Helvetia Holding AG

Annual Report • Jun 29, 2005

Contents

Imprint

Imprint

Part 1

Six-year review	2
Key figures	5
Chairman's address	6
The corporate strategy	9
The Group structure	10
A conversation with Erich Walser	12
The Board of Directors	14
The Management	16
The corporate governance	20
In focus: Compliance	34
The risk management	36
The personnel management	40

Part 2

The Group result	44
The insurance business	46
The investment business	50
Developments by market	53
Investor information	68
The environmental policy	70
The social responsibility	73

Part 3

Financial statements	75
Glossary	98

Additional Information

The important addresses	102
A historical overview	104

The 2004 Annual Report of Helvetia Patria Holding is available in German, French and English. Published by Helvetia Patria Holding, St.Gallen Concept, design and layout Die Gestalter, St.Gallen Pictures All pictures by Katharina Wernli, Zurich Lithography and printing Schwabe Ltd., Basel Copyright © 2005 by Helvetia Patria Holding, St.Gallen The German text of the Annual Report is legally binding.

Important dates

May 13, 2005: Ordinary Shareholders' Meeting in St.Gallen September 14, 2005: Publication of the half-year results 2005 April 5, 2006: Annual Results 2005, Media- and Financial Analysts-Meeting

May 12, 2006: Ordinary Shareholders' Meeting in St.Gallen September 7, 2006: Publication of the half-year results 2006

Your Helvetia Patria contact

Helvetia Patria Holding Corporate Communications POB, CH-9001 St.Gallen Phone +41 71 493 54 48 Fax +41 71 493 55 89 www.helvetiapatria.com info@helvetiapatria.com

Page	4	At the "Poly Ball" in Zurich (Poly = nickname of "Swiss Federal Institute of Technology")
Page	8	The bell foundry in Aarau
Page 11		Moving day in Zurich
Page 19		At the optician in Rapperswil
		Pages 26/27 At the cinema box office in Basel
Page 33		Renovating the lakeside promenade in Ascona
Page 39		At the main station in Zurich
Page	43	Cows on the alp (Hoch-Ybrig)
Page	45	A chimney sweep in Horgen
Page	49	Road maintenance in the canton Schwyz
Page 52		Chess players at the Lindenhof in Zurich
Page 64		At the airport in Zurich
Page 67		World Aids-Day in Berne
Page	72	Robin, two days old
Page	74	Top of Europe, between Jungfraujoch and the "Mönchsjoch" hut
Page 86		At the lake basin in Lucerne, view from "Kultur- und Kongresszentrum (KKL)" (Culture and Congress Center)
Page 94		A rainy day in Lausanne

Page 100 Patricia and Philipp at Hoch-Ybrig

Cautionary statement regarding forward-looking information

This document is made by Helvetia Patria Group and may not be copied, altered, offered, sold or otherwise distributed to any other person by any recipient without the consent of Helvetia Patria 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 Patria 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 Patria Group as being accurate. Neither Helvetia Patria 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 Patria 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 Patria 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 Patria Group on the date of its posting and Helvetia Patria Group assumes no obligation to update such statements unless otherwise required by applicable law.

The purpose of this document is to inform Helvetia Patria Group's shareholders and the public of Helvetia Patria Group's business activities for the year ended 31.12.2004. 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 within the meaning of Art. 652a of the Swiss Code of Obligations or a listing prospectus within the meaning of the listing rules of SWX Swiss Exchange. Should Helvetia Patria Group make in the future one or more capital increases, investors should make their decision to buy or to subscribe for new shares or other securities solely based on the relevant offering circular.

This document is also available in German and French. The German version is binding.

Six-year review

Total businessin CHF million

	1999	2000	2001	2002	2003	2004
Gross written premiums	4112.8	4351.8	4606.4	5144.9	5392.6	5104.8
Net earned premiums	3875.9	4121.8	4333.8	4855.0	5048.0	4722.5
Income from investments	1549.3	1240.3	736.2	–67.2	1083.6	970.5
Result after taxation and minority interests	133.1	161.1	100.6	–362.0	92.4	158.7
Investments at market value	23232.3	24087.7	23529.3	23793.8	25491.2	25989.0
Net underwriting reserves	18466.3	19591.1	20477.6	21815.2	23360.5	23958.3
Consolidated shareholders' equity
before appropriation of profit	2835.9	2664.3	1521.7	1048.4	1155.3	1417.1

Non-life businessin CHF million

	1999	2000	2001	2002	2003	2004
Gross written premiums	1900.6	2005.0	1982.3	2066.6	2269.3	2596.8
Net earned premiums	1692.1	1800.5	1744.9	1810.4	1968.2	2251.5
Net claims paid	1239.8	1284.4	1229.5	1291.6	1309.0	1482.5
Net underwriting expenses	568.1	597.5	561.3	576.1	615.2	693.6
Result from non-life underwriting activities	23.0	34.3	81.4	95.8	132.1	142.8

Life businessin CHF million

	1999	2000	2001	2002	2003	2004
Gross written premiums	2212.2	2346.8	2624.0	3078.3	3123.3	2508.0
Net earned premiums	2183.8	2321.3	2588.9	3044.6	3079.8	2471.1
Net benefits paid	1429.1	1709.1	1658.8	1814.8	2389.4	2665.4
Net change in actuarial reserves	1080.0	855.6	1135.2	1529.2	1055.5	107.6
Net underwriting expenses	304.7	322.1	290.1	330.5	305.9	281.8
Net expenditure on results-linked and
non-results-linked policyholders' dividends	305.0	254.5	145.8	9.9	103.4	124.3
Result from life underwriting activities	43.8	59.1	17.8	–87.2	29.6	38.4

Everyday life in Switzerland

Work and leisure, celebrations and travel. Swiss moments in black and white and in the scale of delicate shades of grey. The photographer Katharina Wernli from Zurich had a look around with her camera and let her impressions compose a colourful picture of our country.

Much remains invisible – but essential. For example, a sense of security and reliability – shaping also our everyday life in Switzerland. It will be soon 150 years that Helvetia Patria is contributing quite a bit to it. Enjoy your life carefree but trust our benefits for an emergency – and rightly so as the Annual Report 2004 illustrates once more.

Key figures

Helvetia Patria Group

	2003	2004	Change
Gross written premiums (CHF million)	5392.6	5104.8	–5.3%
Income from investments (CHF million)	1083.6	970.5	–10.4%
Result before taxation (CHF million)	147.3	204.5	38.8%
Result after taxation and minority interests (CHF million)	92.4	158.7	71.8%
Post-tax result per Helvetia Patria Holding share (CHF)	15.4	19.2	24.7%
Investments at market value (CHF million)	25491.2	25989.0	2.0%
Net underwriting reserves (CHF million)	23360.5	23958.3	2.6%
Consolidated shareholders' equity before appropriation of profit (CHF million)	1155.3	1417.1	22.7%
Consolidated shareholders' equity per Helvetia Patria Holding share (CHF) 1	185.1	171.7	–6.5%
Number of employees	4845	4717	–2.6%

Helvetia Patria Holding

	2003	2004	Change
Result after taxation (CHF million)	24.1	52.4	117.4%
Total dividend paid (CHF million)	25.2	47.6	88.9%
Dividend per share (CHF)	4.0	5.52	37.5%
Share price at end of year (CHF)	212.0	169.4	–20.1%
Market capitalisation at end-of-year price (CHF million)	1334.1	1465.8	9.9%

¹ Value 2003 adjusted for new ARR 24 incl. "legal quote"; value 2004 excl. "legal quote"

² Proposal to the Shareholders' Meeting

The 2004 business year

Ladies and Gentlemen!

The Helvetia Patria Group generated a profit of CHF 158.7 million after taxes in 2004 and thus exceeded the already very good prior-year level by CHF 66.3 million or 71.8 per cent. All Group companies contributed to this excellent result. Our profit-oriented strategy proves successful and the environment has improved in some of the markets.

The largest profit contribution comes from the non-life business that added CHF 142.8 million (+8.2 per cent) before taxes to the total profit. Once again we could count on our excellent portfolio quality. This pleasing result is even more significant due to the fact that the good loss experience allowed us to endow the local equalisation reserves with an additional amount of CHF 35.3 million.

The life segment reaped the benefits of both, the better framework in the occupational benefits segment in Switzerland and the restructuring measures initiated in the prior year. A sector result of CHF 38.4 million (+29.8 per cent) before taxes is proof of the significant progress achieved last year. This result contains various elements. An amount of CHF 20.9 million for increased expenditure on results-linked and non-resultslinked policyholders' dividends is included. The interest rates applied to the calculation of the actuarial reserves were adjusted to the changed capital market conditions, where necessary. Additionally, we further strengthened the underwriting reserves by anticipating the "liability adequacy" test required by the International Financial Reporting Standards (IFRS). Those measures are partly reflected in the additional allocation to the actuarial reserves and partly in the expenditure for other underwriting reserves that increased by CHF 43.5 million on the prior year. Future charges will likely be alleviated by all those measures implemented.

The investment result before deduction of the interest assigned to life and non-life business underwriting activities fell by about CHF 105.1 million on the previous year and amounted to CHF 972.8 million in 2004. Reasons for the decrease were a lower ordinary income and higher depreciation of investments. The contribution to the Group result from the investment business after deduction of the interest assigned to life and non-life business underwriting activities fell from CHF 142.8 million in 2003 to CHF 23 million in 2004 before taxes. The overall non-underwriting account contributed CHF 27 million before taxes.

This favourable Group result allows submitting a proposal to the Shareholders' Meeting to increase the dividend payment by CHF 1.50 to CHF 5.50 per share which translates into an increase by 37.5 per cent.

Competitive non-life business

The premium volume experienced a range of different developments depending on the business segment. The premium income of the direct non-life business increased by 1.8 per cent and reached CHF 2.2 billion while it decreased in the life business by 19.9 per cent to CHF 2.5 billion. Responsible for this outcome was the Swiss life sector which seems less attractive to investors due to the low interest rates. The group life segment in Switzerland was marked by a cautious underwriting policy with the premium volume thus being reduced to 1.4 billion or by 24.5 per cent. The overall premium volume for all business segments fell to CHF 5.1 billion (–5.3 per cent).

Unlike the growth rate the result of the Swiss group pension business (BVG-LOB) has significantly improved last year. For once, the Executive Federal Council has lowered the guaranteed minimum interest rate from 3.25 per cent to 2.25 per cent but internal measures, such as increased premiums, a strict classification of the business in segments with varying terms as well as cost reductions, all contributed to the better outcome. Unsatisfactory are the still too elevated conversion rate for the mandatory part and also the lack of a reliable formula to annually calculate the minimum

interest rate. Nevertheless, we remain committed to this economically important business.

Portfolio quality further increased in the non-life business. A strict cost management as well as riskappropriate tariffs are reflected in the good net combined ratio (sum of claims and expense ratio) of 99.2 per cent.

The portfolio structure slightly changed during the year under review: 53 per cent were generated by the life sector (2003: 59 per cent) and 47 per cent by the non-life sector (2003: 41 per cent). The Swiss market earned 55 per cent of the premiums (2003: 62 per cent) while the country markets abroad generated 45 per cent (2003: 38 per cent).

The investment portfolio increased by 2 per cent in the business year 2004 and reached the sum of CHF 26 billion with the shift from shares to fixedinterest-rate securities still continuing. The disadvantage of low yields was more than compensated for by lower risks and by a predictable and consistent funds inflow from the interest income.

Very good return on shareholders' equity

The shareholders' equity increased in the year under review by 0.26 billion to 1.42 billion (+22.7 per cent). Notice needs to be taken that the valuation margin on the fixed-interest-rate securities of about CHF 471 million – according to their valuation at amortized cost – is not recorded in the shareholders' equity but is set aside as an undisclosed reserve in the investments. The return on shareholders' equity rose from 8.4 per cent to an excellent 12.3 per cent.

The approved capital increase past December raised the shareholders' equity by CHF 295 million. The additional capital will be used to support the future organic growth and to maintain strategic flexibility for potential acquisitions of insurance portfolios or takeovers. Furthermore, the additional capital allows the Group to improve its risk capacity, to continue pursuing a diversified investment strategy and to also increase its solvency. On the other hand, the shareholders' equity had to be charged with an amount of CHF 173.6 million as a result of both, the change in the accounting principles Swiss GAAP ARR and the introduction of the "legal quote".

Strategically on course

Although the business year 2004 was able to take advantage of many positive factors, we are confident that a good loss experience, a stable situation on the capital markets as well as an improved environment will all allow us to continue to generate an appropriate profit. We will continue to concentrate on our strengths – trustworthiness, cost control and portfolio quality – and will achieve a sustainably profitable premium growth thanks to our clear strategy, a consistent focus on the core competencies as well as to the continuous optimisation of the business procedures.

We owe the success of Helvetia Patria first and foremost to our employees. Without their commitment, their motivation and enthusiasm much would be impossible. Helvetia Patria is in excellent shape thanks to their efforts. I extend therefore my warmest thanks to all of them for their willingness to work hard, their initiative and their cooperation. Equal thanks are due to our clients and business partners for their loyalty as well as to our shareholders for the trust they are placing in us.

Sincerely

Erich Walser Chairman of the Board of Directors and Chief Executive Officer

The corporate strategy

We are staying the course with the strategy.

Even with the backdrop of a significantly friendlier environment – for the core business in particular – Helvetia Patria is staying the course with its strategy that was successfully introduced last year. Focal points of that strategy remain the sustainable strengthening of the profitability and of the capital base.

The strategy implementation on the Group-level and in the individual business units takes place along those guidelines:

• A distinct emphasis on being an insurance group with relatively autonomous, noticeably performanceoriented business units;
• Concentration on the business with private individuals and small and medium-sized companies;
• A consistent financial management;
• A focussed market presence matching the individual size of the business unit;
• Support for a conservative and professional investment and risk policy;
• A targeted reduction of the financial risks and of the tie-up of capital in the insurance business as well as
• Maintenance of continuously good corporate governance and a high reputation of being a sound and reliable insurance partner.

The strategy focuses on the specific further development of the Group. Implementing it consistently, concentrating increasingly on our core competencies and on promising market segments as well as professionally managing the risks will all together provide the necessary and favourable support to ensure profitability and the sustainable positive development of the Group.

The business units remain autonomous.

Performance-oriented business units

Autonomous units remain to be part of the core business in the future. This freedom guarantees a broad flexibility, rapid response abilities to local market changes and a high performance and market orientation of the local business units.

Consistent financial management

Strict return rate requirements ensure profitability.

Strict return rate requirements on the allocated capital and corresponding control instruments ensure the focus of all business units on a sustainable increase of

the earnings power in the insurance business and on the achievement of the set goals for the return on capital.

Focussed market presence

Striving for an even better positioning in the market our foreign business units – small on an international platform – will be increasingly focussing on specific insurance and pension products for private and commercial clients. The local concentration to a larger extent on interesting and sustainable profit-oriented business and customer segments, the distinction in paying strict attention to quality and service as well as a discernible Swiss identity should all contribute to reaching this goal. In Switzerland, a clear focus on profitable segments should help to strengthen the already good position as integrated insurance service provider for private clients and smaller and medium-size commercial customers.

Local concentration provides a better positioning.

Performance takes precedence over growth which primarily occurs from within. Selective investments in expanding areas are only effected with evidence of earnings potential and in accordance with the strategic objectives.

Good corporate governance

The management of the Group – successful in the past – will be consistently continued in this strategic period. A clear corporate governance and transparent communications will further strengthen the existing trust of the most important partners – investors, customers and employees – and position Helvetia Patria as a solid and reliable insurance company.

25%

The Group structure

The structure of the Helvetia Patria Group

Please refer to page 83 for minority holdings (Notes to the consolidated financial statements of Helvetia Patria Group).

"Continuously successful"

A conversation with Erich Walser, Chairman of the Board and CEO

Daniel Schläpfer: Mr. Walser, what are your views on the business result 2004?

Erich Walser: I am very satisfied with the attained results. We achieved improvements in the life and non-life business and increases in the sector results. From an operating standpoint we are right on course.

Premium income was strongly declining in the past year. Are you concerned about this development? In the current strategic period profitability is given highest priority. To increase the profitability we are readily accepting lower growth and forego unprofitable business segments. The decline in the Swiss life business was therefore deliberate. Unlike our large competitors in Switzerland we have not taken specific measures to stimulate the business towards the end of the year.

For many years, Helvetia Patria achieved an excellent combined ratio (sum of claims and expense ratio) in the non-life business. Is it possible to still improve this key ratio further?

We are aiming for a continuous combined ratio of below 100 per cent in the future. There are no indications for a shift to an upward trend – especially not in the business with private clients and small and medium-size companies where we are active. A disciplining effect also comes from the new solvency regulations with their tightened equity capital requirements. They are impeding a low rate policy joint with bad combined ratios.

At the media conference on the half-year results you said that you are keeping your foot on the cost brake. Is there more cost- and location streamlining in the offing?

Cost reductions are an eternal topic. We are having, however, no large specific cost-cutting programs scheduled.

The capital increase, announced in December, for the purpose of acquisitions took many by surprise. The purpose of the capital increase was not large acquisitions. For many years, we have not borrowed money from the capital market and have financed our corporate development with our own funds instead. We have used up about CHF 100 million of our own funds each year for the past three years for the growth in the life and non-life business. The capital increase in the amount of CHF 295 million is aimed to finance in the coming periods the further organic growth and the purchase of smaller portfolios in accordance with our acquisition strategy.

There was no urgent need for it?

No, certainly not in the past year. We could have probably waited also in the current year by putting certain limits on the growth targets. It would not have paid off, however, as implementing risk-based solvency calculations might lead various companies to increase their capital. As a medium-size Group we wanted to come early to the capital market before the capital needs of larger companies have "dried it up".

What part, if any, played the favourable stock market environment in the fourth quarter of 2004? It certainly did play a part. A negative stock market climate would have prevented us from going through with the capital increase.

Helvetia Patria is provided with an exclusive cooperation agreement with Raiffeisen to market individual life products. Are there any considerations of expanding this cooperation to the occupational benefits business (BVG-LOB)?

Three years ago when our market share in the BVG-LOB business was smaller than the one of the individual life segment we were aiming for an increasing market share. We managed to achieve that. Today, we have no further intentions of strengthening that line of business. Our long-term partners in the BVG-LOB business are the cantonal banks which are maintaining with us the collective foundation SwissCanto (formerly Servisa). We are still putting our confidence in the business model of a collective foundation with interest rate guarantee and 100 per cent capital coverage at all times. The economic idea behind is relieving the small and medium-size companies of the risks involved with pensions and investments. They have then a better opportunity to enter into entrepreneurial risks with good prospects for the operating side of their business. This is pivotal in the segment of small and mediumsize companies where we are doing business in: the average workforce of the companies linked with us is 8.5 people, this means they are primarily small-scale trade companies.

Is it possible to generate in that segment a sensible return on equity for your shareholders?

Until the end of the strategy period in 2006 we are aiming at achieving a sustainable return on equity of 8 per cent. From our internal point of view we have done everything necessary: such as cutting our costs, charging higher cost and disability premiums, splitting the business by terms and pursuing a cautious underwriting policy. Ten per cent are realistic in the long term if the framework is right. The main problem is not the too high and "politicised" BVG-LOB minimum interest rate, which is set every year, but the pension conversion rate. We are counting on the Parliament to

grant the pending requests already in 2005 for reducing the rate faster than over the next ten years from 7.2 to 6.8 per cent.

Why are you not investing in the more profitable non-life business – especially abroad – instead of the "politicised" BVG-LOB business?

Currently the non-life market, for example in Italy and Germany, is indeed generating significantly higher rates of return on equity. But there is a limit to everything – sometimes in the future the return rates will come back down again. Furthermore, a difference needs to be made between property and motor-vehicle businesses. The latter is also frequently a topic of political discussions and is producing for years a lower profitability than the property business. Our advantage is that we are stronger involved in the property sector. We want to continue maintaining a balanced portfolio composition with life and non-life business since this combination provides us with a useful balancing of the risks as well.

Helvetia Patria achieved an excellent result in the last year. What are the goals you are aiming for in 2005? We will continue pursuing our successful strategy and consistently concentrating on our business with private customers as well as small and medium-sized companies. Increasing the profitability remains the focus of our business activities. We are expecting from our business units an adequate return on the shareholders' equity, combined ratios below 100 per cent as well as a market-conform growth rate. Acquisitions and partnerships are possible – combined with our organic development – if they are in step with our strict criteria and are helping us to achieve our strategic goals. We had a good start with the first months of this year and I am convinced that we will again meet the high expectations.

The Board of Directors Helvetia Patria Holding

The Board of Directors of Helvetia Patria is the highest supervisory body of the company.

The Board of Directors of Helvetia Patria Holding is the highest supervisory body of the company. It is in charge of the overall control and the strategic direction of the Group and it appoints and supervises the Executive Management. The Board of Directors consists of eight Members. The purpose of establishing various Committees was to bring the specific knowledge of the individual Board Members into the decision-making process. The Strategy- and Governance Committee, the Nomination- and Compensation Committee, the Audit Committee and the Investment- and Risk Committee provide Helvetia Patria with four Board Committees which ensure an effective management control and supervision.

Elections

Each year a third of the mandates is up for election.

The term of office of the individual Members is coordinated in such a way that each year about one-third of the Members stands election or re-election. The term of office is set for each Member at the time of the election and cannot exceed three years but includes the option

of being re-elected. The Board mandates for Messrs Silvio Borner, Ueli Forster and Olivier Vodoz expire at the Shareholders' Meeting 2005. All three have offered to be candidates for a further three year term of office.

Peter Wagner, a former Member of the Board of Directors of Patria Mutual and Member of the Board of Directors of Helvetia Patria Holding since 2002, will resign from his office at the Shareholders' Meeting 2005. The Board of Directors thanks him warmly for his very strong and professional commitment to the well-being of our companies and wishes him the best for his personal and professional future.

The Board of Directors will propose Urs Widmer to the Shareholders' Meeting as his successor. Urs Widmer is designated Chairman of the Board of Vontobel Holding AG and will contribute his broad economic experience as well as his sound knowledge of the finance and audit sector. In case of his election he will join the Audit Committee.

Urs Widmer is proposed to succeed Peter Wagner as a new Member.

