Profile Helvetia Group has its registered office in Switzerland. Over the past 150 years, it has grown to become a successful international insurance group. Alongside its domestic market of Switzerland, its core geographic markets include Germany, Italy, Austria, Spain and France. Helvetia is active in the life, non-life and reinsurance sectors, and 7,012 employees provide services to more than 4.7 million customers. Business volume in financial year 2014 was nearly CHF 7.8 billion. The registered shares of Helvetia Holding AG are traded on the SIX Swiss Exchange.
The announcement of the takeover of Nationale Suisse in July 2014 was made under the title “solidarity”. Joining together means closing ranks and harnessing forces. According to the motto: Together we are stronger. However, this only applies if we manage to focus on what we have in common and overcome any divisions. Of course, new developments always arouse uncertainties and fears. At the same time, however, the positive spirit of the new-found energy is becoming increasingly solid and tangible for all participants as each day passes.
This is also reflected in the visual concept of this year’s Annual Report. Here we see employees from Helvetia and Nationale Suisse joining together in similar roles. They seek eye contact with each other, and the actual gesture should be interpreted as looking each other in the eye and making contact for the cooperation targeted. In their statements they talk about their surprise at the announcement, about recovering hidden values, about fears and respect for the new challenge, about looking forward to the new potential, about dynamic movement, about additional impetus, about when the best of two worlds combine and about new perspectives. Even if their views differ, there is still one clear direction: we are convinced that, thanks to the new strengths, we will be able to master any challenges that the future may present.
Consolidated equity per share in CHF 503.2 445.0 13.1 % 112
Underlying earnings of the Group after tax1 421.7 363.8 15.9 % 91
Consolidated equity (without preferred securities) 4 963.1 3 831.2 29.5 % 112
Provisions for insurance and investment contracts (net) 41 275.0 34 518.7 19.6 % 163 of which Group financial assets and investment property 44 843.4 36 736.7 22.1 % –
Employees 1 For detailed information about calculating the underlying earnings, refer to pages 90/91. 2 Based on the 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 Erich Walser – obituary 10 The new Helvetia 14 Business model
Business development 88 Market environment 90 Helvetia Group’s performance 92 Development of business activities 96 Investments 100 Business units
CHF 22 million. The profit in the life business remained stable in a difficult capital market environment.
The capital base remains extremely solid, even after the acquisitions, with a Solvency I ratio of 216 %. The SST
Thanks to the low claims ratio in a financial year that had few major claim events, the net combined ratio improved to 93.1 %, once again exceeding the Group’s target
have been defined in all the country markets. The sales launch with an expanded network of offices under the
Helvetia brand will take place in Switzerland on 1 May 2015 and gradually in Germany, Spain and Italy from mid-2015.
Group into a successful European all-lines insurer with his great creativity and creative energy for over 35 years – as Chief Executive Officer from 1991 to 2007 and as Chairman of the Board of
Strategically, we were able to take a major step forward with the acquisitions of Nationale Suisse and Basler Austria. The “new Helvetia” is now in the top three in Switzerland, will strengthen its market position in Europe and combines the existing strengths of both groups with the new market area “Specialty Markets”. The operational performance was also convincing with a very good development of the business and further increased profits.
Helvetia Group’s IFRS profit for the period was overlaid by temporary special effects following the acquisitions. We are therefore focusing on “underlying earnings” until the end of the 2017 financial year in order to comment on the operating performance of the new Helvetia Group. Helvetia increased its underlying earnings by 16 % to CHF 422 million (previous year: CHF 364 million). The acquired companies contributed CHF 22 million pro rata to earnings. The CHF 393 million profit for the period pursuant to IFRS is 8 % higher than the previous year. This was primarily influenced by acquisition effects.
The consolidation of the new companies took place in the 2014 financial statements and will be fully reflected in the 2015 financial year. Organically, the volume of business increased by 0.3 % (in original currency). The non-life business grew by 1.4 %, whereas the life business was intentionally curtailed.
The integration of the two companies is going according to plan. The management, target organisations and a harmonised range of products have been defined in all the country markets for the “new
Germany, Spain and Italy will gradually follow from mid-2015. In Belgium, the process of strategic review already initialised by Nationale Suisse was concluded with the sale of Nationale Suisse
Following the acquisitions, Helvetia retains a very good capital position. This is also reflected in the
Equity excluding preferred securities increased to CHF 4,963.1 million mainly due to the capital increase in connection with the cash and share offer for Nationale Suisse and the increase in the valuation reserves for investments (previous year: CHF 3,831.2 million). Standard & Poor’s confirmed
Helvetia’s A rating following the completion of the acquisition of Nationale Suisse at the end of
The Chairman of the Board of Directors of Helvetia Group, Erich Walser, died unexpectedly on 30 December 2014. Erich Walser played a decisive role, first as CEO, and later as Chairman of the Board of Directors. The Board of Directors, Executive Management and employees were deeply affected by his sudden death. Erich Walser was 67 years old when he died, following a brief, serious illness in the middle of his active, dedicated and successful career with Helvetia.
In 1979, Erich Walser entered the finance department of the former Helvetia Feuer, which, alongside various management roles, soon also entrusted him with the task of strategic planning. When he was appointed General Manager in 1991, the Board of Directors gave him the task of implementing a new strategy, which was intended in particular to take the company from a non-life insurer to an all-lines Group. Under his leadership as CEO, the company rapidly increased its cooperation with the Patria life insurance, which had its headquarters in Basel, and which ultimately led to the merger of the two companies in 1996. The new Helvetia Patria was able to establish itself very well on the market in the years that followed.
In 2001, in addition to his role as CEO, Erich Walser also undertook the mandate as Delegate of the Board of Directors. At the end of 2003, he also took on the role as Chairman of the Board of Directors alongside his role as CEO, up to the autumn of 2007. As the Chairman of the Board of Directors he was also able to use his strategic flair together with a number of acquisitions both at home and abroad to successfully prepare Helvetia Group for future market developments. Even recently in July 2014, Erich Walser was able to announce a convincing merger for the Swiss insurance industry, with the takeover of Nationale Suisse.
The steady development of Helvetia into a successful European all-lines insurer owes a great deal to the determination, prudence and outstanding entrepreneurial vision of Erich Walser. His management was characterised by considerable trust and respect across and beyond all levels. It is not an overstatement to say that Erich Walser may be considered as the architect of today ś Helvetia.
He also shaped the corporate culture as an example of integrity, humanity and modesty.
The new Helvetia 8.8.2014 Helvetia publishes offer document for the takeover of Nationale Suisse 28.8.2014 Helvetia completes acquisition of Basler Austria 15.5.2014 Helvetia acquires
Basler Austria 7.7.2014 Announcement: Helvetia and Nationale Suisse join to form a new Swiss insurance group
Group. The transaction was completed in August 2014. The acquisition expands our volume in
Helvetia is extending its advisory network both in the strong exclusive sales network and in agency and broker sales. The merger of central services allows additional professionalisation, greater efficiency and thus the realisation of synergy effects.
The combination of two companies that have a very similar corporate culture and understanding of business is a special opportunity to expand Helvetia ś market presence in Austria. On the completion of the acquisition, the Executive
The integration is going according to plan. The two local companies are to be merged during the first half of 2015.
A landmark decision was reached in July 2014: On 7 July 2014, Helvetia and Nationale Suisse announced that they had agreed to form a new insurance group together. To this end, Helvetia made the shareholders of Nationale Suisse a combined cash and share offer of CHF 80.00 per Nationale Suisse share. The transaction was very positively received by the capital market.
500 million. Thanks its strong top 3 position in the home market, attractive positions in the European core markets as well as the “Specialty
Nationale Suisse creates a leading all-lines insurer in Switzerland. The “new Helvetia” can benefit from extensive merger and synergy effects, for example in the product range, access to customers and customer care or in technical insurance expertise. Thanks to a better balance between life and non-life business and new possibilities in the specialty business and in the health / accident insurance business, the insurance portfolio is optimised. The multichannel strategy continues to have a central role –
1.9.2014 Interim financial statements: Helvetia increases profit and prepares for the merger with Nationale Suisse
The new Europe business segment includes the countries Germany, Austria, Italy and Spain and the merger has enabled Helvetia to grow the non-life business and further focus on its development. Additional potential can also be found in cross-selling, e.g. in the life business as well as in the specialty business. Any country-specific differences shall be taken into consideration when doing so.
The new market area Specialty Markets combines the expertise of both companies and has three important sections: – The “Specialty Lines Switzerland / International ” market unit bundles management and development of the engineering (technical insurance ), marine (transport) and art business lines in Switzerland as well as in the non-European international markets such as Asia or
Since completion of the offer on 20 October 2014, the integration work is running at full speed. The new target structures for all market units and Group functions and the fundamental organisational model for the new Helvetia were already adopted at the start of December 2014.
Helvetia succeeded in obtaining the financing for the acquisition much more quickly than originally planned and within a few weeks successfully placed two bonds (hybrid and senior) for CHF 625 million and CHF 375 million, respectively. This is one of the largest bond placements in the Swiss insurance sector in years.
1. How should we as outsiders understand the merger of the two companies?
Stefan Loacker: As key shareholders, we have always been interested in the long-term development of the Nationale Suisse Group. When we were invited to present a binding concept for a mutual future, we mobilised all our strengths. We are very happy that Nationale Suisse was impressed by our offer. Our two companies maintain a similar culture. Both are Swiss companies with sustained, healthy capital. Our aim is to become the best Swiss insurer. The best, not the biggest! An insurer which guarantees to offer firstrate products and professional consultation by means of strong customer access and state-ofthe -art processes both at home and abroad.
A company which is known by everyone for its considerable reliability. Helvetia and Nationale
6 questions for Stefan Loacker, CEO of Helvetia Group 2. What were the first reactions like?
Stefan Loacker: We informed the employees personally the following day and visited investors from London to Paris to Frankfurt. The first few hours were, understandably, shaped by a strong need for information. Our joint strategy is very persuasive, meaning that we experienced a lot of approval everywhere. Of course, particularly at the start, everyone wondered whether the merger would in fact take place and how our joint vision would then be realised. Today, we are already a major step further, and that initial uncertainty is gradually being replaced with specific prospects.
Stefan Loacker: The high complexity and the fact that many important questions arise at the same time is challenging. That needs careful planning and a structure in the project team – consisting of representatives of both insurance groups. That way we can stay on top of things and make decisions quickly if we need to. But we must not forget that integration is not a race against time, but rather needs two to three years overall.
Successful partial completion of the financing process and submission of all supervisory approvals. Increase in the bond volume to CHF 625 million2.10.2014 Successful start to the financing process for the takeover of Nationale Suisse. Helvetia places double-tranche bond amounting to CHF 525 million 2014 time line
Stefan Loacker: My management team and I are happy to bear the responsibility ourselves. Bearing responsibility ultimately means being allowed to shape something. That ś a great privilege. Keeping the balance between all the stakeholders is nothing new for us. The shape of our logo with three sides already reminds us symbolically that employees, customers and shareholders always need to be taken into account equally.
The question about the public can be answered pretty simply: be transparent and authentic, leave no leeway for interpretation, make clear and credible statements, make sure you implement what you announce. All that creates trust.
Stefan Loacker: Culture is always shaped by the people involved. Our values, such as trust, dynamism and enthusiasm, are being given an even stronger foundation by the merger with Nationale Suisse. Mutual trust as a basis for the integration; dynamisation in the further development of our business; ultimately, the enthusiasm for actively seizing this unique opportunity for a “new
6. How satisfied are you with the state of the integration work?
The merger of the two field sales organisations into the “new Helvetia” will substantially strengthen Helvetia Switzerland ś network of offices as of 1 May 2015.
Although we are well on course with the integration, we are very well aware that we still have some special tasks to deal with. 2015 will be highly decisive for our ambition. Due to the extremely successful start, I am today completely convinced that the “new Helvetia” will be a great success.
Helvetia is active in life insurance, non-life insurance and reinsurance and has approximately 7,012 employees providing services for more than 4.7 million customers. In addition to its main market of Switzerland, Helvetia also has branch offices and subsidiaries in Germany, Austria, Spain, Italy and France. With a business volume of approximately CHF 7.8 billion, Helvetia generated a net profit of CHF 393.3 million in financial year 2014.
Our employees Helvetia considers well-trained, committed and wellinformed employees to be the most important source of success. Read more about this on page 30.
Our sales channels / our partners Helvetia’s sales structures are optimised for specific countries and it has numerous strong sales partnerships which it has been able to continuously expand in recent years. The multi-channelling approach will be further expanded in all country markets in the coming years. Read more about this on page 32.
Our customers We see every customer relationship as a personal partnership, sustained by professionalism, understanding and mutual trust. Read more about this on page 32.
Our environment Helvetia’s voluntary involvement in the areas of culture, society, education, recreation, the environment and the economy is broadly diversified. Read more about this on page 38.
Risk and investment management 49 Board of Directors 55 Executive Management 59 Corporate governance 74 Compensation report
Group strategy values. We consider the satisfaction of our customers and our employees to be what is most important. It is on this foundation that we can create the best possible benefits for our shareholders, flanked by our continued efforts to increase our earning power. In doing so, we pursue our efforts to constantly increase the productivity of our operating processes in the country markets by means of selected processes and systems at a group wide level.
We accentuate our ambition by means of the following objectives in accordance with our principle: “To excel in growth, profitability and customer loyalty.”
Growth We want to dynamically expand our market positions. In financial year 2014, our ambition for growth was characterised by two strategically significant takeovers.
Helvetia Group has stood for reliable insurance services for more than 150 years. The cornerstones of our success are based on the combination of selected markets, attractive insurance solutions and aiming for sustainable growth, accompanied by technical discipline, high awareness of costs and a prudent investment strategy. This is supported by a solid capital base. Our achievements in 2014 show that we are well on course with our “Helvetia 2015+”
Company profile Group strategy also provides an opportunity for sustained and profitable growth. Finally, the consolidation of central services allows additional professionalisation and greater operational efficiency.
Suisse was agreed in July. The “new Helvetia” resulting from the merger will generate a premium volume of around CHF 9 billion and have a profit potential of more than CHF 500 million. This will represent a leading all-sector insurance in
The new market area “Specialty Markets” has combined the expertise of both companies in the business lines engineering (technical insurance), art, transport insurance and active reinsurance.
European countries. In addition, there was a further tightening of the low interest rate environment.
On a currency-adjusted basis, the acquisition helped the profitable non-life business to achieve satisfying growth of 10.3 %. Excluding the two acquired companies, the growth amounted to 1.4 %. Virtually all the country markets made a positive contribution towards growth. Only the country market of France experienced a slight decline as a result of declining unprofitable contracts. Thanks to the acquisitions, life business grew by 1.1 % and would have declined had it not been for Nationale Suisse and Basler Austria.
Following the acquisitions of Nationale Suisse and Basler Austria, the merged product portfolios of the “new Helvetia” offer organic new opportunities for market cultivation in each country and therefore potential for attractive organic growth. Looking back, Helvetia was able to sustainably and, in part, significantly, further develop the market positions in all core markets. The “new Helvetia” will continue to have particularly robust capitalisation and now very favourably increased earnings power.
Return on equity (ROE) due to the interest rate environment temporarily slightly
Nationale Suisse, Helvetia Group will have an increased earnings power. In addition, the greater proportion of the profitable non-life business, particularly in our home market of Switzerland, will achieve higher profit margins in the Group.
Customer loyalty We want to increase the benefits to our customers based on their needs. Our dedication to retail and SME clients places customer loyalty at the centre of our business. Thus we have implemented numerous long-term measures in our core markets to gain new customers and generate loyalty among existing customers. We aim to offer our customers true added value, specifically with our innovative products and tailored customer solutions.
Alongside this, we see very good starting points for even more comprehensive customer solutions. Particularly in the products of Nationale
• Synergies as a key instrument for a sustained increase in profitability
Ruedi Burkart, Head of Sales Force – East Region could sense a process of change among the employees as soon as the announcement was made. For him, a key factor is for the company to become ONE insurance company as quickly as possible: “The greatest challenge lies in us be coming a SINGLE entity fast. It is only then that the important levers for synergies and efficiency will be able to take effect.”
Joy Müller, Managing Director of smile.direct knows the competitive environment of the online insurance business and primarily sees the opportunity to develop this further through the merger: “Agility, dynamism and speed are critical in our environment. I look forward to being involved in future projects and hope we can continue to work together as an innovator and pioneer in the direct business.”
