Annual Report • Apr 30, 2008
Annual Report
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| Page | 4 | Switzerland, St.Gallen – 2.16 p.m. |
|---|---|---|
| Page | 11 | Switzerland, Basel – 2.30 p.m. |
| Page | 15 | Austria, Vienna – 2.21 p.m. |
| Page | 25 | Germany, Frankfurt – 2.26 p.m. |
| Page | 40 | Italy, Milan – 2.22 p.m. |
| Pages 44/45 | France, Paris – 2.27 p.m. | |
| Page | 53 | Spain, Seville – 2.21 p.m. |
| Page | 59 | Austria, Vienna – 2.15 p.m. |
| Page | 67 | France, Paris – 2.16 p.m. |
| Page | 68 | Germany, Frankfurt – 2.23 p.m. |
| Page | 73 | Switzerland, Basel – 2.18 p.m. |
| Page | 77 | Italy, Milan – 2.28 p.m. |
| Page | 80 | Switzerland, St.Gallen – 2.28 p.m. |
| Page | 193 | Spain, Seville – 2.22 p.m. |
| At a glance | 5 |
|---|---|
| The financial year 2007 | 6 |
| Group strategy | 8 |
| Group structure | 10 |
| Interview with Erich Walser | |
| and Stefan Loacker | 12 |
| The Board of Directors | 16 |
| Executive Management | 20 |
| Corporate governance | 26 |
| Spotlight | 39 |
| Human resources management | 41 |
| Group results | 46 |
| Investment business | 51 |
| Market performance | 54 |
| Embedded Value | 70 |
| The share | 74 |
| Our commitment to the environment | 78 |
| Corporate responsibility | 79 |
| Financial statements | 81 |
|---|---|
| Glossary | 194 |
| Important addresses | 198 |
|---|---|
| Historical overview | 200 |
"Same time, different places". This is the theme for the photos used in this year's Annual Report. For the 150th anniversary we sent two photographers to every "Helvetia country" and to the Head Office of Helvetia Group to take pictures of employees during their working day.
Switzerland, St.Gallen – 2.16 p.m. Mario Lutz, Head Apprentice Training Programmes Switzerland, discussing work issues with Jasmin Christen, Assistant Apprentice Training Programmes Switzerland.
| Key share data Helvetia Holding AG | 2007 | 2006 | Change |
|---|---|---|---|
| Group profit for the period per share in CHF | 46.7 | 49.3 | –5.3% |
| Consolidated equity per share in CHF | 332.1 | 319.1 | 4.1% |
| Year-end price of Helvetia registered share in CHF | 407.0 | 401.5 | 1.4% |
| Market capitalisation at year-end price in CHF million | 3 521.7 | 3 474.1 | 1.4% |
| Price/earnings ratio | 8.7 | 8.1 | |
| Dividend per share1 in CHF |
15.00 | 13.50 | 11.1% |
| Reduction of the par value per share1 in CHF |
9.90 | – | 100.0% |
| Number of shares issued | 8 652 875 | 8 652 875 | |
| 1 Based on the proposal made at the Shareholders' Meeting |
2007 2006
| Life in CHF million | 2007 | 2006 | Change |
|---|---|---|---|
| Embedded value total | 2 223.8 | 1 881.7 | 18.2% |
| – of which value of new business | 32.3 | 21.7 | 48.8% |
| Non-life (%) | 2007 | 2006 | Change |
| Funding ratio | 152.3% | 154.6% | |
| Combined ratio (gross) | 94.9% | 93.2% | |
| Combined ratio (net) | 94.5% | 94.1% |
Consolidated equity 2 850.6 2 738.4 4.1%
Return on equity (%) 14.4% 16.2%
| Investments (%) | 2007 | 2006 | Change |
|---|---|---|---|
| Direct yield | 3.3% | 3.1% | |
| Investment performance | 2.4% | 3.1% | |
| Employees | 2007 | 2006 | Change |
| Helvetia Group total | 4 607 | 4 595 | 0.2% |
| – of which in Switzerland | 2 262 | 2 239 | 1.0% |
Key data
| 2007 | 2006 | Change |
|---|---|---|
| 5 488.9 | 5 255.7 | 4.4% |
| 2 893.9 | 2 832.4 | 2.2% |
| 2 595.0 | 2 423.3 | 7.1% |
| 1 040.0 | 1 109.3 | –6.2% |
| 505.5 | 562.2 | –10.1% |
| 190.6 | 184.6 | 3.3% |
| 286.5 | 321.6 | –10.9% |
| 28.4 | 56.0 | –49.3% |
| 402.0 | 423.8 | –5.1% |
| 2007 | 2006 | Change |
| 29 381.5 | 28 927.7 | 1.6% |
| 25 924.7 | 25 094.6 | 3.3% |
Ladies and Gentlemen,
Helvetia Group produced inaconvincing performance in the 2007 financial year. The annual profit of CHF 402.0 million represents the second-best result in Helvetia's 150-year history. This is even more remarkable as the market environment in 2007 was very challenging. The past business year was shaped by substantial major claims, stronger competition in the insurance business and much volatility on financial markets.
However, Helvetia Group's earning power is strongly anchored: we posted a good non-life result, the life result improved from an already high level, and the investment result was excellent once again. All the Group's business units contributed at least double-digit millions of francs to this outstanding result, with the country markets Switzerland, Spain and Germany making the largest contributions.
Our consistent focus on quality once again proved to be one of Helvetia Group's biggest strengths. Helvetia managed to maintain its risk-adequate underwriting policy even in a very competitive market, and thus maintain the quality of the country market portfolios at a high level.
Thanks to its prudent investment strategy and a uniform approach to risk management, Helvetia Group was again able to post strong capital gains, thereby also confirming its requirement to maintain quality on investments, which retain their high credit ratings. Helvetia has no direct investments in subprime-related instruments and is consequently not directly affected by the US real-estate crisis.
Helvetia posted a record result for its life business of CHF 190.6 million, which represents a 3.3% improvement on the prior year. The Group generated most of this sound result in the Swiss domestic market, but the foreign markets also made a valuable contribution. In view of the difficult market environment, the 2.2% growth recorded in the life segment is satisfactory, while the 13.1% increase in new business is very gratifying. The country markets Germany and Spain in particular were very successful and achieved currency-adjusted growth rates of 35.0% and 12.4%, respectively.
In the non-life segment Helvetia could not repeat the record performance of 2006, but the profit of CHF 286.5 million is still very high. All in all, the net combined ratio of 94.5% confirms that our insurance business is still extremely profitable. As expected, the combined ratio quickly recovered from the three-digit ratio reported at the end of the first half year. The efficiency of our sales channels means that Helvetia's non-life business can maintain its healthy growth momentum, even in a market that has become more challenging. In 2007, premium volumes were up by 7.1%.
Thanks to Helvetia's sustained strong earning power, the Group's equity rose once more to CHF 2.85 billion (previous year: CHF 2.74 billion), ensuring full compliance with solvency requirements. As part of the active management of our capital base, we want our shareholders to share in our success. The Shareholders' Meeting will therefore be requested to approve an increase in the dividend to CHF 15.00 per share. In addition, we propose making our shareholders a oneoff anniversary payment of CHF 85.7 million or CHF 9.90 per share in the form ofareduction of the par value. These measures live up to our principle of active capital management and at the
same time improve the conditions for attractive future returns on equity.
We can be satisfied with our performance in the 2007 financial year. Our objective is to create sustained added value for our shareholders, customers and employees.
We are aiming to achieve an attractive return on equity of around 15% in the medium term. With a return on equity of 14.4% and substantially more equity, our 2007 results confirm that we are well on our way to achieving this goal. We are also striving for healthy growth in our insurance markets, focusing on organic growth supplemented by strategically sensible acquisitions in our existing markets.
150 years of experience and our excellent shape lay a strong foundation for an ambitious future.
Erich Walser Chairman of the Board of Directors
Stefan Loacker Chief Executive Officer
The year 2007 was the first year of the new strategy period running from 2007 to 2010 for Helvetia Group. As such, the focus fell on the consistent launch and implementation of the important initiatives and the first confirmation of the course the Group has taken. Under the new management, the Group's strategic focus was strengthened by continuously developing the strategy and highlighting the most important aspects in its implementation.
Helvetia is a distinctive and unique company in its approach to and understanding of business as well as regards its corporate culture.
We do not want to offer "everything for everybody", but are sharply focused in all our country markets: a provider of insurance products to discerning private and corporate customers in the best of the Swiss tradition. We distinguish ourselves by providing our customers and partners with individual, personal and competent services and striving to offer them the best and most straightforward solutions possible.
We are convinced that we are creating sustained added value for our shareholders by continuing to consistently implement our strategy.
The Helvetia Group is in fine health. This fact coupled with the strategic programmes we have initiated enables us to set ambitious financial targets:
Even though the market environment is likely to become ever more difficult in the coming years, our position in our country markets and as a group means that we are well equipped to continue to follow a strategy that focuses on healthy growth. At country level we want to grow by making our sales systems more dynamic, exploiting new cooperation opportunities, and consistently renewing and expanding our range of products. Improvements in the efficiency and efficacy of the sales systems must be targeted. A cross-national Group project has been launched to support the business units in this endeavour. The objective is to transfer successful sales models or practices from one country market to another. In Switzerland, our successful collaboration with the Raiffeisen Group needs to be refined and optimised and our collaboration with the cantonal banks put on a sustained foundation.
In the medium to long term, the life insurance business outside of Switzerland promises special opportunities for growth. In Germany, Austria, Italy and Spain, the shift from government pension schemes to personal retirement provision and occupational pension schemes set up by employers harbours much potential. With our "Helvetia" brand and our expertise in the life insurance sector, we can and will profit from this trend. To underline its strategic thrust in the life business, the Group has launched a cross-national project designed to trigger additional growth momentum in unit-linked life insurance business in the local markets with new products and new sales models.
An active acquisition strategy allows us to investigate and realise strategic and financially auspicious opportunities quickly. The focus falls on complementary acquisitions within the Group's existing markets, in particular also in an effort to improve our access to the markets and the customers. We do not plan to expand into new geographic markets during the next few years.
In the past few years Helvetia has substantially improved its operating performance. As in previous years, this had a positive effect on our result for the year under review. To ensure that the Group can hold its own in increasingly competitive market conditions in future, we plan to improve our cost ratios. Consistent exploitation of the potential for efficiency gains in the country units is covered by a Group-wide initiative investigating and, where feasible, making the best use of crossborder synergies.
In addition to our spotless reputation and motivated and skilled employees, the equity capital of the company is one of our most important resources. This resource must therefore be managed carefully and efficiently. To this end we will continue to systematically monitor and govern the allocation of capital in our business portfolio.
Helvetia is well on course with its clearly defined strategic programmes after the first year of the new strategy period. The expectations of our most important stakeholder groups give us the impetus to do our very best. This motivation and our confidence in our strengths and skills will also ensure our continued success in the future.
For minority interests, see pages 185 and 186 (Notes to the consolidated financial statements of Helvetia Group). Status: March 2008
France, Paris – 2.27 p.m. Jeanne Castaing-Donat, Head Human Resources and Services, on her way to her English course at 'La Défense', Paris.
Interview with Erich Walser, Chairman of the Board of Directors, and Stefan Loacker, Chief Executive Officer
Erich Walser: We achieved excellent results in spite of some major loss events and much volatility in the financial markets. The course taken by the Group as part of its 'Strategy 2010' has been proven. Our customer orientation, consistent focus on quality and avoidance of risks that cannot be calculated have once again been rewarded by profitable growth in most segments. The good annual result puts the Board of Directors in a position to propose another generous dividend to the Shareholders' Meeting. With a proposed dividend of CHF 15.00 and a reduction of the par value of our shares in the form ofaone-off anniversary payment, we are confirming our continuous income-oriented distribution policy and proving to our shareholders that Helvetia is a worthwhile long-term investment.
Stefan Loacker: Overall, I am satisfied with our earnings performance, especially as we once again had to cope with extraordinary claims in 2007. The Group has a broad earning base and is on very solid foundations.
We managed to reach most of our growth targets in our home market, but our other European markets are even more dynamic. In Germany and Spain in particular we posted above-average growth, with the life business achieving doubledigit growth rates. This illustrates once again that our market portfolio has healthy growth potential, also in the medium and long term, and that our 'Helvetia' brand with its convincing insurance and pension products is well positioned to successfully exploit these markets.
Stefan Loacker: In some instances, a competitive environment causes risk awareness to decrease while pressure on premiums grows. Helvetia is continuing its healthy and quality-centric underwriting policy. We want to be a reliable partner for our customers and will only accept risks that we can control. A short-term price offensive followed by a cleaning-up period is not part of our business policy. We continue to place our faith in our traditional strengths: high quality, distribution strength based on closeness to our customers, and professional and fast claims handling processes. Efficiency gains and cost optimisation enable us to go on offering attractive products to our customers and to earn sustainable profits for our shareholders.
Erich Walser: Key indicators such as return on equity and the combined ratio point towards a healthy and profitable company. This, of course, is good news for our shareholders, who, together with our customers, are the focus of our commitment. The determination and skills of our management team and our employees also convince me that we are equipped to meet all future challenges.
Erich Walser: We have certainly proved that we are doing the right thing in remaining independent. Helvetia Group is a European company rich in tradition with Swiss roots that has consistently proven its successful business policy. We have the required size to inspire confidence on the market, but we remain close to our customers. Helvetia is listed on the stock exchange, has a stable Standard & Poor's rating, and remains an interesting investment for investors with a long-term investment horizon. We are not only willing but also able to continue to operate in the market independently and successfully. The successful change in top management, which was nothing less than a generation change, also strengthened our position.
Stefan Loacker: Helvetia Group builds on its international orientation to exploit the growth potential in the European insurance market, but focuses its
efforts in this regard. We will speed up growth in the pension business by progressively expanding our sales channels in the country markets and further developing our attractive international range of products. In the non-life segment we want to put the earning power already achieved on a sustained footing. Cost efficiency and sales productivity will play a key role in these endeavours.
Stefan Loacker: It is really very special being part of a company that has been in business successfully for so long. I combine this with the knowledge that I am responsible for ensuring that Helvetia has a prosperous future. And of course I am very happy that I will be able to celebrate this very special anniversary with our shareholders, customers, employees and interested members of the public. Over all this time Helvetia has enjoyed an excellent reputation – an asset which all employees will continue to protect on behalf of our customers and shareholders and in strict compliance with our values of "trust", "dynamism" and "enthusiasm".
Erich Walser: I am proud of Helvetia and grateful to everybody who helped bring Helvetia to where it is today. Over the past 150 years we have grown from various Swiss and foreign companies into a successful insurance group. Our history has been shaped by permanent change. We were able to safeguard our identity and success by keeping a balance between our pursuit of security and our need for entrepreneurial freedom.
However, even 150 years of success do not guarantee a successful future. This is why I am happy that Helvetia can celebrate its anniversary while it is in such good shape. I know that the Group is in the hands of a committed management team and motivated employees, all of whom I would like to thank sincerely.Iwould also like to thank our customers and business partners who gave us a chance to prove our service efficiency as well as our shareholders who have given us their confidence.
This interview was conducted by Martin Nellen, Head of Corporate Communications and Brand Management at Helvetia Group.
Austria, Vienna – 2.21 p.m. Susanne Bleim, member of the Marketing team, talking in the Piazza to Thomas Stellfeld, ZVO/EDV Sales Systems.
The Board of Directors of Helvetia Holding AG serves as the company's highest executive body. It is responsible for the overall management and strategic direction of the Group, and appoints and oversees the Executive Management. The Board of Directors currently consists of nine members. In a bid to exploit the specific expertise of the individual Board members and ensure that their know-how is brought into the decision-making process, various committees have been set up. In the Strategy and Governance Committee, the Compensation Committee, the Audit Committee and the Investment and Risk Committee, Helvetia has at its disposal four Board committees designed to ensure effective corporate control and supervision. The committees mostly do preparatory work. The areas where they have the power to take decisions are set out in Appendix I of the organisation regulations: "www.helvetia.com/en/gruppe/governance".
The terms of office of the individual Board members have been organised to ensure that one-third of the seats are up for election or reelection every year. The term of office of the individual members is determined on election and may not exceed three years, though reelection is permitted. Elections and re-elections take place separately.
The terms of office of Silvio Borner, Ueli Forster and Olivier Vodoz will end at the 2008 Shareholders' Meeting. Silvio Borner will stand for re-election, but the other two Board members have resigned with effect from the 2008 Shareholders' Meeting.
Ueli Forster has been on the board of the former Helvetia since 1984 and the board of the merged company (after the merger with Patria) since 1996, where he made an important contribution with his great store of political and business knowledge. He is well versed in the intricacies and challenges of the insurance business in general and Helvetia in particular. His commitment to the company and dedication to the Board of Directors in his role as Vice-Chairman and as a member of various committees as well as Lead Director during the time that Erich Walser served both as chairman of the Board and CEO were exemplary.
Olivier Vodoz is also a politician and businessman. Thanks to his legal expertise and many international functions, he made an important contribution to Helvetia as a Board member and a member of the Audit Committee. The Board of Directors would like to express its sincere thanks to these two retiring members for their much valued contribution.
| Office | Joined | Current term expires |
SGC | Committee memberships CC1 |
IRC | AC | |
|---|---|---|---|---|---|---|---|
| Erich Walser | Chairman (also CEO until August 2007) |
2001 | 2010 | •• | + | • | + |
| Ueli Forster | Vice-Chairman (Lead Director until August 2007) |
1996 | 2008 | • | • | • | |
| Silvio Borner | Vice-Chairman | 1996 | 2008 | • | •• | ||
| Hans-Jürg Bernet | Member | 2006 | 2009 | • | |||
| Christoph Lechner | Member | 2006 | 2010 | • | |||
| John Martin Manser | Member | 1996 | 2009 | • | •• | ||
| Pierin Vincenz | Member | 2000 | 2009 | • | • | ||
| Olivier Vodoz | Member | 2001 | 2008 | • | • | ||
| Urs Widmer | Member | 2005 | 2010 | •• |
• SGC = Strategy and Governance Committee
• CC = Compensation Committee1
• IRC = Investment and Risk Committee
• AC = Audit Committee
1 Previously the Nomination and Compensation Committee. Nominations are now handled by the Strategy and Governance Committee.
Secretary of the Board of Directors: Thomas Oesch, Dr. iur., lawyer
a Place of residence, nationality
b Education, title
c Professional background, executive responsibilities
d Significant business relationships, mandates, official functions, political functions
The Executive Management is the highest executive body of Helvetia Group and is responsible for implementing the strategy adopted by the Board of Directors. The organisational structure of the Executive Management is geared to the value chain and the management of the operating business units. Key functions such as the control of financial operations, investment business, Group reinsurance and elements of risk and personnel management are centralised, making it easier to pool knowledge and resources. This management structure–with international, functional responsibilities – is extremely effective and it enables rapid decision-making, enhances transparency and avoids duplication.
At the end of August 2007 Erich Walser stepped down from his position as CEO of Helvetia Group after 16 years at the helm of the Group. Erich Walser remains closely associated with Helvetia in his position as Chairman of the Board of Directors where he makes sure that the successful strategy adopted by the Group is consistently continued. He was followed as CEO of Helvetia Group by Stefan Loacker, who took up this function on 1 September 2007. Stefan Loacker held various management functions at Helvetia during the past ten years and is totally conversant with the company and its operations, so he will ensure the company's solidity and continuity.
Roland Geissmann retired from his position as CFO on 30 June 2007 at his own request. He joined the former Patria in 1983. He was CFO and Deputy Chief Executive Officer since 1986, first in the Executive Management of Patria and then in the present Helvetia Group. Paul Norton took over as CFO and member of the Executive Management of Helvetia Group on 1 July 2007.
Helvetia's top management team gained two proven insurance professionals in the persons of Stefan Loacker and Paul Norton. Their appointments also marked the completion of a generation change at the top of Helvetia Group that has been long in the planning.
After the change in Group management, the remit of the Finance department was reviewed. It was reorganised and two new departments were set up for the country market Switzerland. Beat Müller, former Chief Actuary Switzerland, took over as Head of the Actuarial/ALM department. Andreas Bolzern, the former Head of Accounting, took over as CFO Switzerland. They were both appointed members of the Executive Management Switzerland. All these changes took effect on 1 September 2007.
Burkhard Gantenbein succeeded Stefan Loacker as CEO Austria on 1 June 2007. He was on the board of a large Austrian insurance company for several years and is an expert in the Austrian insurance market.
In Italy, Michele Colio took over as Head of Sales in mid-December 2007 and is a member of the Executive Management.
We would like to take this opportunity to congratulate all the new members of the Executive Management on their appointment and wish them continued success for the future.
The country market France under the successful management of Alain Tintelin which previously reported to the Head of Finance has been reporting directly to the Chairman of the Group Executive Management, Stefan Loacker, since 1 July 2007. Central brand management has been added to the remit of the Corporate Communications department and the new department is now called Corporate Communications and Brand Management. In order to do justice to the importance of this area, the department head now also reports directly to the Group CEO.
* Member of Group Executive Management as at March 2008
Erich Walser (1947)
2003 Member of Group Executive Management in current position with various mandates for subsidiaries of Helvetia Group in Switzerland;
e in particular member of the boards of trustees of the pension funds of Helvetia Versicherungen; Vice-Chairman of the Helvetia Patria Jeunesse Foundation; Vice-Chairman of the Swisscanto Vested Benefits Foundation and the Swisscanto Supra Joint Foundation of the Cantonal Banks; member of the board of directors of Swisscanto Verwaltungs AG, Basel; member of the board of directors of Coop Rechtsschutz AG, Aarau and two other board mandates at non-listed companies and three board of trustee mandates.
1995 General Manager for Germany and Chairman of Helvetia Leben and Helvetia International, D-Frankfurt/Main;
since 1998 with the Helvetia Patria Group in current position;
e in particular member of the Chairman's and Professional Committee for Property Insurance and Chairman of the Legal Committee of the German Insurance Association, D-Berlin; member of the Insurance Advisory Council of the Federal Financial Supervisory Authority, D-Bonn; representative of the Hesse State Government for the insurance industry; Honorary Consul in Germany of the Republic of Ecuador in D-Frankfurt/Main.
Germany, Frankfurt–2.26 p.m. Ralf Meister ataproject commission meeting.
Helvetia wants to meet the demanding legal and ethical expectations of all stakeholders by providing comprehensive and transparent reporting and responsible and value-oriented corporate governance, to the best of its knowledge and in good faith. The main aims are to further strengthen confidence in Helvetia Group, to safeguard the interests of our shareholders, and to sustainably enhance the value of the Group. We ensure that the principles of good corporate governance are consistently implemented and continually optimised throughout the Group.
For the Board of Directors, Executive Management and all employees of Helvetia, corporate governance is an ongoing process that is periodically reviewed and adapted in line with new developments, findings and requirements. The appointment of a "Corporate Governance Officer" underlines the Group's willingness and efforts to practice proper corporate governance. Good corporate governance can only be truly effective if it is constantly oriented to the Group's strategy and positioning. For more information, please refer to pages 8 and 9.
With this strategic focus, Helvetia wants to comply with the applicable standards of the Swiss Code of Best Practice for Corporate Governance and the SWX Swiss Exchange Guidelines concerning Information on Corporate Governance dated 1.7.2002, including appendices. The comments concerning our corporate governance principles therefore follow the order of content of the above Guidelines. Important information can also be found in Note 15 to the financial statements, 'Related party transactions', on pages 152 to 156. If relevant information is provided elsewhere in the Annual Report or in other documents, reference is made to the location or document concerned. Important documents such as the articles of association and the organisation regulations with appendices have been published on our website www.helvetia.com/en/gruppe/ governance, which also contains plenty of additional interesting and up-to-date information.
Helvetia is an internationally active Swiss all-lines insurance group that focuses primarily on central and southern Europe. The parent company, Helvetia Holding AG, is organised in accordance with Swiss law. The management structure is shown on page 21. The organisational structure is intended to create the best possible legal, financial, fiscal and regulatory framework and to ensure smooth, efficient and flexible business operations.
The legal structure of Helvetia Group (including investments in associates) is shown on page 10.
Helvetia Holding AG has its head office in St. Gallen and is listed on the SWX Swiss Exchange in Zurich: security no./ticker 1 227 168/HELN. Key data for investors is given on pages 74 to 76 under 'Investor information'.
Helvetia Holding AG is the only listed company within the Group. The Group's subsidiaries included in the scope of consolidation are listed on pages 185 and 186. Detailed reports on the main subsidiaries – Helvetia Schweizerische Versicherungsgesellschaft AG, St. Gallen (Helvetia Versicherungen), and Helvetia Schweizerische Lebensversicherungsgesellschaft AG, Basel (Helvetia Leben) – can be found on pages 54 to 56, and in the Notes on page 190.
The controlled opening of the Helvetia Holding AG shareholder base was initiated in 2000. In 2002, the holdings of the shareholder pool were reduced in a regrouping process from 50.9% to 45%. In 2004 these were reduced again to 40% following a share capital increase and, by the end of 2006, the holdings were reduced to 37.8%. The aim behind these and other measures was (and remains) to underscore our policy of increasing the volume of tradeable shares so that other investors with a long-term investment horizon can hold a stake in Helvetia Holding AG. As of the reporting date, the following major or otherwise notable holdings were entered in the share register of Helvetia Holding AG:
The pool agreement strengthens and promotes Helvetia's strategic focus on co-operation in areas outside its core business (insurance), and supports the activities of the Group in crucial areas such as sales. It unites the co-operation partners of Helvetia Group in their capacity as long-term investors with a strategic focus who share a common interest in ensuring that Helvetia remains independent and self-sufficient in its relationships with third parties as well as pool members, and is able to continue to develop going into the future in accordance with its adopted strategy and without undesirable negative influences. Pool members may only sell their holdings of Helvetia shares with the consent of the other members, who also enjoy the right of first refusal at market conditions. Beyond the scope of normal co-operation activities relating to consulting and the sale of financial, insurance and asset management products and services – in each case at market conditions – there are no significant business relationships between pool members and Helvetia Group.
b) In view of the sound and close business relationship we have maintained for many years – and wish to continue to maintain – with Münchener Rückversicherungs-Gesellschaft (Munich Re), Munich, a holding of 8.2% has been agreed with this company. If Munich Re should decide to sell any of these shares, Helvetia may, under certain conditions, acquire them itself at market conditions or nominate a third-party buyer.
c) The Bâloise Group, Basel, has disclosed a holding of 4.0% in Helvetia Group but is only registered for 3.1%.
d) The Pension Fund of Helvetia Versicherungen holds 2.4% of the shares of Helvetia Holding AG. e) Helvetia Beteiligungen AG, St. Gallen, holds 0.8% of Helvetia shares classified as 'treasury shares'.
There are no cross-holdings that exceed 3% of the capital or voting rights.
The share capital of Helvetia Holding AG amounts to CHF 86,528,750.
The share capital can be increased by a maximum of CHF 12,979,320 by issuing a maximum of 1,297,932 registered shares with a nominal value of CHF 10.00 each which must be fully paid up. The conditions for such a share capital increase are set out in Art. 3 bis of the articles of association.
In 2001, the share capital was reduced by CHF 16,492,980 to CHF 65,971,920 by a reduction in the nominal share value from CHF 50.00 to CHF 40.00 and a share split at the ratio of 1:4 to CHF 10.00 per share.
In 2002, the share capital was reduced by 4.61% to CHF 62,930,000 through a share buyback programme and the cancellation of shares amounting to CHF 3,041,920.
In December 2004, an approved share capital increase of CHF 23,598,750 was effected 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.
In 2007, conditional share capital was introduced: see section 2.2.
Changes in equity are presented on pages 86 and 87, those for the 2005 financial year are presented on page 140 et seq. of the Annual Report 2005, and those for 2006 are presented on page 136 et seq. of the Annual Report 2006.
The share capital comprises 8,652,875 fully paidup registered shares with voting and dividend rights with a nominal value of CHF 10.00 each. There are no preferential rights, participation certificates or dividend-right certificates. For more details concerning the Helvetia share, please refer to pages 74 to 76.
The Board of Directors may refuse to approve registration with voting rights if an individual should 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 year under review, 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 association.
Any amendment by the Shareholders' Meeting to the statutory restriction of transferability referred to above requires a two-thirds majority of represented votes.
Helvetia Group issued a convertible bond via Helvetia Finance Ltd, Jersey, which was redeemed as of 6.6.2005 (conditions, see Annual Report 2004). No convertible bonds have been outstanding since this date.
b) Options: Helvetia Group has not issued any options.
c) Employee options:
The employee share option programme was concluded as of the end of 2002, and expired at the end of October 2005.
See also the diagram and information provided on pages 16 to 19.
The Board of Directors of Helvetia Holding AG consists of nine members. It is identical to the boards of directors of the two subsidiaries, Helvetia Leben and Helvetia Versicherungen. Members of the Board of Directors are required to possess experience and know-how about a wide variety of fields. They should have the requisite expertise to represent their personal opinion in discussions with the Executive Management. Since Helvetia Group conducts a significant proportion of its business abroad, the Board of Directors also includes citizens of different countries or 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, and social skills. They must also have the necessary amount of time at their disposal for the efficient and proper performance of a director's mandate. As far as the independence of the Board members is concerned, Helvetia complies with the basic requirements of the "Swiss Code of Best Practice for Corporate Governance". For example, the Board consists only of members whose personal and business skills enable them to form an independent opinion and to take decisions that are in the best interests of the company. The committees consist mainly of non-executive and independent directors. The members of the 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 Compensation Committee and the companies represented by them have no or insignificant personal business relationships with Helvetia and also do not hold any cross directorships. The rule that members must abstain from taking part in meetings when business is dealt with that involves their own interests is consistently applied by all committees. Each 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.
The composition of the Board of Directors is given on pages 16 to 19.
Erich Walser, Chairman of the Board of Directors, handed over the function of CEO of Helvetia Group to Stefan Loacker on 1 September 2007. Since this date, none of the members of the Board of Directors have held any executive functions or – except for Erich Walser whose three-year cooling off period will expire at the end of August 2010 – belonged to the Executive Management of Helvetia or any of its Group companies during the financial years preceding the reporting year. None of the members of the Board of Directors have any significant business relationships with Helvetia other than as policyholders at normal conditions.
The following business relationships exist with companies represented by members of the Board of Directors:
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 through financial participation in Helvetia.
Helvetia, the Vontobel Group and the Raiffeisen Group are co-operation partners in the areas of consulting and the sale of financial services. Both groups are therefore members of the shareholder pool together with Patria Genossenschaft.
See section 3.2.
Urs Widmer and Pierin Vincenz are members of the boards of directors of Vontobel Holding AG and Helvetia Holding AG. The company is unaware of any other cross ties with the boards of directors of listed companies.
The normal term of office for members of the Board of Directors is three years. Members of the Board of Directors are required to step down for reasons of age at the Shareholders' Meeting that is held in the year in which they turn 70. New members complete the term of office of the retiring members. Terms of office are co-ordinated in such a way as to ensure that, every year, one-third of the members of the Board of Directors is available for election or re-election. Re-election is possible. Every member of the Board of Directors has to be elected by the shareholders.
For information concerning first-time election to the Board of Helvetia Holding AG and the remaining term of office of the members of the Board of Directors, please refer to the table on page 16.
Good governance at Helvetia is based on the relevant legal provisions (in particular company law and stock market legislation) and on internal directives and regulations. The functions defined by the Board of Directors and the allocation of duties are set out on page 16. The Board of Directors appoints the Chairman, Vice-Chairman and
members of the various committees as well as the secretary of the Board of Directors.
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: Strategy and Governance Committee, Investment and Risk Committee, Audit Committee and Compensation Committee. The duties and powers of these committees are described in detail in the by-laws, and the composition of each committee is presented on page 16.
tee prepares the resolutions to be passed by the Board of Directors in the event of a change or redefinition of strategy, and deals with mergers, takeovers and disposals of companies or major portfolios, including the preparation of the required resolutions by the full Board of Directors. 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 Management, handles the appointment and dismissal of the country CEOs and the other members of the country Boards, and periodically reviews plans and measures to retain and promote senior managers. It also secures good corporate governance within Helvetia Group, assumes duties and powers that have been assigned to the Strategy and Governance Committee 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, articles of association or Group regulations, and discusses important and urgent issues. It 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, which is regularly the case. As a rule, the CEO takes part in an advisory capacity. In 2007, the Strategy and Governance Committee held five meetings, all of which were attended by all its members. Most of these meetings lasted approximately half a day.
b) The Compensation Committee, which consists only of independent members, puts forward proposals regarding the structure of the remuneration system that applies to the members of the Board of Directors and to the salaries and remuneration of the members of the Executive Management, and specifies the fixed and variable salaries and remuneration 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. During the three-year cooling off period (until the end of August 2010), the Chairman cannot be a member of the Compensation Committee, but may on request take part in its meetings in an advisory capacity. The Compensation Committee convenes as often as business requires. In 2007, it held five meetings, all of which were attended by all its members. It also passed resolutions by circular letter twice. Most of the meetings lasted approximately half a day. 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 CEO takes part in a supervisory capacity insofar as topics concerning Executive Management are affected.
formulates the investment concept, basic guidelines and investment strategy, proposes the strategic bandwidths of asset allocation, approves the investment strategy and supervises the investment activities of Helvetia Group. It also makes investment decisions insofar as the Board of Directors has entrusted it with the corresponding powers, and supervises operational aspects of risk management, including reporting. It convenes as
often as business requires. The heads of the Group Finance and Investment divisions attend its meetings in an advisory capacity and were present at all meetings. In order to deal with specific issues, it may call on internal or external specialists to attend its meetings, which is regularly the case. As a rule, the CEO takes part inasupervisory capacity. In 2007, the Investment and Risk Committee held four meetings, which, except for a single absence, were all attended by all members. Most of these meetings lasted approximately half a day.
d) The Audit Committee assists the Board of Directors in its duties with regard to overall supervision and financial control. It examines the accounts from the points of view of completeness, integrity and transparency, verifies their compliance with applicable accounting standards and external reporting requirements, and monitors the functional capacity and effectiveness of external and internal control systems, including risk management and compliance, insofar as tasks and powers have not been delegated to another executive body of the company. It also verifies the independence and quality of the audits by the internal and external auditors. It ensures optimal co-operation between internal and external control units, the Audit Committee, the Chairman and the Executive Management. The Audit Committee approves the internal audit plan and assists with the compilation of external audit plans, examines the results of audits, comments on them for the attention of the Board of Directors, and may if necessary award special audit mandates. It also prepares the election of the statutory and Group auditors, and submits the necessary proposals to the Board of Directors. It verifies the consistency of auditing activities with any existing consulting mandates and examines the overall fee structure. During the three-year cooling off period (until the end of August 2010), the Chairman cannot be a member of the Audit Committee, but may on request take part in its meetings in an advisory capacity. The CEO, Group CFO, representatives of the external auditors and the head of Internal Audit attend its
meetings in an advisory capacity. The attendance rate was 100% at closing meetings. In order to deal with specific issues, it may call on internal or external specialists to attend its meetings, which is regularly the case. In 2007, the Audit Committee held three meetings, and one member was absent from one of them. Most of the meetings lasted approximately half a day.
On 12 December 2003, the CEO of Helvetia Group at that time, Erich Walser, was elected Chairman of the Board of Directors. He exercised the joint function of Chairman of the Board and CEO of Helvetia Group until the position of CEO was taken over by Stefan Loacker on 1 September 2007. In keeping with the principles of good corporate governance and the provisions of the Swiss Code of Best Practice for Corporate Governance, the Board of Directors introduced a variety of control mechanisms, including the function of Lead Director which was exercised by Ueli Forster until 30 August 2007.
The Chairman heads the Board of Directors. He calls the meetings of the Board, prepares the agenda for the Board meetings and meetings of the Strategy and Governance Committee, and chairs these meetings. He prepares the Shareholders' Meeting and the invitation to the Shareholders' Meeting, and also chairs this meeting. He draws up the strategic objectives that are discussed by the Board of Directors and represents the shareholders in important strategic projects in consultation with the CEO. He ensures that shareholders receive timely and correct information on the Group's business operations and nurtures relationships with large investors. Together with the other executive bodies of the Group, the Chairman ensures good corporate governance and an effective internal control system. He serves as line manager to the CEO and acts in consultation with the CEO whenever possible. He and the 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 Management as a guest; to this end he receives the agenda and accompanying documents for all meetings. He manages the Group's internal audit team in hierarchical as well as practical terms, assesses requests for information, a hearing or inspection of documents from members of the Board of Directors, signs Commercial Register applications and handles other tasks delegated to him by the Board of Directors. He may at all times inspect any and all documents.
The Board of Directors convenes as often as business requires, though as a rule six times a year. Most of its half-day meetings are held at Group head office in St. Gallen, one is held at the head office of Helvetia Switzerland in Basel, while the executive seminar, which usually lasts two days, is generally held at the premises of a subsidiary abroad. The Board is quorate if the majority of the members are present. Its resolutions are carried with a majority of the votes of the members in attendance. Resolutions may also be made by circular letter. Asarule, all members of the Board of Directors and (in an advisory capacity) all members of the Executive Management attend its meetings. In the year under review, six meetings were held, with the absence of one member of the Board of Directors at one meeting while the members of the Executive Management attended all meetings. In order to deal with specific issues, it may call on specialists to attend its meetings, which is regularly the case. Members of the Board of Directors and all executive bodies are obliged to abstain if business is being dealt with that involves their own interests or the interests of associates (natural persons or legal entities).
The Board of Directors possesses the following powers based on its inalienable and non-transferable duties stipulated in the provisions of Swiss company law, the articles of association and the internal by-laws of Helvetia Group:
Definition of the organisational principles,
Definition of the structure and principles of accounting, financial control and financial planning,
Appendix I of the by-laws contains a detailed description of the division of powers between the Board of Directors, the Board Committees and the Executive Management: www.helvetia.com/ gruppe/governance.
The Board of Directors is kept up to date inavariety of ways concerning the activities of Helvetia, its course of business and trends on the market. At its meetings, it requests information concerning:
influence the interests of stakeholders, spontaneously on the occurrence of special events, otherwise in a detailed annual report and a condensed interim report.
Every month, the members of the Board of Directors receive key data concerning the course of business. As a rule, they also receive regular reports on current issues relating to governance as well as selected analyses and situation reports concerning market trends, market players and noteworthy occurrences. The regular reports submitted to the Board of Directors and its committees are listed in Appendix II of the by-laws: www.helvetia.com/gruppe/governance.
At the meetings, every member of the Board of Directors may ask other members and members of the Executive Management for information concerning all matters pertaining to the Group. Outside of meetings, every member of the Board of Directors may ask the Executive Management to provide information about the general course of business or the course of specific business cases, and/or may inspect any business documents as required.
The Board of Directors also has the Internal Audit unit at its disposal as an auditing and supervisory body that monitors compliance with legal and regulatory provisions, internal guidelines and directives systematically, purposefully and in a riskoriented manner.
It also receives reports concerning the general development and specific activities of Helvetia in the areas of corporate governance, risk management and compliance.
See also pages 20 to 24.
The members of the Executive Management are listed on pages 22 to 24. The Executive Management of Helvetia Group was chaired by Erich Walser in his function as CEO and Chairman of the Board of Directors since its establishment on 12 December 2003 until 31 August 2007. Stefan Loacker took over as CEO of Helvetia on 1 September 2007. Together with division heads at Group level and the management boards of the national markets, he is responsible for the operational management of the Group.
For further details, please refer to pages 22 to 24.
See pages 22 to 24.
There are no management contracts.
This section describes the general principles and essential features of the compensation system, participations and the terms and conditions that apply to loans for the members of the Board of Directors and the Executive Management. The application of these in the past financial year and specific transactions are described in Note 15 'Related party transactions' on pages 152 et seq. This section complies with the Swiss Code of Best Practice for Corporate Governance as well as the Swiss Code of Obligations, including its new articles 663bbis and 663 c par. 3. Together, these sections comprise the compensation report addressed to the shareholders and other investors in Helvetia Holding AG, who can comment on this compensation report at the Shareholders' Meeting.
The remuneration principles, individual components and procedure when determining performance-related payments are set out in the remuneration regulations issued by the Board of Directors. These regulations are based on the principle that the compensation paid to the Board of Directors must be appropriate and competitive compared to the salaries paid by other companies in the same economic sector. To this end the Board studies the information published in the annual reports and investor relations reports of such companies as well as comparisons published by various associations (for example 'Ethos') and in the media. The individual members of the Board of Directors also contribute experience and knowledge gained from their activities in their own or third-party companies. The compensation should also be commensurate to the Board members' responsibility and workload and relative to the sustained earning power of the Group. The rules should be simple and transparent.
b) Fixed and variable components
Compensation is paid in the form of fixed and variable components. 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.
The fixed compensation comprises several components consisting of fixed amounts for the Chairman and the members of the Board of Directors. The Vice-Chairman and the chairmen and members of the committees also receive an additional allowance. The compensation of the individual Board members calculated in this manner is paid out in cash.
The fixed salary is supplemented by a variable component which depends on the business result and amounts to a maximum of 30% of the fixed salary for members of the Board of Directors. Once the business result is known and the individual financial and actuarial components of the result as well as the development of the share price have been evaluated, the Compensation Committee determines the percentage of objective attainment that will apply to the variable payment, for example 80%. This percentage applies to the members of the Board of Directors, the Executive Management and all employees of Helvetia in Switzerland. The variable component is paid out to the members of the Board of Directors in shares only. The relevant value is the market value of the share on the date that the variable salary component is calculated. The shares are blocked for three years from this date.
c) Meeting attendance fees and expenses The compensation regulations govern the meeting attendance fees and expenses.
The members of the Board of Directors receive shares in payment of the variable component of their salaries (see b above). Board members do not participate in any employee share purchase plans, but may voluntarily buy or sell shares at current market prices. The Board members also did not participate in any share option programmes.
As a general rule no severance payments are granted. Loans are granted at usual market conditions.
The Compensation Committee determines the salaries of the members of the Executive Committee every year. These salaries must be appropriate and competitive compared to the salaries paid by other companies in the same economic sector. To this end the Compensation Committee studies the information published in the annual reports and investor relations reports of such companies as well as comparisons published by various associations (for example 'Ethos') and in the media. The individual members of the Compensation Committee also contribute experience and knowledge gained from their activities in their own or third-party companies. The salaries should be relative to the Group's sustained earning power. The rules should be simple and transparent.
The members of the Executive Management are paid a fixed and a variable salary which is determined every year by the Compensation Committee. Both components are paid out in cash.
The fixed salary is individual and takes account of the function and level of responsibility of the
individual member of the Executive Management. It also includes all child or education allowances, expenses allowances and anniversary bonuses paid.
The amount of the variable component, which is usually limited to 50% of the fixed component, is based on the financial results (30%) and the degree of attainment of the personal objectives agreed with the immediate superior (20%). These objectives can contain quantitative and/or qualitative components. The component that is dependent on the business result is determined every year by the Compensation Committee once the business result is known and the individual financial and actuarial components of the result as well as the development of the share price have been evaluated, for example 80%. This percentage applies to the members of the Board of Directors, the Executive Management and all employees of Helvetia in Switzerland.
If the business result is very good, the Compensation Committee can also decide to pay a special bonus in the form of shares. The relevant value is the market value of the share on the date on which the special bonus is calculated. The shares are blocked for three years from this date.
