Helvetia offers life insurance in Switzerland, Italy, Germany, Spain and Austria. The home market of Switzerland is the most important market with 77 % of the business. The product range includes individual products and group life insurance policies. At around 59 % of the Group’s total life volume, occupational pension plans for SMEs represent one of the most important insurance business lines. At 97 %, this business is generated almost exclusively in Switzerland, where Helvetia has established itself as one of the top 3 providers of BVG (Swiss occupational pension system) insurance solutions.
What is your recipe for success? In all of the European units, we work continuously on improving our customer access, the service quality and the interfaces to our partners. We do so with the objective of providing our services in as efficient and customer-oriented manner as possible. Helvetia is known as a reliable partner. We have a strong sales organisation that we equip with innovative elements and consistently align with omni-channelling. Here, we take account of local needs. We put our faith in a combination of traditional, physical sales and innovative sales forms.
We also diversify the investment portfolios via various asset classes and sources of income. We control our investment risk through the careful combination of low-risk assets, such as high-quality bonds and mortgages, and riskier instruments with higher returns, such as real estate, equities, foreign currency bonds and corporate bonds. At the same time, this allows us to generate attractive investment income for our customers and shareholders. Our 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 value of the assets.
Following the successful integration of the acquisitions in 2014 of Nationale Suisse and Basler Austria, we will report the result from the 2018 financial year according to IFRS rather than “underlying earnings” adjusted for acquisition effects. The background to this decision is that, with the exception of ongoing amortisation of bonds to par, the financial statements no longer contain any acquisition effects. To allow for a better assessment of the operating performance, however, we compare the current IFRS annual performance with the underlying earnings of 2017 adjusted for all acquisition effects.
Successful Shareholders’ Meeting in 2018 The Helvetia Group once again presented a very good annual result to the 1,917 shareholders with voting rights attending the ordinary Shareholders’
No changes to the core shareholder base At the end of 2018, Helvetia’s core shareholder Patria Genossenschaft still held 34.1 % of the share capital. Compared to the end of 2017, there were no changes in the core shareholder base. At 65.9 %, the free float was the same as in the previous year. As at 31 December 2018, the following important shareholders were entered in the share register of Helvetia Holding: – Patria Genossenschaft 34.1 %
Meeting. The Shareholders’ Meeting took note of the strong operating performance in challenging market conditions and approved the annual report, financial statements and consolidated financial statements for 2017. Furthermore, in accordance with the Articles of Association and in line with the Ordinance Against Excessive Compensation in Swiss Listed Companies (VegüV), all members of the Board of Directors were proposed for re-election and reappointed individually for a further oneyear term in office. Beat Fellmann, Dr Thomas Schmuckli and Regula Wallimann were elected as new members of the Board of Directors.
IFRS earnings for the period per share in CHF 41.9 39.1
Financial report Board of Directors and executive management, the ability to think in a visionary manner, social skills and a belief in sustainability. They must also have the necessary amount of time at their disposal for the efficient and proper performance of a director’s term of office. As far as the independence of Board members is concerned, we follow the requirements of the Swiss Code of Best Practice for Corporate Governance and also Circular 2017 / 2 Corporate Governance – Insurers issued by FINMA on 7 December 2016. For example, the Board consists of members whose personal and business skills enable them to form an independent opinion and take decisions that are in the best interests of the company. All Board members are non-executive members and no Board member belonged to the Executive Management of the Helvetia Group or any of its Group companies in the three financial years preceding the reporting period. No member of the Board of Directors has any significant business relationships with Helvetia other than as a policyholder. 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.
Fournier the Vice-Chairman of the Board of Directors of the Patria Genossenschaft, Basel, the statutory objectives of which 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.
3.3 Statutory rules regarding the number of activities allowed pursuant to Art. 12 para. 1 (1) VegüV According to Art. 32 (mandates outside the Group) of the Articles of Association ( tia.com/content/dam/os/corporate/web/de/ home/investor-relations/auf-einen-blick/publikationen /unternehmenspublikationen/statuten_2017.
6.2 Statutory quorum The Shareholders’ Meeting is quorate regardless of the number of shareholders in attendance and votes represented by proxy. Unless stipulated otherwise by legal provisions or the Articles of Association, the Shareholders’ Meeting passes resolutions 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 Association, the premature termination of office of more than one member of the Board of Directors, and the liquidation of the company. The exceptions for Patria Genossenschaft as an individual shareholder mentioned in section 6.1 also apply here.