Company profile The Helvetia Brand position and further develop itself as a strong, distinctive and successful insurance company on the market. Nationale Suisse’s “European travel insurance” and the online insurer “smile.direct”
will continue to be independent brands within the scope of the defined brand architecture of
Skiing sponsorship strengthens brand awareness and identification Helvetia is committed to a long-term partnership with the International Ski Federation FIS and with
Swiss-Ski, event organisers and athletes in various disciplines. 30 athletes from Switzerland,
World Cup including Tour de Ski and official partner of the FIS Alpine World Cup – run until 2017. Helvetia is the principal sponsor of the
and “partnership” are the focal points. Customer needs and collaboration based on trust are the most important factors. Our brand promises of
“perfect fit”, “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.” The conversation builds trust and interest and creates the foundation for a solid partnership.
Brand awareness and its perception throughout the Group is surveyed in regular surveys of retail customers and brokers. Our long-term continued involvement in skiing across Europe, the expansion of online activities with country-specific Helvetia blogs and further market processing measures have increased brand awareness of
“your Swiss insurer” has been strengthened. The perception of Helvetia as a particularly trustworthy and quality-focussed insurance and pension institution has seen encouraging development.
Helvetia customers especially include private individuals and small and medium-sized companies. Their needs are shaped both by the various stages in their lives and, particularly in life insurance, by changes in the economic environment.
Group’s total 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 become the third largest provider of BVG (Swiss occupational pension system) insurance solutions.
Management pension scheme Additional and separate pension solutions, which go beyond the legal requirements.
BVG Invest Covers the risks of death and invalidity by means of insurance contracts with Helvetia. Assumes the complete administration. Manages the investments through the Helvetia Investment Foundation. Appropriate pension plans with return opportunities.
Helvetia Investment Foundation Joint investment and administration of the pension funds investment. Specialising in indexed and core satellite investment products as well as real estate investments.
Nationale Suisse, Helvetia has expanded the product portfolio and therefore strengthened its activities in the profitable non-life business.
In the future, Helvetia will also be providing health and accident insurance from Nationale
Suisse in Switzerland. The also recently acquired smile. direct is characterised by its leading customer satisfaction on the market and a very good price-performance-ratio. Further details on the development of the non-life business as a result of the takeover of Nationale Suisse can be found in the chapter “The new Helvetia” on pages 10 – 13 of this report.
Helvetia will in the future also have a presence through representative offices in Istanbul for
Turkey and Miami for Latin America and through branches in Singapore and Kuala Lumpur.
Reinsurance business Helvetia is one of the oldest reinsurers in the world. As a niche provider, it stands out because of its sustainable and long-term business relationships and strict underwriting policy. The focus of activities is on the highly diversified non-life insurance business. Active Reinsurance strives to grow selectively with profitable, worldwide underwriting lines. It also benefits from the balance sheet strength of the new Helvetia and makes further increased underwriting capacities available to its customers.
Helvetia Holding has acquired 100 % of the following subsidiaries: – Europäische Reiseversicherungs AG, Basel
The mergers in the financial year 2014 have also had a significant effect on the HR agenda.
Comprehensive change management and the prudent incorporation of the new employees have formed the focus of the integration work.
During the course of formal employee appraisals, the employees’ performance is assessed and their opportunities for development discussed with them. Helvetia attaches great importance to giving its employees individualised, equal opportunities. Measures to support women include promoting a better work-life balance by using flexible working time models, the granting of parental leave and, in some cases, in-house company childcare facilities. Helvetia also ensures equal pay for men and women.
Personnel development Well-educated, dedicated and competent employees are the most important drivers of our success. Helvetia operates in a demanding, intensely competitive market environment that is changing considerably due to globalisation, of new technology and regulation. With a systematic and proactive personnel planning and development programme, Helvetia is addressing these changes as well as future demographic challenges. Personnel planning is concentrated on acquiring new employees and on the systematic definition and development of their potential.
duties have included the support of the line functions in terms of job placements so as to ensure the balance between the stability and further development of the Group as well as the optimum employment of the employees and the use and expansion of existing skills and expertise. The knowledge exchange between the employees of the different companies has been promoted within the framework of management training, as has the desire of the employees to participate actively in the changes. A leadership training package has been designed under the title “How to successfully manage the integration”, which was launched in Switzerland in 2014 and will be rolled out to all the relevant country markets in 2015. To take into consideration the different local requirements, this training package will be supplemented in each case with specific local modules. The programme is part of the familiar
Group modular international management training programme, in which the top managers regularly participate and which deals with developments in strategic matters. In order to ensure that the contents are up to date, Helvetia works closely with renowned educational institutions such as the London Business School and the University of
Average age 1 / 2 The increase in employees compared to the previous year was due to the acquisitions of
The definition was revised so that the number of FTEs for the previous year (including employees in training) was about 90 FTEs less the figures published for 2013.
Switzerland as of 1 May 2015. We can significantly develop our market position particularly in the French part of Switzerland and in Ticino. With smile.direct we also have an online sales platform 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.
France X Yacht insurance with Société Générale, bank partner with Caisses Régionales and access to the GAN agents network for transport insurance
Detailed information about awards in Germany at: Detailed information on Italy at: In the past financial year, external surveys were carried out on customers and brokers in the
Innovations Helvetia has been involved in social networks since 2010. Since then, social media has also become firmly established in the professional environment as a new communication channel. It not only offers the functionality of direct information and contact platforms but is also a crucial marketing instrument.
Corporate Publishing” (BCP) competition in 2013 and 2014. With over 700 publications submitted, BCP is one of the most important competitions for corporate communication in Europe.
New products in the financial year 2014 Helvetia provides tailor-made insurance solutions to help support its customers in managing risks and financially providing for a securer future.
The following overview shows the new products launched in the financial year 2014.
– The collaboration offers retail customers investment advice and solutions to insurance issues from one source as well as comprehensive advice and care
CleVesto Balance – Fund-linked annuity insurance – Focus on single premiums de/privatkunden/leben-alter/ fondsgebundene-versicherungen/ helvetia-clevesto-balance.html
Accident insurance – Covers cosmetic operations up to EUR 30,000 – Medical assistance up to EUR 15,000 – Increased advance payments for ongoing treatment
– Traditional life insurance for children – “Provider clause”: if something should happen to the provider during the period of payment of the premium, Helvetia will continue with the ongoing premiums. – Includes the option to make additional payments or withdrawals, time-out arrangements www.helvetia.com/at/content/de/ privatkunden/lebensversicherungvorsorge /kindervorsorge.html
– Coverage of risk in agricultural operations, irrespective of the size of the company – Special highlight: underinsurance is excluded.
For detailed information about the corporate responsibility strategy and key topics, refer to: For detailed information, refer to: Sustainability is a key factor in ensuring longterm economic success. As a company that operates throughout Europe, Helvetia acts on its corporate responsibility by continuously critically assessing the impact of its own business activities both on the environment and on society. In doing so, Helvetia exceeds the expectations of statutory provisions and takes into consideration more far-reaching voluntary standards.
As part of an extensive analysis, at the start of 2013 Helvetia assessed the opportunities and risks in terms of sustainability, and gleaned a
Group-wide corporate responsibility strategy from this. It focuses on involving corporate responsibility aspects in the insurance business, the protection of natural resources and a varied, social commitment at the Helvetia locations.
Targets have been set in the individual areas of activity and appropriate measures and projects launched. Some of which started in 2014.
Progress in the core business Helvetia was the founding member of Swiss
Sustainable Finance. The platform – established in 2014 – promotes the sustainability of the
have agreed to help promote social and environmental issues in the investment and financing business. The membership has given Helvetia the opportunity to obtain more information about
So as to implement its sustainable procurement policy, Helvetia has established recommendations for all the key product categories. These include the areas of human rights, employment standards, environmental protection and combating corruption. The international Corporate
Responsibility Advisory Board has taken the responsibility for implementing the recommendations throughout the Group. The open dialogue with the suppliers should lend an important stimulus to the further development of the sustainable procurement strategy.
Environmental management measures All Helvetia country markets have taken measures to improve their environmental performance and environmental protection. These resulted in slightly lowering the emissions which are incurred by business trips and also achieving certain savings in energy, water, paper consumption and waste. By converting to renewable energy and installing a photovoltaic system on the roof of the Helvetia Head Office in Vienna, Austria became the first country market to considerably reduce its greenhouse gas pollution. Preliminary studies on green building standards are under way in France, Austria and Switzerland. The majority of CO
emissions come for our own office buildings. Therefore, measures to increase their energy efficiency have been a particularly effective instrument in further reducing our ecological footprint.
Leadership Index (CDLI) of the CDP (former Carbon Disclosure Project) for the first time ever. As a non-profit organisation, each year the CDP
Company profile Corporate responsibility ly companies are tackling the issues of climate change. The transparency of the information provided by Helvetia has been assessed by the CDP
Social commitment in the form of donations, social sponsoring and supporting the voluntary activities of Helvetia employees and third-parties are becoming increasingly linked with aspects of the insurance business. This has been especially successful with the commitment to protect forests, which, alongside Switzerland, has now also been rolled out in Germany, Austria and Italy.
located in Basel – has been devoted to Swiss child and youth welfare for more than 35 years.
Suisse and the associated capital increase, there was temporarily a slight dilution of the shareholding of our pool shareholders, which was, however, reversed by means of purchases. The free float thus remains unchanged at 61.9 %: Shareholder base as of 31 December 2014 – Patria Genossenschaft 30.1 %
of the registered share capital, around 0.1 % of which was held by members of the Board of
– 64.2 % have their registered office in Switzerland (previous year: 65.0 %) and 35.8 % are based abroad (previous year: 35.0 %). Shares pending registration rose slightly year-on-year, ending the year at 23.5 %.
The structure of the types of investors has shifted slightly since the previous year to include more private individuals, banks and insurance companies and fewer other institutional investors.
Bonds in circulation Helvetia made use of the favourable market conditions to finance partly the acquisition of
Active capital market communication Helvetia communicates with shareholders, potential investors, financial analysts, retail investors and the general public comprehensively and on a regular basis. We communicate financial results at analysts’, media and telephone conferences. All publications are made publicly available at the same time. We engage in regular dialogue with our investors and visit them in the most important financial centres. In the 2014 reporting year, our road shows took us to Zurich,
Group and the Basler Austria as well as the continuing challenging economic environment. To ensure appropriate risk control and governance, the risk management of the Nationale Suisse is undergoing a transition under the guidance of the Helvetia risk organisation. Integration in the
A primary objective of risk management is the sustained safeguarding of the capital base as well as the reputation of Helvetia Group and its
The supreme risk owner is the Board of Directors of Helvetia Holding (particularly the Investment and Risk Committee, Audit Committee and the Strategy and Governance Committee) as well as the Group Executive Management. As the central bodies responsible for this function, they bear the ultimate responsibility for risk and define the risk strategy and the risk appetite for the
In te rn a l a u d it o rs
Helvetia as offering potential for new developments: “I hope that the merger will provide plenty of ideas for modernisation, that the ‘new Helvetia’ will continue to move forwards with the best of both worlds and will be given that extra boost from the integration.”
Swiss supervisory authorities as a primary instrument for analysing and quantifying market, counterparty and technical risks. The company uses internal models here, including for the areas of market risk and technical risk. Risks are controlled and limited by means of hedging instruments, specific product design, reinsurance protection, limit systems (including exposure control and loss limits), diversification strategies, process optimisations and other measures.
The numerous risks to which Helvetia Group is exposed in its business activities are included in the Group’s risk management process. Market risks arise, in particular, from interest rate changes, fluctuations in share prices, real estate prices, or exchange rates which influence the value of the Group’s investments. Liquidity risk generally refers to the risk of being unable to provide an unexpected cash outflow in a timely manner.
These objectives will be defined whilst taking into consideration the risk-bearing capacity and cost / benefit considerations. Furthermore, as part of its capital management, Helvetia Group pursues the goal of an interactive financial strength rating of at least “A–”.
Methods for measuring capital The measurement of capitalisation is carried out both at Group level and at local level, i.e. at the level of the individual legal entities. At a local level, the country-specific regulatory and commercial law requirements are key. At Group level, capital is measured on the basis of the consolidated balance sheet. In doing so, the capital requirements are measured by the capital models which are relevant to Helvetia Group: Solvency I, Swiss Solvency Test and Standard &
Additional capital is added depending on the model and other components, such as planned dividend payments and intangible assets, are deducted. Under the Swiss Solvency Test, all assets and liabilities are measured at market prices for the calculation of the available capital.
Solvency I is basically calculated as a function of business volume, a risk-based calculation method is applied to calculate the capital required under Standard & Poor’s and under the Swiss
Solvency Test. In the Swiss Solvency Test, the effects of risks on the available capital are determined by means of scenario simulations and statistical methods, and quantified taking into consider ation dependencies and diversification effects in the form of a risk-based capital requirement.
Outlook The regulatory requirements for risk and capital management remain subject to major changes.
Solvency II requirements. Helvetia is well prepared for the new requirements. In addition to the monitoring of corporate governance, the introduction of Solvency II at Helvetia requires in particular providing the necessary data and systems to enable the optimal incorporation of the new requirements in the existing processes (particularly reporting, risk and capital management)
and to implement them in a timely manner using strict planning and tests. Further statements concerning capital management are provided on page 180 in the notes to the Financial Report.
Company profile Risk and investment management curities and collateralised bonds is above average at around 72.4 %.
Attractive, stable investment income We generate attractive investment income for our customers and shareholders while controlling investment risk through the prudent combination of low-risk assets, such as high-quality bonds and mortgages, which make up almost 70 % of the portfolio, and instruments with higher returns such as real estate and shares. The interest income gained from bonds, mortgages and real estate ensures the sustained stability of the investment income, while the valuation gains from the equity exposure create interesting medium-term potential for returns. Helvetia’s high-quality property portfolio is an excellent fit with the liabilities from the insurance business, not only because of the long-term stable and attractive rental income, but also due to the stable values of the assets.
This applies to exposures in foreign currencies and shares, whereby – depending on market developments – particular use is made of options and futures to hedge risks; in addition, counterparty risks are subjected to ongoing analysis and control using various criteria such as ratings, credit quality, and the development of interest spreads. To avoid cluster risks, we also apply graded upper limits based on debtor quality.
Board of Directors the Nomination and Compensation Committee, the Audit Committee as well as the Investment and Risk Committee, Helvetia has four Board committees which ensure the effective control and monitoring of the company. The tasks of the committees are of an essentially preparatory nature. Any decision-making powers are listed in the Notes of the organisational regulations: www.helvetia.com/en/gruppe/governance
The composition of the Board of Directors as of January 2015 is shown in the following table.
Different committees have been formed in order to make good use of individual member expertise in the decision-making processes.
• Member * The duties of the Board of Directors will be managed by Vice-Chairwoman Doris Russi Schurter until the end of the Shareholders’ Meeting 2015.
Until 2005, partner at KPMG Switzerland, including 1994 – 2005 Managing Partner at KPMG Lucerne.
Professional background, exercising operational executive functions 1989 joined Winterthur Versicherungen; 1995 – 2004 various managing roles in Switzerland and in Europe, including: CEO of Winterthur operations in the Czech Republic and responsible for mergers & acquisitions at group level; 2004 – 2014 CEO of the Schweizerische
National-Versicherungs-Gesellschaft AG, Basel; since 1 January 2015 Vice President of the
State Council of the canton of Valais; since 2007 Senate of the canton of Valais; 2011 – 2013 President of the Finance
Joined the Zurich Insurance Group in 1977, various managerial positions, including: 1993 member of the Executive Management of Zurich
Switzerland, 2001 – 2005 CEO Zurich Switzerland, 2001 – 2004 Member of the Extended Group Executive Board of the ZFS Group; 2002 – 2005 Vice-President of the SVV (Swiss
Insurance Association); 2001 – 2005 Member of the Management Board and Vice-President of the Förder gesellschaft I.VW.
Development in Europa; 2000 – 2004 CEO of the Swiss export promotion organisation, Osec; since 2004 partner of the law firm MME Legal
(LBBW), most recently as Member of the Board in Stuttgart, responsible for international business. Since 2011, CEO of DKSH Japan in Tokyo.
St Gall, promotion and habilitation, guest professor in the USA (Wharton and Connecticut) as well as South America (IAE Argentina); 2004 to present, professor of Strategic Management at the University of St Gall and also Chairman of the Board at the Institute of Management (IfB).
Swiss Commercial and Investment Banks (VHV); Member of the Board of Directors of the SIX
Corporation Global Treasury at the head office in Zurich, as well as Vice-Director at
Vice-President of the Board of Directors of Leonteq Securities AG, Zurich.
Six appointments at non-listed companies: Member of the Board Committee of the Swiss
Asset Management AG, Zollikon; Member of the Board of Directors of Pfandbriefbank
Since 1983 law firm Lenz & Staehelin, Geneva; partner since 1988.