The payment of expenses is governed by written regulations. If required, members of the 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 non-monetary benefits. Where all-in allowances are paid, the non-monetary benefits are included in the amounts provided in Note 15 on pages 152 et seq.
The members of the 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 5.3). There is no share option plan.
As a general rule no severance payments are granted. Loans are granted at usual market conditions.
The employer's annual contributions to pension funds are set out in the annual compensation report in Note 15 on pages 152 et seq.
In 2005, an employee share purchase plan was introduced in Switzerland to allow employees to participate in the performance of Helvetia and thus to strengthen their personal ties to the company. Employees can now purchase registered shares of Helvetia at reduced prices. The number of available shares is specified by the Board of Directors, taking account of the financial results and the functions of the employees concerned. The purchase price is calculated on the basis of the average stock market price during the five trading days following the publication of the financial results. Participation in this scheme is voluntary. Shares acquired under this plan are blocked for three years, which allows for a discount of 16.038%. The members of the Executive Management can also take part in this programme, but the members of the Board of Directors may not.
Helvetia observes the principle of equal treatment of all shareholders.
Certain restrictions on voting rights that are identical to restrictions relating to the transferability of registered shares of Helvetia Holding AG are described in section 2 above.
The Board of Directors specifies the rules that govern participation in the Shareholders' Meeting and the determination of voting rights. For representatives of executive bodies, independent voting rights and custody proxies (who do not necessarily have to be shareholders themselves), it may stipulate regulations that deviate from the restriction of proxy voting to 10% of the share capital.
At the 2007 Shareholders' Meeting, no shareholder with voting rights represented more than 10% of the voting rights, other than Patria Genossenschaft. No specific exceptions with respect to voting right restrictions or proxy voting were granted in the year under review.
Shareholders who possess voting rights but who do not attend the Shareholders' Meeting may assign their voting rights toathird party (who do not necessarily have to be a shareholder) by means of a written power of attorney. However, he or she may only represent the voting rights of third parties if, together with his or her own shares, they do not exceed 10% of the total share capital. Here, too, shareholders who are connected to each other by way of capital or votes or by united management or in any other form count as one shareholder.
The Shareholders' Meeting is quorate regardless of the number of shareholders in attendance and votes represented by proxy. Unless stipulated otherwise by statutory provisions or the articles of association, the Shareholders' Meeting passes resolutions by an absolute majority of the submitted votes. In addition to the resolutions cited in Art. 704 par.1of the Swiss Code of Obligations, a two-thirds majority of represented votes is also 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 Shareholders' Meeting is convened by the Board of Directors, or if necessary by the 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 or May, but at the latest within six
months after the end of the financial year. Extraordinary Shareholders' Meetings are convened as necessary.
Shareholders with voting rights who together represent at least 10% of the share capital may request a Shareholders' Meeting in writing, stating the items on the agenda and the motions to be put forward. Every shareholder receives a personal invitation not later than 20 days before the meeting, including a detailed agenda, a brief explanation of the motions to be put forward, plus other explanations concerning significant occurrences in the year under review. The items on the agenda are also published in various Swiss newspapers and in the electronic media.
Shareholders with voting rights who together represent shares to the nominal value of at least CHF 200,000 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.
The right to attend the Shareholders' Meeting (25.4.2008) 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 (11.4.2008) specified by the Board of Directors and announced in the Swiss Commercial Gazette and various other newspapers. In the period between the above cut-off date and a few days (22.4.2008) prior to the Shareholders' Meeting, shares will still be registered in the register but no additional invitations to the Shareholders' Meeting will be issued. Shareholders are entitled to a dividend for the 2007 financial year until this date. The share register is only blocked for a few days from 23.4.2008 to 2.5.2008; during this period no changes can be registered. 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 share register entitles the holder to cast one vote.
7.1 Obligation to announce takeover bids
Art. 30 of the articles of association states that the obligation to announceatakeover bid in accordance with Art. 32 of the Stock Market Act only applies ifashareholder acquires 40% or more of the voting rights.
Employment contracts of Helvetia do not contain any agreements regarding a change in control. The practice of 'golden parachutes' does not apply at Helvetia. Normal periods of notice apply, during which contractual salary and bonus arrangements remain applicable.
The independent auditors KPMG Ltd, Zurich, have served as the auditors of Helvetia Holding AG and the consolidated subsidiaries since 2005. The auditors' mandate must be renewed by the Shareholders' Meeting every year.
The KPMG Ltd audit team for the 2007 financial year consisted of:
In the year under review, the fees charged by the auditors amounted to:
CHF 2,167,411.
These fees primarily concern services associated with the implementation of new software and tax consulting services.
The Audit Committee prepares the election of company and Group auditors, which, as a rule, is scheduled to rotate approximately every seven years. It supervises and assesses their activities, predominantly through the external auditors' reports on audit results, the reporting process, decisions e.g., on IFRS issues and statements in the local audits. Important findings are summarised in a management letter.
In addition to an external auditor, Helvetia Group has an internal auditing section that reports directly to the Audit Committee and the Chairman of the Board of Directors. The Head of Internal Audit reports directly to the Chairman of the Board of Directors, which enhances the independence of Internal Audit.
Representatives of the external auditors and the head of Internal Audit attend meetings of the Audit Committee in an advisory capacity. The minutes of the Audit Committee are submitted to all members of the Board of Directors and during meetings of the Board of Directors it reports on its activities. In the year under review, three meetings were held, whereby the external auditors attended the meetings on the annual and interim accounts. The third Audit Committee meeting was held outside Switzerland without the external auditors. Discussions between the external auditors, the Chairman of the Board of Directors, the Chairman of the Audit Committee, the CEO and the Group CFO take place annually. Meetings or an exchange of experiences with specialists from the areas of accounting, risk management, legal and compliance, the general secretariat and corporate governance are held periodically. The External and Internal Audit teams are also frequently in contact regarding issues such as audit planning, audits and results as well as current problems.
As a rule, Helvetia provides its shareholders with information twice a year – in the scope of the periodic reporting on annual and interim results – in the form ofadetailed letter to shareholders. This letter deals with a variety of current issues, including strategy, market positioning and business policy.Abrief portrait of Helvetia Switzerland is available to anyone who may be interested. Furthermore, our website (www.helvetia.com) contains a great deal of current and archived information about Helvetia Group, including strategy, organisation, Group structure, facts and figures, corporate governance, sustainability, the insurance markets in which Helvetia is active, investor information, e.g. rating, analysts' reports, annual and interim reports, share including share price trends, news alert, investor and media contacts as well as other publications, media releases, interviews, and important dates. Helvetia periodically meets with institutional investors and presents the published financial results at special road shows. These presentations can also be called up on our website.
Our Investor Relations team will be pleased to assist with any personal enquiries (contact details are given at the end of this report as well as on our homepage). 150 years of Helvetia – Just ask us!
Helvetia turns 150 years – an occasion on which to look back over the past, think deeply about the present and dare to forecast the future. Since the 19th century, our world has seen many profound changes in all areas of society, whether technological, economical or cultural. The same is true for the insurance industry, which had to constantly adapt to changing circumstances and new risks. From the beginning, our company was exposed to fast and constant change.
Today's Helvetia traces its roots back to Allgemeine Versicherungs-Gesellschaft Helvetia, which was established in St. Gallen on 6 December 1858. It was the first transport insurer in the Swiss market and was therefore in an excellent position to serve the growing transport industry and to benefit from the increased mobility of the population.
Helvetia's corporate history has been very eventful and diverse. Today it is a strong and internationally renowned all-lines insurer with a reputation for providing top quality products and services. In this our anniversary year we wish to pay tribute to our success story.
Helvetia's anniversary offers a unique opportunity to strengthen the Helvetia brand and profile. The foundations have already been laid: Helvetia is a healthy company that is successfully going its own way.
This year Helvetia is attracting more attention than usual withawide range of activities. The Shareholders' Meeting will take place in a very celebratory atmosphere and Helvetia will be honoured to welcome Federal Councillor Hans-Rudolf Merz as the main speaker.
The broad public will be targeted with a health initiative. Helvetia wants to motivate as many people as possible to start moving more and is giving away almost 300,000 step counters. 31 July is 'Helvetia Day' when the company will establish close contact with the Swiss population. More than 280 Helvetia employees will surprise people at the 37 busiest railway stations in the country with a small gift.
In 2008 the company will also intensify its focus on its traditional youth promotion programme. The Helvetia Patria Jeunesse Foundation will donate CHF 500,000 to the national camp of the Swiss Guide and Scout Movement (Contura '08) which will take place at the end of July.
Helvetia's customers can benefit from an innovative new fund product, 'Helvetia Jubi+', a unitlinked life insurance product with attractive preferential conditions which has been on the market since 18 February.
Our society will continue to experience fast and constant socio-political change in the next years that will pose enormous challenges to market players. Helvetia, however, can look to the future with confidence and anticipation. With its clear and strong positioning, highly developed actuarial expertise and the right combintion of continuity and innovation, Helvetia is perfectly equipped to continue its success in the next years and decades.
Elda Barbui, Sales Force, having lunch with Vittorino Sanvito, an agent from Meda, at the 'La Plancia' restaurant.
"Our employees are highly motivated and committed to achieving our corporate objectives. They possess an ideal combination of personal and specialist skills, and they adhere to ethical and judicial principles." This quotation comes from Helvetia Group's HR policy, which was updated in the past business year. Another aspect which is just as important is what it is that unites the people working for Helvetia Group: "Together we focus on the three values 'trust', 'dynamism' and 'enthusiasm'." This common understanding of the principles and values that define all employees and their personal commitment are the main drivers of our corporate success. At a strategic level, forwardlooking human resources management is designed to strengthen the Group's management and business units and help them achieve their business goals. If we want to continue to grow above the market in the next years in a highly competitive environment, we must achieve not only cost efficiency, but also provide professional customer service and pursue qualified human resources management.
The future success of Helvetia Group will depend to a large extent on the optimum use of our human resources and their skills. Line managers as well as employees are supported by HR staff who take on a position of trust and act as advisor, partner and service provider in everyday business life to all parties. In so doing, HR staff adhere to the new HR policy as well as a uniform HR process model which is constantly improved and developed further in line with our quality management procedures.
At management level, the spotlight falls on the implementation of the strategic Group initiatives that were defined this year. These projects require more intensive co-operation between all country markets. The project managers are therefore supported by HR management and the Management Development (MD) team with a number of change measures, including the selection of qualified managers, the improvement of skills and the provision of the tools required for successful cross-country projects.
In order to give managers and specialists with special qualifications more opportunities to work on international, cross-market projects, the Management Development team will launch a new exchange programme this year. This should secure the sustained success of the strategic initiatives that have already been started and also offer a new generation of managers the opportunity to gain practical and Group-wide management and project experience in this field.
In a bid to bolster these cross-country strategies and projects, all 150 senior Helvetia managers will attend two four-day practical strategy seminars over the next two years, offered as part of the redesigned International Executive Programme (IEP): the 'Leadership' and 'Think Tank' modules. These seminars are organised by the Management Development team in collaboration with two research institutes of the University of St. Gallen. At these seminars, managers will learn how strategic general management navigator (GMN) concepts can be used to solve practical, marketrelevant problems.
The various business units are responsible for improving the specialist and management skills of their employees. In the German-speaking areas, Helvetia successfully increased the number of apprenticeships for young professionals by more than 10% to a total of 220. Helvetia Switzerland generally offers permanent employment contracts to almost 60% of its former apprentices. The company also focuses on training courses designed to improve communication processes and motivation, to deepen understanding of the company's core values, and to improve the use of assessment tools – for example the agreements on objectives and assessment interviews with employees. In Switzerland, Austria and Italy, new leadership programmes for managers were launched or continued with new modules. While Helvetia Italy focused on change management and internal communication, Helvetia Austria with the support
of the Group's Management Development team introduced a third three-day seminar on management communication and the application of key management indicators for its almost 90 managers and specialists. In Switzerland the first of the eight modules in the new Helvetia Leadership Programme (HLP) has started. This module aims to help the more than 400 managers and specialists with the implementation of the new strategy and values. The costs associated with all these continuing education measures introduced by the different business units are expected to run into the doubledigit CHF million range.
The total number of Group employees remained constant compared to the previous year, although there were slight shifts as regards the individual country markets. Thanks to further improvements to the business processes and/or structural changes in our business units in Germany and Austria, the number of employees in these business units could be reduced slightly, while the development of Group business in Italy, France and Switzerland required a slight increase in the number of employees in these business units. At Helvetia Spain the headcount is more or less on a par with last year, which was also made possible by the improvement in business processes following the merger of the former companies. The rate of termination of employment is between 3.8% and 11.3% in all business units.
Helvetia generally positions itself as an appealing employer with a farsighted generational policy for employees in all age groups. The main emphasis falls on the consistent implementation of equal
opportunities – the success of the Group's policy of paying performance-related salaries was recently confirmed with a survey on pay parity – and on the active promotion of collaboration between the generations in answer to current demographic challenges. Helvetia promotes a policy of 'challenging and supporting' its employees in all age groups. The basic belief is that employees are personally responsible for their professional development. Our employees' strong motivation and productive capacity should be enhanced during all of their careers, mainly by ensuring that lifelong learning is encouraged with suitable tasks and working arrangements, family-friendly working conditions, health management measures, advice on providing for the future, situation analyses and career planning.
At Helvetia Group, women constitute about one-third of all staff, except in France (54%) and Italy (44%). In order to gradually increase this percentage in Switzerland over the next few years, the Executive Management has launched a mentoring programme for women who are interested in following a career with Helvetia. The first 14 teams consisting of a mentor and a mentee have already been set up. The Executive Management also started a programme under which employees from the age of 45 can voluntarily apply for a personal situation analysis. On the first announcement of this programme, more than 60 persons applied, of which 20 are women.
The constant expansion of HR Controlling means that HR managers and other line managers now have access to valuable information enabling detailed staff analyses. In the current business year, an interactive electronic tool was used for
| CH | DE | AT | ES | IT | FR | Total | |
|---|---|---|---|---|---|---|---|
| As at 31.12.2006 | 2 239 | 789 | 634 | 547 | 300 | 86 | 4 595 |
| Departures | 256 | 42 | 33 | 36 | 12 | 10 | 389 |
| Entries | 279 | 26 | 22 | 33 | 24 | 17 | 401 |
| As at 31.12.2007 | 2 262 | 773 | 623 | 544 | 312 | 93 | 4 607 |
the first time in Switzerland to capture individual salary adjustments. In the medium term all managers should have password-protected access to an electronic portal which will serve as an interactive management tool. Helvetia Germany and Italy have similar plans.
Most employees in the business units give Helvetia good marks, and our employee surveys again reflected a high level of employee satisfaction. At 79%, employee commitment in Switzerland is again above average, and the same applies to overall satisfaction which reached 76%. With these results Helvetia once again ranked as the best insurance company among the 25 leading employers in Switzerland. In order to compare employee survey results in all business units, HR managers are investigating the possibility of using the same questionnaire for all Group units this year.
Switzerland, Basel – 2.30 p.m. Martina Sommer, Claims Inspector, investigating a construction site in Münchenstein.
Helvetia posted a profit of CHF 402.0 million, the second-best result in its 150-year history. This confirms the high earning power demonstrated in the previous year. All business units contributed double-digit millions of francs to this good result, with the country markets Switzerland, Spain and Germany contributing the most. At 4.4% premium growth was also very satisfactory, especially in view of the challenging market conditions. In terms of growth, the non-life segment as a whole outperformed the market. Group-wide growth in
direct non-life business reached a convincing level of 5.7%. In view of the difficult market environment, the growth of 2.1% recorded in direct life business is also satisfactory, while the increase in new business measured in Annual Premium Equivalent (APE) of 13.1% is very pleasing. Helvetia posted impressive growth for unit-linked life insurance in particular. Despite volatile markets, our investment portfolio once again made a substantial contribution to Group profit.
| Gross premiums (CHF million) | Growth in CHF (%) | |||||
|---|---|---|---|---|---|---|
| 2007 | 2006 | 2007 | 2006 | |||
| Direct business total | 5 249.3 | 5 062.5 | 3.7% | 2.3% | ||
| – life | 2 887.0 | 2 827.9 | 2.1% | 1.4% | ||
| – non-life | 2 362.3 | 2 234.6 | 5.7% | 3.5% | ||
| Assumed reinsurance total | 239.6 | 193.2 | 24.1% | –15.7% | ||
| Helvetia Group | 5 488.9 | 5 255.7 | 4.4% | 1.5% |
Helvetia achieved a record result in the life business. Pre-tax profit rose 3.3% year-on-year to CHF 190.6 million, the highest profit ever recorded in this segment. This is remarkable in view of the volatility in the capital markets. Particularly pleasing was the development in embedded value, which increased to CHF 2,223.8 million or 18.2%. The profitability of new business also improved by 3.8% to 15.9%.
| 2007 | 2006 | % | |
|---|---|---|---|
| Profit before tax, total | 505.5 | 562.2 | –10.1% |
| – life | 190.6 | 184.6 | 3.3% |
| – non-life | 286.5 | 321.6 | –10.9% |
| – other | 28.4 | 56.0 | –49.3% |
| Taxes | 103.5 | 138.4 | –25.2% |
| Profit for the period (after taxes) | 402.0 | 423.8 | –5.1% |
In spite of major claims and bad weather in the first half of the year, the non-life technical result was on a par with the previous year's good performance. The net combined ratio of 94.5% is just slightly higher than the past financial year and recovered clearly and quickly after the negative claims experience in the first half of the year. At CHF 286.5 million, the segment result is 10.9% below the excellent result posted in the previous year. The 'Others' segment which mainly consists of Helvetia Holding AG and the finance companies contributed CHF 28.4 million to the pre-tax profit. This is less than in 2006, primarily as a result of the extraordinary capital gains recorded in the previous year.
The equity base was strengthened by CHF 112.2 million or 4.1% to CHF 2,850.6 million. This increase is due to the good result partially offset by the dividend payment, changes in the fair value of the investments recognised in equity, and realised gains on shares. These gains were made possible by our prudent investment policy and correct assessment of the markets. At 14.4%, the return on equity is within reach of the strategic target of around 15%. This is 1.8% lower than in the excellent prior year, due to a slightly lower after-tax profit and higher equity. Solvency is also excellent our 217.4% and within our target area.
At CHF 190.6 million, profit for the life business was up 3.3% from the previous year. This is the best pre-tax result for this segment in the company's history. The record result was possible thanks to improvements in the technical result and the investment result for the account of Helvetia Group shareholders. This excellent performance makes it possible to allocate a substantial amount to the profit reserves for policyholder participation. The allocation to policyholder dividends and bonuses improved 6.2% year-on-year. Apart from Austria which further improved its pre-tax profit, all units involved in direct insurance posted profits in the double-digit CHF million range. Of the pretax profit, Switzerland once again contributed more than half (57%), while Spain managed to significantly increase its share in the Group profit, thus ensuring that the life business is not only dependent on profit dynamics in Switzerland.
The embedded value also developed very well and improved by 18.2% to CHF 2,223.8 million, achieving an excellent yield of 21.3%. This improvement is also a result of the increased value of new business which was up almost 50% yearon-year from CHF 21.7 million to CHF 32.3 million. This is due on the one hand to an increase in new business of 13.1% and on the other to the excellent new business margin which rose from 12.1% to 15.9%. The volume of new business
in the countries outside of Switzerland is showing first signs of the success of our growth strategy. In the EU markets, the volume of new business was up substantially by 34.1% while the value of new business improved by as much as 121.7%. Details on the embedded value are provided on pages 70 to 72 of the Annual Report.
Direct life business grew by 2.1% and, as in the previous year, benefited particularly from strong development in Germany (35.0% in original currency) and in Spain (12.4% in original currency). As mentioned above we are very pleased with the volume of new business, which improved from CHF 179.1 million to CHF 202.6 million for the Group as a whole. We should also point out the growth posted by unit-linked life insurance, which improved 20.8% for the Group as a whole and 43.6% in original currency in Germany. In the group life business the growth posted in Germany (164.2% in original currency) is of particular note, although this includes a single premium of CHF 47 million. In contrast, life premiums in Switzerland (–0.5%) and Italy (–28.5% in original currency) fell due to a decrease in single premiums. For reasons of profitability, Helvetia Switzerland did not launch single premium special offers for individual life policies to the same extent as its competitors. The growth rate for the group life business was better than the market average. As mentioned last year, Italy's quality-centric and profitoriented underwriting policy for contracts financed
by high single premiums was responsible for the decline in premiums and led toasubstantial yearon-year increase in the embedded value in Italy.
At CHF 286.5 million, the pre-tax non-life profit is still very high even though the segment result is 10.9% below last year's excellent result. This can be attributed to the slight decline in the investment result and high project costs, among others for our 150th anniversary. On the other hand the technical result hardly weakened, in spite of the large charges in the first half of the year related to the winter storm Cyril and other major claims. Compared to the end of the first half year, the net combined ratio normalised during the second half thanks to the excellent claims experience and loss development result and at 94.5% is just 0.4% above the 2006 ratio. The gross combined ratio is 94.9%, up from 93.2% in the previous year. This is primarily due to the loss related to Cyril, which also explains why the gross claims ratio is 63% or 1.7% higher year-on-year.
All country markets once again contributed to the good non-life result, with Spain – as in the life business – gaining in importance. This led to a further improvement in geographic diversification, which also had a positive impact on the recovery of the technical result after the bad weather in the first semester.
In the direct non-life business which grew by 5.7%, most regions gained market shares. This is especially pleasing in view of the price competition in all markets and in particular in the motor vehicle insurance business. Growth by region was strongest in Spain (4.4% in original currency) and Germany (3.3% in original currency). It is notable that all segments (with the exception of France which faced a currency-adjusted decline in premiums of CHF 6.3 million) contributed to this growth. In terms of business lines, property insurance, the largest line, posted currency-adjusted growth of 3.8%, while just the liability insurance, smaller in terms of volume only, exceeded this remarkable growth with 4.9% (in original currency).
| Combined ratio net |
Helvetia Group |
CH | DE | IT | ES | Others |
|---|---|---|---|---|---|---|
| 2007 | 94.5% | 89.5% | 100.4% | 99.4% | 85.3% | 94.2% |
| 2006 | 94.1% | 89.1% | 99.0% | 98.4% | 90.5% | 92.3% |
| 2005 | 94.0% | 95.4% | 95.7% | 98.0% | 86.5% | 92.8% |
As in the previous year, all operational business units contributed at least double-digit millions of francs to the Group's pre-tax profit of CHF 505.5 million. Switzerland again contributed the largest amount (CHF 221.8 million). Germany's result was on a par with the previous year. The German non-life segment performed very well in spite of the burden of the winter storm Cyril and made up for the slightly lower life result. The improvement in Italy's pre-tax profit was driven by the life business which posted both higher financial earnings and technical progress, while the non-life result was in line with the previous year's result. In Spain, technical improvements in both the life and non-life segments led to higher contributions in both segments. As mentioned before, Spain is gaining in importance next to Switzerland. In the 'Other' segment, Austria in particular made excellent progress in both segments in spite of one-off costs.
| 2007 | 2006 | % | |
|---|---|---|---|
| Switzerland | 221.8 | 289.0 | –23.3% |
| Germany | 50.2 | 51.4 | –2.3% |
| Italy | 35.1 | 27.7 | 26.7% |
| Spain | 125.5 | 110.1 | 14.0% |
| Other1 | 72.9 | 84.0 | –13.2% |
| Helvetia Group | 505.5 | 562.2 | –10.1% |
1 Austria, France, reinsurance, Luxembourg and Jersey
| 2007 | Gross | Reinsurers' share |
Net |
|---|---|---|---|
| Earned premiums | 2 554.0 | –238.5 | 2 315.5 |
| Insurance claims | –1 610.1 | 183.4 | –1 426.7 |
| Technical costs | –814.2 | 52.5 | –761.7 |
| Technical profit/loss | 129.7 | –2.6 | 127.1 |
| Investment income (net) | 206.5 | ||
| Other non-actuarial income and expenses | –47.1 | ||
| Profit before tax | 286.5 | ||
| Claims ratio (incl. policyholder dividend) | 63.0% | 61.6% | |
| Cost ratio | 31.9% | 32.9% | |
| Combined ratio | 94.9% | 94.5% |
| 2006 | Gross | Reinsurers' share |
Net |
|---|---|---|---|
| Earned premiums | 2 395.5 | –226.3 | 2 169.2 |
| Insurance claims | –1 468.5 | 135.0 | –1 333.5 |
| Technical costs | –764.1 | 55.7 | –708.4 |
| Technical profit/loss | 162.9 | –35.6 | 127.3 |
| Investment income (net) | 216.9 | ||
| Other non-actuarial income and expenses | –22.6 | ||
| Profit before tax | 321.6 | ||
| Claims ratio (incl. policyholder dividend) | 61.3% | 61.5% | |
| Cost ratio | 31.9% | 32.6% | |
| Combined ratio | 93.2% | 94.1% |
The 2007 investment year can be divided into two very different halves. In a phase of robust global economic growth many equity markets reached new record highs until the end of May, while interest rates rose substantially. In the second half of the year, the ever increasing effects of the subprime and credit crisis abruptly ended the good mood. Growing uncertainty and a loss of confidence crowded out the earlier euphoria. Except for the Far East and Germany, the equity markets gave up their gains and interest rates started falling. The central banks managed to ward off the worst of the crisis with liquidity measures, but still did not manage to counter the unstable market conditions.
Against this background we continued our solvency-focused investment policy launched in 2006, while at the same time keeping a close eye on real-time risk management.
The duration of the life insurance portfolio was increased again, which allowed us to further reduce the maturities mismatch between the interest-bearing investments and our life insurance liabilities. The rising interest rates intensified this effect and led to a welcome increase in direct earnings. In order to cushion the balance sheet risks associated with the longer maturities, new interestbearing investments were mostly classified as 'held-to-maturity' investments or as 'loans and receivables'. The share of these valuation categories is 50.4% of all bonds.
The asset allocation remained more or less unchanged. The equity component is 8%, and the bond weighting was increased by almost 1% to the debit of the money market investments. The investment property and mortgage components were almost the same as last year at 14.0% and 11.0%, respectively. All asset classes comply with the strategic target bandwidths.
Strategic risk management begins with sustainable asset allocation which takes account of the insurance liabilities and the company's risk capacity. Operational risk management means managing the risks associated with the investment portfolio in consideration of current market developments and assessments.
In view of the fact that the euro became increasingly overvalued as the year progressed, we hedged most of our euro exposure with forward contracts and options. We also hedged our dollar exposure to a large extent in the face of growing uncertainties about the economy and the subprime crisis. As the crisis became more pronounced in the second half of the year, we stepped up transactions to hedge our equity holdings, but we mostly refrained from hedging our bond exposure. Thanks to its high quality, the bond portfolio withstood the 'stress test' of the accelerating credit crisis. Helvetia has no direct exposure in the problematic subprime sector, neither in the field of mortgages nor credit cards. We also do not use credit derivatives. Only a few securities in the portfolio were affected by downgrading, and only a very few investments were downgraded to a rating less than the 'A' rating required by our internal investment guidelines. This did not, however, have a negative impact on the high quality of our bond portfolio.
Hedging costs totalled around CHF 74 million. This is an increase of CHF 11 million compared to the previous year.
Interest and dividend income totalling CHF 793.8 million and rental income totalling CHF 231.6 million was up compared to the previous year by a substantial CHF 94.4 million. The increase is due to the higher investment volume, the strong euro, the longer duration of the portfolio, and rising interest rates. Rising interest rates not only resulted in higher bond yields,
but also led to an increase in rental income from the real estate portfolio.
In view of the unstable market situation, investment performance was good at 2.4%. Falling bond prices due to rising interest rates and the weaker equity markets in the second semester prevented a better performance. In this difficult environment, investment property and mortgages once again proved to be an important mainstay of our total earnings.
| Interest on interest-bearing securities 499.6 453.3 Interest income from loans 178.2 176.0 Interest income from money market instruments 26.9 19.0 Interest income 704.7 648.3 Dividends on shares, unit certificates and alternative instruments 86.8 54.8 Interest on securities lending 2.3 1.2 Other 0.0 0.1 Interest and dividend income 793.8 704.4 |
2007 | 2006 |
|---|---|---|
| 2007 | 2006 | |
|---|---|---|
| Interest-bearing securities | 27.0 | 63.4 |
| Shares | 168.8 | 228.6 |
| Investment funds | –23.8 | 71.8 |
| Alternative instruments | 37.9 | 29.6 |
| Derivative financial instruments | –73.7 | –102.9 |
| Mortgages | 0.0 | 0.1 |
| Loans | –1.0 | 0.4 |
| Money market instruments | – | 0.5 |
| Other investments | 1.5 | 2.1 |
| Impairment of financial assets of the period | –9.0 | –4.1 |
| Reversal of impairment losses | ||
| of financial assets | 2.5 | 1.9 |
| Total gains and losses on investments (net) | 130.2 | 291.4 |
After the continued global economic upswing of the past few years, the current economic picture is irregular. While many analysts fear that the US has already slid into a recession, economic growth in the Far East in particular but also in Europe seems intact. The question therefore is whether these economic regions will be able to distance themselves from developments in the US. Many things will depend on the outcome of the still smouldering
credit crisis. The quicker acceptable solutions can be found, the faster the economy will recover.
In this difficult environment we will continue to focus our investment policy on consistency and security, and we will react to any new market turbulence with appropriate hedging measures.
In 2007 the Swiss economy did very well for the fourth consecutive year thanks to across-the-board impetus provided by exports and private consumption. However, economic growth in the EU and Switzerland is likely to start slowing down slightly in view of the foreseeable cooling of the world economy. Given the good development in the second half year, first estimates point towards GDP growth of 3.1% for 2007. Unemployment fell further thanks to the good economic climate and the unemployment rate was 2.6% adjusted for seasonal differences at the end of November 2007.
The number of claims rose slightly compared to the previous year, mostly as a result of the winter storm Cyril. According to projections by the Swiss Insurance Association (SIA), life premiums (individual and group life) rose by a total of 1.5% last year. For the non-life market the SIA expects premium growth of 1.2% for 2007. The discussions regarding the pension conversion rate and the legal quota are continuing unabated. The project regarding the introduction of compulsory earthquake insurance in Switzerland suffered a slight delay and will not be implemented before 1 January 2010. A number of other laws are also currently under examination, such as amendments regarding improved transparency and the position of insurance brokers.
During the previous strategy period 2004–2006, Helvetia focused consistently on sustained returns. The new strategy 2007–2010 targets ambitious growth rates in addition to the high earnings targets, which is reflected in our slogan "First in growth, profitability and customer loyalty". With the start of the new strategy period at the beginning of 2007, we defined ten strategic thrusts and launched value programmes based on our core expertise in insurance and pension provision in support of our target attainment. The focus falls on the exploitation of new customer channels by improving our sales network, simplifying our products and strengthening our brand. We will also improve our business processes and expand and further optimise the existing e-business solutions.
Following the previous year's excellent performance, Helvetia Switzerland again achieved very good results in 2007. The pre-tax profit was CHF 221.8 million. Life business performance was pleasing in spite of the difficult capital markets and proved its profitability. This allows us to allocate a substantial amount to the profit reserves of our policyholders. The non-life technical result remained stable compared to 2006 in spite of a number of major claims in the first semester. The 'Switzerland' segment was influenced by the
slightly weaker financial result of the investment portfolio managed outside of the underwriting units and to special factors, mostly project costs.
The change to the brand name 'Helvetia' in 2006 and our extremely successful sponsoring of skiing allowed us to differentiate ourselves more strongly in insurance market communication. "It's simple. Just ask us." This is the slogan for our new brand campaign and our promise to our customers. With this campaign we appear on the market as a partner for security and high-quality service and promise our customers simplicity as an added benefit in an ever more complex world. We are also expanding our sales network – in addition to full market coverage by our own sales force and market access through brokers, we rely on our cooperation with the Raiffeisen Group in the private customer business. Thanks to this unique partnership we were able to include our buildings insurance and builder's risk insurance in the mortgage advisory process of the Raiffeisen banks. The Raiffeisen Group contributed around 10% of new business in the individual life segment. Cooperation in non-life business started in 2006 and has already made a substantial contribution in some lines. In occupational benefits insurance we continue to build on our co-operation with the Association of Swiss Cantonal Banks. Under the label 'Swisscanto' we offer group pension solutions via the cantonal banks that contributed to the growth posted in the group life business.
In the group life business, Helvetia continued to focus on sustained growth while maintaining its risk-oriented underwriting policy in 2007. Regular premiums grew by 3.4% year-on-year and enabled us to increase our market share to more than 9%. This pleasing development is also due to our new and innovative 'BVG Invest' product and our participation in the Generali Employee Benefit Programme as a Swiss network partner.
in Switzerland in CHF million
| 2007 | 2006 | Change | |
|---|---|---|---|
| Non-life | |||
| Property | 334.2 | 332.5 | 0.5% |
| Transport | 37.5 | 36.4 | 3.0% |
| Motor vehicle | 167.9 | 162.4 | 3.4% |
| Liability | 77.8 | 76.2 | 2.1% |
| Total | 617.4 | 607.5 | 1.6% |
| Life | |||
| Individual | 545.4 | 577.1 | –5.5% |
| Group | 1 586.4 | 1 555.3 | 2.0% |
| Unit-linked | 74.9 | 84.6 | –11.5% |
| Total | 2 206.7 | 2 217.0 | –0.5% |
Individual life premiums did not reach the same level as in the previous year. The decline can be explained by the market conditions in the traditional individual life segment. The share of equityprotecting, unit-linked life insurance products financed by regular premiums improved substantially and according to plan, but the share of these products financed by single premiums has declined. In a bid to counter this development we launched our new product 'Helvetia fund investment with insurance coverage' in the 4th quarter of 2007. In the single premium business we profited from another new issue of our index-linked product 'Swiss Trend', which was open for subscription for a short time only. The 'terzAvita' initiative was expanded as part of our strategy of managing our target groups and focusing on the 50-plus customer segment. Specialised terzAvita advisors use a three-step advisory approach to identify the special needs of persons older than 50 who are beginning to prepare for their retirement. A completely new quotation system for the sales channels was launched as part of the successful implementation of our new individual life market strategy, and products and sales documentation for customers and distribution partners were simplified. In this way Helvetia promoted its strategy of simplifying its products and services.
Seen overall, the technical results were very good, mainly as a result of an underwriting policy that focuses consistently on earnings, the high quality of our portfolio and the decline – partly for economic reasons – in the number of people who become disabled or, formulated differently, the rise in the number of people who are reintegrated into the workforce, which improved our disability results.
The non-life business continued to be affected by intense competition and prices that trended lower in all three business lines private customers, motor vehicle insurance and corporate customers. It is therefore all the more pleasing that we still achieved a good performance. Premium growth amounted to 1.6% in total, with property insurance improving by 0.5% and motor vehicle insurance by 3.4%. We thus further improved our market position in both the private and the corporate customer segments. In the corporate customer business we managed to access some niche markets such as photovoltaics and jewellery.
From an actuarial viewpoint the Swiss non-life unit is strong in spite of special charges in the first half of the year. The claims ratio rose slightly due to major claims and bad weather and could not be compensated entirely by the reduction in the cost ratio. As a result the combined ratio for 2007 increased slightly but to the still excellent 89.5%, which is only 0.4% higher than in the excellent prior year.
We are a quality insurer and as such have high demands as regards the quality of our services. We are convinced that a high standard of quality is indispensable for differentiation in the market. The importance of this increases as competition becomes ever more fierce in an already saturated market. Our successful efforts to achieve quality and service were again independently praised in 2007. The Helvetia Call Centre was ranked first by the company Teleperformance for the Swiss Service Barometer for insurance companies for the fourth consecutive year.
We employ capital efficiently and continue to focus on lucrative segments. Private customers and SMEs are the central customer groups. The goal is to expand property insurance the non-life segment and to introduce products with little impact on equity and corresponding innovative force in the life segment.
In order to continuously improve our technical results we focus specifically on efficiency, throughput times and service quality. In further developing our business model, we emphasise product simplification and the optimisation of business processes, the continued development of e-business solutions and continuous improvements in the quality and service mentality. Our growth strategy is supported by the launch in our anniversary year of a unique individual life product with an attractive yield and by promising projects focusing on the exploitation of new sales channels and customer groups.
The German economy continued to develop positively last year. GDP for 2007 was 2.5%, which also contributed to the improvement of the situation on the labour market. The economy was supported by corporate investments and exports, while private consumption stagnated and will even decline by 0.1%. Real income was unchanged again in 2007.
The German insurance market did not benefit from the improved economic mood of the past two years. The only slightly improved financial situation of private households, sector-specific factors such as strong competition and the effects of political reforms once again dampened premium growth. This is likely to apply to the entire insurance sector for 2007, more or less the same as in the previous year.
Life premiums are stagnating, and the trend against endowment insurance and in favour of annuity insurance and unit-linked life insurance is continuing.
Following the decline in the previous year, non-life premiums will likely fall by another 0.4%. This can be attributed to the fact that the market remains highly competitive with some market players introducing substantial price cuts and expanded insurance coverage.
The decline in premiums in 2007 is opposed by a substantial increase in claims payments in the reporting year, not least due to the damage caused by the winter storm Cyril.
Helvetia Germany posted a profit of CHF 50.2 million for the reporting year. This is in line with the previous year's result. The non-life segment performed very well in spite of the cost of the winter storm Cyril and, supported by investment income, even managed to compensate for the slightly weaker life result. In spite of the bad weather in the first half of the year the net combined ratio of 100.4% is just slightly higher than in 2006. This is mainly due to our balanced underwriting and reinsurance policy, strict cost management, and efficiency gains. The latter included a new private customer portfolio management system and the implementation of a flatter sales hierarchy (regional offices in the new Bundesländer and in Hamburg) as defined by the 2007–2010 strategy. All German units now have a uniform organisational structure. In order to boost growth and further improve the quality of the advice provided to our customers, we invested in the expansion of the exclusive broker sales channels. A large number of new brokers have already been recruited. As part of our 'Quality + Service' project we introduced the sales support tool 'Profil.as', which allows us to provide better and more selective support to our third-party brokers.
With premium growth of 40.9% (35.0% in original currency), our life business outperformed the overall market by far. This dynamic growth is mainly due to the success of our 'CleVesto' unit-linked
Gross premiums in 2007 from direct non-life business in Germany in CHF million
insurance products and the excellent performance of products financed by a single premium, although the result of the single premium business in the group life segment was strongly influenced by a one-off effect in the reporting year. We also profited from investments in the systematic expansion of our sales channels. Contrary to the general market trend we also achieved significant premium growth of 7.9% (3.3% in original currency) in the non-life segment. Our core non-life business line, property insurance, improved by as much as 10.4% (5.7% in original currency).
We have been continuously improving the quality of our services for customers and brokers for many years. The success of these measures and the progress made was assessed by a neutral organisation in 2007. Helvetia is the first insurance company in Germany to take part in the Levels of Excellence programme of the European Foundation for Quality Management, and to reach the second level. In addition to the 'Committed to Excellence' certificate earned previously, we now also comply with the quality requirements of the 'Recognised for Excellence' level and proceeded to the final round for the German quality prize in the large corporates category.
The boundary conditions for the German insurance industry will be influenced in the long term by the current economic forecasts for 2008 and in particular by the new insurance contract law which entered into force on 1 January 2008. However, we are confident that the introduction of new rates for occupational pensions and the systematic revision and development of our product range will enable us to continue to achieve our ambitious growth targets in the life business.
In the non-life business we see positive opportunities for growth and good results in the strategic expansion of our sales power and the introduction of new products such as the MultiLine policy for doctors. Measures to improve efficiency that are planned as part of the implementation of our strategy will also contribute to our success.
| Germany in CHF million | |
|---|---|
| ------------------------ | -- |
| 2007 | 2006 | Change | |
|---|---|---|---|
| Non-life | |||
| Property | 295.8 | 268.0 | 10.4% |
| Transport | 67.7 | 60.1 | 12.6% |
| Motor vehicle | 153.7 | 149.1 | 3.1% |
| Liability | 75.6 | 72.2 | 4.7% |
| Accident/health | 40.2 | 37.5 | 7.2% |
| Total | 633.0 | 586.9 | 7.9% |
| Life | |||
| Individual | 123.0 | 118.6 | 3.7% |
| Group | 78.8 | 28.6 | 175.5% |
| Unit-linked | 96.1 | 64.1 | 49.9% |
| Total | 297.9 | 211.3 | 40.9% |
Austria, Vienna – 2.15 p.m. Thomas Jaklin at a production meeting.
The Italian economy grew stronger last year than in the previous years. GDP is expected to rise by around 1.7%. The inflation rate was higher and was 2.6% at the end of the year as a result of the strong increase in prices for consumer goods and in particular for oil. At the same time unemployment declined further and at an estimated 7.4% the unemployment rate is at a historic low. The political will to institute reform continued in 2007 and a large number of new laws and rules were approved. These measures had a big effect in the financial sector.
The Italian insurance market saw a slight trend reversal last year. While growth for the market as a whole was slightly negative in 2006, the Italian insurance market is expected to have returned to slight growth in 2007. Non-life business grew by around 2% last year, but this trend was seriously dampened by increasing competitive pressure in the motor vehicle segment. The life business will post declining premium volumes for the second year in a row, even though the negative growth rate is likely to be much improved. The declining growth is primarily due to uncertainties regarding the continued outsourcing of pension funds to insurance companies.
Last year,alarge number of new laws and rules were approved that will also affect our business activities. For example, we will benefit from the new EU agent guidelines under which exclusive
broker agreements are forbidden with effect from 2008, as we never worked with exclusive agents in the past. The introduction of transparency standards such as the disclosure of commission payments in the motor vehicle business require us to invest in our systems. At the beginning of 2007 a new system of claims settlement in motor vehicle insurance was introduced across the market, which is radically changing the existing system. Under the new system the insurer must first pay compensation to its own insured after an accident (and not the counterparty as before) before it can recover from the insurance company of the person who caused the accident.
The pre-tax profit confirms our growing profitability even in an increasingly competitive market. It is clear that our focus on quality products is paying off. At CHF 35.1 million, the overall pre-tax profit is around 26.7% better than in the previous year, with the non-life business posting a slight decline and the life business a healthy improvement. The decline in the non-life business can be attributed to the slightly higher net combined ratio of 99.4% (previous year 98.4%). The life technical result improved compared to the previous year, mainly thanks to the positive development of the risk result and good earnings on investments income.
Gross premiums in 2007 from direct non-life Gross premiums in 2007 from direct life business in Italy in CHF million
Even though life profit was higher than in the previous year, premium income in the life segment declined. After the strong growth posted in previous years, Helvetia Vita continued to focus on profit-oriented consolidation in 2007, as a result of which overall premiums declined by 25.3% (28.5% in original currency). This was also due in part to income considerations, as we were very cautious in concluding policies with high single premiums. In 2007 two new index-linked products were launched which developed in line with our expectations.
In 2007, Helvetia Italy once again achieved above-average non-life premium growth of 7.2% (2.6% in original currency). This growth was driven by property insurance which improved by 18.8% (13.7% in original currency). Although motor vehicle insurance is still slipping slightly, new business is showing first positive trends. Non-life growth was also boosted by the premiums generated by the banking channel. We still consider the business mix between motor vehicle insurance on the one hand and the other non-life segments on the other as reasonable and promising. Geographically, the focus of our business activities remains on the economically interesting northern regions of the country.