In the back from left to right: Pierin Vincenz, Peter Wagner (until the Shareholders' Meeting 2005), Olivier Vodoz, John Martin Manser, Silvio Borner; in the front from left to right: Ueli Forster, Erich Walser, Marguerite Florio

The Members of the Board of Directors of Helvetia Patria Holding	Office		term expires	SGC	Joined1 Current Committee memberships NCC	IRC	AC
Erich Walser (1947) a Rehetobel, Swiss b lic. oec. HSG, lic. iur. c Chairman of the Board of Directors and Chief Executive Officer of Helvetia Patria Group; Head of the country markets Italy, Spain and also Austria after 1.4.2005; President of various personnel welfare institutions of Helvetia Patria Versicherungen; 1979 joined Helvetia: various managing positions; 1991 Chief Executive Officer Helvetia Versicherungen; 1994 Chief Executive Officer Helvetia Patria Group; 2001 Delegate of the Board of Directors; since 12.12.2003 in the current function; d in particular MoB Swiss Insurance Association, Zurich; President of the Non-profit Developer Association of the Institute of Insurance Economics at the University of St.Gallen; MoB Nouvelle Compagnie de Réassurances, Genève; Deputy Board Chairman Allreal Holding, Baar; MoB Huber + Suhner, Pfäffikon.	President and CEO	2001	2007	••	+	•	+
Ueli Forster (1939) a St.Gallen, Swiss b lic. oec. HSG c Board Chairman of Forster Rohner AG, St.Gallen; d in particular President economiesuisse, Zurich; Member Advisory Council Swiss National Bank, Berne; MoB Chamber of Industry and Commerce for St.Gallen-Appenzell, St.Gallen; MoB Swiss Textiles Federation, Zurich.	Deputy Chairman and Lead Director	1984	2005	•	•	*	•
Silvio Borner (1941) a Basel, Swiss b Prof. Dr. oec. c Professor for economics at the University of Basel (since 1978), Head of the Economics and Politics Department at the Wirtschaftswissenschaftlichen Zentrum (WWZ), Basel; d in particular Board Chairman Patria Genossenschaft, Basel; Member of the Executive Committee AVENIR-SUISSE, Zurich.	Deputy Chairman	1983	2005	•	••	•
Marguerite Florio (1944) a Lausanne, Swiss b Dr. iur., Lawyer c Lawyer; d in particular Board Deputy Chairwoman Patria Mutual, Basel.	Member	2001	2006				•
John Martin Manser (1947) a Riehen, Swiss b MBA c Treasurer at Novartis International AG, Basel; d in particular Board Chairman Ciba-Vision AG, Embrach; MoB of Foundation CS-Anlagestiftung (Investment Foundation), Zurich.	Member	1993	2006		•	••
Pierin Vincenz (1956) a St.Gallen, Swiss b Dr. oec. HSG c Chairman of the Raiffeisen Group Switzerland, St.Gallen; d in particular Member of the Board Committee of the Swiss Bankers' Association, Basel; Board Chairman VISECA Card Services SA, Glattbrugg; Deputy Board Chairman cosba private banking ag, Zurich; MoB Pfandbriefbank Schweizerischer Hypothekarinstitute, Zurich; MoB Telekurs Holding AG, Zurich; MoB Plozza AG, Brusio.	Member	2000	2006	•		•
Olivier Vodoz (1943) a Geneva, Swiss b lic. iur., Lawyer c Member of the Governing Council of the Canton Geneva (1989–1997), as its President (1994/95); d in particular MoB and President of the Delegate Conference of Patria Mutual, Basel; Member International Committee of the Red Cross, Geneva; MoB Union Bancaire Privée UBP, Geneva; MoB Heritage Finance & Trust Company, Geneva; MoB SRO Kundig SA, Geneva; MoB Coopérative Médecine & Hygiène, Geneva; MoB Holding Parkgest SA, Geneva; MoB Mandarin Oriental Hôtel du Rhône, Geneva.	Member	2001	2005		•		•
Peter Wagner (1946) a Feusisberg, Swiss b Business training, Swiss certified accountant, certified controller; c Danzas Holding AG (last: Chief Executive Officer of the Group); Member of the Managing Board Deutsche Post AG (until 2001); Board Chairman Vontobel Holding AG and of Vontobel Bank AG, Zurich (until the Shareholders' Meeting 2005); d in particular MoB Association of Swiss Commercial and Investment Banks, Zurich. Until the Shareholders' Meeting 2005 (Urs Widmer proposed as his successor)	Member	2002	2007				••
Secretary of the Board of Directors: Thomas Oesch, Dr. iur., Lawyer • SGC = Strategy- and Governance Committee
• MoB: Member of the Board	NCC = Nomination- and Compensation Committee
• a Place of residence, Nationality	IRC = Investment- and Risk Committee AC = Audit Committee
• b Education, Title •• Chair
c Professional background, Executive responsibilities * May join meetings at own request and with decision-making power d Significant business relations, Mandates, Official functions, Political functions +	May join meetings at own request and in advisory capacity

¹ Before 1996: Date of joining the Board of former companies Helvetia or Patria

The Management Helvetia Patria Group

The Group Executive Management under the leadership of Erich Walser is the top managing body of Helvetia Patria Group and implements the strategy decided by the Board of Directors. The organisational structure of the Management aligns itself with both, the value creation chain and the management of the operating business units which are responsible for the underwriting results. Important functions such as the control of the financial operations, the investment activities and the Group reinsurance are centralised and facilitate the joint use of know-how and resources. Such a management structure with functional and international responsibilities is enhancing the transparency and avoids overlapping.

Centralised functions avoid overlapping.

Besides the Group functions Finances, Investments as well as Human Resources and Services the business units Switzerland, Germany, Austria, Italy, Spain and France are responsible for achieving the operating results. The Corporate Center supports the CEO in areas such as strategy implementation, corporate development, project control and management of the country markets.

Smaller Group Management

Tjarko Ullings, a Member of the Group Management and the CEO Austria, will retire for age reasons from our company on 30.4.2005. During his more than ten years in office at Helvetia Patria he held various leadership positions in the foreign business operations and had a strong influence on shaping their profitability and positioning. The Board of Directors and the Executive Management extend their warmest thanks to Tjarko Ullings and wish him the best for his personal future. With his retirement the Executive Management of the Helvetia Patria Group will be reduced from seven to six Members.

Stefan Loacker will succeed Tjarko Ullings on 1.4.2005, in chairing the Austrian Managing Board of "Der ANKER" where he was formerly holding the position of Finance Manager. Markus Bänziger was appointed to join the Austrian Management as a new Member and will be responsible for the newly created department "Life insurances/Finances" of Der ANKER. He was formerly leading the Internal Group Audit department of Helvetia Patria at the headquarters in St.Gallen.

In Switzerland, Markus Gemperle joined the Management Team on 1.6.2004, and took charge of the Information Technology (IT) department. He held a wide range of management positions within Helvetia Patria since 1986 and was last heading the Corporate Center in St.Gallen. The Swiss Executive Management was increased from six to seven Members.

After being more than 33 years active in the professional life Luis R. Fernández Durán retired as Member of the Spanish Management. The Board of Directors and the Executive Management extend their warmest thanks to him for his personal commitment and wish him the best.

We sincerely congratulate all newly appointed and promoted Members of the Management once again and wish them much success for the future.

CEO Erich Walser Switzerland Philipp Gmür Germany Wolfram Wrabetz Austria Tjarko Ullings

(until 30.4.2005)

The Management of Helvetia Patria Group newly consists of six Members.

The Management of Helvetia Patria Group

Finance Roland Geissmann, Deputy CEO

Investments Ralph-Thomas Honegger Human Resources and Services Markus Isenrich

* Member of the Group Management ** until 30.4.2005

*** from 1.4.2005

As of April, 2005

The Members of the Executive Management of Helvetia Patria Group

Erich Walser (1947)

a Rehetobel, Swiss

• b lic. oec. HSG, lic. iur.
• c Chairman of the Board of Directors and Chief Executive Officer of Helvetia Patria Group, Head of the country markets Italy, Spain and also Austria after 1.4.2005, President of various Personnel Welfare Institutions of Helvetia Patria Versicherungen;
• d Various functions at Schweizerische Bankgesellschaft and Schweizerische Volksbank,
• 1979 Joined Helvetia: various managing positions, 1991 Chief Executive Officer Helvetia Versicherungen,
• 1994 Chief Executive Officer Helvetia Patria Group,
• 2001 MoB and Delegate of the Board of Directors,
• Since 12.12.2003 in the current function;
• e especially MoB Swiss Insurance Association, Zurich,
• President of the Non-profit Developer Association of the Institute of Insurance Economics at the University of St.Gallen,
• Board Deputy Chairman of Allreal Holding, Baar,
• MoB Nouvelle Compagnie de Réassurances, Genève,
• MoB Huber + Suhner, Pfäffikon,
• Additional mandates in subsidiaries of the Helvetia Patria Group abroad.

Roland Geissmann (1948)

• a Binningen, Swiss
• b Business Economist FH, Swiss certified accountant
• c Deputy CEO of Helvetia Patria Group, Chief Financial Officer (CFO), Responsible for the business units France and Assumed Reinsurance, Corporate Communications, Group Reinsurance, MoB of various Personnel Welfare Institutions of Helvetia Patria Versicherungen;
• d Various managing positions at KPMG (former Fides) as certified accountant and consultant,

1983 Joined Patria: various managing positions such as Head of Staff Divisions of the Executive Management, Member of the Managing Committee, Head of Finance and Investments, Member of and later Deputy President of the Executive Management Patria Leben,

1994 Member and Deputy President of the joint Executive Management Helvetia and Patria: Head of Finance and Investments,

2002 Set-up of a separate Investment Division and restructuring of the CFO-function;

e especially MoB Foundation of Personnel Welfare Institutions of the SwissCanto-Group, MoB SwissCanto, Basel,

Member of the Committee "Economy and Finances" of the Swiss Insurance Association, Zurich.

Philipp Gmür (1963)

• a Lucerne, Swiss
• b Dr. iur., Lawyer, LL.M.
• c CEO of Helvetia Patria Switzerland;
• d Upper Court Lucerne,
• 1993 Joined Helvetia: general agent in Lucerne,

2000 Member of the Management Switzerland: Head of Sales Management, 2003 Member of the Group Executive Management in the current function;

e especially MoB Foundation of various Personnel Welfare Institutions of the Swiss-Canto-Group, MoB SwissCanto, Basel.

Ralph-Thomas Honegger (1959)

• a Aesch, Swiss
• b Dr. rer. pol.
• c Head of the Investment Division (CIO), Chairman of the Board Patria Investment Foundation;
• d 1987 Joined Patria: various managing positions such as Head of the Portfolio Strategy and Management Department, 1997 Member of the Management Switzerland: first as Head of the "Investment Clients" Department, later as Head of the "Private Pension" Department,
• 2002 Member of the Group Executive Management in the current position; e especially Honorary consul general for Austria in Basel.

Markus Isenrich (1953)

• a St.Gallen, Swiss
• b lic. oec. HSG, lic. iur.
• c Head of Human Resources and Services Division, MoB of Trustees of various Personnel Welfare Institutions of Helvetia Patria;
• d Building Authorities of the Canton St.Gallen,
• 1985 Joined Helvetia: various managing positions such as Head of the "Real Estate" Department, Chief of Staff and Secretary General, 2000 Member of the Group Executive Management in the current function;
• e especially Board Chairman of swissregiobank, Wil.

Until his retirement on 30.4.2005 (afterwards Member of the Supervisory Board of Der ANKER Allgemeine Versicherungs AG, Vienna)

Tjarko Ullings (1944)

• a Oetwil an der Limmat, Dutch
• b Dr. iur.
• c Chairman of the Managing Board of Der ANKER Allgemeine Versicherungs AG, Vienna, in charge of Helvetia Versicherungen Österreich, Vienna;
• d Various managing positions at ING Holland, Elvia Versicherungen Holland and Elvia Versicherungs-Gruppe Switzerland,
• 1995 Joined as Member of the Executive Management of Helvetia Patria Group: e.g. in charge of country markets Austria, Italy, Spain, France and Canada, since 2002 in current position;
• e especially Co-Chairman of the Association of Austrian Insurance Companies, Member of the Management Council of the Chamber of Commerce for Switzerland,

Austria and Liechtenstein.

Wolfram Wrabetz (1950)

- a D-Bad Soden, German b Prof. Dr. iur., Dipl. Betriebswirt

• c CEO Germany;
• d Various positions in the Gerling Group,
• 1981 Joined Helvetia Germany: various managing functions, 1995 "Hauptbevollmächtigter" (Principal representative) for Germany and Chairman of the Managing Board Helvetia Leben und Helvetia International, D-Frankfurt/Main, 1998 Joined the Helvetia Patria Group in his current function;
• e especially Member of the Advisory Council of the Bundesanstalt für Finanzdienstleistungen, D-Bonn,

Member of the Chairman's and Professional Committees "Indemnity Insurance" and Chairman of the Legal Committee of the "The German Insurance Association", D-Berlin,

Honorary Consul of the Republic of Ecuador in D-Frankfurt/Main,

Representative of the Hessian State Government for the insurance industry.

MoB: Member of the Board

a Place of residence, Nationality

c Function

e Additional significant activities and other interconnected interests such as mandates, official functions, political functions

b Education, Title

d Professional background: Date of employment and former functions at Helvetia Patria

The corporate governance and -control

Transparency in reporting promotes trust. Helvetia Patria intends to meet to the best of its knowledge and belief the high legal and ethical demands of all its stakeholders also with regard to an understandable and transparent reporting as well as to responsible and value-oriented corporate governance and -control. This should help to further strengthen the trust into the economy and in the Helvetia Patria Group in particular, to protect the interests of the shareholders and to increase the market value of our company. We will ensure that the focus on corporate governance will be Groupwide, consistently upheld and further optimised.

The Board of Directors and all employees of Helvetia Patria see corporate governance as an ongoing process being periodically analyzed and adjusted with consideration given to new developments, findings and needs. Good corporate governance can only come to life and have an effect if it is consistently guided by the company's strategy and positioning. Page 9 will address this topic in more detail.

Our corporate governance meets the standards in effect.

By choosing this course Helvetia Patria Holding wants to meet the current standards of the "Swiss Code of Best Practice for Corporate Governance" as well as the "Directive on Information Relating to Corporate Governance" issued by the SWX Swiss Stock Exchange on 1.7.2002. Our comments on our corporate governance principles thus correspond in content to the abovementioned guidelines. Reference is made to other sections of the Annual Report or other documents to address certain of the information required. The Articles of Incorporation as well as the Organization Regulations, including their respective appendices, are among others published on our website "http://www.helvetiapatria. com/gr-corporategovernance".

1. Group and shareholders' structures

1.1 Group structure

Helvetia Patria is governed by Swiss law.

Helvetia Patria is an internationally active Swiss insurance service provider which mainly does business in Central and southern Europe. Helvetia Patria Holding, the top holding, is subject to Swiss law. The executive management structure is illustrated on page 17. The purpose of those structures is twofold: to create the best possible framework based on the legal, financial, tax and regulatory factors and to permit fast, flexible and efficient action.

The legal corporate structure of the Helvetia Patria Group, including holdings, is shown on page 10.

Helvetia Patria Holding's headquarters are located in St.Gallen and its shares are listed on the Swiss Stock Exchange SWX in Zurich. The securities number and symbol are 1 227 168/HEPN. Important key figures for the investor are listed on pages 68 and 69.

Helvetia Patria Holding is the only company in our Group which is listed on the Stock Exchange. The consolidated subsidiaries are included on page 83. Detailed reports on the most important subsidiaries – Helvetia Schweizerische Versicherungsgesellschaft, St.Gallen, and Patria Schweizerische Lebensversicherungs-Gesellschaft, Basel – are found on the pages 53 to 55 as well as in the Notes on page 96.

1.2 Important shareholders

The controlled opening of Helvetia Patria Holding's shareholder structure was initiated in 2000. Regrouping in 2002 reduced the holdings of the shareholder pool from 50.9 to 45 per cent and last year's capital increase further decreased its holdings to 40 per cent. These measures and others in the future have been and will be reflective of our efforts to increase the portion of the free float in an orderly manner so that additional long-term-oriented investors have the opportunity of taking an interest in Helvetia Patria Holding. The Helvetia Patria Holding share register shows the following important holdings at the balance-sheet date: Exchange.

The Holding is listed on the Swiss Stock

The free float was increased.

a) The shareholder pool holds 40 per cent and consists of

• Patria Mutual, Basel, with 33.3 per cent,
• Vontobel Beteiligungen AG, Zurich, with 4 per cent as well as
• Swiss Union of Raiffeisenbanks, St.Gallen, with 2.7 per cent.

The purpose of this agreement is also to strengthen and support Helvetia Patria's strategically important focus on co-operations in areas that are not part of its core operations in the insurance business or that support the activities of our Group in important areas, such as distribution. It brings together the strategically important co-operation partners of the Helvetia Patria Group in their capacity as strategy-oriented shareholders investing for the long-term. Those shareholders are also interested that Helvetia Patria Holding remains independent and self-supporting in both its relationships, to third-parties and to the individual pool members, and also has the opportunity, within its strategic framework, to further develop with determination and a view to the future but without unwelcome elements of interference. Pool members are only allowed to sell their Helvetia Patria shares with the permission of the other pool members who are granted a pre-emptive right at market conditions.

b) Considering the good and close business relationships over many years and the intention to continue and strengthen them also in the future, the following significant shareholdings have been agreed with

• Münchener Rückversicherungs Gesellschaft, Munich, 8.2 per cent, and with
• Schweizer Rückversicherungs-Gesellschaft, Zurich, under 5 per cent.

If shares from those holdings shall be sold, then the Helvetia Patria has the right under certain circumstances either to purchase all or some of those shares at market conditions or to designate a third-party purchaser.

c) The pension fund of Helvetia Patria Versicherungen, St.Gallen, holds 3.6 per cent of Helvetia Patria Holding's shares.

d) Helvetia Beteiligungen, St.Gallen, owns 4.6 per cent of Helvetia Patria Holding shares, which count as "own shares" and are reserved for the convertible bond (see item 2.7a).

1.3 Cross holdings

There are no cross holdings exceeding 5 per cent of the share capital or the voting rights.

2. Capital structure

2.1 Share capital

The share capital of the Helvetia Patria Holding amounts to CHF 86528750.

2.2 Approved capital

At the Shareholders' Meeting on 9.5.2003, the resolution for an approved capital increase was accepted with the purpose of enabling Helvetia Patria to finance organic growth with profitable business while maintaining its strategic room to manoeuvre, to take advantage of external acquisition opportunities at home and abroad and to adjust the capital protection as appropriate. The Board of Directors was authorized to increase the share capital by a maximum of CHF 31465000 by issuing a maximum of 3146500 registered shares, fully paid at subscription, with a nominal value of CHF 10 per share until 9.5.2005, the latest. An increase in partial amounts is permitted.

The Board of Directors has purpose-driven executed a capital increase on 13.12.2004, and has increased the share capital to CHF 86528750 by issuing 2359875 new registered shares thus still leaving an approved capital in the amount of CHF 7866250 within the above-mentioned framework. The detailed rules are included in Article 3bis in the Articles of Incorporation: "http://www.helvetiapatria.com/gr-statuten.pdf ".

The Board of Directors has carried out a capital increase.

2.3 Changes in the capital structure

In 2001, the capital was reduced by CHF 16492980 to CHF 65971920 by decreasing the nominal value per share from CHF 50 to CHF 40 with a subsequent stock split in a ratio of 1:4 resulting in a nominal value of CHF 10 per share.

In 2002, the share capital was decreased by 4.61 per cent by re-purchasing and cancelling shares with a value of CHF 3 041 920 to reach an amount of CHF 62930000.

Per 13.12.2004 an approved capital increase by CHF 23598750 was executed by issuing 2359875 new registered shares with a nominal value of CHF 10 thus increasing the share capital from CHF 62930000 to CHF 86528750. The changes in the total shareholders' equity are described in detail on page 95, those for the business year 2002 are included in the appropriate Annual Report on page 79 and those for the year 2003 are described in that year's Annual Report on page 89.

The share capital newly consists of 8652875 registered shares.

2.4/2.5 Shares and participation certificates

The share capital consists of 8652875 fully paid-in registered shares entitled to dividends and eligible to vote with a nominal value of CHF 10. Preferential rights and participating certificates do not exist. Pages 68 and 69 give more detailed information on the Helvetia Patria shares.

2.6 Restricting transferability and nominee-registrations

The Board of Directors can refuse its approval for registering voting shareholders especially in the case of a single person acquiring more than 5 per cent of the voting rights of the aggregate share capital as registered in the Commercial Register. Acquirers of shares who are affiliated through capital or votingrights or otherwise, or who are under common management are to be considered as one person. The restriction shall also apply in case of an acquisition of shares by the exercise of subscription or conversion rights which are connected with rights issued by the Corporation or third parties.

In the year under review, no new exceptions with regard to transferability restrictions were issued (please see 1.2 concerning important shareholders).

Individuals who do not explicitly certify in the registration application that they acquired the shares in their own name and interest (= nominees) shall be entered in the share register with voting rights not exceeding 3 per cent of the aggregate share capital. The administrative regulations for registering are described in detail in Article 7 in the Articles of Incorporation: "http:// www.helvetiapatria.com/ gr-statuten.pdf ".

A two-thirds majority of the votes represented at the Shareholders' Meeting is needed to change the transferability, restricted by the Articles of Incorporation.

2.7 Convertible bonds and options

a) Convertible bond: The Helvetia Patria Group has the following convertible bond outstanding, issued by the finance company Helvetia Finance Ltd., Jersey, and guaranteed by Helvetia Patria Holding (conversion price CHF 319.90, adjusted on 15.12.2004):

Issuer	CHF million	Interest	Year of	Redemption	Conversion ratio
		rate	issue		at 15.12.2004
Helvetia	150.0	2%	2000	16.6.05	15.629884
Finance Ltd.,					Helvetia Patria
Jersey					Holding
					(for each bond with a nominal value of CHF 5000)

b) Options: The Helvetia Patria Group has not issued options.

c) Employee options: The chart below lists the employee options for the year 2002 and their exercise terms:

Year of issue	Number of options	Exercise price (CHF)	Maturity	Exercise ratio
2002	5510	153.60	on 15.6.2005	1:1
			to the first trading
			day in November 2005

The total share capital covered by those options amounts to CHF 55510. All options have always been purchased at market rates. The option program was terminated per 31.12.2002.

3. The Board of Directors

3.1 Members of the Board of Directors

The Board of Directors of Helvetia Patria Holding is identical with the ones of both subsidiaries, Patria Leben and Helvetia Versicherungen. Members of the Board of Directors are individuals with experience and knowledge in various fields thus providing the necessary competencies to warrant independent positions in the dialogue with the Executive Management. Since Helvetia Patria's foreign activities play an important role, some of the Board Members have many years of work experience abroad. The Board of Directors of Helvetia Patria Holding attaches great importance to its Members being individuals with strengths of character (such as integrity), with particular specialist and industry knowledge, strategic and operative experience, visionary thinking as well as with social competence.

The Board Members have international experience.

The composition of the Board of Directors is shown on the chart on pages 14 and 15.

With the exception of Erich Walser all Board Members are in non-executive capacity.

With the exception of Erich Walser, Chairman of the Board of Directors and at the same time CEO of the Helvetia Patria Group, all Board Members are nonexecutive Directors and did not hold any management position either in Helvetia Patria or in any of its Group companies during the three business years preceding this period under review. None of the Board Members has significant business relations with Helvetia Patria – with the exception of being a policyholder at regular terms and conditions.

3.2 Other activities and interconnection of interests

There are, however, the following business connections with some of the companies they are representing:

• Silvio Borner, Marguerite Florio and Olivier Vodoz are representing Patria Mutual in the shareholder pool, Pierin Vincenz is representing the Raiffeisen Group and Peter Wagner the Vontobel Group, where he is, among other functions, the Chairman of the Board of Directors of the Vontobel Holding AG. He will not run for re-election and his mandate will expire by the Shareholders' Meeting of 2005. Urs Widmer is proposed as his successor.
• S. Borner, M. Florio and O. Vodoz are also Board Members of the Patria Mutual, Basel. Promoting the underwriting and performance of life insurance policies with Helvetia Patria as well as strengthening Helvetia Patria's economic independence and development by taking a financial interest in it are its statutory objectives and are all carried out in the interest of the mutual association's members.
• Helvetia Patria Versicherungen, the Vontobel Group as well as the Raiffeisen Group are co-operation partners in offering consulting and sale of financial services, among others. Both latter Groups are therefore – jointly with Patria Mutual – also members of the shareholder pool.

3.3 Cross involvement

As mentioned above, Peter Wagner is a member of the Board of Directors of Vontobel Holding AG and of Helvetia Patria Holding until the corresponding Shareholders' Meeting in 2005 (Urs Widmer is proposed as his successor). Other reciprocal memberships on the Boards of listed companies do not exist.

3.4 Election and term of office

The ordinary term of office for the Members of the Board of Directors shall be three years and ends not later than with the annual Shareholders' Meeting of that calendar year in which they turn seventy years old. New Members enter upon the term of office of their predecessors. The terms of office are coordinated in such a way that each year about one-third of the Members stands for election or re-election. Re-election is possible. Each Member of the Board is individually elected by the shareholders.

Page 15 contains more information on the year each Member was first elected and on their remaining time in office.

3.5 Internal organization

The corporate governance and -control of the Helvetia Patria draw their fundamentals from the statutory foundation (the Stock Corporation Law and Stock Exchange Act in particular) and also from internal rules and regulations. The functions and duties assigned by the Board of Directors are described in the chart on page 15. The Board of Directors appoints the Chairman, the deputy Chairman, the Lead Director, the Chairmen and the Members of the various Committees as well as the Secretary of the Board.

Committees of the Board of Directors

The Board of Directors has internally established special committees for the purpose of supporting the Board in its leadership and supervisory duties in close co-operation with the Executive Management. The Board is thus able to make best use of the individual Members' specific knowledge and extensive business experience by applying those skills in the decisionmaking process or the Members' reports for the purpose of assisting the Board's control responsibility: the Strategy- and Governance Committee, the Nomination- and Compensation Committee, the Investmentand Risk Committee as well as the Audit Committee. Their duties and authorities are stated in detail in the Organisation Regulations and their compositions are included on page 15.

The term of office for Members of the Board is three years.

The Board of Directors has formed four Committees.

The Strategyand Governance Committee prepares strategic changes.

a) The Strategy- and Governance Committee prepares the Board's resolutions to be made if the strategy is either newly set or changed; deals with mergers, acquisition and sale of companies or with important portfolios and prepares the Board's resolutions to be made related to those activities; ensures good corporate governance within the Helvetia Patria Group; assumes duties and authorities delegated to it by the Board of Directors and deals with other issues submitted by the Chairman/CEO which are not reserved for the Board of Directors according to the law, the Articles of Incorporations or the Organisation Regulations and also discusses important matters of urgency. The Strategy- and Governance Committee meets as often as the affairs require it. Specialists are invited to attend a meeting if specific topics are being worked on. The Strategy- and Governance Committee met three times in 2004 with all Members being present every time (the first meeting was held in the composition and under the conditions of the former Chairman's Committee).