Suisse, Basel (until Shareholder’s Meeting 2015); Member of the Board of Directors of
The Executive Management is the highest execut ive body of Helvetia Group and is responsible for implementing the strategy adopted by the
Board of Directors. The organisational structure of the Management is oriented to the value chain and the management of the operating business units. Key functions such as the management of financial operations and information technology, investment business, group reinsurance, strategic and operational functions and parts of risk and personnel management are centralised, making it easier to pool knowledge and resources. The management structure – with cross-border, functional responsibilities – is very efficient, enables rapid decision-making, enhances transparency and avoids duplication.
Austria have brought about changes in the Executive Management, both in the Group as well as in the local companies, which mainly came into force as of 1 January 2015. For the purposes of relevance, we are publishing this information in this Annual Report.
Helvetia Germany. In this role, he was also a member of the Group Executive Management since 1998.
Markus Gemperle, previously Head of Strategy and Operations, will be managing the new market area of “Europe” in the future. This includes the country markets of Germany, Austria,
Armin Suter have joined the Executive Management Switzerland from 1 January 2015. During the course of the year, Mr Jeitziner will replace
Mr René Stocker as Head of Sales, as Mr Stocker will be retiring.
Germany In Germany, Volker Steck joined the company on 1 October 2014. As of 1 January 2015 he replaced Wolfram Wrabetz as CEO Germany.
Torsten Müller joined the Executive Management Germany on 1 January 2014 as Chief Information Officer.
Support functions * CEOs of the country markets ** reports to the Chairman of the Board of Directors
Bodner (who joined Helvetia from Basler Austria), succeeding Burkhard Gantenbein as CEO, who left the company on 31 October 2014 at his own request in order to pursue challenges outside of insurance.
Italy Michelangelo Avello from Nationale Suisse Italy has been newly elected to the Executive
Minichiello, who will be the Chief Risk Officer and will remain in the Executive Management.
Also from Nationale Suisse Italy, Massimo Fedeli has become a new member of Executive Management Italy, as Head of Non-Life Commercial
Management of Schweizerische National-Versicherungs - Gesellschaft AG, Basel up until merger.
Bachelor’s degree (lic. oec. HSG); Master’s degree (Mag. rer. soc. oec.), Vienna University of
Vienna: Chief Executive Officer; 2007, since 1 September in his current position with various appointments at the foreign subsidiaries of
BA History (University of Reading, UK); Chartered Accountant British and Swiss national,
Underwriter Property & Casualty; 2001 moved to Zurich Global Corporate Switzerland as actuary head; 2005 Chief Pricing Actuary
Underwriting Officer at Zurich Italy; 2012 joined executive management at Nationale
Specialty Lines & Foreign Countries; since 1 January 2015 Member of Group Executive
Member of Group Executive Management in his current position with various appointments at the Swiss subsidiaries of Helvetia Group.
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
This strategic focus expresses Helvetia’s commitment to comply as fully as possible with the applicable standards of the “Swiss Code of Best
Swiss Exchange Corporate Governance Guidelines of 26 September 2014, and also the Ordinance Against Excessive Compensation in Swiss
At the 2014 Shareholders’ Meeting, Helvetia fully adapted its articles of incorporation to the requirements of the VegüV. All elections, the compensation policy as well as reporting and the votes on the compensations therefore reflect these requirements in full. The compensation principles and policy at Helvetia continue to be simple, transparent, state-of-the-art and – in particular when compared to the principles applied by our most important competitors – well-balanced. As in the past years, these principles comply with the values held by Helvetia Group. The
Board of Directors considers the compensation policy applied by Helvetia to be exemplary.
Gesellschaft AG (“Nationale Suisse”) and integrated the company as a subsidiary in the Group.
Exchange has been initiated and should be concluded in the first half of 2015.
The legal structure of Helvetia Group (including investments) is shown on page 29.
Holding AG will be the only listed company within the Group. The Group’s subsidiaries included in the scope of consolidation are listed on pages
Holding. This renewed year-on-year increase in the number of registered shareholders underscores the attractiveness of our shares, despite all the turbulence in the financial markets. It is also the result of the share exchange in connection with the takeover of Nationale Suisse. In the context of our shareholder base, the holdings of the pool are worthy of special mention.
Helvetia’s strategic focus on cooperation in areas outside its core business (insurance), and supports the activities of the Group in crucial areas such as sales. It unites the cooperation partners of Helvetia Group in their capacity as strategically orientated, long-term investing shareholders who are interested in the successful development of the company. Pool members may only sell their
2.2 Treasury shares On 31 December 2014, Helvetia held 26,288 treasury shares (0.27 %).
Company profile Corporate governance 2.6 / 2.7 Shares, participation certificates and dividend rights certificates The share capital comprises 9,889,531 fully paid-up registered shares with voting and dividend rights with a nominal value of CHF 0.10 each. There are no preferential rights, participation certificates or dividend rights certificates.
For more details concerning Helvetia shares, please refer to pages 40 to 42.
2.8 Restriction on transferability and nominee registrations The Board of Directors may refuse to approve registration with voting rights if an individual would then own more than 5 % of the voting rights of the entire share capital recorded with the Commercial Register. Here the term “individual ” also includes buyers of shares who are connected to each other either by way of capital or votes, or by united management, or in any other form. This restriction also applies if, for example, shares were subscribed or acquired by means of convertible rights that are associated with instruments issued by the company or third parties. In the reporting year, no new exceptions were declared regarding the restriction of transferability
(for major shareholders: see section 1.2). Private individuals who do not declare in the application for registration that they have acquired the shares on their own behalf (= nominees) will only be entered in the share register for a maximum of 3 % of the total share capital. The registration regulations are described in detail in Art. 7 of the articles of incorporation. Any amendment by the
Shareholders’ Meeting to the statutory restriction of transferability referred to above requires a two-thirds majority of votes represented.
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 registered shares with a nominal value of CHF 0.10 each, which must be fully paid up. The conditions for this are set out in Art. 4 of the articles of incorporation.
2.5 Changes in capital – In December 2004, an approved share capital increase of CHF 23,598,750 was carried out by issuing 2,359,875 registered shares with a nominal value of CHF 10.00 each, as a result of which the share capital increased from CHF 62,930,000 to CHF 86,528,750.
Helvetia reduced the nominal value of the registered shares from CHF 10.00 to CHF 0.10 and paid out the difference of CHF 9.90 to its shareholders in the form of a nominal value dividend.
Marc Von Wartburg COO Group, Project Manager, Integration sees great potential in the challenges of the merger of Helvetia and Nationale Suisse: “We want to make sure that the integration is a powerful and optimistic one. The differences are both a challenge and a treasure, which we aim to mutually nurture for the good of the company and with the necessary sensitivity.”
Compensation Committee and the Audit Committee have either never been members of the Executive Management or have not been members of the Executive Management for the past three years or more. 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 hold 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 requirements and the quality of the services it has performed, both in its entirety and within each committee, and – where necessary – identifies any improvements that may be required.
(CEO of Nationale Suisse until 31 December 2014 and a board member from 1 January 2015
Board of Directors of the Patria Genossenschaft, Basel, the statutory objectives of which 2.9 Convertible bonds and options a) Convertible bonds
No convertible bonds are outstanding and none have been issued since 2004.
3.1 Members of the Board of Directors As of the end of financial year 2014, the Board of Directors of Helvetia Holding AG consists of twelve members. The Chairman of the Board of
Shareholders’ Meeting, the position of Chairman of the Board of Directors will be carried out by the Vice Chairwoman, Mrs Doris Russi Schurter.
Management. Since Helvetia Group conducts a significant proportion of its business abroad, the
Board committees In order to use 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 and the Executive Management in its management and control activities: the Strategy and Governance Committee, the
(SGC) prepares the resolutions to be passed by the Board of Directors in the event of a change or redefinition of strategy, monitors the strategic risks within the framework of the defined strategy and the related measures, deals with mergers, acquisitions and disposals of companies or major portfolios, and prepares the required resolutions by the full Board of Directors. It also ensures good corporate governance within Helvetia
Group, assumes duties and powers that have been assigned to the SGC by the Board of Directors, deals with issues entrusted to it by the Chairman that are not reserved for the full Board of Directors in accordance with the law, the articles of incorporation or Group regulations, and discusses important and urgent issues. The SGC convenes as often as business requires. In order to deal with specific issues, it may call on internal or external specialists to attend its meetings, are to promote the conclusion and execution of life insurance contracts with Helvetia in the interests of its members, and to secure and promote its independence and development by means of financial participation in Helvetia.
Raiffeisen Group are cooperation partners in the areas of consulting and the sale of financial services.
Vontobel Group by a person who has no relationship with Helvetia.
Until the listing of Nationale Suisse in the spring of 2015, Andreas von Planta, Philipp
Suisse. Andreas von Planta and Balz Hösly also sit on the Board of Directors of Helvetia and
There are no further interlocking directorates within the Boards of Directors of listed companies.
3.4 Election and term of office All Boards of Directors, the Chairman and the members of the Nomination and Compensation
Company profile Corporate governance as business requires. The CEO, CFO, CIO as well as the Head of Risk Management attend the meetings in an advisory capacity; in 2014, they attended all meetings. In order to deal with specific issues, the Committee may call on internal or external specialists to attend its meetings, which is regularly the case. The IRC met four times in 2014. One of the Board members was absent at three of the four meetings. Most of the meetings lasted half a day.
Group Executive Management, and specifies the fixed and variable salaries and compensation due to the members of the Executive Management. It approves the concept and strategy of the employee pension funds in Switzerland on behalf of the employer and takes note of their annual financial statements. It prepares the resolutions by the Shareholders’ Meeting regarding the appointment and dismissal of members of the Board of Directors, puts forward proposals regarding personnel decisions and appointments and dismissals of members of the Group Executive
Executive Management are concerned. In 2014, the NCC held three meetings; one meeting was without one of its members. Most of the meetings lasted half a day.
Company profile Corporate governance tions may also be passed by circular letter, which was the case three times in 2014. As a rule, all members of the Board of Directors and (in an advisory capacity) all members of the Executive
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
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
Directors may ask other members and members of the Executive Management for information concerning all matters pertaining to the Group.
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. After the takeover of
Group Executive Management on 1 January 2015. He was previously a member of the
3.7 Information and control tools 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.
Company profile Corporate governance reso lutions by an absolute majority of the votes cast. In addition to the resolutions cited in Art.
704, para. 1 of the Swiss Code of Obligations, a two-thirds majority of represented votes is required for amendments to the articles of incorporation, the premature termination of office of more than one member of the Board of Directors, and the liquidation of the company. The exceptions for the Patria Genossenschaft as individual shareholder and for the group of pool members mentioned in section 5.1 also apply here.
5.3 Convening the Shareholders’ Meeting The Shareholders’ Meeting is convened by the
Board of Directors, or, if necessary, by the statutory auditors. Liquidators and representatives of creditors also have the right to call a meeting.
As a rule, the Ordinary Shareholders’ Meeting is held in April / May, but at the latest within six months after the end of the financial year.
Extraordinary Shareholders’ Meetings take place if the Board of Directors or the statutory auditors consider it necessary, if this is passed by a Shareholders ’ Meeting or if shareholders who represent at least 10 % of the share capital jointly request in writing an Extraordinary Shareholders ’ Meeting, whilst stating the items on the agenda and the motions to be put forward and choosing the names of the proposed candidates.
5.4 Addition of items to the agenda Shareholders with voting rights who together represent shares with the nominal value of at least CHF 2,000 may request the addition of items to the agenda in writing, stating the motions to be put forward, no later than 45 days before the Shareholders’ Meeting.
At the 2014 Shareholders’ Meeting and the extraordinary 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 the Patria Genossenschaft. No specific exceptions with respect to voting rights restrictions or proxy voting were granted in the reporting year.
5.2 Statutory quorum The Shareholders’ Meeting is quorate regardless of the number of shareholders in attendance and votes represented by proxy. Unless stipulated other wise by legal provisions or the articles of incorporation, the Shareholders’ Meeting passes
The statutory auditors’ terms of office must be renewed by the Shareholders’ Meeting every year. The KPMG AG audit team for the financial year 2014 consisted of: – Philipp Rickert (since 2012), Swiss Certified
Accountant, Partner Audit Financial Services, lead auditor; – Bill Schiller (since 2013), Swiss Certified
These fees covered legal and tax advisory services and the actuarial review.
The Audit Committee prepares the election of the statutory auditors. It monitors and assesses their activities. This supervision is predominantly carried out by means of the external auditors’ reports on audit results, the reporting process, decisions, for example on IFRS issues, and statements in the local audits. Important findings are summarised in a management letter.
Internal Audit reports directly to the Chairman of the Board of Directors. This reinforces the independence of the internal auditors.
(24 April 2015) and exercise voting rights is reserved for persons who were registered in the share register as shareholders with voting rights as of the cut-off date (14 April 2015) specified by the Board of Directors and announced in the
Swiss Commercial Gazette and various other newspapers. In exceptional cases, guest tickets for the Shareholders’ Meeting may be issued, but holders of such tickets do not have any voting rights. Every share registered in the register entitles the holder to cast one vote.
6.2 Clauses regulating a change in control Employment contracts of Helvetia do not contain any agreements regarding a change in control.
Helvetia periodically meets with institutional investors and presents the published financial results at special roadshows. Our Investor
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
Access is via www.shapp.ch. Instructions regarding initial registration will be included in the invitation to the Shareholders’ Meeting. Shareholders who are already registered will be issued with the respective documentation electronically until further notice.
Audit Committee in an advisory capacity. Copies of the minutes are sent to all the members of the
Chairman of the Board of Directors, the Chairman of the Audit Committee, the CEO and the
CFO take place annually. Meetings or an exchange of experience with specialists from the areas of Group finance, corporate finance and risk management, legal and compliance, general secretariat and corporate governance are held periodically. The external and internal audit teams also liaise frequently regarding issues such as audit planning, audits and results as well as current problems.
8. Information policy Helvetia communicates with shareholders, potential investors, retail investors and the general public comprehensively and on a regular basis.
shows in a first paragraph the general principles and the main components and criteria regarding the participation rights as well as the loan and credit terms and conditions for members of the
Board of Directors and the Executive Management teams. They provide an overview of the philosophy, guiding principles and processes pertaining to the compensation paid by Helvetia that apply to all operational and executive levels. The application of the general principles in the financial year and the specific payments as well as the relevant information for the vote on compensation are then – unless explicitly mentioned – only presented in a second and third part for the
Management, which must be reported pursuant to VegüV. All parts comply with the Corporate
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; Helvetia remuneration model
Board of Directors: uniform basic remuneration (exception: Chairman of the Board of Directors) with allowances for committees and committee councils (cash)
– 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 Board of Directors continues to be in charge of general compensation issues and compensation models. It is supported in its work by the
Nomination and Compensation Committee, which provides support to the Board of Directors in the decision-making process in accordance with the internal organisational regulations and has final decision-making power in partial areas.
Excessive Compensation in Swiss Listed Companies (VegüV) it is now mandatory for the Board of Directors to compile a yearly compensation report; this report presents to the Shareholders’
Meeting the total amounts of fixed and variable compensation of the Board of Directors and the
Group Executive Management. No payment / share allocations may take place before the final approval of the compensation for the
b) Approval of the following total amounts: – fixed compensation to the Board of Directors for the period from the current Shareholders’
Management for the period from the 1 July following the current Shareholders’ Meeting until 30 June of the next year (prospective); – variable compensation to the Board of Directors for the past financial year (retrospective); – variable compensation to the Group Executive Management for the past financial year
Company profile Compensation report receive an allowance in addition to their basic remuneration. These payments take account of the responsibility and specific functions of each of the individual Board members. The compensation for each individual Board member calculated annually in this way is paid out in cash. When a director leaves the Board, compensation is paid on a pro rata basis up to the end of the month in which he or she leaves the Board of
The variable compensation paid to a Board member is calculated based on a reference value of 30 % of the fixed compensation. This reference value is multiplied by the extent of target achievement that applies to the LTC (for the calculation of the percentage of target achieved, see the explanations on the LTC below). The Board member is then allocated a prospective number of shares
(deferred shares) for this amount. The relevant share price is calculated as the average of the stock exchange prices for Helvetia Holding shares for five consecutive trading days from the day on which the business result is announced.
Ownership of the resulting number of shares is transferred after three years. When a director leaves the Board, the LTC is paid on a pro rata basis up to the end of the month in which he or she leaves the Board of Directors. Here, the deferred allocation of LTC shares applicable to each member of the Board of Directors takes place only after the approval of the total amount by the Shareholders’ Meeting (retrospective determination).
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.
