Contents 4 Key figures 5 Key messages 6 Interview 10 At a glance 13 Customer Journeys
Company profile 28 Group strategy 32 The Helvetia brand 33 Organisation 35 Business activities, segments and market areas 40 Customers and sales 42 New products and innovations 44 Employees 46 Corporate Responsibility 48 Risk and investment management 52 Share and bonds
Individual and flexible solutions “We can reach our advisor at any time. His proposals for solutions to our complex requirements are always convincing and cover every single risk. It is also crucial for us that the insurance cover can be flexibly and individually adjusted to the market value of an art work.”
Tailor-made insurance for an unusual business model “Helvetia has since proved to be extremely flexible and helped develop a tailor-made insurance solution for our unusual business model. We were particularly impressed by the insurance cover for additional costs triggered by business interruptions or power failures. The solution offered by Helvetia is perfectly geared to meet our needs. And when we had to report a claim, Helvetia also proved to be the perfect partner.”
As number three, we already have a strong position in the Swiss market. With the helvetia 20.20 strategy, we are pursuing the ambitious goal of becoming the best Swiss insurer thanks to innovative and customised insurance and pension solutions. Here, we will focus on retail customers as well as small and medium-sized companies.
We extended our partnership of Swiss Ski by four years in 2016. Helvetia has sponsored skiing since the 2005/2006 season and believes in long-term partnerships. This continuity means we are paving the way for successful athletes and thus strengthening identification with the Helvetia brand. Thirty athletes from Switzerland, Germany, Italy and Austria – including four Olympic champions, Dario Cologna, Simon Ammann, Sandro Viletta and Victoria Rebensburg (until 2016) – are sponsored personally.
Improvement of employer attractiveness Well-trained, motivated and innovative employees are an essential element of success in the achievement of the strategic objectives. With a systematic and proactive personnel planning and development programme, Helvetia is paying great attention to this aspect. We are intensifying our efforts to increase our attractiveness as an employer in order to ensure the long-term retention of our current workforce and remain interesting to external specialists. A key element of these efforts is the introduction of a systematic, Group-wide system of talent and succession management that redefines the approach to employee promotion. Employees at all levels are promoted in a targeted manner and supported in their professional development. Special attention is paid to talented employees who could accept even more responsibility in the organisation in the future.
1 The definition of key figures complies with the Global Reporting Initiative (GRI) and includes all employees (permanent and temporary). The employees in training were not included but are disclosed in a separate figure.
3 Progressive HR management with a focus on continual employee development and the well-being of the workforce. Investments in training and further education, health management and work life balance.
Sustainability as a unifying element Helvetia has 6,481 employees who with their input and commitment make a substantial contribution to customer satisfaction. A systematic approach to occupational health management gives employees the opportunity to protect their well-being and prevent stress. For this approach, Helvetia received the “Friendly Work Space” award from Health Promotion Switzerland in 2016.
The structure of the types of investors has shifted since the previous year to include more banks, insurance companies and private individuals and fewer other institutional investors.
Subordinate bond CHF 225 million 4.00 % p.a. 30 years 2014
Company profile Corporate Governance 1.2 Major shareholders We maintain an open and shareholder-friendly strategy in an effort to build up a widely diversified and informed shareholder base. We have a longterm and, in view of the positive development of the Group, very successful relationship with our major pool of shareholders, Patria Genossenschaft (founding partner), Raiffeisen and Vontobel (cooperation partners). On the reporting date, 14,625 (previous year: 13,203) shareholders were registered in the share register of Helvetia Holding. This renewed year-on-year increase in the number of registered shareholders underscores the attractiveness of our stock.