As part of the strategy 2010, significant restructuring measures were introduced last year:
As far as the objectives of the strategy 2010 are concerned, Helvetia Italy is well on course. We are convinced that, as a focused player and specialised provider in the private customer and SME segments, we will continue to operate successfully and grow profitably in the future. In view of the Italian business unit's good performance in the past few years and the measures that have been introduced, we are facing the future with confidence.
| Italy in CHF million | |||||
|---|---|---|---|---|---|
| 2007 | 2006 | Change | |||
| Non-life | |||||
| Property | 92.8 | 78.1 | 18.8% | ||
| Transport | 4.7 | 4.6 | 2.2% | ||
| Motor vehicle | 204.9 | 203.3 | 0.8% | ||
| Liability | 35.5 | 31.0 | 14.5% | ||
| Accident/health | 53.4 | 48.0 | 11.3% | ||
| Total | 391.3 | 365.0 | 7.2% | ||
| Life | |||||
| Individual | 81.8 | 137.4 | –40.5% | ||
| Group | 36.0 | 20.4 | 76.5% | ||
| Total | 117.8 | 157.8 | –25.3% | ||
Last year the Spanish economy continued its dynamic trend; according to the latest projection, the increase in the GDP was 3.8%. However, by the end of the year rising interest rates and the negative impact of the subprime crisis triggered by difficulties in the US real estate market had left their mark on private consumption and the home construction industry, with the result that the GDP growth forecast for 2008 is more restrained. At an estimated 4.2%, inflation was above the European Union mean.
According to initial estimates, the Spanish insurance market grew slightly less in 2007 than in the previous years, but with an anticipated growth rate of 6% to 7% growth momentum is still above average.
As tax privileges for life insurance policies were abolished under the tax reform, the life segment generally reported only moderate growth. The growth drivers were risk life insurance and unitlinked products, which as alternative types of investment managed to benefit from the cooling experienced in the real estate market.
As in previous years, non-life growth was satisfactory, and liability and health insurance in particular posted very pleasing growth rates. The motor vehicle segment continued to be plagued by price pressure, among other things as a result of entry to the market by new competitors and a reduction in car sales. The household contents insurance and corporate customer segments also found it more difficult to continue the successes of the past.
In the life business the Spanish insurance market continues to hold enormous growth potential – the premiums per capita and insurance penetration (percentage of premiums in GDP) are still significantly lower than the western European mean.
In 2007 a number of new regulatory provisions had a direct impact on the insurance business. In the past year, the financial brokers managed to hold on to their market position, but bank sales channels suffered from the real estate crisis and sold fewer mortgage-related insurance products, while the entry of the banks to the non-life market and the correspondingly high level of investments also brought additional competitive pressure to the industry.
In 2007 the pre-tax profit rose by around 14% to an excellent level of CHF 125.5 million, with both the life and non-life segments contributing to this success. The improvement in the life business, which posted an excellent underwriting result, was due to the good risk experience. The non-life segment also saw a significant improvement in the result, even though the prior year result was boosted by one-off special effects related to the valuation of the investment property portfolio. Claims experience in the non-life business has further improved compared to the already good experience in 2006. The excellent net combined ratio of 85.3% was below the previous year's level, with all business lines reporting a very positive trend.
Last year Helvetia achieved double-digit premium growth of 17.3% (12.4% in original currency) in the life segment, which is far better than the sector average. The most important growth drivers included traditional risk insurance and family financial provision, but funeral expenses insurance and unit-linked products in particular also reported excellent growth.
Non-life growth came in at 9.0% (4.4% in original currency) for 2007 even though for income considerations we refrained from joining the price war in the household contents and industrial insurance segments. Helvetia therefore had to accept losses in these business lines. Overall, however, property insurance grew by 8.0% (3.4% in original currency). In contrast to the previous years, motor vehicle insurance did very well and we posted growth of 9.2% (4.6% in original currency) for this line and even gained market share. At +17.2% (11.8% in original currency) Helvetia also achieved very pleasing growth in general liability insurance. Transport insurance was up by 14.3% (9.9% in original currency) and is growing at a steady pace after it was classified as a niche product under the new strategy.
Helvetia Spain started the strategy 2010 period very successfully, as is confirmed by the figures for the past business year. In the coming years we will accelerate growth and sustainably increase the market share of Helvetia Spain without endangering our excellent level of earnings. The exploitation of the potential for cutting internal costs and an increase in volumes should help us to further improve our cost ratio. This will be done with strategic local programmes launched directly by Helvetia Spain as well as with new Group-wide strategic initiatives designed to reduce our cost ratios and to push growth.
We are convinced that we are in an excellent position to exploit the growth opportunities in the Spanish insurance market to our benefit by using the various measures at our disposal. The growth potential of the Spanish economy, which can still be assessed as very favourable, and the development potential of the life segment paint a very positive picture.
| 2007 | 2006 | Change | |
|---|---|---|---|
| Non-life | |||
| Property | 163.6 | 151.5 | 8.0% |
| Transport | 26.3 | 23.0 | 14.3% |
| Motor vehicle | 157.4 | 144.1 | 9.2% |
| Liability | 34.0 | 29.0 | 17.2% |
| Accident/health | 39.9 | 38.9 | 2.6% |
| Total | 421.2 | 386.5 | 9.0% |
| Life | |||
| Individual | 72.5 | 65.3 | 11.0% |
| Group | 40.4 | 34.6 | 16.8% |
| Unit-linked | 14.1 | 8.4 | 67.9% |
| Total | 127.0 | 108.3 | 17.3% |
The Austrian economy grew by 3.4% in 2007, thus continuing the dynamic trend of 2006. Lively exports remain one of the pillars of the economy, with Austria benefiting in particular from expansion and the sustained momentum enjoyed by the central and eastern European markets. However, the unfavourable trends in the global economy seem to predict that the Austrian economy has already peaked.
Following volume growth of 1.9% in 2006, growth for the Austrian insurance industry came in at 1.9% in the business year, which is less than for the economy as a whole. Thanks to dynamic changes in the property insurance market, non-life insurance grew by a total of 3.1%. At +0.4%, the life segment fell short of expectations. The slight growth rate can be partly explained by the 6.6% decline in single premium business. Life insurance growth was again driven by unit-linked life products – double-digit growth was reported for regular premiums as well as for single premiums.
In Austria, 2007 was the year in which we focused on strengthening our position under the new brand. Country-wide image campaigns helped to increase brand recognition. There was also a change in top management, with Burkhard Gantenbein taking over as CEO of Helvetia Austria on 1 June 2007. He succeeded Stefan
Loacker, who was appointed CEO of Helvetia Group in St. Gallen following his success in Austria.
The Austrian group companies improved their results in both the life and non-life segments.
The life segment's substantial contribution to profit was higher than last year in spite of extraordinary charges following a judgement by the Austrian Superior Court which ordered the Austrian insurance industry to pay claims related to reversal discounts and acquisition costs. This positive development is mainly due to the financial result which improved despite the volatility on the equity markets.
The ongoing improvement of the earnings situation in non-life business was continued in the business year. Portfolio quality is still excellent and diversification ensures that even natural disasters such as the winter storm Cyril have not increased volatility on an annual basis. The net claims ratio improved substantially compared to 2006 and now equals the average of the past three years. Seen overall, at 100.1% the net combined ratio is robust despite Cyril and slightly lower year-onyear.
The good financial result is pleasing and according to plan thanks to our conservative investment policy. Generally speaking, Helvetia Austria successfully continued to improve its operating earning power in the business year.
Gross premiums in 2007 from direct life business in Austria in CHF million
In line with the general market trend, the development of new business in the traditional life insurance segment was restrained while more and more customers surrendered their policies or shifted to unit-linked products. At +3.1% or –1.3% in original currency, life premiums are falling. Our product range was successfully expanded and completed by the introduction of the unit-linked CleVesto life product. Product comparisons carried out by independent test institutions confirm that Helvetia has introducedavery flexible and costtransparent product that gives an excellent performance. Although the CleVesto product outstripped our expectations, life products financed by regular premiums still declined due to the restrained growth of the traditional life segment. Income from single premiums, however, was up by 34.2% (28.5% in local currency) against the general market trend thanks to the momentum provided by unit-linked life products and the strengthening of our broker relationships.
Non-life business posted premium growth over all business lines of 6.6% (2.1% in original currency) and reached a premium volume of CHF 208.8 million. After the good performance in 2006, motor vehicle insurance again outper-
Austria in CHF million
| Change | ||
|---|---|---|
| 75.8 | 71.0 | 6.8% |
| 5.9 | 5.3 | 10.1% |
| 79.8 | 74.3 | 7.5% |
| 27.6 | 26.2 | 5.4% |
| 19.7 | 19.1 | 3.2% |
| 208.8 | 195.9 | 6.6% |
| 133.0 | 133.5 | –0.4% |
| 4.6 | 0.0 | 100.0% |
| 137.6 | 133.5 | 3.1% |
| 2007 | 2006 |
formed the market in terms of premium growth. The target group approach applied to the private customer business is also bearing fruit, and the profitable property segment achieved premium growth of 6.8% (2.2% in original currency) in the business year.
The Austrian Helvetia branch specialises in transport insurance and has been known for its efficient, flexible and smooth handling of claims for more than 130 years.
In accordance with the strategy, the focus in the reporting year was again on the strengthening of sales cooperation programmes. The 2007 results were excellent and in line with expectations.
The conditions for further profitable growth in Austria remain good. The completion of the product range with the new unit-linked life product and new approaches in the industrial business have contributed to this, as well as the implementation of measures to improve sales productivity and the strengthening of emphasis for quality-oriented advisory services. In 2008 we want to continue to push Helvetia's growth in Austria. We are also convinced that our 150 years of success in the insurance market will give us enough power in our anniversary year to outperform the market in terms of growth.
In France, last year's growth in gross domestic product is expected to have been almost 2%. Due to rising energy costs and higher prices for consumer durables, consumer prices probably rose by around 2.5%. Unemployment decreased substantially by around 8% for the second year running. In contrast to the trend on the world markets, the French economy was relatively robust at the end of the year.
Although the entire French insurance market was on a growth trajectory, the transport segment was in decline again in spite of the increase in international trade. The situation in the transport insurance market was negatively affected by strong international competition as well as the weakness of the dollar.
Helvetia France has been concentrating exclusively on transport insurance for more than 15 years. In the past we strengthened our position in this market with several acquisitions, but in the business year we focused on organic development.
With a gross premium income of CHF 90.6 million in 2007 and a market share of around 6%, Helvetia remains the fifth largest transport insurer in France. In 2007, premium volume fell 2.4% year-on-year (–6.5% in original currency). This was caused by the fact that we follow an incomeoriented policy within a field which has become very competitive internationally.
| 2007 | 2006 | Change | |
|---|---|---|---|
| Transport | 87.5 | 92.8 | –5.7% |
| Liability | 3.1 | 0.0 | 100.0% |
| Total | 90.6 | 92.8 | –2.4% |
Around 56% of total premiums were derived from cargo insurance and around 40% from shipper's liability insurance. The other transport segments generated around 4% of the total.
In 2007, the transport business was in good shape again and the net combined ratio was again less than 85%.
Last year Helvetia introduced several new products to the market to round off its product range and prepared the launch in 2008 of several products that are even better tailored to the needs of its customers. Management also saw future-oriented changes and administrative processes were streamlined inabid to prepare the company for profitable growth. The opening of another regional agency will also enable us to achieve better market penetration and to push future growth.
We are absolutely convinced that Helvetia France will continue to operate successfully in the highly competitive transport insurance market and that it will generate profitable growth.
France, Paris – 2.16 p.m. Valérie Guéguen-Corne, in charge of marketing and communication, returning from the canteen at the head office in Courbevoie in the company of her colleagues.
Primary insurers and reinsurers posted record results in 2006 as the claims experience was very good, mostly because there were no natural disasters. As a result, the renewal round for reinsurance contracts for 2007 went hand in hand with price reductions, in particular for non-proportional catastrophe coverage. In most of the other segments prices and conditions remained attractive.
Assumed reinsurance had another excellent year and, in spite of the claims related to the winter storm Cyril, the result is only marginally below the record result for 2006, which was a year of very low claims. This is even more impressive if we remember that global claims related to natural disasters in 2007 were almost double that of the previous year.
The good result in the double-digit CHF million range is again based on a strict profit-oriented underwriting policy and a well-diversified portfolio as well as a cost ratio which is very low compared to the market.
The 2007 renewal round confirmed that Helvetia's assumed reinsurance business is well-positioned to exploit market opportunities and has a very good franchise. Premium volume increased by as much as 24.1% year-on-year to CHF 239.6 million in spite of our withdrawal from the North American market. This increase is due on the one hand to the interactive S&P 'A–' rating with stable outlook received at the end of 2006, as this had a positive impact on the expansion of existing relationships as well as on new business, and on the other to currency effects and follow-up premiums for earlier years.
Property insurance accounted for around 55% of premium income and remains the major component in our well-proportioned portfolio. Pure catastrophe insurance only contributed 3% to the total volume.
We were generally satisfied with the 2008 renewal round. Although increased competition and a positive claims experience meant that some segments saw a slight softening of the market, reinsurance prices and conditions remained at a level that will allow us to achieve a positive underwriting result. As we terminated contracts that no longer met our profit expectations, premium volume for 2008 is expected to be slightly lower, which once again confirms our profit-oriented approach.
Embedded value measures the shareholder value of the life insurance portfolio and is made up of
The adjusted equity includes 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 of the reporting date. Solvency costs are the costs incurred to cover the solvency requirements of the business.
In order to calculate embedded value, different best estimate assumptions are made, notably concerning return on investments, costs, claims experience and policyholder profit participation. The key assumptions are listed in a table on the following page. The embedded value depends on these assumptions, while the sensitivities are shown in the table on page 72.
The embedded value that Helvetia has published here was calculated in accordance with the traditional method. In contrast, the European embedded value incorporates other variables, such as guarantees and options included in the business. Both embedded value methods are closely connected to shareholder value and are useful to company management. Future new business is not taken into consideration in either of the calculation methods.
Deloitte & Touche LLP audited the calculation method selected by Helvetia Group as well as the assumptions applied to the calculation of the embedded value as at 31.12.2007. Deloitte considers the calculation method applied by Helvetia Group and the assumptions to be appropriate and reasonable and the disclosures on embedded value given below and based on the selected calculation method and 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.
The embedded value was determined in full for all Helvetia Group companies that handle life business. Therefore the life business in Switzerland and the life business in the EU countries Germany, Austria, Spain and Italy were considered.
At the end of 2007, the embedded value of Helvetia Group amounted to CHF 2,223.8 million, which represents an increase of CHF 342.1 million or 18.2% year-on-year. This strong increase is mostly due to a higher yield on new investments in bonds as well as the positive claims experience. Two additional insurance portfolios also contributed CHF 81.2 million to the increase. The value of new business written improved by 49% thanks to a higher volume of new business and the fact that new business is more profitable due to the higher new money rate.
| Embedded value after tax as per 31.12. in CHF million | 2007 | 2006 |
|---|---|---|
| Switzerland | 1 793.0 | 1 519.4 |
| of which value of insurance portfolio | 1 024.9 | 801.0 |
| of which adjusted equity | 1 130.5 | 1 089.0 |
| of which solvency costs | –362.4 | –370.6 |
| EU | 430.8 | 362.3 |
| of which value of insurance portfolio | 289.4 | 225.5 |
| of which adjusted equity | 233.0 | 224.8 |
| of which solvency costs | –91.6 | –88.0 |
| Total | 2 223.8 | 1 881.7 |
| of which value of insurance portfolio | 1 314.3 | 1 026.5 |
| of which adjusted equity | 1 363.5 | 1 313.8 |
| of which solvency costs | –454.0 | –458.6 |
| Assumptions | 2007 | 2006 |
|---|---|---|
| Switzerland | ||
| Risk discount rate | 7.0% | 7.0% |
| Yield on bonds | 3.4% – 3.7% | 2.8% |
| Yield on equities | 6.5% | 6.5% |
| Yield on real estate | 4.5% | 4.5% |
| EU | ||
| Risk discount rate | 8.0% | 8.0% |
| Yield on bonds | 4.7% – 5.2% | 4.0% – 4.2% |
| Yield on equities | 7.5% | 7.5% |
| Yield on real estate | 4.6% | 5.1% |
| Development of embedded value after tax in CHF million | 2007 | 2006 |
|---|---|---|
| Embedded value as of 1 January | 1881.7 | 1673.6 |
| Operating profit from insurance portfolio and adjusted equity | 155.3 | 138.2 |
| Value of new business | 32.3 | 21.7 |
| Economic changes, including changes to unrealised gains and losses on investments | ||
| (equities and real estate) | 120.3 | 64.9 |
| Dividends and movement of capital | –58.6 | –27.3 |
| Portfolios added since last year | 81.2 | – |
| Foreign currency translation differences | 11.6 | 10.6 |
| Embedded value as of 31 December | 2223.8 | 1881.7 |
| Sensitivities in percentage | 2007 | 2006 | |
|---|---|---|---|
| +1% | change to risk discount rate | –7.1% | –7.1% |
| –1% | change to risk discount rate | +8.6% | +8.7% |
| –10% | change to fair value of equities | –3.5% | –3.1% |
| –10% | change to fair value of real estate | –8.0% | –8.3% |
| +1% | change to new money rate | +6.2% | +7.3% |
| –1% | change to new money rate | –6.6% | –9.6% |
| New business | 2007 | 2006 |
|---|---|---|
| Switzerland | ||
| Value of new business in CHF million | 22.1 | 17.1 |
| Annual premium equivalent (APE) in CHF million | 119.3 | 117.0 |
| Value of new business (APE) in % | 18.5% | 14.6% |
| Present value of new business premiums (PVNBP) in CHF million | 1034.7 | 1183.0 |
| Value of new business (PVNBP) in % | 2.1% | 1.4% |
| EU | ||
| Value of new business in CHF million | 10.2 | 4.6 |
| Annual premium equivalent (APE) in CHF million | 83.3 | 62.1 |
| Value of new business (APE) in % | 12.2% | 7.4% |
| Present value of new business premiums (PVNBP) in CHF million | 614.3 | 441.9 |
| Value of new business (PVNBP) in % | 1.7% | 1.0% |
| Total | ||
| Value of new business in CHF million | 32.3 | 21.7 |
| Annual premium equivalent (APE) in CHF million | 202.6 | 179.1 |
| Value of new business (APE) in % | 15.9% | 12.1% |
| Present value of new business premiums (PVNBP) in CHF million | 1649.0 | 1624.9 |
| Value of new business (PVNBP) in % | 2.0% | 1.3% |
APE: 100% annual new business premium +10% single new business premium PVNBP: present value of new business premiums
The 2007 stock exchange year was shaped by contrary developments. Driven by a persistently booming economy in the Far East and growing takeover speculation, many equity markets exceeded the previous record highs in the fifth bull year after the new economy bubble burst.
In the second half of the year, however, the subprime and credit crisis put the euphoria to an abrupt end. Illiquid money and credit markets and a serious loss of confidence caused volatility on the equity markets, and only courageous action by the central banks avoided off worse.
In spite of the severe turbulence the US markets closed well into positive territory, while Japan once again did not manage to meet expectations. Thanks to sustained economic growth, the emerging markets of the Far East mostly achieved double-digit gains. The leader of the pack was the Chinese stock exchange with a performance of more than 160%.
Europe performed irregularly. Germany was the undisputed forerunner with a performance of 22%. Switzerland, however, closed in negative territory due to the comparatively tight market and the high weighting of the financial sector.
The Helvetia share was up 1.37% at the end of the 2007 stock exchange year. The year-end price was CHF 407.00 after a volatile year of being sucked into the vortex of the market during which the share price fluctuated between a high of CHF 540.00 in April and a low of CHF 340.00 in November. Compared to the Swiss Performance Index (–0.05%) and the insurance index (–8.32%), our share performed very well in an environment that was largely unfriendly towards financial stocks. This confirms our investors' confidence in our company.
| 2007 | 2006 | |
|---|---|---|
| Helvetia Group | ||
| Consolidated equity in CHF million | 2 850.6 | 2 738.4 |
| Consolidated equity per share in CHF | 332.1 | 319.1 |
| Group profit for the period per share in CHF | 46.7 | 49.3 |
| Return on equity (ROE) | 14.4% | 16.2% |
| Helvetia Holding registered share | ||
| Stock exchange price | ||
| Year-end in CHF | 407.0 | 401.5 |
| High for the year in CHF | 540.0 | 404.5 |
| Low for the year in CHF | 340.0 | 271.0 |
| Market capitalisation at year-end price in CHF million | 3 521.7 | 3 474.1 |
| Ratio market capitalisation/consolidated equity | 124% | 127% |
| Ratio market capitalisation/gross premiums | 64% | 66% |
| Number of shareholders as of reporting date | 5 838 | 4 366 |
| Annual dividend per share1 in CHF |
15.00 | 13.50 |
| Dividend yield2 | 3.7% | 3.4% |
| P/E ratio2 | 8.7 | 8.1 |
| Payout ratio | 32% | 28% |
1 Proposal to the Shareholders' Meeting
2 Based on year-end price
Share price trend 1.1.2007 to 29.2.2008 in CHF
SPI overall
SPI insurance
Last year the number of investors holding Helvetia Holding shares increased by more than 25%. Our shareholder structure changed only slightly in the business year, which means that our ownership base is very stable. As of 31.12.2007, a total of 5,838 registered shareholders were entered in the share register. The investor groups comprise:
| 31.12.2007 | 31.12.2006 | |
|---|---|---|
| Private individuals | 10.53% | 12.8% |
| Banks and insurance | ||
| companies | 27.93% | 24.8% |
| Other institutional investors | 61.54% | 62.4% |
At the balance sheet date of 31.12.2007, 92.6% of investors were based in Switzerland, while 7.4% were based abroad. According to the new disclosure requirements of the SWX Swiss Exchange dated 1.12.2007 we have to disclose holdings of more than 3% separately. The free float did not change compared to the previous year.
| 31.12.2007 | 31.12.2006 | |
|---|---|---|
| Patria Genossenschaft | 30.1% | 30.1% |
| Vontobel | 4.0% | 4.0% |
| Raiffeisen | 4.0% | 4.0% |
| Munich Re | 8.2% | 8.2% |
| Bâloise Group | 4.04% | n/a |
| Total holdings <3% | 49.66% | 53.7% |
The purchase of registered Helvetia shares is not subject to any restrictions. Shareholders who purchase the shares in their own name and on their own behalf will be entered in the share register for up to a maximum of 5% of the total number of issued registered shares with voting rights.
Helvetia has been pursuing an income-oriented, continuous distribution policy for many years. The Group's excellent operating performance and good earning power enable the Board of Directors to request the Shareholders' Meeting of 25 April 2008 to approve the distribution of a dividend of CHF 15.00 per share for the 2007 financial year. This is 11.1% more than the dividend of CHF 13.50 paid out for the 2006 financial year. In addition we will request a reduction of the par value of the Helvetia shares which will be paid out in the form ofaone-off anniversary payment to our shareholders amounting to CHF 85.7 million or CHF 9.90 per share. These measures live up to our principle of active equity management and at the same time set the stage for attractive future returns on equity.
Dividend per share
Reduction of par value per share
Dividend yield at year-end price
Proposal to the Shareholders' Meeting for a dividend payment and reduction in par value *
Helvetia actively promotes the conservation of the environment and views sustainable conduct as an important investment in its future. Environmental sensitivity is part and parcel of the daily working lives of all our employees. The following is a description of the most important measures implemented in our country markets Switzerland and Germany last year. We also introduce some products that reward ecological consciousness.
In a time when raw materials are becoming ever scarcer, climate change is an important topic of conversation and the future security of electricity supply in Switzerland is in question, the alternative energies market is growing dynamically. The ten leading providers in the field of solar power plants (photovoltaic plants) share around 90% of the market in Switzerland. Helvetia has developed a new insurance product that covers the specific risks associated with photovoltaic plants and is only sold in combination with such plants. A framework agreement has since been concluded with six of the leading providers in this market.
Helvetia was also nominated as one of the top providers in the German market in 2007. The current climate discussion in Europe which puts the onus on every individual company to increase the share of renewable energies in the EU in the next few years will boost the photovoltaic market and promises a good future for Helvetia's photovoltaic insurance.
Helvetia introduced a green discount for alternative-fuel vehicles on 14 May 2007. Vehicles using alternative technologies or ecological fuel are insured at lower rates. Consumers who choose a hybrid car or a car powered by alternative fuel, e.g., natural gas instead of petrol, will in future benefit from a discount of up to 15% on liability and collision damage insurance. Helvetia has been insuring electric cars at 'green rates' for more than ten years. In this case the premium reduction
on various insurance policies is sometimes as much as 50%.
In Germany, environment-related changes were introduced in household contents insurance. The compensation limit for damage caused by overvoltage was increased substantially and the deductible for expanded natural disaster coverage was reduced.
Helvetia has been supporting the WWF eastern Switzerland environmental award 'Der Grüne Zweig' (The Green Branch) for the past five years. This prize honours outstanding environmental concepts developed by families, school classes, groups and private persons who display great commitment to preserving the environment in which we live. The eastern Switzerland environmental award for 2007 was given to Class 2a of the school in Jonschwil and the 'Waldkinder' [Forest Children]. The school class and the forest children exhibited impressive commitment to the preservation of our environment.
In summer 2007 Helvetia celebrated the toppingout ceremony for one of its largest construction projects in Germany, the 'Altenhagener Weg' in Hamburg. This project consists of the total refurbishment or new construction of 156 apartments on a site of 22,200 square metres. Helvetia attaches special importance to applying the latest energy-saving standards. All buildings will retain the typical Hamburg architectural style with traditional brick façades. Effective thermal insulation and state-of-the-art heating technology guarantee low operating costs.
In awareness of its corporate responsibility, Helvetia supported numerous non-profit projects and organisations in 2007. Donations were mainly given to charitable and social institutions. We also focus on projects aimed at helping young people and promoting the arts. The public authorities also benefited from Helvetia's support as we paid CHF 97.2 million in direct taxes last year.
Helvetia Patria Jeunesse is a foundation that promotes Swiss youth groups, clubs and youth projects in keeping with the foundation's purpose. It donated around CHF 718,000 to 54 institutions in the year under review. This includes a special anniversary donation in 2008 of CHF 500,000 to the national camp of the Swiss Guide and Scout Movement (Contura 08).
'Jugendliches Theater 2000' is provided with CHF 30,000 a year. The aim of this initiative of the Helvetia Patria-Paul Bürgi fund is to motivate young people between the ages of 16 and 20 to take advantage of the cultural offerings of the city theatre in St. Gallen.
The year 2007 was the third year of Helvetia's successful partnership with Swiss-Ski. Helvetia proudly supports Switzerland as a ski nation and views this commitment as an investment in the next generation of Swiss skiers. This sponsorship improved our visibility and strengthened the market position of the 'Helvetia' brand. We will continue this partnership in the same vein. Internationally, Helvetia Germany continued its commitment to winter sport as one of the official main sponsors of the Four Hills Tournament, which is also the focus of Helvetia Austria's sponsorship activities.
As our head office is located in St. Gallen, Helvetia once again acted as a main sponsor of the St. Gallen Festival. The open-air production of 'Cavalleria Rusticana' was set against the historical backdrop of the monastery and served as the venue for two exclusive customer events.
Helvetia also supported cultural events such as the Volta Show in Basel (a side show to Art Basel), the Blue Balls festival in Lucerne, the Montreux Jazz Festival and the Menuhin festival in Gstaad. Numerous customers attended these events at our invitation. Helvetia's commitment to the Swiss Wrestling and Alpine Festival is quite unique. This event in Aarau was attended by more than 200,000 spectators, among them 800 guests invited to this extremely successful customer event by Helvetia.
Helvetia was a chief sponsor in financial and logistics terms of the third World Ageing and Generations Congress at the University of St. Gallen in autumn 2007. Experts from all over the world gathered in St. Gallen to engage in high-level discussions on possible solutions to demographic trends. Helvetia also supported the two generations forums of the WDA (World Demographic Association) in Baden and St. Gallen and used them as a platform for customer events.
Helvetia added two commitments in the Swiss SME segment to its portfolio of sponsorships and supported the Swiss Venture Club's third entrepreneur's award for northern Switzerland and the fifth SME seminar in St. Gallen.
Helvetia Germany also used music to express its commitment to humanitarian issues at two big events. It organised a unique pop/classical concert to promote international union and combat racism together with the German Red Cross, and supported a top-class cultural event, the German Opera Ball in Frankfurt. All donations to this event are used for accident prevention and to help accident victims who suffered brain damage.
working on a presentation on the current corporate strategy.
| Consolidated balance sheet |
84 |
|---|---|
| Consolidated statement of equity Consolidated cash flow statement |
86 88 |
| Notes to the consolidated financial statements |
91 |
| Report of the Group Auditors |
187 |
| Gross premiums written Reinsurance premiums ceded |
Notes 3 |
2007 5 488.9 –288.7 |
2006 5 255.7 –272.0 |
|---|---|---|---|
| Net premiums written |
5 200.2 | 4 983.7 | |
| Net change in unearned premium reserve |
–35.6 | –24.6 | |
| Net earned premiums |
5 164.6 | 4 959.1 | |
| Interest and dividend income |
793.8 | 704.4 | |
| Gains and losses on investments (net) |
7.1.1 | 130.2 | 291.4 |
| Income on investment property |
7.1.3 | 194.4 | 186.4 |
| Other income |
7.1.4 | 89.1 | 89.4 |
| Total operating income |
6 372.1 | 6 230.7 | |
| Expenses | |||
| in CHF million |
|||
| Claims incurred including claims-handling costs (non-life) Claims and benefits paid (life) Change in actuarial reserve |
–1 610.9 –2 369.8 –591.1 |
–1 465.8 –2 226.3 –738.0 |
|
| Reinsurers´ share of benefits and claims |
205.9 | 160.8 | |
| Policyholder dividends and bonuses |
–173.4 | –166.7 | |
| Insurance benefits and claims (net) |
–4 539.3 |
–4 436.0 |
|
| Acquisition costs |
–692.4 | –647.4 | |
| Operating and administrative expenses |
–534.2 | –509.8 | |
| Interest payable |
–44.6 | –41.8 | |
| Other expenses |
–51.7 | –29.3 | |
| Total operating expenses |
–5 862.2 |
–5 664.3 |
|
| Profit or loss from operating activities |
509.9 | 566.4 | |
| Finance costs Share of profit or loss of associates |
8.1 | –7.2 2.8 |
–6.0 1.8 |
| Profit or loss before tax Income taxes |
505.5 –103.5 |
562.2 –138.4 |
|
| 10 | |||
| Profit or loss for the period |
402.0 | 423.8 | |
| Attributable to: Shareholders of Helvetia Holding AG |
401.0 | 423.0 | |
| Minority interests 1 |
1.0 | 0.8 | |
| Earnings per share: |
|||
| Basic earnings per share (in CHF) |
46.72 | 49.35 | |
| Diluted earnings per share (in CHF) |
11.4 | 46.72 | 49.35 |
| 11.4 | |||
| Details on this item can be found under 'Consolidated statement of equity'. |
|||
| 1 | |||
| as of 31.12. Property and equipment Goodwill and other intangible assets |
Notes 5 |
2007 560.6 64.9 |
2006 526.2 68.6 |
|---|---|---|---|
| Investments in associates |
6 | 48.3 | 46.2 |
| Investment property |
7.3 | 3 970.4 | 3 890.0 |
| Financial assets |
7.4 | 25 362.8 |
24 991.5 |
| Receivables from insurance business 1 |
7.5 | 696.4 | 638.1 |
| Deferred acquisition costs (life) |
9.5 | 223.2 | 219.8 |
| Reinsurance assets |
9.4.1 | 688.5 | 782.4 |
| Deferred tax assets |
9.1 | 49.8 | 49.6 |
| Current income tax assets |
10.4 | 6.2 | 1.5 |
| Other assets |
157.5 | 151.7 | |
| Accrued investment income |
340.2 | 323.3 | |
| Cash and cash equivalents |
375.9 | 121.2 | |
| Total assets |
32 544.7 |
31810.1 | |
| This position contains the previous year's positions 'Loans and receivables (LAR) incl. (HTM)', 1 |
money market instruments', |
'Held-to-maturity | investments |
(HTM)','Available-for-sale investments (AFS)' and 'Financial assets at fair value through profit or loss'.
| as of 31.12. Share capital Capital reserves |
Notes 11.1 |
2007 86.5 636.1 |
2006 86.5 636.1 |
|---|---|---|---|
| Treasury shares |
–17.1 | –17.1 | |
| Unrealised gains and losses (net) |
48.2 | 127.9 | |
| Foreign currency translation differences |
11.2.4 | 20.9 | 15.6 |
| Retained earnings |
1 526.4 | 1 277.2 | |
| Valuation reserves for contracts with participation features |
545.8 | 608.8 | |
| Equity of Helvetia Holding AG shareholders |
11.2.5 | 2 846.8 | 2 735.0 |
| Minority interests |
3.8 | 3.4 | |
| Total equity |
2 850.6 | 2 738.4 | |
| Actuarial reserve (gross) |
21 725.0 |
21 019.0 |
|
| Provision for future policyholder participation |
9 | 693.2 | 742.2 |
| Loss reserves (gross) |
9 | 3 017.8 | 2 886.1 |
| Unearned premium reserve (gross) |
9 | 944.7 | 890.5 |
| Financial liabilities from financing activities |
9 | 234.2 | 199.1 |
| Financial liabilities from insurance business |
8.1 | 1 295.3 | 1 489.5 |
| Other financial liabilities |
8.2 | 21.4 | 37.2 |
| Liabilities from insurance business |
8.3 | 737.1 | 703.5 |
| Non-actuarial provisions |
9.5 | 77.5 | 64.1 |
| Employee benefit obligations |
12.1 | 286.6 | 272.1 |
| Deferred tax liabilities |
13.2 | 405.9 | 465.7 |
| Current income tax liabilities |
10.4 | 129.5 | 115.9 |
| Other liabilities and accruals |
125.9 | 186.8 | |
| Total liabilities |
29 694.1 |
29 071.7 |
|
| Total liabilities and equity |
32 544.7 |
31 810.1 |
|
attributable to shareholders of Helvetia Holding AG
| in CHF million |
Share capital |
Capital reserves |
Treasury shares |
gains and losses (net) |
|
|---|---|---|---|---|---|
| Notes Balance as of 1 January 2006 |
11.1 86.5 |
628.1 | –24.4 | 11.2.4 182.3 |
|
| Fair value revaluation of investments |
– | – | – | –125.5 | |
| Change in liabilities for contracts with participation features |
– | – | – | 48.3 | |
| Foreign currency translation differences |
– | – | – | – | |
| Deferred taxes |
– | – | – | 22.4 | |
| Gains/losses recognised directly in equity (net) |
– | – | – | –54.8 | |
| Profit for the period |
– | – | – | – | |
| Total recognised income |
– | – | – | –54.8 | |
| Transfer from/to retained earnings |
– | – | – | 0.4 | |
| Change in minority interests |
– | – | – | 0.0 | |
| Treasury share transactions |
– | 2.3 | 7.3 | – | |
| Share-based payments |
– | 0.7 | – | – | |
| Dividends | – | – | – | – | |
| Shareholders' contribution |
– | 5.0 | – | – | |
| Balance as of 31 December 2006 |
86.5 | 636.1 | –17.1 | 127.9 | |
| Balance as of 1 January 2007 |
86.5 | 636.1 | –17.1 | 127.9 | |
| Fair value revaluation of investments Change in liabilities for contracts with participation features |
– – |
– – |
– – |
–226.6 122.5 |
|
| Foreign currency translation differences |
– | – | – | – | |
| Deferred taxes |
– | – | – | 25.6 | |
| Gains/losses recognised directly in equity (net) |
– | – | – | –78.5 | |
| Profit for the period |
– | – | – | – | |
| Total recognised income |
– | – | – | –78.5 | |
| Transfer from/to retained earnings |
– | – | – | –1.2 | |
| Change in minority interests |
– | – | – | 0.0 | |
| Treasury share transactions |
– | –0.7 | – | – | |
| Share-based payments |
– | 0.7 | – | – | |
| Dividends | – | – | – | – | |
| Shareholders' contribution |
– | 9.0 | – | – | |
| Allocation of shareholders' contribution |
– | –9.0 | – | – | |
| Balance as of 31 December 2007 |
86.5 | 636.1 | –17.1 | 48.2 | |
| Foreign | reserves for contracts with |
Total before |
|||
|---|---|---|---|---|---|
| currency reserve 0.1 – |
Retained earnings 1 016.5 – |
participation features 11.2.5 588.6 –84.5 |
minority interests 2 477.7 –210.0 |
Minority interests 3.1 –0.2 |
Total equity 2 480.8 –210.2 |
| – | – | – | 48.3 | – | 48.3 |
| 15.5 | 0.0 | – | 15.5 | 0.1 | 15.6 |
| – | – | 20.0 | 42.4 | 0.1 | 42.5 |
| 15.5 | 0.0 | –64.5 | –103.8 | 0.0 | –103.8 |
| – | 338.5 | 84.5 | 423.0 | 0.8 | 423.8 |
| 15.5 | 338.5 | 20.0 | 319.2 | 0.8 | 320.0 |
| – | –0.6 | 0.2 | 0.0 | – | 0.0 |
| 0.0 | 0.0 | – | 0.0 | –0.1 | –0.1 |
| – | – | – | 9.6 | – | 9.6 |
| – | – | – | 0.7 | – | 0.7 |
| – | –77.2 | – | –77.2 | –0.4 | –77.6 |
| – | – | – | 5.0 | – | 5.0 |
| 15.6 | 1277.2 | 608.8 | 2 735.0 | 3.4 | 2 738.4 |
| 15.6 | 1277.2 | 608.8 | 2 735.0 | 3.4 | 2 738.4 |
| – | – | –135.1 | –361.7 | –0.2 | –361.9 |
| – | – | – | 122.5 | – | 122.5 |
| 5.3 | – | – | 5.3 | 0.1 | 5.4 |
| – | – | 34.8 | 60.4 | 0.0 | 60.4 |
| 5.3 | 0.0 | –100.3 | –173.5 | –0.1 | –173.6 |
| – | 363.6 | 37.4 | 401.0 | 1.0 | 402.0 |
| 5.3 | 363.6 | –62.9 | 227.5 | 0.9 | 228.4 |
| – | 1.3 | –0.1 | 0.0 | – | 0.0 |
| 0.0 | 0.0 | – | 0.0 | 0.0 | 0.0 |
| – | – | – | –0.7 | – | –0.7 |
| – | – | – | 0.7 | – | 0.7 |
| – | –115.7 | – | –115.7 | –0.5 | –116.2 |
| – | – | – | 9.0 | – | 9.0 |
| – | – | – | –9.0 | – | –9.0 |
| 20.9 | 1 526.4 | 545.8 | 2 846.8 | 3.8 | 2 850.6 |
| Profit before tax |
2007 505.5 |
2006 562.2 |
|---|---|---|
| Reclassifications to investing and financing activities (affecting cash): |
||
| Realised gains and losses on property, equipment and intangible assets Realised gains and losses on sale of associates |
0.4 – |
0.2 0.0 |
| Dividends from associates |
–0.6 | –0.6 |
| Adjustments: | ||
| Depreciation/amortisation of property, equipment and intangible assets |
37.9 | 31.8 |
| Realised gains and losses on financial assets and investment property Unrealised gains and losses on investments in associates 1 |
–51.4 –2.0 |
–65.0 –0.9 |
| Unrealised gains and losses on investment property |
43.9 | 47.2 |
| Unrealised gains and losses on financial instruments 1 |
6.5 | –77.2 |
| Share-based payments for employees |
0.7 | 0.8 |
| Foreign currency gains and losses |
–53.0 | –87.4 |
| Other income and expenses not affecting cash |
88.9 | 13.9 |
| 2 | ||
| Change in operating assets and liabilities: |
||
| Deferred acquisition costs (life) |
–2.9 | 2.4 |
| Reinsurance assets |
99.9 | 128.0 |
| Actuarial reserve |
590.7 | 738.8 |
| Provisions for future policyholder participation |
61.5 | 98.7 |
| Loss reserves |
87.1 | 44.8 |
| Unearned premium reserve |
38.0 | 27.5 |
| Financial liabilities from insurance business |
–292.5 | –256.7 |
| Changes in other operating assets and liabilities |
–35.7 | –39.7 |
| Purchase of investment property 1 |
–61.3 | –81.9 |
| Sale of investment property |
38.5 | 30.8 |
| Purchase of bonds |
–3 403.5 |
–5 483.9 |
| Repayment/sale of bonds |
2 653.3 | 4 768.8 |
| Purchase of shares, investment fund units and alternative investments |
–2 185.8 |
–1 287.7 |
| Sale of shares, investment fund units and alternative investments |
2 123.5 | 1 332.8 |
| Purchase of derivatives |
–117.4 | –135.7 |
| Sale of derivatives |
4.1 | 0.1 |
| Origination of mortgages and loans |
–349.4 | –366.5 |
| Repayment of mortages and loans |
398.1 | 337.0 |
| Purchase of money market instruments |
–17 735.6 | –55 129.1 |
| Repayment of money market instruments |
18 114.1 |
55 041.2 |
| Cash flow from operating activities (gross) |
601.5 | 194.7 |
| Income taxes paid |
–97.2 | –81.2 |
| Cash flow from operating activities (net) |
504.3 | 113.5 |
| The change to the previous year's figures for these positions results from the new and more precise allocation balance 1 |
of the cash flows |
related to the new |
| 'Other with 2 |
sheet structure. 2'Other income and expenses not affecting cash' primarily contains the change to interest-accruing profit participation of owners of contracts withparticipation features.
| 2007 2006 Purchase of property and equipment –135.7 –86.1 Sale of property and equipment 3.7 1.4 |
||||
|---|---|---|---|---|
| Purchase of intangible assets |
–12.5 | –20.4 | ||
| Sale of intangible assets |
0.1 | 0.0 | ||
| Purchase of investments in subsidiaries, net of cash and cash equivalents |
0.0 | 0.0 | ||
| Sale of investments in subsidiaries, net of cash and cash equivalents |
– | – | ||
| Dividends from associates |
0.6 | 0.6 | ||
| Cash flow from investing activities (net) |
–143.8 | –104.5 | ||
| Cash flow from financing activities |
||||
| in CHF million |
||||
| Sale |
| Sale of treasury shares Purchase of treasury shares |
– –0.7 |
9.6 – |
|---|---|---|
| Shareholders' contribution Dividends paid |
9.0 –116.2 |
5.0 –77.6 |
| Lease payments under finance lease |
– | 0.0 |
| Cash flow from financing activities (net) |
–107.9 | –63.0 |
| Effect of exchange rate differences on cash and cash equivalents |
2.1 | 2.8 |
| Total change in cash and cash equivalents |
254.7 | –51.2 |
| Cash and cash equivalents |
||
| in CHF million |
||
| Cash Change |
2007 |
| Cash and cash equivalents as of 31 December |
375.9 | 121.2 |
|---|---|---|
| Composition of cash and cash equivalents |
||
| in CHF million |
| Cash | 2007 0.7 |
2006 1.6 |
|---|---|---|
| Due from banks Other cash equivalents with a maturity of less than three months |
375.0 0.2 |
119.4 0.2 |
| Balance as of 31 December |
375.9 | 121.2 |
| Other disclosures on cash flow from operating activities: Interest |
||
| Dividends |
| Interest received |
726.8 | 694.0 |
|---|---|---|
| Dividends received |
86.8 | 54.8 |
| Interest paid |
11.6 | 10.4 |
| 2. 3. |
Summary of significant accounting policies Segment information |
92 107 |
|---|---|---|
| 4. | Foreign currency translation |
114 |
| 5. | Property and equipment |
115 |
| 6. | Goodwill and other intangible assets |
116 |
| 7. | Investments | 117 |
| 8. | Financial liabilities |
126 |
| 9. | Insurance business |
129 |
| 10. Income taxes |
136 | |
| 12. Provisions, contingent liabilities and other commitments |
145 |
|---|---|
| 13. Employee benefits |
146 |
| 14. Share-based payments |
151 |
| 15. Related party transactions |
152 |
| 16. Financial instruments by categories |
157 |
| 17. Risk management |
159 |
| 18. Events after the reporting date |
184 |
| 19. Scope of consolidation |
185 |
Group is an all-lines insurance group operates in many life and non-life business as well as in reinsurance. The holding company, Helvetia Holding AG with headquarters in St. Gallen, is a Swiss public limited company listed on the SWX Swiss Exchange. The Group operates through its branch offices and subsidiaries in the insurance markets of Switzerland, Germany, Austria, Spain, Italy and France, and worldwide in assumed reinsurance business. Parts of its investment and financing activities are 2.accounting
through subsidiaries and fund companies Luxembourg and Jersey (UK). The Board of Directors approved the consolidated financial
statements and authorised them for issue 13.3.2008. The financial statements will be submitted to the shareholders for approval at theShareholders' Meeting on 25.4.2008.