Helvetia’s compensation systems as well as the employee benefits programmes, some of which can be optimised at an individual level, have proved their value; they are correct and fair, balanced and competitive, and the amounts that are paid can be justified at all times.
1. Compensation for the Board of Directors The compensation principles relevant for the
Board of Directors consists of the following simple and transparent components, whereby the fixed cash component is the largest component by far.
Management can include quantitative and / or qualitative components and depend on his or her operational responsibility. Compensation for individual target achievement is due to the
Results-based compensation component (reference value 20 % of fixed compensation): This compensation component based on the annual result is multiplied by the extent of target achievement, which in each case also applies for establishing the results-based variable compensation for all employees in Switzerland. The resulting amount is paid out to the member of Executive
Long-term results-based compensation component (LTC up to no more than 40 % of fixed compensation ): This compensation component with a longer-term orientation is multiplied by the percentage of the strategic target achieved. In contrast to the regular results-based compensation component, the amount calculated in this way is not paid out to the Executive Management member in cash, but in the form of a deferred claim to a certain number of shares. The relevant share price is calculated as the average of the stock exchange prices for Helvetia Holding shares for five consecutive trading days from the day on which the business result is announced. This number of shares is transferred to the ownership of the Executive Management member after three years either in the form of shares or as a cash payment based on the share price at that time, provided that there were no negative developments in this period that were triggered in the e) Shares and options
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
The definitive 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 attainment of the personal targets agreed with the line manager in advance. The result of this multiplication is paid out to the member of Executive Management in cash. The individual targets of a member of Executive
The degree to which strategic objectives have been attained (ranging between 0 and 125 %) is fixed annually during the first quarter following the end of a financial year 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 and Switzerland Executive Management.
(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.
Switzerland as for Group Executive Management. The Executive Management abroad is compensated according to the local market conditions governing the compensation systems. The local compensation systems can include fixed and variable salary components. At Group level, members of the local Executive Management abroad are also paid a results-based bonus in the form of shares, based on a reference figure of 10 % of the local basic compensation. The reference figure is also multiplied by the LTC percentage of target achieved. This Group bonus has been designed to promote the sense of belonging to the Group of the Executive Management teams abroad.
The reimbursement of expenses is governed by written regulations. The members of Group Executive Management are entitled to a Helvetia company car which they may also use for private purposes for a fixed fee. The employer does not grant any other benefits in kind.
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 section 3). They therefore also benefit from a discount of 16.038 %
Management are entitled under occupational pension plans are in line with the model for internal pension regulations applicable to all employees. In addition, the employer makes the standard joint contribution. The employer also finances the option for members of the Executive Management to retire upon reaching the age of 59. These additional contributions are presented as part of the overall pension contributions made to members of the Executive Management. No extraordinary benefits were paid.
CHF 2,292,622. The fixed salary includes all allowances and expenses set out in the compensation regulations. A variable payment (including AHV/IV/EO) of CHF 417,835 in the form of in total 814 deferred shares at a stock exchange price of CHF 480.50 on 25 February 2015 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 1,905,000 and variable remuneration of CHF 373,510 paid in the form of in total 820 deferred shares at a stock exchange price of CHF 455.50.
All compensation and fees to the Board of Directors are shown in the above table.
As of 2014, the compensation also includes AHV/IV/EO employer contributions; 2013 AHV/IV/EO contributions of CHF 98,108 were paid with respect to the fixed compensation and of CHF 19,236 with respect to the variable compensation.
Group Executive Management received nonmonetary benefits as part of the company car programme valued at CHF 22,158 (previous year: CHF 14,844). All other benefits that the members of the Executive Management receive as employees (e.g. discounts on insurances etc.)
3. Highest individual compensation The highest individual amount paid out in the reporting year was paid to Stefan Loacker (CEO).
This amounted to CHF 1,758,678 in total (previous year: CHF 1,643,412), comprising the following: cash remuneration of CHF 1,226,595
(fixed component CHF 859,392, variable component CHF 367,203), share-based payments of
Salaries and other short-term benefits: – Fixed remuneration (incl. expenses allowances, child / education allowances, long service awards, company car) 3 745 927 3 652 802
– Employer contributions to pension funds with respect to the fixed compensation (as of 2014 incl. contributions to AHV/IV/EO)1 1 009 297 808 404
– Share-based compensation in the form of deferred shares acquired during the financial year (LTC)4 1 248 820 1 228 939
1. Approval of the total amount of the fixed compensation for the Board of Directors for the period from the 2015 Shareholders’ Meeting to the 2016 Shareholders’ Meeting
Board of Directors with remuneration otherwise remaining the same and the newly recognised employer contribution to AHV/IV/EO lead to an increase in the total remuneration amount in accordance with the table on the left.
III. Compensation for the Board of Directors and the Group Executive Management to be approved by the 2015 Shareholders’ Meeting
– Total amount of the fixed compensation for the Group Executive Management for the period between 1 July 2015 and 30 June 2016
3. Approval of the total amount of variable compensation for the Board of Directors for the past financial year 2014
Director’s composition (newly joined members as of 20 October 2014 or 1 January 2015)
Group Executive Management and their calculation were described in section 2 and the amounts were disclosed in part II. The resulting differences between 2014 and 2015 simply arose from changes in the degree of target attainment and changes in the basic salaries while the calculation, the number of members of the Group
The Board of Directors shall apply for approval from the Shareholders’ Meeting for the variable compensation for the Group Executive Management in the amount of CHF 3,097,000 for the concluded financial year 2014.
Total sum variable compensation Executive Management retrospective financial year retrospective paid out 2014 for 2013 approved for 2013 Change
Employer contributions paid to pension funds with respect to the variable compensation (as of 2014 incl. AHV/
1 With respect to the variable compensation paid in 2014 for 2013, the employer paid additional AHV/IV/EO contributions of CHF 19,261 2 Comprises the value of the deferred shares allocated as part of LTC 3 With respect to the variable compensation paid in 2014 for 2013, the employer paid additional AHV/IV/EO contributions of CHF 136,242
We have audited the remuneration report dated 11 March 2015 of Helvetia Holding AG for the year ended 31 December 2014. The audit was limited to the information according to articles 14 – 16 of the Ordinance against Excessive
(Ordinance). The Board of Directors is also responsible for designing the remuneration system and defining individual remuneration packages.
Holding AG complies with Swiss law and articles 14 – 16 of the Ordinance.
The current market conditions2 in the European markets continued to present a number of challenges to insurers in 2014. In the past financial year, the recovering economy caused the global insurance market to grow more strongly again.
The growth of the global economy was driven primarily by the USA, as recovery in the European markets in particular tended to be slow in comparison. The decline in growth in Germany in the second quarter had a particularly dampening effect on the European economy. The restructured supervisory regulations in Europe under Solvency II created additional momentum and a greater need for action.
IVASS, the non-life market again declined by 3.2 % in 2014, and the motor vehicle business saw a decrease of 6.1 %. The transport business in France also experienced an increase in competition intensity, primarily due to pricing measures. However, the Swiss non-life market remained robust in 2014, with an estimated growth of 1.0 % 5, and in Germany the non-life business was supported by the economic recovery. Europe was mainly untouched by major storms and natural catastrophes in 2014. The 2014 Whitsun weekend storms and heavy rains in Germany led to considerable weather-related claims, which will be reflected in the combined ratios of
European insurers. In addition, the low interest rate environment in the non-life business also had an unfavourable impact on the profitability of insurers, although to a lesser extent than in the life business.
The life insurance business in the past financial year was dominated by conditions in the capital markets. The biggest problem for life insurers in 2014 was once again the low interest rate environment, as low-risk investments yielded very low returns. With regard to business vol ume, all country markets in which Helvetia operates continued to show signs of growth. The foreseeable further cuts in statutory pension schemes will boost demand for private pension solutions.
The turmoil in the financial markets has increased the demand for products with financial guarantees and yield-oriented financial investments.
This enabled primary insurers to cover their requirements in a more tailored manner, thanks to innovative solutions in specific areas. Natural catastrophes in 2014 presented fewer claims worldwide due to extreme weather and earthquakes. Despite the floods, storms and hailstorms in central and northern Europe, the impact was lower than in previous years. These factors caused pressure on prices and conditions to further increase in virtually all areas. However, this development was contrary to the trend that, although especially primary insurers in the developed markets are demanding price reductions, they increasingly favour sustainable conditions and partnerships with their reinsurers, whilst giving short shrift to pure opportunistic transactions. It is also expected that the consolidation phase in the reinsurance market which was initiated at the turn of the year and had been expected for a long time will continue in the coming months and years.
In contrast to most of the projections, interest rates in Switzerland and in Europe sank to new lows during the course of the year. Interest spreads also decreased further. This development is partly due to the sustained aggressive monetary policy of the European Central Bank and partly due to the only hesitant tightening of the monetary reins by the Fed. Added to this was the lagging economic recovery in Europe, in contrast to the robust economic upturn in the USA.
Helvetia is ranked among the top 10 Austrian insurance companies. Thanks to the acquisition of Nationale Suisse, Helvetia was also able to develop further its position in Europe. The good business performance was also reflected in the business figures.
Group increased by 15.9 % from CHF 363.8 million in financial year 2013 to CHF 421.7 million2.
ratio as of 30 June 2014 was within the 1 Underlying earnings are adjusted for integration expenses, as well as amortisation of intangible assets, additional planned amortisation due to revaluation of interest-bearing securities at market value and other one-off effects of the acquisitions. Underlying earnings is not an IFRS key figure, and therefore was not audited by the Helvetia Group’s statutory auditor. Nonetheless, it is derived from the audited
Business volume for direct insurance 7 556.7 7 282.0 3.8 − 0.2 * including Nationale Suisse and Basler Austria on a pro rata basis
Nationale Suisse and Basler Austria, made a significant contribution to growth. The business volume recorded organic growth of 0.3 % (in
OC). Both the life and the non-life business profited from the two acquisitions. The development of the business volume in the life and nonlife segments is described in detail on pages 92 to 94.
Earnings: a significant improvement of the underlying earnings thanks to the non-life business; stable earnings in life insurance in the difficult capital market environment
Preliminary remark: Helvetia acquired the Nationale Suisse Group in financial year 2014, and it was fully consolidated on 20 October 2014. Therefore, Nationale Suisse is taken into account as of that date in the 2014 Group financial statements. Basler Austria was also acquired and is included in the Helvetia Group financial statements as from 28 August 2014.
The IFRS profit for the period for Helvetia after the acquisitions will be temporarily significantly shaped by special effects. These special effects include integration costs, planned amortisation of intangible assets and additional planned write-downs due to the revaluation of interestbearing securities to fair value, resulting from the specific IFRS accounting requirements for acquisitions.
Helvetia Group impressed with underlying earnings of CHF 421.7 million, an increase of 15.9 % compared with the previous year (CHF 363.8 million3).
CHF 22.1 million to these earnings (since the first consolidation in the financial statements). The improvement at Group level stems from the non- life business, while the result of the life business remained largely stable despite a difficult capital market environment, and the result for “Other activities” decreased due to the capital market. The results of the individual segments are described in detail on the following pages.
Bridge to the IFRS profit for the period Helvetia Group’s profit for the period reported in accordance with IFRS for financial year 2014 is
CHF 393.3 million – an increase of 8.1 % compared to the previous year. The IFRS profit for the period was significantly influenced by acquisi tion effects: including integration costs of
Additional write-downs due to revaluation at fair value − 13.0 – n.a.
Even after the two acquisitions, Helvetia still has a very good capital position. This is also reflected in the excellent Solvency I ratio of 216 %. Despite paying an attractive dividend, equity4 rose compared to the financial year 2013 from
Nationale Suisse acquisition. The unrealised gains and losses recognised in equity also saw a further increase due to the declining interest rate environment. The return on equity increased from
Basler Austria and Nationale Suisse, contributed to the business volume with premiums of
CHF 103.0 million. The organic growth recorded amounted to − 1.1 % (in OC).
* Including Nationale Suisse and Basler Austria on a pro rata basis
By line of business, the premium volume in the group life business increased slightly compared to the previous year (+0.8 % in OC).
The growth came from Switzerland; the demand for full insurance solutions there remains high.
In the individual life business, the business volume increased by 3.3 % (in OC) on account of the acquisitions. By contrast, the organic growth recorded was negative. As a result of the difficult capital market environment, the single -premium business declined significantly. Particularly in the largest market of Switzerland, the exceptionally strong growth of the previous year in investment-linked products did not continue on account of the low interest environment.
Profit for the period: stable earnings in a difficult capital market environment
Underlying earnings for the life insurance segment amounted to CHF 151.2 million, representing a slight decline of 1.1 % compared with the previous year. As a result of the difficult capital market environment, lower investment returns were recorded in financial year 2014. In addition to this, the interest result dropped in the Swiss group life business as a result of the Swiss Federal
Council increasing the minimum interest rate for 2014 from 1.5 % to 1.75 % within the scope of the annual adjustment. Both effects could not be fully compensated for by the lower policy holder participation compared with the previous year.
In comparison with the previous year, the risk result remained stable. The sustained low interest rate environment required a further increase to reserves in the country markets of Switzerland,
Helvetia Group was CHF 2,979.3 million. This corresponded to growth of CHF 56.7 million or 1.9 % compared with December 2013 or a decline of CHF 225.4 million or 7.7 % without taking the new acquisitions into consideration.
The analysis of changes shows that, without the new acquisitions, the embedded value records a decline essentially due to the considerably poorer than planned economic result on account of the falling interest rates. This is by contrast to a significantly better operating profit due to more favourable mortality and cost assumptions as well as the positive contribution of the new business in all countries. The newly added adjusted equity of the acquisitions included in the capital movements ultimately led to an increase in the embedded value of the life insurance portfolio.
The volume of new business fell compared to the previous year because, for capital market reasons, it was not possible to launch investmentlinked tranche products in the individual life business in Switzerland to the desired extent and it was therefore no longer possible to build on the exceptionally successful previous year. In occupational pension plans in Switzerland, the record premiums of the previous year were not reached again. The main reason was the outsourcing of the Swisscanto pension business. Since 1 January 2014 Swisscanto has taken over the liabilities for these pensions from Helvetia. After foreign markets had suffered in 2013 due to the difficult economic environment, the volume of new business rose again in this area.
Business volume: pleasing growth thanks to acquisitions (+10.3 % in OC); solid organic performance driven by the large insurance lines of motor vehicle and property insurance
Austria, contributed significantly to this growth with CHF 225.1 million. The organic growth also amounted to a satisfying 1.4 % (in OC).
* Including Nationale Suisse and Basler Austria on a pro rata basis ** Includes the country market of Belgium, the representative office in Liechtenstein and the specialty business of Nationale Suisse in Latin America, Turkey and Asia
The net combined ratio improved from 93.6 % in the previous year to 93.1 %. Helvetia was therefore able once again to surpass the target range of a combined ratio of between 94 and
Investments Thanks to the acquisition of Nationale Suisse, the investment volumes of Helvetia Group increased to CHF 48.0 billion. The fixed-income securities and investment property in particular recorded a marked increase.
CHF 1.68 billion remains in equity as unrealised gains. The previous year’s decline of CHF 0.53 billion was more than compensated for with this.
The shares were hedged to a high degree throughout the whole year. Put options that were 10 % out of the money at the purchase date were usually employed. These had the desired effect against the regularly occurring market setbacks during 2014 and protected the portfolio from excessive losses. On average 66 % of the net foreign currency exposures of the Swiss investment portfolio in euros, US dollars and British pounds were hedged. Nevertheless, the insurance protection did not take effect as the Swiss National
Outlook With the integration of Nationale Suisse in 2015, the investment policy will be subjected to an intensive review based on the proven asset liability approach, and adjusted taking into consideration the current market circumstances. We will adhere to our security and earnings-oriented approach, even if, in view of the record-low interest rates for government bonds, we may have to assume gradually greater risks.
Total result from financial assets and investment property of the Group 2 952.4 628.9
is now looking positively to the future, after an initial phase of uncertainty and disappointment: “To be no. 3 in
Switzerland is a great thing. We have a very good starting position and are therefore best equipped for the future.”
CHF 4,371.4 million to CHF 4,450.9 million, thereby adding on 1.8 %. The strength of the
Swiss home market is also reflected in a good set of key figures: both Helvetia and Nationale
CHF 250.8 million to CHF 293.5 million. The increase in the non-life business was essentially attributable to a once again better technical result and also to the contribution to earnings by
The business volume in the life business decreased slightly from CHF 3,574.4 million in the previous year to CHF 3,538.7 million. In doing so, the growth achieved in the group life business was balanced out by the declining individual life business. Nationale Suisse contributed to the individual life business with premiums amounting to CHF 68.5 million.