The Nominationand Compensation Committee deals with personnel decisions. b) The Nomination- and Compensation Committee prepares the resolutions to be brought before the Shareholders' Meeting with regard to electing and dismissing Members of the Board; proposes the personnel decisions to be made by the Board of Directors, such as for human resources planning, appointment and dismissal of Members of the Board and the system of their honorarium as well as for the compensation and remuneration system for the Members of the Executive Management; nominates and dismisses the chairpersons and the other members of the management of all country markets; determines fixed and variable compensations and remuneration for the management; periodically reviews the measures taken to retain and promote top management as well as approves for the employer's side the concept and the strategy of the personnel welfare plan in Switzerland and receives its year-end financial statement for information purposes. The Chairman and CEO cannot be a Member of this Committee but has the right to attend the meetings in an advisory capacity if he wishes to do so. The Nomination- and Compensation Committee meets as often as the affairs require it. It met five times in 2004 with all Members being present at each meeting (the first meeting was held in the composition and under the conditions of the former Chairman's Committee).

c) The Investment- and Risk Committee prepares the investment concept, the fundamental guidelines and the investment strategy; proposes the strategic ranges for the asset allocation; approves the investment tactics and supervises the investment activities of the Helvetia Patria Group; decides on specific investments in the investment sector to the extent as the Board of Directors delegates this authority to it; supervises the operating aspects of the risk management with respect to the financial risks, including reporting. It meets as often as the affairs require it. The Heads of the Finance and Investment Divisions take part in the meetings in an advisory capacity. Specialists are invited to attend a meeting if specific topics are being worked on. The Investment- and Risk Committee met three times in 2004 with all Members attending every time.

d) The Audit Committee assists the Board of Directors in fulfilling its responsibilities with regard to the oversight and financial control and thus assesses the completeness, integrity and transparency of the financial statements, their compliance with accepted accounting principles as well as the correct reporting to the public; it supervises the functioning and the effectiveness of the external and internal control systems in place, including for the risk management and the compliance, to the extent that certain duties and authorities have not been delegated to another body of the Company; it looks after the independence and quality of the auditors' function of the internal and external auditing. It ensures an optimal co-operation between the two latter, the Audit Committee, the Chairman and CEO, the Lead Director and the Management. The Audit Committee approves the auditing program of the internal auditing and helps setting up the one for the external auditing, examines the audit results and brings its comments to the attention of the Board of Directors and may order special audits if deemed necessary. It prepares the election of the statutory and group auditors and proposes the corresponding motions to the Board of Directors. It examines the compatibility of the auditing work with possible

The Investmentand Risk Committee supervises the investment activities.

The Audit Committee supports the Board of Directors with respect to oversight and financial control. consulting mandates and reviews the overall compensation. The Chairman and CEO, the Head of the Finance Division, a representative of the external auditors and the Head of the internal auditing all take part in the meetings in an advisory capacity. Specialists are invited to attend a meeting if specific topics are being worked on. During the year under review, the Audit Committee met three times with one Member missing two of the meetings.

Chairman of the Board of Directors and Chief Executive Officer (CEO)

Erich Walser carries out both functions: Chairman of the Board and CEO.

On 12.12.2003, the Delegate of the Board and Managing Director (CEO) of the Helvetia Patria Group, Erich Walser, was elected new Chairman of the Board of Directors. He will continue to lead the Helvetia Patria Group thus carrying out both functions until a new CEO has been appointed. The Management of the Helvetia Patria Group and of Helvetia Patria Switzerland had shortly before undergone restructuring including some in its composition. This is the reason why this limited-period measure suggested itself as a result of the special constellation of the available top managers at that time. With the greatest respect for the rules of good corporate governance and in accordance with the Swiss Code of Best Practice for Corporate Governance the Board of Directors has put in place a range of appropriate control mechanisms, such as the function of the Lead Director which is described below.

The Lead Director ensures a balanced leadership of the top Management.

Ueli Forster has assumed the function of Lead Director. He ensures a balanced management and control of the top Management of the Company with regard to good corporate governance. If the circumstances with respect to assuring a balanced management and control require it, he calls for a Meeting of the Board of Directors, draws up the agenda and presides over the meeting, decides on the attendance of the meeting by the Chairman and CEO and by other persons. He also presides at his own request over specific items on the agenda of the Board meetings if this is in the interest of this particular situation or if the control or the supervisory responsibilities make it necessary. The Lead Director supervises the communication, the information flow and the coordination of the activi-

Lead Director (took up his duties on 20.2.2004)

ties within the Board of Directors as well as between the Board and the Management. He may inspect at any time all books and records of the Company and may ask the Members of the Management for information on all matters deemed necessary by him. He may participate at his own request in the decisionmaking of those Board Committees in which he is not a Member.

Entire Board of Directors

The entire Board of Directors meets as often as the affairs require it but generally at least six times per year. The majority of the half-day meetings are taking place at the Group headquarters in St.Gallen, one is held at the headquarters of Helvetia Patria Switzerland in Basel, a mainly two-day retreat takes place somewhere in Switzerland and – at irregular intervals – one meeting is organized at a subsidiary abroad. The Board of Directors constitutes a quorum if the majority of the Members is present. The resolutions are adopted by a majority vote of the Members present. Decisions may also be made by written vote. In general, all Members of the Board of Directors and, in an advisory capacity, all Members of the Executive Management are present at the meetings. In the past year, eight meetings (including one telephone conference) took place and attendance of the Board Members was 97 per cent. All members of the Management attended each meeting (except for the telephone conference when only two members were intended to participate). Specialists are invited to attend a meeting if specific topics are being worked on. The Members of the Board and of all executive bodies are obliged to excuse themselves whenever business affairs are being dealt with affecting their own interests or those of natural persons or legal entities close to them.

3.6 Scope of responsibilities

The following is a list of the Board's most important responsibilities which have been established by the Swiss stock law stipulating that those duties can neither be suspended nor transferred, as well as by the Articles of Incorporation and by the internal Organisation Regulations of Helvetia Patria Holding:

• Providing the ultimate management of the corporation
• Establishing the fundamentals of the organization

The Board of Directors meets at least six times per year.

• Setting up the accounting, the financial control as well as the financial planning
• Appointing and dismissing Members of the Group Executive Management
• Providing ultimate supervision of the business management
• Preparing the Annual Report and the Shareholders' Meeting and implementing its resolutions
• Approving important legal business.

Appendix I of the Organisation Regulations is detailing the different areas of responsibilities of the Board of Directors, of its Committees and of the Group Executive Management.

3.7 Tools to stay informed and in control

The Board of Directors is regularly informed about the activities.

There are several different ways in place to keep the Board of Directors regularly informed about activities at Helvetia Patria Group, the course of business and the developments in the market:

The Board is thus regularly receiving information at its meetings on topics such as:

• The course and contents of discussions, the decisions reached and proposals put forward in the committees, whose minutes are immediately forwarded to the Board's Members
• The general course of business, the market and the most important projects, if necessary, from the individual representatives responsible for the country markets and divisions
• The status of the budget and of other objectives for the year
• The results and findings from the external and internal auditors regarding their auditing activities
• Compliance with the law, regulations and internal directives
• Important issues and events which could affect the interests of the stakeholders.

The Members of the Board of Directors receive weekly the most important newspaper articles on topics related to corporate governance and -control as well as the insurance industry; on a monthly basis, the most important business figures and, each quarter, selected analysis and status reports regarding market trends, market participants and special occurrences. Appendix II of the Organisation Regulations is detailing the

system of regular reporting to the Board and its Committees.

In the meetings, each Board Member has the right to ask the other Members and the Executive Management for information on any matter related to the Company. Outside of the meetings, each Board Member is entitled to ask the Executive Management for information regarding the course of business or individual business incidents and/or has the right to examine business documents.

The internal auditing is also available to the Board of Directors as an inspection- and control instrument supervising the compliance with legal and regulatory requirements as well as with internal rules and directives. The Board also receives reports on general developments and specific activities within Helvetia Patria with regard to issues of the risk management, compliance, corporate governance and sustainability.

The internal audit serves as inspection and control instrument.

4. Management

4.1 Members of the Management

The Members of the Management are shown on pages 16 and 17. Since the formation of the Holding the Helvetia Patria Group is under the leadership of Erich Walser, Chief Executive Officer and also Chairman of the Board of Directors. Together with the Division Managers on the Group level as well as the Management of the country markets he is responsible for the operative management of the Group. There is more information on that topic on page 18.

The Management is in charge of the operating leadership of the Group.

4.2 Other activities and interconnection of interests Please see on page 18.

4.3 Management contracts

There are no management contracts.

5. Remuneration, shareholdings and loans

5.1 Contents and procedure for remuneration and shareholdings

The Nomination- and Compensation Committee proposes the remuneration for the Members of the Board of Directors which need to be approved by the entire Board. The same Committee directly sets them for the Executive Management. In the first half of 2005, a share participation program will be introduced in Switzerland.

The amounts of the yearly fixed and variable remunerations, the meeting attendance fees and the expenses for the Directors – individually for the Chairman, the Deputy Chairmen, the Members of the Board, the Lead Director as well as for the Chairmen of the Committees –, are part of the remuneration directives which are set by the Board of Directors. The variable remunerations, dependent on the operating result, are paid exclusively in form of shares at market value and with a blocking period of three years. These rules also set forth that the current Chairman and CEO is remunerated and compensated for his position as Chairman of the Board according to the above-mentioned remuneration directives and for his function as CEO according to his employment contract. He does not receive variable Board-Member remuneration or attendance fees nor any additional remuneration for chairing the Strategy- and Governance Committee.

The Members of the Board do not receive severance pay.

The Members of the Management receive fixed and variable remunerations.

Retiring Directors are receiving the fixed remuneration pro rata until the end of that month during which they are taking their retirement. Severance pay will generally not be provided. Insofar the Group's financial performance allowed it, those Directors who were holding office in the years 2000 and 2001 were granted the possibility at the date of the issue to receive a bonus, in addition to their regular remuneration, in form of options on Helvetia Patria Holding registered shares. The entire Board made the decision upon request by the then Chairman's Committee with consideration given to the development of the operating results as well as to the share price trend. Terms and conditions (maturity, subscription ratio, exercise price) are set in the Management-issued directives governing employee participation.

Each Member of the Management receives a fixed remuneration determined by the Nomination- and Compensation Committee and a variable compensation which, in the years 2000–2002, could be either drawn in cash or in options or in a combination of both based on the Member's choice. The terms of the options are also set by the Management-issued directives governing employee participation. The amount

of the variable compensation which cannot exceed the maximum of 50 per cent of the fixed remuneration and is dependent on the operating result, is tied to both, the Group's financial performance (30 per cent) and the Manager's achievement level of the personal objectives agreed upon with him or her (20 per cent). It falls to the Nomination- and Compensation Committee to decide both elements: the first in general, the second individually for each person concerned. Severance pay will generally not be provided. The Nomination- and Compensation Committee which denies membership to Erich Walser, Chairman and CEO, also sets his remuneration and compensation.

5.2 Remuneration for incumbent officers

The Members of the Group Executive Management (including the Chairman of the Board and CEO) received in 2004 a total in

• fixed remuneration (incl. expense stipulations, children's/education allowances and anniversary bonus) of CHF 3407660
• and variable compensations for the business year 2004 of CHF 1443633.
• The employer has also paid contributions into pension funds of CHF 525070.

The seven non-executive Members of the Board of Directors in office (without the Chairman and CEO) received for the business year 2004 a gross total of CHF 937 700 (including meeting attendance fees). Included in this latter figure is also a variable remuneration, dependent on the operating result in 2004, in the equivalent amount of CHF 151200 paid in form of shares at market value and with a blocking period of three years.

Persons whose Helvetia Patria employment concluded do not receive severance pay. During the year under review neither a Member of the Board nor of the Management has left his or her function.

5.3 Remuneration for former officers

No remuneration was paid either to former officers.

5.4 Allocation of shares during the year under review

Neither Members of the Board of Directors nor of the Group Management (including the Chairman of the Board and CEO) nor persons close to them were allocated shares during the year under review.

5.5 Shareholdings

At the cut-off date the following total number of shares was held by

• the Members of the Group Management (including the Chairman of the Board and CEO) and by persons close to them: 2109
• the non-executive Members of the Board of Directors and persons close to them: 1085.

5.6 Options

At the reporting date, the following options with maturities of three years were held:

• None by the non-executive Members of the Board of Directors.
• By the Members of the Management (including Chairman and CEO):

Issuing year	Number	Exercise ratio	Exercise price	Blocking period
2002	1810	1:1	CHF 153.60	15.6.2005

The option program concluded by the end of 2002.

5.7 Additional remuneration and compensation

During the year under review, none of the officers or persons close to them charged the company with relevant fees or other compensations for additional services.

5.8 Loans to Officers

At the reporting date, mortgage loans to seven Members of the Executive Board (including the Chairman and CEO) amounted to a total of CHF 8245442. During the year under review, the loans, which have been granted as fixed or variable mortgages at regular interest rate conditions, bore interest in the range of 2.2 to 4.65 per cent.

No loans were granted to non-executive members of the Board or to persons close to Members of the Board or the Management.

5.9 Highest total remuneration

The Chairman and CEO received remuneration in the amount of CHF 200 000 for his function as Chairman of the Board of Directors during the year under review. The terms of his employment contract were applied to set his salary as CEO. Fixed and variable remunerations (including anniversary bonus) in the total amount of CHF 934280 were paid in 2004. The employer made contributions to pension plans in the total amount of CHF 127708. Shares or options were not allocated.

6. Shareholders' rights of participation

Helvetia Patria is committed to the non-discrimination clause of all shareholders, from institutional to private investors.

All shareholders are treated equally.

6.1 Restrictions on voting rights and vote by proxy

Certain restrictions on voting rights which are identical with the transferability restrictions placed on Helvetia Patria Holding registered shares are already described in chapter 2 above.

The Board of Directors gives the necessary instructions regarding the attendance of the Shareholders' Meeting and the determination of the voting rights. The Board may issue rules which differ from the restrictions on share representations limited to 10 per cent of the aggregate share capital and which apply to non-corporate independent proxy and deposit representatives who need not be shareholders.

Besides Patria Mutual and Münchener Rückversicherungs-Gesellschaft with large blocks of shares (please see 1.2), no other shareholder with voting rights has represented more than 10 per cent of the share votes at the Shareholders' Meeting 2004. No other specific exceptions regarding voting rights restrictions or representations were granted in the year under review.

A shareholder with voting rights who does not personally attend the Shareholders' Meeting is entitled to transfer his voting rights by written proxy to another person who need not be a shareholder. A shareholder with voting rights, however, is only authorized to represent shares of third parties inasmuch as all these shares

A shareholder may delegate his votes to a third party.

– together with his own shares – do not represent more than 10 per cent of the aggregate share capital. Shareholders, for example, who are affiliated through capital or voting rights or otherwise, or who are under common management, are to be considered as one shareholder.

6.2 Statutory quorums

The Shareholders' Meeting constitutes a quorum regardless of the number of attending shareholders and represented votes. Unless otherwise provided by law or by the Articles of Incorporation, the Shareholders' Meeting passes its resolutions with the absolute majority of valid cast votes. In addition to the resolutions pursuant to Art. 704 Para. 1 CO, an alteration of the Articles of Incorporation, the premature recall of more than one Member of the Board of Directors and the liquidation of the Corporation also require a resolution passed by a two-thirds majority of the represented votes.

6.3 Convocation of the Shareholders' Meeting

The Shareholders' Meeting is convened by the Board of Directors and, if necessary, by the Auditors. The liquidators as well as representatives of bond debtors are also entitled to convoke a Shareholders' Meeting. The ordinary Shareholders' Meeting usually takes place in May every year but not later than six months following the close of the business year; extraordinary meetings may be convened according to need. Shareholders with voting rights who represent at least 10 per cent of the share capital may request a Shareholders' Meeting in writing, setting forth the items of the agenda and the motions. Each shareholder receives a personal invitation 20 days prior to the day of the meeting at the latest. The convening letter states a detailed agenda, the proposals with brief comments as well as additional explanations of important events during the year under review. The agenda is also published in various Swiss newspapers.

6.4 Agenda

The Shareholders' Meeting usually takes place in May.

Voting shareholders jointly representing shares with a minimal nominal value in the amount of CHF 800000 may request – in writing, by stating the motions and not later than 45 days before the Shareholders' Meeting – that items be put on the agenda.

6.5 Registration in the shareholders' register

Any person registered in the shareholders' register as a shareholder with voting rights at the cut-off date (20.4.2005), determined by the Board of Directors and published in the Swiss Official Gazette of Commerce and in various newspapers, is entitled to attend the Shareholders' Meeting (13.5.2005) and to exercise the voting rights.

All shareholders entered in the share register have a voting right.

In the period of time between the cut-off date (20.4.2005) and a few days (10.5.2005) before the Shareholders' Meeting (13.5.2005) registrations in the shareholders' register are carried out but no invitations to the Shareholders' Meeting are mailed. The actual registration ban lasts only a few days (11–20.5.2005). In special circumstances guest cards without voting rights are issued. Each share registered with a voting right entitles to one vote.

7. Changes of control and defensive measures

7.1 Duty of offer

According to Art. 30 of the Articles of Incorporation the duty to submit a take-over offer pursuant to Art. 32 of the Stock Exchange Act exists only if the acquisition of shares crosses the threshold of 40 per cent of the voting rights.

7.2 Clauses on changes of control

The employment contracts do not include clauses on changes of control. There is no provision for "golden parachutes". Market-common periods for dismissal notices apply during which the ordinary salary and bonus regulations are in effect.

8.Auditing company

8.1 Duration of assignment and term of office of the auditor in charge

Ernst & Young Ltd, Zurich, is Helvetia Patria Holding's statutory auditor and Group Auditor of its consolidated subsidiaries. The Shareholders' Meeting has to renew the mandate on a yearly basis.

From the business year 2004 on Peter Coats, Partner, Chartered Accountant (UK), is the lead auditor responsible together with Armin Imoberdorf, Senior Manager.

Generally accepted terms of notice apply to employment contracts for Members of the Management. Helvetia Patria is about to change the accounting from Swiss GAAP ARR to IFRS. This is the point in time when – in accordance with good corporate governance – a change in mandate should be considered after a competent cooperation with Ernst & Young Ltd for many years. The Board of Directors therefore submits to the Shareholders' Meeting the proposal to elect KPMG Fides Peat as statutory auditor and as Group Auditor for the next auditing period.

8.2 Audit fee Ernst & Young Ltd

The auditing company charged the following amounts for the year under review: Audit fees: CHF 2320487 (2003: CHF 1 805 289).

8.3 Additional fees for advisory services

Total: CHF 511 573 (2003: CHF 641 573). These fees cover primarily taxation- and legal consulting of various kinds.

8.4 Audit supervisory and control tools

Helvetia Patria Group has an external and an internal auditing. The Audit Committee prepares the election of the statutory auditor and the Group Auditor. It supervises and assesses the auditors' functions. Besides the external statutory auditors, the Helvetia Patria Group is also provided with an internal auditing department that delivers its audit reports directly, among others, to the Audit Committee and to the Chairman of the Board and CEO. The Chairman of the Audit Committee approves all aspects of the employment contract for the Head of the internal audit, such as hiring, dismissal, compensation and bonus, with the objective to further strengthen the independence of the internal audit. The representatives of the external auditors and the Head of the internal auditing are taking part in an advisory capacity in the meetings of the Audit Committee with its minutes being distributed to all Members of the Board of Directors. This committee, just like the others, regularly reports on its activities at the meetings of the entire Board of Directors.

9. Information policy

Twice per year, Helvetia Patria usually addresses the shareholders with a detailed letter, once to report the annual results and then again for the half-year results. All shareholders receive the Annual Report. All interested may order the Sustainability Report and a short portrait of Helvetia Patria in Switzerland. Our website on the internet, http://www.helvetiapatria.com, offers a wide range of information. Furthermore, Helvetia Patria regularly meets with institutional investors and presents the published results, especially also on road shows at home and abroad.

The shareholders receive twice a year a detailed shareholders' letter.

Our Corporate Communications Department is happy to assist you with personal information requests. Its address is listed on the last page in this Annual Report and on our website: Helvetia Patria – Just ask us!

In focus: Compliance

Compliance is an answer to various corporate scandals in the United States, but also in Europe and in Switzerland. Balance sheet falsifications, cartel agreements and other law violations resulted in sudden share price falls, in the imposition of sanctions running in the millions as well as the forced retirement of top managers and in the revocation of professional licenses.

Compliance serves a fair and transparent corporate governance and -control.

All parties involved – not only the public but also the shareholders, authorities and courts of law – are increasingly demanding a fair and transparent corporate governance and -control. Helvetia Patria was attaching all along great importance to good compliance and to perfect legal and ethical behaviour.

The term "Compliance"

Compliance basically covers the conduct with respect to legal and ethical standards prevailing in the workplace. It is, however, not only a matter of following the currently valid laws, guidelines and standards but also of consciously and deliberately adhering to the rules in the widest sense.

In Switzerland, compliance began to become a topic in the nineties, especially in the area of financial services. Compliance was predominantly limited to preventing money laundering and insider trading as well as interest conflicts.

Legal and ethical standards should prevail.

The term covers nowadays a much larger area and aims at recognising, managing, reducing and avoiding legal risks as well as social, ethical and reputation risks.

Scope of Compliance

"Compliance" contains, however, an additional, similarly important, ethical dimension that is strongly marked by the value system prevailing in our society and in politics. The basic principles of ethical behaviour are honesty, integrity, decency, loyalty, respect, duty, commitment, responsibility and dignity. It is especially in the so-called grey areas, where the law does not explicitly allow or forbid something that the ethical dimension should take on a significant role. Looking to ethical values helps the employees to make the right decision or behave in the right way in case of interest conflicts or dilemmas. Compliance taken in this sense concerns each and every employee and represents an essential control tool for the management.

Reputation as an important asset

Besides the hard facts it is the intangible values that are increasingly impacting the valuation of a corporation. One of the most important intangible assets is the reputation of the corporation.

The term "reputation" summarizes the attitudes and opinions of various reference groups towards and about a company. Emotional judgments are the only ones that are covered by the term – unlike to the image. Central issues are credibility and trust as well as the resulting goodwill towards a company – also in times of crisis. Proper actions are the only way to create trust and credibility.

Credibility and trust are important intangible assets.

Tasks of compliance

Compliance management includes information collection and processing to spot, integrate and utilize trends. It plays the role of an early warning system and serves the causes of prophylaxis or prevention. Furthermore, the employees receive advice and support on and in compliance-related matters.

Using information and training are continuously making the employees more sensitive to the importance of compliance. Monitoring compliance with the law and directives as well as the reporting on it are other tasks to be fulfilled. Uncovered abuse will be corrected through appropriate measures and – if needed – confirmed.

The compliance management gives advice and support to the employees.

Use of compliance management

The pivotal issue is to avoid value destruction as a result of rule violations. Value destruction may come in a wide of range of forms: avoidable costs for handling and proceedings, fines, reputation-damaging headlines, sudden share price falls or criminal proceedings.

Compliance should and also could prevent the legislator from becoming active. The flood of continuously newly created laws and regulations has a significant impact on our economic activity.

Consciously dealing with the flood of new laws supports value creation.

Helvetia Patria is committed to ethically correct conduct.

Ensuring that compliance activities are connected to value creation requires to autonomously develop sensitivity and awareness. Writing, reading, understanding and complying with regulations are all also components of the value creation chain. Otherwise value creation will become a fleeting experience.

Compliance in Helvetia Patria

The law stipulates that compliance is one of those non-transferrable duties of the Board of Directors. The Board has the overall control over the compliance with laws, Articles of Incorporation, regulations and directives. It is further responsible for an adequate internal control system. Internal Audit, Risk Management, Compliance and Controlling are complementing each other for those tasks.

Helvetia Patria's goal is to generate profit but in a legal, ethical and responsible manner. A good reputation and doing the right thing in every respect are central concerns of Helvetia Patria. Ethical values such as fairness, integrity, discretion, trust and transparency are all business practice standards to which Helvetia Patria is committed.

The focus is being put on prevention. Helvetia Patria is doing what goal-orientation requires and wants to position itself not only as a quality- but also as a compliance-conscious company.