Representatives of the external auditors attend meetings of the AC in an advisory capacity. Copies of the minutes are sent to all members of the Board of Directors. Reports on the activities of the AC are provided at the meetings of the full Board of Directors. In the reporting year, four meetings were held and the external auditors attended all four meetings. Discussions between the external auditors, the Chairwoman of the Board of Directors, the Chairman of the AC, the CEO and the CFO take place annually. Meetings or an exchange of experience with specialists from the areas of finance, risk management, legal and compliance, General Council 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.
1. Compensation paid to the Board of Directors In the reporting year, the BoD members received fixed compensation totalling CHF 2,685,734. The fixed compensation includes all allowances and expenses set out in the compensation regulations as well as the contributions to social insurance schemes (AHV / IV / EO employer contributions). In the previous year, the members of the BoD received fixed remuneration of CHF 3,117,085.
Doris Russi Schurter (Chairwoman) (since 1.1.2018) 724 754 267 556 0 31 703 724 754 299 259
The details of business performance at Group level are as follows: The business volume amounted to CHF 9,073.3 million (financial year 2017: CHF 8,641.3 million). In original currency, this was an increase of 3.9 %. Expressed in Swiss francs, the business volume also increased by 5.0 % thanks to positive ex-
– All country markets reported substantial growth for almost all lines of business
In addition to the Corporate segment (financing companies, Corporate Centre, centrally managed investments (funds) and Group reinsurance), other activities also include the intermediary and advisory business as well as various smaller foreign service companies that cannot be allocated to the life or non-life business.
Total profit from Group financial assets and investment property 155.1 1,310.8
Ongoing amortisation of bonds to par (CHF 2.8 million after tax)
Spain CHF 140.8 million, + 0.5 % in OC – Growth driver: burial insurance policies – Investment-linked insurance solutions contracted due to market-related lower volume for the tranche product relative to the previous year 62 Helvetia Financial Report 2018
Compensating effects: Lower expenses for interest-related strengthening of reserves in Germany and Austria (greatest effect from Germany due to the new calculation method for the additional interest reserve)
Almost all country markets achieved, in some cases, significant improvements relative to the previous year. All units reported a net combined ratio of below 100 %.
Net cost ratio 2018 Net cost ratio 2017 64 Helvetia Financial Report 2018
Purchase of money market instruments – 2 825.5 – 3 156.3
Helvetia Group does not capitalise properties where it acts as tenant in an operating lease relationship.
2.14 Financial liabilities Financial liabilities are initially recognised at fair value. Directly attributable transaction costs are offset, except in the case of financial liabilities at fair value through profit or loss. After initial recognition, financial liabilities are carried at fair value or amortised cost (AC). The financial liability is derecognised when the obligation has been discharged.
This income is measured on the basis of the contractual agreements concluded with customers. Amounts received on behalf of third parties (as agent) are not recognised as income. The income is recorded in the income statement according to the services provided.
Current income on Group investments (net) 63.3 63.5 88.7 85.1 19.7 19.3 37.5 38.4 – – 209.2 206.3
Share of profit or loss of associates 0.0 0.0 1.0 5.2 0.4 – – – 1.4 5.2
The goodwill impairment test was based on the following growth and discount rates, assuming a perpetuity: as of 31.12.2018 Goodwill Growth rate
Investment 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 4.1 million in the reporting year (previous year: CHF 3.9 million).
Gains and losses on investments (net) – 192.9 347.3 – 229.7 144.6 – 422.6 491.9
Minority interests in own funds 258.3 274.1 209.7 195.4 258.3 274.1
Due from agents and brokers 5.1 5.3 6.6 5.4 4.2 3.9 – 0.5 14.7
Unrealised gains and losses (net) as of 31 December 170.5 283.9
The management of the pension funds is under the supervision of the respective boards of trustees. Their responsibilities are set out in the respective pension fund regulations. The pension plans are answerable to the respective local supervisory authorities. In accordance with local regulations, some of these are defined contribution plans, so the benefits do not depend on the final salary. Nevertheless, these plans are also deemed to be defined benefit plans under IFRS, as in cases in which the plan assets no longer cover the pension obligations in accordance with local accounting standards – a socalled funding deficiency of an employee pension plan – restructuring contributions may be levied from the employer.