consolidated financial statements of Helvetia were prepared in accordance with Inter- Financial Reporting Standards (IFRS) and under the historical cost convention with the exception of adjustments resulting from the IFRS requirement to record investments at fair value. The fair value valuation methods are explained in Note 2.4 (page 95). 2.1Changes in accounting policies
standards, interpretations (IFRIC) and to standards came into force: n IFRS7 – Financial instruments: disclosures
n IFRIC 10 – Interim financial reporting and Adoption of the standards did not lead to any significant
adjustments to accounting policies. amendments that are relevant to Helvetia Group are explained below: The
IFRS 7 – Financial instruments: disclosures principles in this IFRS complement the princi for recognising, measuring and presenting financial assets and financial liabilities in IAS 32 (Financial instruments: presentation) and IAS 39 (Financial instruments: recognition and measurement). IFRS 7 requires entities to disclose the significance of financial instruments for the entity's financial position and performance and to report on the risks arising from financial instruments. The regulations in IFRS 7 primarily relate to disclosure and therefore have no financial implications for HelvetiaGroup.
regarding equity in the annual report. amendment relates exclusively to disclosure and therefore has no financial implications for Helvetia Group. Thisinterpretation investigates whether IFRS 2
be applied to transactions where the cannot identify some or all of the specific goods or services received. Helvetia Group does not have any transactions that would be affected by this interpretation. This
IFRIC 9 – Reassessment of embedded derivatives interpretation clarifies that embedded deriva must be accounted for separately from the host contract and may only be reassessed when there has been a change in the terms of the contract that significantly modifies the related cash flows. The application of this interpretation has no impact on the assessment practice of HelvetiaGroup.
the requirements of IAS 34 (Interim finan reporting) and the recognition of impairment losses on goodwill in IAS 36 (Impairment of assets), and the effect of this interaction on specific financial assets (IAS 39). IFRIC 10 concludes that an entity may not reverse an impairment loss recognised in a previous interim period in respect of goodwill for which a reversal is not allowed in IAS 36 and IAS 39 in subsequent consolidated financial statements. In previous periods Helvetia Group already dealt with impairment losses in accordance with this interpretation. The application of this interpretation therefore does not affect theGroup.
the following published standards, inter and amendments to standards were not applied to the 2007 consolidated financial statements:
| Effective date: to be applied for annual periods |
|
|---|---|
| IFRS 8 – Operating segments |
1.1.2009 beginning on/after |
| Amendments to IAS 1 – Presentation of financial statements Amendments to IAS 23 – Borrowing costs |
1.1.2009 1.1.2009 |
| IFRIC 11 – IFRS 2 Group and treasury share transactions n |
1.3.2007 |
| IFRIC 12 – Service concession arrangements n |
1.1.2008 |
| IFRIC 13 – Customer loyalty programmes n |
1.7.2008 |
| IFRIC 14 – The limit on a defined benefit asset, minimum funding requirements n |
|
| and their interaction n |
1.1.2008 |
| Amendments to IFRS 2 – Vesting conditions and cancellations n |
1.1.2009 |
| Amendments to IFRS 3/IAS 27 Phase II – business combinations n |
1.7.2009 |
| n | |
| n |
Group does not expect the first-time of the new standards to have any impact on the consolidated financial statements, as this will primarily affect the type and extent of disclosure. The other new amendments to standards and interpretations are not expected to have any significant impact on the financial statements. 2.2Consolidation principles
consolidated financial statements include financial statements of Helvetia Holding AG, subsidiaries and special purpose entities. Consolidation occurs when Helvetia Holding AG exercises indirect or direct control over the company's operations. 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. Intercompany transactions and balance sheet items are eliminated. Associatesof Helvetia Group are accounted for
the equity method if significant control is by Helvetia Group. Significant control is assumed when the Group controls 20% to 50% of the voting rights. The goodwill resulting from equity valuation is posted to 'Investments in associates'. The carrying value of all investments is tested for impairment if there is objective and substantial evidence for impairment at the balance sheet date. Associates of Helvetia Group are listed together with
the fully consolidated subsidiaries in Note 19 page 185).
of the significant companies included in the have the same reporting periods. Group companies with different financial years prepare interim financial statements as of the reporting date of 31.12. 2.3 Foreign currency translation Thereporting currency of Helvetia Group
the Swiss franc (CHF). Items
included in the financial statements of those that do not have the Swiss franc as their 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 disposal of a subsidiary, these 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 Note 4.1 (page 114). Foreigncurrency transactions in the individual
are accounted for using the exchange on the date of the transaction. The individual entities translate balance sheet items
denominated in foreign currencies as monetary and non-monetary balance sheet items, which are recorded at fair value, at closing rates, and non-monetary items, which are recorded at cost, at historical rates. 'Monetary items' include cash and cash equivalents, assets and liabilities for which Helvetia Group either receives or pays a fixed or determinable amount ofmoney.
non-monetary items classified as available investments, such as shares and shares in funds, the unrealised foreign exchange gain is recognised in equity without affecting the income statement until the financial instrument is sold. However, for monetary items such as bonds and loans, the unrealised foreign exchange difference is immediately recognised in the income statement.2.4Accounting estimates
IFRS requires Group management to make and estimates that affect the reported amounts of assets and liabilities for the ongoing business year. All estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual figures and estimates may differ as a result. Management judgement is in particular required in the following assumptions relevant to the preparation of the financial statements: The
Fair value of financial assets and liabilities methods and assumptions used to determine fair value are described below: The fair value of a financial instrument is the quoted
market price for which an asset could be in an active market between knowledgeable, willing parties in an arm's length transaction.'In an active market' means that the prices are made
available regularly, either by a stock a broker or a pricing service, and that those prices represent current and regular markettransactions.
financial assets, the fair value is the quoted price, and for financial liabilities it is the ask price. If no market value in an active market is available, the
fair value is determined using valuation meth such as the discounted cash flow (DCF) method, comparison with current market transactions, with reference to transactions with similar instruments, and option price models. Such methods are considerably influenced by assumptions that have to be made, which can lead to varying fair value estimates. This affects the following positions in particular: n Alternative investments: The fair value of private equity
the range of possible fair values is very large reliable estimates cannot be made, the instrument is valued at cost, less any value adjustments (impairment). The
Impairment of available-for-sale investments judgement as to whether an equity instrument as available-for-sale is subject to impairment depends on the existence of objective indications. One decisive criterion is the constant or considerable decrease in value of an instrument: at Helvetia 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 analysts' 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 cases, the need for impairment is examined and – if justified – recorded. Thefair value of investment properties is calcu-
in Switzerland using a model-supported method (see Note 2.10.1, page 98). In order to determine the fair value, different capitalisation rates are used, which are subject to assessment by Group management. The capitalisation rates applied in the reporting period are set out in Note 7.4 (page 121). The portfolio is regularly reviewed and appraisal reports are prepared by independent experts. All other countries use independent experts to determine market estimates at intervals of three years, at themost.
Accounting estimates specific to insurance estimate uncertainties in the area of actuarial are explained in Note 2.13 (from page 101). Any significant change to the parameters used for reserve calculation is documented in Notes 9.3 (non-life business) and 9.4 (life business).Capitalisedgoodwill is tested annually for impair-
The procedure is described in Note 2.9 98). The recoverable amount is calculated on the basis of several assumptions, which are disclosed in Note 6 (page 116). 2.5 The current, non-current distinction Assetsand liabilities are classified as current if
are expected to be realised or settled within months after the reporting date. All other assets are considered to be non-current and liabilities.The following items are fundamentally classified as
non-current: 'Property and equipment', 'Good and other intangible assets', 'Investments in associates', 'Investment property' and 'Deferred tax assets and liabilities'. The following items are fundamentally classified as
current: 'Current income tax assets and liabilities', 'Accrued investment income' and 'Cash and cash equivalents'. All other positions are of a mixed nature. The differentiation
between current and non-current of relevant positions is set out in the notes. The maturity schedule of financial assets, financial liabilities and other liabilities and reserves for insurance and investment contracts is described in Note 17.4 (from page 169) as partof the risk assessment process.
and equipment are carried at cost less depreciation and accrued impair- Depreciation is normally calculated using the straight-line method over the estimated useful life as follows: n Furniture4–15 years
| Technical equipment Motor vehicles |
4–10 years 4–6 years |
|---|---|
| Computer hardware |
2–5 years |
| n | |
| n The following rates of depreciation |
apply |
| n to |
|
owner-occupied property: n Supportingstructure 1.0–3.5%
| Interior completion |
1.33–8.0% |
|---|---|
| Land is not depreciated. n |
|
| Useful of |
of
life is adjusted if the pattern of consumption the economic benefit has changed. Investments offset against the current carrying value in the period and are depreciated over the entire term if an increase in the economic benefit is expected from the investment and reliable estimates exist for the cost. Depreciation is recognised in the income statement under 'Operating and administrative expenses'. Repairs and maintenance are charged to the income statement as incurred. Tangible assets are regularly tested for impairment (see Note 2.9). 2.7 Leasing Ifa lease agreement transfers all risks and
incidental to the ownership to Helvetia the lease is classified and treated as a finance lease. The finance lease agreements of Helvetia Group are limited to lessee agreements. At inception of the lease agreement, recognition occurs at the lower of the present value of the minimumlease payments and the fair value of
lease object. A finance lease obligation of same amount is recorded as a liability. Lease are apportioned between the finance charge and reduction of the outstanding liability so as to achieve a constant rate of interest on the remaining balance of the liability. The depreciation of the asset follows the rules for depreciating tangible assets. All other lease agreements are classified as operating
leases. Payments – less any reductions – under operating lease agreements are charged to the income statement on a straight-line basis over the term of the lease. 2.8 Goodwill and other intangible assets Acquired
and amortised on a straight-line basis over useful life, normally three to ten years. Other intangible assets also include intangible assets developed by the company, principally internally developed software that is recorded at cost and amortised from the date on which it enters service. Amortisation is recognised in the income statement in the position 'Operating and administrative expenses'. Intangible assets with an indefinite useful life are not amortised, but are reviewed annually for impairment (see Note 2.9). Goodwill is the difference between the costs of a
business combination and the fair value at the date of the acquired entity's identifiable assets, liabilities and contingent liabilities. A positive balance is accounted for as goodwill. If the value of the acquired entity's net assets exceeds the acquisition cost at the purchase date, this surplus is immediately recognised in the income statement. Goodwill acquired in a business combination is recognised as an intangible asset, net of accumulated impairment loss, and is tested annually for impairment. It is carried as an assetin the local currency of the acquired entity
translated at the applicable closing rate on balance sheet date. 2.9Impairment of tangible assets,
asset amortised using the straight-line is tested for impairment if there is evidence for impairment. Goodwill and intangible assets with an indefinite useful life are reviewed for impairment annually in the second half of the year.An intangible asset is impaired if its carrying value
exceeds its recoverable amount. The recov amount is measured as the higher of fair value less cost to sell and value in use. Fair value less cost to sell is the amount obtainable from the sale of an asset at current market conditions after deducting any direct disposal costs. Value in use is the present value of estimated future cash flows expected to be generated from the continuing use of an asset and from its disposal at the end of its useful life. For the purpose of impairment testing, the value in use is measured under realistic conditions, with consideration given to planned activities and their resulting cash in- and outflows. If the carrying value exceeds the recoverable amount, the difference is recognised in the income statement as an impairment loss and reported under 'Other expenses'. A reversal of the impairment loss is recognised if
there has been a change in the estimates used determine the recoverable amount arising from events since the impairment loss was accounted for. If the new circumstances result in a decreased impairment loss, the reversal impairment is reported up to the maximum of the historical cost and recorded in the income statement in 'Otherexpenses'.
the purpose of impairment testing, goodwill is at the time of acquisition to those cash units (CGU) that are expected to benefit from the business combination. These are in general identical to the legal entities of Helvetia Group. If there is no intention to sell, the value in use of the CGU is determined and compared to the carrying value for the purpose of calculating any impairment loss. The value in use is calculated applying the discounted cash flow method (DCF), with future operating cash flows less necessary operating investments (free cash flows) being included. If there is an intention to sell, the fair value less cost to sell is used for impairment testing. If an impairment loss arises, the goodwill is adjusted accordingly. An impairment loss for goodwill cannot be reversed. 2.10 Investments AtHelvetia Group, investments include invest-
in associates, investment property and assets (securities, derivative financial assets, loans and money market instruments). The treatment of investments in associates is described in Note 2.2, page 94, under 'Consolidation principles'. Theaim of the investment property portfolio is
earn rentals or achieve long-term capital appre- Property held for investment purposes includes both land and buildings and is carried at fair value. Changes in fair value are recognised in the income statement. Companies in Switzerland calculate fair value using a model-supported valuation method, whereas all other countries use independent experts to determine market estimates at least every three years. These estimates areupdated between valuation dates.
model-supported valuation method considers factors: building type, extent of renova loss in value due to age, expected rental income as well as location, desirability, rents for comparable objects, maintenance needs, operating costs and future expectations with regard to the environment. The portfolio is regularly reviewed and appraisal reports are prepared by independent experts. Helvetia Group does not capitalise properties where
it acts as tenant in an operating lease Rental income is recognised on a straight-line basis over the lease term. Therecognition and valuation of financial assets
the IFRS categories: 'Loans' (Loans and LAR), 'Held-to-maturity' (HTM), 'At fair value through profit or loss' and 'Available-for-sale' (AFS). Financial assets are initially recognised at fair value.
Directly attributable transaction costs are as assets, except for financial assets at fair value through profit or loss which are recorded in 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. Through its securities lending activities, the Group lends out certain securities to other companies for a certain period of time and against payment. The securities lent to third parties remain under the control and in the portfolio of Helvetia Group. Revenues from securities lending are recorded in the income statement under 'Interest and dividend income'.
(LAR) and financial assets that the Group the intention and ability to hold to maturity are carried at amortised cost (AC). LAR loans are not traded on an active market. Helvetia Group usually generates them by directly providing funds to a debtor. 'Financialassets at fair value through profit or
loss' comprise 'financial assets held for trading' '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 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 reported separately from 'Interest and dividend income' in the position 'Gains and losses on investments'.Financial assets held for an undetermined period and
which cannot be classified to any other cate are classified as available-for-sale (AFS). AFS investments are carried on the balance sheet at fair value. Unrealised gains and losses are recognised directly in equity with no impact on profit or loss. Interest income is recognised on an accruals basis subject
to the asset's effective rate of interest 'Financial assets at fair value through profit or loss'). Dividends are recorded when a legalright arises. Depreciation and appreciation
from the amortised cost method are in in interest income in the income statement. line item 'Interest and dividend income' also contains the interest and dividend income from investments that are designated as 'At fair value through profit or loss'. The
2.10.3 Impairment of financial assets carrying values of financial assets that are not as 'At fair value through profit or loss' (LAR, HTM, AFS) are regularly reviewed for impairment. If objective and substantial evidence indicates permanent impairment at the reporting date, the difference between cost and the recoverable amount is recognised as an impairment through profit or loss. An equity instrument is considered impaired if its fair value falls considerably or constantly below cost (see also Note 2.4). Debt instruments are impaired or sold if it is probable that not all amounts due under the contractual terms will be collectible. This usually happens when contractually agreed interest or redemption payments are stopped or are in arrears, if the debtor suffers from serious financial difficulties, and/or if the rating falls below a specific threshold value. If, in order to avoid impairment, new conditions are negotiated for mortgages or loans, the mortgages or loans in question are still recognised in the balance sheet at amortised cost. For LAR and HTM financial investments, the recoverable
amount at the reporting date is equiv to the present value of estimated future cash flows discounted at the original interest rate. Impairments are booked using an allowance account. The impairment is reversed through profit or loss if a subsequent event causes a decreasein the impairment loss.
AFS financial assets, the recoverable amount the reporting date equals the fair value. For AFS financial assets, such as shares and investment fund units, any additional impairment loss after the initial impairment is immediately recognised in the income statement. The impairment is not reversed, even if the circumstances causing the impairment cease to apply. Valuation gains are recognised in equity until disposal. For monetary AFS financial assets, such as bonds, the impairment is reversed through profit or loss if the circumstances causing the impairment cease to apply. Financial investments are derecognised at the latest
when the bankruptcy proceedings end or, the case of ongoing bankruptcy proceedings, when the outstanding debt plus interest is received. If a settlement is agreed, derecognition takes place at the end of the agreed period after receipt of the payment. 2.11 Financial derivatives Derivativefinancial instruments are classified as
'Financial assets held for trading' and are shown the position 'Financial assets at fair value through profit or loss'. Helvetia Group currently does not use hedge accounting as defined by IAS 39. The hedging strategies used by Helvetia Group for risk management purposes are described in Note 17 (from page 159). Derivatives may also be embedded in financial instruments,
insurance contracts or other con- They are valued either together with their host contract or separately at fair value. The underlying security and derivative are valued 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.
liabilities are initially recognised at fair Directly attributable transaction costs are 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.Those financial liabilities that are either held for
trading or irrevocably classified upon initial 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 contracts 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 Note 2.13), only the withdrawals and allocations that are part of the operating result are recorded in the income statement. The risk and cost portions of premiums from policyholders are recognised in the income statement and recorded in the position 'Other income'. The policyholder's deposit is directly credited or debited with the investment portion of the premium.Those financial liabilities not held for trading and also
not designated as at fair value through profit loss are recognised at amortised cost. Interest expenses for financial liabilities that are used for financing purposes are recognised in the income statement as 'Finance costs'. Depreciation and appreciation resulting from the amortised cost method are offset against interest expenses in theincome statement.
business includes assumed primary busi and business ceded to reinsurers. Indirect consists of assumed reinsurance business and business retroceded to reinsurers. The actuarial 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 insurance The significance is assessed at product level.Contracts that are considered insurance products in
the formal sense of the law and mainly carry risk rather than any significant insurance risk are treated as financial instruments unless they carry a discretionary participation feature (DPF), in which case they are classified as insurance contracts. Under IFRS, discretionary participation features are contractual benefits where, in addition to the guaranteed benefit, the policyholder has a claim to the realised or unrealised investment returns on certain assets or to a share of the insurance company's profit or loss. 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
insurance technical items in non-life business established Group-wide on the same princi- All non-life insurance products of Helvetia Group contain significant insurance risk and arereported as insurance contracts.
reserves are set aside for all claims incurred the end of the accounting period. The reserves include provisions for claims incurred but not yet reported. Actuarial methods that take account of uncertainties are applied to determine the amount of reserves. Reserves are not discounted, except for those provisions for claims for which there are payment arrangements. Reserve estimates and the assumptions on which they
are based are reviewed continuously. Valua changes are taken to profit or loss at the time of the change. A Liability Adequacy Test (LAT) is carried out on every
reporting date to determine whether, taking consideration expected future cash flows, the existing liabilities of each business line (property, motor vehicle, liability, transport and accident/ health insurance) at all Group companies are adequately provided. 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. Premiums are booked at the beginning of the contract
period. Earned premiums are calculated rata per individual contract and recorded as income for the relevant risk periods. Premium proportions relating to future business periods are accounted for as unearned premium reserves. The cost of claims is assigned to the relevant period.Helvetia Group does not defer acquisition costs in
non-life business.
Group classifies all life insurance prod containing significant insurance risk as insu contracts. The valuation and accounting principles applied locally
by the life companies determine the actua items in life business. The assumptions made in setting the reserves are based on best estimate principles that, firstly, take account of the businessspecific 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.Unearned premium reserves and actuarial reserves
are calculated using local methods. is not applied to actuarial reserves in any country market apart from Germany and Austria.All Group companies defer acquisition costs under
local accounting rules. Depending on the either the effectively incurred acquisition costs or acquisition cost surcharges included in the premium are deferred in part. A Liability Adequacy Test is applied at each reporting
date to examine whether existing are sufficient to cover expected future needs. The reserve increases that are shown by the LAT to be necessary are calculated Groupwide according to standard principles. The LAT is based on actuarial principles using best estimate assumptions. The estimate of expected needs is calculated by using the difference between the present value of the benefits (including expected administrationcosts and expected policyholder
and the present value of expected premiums. If expected needs exceed exist reserves (less deferred acquisition costs not included in the actuarial reserve), the actuarial reserve is increased to the required level through profit or loss. Policyholders with contracts containing discretionary
participation features may have the right participate in local investment returns on capital or local company results under statutory or contractual regulations. Provisions set up for that purpose in accordance with local accounting principles are not changed under IFRS rules and are included under 'Provision for future policyholder participation' or under 'Actuarial reserve' in the balance sheet. Portions of the valuation differences in relation to local
accounting principles allocated to contracts discretionary participation features which affect either the net income or unrealised gains in equity are also reserved under the aforementioned balance sheet item. The portion is equal to the percentage rate which sets the minimum participation level of policyholders in the respective revenues under local statutory or contractual regulations. This participation in income is credited or debited to the position 'Provision for future policyholder participation' through profit or loss. Similarly, the portion of unrealised gains or losses is recognised in the provisions without affecting profit or loss. The remaining gains – either through profit or loss
or with no impact on the results – that relate contracts with a discretionary participation feature (i.e. every share for which no legal or contractual obligations exist) are recorded under 'Valuation reserves for contracts with participation features'within equity.
already assigned which accrue interest allocated to the deposits of policyholders and contained in the balance sheet as 'Financial liabilities from insurance business'. If insurance contracts contain both an insurance and
a deposit component, unbundling is carried if the rights and obligations resulting from the deposit component cannot be fully reflected without a separate valuation of the deposit component.Financial derivatives embedded in insurance contracts
that are not closely related to the host are recognised at fair value. Option pricing techniques are used to assess embedded derivatives. Such embedded derivatives are accounted for under 'Other financial liabilities', separate from the actuarial reserve. Premiums, insurance benefits and costs arising from
life insurance contracts are booked as they due. These income and expenses are accrued or deferred so that profit from the contracts is recognised in the appropriate period. Reinsurancecontracts are contracts between
companies. As in primary insurance there must be sufficient risk transfer for a transaction to be booked as a reinsurance contract, otherwise the contract is considered a financial instrument. The direct business transferred to reinsurance companies
is recorded as ceded reinsurance and cessions from direct life and non-life business. Premiums, unearned premium reserves and premium adjustments for ceded business are recognised and shown separately from primary businessin the financial statements. The account-
rules used for primary insurance business to ceded business. Assets from ceded reinsurance business are regularly
reviewed for potential impairment and If there is objective and substantial evidence of impairment at the balance sheet date, the difference between the carrying value and estimated recoverable amount is recognised in the income statement as an impairment loss. Indirect business accepted from another insurance company
is reported as assumed reinsurance. As primary insurance business, technical reserves are included in the respective actuarial items on the liabilities side, and are similarly estimated using mathematical-statistical models and the most up-to-date information available. They also reflect uncertainties. Non-traditional insurance contracts are treated as financial instruments and are reported under 'Reinsurance assets' or 'Financial liabilities from insurance business' if no significant insurance risks have been transferred. Net commission is carried directly to the income statement.Indirect business ceded to insurance companies outside
the Group is reported as retrocession. principles of ceded business apply in this instance.2.14 Income taxes Deferredtax assets and liabilities are calculated
the tax rate changes enacted or substan enacted as of the balance sheet date. Deferred taxes are recognised for all temporary differences between the carrying values of assets and liabilities and the tax bases of these assets and liabilities, using the liability method. Deferred tax assets from losses carried forward are recorded only to the extent that it is probable that futuretaxable profit can be offset against the
losses. Deferred tax assets and liabilities offset when an enforceable legal right was by the tax authorities in question to set off actual tax assets and liabilities. 2.15 Receivables Receivablesfrom insurance business and other
are carried at amortised cost which is, general, the nominal value of the receivables. Impairment is recognised in the income statement. The impairment loss is reported under 'Other expenses' in the income statement. Impairment for receivables from insurance business
is booked as individual impairment or impairment. If the counterparty does not meet its payment obligations during the normal reminder procedure, the claims are impaired on the basis of the historic delinquency ratio for specific risk groups. Individual impairment is also carried out to take account of current default risks, in the event the counterparty is overindebted or threatened by bankruptcy, or in the event of foreclosure.2.16 Accrued investment income Interestincome on interest-bearing financial
and loans is accrued or deferred financial assets. 2.17 Cash and cash equivalents Cashand cash equivalents consist of cash on
demand deposits and short-term liquid with a maturity of 90 days or less from the date of acquisition. 2.18 Treasury shares Treasuryshares are recorded at cost, including
costs, and reported as a deduction equity. The difference between cost and sales price is recorded as a change in capital reserves,with no impact on profit or loss.
shares are exclusively shares of Helvetia AG, St. Gallen. 2.19Non-technical provisions
that will probably require an outflow of but the extent of such obligations and the time they will be called have not yet been determined exactly. Provisions are created if, on the balance sheet date and on the basis of a past event, a current obligation exists, the probability of an outflow of assets is high and the extent of the outflow can be reliably estimated. Any current obligations with a low probability of
an outflow of assets or the extent of which be reliably estimated are reported under contingent liabilities. 2.20 Employee benefits Employeebenefits include short-term employee
post-employment benefits, other employee benefits and termination benefits.Short-term employee benefits are due in full within 12
months after the end of the reporting period. include salaries, social security contributions, holiday and sickness pay, bonuses and nonmonetary benefits for active employees. Expected expenses for entitlements which can be accumulated, such as accrued holiday and overtime entitlements, are recognised as short-term liabilities at the balance sheet date. Post-employment benefits pertain to defined contribution
plans and defined benefit plans. The of the employers' contributions for defined contribution plans depends on the employee services rendered during the reporting period andis charged directly to the income statement.
defined benefit plans, pension obligations related expenses are calculated at each sheet date by a qualified actuary, using the projected unit credit method. The actuarial assumptions applied to the calculations consider the regulations of the respective countries and Group companies. Changes in the assumptions or differences between the expected and actual return from the plan's assets are actuarial gains and losses. Actuarial gains and losses to be depreciated in the income statement are recorded for each individual plan using the 'corridor method', under which recognition is only required if the balance of the accumulated, unrecognised actuarial gains and losses exceeds the greater of ten per cent of the present value of the defined benefit obligations and ten per cent of the fair value of plan assets at the end of the previous reporting period. The portion of actuarial gains and losses outside the ten-per-cent corridor is recognised in the income statement over the expected average remaining working lives of the employees participating in the plans. For funded benefit plans, a surplus in the plan may
arise if the fair value of the plan assets the present value of the defined benefit obligations. Portions of this surplus are only recognised and recorded as an asset if an economic benefit in the form of future reductions in contributions or refunds to the employer arises. A review is carried out to ensure that newly arising actuarial gains or losses do not lead to an increase or decrease in the assets on record.Other long-term employee benefits are benefits that
fall due 12 months or more after the balance date. At Helvetia Group, these consist mainly of long-service awards and are calculated using actuarial principles. The amount recognised inthe balance sheet is equal to the present value
the defined benefit obligation less any plan Termination benefits consist, for example, of severance
pay and benefits from social schemes redundancies. Such benefits are immediately recognised as expenses in the income statement at the time the employment relationship is terminated.2.21 Share-based payments Share-basedpayment transactions include all
agreements under which employees shares, options or similar equity instruments or the granting Group company assumes obligations that depend on the price of its shares. All share-based payment transactions with employees are recognised at fair value. Equity instruments granted to employees through employee
share purchase plans represent com for services already rendered for which compensation expenses arise in the granting company. The amount of the compensation expense is based on the fair value of the equity instruments at the grant date and is expensed over the vesting period. 2.22 Other liabilities Otherliabilities are carried at amortised cost,
is generally equal to the nominal value. 2.23 Offsetting of assets and liabilities Assets
when there is a legal right to set off the amounts and only the net position hasactually been reported.
management structure of Helvetia Group is based on country markets. Each country its own management team which is in charge of the operational management of all local business units. This has led to the following reporting segments:Primary segmentation at Helvetia Group is structured
by geographical area and follows the report responsibility: Switzerland, Germany, Italy, Spain and Others. The segment 'Others' covers the country markets of Austria and France, the financing companies in the UK and Luxembourg, as well as the Group's assumed and ceded reinsurance business. Special purpose entities are assigned to the individual countries in proportion to their ownership structure. With the exception of the reinsurance business, the geographical segmentation is based on the location of the legal entity where all service-rendering activities occur. This segmentation also reflects the locations where customers of Helvetia Group reside. Secondary segmentation is based on the business segments
of Helvetia Group: life and non-life and other activities. In the life segment, Helvetia Group offers various product lines, such as life insurance, pension plans and annuities. The non-life segment offers property, motor vehicle, liability and transport insurance policies as well as health and accident insurance coverage. Other activities refer to the reporting of the non-underwriting activities of the Group's service, distribution and real estate companies. Special purpose entities are proportionally assigned to the life and non-life segments. Reinsurance contracts are reported in the life or non-life segments depending onthe type of contract.
accounting policies that apply to the segment are the same as those described in the of significant accounting policies. Intersegmental services and transfers of assets and liabilities are made on an arm's length basis. Investments and investment-and--interest income from subsidiaries between the segments are eliminated within the respective segment. All other intersegmental relations and revenues within the Group are eliminated in full. Current and deferred income taxes are not components of segment result or segment assets or liabilities, and are therefore not allocated to the individual segments. The assignment of individual Group entities to the
various business and geographical segments explained in Note 19 (from page 185).
| Income | Switzerland 2007 |
2006 | Germany 2007 |
2006 | |
|---|---|---|---|---|---|
| Gross premiums written Reinsurance premiums ceded |
2 824.1 –91.5 |
2 824.5 –88.1 |
930.9 –99.6 |
798.2 –84.2 |
|
| Net premiums written |
2 732.6 | 2 736.4 | 831.3 | 714.0 | |
| Net change in unearned premium reserve |
–0.3 | –7.8 | –2.9 | –0.2 | |
| Net earned premiums |
2 732.3 | 2 728.6 | 828.4 | 713.8 | |
| Interest and dividend income |
528.1 | 464.5 | 100.8 | 95.0 | |
| Gains and losses on investments (net) |
92.9 | 234.5 | 20.8 | 30.3 | |
| Income on investment property |
158.9 | 123.7 | 4.8 | 7.3 | |
| Other income |
32.4 | 32.7 | 25.3 | 22.1 | |
| Total operating income |
3 544.6 | 3 584.0 | 980.1 | 868.5 | |
| of which transactions between geographical segments |
37.4 | 39.1 | 61.2 | 51.6 | |
| Expenses | |||||
| Claims incurred including claims-handling costs (non-life) Claims and benefits paid (life) |
–378.5 –1 956.1 |
–325.3 –1862.1 |
–432.1 –124.3 |
–355.6 –120.0 |
|
| Change in actuarial reserve Reinsurers' share of benefits and claims |
–333.2 62.2 |
–480.8 19.8 |
–159.2 94.0 |
–85.6 43.9 |
|
| Policyholder dividends and bonuses |
–164.1 | –142.8 | –18.8 | –29.4 | |
| Net insurance benefits and claims |
–2 769.7 |
–2 791.2 |
–640.4 | –546.7 | |
| Acquisition costs |
–200.9 | –192.2 | –188.9 | –168.0 | |
| Operating and administrative expenses |
–298.3 | –272.4 | –82.5 | –85.2 | |
| Interest payable |
–37.2 | –34.2 | –3.8 | –3.9 | |
| Other expenses |
–12.2 | 0.1 | –14.3 | –13.3 | |
| Total operating expenses |
–3 318.3 |
–3 289.9 |
–929.9 | –817.1 | |
| Profit or loss from operating activities |
226.3 | 294.1 | 50.2 | 51.4 | |
| Finance costs |
–6.3 | –6.0 | – | – | |
| Share of profit or loss of associates |
1.8 | 0.9 | – | – | |
| Profit or loss before tax |
221.8 | 289.0 | 50.2 | 51.4 | |
| Income taxes |
|||||
| Profit or loss for the period |
|||||
| Other disclosures: |
|||||
| Assets by geographical segment as of 31.12. of which investments |
23 588.4 22 098.6 |
23 383.4 22 011.5 |
3 067.5 2 612.6 |
2 787.7 2 381.7 |
|
| of which investments in associates |
45.1 | 43.6 | – | – | |
| Liabilities by geographical segment as of 31.12. |
21 420.1 |
21271.1 | 2 705.8 | 2 422.6 | |
| of which technical provisions (gross) |
19 136.9 |
18 764.6 |
2 271.3 | 2 025.6 | |
| Cash flow from operating activities (net) |
334.1 | 29.6 | 42.7 | 59.9 | |
| Cash flow from investing activities (net) |
–54.9 | –69.8 | –32.5 | –59.9 | |
| Cash flow from financing activities (net) |
–69.0 | –10.1 | –1.4 | –1.3 | |
| Acquisition of owner-occupied property, equipment and intangible assets |
100.9 | 81.3 | 13.2 | 7.5 | |
| Depreciation and amortisation of tangible and intangible assets |
–15.6 | –15.6 | –3.8 | –3.9 | |
| Impairment of tangible and intangible assets affecting income Reversal of impairment losses on tangible and intangible assets affecting income |
–2.1 0.0 |
– – |
– – |
– – |
|
| Share-based payment transaction costs |
–0.7 | –0.8 | – | – | |
| Notes to the consolidated financial statements of Helvetia Group 2007 |
|||||
| 2006 5 255.7 |
2007 5 488.9 |
2006 –215.2 |
2007 –214.7 |
2006 830.6 |
2007 891.3 |
2006 494.8 |
2007 548.2 |
2006 522.8 |
2007 509.1 |
|---|---|---|---|---|---|---|---|---|---|
| –272.0 | –288.7 | 214.2 | 214.6 | –184.5 | –196.8 | –60.5 | –42.8 | –68.9 | –72.6 |
| 4 983.7 | 5 200.2 | –1.0 | –0.1 | 646.1 | 694.5 | 434.3 | 505.4 | 453.9 | 436.5 |
| –24.6 | –35.6 | 1.0 | 0.1 | 4.7 | –2.7 | –11.2 | –12.9 | –11.1 | –16.9 |
| 4 959.1 | 5 164.6 | 0.0 | 0.0 | 650.8 | 691.8 | 423.1 | 492.5 | 442.8 | 419.6 |
| 704.4 | 793.8 | – | – | 63.1 | 69.5 | 30.2 | 35.7 | 51.6 | 59.7 |
| 291.4 | 130.2 | – | – | –5.1 | –1.3 | 22.7 | 10.5 | 9.0 | 7.3 |
| 186.4 | 194.4 | – | – | 21.3 | 23.0 | 33.3 | 6.1 | 0.8 | 1.6 |
| 89.4 | 89.1 | –53.4 | –54.8 | 53.0 | 49.2 | 16.6 | 12.4 | 18.4 | 24.6 |
| 6 230.7 | 6 372.1 | –53.4 | –54.8 | 783.1 | 832.2 | 525.9 | 557.2 | 522.6 | 512.8 |
| 53.4 | 54.8 | –213.2 | –209.4 | 36.2 | 21.2 | 32.9 | 34.8 | ||
| –1 465.8 –2 226.3 –738.0 |
–1 610.9 –2 369.8 –591.1 |
96.3 8.5 –0.7 |
143.4 7.3 1.1 |
–421.6 –111.0 –59.4 |
–497.3 –133.9 –45.6 |
–225.1 –67.3 –18.5 |
–208.8 –74.9 –14.2 |
–234.5 –74.4 –93.0 |
–237.6 –87.9 –40.0 |
| 160.8 | 205.9 | –104.1 | –151.8 | 120.4 | 153.7 | 35.3 | 12.1 | 45.5 | 35.7 |
| –166.7 | –173.4 | – | – | 1.2 | 3.6 | – | – | 4.3 | 5.9 |
| –4 436.0 |
–4 539.3 |
0.0 | 0.0 | –470.4 | –519.5 | –275.6 | –285.8 | –352.1 | –323.9 |
| –647.4 | –692.4 | 51.8 | 52.8 | –182.8 | –177.2 | –75.4 | –88.1 | –80.8 | –90.1 |
| –509.8 | –534.2 | –0.4 | 0.0 | –39.5 | –43.2 | –63.1 | –54.7 | –49.2 | –55.5 |
| –41.8 | –44.6 | – | – | –0.7 | –0.6 | –0.1 | –0.1 | –2.9 | –2.9 |
| –29.3 | –51.7 | 2.0 | 2.0 | –5.7 | –18.8 | –2.5 | –4.0 | –9.9 | –4.4 |
| –5 664.3 |
–5 862.2 |
53.4 | 54.8 | –699.1 | –759.3 | –416.7 | –432.7 | –494.9 | –476.8 |
| 566.4 | 509.9 | 0.0 | 0.0 | 84.0 | 72.9 | 109.2 | 124.5 | 27.7 | 36.0 |
| –6.0 | –7.2 | – | – | – | – | – | – | – | –0.9 |
| 1.8 | 2.8 | – | – | 0.0 | 0.0 | 0.9 | 1.0 | – | – |
| 562.2 | 505.5 | 0.0 | 0.0 | 84.0 | 72.9 | 110.1 | 125.5 | 27.7 | 35.1 |
| –138.4 | –103.5 | –138.4 | –103.5 | ||||||
| 423.8 | 402.0 | ||||||||
| 31 810.1 28 927.7 |
32 544.7 29 381.5 |
–335.7 0.0 |
–362.9 0.0 |
2 567.4 1 811.2 |
2 638.4 1 835.6 |
1 513.8 1 224.8 |
1 592.2 1 290.7 |
1 893.5 1 498.5 |
2 021.1 1 544.0 |
| 46.2 | 48.3 | – | – | 0.0 | 0.1 | 2.6 | 3.1 | – | – |
| 29 071.7 |
29 694.1 |
194.9 | 116.5 | 2 067.7 | 2 167.4 | 1 207.5 | 1 242.5 | 1 907.9 | 2 041.8 |
| 25 537.8 |
26 380.7 |
–238.5 | –248.6 | 2 362.0 | 2 467.5 | 1 105.8 | 1 147.2 | 1 518.3 | 1 606.4 |
| 113.5 | 504.3 | –9.7 | –10.0 | 33.7 | 30.7 | 34.8 | 60.9 | –34.8 | 45.9 |
| –104.5 | –143.8 | 8.1 | –37.4 | –3.9 | –3.3 | –5.2 | –3.3 | 26.2 | –12.4 |
| –63.0 | –107.9 | 1.6 | 46.6 | –26.5 | –38.5 | –26.7 | –46.4 | 0.0 | 0.8 |
| 106.5 | 148.2 | 4.6 | 4.7 | 5.8 | 4.2 | 7.3 | 25.2 | ||
| –31.8 | –33.5 | –7.5 | –8.3 | –2.3 | –2.8 | –2.5 | –3.0 | ||
| – | –4.4 | – | – | – | – | – | –2.3 | ||
| – –0.8 |
0.0 –0.7 |
– – |
– – |
– – |
– – |
– – |
– – |
||
| Group 2007 |
of Helvetia |
financial statements |
consolidated | Notes to the |
|||||
| Income | Life 2007 |
2006 | Non-life 2007 |
2006 | |
|---|---|---|---|---|---|
| Gross premiums written Reinsurance premiums ceded |
2 893.9 –46.7 |
2 832.4 –41.6 |
2 595.0 2423.3 –242.0 –230.4 |
||
| Net premiums written |
2 847.2 | 2 790.8 | 2 353.0 | 2 192.9 | |
| Net change in unearned premium reserve |
1.9 | –0.9 | –37.5 | –23.7 | |
| Net earned premiums |
2 849.1 | 2 789.9 | 2 315.5 | 2 169.2 | |
| Interest and dividend income |
639.8 | 568.0 | 141.8 | 124.0 | |
| Gains and losses on investments (net) |
86.1 | 214.8 | 26.1 | 33.0 | |
| Income on investment property |
157.6 | 123.4 | 38.6 | 59.9 | |
| Other income |
23.7 | 17.7 | 65.5 | 71.6 | |
| Total operating income |
3 756.3 | 3 713.8 | 2 587.5 | 2 457.7 | |
| of which transactions between business segments |
0.4 | 0.5 | –0.7 | – 0.8 | |
| Expenses | |||||
| Claims incurred including claims handling costs (non-life) Claims and benefits paid (life) Change in actuarial reserve |
– –2 369.8 –591.1 |
– –2 226.3 –738.0 |
–1 610.9 – – |
–1 465.8 – – |
|
| Reinsurers' share of benefits and claims |
22.5 | 25.8 | 183.4 | 135.0 | |
| Policyholder dividends and bonuses |
–174.2 | –164.0 | 0.8 | –2.7 | |
| Net insurance benefits and claims |
–3 112.6 |
–3 102.5 |
–1 426.7 |
–1333.5 | |
| Acquisition costs |
–168.9 | –156.7 | –523.5 | –490.7 | |
| Operating and administrative expenses |
–228.7 | –215.4 | –302.4 | –292.0 | |
| Interest payable |
–42.2 | –40.0 | –2.4 | –1.5 | |
| Other expenses |
–15.0 | –15.5 | –46.2 | –19.3 | |
| Total operating expenses |
–3 567.4 |
–3 530.1 |
–2 301.2 |
–2 137.0 |
|
| Profit or loss from operating activities |
188.9 | 183.7 | 286.3 | 320.7 | |
| Finance costs |
– | – | –0.9 | – | |
| Share of profit or loss of associates |
1.7 | 0.9 | 1.1 | 0.9 | |
| Profit or loss before tax Income taxes |
190.6 | 184.6 | 286.5 | 321.6 | |
| Profit or loss for the period |
|||||
| Other disclosures: |
|||||
| Assets by business segment as of 31.12. Liabilities by business segment as of 31.12. |
25 843.7 24 444.9 |
25 423.7 23 956.6 |
6 102.2 4 587.5 |
5 833.7 4 346.9 |
|
| Acquisition of owner-occupied property, equipment and intangible assets |
87.7 | 61.7 | 43.9 | 28.3 | |
| Depreciation and amortisation on tangible and intangible assets |
–10.2 | –10.0 | –19.5 | –18.5 | |
| Impairment of tangible and intangible assets affecting income |
0.0 | – | –4.4 | – | |
| Reversal of impairment losses on tangible and intangible assets affecting income |
– | – | 0.0 | – | |
| Others | and non allocated items |
Total | |||
|---|---|---|---|---|---|
| 2007 – |
2006 – |
2007 – |
2006 – |
2007 5 488.9 |
2006 5 255.7 |
| – | – | – | – | –288.7 | –272.0 |
| – | – | – | – | 5 200.2 | 4 983.7 |
| – | – | – | – | –35.6 | –24.6 |
| – | – | – | – | 5 164.6 | 4 959.1 |
| 12.2 | 12.4 | – | – | 793.8 | 704.4 |
| 18.0 | 43.6 | – | – | 130.2 | 291.4 |
| –1.8 | 3.1 | – | – | 194.4 | 186.4 |
| 4.4 | 0.4 | –4.5 | –0.3 | 89.1 | 89.4 |
| 32.8 | 59.5 | –4.5 | –0.3 | 6 372.1 | 6 230.7 |
| –4.2 | – | 4.5 | 0.3 | ||
| – – |
– – |
– – |
– – |
–1 610.9 –2 369.8 |
–1 465.8 –2 226.3 |
| – | – | – | – | –591.1 | –738.0 |
| – | – | – | – | 205.9 | 160.8 |
| – | – | – | – | –173.4 | –166.7 |
| – | – | – | – | –4 539.3 |
–4 436.0 |
| – | – | – | – | –692.4 | – 647.4 |
| –3.1 | –2.4 | 0.0 | 0.0 | –534.2 | –509.8 |
| 0.0 | –0.3 | – | – | –44.6 | –41.8 |
| 5.0 | 5.2 | 4.5 | 0.3 | –51.7 | –29.3 |
| 1.9 | 2.5 | 4.5 | 0.3 | –5 862.2 |
–5 664.3 |
| 34.7 | 62.0 | 0.0 | 0.0 | 509.9 | 566.4 |
| –6.3 | –6.0 | – | – | –7.2 | –6.0 |
| – | – | – | – | 2.8 | 1.8 |
| 28.4 | 56.0 | 0.0 | 0.0 | 505.5 | 562.2 |
| –103.5 | –138.4 | –103.5 | –138.4 | ||
| 402.0 | 423.8 | ||||
| 585.3 | 546.3 | 13.5 | 6.4 | 32 544.7 |
31 810.1 |
| 168.8 | 231.3 | 492.9 | 536.9 | 29 694.1 |
29 071.7 |
| 16.6 | 16.5 | 148.2 | 106.5 | ||
| –3.8 | –3.3 | –33.5 | –31.8 | ||
| 0.0 | – | –4.4 | – | ||
| – | – | 0.0 | – | ||
| Gross premiums |
Elimination | Total consolidated |
Change in % |
Change in % |
||||
|---|---|---|---|---|---|---|---|---|
| Switzerland non-life Switzerland life |
2007 617.4 2 206.7 |
2006 607.5 2 217.0 |
2007 – – |
2006 – |
2007 2006 617.4 607.5 – 2 206.7 2 217.0 |
1.6 –0.5 |
(FX-adjusted) 1.6 –0.5 |
|
| Total Switzerland |
2 824.1 | 2 824.5 | – | – | 2 824.1 | 2 824.5 | 0.0 | 0.0 |
| Germany non-life |
633.0 | 586.9 | – | – | 633.0 | 586.9 | 7.9 | 3.3 |
| Germany life |
297.9 | 211.3 | – | – | 297.9 | 211.3 | 40.9 | 35.0 |
| Total Germany |
930.9 | 798.2 | – | – | 930.9 | 798.2 | 16.6 | 11.7 |
| Italy non-life |
391.3 | 365.0 | – | – | 391.3 | 365.0 | 7.2 | 2.6 |
| Italy life |
117.8 | 157.8 | – | – | 117.8 | 157.8 | –25.3 | –28.5 |
| Total Italy |
509.1 | 522.8 | – | – | 509.1 | 522.8 | –2.6 | –6.8 |
| Spain non-life |
421.2 | 386.5 | – | – | 421.2 | 386.5 | 9.0 | 4.4 |
| Spain life |
127.0 | 108.3 | – | – | 127.0 | 108.3 | 17.3 | 12.4 |
| Total Spain |
548.2 | 494.8 | – | – | 548.2 | 494.8 | 10.8 | 6.1 |
| Others non-life: |
||||||||
| Other countries |
299.4 | 288.7 | – | – | 299.4 | 288.7 | 3.7 | –0.7 |
| Reinsurance Others life: |
432.9 | 391.2 | –200.2 | –202.5 | 232.7 | 188.7 | 23.4 | 23.4 |
| Other countries |
137.6 | 133.5 | – | – | 137.6 | 133.5 | 3.1 | –1.3 |
| Reinsurance | 21.3 | 17.2 | –14.4 | –12.7 | 6.9 | 4.5 | 55.0 | 55.0 |
| Total others |
891.2 | 830.6 | –214.6 | –215.2 | 676.6 | 615.4 | 10.0 | 6.9 |
| Total gross premiums |
5 703.5 | 5 470.9 | –214.6 | –215.2 | 5 488.9 | 5 255.7 | 4.4 | 2.5 |
| Gross premiums |
Change in % |
Change in % |
||
|---|---|---|---|---|
| Individual insurance Group insurance |
2007 955.7 1 741.6 |
2006 1 031.9 1 638.9 |
–7.4 6.3 |
(FX-adjusted) –9.1 5.9 |
| Unit-linked life insurance |
189.7 | 157.1 | 20.8 | 17.7 |
| Reinsurance life |
6.9 | 4.5 | 55.0 | 55.0 |
| Gross premiums life |
2 893.9 | 2 832.4 | 2.2 | 1.2 |
| Property | 962.3 | 901.2 | 6.8 | 3.8 |
| Transport | 229.6 | 222.1 | 3.4 | –0.3 |
| Motor vehicle |
763.7 | 733.2 | 4.2 | 0.7 |
| Liability | 253.5 | 234.6 | 8.1 | 4.9 |
| Accident/health | 153.2 | 143.5 | 6.8 | 2.2 |
| Reinsurance non-life |
232.7 | 188.7 | 23.4 | 23.4 |
| Gross premiums non-life |
2 595.0 | 2 423.3 | 7.1 | 4.0 |
| Total gross premiums |
5 488.9 | 5 255.7 | 4.4 | 2.5 |
Exchange Euro, Swiss franc, British pound and US dollar the functional currencies in the individual units of Helvetia Group. The following exchange rates apply to the translation of these financial statements and foreign currency transactions:
| Exchange rate at reporting date |
31.12.2007 | 31.12.2006 |
|---|---|---|
| 1 EUR 1 USD |
1.6553 1.1322 |
1.6097 1.2207 |
| 1 GBP | 2.2537 | 2.3891 |
| Annual average |
2007 Jan–Dec |
2006 Jan–Dec |
| 1 EUR | 1.6463 | 1.5765 |
| 1 USD 1 GBP |
1.1956 2.3977 |
1.2470 2.3121 |
income statement show a profit of 68.9 million (previous year: CHF 97.7 million). The foreign exchange gains and losses from financial investments are included in 'Gains and losses on investments' in the consolidated income statement and amount to CHF 61.8 million (previous year: CHF 80.0 million) excluding foreign currency translation differences from investments at fair value through profit or loss. Other foreign exchange results are reported under 'Other income'and 'Other expenses'.