(SVV). In addi tion to our own sales force, selected brokers and direct sales in particular contributed to the business expansion. By contrast, the single premiums in the group life business reported a decline. This was due to the fact that since 1 January 2014 the major customer Swisscanto
Collective Founda tion has assumed responsibility for pensions, which had previously been covered by Helvetia. Helvetia therefore no longer receives
in CHF million * Including Nationale Suisse on a pro rata basis
Business development Business units the single premiums previously paid to cover these pensions. Without this one-off special effect, we would have recorded growth for single premiums in the group life business.
“payment plan” product compared with the previous year; however, they were not able to offset the decline in investment-linked insurance.
The share of modern capital-efficient pension products of the total premium volume of the individual life business was 37.2 %. In line with the strategy, Helvetia focussed particularly on the growth in these product categories.
The premium income in the non-life business increased to CHF 912.2 million (2013: CHF 797 million). The very pleasing growth of 14.5 % is mainly attributable to the acquisition of Nationale
However, the business operated by Helvetia independently performed very positively. All lines grew well organically, growing 2.5 % in total, and therefore also above the forecast market growth of 1.0 %. This was essentially aided by the large insurance lines of property insurance and motor vehicle insurance. This strong organic growth is even more encour aging, considering we have observed increased competition across all lines of business and sales channels (particularly among the brokers).
Germany achieved premium growth of 3.9 % (in original currency) compared with the financial year 2013. The main growth driver was the nonlife business (+5.4 % in OC), which particularly profited from the acquisition of Nationale Suisse, which contributed to the business volume with premiums amounting to CHF 15.5 million.
At 99.7 %, the net combined ratio in creased compared with financial year 2013
Business development Business units 7 Data as of end of Q3/2014 8 According to the figures issued by the supervisory authority IVASS, the decline in premiums in the motor vehicle business was 6.2 %
Italy also recorded very pleasing organic results and increased the volume by 3.2 % (in OC). The underlying earnings improved to CHF 32.4 million, an increase of 57.5 % compared with the previous year (2013: CHF 20.6 million). In the non-life business, the improved technical results in particular contributed towards the result increase, which is reflected in the lower net combined ratio. Higher investment income was achieved in the life business.
The IFRS profit for the period at CHF 3.0 million was, however, below that of the previous year (2013: CHF 20.6 million).
As a result of the annual impairment test, the goodwill from the acquisition of Chiara Vita S.p.A
of CHF 27.1 million was completely written off. The difficult general economic situation in Italy and the current very low interest rate environment had a negative impact on the life business. In addition, market-wide shifts in the product mix have been seen in the past few years – from modern products to the traditional, less profitable insurance solutions. This was the main reason for the assumption of lower cash flows over the planning horizon, which was chosen in the impairment test and this is why management has decided to carry out an appropriate impairment.
Helvetia’s life business in Italy grew organically by around 6.0 % (in OC). The increase originated from the traditional business. As a result of the difficult capital market environment, during the past financial year only three tranche products with very small volumes were launched.
and was thus better than the market, which declined 3.1 % 7 according to estimates of the supervisory authority IVASS. The decline at Helvetia was attributable to the motor vehicle business, which is still receding (− 2.9 % [in OC]) – albeit at a slower pace than the market 8 – and which the other lines were not able to make up for.
The net combined ratio improved from 98.8 % in the previous year to 96.4 % in the reporting year. The claims ratio fell from 67.1 % to 63.6 %, primarily thanks to portfolio restructuring. On the other hand, the cost ratio increased slightly. This is mainly due to Chiara Assicurazioni, which was taken into account for a full reporting year for the first time. Although Chiara Assicurazioni’s portfolio did increase the cost ratio due to sales via bank channels, it produced lower claims ratios.
representing a 9.1 % (in OC) increase on the previous year (2013: CHF 405.2 million).
Both the life (+9.7 % [in OC]) and as the nonlife business (+8.8 % [in OC]) contributed to this positive performance. Nationale Suisse again provided a significant contribution to the growth in the non-life business.
At CHF 28.3 million, underlying earnings were above those of the previous year (CHF 27.1 million). At CHF 27.7 million, the IFRS profit for the period was virtually at the same level as the underlying earnings.
(2013: CHF 130.2 million). Growth drivers here were investment-linked insurance products as well as burial insurance. In the past financial year, Spain was able to place a relatively small tranche product. Growth was exclusively organic, as Nationale Suisse had no life business in
At CHF 295.1 million, compared with the previous year, Helvetia Spain generated 8.8 % (in OC)
CHF 18.1 million. Helvetia also once again recorded a significant positive growth: premiums increased by 2.1 % (in OC) compared with the previous year. In terms of insurance lines, particularly the motor vehicle business (+11.6 % [in
For this reason the claims ratio increased from 69.1 % in the financial year 2013 to 71.5 % in the reporting year. The cost ratio, however, re mained
higher than those of the previous year (2013: CHF 129.8 million). At CHF 12.6 million, Basler
Austria contributed significantly to this growth; however, Helvetia Austria also recorded organic growth of 1.4 % (in OC). In terms of product categories, investment-linked insurance solutions in particular enjoyed continued strong demand, reporting growth of 23.8 % (in OC).
Non-life: increase in the non-life volume by 23.5 % (in OC), thanks to the acquisition of Basler Austria
Austria was even more conspicuous: compared to the previous year, premiums increased by 23.5 % (in OC) to CHF 233.8 million (2013: CHF 191.4 million). Basler Austria’s share of this growth was CHF 41 million. Helvetia also grew organically: the growth achieved was 1.8 % (in
OC). All insurance lines improved their premium volumes compared with the previous year. The greatest contribution to growth came from the large business line, motor vehicle insurance,
(+20.2 % [in OC]). Premiums also increased significantly in the accident and health area
Combined ratio * Including Nationale Suisse and Basler Austria on a pro rata basis ** Includes the country market of Belgium, the representative office in Liechtenstein and the specialty business of Nationale Suisse in Latin America, Turkey and Asia
Portfolio structure of active reinsurance by region 2014 Share in % | in CHF million
Middle East folio restructuring and partly the general economic environment only improving slowly, which had a negative effect on the transport sector.
in the previous year to 97.1 % in the reporting year. The portfolio restructuring was particularly noticeable in the claims ratio, which fell from 66.0 % in 2013 to 64.4 % in the reporting year.
Business development: encouraging volume increase of 7.8 %, further diversification of the portfolio
The international area includes the country markets of Liechtenstein and Belgium as well as the specialty business of Nationale Suisse in
The pro rata business volumes recorded in this area for 2014 are CHF 28.5 million
Goodwill and other intangible assets 146 Investments 159 Financial liabilities 163 Insurance business 172 Income taxes 175 Equity
Claims incurred including claims handling costs (non-life) – 1 933.1 – 1 761.8
Income attributable to deposits for investment contracts1 – 73.8 – 87.4
Diluted earnings per share (in CHF) 11.5 42.98 40.89 1 Voluntary change in presentation (see section 2.3 on page 117)
Share of associates’ net profit recognised directly in equity – 0.5 –
Change in liabilities for contracts with participation features – 989.0 395.6
Total that will not be reclassified to income – 128.1 – 0.6
Cash and cash equivalents 2 090.4 1 708.1 1 Voluntary change in presentation (see section 2.3 on page 117)
Valuation reserves for contracts with participation features 11.2.5 1 261.1 863.5
Income and expense that will not be reclassified to income – – – 3.1
Purchase of shares, investment funds and alternative investments – 979.4 – 981.9
Sale of shares, investment funds and alternative investments 1 084.1 782.4
Purchase of investments in subsidiaries, net of cash and cash equivalents – 603.5 – 20.4
Cash and cash equivalents as of 1 January 1 708.1 1 565.2
Cash and cash equivalents as of 31 December 2 090.4 1 708.1
Other cash equivalents with a maturity of less than three months 114.7 12.4
Interest paid 10.5 6.3 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.
Helvetia Group is an all-lines insurance group which operates in many sectors of the life and non-life insurance business as well as in reinsurance. The holding company, Helvetia
Jersey. With the acquisition of Nationale Suisse Group in 2014 (see section 18, page 217), Helvetia Group is now also represented in Belgium, Liechtenstein, Malaysia,
Disclosure initiative (Amendments to IAS 1: Presentation of financial statements) 1.1.2016
As part of its voluntary disclosures, Helvetia Group previously distinguished between the Group’s financial assets and financial assets for unit-linked contracts. From 1 January 2014, the term “Financial assets for unit-linked contracts” was replaced by the term
This new presentation makes it easier to interpret the investment results.
2.1 Standards applied for the first time in the reporting year 2.2 Standards not yet applied in the reporting year 2.3 Voluntary change in presentation 2. Summary of significant accounting policies
Subsidiaries acquired during the course of the financial year are included in the consolidated financial statements from the date on which Helvetia Group took effective control.
Acquisitions of companies are recorded using the purchase method. Intergroup transactions and balance sheet items are eliminated.
Any changes in Helvetia Group’s percentage of shares held in a subsidiary, without losing control, are treated as transactions among shareholders. The adjustments of minority interests are based on the proportional net assets of the subsidiary. Goodwill is not adjusted and no gains or losses are recognised in the income statement.
Associates of Helvetia Group are accounted for using the equity method if significant influence is exercised by Helvetia Group. The goodwill resulting from the equity valuation is recognised in “Investments in associates”. The book value of all investments is tested for impairment if there is objective and substantial evidence for impairment at the balance sheet date. Associates of the Helvetia Group are listed together with the fully consolidated subsidiaries in section 18 (from page 217).
Diluted earnings per share (in CHF) 40.89 – 40.89 1 previously “investments for unit-linked contracts”
Items included in the financial statements of such entities that do not have the Swiss franc as their functional currency were translated using the applicable closing rate. Items in the income statement are translated at the average exchange rates for the reporting period. The resulting translation differences are recorded in “Foreign currency translation differences” in equity, not affecting profit or loss. Upon (partial) disposal of a subsidiary, these currency differences, attributable to the subsidiary in question and accumulated in equity, are released through income. The rates applied in these financial statements are given in section 4.1 (page 141).
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 2.6.1 Fair value of financial assets and financial liabilities
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 c ases, the need for impairment is examined and – if justified – recorded.
In Switzerland and Austria, investment properties are valued in accordance with the discounted cash flow (DCF) method. The procedure is described in section 2.12.1 (page
The estimate uncertainties in the area of technical results are explained in section 2.16
(from page 126). Any material change to the parameters used for the calculation of the provisions is documented in sections 9.3 from page 166 (non-life business) and 9.4 on page 168 (life business).
Capitalised goodwill is tested annually for impairment. The procedure is described in Note 2.11 (page 122). The recoverable amount is calculated on the basis of several assumptions, which are disclosed in section 6 (from page 144).
2.6.2 Impairment of available-for-sale investments 2.6.3 Fair value of investment property 2.6.4 Insurance-specific estimate uncertainties 2.6.5 Impairment of goodwill
All other items are of a mixed nature. The differentiation between the current and non-current balances of relevant items is explained in the notes. The maturity schedule of financial assets, financial liabilities and provisions for insurance and investment contracts is described in section 16.5 (from page 200) as part of the risk assessment process.
If a lease agreement transfers all risks and rewards incidental to the ownership to
2.7 Current and non- current distinction 2.8 Property and equipment 2.9 Leasing
2.10 Goodwill and other intangible assets 2.11 Impairment of tangible assets, goodwill and other intangible assets
The recognition and measurement of financial assets follow the IFRS categories: “loans”
Financial assets are initially recognised at fair value. Directly attributable transaction costs are capitalised, except for financial assets at fair value through profit or loss, for which the transaction costs are charged to the income statement. Helvetia Group records all acquisitions and disposals of financial instruments at trade date. Derecognition of a financial investment occurs on expiration of the contract or at disposal if all risks and control have been transferred and if no rights to cash flows from the investment are retained.
“Financial assets at fair value through profit or loss” comprise “financial assets held for trading” and “financial assets designated as at fair value through profit or loss”. An instrument is classified as “held for trading” if it is held with the aim of making short-term gains from market price fluctuations and dealer margins. Upon initial recognition, financial investments are irrevocably classified as “designated as at fair value” only if they are a component of a particular group of financial assets that, according to a documented investment strategy, are managed on a fair value basis, or their recognition as at fair 2.12 Investments 2.12.1 Fair value of investment property 2.12.2 Financial assets
Financial report Summary of significant accounting policies value serves to compensate for market value fluctuations of liabilities due to policyholders. The value fluctuations that result from the fair value valuation are directly recognised in the income statement and for Group investments are reported separately from current income in the item “Gains and losses on Group investments (net)”.
Group for risk management purposes are described in section 16 (from page 191).
Derivatives may also be embedded in financial instruments, insurance contracts or other contracts. They are measured either together with their host contract or separately at fair value. The underlying security and derivative are measured and recognised separately if the risk characteristics of the embedded derivative are not closely related to those of the host contract. Changes in the fair value of derivatives are recognised in the income statement.
Those financial liabilities that are either held for trading or are irrevocably classified upon initial recognition as “designated as at fair value through profit or loss” are recognised at fair value. The latter classification is given to deposits if they are associated with investment funds or products for which the policyholder benefit is almost identical with the investment return. For these deposits for investment contracts without a discretionary participation feature (see section 2.16, below) only the withdrawals and allocations that are part of the operating result are recorded in the income statement.
Indirect business consists of active reinsurance business and business retroceded to reinsurers. The technical items are described as “gross” before deduction of ceded business and as “net” after the deduction.
Insurance contracts as defined by IFRS comprise all products containing a significant technical risk. The significance is assessed at product level.
Contracts that are considered insurance products in the formal sense of the law and mainly carry financial risk rather than any significant technical risk are not insurance contracts but are treated as financial instruments unless they carry a discretionary participation feature (DPF), in which case they are classified as insurance contracts. Under
This additional benefit must form a significant proportion of the overall contractual benefit, and its amount or timing must be at the insurance company’s discretion.
The technical items in non-life business are established Group-wide on the same principles. All non-life insurance products of Helvetia Group contain significant technical risks and are recognised as insurance contracts.
at all Group companies are adequately covered up to the reporting date in order to ensure a loss-free valuation. Expected future premium income is compared to expected claims expenses, expected administration and acquisition costs and expected policyholder dividends. If the expected costs exceed the expected premium income, the loss reserves are increased – without prior amortisation of the deferred acquisition costs.
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 capital 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 country- specific experiences.
The remaining gains – either through profit or loss or with no impact on the results –
that relate to contracts with a discretionary participation feature (i.e. every share for which no legal or contractual obligations exists) are recorded under “Valuation reserves for contracts with participation features” within equity.
A long-term compensation component (LTC) for the Board of Directors and the
2.24 Share-based payments 2.25 Other liabilities 2.26 Offsetting of assets and liabilities
Executive Management which is responsible for the operational management of all local business units and for the legal entities. Apart from reinsurance, which operates worldwide, segmentation is based on the geographical country markets where all service-rendering activities occur. These country markets correspond to the locations of
The operating segments of Helvetia Group derived from this are the country markets
“Switzerland”, “Germany”, “Italy”, “Spain” and “Other insurance units”, consisting of the country markets and worldwide reinsurance. “Corporate” comprises a separate reportable segment. This comprises all Group activities, the financing companies and
All other units and active reinsurance are classed in “Other activities”.
The allocation of the individual Group companies to the regions and segments is set out in section 18 (from page 217).
Income investments with market risk for the policyholder1 73.2 20.8 37.9 41.7 67.8 87.4
Reinsurers’ share of benefits and claims 47.9 40.0 52.4 61.0 58.9 61.1
Income attributable to deposits for investment contracts1 – 6.3 0.1 – – – 67.5 – 87.5
Net benefits to policyholders and claims – 4 342.7 – 4 267.8 – 679.1 – 667.8 – 932.3 – 848.8
Reinsurers’ share of acquisition costs 24.7 19.4 26.2 17.5 17.9 12.4
Gains and losses on Group investments (net)1 98.3 131.0 67.6 38.1
Income investments with market risk for the policyholder1 200.5 160.2 – –
Claims and benefits paid (life) – 4 140.7 – 2 932.1 – –
Income attributable to deposits for investment contracts1 – 73.8 – 87.4 – –
Operating and administrative expenses – 179.9 – 170.0 – 267.7 – 230.7
of which technical provisions (gross) 30 838.2 25 979.7 2 913.1 2 578.8 4 177.6 3 351.8
Cash flow from operating activities (net) 1 114.4 224.5 – 2.5 – 38.6 – 2.1 22.4
Cash flow from financing activities (net) – 5.6 14.5 3.6 24.6 37.2 – 43.7
Share-based payment transaction costs – 1.2 – 1.0 – – – –
Acquisition of owner-occupied property, equipment and intangible assets 37.2 – 4.1 1 179.2 33.7
Impairment of tangible and intangible assets affecting income – 27.1 – 0.0 0.0
Share-based payment transaction costs – 0.6 – 0.5 – 0.6 – 0.5
Financial report Segment information 3.4 Gross premiums by geography and business area
Investment-linked life insurance1 448.8 515.7 – 13.0 – 12.4 1 Voluntary change in presentation (see section 2.3 on page 117)
Deposits received from investment contracts life1 153.0 183.6 – 16.7 – 16.0
Gross premiums and deposits received 7 766.6 7 476.8 3.9 4.4 1 Currently, all deposits from investment contracts life relate to the country markets Italy and Switzerland.