Within the scope of the compliance management numerous efforts have been made in a first phase to raise awareness among the employees for that important issue. The intranet offers to all employees various information on compliance. A series of training events should ensure that the management and the employees know how to behave correctly in their work environment. The compliance notion has to reach the whole Group since our company is operating on an international level. In cooperation with the compliance officers in the country markets the information exchange on the newest legal developments and trends is ensured and the compliance awareness on the Group-level encouraged.

Outlook

New legal provisions and the jurisdiction will show the future development we can expect. Having compliance merely included on the intranet or in a manual doesn't do any good. It is vital for Helvetia Patria that all employees are breathing life into it.

This is the only way that compliance management serves all: the clients, the employees, the shareholders and the company.

Gerold Anderegg Compliance Officer Helvetia Patria Group Raising compliance awareness is a Group-wide effort.

The Risk Management

Extraordinary loss events and falling stock markets put the insurance industry to a difficult endurance test during the past years. Those developments did not leave the insurance companies unscathed. Most of the latter re-acted by concentrating on core competencies, streamlining portfolios and implementing programs to gain in operational efficiency. The insurance companies began to set up their management control to be more risk-oriented with the purpose of lastingly protecting past positive results and of efficiently utilizing their capital in view of the stepped-up regulatory requirements (IFRS, Solvency II). Risk management supports a more effective management through riskadjusted capital allocation and -utilization, increased transparency and through targeted management of the risks.

The risk organisation enables a comprehensive risk management.

The Helvetia Patria Group responded to those developments by establishing a risk organisation that provides for a comprehensive and process-integrated risk management and pushes for its further expansion.

Clear risk responsibility

The Board of Directors is in charge of establishing and maintaining an appropriate internal control and risk management. In particular, the Board is responsible for:

• Approving and regularly reviewing strategically important decisions, i.e. the Board of Directors is responsible for strategic risks.
• Ensuring an appropriate control of the effectiveness of the internal control systems by the Management.
• Assuring the implementation of a comprehensive financial risk management which guarantees an efficient allocation of risk capital and a systematic control of the risks by the Management.

The Board of Directors supervises the risk profile.

Supervising the Group's risk profile by setting upper risk limits for selected and defined risk categories with the Board of Directors determining both, the risk capacity and the extent of the willingness to take risks.

The Board of Directors delegates – within the stipulated framework – the operating aspects of the risk management to the "Investment and Risk Committee" (IRC).

The operational implementation

The Management takes responsibility for executing and complying with the strategies, business principles and risk limits that were determined by the Board of Directors. The Risk Committee supports the Management in an advisory capacity. It coordinates, supervises and assesses risk decisions, financing and hedging measures. The Committee meets at least twice a year and is headed by the Group's Chief Financial Officer (CFO). Additional Members are the Chief Investment Officer (CIO), the Heads of "Corporate Finance & Risk Management" and "Group Reinsurance" as well as the Group actuaries for the Life and Non-Life businesses.

The Risk Committee advices the Management for the implemen-

tation.

The department "Corporate Finance & Risk Management", which reports to the CFO, ensures the necessary risk transparency. The Risk Map informs the Board of Directors on the most important risks, changes in them and on strategies to manage risk issues. The Risk Report supports the "Investment and Risk Committee" (IRC) and the Risk Committee in their work by providing them with detailed information.

Managing financial risks

The Helvetia Patria Group divides financial risks into the following categories:

The above graph refers to risks to which the shareholders' equity is exposed and thus reflects the whole financial statement. The financial market risk, in particular, also includes the interest rate and currency exchange risks of the liabilities. The financial risks are tying up the risk capital in the operational context and can be influenced through hedging instruments,

Risk is considered the adverse divergence from the planned development.

product design or other risk measures. Risk is considered to be the adverse financial divergence from the planned development.

Insurance risks in the non-life business

The random occurrence of an insured event (policyholder event) and the uncertainty about the amount of the deriving liability are causing insurance risks.

For insurance cases which have not yet occurred but

Geographical diversification and focus on smaller risks reduce the overall risk.

are covered by current insurance contracts (prospective risks) the risk is balanced through a portfolio of many similar insurance contracts and lowered through diversification. The deliberate focus of Helvetia Patria on a geographically diversified portfolio with mostly small risks (individual customers and small and mediumsized companies) enhances the risk balancing and reduces the overall risk. Already occurred insurance events induce the risk of the extent or the number of liabilities possibly exceeding the expectations and of the reserves set aside being insufficient to cover the future claim payments (retrospective risks). The Group responds to those risks through actuarial control, adequate reserves and diversification.

Risk concentrations are coordinated and hedged.

Besides those diversifying risks there is also the occurrence of risk concentrations, for example individual jumbo risks, and of cumulative risks, such as multiportfolio exposure as a result of natural disasters. Such risk potentials are Group-wide coordinated and hedged through reinsurance. The central unit "Group reinsurance" protects each business unit from such cases with an individual reinsurance program and purchases the necessary coverage on the reinsurance market while taking the Group-wide diversification effects into account. Such a hedging policy provides a high level of protection at moderate costs.

Insurance risks in the life business

The Group actuary department for the life business employs a wide range of actuarial methods to supervise existing and new products with regard to underwriting policy, setting of necessary reserves and risk-appropriate tariffs. Retrospective methods compare the original expectations with the actual developments. Prospective methods allow early recognition and analysis of the impact of new trends. Most of those calculations are using parameter sensitivities to monitor the impact

of unfavourable developments in investment returns, mortality and termination rates and other parameters. All tools combined provide an effective system to early and actively respond to adverse trends.

Reinsurance is additionally brought into play as protection against mortality and disability risks.

Financial market risks and Asset-Liability-Management (ALM)

The most important financial market risks to which the Group is exposed are the risks in interest rate changes, currency exchange risks and stock markets risks. Furthermore, the Group has exposure in the real estate market through the limited portion of real estate in its investment portfolio. Financial market risks influence the profit and loss account as well as the asset- and liabilities-side of the balance sheet. The Asset-Liability-Management (ALM) concept manages in an integrated way the various influences of the financial market risks and defines both, investment strategy and hedging policy. The ALM process has also two purposes: First, it ensures that statutory solvency requirements and loss limits are met at any time. The investment strategy is basically determined on the business unit level and then aggregated – applying "bottom-up" planning. Secondly, it aims at complying with the risk budget – economically determined and allocated "top-down" to

risks are included in the investment strategy and the hedging policy.

Financial market

Allocation of shareholders' equity

the investment function – and at optimally utilizing it. This approach controls and manages the level of the asset-liability-mismatch.

The selective use of derivatives meets the requirements: hedging foreign currency risks to a large extent and managing the down-side risks of equity investments.

Counterparty risks

Counter party risks include risks of default and of change of value. The risk of default refers to the possibility of insolvency of the other party while the risk of change of value is related to the possibility of a financial loss if the credit rating of the other side changes.

Counterparty risks are especially present in a portfolio holding fixed-interest-rate securities and mortgages. The Group is further exposed to counterparty risks stemming from hedging instruments such as derivatives or reinsurance. The Group monitors counterparty risks on a regular basis, diversifies and avoids them as much as possible. The largest individual third parties are government debtors with excellent credit ratings.

Managing operating risks

Operational risk management covers infrastructure, organisation, processes and people.

Operating risks – in addition to the financial risks – comprise especially risks of infrastructure (e.g. information technology), of organisation and processes (e.g. distribution) and of people. Other external events are also included insofar as they don't belong in the financial risks category. Managing operating risks is carried out mostly decentralised but is – where it makes sense – supported by the central functions. A part of the operating risks is administered by the Compliance department (please see "In focus: Compliance" on pages 34/35), including legal, regulatory, social, ethical and reputation-related risks.

For the information technology, which is largely managed decentralised in each business unit, a Group-wide information exchange takes place on IT-activities within the ITC framework (IT-Coordination). The purpose is coordinating activities and thus improving

efficiency and quality with concurrent risk reduction. The ability of the Group to conduct its business depends on the efficient operation of its data management and information systems. Data security, in case of hardware or software failures or external interferences such as fire or flooding, is best possibly ensured by maintaining geographically separated dual systems or by developing disaster plans.

The personnel management

The personnel management contributes to the value creation of the individual business units.

From a strategic point of view coordinating and using synergies are the pivotal issues for the personnel management: through a generally favourable and multinational framework in accordance with our human resource policies as well as through a consistent management development. The services from the personnel departments in the individual business units play with their support processes an important role in the value creation chain. By continuously improving their own processes within the quality management and by providing advice and support in times of change the specialists from the Human Resources Management contribute to the best possible use of the personnel resources and abilities with respect to the corporate goals. Besides finding the best qualified candidates for the open positions and supporting the managers individually, additional tasks are as important: Promoting the entrepreneurial spirit, a personal willingness to achieve and the exchange of knowledge.

Systematic management development

With the support of the Group-wide used PEP system (Potential Assessment and Retention) the performance and the leadership skills of the Management are annually evaluated and individual steps for development are determined. Specifically promoting potential – already existing within the companies – and using it becomes much easier through this procedure. During the past years, we especially succeeded in opening up new perspectives to the young executives by filling two-thirds of the vacancies on the first two Management levels with in-house candidates.

For the strategically relevant development of the executive personnel in the whole Group our Management Development Team has expanded our own "International Executive Program" (IEP) in cooperation with two Institutes at the University St.Gallen. Already more than 130 members of the management as well as senior executives and selected "high potentials" from Group functions and country markets have successfully completed the current twelve-day basic training program spread over a year. Most of the participating managers rated the high level of knowledge transfer, the practical use as well as the focus on actual strategic issues and the Group-wide knowledge exchange as very positive.

Taking the method of the "General Management Navigator (GMN)" as basis we will add to the IEP individual modules in the coming years with the goal of extending the strategic and managerial knowledge. Such an "IEP Follow-up" takes again four days and serves first of all as a support to the strategic focus and its implementation within the Group. Using a variety of teaching tools – interactive e-learning, individual knowledge exchange through the internet and bestpractice applications within group modules – has proven successful and will be continued. Furthermore, all members of the Management gather once a year at the Management Forum and are intensely working on a strategy-related topic. The conference in autumn 2004 was dealing with the topic "Ageing society – major challenges for the development of our products and client relationship" through the presentations by

Our own Executive Development Program will be expanded.

The Management Forum works on a main topic.

several internal and external speakers as well as a series of workshops.

Declining workforce

The size of the Group's overall workforce in the individual country markets has again declined compared to the previous year. Adapting to the new structures and business procedures as well as focussing of our market activities have contributed to this change. The merger of our business units in Spain, in particular, led to a significant reduction of the workforce.

Personnel numbers

	2003	2004
Switzerland	2286	2248
Germany	847	845
Austria	684	704
Spain	719	558
Italy	228	278
France	81	84
Total	4845	4 717

Personnel by years of service

The personnel management in Switzerland

Our workforce in Switzerland slightly declined in the Group functions as well as in the operating insurance business to a total of 2 248. The average age largely remained at just under 42 years. Strongly represented is the group of employees age 40 and over. The workforce in the age group of 20 to 39 forms a broad, well-qualified and committed junior staff. A bit over one third of the employees in Switzerland is employed in our company for less than five years, another one third has been already working five to fifteen years for Helvetia Patria and the remaining group is looking back on a career with the company lasting for more than fifteen years.

The age group of 20 to 39 provides the wellqualified and committed junior staff.

Having employees with a long work and life experience and training younger executives and specialists are both pivotal to the successful operation of an insurance business. We were able to offer permanent employment to most of the employees who had completed their apprentice- or internship with our company. About one out of seven employees is working part-time.

Continuously high job satisfaction

The fluctuation rate remained in 2004 within the industry average with 10 per cent overall giving notice in 2004. We managed to keep job satisfaction at a high level. The positive rating of the personal work environment, of the own areas of operation and responsibility as well as of the confidence in the managerial effectiveness of their superiors has slightly increased last year. A "mood barometer" is regularly used as a tool: the survey is carried out online with voluntary participation and regularly one third of the employees reviewed are responding. The main reason in 2004 for being absent is illness with an average number of 5.5 working days per employee per year, followed by a bit more than 4.5 working days for internal and external training and continuing education.

The "mood barometer" regularly determines the level of job satisfaction.

Educational controlling assesses use of continuing education.

The intensity and the usefulness of the continuing education will be systematically assessed by an educational controlling function in the future. Furthermore, the variety of the learning tools and the learning efficiency should both be specifically increased by using "blended learning". Four out of five employees participated last year at least once at the numerous activities organised by the project "Fit + Wohl" (fit and well) promoting healthy living with last year's focus being on "heart health": for example, in bicycle tours or running groups, support groups to give up smoking or to loose weight, in classes to learn how to avoid back problems or how to design an ergonomically correct work space.

Efficient recruitment for the sales force

New electronic questionnaire makes the salesforce recruitment more efficient.

The Management Development and the Sales Management have cooperated for developing the electronic questionnaire "AC online" which should help to make the selection process for new members of our own sales force as successful and as efficient as possible. This questionnaire includes both, the criteria for our own, successful sales agents and the current knowledge

about the success potential in the sales division. Using the established job description and requirements a so-called "5-factor-model for success in the sales force" was designed. Every person interested in working in this field receives within the recruitment process the opportunity to answer in "AC online" a series of personality-driven questions with respect to ad-hoc, biographical and other relevant aspects. The answers give useful indications for the aptitude of that particular person to deal with customers. With adaptations the instrument should also be used for the recruitment process in other countries.

Progressive pension plan concept for the long term

The jointly constituted Board of the Foundation decided to change the company's pension fund at 1.1.2005 from a defined-benefits pension plan to a defined-contribution pension plan to ensure modern and attractive employee benefits for the future. The solution with higher contributions from employers and employees takes various elements into account: the expected development of the returns on investments, the aspects of a longer life expectancy after retirement as well as the increase in disability.

The pension plan changes from a defined-benefitsto a definedcontribution system.

New participation concept with employee shares

Helvetia Patria will introduce a share-participation program for employees in Switzerland in the current year. They have the opportunity to acquire Helvetia Patria Holding shares at a favourable price once per year without equity dilution. Especially recognizing personal commitment and enabling a direct participation in the development of Helvetia Patria are the purposes of this concept. At the same time, this program strengthens the connection of the performance-oriented conduct of the employees with the company's success and the concerns of the investors.

Employee shares increase the performancedrive.

The Group Result

The 2004 Group result has further increased.

Once again the Helvetia Patria Group looks back on an excellent year. The profit for the year after taxes amounted to CHF 158.7 million and reflects an improvement by CHF 66.3 million (+71.8 per cent) on 2003. The return on the shareholders' equity reached 12.3 per cent and exceeds the goals set for the year 2004. With respect to our strategic goals we are thus on the right way.

Being spared larger-scale loss events and adhering to a cautious underwriting policy led in the non-life insurance to a further reduction of the claims ratio while the strict cost management resulted also in a reduction of

Better underwriting results

The result of the life underwriting improved significantly.

the expense ratio. The net claims/expense ratio (combined ratio all in) thus further decreased to 99.2 per cent (prior year: 99.9 per cent). The underwriting result in the life business significantly improved as well despite the volume-related increase of the expense ratio. The reported quantitative advance of the result, however, conceals significant qualitative elements. The clearly improved risk trend allowed increasing the reserve for results-linked and non-results-linked policyholders' dividend by about CHF 21 million. The process of calculating the underwriting reserves took the changed capital market conditions into account: either through directly reducing the interest rates applied to the calculation of the actuarial reserves or through allocating the appropriate amount of reserves related to the "liability adequacy test". The latter was carried out for the first time in 2004 in view of the changeover to the IFRS-based accounting. Those expenditures are recognized in the life account either through allocations to the actuarial reserves, the equalisation reserve or as build-up of the other underwriting reserves.

Lower result from the investment activities

The result of the investment activities remained below the previous year unlike the increased underwriting results. The receding volume in the life business, in particular, and the declining direct return led to lower ordinary income. Moreover, Euro-caused currency losses in 2004 took the places of the Eurorelated currency gains in 2003. The newly implemented accounting standard Swiss GAAP ARR 23 required the release of those reserves, which are only covering liabilities of the future. This resulted in an extraordinary income of CHF 53.5 million and improved thus the non-underwriting account, credited with the amount.

Change of accounting principles

Regulations of the Swiss Stock Exchange requires us to change the accounting for the consolidated financial statements from Swiss GAAP ARR to IFRS and to publish the 2005 year-end financial statements, with comparison to the previous year, for the first time in accordance with this international standard. This upcoming adjustment with not yet quantifiable effects on the investments, the shareholders' equity and also the profit of the Helvetia Patria Group may lead to changes in the shareholders' equity and the profit due to revaluations and reclassifications. The changes in the accounting standards, however, will probably not have a significant impact on the solvency of our business units which is generally determined by the local statutory requirements and accounting principles in the individual countries. The half-year results 2005 will be the last ones to be published in the old form and still based on Swiss GAAP ARR.

Significantly higher shareholders' equity

Various reasons are behind the increase of the consolidated shareholders' equity by CHF 261.8 million to CHF 1 417.1 million: The capital increase end of 2004 brought an inflow of CHF 295 million. The change in the GAAP ARR 24 standard, requiring that own shares be newly reported as a negative position in the shareholders' equity, resulted in a reduction by CHF 44.5 million. At the same time, the new regulations regarding the "legal quote" stipulated that those revaluation reserves affected by the "legal quote" be separated from the shareholders' equity. This led to a reduction of the latter by CHF 129.1 million. On the other side, the valuation margin on the fixed-interestrate securities of about CHF 471 million – according to their valuation at amortized cost – is not recorded in the shareholders' equity but is set aside as undisclosed reserves in the investments.

Various reasons led to an increase of the consolidated shareholders' equity.

Group resultsin CHF million

	2003	2004
Underwriting result from non-life activities	132.1	142.8
Underwriting result from life activities	29.6	38.4
Non-underwriting result	76.4	27.0
Amortization of goodwill	–90.8	–3.8
Result before taxation	147.3	204.4
Taxation	–54.8	–45.8
Minority interests	–0.1	0.1
Result after taxation and minority interests	92.4	158.7

All business units reached or even exceeded the goals set for the return on shareholders' equity for the 2004 business year. We managed to successfully complete the merger in Spain at less expense than planned. Der ANKER makes good progress in its earnings-growth initiative.

The insurance business

The premium volume in the direct business declined.

Premium income in local currency decreased in the direct business by 10.8 per cent (previous year: +1.4 per cent). This was mainly caused by the life business' decline by 19.8 per cent (prior year: +0.7 per cent). The Swiss market was the main "culprit" for this development with premium revenues falling by 25.2 per cent as a result of our restrictive underwriting policy and the low interest rates. Both life insurance segments were involved: the individual and the group business. The increase in the non-life business amounted to 2.4 per cent and thus reached the prioryear level.

The acquisition of the transport insurance portfolio of British & Foreign in France added 0.3 per cent to the growth rate of the non-life business. The extraordinary strong advance in the Assumed Reinsurance is the result of the change in the accounting method from the traditional prior-year reporting to the current-year reporting. The financial statements 2004 include therefore the premiums for 2003 and 2004. The corresponding growth rates before consolidation, however, were

Gross written premiums in CHF million

Direct business		2003	2004	Change	Change in original currency
Switzerland Non-life		562.9	575.8	2.3%	2.3%
	Life	2681.2	2005.1	–25.2%	–25.2%
Germany	Non-life	594.5	607.0	2.1%	3.0%
	Life	138.1	148.1	7.2%	8.2%
Austria	Non-life	190.1	188.3	–0.9%	0.0%
	Life	131.2	128.8	–1.8%	–0.9%
Italy	Non-life	343.9	346.9	0.9%	1.8%
	Life	90.6	128.0	41.3%	42.5%
Spain	Non-life	364.8	361.9	–0.8%	0.1%
	Life	78.6	87.8	11.7%	12.7%
France	Non-life	82.4	96.5	17.1%	18.1%
Indirect business
	Non-life	130.7	420.4	221.7%	221.6%
	Life	3.6	10.2	183.3%	184.0%
Total	Non-life	2269.3	2596.8	14.4%	15.1%
	Life	3123.3	2508.0	–19.7%	–19.6%
Total		5392.6	5104.8	–5.3%	–5.0%

Gross premiums earned in 2004 in CHF million

high in any case: about 42 per cent in 2003 and about 6 per cent in 2004. The business with the assumed reinsurance benefited well from the good market conditions thanks to rising premium rates and generated sizeable profit contributions in both years.

The premium income in Swiss Francs in the direct business decreased by 11.1 per cent (in original currency: –10.8 per cent) as a consequence of the weaker Euro. The life business saw its premium income in the balance sheet currency decline by –19.9 per cent; with this line of business being mostly generated in Switzerland the negative effect of the exchange rate remained here with 0.1 per cent small. The non-life business reports a growth rate of 1.8 per cent in Swiss Francs and 2.4 per cent in the original currency.

The foreign business is gaining ground

The proportion of the total premium income, accounted for by the foreign direct business, shifted from 38.3 to 44.8 per cent due to the strong decrease in the Swiss life sector. The significant growth rates in the German, Spanish and Italian life business further heightened the impact of the lower volume in Switzerland. The proportion of the direct life business, generated abroad, rose from 14.1 to 19.7 per cent. Against the backdrop of a negative currency impact for the business units abroad the proportion of the foreign non-life business remained almost unchanged at 73.5 per cent (2003: 73.7 per cent).

The foreigngenerated life business increased.

The non-life business

Compared to the overall increase in the non-life direct business of 2.4 per cent in local currency the property and motor vehicle segments' contributions to the overall growth remained below their proportions while all other segments' contributions exceeded theirs. While the proportion of the overall premium volume in the direct business, generated by the continuously dominating property insurance business, receded from 39.7 to 39 per cent – thus slightly correcting its proportionally larger growth of last year – the share of the motor vehicle sector further decreased – as it did already last year – and stood at 33.5 per cent (prior year: 34 per cent).

Claims ratio was gross and net lower.

The gross and net claims ratio fell again in 2004 thanks to the absence of larger-scale natural disasters. The reason for the gross claims ratio to fall in the year under review stems from the development of the assumed reinsurance. The decline was only marginal, however, in the direct business. The gross claims ratio decreased in all business units with the exception of Switzerland and Italy. The main reason behind the higher gross claims ratio in Switzerland was a major damage in the liability insurance business which will, however, mostly be charged to the re-insurer. Italy was not quite able to pick up the thread of last year's excellent course.

Our strict cost management achieved a further reduction of the expense ratio. The combined claims/expense ratio (combined ratio net all in) receded again and stood at 99.2 per cent (2004: 99.9 per cent).

The other side of the coin of this pleasing development are the equalisation reserves which are therefore required to be formed and are affecting the operating results. Those reserves experienced another increase by CHF 35.3 million.

In France, Spain, Austria and in the Group Reinsurance, which combines all outwards reinsurance business of Helvetia Patria, the underwriting results improved. In France, they are also proof that the newly acquired portfolios fulfilled our expectations. Spain's outcome thus confirms that the merger was successfully completed while the results at Der ANKER are a reflection of the progress achieved in increasing profitability. The underwriting result in Switzerland reached again prior year's pleasing level. The German and Italian country markets report a slight decline of the excellent results attained in the previous year. Overall, however, the goals set for the non-life business for 2004 have been exceeded.

Some of the country markets report better underwriting results.

Key indicators for non-life business

	2003	2004
Non-life claims ratio net	66.5%	65.8%
Non-life expense ratio net	31.3%	30.8%
Non-life combined ratio net all in*	99.9%	99.2%

* Sum of claims and expense ratio including all other expenses accrued in the underwriting account

Gross premiums from direct non-life businessin CHF million

				Change in original
	2003	2004	Change	currency
Property	848.3	848.9	0.1%	0.6%
Transport	224.0	236.4	5.5%	6.3%
Motor vehicle	727.2	729.7	0.3%	1.1%
Liability	213.1	223.5	4.9%	5.5%
Accident/health	126.0	137.9	9.4%	10.5%
Total	2138.6	2176.4	1.8%	2.4%

The Swiss business led to a decrease in premium income.

