHF 172.5 million). Please see table below for details.
The consolidated balance sheet contains pension commitments and other liabilities towards staff pension schemes amounting to CHF 112.5 million (2000: CHF 120.0 million).
Leasing liabilities amount to CHF 3.9 million (2000: CHF 7.6 million).
Repayment of revaluation Profit differences/ profit for in CHF million At 01.01.2001 nominal value reserve appropriation restatements the year At 31.12.2001
Net Group profit for the year 161.1 - 161.1 100.6 100.6
Share capital consists of 6 597192 registered shares of CHF 10.00 nominal value.
A n n e x t o t h e c o n s o l i d a t e d f i n a n c i a l s t a t e m e n t s o f t h e H e l v e t i a P a t r i a G r o u p 7.8 Bonds
The Helvetia Patria Group has the following convertible bond outstanding, issued by the finance company Helvetia Finance Ltd., Jersey, and guaranteed by the Helvetia Patria
Employees of the Group companies are covered under various pension plans with different benefits: In Switzerland, they are insured above the legal requirements; in the
Non-life underwriting reserves Reserves for unearned premiums 503.4 466.2 495.7 446.8
Total non-life underwriting reserves 3 168.3 2 881.2 3 158.5 2 872.3
Derivatives and other financial instruments are used to limit the loss risks associated with certain assets, liabilities and fixed commitments and obligations. Any profits or losses from derivatives and other financial instruments are taken straight to the profit and loss account together with the realised or unrealised loss or profit on the position to which they refers.
For the future acquisition of investments, promises to pay amounted to CHF 272.1 million (2000: CHF 214.6 million) on the balance sheet date.
R e p o r t o f t h e G r o u p A u d i t o r s
Derivative financial instruments Gross positive Gross negative Gross positive Gross negative
Balance to be carried forward to 2002 15 906 4 946
Helvetia Patria Holding held direct investments in the following companies on the balance sheet date: The investments in Helvetia Schweizerische Versicherungsgesellschaft and in Patria Schweizerische Lebensversicherungs -Gesellschaft were transferred to
Patria Schweizerische Lebensversicherungs -Gesellschaft itself holds a 24.7 per cent equity stake in Helvetia Schweizerische
The income shown for Helvetia Patria Holding corresponds to the dividends which will be paid to it by its two subsidiaries, Helvetia
Schweizerische Versicherungsgesellschaft and Patria Schweizerische Lebensversicherungs -Gesellschaft, for the 2001 business year.
Subsidiaries of Helvetia Patria Holding held 300 304 Helvetia Patria Holding registered shares (compared to 294 048 such shares held at the end of 2000). Of those, 291 136
Helvetia Patria Holding registered shares are held in a deposit for the 2% convertible bond issued by Helvetia Finance Ltd., Jersey.
Patria Holding shares were purchased at an average price of CHF 379 through the internal electronic trading line within the scope of the share buyback program.
323 264 Helvetia Patria Holding registered shares, owned by Patria Genossenschaft, were committed to securities lending at Helvetia Patria Holding on the balance sheet day.
Helvetia Finance Ltd., Jersey, up to the amount of the face value which has not yet been converted, including outstanding interest payments. The outstanding face value stands at CHF 150 million at the balance sheet date.
Our audit was conducted in accordance with auditing standards promulgated by the
Swiss profession, which require that an audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. 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.
A n n e x t o t h e f i n a n c i a l s t a t e m e n t s o f H e l v e t i a P a t r i a H o l d i n g
L i f e b u s i n e s s in CHF million in CHF million in CHF million in CHF million in CHF million in CHF million
Profit after taxation and minority interests 100.6 161.1 133.1 104.4 75.2 56.2
Consolidated shareholders’ equity in CHF million in CHF million in CHF million in CHF million in CHF million in CHF million
• Actuarial reserves Underwriting provisions made in the life insurance sector which are calculated on the basis of official regulations and, together with future premiums, ensure that sufficient funds are available to pay all claims to which an insuree may be entitled.
• Asset liability concept A means of balancing assets and liabilities on our clients’ behalf in such a way as to ensure that all the Group’s insurance commitments can be met with maximum security at any time.
• Benefit Amount paid by the insurer to the insuree in life insurance if the insured event occurs.
• Convertible bond A fixed-interest security whose bonds are convertible into Helvetia Patria Holding shares according to pre-set conditions and terms.
• Direct business All insurance policies concluded by Helvetia Patria with clients who are not insurers themselves.
• Dread Disease Insurance A Dread Disease insurance policy will pay the benefits insured in case of a severe, precisely defined illness of the person insured
(such as heart attack, stroke, cancer, bypass surgery, etc.) The compensation can be used at will, for example to pay for expensive treatments, to sustain the standard of living, to pay off a mortgage, etc.
• Net expense ratio The ratio of net underwriting expenditure to net premiums earned.
• Periodic premium Premium paid on an insurance policy at regular intervals.
• Reinsurance deposits Original insurers always retain part of the reinsurance premium as a security for any claims they may themselves need to make.
ing which the insurance company bears the risk does not correspond with the financial year. That part of the premium relating to the next financial year will not have been earned by the end of the current one, even though the money has already been received. This amount must therefore be placed in the “reserves for unearned premiums ”, which appear on the balance sheet under underwriting reserves. All changes to reserves for unearned premiums are shown in the profit and loss account.
• Results-linked and non-results linked policyholders dividend The positive difference between actual and guaranteed interest and between a policy’s theoretical and actual benefits and costs is returned to the insuree in the form of a dividend. Dividends are particularly common in the life insurance business.
• Revaluation reserve The difference between the market value and the balance sheet value of shares, investment funds and real estate, which is taken directly to shareholders’ equity after deferred taxation has been deducted.
• Securities lending The loaning of securities for a fixed or unlimited period, in exchange for adequate sureties and a commission fee.
• Solvability The minimum amount of capital funds an insurance company is calculated to need to ensure that it can meet its liabilities from the policies in the long term.
• Underwriting reserves Total amount of reserves for unearned premiums, life insurance reserves and annuity reserves, reserves for claims outstanding, reserves for premium reimbursements and other underwriting reserves, appearing under liabilities on the balance sheet.
• Reinsurer Insurance company that assumes part of the risk of an insurance concluded by another insurance company.
• Reserves for unearned premiums In many cases, the insurance period for which a premium is paid in advance and dur-
Helvetia Versicherungen Prof. Dr. Wolfram Wrabetz Berliner Strasse 56-58 DE-60311 Frankfurt a.M.
Helvetia International Prof. Dr. Wolfram Wrabetz Berliner Strasse 56-58 DE-60311 Frankfurt a.M.
Helvetia Vita Compagnia Italo Dott. Franco Armeni Via G. B. Cassinis 21 IT-20139 Milano
Sede Pamplona Luis F. Ona Avda. de San Ignacio, 7 ES-31002 Pamplona
N a t i o n a l r e g i o n a l o f f i c e s
S u b s i d i a r i e s
Helvetia Patria Versicherungen 4002 Basel St. Alban-Anlage 26 Phone 0848 80 10 20
Internet: Important dates 2002: Helvetia Patria Holding Shareholders’ Meeting, May 17, 2002
Publication of half-year results, October 1, 2002 2003: Helvetia Patria Holding Shareholders’ Meeting, May 9, 2003
The 2001 annual report of the Helvetia Patria Group is available in German, French and
English. A summarised version (containing the consolidated financial statements of the