Group investments” in the consolidated income statement and, excluding foreign currency translation differences from investments at fair value through profit or loss, amounts to CHF 29.4 million (previous year’s loss: CHF 8.8 million). Other foreign currency gains and losses are reported under the items “Other expenses” and “Other income”.
Change in scope of consolidation – – 146.3 – 34.8 0.2
Foreign currency translation differences – – – 2.1 1.5 – 1.0 0.7
Book value as of 1 January 2.6 2.6 344.9 345.0 20.6 19.6
In connection with the 2014 takeover of Nationale Suisse and Basler Versicherungs
The goodwill from the takeover of Basler Versicherungs AG in Austria of CHF 70.2 million has been allocated to the cash-generating unit “Austria”.
Goodwill is tested annually for impairment in accordance with section 2.11 (from page
The impairment test compares the recoverable amount with the book value. The recoverable amount is determined by calculating the value in use. This calculation requires management to make estimates of expected cash flows to be derived from the assets.
These free cash flows are usually considered for a period of three to five years and are based on the budget approved by management and the strategic plans. The growth rate is set by management and is based on past experience and future expectations. The applied discount rates are pre-tax rates and reflect the risks attached to the business units in question.
The impairment test carried out in 2014 resulted in an impairment requirement of
Income from investments with market risk for the policyholder1 7.1.5 200.5 160.2
Share of profit or loss of associates 1.0 15.2 1 Voluntary change in presentation (see section 2.3 on page 117)
Current income on financial assets (net) 783.9 762.4 27.6 30.6 811.5 793.0
Current income from investment property (net) 209.0 204.6 – – 209.0 204.6
Current income from investments (net) 992.9 967.0 27.6 30.6 1 020.5 997.6 1 Voluntary change in presentation (see section 2.3 on page 117) 2 Derivatives comprise current income on derivative financial assets and derivative financial liabilities.
Asset management expenses on property include all maintenance and repair costs as well as the operating expenses for property that did not generate rental income during the reporting year. The latter amounted to CHF 2.6 million in the reporting year (previous year: CHF 1.9 million).
Helvetia Group of CHF 65.1 million (previous year: CHF 61.3 million) due in less than one year, CHF 146.0 million (previous year: CHF 140.7 million) due between one and five years, and CHF 38.5 million (previous year: CHF 46.7 million) due in more than five years.
Interest income from investments at fair value through profit or loss stood at CHF 32.2 million (previous year: CHF 35.4 million).
Gains and losses on financial assets (net) 279.7 206.6 172.9 129.6 452.6 336.2
Gains and losses on investments (net) 282.5 189.8 172.9 129.6 455.4 319.4 1 Voluntary change in presentation (see section 2.3 on page 117)
Realised and book gains and losses on financial assets held for trading – 57.0 – 4.9
CHF 8.1 million (previous year: CHF 1.2 million), as well as impairment loss reversals on financial assets of CHF 0.8 million (previous year: CHF 0.6 million).
Income investments with market risk for the policyholder 200.5 160.2 1 Voluntary change in presentation (see section 2.3 on page 117)
Financial report Investments 7.2 Investments by class as of 31.12.2014 Notes
Investments with market risk for the policyholder Total in CHF million reclassified1 reclassified1
Dividend income from associates totalled CHF 0.5 million (previous year: CHF 0.5 million). Income and expenses in respect of associates are reported in the income statement under “Share of profit or loss of associates”.
Investments in associates accounted for under the equity method are listed in the table in section 18 (from page 217).
In the reporting year, the discounted cash flow method was based on discount rates ranging from 3.4 % to 5.5 % (previous year: 3.4 % to 4.6 %). If the discount rates were increased by 10 basis points, the value would be reduced by CHF 150.5 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 283.3 million.
Total “loans and receivables” (LAR)1 9 017.4 9 305.5 9 017.4 9 305.5
Investments with market risk for the policyholder2 77.8 64.7 64.8 60.0
Total “at fair value through profit and loss” 5 489.9 4 806.5 4 820.1 4 430.9
Of last year’s CHF 12.7 million total “Level 3” investments, CHF 2.1 million of alternative assets were sold. The acquisitions added a further CHF 59.9 million to “Level 3”
investments. In addition, CHF 0.1 million “Level 3” shares were purchased.
Individual impairment Net in CHF million 7.6.2 Derivatives for hedge accounting 7.7 Maturity dates and impairment of financial assets 7.7.1 Analysis of past due financial assets without impairment 7.7.2 Analysis of individual impaired financial assets at amortised cost
Total financial liabilities at amortised cost 771.5 177.7 771.5 177.7 809.0 179.0
Total financial liabilities from financing activities 913.8 278.7 882.3 255.2 951.3 280.0
Helvetia has bonds in liabilities and in equity. The classification depends on the characteristics of the respective bond. A list of the current bonds can be found in the table on the following page.
Helvetia Schweizerische Versicherungsgesellschaft AG CHF 150 Mio. 1.50 % 2014 28.04.2025 1.55 % 149.3 –
Total bonds in equity 700.0 300.0 1 First call date for the issuer 30.11.2015 2 First call date for the issuer 17.04.2020 3 The effective interest rate quantifies the actual cost of loans (taking account of the transaction rate, premium / discount, transaction costs, payment dates, repayment, etc.)
Present value liabilities from finance lease 2.5 10.1 12.5 25.1 28.1
Deposit liabilities for credited policyholder profit participation 801.7 726.0 801.7 726.0 801.7 726.0
Total financial liabilities at fair value 1 344.7 1 340.3 1 344.7 1 340.3 1 344.7 1 340.3
Deposit liabilities from reinsurance contracts consist of reserves for unearned premiums, future loss payments and actuarial reserves for direct (ceded) and indirect (retroceded)
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 risk. Insurance conditions and risks are described in section 16
The income earned from the management of deposits for investment contracts is included in “Other income” and amounted to CHF 7.0 million in the reporting year
With the acquisition of Chiara Assicurazioni in 2013 – if contractually agreed premium volumes are exceeded – the seller has been granted the option of disposing of a further 25 % of the shares to Helvetia Group in 2017. In this connection, the “financial liabilities at fair value” includes a provision in the amount of CHF 11.3 million (previous year: CHF 11.3 million).
Total derivatives for hedge accounting 497.2 – – 497.2 98.8 23.1 0.3 1 At fair value through profit and loss (held for trading)
Provision for policyholder participation – investment contracts 200.9 58.4 – – 200.9 58.4
Unearned premium reserve for insurance contracts non-life 1 217.5 890.4 69.7 33.1 1 147.8 857.3
Unearned premium reserve for insurance contracts life 217.2 163.1 6.5 6.5 210.7 156.6
Reserves for insurance and investment contracts 41 854.8 34 927.8 579.8 409.1 41 275.0 34 518.7
Further details on technical reserves for the life and the non-life business can be found in the following tables. A maturity schedule of the reserves for insurance contracts and investment contracts is provided in section 16.5.1 (page 201).
Actuarial methods derived from many years of claims experience are applied to determine the loss reserves. The assumptions used in determining the loss reserves have not changed materially in this reporting year.
The Liability Adequacy Test (LAT) for non-life business resulted in an additional increase in loss reserves of CHF 48.6 million as at 31 December 2014 (previous year: CHF 22.1 million).
In the reporting period, this resulted in claims and benefits paid (life) of CHF 962.1 million and a corresponding reduction in the actuarial reserves.
The management of the Swisscanto Collective Foundation continues to be carried out in full by Helvetia Versicherungen, and the death and invalidity risks remain reinsured.
Investments with market risk for the policyholder 3 134.7 2 837.5
Total assets with market risk for the policyholder 3 157.2 2 857.3
Total liabilities with market risk for the policyholder 3 157.2 2 857.3 9.4 Life business 9.4.1 Assets and liabilities with market risk for the policyholder
Due from / due to policyholders 502.1 440.7 1 546.1 1 295.2
Due from / due to agents and brokers 222.1 140.0 200.4 137.5
The receivables and liabilities from insurance business are primarily short-term. A maturity schedule of the liabilities is provided in section 16.5.1 (page 201). 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 11.6 3.6 3.4 5.6 1.4 2.0 15.1 5.1
Total past due receivables from insurance business without individual impairment 181.8 135.2 24.8 41.7 9.3 11.3 51.6 31.2
Change in the scope of consolidation 2.9 0.1 12.8 – 15.7 0.1
Individual impairment is mostly applied to specific receivables from agents and brokers and from insurance companies.
The reason for the decrease in the weighted average tax rate lies in the geographical weighting of the profits on the one hand, and the different tax rates that apply in the individual territories on the other.
10.1 Current and deferred income taxes 10.2 Change in the deferred tax assets and liabilities (net)
Change in unrealised gains and losses on investments 1 669.5 – 532.6 – 415.5 125.1 1 254.0 – 407.5
Change from net investment hedge – 35.7 5.3 – – – 35.7 5.3
Total that may be reclassified to income 661.1 – 123.5 – 171.9 34.1 489.2 – 89.4
Revaluation from reclassification of property and equipment 7.5 4.7 – 2.0 – 1.0 5.5 3.7
Change in liabilities for contracts with participation features 35.1 – 11.1 – 8.2 2.1 26.9 – 9.0
Total that will not be reclassified to income – 171.3 1.8 43.2 – 2.4 – 128.1 – 0.6
cannot be expected in the near future, or the gains are not subject to taxation.
As of 31 December 2014, no tax assets were recognised for losses carried forward of
The fully paid up registered shares of Helvetia Holding AG have a nominal value of
At the extraordinary Shareholders’ Meeting on 17 September 2014, the share holders of Helvetia Holding AG approved the establishment of approved share capital (required for the takeover of Nationale Suisse) with a nominal value of up to CHF 130,000 excluding the subscription rights of the previous shareholders. Within the scope of the public purchase and exchange offer, these additional maximum 1.3 million shares
Group employees at favourable terms under the Helvetia employee share purchase plan did not come from the company’s own stock but were acquired on the market. This resulted in a loss of CHF 0.9 million (previous year: CHF 0.5 million) which was charged to the capital reserve without affecting profit or loss. This amount represents the difference between the market purchase price and the reduced price for employees.
In the reporting year, Patria Genossenschaft paid CHF 45.0 million into the bonus reserves of Helvetia Schweizerische Lebensversicherungsgesellschaft AG (previous year: CHF 42.0 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.
The capital reserve consists of assets paid in by third parties. The capital reserve primarily comprises the share premium of shares issued by Helvetia Holding AG and the preferred securities of Helvetia Group as well as the result from treasury share transactions.
The reserve for “Foreign currency translation differences” results from the translation of financial statements prepared in foreign currency into the Group’s reporting currency (Swiss franc) as well as the effective portion of the net investment hedge for foreign exchange gains and losses on investments in subsidiaries with a foreign reporting currency.
In the reporting year, as in the previous year, no transfer as a consequence of disposals of owner-occupied properties transferred to investment property was made to retained earnings.
Balance as of 31 December less: Obligations for contracts with participation features in “Liabilities”
Total retained earnings as of 31 December 2 997.6 2 939.0
These arise because the policyholder additionally participates in valuation differences that result from the differences between local and IFRS accounting.
The valuation reserve for contracts with participation features comprises the share of unrealised gains and losses on investments relating to contracts with profit participation recognised directly in equity, and the portion from retained earnings arising from valuation differences. The use of the reserves is at the insurer’s discretion (see section 2.16.2, from page 126).
Balance as of 31 December 718.0 215.9 less: Deferred taxes – 164.3 – 49.0
Reclassifications of unrealised gains and losses on contracts with policyholder bonus funds from minorities in 2013 were made due to the increase in the investment in the subsidiary Chiara Vita from 70 % to 100 %.
The first call date on which Helvetia has the right, but not the obligation, to repay the bond is 17 April 2020. After this date, the interest rate will be set for five years at a time based on the 5-year CHF swap rate, plus 322.05 basis points.
Development of valuation reserve for contracts with participation features 11.3 Preferred stock
For the first five years, the bond will pay an annual interest of 4.75 %. The interest is recognised directly in equity. Helvetia can suspend interest payments as it sees fit, providing that Helvetia Holding does not pay any dividends and other conditions are fulfilled. However, the suspended interest payments do not lapse.
Deferred taxes recognised directly in equity arise from valuation differences that primarily result from the fair value valuation of AFS financial assets and value changes related to the transfer of property and the revaluation of benefit obligations. On the reporting date, they amounted to a total of CHF 220.2 million (previous year adjusted: CHF 92.2 million).
Profit or loss for the period 393 309 398 363 803 087
Earnings per share without minority interests 380 502 367 352 064 387
Weighted average number of shares outstanding 8 853 822 8 609 669
Helvetia Group is required to report to the Swiss Financial Market Supervisory
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 (Solvency I and Swiss Solvency Test), compliance with which can lead to restrictions with regard to the dividends of Helvetia Holding AG.
11.4 Deferred taxes recognised directly in equity 11.5 Earnings per share
Helvetia Group is subject to minimum supervisory requirements to ensure that it has sufficient risk-based capital to finance its obligations. These capital adequacy requirements have been implemented to protect the policyholders. These requirements are supplemented by internal capital adequacy guidelines.
The supervisory authority’s equity requirement for Helvetia Group is calculated in accordance with Solvency I and also in accordance with the rules of the Swiss
For Solvency I and the Swiss Solvency Test, the available capital is calculated on the basis of the IFRS equity. Additional capital, such as free reserves for future policyholder participation and surpluses, is added under Solvency I, and other components such as planned dividend payments and intangible assets are deducted. Under the Swiss
Solvency Test, all assets and liabilities are measured at market price for the calculation of the available capital.
The regulatory coverage ratio under Solvency I reported at Group level is in line with the strategic objectives described above. The available capital under Solvency I as of 31 December 2014 was CHF 4,466.2 million (previous year adjusted: CHF 3,735.2 million), and the required capital was CHF 2,070.3 million (previous year: CHF 1,710.4 million). As of 31 December 2014, the available capital covered 215.7 %
13.1 Personnel costs 13.2 Total employee benefit receivables and obligations 13. Employee benefits
Retirement, Survivors’ and Disability Pension Plans (BVG). The benefits provided by the pension fund meet at least the statutory minimum required by the BVG. Contributions to the pension fund are set as a percentage of the employee’s pensionable annual salary, deducted from the salary by the employer and transferred every month to the pension fund, together with the employer’s contributions. In the reporting year there were no significant transactions between the pension fund and Helvetia Group that are not directly related to employee benefits.
Net liability1 for defined benefit plans 606.8 249.9 1 The “Net liability” position does not contain any reimbursement rights 13.3 Defined benefit plans 13.3.1 Reconciliation of balance sheet
Defined benefit obligation as of 31 December 3 269.2 1 822.6
Fair value of plan assets as of 1 January 1 581.0 1 449.5
As at 31 December 2014, 99.1 % of the pension obligations resulted from defined benefit plans in Switzerland.
Costs for defined benefit plans are recognised in the income statement under “Operating and administrative expenses”. Expected employer contributions toward defined benefit plans for the next year amount to CHF 65.3 million.
Return on plan assets excluding interest income – 99.1 – 83.7
Revaluations of benefit obligations are recognised in the consolidated comprehensive income statement.
Duration of the defined benefit liability (in years) 14.9 15.4 17.9 15.7
The sensitivity analysis takes into account the change to benefit obligations or the current service cost when there is 50 basis point change to the actuarial assumptions. Only one parameter is adjusted in each case, the other assumptions remain unchanged.
13.3.5 Revaluation of benefit obligations 13.3.6 Actuarial assumptions 13.3.7 Sensitivity analysis 13.3.8 Plan asset allocation
As at 31 December 2014, the plan assets include shares issued by Helvetia Holding AG
with a fair value of CHF 89.7 million (previous year: CHF 86.9 million). Plan assets do not include any of the Group ś owner-occupied properties.