The life business

Premiums in the direct life business decreased by 19.9 per cent in the year under review after their growth rate had already weakened to 1.6 per cent in the previous year. This was largely due to the development in Switzerland where – in 2004 as well – more than 80.3 per cent of the premium volume was generated. As a consequence of the restrictive underwriting policy in the group life business, which had already been tightened in 2003, the Swiss group life segment fell by 25.7 per cent in the year under review. The volume in the individual life business in Switzerland was also decreasing – by an amount of 24.3 per cent – and its cause is to be found in the low capital market interest rates. On the other hand, the life premiums in Spain (+12.7 per cent), in Italy (+42.5 per cent) and in Germany (+8.2 per cent) experienced a significantly dynamic development. Der ANKER by comparison reported only a small decline in its premium volume in local currency (–0.9 per cent). Overall the periodicpremium and the unit-linked products noted an increase. It was thus exclusively the development in the single-premium segment which caused in both sectors – group- and individual life insurance – the premium volume to fall. This fact basically applies to all business units except Italy where the increase solely stems from the progress made in the traditional singlepremium sector.

Strengthening profitability

The actuarial result in Switzerland improved again.

Taking the investment income into consideration, which increased only slightly on the prior year, the improvement of the life business result is actuarialrelated and due to the development in Switzerland. On one hand, the adjustments made to premiums, guarantees and dividends – in 2003 and partly by 1.1.2004 – had a positive impact and, on the other hand, the risk result significantly improved – among others – for cyclical reasons. This allowed to reduce the interest rates or to adjust them to the changed capital market conditions, which will be used to calculate future actuarial reserves, and at the same time to increase the allocations to the reserves for results-linked and nonresults-linked policyholders' dividends. In Spain the interest rates important to the calculation of actuarial reserves were trimmed back as well. By following

already the IFRS rules additional reserves became necessary in Spain and at Der ANKER in accordance with the "liability adequacy test". The underwriting results in the mentioned business units remained therefore below the previous year's level. Similar applies to Italy and Germany but there it was growth-related. Overall the goals set for the life business in 2004 were exceeded.

Introducing the "legal quote" in the Swiss group life business found its reflection not only in the reduction of the shareholders' equity but also in the strong increase of the "Reserves for results-linked and nonresults-linked policyholders' dividends" in the balance sheet. 92 per cent of the income from that business segment was forwarded to the policyholders for the year under review.

The new "legal quote" was introduced in the Swiss group life business.

Gross premiums from direct life business in CHF million

	2003	2004	Change
Individual	1167.2	985.2	–15.6%
Group	1857.3	1402.0	–24.5%
Unit-linked	95.2	110.6	16.2%
Total	3119.7	2497.8	–19.9%

The investment business

Investments by asset type in 2004

in CHF million

Funds under management increased in 2004 by about CHF 498 million and reached an amount of CHF 26 billion. The inflows were invested in fixedinterest-rate securities. Taking risk considerations into account was the reason for investing the funds about equally in the same local currencies as the liabilities from the insurance business are in. The further declining interest rates in December led to relatively high money market holdings over the year's end, which were then gradually allocated to longer-term investments in the new year.

The investment structure shifted towards the fixed-interest-rate securities.

Asset allocation experienced a shift to the fixedinterest-rate securities – due to the investment activities – but also as the result of further reducing the physical equity holdings. Fixed-interest-rate securities allocation stood at 52.4 per cent at the end of the year while the equity allocation fell to 8.8 per cent. The positions in real estate and mortgages changed only marginally so that their portions slightly receded. Investing the new funds and restructuring the portfolio were carried out in accordance with our proven assetliability models.

Higher performance

Contrary to the widespread opinion that the capital markets would experience a change in trend as a result of the growth drive in the world economy, the interest rates remained on their low level and fell at the year's end again to their historic lows of early summer 2003. Although the investment volume was increasing, the continuously low coupon yields caused the direct investment income to decrease. The latter reached an amount of CHF 900.8 million, a loss of CHF 32.4 million on the last year. The direct return of the investment portfolio receded from 4.1 to 3.7 per cent, applying it to the average investment portfolio at book values.

The performance of the investments, however, improved from 3.5 to 4.3 per cent on the last year. It measures the ordinary and the extraordinary investment income, including the change in valuation reserves, while applying it to the average investment volume at market values. The progress was carried by The low coupon yields caused the direct investment income to decline.

The investment performance has significantly improved.

Investments by asset type in CHF million

	Balance sheet	Balance sheet	Balance sheet
	2003	2004	Change
Real estate	4512.0	4444.0	–1.5%
Investments in affiliates	14.7	4.6	– 68.7%
Investments in associated companies	4.3	3.6	–16.3%
Own shares	44.6	0.0	–100.0%
Shares, other non-fixed-interest-rate securities,
investment funds and derivatives	2844.9	2288.6	–19.6%
Fixed-interest-rate securities	13216.5	13621.8	3.1%
Promissory loans	737.1	865.4	17.4%
Mortgages	2969.7	2952.3	–0.6%
Policy loans	157.3	149.4	–5.0%
Fixed-term deposits and similar	990.1	1659.3	67.6%
Total	25491.2	25989.0	2.0%

increasing bond prices which is related to the interest rates and the year-end rally in the stock markets. The strength of the Swiss Franc against the Euro and the Dollar prevented the Swiss-Franc investors from achieving an even better result.

Strict risk management

Protecting the accounts and ensuring the investment income still required continuous and comprehensive hedging measures despite the further reduction of the equity and the foreign currency holdings. We continued applying the hedging concept which proved successful in the past year. The net equity allocation fluctuated therefore within a narrow range of 3.5 and 4 per cent. The relatively high volatility of the Euro and the Dollar required our absolute attention. The hedging level was kept high for the whole year and reached in peak periods over 90 per cent for both currencies.

Total hedging costs amounted to about CHF 42 million with CHF 18 million being put to work for the currencies and CHF 24 million for the equities. On one hand, those insurance premiums were used with the goal of reducing the investment risks. On the other hand, they allowed us to continuously participate in the stock markets' profit potential and to achieve extraordinary income in the scale of CHF 80 million.

Preview

The year 2004 was marked by low interest rates, despite a broadly above-average growth of the global economy, and by stock markets with tendencies to sideways movements and occasional periods of disorientation. 2005 will probably see the growth drive in the Asian zone and the United States somewhat slackening without jeopardizing though the further economic recovery. Europe will tend to rank at the lower end of the growth chart as a consequence of structural issues and only slow-paced reforms. The interest rates will probably move away from their historic lows in the wake of further increases in the offing for the United States. A fast break, however, with the dominating low-interest-rate environment seems not to occur in the near future. The yield potential remains limited. This means again for the asset managers that the investment income necessary for the insurance business has to be secured through careful asset-liability management, through specific and profit-oriented diversification of the new funds as well as accompanying hedging measures.

The thorough investment management ensures the necessary investment income.

Investment income by asset type (without value adjustments and readjustments as recorded in the books) in CHF million

Real estate	Ordinary income 2003 192.4	Ordinary income 2004 191.8	Change –0.3%	Realized gains (losses) 2003 27.6	Realized gains (losses) 2004 14.9	Change –46.0%
Investments in affiliates and associated companies	0.4	0.0	–100.0%	0.0	0.0	–
Shares, other non-fixed-interest-rate securities, investment funds and derivatives	55.5	50.0	–9.9%	–18.7	138.6	–
Fixed-interest-rate securities	526.2	512.1	–2.7%	150.5	63.5	–57.8%
Promissory loans	32.8	34.3	4.6%	10.7	7.0	–34.6%
Mortgages	108.5	97.9	–9.8%	–1.4	–4.9	250.0%
Policy loans	7.0	5.9	–15.7%	0.0	0.0	–
Fixed-term deposits and similar	10.4	8.8	–15.4%	0.0	–2.5	100.0%
Total	933.2	900.8	–3.5%	168.7	216.6	28.4%

The hedging concept has proven successful.

Switzerland

The federal Old-Age, Survivors' and Disability Insurance was the centre of attention.

The Swiss economy picked up speed with an increase of 1.9 per cent in the real gross domestic product in the past year. The inflation with a rate of 1.3 per cent almost remained on last year's level. With the unemployment rate still remaining on a high level of 3.8 per cent the course of the labour market took a slower pace than expected by the leading economic research institutes. While the public's discussion centred in the prior year on occupational benefits issues, in particular, it was the federal Old-Age, Survivors' and Disability Insurance getting all the attentiveness in 2004.

In the business year 2004 Helvetia Patria put its full attention on the domestic market to continuously implementing the Strategy 2004–2006 with its main focus being put on our core competencies in insurance and pension planning services. We consistently continued concentrating on profit-oriented growth. In the group life business priority was given to introducing the changed parameters of the "second pillar" such as keeping a separate profit and loss statement and adjustments to the guaranteed minimum interest rate and the conversion rate.

Different premium developments

The premium volume in the non-life segment is exceeding our expectations while the development in the life sector is only partly satisfactory. We were able, however, to achieve further cost savings, in all sectors, especially also by successfully analysing the cost and

performance structure in the IT sector. The premium income in the individual life sector decreased by 24 per cent while the important periodic-premiums segment achieved moderate growth which we consider to be a reflection of the customers' trust in Helvetia Patria's stability and in the appeal of its products. The single premiums did indeed suffer from the still historically low interest rates which may render this product category not so attractive for individual customer segments in light of the rates of return. In accordance with our strategy of a profit-oriented growth we forewent – unlike numerous competitors – market-stimulating measures which would have indeed led to increased premium income but had jeopardized our profitability goals. Thanks to a range of interesting re-investment conditions we succeeded, however, to keep a significant part of those funds from contracts in-house which expired last year. As a result of the interest rate development in the financial markets and the rising life expectancy we have reduced the policyholders' dividends on those current pensions, which had been concluded before 2002. The group business experienced a decline in the single premiums which is a consequence of the continuous profitability efforts combined with a focussed underwriting policy. The first measures from the "BVG-law revision" (LOB – Federal Law on Occupational Old-Age, Survivors' and Disability Benefits Plan) were successfully implemented and are reflected, for example, in higher contributions for the risk and

Helvetia Patria forewent marketstimulating measures in the single-premium sector.

Gross premiums in 2004 from direct non-life business in Switzerland in CHF million

Gross premiums in 2004 from direct life business in Switzerland in CHF million

The group life business had the first measures of the BVG-LOB reform implemented.

cost premiums. Furthermore, good news is coming from two sides: a continuously favourable risk result in the term life sector and a sustainable positive outcome in the disability business. Our clients perceived our customer service representatives as competent contact persons to get information on the numerous changes in the "second pillar". As far as the regulatory framework is concerned a wide range of uncertainties continue to persist. An example is the Executive Federal Council's decision to increase the guaranteed interest rate from 2.25 per cent to 2.5 per 1.1.2005 despite the fact that the interest rate environment had not significantly changed. What kind of factors will determine the minimum guaranteed interest rate in the future remains also unclear.

Very good non-life result

The non-life market is characterized by an intense predatory pricing policy. Helvetia Patria exceeded expectations and excelled at a premium growth rate of 2.3 per cent – stimulated in particular by the profitable technical, transport and motor vehicle insurance segments. All sectors profited from the traditionally cautious underwriting policy combined with a more attractive portfolio than the one of our competition. An active cost control further reduced the operating expenses as well. The gross claims burden, though, was marked by three large losses in the theft and liability sectors which were, however, mostly absorbed by the reinsurance companies. This led to an increase of the gross combined ratio from 90.6 to 103.3 per cent in the year under review. Thanks to a perfectly functioning reinsurance concept the net combined ratio increased thus only slightly from 97.3 to 98.1 per cent.

Continuity in the distribution

The most important element in the Helvetia Patria distribution strategy is our own, in the regions embedded sales force. Especially in the past year our own sales force managed to play a stabilising role when the single-premium individual life insurance sector experienced difficulties. The co-operation with external distribution partners is an integral part of our distribution strategy. Favourable growth rates were achieved through broker distribution in the life business – for periodic-premium contracts in the individual and group

Gross premiums from direct business in Switzerland in CHF million

	2003	2004	Change
Non-life
Property	323.6	316.5	–2.2%
Transport	31.9	36.7	15.0%
Motor vehicle	137.3	149.8	9.1%
Liability	70.1	72.8	3.9%
Total	562.9	575.8	2.3%
Life
Individual	814.0	594.4	–27.0%
Group	1803.8	1341.1	–25.7%
Unit-linked	63.4	69.6	9.8%
Total	2681.2	2005.1	–25.2%

life sectors – and in the non-life business for the technical and transport segments. The cooperation with the Swiss Union of Raiffeisen Banks (SVRB) took a positive course. The Raiffeisen Banks contributed 11 per cent to the growth rate of the periodic-premium individual life business. Against the backdrop of this co-operation's positive development our agreement with the Swiss Union of Raiffeisen Banks was renewed in 2004. We have successfully continued our long-run co-operation with the Union of Swiss Cantonal Banks with regard to services in the "second pillar" sector and have extended the co-operation agreement which was adjusted to the changed framework.

Consistent focus on quality

Implementing the project of increasing quality and service, which was already launched in 2002, reached additional milestones last year. In 2003, the private customers were the focus of our customer satisfaction surveys. In the past year, we conducted an opinion poll on our service quality among the brokers and commercial clients in the group life business. The results were pleasing indeed. The customers rated as high the service quality of the sales force and of the staff at the headquarters for the currently difficult occupational benefits sector. The use of modern internetbased tools for the administration is highly appreciated as well. We are working rapidly on appropriate optimiThe co-operation agreement with the Swiss Union of Raiffeisen Banks was renewed.

Broker and commercial clients praise the service quality of the group life segment.

The attractive portfolio enabled an excellent premium growth.

Systematic complaint management serves as basis for improvement.

sation measures for those areas identified as having potential for improvement. After having launched a systematic complaint management which is embedded in our service and quality initiative, customer complaints are an important basis for continuous improvement.

Innovative and competitive product range

Specific innovations complement the product range.

Besides putting the focus on high quality and services as well as on a solid distribution network Helvetia Patria also distinguishes itself by an up-to-date and competitive product range for its target customer segments "private customers" and "small and mediumsized companies". We are anticipating market trends by partially changing products and thus accentuating our positioning within the target segments. In the individual life business, for example, a unit-linked periodic-premium life insurance was launched offering a guaranteed endowment capital and a guarantee for receiving the highest mutual fund price. Furthermore, we continued developing a comprehensive customized product range for the interesting segment of older customers (50plus). We held numerous local customer information events which were met by broad interest. We also have successfully completed the preparations to launch a pension product meeting the specific needs of the target segment "50plus".

Successful start into the New Year

The first months in the new business year met our expectations. While the life segment takes a more cautious course of development we are reporting a pleasing growth in the non-life sector. All businesses continue their good cost trends.

Implementing the Strategy 2004–2006 is at the forefront.

In the current year we are focussing our attention on consistently working the market and implementing the Strategy 2004–2006 with our high-quality-oriented service and the further optimisation of our competitive product range. The group life segment is marked by the integration of the first BVG-revision (LOB – Federal Law on Occupational Old-Age, Survivors' and Disability Benefits Plan) and the conclusion of the development of a modern portfolio management system. Various training initiatives, a focus on service excellence and the development of a new distribution and consulting platform should all help us to be continuously

successful with our own sales force, the essential pillar of our distribution. We are planning for this year to strengthen our successful co-operation with the Raiffeisen Group for the individual life segment and to expand it to the non-life business. This project will build on the co-operation abilities of both companies and on the non-life experience of Helvetia Patria. We are not slowing down in our intense efforts to continuously optimise the services provided by Helvetia Patria by putting quality and service on the forefront. Further surveys to identify optimisation potentials are scheduled to be conducted while the process management – already well integrated in the organisation – will be broadened in all areas.

Key indicators Switzerland

	2003	2004
Gross domestic product (GDP)	–0.1%	1.9%
Interest rate	2.7%	2.3%
Inflation	0.6%	1.3%
Unemployment rate	4.1%	3.8%

Germany

The insurance industry stands its ground in a difficult environment.

The premium growth exceeds the market average.

The German economy picked up again some speed in the last year and reports a real growth by 1.7 per cent. The rise in economic activity, however, came almost exclusively from foreign trade. The continuously high unemployment and fallen real income though caused the domestic demand and the spending by private households to remain weak. Considering that difficult environment in 2004 the business activities in the insurance industry took a good course in comparison with other sectors. The non-life and accident business saw their premium income grow by 1.8 per cent which remained, however, below last year's rate. Some severe natural disasters occurred in the first half year – such as the storm "Ingo" over Germany as well as tornados over the Lower Rhine and the western Ruhr areas – causing damages in the millions. Nevertheless, the overall number of loss events was smaller and the amount for claims paid lower thus enabling us to realise actuarial profits.

Growth in the non-life business

We are again in the good position to look back on a successful year for this business line which is focussing on private individuals and small and medium-sized companies. The premium growth of 4 per cent significantly exceeds the market average. The underwriting result has further improved especially thanks to an again reduced claims ratio on the last year. The results are proof for our value-oriented underwriting policy, our solid portfolio quality as well as our excellent claims management – with the latter providing us with a top position in the industry.

During the past months the motor vehicle insurance providers fought again an especially fierce price competition in their battle for market shares. We have not joined in but are putting our energy into pursuing our profit-oriented strategy in the private and commercial segments, achieving a good claims/expense ratio (combined ratio) and into setting up appropriate reserves for those risks. This policy resulted last year in a reduced loss burden for that segment as well. At the same time the introduction of a second product line with changed price/coverage features was again evidence of our innovative capabilities. After two and a half years, we also achieved further growth and a positive actuarial result in our business with car dealerships. The German transport insurance industry did not manage to get out of the actuarial red last year but we are able to report again a positive result. The same applies to our small industrial business where we pursue a focussed strategy of emphasizing special customer relations and segments with riskappropriate premiums while giving up deficit-ridden lines of business. Our success in the overall non-life business is substantiated by a strict cost management which helped us to achieve a further cut in the expense ratio. The good gross combined ratio of about 96 per cent managed to remain on last year's level despite large investments in forward-looking projects.

Strict cost management significantly reduced the expense ratio.

Boom in the life business

In the life-business we managed to implement our strategy – aiming for an above-market-average growth

Gross premiums in 2004 from direct non-life business in Germany in EUR million

Gross premiums in 2004 from direct life business in Germany in EUR million

– earlier than planned by expanding both, our product range and the distribution channels.

With the law regarding retirement income being in place and the related drop of the current tax incentives being set at 1.1.2005 the overall market saw new business picking up and significantly exceeding last year's level. Especially in the last weeks of 2004 the soon expiring privilege resulted in a record number of applications and in an extraordinary growth of new business for our company. Premium income increased by 8.2 per cent and exceeded most of the competitors' growth rates. In high demand were especially the unit-linked insurance contracts. We managed up to now to significantly exceed all sub-goals and are among the most dynamic insurance service providers in the market. Our market presence was supported by poster advertising that was drawing attention to our exclusive broker arrangements for our business area and our positive image as a Swiss insurer.

New business grew extraordinarily.

Existing market opportunities

A drastic economic upswing is not in the books for the new business year. Nevertheless, the German government counts on the domestic demand to become firmer and the employment rate to slightly increase. The forecasts allow hopes for improving economic fundamentals which will advance our growth- and profit-oriented business policy.

Within this environment we are aiming at providing

The customers gave high marks to quality and service.

highest quality in service, consulting, products and claims settlement and will continue to do our utmost also during the current year. We have therefore launched at the end of 2004 another customer survey within our quality and service strategy. Its results are now available and are being analysed for additional areas where further improvements are to be considered. They already show, however, that the overall satisfaction of our customers has again increased and that we have achieved optimum values in many performance areas in comparison with our competitors. With the backdrop of the demographic trends and the necessity of additional reforms in the German social insurance systems a supplemental private pension planning gains in importance and opens up large future market potentials in the life business. We are ready to use those market opportunities that are presenting themselves by

Gross premiums from direct business in Germany in EUR million

	2003	2004	Change
Non-life
Property	159.6	167.2	4.8%
Transport	53.1	49.7	–6.4%
Motor vehicle	98.6	105.9	7.4%
Liability	44.9	45.3	0.9%
Accident/health	24.9	24.6	–1.2%
Total	381.1	392.7	3.0%
Life
Individual	71.4	72.3	1.3%
Group
	13.4	15.0	11.9%
Unit-linked	3.7	8.5	129.7%

offering innovative products and by enhancing our focus on older customers ("50plus") while also expanding and strengthening our distribution channels. For the latter we have successfully implemented our specialisation in distribution channels already by begin of this year. It will enable our exclusive sales organisation and our free brokers to provide optimal support and consulting. We are confident that this will generate further growth and enhance our earnings position.

Specialising the distribution channels will lead to new growth.

Key indicators Germany

	2003	2004
Gross domestic product (GDP)	0%	1.2%
Interest rate	4.3%	3.7%
Inflation	1.1%	2.1%
Unemployment rate	10.4%	10.8%

Austria

The economic environment in Austria took a positive albeit subdued course during the year under review. The real gross domestic product grew by 1.9 per cent. The industrial output and employment indicators were still showing no real sign of the economy picking up a sustainable speed. The inflation rate amounted to 2.9 per cent which was mostly caused by a noticeable price increase of important commodities.

Success in implementing the strategy

Within the framework of the Strategy period 2004– 2006 Der ANKER implements essential measures to optimize the most important value drivers. Priority was given to broad initiatives to further improve the internal value creation. Within a few months noticeable cost reductions in the administration of the Executive Board were achieved. Streamlining the decentralised structures is well on course with the completed bundling into four distribution regions and with the concentration on fewer but more profitable branch office locations. The corporate model experienced also a functional adjustment with the far-reaching and important centralisation of the claims settlement being one of the more noteworthy and important parts of it. Starting from an almost exclusively regional settlement model we achieved establishing last year a central claims settlement organisation that is working under a completely uniform leadership and is departmentalized based on the segment it is dealing with. The experience of the past few months has already shown that this new structure not only increases the cost efficiency but also

Centralisation of claims settlement was combined with the re-organisation of the distribution regions.

further enhances the level of the already good broker and customer satisfaction.

High cost and quality consciousness

Additional measures have the purpose of improving step by step the underwriting results in the main categories of the non-life business. We are already noticing the positive influence coming from consistently pursuing the necessary factors, such as for example moderately increasing the premium per risk in the motor vehicle insurance, reducing the distribution-related discount possibilities, applying stricter acceptance guidelines for some areas. The motor vehicle insurance – a difficult segment on the Austrian market – was 2004 also able to provide a positive contribution margin.

Selective quality-related issues complemented the clear focus on profit-oriented measures. This emphasizes the sustainability and strengthens the qualitative profile of the company. The typical Swiss values – quality, security, trust and excellent service – of our parent company serve as the ANKER's basis for its self-image in Austria.

Good course of business

The sum of all measures implemented and the positive trend of the claims burden led to a significant increase of the operating result on the previous year. The improvement we were aiming for in the non-life business with regard to the combined ratio shows already a positive effect after the first third of the strategic

The business result increased significantly.

The underwriting results in the nonlife business are consistently improved.

Gross premiums in 2004 from direct non-life business in Austria in EUR million

Gross premiums in 2004 from direct life business in Austria in EUR million

period: the ratio stands at gross 105.6 per cent. A noticeable reduction of the expense ratio as well as a very good claims ratio – even if compared over several periods – led to the best underwriting result of the past years.

Der ANKER was able to maintain the overall premium income level in the non-life business (+0.3 per cent) despite consistently optimising profitability. The growth rate in the core business – the property insurance – amounted to pleasing 3.6 per cent in the year under review. The particularly price sensitive motor vehicle sector saw its sales revenue fall by 2.5 per cent as a result of the strict underwriting policy.

The life insurance segments also reveal varying pictures: The periodic premium business experienced a moderate positive development with a growth rate of +3.5 per cent on the prior year. The single premium sector fell further in 2004 – from prior year's already low level. The overall premium volume in the life business decreased by 0.9 per cent on 2003.

The active asset management contributed to the pleasing result.

The financial result of Der ANKER was favourable. The ordinary income from investments developed according to plan. Using an active asset management generated moreover a pleasing profit contribution through extraordinary investment income with the valuation margins of the investments rising at the same time. The renovation process of the headquarters in Vienna (Hoher Markt) is proceeding well. The good structural fabric combined with a tight project management enables us to move back in already in autumn 2005 – a few months earlier than planned.

Higher premium income of Helvetia Versicherungen

The "Direktion für Österreich" of Helvetia Versicherungen was again successful as specialised transport insurer in the year under review. Sustainable co-operations are helping to gradually expand the premium income. The well-grounded underwriting policy as well as the excellent financial basis ensured this niche business with a very favourable operating result for 2004.

