Further informations for the financial year 2017 you will find on www.helvetia.com/annual-results.
Our capital management is an essential pillar for achieving the Helvetia Group’s long-term growth targets aimed at profitability. The optimisation of capital allocation and income flows has the following objectives: – ensuring compliance with supervisory capital requirements at all times; – securing the capital required to underwrite new business; – optimising the earning power of its equity and the associated dividend potential; – supporting strategic growth; – optimising financial flexibility.
2. Capital structure 2.1 Capital Helvetia Holding AG has share capital of CHF 994,513.70, consisting of 9,945,137 registered shares with a nominal value of CHF 0.10 each. At the year-end price of CHF 548.50 per share, this equals a market capitalisation of CHF 5,454.9 million.
Pro bono appointments Four appointments, in particular President of the Association of Swiss Companies in Germany, VSUD, Basel
3.4 Election and term of office All Board members, the Chairman and the members of the Nomination and Compensation Committee are individually elected at the Shareholders’ Meeting each year in accordance with the provisions of the VegüV. Re-election of existing Board members is possible. The option of re-election ends at the latest with the Ordinary Shareholders’ Meeting in the year in which a Board member turns 70. No Board member will reach the statutory age limit of 70 before or after the 2017 Shareholders ’ Meeting. Following the sale of the shares of Raiffeisen Schweiz AG and the dissolution of the shareholder pool owing to its exit, Dr Patrik Gisel will not stand for re-election at the 2018 Shareholders ’ Meeting. The other Board members and the members of the Nomination and Compensation Committee will stand for re-election. The Board of Directors will now propose to the 2018 Shareholders ’ Meeting that Doris Russi Schurter be elected as Chairwoman of the Board of Directors and that Beat Fellmann, Dr Thomas Schmuckli and Regula Wallimann be elected as new members of the Board of Directors
c) The Investment and Risk Committee (IRC) formulates the investment concept, basic guidelines and investment strategy. It proposes the strategic ranges of asset allocation, approves the investment strategy, supervises the investment activities of the Helvetia Group and decides on investments to the extent that the
Financial report Executive Management 4.1 Members of the Executive Management 4. Executive Management The Executive Management is the highest executive body of the Helvetia Group and is responsible for implementing the strategy adopted by the Board of Directors.
Professional background 1992 – 1995 Consultant and Project Manager at Andersen Consulting; 1995 – 2000 Programme Manager at debis Systemhaus, Stuttgart; 2000 – 2005 Managing Director, Chief Operating Officer at Daimler Chrysler Services Information Technology Ltd., United Kingdom; 2005 – 2006 Chief Information Officer for Europe / Africa / Asia Pacific at Daimler Chrysler Financial Services AG, Berlin; Director ITF / F at Daimler Chrysler AG, Stuttgart; 2009 – 2012 Head of Group Solutions at Zurich Financial Services; 2012 – 2013 Chief Information Officer at Zurich Switzerland; 2013 – 2017 Chief Information Officer, member of the Executive Board of the Helsana Group; in his current position since 1 April 2017
The former variable compensation for the BoD is now converted into fixed compensation and the basic remuneration is increased by this amount.
Balz Hösly (until Shareholders’ Meeting 22.4.2016) 0 33 290 0 9 638 0 42 928
Compensation for Executive Management as at 31 December, in CHF million 2017 2016
Health / accident CHF 348.2 million, + 3.6 % in OC
– Drop in group life business (– 3.5 %) despite very good growth in capital-efficient insurance solutions (Swisscanto) because of a positive special effect in the full insurance product in the previous year
Higher costs due to the acquisition of MoneyPark and DL (Defferrard & Lanz) and planned project investments The lack of the positive tax effects as in the previous year
The extraordinary investment result contributed almost CHF 350 million to the total return. The marked year-on-year increase was chiefly attributable to the pleasing performance posted by equities, which generated an attractive total return – driven by the more favourable equity environment worldwide.
Investments with market risk for the policyholder 7.2 3 651.1 3 089.7
The consolidated financial statements of Helvetia Group were prepared in accordance with the International Financial Reporting Standards (IFRS) and under the historical cost convention with the exception of adjustments resulting from the IFRS requirement to recognise investments at fair value. Fair value measurement methods are explained in section 2.5 (page 80).
Financial report Summary of siginificant accounting policies statement. Goodwill acquired in a business combination is recognised at cost, net of accumulated impairment loss, and is tested annually for impairment. It is carried as an asset in the local currency of the acquired entity and translated at the applicable closing rate on each balance sheet date.