Helvetia Holding AG shares. With this plan employees can directly and voluntarily participate in the added value created by the Group at preferential conditions. All employees of Helvetia in Switzerland are eligible if they are in regular employment (not on notice) and entitled to variable compensation. The number of available shares is specified by the Board of Directors, taking into account the functions of the employees concerned. All shares acquired in this manner are transferred to the ownership of the employee upon receipt and are subject to a mandatory vesting period of three years.
Directors for the 2014 financial year (previous year: CHF 0.4 million). This is subject to approval by the Shareholders’ Meeting. The amount represents 814 shares at a price of CHF 480.50 on the reference date of 25.2.2015. This payment is recognised proportionally in the income statement every year until ownership of the shares is transferred and amounted to CHF 0.3 million for 2014 (previous year: CHF 0.3 million).
The Board of Directors determines the extent of target achievement for the long-term compensation component (LTC). The reference figure, which is multiplied by the degree of objective attainment, is a percentage of up to 40 % of the fixed salary component. The LTC
The members of the Executive Management teams of the foreign subsidiaries receive a variable compensation component which is calculated by multiplying the extent of target achievement by a reference figure equalling 10 % of the basic salary. This results-based component is paid out in full in the form of shares without any option. The conversion price per share is calculated as described in section 14.2. All shares acquired in this manner are transferred to the ownership of the Executive Management member upon receipt and are subject to a mandatory vesting period of three years. The share-based payments for the 2014 financial year amounted to CHF 0.4 million (previous year: CHF 0.3 million).
14.1 Employees of Helvetia Group in Switzerland 14.2 Members of the Board of Directors 14.3 Members of the Executive Management of the Group and Switzerland 14.4 Members of the Executive Management teams of the foreign subsidiaries 14. Share-based payments
“Related companies” are the cooperation partners represented in the shareholder pool and on the Board of Directors of Helvetia Group, i.e. Patria Genossenschaft, Vontobel
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 183) and section 7.4 “Investments in associates” (page 152).
Helvetia Group does not have interlocking directorates in the boards of directors of listed companies. With the exception of Patria Genossenschaft (Patria cooperative society ), transactions with cooperation partners are not material for Helvetia Group either as a single transaction or overall. The dividend payment to Patria Genossenschaft of
“Related persons” include the members of the Board of Directors and Executive
Management of Helvetia Group as well as their close family members (partners and financially dependent children).
Salaries and other short-term employee benefits 7 490 860 6 974 341
Members of the Group Executive Management may conclude insurance contracts, loans and other services under the terms and conditions currently in effect for employees.
At the reporting date a mortgage loan had been granted to Philipp Gmür for
Members of the Board of Directors have no claim to employee conditions. 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 customer conditions, earned interest at 2 % (previous year: 2 %).
As at 31 December 2014, the members of the Group Executive Management and persons closely related to them held the shares listed in the following table, some of which were acquired under the employee share purchase plan and which have a vesting period of three years from the purchase date.
The shares held by the members of the Board of Directors and persons closely related to them as of the end of the year are listed in the following table.
1 Joined the Helvetia Board of Directors as of 20 October 2014.
In addition to the ownership of shares as set out here, the active members of the Board of Directors have deferred claims to a total of 2,353 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; – determine a risk strategy / partial risk strategies that cover the risk management objectives of all essential business activities; – set risk tolerance limits and monitor the risk profile of the Group and the individual business units; – ensure the implementation and application of a comprehensive risk management approach, including an internal control system, that guarantees the efficient allocation of risk capital and systematic control of risks by the Executive Management; – ensure appropriate monitoring of the effectiveness of the internal control systems by the Executive Management.
The Executive Management is responsible for implementing and complying with the strategies, business principles and risk limits. The Risk Committee supports the Executive
Management in an advisory capacity. It coordinates, monitors and assesses the risk decisions and financing and hedging measures of all business units. The Risk Committee meets at least once a quarter and is chaired by the Head of “Risk & Capital Management ”. Other permanent members are the Chief Executive Officer (CEO), the Chief
Financial Officer (CFO), the Chief Investment Officer (CIO), the Head of Group Port folio
Even after Helvetia Group ś acquisition of Nationale Suisse Group and Basler Austria during 2014, Helvetia Group ś risk management organisation has not fundamentally altered. In order to ensure appropriate risk management and governance, Nationale
Suisse ś risk management will be maintained in a transition phase and under the management of Helvetia ś risk organisation so as then to be integrated into Helvetia ś
risk organisation during 2015. The following description of risk management processes and analyses relates to Helvetia Group, including the acquisitions made during 2014.
The figures for previous periods reflect Helvetia Group in its original form.
The market risks of Helvetia Group are controlled using the ALM process. This enables the company to control the various impacts of market risks in an integrated way and defines both the investment strategy and the hedging policy, taking the following points of view into consideration: – 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
Insurance 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, casualty (liability, accident, motor vehicle) and transport insurance. Motor vehicle insurance policies represent the largest proportion of casualty insurance policies. In 2014, 67.3 % (previous year: 68.8 %) of the direct non-life business of Helvetia Group was generated outside of Switzerland. The share of gross premiums written per business segment is as follows: Switzerland 32.7 % (previous year: 31.2 %), Germany 20.2 % (previous year: 21.3 %),
(previous year: 7.5 %), France 9.0 % (previous year: 10.2 %) and other countries 0.9 %.
The merger with Nationale Suisse added the new country market in Belgium, the representative office in Liechtenstein and the specialty business in Latin America, Turkey and
2014 Switzerland Germany Italy Spain Other Total in CHF million 2013 Switzerland Germany Italy Spain Other Total in CHF million
Helvetia Group’s consistent focus on a portfolio that is well diversified geographically and across sectors encourages risk-balancing and reduces the risk that the cost of future covered claims arising from existing contracts will be higher than expected (prospective risks). For example, a change in the net claims ratio of + / 5 percentage points would have a positive or negative effect of CHF 128.8 million (previous year: CHF 110.3 million) on the income statement (not taking deferred taxes into account). For claims already incurred there is a risk that the level of existing commitments exceeds expectations and the provisions established to cover future claim payments are insufficient
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 way via reinsurance contracts (see section 16.4, page 199).
CHF 25.0 million (previous year: CHF 25.0 million) for Helvetia companies and additionally CHF 10.0 million for Nationale Suisse companies. For more information about 16.2 Insurance technical risks non-life
(previous year: 14.4 %) of the premiums written in the non-life business were ceded to reinsurers.
A considerable amount of time may pass between the occurrence and the reporting of a claim event, in particular in the liability business. In order to cover existing liabilities that are still to be claimed by policyholders, the Helvetia Group establishes incurred but not reported reserves. These are calculated using actuarial methods on the basis of many years of claims experience, taking into account current developments and existing uncertainties.
Risk control is made possible both by risk-oriented underwriting and by the fact that reinsurance contracts define conditions under which newly underwritten risks are covered under the respective reinsurance contract. Facultative reinsurance contracts are taken out for individual large risks not covered under the reinsurance contract. Generally, only large risks with appropriate reinsurance cover are underwritten.
Uncertainties in the estimation of future claim payments 16.2.2 Property insurance
2014 Switzerland Germany Italy Spain Other Total in CHF million 2013 Switzerland Germany Italy Spain Other Total in CHF million reclassified reclassified reclassified 1 Voluntary change in presentation (see section 2.3 on page 117)
For private persons, Helvetia Group offers pure risk insurance, savings insurance and endowment insurance, annuity insurance, as well as investment-linked products. Depending on the product, premiums are paid as single or regular premiums. Most of the products include a discretionary participation feature, although some countries regulate the minimum amount of profit participation to be credited to the customer. Traditional individual life insurance accounts for 31.2 % (previous year: 29.2 %) of the gross premium volume of the life business of Helvetia Group, with 41.9 % of the premiums (previous year: 45.4 %) coming from Switzerland. The investment-linked life insurance (index and unit-linked products) generates 9.7 % (previous year: 11.3 %) of the life business of
Helvetia Group. 50.1 % of the premiums (previous year: 62.2 %) from the investment -linked life business originate in Switzerland.
Financial reportFinancial report Risk management tant exceptions apply to the guaranteed bases: first, no interest guarantees exist for the unit-linked insurance policies. However, there may be some products that guarantee the payment of a minimum survival benefit. Secondly, in Switzerland, premiums for insurance policies for disability pensions are not guaranteed for policies concluded since mid-1997, and may be adjusted.
An insurance policy which includes death or morbidity risk may under normal conditions be concluded 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.
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 59.0 % (previous year: 59.5 %) of the gross premium volume of the life business of Helvetia Group, with 97.3 % of the premiums (previous year: 97.2 %) 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 2.0 % from 2009 to 2011 and was reduced to 1.5 % for 2012 and 2013. For 2014, this rate is being raised to 1.75 %.
When policyholders reach retirement age they may choose to have the retirement capital paid out as a lump sum or converted into a pension. The conversion of the mandatory savings component is carried out at the government-mandated BVG conversion rate, while the conversion rate on the extra-mandatory savings component is determined by Helvetia Group. After conversion, the pensions and any resulting survivors’ benefits are guaranteed for life.
For the mandatory component of the insurance policy, it is forbidden to exclude someone from a company’s insurance on account of ill health. However, certain benefits may be excluded in the non-mandatory part, or a premium for the increased risk may be required. However, there is no obligation to insure a company. On the basis of benefits previously claimed by the company and based on estimates of future claims potential,
Test (LAT) is used to review whether the provisions together with the expected premiums are sufficient to finance future benefits. If this is not the case, the IFRS reserves are increased accordingly.
However, an increase in mortality rate in these portfolios, which have to be increased due to high interest rate guarantees, has a small impact on the amount of the increase in reserves.
As life expectancy is continuously rising, when setting up reserves, the current mortality rate as well as expected trends of the increase in life expectancy are taken into account. These reserves of portfolios exposed to longevity are very sensitive to assumed life expectancies and assumed interest rates.
conversion rate in the group life insurance in Switzerland had brought about expected losses for which reserves were used at the expense of the profit participation of the policyholders. The proportion of policyholders who receive a pension at retirement and do not withdraw the capital as well as the conversion rates are monitored and the reserves kept at a sufficient level by means of possible reserve increases.
Losses for the shareholders may arise if more active members than expected become disabled or fewer disabled policyholders than expected are able to return to work and the participation feature is not sufficient to absorb such deviations. Here, the parameters of invalidity and reactivation rate are analysed in detail. Therefore an increase in the disability rate by 10 % would lead to an increase in reserves with a negative impact on the income statement of CHF 0.1 million, while a reduction in the reactivation rate would have a negative impact in the amount of CHF 1.7 million.
Depending on the nature of the contract, higher or lower cancellation rates can cause losses for shareholders. Overall, in the bases of calculation at all Helvetia Group life insurance units, sufficient margins of safety are applied so that a 10 % increase in the cancellation rate would have only a negligible effect on the amount of reserves: negative effect on the income statement in the amount of CHF 0.2 million.
In summary, it can be stated that although there is a variety of different product- specific risks in life insurance, these risks are controlled by Helvetia Group using a number of actuarial methods and, where necessary, with an appropriate increase in reserves. In addition, through its compliance with IFRS 4, Helvetia Group has a free, non-linked provision for future profit-sharing. This can be used to cover insurance risks.
Within the reinsurance, the “Group reinsurance” unit assumes the role and function of Group reinsurer. It ensures that the individual business units have the appropriate contractual reinsurance protection, and transfers the risks assumed, taking account of the risk correlation and diversification in the reinsurance market. This centralisation leads to the application of uniform Group-wide reinsurance standards, particularly in relation to the hedging level, as well as synergies in the reinsurance process. Based on the Group’s risk appetite and the composition of the reinsurance markets, Group reinsurance ensures efficient use of existing risk capacity at the Group level and provides optimal management of the purchase of reinsurance protection.
Reinsurance premiums ceded – 125.9 – 9.2 2013 Non-Life Life in CHF million
An actuarial department specialising in reinsurance handles price and reserve calculations.
For more information about the quality of reinsurance and claims settlement, please see sections 16.6 “Counterparty risk” (from page 210) and 9 “Insurance business” (from page 163).
Group manages its real estate, mortgages and securities itself. Smaller holdings of assets are invested in convertible bonds and are managed by external asset managers.
Asset-Liability Management (ALM, see also section 16.1.2) at Helvetia Group is oriented towards both accounting, in particular the protection of the income statement and balance sheet, and fair value considerations on risk limitation. Besides matching the investment strategy to liabilities, targeted use is made of derivatives. Foreign currency risks are currently hedged in this way and the risk of losses on equity investments controlled.
In Helvetia’s internal funds, the balance sheet currency exposure is hedged by a net investment hedge. The risk of loss on shares is kept under control by hedging with options.
Total reserves for insurance and investment contracts (net) 6 817.7 11 665.8 7 950.2 12 797.8 2 043.5 41 275.0 as of 31.12.2013 < 1 year 1 – 5 years 5 – 10 years > 10 years
Total reserves for insurance and investment contracts (net) 5 537.6 10 552.1 6 881.3 10 783.3 764.4 34 518.7
Callable at any time < 1 year 1 – 5 years 5 – 10 years > 10 years
Other financial and other liabilities 0.6 205.6 0.0 – – 0.5 206.7
Total financial and other liabilities 2 576.5 1 849.8 228.7 530.5 159.0 193.1 5 537.6 as of 31.12.2013
Financial liabilities from financing activities – 4.2 16.9 167.1 – 101.0 289.2
Total financial and other liabilities 2 464.8 1 431.6 18.9 168.4 1.8 176.9 4 262.4
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 right to cancel that is contained in the contracts.
as of 31.12.2014 < 1 year 1 – 5 years 5 – 10 years > 10 years
Held-to-maturity investments (HTM) 269.6 631.7 494.6 1 725.9 – 3 121.8
Financial assets at fair value through profit or loss 458.4 927.0 441.7 184.5 3 478.3 5 489.9
Held-to-maturity investments (HTM) 235.1 727.9 607.6 1 804.7 – 3 375.3
Available-for-sale investments (AFS) 705.1 4 564.8 4 870.6 5 715.6 1 163.9 17 020.0
Actuarial reserves for insurance and investment contracts excluding interest guarantee 1 022.0 – 642.7 –
Actuarial reserves for insurance and investment contracts with positive interest guarantee 24 940.8 141.3 5 869.2 4.2
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, 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.
Market risks are mitigated through hedging strategies. Out-of-the-money put options are largely used to comply with internal loss limits. Direct investment in equities represents 5.6 % (before hedging) of the Group’s financial assets (excluding investments from life insurance policies with the market borne by the customers). A substantial portion is hedged against the risk of significant losses.
The above table analyses the impact of a change in the share price on Helvetia Group’s equity and income statement, taking account of deferred taxes and the legal quota. 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 “look through” principle was used for significant holdings in balanced funds. Effects of share price changes on impairments were not considered.
Bank would end its minimum exchange rate strategy at some point. Within the defined limits, the tactical implementation of the hedging strategy is, however, partially oriented on the minimum Swiss National Bank rate. As a consequence of the Swiss National
In the table above, the impact of changes in exchange rates on the equity and income statement of Helvetia Group is analysed, taking into account deferred taxes and the legal quota. In accordance with IFRS requirements, only the monetary financial instruments and insurance liabilities in non-functional currencies and derivative financial instruments were included in the evaluation.
Provision for future policyholder participation 1 526.9 499.0 – – 2 025.9
Financial report Risk management as of 31.12.2013 CHF EUR USD Others Total in CHF million reclassified reclassified reclassified
Investments with market risk for the policyholder1 893.2 1 805.4 124.1 14.8 2 837.5
Financial liabilities from insurance business 690.3 1 482.1 0.8 0.0 2 173.2
– Counterparty risks from the insurance business: the default of other counterparties
(policyholders, insurance agents, insurance companies) may lead to a loss of receivables from the insurance business. On the balance sheet, the maximum gross exposure would correspond to the items shown in section 9.6 (from page 169)
“Receivables from policyholders, insurance agents and insurance companies” (after deducting receivables from the reinsurance business recognised under “Credit risk exposure from ceded reinsurance”). However, these receivables are largely of a short-term nature. In addition, the receivables from policyholders represent the largest group in this class. Because of the prepayment of premiums and the fact that the insurance cover is linked to the performance of contractual obligations by customers, the counterparty risk from the insurance business both in the non-life and life business plays a secondary role.
The information relevant for setting the level of the counterparty risk exposure includes information on balance-sheet netting and on existing set-off agreements regarding financial assets and liabilities. The relevant information is summarised in the table below.