Preview

From the current point of view the market prospects for a good business year 2005 are in Austria in good shape. Helvetia Austria will consistently continue the profit-

Gross premiums from direct business in Austria in EUR million

	2003	2004	Change
Non-life
Property	41.7	43.2	3.6%
Transport	3.7	3.3	–10.8%
Motor vehicle	47.5	46.3	–2.5%
Liability	16.5	16.6	0.6%
Accident/health	12.5	12.4	–0.8%
Total	121.9	121.8	–0.1%
Life
Periodic premiums	68.5	77.3	12.8%
Single premiums	15.6	6.0	–61.5%
Total	84.1	83.3	–0.9%

oriented niche policy and aims for further strengthening its co-operation network.

Implementing the structural measures to optimize the performance will gradually come to an end at Der ANKER. The company is well on course for reaching its main goal of the Strategy period 2004–2006: consistently maintaining a combined claims/expense ratio of below 100 per cent. Building on this solid foundation allows putting fresh emphasis on the other goals: profitable growth and additional quality initiatives.

The combined claims/expense ratio developed very well.

Key indicators Austria

	2003	2004
Gross domestic product (GDP)	0.7%	1.9%
Interest rate	4.3%	3.7%
Inflation	1.2%	2.9%
Unemployment rate	4.6%	4.5%

Concentration process in the insurance market continues undiminished.

Italy

The first semester reported the demand in Italy and especially the export taking both a favourable course while the second semester showed only subdued progress. The growth of the gross domestic product (GDP) hovers around 1.4 per cent at year's end. The average inflation rate remained at 2 per cent.

Driving insurance market

The latest estimates by the Italian underwriters' association ANIA indicate a growth rate of the life insurance market of about 3.7 per cent with the traditional products experiencing a stronger increase and the unitlinked products a slowdown. The non-life sector grew by 3.5 per cent (motor vehicle liability sector: +2.7 per cent). Market concentration of the Italian insurance industry continued undiminished: The ten largest insurance companies are controlling more than 85 per cent of the entire market. This trend aggravates the competition especially in the motor vehicle sector. The pressure from the consumer organisation on the insurance companies strengthens not least because of the new EU-middlemen-guidelines requiring – among others – more transparency in the relationship with the customers. The legislators have again worked on the structure of the second pillar in the pension system. This particular market segment holds a lot of interesting potential.

Improved portfolio composition

The non-life business saw its premium volume grow by a 1.8 per cent. The decrease by 2 per cent of the motor vehicle segment is juxtaposed to an increase by 7.5 per cent in the other sectors: factors which further improved the portfolio's quality. The motor vehicle portion in numbers amounts now to 48.3 per cent compared to 52 per cent in the market average.

The Italian life business experienced a very pleasing growth rate of 42.5 per cent with the traditional singlepremium products being the main contributor while the impact of the unit- and index-linked products on the premium income remained unimportant. This led to a desirable improvement of the portfolio composition.

At 31.12.2004 we had 355 agencies, an increase by seven. Furthermore, ongoing relationships were maintained with 114 brokers. In 2004, Helvetia Life expanded the cooperation agreements with two distribution networks of financial institutions – the Credem Group and Banque Cortal. Additional co-operation agreements are in place with nine banks and their 80 points of sale. The claims burden in the non-life sector has slightly increased on the previous year; the gross combined ratio, however, remains on its excellent level of 95.4 per cent.

Helvetia's goals remained unchanged last year: improving the portfolio composition and providing The life business grew thanks to the traditional products.

The combined ratio remains excellent.

Gross premiums in 2004 from direct non-life business in Italy in EUR million

Gross premiums in 2004 from direct life business in Italy in EUR million

A new application form will considerably enhance the quality of the claims settlement.

brokers and customers with high-quality services. Work procedures and services are continuously analysed, adjusted and updated with those goals in mind. We are approaching the final development phase of a new claims application which should result in a significant quality improvement in the claims settlement. The acceptance and underwriting policies are still aiming to reduce the influence of the motor vehicle insurance. The measures we are taking are being cautious in accepting new contracts, stimulating business in the other non-life segments as well as in the life sector. In the latter sector two new term life products were created: "Helvetia Defensa Top" for more comprehensive needs which should protect owner or partners of smaller companies in particular and "Helvetia Easy", which the agents can directly conclude and settle without many formalities.

The business year 2004 exceeded our expectations and makes us optimistic.

The business year 2004 concluded, therefore, with an excellent underwriting result. The initiated measures, motivated and well-trained employees as well as a similarly committed distribution network allow us to be optimistic for the future.

Gross premiums from direct business in Italy in EUR million

	2003	2004	Change
Non-life
Property	41.2	44.0	6.8%
Transport	2.3	2.1	–8.7%
Motor vehicle	133.2	130.5	–2.0%
Liability	17.1	18.9	10.5%
Accident/health	26.7	28.9	8.2%
Total	220.5	224.4	1.8%
Life
Individual	51.3	74.5	45.2%
Group	6.3	7.4	17.5%
Unit-linked	0.5	0.9	80.0%
Total	58.1	82.8	42.5%

Key indicators Italy

	2003	2004
Gross domestic product (GDP)	0.1%	1.4%
Interest rate	4.3%	3.8%
Inflation	2.6%	2.0%
Unemployment rate	8.5%	7.9%

Spain

The Spanish economy is in good shape despite the change in government.

The Spanish economy presented itself again in good shape in 2004 as it did already for the past years. The strength of the private consumption and the drive of the real estate sector additionally supported the development of the gross domestic product (GDP) thus leading to a 2.6 per cent rise. The progress resulted in more job creation and in a further reduction of the unemployment rate, one of Spain's biggest problems. The other side of the coin is, however, the continuous deterioration of the traditionally negative trade balance.

A change in government took place in March thus re-launching the debate on reforms, urgently needed by the local economy and the national politics. Some of the many topics on the table are related to the insurance industry, such as occupational benefits, nursing insurance or tax incentives for various savings instruments.

Modernising the insurance industry

Resolutions by the new government are changing the framework for the insurance industry.

New government resolutions, such as the introduction of the penalty-points driver licence, will affect the features of insurance products. The local adjustment to the EU-guidelines for insurance middlemen ensues a new method of subdividing the traditional distribution channels. This will have a direct impact on the marketing strategy of the Spanish insurers. All those measures will create a new set of rules to which the Spanish insurance industry has to adapt. The impact of the insurance sector on the Spanish economy was continuously rising over the years thanks to the high growth rates of the premium income. Last year was no exception either. The non-life sector, in particular, took advantage of the generally good state of the Spanish economy as the increase in the premium volume of 8.9 per cent shows (estimate by the underwriters' association). The life business strongly advanced with 5.4 per cent as well. The sale of some of the life insurance products, though, suffered from the low-interest situation. Furthermore, the underwriting results, already in good shape in the prior year, kept improving as a result of the implemented cost-reduction measures and the lower loss burden.

Despite the continuous increase of the premium volume there is still a significant pent-up demand in the insurance coverage compared to other European countries.

Merger successfully concluded

Helvetia Previsión is especially able of taking advantage of the good market situation thanks to the positive effects of the merger of our two Spanish subsidiaries and an excellent portfolio quality. The past business year was very meaningful for our Spanish subsidiary. One and a half years after the integration project went under way the merger of the former companies Helvetia CVN and Previsión Española was completed in June on schedule. The personnel were reduced by 161 jobs without cutting the sales force.

The merger of the two Spanish subsidiaries was successfully completed.

Gross premiums in 2004 from direct non-life business in Spain in EUR million

Gross premiums in 2004 from direct life business in Spain in EUR million

The premium income is growing continuously. Helvetia Previsión aims for gains in market share.

Helvetia Previsión with headquarters in Seville strives to further expand its current position in selected business segments of the Spanish market through a broad range of innovative products and high-quality services. A solid foundation was established over the past years exactly for that purpose: a modern organisation, streamlined procedures, a strong network of branches and a high-quality portfolio. This focus on high quality bore again fruits in 2004 as the low claims burden proves (in the motor-vehicle and the property business in particular). The gross combined ratio stands at 93.4 per cent. The first positive effects of the merger additionally contributed to the good annual result. The premium income was pleasing and exceeded even our expectations since we had the merger's impact expected to cause a more moderate growth rate. The motor-vehicle segment of Helvetia Previsión was the only line of business reporting a decrease in premium income. The acquisition of new customers was deliberately slowed down in accordance with the disciplined underwriting policy and as a result of the rate cutting by various providers. Those rate cuts are the first sign of an upcoming phase of a softening market in this cyclical business segment which regularly provided the Spanish insurers with good results in the past years.

Certain term insurance products in the life sector profited from a strong upswing thus providing that line of business with a satisfactory development.

Strengthened market presence

Within the concept of positioning the company as a member of a Swiss insurance group an innovative marketing campaign was launched to effectively support this market presence. This campaign, which uses a St.Bernard dog as a symbol for Switzerland, was lauded as being very original and creative and was getting much attention. Strengthening the brand name "Helvetia Previsión" is one of the company's strategic goals and will be reinforced with additional measures.

Gross premiums from direct business in Spain in EUR million

	2003	2004	Change
Non-life
Property	93.9	90.0	–4.2%
Transport	11.3	11.7	3.5%
Motor vehicle	98.9	92.3	–6.7%
Liability	13.3	16.7	25.6%
Accident/health	16.5	23.4	41.8%
Total	233.9	234.1	0.1%
Life
Individual	35.2	39.4	11.9%
Group	14.6	17.0	16.4%
Unit-linked	0.6	0.4	–33.3%
Total	50.4	56.8	12.7%

Optimistic outlook

In the past year, the merger was successfully completed and the solid foundation established for the future development of Helvetia Previsión. This current year will see the company expanding its strength as an innovative and modern enterprise to take advantage of the good market opportunities.

Key indicators Spain

	2003	2004
Gross domestic product (GDP)	2.7%	2.6%
Interest rate	4.3%	3.7%
Inflation	2.6%	3.2%
Unemployment rate	11.2%	10.5%

The new brand advertises with Swiss symbol.

France

Despite a slow-down around the middle of last year the economic growth in France should be above 2 per cent especially as a result of the strong private consumption. The revival of the investment activity remains though subdued while the contribution of the foreign trade will probably end up being in negative territory. The latter is the consequence of extraordinarily vigorous imports and a high Euro exchange rate which is diminishing the competitiveness. This situation has caused the companies to be more restraint so that employment has only slightly increased on 2003 and the unemployment rate remained almost the same (9.9 per cent of the working population). The freight transportation business of our company in France took advantage of this development and expanded its volume.

The freight transportation sector gained from the economic growth.

Clear strategy

Our subsidiary continued also in the past year to strictly adhere to its niche strategy in the transport insurance sector. This focus allows us to develop products and services which are completely in line with the needs of the targeted clientele and are conveying a clear picture of our market position to the external distribution networks. The marketing and communication activities – segmented by customers – provide an improvement of the economic efficiency.

High market share

Thanks to the acquisition of two insurance portfolios Helvetia was able to report again strong growth in France for the past business year. Integrating those portfolios coincided with a co-operation agreement with "Lanoire et Chevilliat" as well as with a significantly expanded broker network. Those steps as well as the further development of our own business resulted in a high premium volume. The growth rate stood at 18 per cent thus leading to an additional expansion of our market share in the transport-insurance industry to about 10 per cent.

The niche transport insurer Helvetia France expanded its market share.

Gross premiums from direct business in France in EUR million

	2003	2004	Change
Non-life
Transport	52.8	62.4	18.2%
Total	52.8	62.4	18.2%

Excellent result

The excellent portfolio quality combined with our consistent cost control as well as the cautious underwriting policy all helped achieving another positive underwriting result with a very good gross combined ratio. Other contributions to the success came from the range of attractive products offered and the streamlined workflows.

The underwriting result was again favourable.

This pleasing result serves thus as a basis to optimally play out the synergies resulting from the latest measures and to use new opportunities for partnerships and acquisitions in our strategic line of business.

Key indicators France

	2003	2004
Gross domestic product (GDP)	0.6%	2.0%
Interest rate	4.3%	3.7%
Inflation	2.4%	2.1%
Unemployment rate	9.7%	9.9%

The Assumed Reinsurance

The IFRS-accounting requires a changed reporting method.

The changeover from the Swiss accounting principles Swiss GAAP ARR to IFRS for the 2005 financial statements will prohibit applying the currently used accounting method – reporting the business with a year in arrears – to the assumed reinsurance. This is the reason for the 2004 financial statements to report about both reinsurance years – 2003 and 2004. The financial statements in hand thus include the business year 2003, prepared in accordance with Swiss GAAP ARR and reporting on the business with one year in arrears, and the business year 2004 calculated using actuarial estimates for the first time.

This one-time transition makes comparing the reported figures with last year's difficult and only of limited use.

Attractive reinsurance market

The start to the renewal round at the end of 2002 was marked by an upbeat mood. The market conditions were so positive that we were able to further diversify and expand our reinsurance portfolio in accordance with our strategy.

The terms in the reinsurance business remain interesting.

The conditions for the renewal round at the end of 2003 remained on an actuarially attractive level. None of the markets experienced a significant softening of the terms and the premium rates.

Higher premium income

Taking the interesting market environment into account the portfolio of the Assumed Reinsurance in the business year 2003 was expanded by CHF 60.9 million on the previous year and amounted to CHF 205 million which translates into an increase by 42 per cent. The estimated premium volume for the business year 2004 stands at CHF 217 million with the portfolio composition largely remaining unchanged. A total of CHF 420 million in premiums is reported in this business year. The diversification of the portfolio had again been broadened.

Better claims trend

USD 18.5 billion of the worldwide catastrophic losses in the year 2003 were carried by the non-life insurance with USD 16.2 billion caused by natural disasters and USD 2.3 billion by man-made damages.

The insured property damages reached with USD 49 billion a new peak in 2004 – a year which was anyway under severe strain from natural disasters. The tsunami tidal wave in South Asia in December 2004 ranks with its USD 5 billion in damages only third when strictly measured by the amount of the loss insured. The first two places are taken by hurricanes "Ivan" (USD 11 billion) and "Charley" (USD 8 billion) – two of four hurricanes which had devastated large coastal areas in Florida.

The portfolio of the Assumed Reinsurance was only marginally affected by those events. The hurricanes in summer 2004 in the United States and in Japan as well as the seaquake end of the year in South Asia are only a minor and easily-to-handle financial burden to our account thanks to the continuously low basic loss burden.

The natural disasters affected our portfolio only marginally.

Excellent profitability

Both business years 2003 and 2004 managed to present excellent annual financial statements thanks to a very good loss experience in the Assumed Reinsurance. The net combined ratio stands at 97.1 per cent and emphasizes that a strictly profit-oriented underwriting policy is still paying off.

Outlook

Based on the current facts the Assumed Reinsurance managed to slightly increase its premium income for 2005 to about CHF 220 million with appropriate rates and terms. We are counting on a similarly good result for the current business year provided that we are spared large-scale disasters. The conditions for a considerable profit contribution from the Assumed Reinsurance and thus the prospects for the coming years remain unchanged positive.

Investor information

In 2004 the stock markets reported a pleasing performance.

The stock markets reported thanks to their year-end rallies a pleasing performance in US Dollar of just under 15 per cent of the MSCI World Index during the year under review. In view of the appreciation of the Swiss Franc, however, the price gains dwindled for the Swiss investors to about 5 per cent. The Swiss shares managed to follow the favourable stock market environment and closed 3.7 per cent higher on the prioryear period.

Past year was overall also pleasing for the bond markets. The return on a ten-year government bond remained with 2.3 per cent on the low level. The extremely low returns, however, make the bond markets now more vulnerable with regard to improving economic information and higher inflation rates respectively.

The Swiss Franc strengthened in the last year against all important currencies. Especially significant was the appreciation of the Swiss Franc against the US Dollar and thus against those (mostly Asian) currencies, in particular, that are linked to the US Dollar. The US currency, for example, slid alone in the last weeks of 2004 from about CHF 1.20 to below CHF 1.14 per US Dollar. Responsible for the devaluation of the US Dollar, which gained renewed momentum with the outcome of the US presidential elections, were the resurgent apprehensions of a possible continuous escalation of the American budget- and current-account deficits.

The Swiss Franc strengthened against all important foreign currencies.

Raising new capital

Last year, Helvetia Patria procured both, new outside capital and shareholders' equity, to continuously ensure

	2003	2004
Helvetia Patria Group
Consolidated shareholders' equity before appropriation of profit (in CHF million)	1155.3	1417.1
Consolidated equity per share (in CHF)1	185.1	171.7
Profit after taxation per share (in CHF)	15.4	19.2
Return on consolidated shareholders' equity	8.4%	12.3%
Return on consolidated shareholders' equity (excluding revaluation reserve)	18.8%	22.3%
Helvetia Patria Holding (Helvetia Patria registered shares)
Market value
End of year (in CHF)	212.0	169.4
Yearly high (in CHF)	212.0	213.2
Yearly low (in CHF)	111.0	152.2
Market capitalisation at end of year (in CHF million)	1334.1	1465.8
Ratio of market capitalisation to consolidated shareholders' equity	115%	103%
Ratio of market capitalisation to gross premiums earned	25%	29%
Number of shareholders	3722	4056
Dividend per share (in CHF)	4.0	5.52
Dividend yield3	1.9%	3.2%
Price/earnings ratio3	14	9
Pay-out ratio	27%	30%
Securities number/Symbol		1227168/HEPN
Stock exchange listed		Swiss Stock Exchange SWX

Key information for investors

¹ Value 2003 adjusted for new ARR 24 incl. "legal quote"; value 2004 excl. "legal quote"

² Proposal to Shareholders' Meeting

³ Based on year-end price

In December, the Board of Directors called the approved capital increase.

a consistent development of the Group. In May of last year, a new bond in the amount of CHF 200 million was issued which will be in part used to refinance the convertible bond maturing this year in June as well as for a Group-internal capital increase for Patria Leben AG. In December, the Board of Directors partially called the capital increase authorized by the Shareholders' Meeting in 2003 and increased the shareholders' equity by CHF 295 million. The proceeds will finance organic growth and smaller acquisitions.

Small changes in the shareholders' structure

The capital increase resulted in a slight change in the shareholders' structure. The share of the shareholder pool – consisting of Patria Mutual, Raiffeisen and Vontobel – decreased from 45 to 40 per cent. The holdings of Münchener Rück Group fell from 10.5 to 8.2 per cent. Those positive changes in the shareholders' structure resulted in an increase of the free float from 44.5 to over 50 per cent thus making our shares even more attractive for private and institutional investors.

At 31.3.2005, a total of 4 134 registered shareholders were entered in the share register. The shares are currently held by the following shareholder groups:

By private individuals	13.7 per cent
By banks and insurance companies	25.0 per cent
By other institutional investors	61.2 per cent
By other investors	0.1 per cent

94 per cent of the shareholders are Swiss residents while 6 per cent of the investors are living abroad.

The purchase of registered shares of Helvetia Patria Holding is not subject to restrictions. Shareholders, who purchase the shares in their own name and interest, will be entered in the share register with up to a

Shareholders' equity following appropriation

of profit in CHF thousand

	2003	2004
Share capital	62930	86529
Statutory reserves	353190	613737
Profit carried forward	2020	6781
Total shareholders' equity	418140	707047

maximum of 5 per cent of the issued registered shares with voting rights.

Consistent dividend policy

For years, Helvetia Patria has been pursuing a policy of performance-oriented and continuous dividend payments. The good operating result in the past year and the high profitability allow the Board of Directors to submit the proposal to the Shareholders' Meeting to increase the cash dividend by CHF 1.50 to CHF 5.50 per share.

Sustainable dividend policy

* Proposal to the Shareholders' Meeting

Share price trends 1.1.2004 to 31.3.2005 indexed in CHF

Our environmental policy

Environmental management is again part of Helvetia Patria's report covering its activities, progress and goals. The criteria of sustainability are applying to all decisions related to increasing energy-efficiency: economy in the sense of a minimum of overall expenses with a maximum of ecological usefulness as well as the credibility. The commitment to the environment is firmly embodied in the Company Policy of the Helvetia Patria Group; it integrates ecological aspects for example into its investment strategy and accentuates them through its architecture.

Environmental activities in Switzerland

The MINERGIE-Certificate was awarded for the extension at the headquarters in St.Gallen.

In the spring of 2004 the extension "North" of the headquarters in St.Gallen was ready for occupation. A high point of the successful project completion was the ceremony when Helvetia Patria was awarded the MINERGIE-Certificate later in June which is presented by the Canton.

A building only qualifies as MINERGIE-House if it meets specifically defined, modern, structural and technical conditions as to comfort, health, emission and energy consumption with respect to the shell of the building and to the technology inside. Helvetia Patria creates with the new buildings, designed by Herzog & de Meuron, landmarks in the administrative building sector – also from an ecological point of view.

Award for ecological achievements

The Helvetia Patria supports sustainable activities for the benefit of our environment.

Helvetia Patria also contributes outside of its company to projects which are original and outstanding with respect to ecology. This is the reason for supporting the WWF Project "Der Grüne Zweig" (the green branch) which rewards sustainable activities for the benefit of our environment. Two projects received a prize. Deciding factors were three criteria: First, achieving an improvement for a particular situation in life, which is noticed in the public. Secondly, creating an incentive to act ecologically in our personal life and last but not least, holding up the achievement as an example worth following.

Project "Agent 21" helped pupils, their leaders, school inspectors and teachers from Rorschach SG to learn in a series of sub-projects, such as "Energy", "Nature", "Forest", "Nutrition" and "Shopping", that their decisions and actions have a direct connection with the state of our environment.

The second project receiving a prize was the "Future E-Bike", a fast electric bicycle which is feeding power into special batteries when driving downhill. This electricity is then re-used when driving uphill.

Encouraging the use of public transportation

According to internal calculations the total business transportation of all Helvetia Patria employees in Switzerland in 2004 accounted for more than one million kilometres, i.e. 1185 per employee which are 150 kilometres more per person than in 2003. The principal share falls with 628 kilometres per employee to the railways. Using bicycles is encouraged by providing lockable storage facilities, dressing rooms and showers. The employees are provided with first class day tickets, if necessary, for taking business trips within Switzerland.

Environmental activities in Germany

New headquarters with energy-efficient standards: Germany focussed its intense environmental efforts in the last year on structural technology. During the summer the new headquarters in Frankfurt were completed. The management and the employees were ready to move back in after being divided and working in three different locations. The building is constructed without halogen-containing plastics and is completely PVCfree.

The new headquarters of Helvetia Patria Germany meet the low-energy consumption standard.

Low energy consumption

Noticeable is especially the new type of climate control concept using thermo-active component cooling. Significant energy savings by about 25 per cent were achieved despite of the old building and the newly constructed extension being both equipped with airconditioning and ventilation systems. Those savings were made possible by using the most modern automatic control systems and improving the thermal insulation techniques for the windows. Energy consumption in the new building was further reduced by the use of built-in thermo-active ceilings. The new lighting systems lowered the average electricity consumption

The new climate control concept led to significant energy savings.

to 8.5 W per square meter office space. A significant reduction of the overall electricity consumption by 50 per cent was achieved compared to the use before the building's renovation.

Goals and measures for the Group

Making the employees sensitive to sustainable ecological conduct is the prerequisite for carrying out a successful environmental management. This implies that the employees wisely use energy, such as water and electricity, and materials, such as paper and computers.

"FAKTOR MAX", an internet-based training program should help the employees to become better aware of environmental issues. It shows in a playful way how to save resources at the workplace by taking a broad range of possible actions and steps. During the year "FAKTOR MAX" will be introduced as pilot project in Switzerland and later also in the foreign business units.

An internet game should raise awareness among the employees for environmental topics.

You find more information on the environmental management at Helvetia Patria on our website "www.helvetiapatria.com".

Key consumption by the locations St.Gallen (SG) and Basel (BS)

Energy	Unit	Total amount 2003	Total amount 2004	Change	Amount per employee 2003	Amount per employee 2004	Change
Electricity	kWh	4955438	4886722	–1.4%	4164	3986	–4.3%
District heating	kWh	2927159	2843000	–2.9%	2460	2319	–5.7%
Heating oil	Ltr	8000	47100	488.8%	6.7	38.4	473.1%
Natural gas	kWh	1617150	1279483	–20.9%	1359	1044	–23.2%
Petrol	km	214000	208000	–2.8%	180	170	–5.6%
Materials
Total paper quantity	kg	176700	175900	–0.5%	148	143	–3.4%
Copier paper	kg	82200	87900	6.9%	69	72	4.3%
100% chlorine-free bleach paper	kg	41700	37300	–10.6%	35	30	–14.3%
Recycled paper	kg	52800	50700	–4.0%	44	41	–6.8%
Water	m3	20184	26187	29.7%	17	21	23.5%
Waste
Total waste	kg	218240	220159	0.9%	183	180	–1.6%
Paper/cardboard	kg	138220	150004	8.5%	116	122	5.2%
Waste for disposal	kg	80020	70155	–12.3%	67	57	–14.9%
Sewage	m3	20184	26178	29.7%	17	21	23.5%
Passenger traffic (external)
Public transportation	Pkm	768000	770000	0.3%	645	628	–2.6%
Air travel	Pkm	250000	475084	90.0%	210	388	84.8%
Reference quantities (employees)		1190	1226	3.0%

The social responsibility

Aware of its social responsibility Helvetia Patria supports numerous philanthropic projects and organizations. Most of the grants are awarded to charitable and social institutions. Projects supporting young people and the arts are also very close to our hearts.