A Liability Adequacy Test (LAT) is applied at each reporting date to examine whether existing reserves are sufficient to cover expected future needs. The reserve increases that are shown by the LAT to be necessary are calculated Group-wide according to standard principles. The LAT is based on ac-
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.
Share of profit or loss of associates 4.5 1.7 0.7 0.3 – – – – – – 5.2 2.0 of which transactions between geographical segments 84.2 80.8 175.0 218.3 48.5 28.5 – 323.9 – 332.6 16.2 5.0 – –
Claims and benefits paid (life) – 3 057.8 – 2 916.8 – 573.6 – 615.0 – – – 9.7 – 12.2 9.7 12.4 – 3 631.4 – 3 531.6
Current income from investment property (net) 241.6 236.3 – – 241.6 236.3
Current income from investments (net) 1 001.4 999.6 14.9 14.2 1 016.3 1 013.8 1 Derivatives comprise current income on derivative financial assets and derivative financial liabilities.
Gains and losses on investments (net) 347.3 144.8 144.6 52.2 491.9 197.0
Realised gains and losses on loans (LAR) incl. money market instruments 27.4 4.8
Maturity profile of contract values Contract value Fair value as of 31.12. < 1 year 1 – 5 years > 5 years 2017 2016 2017 2016 in CHF million
In the Swiss life business, the actuarial reserves increased by CHF 172.9 million due to changes to local actuarial assumptions, in particular assumptions regarding mortality, expected claims for disability and the maximum interest rate for reserves, within the framework of the standard periodic review.
Total assets with market risk for the policyholder 3 689.0 3 115.6
Total liabilities with market risk for the policyholder 3 689.0 3 115.6 9.5 Reinsurance assets as of 31.12. Notes 2017 2016 in CHF million
Helvetia Group does not have interlocking directorates or cross-involvement in the boards of directors of listed companies. With the exception of Patria Genossenschaft, transactions with cooperation partners are not material for Helvetia Group, either as a single transaction or overall. The dividend payment to Patria Genossenschaft in the amount of CHF 71.2 million (previous year: CHF 56.9 million ) and the contribution of CHF 40.0 million (previous year: CHF 45.0 million) from Patria Genossenschaft to Helvetia Schweizerische Lebensversicherungsgesellschaft AG were the only significant transactions in the reporting period.
Within the stipulated parameters, the Board of Directors delegates operational aspects of risk management. For example, the monitoring of the Group’s risk profile and in particular the monitoring of the market, liquidity, counterparty and technical risks are delegated to the Investment and Risk Committee (IRC). The structural aspects of risk management (structure of the risk management organisation and the internal control system) 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.
The Executive Management is responsible for implementing and complying with the strategies, business principles and risk limits defined by the Board of Directors, analysing the risk position of Helvetia Group, capital planning, defining the corresponding control measures and ensuring the necessary external transparency. The topics of risk and capital management are addressed directly in the Executive Management meetings under the direction of the Chief Risk Officer (CRO). The Risk Committee is also managed by the CRO and advises the Executive Management. It coordinates, monitors and assesses the risk decisions and financing and hedging measures of all business units. Other permanent members of the Risk Committee at Group level are the Chief Financial Officer (CFO), Head of Capital Management, Head of Risk and Capital Reporting, Head of Actuarial Life, Head of Portfolio Strategy and Risk Management and Head of Legal and Compliance. Other specialists can be invited to attend Risk Committee meetings when required and depending on the topic. The entire committee meets at least quarterly and it holds regular discussions at monthly meetings. The Risk and Capital Reporting department, which reports to the CRO, ensures that there is sufficient risk and capital transparency: – The Own Risk and Solvency Assessment (ORSA) informs the Executive Management and the Board of Directors of the capitalisation and key risks that affect Helvetia Group (including the risk strategy and management).
Financial report Risk management 16.3.2 Group Life insurance Group life insurance accounts for 60.9 % (previous year: 61.0 %) of the gross premium volume of the life business of Helvetia Group, with 97.0 % of the premiums (previous year: 97.3 %) 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.
Invalidity risk 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 disability and reactivation rate are analysed in detail. However, a 10 % increase in disability would lead to a reserve increase with a negative impact on the income statement of CHF 0.1 million (previous year: CHF 0.1 million), while a decrease in the reactivation rate would have a negative effect of CHF 1.9 million (previous year: CHF 2.1 million).