| Undeveloped land |
Owner-occupied property |
Equipment | Property under construction |
Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| in CHF million Acquisition costs: Balance as of 1 January |
2007 5.4 |
2006 5.4 |
2007 514.3 |
2006 510.6 |
2007 103.7 |
2006 96.0 |
2007 129.0 |
2006 22.9 |
2007 752.4 |
2006 634.9 |
| Change in the scope of consolidation |
– | – | – | – | – | – | – | – | – | – |
| Additions | – | – | 1.6 | 1.4 | 7.6 | 7.7 | 126.5 | 77.0 | 135.7 | 86.1 |
| Disposals | –0.1 | – | –3.9 | –1.4 | –11.8 | –2.8 | –1.2 | –0.1 | –17.0 | –4.3 |
| Revaluation gains on transfers |
||||||||||
| to investment property |
– | – | 0.2 | 5.6 | – | – | – | – | 0.2 | 5.6 |
| Transfer | – | – | 4.3 | –10.4 | – | – | –89.3 | 28.6 | –85.0 | 18.2 |
| Foreign currency translation differences |
– | – | 7.0 | 8.5 | 2.2 | 2.8 | 0.8 | 0.6 | 10.0 | 11.9 |
| Other changes |
4.0 | – | – | 0.0 | 0.0 | 0.0 | – | – | 4.0 | 0.0 |
| Balance as of 31 December |
9.3 | 5.4 | 523.5 | 514.3 | 101.7 | 103.7 | 165.8 | 129.0 | 800.3 | 752.4 |
| Accumulated | ||||||||||
| depreciation/impairment: | ||||||||||
| Balance as of 1 January Change in the scope of consolidation Depreciation |
– – – |
– – – |
141.3 – 8.5 |
133.9 – 7.9 |
83.3 – 7.9 |
74.9 – 8.3 |
1.6 – – |
0.0 – – |
226.2 – 16.4 |
208.8 – 16.2 |
| Impairment | – | – | – | – | 0.0 | – | 4.3 | – | 4.3 | – |
| Reversal of impairment losses |
0.0 | – | – | – | – | – | – | – | 0.0 | – |
| Disposals depreciation/ |
||||||||||
| impairment | – | – | –2.3 | –0.6 | –10.6 | –2.1 | – | – | –12.9 | –2.7 |
| Transfer | – | – | –0.4 | –2.6 | – | – | –2.0 | 1.7 | –2.4 | –0.9 |
| Foreign currency translation differences |
– | – | 2.2 | 2.7 | 1.7 | 2.2 | 0.2 | –0.1 | 4.1 | 4.8 |
| Other changes |
4.0 | – | – | 0.0 | 0.0 | 0.0 | – | – | 4.0 | – |
| Balance as of 31 December |
4.0 | – | 149.3 | 141.3 | 82.3 | 83.3 | 4.1 | 1.6 | 239.7 | 226.2 |
| Book value as of 31 December |
5.3 | 5.4 | 374.2 | 373.0 | 19.4 | 20.4 | 161.7 | 127.4 | 560.6 | 526.2 |
| Book value as of 1 January |
5.4 | 5.4 | 373.0 | 376.7 | 20.4 | 21.1 | 127.4 | 22.9 | 526.2 | 426.1 |
| in CHF million Acquisition costs: Balance as of 1 January |
2007 24.3 |
2006 23.4 |
2007 150.4 |
2006 127.2 |
2007 174.7 |
2006 150.6 |
|---|---|---|---|---|---|---|
| Change in the scope of consolidation |
– | – | – | – | – | – |
| Additions | – | – | 12.5 | 20.4 | 12.5 | 20.4 |
| Disposals | – | – | –1.3 | –0.1 | –1.3 | –0.1 |
| Foreign currency translation differences |
0.6 | 0.9 | 2.6 | 2.9 | 3.2 | 3.8 |
| Balance as of 31 December |
24.9 | 24.3 | 164.2 | 150.4 | 189.1 | 174.7 |
| Accumulated amortisation/impairment: |
||||||
| Balance as of 1 January |
0.1 | 0.1 | 106.0 | 88.2 | 106.1 | 88.3 |
| Change in the scope of consolidation |
– | – | – | – | – | – |
| Amortisation | – | – | 17.1 | 15.6 | 17.1 | 15.6 |
| Impairment | – | – | 0.1 | – | 0.1 | – |
| Reversal of impairment losses |
– | – | – | – | – | – |
| Disposals amortisation/impairment |
– | – | –1.2 | –0.1 | –1.2 | –0.1 |
| Foreign currency translation differences |
0.0 | 0.0 | 2.1 | 2.3 | 2.1 | 2.3 |
| Balance as of 31 December |
0.1 | 0.1 | 124.1 | 106.0 | 124.2 | 106.1 |
| Book value as of 31 December |
24.8 | 24.2 | 40.1 | 44.4 | 64.9 | 68.6 |
| Book value as of 1 January |
24.2 | 23.3 | 44.4 | 39.0 | 68.6 | 62.3 |
| 'Other intangible assets' of Helvetia Group |
largely consist |
usually considered |
for a |
period of |
two to five |
years and |
| of | are |
purchased and internally developed software. Helvetia has currently not capitalised any other intangible assets with an indefinite useful life. 'Goodwill' comprises the goodwill resulting from the acquisition
of Helvetia Compañía Suiza S.A. (formerly: Española S.A.), Seville, in 2000. The book value of the resulting goodwill stood at CHF 24.8 million on the balance sheet date (previous year: CHF 24.2 million). The change compared to the previous year results exclusively from currency influences. For the purpose of impairment testing, goodwill is fully assigned to the cash generating unit (CGU) Helvetia Compañía Suiza, which is part of the geographical segment Spain. Goodwill is tested annually for impairment in accordance with Note 2.9 (page 98). The impairment test carried out in 2007 did not result in an
impairment loss for the cash generating unit. The recov amount was determined by calculating the value in use. This calculation required management to make estimatesof expected returns. These free cash flows are
based on the budget approved by management and strategic planning. The calculations are based on the following growth and discount rates, assuming cash flows in perpetuity: Growth
| Growth rate Risk-adjusted discount rate after taxes |
1% 12.05% |
|---|---|
| Assumptions: | |
| The growth rate was set by management and |
is based |
| on capital |
|
| to |
past experience and future expectations. The risk-free market interest rate plus a risk premium were used to determine the discount rate. Management believes that any reasonable change in any of
the key assumptions used to determine the recoverable of the individual segments will not result in impairment.
| Interest and dividend income Gains and losses on investments (net) |
Notes 7.1.1 |
2007 793.8 130.2 |
2006 704.4 291.4 |
|---|---|---|---|
| Income on investment property |
7.1.3 | 194.4 | 186.4 |
| Share of profit or loss of associates |
7.1.4 | 2.8 | 1.8 |
| Investment income (gross) |
1 121.2 | 1 184.0 | |
| Asset management expenses on financial assets |
–15.6 | –10.2 | |
| Asset management expenses on property |
–65.6 | –64.5 | |
| Investment income (net) |
1 040.0 | 1 109.3 | |
| Asset as |
management expenses are reported under 'Operating and administrative expenses' in the statement. Asset management expenses on propertyinclude all maintenance and repair costs
well as the operating expenses for property that not generate rental income during the period. latter amounted to CHF 1.4 million in the reportingyear (previous year: CHF 2.8 million).
| Interest on bonds Interest on loans |
2007 499.6 178.2 |
2006 453.3 176.0 |
|---|---|---|
| Interest on money market instruments |
26.9 | 19.0 |
| Interest income |
704.7 | 648.3 |
| Dividends from shares, investment funds and alternative investments |
86.8 | 54.8 |
| Income from securities lending |
2.3 | 1.2 |
| Other investments |
0.0 | 0.1 |
| Interest and dividend income |
793.8 | 704.4 |
| Interest |
income from investments at fair value profit or loss stood at CHF 11.0 million year: CHF 11.4 million).
| Bonds Mortgages, loans and money market instruments |
2007 3.3 3.4 |
2006 3.1 3.2 |
|---|---|---|
| Total interest-rate-sensitive financial assets |
3.4 | 3.2 |
| Bonds | 2007 27.0 |
2006 63.4 |
|---|---|---|
| Shares Investment funds |
168.8 –23.8 |
228.6 71.8 |
| Alternative investments |
37.9 | 29.6 |
| Derivative financial instruments |
–73.7 | –102.9 |
| Mortgages | 0.0 | 0.1 |
| Loans | –1.0 | 0.4 |
| Money market instruments |
– | 0.5 |
| Other | 1.5 | 2.1 |
| Impairment of financial assets of the period |
–9.0 | –4.1 |
| Reversal of impairment losses on financial assets of the period |
2.5 | 1.9 |
| Gains and losses on investments (net) |
130.2 | 291.4 |
| 'Derivatives' comprise gains and losses on derivative financial assets and derivative financial liabilities. |
||
Gainsand losses on investments include
–35.4 million (previous year: CHF 51.9 mil of gains and losses relating to investments for the account and risk of owners of unit-linked products.
| Rental income Realised and unrealised gains and losses |
2007 231.6 –37.2 |
2006 226.6 – 40.2 |
|---|---|---|
| Total income on investment property |
194.4 | 186.4 |
| Based (previous |
on notice periods, real estate tenancies will future rental income for Helvetia Group CHF 60.9 million (previous year: CHF 55.6 million)due in less than one year, CHF 123.4 million
year: CHF 138.9 million) due inbetween and five years, and CHF 43.4 million (previ year: CHF 50.8 million) due in more than five years.
| Life Non-Life Other Total as of 31.12. Notes 2007 2006 2007 2006 2007 2006 2007 2006 Investments in associates 45.1 43.6 3.2 2.6 – – 48.3 46.2 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Investment property |
7.3 | 3 463.3 | 3 392.0 | 456.3 | 458.5 | 50.8 | 39.5 | 3 970.4 | 3 890.0 |
| 7.4 | |||||||||
| Financial assets by class: |
|||||||||
| Bonds | 7.5 | 12 337.8 |
11 926.3 |
2 756.7 | 2 568.4 | 220.5 | 237.3 | 15 315.0 |
14 732.0 |
| Shares Investment funds |
1 675.3 1 628.7 |
1 571.1 1 550.0 |
330.4 63.8 |
255.9 20.9 |
233.5 0.7 |
222.5 0.5 |
2 239.2 1 693.2 |
2 049.5 1 571.4 |
|
| Alternative investments |
313.4 | 436.0 | 27.1 | 52.9 | – | – | 340.5 | 488.9 | |
| Derivative financial assets |
15.8 | 6.0 | 0.1 | – | 0.4 | – | 16.3 | 6.0 | |
| Mortgages | 2 953.0 | 2 950.0 | 143.9 | 144.0 | – | – | 3 096.9 | 3 094.0 | |
| Policy loans |
130.3 | 141.1 | – | – | – | – | 130.3 | 141.1 | |
| Other loans |
1 477.4 | 1 472.8 | 326.2 | 336.6 | – | – | 1 803.6 | 1 809.4 | |
| Money market instruments |
383.8 | 765.0 | 312.5 | 329.0 | 31.5 | 5.2 | 727.8 | 1 099.2 | |
| Total Investments |
24 423.9 |
24 253.9 |
4 420.2 | 4 168.8 | 537.4 | 505.0 | 29 381.5 |
28 927.7 |
|
was no change to the investments in associ in the reporting year. There is a loan contract Helvetia Schweizerische Lebensversicherungsgesellschaft AG, Basel, and Tertianum AG (debtor) for CHF 7.8 million, which attracts interest at usual market conditions. Dividend income from associates totalled CHF
0.6 million (previous year: CHF 0.6 million).
and expenses in respect of associates are in the income statement under 'Share of or loss of associates'. Investments in associates accounted for under the equity
method are listed in the table in Note 19 page 185).
| Balance as of 1 January Change in the scope of consolidation |
2007 46.2 – |
2006 45.2 – |
|---|---|---|
| Additions | – | – |
| Disposals | – | – |
| Unrealised gains and losses in equity |
0.0 | 0.0 |
| Share of profits for the year |
2.6 | 1.5 |
| Dividends paid |
–0.6 | –0.6 |
| Impairment (net) |
– | – |
| Foreign currency translation differences |
0.1 | 0.1 |
| Book value as of 31 December |
48.3 | 46.2 |
| Impairment losses: Accumulated impairment losses as of 1 January |
7.7 | 7.7 |
| Impairment losses of the period Reversal of impairment losses of the period |
– – |
– – |
| Disposals | – | – |
| Foreign currency translation differences |
– | – |
| Accumulated impairment losses as of 31 December |
7.7 | 7.7 |
| in CHF million |
||
|---|---|---|
| as of 31.12. Non-current assets Assets Current assets |
2007 358.0 12.6 |
2006 297.9 21.2 |
| Total assets |
370.6 | 319.1 |
| Short-term liabilities |
20.1 | 25.4 | ||
|---|---|---|---|---|
| Total liabilities |
149.1 | 129.1 | ||
| Total liabilities and equity |
370.6 | 319.1 | ||
| Helvetia Group's share in |
the liabilities |
of associ |
||
| ates |
| 2007 2006 Income 142.4 132.2 Expenses –136.6 –126.5 |
||||
|---|---|---|---|---|
| Profit for the year |
5.8 | 5.7 | ||
amounted to CHF 30.0 million (previous year: 30.1 million). Associates have total contingent liabilities of CHF 13.5 million (previous year: CHF14.9 million).
| Additions 27.8 Capitalised subsequent expenditure 33.5 –38.5 and book gains and losses –37.2 from/to property and equipment 82.6 currency translation differences 12.2 as of 31 December 3 970.4 |
44.1 37.8 –30.8 –40.2 –19.1 14.4 |
|---|---|
| Disposals Realised Transfer Foreign Balance |
|
| 3 890.0 | |
| The fair value valuation of the investment proper on capitalisation |
rates ranging |
in the portfolio of the Swiss Group companies calculated using a model-supported valuation method.In the 2007 financial year, this was based
(previous year: 4.83% to 7.62%). For all portfolios, the valuation is based on valuation reportsby independent experts.
| as of 31.12. Financial assets at amortised cost: Bonds |
Book value 2007 4 909.1 |
2006 4 131.6 |
amortised cost 2007 4 909.1 |
2006 4 131.6 |
to equity (net) 2007 |
2006 | Fair value 2007 4 727.2 |
2006 4 168.0 |
|---|---|---|---|---|---|---|---|---|
| Mortgages | 3 096.9 | 3 094.0 | 3 096.9 | 3 094.0 | 3 066.8 | 3 093.4 | ||
| Policy loans |
130.3 | 141.1 | 130.3 | 141.1 | 129.7 | 140.0 | ||
| Other loans |
1 757.5 | 1 747.0 | 1 757.5 | 1 747.0 | 1 726.8 | 1 757.3 | ||
| Money market instruments |
727.8 | 1 099.2 | 727.8 | 1 099.2 | 727.8 | 1 099.2 | ||
| Total financial assets at amortised cost |
10 621.6 |
10 212.9 |
10 621.6 |
10 212.9 |
10 378.3 |
10 257.9 |
||
| Financial assets at fair value: At fair value through profit and loss |
||||||||
| Bonds Shares |
382.8 996.8 |
431.4 663.6 |
389.6 949.7 |
422.5 575.8 |
382.8 996.8 |
431.4 663.6 |
||
| Investment funds – bonds |
35.5 | 33.5 | 35.4 | 33.4 | 35.5 | 33.5 | ||
| Investment funds – equities |
142.5 | 125.9 | 128.6 | 87.9 | 142.5 | 125.9 | ||
| Investment funds – mixed |
555.4 | 503.2 | 503.7 | 452.0 | 555.4 | 503.2 | ||
| Investment funds for account and |
||||||||
| risk of holders of life policyholders |
933.3 | 888.0 | 886.4 | 770.0 | 933.3 | 888.0 | ||
| Alternative investments |
41.6 | 263.3 | 19.7 | 224.0 | 41.6 | 263.3 | ||
| Derivative financial assets |
16.3 | 6.0 | 39.1 | 28.0 | 16.3 | 6.0 | ||
| Available-for-sale | ||||||||
| Bonds | 10 023.1 |
10 169.0 |
10 273.3 |
10 143.9 |
–250.2 | 25.0 | 10 023.1 |
10 169.0 |
| Shares | 1 242.4 | 1 385.9 | 877.4 | 918.8 | 365.0 | 467.0 | 1 242.4 | 1 385.9 |
| Investment funds – bonds |
1.1 | 0.9 | 1.0 | 0.8 | 0.1 | 0.1 | 1.1 | 0.9 |
| Investment funds – equities |
24.5 | 19.1 | 18.5 | 10.3 | 6.0 | 8.9 | 24.5 | 19.1 |
| Investment funds – mixed |
0.9 | 0.8 | 0.9 | 0.8 | 0.0 | 0.0 | 0.9 | 0.8 |
| Alternative investments |
298.9 | 225.6 | 276.1 | 221.6 | 22.8 | 4.0 | 298.9 | 225.6 |
| Loans | 46.1 | 62.4 | 46.2 | 61.3 | –0.1 | 1.0 | 46.1 | 62.4 |
| Total financial assets at fair value |
14 741.2 |
14 778.6 |
14 445.6 |
13 951.1 |
143.6 | 506.0 | 14 741.2 |
14 778.6 |
| Total financial assets |
25 362.8 |
24 991.5 |
||||||
position 'Investment funds for account and of life policyholders' includes the value of of unit-linked products whose fund investmentsare managed by third-party companies.
The
16, page 157, contains information on finaninstruments by IFRS categories.
7.5.1 Assets in securities lending the reporting date, securities with a fair value CHF 1,483.7 million (previous year: CHF 1,528.7 million) were committed to securitieslending by the Group.
| as of 31.12. |
Maturity profile <1 year |
of contract values 1–5 years |
>5 years |
Contract value 2007 |
2006 | Fair value 2007 |
2006 |
|---|---|---|---|---|---|---|---|
| Interest rate instruments: Forward rate agreements |
– | – | – | – | – | – | – |
| Swaps | – | – | – | – | – | – | – |
| Options (over-the-counter) |
– | – | – | – | 0.3 | – | 0.0 |
| Options (exchange-traded) |
– | – | – | – | – | – | – |
| Futures (exchange-traded) |
– | – | – | – | – | – | – |
| Total interest rate instruments |
– | – | – | – | 0.3 | – | 0.0 |
| Equity- and equity-index instruments: |
|||||||
| Forwards | – | – | – | – | – | – | – |
| Options (over-the-counter) Options (exchange-traded) |
1 075.1 63.6 |
39.7 – |
88.0 – |
1 202.8 63.6 |
911.0 6.9 |
8.0 1.1 |
2.7 0.0 |
| Futures (exchange-traded) |
– | – | – | – | – | – | – |
| Total equity- and equity-index |
|||||||
| instruments | 1 138.7 | 39.7 | 88.0 | 1 266.4 | 917.9 | 9.1 | 2.7 |
| Currency instruments: Forwards |
620.2 | – | – | 620.2 | 138.4 | 5.2 | 3.2 |
| Swaps Options (over-the-counter) |
– 764.7 |
– – |
– – |
– 764.7 |
– 212.5 |
– 2.0 |
– 0.1 |
| Options (exchange-traded) |
– | – | – | – | – | – | – |
| Futures (exchange-traded) |
– | – | – | – | – | – | – |
| Total currency instruments |
1 384.9 | – | – | 1 384.9 | 350.9 | 7.2 | 3.3 |
| Total derivative financial assets |
2 523.6 | 39.7 | 88.0 | 2 651.3 | 1 269.1 | 16.3 | 6.0 |
| in | CHF million |
||
|---|---|---|---|
| 7.6.1 Analysis of past due financial assets without impairment | <1 |
| <1 month 2–3 months 4–6 months >6 months as of 31.12. 2007 2006 2007 2006 2007 2006 2007 2006 Bonds 8.3 0.1 – – – – – – |
||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mortgages | 30.1 | 31.4 38.5 |
14.8 | 4.9 | 7.0 3.0 |
|||||||
| Other loans |
– | 0.0 | – | 0.0 | – | 0.0 | 0.0 | 4.0 0.0 |
||||
| Total past due financial assets |
||||||||||||
| without impairment |
38.4 | 31.5 | 38.5 | 14.8 | 4.9 | 7.0 | 3.0 | 4.0 | ||||
| Outstanding | and |
amounts are collected in the course the normal reminder procedure and impaired if (see Note 2.10.3, page 100). Mortgages and loans are renegotiated to enable the fullamount to be recovered only in a few instances
this does not have a significant impact on of the Group companies. Information on the held by Helvetia Group is provided in Note17.5, page 179.
| as of 31.12. Mortgages Other loans |
Gross 2007 9.4 0.5 |
2006 12.8 2.4 |
impairment 2007 2.7 0.5 |
2006 2.6 2.0 |
Net 2007 6.7 – |
2006 10.2 0.4 |
|---|---|---|---|---|---|---|
| Total | 9.9 | 15.2 | 3.2 | 4.6 | 6.7 | 10.6 |
| The | CHF |
7.6.2 Analysis of individual impaired financial assets at amortised cost in CHF million IndividualGross
impairment for financial assets at fair value amounted to CHF 7.7 million in the 2007 year (previous year: CHF 2.6 million). Ofthis, CHF 7.5 million (previous year:
1.9 million) related to shares and CHF 0.2 mil- (previous year: CHF 0.7 million) to alternative There was no reversal of impairment losses.
| Balance as of 1 January |
2007 2.6 |
2006 3.2 |
2007 2.0 |
2006 1.9 |
2007 4.6 |
2006 5.1 |
|---|---|---|---|---|---|---|
| Change in the scope of conslidation |
– | – | – | – | – | – |
| Impairment | 1.2 | 1.4 | 0.0 | 0.1 | 1.2 | 1.5 |
| Reversal of impairment losses |
–1.0 | –1.9 | –1.5 | – | –2.5 | –1.9 |
| Disposals impairment |
–0.1 | –0.1 | – | – | –0.1 | –0.1 |
| Foreign currency translation differences |
0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Balance as of 31 December |
2.7 | 2.6 | 0.5 | 2.0 | 3.2 | 4.6 |
Group classifies financial liabilities to their origin as financial liabilities financing activities, financial liabilities from insurance business and other financial liabilities. Helvetia Group's financial liabilities do not include anyfinancial covenants that will significantly
the terms and conditions of any agreement maturity, interest rate, securities and cur- Financial liabilities at fair value equal the amount repayable on the due date. Note 17.4.1 contains a maturity schedule of loans and financial liabilities.
| Acquisition cost/ amortised cost Fair value |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| as of 31.12. Bonds Liabilites from finance leases |
2007 199.4 34.8 |
2006 199.1 – |
2007 199.0 34.8 |
2006 201.4 – |
|||||||||
| Total financial liabilities from financing activities |
234.2 | 199.1 | 233.8 | 201.4 | |||||||||
| Helvetia Holding AG, St.Gallen, issued a 3% bond |
Liabilities from |
finance | leases include a |
debt that |
|||||||||
| 2004–2010 nominal est |
arose acquisition rently |
in the 2004 financial year. It has a value of CHF 200 million and pays interest at 3% over the bond's life of six years. The effective interest rate used for the valuation is 3.14%. Repayment at nominal value is scheduled for 5.5.2010. The bond is measured at amortised cost. At the reporting date, the bond's book value stood at CHF 199.4 million (previous year: CHF 199.1 million). Interest expenses of CHF 6.3 million (previous year: CHF 6.0 million) for the bond were recognised in the income statementunder 'Finance costs'.
under a financing agreement regarding the of a property for own use that is currently under construction. This debt is recorded at the current book value of the property. The financial liability and book value of the property are constantly increased as construction progresses. Once the property is finished it will be measured in accordance with accounting policies for finance leases. The interest costs under this agreement amount to CHF 0.9 million (previous year: CHF 0.0 million) and are recognised in the income statementunder 'Finance costs'.
| as of 31.12. Financial liabilities at amortised cost: Deposit liabilities for credited policyholder |
2007 | 2006 | 2007 | 2006 | 2007 | 2006 |
|---|---|---|---|---|---|---|
| profit participation |
856.4 | 883.7 | 856.4 | 883.7 | 856.4 | 883.7 |
| Deposit liabilities from reinsurance contracts |
300.6 | 405.7 | 300.6 | 405.7 | 300.6 | 405.7 |
| Total financial liabilities at amortised cost |
1 157.0 | 1 289.4 | 1 157.0 | 1 289.4 | 1 157.0 | 1 289.4 |
| Financial liabilities at fair value: |
||||||
| Deposits for investment contracts |
138.3 | 200.1 | 138.4 | 203.0 | 138.3 | 200.1 |
| Total financial liabilities at fair value |
138.3 | 200.1 | 138.4 | 203.0 | 138.3 | 200.1 |
| Total financial liabilities from insurance business |
1 295.3 | 1 489.5 | 1 295.4 | 1 492.4 | 1 295.3 | 1 489.5 |
| nantly from |
index and |
unit-linked | products, | without |
Deposit liabilities for credited policyholder profit participation include interest-bearing credit already contractually allocated to the holders of individual life insurance policies and policyholder dividends from the group life insurance business that are either available early or only when the insurance benefits fall due, depending on the applicable insurance terms and conditions.consist
Deposit liabilities from reinsurance contracts of reserves for unearned premiums, future payments and actuarial reserves for direct (ceded) and indirect (retroceded) business as well as deposits of future cash flows from non-traditional reinsurance business. Deposits for investment contracts contain deposits of
policyholders owning investment contracts withdiscretionary participation features, predomi-
insurance risk, allowing the policy to directly participate in the development of an external fund or external index. The change in fair value is solely due to changes in the performance of the underlying investment fund or index. There is no change in fair value that is attributable to changes in the credit risk component of these liabilities. Amounts paid into or from these deposits do not affect revenues and are not entered 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 Note 17 (from page 159). The income earned from the management of deposits for investment contracts reported in the income statement amounted to CHF 1.0 million in the reporting year(previous year: CHF 0.7 million).
| Acquisition cost/ amortised cost Fair value as of 31.12. Notes 2007 2006 2007 2006 |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Derivative financial liabilities Other |
8.3.1 | 11.1 9.3 |
0.7 10.6 |
12.1 9.3 |
26.6 10.6 |
||||||
| Total other financial liabilities |
20.4 | 11.3 | 21.4 | 37.2 | |||||||
| as of 31.12. Interest rate instruments: |
Maturity <1 year |
profile of contract 1–5 years |
values >5 years |
Contract value 2007 |
2006 | Fair value 2007 |
2006 |
|---|---|---|---|---|---|---|---|
| Forward rate agreements |
– | – | – | – | – | – | – |
| Swaps | – | – | – | – | 110.0 | – | 0.0 |
| Options (over-the-counter) |
– | – | – | – | – | – | – |
| Options (exchange-traded) |
– | – | – | – | – | – | – |
| Futures (exchange-traded) |
– | – | – | – | – | – | – |
| Total interest rate instruments |
– | – | – | – | 110.0 | – | 0.0 |
| Equity- and equity-index instruments: |
|||||||
| Forwards | – | – | – | – | – | – | – |
| Options (over-the-counter) Options (exchange-traded) |
819.6 47.3 |
– – |
– – |
819.6 47.3 |
– – |
3.4 0.6 |
– – |
| Futures (exchange-traded) |
– | – | – | – | – | – | – |
| Total equity- and equity-index |
|||||||
| instruments | 866.9 | – | – | 866.9 | – | 4.0 | – |
| Currency instruments: |
|||||||
| Forwards | 250.0 | – | – | 250.0 | 1 542.4 | 6.6 | 25.9 |
| Swaps Options (over-the-counter) |
– – |
– – |
– – |
– – |
– – |
– – |
– – |
| Options (exchange-traded) |
– | – | – | – | – | – | – |
| Futures (exchange-traded) |
– | – | – | – | – | – | – |
| Total currency instruments |
250.0 | – | – | 250.0 | 1 542.4 | 6.6 | 25.9 |
| Derivatives from life policies |
– | 37.5 | 86.0 | 123.5 | 124.5 | 1.5 | 0.7 |
| Total derivative financial liabilities |
1 116.9 | 37.5 | 86.0 | 1 240.4 | 1 776.9 | 12.1 | 26.6 |
CHF million Gross
| Gross | assets | Net | |||||
|---|---|---|---|---|---|---|---|
| as of 31.12. Notes Actuarial reserve for insurance contracts life Actuarial reserve for investment contracts |
2007 21 082.4 642.6 |
2006 20 396.7 622.3 |
2007 148.2 – |
2006 149.0 – |
2007 20 934.2 642.6 |
2006 20 247.7 622.3 |
|
| Total actuarial reserve |
21 725.0 |
21 019.0 |
148.2 | 149.0 | 21 576.8 |
20 870.0 |
|
| Provision for policyholder participation – non-life contracts |
24.4 | 26.0 | – | – | 24.4 | 26.0 | |
| Provision for policyholder participation – life contracts |
680.7 | 710.0 | – | – | 680.7 | 710.0 | |
| Provision for policyholder participation – investment contracts Total provision for future policyholder participation |
–11.9 693.2 |
6.2 742.2 |
– – |
– – |
–11.9 693.2 |
6.2 742.2 |
|
| Loss reserves for insurance contracts non-life |
3 017.8 | 2 886.1 | 277.4 | 264.9 | 2 740.4 | 2 621.2 | |
| 9.3.1 Total loss reserves |
3 017.8 | 2 886.1 | 277.4 | 264.9 | 2 740.4 | 2 621.2 | |
| Unearned premium reserve for insurance contracts non-life |
781.1 | 726.2 | 19.8 | 19.1 | 761.3 | 707.1 | |
| Unearned premium reserve for insurance contracts life |
163.6 | 164.3 | 10.6 | 10.2 | 153.0 | 154.1 | |
| Unearned premium reserve for investment contracts Total unearned premium reserve |
– 944.7 |
– 890.5 |
– 30.4 |
– 29.3 |
– 914.3 |
– 861.2 |
|
| Total reserves for insurance and investment contracts |
26 380.7 |
25 537.8 |
456.0 | 443.2 | 25 924.7 |
25 094.6 |
|
| Reinsurance deposit receivables |
232.5 | 339.2 | |||||
| Reinsurance assets |
688.5 | 782.4 | |||||
Reinsurance deposit receivables include deposits held by the ceding direct insurer in respect unearned premiums, future loss payments and actuarial reserves for assumed indirect business. The fair value at the reporting date equals the reported book values. There was no impairment of deposit receivables. This item also contains receivables from nontraditional
reinsurance for which a corresponding exists on the liabilities side of the balance sheet.
details on actuarial reserves for life and business can be found in the following A maturity analysis of the reserves for insurance contracts and investment contracts is providedin Note 17.4.1 (page 169).
| Balance as of 1 January |
2007 | 2006 | 2007 26.0 |
2006 25.6 |
|---|---|---|---|---|
| Change in the scope of consolidation |
– | – | ||
| Allocation | 24.2 | 24.5 | ||
| Release | –25.0 | –23.2 | ||
| Used amounts |
–0.9 | –1.0 | ||
| Foreign currency translation differences |
0.1 | 0.1 | ||
| Balance as of 31 December |
24.4 | 26.0 | ||
| Reserves for insurance contracts life (gross) |
||||
| Balance as of 1 January |
2007 20 396.7 |
2006 19 615.1 |
2007 710.0 |
2006 646.0 |
| Change in the scope of consolidation |
– | – | – | – |
| Allocation | 2 904.3 | 2 897.2 | 103.8 | 148.8 |
| Release | –28.3 | –53.6 | –26.5 | –25.4 |
| Used amounts |
–2 289.4 |
–2 177.8 |
–110.3 | –64.1 |
| Foreign currency translation differences |
99.1 | 115.8 | 3.7 | 4.7 |
| Balance as of 31 December |
21 082.4 |
20 396.7 |
680.7 | 710.0 |
| Reserves for investment contracts (gross) |
||||
| Balance as of 1 January |
2007 622.3 |
2006 531.2 |
2007 6.2 |
2006 16.7 |
| Change in the scope of consolidation |
– | – | – | – |
| Allocation | 94.3 | 133.7 | – | 2.2 |
| Release | –1.3 | –2.9 | –17.5 | –11.6 |
| Used amounts |
–88.9 | –57.8 | –0.6 | –1.4 |
| Foreign currency translation differences |
16.2 | 18.1 | 0.0 | 0.3 |
| Balance as of 31 December |
642.6 | 622.3 | –11.9 | 6.2 |
| share in reserves for insurance contracts |
||||
| 2007 | 2006 | 2007 | 2006 | |
| as of 1 January in the scope of consolidation |
149.0 – |
149.3 – |
||
| 22.0 | 29.4 | |||
| –0.5 | –3.3 | |||
| amounts | –26.3 | –31.4 | ||
| – | – | |||
| currency translation differences |
4.0 | 5.0 | ||
| as of 31 December |
148.2 | 149.0 | ||
| Reinsurers' Balance Change Allocation Release Used Impairment Foreign Balance Notes to the consolidated financial statements of Helvetia Group 2007 |
| Loss reserves |
premium reserve |
Total | |||
|---|---|---|---|---|---|
| 2007 2 886.1 – |
2006 2 792.0 – |
2007 726.2 – |
2006 682.5 – |
2007 3 638.3 – |
2006 3 500.1 – |
| 1 117.3 | 998.3 | 778.1 | 715.8 | 1 919.6 | 1 738.6 |
| –375.6 | –277.2 | –738.1 | –688.9 | –1 138.7 |
–989.3 |
| –654.5 | –676.3 | – | – | –655.4 | –677.3 |
| 44.5 | 49.3 | 14.9 | 16.8 | 59.5 | 66.2 |
| 3 017.8 | 2 886.1 | 781.1 | 726.2 | 3 823.3 | 3 638.3 |
| 2007 | 2006 | 2007 164.3 – |
2006 162.2 – |
2007 21 271.0 |
2006 20 423.3 |
| 163.3 | |||||
| – | – | – | – | |
|---|---|---|---|---|
| 163.3 | 163.4 | 3 171.4 | 3 209.4 | |
| –165.3 | –162.8 | –220.1 | –241.8 | |
| – | – | –2 399.7 |
–2 241.9 |
|
| 1.3 | 1.5 | 104.1 | 122.0 | |
| 163.6 | 164.3 | 21 926.7 |
21 271.0 |
|
| 2007 | 2006 | 2007 – |
2006 – |
2007 628.5 |
2006 547.9 |
|---|---|---|---|---|---|
| – – |
– – |
– 94.3 |
– 135.9 |
||
| – | – | –18.8 | –14.5 | ||
| – | – | –89.5 | –59.2 | ||
| – | – | 16.2 | 18.4 | ||
| – | – | 630.7 | 628.5 | ||
| 2007 264.9 |
2006 326.2 |
2007 29.3 |
2006 25.9 |
2007 443.2 |
2006 501.4 |
|---|---|---|---|---|---|
| – 74.6 |
– 65.9 |
– 30.3 |
– 29.1 |
– 126.9 |
– 124.4 |
| –31.5 | –13.6 | –29.5 | –26.0 | –61.5 | –42.9 |
| –32.3 | –116.1 | – | – | –58.6 | –147.5 |
| – | – | – | – | – | – |
| 1.7 | 2.5 | 0.3 | 0.3 | 6.0 | 7.8 |
| 277.4 | 264.9 | 30.4 | 29.3 | 456.0 | 443.2 |
| Notes to the consolidated |
financial | statements of Helvetia |
Group 2007 |
||
methods derived from many years of experience that take account of uncertain associated with claims estimates are applied to determine the required loss reserves. The assumptions applied to determine the required loss reserves did not change substantially in the reporting year. No acquisition costs are deferred innon-life business.