Specifically supporting the youth

The foundation "Patria Jeunesse" was established in 1978 at the occasion of the hundredth anniversary of Patria Mutual and was renamed in "Stiftung Helvetia Patria Jeunesse" in 2003. It puts its main focus on supporting youth groups, associations and youth projects. During the year under review more than CHF 165000 were granted to 29 beneficiaries related to projects supporting the youth in Switzerland. The Swiss-wide annual grant was awarded to "Plusport Behindertensport Schweiz" (sport for people with disabilities in Switzerland) for the integrated youth camp "fürenand – mitenand" (for each other and with each other) in the holiday village Fiesch.

Within the scope of its youth support in the eastern part of Switzerland Helvetia Patria awards every year the "Helvetia Patria-Prize" for outstanding individual or group achievements in school, music or charitable activities. Raising the interest level of young people between 16 and 20 in the cultural offerings of the "Stadttheater St.Gallen" is the purpose of the Helvetia Patria-Paul Bürgi Foundation which annually provides the amount of CHF 30000.

Supporting the arts

With its specific concept of assisting the arts Helvetia Patria is taking this cultural obligation in the public interest very serious. During the past year, five new artworks were purchased from young and still little known talents.

Sponsoring

The student body of the University of St.Gallen organizes every year a wide range of events such as "Jazz a de Uni" (Jazz at the University), lectures and exhibitions. For four years now, we are supporting this project with a yearly donation of CHF 10 000 as well as with free logistical services.

Besides donating to numerous high quality cultural events – in the year under review, our company supported the production of Verdi's "Otello" at the Stadttheater St.Gallen with a large six-figure contribution – Helvetia Patria also participates in various sport activities within its sponsoring program by assisting professional but also amateur clubs.

Helvetia Patria acts as co-sponsor of the renowned Menuhin Festival in Gstaad by giving substantial funding.

Taking up the role of main sponsor, our financial involvement is also at a high level for the "Esprix – the Swiss Quality Award". This annual award is presented in spring to a company excelling in quality management.

Helvetia Patria also supports the Robinson Children's Circus. Our company made it in 2004 for about 1000 children and adults possible to experience the summer performances by the young circus stars between the ages of 6 and 16 years.

Group-wide social responsibility

Helvetia Germany is providing financial support to insurance institutes at universities, associations as well as to institutions with social, cultural and philanthropic purposes. Related to this is the acquisition of an art object by the artist "rosalie" for the headquarters in Frankfurt.

Efficient, fast and unbureaucratic help comes from our Austrian subsidiary Der ANKER for disasters in its home country. The company is similarly committed to helping its own employees, for example with free influenza vaccinations.

The foreign business units are taking their social responsibility serious.

Helvetia Italy was assisting in the year under review a research centre for psychoanalysis for new symptoms (Jonas Onlus). The purpose of this centre is to research the connections between the difficulties of today's life, their symptoms and the social situation. Another project receiving help is the "Villa Luce" Onlus which supports the social re-integration of girls from difficult family situations. Furthermore, numerous contributions were granted to volleyball teams, boccia clubs or to support soccer.

In Spain, Helvetia Previsión has committed to be sponsor of the Spanish basket ball association for the year 2005 and supports this sport with a significant donation helping to finance sport and basket ball schools for children suffering economic or social hardships.

Helvetia Patria Jeunesse supports young people in Switzerland.

Financial statements

Consolidated financial statements for the Helvetia Patria Group in 2004

Consolidated profit and loss account Non-life underwriting 76 Life underwriting 77 Non-underwriting 78

Combined 79

Consolidated balance sheet

Assets	80
Liabilities
Consolidated cash flow statement	82
Notes to the consolidated financial statements	83
Report of the Group Auditors	93

Financial statements for Helvetia Patria Holding in 2004

Profit and loss account	95
Balance sheet	95
Notes to the financial statements	96
Report of the statutory auditors	97

Consolidated profit and loss account

Non-life underwriting in CHF thousand

	2003	2004	Change
Net earned premiums:
Gross written premiums	2269312	2596720
Premiums ceded to reinsurers	–284208	–269958
Net written premiums	1985104	2326762
Gross change in reserves for unearned premiums	–20319	–73524
Reinsurers' share of gross change in reserves
for unearned premiums	3411	–1777
Net change in reserves for unearned premiums	–16908	–75301
Net earned premiums	1968196	2251461	14.4%
Net interest income assigned to non-life activities	130099	124890	–4.0%
Net claims paid:
Claims paid:
– Gross	–1363182	–1361476
– Reinsurers' share	151237	126259
– Net	–1211945	–1235217
Change in reserves for claims outstanding:
– Gross	–85618	–228131
– Reinsurers' share	–11429	–19110
– Net	–97047	–247241
Net claims paid	–1308992	–1482458	13.3%
Net change in other underwriting reserves	–530	643	–221.3%
Net expenditure on results-linked and non-results-linked
policyholders' dividends	–1273	–665	–47.8%
Net change in equalisation reserve	–17425	–35263	102.4%
Net underwriting expenses:
Gross underwriting expenses	–670109	–743920	11.0%
Commissions and profit share received
from reinsurers	54862	50343
Net underwriting expenses	–615247	–693577	12.7%
Other net underwriting expenditure	–22749	–22184	–2.5%
Result from non-life underwriting activities	132079	142847	8.2%

Life underwriting in CHF thousand

	2003	2004	Change
Net earned premiums:
Gross written premiums	3123337	2508035
Premiums ceded to reinsurers	–38254	–35620
Net written premiums	3085083	2472415
Gross change in reserves for unearned premiums	–6439	–266
Reinsurers' share of gross change in reserves
for unearned premiums	1129	–1089
Net change in reserves for unearned premiums	–5310	–1355
Net earned premiums	3079773	2471060	–19.8%
Net interest income assigned to life activities	790616	801667	1.4%
Funds transferred from policyholders' dividend reserve	27845	2494	–91.0%
Net benefits paid:
Benefits paid:
– Gross	–2385591	–2706743
– Reinsurers' share	24812	36131
– Net	–2360779	–2670612
Change in reserves for benefits outstanding:
– Gross	–31033	6283
– Reinsurers' share	2377	–1051
– Net	–28656	5232
Net benefits paid	–2389435	–2665380	11.5%
Net change in actuarial reserves:
– Gross	–1055012	–106873
– Reinsurers' share	–475	–747
– Net	–1055487	–107620	–89.8%
Net change in other underwriting reserves	–13645	–57170	319.0%
Net underwriting expenses:
– Gross underwriting expenses	–313364	–286733
– Commissions and profit share received
from reinsurers	7508	4928
Net underwriting expenses	–305856	–281805	–7.9%
Other net underwriting expenditure
Net	–841	–592	–29.6%
Result from life underwriting activities before policyholders'
dividend distribution	132970	162654	22.3%
Net expenditure on results-linked and non-results-linked
policyholders' dividends	–103408	–124287	20.2%
Result from life underwriting activities	29562	38367	29.8%

Non-underwriting in CHF thousand

	2003	2004	Change
Income from real estate	192350	191833	–0.3%
Income from non-consolidated holdings	404	11	–97.3%
Income from other investments:
From shares, other non-fixed-interest-rate securities
and investment funds	55546	49977
From fixed-interest-rate securities	526156	512150
From promissory loans	32760	34260
From mortgages	108538	97883
From policy loans	7035	5936
From fixed-term deposits and similar	10377	8765
Income from other investments	740412	708971	–4.2%
Interest on deposits	1223	3149	157.5%
Gross realized gains on investments	358116	468962	31.0%
Gross unrealized gains on investments	100058	73766	–26.3%
Other interest income	8331	8735	4.8%
Expenditure on investments and interest costs:
Investment administration costs	–20019	–20966
Realized losses on investments, including hedging expenses	–189469	–252357
Depreciation of investments	–118291	–220680
Interest payments on reinsured business and
other interest costs	–62156	–55794
Expenditure on investments and interest costs	–389935	–549797	41.0%
Interest assigned to life- and non-life underwriting activities	–920 715	–926557	0.6%
Other extraordinary profit from other business operations	0	53490	100.0%
Other income from ordinary business operations	5804	53790	826.8%
Other expenditure on ordinary business operations	–19638	–59308	202.0%
Result from non-underwriting activities	76410	27045	–64.6%

Combined in CHF thousand

	2003	2004	Change
Result from non-life underwriting activities	132079	142847	8.2%
Result from life underwriting activities	29562	38367	29.8%
Result from non-underwriting activities	76410	27045	–64.6%
Amortization of goodwill	–90779	–3776	–95.8%
Result before taxation	147272	204483	38.8%
Taxation	–54756	–45815	–16.3%
Minority interests	–120	56	–146.7%
Result after taxation and minority interests	92396	158724	71.8%

Consolidated balance sheet

Assets in CHF thousand

	31.12.2003	31.12.2004	Change
Intangible assets	22463	18719	–16.7%
Investments:
Real estate	4511988	4444023
Investments in affiliates	14706	4627
Non-consolidated holdings	4293	3564
Own shares	44544	0
Shares, derivatives, other non-fixed-interest-rate securities and investment funds	2844917	2288576
Fixed-interest-rate securities	13216479	13621768
Promissory loans	737065	865445
Mortgages	2969744	2952332
Policy loans	157296	149359
Fixed-term deposits and similar	990149	1659324
Investments	25491181	25989018	2.0%
Investments for unit-linked life insurance policies	607930	700179	15.2%
Deposits from reinsurance assumed	73846	105104	42.3%
Receivables from underwriting activities:
From policyholders	273081	276659
From agents and brokers	91765	80880
From insurance companies	165606	186810
Receivables from underwriting activities	530452	544349	2.6%
Other receivables:
From affiliates and associated companies	1390	592
From others	145989	143257
Other receivables	147379	143849	–2.4%
Tangible fixed assets	46887	23998	–48.8%
Liquid assets	162560	159839	–1.7%
Other assets	2760	3517	27.4%
Prepaid expenses:
Interest and rents	286557	292121
Other	349287	426274
Prepaid expenses	635844	718395	13.0%
Total assets	27 721302	28406967	2.5%

Liabilities and shareholders' equity in CHF thousand

	31.12.2003	31.12.2004	Change
Shareholders' equity:
Share capital	62930	86529
Capital reserve	269449	613737
Own-shares reserve of prior year/Own shares	83741	–58191
Retained earnings and revaluation reserves	644480	613829
Result for the year	92396	158724
Shareholders' equity excluding minority interests	1152996	1414628	22.7%
Minority interest in shareholders' equity	2257	2481	9.9%
Shareholders' equity including minority interests	1155253	1417109	22.7%
Reserve for unearned premiums Gross	725100	687068
Reinsurers' share	–23918	–36186
Net	701182	650882	–7.2%
Gross actuarial reserves	19191853	19196337
Reinsurers' share	–185868	–167404
Net	19005985	19028933	0.1%
Gross outstanding claims reserve	2758734	3013289
Reinsurers' share	–273943	–279828
Net	2484791	2733461	10.0%
Net reserves for results-linked and non-results-linked
policyholders' dividends	243859	447011	83.3%
Net equalisation reserve	280191	346174	23.5%
Reserves for unit-linked life insurance policies	592725	675124	13.9%
Other net underwriting reserves	51766	76719	48.2%
Other reserves:
Reserves for pensions and similar obligations	115348	121916
Reserves for current taxes	34009	39879
Reserves for deferred taxes	381644	241257
Miscellaneous reserves	225192	113078
Other reserves	756193	516130	–31.7%
Reinsurance deposit liabilities	184477	179177	–2.9%
Bonds and convertible bonds	150000	350000	133.3%
Other insurance liabilities:
Towards affiliated or associated companies	0	7134
Premium deposits/prepaid premiums	690398	645277
Credited results-linked and non-results-linked policyholders' dividends	1037655	988401
Towards agents and brokers	44904	31638
Towards insurance companies	78067	64041
Other insurance liabilities	1851024	1736491	–6.2%
Other liabilities:
Towards affiliates and associated companies	2666	2552
Towards other creditors	106324	123068
Other liabilities	108990	125620	15.3%
Accrued liabilities	154866	124136	–19.8%
Total liabilities and shareholders' equity	27721302	28406967	2.5%

Consolidated cash flow statement

in CHF thousand	2003	2004	Change
Cash flow from operations
Consolidated annual profit	92396	158724	71.8%
Expenditure not affecting the flow of funds:
Increase in underwriting reserves	1346379	433121
Increase in reserves for unit-linked life insurance policies	77488	83285
Change in results-linked and non-results-linked policyholders' dividends	83167	295500
Depreciation of intangible assets	95105	7563
Depreciation of investments	152071	171483
Depreciation of tangible fixed and other assets	20445	15397
Change in non-actuarial reserves and other	118977	–264714
Total expenditure not affecting the flow of funds	1893632	741635	–60.8%
Income not affecting the flow of funds:
Income from value readjustments	–102954	–68902
Profit from revaluation of investments and other assets	–120995	–41783
Total income not affecting the flow of funds	–223949	–110685	–50.6%
Cash inflow before changes in working capital:
Increase in receivables	–3917	–10367
Change in other assets	–18714	6734
Increase in prepaid expenses	–35110	–82553
Change in liabilities	170662	–149273
Change in accrued liabilities	57780	–30730
Payments from reserves	–323026	–242327
Total cash inflow before changes in working capital	–152325	–508516	233.8%
Total cash flow from operations	1609754	281158	–82.5%
Cash flow from investments:
Increase in own shares	0	–13647
Increase in intangible assets	–607	–3819
Decrease in non-consolidated holdings	10	9546
Change in real estate	–183713	2156
Increase in other investments	–1441735	–630812
Increase in investments for unit-linked life insurance policies	–59134	–71026
Increase in deposits receivable for assumed
insurance business	–3714	–31259
Total cash flow from investments	–1688893	–738861	–56.3%
Cash flow from financing activities:
Change in reinsurance deposit liabilities	10877	–5301
Capital increase of Helvetia Patria Holding net of expenses	0	284146
Issue of bonds and convertible bonds	0	200000
Change in minority interest in shareholders' equity	392	223
Payments from shareholders' equity	–12080	–24086
Total cash flow from financing activities	–811	454982	–
Net cash flow	–79950	–2721	–96.6%
Cash and cash equivalents at January 1	242510	162560	–33.0%
Cash and cash equivalents at December 31	162560	159839	–1.7%

Notes to the consolidated financial statements of the Helvetia Patria Group

1. Accounting principles

The consolidated financial statements of the Helvetia Patria Group have been prepared in accordance with the consolidation and valuation principles specified below, and are in accordance with the Swiss GAAP ARR reporting standards for insurance companies.

2. Scope and principles of consolidation

The consolidated financial statements of the Helvetia Patria Group contain the annual accounts at 31.12.2004 of Helvetia Patria Holding and all those companies in which the holding company controls, directly or indirectly, more than 50 per cent of voting rights (the "subsidiaries"). Consolidated subsidiaries of Helvetia Patria Holding are listed in detail in the table below.

Consolidated subsidiaries of Helvetia Patria Group in million

	Company's	Holding
Company	capital	at 31.12.2004
Helvetia Schweizerische Versicherungsgesellschaft, St.Gallen (CHF)	77.5	100.00%
Patria Schweizerische Lebensversicherungs-Gesellschaft, Basel (CHF)	50.0	100.00%
Helvetia Beteiligungen, St.Gallen (CHF)	225.7	100.00%
Helvetia Finance Ltd., Jersey (CHF)	0.1	100.00%
Helvetia Europe S.A., Luxembourg (EUR)	11.5	100.00%
Helvetia International Versicherungs-AG, Frankfurt am Main (EUR)	8.0	100.00%
Helvetia Schweizerische Lebensversicherungs-AG, Frankfurt am Main (EUR)	6.5	100.00%
Der ANKER Vermögensverwaltung GmbH, Frankfurt am Main (EUR)	0.0	100.00%
Helvetia Vermittlungs- und Grundstückverwaltungs GmbH & Co. KG, Frankfurt (EUR)	8.3	100.00%
Helvetia Grundstückverwaltungs GmbH, Frankfurt am Main (EUR)	0.0	100.00%
Der ANKER, Allgemeine Versicherungs-Aktiengesellschaft, Vienna (EUR)	12.7	100.00%
Römertor Versicherungsmakler, Immobilien- und Baugesellschaft mbH, Vienna (EUR)	0.0	100.00%
Marc Aurel Liegenschaftsverwaltungsgesellschaft mbH, Vienna (EUR)	0.0	100.00%
Helvetia Vita Compagnia Italo Svizzera di Assicurazioni sulla Vita, Milan (EUR)	13.4	100.00%
Helvetia Life S.p.A., Milan (EUR)	6.8	100.00%
Helvetia Patria Holding España S.A., Madrid (EUR)	90.3	100.00%
Helvetia Previsión, Sociedad Anónima de Seguros y Reaseguros, Seville (EUR)	21.4	98.67%

Assets and liabilities, income and expenditure for all these companies are fully consolidated.

In 2004, the share capital of Patria Leben, Basel, and of Helvetia International, Frankfurt, were increased by CHF 25.9 million and EUR 4 million respectively.

The holding in Der ANKER, Vienna, was increased from 99.99 to 100 per cent during 2004.

Helvetia CVN, Madrid, transferred its assets and liabilities into Helvetia Previsión, Seville, as a result of their merger. The subsidiary Orfila Inversiones SA, Seville, was dissolved in 2004, the remaining assets and liabilities were fully integrated into Helvetia Previsión, Seville.

The Anglo-Saxon capital consolidation method is applied. Minority interests in shareholders' equity and profit are disclosed separately in the balance sheet and the profit and loss account.

Inter-company receivables and liabilities have been set off, as have all inter-company income and expenditure. All intermediate profits resulting from intercompany asset sales have been eliminated.

Deferred taxation has been applied based on local income tax rates for all revalued items.

3. Foreign currency translation

Income and expense denominated in foreign currencies in the accounts of individual Group companies are recorded at the actual rates ruling on the transaction date; foreign-currency balance sheet positions for such companies are translated at the rate ruling on the balance sheet date. The resulting foreign-currency exchange differences are shown in the profit and loss accounts.

The financial statements of subsidiaries outside Switzerland are translated into Swiss francs at the rate ruling at the end of the year. Any differences arising from translation are recorded directly in retained earnings as part of shareholders' equity, with no impact on results for the year.

4. Valuation principles

4.1 Important valuation and accounting principles

The consolidated financial statements for 2003 and 2004 of the Helvetia Patria Group have been compiled in accordance with the valuation and accounting methods of Swiss GAAP ARR. The reporting sometimes requires estimates and assumptions to be made which may later differ from the actual results. Matters that are subject to estimates and assumptions that may have an impact on the results are described below:

A review of the value of fixed assets including goodwill and other intangible assets is made if there are indicators as a result of changed circumstances or events that have occurred that suggest that book values are too high. A negative difference to the book value is recognized in the shareholders' equity (e.g. real estate) or charged to the income statement (e.g. goodwill). The determination of the value is based on estimates and assumptions by the management. The actually attained values may therefore differ significantly from those estimates.

The allowed treatment of deferring unrealised losses on securities has not been applied (ARR 14).

4.2 Changes in the valuation and accounting principles

The new Swiss GAAP ARR-Standards 23 (financial reserves) and 24 (shareholders' equity and own shares) came into effect in the year under review and were applied for the first time. The introduction of the "legal quote" for the Swiss group business requires the related revaluation reserves – of those business units whose life business are subject to the "legal quote" to be reclassified from shareholders' equity to liabilities. The impact of these new regulations with regard to the "legal quote" and of ARR 24 is shown in the Notes 7.6 and 7.7. The effects of the first-time application of ARR 23 are reported in the non-underwriting account under the position "Other extraordinary profit from other business operations".

Up to and including the business year 2003, the underwriting business of the assumed reinsurance within Helvetia Versicherungen, St.Gallen, was recorded with one year in arrears. This process was adjusted to include an estimate for the current year in 2004, as a result the year under review reports two underwriting years (2003 and 2004).

4.3 Investments

Real estate is shown at market value. The valuation is based on independent estimates or on a valuation model with the rates of return applied that are customary in the individual country and market. In 2004, the valuation method used for Swiss real estate was changed. The resulting valuation difference, less than 1 per cent of the market value in Switzerland, was directly charged to the net revaluation reserve. Deferred taxes are shown on the balance sheet under "Reserves for taxes".

Investments in affiliated companies that are immaterial for the consolidation and in minority holdings of the Helvetia Patria Group are shown at cost less required depreciation.

Shares, other non-fixed interest rate securities, investment funds and derivatives are shown at market value. Deferred taxes are shown on the balance sheet under "Reserves for taxes".

Fixed interest rate securities are recorded at amortised cost, with the difference between the purchase and redemption price spread over the remaining duration. Supplementary depreciation is effected to cover credit risks.

The valuation of promissory loans, mortgages, policy loans and other loan amounts is based on their redemption value. Additional depreciation is effected to cover credit risks.

Valuation differences between the market value of shares, other non-fixed interest rate securities and investment funds as shown in the consolidated financial statements and their book value as stated in individual company accounts are recorded in the revaluation reserve, which forms part of shareholders' equity, after the deduction of any deferred taxation amounts. Any differences between the market value and book value in individual accounts of real-estate assets held are similarly treated. All other valuation differences between the consolidated financial statements and the accounts of individual companies are charged or credited in the profit and loss account. Necessary depreciation on investments is charged to the consolidated profit and loss account.

In individual countries the lower-of-cost or marketvalue principle has been alleviated in the accounts of individual companies according to legal provisions, the investments in shares and investment funds are shown at cost value or at the prior year's book value. The difference to market value is charged or credited to the consolidated profit and loss account in accordance with Group accounting policies (Swiss GAAP ARR 14) – taking into account any deferred taxation.

4.4 Underwriting reserves

All calculations of underwriting reserves comply with the rules and requirements of local regulatory authorities. All such calculations are based on assumed liabilities towards claimants and policyholders.

In consideration of the implementation of IFRS for the business year 2005 the current underwriting reserves were subjected to a liability adequacy test and increased as appropriate. Based on an internal model the reserves were further strengthened by CHF 25.7 million during the business year 2004.

4.5 Deferred acquisition costs

The deferred acquisition costs of Swiss individual life business were re-assessed at the balance sheet date. The amount totals CHF 205.9 million (previous year: CHF 208.4 million) at the end of 2004. This amount is included in the balance sheet under "Other prepaid expenses". Acquisition costs of life business of other entities are written off in the consolidated financial statements.

4.6 Taxes

Taxes on income are calculated based on the profits reported by the Group's companies. Deferred tax liabilities and claims are reported on the basis of the difference between balance-sheet book values and the corresponding tax rates for assets and liabilities according to the tax rates currently in effect. Deferred tax credits are only recognized if setting them off against future tax liabilities is probable.

At 31.12.2004, Helvetia Beteiligungen, St.Gallen, has a tax loss carry forward of CHF 47.6 million (2003: CHF 78.2 million) from the business year 2001. No deferred tax asset has been recognised for this loss carry forward.

4.7 Fixed assets

Fixed assets are valued at cost less cumulative depreciation and cumulative impairments of value. Depreciation is carried out using the straight-line method and is based on the estimated useful economic life – with the exception of Switzerland where fixed assets are written off in the year of acquisition.

4.8 Other balance sheet items

Other balance sheet items are shown using those valuation methods applied to individual company accounts.

4.9 Own shares

Holdings of own shares are deducted at their average cost from the shareholders' equity in the consolidated financial statements in accordance with ARR 24. The result from purchases or sales of own shares is recorded in the capital reserves.