Financial assets at fair value through profit or loss 263.3 1 343.5 475.0 190.7 5 097.7 7 370.2
16.4.3 Exchange rate risk Most of the Group’s assets, including its investments, as well as most of its liabilities, are denominated in CHF and EUR. Except for the Swiss business, liabilities are largely hedged through investments in matching currencies. For return and liquidity reasons, investments in the Swiss business are made both in CHF-denominated and foreign-currency-denominated assets in order to cover the CHF liabilities. The resulting exchange rate risk is generally largely hedged within the internally defined limits. This is carried out via foreign exchange forward contracts for EUR, USD, GBP and CAD against the Swiss franc.
Maturity schedule of recognised insurance liabilities as of 31.12.2017 < 1 year 1 – 5 years 5 – 10 years > 10 years Without maturity Total in CHF million
Issuer rating Book value total Securities rating Bonds Money market instruments Derivative financial assets Borrower’s note loans Other loans as of 31.12.2017 AAA AA A BBB and lower Not rated in CHF million
1measured by the cretit risk exposure shown in the tables “Credit quality of debt instruments” and “Credit risk from ceded reinsurance”.
– On 10 July 2017 MoneyPark AG, Wollerau acquired 100 % of the mortgage broker Defferrard & Lanz SA based in Lausanne. The merger will allow MoneyPark to tap into the strategically important market in French-speaking Switzerland in a quick and comprehensive manner. The purchase price was CHF 45.5 million, consisting of CHF 43.5 million paid in cash and a purchase price retention arrangement of CHF 2.0 million, due within the next two years, connected to the retention of the key employees in the company.
The goodwill represents future growth potential from intermediary business in the western Swiss market and is allocated to the “Switzerland” segment. There is expected to be nothing tax-deductible from the goodwill.
VP SICAV Helvetia Fund International Bonds Other 100.00 full EUR –
Effective interest method Allocates the difference between the cost price and redemption amount (premium discount) over the expected life of the corresponding asset using the present value method, thus achieving a consistent interest rate.
Equity valuation Balance sheet practice for measurement of holdings in associated companies. The valuation of the holding in the balance sheet corresponds to the shareholders’ equity in this company held by the Group. In the context of ongoing evaluation, this valuation is projected forward to take account of changes in proportional shareholders’ equity, while allocating the proportional annual earnings to the Group results.
Reinsurer Insurance company that assumes part of the risks entered into by a primary insurer.
Helvetia Group Alessandra Albisetti Szalay Investor Relations Coordinator P. O. Box, CH -9011 St Gall www.helvetia.com alessandra.albisetti@helvetia.ch
N e w b u si n e ss m a rg in o f
Fit for the future  Agile and efficient  Innovative and digital  Customer-centric through combination of traditional strengths and utilisation of new opportunities
 Customers can fully satisfy their needs in a simple and convenient manner
In addition to traditional non-life (motor vehicle, property, liability) and personal (accident and health) insurance cover, Helvetia’s Swiss and European non-life product portfolio also includes special insurance policies such as transport, engineering and art insurance. These are consolidated together with the Active Reinsurance business in the Specialty Lines segment.
The Specialty Markets segment pursues a selective niche strategy, thus achieving a strong market position and making a corresponding profit contribution. It also contributes to the Group’s diversification. Specialty Markets comprises three important parts: The “Specialty Lines Switzerland / International” market unit bundles the engineering (technical insurance), marine (transport) and art business lines in Switzerland as well as in the international markets such as Asia or Latin America. The France market unit acts as a focussed transport insurance specialist and holds a strong position as the number two on the market. Active Reinsurance, which is also assigned to the Specialty Markets segment, stands out as a niche provider due to its mostly long-term and outstanding business relationships, a strict underwriting policy and a high level of sector diversification.
 highly effective sales network with 11 regional and local commercial offices
Helvetia Art Prize The Helvetia Art Prize is an impor- tant badge of distinction and leg-up for the up-and-coming generation of artists.
On the one hand, our efforts to ensure a pleasant working environment have been recognised with the “Friendly Workspace” label. On the other, we received the HR Excellence Award for the Innovation of the Year at the end of 2017 (see box on page 41).
In 2018, Helvetia wants to provide its employees with even greater support in their transformation process. In particular, our managers should be enabled to set an example with their agility, innovation and customer focus within their own organisational units and also have the opportunity to anchor these qualities there. Here, we are aware that a change of culture takes time and energy and does not happen from one day to the next.