3. Board of Directors See also the diagram and information provided on pages 56 to 61.
Dr Pierin Vincenz has been the Chairman of the Board of Directors since 1 October 2015. The Board of Directors of Helvetia Holding AG is identical to the Boards of Directors of the two subsidiaries, Helvetia Leben and Helvetia Versicherungen. All the members of the Board of Directors have experience and knowledge of a wide variety of fields. They have the requisite expertise to represent their personal opinion in discussions with the Executive Management. Since the Helvetia Group conducts a significant proportion of its business abroad, the Board of Directors also includes citizens of different countries and members who have extensive international experience. Members of the Board of Directors should possess strong personal values (including integrity), specialised financial, business and insurance knowledge, experience in strategic and executive management, the ability to think in a visionary manner, social skills and a belief in sustainability.
The full Board of Directors The Board of Directors convenes as often as business requires, as a rule five to six times a year. Most of its meetings, which usually last half a day, are held at the Group head office in St Gall, and the executive seminar, which usually lasts two days, is generally held at external premises. The Board of Directors is quorate if the majority of its members are present. Its resolutions are carried with a majority of the votes of the members in attendance. Reso- lutions may also be passed by circular letter, which was the case twice in 2016.
Compensation is paid in the form of cash, shares, options, similar instruments or units, benefits in kind or services. The Board of Directors or, if the matter has been delegated to it, the Compensation Committee determines the conditions and deadlines for allocation, exercise and transfer as well as the vesting periods and conditions of expiry, if any. The Board may decide that conditions and deadlines for exercise and transfer as well as vesting periods are shortened or cancelled, payments are made under the assumption that the target values are reached or payments are cancelled if specific events defined in advance should occur, such as a change in control or the termination of an employment or mandate relationship. In doing so, the Board of Directors takes account of the company’s ability to recruit suitable employees on the labour market and to retain these employees.
– Approval of the following total amounts by way of individual voting: a) fixed compensation of the Board of Directors for the period from the current Shareholders’ Meeting to the next Shareholders’ Meeting (prospect- ive); b) fixed compensation of the Executive Management for the period from 1 July following the current Shareholders’ Meeting to 30 June of the next year (prospective); c) variable compensation of the Board of Directors for the past financial year (retrospective); d) variable compensation of the Executive Management for the past financial year (retrospective).
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.
Fixed compensation components The Nomination and Compensation Committee defines the principles on which compensation decisions are based. With regard to the Shareholders’ Meeting that takes place in April and the compensation periods beginning subsequently (Board of Directors: Shareholders’ Meeting to Shareholders’ Meeting; Executive Management: 1 July to 30 June of the following year), the compensation concepts are reviewed by the Nomination and Compensation Committee to ensure that they are still appropriate and in line with the market; a proposal for appropriate adjustments to the total sum is then submitted to the Board of Directors and then to the Shareholders ’ Meeting at which final approval will be granted.
Results-based compensation component (reference value 20 % of fixed compensation): This compensation component based on the annual result is multiplied by the percentage of target achievement, which 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 Management in cash. The amount of the results-based compensation is based on the operating result and the achievement of the budget goals for the relevant financial year with a special consideration of developments in Switzerland.
Long-term results-based compensation component (LTC up to no more than 40 % of fixed compensation ): This compensation component with a longerterm 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 granted to the Executive Management member in the form of a deferred claim to a certain number of shares. The relevant share price is calculated on the basis of the closing price on the date of the meeting of the Nomination and Compensation Committee at which the extent of target achievement is determined. The relevant 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 reporting year and can be attributed to the conduct of the Executive Management member in question. If the person in question leaves the Executive Management, his or her deferred claim lapses as follows: cancellation of all claims for the year in which notice of termination was given, cancellation of one-half of the claims in the first preceding year, and no cancellation of any claims from the second preceding year. This concept establishes a direct link between the members of the Executive Management and the longterm development of the company in two ways: positive or negative share price trends over the three-year period, and the possibility that the number of allocated shares can be reduced retroactively.
As regards fixed compensation, these total amounts refer to different time periods in comparison to the figures given in section II and in reference to financial year 2016: Shareholders’ Meeting to Shareholders ’ Meeting or 1 July to 30 June, respectively, of the year following the Shareholders’ Meeting. These figures are therefore not directly comparable. To provide the reader with a comparison, however, the amounts to be approved are compared to the figures from the same period of the previous year (the amounts approved by the Shareholders’ Meeting and actually paid out).