Liability Adequacy Test (LAT) for non-life resulted in an additional increase in loss of CHF 14.2 million as of 31.12.2007 (previous year: CHF 15.0 million). Insurance conditions and risks in non-life business are
described in Note 17.2 (from page 161). following table sets out the development of loss reservesfor the previous six years.
| Year of loss occurrence Run-off year 1 Run-off year 2 |
before 2002 |
2002 1 839.0 1 743.9 |
2003 1 709.2 1 622.8 |
2004 1 769.9 1 726.6 |
2005 1 899.2 1 843.1 |
2006 1 738.3 1 709.4 |
2007 1 928.2 |
Total |
|---|---|---|---|---|---|---|---|---|
| Run-off year 3 |
1 712.6 |
1 563.1 | 1 657.2 | 1 758.8 | ||||
| Run-off year 4 |
1 689.7 |
1 545.2 | 1 602.9 | |||||
| Run-off year 5 |
1 680.2 |
1 498.4 | ||||||
| Run-off year 6 |
1 653.2 |
|||||||
| Estimated claims after year of loss occurrence |
1 653.2 | 1 498.4 | 1 602.9 | 1 758.8 | 1 709.4 | 1 928.2 | ||
| Accumulated claims paid as of 31 December |
–1 487.8 |
–1 314.0 |
–1 259.4 |
–1 459.9 |
–1 187.6 |
–886.3 | ||
| Estimated loss reserves as of 31 December |
504.0 | 165.4 | 184.4 | 343.5 | 298.9 | 521.8 | 1 041.9 | 3 059.9 |
| Increase of loss reserves based on LAT |
14.2 | |||||||
| Claims-handling costs |
130.1 | |||||||
| Other technical reserves non-life Loss reserves as of 31 December |
2.1 3 206.3 |
|||||||
| Group reinsurance share |
–188.5 | |||||||
| Loss reserves as of 31 December |
3 017.8 | |||||||
table above regarding the claims development non-life business shows: n Claims development is very stable. n All existing actuarial liabilities are covered at
actuarial reserve is normally calculated in three-step process. In a first step, the actuarial is computed based on local standards. These include applicable local parameters such as interest rates, mortality, surrender rates, expenses and additional biometric parameters which are usually set at the time of contract conclusion and vary by country, year of issuance and product. In the reporting year, no substantial adjustments to the parameters used for the calculation were made that would have had a material impact on the calculation of the actuarial reserve. If the reserves prove to be insufficient from a local point
of view, they have to be increased in most in a second step. A reserve increase recognised as necessary may be spread over several years in the local financial statements, depending on local requirements and circumstances.
a third step, the Liability Adequacy Test finally Group-wide uniform standards to test the actuarial reserves included in the local financial statements (including additional reserve increases less deferred acquisition costs) are sufficient. Across the Group the Liability Adequacy Test required an allocation of additional actuarial reserves of CHF 30.2 million as of 31.12.2007 (previous year: CHF 26.7 million). Insurance conditions and risks in life business are
described in Note 17.3 (from page 164). of actuarial reserves are outlined in Note17.3.3 (from page 167).
| Balance as of 1 January Change in the scope of consolidation |
2007 219.8 – |
2006 221.6 – |
|---|---|---|
| Capitalised in the period |
25.4 | 21.4 |
| Amortised in the period |
–22.5 | –23.8 |
| Impairment in the period |
– | – |
| Foreign currency translation differences |
0.5 | 0.6 |
| Balance as of 31 December |
223.2 | 219.8 |
| Helvetia Group defers acquisition costs only in of the Liability Adequacy Test. |
The share |
of |
| individual 'Deferred local term deferred CHF |
life business and such deferrals follow accounting regulations. Impairment of deferredacquisition costs is checked as part
'Deferred acquisition costs' classified as short is CHF 41.3 million (previous year: CHF34.6 million).
| Receivables Liabilities as of 31.12. 2007 2006 2007 2006 Due from/to policyholders 329.4 289.8 647.2 626.9 |
||||||
|---|---|---|---|---|---|---|
| Due from/to agents and brokers |
78.5 77.4 55.6 46.1 |
|||||
| Due from/to insurance companies |
288.5 | 270.9 | 34.3 | 30.5 | ||
| Total receivables/liabilities |
696.4 | 638.1 | 737.1 | 703.5 | ||
| The |
receivables and liabilities from insurance busi are primarily short-term. A maturity analysis the liabilities is provided in Note 17.4.1, page 169. The amortised cost of the receivables usuallyequals the fair value.
9.5.1 Analysis of past due receivables without individual impairment in CHF million
| <1 month 2–3 months 4–6 months >6 months as of 31.12. 2007 2006 2007 2006 2007 2006 2007 2006 Due from policyholders 77.1 63.9 27.4 28.4 11.2 10.2 41.3 32.4 |
||||||||
|---|---|---|---|---|---|---|---|---|
| Due from agents and brokers |
12.5 | 10.8 | 8.0 | 12.2 | 6.0 | 6.1 | 5.6 | 11.0 |
| Due from insurance companies |
2.6 | 3.0 | 2.8 | 1.6 | 1.6 | 1.1 | 2.7 | 3.2 |
| Total past due receivables from |
||||||||
| insurance business without individual |
||||||||
| impairment | 92.2 | 77.7 | 38.2 | 42.2 | 18.8 | 17.4 | 49.6 | 46.6 |
| The |
analysis of past due receivables contains past due receivables that were not impaired well as impairments in the portfolio.
| Balance as of 1 January Change in the scope of consolidation |
2007 9.9 – |
– | 2006 2007 9.1 25.9 – |
2006 2007 27.1 35.8 – – |
||
|---|---|---|---|---|---|---|
| Impairment | 4.0 | 1.7 | 0.5 | 2.6 | 4.5 | – 4.3 |
| Reversal of impairment loss |
–0.7 | –0.1 | –1.2 | –4.5 | –1.9 | –4.6 |
| Disposals | –0.4 | –1.1 | –1.8 | – | –2.2 | –1.1 |
| Foreign currency translation differences |
0.3 | 0.3 | 0.6 | 0.7 | 0.9 | 1.0 |
| Other changes |
3.5 | – | –3.5 | – | – | – |
| Balance as of 31 December |
16.6 | 9.9 | 20.5 | 25.9 | 37.1 | 35.8 |
| Past due receivables from policyholders are |
usually | |||||
| impaired |
on a collective basis. Individual impair is mostly applied to specific receivables from agentsand brokers and from insurance companies.
| Gross Impairment Net 2006 |
|||||||
|---|---|---|---|---|---|---|---|
| as of 31.12. Due from/to policyholders Due from/to agents and brokers |
2007 2006 2007 2006 2007 0.0 0.0 0.0 0.0 0.0 17.1 9.2 15.2 8.2 1.9 |
||||||
| Due from/to insurance companies |
1.4 | 1.7 | 1.4 | 1.7 | – | – | |
| Total | 18.5 | 10.9 | 16.6 | 9.9 | 1.9 | 1.0 | |
| 2007 2006 Current income taxes 104.0 99.1 Deferred income taxes –0.5 39.3 |
||||||
|---|---|---|---|---|---|---|
| Total income taxes |
103.5 | 138.4 | ||||
| 2007 2006 Balance as of 1 January 416.1 418.7 Change in the scope of consolidation – – |
||||||
|---|---|---|---|---|---|---|
| Deferred income taxes recognised in equity |
–61.4 | –43.9 | ||||
| Deferred income taxes recognised in the income statement |
–0.5 | 39.3 | ||||
| Foreign currency translation differences |
1.9 | 2.6 | ||||
| Reclassifications | 0.0 | –0.6 | ||||
| Balance as of 31 December |
356.1 | 416.1 | ||||
| 2007 2006 Expected income taxes 122.0 138.7 Increase/reduction in taxes resulting from: |
|||||
|---|---|---|---|---|---|
| tax-exempt interest and dividends |
–1.9 | –0.6 | |||
| tax-exempt gains from shares and investments |
–3.7 | –3.9 | |||
| non-deductible expenses |
12.3 | 24.4 | |||
| Back taxes |
–0.9 | 0.9 | |||
| Change in tax rates |
–11.3 | –10.8 | |||
| Tax elements related to other periods |
–13.2 | –10.4 | |||
| Disposal of subsidiaries |
– | – | |||
| Use of previously unrecognised losses carried forward |
0.4 | 0.1 | |||
| Other | –0.2 | 0.0 | |||
| Actual income taxes |
103.5 | 138.4 | |||
| The expected tax rate applicable to Helvetia |
|||||
| Group 24.7%). |
|||||
| average |
was 24.1% for 2007 (previous year: This rate is derived from the weighted average of expected tax rates in the individual countrieswhere the Group operates.
| as of 31.12. Notes Composition of deferred taxes in the balance sheet: |
Tax assets 2007 |
2006 | Tax liabilities 2007 |
2006 |
|---|---|---|---|---|
| Unearned premium reserve |
19.1 | 19.6 | 0.0 | – |
| Loss reserves |
28.4 | 39.2 | 134.0 | 147.0 |
| Actuarial reserve |
9.0 | 9.0 | 1.6 | 3.6 |
| Investments | 92.9 | 44.1 | 389.7 | 437.9 |
| Deferred acquisition costs (life) |
1.3 | 2.1 | – | – |
| Property and equipment |
5.9 | 8.9 | 14.8 | 5.4 |
| Intangible assets |
0.0 | 0.1 | 3.4 | 4.6 |
| Non-actuarial provisions |
0.1 | 0.1 | 11.9 | 15.1 |
| Employee benefits |
17.0 | 19.2 | 0.7 | 1.0 |
| Tax assets from losses carried forward |
0.7 | 1.0 | – | – |
| 10.5.1 Other |
109.8 | 130.7 | 84.2 | 75.5 |
| Deferred taxes (gross) |
284.2 | 274.0 | 640.3 | 690.1 |
| Offset | –234.4 | –224.4 | –234.4 | –224.4 |
| Deferred taxes (net) |
49.8 | 49.6 | 405.9 | 465.7 |
| No deferred tax liabilities were recognised for |
payable on |
the unremitted |
income from |
certain |
| withholding | subsidiaries, | |||
tax and other taxes that would be
as these amounts are retained.
| in CHF million |
||
|---|---|---|
| as of 31.12. Expire 10.5.1 Net tax assets from losses carried forward Expire |
2007 | 2006 |
| of 31.12. 2007 2006 Expire within 1 year 0.4 0.1 Expire between 2 and 3 years 0.8 1.9 |
||||||
|---|---|---|---|---|---|---|
| Expire between 4 and 7 years |
– | – | ||||
| Without expiration |
1.1 | 1.0 | ||||
| Total recognised losses carried forward |
2.3 | 3.0 | ||||
| Resulting tax assets |
0.7 | 1.0 | ||||
| Net tax assets from losses carried forward |
0.7 | 1.0 | ||||
| after | ||||||
| As | not |
10.5.2 No tax assets for losses carried forward of 31.12.2007, no tax assets were recognised losses carried forward of CHF 18.4 million (previous year: CHF 22.3 million). Of this amount, CHF 0.1 million will expire next year, CHF 0.1 millionafter two to three years, CHF 10.5 million
four or more years and CHF 7.7 million do have an expiry date. Tax rates applicable to losses carried forward for which no tax assets were recognised are between 30 and 33per cent.
AG have a nominal value of CHF 10 (pre year: CHF 10). The purchase of Helvetia Holding AG registered shares is not subject to any restrictions. Shareholders who purchase the shares in their own name and on their own behalf are entered in the share register with voting rights for a maximum of 5% of the issued registered shares. Individuals who do not explicitly certify in the registration application that they acquired the shares on their own behalf are entered in the share register for a maximum of 3%. At the Shareholders' Meeting of 4.5.2007 conditional
capital was approved. The Board of Direc of Helvetia Holding AG was authorised to increase the share capital by a maximum of 1,297,932 fully paid-up registered shares with a nominal value of CHF 10 each to a total of CHF 12,979,320 by issuing conversion and/or option rights. Apart from the granting of registered shares of Helvetia
Holding AG to Helvetia Group employees favourable terms no transactions involving treas-
shares took place in the 2007 financial year. the previous year 30,000 treasury shares were The number of treasury shares thus fell to 70,312 shares. The CHF 2.9 million gain arising from the sale was credited to the capital reserve without affecting profit or loss. The treasury shares that were granted to employees
at favourable terms under the Helvetia 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 0.7 million (previous year: CHF 0.6 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 9.0 million into the bonus reserves of Schweizerische Lebensversicherungsgesellschaft AG. This was credited to the capital reserve without affecting profit or loss and allocated in total to 'Provision for future policyholder participation' under liabilities in accordance withits objective.
| in CHF million Share capital: |
Number of shares |
Share capital |
|---|---|---|
| As of 1.1.2006 |
8 652 875 |
86.5 |
| As of 31.12.2006 |
8 652 875 |
86.5 |
| As of 31.12.2007 |
8 652 875 |
86.5 |
| Treasury shares: |
||
| As of 1.1.2006 |
100 312 |
1.0 |
| Purchase/sale of treasury shares |
–30 000 | –0.3 |
| As of 31.12.2006 |
70 312 |
0.7 |
| As of 31.12.2007 |
70 312 |
0.7 |
| Shares outstanding: |
||
| As of 1.1.2006 |
8 552 563 |
85.5 |
| As of 31.12.2006 |
8 582 563 |
85.8 |
| As of 31.12.2007 |
8 582 563 |
85.8 |
reserves consist of assets paid in by third Capital reserves primarily comprise share premium of shares issued by Helvetia Holding AG and the result from treasury share transactions.Accumulatednon-distributed earnings of Helvetia
are recognised in the balance sheet as 'Retained earnings'. Besides freely disposable funds, they also comprise statutory reserves and reserves bound by the articles of association which are sustained by the net profit for the year and are subjectto restrictions on distributions.
prepared in foreign currency into the Group'sreporting currency (Swiss franc).
11.2.4 Reserve for 'Unrealised gains and losses' reserve for 'Unrealised gains and losses' fair value changes of available-for-sale investments (AFS), the portion of unrealised gains and losses of associates, as well as value changes resulting from the transfer of owner-occupied property.The position is adjusted at the balance sheet date by
the portion relating to contracts with discre participation features. The portion reserved for the owners of contracts with participation features is transferred to 'Liabilities'. This item plus foreign exchange influences amounts to CHF –122.5 million for the period (previous year: CHF –48.3 million). The remaining portion regarding contracts with participation features is allocated to the 'Valuation reserves for contracts with participation features in equity' (see Note 11.2.5). In the 2007 financial year, as a result of the sale of
owner-occupied properties transferred to invest properties, CHF 1.2 million was recorded inretained earnings.
| Available-for-sale investments (AFS) |
Associates | of owner-occupied property |
Total unrealised and losses |
gains | ||||
|---|---|---|---|---|---|---|---|---|
| Balance as of 1 January Fair value revaluation |
2007 506.0 –254.9 |
2006 721.5 –74.8 |
2007 0.2 0.0 |
2006 0.1 0.1 |
2007 14.5 – |
2006 8.6 – |
2007 520.7 –254.9 |
2006 730.2 –74.7 |
| Revaluation gains on transfer |
||||||||
| of owner-occupied property |
– | – | – | – | 0.2 | 5.6 | 0.2 | 5.6 |
| Gains reclassified to retained |
||||||||
| earnings due to disposals |
– | – | – | – | –1.2 | – | –1.2 | – |
| Gains reclassified to the income |
||||||||
| statement due to disposals |
–123.3 | –159.7 | – | – | – | – | –123.3 | –159.7 |
| Losses reclassified to the income |
||||||||
| statement due to disposals |
15.4 | 11.4 | – | – | – | – | 15.4 | 11.4 |
| Impairment losses reclassified |
||||||||
| to the income statement |
–3.0 | 0.7 | – | – | – | – | –3.0 | 0.7 |
| Foreign currency translation |
||||||||
| differences | 3.4 | 6.2 | 0.0 | 0.0 | 0.4 | 0.3 | 3.8 | 6.5 |
| Reclassification | – | 0.7 | – | – | – | – | – | 0.7 |
| Balance as of 31 December |
143.6 | 506.0 | 0.2 | 0.2 | 13.9 | 14.5 | 157.7 | 520.7 |
| less: | ||||||||
| Obligations for contracts with |
Notes | |||||||
| participation features in 'Liabilities' |
–29.5 | –152.0 | ||||||
| Valuation | ||||||||
| with | ||||||||
'Equity' (gross) 11.2.5 –58.4 –193.5
interests –0.3 –0.4
taxes on remaining portion –21.3 –46.9
gains and losses (net) as of 31 December 48.2 127.9
reserves for contracts
participation features
Minority
Deferred
Unrealised
in
features are created for bonuses from insu and investment contracts that arise from IFRS-related adjustments, impact either net income or unrealised gains, and are not considered a liabilityfor policyholders under country-defined
'legal quotas' governing minimum distributions to The reserves comprise the share of gains and losses on investments relating to contracts with profit participation recognised directly in equity, and the share of retained earnings arising from valuation differences relating to the same contracts. The use of the reserves is at the insurer'sdiscretion (see Note 2.13.2, page 102).
Valuation reserves for contracts with participation features in CHF million Unrealised
| Unrealised gains and losses on contracts with participation features: |
2007 | 2006 |
|---|---|---|
| Balance as of 1 January Change in unrealised gains and losses |
193.5 –135.2 |
278.0 –85.0 |
| Foreign currency translation differences |
0.1 | 0.5 |
| Balance as of 31 December |
58.4 | 193.5 |
| less: | ||
| Deferred taxes |
–13.6 | –48.4 |
| Unrealised gains and losses as of 31 December |
44.8 | 145.1 |
| Retained earnings on contracts with participation features: |
||
| Balance as of 1 January |
463.7 | 379.0 |
| Change in the scope of consolidation |
– | – |
| Share of profit for the year |
37.4 | 84.5 |
| Reclassifications | –0.1 | 0.2 |
| Retained earnings as of 31 December |
501.0 | 463.7 |
| Valuation reserves for contracts with participation features as of 31 December |
545.8 | 608.8 |
| The |
reclassification of the retained earnings on with discretionary participation features required under local regulations for the appropriation of profit in Italy. The amounts are transferredto retained earnings.
valuation differences that primarily result from fair value valuation of AFS financial assets and value changes related to the transfer of property. On the reporting date, they amounted to a total of CHF 34.9 million (previous year: CHF 95.3 million).
earnings per share (EPS) are calculated on weighted average number of shares outstand of Helvetia Holding AG and the portion of the Group's net profit for the year attributable to shareholders. Diluted earnings for both reporting periods correspond to the basic earnings, as no convertible instruments or options that could have adilutive effect are outstanding.
Earnings per share in CHF ProfitWeighted
| Profit for the year less minority interests Weighted average number of shares outstanding |
2007 400 972 475 8 582 563 |
2006 423024441 8572021 |
|---|---|---|
| Basic earnings per share |
46.72 | 49.35 |
Board of Directors will submit a proposal to Shareholders' Meeting of 25.4.2008 to pay a per share of CHF 15.00 (previous year: CHF 13.50) and to reduce the nominal share value by CHF 9.90 per share to CHF 0.10 nominal value per share, with the total payout amounting to CHF 215.5 million (previous year: CHF 116.8 million). The proposed dividend and the reduction in the nominal share value will not be distributed before approved by the ordinary Shareholders' Meeting. The dividend distribution is only recognised when approved by the Shareholders' Meeting. The payment of the par value reduction will be made at a later date than the normal dividend payment.The
Dividend restrictions and solvency requirements Swiss subsidiaries are subject to the restric of the Swiss Code of Obligations with regard to the dividends that may be distributed to the parent company. The Code requires 5% of profit to be allocated to the statutory reserve fund until its amount equals 20% of the paid-in share capital. In addition, 10% of the amount that is paid out as a policyholder dividend after payment of a dividend of 5% must be allocated to the reserve fund, even after the latter has reached the statutory level. Other countries where subsidiaries of Helvetia Group operate have similar rules, and company law restricts the dividend payment to the parent company.In addition to the aforementioned regulations, the payment
of dividends by subsidiaries of Helvetia may be restricted by minimum capital or solvency requirements imposed by supervisory authorities.All insurance units of Helvetia Group must meet minimum
solvency margins (so-called Solvency I), in accordance with Art. 24 et seq. of the Swiss Supervision Ordinance (AVO) for life insurance and Art. 27 et seq. AVO for non-life insuranceor similar local requirements.
Group is required to report to the Federal of Private Insurance (BPV) in Switzerland. BPV also acts as the European Supervisory Office. At the end of 2006, the ISVAP (Istituto per la Vigilanza delle Assicurazioni Private) delegated this function to the BPV, which is now also responsible for Helvetia Group in its supervisory function as 'Lead Supervisor'. 11.6 Capital management HelvetiaGroup manages its invested capital in
with the IFRS. Helvetia Group's capital strategy is unchanged to prior year and focuses on the following objectives: n Optimisingthe earning power of its equity
of risk capacity and cost/benefit argu- Therefore the Group targets an interactive rating of at least 'A–'. The Group also targets a return on equity (RoE) of 15% to prove its efficient use of capital. The regulatory coverage ratio under Solvency I reported
at Group level is in line with the strategic described above.
| in CHF million |
||
|---|---|---|
| as of 31.12. Equity Equity of Helvetia Group according to Solvency I Available capital under Solvency I |
2007 2 850.6 2 957.7 |
2006 2 738.4 2 883.7 |
| Required capital under Solvency I |
1 360.5 |
1 301.3 |
| Solvency I coverage ratio |
217.4% | 221.7% |
| The required. |
decrease in the coverage ratio by 4.3% driven by the increase in the equity by 112.2 million and the increase in the dividend compared to last year by CHF 13.0 million as well as the additional par value reduction by CHF85.7 million i.e., the increase in the capital
More information can be derived from consolidated statement of equity (page 86). As of 31.12.2007, all Group legal entities fulfilled the
regulatory capital requirements.
| Balance as of 1 January Change in the scope of consolidation |
2007 64.1 – |
2006 61.2 – |
|---|---|---|
| Allocation | 38.6 | 28.4 |
| Release | –10.9 | –16.4 |
| Used amounts |
–15.0 | –9.9 |
| Foreign currency translation differences |
0.7 | 0.8 |
| Other changes |
– | 0.0 |
| Balance as of 31 December |
77.5 | 64.1 |
| No significant new provisions were set up in the |
||
| reporting Helvetia were ferent The liabilities |
year. At the balance sheet date, there no provisions for restructuring expenses. The 'Non-actuarial provisions' position primarily consists of provisions for liabilities due to authorities arising from other tax obligations and liabilities due to agents. The share of provisions classified as current is CHF 62.5 million (previous year: CHF 48.9 million). 12.2Contingent liabilities
the future acquisition of financial investments to CHF 0.6 million (previous year: CHF 34.4 million). The leasing arrangement described in Note 8.1, page 126, includes additional off-balance-sheet contractual obligations for CHF 16.4 million. Helvetia
Group has pledged assets of CHF 54.8 mil- (previous year: CHF 30.5 million) as security liabilities. They all relate to financial assets pledged to cover liabilities arising from the underwritingbusiness.
Group is a lessee in a number of dif operating leases. As a result, future leasing due in less than one year amount to CHF 2.2 million (previous year: CHF 1.8 million), in one to five years CHF 5.4 million (previous year: CHF 5.5 million), and in more than five years CHF 0.3 million (previous year: CHF 0.2 million). TheGroup is involved in various legal proceed-
claims and litigation that are mostly related its insurance operations. However, Group management is not aware of any case that could significantly impact the Group's financial position. Helvetia
Group has guaranteed letters of credit for 43.8 million (previous year: CHF 80.1 mil to third-party insurance companies as security for reinsurance business. These guarantees have been issued by a bank. Under the Swiss Federal Law on Occupational Retirement, Survivors' and Disability Pension Plans (BVG), Helvetia Schweizerische Lebensversicherungsgesellschaft AG, Basel, has given a guarantee agreement towards collective foundations for CHF 0.5 million. Contingent liabilities amounted to CHF 17.3 million as ofthe balance sheet date.
Group had 4,607 employees as of (previous year: 4,595). Total costs are shown in the table below.
| Notes Commissions Salaries |
2007 205.0 338.1 |
2006 195.4 321.5 |
|---|---|---|
| Social security costs |
62.8 | 61.0 |
| Pension costs – defined contribution plans |
2.6 | 2.4 |
| Pension costs – defined benefit plans |
47.0 | 47.9 |
| 13.3.4 Other long-term employee benefit expenses |
1.2 | 1.4 |
| Termination benefits |
2.5 | 1.2 |
| Share-based payment transaction costs |
0.7 | 0.8 |
| Other personnel costs |
23.1 | 30.6 |
| Total personnel costs |
683.0 | 662.2 |
| Receivables Liabilities as of 31.12. Notes 2007 2006 2007 2006 Kind of benefit: |
|||||
|---|---|---|---|---|---|
| Defined benefit plans |
1.5 | 1.4 | 219.3 | 204.5 | |
| Other long-term employee benefits |
13.3.1 | – | – | 14.7 | 14.2 |
| Short-term employee benefits |
1.2 | 1.4 | 52.6 | 53.4 | |
| Total employee benefit receivables and obligations |
2.7 | 2.8 | 286.6 | 272.1 | |
| 'Other | no |
'Other long-term employee benefits' primarily liabilities for service awards. There were employee contingent obligations or employee receivables.
employees of Helvetia Group are covered several pension plans in Switzerland and InSwitzerland, employees are covered by the
'Pensionskasse der Helvetia Versicherungen' foun- (Pension Fund of Helvetia Versicherungen) with registered office in St. Gallen. It was founded with the purpose of providing occupational benefits to employees on retirement and disability as well as after their death to their surviving dependants in accordance with the Swiss Federal Law on Occupational 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 pensionableannual salary, deducted from the
by the employer and transferred every to the pension fund, together with the 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. The Group investments included in the plan assets are set out in Note 13.3.6. Unfunded defined benefit plans are in place in Germany,
Austria, Italy and Spain. The accumu pension obligations are recorded as pension liabilities in the balance sheet of the employer. These pension plans cover benefits for retirement, death, disability or termination of the employment contract with consideration given to local labour laws and social legislation in the individual countries. The benefits are fully financed by the employer.
| as of 31.12. Present value of funded obligations (+) Fair value of plan assets (–) |
2007 1 339.6 –1 418.6 |
2006 1 269.0 –1 402.4 |
|---|---|---|
| –79.0 | –133.4 | |
| Present value of unfunded obligations (+) |
129.6 | 126.7 |
| Unrecognised actuarial gains (+) or losses (–) |
–21.2 | –28.2 |
| Unrecognised past service cost (–) |
– | – |
| Amounts not recognised as assets (+) |
188.4 | 238.0 |
| Net liability for defined benefit plans |
217.8 | 203.1 |
| The net liability consists of: |
||
| Gross defined benefit liabilities Gross defined benefit assets |
219.3 1.5 |
204.5 1.4 |
| The 'Net liabilities' position does not contain any reimbursement rights. |
||
| 2007 2006 Present value of the defined benefit obligation as of 1 January 1 395.7 1379.0 Service cost 47.6 47.0 |
||||
|---|---|---|---|---|
| Interest cost |
44.8 | 43.4 | ||
| Actuarial gains (–) or losses (+) |
38.4 | –25.2 | ||
| Benefits paid |
–85.8 | –75.3 | ||
| Past service cost |
– | – | ||
| Change in the scope of consolidation |
– | – | ||
| Other amounts |
23.2 | 21.1 | ||
| Curtailments and settlements |
–0.2 | – | ||
| Foreign currency translation differences |
5.5 | 5.7 | ||
| Present value of the defined benefit obligation as of 31 December |
1 469.2 | 1395.7 | ||
| 2007 1 402.4 |
2006 1274.0 42.4 |
|---|---|
| 91.0 | |
| 27.6 | |
| 13.4 | |
| –67.6 | |
| – | |
| 21.1 | |
| 0.5 | |
| 1402.4 | |
| 55.4 –27.0 28.9 13.8 –77.2 – 23.2 –0.9 1 418.6 |
position 'Other amounts' contains vested bene brought into the pension fund of CHF 23.2 mil-(previous year: CHF 21.1 million).
| Current service cost Interest cost |
2007 47.6 44.8 |
2006 47.0 43.4 |
|---|---|---|
| Expected return on plan assets |
–55.4 | –42.4 |
| Amortisation of actuarial gains and losses |
73.3 | –107.4 |
| Employee contributions |
–13.8 | –13.4 |
| Change in amounts not recognised as assets |
–49.5 | 120.7 |
| Past service cost |
– | – |
| Total net pension costs |
47.0 | 47.9 |
| Actual return on plan assets |
28.3 | 133.5 |
pension costs for defined benefit plans are in the income statement under 'Operatand administrative expenses'. Expected
contributions toward defined benefit for the next year amount to CHF 35.1 mil-
| Switzerland Abroad 2007 2006 2007 2006 Discount rate 3.3 3.0 4.5 4.3 |
||||
|---|---|---|---|---|
| Expected rate of return on plan assets |
4.8 | 3.9 | 4.1 | 4.0 |
| Expected salary increases |
2.6 | 1.5 | 2.9 | 2.8 |
| Expected pension increases |
0.7 | 0.6 | 1.9 | 1.9 |
| Equity instruments Debt instruments |
2007 28 53 |
2006 26 54 |
|---|---|---|
| Real estate |
18 | 19 |
| Other | 1 | 1 |
| Total | 100 | 100 |
| Plan Plan |
assets include shares issued by Helvetia Hold- AG with a fair value of CHF 80.8 million as of (previous year: CHF 83.9 million).
assets do not include any of the Group's properties.
| from to from to Equity instruments 14 – 36 17 – 39 |
||||||
|---|---|---|---|---|---|---|
| Debt instruments Real estate |
44 – 65 14 – 24 |
41 – 62 19 – 24 |
||||
far as investment policy and strategy are con occupational benefit plans in Switzerland on total returns. The strategic goal is to optimise rates of return on plan assets, benefit costs and the funding ratio of benefit plans with a diversified mix of shares, bonds, real estate and other investments.Expected long-term rates of return on plan assets are
based on the long-term expected interest rates risk premiums and on the target plan asset allocation. These estimates are based on historic ratesof return for individual asset classes and are
by specialists in the field and pension actu-Actual plan asset allocation depends on the current economic
and market situation and fluctuates pre-determined ranges. Alternative investments, such as hedge funds, are used to improve long-term rates of return and portfolio diversification.The investment risk is monitored through the periodic
review of the assets and liabilities as well as reviews of the investment portfolio.
| as of 31.12. Present value of defined benefit obligation (–) Fair value of plan assets (+) |
2007 –1 469.2 1 418.6 |
2006 –1395.7 1402.4 |
2005 –1 379.0 1 274.0 |
|---|---|---|---|
| Surplus (+) / deficit (–) |
–50.6 | 6.7 | –105.0 |
| Experience adjustments on plan liabilities |
–74.8 | 0.9 | –46.2 |
| Experience adjustments on plan assets |
–27.1 | 91.0 | 19.7 |
Helvetia employee share purchase plan employees to acquire registered Helvetia AG shares at lower prices. The plan therefore allows employees to directly participate in the Group's success at favourable terms. All employees of Helvetia Group in Switzerland are eligible if they are in regular employment (not on notice) and entitled to variable compensation. The Board of Directors determines the number of shares that are offered to eligible employees, which is dependent on the individual's respective function. All acquired shares are blocked for a period of three years. The shares are vested immediately at the grant date, so that the associated personnel costs for share-based payments of CHF 0.7 million were recognised in the income statement (previous year:CHF 0.8 million).
Board's Compensation Committee may allo a special bonus in the form of shares to the of the Executive Management in the event of very good business performance. The relevant value is the market value of the share on the date on which the special bonus is calculated. These shares may be exercised after a vesting period of three years. The variable component of the salary which is dependent
on the business results is paid to the of the Board of Directors in the form of shares only. The relevant value is the market value of the share on the date on which the variable payment is announced. These shares may be exercisedafter a vesting period of three years.
in the shareholder pool and on the of Directors of Helvetia Group, i.e. Patria Genossenschaft, Vontobel Beteiligungen AG and Raiffeisen Switzerland (see page 27, Note 1.2 (a)) as well as the pension funds and all associates of Helvetia Group. The latter two are discussed in Note 13.3 'Defined benefit plans' (page 147 et seq.) and Note 7.3 'Investments in associates' (page 120 et seq.). Helvetia supports normal business relationships in the
areas of advisory services, the sale of financial insurance services and asset management services with the members of the shareholder pool. All transactions are executed at normal market conditions. There are no other significant business relationships apart from these regular cooperation activities. Urs Widmer and Pierin Vincenz are members of the boards of directors of Vontobel Holding AG and Helvetia Holding AG. There are no other cross ties or board mandates with the boards of directors of listed companies. With the exception of Patria Genossenschaft (the Patria cooperative society), transactions with cooperation partners are not significant for Helvetia Group either as a single transaction or overall. The dividend payment of CHF 35.2 million (previous year: CHF 26.0 million) to Patria Genossenschaft and the contribution of CHF 9.0 million (previous year: CHF 5.0 million) by Patria Genossenschaft to the bonus reserves of Helvetia Schweizerische Lebensversicherungsgesellschaft AG were the only significanttransactions in the reporting period.
of Directors and Executive Management Helvetia Group as well as their close family members (partners and financially dependent children).This section provides information on the actual compensation,
shares and loans granted to the of the Board of Directors and the Executive Management in the 2007 financial year. The general principles and key criteria that apply to the compensation system and share purchase plan as well as the terms and conditions for loans are set out in the chapter on Corporate Governance (Chapter 5, from page 34). This chapter follows the 'Swiss Code of Best Practice for Corporate Governance' as well as the Swiss Code of Obligations, including its new articles 663bbis and663c par. 3. Together, these sections comprise the compensation report addressed to the shareholders and other investors in Helvetia Holding AG, who can comment on this compensation report atthe Shareholders' Meeting.
the following fixed salaries in the report year, plus variable payments that depend on the 2007 business result and the performance of the share which will be paid in the form of a total of 603 shares in all at a market price of CHF 360 on 13.3.2008. These shares may be exercised after a vesting period of three years. The fixed salary includes all allowances, meeting attendance fees and expenses set out in the compensationregulations.
| in CHF |
Fixed salary |
Variable compensation |
Total compensation |
Total compensation |
|---|---|---|---|---|
| Erich Walser (Chairman) |
361 335 |
24 120 |
385 455 |
|
| Ueli Forster (Vice-Chairman) Silvio Borner (Vice-Chairman) |
249 667 1 219 000 |
24 120 24 120 |
273 787 243 120 |
|
| Hans-Jürg Bernet (member) |
120 000 |
24 120 |
144 120 |
|
| Christoph Lechner (member) |
120 000 |
24 120 |
144 120 |
|
| John Martin Manser (member) |
170 000 |
24 120 |
194 120 |
|
| Pierin Vincenz (member) |
148 000 |
24 120 |
172 120 |
|
| Olivier Vodoz (member) |
150 000 |
24 120 |
174 120 |
|
| Urs Widmer (member) |
140 000 |
24 120 |
164 120 |
|
| Total | 1 678 002 |
217 080 |
1 895 082 |
1 932 577 |
| The fixed amount paid to the Chairman and former CEO, Erich Walser, |
includes compensation |
for his function |
as Chairman of the |
Board of |
| Directors until 31.8.2007 on an annual salary of CHF 250,000, from 1 for |
1.9.2007 on an annual |
salary of CHF |
500,000 plus |
allowances |
They did not write any options. The members of committee memberships and meeting attendance fees.
shares held by the members of the Board of and persons closely related to them as 31.12.2007 are listed in the following table. Board of Directors do not participate in the share purchase plan.
| 31.12.2007 Number |
31.12.2006 Number |
|
|---|---|---|
| Erich Walser (Chairman) Ueli Forster (Vice-Chairman) Silvio Borner (Vice-Chairman) |
of shares 1 855 952 467 |
|
| Hans-Jürg Bernet (member) |
560 | |
| Christoph Lechner (member) |
115 | |
| John Martin Manser (member) |
347 | |
| Pierin Vincenz (member) |
842 | |
| Olivier Vodoz (member) |
318 | |
| Urs Widmer (member) |
398 | |
| Total | 5 854 | 4 849 |
loans or guarantees were granted to or taken from members of the Board of Directors or closely related to them. Boardmembers or persons closely related to them
not have any significant personal business with Helvetia Group and also did not bill the Group for any fees or remuneration relating to additional services. Resigning
e) Payments to resigning Board members Board members did not receive any
compensation for the reporting period paid the members of the Group Executive Manage is summarised in the table below. For every member of Executive Management it consists of a fixed and a variable component, a special bonus related to the good business year 2007 – for all Executive Management members a total of 784 shares at the market price of CHF 360 as at 13.3.2008, which have a vesting period of three years – and employer contributions to pensionfunds.
| in CHF Salaries and other short-term employee benefits: |
2007 1 |
2006 2 |
|---|---|---|
| – fixed salaries (incl. expenses allowances, child/ education allowances, long service awards, company car) |
3 059 980 |
2 961 214 |
| – Variable compensation |
1 670 745 |
1 633 013 |
| Share-based payments |
323 740 |
417 793 |
| Employer contributions to pension funds |
538 893 |
507 571 |
| 3 Other long-term and non-monetary benefits |
– | – |
| Subtotal | 5 593 358 |
5 519 591 |
| Termination benefits |
3 861 405 |
– |
| 4 Total |
9 454 763 |
5 519 591 |
| The 2007 compensation includes payments to the Chairman and former CEO Erich Walser for his function |
as CEO up to the |
end of August 2007, |
| payments 1 |
||
| Management |
to the current CEO Stefan Loacker from September 2007, payments to the former CFO and deputy Chairman of the Group Executive Roland Geissman up to the end of June 2007, and payments to the current CFO Paul Norton from June 2007. The 2006 payments to the Chairman and former CEO Erich Walser include only payments related to his function as CEO. The equity-based compensation for the members of Executive Management includes special bonuses and the discount of 16.038% for shares obtainded
as part of the share purchase plan for members of Executive Management. 4 These benefits mainly comprise the pension fund contributions for Erich Walser (for his function as former CEO) and for Roland Geissmann (formerthe
CFO and deputy Chairman of the Group Executive Management), in particular the contributions from the pension fund required to finance bridging pension and to eliminate any shortfalls in pension cover due to early retirement (see also Note 15.2.4).
of 31.12.2007, the members of the Group Management and persons closely to them held the shares listed in the following table, some of which were acquired under the employeeshare purchase plan. The 2007 figures
include the shares of CEO Stefan Loacker and Paul Norton, while the 2006 figures include shares held by the former CEO Erich Walser and the former CFO and deputy Chairman of the Group Executive Management Roland Geissmann. There is no share option plan. 31.12.2007
| 31.12.2007 31.12.2006 Number Number |
|||
|---|---|---|---|
| Stefan Loacker (CEO from 1.9.2007) Philipp Gmür Ralph Th. Honegger |
of shares 176 1 078 555 |
of shares |
|
| Markus Isenrich |
1 195 | ||
| Paul Norton (CFO from 1.7.2007) |
20 | ||
| Wolfram Wrabetz |
300 | ||
| Total | 3 324 | 4 464 | |
c) Insurance contracts, loans, guarantees of the Executive Management may close contracts, loans and other services on the terms and conditions currently in effect for employees. At the reporting date, mortgage loans to four members of the Executive Management to the amount of CHF 2,651,435 (previous year: CHF 4,339,023 for five members of Executive Management) were outstanding. The mortgage of Philipp Gmür, CEO of Helvetia Switzerland, for CHF 1,000,000 is the biggest amount outstanding from a member of the Executive Management. During the reporting period, loans granted as variable or fixed-rate mortgages at regular interest rates bore interest at rates between 2.50% and 3.72%. There are no other insurance contracts, loansor guarantees.
d) Other benefits in kind or additional services the 2007 financial year, members of the Execu- Management received non-monetary benefits as part of the company car programme to the amount of CHF 8,534. This amount is included in the fixed salaries given above. None of the members of the Executive Management or any closely related persons have significant personal business relationships with Helvetia Group. They did not receive any other benefits in kind or bill the company for any additional services. Normal market conditions apply to transactions with members of the Executive Management that are not subject topreferential employee conditions.
15.2.3 Total compensation paid to members of the Board of Directors and the Executive Management following table lists the total compensation paid to the members of the Board of Directors and theGroup Executive Management:
| in CHF Salaries and other short-term employee benefits: |
2007 1 |
2006 |
|---|---|---|
| – fixed salaries (incl. expenses allowances, child/ education allowances, long service awards, company car) |
4 737 982 |
4 449 215 |
| – Variable compensation |
1 670 745 |
1 633 013 |
| Share-based payments |
540 820 |
862 369 |
| Employer contributions to pension funds |
538 893 |
507 571 |
| 2 Other long-term and non-monetary benefits |
– | – |
| Subtotal | 7 488 440 |
7 452 168 |
| Termination benefits |
3 861 405 |
– |
| 3 Total |
11 349 845 |
7 452 168 |
| The 2007 compensation includes payments to the Chairman and former CEO Erich Walser for his function |
as CEO up to the |
end of August 2007, |
| payments 1 |
||
| Management |
to the current CEO Stefan Loacker from September 2007, payments to the former CFO and deputy Chairman of the Group Executive Roland Geissman up to the end of June 2007, and payments to the current CFO Paul Norton from June 2007. The equity-based compensation includes the special bonuses and the discount of 16.038% for shares obtained as part of the share purchase planfor members of Executive Management and the variable compensation in shares for the Board of Directors.