Master Agreements for OTC derivatives transactions. If one of the parties does not fulfil its contractual obligations or in the event of insolvency, there is a mutual right to close the current derivatives contracts and to offset outstanding receivables with liabilities and collateral received within the set-off agreement.
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’ 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.
as of 31.12.2014 AAA AA A BBB BB and lower Not rated Total in CHF million
Derivative financial assets (incl. hedge accounting) 4.5 3.2 87.9 11.4 – 55.3 162.3
Financial report Risk management as of 31.12.2014 Exposure Share in %
The ten largest counterparties, measured by the credit risk exposure shown in the tables
Central Mortgage Bond Institution of the Swiss Cantonal Banks AAA 1 008.5 1 008.5
– On 31 March 2014, the share capital of Helvetia Europe S.A., Luxembourg, was reduced to EUR 3.6 million as a result of structural adjustments within Helvetia Group.
Aktiengesellschaft, Vienna, a subsidiary of the Bâloise Group. The company generated premium volume of EUR 135.3 million in 2013, of which EUR 105.5 million was in non-life and EUR 29.8 million in the life business. The purchase price was EUR
159.3 million in cash. The takeover of Basler Austria gives Helvetia a broader base for its Austrian business. It extends Helvetia’s advisory network in both the strong exclusive sales and in agency and broker sales. The merging of centralised services allows additional professionalisation and greater efficiency. The transaction increases Helvetia’s volume in Austria by more than 50 % and will make Helvetia one of the top 10 insurance companies in Austria. On 21 November 2014, the Basler
– In the reporting period, Helvetia Versicherungen AG, Vienna, purchased 26 % of the fvv – Vorarlberger Versicherungsmakler GmbH, Götzis.
Nationale Suisse AG, Basel. Therefore, Helvetia Group increased its investment in
Nationale Suisse 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 offer price of Helvetia shares as at 20 October 2015 of CHF 433.00 per share, amounted to CHF 535.5 million. Furthermore, Nationale
Suisse shares were already held by Helvetia valued CHF 81,444 in the takeover offer and – according to IFRS – represent a component of the purchase price equal to
CHF 246.1 million. This resulted in a profit of CHF 108.9 million. In the coming months, a new, strong Swiss insurance group will emerge under the Helvetia brand.
In the period from 21 October to the end of the reporting year, Helvetia increased its involvement in Nationale Suisse by purchasing a further 98.5 %.
The following overview shows acquired assets and liabilities at fair value within the scope of the company acquisitions.
CHF 32.4 million, of which CHF 1.9 million was classified as potentially irrecoverable.
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), “Germany non-life” (CHF 30.2 million), “Italy non-life” (CHF 27.8 million) and “Spain”
There is expected to be nothing tax-deductible from the recognised goodwill.
For the reporting period, the newly acquired companies contributed CHF − 28.3 million to Group earnings. These earnings comprise the profits from 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 of a company under IFRS. This includes, in particular, integration costs and amortisations of intangible assets capitalised as part of the acquisition. In the management ś view, the information on ordinary business operations gives little indication of future earnings.
In connection with the acquisitions, costs of CHF 6.9 million were charged for broker fees, legal and tax consultancy and auditing. These costs were recorded as “Other expenses”.
Integration and restructuring expenses of CHF 77.1 million, amortisations of intangible assets from acquisitions of CHF 43.0 million and the CHF 27.1 million write-off of goodwill in Italy were the key causes of the increase in the “Other expenses” item from
– The investment in the associated company Gesnorte SA, Madrid, fell from 31.73 %
to 26 %. The associated company GESPRADO SA, Madrid, was liquidated. The investment of 21.13 % in the associated company Tertianum AG, Zurich, was sold.
– On 1 May 2013 Helvetia Versicherungen AG, St Gall, acquired 51 % of Chiara
Financial reportFinancial report Scope of consolidation 18.4 Complete list of Group companies as of 31.12.2014
Medicall AG, Brüttisellen Non-life 74.32 full CHF 0.9 smile.direct Versicherungen, Wallisellen2 Non-life 98.51 full CHF –
Swiss Cap PRO Red Fund, Dublin Non-life 100.00 full USD –
Helvetia Compagnia Svizzera d’Assicurazioni S.A., Rappresentanza Generale e Direzione per l’Italia, Milan2 Non-life 100.00 full EUR
Financial reportFinancial report Scope of consolidation as of 31 December 2014
Nacional Suiza Compañia de Seguros y Reaseguros S.A., Barcelona Non-life 100.00 full EUR 18.0
Helvetia Schweizerische Versicherungsgesellschaft AG, Direktion für Österreich, Vienna2 Non-life 100.00 full EUR
Helvetia Versicherungen Österreich AG, Vienna Life and non-life 100.00 full EUR 5.1
Swoboda & Kafka Gesellschaft m.b.H., Vienna Other 100.00 full EUR 0.0
RZD Datenverarbeitungsgesellschaft GmbH, Vienna Other 100.00 full EUR 0.0 protecta.at Finanz- und Versicherungsservice GmbH, Vienna Other 100.00 full EUR 0.0
Vander Haeghen & Co. S.A., Bruxelles Non-life 100.00 full EUR 0.1
Société Immobilière Joseph II SA, Bruxelles Non-life 100.00 full EUR 11.1
1 Group costs are included in “Corporate” segment. 2 Branches as of 31 December 2014
Report of the Statutory Auditor to the General Meeting of Shareholders of Helvetia
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
The financial statements 2014 of Helvetia Holding AG comply with the provisions of the
Swiss Code of Obligations (CO). As a result of applying the transitional provisions
(transitional provisions of the amendments from 23 December 2011, Art. 2) of the new
Swiss accounting law, these financial statements were prepared in accordance with the previous provisions rather than the new legislation for accounting and financial reporting that came into force on 1 January 2013.
On 31 December 2014, Helvetia Holding AG owned the following direct investments: Reported company capital Holding as of
Schweizerische National-Versicherungs- Gesellschaft AG, Basel 8.8 84.80 % 8.8 0.00 %
The reported dividend income of Helvetia Holding AG represents the dividend paid simultaneously to Helvetia Holding AG by the subsidiaries Helvetia Schweizerische
AG and Helvetia Finance Ltd. from their respective net profits for 2014.
2. Capital increase 3. Dividend income 4. Bonds 5. Treasury shares
The information on payments to and investments of the members of the Board of Directors and the Executive Management required under Art. 663c (3) OR and the Ordinance
CHF 1 300 million vis-à-vis the bond creditors of Helvetia Schweizerische Versicherungsgesellschaft AG. This is associated with (i) the subordinate bond issued in November 2010 as well as with (ii) subordinate bonds in the amount of CHF 1 000 million (two unsecured senior bonds at CHF 225 million and CHF 150 million and two unsecured junior bonds at CHF 400 million and CHF 225 million).
7. Additional information for companies listed on the stock exchange 8. Guarantee and contingent liabilities
Risk management helps to ensure that the fundamental company objectives are achieved and contributes to the effective safeguarding of Helvetia’s equity base. Risk management is part of the systematic risk management process of Helvetia Group and comprises all Group companies.
The risk management process includes all activities related to the systematic assessment of risks. The essential components of this process include the identification, analysis and management of risks, the operational monitoring of the success of the risk management measures, the monitoring of the effectiveness and appropriateness of the risk management measures, and reporting and communication.
The risk management process also puts particular emphasis on the operational risks, which are defined as the risk of losses resulting from the inappropriateness or failure of internal procedures, people and systems, or from external events. Operational risk includes the impact of reputational risks.
Helvetia Holding AG is fully integrated into the risk management process of Helvetia
Group. This Group-wide risk management process and organisation also takes account of the type and scope of the business activities and specific risks of Helvetia Holding AG.
and the monitoring of operational risks in particular are delegated to the Audit Committee. The strategic risks are monitored by the Strategy and Governance Committee.
Directors for Helvetia Group and its Group companies. The Risk Committee supports the
Executive Management in an advisory capacity. It coordinates, monitors and assesses the risk decisions and financing and hedging measures of all business units. The Risk
Management. Other permanent members are the Chief Executive Officer (CEO), the
Chief Financial Officer (CFO), the Chief Investment Officer (CIO), the Head of Group
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 statement is free from material misstatement.
In our opinion, the financial statements for the year ended 31 December 2014 comply with Swiss law and the company’s articles of incorporation.
Markus Deplazes, Head of Customer Service & Non-Life Switzerland considers the integration of the employees in the “new Helvetia” to be a major task: “As an employee of Nationale Suisse, it will be very challenging to become part of a wellfunctioning system and the Helvetia family. A
mutual openness to change and a respectful interaction with one another are required.”
The adjusted equity comprises the statutory equity and the shareholders´ interest in the valuation reserves. The value of the insurance portfolio corresponds to the present value of all expected future statutory earnings after tax from the life insurance portfolio as at the reporting date.
In order to calculate embedded value, various best estimate assumptions are made, notably concerning return on investments, costs, claims development and policyholder profit participation. The key assumptions are listed in the following table. These also include the risk discount rates that are established separately for each country market. Given the high levels of volatility, these rates are partly based on average interest rates, while future bond yields continue to be calculated as of the reference date. The risk discount rate in Switzerland has increased slightly compared to the previous year, thus reflecting the higher return expected by the shareholder as a consequence of the increase in equity yields, whereas it continues to decrease in Italy and
The life units of Nationale Suisse in Switzerland and Italy acquired in the second half of the reporting year and the life business of the former
Basler Austria were only reported at their respective adjusted equity as of the end of 2014 (without specifically taking account of the value of the insurance portfolio or the solvency costs). The life business of Nationale Suisse Belgium is not included because of its planned sale.
Helvetia Group to be appropriate and reasonable and the disclosures on embedded value given below and based on the corresponding assumptions to be in proper form. For the purpose of this report, Deloitte reviewed some of the data provided by Helvetia on a test basis, relying, however, on the financial information published in the financial report.
Yield on real estate newly added adjusted net asset value of the acquisitions included in the capital movements ultimately led to an increase of the embedded value of the life insurance portfolio.
+1 % change to risk discount rate – 9.3 % – 10.5 %
− 1 % change to risk discount rate 11.5 % 12.9 %
− 10 % change to fair value of equities – 2.9 % – 2.4 %
− 10 % change to fair value of real estate – 9.9 % – 8.6 %
Present value of new business premiums (PVNBP) 2 133.4 2 311.2
Value of new business in % APE 6.2 % 7.8 %
Present value of new business premiums (PVNBP) 1 044.4 1 003.6
Value of new business in % PVNBP 0.7 % 0.9 %
Embedded value Embedded value measures the shareholder value of the life insurance portfolio and is made up of
Cash generating unit The smallest identifiable group of a company’s assets that generates cash inflows that are largely independent of cash flows from other assets.
Deferred taxes Deferred taxes arise due to temporary taxable differences between the local tax balance and the IFRS balance.
GRI (Global Reporting Initiative) The Global Reporting Initiative is a not-for-profit organisation. It was founded in 1997 in connection with the United Nations Environment Programme (UNEP). The GRI’s mandate is to develop globally applicable guidelines for sustainability reports.
Gross premiums The premiums written in the financial year before deduction of premiums ceded to reinsurers.
– often do not bear the entire risk alone but pass some of it on to a reinsurer. Like many companies active in direct insurance business, Helvetia also acts as a reinsurer and assumes part of the risk of other primary insurers. These reinsurance transactions are known as indirect business.
Legal quota Legal or contractual obligation to credit the policyholder with a minimum amount of the income or profits from an insurance portfolio in the form of dividends.
Solvenz, Solvenz I, Swiss Solvency Test The term “solvency” refers to the minimum supervisory capital adequacy requirements that must be met by an insurance company. To calculate this, the available capital is compared to the required capital, with the available capital being the equity that is available to cover the required capital.
The required capital is the minimum amount of capital funds which an insurance company needs to ensure that it can always meet its liabilities from insurance policies.
Currently, insurance groups domiciled in Switzerland are subject to two different solvency systems. While the “Solvency I” system, which has been in force for many years, requires sufficient volume-based capital to cover the insurance obligations, the required capital is calculated on a risk basis for the “Swiss Solvency Test” (SST) which entered into force on 1 January 2011.
Helvetia Group Susanne Tengler P.O. Box, CH-9001 St Gall Tel. +41 58 280 57 79 www.helvetia.com investor.relations@helvetia.ch
Helvetia Group Martin Nellen P.O. Box, CH-9001 St Gall Tel. +41 58 280 56 88 www.helvetia.com prinfo@helvetia.ch
Cautionary note regarding forward-looking information This document is made by Helvetia Group and may not be copied, altered, offered, sold or otherwise distributed to any other person by any recipient without the consent of Helvetia Group. Although all reasonable effort has been made to ensure the facts stated herein are accurate and that the opinions contained herein are fair and reasonable, this document is selective in nature and is intended to provide an introduction to, and overview of, the business of Helvetia Group.
Where any information and statistics are quoted from any external source, such information or statistics should not be interpreted as having been adopted or endorsed by Helvetia Group as being accurate.
Helvetia Group on the date of its posting and Helvetia Group assumes no obligation to update such statements unless otherwise required by applicable law.
Group profit for the period after tax 341.5 289.9 333.1 363.8 393.3 of which investment result from Group financial assets and investment property 1 036.5 896.4 1 087.5 1 156.8 1 275.4
Consolidated equity (without preferred securities) 3 157.6 3 377.9 3 750.2 3 831.2 4 963.1
Even in the business world, light and shadow are often found close together. At the end of a very successful financial year, the long-standing Chairman of the Board of Directors, Erich Walser, died unexpectedly on 30 December 2014. Erich Walser shaped the continuing development of Helvetia Group into a successful European all-lines insurer with his great creativity and creative energy for over 35 years – as Chief Executive Officer from 1991 to 2007 and as Chairman of the Board of Directors from 2003. It is no exaggeration to describe Erich Walser as the architect of Helvetia today. We will always honour his memory.
The successful business performance and the acquisitions of Nationale Suisse and Basler Austria has increased Helvetia Group’s investment assets to CHF 48.0 billion (previous year: CHF 39.6 billion). In 2014, Helvetia generated current investment of CHF 993 million. This is equivalent to a direct yield of 2.5 %1. Including the contribution of real estate, the overall performance was an attractive 7.7 %1 and generated a contribution of CHF 2.95 billion, of which CHF 1.28 billion was reported in the income statement (previous year: CHF 1.16 billion).
Following the acquisitions, Helvetia retains a very good capital position. This is also reflected in the Solvency I ratio, which was around 216 % (previous year: 218 %) We believe that the SST ratio as of the end of 2014 will remain within the target range of 150 to 200 % even after the acquisitions. Equity excluding preferred securities increased to CHF 4,963.1 million mainly due to the capital increase in connection with the cash and share offer for Nationale Suisse and the increase in the valuation reserves for investments (previous year: CHF 3,831.2 million). Standard & Poor’s confirmed Helvetia’s A rating following the completion of the acquisition of Nationale Suisse at the end of October 2014 and gave it a stable outlook. The attractive dividend policy will now be continued: we will propose a 2.9 % increase in the dividend to CHF 18.00 per share at the Shareholders’ Meeting.
Helvetia Group can look back at a strategically and operationally successful financial year. The integration of Nationale Suisse and Basler Austria is on track. In the medium and long term, this will result in additional growth opportunities, substantial economies of scale and synergies and an improved risk profile. The newly formed insurance group is thus ideally positioned for sustainable, healthy further development.
Group profit for the period per share in CHF 43.0 40.9 5.1 %
Price of Helvetia registered shares at the reporting date in CHF 474.0 447.5 5.9 %
IFRS earnings of the Group after tax 393.3 363.8 8.1 %
of which investment result from Group financial assets and investment property 1 275.4 1 156.8 10.3 %
Employees 1 For detailed information about calculating the result from the business activities, refer to pages 90/91 in the annual report. 2 Based on the earnings per share (including interest on preferred securities through profit and loss) divided by the average shareholder capital (equity before preferred securities).
Thanks to the takeover of Nationale Suisse and Basler Austria, premiums increased across the group by 10.3 percent in the profitable non-life business (in original currency) to CHF 2,789 million. The two acquisitions in the largest country markets of Switzerland and Austria boosted growth considerably, and premium volumes in the non-life business increased by 14.5 percent and 23.5 percent.
Thanks to Helvetia’s very good profit, the Board of Directors will propose an increase in the dividend to CHF 18.00 at the Shareholders’ Meeting.
Important dates 24 April 2015: Ordinary Shareholders’ Meeting in St Gall 31 August 2015: Publication of half-year financial results for 2015 14 March 2016: Publication of financial results 2015