Total fixed compensation amount for the Board of Directors (prospective) Shareholders’ Meeting to Shareholders’ Meeting
The Board of Directors thus requests approval from the Shareholders’ Meeting for the fixed remuneration for the Executive Management in the total maximum amount of CHF 8,400,000 for the period from 1 July 2017 to 30 June 2018.
The markets in which Helvetia is active generate a volume of USD 750.8 billion, representing 16.5 % of the global market1.
The combination of political uncertainty and strong economic data did not bring about any real shift in monetary policy. The long-awaited rate hike in the US did not come until the end of December, when key interest rates were once again increased slightly. The European Central Bank did not yet choose to follow the US’s lead, which means that the Swiss National Bank cannot yet change its policy and must retain its negative interest rates.
The real estate markets recovered in some per- ipheral countries and they remained stable at a high level in Germany and Switzerland, although it became more difficult to sign new leases outside of large cities. The demand for mortgage loans in Switzerland remains high. Margins are stable, although the introduction of new providers and the return of banks to the market have had a noticeable effect.
The successful integration is also reflected in the achievement of the synergy goals: underlying earnings include realised pre-tax synergies of CHF 118.3 million (financial year 2015: CHF 45.3 million).
Business development The Helvetia Group’s business performance on the prior year (financial year 2015: CHF 439.0 million ).
2 Underlying earnings are adjusted for integration costs as well as amortisation of intangible assets, additional planned depreciation due to the 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 IFRS figures.
Group life premiums increased by 4.7 %. Helvetia continued to pursue its full-range strategy in the reporting period, but maintained its selective underwriting policy with regard to new business. Nevertheless, single premiums increased by 8.2 % year-on-year. This was, however, mainly due to a single transfer of policyholder bonuses into retirement assets, booked as premiums in the first half-year. The regular premiums – which are key to assessing business performance – also increased by CHF 9.8 million or 0.8 %. Sales of products offered by Swisscanto, which Helvetia distributes via cantonal banks, were particularly pleasing. When it comes to these products, Helvetia serves solely as a reinsurer for death and disability.
The decrease in volume in original currency was mainly due to restructuring measures that Helvetia implemented in the non-life portfolios in the Germany, Italy and Spain country markets. These portfolio optimisations were carried out following the acquisition of Nationale Suisse and have now been largely completed. The market-wide decline in the motor vehicle business in Italy also had a negative effect on volume growth.
Annual improvements to IFRS (cycle 2014 – 2016) 1 January 2018
2.4.1 Translation of financial statements prepared in foreign currency 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 “Reserve for 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 145).
Financial report Summary of siginificant accounting policies 2.15.1 Non-life business 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.
Financial report Summary of siginificant accounting policies 2.22 Employee benefits Employee benefits include short-term employee benefits, post-employment benefits, other long-term employee benefits and termination benefits.
Financial report Summary of siginificant accounting policies 2.24 Other liabilities Other liabilities are carried at amortised cost, which is generally equal to the nominal value.
Claims incurred including claims handling costs (non-life) – – – 2 304.3 – 2 404.6 – 151.3 – 271.6 145.9 287.6 – 2 309.7 – 2 388.6
Profit or loss for the period 150.6 149.8 251.2 240.3 – 25.2 – 80.6 0.0 0.0 376.6 309.5
Gains and losses on Group investments (net) 111.5 90.3 19.0 39.4 14.3 – 12.5 – – 144.8 117.2
Cash flow from financing activities (net) – 422.7 85.5 8.5 46.7 405.7 – 20.3 – 156.1 – 170.7 0.0 – 101.4 – 164.6 – 160.2
The goodwill impairment test was based on the following growth and discount rates, assuming a per- petuity: as of 31.12.2016 Goodwill Growth rate
Reserves for investment contracts with descretionary participation features 2 546.7 2 481.6 – – 2 546.7 2 481.6
Due from / due to insurance companies 482.8 611.5 140.3 307.6
Total past due receivables without individual impairment 160.0 166.6 32.2 29.6 14.5 10.5 42.9 33.6
Total that will not be reclassified to income 31.0 – 137.8 – 6.3 28.9 24.7 – 108.9 10.5 Deferred tax assets and liabilities
In addition to the ownership of shares as reported, the active members of the Group Executive Management have deferred claims to a total of 4,929 shares acquired under the LTC programme.