3 These benefits mainly comprise the pension fund contributions for Erich Walser (for his function as former CEO) and for Roland Geissmann (former CFO and deputy Chairman of the Group Executive Management), in particular the contributions from the pension fund required to finance the
bridging pension and to eliminate any shortfalls in pension cover due to early retirement (see also Note 15.2.4). as
the reporting year was paid to Erich Walser. amounted to CHF 1,135,757 in total, comprising his total salary as CEO of CHF 648,620 until the end of August 2007: fixed CHF 400,380, variable CHF 200,000, special bonus of CHF 48,240 in the form of 134 shares blocked for three years at a price of CHF 360 as at 13.3.2008, his fee as Chairman of the Board of Directors of CHF 385,455 until the end of August on an annual fixed salary of CHF 250,000, from September on an annual fixed salary of CHF 500,000, comprising CHF 361,355, variable CHF 24,120 in the form of 67 shares blockedfor three years at the price of CHF 360
at 13.3.2008 and employer contributions to funds of CHF 101,682. An additional of CHF 1,490,777 was paid to the pension funds to finance his bridging pension and any reductions in retirement benefits as a result of early retirement. The highest special amount paid to an individual was
CHF 2,851,102 paid to Roland Geissmann part of this amount was paid during the reporting year and a part is still outstanding). This is related to his resignation as CFO after many successful years in his positions (former CFO and deputy Chairman of the Group Executive Management) and his early retirement with a full bridging pension and retirement benefits from the pension fund.
| Realised gains and losses on disposals of loans (LAR) |
2007 | 2006 |
|---|---|---|
| including foreign currency gains and losses: Mortgages |
0.0 | 0.1 |
| Loans | –1.0 | 0.4 |
| Money market instruments |
– | 0.5 |
| Realised gains and losses on loans (LAR) incl. money market instruments |
–1.0 | 1.0 |
| Realised gains and losses on disposals of held-to-maturity investments (HTM) |
||
| including foreign currency gains and losses: |
||
| Bonds Realised gains and losses on HTM investments |
11.0 11.0 |
15.3 15.3 |
| Realised gains and losses on disposals of available-for-sale investments (AFS) |
||
| including foreign currency gains and losses: |
||
| Bonds | 19.2 | 40.4 |
| Shares | 129.7 | 143.0 |
| Investment funds |
0.6 | 0.7 |
| Alternative investments |
0.7 | 0.0 |
| Realised gains and losses on AFS investments |
150.2 | 184.1 |
| Realised and book gains and losses on financial assets held for trading |
||
| including foreign currency gains and losses: |
||
| Bonds | –0.2 | – |
| Shares | –0.1 | 3.6 |
| Investment funds |
9.5 | 16.2 |
| Derivative financial instruments |
–73.7 | –102.9 |
| Realised gains and losses on financial assets held for trading |
–64.5 | –83.1 |
| Realised and book gains and losses on financial assets designated as |
||
| at fair value through profit or loss including foreign currency gains and losses: |
||
| Bonds Shares |
–3.0 39.2 |
7.7 82.0 |
| Investment funds |
–33.9 | 54.9 |
| Alternative investments |
37.2 | 29.6 |
| Realised gains and losses on financial assets designated as at fair value |
||
| through profit or loss |
39.5 | 174.2 |
| Other | 1.5 | 2.1 |
| Impairment of financial assets of the period |
–9.0 | –4.1 |
| Reversal of impairment losses on financial assets of the period |
2.5 | 1.9 |
| Total gains and losses on investments (net) |
130.2 | 291.4 |
| as of 31.12. |
2007 | 2006 |
|---|---|---|
| Financial assets Loans and receivables: Bonds |
1 394.2 | 661.9 |
| Mortgages | 3 096.9 | 3 094.0 |
| Loans | 1 887.8 | 1 888.1 |
| Money market instruments |
727.8 | 1 099.2 |
| Receivables from insurance business |
696.4 | 638.1 |
| Reinsurance deposit receivables |
232.5 | 339.2 |
| Total loans and receivables (LAR) |
8 035.6 | 7 720.5 |
| Held-to-maturity investments: |
||
| Bonds | 3 514.9 | 3 469.7 |
| Total held-to-maturity investments (HTM) |
3 514.9 | 3 469.7 |
| Available-for-sale investments: |
||
| Bonds | 10 023.1 |
10 169.0 |
| Shares Investment funds |
1 242.4 26.5 |
1 385.9 20.8 |
| Alternative investments |
298.9 | 225.6 |
| Loans | 46.1 | 62.4 |
| Total available-for-sale investments (AFS) |
11 637.0 |
11 863.7 |
| Financial assets at fair value through profit or loss: |
||
| Financial assets held for trading |
||
| Bonds Shares |
9.8 16.8 |
– 13.7 |
| Investment funds |
246.1 | 263.8 |
| Derivative financial assets |
16.3 | 6.0 |
| Financial assets designated as at fair value through profit or loss |
||
| Bonds | 373.0 | 431.4 |
| Shares | 980.0 | 649.9 |
| Investment funds |
1 420.6 | 1 286.8 |
| Alternative investments |
41.6 | 263.3 |
| Total financial assets at fair value through profit or loss |
3 104.2 | 2 914.9 |
| Financial liabilities Financial liabilities at amortised cost: |
||
| Financial liabilities from financing activities |
234.2 | 199.1 |
| Liabilities from insurance business Deposit liabilities for credited policyholder profit participation |
737.1 856.4 |
703.5 883.7 |
| Deposit liabilities from reinsurance contracts |
300.6 | 405.7 |
| Other | 45.3 | 102.3 |
| Total financial liabilities at amortised cost |
2 173.6 | 2 294.2 |
| Financial liabilities at fair value through profit or loss: |
||
| Financial liabilities held for trading |
||
| Derivative financial liabilities |
12.1 | 26.6 |
| Financial liabilities designated as at fair value through profit or loss |
||
| Deposits for investment contracts |
138.3 | 200.1 |
| Other | 6.7 | 7.9 |
| Total financial liabilities at fair value through profit or loss |
157.1 | 234.6 |
| Notes to the consolidated financial statements of Helvetia Group 2007 |
||
is to systematically identify, analyse monitor all significant risks as well as manage them efficiently through risk management procedures and hedging policy. The risk transparency required for this is created by integrating risk reporting into the management process. Risk management helps to ensure that the fundamental
company objectives are obtained and to the effective protection of the equity base of Helvetia Group and its subsidiaries. The risk transparency created through risk management
also enables the risk-appropriate alloca of capital, thus supporting financial management.The
17.1.1 Risk management organisation Board of Directors of Helvetia Holding AG and Group Executive Management are the supreme risk owners of Helvetia Group. The Board of Directors of Helvetia 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: n Set risk policy principles that support the development
the stipulated parameters, the Board of delegates operational aspects of risk (e.g. monitoring the risk profile of the Group) to the Investment and Risk Committee (IRC) and governance aspects of risk management (e.g. structure of the risk management organisation) to the Audit Committee. The Executive Management is responsible for risk management
implementation and compliance with strategies, business principles and risk limits determined by the Board of Directors. The Risk Committee supports the Executive Management in an advisory capacity. It coordinates, monitors and assesses risk decisions and financing and hedging measures. The Risk Committee meets at least twice a year and is chaired by the Head of Corporate Finance & Risk Management. Other permanent members are the Chief Financial Officer (CFO), the heads of Investments (CIO) and Group Reinsurance as well as the Group's life and non-life actuaries. Other specialists can be invited to attend a meeting when required and depending on the topic. The Corporate Finance & Risk Management department, which reports to the CFO and exercises the Group's risk monitoring function, ensures the necessary risk transparency: n The Risk Map informs the Executive Management and
reporting directly to the Chairman of the of Directors, monitors the course of operations and business, the internal control system and the efficiency of the Group's risk management system. While the risk-controlling functions are responsible for the ongoing monitoring of the Group's risk management system, the internal auditunit monitors the effectiveness, appropriate-
and efficiency of the risk management meas at irregular intervals and identifies weak-HelvetiaGroup distinguishes between the follow-
types of risk: financial market risks (including market risks of liabilities, liquidity risks), counterparty risks, insurance risks (life and nonlife), operational risks (including reputational risks asan impacting dimension), and strategic risks.
up risk capital in an operational context and be influenced through hedging instruments, product design and other risk management measures. Helvetia Group categorises these risks according to the above table. Such risks affect risk-bearing capital and thus the entire balance sheet. Risk is defined as an adverse financial deviation from what is expected. Risks that arise from insufficient liquidity of assets are partially taken into consideration, where appropriate, in market price models. In addition to the analysis of the liquidity risk, improbabilistic methods are also applied.
and non-life risks are the traditional insurance of an insurance company, with reinsurance playing a significant role in managing these risks (see Notes 17.2 and 17.3). Financial market risk also includes the interest rate and foreign exchange risks associated with liabilities. The Asset & Liability Management (ALM) process manages
the influences of financial market risks an integrated way and defines both investment strategy and hedging policy. The ALM process has a dual purpose: n Firstly, it ensures compliance with statutory solvency
market risks (see Note 17.5).
Group defines operational risks as the risk losses resulting from the inappropriateness or of internal procedures, people and systems, or from external events. Operational risk includes the impact of reputational risks. Management of operational risks is carried out primarily on a decentralised basis, but is becoming increasingly centralised where necessary. As part of a project initiated in autumn 2006, uniform standards for the identification, analysis, management and monitoring of operational risks at Group level were established and a Group-wide reporting process was defined. Strategicrisks include the risk that the company's
activities are not adjusted to the changes the insurance industry and on the insurance market and that fundamental business decisions may jeopardise the long-term success of the Group. This risk is countered by constant observation of developments on the market and among the competitors. The management of strategic risks is carried out as part of the annual strategy check and is an integral component of the strategy process.
random occurrence of an insured event and about the amount of the resulting create insurance risks in non-life business. The most important non-life segments of Helvetia Group are property, transport and casualty insurance (liability, accident, collision). The latter consists largely of motor insurance and, to a lesser extent, liability, health and accident insurance. In 2007, 73.9% (previous year: 72.8%) of Helvetia Group's direct non-life business was generated outside of Switzerland. The business segments accounted for the following percentages of gross premiums written: Switzerland 23.8% (previous year: 25.1%), Germany 24.4% (previous year: 24.2%), Italy 15.1% (previous year: 15.1%), Spain 16.2% (previous year: 15.9%), Austria 8.0% (previous year: 8.1%), France 3.5% (previous year: 3.8%) and assumed reinsurance 9.0% (previous year: 7.8%) (see also Note 9 'Insurancebusiness').
| 2007 Property Transport |
Switzerland 334.2 37.5 |
Germany 295.8 67.7 |
Italy 92.8 4.7 |
Spain 163.6 26.3 |
Other 75.9 93.4 |
Total 962.3 229.6 |
|---|---|---|---|---|---|---|
| Motor vehicle |
167.9 | 153.7 | 204.9 | 157.4 | 79.8 | 763.7 |
| Liability | 77.8 | 75.6 | 35.5 | 34.0 | 30.6 | 253.5 |
| Accident/healt | 0.0 | 40.2 | 53.4 | 39.9 | 19.7 | 153.2 |
| Reinsurance | – | – | – | – | 232.7 | 232.7 |
| Gross premiums non-life |
617.4 | 633.0 | 391.3 | 421.2 | 532.1 | 2595.0 |
| 2006 Property Transport |
Switzerland 332.6 36.3 |
Germany 268.0 60.1 |
Italy 78.1 4.6 |
Spain 151.5 23.0 |
Other 71.0 98.1 |
Total 901.2 222.1 |
| Motor vehicle |
162.4 | 149.1 | 203.3 | 144.1 | 74.3 | 733.2 |
| Liability | 76.2 | 72.2 | 31.0 | 29.0 | 26.2 | 234.6 |
| Accident/healt | 0.0 | 37.5 | 48.0 | 38.9 | 19.1 | 143.5 |
| Reinsurance | – | – | – | – | 188.7 | 188.7 |
| Gross premiums non-life |
607.5 | 586.9 | 365.0 | 386.5 | 477.4 | 2423.3 |
| These tables were prepared in accordance |
with the principles of |
segment reporting |
described in |
Note 3. |
||
Gross premiums by business line and region in the non-life business in CHF million 2007Property
through
Group's consistent focus on a geographi well-diversified portfolio of mainly small risks customers and SMEs) encourages risk equalisation and reduces the risk that the cost of claims that are covered by existing contracts but have not yet occurred will be higher than expected (prospective risks). For example, a change in the net claims ratio by 85 percentage points would result in a decrease or increase of CHF 115.8 million (previous year: CHF 108.5 million) in the income statement. In relation to insured events that have already occurred the risk exists that the amount of existing liabilities might exceed expectations and that the reserves set aside will be insufficient to cover future claim payments (retrospective risks). The Group responds to prospective and retrospective risks with actuarial control measures, by setting up reserves designed to meet requirements,and by diversification. Risk balancing
diversification, however, does not totally the occurrence of isolated risk clusters example in the form of individual large risks) or cumulative risks (such as those resulting from multi-portfolio exposure to natural disasters). This risk potential is monitored Group-wide and hedged through reinsurance in a coordinated way. The Group Reinsurance central unit protects each business
unit from such risks through a customised programme and purchases the necessary Group-wide protection on the reinsurance market while ensuring diversification. This kind of hedging policy provides a high level of protection at moderate cost. From a Group-wide perspective, the insurance risks in the non-life business are dominated by natural hazards. Reinsurance cover reduces the residual claims from a natural disaster orindividual risk at Group level to less than
25 million in most cases. More information on quality of the reinsurance cover and the claims over the last five years can be found in Notes 17.5 (Counterparty risks) and 9 (Insurance business). Together with the optional reinsurance business, 9.3% (previous year: 9.5%) of the premiums written in non-life business were ceded to reinsurers in 2007. HelvetiaGroup underwrites liability cover for
customers, motor vehicles and compa- Liability claims result from action or neglect leading to bodily injury and/or property damage to third parties. Collision cover is also underwritten within the motor insurance sector. The volume of accident insurance business at Group level is small.
it is exposed through risk-appropriate rates, underwriting, pro-active claims settlement and a prudent reinsurance policy. The underwriting process ensures that the assumed risks in terms of type, exposure, customer segment and location meet the necessary quality criteria. One example is the decrease in employer's liability claims as a result of the Group's stricter underwriting policy since1999.
risks are usually hedged through nonproportional treaty reinsurance. In
(c) Uncertainties in estimating future loss payments the liability business in particular, quite some can pass between the occurrence and the reporting of a claim. In order to cover existing liabilities not yet asserted by policyholders, HelvetiaGroup sets up incurred but not reported
which are determined with actuarial on the basis of many years of claims and with consideration to current developments and given uncertainties. Propertyinsurance contracts cover damage to
the loss of the property of the insured through events or damage to or loss of third-party property as a result of negligent actions or neglect by policyholders. From a risk perspective, Helvetia Group differentiates between the frequency and amountsof claims.
set out the general conditions under which the newly underwritten risks will be covered by the specific reinsurance contract. Individual large risks which are not covered by the corresponding treaty reinsurance are reinsured on a facultative basis. Large risks are generally not underwritten unless appropriate reinsurance cover can be purchased. This approach allows for comprehensive risk control. Risk-oriented underwriting oflarge risks provides additional risk control.
well-diversified and there is a good balance between commercial and private customers in the total property portfolio. The geographical distribution of risks has not changed significantly compared to the previous year. By definition, the property insurance portfolio is exposed
to natural disasters, such as flooding, storms and hail. Major events and man-made disasters, such as explosions, fire and oil spills, may result in large claims. The number and extent ofdisasters that can occur in a certain period are
definition unforeseeable. Helvetia Group guards against catastrophe losses a multi-level reinsurance programme and itsselective underwriting policy.
payments
the year of the claim. HelvetiaGroup offers transport insurance as a
market in France and to a lesser extent in Germany and Austria. Helvetia Group mainly focuses on cargo/hull insurance, which carries a comparatively low level of risk. Risk exposure is managed by the application of local underwriting guidelines and through the close relationship – made possible by the small volume – with the insurance broker and the customer.Bytradition, Helvetia Group owns a small assumed
portfolio which is limited in size in with its business strategy. Assumed reinsurance is run by Helvetia Schweizerische Versicherungsgesellschaft AG, based in St. Gallen. The portfolio was dominated by property reinsurance
until the mid-1990s, but has diversified in years. The business philosophy positions assumed reinsurance as a 'follower' with typically only small shares in individual reinsurance contracts. This policy of small shares, combined with broad diversification by geographical and business segment, creates a well-diversified reinsuranceportfolio without major risk clusters.
for detailed tracking of customer relations the strict control of risks and commitments from business written. An actuarial department specialising in reinsurance handles price and reservecalculations.
system has been set up to manage major claims. Besides managing risk exposure, cumulative risks arising from natural disasters are monitored and quantified using actuarial methods, and from 2008 are also covered by retro insurance.17.3 Insurance risk (life) HelvetiaGroup offers a comprehensive range of
insurance products. These include risk and solutions and are aimed at private individuals (individual life insurance) and companies (group life insurance). The risks associated with these products are explained in detail in the following notes. There is also a small assumed reinsurance portfolio that is no longer included in the following description due to its lack of size. Life insurance is mostly operated from Switzerland, where 76.3% (previous year: 78.3%) of the Group's gross premium volume in the life insurance sector is generated. The following table shows the distribution of gross premium income by business line and region. In total, 1.6% (previous year: 1.5%) of the life premiums written was ceded to reinsurersin 2007.
| 2007 Individual insurance Group insurance |
Switzerland 545.4 1 586.4 |
Germany 123.0 78.8 |
Italy 81.8 36.0 |
Spain 72.5 40.4 |
Other 133.0 – |
Total 955.7 1 741.6 |
|---|---|---|---|---|---|---|
| Unit-linked life insurance |
74.9 | 96.1 | – | 14.1 | 4.6 | 189.7 |
| Reinsurance | – | – | – | – | 6.9 | 6.9 |
| Gross premiums life |
2 206.7 | 297.9 | 117.8 | 127.0 | 144.5 | 2 893.9 |
| 2006 |
Gross premiums by business line and region in the life business in CHF million 2007Individual
| 2006 Individual insurance |
Switzerland 577.1 |
Germany 118.6 |
Italy 137.4 |
Spain 65.3 |
Other 133.5 |
Total 1 031.9 |
|---|---|---|---|---|---|---|
| Group insurance |
1555.3 | 28.6 | 20.4 | 34.6 | – | 1638.9 |
| Unit-linked life insurance |
84.6 | 64.1 | – | 8.4 | – | 157.1 |
| Reinsurance | – | – | – | – | 4.5 | 4.5 |
| Gross premiums life |
2217.0 | 211.3 | 157.8 | 108.3 | 138.0 | 2832.4 |
| These tables were prepared in accordance with |
the principles of |
segment reporting |
described in |
Note 3. |
||
as index- and unit-linked products. Depending on the product, premiums are paid as single or regular premiums. Most of the products include a discretionary participation feature for which regulations in certain countries stipulate the minimum amount of profit participation to be paid out to policyholders. Individual life insurance accounts for 33.0% (previous year: 36.4%) of the Group's gross premium volume in the life insurance sector, with 57.1% (previous year: 55.9%) generated in Switzerland. The share of unit-linked life insurance amounts to 6.6% (previous year: 5.5%) of the Group's gross premium volume, with 39.5% (previousyear: 53.9%) generated in Switzerland.
interest rates and expenses used to the premiums are guaranteed. These fun are therefore set prudently at the time the contract is underwritten. If the contract develops as expected, profits accrue which are paid out in part to the policyholder in the form of policyholder dividends. There are two important exceptions to note with regard to the guaranteed assumptions. Firstly, there are no interest-rate guarantees for unit-linked insurance, however, some products may guarantee a minimum benefit payout on maturity. Secondly, premiums in Switzerland for disability benefit policies concluded after mid-1997 are not guaranteed and may be adjusted.An
insurance policy covering death or disability may only be taken out at regular terms and if the insured is in good health. Compliance with this condition is checked during verification of the application. The check is based on the answersto the health questionnaire, and from a
insured risk amount, a medical examina is required. Large risks for insured individuals are ceded to various
reinsurers through excess-of-loss reinsu with the deductible varying by country. Helvetia Switzerland is also reinsured against catastrophes which may concurrently cause several casualties and claim several lives. Grouplife insurance accounts for 60.2% (previous
57.9%) of the Group's gross premium in the life insurance sector, with 91.1% (previous year: 94.9%) generated in Switzerland. Outside of Switzerland and in a small run-off portfolio within Switzerland, group life insurance products are very similar to individual insurance policies. For this reason we focus on business with occupational benefit plans in Switzerland when referring to group life insurance below. In Switzerland, companies are required under the Swiss Federal Law on Occupational Retirement, Survivors' and Disability Pension Plans (BVG) to insure their employees against the risks of death and disability and for retirement benefits. Helvetia Group offers products that cover these risks. The majority of these products include a discretionary participation feature with the minimum amount beingstipulated by law or by contract.
death and disability and to the expense load for most of these products. These premiums may therefore be adjusted annually by Helvetia Group. After a loss has occurred, the benefits that fall due are either guaranteed until the agreed expiry date or for life. Annual interest is credited to the investment portion of
the premiums. The interest rate on the manda savings portion is set by the Swiss Federal Council,while the interest rate on the extra-manda-
portion is determined by Helvetia Group. the end of 2007, the interest rate for the manda insurance was 2.5%, and this was increased to 2.75% for 2008. The interest rate for the extramandatory insurance determined by Helvetia Group is 2.25%. On retirement, a policyholder may choose to have the
retirement capital paid out as a lump sum or into a retirement pension. The conversion of the mandatory savings capital follows the BVG conversion rate set by the government, while Helvetia Group determines the conversion rate for the extra-mandatory capital. After conversion, retirement pensions and any survivors' benefits are guaranteed for life. Statutory regulations stipulate for the majority of products
that a minimum of 90% of revenue must used for the benefit of the policyholder. For example, the return on capital exceeding the guaranteed minimum interest rates must be returned to customers partly in the form of policyholder dividends. Similar rules are stipulated in the insurance contract for most of the products which are not subject to this statutory regulation. Asfar as the mandatory insurance is concerned,
with an employer's pension fund cannot refused on the grounds of ill health. However, certain benefits may be excluded or a higher premium charged for the extra-mandatory cover. There is no obligation to insure a specific company. During the underwriting process it is determined whether and under which terms the company will be insured on the basis of past losses caused by that company and based on estimates of future loss potential. Large risks for insured individuals are ceded to various
reinsurers through excess-of-loss reinsu as for individual insurance. Reinsurance for disasterevents also covers group life insurance.
to monitor existing and new products with to underwriting policy, the setting of the necessary reserves and risk-appropriate pricing. Retrospective methods compare original expectations with actual developments. Prospective methods allow early recognition and analysis of the impact of new trends. Most of those calculations use parameter sensitivities to monitor the impact of unfavourable developments in investment returns, mortality, lapse rates and other parameters. All tools combined allow the Group to respond early and actively to adverse trends. If a certain risk takes a worse than expected course, the profit participation is usually the first to be reduced in most of the products. If a product shows evidence of an insufficient security margin, the premiums are adjusted, either for new business only or, if permissible, also for the existing portfolio. Helvetia Group establishes reserves for its life insurance
business to cover its estimated guaran and discretionary payments. The amount of life insurance reserves depends on the interest rates applied as well as on actuarial and other parameters. Additionally, the Liability Adequacy Test (LAT) examines whether the reserves in combination with expected premiums are sufficient to finance future benefits. Should this not be the case, local reserves are strengthened accordingly. If assumptions must be changed, the reserve reinforcements
are either increased or decreased A decrease in reserves flows largely back to the policyholders as a result of the discretionary participation feature. Policyholder dividends are reduced in a first step to compensate for a required increase in reserves, with shareholders bearing the remaining increase. In the local statutory balance sheet, reserve reinforcements recognised as necessary may be spread over several years and, if possible, compensated by gradually lesseningthe allocation to the provisions for future
participation or by the release of undisclosed on investments. In the consolidated finan statements, however, required reinforcement of reserves must be immediately recognised in profit or loss, while offsetting against differences in valuation to the local balance sheet (especially for investments) is allowed in the consolidated financial statements before the deferred profit participation is determined for contracts with discretionary profit participation. Therefore, a 10% increase in mortality in the LAT of
all companies of Helvetia Group would have no on the reserves. This is because the margins are sufficient, even after the increase in mortality. A reduction in mortality by 10% would only have an impact on the reserves for annuity insurance in Switzerland. This scenario would lead to a reserve reinforcement that would burden the income statement by CHF 30.6 million (previous year: CHF 29.1 million). However, it should be noted that these sensitivities are usually non-linear, so that extrapolation is not possible. See Note 17.4.2 for the impact of an interest rate change on equity and the income statement. Various impacting factors are described individually
below. Ifthe death rate exceeds expectations, sharehold-
may suffer losses once the buffer of profit has been exhausted. Analysis shows this risk to be very low for both individual and group life sectors. Helvetia Group sees no necessity to reinforce reserves for this particular risk. Ifthe death rate in individual insurance remains
expectations and policyholders live longer expected, shareholders may suffer losses. Given the fact that life expectancy is continuously rising, the current mortality rate as well as expected trends regarding increases in life expectancy aretaken into account. These reserves are very
to assumed life expectancies and interest In addition to these considerations, which also apply
to group life insurance, the high statutory conversion rate results in losses in the group life sector that are built into reserves at the expense of policyholders' profit participation. Besides reacting to interest rates and life expectancy, these reserves are also particularly sensitive to the assumed number of policyholders choosing a pension over a lump-sum payment on retirement. Lossesmay occur for shareholders if the number of
policyholders becoming disabled exceeds or if fewer disabled policyholders than expected recover and the profit participation system is insufficient to cushion the impact of these variances. As disability benefit policies are almost exclusively taken out in Switzerland and premiums in the group life sector and individual life business may be adjusted for disability benefit contracts sold after mid-1997, the risk in Switzerland is limited to disability benefit policies sold before mid-1997. Here, the portfolio losses that are expected to occur are covered in full by local reserve reinforcements. These reserves are sensitive to the assumed expected loss burden in particular. Shareholdersmay have to bear losses if the
interest included in premiums and cannot be generated. At the end of 2007, the individual life segment in Spain had the highest interest-rate guarantees as older policies still include guaranteed minimum interest rates of up to 6%. These guarantees are partly covered by corresponding assets and the residual risk is covered by supplementary reserves. In other countries, the maximum guaranteed interest rate stands at 4% in euros and at 3.5% in Swiss francs, and it is expected that the structure of the underlying investmentsfor these sub-portfolios will produce such
Rising interest rates may lead to higher rates of endowment contracts. This risk, is considered to be low for two reasons. Firstly, most countries enforce high tax consequences for premature contract terminations, and secondly, a deduction is usually made on highly interest-sensitive products at the time the contract is cancelled to reflect the lower fair values of the underlying investments. Long-term interest guarantees on reserves for current
benefits are in place in group life business. BVG minimum interest rate on the mandatory accrued savings assets of the insured is reviewed annually by the Swiss Federal Council. This minimum interest rate was 2.5% from 1.1.2005 to 31.12.2007, and was increased to 2.75% with effect from 1.1.2008. Rising rates may lead to higher lapse rates in the group life segment and thus cause losses. Since 2004, no deductions can be made from nominally defined surrender values that reflect the fact that the fair value of the corresponding fixed-income securities may be below the (local) book value for contracts that have been in Helvetia Group's portfolio for more than five years.Thereturn for policyholders of index-linked insu-
contracts depends on an external index. insurance products may include a guaranteed survival benefit. These product components must be separated as embedded derivatives and recognised at fair value. The majority of these guarantees and index-dependent payouts are serviced by and at the risk of external partners. There are two products in Switzerland where this does not apply and the risk is assumed by Helvetia Group, but these are covered by appropriate reserves. Their amount is determined especially by the volatility of the underlying assets as well as by the level of the risk-free interest rate. A change in the reserve is charged to profit and loss and cannot be compensated with a profit participationcomponent.
summary, there is a wide range of various and risks in life insurance, which Group monitors using a number of actuarial methods and then offsets where necessary with an appropriate increase in reserves. In compliance with IFRS 4, Helvetia Group also has free reserves at its disposal for future policyholder dividends. These reserves can also be used to cover insurance risks. 17.4 Financial market risks and ALM Asat 31.12.2007, Helvetia Group managed
of CHF 29.4 billion (previous year: 28.9 billion). The most important financial market risks to which the
Group is exposed are interest rate risk, foreign 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. Financial market risks influence the income statement as well as the balance sheet. The Group manages its real estate, mortgages and securities in-house. Smaller shares of the portfolio are invested in hedge funds or convertible bonds and are managed by external asset managers. Savings accumulated in unit-linked policies are invested in a wide range of funds and managed bythird parties.
17.1.2) at Helvetia Group is geared towards especially protecting the income statement and balance sheet, as well as towards fair value considerations on risk limitation. Besides matching the investment strategy to liabilities, derivatives are selectively used to hedge foreign exchange risks and to control the risk of losses on equity investments. The instruments mostly employed are options and forwards on both equity investments and foreign exchange underlyings. Asof 31.12.2007, the risk of loss on equities was
by hedging with put options, and for exchange exposure was largely hedged. information is available in tables 7.5.2 'Derivative financial assets' and 8.3.1 'Derivative financial liabilities'. Helvetia Group has sufficient liquid assets at its disposal
to meet unforeseen outflows of funds at all The proportion of liquid assets (cash, premiums to be invested, liquid equity and bonds) exceeds the scale of annual net flows of funds many times over. Additionally, the Group manages assets and liabilities in terms of their liquidity. The liabilities side of the balance sheet does not contain any significant individual positions. Part of the Group's investment portfolio consists of investments in assets which are not easily realisable, such as real estate or mortgages. These investments can only be realised over a longer periodof time.
| as of 31.12.2007 Actuarial reserve (gross) |
<1 year 2 219.9 |
1–5 years 7 011.6 |
5–10 years 4 701.5 |
>10 years 7 791.9 |
maturity 0.1 |
Total 21 725.0 |
|---|---|---|---|---|---|---|
| Provision for future policyholder participation Loss reserves (gross) |
163.0 1 218.4 |
18.4 1 226.1 |
– 395.5 |
– 177.8 |
511.8 – |
693.2 3 017.8 |
| Unearned premium reserve (gross) |
944.7 | – | – | – | – | 944.7 |
| Total reserves for insurance and investment |
||||||
| contracts (gross) |
4 546.0 | 8 256.1 | 5 097.0 | 7 969.7 | 511.9 | 26 380.7 |
| Reinsurers' share |
107.2 | 175.6 | 101.8 | 71.4 | – | 456.0 |
| Total reserves for insurance and investment |
||||||
| contracts (net) |
4 438.8 | 8 080.5 | 4 995.2 | 7 898.3 | 511.9 | 25 924.7 |
| as of 31.12.2006 <1 year 1–5 years 5–10 years >10 years Actuarial reserve (gross) 1936.4 6706.8 4673.1 7 701.8 |
maturity 0.9 |
Total 21 019.0 |
||||
|---|---|---|---|---|---|---|
| Provision for future policyholder participation |
122.2 | 18.0 | – | – | 602.0 | 742.2 |
| Loss reserves (gross) |
1167.5 | 1194.9 | 384.3 | 139.4 | – | 2 886.1 |
| Unearned premium reserve (gross) |
890.5 | – | – | – | – | 890.5 |
| Total reserves for insurance and investment |
||||||
| contracts (gross) |
4 116.6 | 7919.7 | 5057.4 | 7841.2 | 602.9 | 25 537.8 |
| Reinsurers' share |
104.6 | 178.0 | 95.3 | 65.3 | – | 443.2 |
| Total reserves for insurance and investment |
||||||
| contracts (net) |
4 012.0 | 7 741.7 | 4 962.1 | 7 775.9 | 602.9 | 25 094.6 |
| as of 31.12.2007 at any time <1 year 1–5 years 5–10 years >10 years maturity Total Financial liabilities from insurance business 994.7 17.2 184.0 17.8 13.3 68.3 1 295.3 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|
| Financial liabilities from financing activities Liabilities from insurance business |
– 283.8 |
6.0 453.3 |
227.0 – |
14.9 – |
– – |
– – |
247.9 737.1 |
||
| Other financial and other liabilities |
1.2 | 46.8 | 4.0 | – | – | – | 52.0 | ||
| Total financial and other liabilities |
1 279.7 | 523.3 | 415.0 | 32.7 | 13.3 | 68.3 | 2 332.3 | ||
Maturity schedule of financial and other liabilities (without derivative financial instruments) in CHF million Without asFinancial
| as of 31.12.2006 |
Redeemable at any time |
<1 year |
1–5 years |
5–10 years |
>10 years |
Without maturity |
Total |
|---|---|---|---|---|---|---|---|
| Financial liabilities from insurance business |
1 083.8 | 17.3 | 287.6 | 18.4 | 13.4 | 69.0 | 1 489.5 |
| Financial liabilities from financing activities |
– | 6.0 | 218.0 | – | – | – | 224.0 |
| Liabilities from insurance business |
310.0 | 393.5 | – | – | – | – | 703.5 |
| Other financial and other liabilities |
1.1 | 107.7 | 1.4 | – | – | – | 110.2 |
| Total financial and other liabilities |
1 394.9 | 524.5 | 507.0 | 18.4 | 13.4 | 69.0 | 2 527.2 |
| The | on |
figures given above may not reconcile to the reported in the balance sheet, as these non-discounted flows of funds. Allocation tothe category 'redeemable at any time' is based
the counterparty's right to cancel that is con in the contracts. Most of these contracts, life and non-life, can be terminated within oneyear at the latest.
| Maturity of non-discounted flows of funds as of 31.12.2007 Fair value <1 year 1–5 years 5–10 years >10 years Derivative financial assets: |
||||||||
|---|---|---|---|---|---|---|---|---|
| Interest rate swaps |
– | – | – | – | – | |||
| Forward exchange transactions |
5.3 | |||||||
| Inflow | 620.1 | – | – | – | ||||
| Outflow | –614.8 | – | – | – | ||||
| Options (planned exercise) |
0.6 | 11.4 | – | – | – | |||
| Other (exercise not planned) |
10.4 | |||||||
| Total derivative financial assets |
16.3 | 16.7 | – | – | – | |||
| Derivative financial liabilities: |
||||||||
| Interest rate swaps |
– | – | – | – | – | |||
| Forward exchange transactions Inflow |
6.6 | 250.0 | – | – | – | |||
| Outflow | –256.6 | – | – | – | ||||
| Options (planned exercise) |
2.4 | 57.3 | – | – | – | |||
| Other (exercise not planned) |
3.1 | |||||||
| Total derivative financial liabilities |
12.1 | 50.7 | – | – | – | |||
| as of 31.12.2006 Derivative financial assets: |
Fair value |
<1 year |
Maturity of 1–5 years |
non-discounted flows of 5–10 years |
funds >10 years |
|---|---|---|---|---|---|
| Interest rate swaps |
– | – | – | – | – |
| Forward exchange transactions |
3.2 | ||||
| Inflow | 138.5 | – | – | – | |
| Outflow | –135.3 | – | – | – | |
| Options (planned exercise) |
– | – | – | – | – |
| Other (exercise not planned) |
2.8 | ||||
| Total derivative financial assets |
6.0 | 3.2 | – | – | – |
| Derivative financial liabilities: |
|||||
| Interest rate swaps |
0.0 | 0.3 | –1.4 | –3.2 | – |
| Forward exchange transactions |
25.9 | ||||
| Inflow | 1 542.4 | – | – | – | |
| Outflow | –1 568.2 |
– | – | – | |
| Options (planned exercise) |
– | – | – | – | – |
| Other (exercise not planned) |
0.7 | ||||
| Total derivative financial liabilities |
26.6 | –25.5 | –1.4 | –3.2 | – |
Group's results are affected by changes interest rates. A prolonged period of low interest reduces the return on fixed-income investments such as bonds and mortgages. On the other hand, return increases with rising interest rates. Information on current investment returns can be found in Note 7.1 (page 117). As with most investments, the value of Helvetia Group's
liabilities depends on interest rate levels. speaking, the higher the interest rate, the lower the present value of assets and liabilities. The extent of this change in values depends, amongother things, on the time pattern of cash
To manage the volatility of net positions – net liabilities, i.e. AL mismatch) the Group the maturities of cash flows arising from liabilities with those resulting from assets, and analyses them for maturity matching. The derived risk is administered as part of the asset & liability management process. Risk capacity, on one side, and the capacity to finance guaranteed benefits or togenerate surpluses, on the other, are balanced.
| as of 31.12.2007 Loans (LAR) incl. money market instruments |
<1 year 2 250.1 |
1–5 years 1 843.7 |
5–10 years 1 632.1 |
>10 years 1 327.4 |
maturity 53.4 |
Total 7 106.7 |
|---|---|---|---|---|---|---|
| Held-to-maturity investments (HTM) Available-for-sale investments (AFS) |
212.8 685.5 |
1 033.4 4 162.7 |
972.9 3 456.7 |
1 295.8 1 764.3 |
– 1 567.8 |
3 514.9 11 637.0 |
| Financial assets at fair value through profit or loss |
114.1 | 129.5 | 87.3 | 67.4 | 2 705.9 | 3 104.2 |
| Total financial assets |
3 262.5 | 7 169.3 | 6 149.0 | 4 454.9 | 4 327.1 | 25 362.8 |
| as of 31.12.2006 Loans (LAR) incl. money market instruments Held-to-maturity investments (HTM) |
<1 year 2 420.2 367.8 |
1–5 years 2 289.6 977.6 |
5–10 years 1 180.6 927.6 |
>10 years 750.6 1 196.7 |
maturity 102.2 – |
Total 6 743.2 3 469.7 |
|---|---|---|---|---|---|---|
| Available-for-sale investments (AFS) |
514.8 | 4 280.4 | 3 448.1 | 1 987.9 | 1 632.5 | 11 863.7 |
| Financial assets at fair value through profit or loss |
59.5 | 230.5 | 78.3 | 69.1 | 2 477.5 | 2 914.9 |
| Total financial assets |
3 362.3 | 7 778.1 | 5 634.6 | 4 004.3 | 4 212.2 | 24 991.5 |
| A statement on the ALM situation of a |
portfolio can |
The | interest | guarantees range |
from 1% |
to 6%. |
| be | Around | |||||
| rates | carry | |||||
| est |
made by comparing the guaranteed interest with yields. Aggregated information on interestguarantees is given in the following diagram.
1% of Helvetia Group's actuarial reserves an interest guarantee of more than 4%.
| Direct business Switzerland |
Direct business EU |
Reinsurance | ||
|---|---|---|---|---|
| as of 31.12.2007 Actuarial reserve for insurance and investment |
CHF | Other currencies |
EUR | |
| contracts excluding interest guarantee Actuarial reserve for insurance and investment |
743.3 | – | 183.8 | – |
| contracts with 0% interest guarantee |
382.1 | – | 135.3 | 14.6 |
| Actuarial reserve for insurance and investment |
||||
| contracts with positive interest guarantee |
16 099.9 |
80.9 | 4 071.9 | 13.2 |
| Average interest guarantee in per cent |
2.71 | 2.86 | 3.03 | 1.43 |
| Direct business Switzerland |
Direct business EU |
Reinsurance | ||
|---|---|---|---|---|
| as of 31.12.2006 |
CHF | Other currencies |
EUR | |
| Actuarial reserve for insurance and investment |
||||
| contracts excluding interest guarantee Actuarial reserve for insurance and investment |
761.4 | – | 126.5 | – |
| contracts with 0% interest guarantee |
312.8 | – | 105.4 | 13.2 |
| Actuarial reserve for insurance and investment |
||||
| contracts with positive interest guaranteee |
15 827.9 |
70.8 | 3 786.5 | 14.5 |
| Average interest guarantee in per cent |
2.73 | 3.01 | 3.09 | 1.57 |
| as of 31.12.2007 Income statement |
Interest +10 bp 1.0 |
rate level – 10 bp –1.0 |
|||
|---|---|---|---|---|---|
| Equity | 1 1 –22.5 22.7 |
||||
| Interest | rate level |
||||
| as of 31.12.2006 Income statement |
+10 bp 0.6 |
– 10 bp –0.6 |
|||
| Equity | 1 –23.9 |
1 24.2 |
|||
| bp = basis point |
|||||
| 1 | |||||
table on the left analyses the impact of a in interest rate on Helvetia Group's equity income statement, taking account of deferred taxes and the legal quota. The analysis also takes account of the investments at fair value through profit and loss, fixed-interest available-for-sale investments, derivatives, the actuarial reserve, deposits for investment contracts and the interest earned on variable-rate investments. The impact of a change in interest rate on impairments was notanalysed.
'reasonable possible change' in the risk factors the sensitivity analysis is every bracket covers a range of possible interest rate changes where the probability of its occurring over a period of one year is between 10% and 90%. Sensitivities are shown for the borders of the bracket that meets these conditions. Investmentsin shares are used to generate long-
surpluses. Funds are mostly invested in large traded on the major stock exchanges. Helvetia Group holds a well-diversified portfolio (mainly stocks traded on the exchanges in Switzerland, Europe and the US). The share of each individual position is less than 5% of the total portfolio (direct investments in equity), with the exception of 'Allreal', a highly diversified holding company which accounts for 9.3% of equity exposure. Market risk is constantly monitored and, if necessary, reduced through sales or the use of hedging instruments in order to meet the strict internal requirements on risk capacity. Market risks are decreased through hedging strategies.