– The risk and capital report published quarterly and the corresponding monthly analyses support the Risk Committee and risk owners with detailed information.
Most of the products include a premium guarantee, which means that the bases for mortality, disability, interest rates and costs used in the premium calculation are guaranteed. These bases are therefore carefully fixed at the time the insurance policy is concluded. If later developments are better than expected, profits accrue which are partially returned to the customer in the form of a participation feature. The following two important 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 underwritten since mid-1997, and may be adjusted.
In group life insurance, there are long-term interest rate guarantees on provisions for current benefits. The BVG minimum interest rate on the mandatory savings of policyholders is set annually by the Swiss Federal Council. Rising interest rates may also lead to increased policy cancellations in group insurance and thus to losses. Since 2004, no deductions can be made from nominally defined surrender values to take into account the fact that the fair value of the corresponding fixed-income investments may be below the (local) carrying value for contracts that have been part of the insurance portfolio of Helvetia Group for more than five years.
The main market risks to which the Group is exposed are interest rate risk, exchange rate risk and equity price risk. The Group is also exposed to the real estate market through a significant portion of real estate in its investment portfolio. Market risks affect the income statement and both the asset and the liability side of the balance sheet. The Group largely manages its real estate, mortgages and securities itself. External providers mainly manage assets invested in convertible bonds and private debt. Savings accumulated in unit-linked policies are invested in a wide range of own and third-party funds, equities and bonds. The market risks associated with these funds lie with Helvetia Group’s insurance customers.
Financial report Risk management 16.4.2 Share price risk Investments in equities are used to generate long-term surpluses. Investments are made primarily in large-caps traded on the major stock exchanges. Helvetia Group holds a well-diversified portfolio (mainly stocks traded on the exchanges in Switzerland, Europe and the USA). The share of each item of the total portfolio (direct investment) is generally below 6 %. An exception to this are holdings in the diversified real estate investment company “Allreal” (10.8 % of total direct investment in equities). The market risk of the equity portfolio is constantly monitored and, if necessary, reduced by sales or the use of hedging instruments in order to meet the strict internal requirements for risk capacity.
– Counterparty risks from ceded reinsurance: Helvetia Group transfers part of its risk exposure to other companies via ceded reinsurance. If the reinsurer defaults, the Group remains liable for the reinsured receivables. Therefore, the Group periodically reviews the creditworthiness of its reinsurers. To reduce dependence on a single reinsurer, the Group places its reinsurance contracts with a number of first-class companies.
The electorate of Basel-Stadt voted resoundingly in favour of cantonal tax proposal (TP) 17 on 10 February 2019. TP 17 includes a substantial reduction in the cantonal profit tax rate. The Basel government decided on 26 February 2019 to make the change retroactive with effect from 1 January 2019. The resulting reduction in the tax rate will have a positive effect in the double-digit millions on the Helvetia financial statements.
Patria Schweizerische Lebensversicherungs-Gesellschaft AG, St. Gallen Life 100.00 full CHF 0.1
Helvetia Holding AG has issued subordinate and unsecured guarantees of CHF 1.9 billion vis-àvis the bond creditors of Helvetia Schweizerische Versicherungsgesellschaft AG. This is associated with (i) the subordinated bond issued in September 2015 in the amount of CHF 300.0 million and (ii) a subordinated bond issued in October 2014 in the amount of CHF 1 billion (two unsecured senior bonds at CHF 225.0 million and CHF 150.0 million, and two unsecured junior bonds at CHF 400.0 million and CHF 225.0 million) as well as (iii) a subordinated hybrid bond issued in March 2017 with a volume of EUR 500.0 million (CHF 563.5 million).
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those provisions and standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the entity in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession and we have fulfilled our other ethical responsibilities in accordance with these requirements.
Value of new business in % APE 17.7 % 17.3 %
Fair value asset valuation Valuation of assets at fair market value. This is the value at which an asset may be exchanged between two specialist and independent business partners who are willing to enter into a contract. As a rule, this is the price that can be achieved on an active market.
Group profit for the period after tax 393.3 309.5 376.6 402.9 431.0 of which investment result from Group financial assets and investment property 1 275.4 1 105.6 1 144.4 1 348.7 794.4