For the majority of the products there is no guaranteed rate for the risk premiums for death and disability or for the cost of premiums. These premiums may therefore be adjusted annually by Helvetia Switzerland. Upon the occurrence of an insured event, the resulting benefits are guaranteed up to the agreed expiry date or for life. 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 interest rate for 2014 and 2015 was 1.75 %. This rate was reduced to 1.25 % for 2016 and to 1 % for the coming year. The interest rate set by Helvetia Group for the non-mandatory component was 1.25 % in 2014 and 2015. This rate was reduced to 0.5 % for 2016 and to 0.25 % for the coming year.
as of 31.12.2016 Callable at any time < 1 year 1 – 5 years 5 – 10 years > 10 years Without maturity Total in CHF million
– On 19 June 2015, Helvetia sold the travel insurance portfolio of its Belgian subsidiary Compagnie Européenne d’Assurance des Marchandises et des Bagages S.A. to Mapfre Asistencia. The profit from the sale of CHF 0.5 million was recognised in other income.
Financial report Holding 1.1 General The 2016 financial statements of Helvetia Holding AG were prepared in accordance with the provisions of the Swiss Code of Obligations (CO) (chapter 32 of the Swiss Code of Obligations). The applied valuation principles comply with the law. The material valuation principles that are not prescribed by law are discussed below.
2. Notes on balance sheet and income statement items 2.1 Investments On the reporting date, Helvetia Holding AG owned the following direct investments: Reported company capital Holding as of
3.5 Ownership interests of members of the Board of Directors and employees Information on the allocation of ownership interests to the members of the Board of Directors and the Executive Management is provided in the Notes to the 2016 consolidated financial statements of the Helvetia Group under chapter 15.
The adjusted equity comprises the statutory equity and the shareholders’ interest in the valuation and fluctuation reserves as well as their share in the available portion of the free bonus reserve. The value of the insurance portfolio corresponds to the present value of all expected future statutory earnings after taxes from the life insurance portfolio as of the reporting date. Solvency costs are the costs of the solvency capital provided by the shareholder and are deducted from the Embedded Value.
Present value of new business premiums (PVNBP) 1 729.0 1 800.1
Value of new business in % APE 12.0 % 8.3 %
Group underlying earnings per share in CHF 47.7 42.1 13.4 %
Group profit for the period (IFRS) per share in CHF 36.1 29.0 24.5 %
of which investment result from Group financial assets and investment property 1 144.4 1 105.6 3.5 %
This document may contain projections or other forwardlooking statements related to Helvetia Group which by their very nature, involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other outcomes described or implied in forward-looking statements will not be achieved. We caution you that a number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include (1) changes in general economic conditions, in particular in the markets in which we operate; (2) the performance of financial markets; (3) changes in interest rates; (4) changes in currency exchange rates; (5) changes in laws and regulations, including accounting policies or practices; (6) risks associated with implementing our business strategies; (7) the frequency, magnitude and general development of insured claim events; (8) the mortality and morbidity experience; (9) policy renewal and lapse rates. We caution you that the foregoing list of important factors is not exclusive; when evaluating forward-looking statements, you should carefully consider the foregoing factors and other uncertainties. All forward-looking statements are based on information available to Helvetia Group on the date of its posting and Helvetia Group assumes no obligation to update such statements unless otherwise required by applicable law.