Out-of-the-money put options are largely to comply with internal loss limits. Direct investment in equities constitutes 8.8% (before hedging) of the Group's investments. A substantial proportion is hedged against the risk of significant losses. Using out-of-the-money put options results in a relatively small delta-adjusted hedge ratio. The hedging protection, however, increases with large market fluctuations. The above table analyses the impact of a change in
equity price on Helvetia Group's equity and statement, taking account of deferred taxes and the legal quota. The analysis covers direct equity investments, derivatives, equity funds and mixed funds. The impact of a change in equity priceon impairments was not analysed.
| Income statement Equity |
80.7 59.9 |
–57.4 –59.9 |
|||
|---|---|---|---|---|---|
| Equity | price | ||||
| as of 31.12.2006 Income statement Equity |
+10% – 10% 57.1 –51.9 65.0 –65.0 |
||||
| A 'reasonable possible change' |
in the risk |
factors |
the sensitivity analysis is every bracket covers a range of possible equity price changes where the probability of its occurring over a period of one year is between 10% and 90%. Sensitivities are shown for the borders of the bracket that meets these conditions. Mostof the Group's assets, including its invest-
and most of its liabilities are denominated Swiss francs and euros. With the exception of the Swiss business, most liabilities are hedged through investments in matching currencies. In the Swiss business, investments to hedge liabilities in Swiss francs are held in both Swiss francs and euros for reasons of return and liquidity. The resulting currency risks are hedged to a great extent, using forward exchange transactions and put options on the most important balance sheet currencies (Euro, US dollar) against the Swiss franc.
| Exposure to currency risk 2007 in CHF million Assets as of 31.12. Property and equipment |
CHF 333.2 |
EUR 227.4 |
USD – |
Other – |
Total 560.6 |
|---|---|---|---|---|---|
| Goodwill and other intangible assets |
25.5 | 39.4 | – | – | 64.9 |
| Investments in associates |
45.1 | 3.2 | – | – | 48.3 |
| Investment property |
3 530.4 | 440.0 | – | – | 3 970.4 |
| Financial investments |
15 377.3 |
9 373.0 | 387.6 | 224.9 | 25 362.8 |
| Receivables from insurance business |
170.8 | 486.3 | 17.0 | 22.3 | 696.4 |
| Deferred acquisition costs (life) |
199.5 | 23.7 | – | – | 223.2 |
| Reinsurance assets |
97.7 | 572.6 | 12.4 | 5.8 | 688.5 |
| Deferred tax assets |
0.1 | 49.7 | – | – | 49.8 |
| Current income tax assets |
0.4 | 5.8 | – | – | 6.2 |
| Other assets |
52.7 | 103.4 | 1.0 | 0.4 | 157.5 |
| Accrued investment income |
171.2 | 168.2 | 0.8 | 0.0 | 340.2 |
| Cash and cash equivalents |
213.2 | 136.4 | 14.8 | 11.5 | 375.9 |
| Total assets |
20 217.1 |
11 629.1 |
433.6 | 264.9 | 32 544.7 |
| in CHF million Liabilities as of 31.12. |
CHF | EUR | USD | Other | Total |
|---|---|---|---|---|---|
| Actuarial reserve (gross) Provision for future policyholder participation |
17 231.4 586.7 |
4 474.1 106.5 |
19.5 – |
– – |
21 725.0 693.2 |
| Loss reserves (gross) |
1 039.9 | 1 842.5 | 89.0 | 46.4 | 3 017.8 |
| Unearned premium reserve (gross) |
262.0 | 647.4 | 20.0 | 15.3 | 944.7 |
| Financial liabilities from financing activities |
199.4 | 34.8 | – | – | 234.2 |
| Financial liabilities from insurance business |
789.2 | 504.9 | 1.2 | – | 1 295.3 |
| Other financial liabilities |
13.4 | 7.9 | 0.0 | 0.1 | 21.4 |
| Liabilities from insurance business |
594.1 | 138.5 | 4.0 | 0.5 | 737.1 |
| Non-actuarial provisions |
49.9 | 27.6 | – | – | 77.5 |
| Employee benefit obligations |
31.5 | 255.1 | – | – | 286.6 |
| Deferred tax liabilities |
302.8 | 103.1 | – | – | 405.9 |
| Current income tax liabilities |
47.4 | 82.1 | – | – | 129.5 |
| Other liabilities and accruals |
50.4 | 76.0 | –1.3 | 0.8 | 125.9 |
| Total liabilities |
21 198.1 |
8 300.5 | 132.4 | 63.1 | 29 694.1 |
| Exposure to currency risk 2006 in CHF million Assets as of 31.12. Property and equipment |
CHF 318.3 |
EUR 207.9 |
USD – |
Other – |
Total 526.2 |
|---|---|---|---|---|---|
| Goodwill and other intangible assets |
29.0 | 39.6 | – | – | 68.6 |
| Investments in associates |
43.6 | 2.6 | – | – | 46.2 |
| Investment property |
3 457.4 | 432.6 | – | – | 3 890.0 |
| Financial investments |
15 097.7 |
9 247.7 | 441.2 | 204.9 | 24 991.5 |
| Receivables from insurance business |
170.5 | 434.5 | 19.2 | 13.9 | 638.1 |
| Deferred acquisition costs (life) |
202.0 | 17.8 | – | – | 219.8 |
| Reinsurance assets |
94.6 | 670.0 | 13.9 | 3.9 | 782.4 |
| Deferred tax assets |
0.1 | 49.5 | – | – | 49.6 |
| Current income tax assets |
0.4 | 1.1 | – | – | 1.5 |
| Other assets |
69.7 | 80.2 | 1.1 | 0.7 | 151.7 |
| Accrued investment income |
163.9 | 158.4 | 1.0 | 0.0 | 323.3 |
| Cash and cash equivalents |
–2.5 | 109.5 | 14.2 | 0.0 | 121.2 |
| Total assets |
19 644.7 |
11 451.4 |
490.6 | 223.4 | 31 810.1 |
| in CHF million Liabilities |
|||||
|---|---|---|---|---|---|
| as of 31.12. Actuarial reserve (gross) Provision for future policyholder participation |
CHF 16 979.3 602.3 |
EUR 4 039.3 139.9 |
USD 0.4 – |
Other – – |
Total 21 019.0 742.2 |
| Loss reserves (gross) |
985.1 | 1 771.8 | 89.9 | 39.3 | 2 886.1 |
| Unearned premium reserve (gross) |
262.7 | 587.3 | 30.2 | 10.3 | 890.5 |
| Financial liabilities from financing activities |
199.1 | – | – | – | 199.1 |
| Financial liabilities from insurance business |
872.9 | 615.2 | 1.4 | 0.0 | 1 489.5 |
| Other financial liabilities |
29.3 | 7.9 | – | – | 37.2 |
| Liabilities from insurance business |
584.7 | 118.2 | 0.6 | 0.0 | 703.5 |
| Non-actuarial provisions |
40.2 | 23.9 | – | – | 64.1 |
| Employee benefit obligations |
29.0 | 243.1 | – | – | 272.1 |
| Deferred tax liabilities |
345.5 | 113.5 | – | 6.7 | 465.7 |
| Current income tax liabilities |
40.9 | 75.0 | – | – | 115.9 |
| Other liabilities and accruals |
90.4 | 97.0 | –1.6 | 1.0 | 186.8 |
| Total liabilities |
21 061.4 |
7 832.1 | 120.9 | 57.3 | 29 071.7 |
| as of 31.12.2007 |
Exchange rate EUR/CHF |
Exchange | rate USD/CHF |
Exchange | rate GBP/CHF |
|
|---|---|---|---|---|---|---|
| Income statement |
+2% 13.3 |
–2% –12.9 |
+2% –1.1 |
–2% 1.6 |
+2% –0.3 |
–2% 0.3 |
| as of 31.12.2006 |
Exchange +2% |
rate EUR/CHF –2% |
Exchange USD/CHF +2% |
rate –2% |
Exchange +2% |
rate GBP/CHF –2% |
|---|---|---|---|---|---|---|
| Income statement |
9.7 | –9.7 | –1.6 | 1.6 | –0.2 | 0.2 |
| The | A |
above table analyses the impact of an rate change on Helvetia Group's income taking account of deferred taxes and the legal quota. In accordance with the IFRS, only monetary financial instruments and insurance liabilities in non-functional currencies and derivative financialinstruments were included in the analysis.
'reasonable possible change' in the risk factors the sensitivity analysis is every bracket covers a range of possible exchange rate changes where the probability of its occurring over a period of one year is between 10% and 90%. Sensitivities are shown for the borders of the bracketthat meets these conditions.
risk includes risks of default and in value. The risk of default refers to the of the counterparty becoming insolvent, while the risk of changes in value is related to the possibility of a financial loss due to a change in the counterparty's credit rating or a change in credit spreads in general. The risk of counterparties failing to meet their obligations is continuously monitored. Helvetia Versicherungen works with various counterparties with good credit ratings in order to minimise counterparty risk. HelvetiaGroup is exposed to counterparty risk
the following areas in particular: n Counterparty risks from bonds and money market
The largest positions in the loans asset consist of borrower's note loans and policy loans. Policy loans are hedged through life insurance policies. As a loan is only granted against a certain percentage of the accumulated savings capital (<100%), this asset class can be qualified as 'fully secured'. The significance of the gross exposure (without taking account of collateral) for the valuation of counterparty risk from the mortgage business is also relatively small: mortgages are secured by a real estate lien and are often also partly secured by a pledged life insurance policy, with the result that the loss rate is correspondingly low. Against this background the counterparty risk from mortgages must be describedas small.
n Counterparty risk from transactions involving financial instruments: This risk primar results from transactions with OTC derivates. As the derivates currently held by Helvetia are predominantly short-term, this exposure is also short-term, with a correspondingly reduced risk. n Counterparty risk from ceded reinsurance: Helvetia
n Counterparty risk from financial guarantees credit approval: Detailed information on liabilities can be found in Note 12 (page145).
Rating of interest rate instruments, loans and derivative financial assets in CHF million asMoney
| as of 31.12.2007 Money market instruments Derivative financial assets |
AAA 90.4 0.0 |
AA 419.4 13.9 |
A 172.2 2.4 |
BBB – – |
BB and lower – – |
Not rated 45.8 – |
Total 727.8 16.3 |
|---|---|---|---|---|---|---|---|
| Bonds | 10 036.6 |
3 972.2 | 1 009.8 | 81.2 | – | 215.2 | 15 315.0 |
| Mortgages | – | – | – | – | – | 3 096.9 |
3 096.9 |
| Borrower's note loans |
457.4 | 772.4 | 275.4 | 13.0 | – | 151.0 | 1 669.2 |
| Policy and other loans |
12.5 | 8.5 | 104.4 | – | – | 139.3 | 264.7 |
| Total | 10 596.9 |
5 186.4 | 1 564.2 | 94.2 | – | 3 648.2 |
21 089.9 |
| as of 31.12.2006 Money market instruments |
AAA 167.4 |
AA 396.2 |
A 283.6 |
BBB – |
BB and lower – |
Not rated 252.0 |
Total 1 099.2 |
|---|---|---|---|---|---|---|---|
| Derivative financial assets |
0.0 | 6.0 | 0.0 | – | – | – | 6.0 |
| Bonds | 9 339.3 | 3 495.2 | 1 584.5 | 97.7 | 8.0 | 207.3 | 14 732.0 |
| Mortgages | – | – | – | – | – | 3 094.0 |
3 094.0 |
| Borrower's note loans |
414.6 | 747.4 | 317.5 | 3.0 | – | 178.0 | 1 660.5 |
| Policy and other loans |
20.4 | 9.3 | 102.5 | 8.0 | – | 149.8 | 290.0 |
| Total | 9 941.7 | 4 654.1 | 2 288.1 | 108.7 | 8.0 | 3 881.1 | 20 881.7 |
rating practice was reviewed in 2007 and ratings from professional rating agencies included in the analysis. The above analysis uses the securities and issuer ratings of Standard & Poor's, Moody's and Fitch, as well as the issuer ratings of Credit Suisse, UBS, Zurich Cantonal Bank and Fedafin. The previous year's figures are still based on the old practice. Given the insignificance of the gross exposure from mortgages and policy loans, these are reported as investments 'without rating'. Credit risk from ceded reinsurance in CHF million
| as of 31.12.2007 AAA AA |
Exposure 13.4 473.9 |
Share in % 2.1 75.1 |
|---|---|---|
| A | 125.2 | 19.9 |
| BBB | 1.9 | 0.3 |
| BB and lower |
0.2 | 0.0 |
| Not rated |
16.4 | 2.6 |
| Total | 631.0 | 100.0 |
| as of 31.12.2006 AAA |
Exposure 15.6 |
Share in % 2.6 |
| AA | 459.3 | 75.0 |
| A | 105.4 | 17.2 |
| BBB | 13.2 | 2.2 |
| BB and lower |
0.1 | 0.0 |
| Not rated |
18.1 | 3.0 |
| Total | 611.7 | 100.0 |
credit risk exposure from ceded reinsurance the ceded actuarial reserves as well as from reinsurance business reported under 'Receivables from insurance companies' in Note 9. The credit rating of a reinsurer is mostly based on an interactive insurer financial strength rating given by one of the professional rating agencies.TheGroup monitors counterparty risk on a regular
and diversifies and avoids this risk as much possible. Credit risk is well diversified and distributed among a wide range of commercial clients. The largest individual positions are governmentbonds with prime credit ratings.
The ten largest counterparties by credit risk exposure as disclosed in the tables 'Rating of interest rate instruments, loans and derivative financial instruments' and 'Credit risk from ceded reinsurance' in CHF million
| Securities rating |
Bonds | |||
|---|---|---|---|---|
| as of 31.12.2007 |
Issuer rating |
Book value IFRS total |
AAA | AA |
| Switzerland Germany Commerzbank AG |
AAA AAA A |
2 212.7 807.9 631.9 |
2 212.7 612.3 552.8 |
– 71.5 8.3 |
| Bayerische Landesbank |
A | 516.2 | 207.3 | 170.8 |
| Mortgage Bond Bank of the Swiss Mortgage Insitutions |
AAA | 451.8 | 451.8 | – |
| Austria | AAA | 441.0 | 403.3 | – |
| Spain | AAA | 363.3 | 232.6 | 40.3 |
| Central Mortgage Bond Institution of the Swiss Cantonal Banks |
AAA | 333.8 | 333.8 | – |
| Italy | A | 305.4 | – | 277.1 |
| Raiffeisen Switzerland |
AA | 292.8 | – | 33.5 |
| Book value IFRS |
Securities rating |
Bonds | ||
|---|---|---|---|---|
| as of 31.12.2006 |
Issuer rating |
total | AAA | AA |
| Switzerland Germany Commerzbank AG |
AAA AAA A |
2 254.3 796.9 526.9 |
2 254.3 582.4 402.7 |
– 56.0 10.0 |
| Spain | AAA | 508.5 | 292.5 | 40.7 |
| Austria | AAA | 470.7 | 416.6 | – |
| Raiffeisen Switzerland |
AA | 385.5 | – | 25.5 |
| Mortgage Bond Bank of the Swiss Mortgage Insitutions |
AAA | 367.4 | 367.4 | – |
| Central Mortgage Bond Institution of the Swiss Cantonal Banks |
AAA | 357.9 | 357.9 | – |
| Italy | A | 332.8 | – | – |
| General Electric Co |
AAA | 288.3 | 288.3 | – |
| Money market |
Derivative | Borrower's | Other | ||
|---|---|---|---|---|---|
| A | not rated |
instruments | financial assets |
note loans |
loans |
| – – 18.5 |
– – 10.7 |
– – – |
– – – |
– 124.1 33.1 |
– – 8.5 |
| 58.3 | – | – | – | 71.3 | 8.5 |
| – | – | – | – | – | – |
| – | – | – | – | 37.7 | – |
| – | – | 90.4 | – | – | – |
| – | – | – | – | – | – |
| 28.3 | – | – | – | – | – |
| – | – | 171.5 | – | 87.8 | – |
| Money market |
Derivative | Borrower's | Other | ||
|---|---|---|---|---|---|
| A | not rated |
instruments | financial assets |
note loans |
loans |
| – – 18.1 |
– 61.9 42.9 |
– – – |
– – – |
– 96.6 36.5 |
– – 16.7 |
| – | 7.9 | 167.4 | – | – | – |
| – | 3.1 | – | – | 51.0 | – |
| – | – | 282.7 | – | 77.3 | – |
| – | – | – | – | – | – |
| – | – | – | – | – | – |
| 332.6 | 0.2 | – | – | – | – |
| – | – | – | – | – | – |
important events occurred before or on the date on which these consolidated statements were completed, that are likely to have a significant impact on the financial statementsas a whole.
following events in the reporting period led to in the scope of consolidation of Helvetia Helvetia Group did not make any acquisitions during
the 2007 financial year. In the reporting period, the share capital of Helvetia
Vermögens- und Grundstücksverwaltung & Co. KG, Frankfurt am Main, was increased by EUR 6.6 million. The investment in Helvetia Compañía Suiza, Seville,
was increased from 98.91% to 98.95% successive share purchases during the reportingyear.
investment in Tertianum AG, Berlingen, was from 23.2% to 20.0% due to a share increase by Tertianum in which Helvetia Group did not participate. The company helvetia-e.com GmbH based in Frankfurt
am Main was renamed Helvetia Leben GmbH. The three Helvetia SICAV Funds were renamed Variopartner (VP) SICAV-Helvetia Funds. The following is a complete list of all Group companies:
| Segment | Holding in |
Method of consoli- |
Currency | Company's capital |
|
|---|---|---|---|---|---|
| as of 31.12.2007 Subsidiaries and associates |
per cent |
dation | in million |
||
| Switzerland Helvetia Holding AG, St.Gallen |
Other | – | – | CHF | 86.5 |
| Helvetia Schweizerische Versicherungsgesellschaft AG, St.Gallen Helvetia Schweizerische Lebensversicherungsgesellschaft AG, Basel |
Non-life Life |
100.00 100.00 |
full full |
CHF CHF |
77.5 50.0 |
| Helvetia Beteiligungen AG, St.Gallen |
Other | 100.00 | full | CHF | 225.7 |
| Patria Schweizerische Lebensversicherungs-Gesellschaft AG, St.Gallen |
Life | 100.00 | full | CHF | 0.1 |
| Helvetia Consulting AG, St.Gallen |
Other | 100.00 | full | CHF | 0.1 |
| Rhydorf AG, Widnau |
Other | 75.00 | full | CHF | 0.4 |
| Ecenter Solutions AG, Zurich |
Other | 100.00 | full | CHF | 0.1 |
| Helvetia I Funds North America |
Life and |
||||
| non-life | 100.00 | full | USD | – | |
| Helvetia I Funds Great Britain |
Life and |
||||
| non-life | 100.00 | full | GBP | – | |
| Helvetia I Funds Europe |
Life and |
||||
| non-life | 100.00 | full | EUR | – | |
| Tertianum AG, Berlingen |
20.00 | equity | CHF | ||
| Prevo-System AG, Basel |
26.00 | equity | CHF | ||
| in per cent |
of consoli- dation |
capital in million |
|||
|---|---|---|---|---|---|
| Helvetia Schweizerische Versicherungsgesellschaft AG, Germany |
|||||
| Direktion für Deutschland, Frankfurt a.M.* HELVETIA INTERNATIONAL Versicherungs-AG, Frankfurt a.M. |
Non-life Non-life |
100.00 100.00 |
full full |
EUR EUR |
– 8.0 |
| HELVETIA Schweizerische Lebensversicherungs-AG, Frankfurt a.M. |
Life | 100.00 | full | EUR | 6.5 |
| Der ANKER Vermögensverwaltung GmbH, Frankfurt a.M. |
Other | 100.00 | full | EUR | 0.0 |
| Helvetia Vermögens- und Grundstücksverwaltung GmbH & Co. KG, Frankfurt a.M. |
Other | 100.00 | full | EUR | 17.3 |
| Helvetia Grundstücksverwaltung GmbH, Frankfurt a.M. |
Other | 100.00 | full | EUR | 0.0 |
| Hamburger Assekuranz GmbH, Frankfurt a.M. |
Other | 100.00 | full | EUR | 3.1 |
| Helvetia Leben Maklerservice GmbH, Frankfurt a.M. |
Other | 100.00 | full | EUR | 0.0 |
| Helvetia Versicherungs- u. Finanzdienstleistungsvermittlung GmbH, Frankfurt a.M. |
Other | 100.00 | full | EUR | 0.0 |
| DeAM Fonds DFD 1 (Europe) |
Non-life | 100.00 | full | EUR | – |
| Italy Helvetia Compagnia Svizzera d'Assicurazioni S.A., |
|||||
| Rappresentanza Generale e Direzione per l'Italia, Milan* |
Non-life | 100.00 | full | EUR | – |
| Helvetia Vita – Compagnia Italo Svizzera di Assicurazioni sulla Vita S.p.A., Milan |
Life | 100.00 | full | EUR | 13.4 |
| GE.SI.ASS Società Consortile a R.L., Milan |
Other | 55.00 | full | EUR | 0.0 |
| Helvetia Spain Holding Suizo, S.A., Madrid |
Other | 100.00 | full | EUR | 90.3 |
| Helvetia Compañía Suiza, Sociedad Anónima de Seguros y Reaseguros, Seville |
Life and |
||||
| non-life | 98.95 | full | EUR | 21.4 | |
| Previcia S.A., Sociedad de Inversion de Capital Variable, S.A. (SICAV), Seville |
Other | 99.95 | full | EUR | 2.4 |
| Previsur Agencia de Seguros S.L., Seville |
Other | 100.00 | full | EUR | 0.0 |
| Gesnorte S.A., S.G.I.I.C., Madrid |
31.73 | equity | EUR | ||
| Gesnorte de Pensiones, S.A., Entidad Gestora de Fondos de Pensiones, Madrid |
24.00 | equity | EUR | ||
| Gesnorte de Servicios, S.A., Madrid |
28.00 | equity | EUR | ||
| Others | |||||
| Helvetia Schweizerische Versicherungsgesellschaft AG, |
|||||
| Direktion für Österreich, Vienna* |
Non-life | 100.00 | full | EUR | – |
| Austria Helvetia Versicherungen AG, Vienna |
Life and |
||||
| non-life | 100.00 | full | EUR | 12.7 | |
| Römertor Versicherungsmakler, Immobilien und Bau GmbH, Vienna |
Other | 100.00 | full | EUR | 0.0 |
| Marc Aurel Liegenschaftsverwaltung GmbH, Vienna |
Other | 100.00 | full | EUR | 0.0 |
| Helvetia Financial Services AG, Vienna |
Other | 100.00 | full | EUR | 0.6 |
| ZSG Kfz-Zulassungsservice GmbH, Vienna |
33.33 | equity | EUR | ||
| Helvetia Compagnie Suisse d'Assurances S.A., |
|||||
| Direction pour la France, Paris* |
Non-life | 100.00 | full | EUR | – |
| France | |||||
| Helvetia Finance Ltd, Jersey |
Other | 100.00 | full | CHF | 0.1 |
| UK Helvetia Europe S.A., Luxembourg |
Other | 100.00 | full | EUR | 11.5 |
| VP SICAV Helvetia Fund Euro Bonds |
Life and |
||||
| Luxembourg | non-life | 100.00 | full | EUR | – |
| VP SICAV Helvetia Fund European Equity |
Life and |
||||
| non-life | 100.00 | full | EUR | – | |
| VP SICAV Helvetia Fund International Equity |
Life and |
||||
| non-life | 100.00 | full | EUR | – | |
| Helvetia Schweizerische Versicherungsgesellschaft AG, Rückversicherung, |
Life and |
||||
| St.Gallen* | non-life | 100.00 | full | CHF | – |
| Worldwide | |||||
| Notes to the consolidated financial statements of Helvetia Group 2007 |
* Branches |
||||
Report of the Group Auditors to the General Meeting of Helvetia Holding AG, St. Gallen As group auditors, we have audited the consolidated
financial statements (consolidated income consolidated balance sheet, consolidated statement of changes in equity, consolidated cash flow statement and notes to the consolidated financial statements) of Helvetia Holding AG for the year ended 31 December 2007 as presented on pages 83 to 186 of the Annual Report 2007. These consolidated financial statements are the
responsibility of the Board of Directors. Our is to express an opinion on these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence.Our audit was conducted in accordance with Swiss
Auditing Standards and with the Interna- Standards on Auditing (ISA), which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement.We have examined on a test basis
supporting the amounts and disclosures the consolidated financial statements. We have assessed the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements
give a true and fair view of the financial the results of operations and the cash flows in accordance with the International Financial Reporting Standards (IFRS) and comply with Swiss law. We recommend that the consolidated financial statements
submitted to you be approved. KPMGLtd
Auditor
T. Dormann Christian Fleig in Charge
13 March 2008
| Balance sheet |
189 |
|---|---|
| Notes to the annual financial statements Report to the Statutory Auditors |
190 192 |
| Loan interest expenses Loan interest income |
–6.0 6.4 |
–6.0 5.7 |
|
|---|---|---|---|
| Trademark expenses |
–3.7 | –2.3 | |
| Profit for the period before tax |
181.7 | 196.6 | –7.6% |
| Taxes | – 0.2 | –0.3 | |
| Profit for the period |
181.5 | 196.3 | –7.5% |
| Balance sheet |
|||
| in CHF million |
| Investments | 803.7 | 745.1 | |
|---|---|---|---|
| Loans to Group companies |
111.6 | 150.1 | |
| Intangible assets |
8.9 | 9.0 | |
| Non-current assets |
924.2 | 904.2 | 2.2% |
| Cash and cash equivalents |
0.2 | 0.4 | |
| Balances receivable from Group companies |
244.1 | 199.2 | |
| Current assets |
244.3 | 199.6 | 22.4% |
| Total assets |
1 168.5 | 1 103.8 | 5.9% |
| Liabilities and shareholders' equity: |
|||
| Share capital |
86.5 | 86.5 | |
| Reserve for treasury shares |
17.1 | 17.1 | |
| Other statutory reserves |
596.7 | 596.7 | |
| Free reserves |
80.0 | 0.0 | |
| Profit carried forward |
2.6 | 3.1 | |
| Profit for the period |
181.5 | 196.3 | |
| Shareholders' equity |
964.4 | 899.7 | 7.2% |
| Bond | 200.0 | 200.0 | |
| Provisions | 0.2 | 0.2 | |
| Accruals | 3.9 | 3.9 | |
| Borrowed capital |
204.1 | 204.1 | 0.0% |
| Total liabilities and shareholders' equity |
1 168.5 | 1 103.8 | 5.9% |
| Proposed appropriation of profit |
|||
| in CHF million |
| 31.12.2007 31.12.2006 Profit for the period 181.5 196.3 Profit carried forward 2.6 3.1 |
|||
|---|---|---|---|
| Profit available for distribution |
184.1 | 199.4 | |
| Dividend (2007: CHF 15.00; 2006: CHF 13.50) per registered share |
129.8 | 116.8 | |
| Allocation to free reserves |
– | 80.0 | |
| Profit carried forward to new account |
54.3 | 2.6 | |
Investments Helvetia Holding AG the balance sheet date, Helvetia Holding AG the following direct investments:
| Reported Reported company capital Percentage company capital Percentage Company in CHF million holding as of in CHF million holding as of |
||||
|---|---|---|---|---|
| Helvetia Schweizerische Versicherungsgesellschaft AG, St.Gallen |
31.12.2007 77.5 |
31.12.2007 100.00% |
31.12.2006 77.5 |
31.12.2006 100.00% |
| Helvetia Schweizerische Lebensversicherungs gesellschaft AG, Basel |
50.0 | 100.00% | 50.0 | 100.00% |
| Helvetia Finance Limited, Jersey |
0.1 | 100.00% | – | |
| The |
investment in Helvetia Finance Limited, Jersey, added in the reporting year by taking over shares held by Helvetia Schweizerische Versicherungsgesellschaft AG, St. Gallen. 2. Dividend income Thereported income of Helvetia Holding AG
the dividend paid simultaneously to Holding AG by the subsidiaries Helvetia Schweizerische Versicherungsgesellschaft AG and Helvetia Schweizerische Lebensversicherungsgesellschaft AG from their respective net profits for2007.
3% bond 2004–2010 of Helvetia Holding AG a par value of CHF 200,000,000 and was on 5 May 2004. It must be repaid at par value on 5 May 2010. The bond has a coupon rate of 3%, which is paid annually on 5 May. The par value and bond terms did not change compared to the previous year. 4. Treasury shares Onthe balance sheet date, subsidiaries of Helvetia
AG held 70,312 registered shares of Holding AG (unchanged from 2006). as
| as of 31.12.2007 in CHF |
as of 31.12.2006 in CHF |
|
|---|---|---|
| Treasury shares Reserve for treasury shares |
70 312 17 105 789 |
70 312 17 105 789 |
owning more than 3% of the share capital were in the share register: Patria Genossenschaft 30.09 % (previous year 30.09%), Vontobel Beteiligungen AG 4.0% (previous year 4.0%), Raiffeisen Switzerland 4.0% (previous year 4.0%), Munich Re 8.16 % (previous year 8.16%), and Basler Lebens-Versicherungs-Gesellschaft, Basel 3.12% (previous year 0%). On the balance sheet date, the shareholder pool comprisedthe following shareholders:
n Patria Genossenschaft with 30.09% (previousyear 30.09%)
the members of the Board of Directors and Executive Management required under Art. 663bbis and Art. 663c par. 3 of the Swiss Code of Obligations is provided in the notes to the consolidated financial statement of Helvetia Group in Chapter 15.2 (page 152 et seq.). 7.Approved and conditional
the creation of conditional capital of up 15%. The share capital can be increased by a maximum of CHF 12,979,320 by issuing a maximum of 1,297,932 registered shares with a par value of CHF 10 each which must be fully paid up. None of this conditional capital increase had been usedas of the balance sheet date.
Report of the Statutory Auditors to the General Meeting of Helvetia Holding AG, St.Gallen As statutory auditors, we have audited the accounting
records and the financial statements (income balance sheet and notes) of Helvetia Holding AG for the year ended 31 December 2007.These financial statements are the responsibility of
the Board of Directors. Our responsibility is to an opinion on these financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with Swiss
Auditing Standards, which require that an be planned and performed to obtain reasonable assurance about whether the financial statements are free of material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.
our opinion, the accounting records and finan statements and the proposed appropriation available earnings comply with Swiss law and the company's articles of incorporation. We recommend that the financial statements submitted
to you be approved.
T. Dormann Christian Fleig in Charge Zurich,13 March 2008
Spain, Seville – 2.22 p.m. Javier Sánchez-Barriga and a member of the Sales Force waiting for the tram in Constitution Avenue.
Underwriting reserves for life insurance which are calculated on the basis of official guidelines and, together with future premiums, serve to ensure that sufficient funds are available to pay all benefits to which an insured person may be entitled.
The amortised cost value of an investment is the amount at which the asset is first valued, less any impairments and plus or minus the difference between the original cost price and the redemption amount on maturity (premium/discount), with the difference being amortised over the term.
(See 'Volume of new business').
A means of balancing assets and liabilities on our clients' behalf in such a way as to ensure that all the Group's insurance commitments can be met with maximum security at any time.
Capital funds available to cover the required level of solvency.
Total of all benefits paid in the financial year and all changes to underwriting reserves, less benefits covered by reinsurers.
The smallest identifiable group of a company's assets that generates cash inflows that are largely independent of cash flows from other assets.
Chief Executive Officer.
Chief Financial Officer.
Chief Investment Officer.
The ratio of claims incurred to net premiums earned.
Assets (generally securities) which are deposited or pledged as a financial surety.
The sum of the net expense ratio and the claims ratio is used to evaluate the profitability of non-life insurance business before underwriting interest income is taken into consideration.
Liabilities with little probability of occurring or low probability of causing an outflow of funds. They are not included in the balance sheet, but are mentioned in the notes to the consolidated financial statements.
The ratio of net underwriting expenditure to net premiums written.
Costs arising in connection with the conclusion of new insurance contracts or the extension of existing insurance contracts. Such costs are reflected as an asset in the balance sheet and are allocated across the term of the contract as an expense in the income statement.
Deferred taxes arise due to temporary taxable differences in the value between the local tax balance sheet and the IFRS balance sheet. They are determined for each balance sheet item and are either taxes owing or tax credits when viewed from the perspective of the balance sheet date.
All insurance policies concluded by Helvetia with clients who are not insurers themselves.
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.
Embedded value measures the shareholder value of the life insurance portfolio and is made up of
Profit/loss after tax as a proportion of the average shareholders' equity as shown in the consolidated balance sheet.
Balance sheet practice for valuation 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.
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.
Leasing contracts under which all the risks and opportunities associated with the property are essentially transferred to the leasing customer.
Securities (such as bonds, medium-term notes) on which a fixed and constant interest is paid for their entire duration.
The premiums written in the financial year before deduction of premiums ceded to reinsurers.
Insurance contracts concluded for a company's employees.
A special IFRS balance sheet practice for hedging transactions which aims to present hedging instruments and underlying transactions using the same valuation methods in order to reduce the potential volatility of results.
Impairment is deemed to be the amount by which the net book value of an asset permanently exceeds its recoverable amount (the higher of its net selling price and the net present value of cash flows which are expected to be generated from the use of the asset).
Endowment life insurance policies which are linked to stock market indices (e.g. Swiss Market Index) or to a securities portfolio. The insurance benefits are increased by a bonus, the amount of which is dependent on the performance of the index.
Companies involved in direct business – primary insurers – often do not bear the entire risk alone but pass on some of it 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.
Insurance contracts concluded for individuals.
Amounts paid by the insurer in the financial year for claims incurred in respect of insured events.
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.
Adequacy test that checks whether the book value of an insurance liability is sufficient to cover estimated future requirements.
Since not all claims will be settled by the end of the financial year in which they arise, provisions must be made in the balance sheet for these outstanding claims or claims likely to be incurred but not yet notified. Such provisions are known as loss reserves or reserves for claims outstanding. Changes to the loss reserves are shown in the income statement.
Net premiums written in the financial year, taking into account changes in the reserves for unearned premiums.
If a risk is reinsured, the reinsurer will receive a part of the gross premium in proportion to the risk assumed. The other part is used to finance the risk that remains for the primary insurer. Net premiums thus correspond to gross premiums from total business less the premiums ceded proportionally to reinsurers.
Lease agreements under which the risks and opportunities associated with the property remain with the lessor.
Assets that serve to cover employee benefits by means of a longterm fund.
The positive difference between actual and guaranteed interest income, and between a policy's calculated and actual benefits or costs, is credited to the policyholder as a dividend (particularly applies to life insurance business).
Amount to be paid by the policyholder to the insurer for the provision of insurance cover.
Some insurance policies provide that part of the premium may be repaid to the client as a policyholder's dividend at times when few claims have been incurred.
Amount paid for the provision of insurance cover, in the form of recurring payments.
Amount paid by the insurer to the reinsurer in exchange for the latter's assumption of risks.
Insurance company that assumes part of the risks entered into by a primary insurer.
The minimum amount of capital funds an insurance company is calculated to need to ensure that it can meet its liabilities from insurance policies.
Amounts set aside on the balance sheet to meet likely future commitments.
An insurance portfolio that is being wound up, i.e. no new contracts are concluded for this portfolio and no existing contracts from this portfolio are extended.
The lending of securities for a fixed or unlimited period in exchange for a commission and adequate sureties.
Amount paid for the provision of insurance cover, in the form of a one-time payment on commencement of the insurance.
Sum of all the benefits insured (particularly applies to life insurance business).
Direct and indirect business combined.
Total amount of reserves for unearned premiums, reserves for claims outstanding, actuarial reserves, reserves for future policyholders' dividends and other underwriting reserves that appear under liabilities on the balance sheet.
In many cases, the insurance period for which a premium is paid in advance and during which the insurance company bears the risk does not correspond with the financial year. The part of the premium relating to the insurance period falling in the next financial year has not been earned by the end of the current year, and must be transferred to reserves at the end of the financial year. This is the unearned premium reserve which appears in the balance sheet under underwriting reserves. Changes to the unearned premium reserve are shown in the income statement.
Life insurance policies in which the insurer invests the policyholder's savings capital for the account of and at the risk of the latter. Most unit-linked life insurance policies are fund-linked products where the policyholder can determine the type of investment by choosing a particular fund.
(See 'Unit-linked life insurance policies')
The volume of new business is the new business written in the reporting year. The Annual Premium Equivalent (APE) is a measure used to compare single premiums and regular premiums and is calculated as the new annual premiums plus 10% of the new single premiums.
Balancing of an account with part of the unamortised acquisition costs taken into consideration.
Helvetia Holding AG, Dufourstrasse 40, CH-9001 St.Gallen Tel. +41 58 280 50 00, Fax +41 58 280 50 01, www.helvetia.com, [email protected]
| Stefan Loacker | Chief Executive Officer Group |
|---|---|
| Philipp Gmür | Chief Executive Officer Switzerland |
| Ralph-Thomas Honegger | Chief Investment Officer |
| Markus Isenrich | Head of Human Resources and Services |
| Paul Norton | Chief Financial Officer |
| Wolfram Wrabetz | Chief Executive Officer Germany |
| Helvetia Versicherungen | Philipp Gmür | St. Alban-Anlage 26 |
|---|---|---|
| Executive Management Switzerland | CEO | CH-4002 Basel |
| Helvetia Versicherungen | Wolfram Wrabetz | Berliner Strasse 56 – 58 |
| Management Board Germany | General Manager | D-60311 Frankfurt a.M. |
| Helvetia Versicherungen | Georg Krenkel | Jasomirgottstrasse 2 |
| Management Board Austria | General Manager | A-1010 Vienna |
| Helvetia Assicurazioni | Fabio De Puppi | Via G.B. Cassinis 21 |
| Management Board Italy | General Manager | I-20139 Milan |
| Helvetia Assurances | Alain Tintelin | 2, rue Sainte Marie |
| Management Board France | General Manager | F-92415 Courbevoie/Paris |
| Helvetia Schweizerische | Wolfram Wrabetz | Weissadlergasse 2 |
|---|---|---|
| Lebensversicherungs-AG | Chairman of the Board of Directors | D-60311 Frankfurt a.M. |
| Helvetia International | Wolfram Wrabetz | Berliner Strasse 56 – 58 |
| Versicherungs-AG | Chairman of the Board of Directors | D-60311 Frankfurt a.M. |
| Helvetia Versicherungen AG | Burkhard Gantenbein | Hoher Markt 10 – 11 |
| Chairman of the Board of Directors | A-1011 Vienna | |
| Helvetia Vita Compagnia Italo | Franco Armeni | Via G.B. Cassinis 21 |
| Svizzera di Assicurazioni sulla Vita S.p.A. | Director General | I-20139 Milan |
| Helvetia Compañía Suiza | Jozef M. Paagman | Paseo de Cristóbal Colón, 26 |
| Sociedad Anónima de Seguros y Reaseguros | Director General | E-41001 Seville |
| Helvetia Europe S.A. | 9, Parc d'Activité Syrdall | |
| L-5365 Münsbach | ||
| Helvetia Finance Ltd | La Motte Chambers | |
| St Helier, Jersey, JE1 1BJ |
Helvetia Versicherungen, St. Alban-Anlage 26, CH-4002 Basel Tel. 058 280 10 00, Fax 058 280 10 01, www.helvetia.ch, [email protected]
| Executive Management Switzerland | |||
|---|---|---|---|
| Philipp Gmür | Chief Executive Officer Switzerland | ||
| Andreas Bolzern | Head of Finance | ||
| Donald Desax | Head of Market Area Occupational Benefits Companies | ||
| Markus Gemperle | Head of Operations & Partners | ||
| Beat Müller | Head of Actuarial Department/ALM | ||
| René Stocker | Head Market Area Sales Management | ||
| Hermann Sutter | Head Market Area Property & Casualty | ||
| Angela Winkelmann | Head Market Area Private Pension Provision | ||
| Helvetia Versicherungen general agencies in Switzerland | |||
| 5400 Baden | Mellingerstrasse 1 | 058 280 34 11 | Hanspeter Koch |
| 4010 Basel | Aeschengraben 6 | 058 280 36 11 | Alexander Ebi/Max Lieberherr |
| 6500 Bellinzona | Viale Portone 12 | 058 280 62 11 | Ruedi Burkart |
| 3001 Berne | Länggassstrasse 7 | 058 280 74 11 | Daniel Beck |
| 2501 Bienne | J. Verresiusstrasse 18 | 058 280 79 11 | Nicolas Dumont |
| 3900 Brig | Kronengasse 6 | 058 280 67 11 | Andreas Schmid |
| 5033 Buchs (AG) | Mitteldorfstrasse 37 | 058 280 33 11 | Bruno Wälle |
| 7001 Chur | Bahnhofstrasse 7 | 058 280 38 11 | Felix Hunger |
| 2800 Delémont | Rue de l'Avenir 2 | 058 280 73 11 | Franco Della Corte |
| 8501 Frauenfeld | Altweg 16 | 058 280 39 11 | Adolf Koch |
| 1211 Geneva | Bd Georges-Favon 18 | 058 280 69 11 | Claude Kuhne |
| 1762 Givisiez | Route du Mont Carmel 2 | 058 280 71 11 | René Aebischer |
| 8302 Kloten | Schaffhauserstrasse 121 | 058 280 65 11 | Andreas Naef |
| 1001 Lausanne | Avenue de la Gare 1 | 058 280 70 11 | Roland Duvoisin |
| 4410 Liestal | Wasserturmplatz 1 | 058 280 35 11 | Hanspeter Geiger |
| 6900 Lugano | Via d'Alberti 1 | 058 280 61 11 | Giordano Zeli |
| 6002 Lucerne | Brünigstrasse 20 | 058 280 77 11 | Jörg Riebli |
| 2000 Neuchâtel | Rue du Concert 6 | 058 280 75 11 | Patrick Riquen |
| 8640 Rapperswil | Kniestrasse 29 | 058 280 60 11 | Pascal Diethelm |
| 9445 Rebstein | ri.nova Impulszentrum, P.O. Box | 058 280 63 11 | Jürg Schwarber |
| 1950 Sion | Rue de la Dent-Blanche 20 | 058 280 68 11 | Jean-Maurice Favre |
| 4501 Solothurn | Dornacherplatz 7 | 058 280 76 11 | René Hohl |
| 9001 St.Gallen | Rosenbergstrasse 20 | 058 280 44 11 | Ulrich Bänziger |
| 6210 Sursee | Bahnhofstrasse 42 | 058 280 37 11 | Lothar Arnold |
| 3601 Thun | Hinter der Burg 2 | 058 280 78 11 | Kurt Nyffenegger |
| 8401 Winterthur | Lagerhausstrasse 9 | 058 280 66 11 | Helmuth Kunz |
| 6302 Zug | Baarerstrasse 133 | 058 280 64 11 | Heinz Schumacher |
| 8048 Zurich 1 | Hohlstrasse 560 | 058 280 87 11 | René Vuille-dit Bille |
| 8048 Zurich 2 | Hohlstrasse 560 | 058 280 85 85 | Peter Bickel |
| Broker Centres in Switzerland | |||
| 8048 Zurich | Hohlstrasse 560 | 058 280 83 33 | |
| 1762 Givisiez | Route du Mont Carmel 2 | 058 280 72 84 | |
| 6900 Lugano | Via d'Alberti 1 | 058 280 61 83 | |
| Helvetia Consulting AG | |||
| 9001 St.Gallen | Dufourstrasse 40, P.O. Box | 058 280 53 63 | Peter Bächtiger |
| Helvetia Investment Foundation | |||
| 4002 Basel | St. Alban-Anlage 26 | 058 280 21 73 | Dunja Schwander |
| Helvetia Consulta Gesellschaft für Vorsorgeberatung AG | |||
| 4002 Basel | St. Alban-Anlage 26 | 058 280 18 05 | Peter Gubser |
| Office for customers based abroad/Swiss nationals abroad | |||
| 4002 Basel | St. Alban-Anlage 26 | 058 280 21 54 | Marcel Graf |
| 1858 | Establishment of Allgemeine Versicherungs-Gesellschaft Helvetia |
|---|---|
| 1861 | Establishment of Helvetia Schweizerische Feuerversicherungs-Gesellschaft |
| 1862 | Establishment of branch offices in Germany |
| 1878 | Establishment Patria, Schweizerische Lebensversicherungsgesellschaft cooperative society in Basel |
| 1920 –1962 | Establishment of branch offices and subsidiaries of Helvetia in France, Italy, Austria, Greece (sold 1997), the Netherlands (sold 1995) and Canada (sold 1999) |
| 1974 | Merger of Helvetia Feuer and Helvetia Allgemeine, St.Gallen |
| 1986 –1988 | Further Helvetia subsidiaries established in Spain, Italy and Germany |
| 1992 | Start of partnership between Helvetia and Patria |
| 1996 | Establishment of Helvetia Patria Holding |
| 1998 | Acquisition of La Vasco Navarra (Spain), acquisition of the portfolio of NCD (Italy) |
| 1999 | Merger of the two companies La Vasco Navarra and Cervantes Helvetia to form Helvetia CVN, Madrid/Pamplona |
| 2000 | Acquisition of the southern Spanish insurer Previsión Española, Seville |
| 2001 | Acquisition of Norwich Union Vita, Milan; renamed Helvetia Life |
| 2002 | Acquisition of British insurer Royal & Sun Alliance's transport portfolio in France |
| 2003 | Merger of the two Spanish companies Helvetia CVN and Previsión Española to form Helvetia Previsión with headquarters in Seville |
| 2004 | Acquisition of two transport insurance portfolios in France |
| 2005 | Merger of Italian subsidiaries Helvetia Vita and Helvetia Life into Helvetia Vita with headquarters in Milan |
| Acquisition of the insurance portfolio of the company Sofid Vita in Italy | |
| 2006 | From September, the Helvetia Patria Group operates throughout Europe under the name Helvetia |
| "A–" rating with stable outlook (by Standard & Poor's) |
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. Neither Helvetia Group nor any of its directors, officers, employees and advisors nor any other person shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this information. The facts and information contained herein are as up to date as is reasonably possible and may be subject to revision in the future. Neither Helvetia Group nor any of its directors, officers, employees or advisors nor any other person makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this document.
This document may contain projections or other forward-looking 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.
The purpose of this document is to inform Helvetia Group's shareholders and the public of Helvetia Group's business activities for the year ended 31.12.2007. This document does not constitute an offer or a solicitation to exchange, buy or subscribe for securities and it does not constitute an offering circular as defined by Art. 652a of the Swiss Code of Obligations or a listing prospectus as defined by the listing rules of SWX Swiss Exchange. Should Helvetia Group make one or more capital increases in the future, investors should make their decision to buy or to subscribe for new shares or other securities solely on the basis of the relevant offering circular.
This document is also available in German and French. The German version is binding.
The Annual Report 2007 of the Helvetia Group is available in English, German and French.
Helvetia Group, St.Gallen
Design, layout and typesetting Die Gestalter AG, St.Gallen
APOSTROPH AG, Lucerne
The members of the Board of Directors and Executive Management were photographed by Marc Wetli, Zurich.
The pictures for "same time, different places" were taken by Keystone photographers.
Schwabe AG, Basel
Copyright © 2008 by Helvetia Group, St.Gallen
The German version of the Annual Report is legally binding.
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