5. Foreign-currency translations

Key foreign currencies for the Helvetia Patria Group were translated into Swiss francs at the following year-end rates:

Currency translation rates

	31.12.2003	31.12.2004
1 EUR	1.5599	1.5459
1 USD	1.2422	1.1405
1 GBP	2.2144	2.1851

6. Notes to the profit and loss account

6.1 Gross written premiums by country and segment

Direct business		2003	2004	Change	Change in original currency
Switzerland Non-life		562.9	575.8	2.3%	2.3%
	Life	2681.2	2005.1	–25.2%	–25.2%
Germany	Non-life	594.5	607.0	2.1%	3.0%
	Life	138.1	148.1	7.2%	8.2%
Austria	Non-life	190.1	188.3	–0.9%	0.0%
	Life	131.2	128.8	–1.8%	–0.9%
Italy	Non-life	343.9	346.9	0.9%	1.8%
	Life	90.6	128.0	41.3%	42.5%
Spain	Non-life	364.8	361.9	–0.8%	0.1%
	Life	78.6	87.8	11.7%	12.7%
France	Non-life	82.4	96.5	17.1%	18.1%
Indirect business
	Non-life	130.7	420.4	221.7%	221.6%
	Life	3.6	10.2	183.3%	184.0%
Total	Non-life	2269.3	2596.8	14.4%	15.1%
	Life	3123.3	2508.0	–19.7%	–19.6%
Total		5392.6	5104.8	–5.3%	–5.0%

Gross written premiums by segment in CHF million

				Change in original
	2003	2004	Change	currency
Individual	1167.2	985.2	–15.6%	–15.3%
Group	1857.3	1402.0	–24.5%	–24.5%
Unit-linked	95.2	110.6	16.2%	16.6%
Direct business life	3119.7	2497.8	–19.9%	–19.8%
Property	848.3	848.9	0.1%	0.6%
Transport	224.0	236.4	5.5%	6.3%
Motor vehicle	727.2	729.7	0.3%	1.1%
Liability	213.1	223.5	4.9%	5.5%
Accident/health	126.0	137.9	9.4%	10.5%
Direct business
non-life	2138.6	2176.4	1.8%	2.4%
Life	3.6	10.2	183.3%	184.0%
Non-life	130.7	420.4	221.7%	221.6%
Indirect business	134.3	430.6	220.6%	220.6%
Total premiums	5392.6	5104.8	–5.3%	–5.0%

Gross written premiums by country in CHF million

6.2 Interest income from life and non-life underwriting activities

Net interest income assigned to non-life business derives from the interest earned on premium income and from the interest earned on the average levels of the reserves for claims outstanding, the equalisation reserves and other underwriting reserves.

The net interest income assigned to life business corresponds to the income earned on investments, less interest on the risk capital invested calculated at local rates, which remains in the non-underwriting account.

6.3 Results-linked and non-results-linked policyholders' dividends

A total of CHF 124.3 million (2003: CHF 103.4 million) was charged to the life underwriting profit and loss account for results-linked and non-results-linked dividends to be distributed to policyholders.

6.4 Personnel costs

Expenditure on commissions and personnel is as follows:

Personnel costsin CHF million

2003	2004
751.1	765.7
57.3	57.2
35.5	35.3
8.1	7.4
852.0	865.6

6.5 Tax expenditure

Tax expenditure in CHF million

	2003	2004
Current tax	48.1	42.7
Deferred tax	6.7	3.1
Total	54.8	45.8

The prior-year figures have been adjusted.

Fixed asset movements in CHF million

	Acquistion costs (incl. change in revaluation)							Value
	Portfolio 1.1.2004	Currency impact	Additions	Disposals	Book transfers	Revaluation	Portfolio changes 31.12.2004	adjust- ments 31.12.2004	Net book value 31.12.2004	Net book value 1.1.2004
Intangible assets	178.3	–0.2	3.8	0.0	0.0	0.0	181.9	163.2	18.7	22.5
Investments:
Real estate	4902.1	–5.2	153.6	–154.9	–2.8	1.0	4893.8	449.8	4444.0	4512.0
Investments in affiliates	14.7	0.0	–10.1	0.0	0.0	0.0	4.6	0.0	4.6	14.7
Non-consolidated holdings	41.7	0.0	0.1	–0.2	0.1	0.0	41.8	38.2	3.6	4.3
Own shares	44.5	0.0	0.0	0.0	–44.5	0.0	0.0	0.0	0.0	44.5
Shares, derivatives, other non-fixed-interest-rate securities and investment funds	3657.5	–6.5	1169.7	–1932.6	–17.3	–40.3	2830.5	542.0	2288.6	2844.9
Fixed-interest-rate securities	13150.2	–32.1	6191.0	–5651.2	1.9	0.0	13659.9	38.1	13621.8	13216.5
Promissory loans	737.2	–2.7	246.9	–115.9	0.0	0.0	865.6	0.2	865.4	737.1
Mortgages	2982.2	–0.7	192.5	–214.6	0.0	0.0	2959.3	7.0	2952.3	2969.7
Policy loans	158.6	–0.2	31.8	–39.2	0.0	0.0	151.0	1.6	149.4	157.3
Fixed-term deposits	991.1	–5.2		42776.5 –42103.1	0.0	0.0	1659.3	0.0	1659.3	990.1
Total investments	26679.9	–52.6		50752.0 –50211.5	–62.7	–38.9	27065.8	1076.8	25989.0	25491.2
Investments for unit-linked life insurance policies	613.9	–1.0	85.5	–22.7	17.2	0.0	692.9	–7.3	700.2	607.9
Tangible fixed assets/other assets	186.1	–1.7	14.3	–8.4	4.9	0.0	195.3	167.8	27.5	49.6
Total	27658.2	–55.5		50855.6 –50242.7	–40.5	–38.9	28135.9	1400.5	26735.4	26171.2

7. Notes to the balance sheet

7.1 Fixed asset movements

In the year under review, fixed asset movements are shown gross, i.e. with cumulative acquisition costs and with cumulative value adjustments.

7.2 Real estate

The CHF 4.4 billion (2003: CHF 4.5 billion) market value of real estate as stated on the consolidated balance sheet compares with a total book value of CHF 3.6 billion (2003: CHF 3.7 billion) based on individual company accounts.

7.3 Non-consolidated holdings

The decrease by CHF 0.7 million is mainly due to foreign currency effects and depreciation.

7.4 Shares, other non-fixed-interest-rate securities and investment funds

Shares, other non-fixed-interest-rate securities and investment funds recorded at the lower-of-cost or market value in individual companies' accounts were valued in aggregate at CHF 1.9 billion (2003: CHF 2.4 billion).

7.5 Fixed-interest-rate securities

The market value of fixed-interest rate securities, which are shown at amortized cost, amounted to CHF 14.1 billion (2003: CHF 13.5 billion). The gross valuation margin that is not included in the revaluation reserves (shareholders' equity) amounts to CHF 471 million (2003: CHF 276.9 million).

Value adjustments
	Portfolio 1.1.2004	Currency impact	Disposals	Transfers		Depreciation Appreciation	Portfolio 31.12.2004
Intangible assets	155.8	–0.2	0.0	0.0	7.6	0.0	163.2
Investments:
Real estate	390.1	–1.2	–3.1	–2.8	66.8	0.0	449.8
Investments in affiliates	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Non-consolidated holdings	37.4	0.0	0.0	0.0	0.8	–0.1	38.2
Own shares	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Shares, derivatives, other non-fixed-interest-rate securities and investment funds	812.6	–23.0	–268.3	7.0	33.8	–20.1	542.0
Fixed-interest-rate securities	–66.2	–22.4	79.0	1.9	61.0	–15.2	38.1
Promissory loans	0.2	0.0	0.0	0.0	0.0	0.0	0.2
Mortgages	12.4	0.0	–2.1	0.0	4.2	–7.5	7.0
Policy loans	1.3	0.3	0.0	0.0	0.0	0.0	1.6
Fixed-term deposits	0.9	–0.9	0.0	0.0	0.0	0.0	0.0
Total investments	1188.7	–47.3	–194.4	6.0	166.6	–42.8	1076.8
Investments for unit-linked life insurance policies	6.0	–0.1	15.0	–6.9	4.9	–26.1	–7.3
Tangible fixed assets/other assets	136.5	–1.2	–5.8	22.9	15.4	0.0	167.8
Total	1486.9	–48.8	–185.2	22.0	194.4	–68.9	1400.5

The fixed asset movements may include rounding differences.

Consolidated movements in shareholders' equity in CHF million

	Share capital	Capital reserve	Own shares	Reserve for own shares	Re- valuation reserves	Cumulative currency differences	Retained earnings	Result for the year	Minor. shareholders	Total
Shareholders' equity at 1.1.2004	62.9	269.5	0.0	83.7	621.1	4.4	19.0	92.4	2.3	1155.3
Impact of accounting change1		83.7	–44.5	–83.7						–44.5
Shareholders' equity at 1.1.2004 after restatement	62.9	353.2	–44.5	0.0	621.1	4.4	19.0	92.4	2.3	1110.8
Dividends							68.3	–92.4		–24.1
Capital increase	23.6	271.4	–13.7							281.3
Transaction costs for capital increase		–10.8								–10.8
Change in revaluation reserve					30.9					30.9
Legal quote on revaluation reserves					–129.1					–129.1
Result for the year								158.7	–0.1	158.6
Foreign currency translation					–2.0	0.7				–1.3
Change in scope of consolidation							0.5		0.3	0.8
Shareholders' equity at 31.12.2004	86.5	613.8	–58.2	0.0	520.9	5.1	87.8	158.7	2.5	1417.1

¹ Based on first-time application of ARR 24

	Share capital	Capital reserve	Own shares	Reserve for own shares	Re- valuation reserves	Cumulative currency differences	Retained earnings	Result for the year	Minor. shareholders	Total
Shareholders' equity at 1.1.2003	62.9	269.5	0.0	83.7	594.5	6.9	391.0	–362.0	1.9	1048.4
Dividends							–374.1	362.0		–12.1
Change in revaluation reserves					13.6					13.6
Result for the year								92.4	0.1	92.5
Foreign currency translation					13.0	–2.5				10.5
Change in scope of consolidation							2.1		0.3	2.4
Shareholders' equity at 31.12.2003	62.9	269.5	0.0	83.7	621.1	4.4	19.0	92.4	2.3	1155.3

7.6 Consolidated movements in shareholders' equity The consolidated shareholders' equity of the Helvetia Patria Group increased by a total of CHF 261.8 million in 2004 (increase in 2003: CHF 106.9 million).

The share capital consists of 8652875 registered shares with a nominal value of CHF 10.

The Board of Directors is authorized until 9.5.2005 – based on the resolution passed by the Shareholders' Meeting on 9.5.2003 –, to increase the share capital by a maximum of CHF 31465000 by issuing a maximum of 3146500 registered shares.

Helvetia Patria Holding increased the capital to CHF 86528750 on 13.12.2004, by issuing 2359875 registered shares with a nominal value of CHF 10. The other statutory reserves were credited with the premium.

Subsidiaries of Helvetia Patria Holding owned 400312 registered Helvetia Patria Holding shares at the balancesheet date (prior year: 291136 registered Helvetia Patria Holding shares). The increase of own-shares holdings results from the capital increase of Helvetia Patria Holding and the subsequently adjusted conversion terms for the outstanding convertible bond. Theses shares are held in a deposit for the 2 per cent convertible bond issued by Helvetia Finance Ltd., Jersey.

Non-underwriting reserves in CHF million

	At 1.1.2004	Currency impact	Book transfers1	Use	Release		At Allocation 31.12.2004
Reserves for pensions and similar obligations	115.3	–1.0	0.0	7.1	0.2	14.9	121.9
Reserves for current taxation	34.0	–0.1	0.4	3.4	31.4	40.4	39.9
Reserves for deferred taxation	381.7	–1.1	–51.1	32.2	77.0	21.0	241.3
Restructuring reserves	17.1	–0.1	0.0	7.1	9.9	0.0	0.0
Other reserves	208.1	–1.8	–45.9	25.7	129.0	107.3	113.0
Non-underwriting reserves	756.2	–4.1	–96.6	75.5	247.5	183.6	516.1

1 Impact from first-time application of ARR 23

Net underwriting reserves in CHF million

	At	Currency	Book				At
	1.1.2004	impact	transfers	Use	Release		Allocation 31.12.2004
Reserves for unearned premiums	701.2	–1.5	–8.1	0.0	1015.8	975.1	650.9
Actuarial reserves	19006.0	–25.5	8.1	0.0	623.6	663.9	19028.9
Reserves for benefits outstanding	2484.8	–17.1	0.0	75.4	1585.3	1926.5	2733.5
Reserves for policyholders' dividends	243.9	–0.8	0.0	91.5	11.4	306.8	447.0
Reserves for unit-linked
life insurance policies	592.7	–0.9	0.0	0.0	1.0	84.3	675.1
Other underwriting reserves	331.9	–1.4	0.0	0.0	120.9	213.3	422.9
Underwriting reserves	23360.5	–47.2	0.0	166.9	3358.0	4169.9	23958.3

7.7 Reserve structure

The position "Other reserves" of CHF 113 million at 31.12.2004 includes financial reserves unrelated to the insurance business, such as vacation and overtime reserves and other accrued liabilities.

7.8 Debt outstanding

The following bonds of the Helvetia Patria Group are outstanding:

Bonds

Issuer	CHF million	Interest rate	Issue	Redemption
Helvetia Finance Ltd., Jersey	150.0	2%	2000	16.6.2005
Helvetia Patria Holding, St.Gallen	200.0	3%	2004	5.5.2010

The Helvetia Patria Group has a convertible bond outstanding, issued by the finance company Helvetia Finance Ltd., Jersey, and guaranteed by the Helvetia Patria Holding. In the year 2004, the conversion price was reduced from CHF 331.50 to CHF 319.90 as a result of the capital increase of Helvetia Patria Holding.

In 2004, Helvetia Patria Holding, St.Gallen, issued a bond in the amount of CHF 200 million.

7.9 Post-employment benefit obligations

Employees of the Group companies are covered under various pension plans with different benefits: In Switzerland, in addition to the mandatory plan there is a defined-contribution plan with benefits that exceed the legal minimum; in the subsidiaries abroad, there are a number of pension plans which may be either definedbenefits or defined-contribution plans. The reserves for pension obligations are set up following local laws and regulations.

The consolidated balance sheet contains pension commitments and other liabilities towards staff pension schemes amounting to CHF 112.3 million (2003: CHF 103.9 million).

The employer's contribution reserve in a welfare foundation amounts to CHF 1.4 million (2003: CHF 21.8 million) at 31.12.2004.

7.10 Securities Lending

Securities with a book value of CHF 647.1 million (2003: CHF 1109.9 million) were committed to securities lending transactions at the balance sheet date.

7.11 Derivatives and other financial instruments

Derivatives and other financial instruments are used to limit the risks associated with certain assets, liabilities and fixed commitments and obligations. Profits or losses from derivatives and other financial instruments are taken straight to the profit and loss account together with the realized or unrealized loss or gain on the position to which they refer.

Derivatives financial instruments in CHF million

	Contractual value at 31.12.2003	Gross positive repurchase value at 31.12.2003	Gross negative repurchase value at 31.12.2003	Contractual value at 31.12.2004	Gross positive repurchase value at 31.12.2004	Gross negative repurchase value at 31.12.2004
Derivatives on shares	1363.3	0.2	–7.6	521.6	0.2	0.0
Derivatives on interest	66.1	0.1	–0.5	0.0	0.0	0.0
Derivatives on currencies	4795.1	18.6	0.0	2174.4	2.3	–18.0

7.12 Capital commitments and other liabilities

Capital commitments for the future acquisition of investments amount to CHF 96.3 million at the balance sheet date (2003: CHF 153.1 million).

Within its regular business activities the Group concluded an outsourcing contract in Switzerland with the following fixed commitments:

At 31.12.2004:	in CHF million
2005	8.2
2006	7.2
2007	7.0
2008	6.9
Total	29.3

7.13 Goodwill

The goodwill qualified to be capitalized is calculated and capitalized following Group-wide accounting principles. The period of depreciation does not exceed 10 years.

In the prior year, given the prudence concept applied and the assessment of the carrying value of goodwill, a charge for impairment of CHF 74.5 million – in addition to the ordinary straight-line depreciations of CHF 16.3 million (2004: CHF 3.8 Million) – was determined to be appropriate based on the strategic plans of the relevant entities. The remainder of capitalized goodwill amounts to CHF 18.7 million at 31.12.2004 (2003: CHF 22.5 million) and is included in the balance sheet position "Intangible assets".

7.14 Pledged assets

In the business year 2004, assets in the amount of CHF 31.2 million (prior year: CHF 30.6 million) were pledged to cover liabilities of the underwriting business.

7.15 Important shareholders

Please consult item 5 in the Notes to the financial statements of Helvetia Patria Holding for more details.

8. Transactions with affiliated persons

All transactions with affiliated persons are carried out at market-conform conditions. The pension fund of Helvetia Patria Versicherungen owns at the balance sheet date 383664 Helvetia Patria Holding shares (prior year: 281676 Helvetia Patria Holding shares). During the year under review a Group company sold real estate with a value of CHF 150.6 million to the pension fund of Helvetia Patria Versicherungen.

9. Guarantee for a company in the process of being established

A Group company has committed to hold harmless the persons responsible for the formation of a new company in respect of the formation costs.

Report of the Group Auditors

to the Shareholders' Meeting of Helvetia Patria Holding, St.Gallen

As auditors of the Group, we have audited the consolidated financial statements (profit and loss account, balance sheet, cash flow statement and notes pages 76 to 93) of Helvetia Patria Group for the year ended 31 December, 2004.

These consolidated financial statements are the responsibility of the Board of Directors. Our responsibility 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 auditing standards promulgated by the Swiss profession, which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also 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 position, the results of operations and the cash flows in accordance with the Accounting and Reporting Recommendations (Swiss GAAP ARR) and comply with Swiss law.

We recommend that the consolidated financial statements submitted to you be approved.

Zurich, April 1, 2005 Ernst & Young Ltd

Peter Coats Chartered Accountant (In charge of audit)

Armin Imoberdorf Swiss Certified Accountant

Financial statements for Helvetia Patria Holding

Profit and loss account in CHF thousand

	2003	2004	Change
Dividend income	24149	56665
Services received from affiliates	–34	–16
Services rendered to affiliates	393	386
Interest paid on loans	–413	–4216
Interest received on loans	147	1273
Fees and expenses	0	–1670
Result before taxation	24242	52422	116.2%
Taxation	–126	–71
Result after taxation	24116	52351	117.1%

Balance sheet

	31.12.2003	31.12.2004	Change
Assets:
Investments	545010	695037
Cash	0	531
Loans to Group companies	0	200000
Other receivables from Group companies	0	63888
Other assets	0	2
Total assets	545010	959458	76.0%
Liabilities:
Shareholders' equity before appropriation of profit:
Share capital	62930	86529
Own-shares reserve	83741	97388
Other statutory reserve	269449	516349
Profit carried forward	3076	2020
Net result for the year	24116	52351
Shareholders' equity before appropriation of profit	443312	754637	70.2%
Bond	0	200000
Liabilities to Group companies	101503	0
Provisions	0	729
Accrued liabilities	195	4092
Total liabilities	545010	959458	76.0%

Proposal for the appropriation of the available earnings

	31.12.2003	31.12.2004
Result after taxation	24116	52351
Balance brought forward	3076	2020
Available earnings	27192	54371
Dividend (2003: CHF 4.00; 2004: CHF 5.50 per registered share)	25172	47590
Balance carried forward	2020	6781

Notes to the financial statements of Helvetia Patria Holding

1. Investments

Helvetia Patria Holding held direct investments in the following companies on the balance sheet date:

Investments of Helvetia Patria Holding in CHF million

Company	Company's capital	Holding at 31.12.2004
Helvetia Schweizerische Ver sicherungsgesellschaft, St.Gallen	77.5	75.30%
Patria Schweizerische Lebens versicherungs-Gesellschaft, Basel	50.0	100.00%

The investments in Helvetia Schweizerische Versicherungsgesellschaft and in Patria Schweizerische Lebensversicherungs-Gesellschaft were transferred to Helvetia Patria Holding under the non-cash contribution agreement of 3.6.1996, and the public take-over offer of 10.6.1996 (see also Articles 26 to 29 of the Articles of Incorporation).

In 2004, Patria Leben increased its capital by CHF 150 million consisting of CHF 25.9 million to add to the share capital and CHF 124.1 million as deposit in the reserves. This increase was fully paid at subscription by Helvetia Patria Holding.

Patria Schweizerische Lebensversicherungs-Gesellschaft itself holds a 24.7 per-cent equity stake in Helvetia Schweizerische Versicherungsgesellschaft.

2. Income from investments

The income shown for Helvetia Patria Holding corresponds to the dividend that will be simultaneously paid to Helvetia Patria Holding by its subsidiaries, Helvetia Schweizerische Versicherungsgesellschaft and Patria Schweizerische Lebensversicherungs-Gesellschaft, from their 2004 operating result.

3. Own shares

At the balance sheet date, subsidiaries of Helvetia Patria Holding held 400 312 registered Helvetia Patria Holding shares (2003: 291 136 such shares). The increase of the holdings of own shares results from the capital increase of Helvetia Patria Holding and the subsequently adjusted conversion terms for the outstanding convertible bond. These shares are held in a deposit for the 2 per cent convertible bond issued by Helvetia

Finance Ltd., Jersey. A corresponding own-shares reserve is reported in the shareholders' equity.

4. Guarantee Obligation

Helvetia Patria Holding has undertaken to guarantee the 2 per cent convertible bond, issued by Helvetia Finance Ltd., Jersey, up to the amount of the face value that has not yet been converted, including outstanding interest payments. The outstanding face value stands at CHF 150 million at the balance sheet date.

5. Shareholders owning more than five per cent of share capital

Two shareholders were entered in the share register as owning more than five per cent of the share capital on 31.12.2004: Patria Mutual (33.33%) and Münchener Rück Group (7.62% registered at 31.12.2004 of the total of 8.16%).

6. Capital increase

The Board of Directors is authorized until 9.5.2005 – based on the resolution passed by the Shareholders' Meeting on 9.5.2003 –, to increase the share capital by a maximum of CHF 31 465 000 by issuing a maximum of 3146500 registered shares.

Helvetia Patria Holding increased the capital to CHF 86528750 on 13.12.2004, by issuing 2359875 registered shares with a nominal value of CHF 10. The other statutory reserves were credited with the premium.

Report of the statutory auditors

to the Shareholders' Meeting of Helvetia Patria Holding, St.Gallen

As statutory auditors, we have audited the accounting records and the financial statements (profit and loss account, balance sheet and notes pages 95/96) of Helvetia Patria Holding for the year ended 31 December, 2004.

These financial statements are the responsibility of the Board of Directors. Our responsibility is to express 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 auditing standards promulgated by the Swiss profession, which require that an audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from 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 basis for our opinion.

In our opinion, the accounting records and financial statements and the proposed appropriation of available earnings comply with Swiss law and the company's articles of incorporation.

We recommend that the financial statements submitted to you be approved.

Zurich, April 1, 2005 Ernst & Young Ltd

Peter Coats Chartered Accountant (In charge of audit)

Armin Imoberdorf Swiss Certified Accountant

Glossary

Actuarial reserves

Underwriting provisions made in the life insurance sector which are calculated on the basis of official regulations and, together with future premiums, ensure that sufficient funds are available to pay all claims to which an insuree may be entitled.

Asset liability concept

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.

Available solvency (solvability)

Capital resources available to cover the required solvability ratio (see below).

Benchmark index

An index used as a point of reference to measure the performance of a particular portfolio.

Benefit

Amount paid by the insurer to the insuree in life insurance if the insured event occurs.

CEO

Chief Executive Officer is the highest ranking top executive of a corporation.

Claim

Amount paid by the insurer to the insuree in non-life insurance if the insured event occurs.

Claims ratio

The ratio of claims incurred (including changes to equalisation reserves) to net premiums earned.

Combined Ratio

The sum of the net expense ratio and the claims ratio is used to evaluate the profitability of the non-life insurance business before underwriting investment income is taken into consideration.

Convertible bond

A fixed-interest security whose bonds are convertible into Helvetia Patria Holding shares according to pre-set conditions and terms.

Direct business

All insurance policies concluded by Helvetia Patria with clients who are not insurers themselves.

Dread Disease Insurance

A Dread Disease insurance policy will pay the benefits insured in case of a severe, precisely defined illness of the person insured (such as heart attack, stroke, cancer, bypass surgery, etc.). The compensation can be used at will, for example to pay for expensive treatments, to sustain the standard of living, to pay off a mortgage, etc.

Equalisation reserve

Underwriting reserves designed to balance out extremes in annual claims payments. Additions to and withdrawals from the equalisation reserve are based on mathematical models stipulated by the relevant supervisory authorities.

Fixed-interest-rate securities

Securities (such as bonds) on which a fixed and constant interest is paid for their entire duration.

Fund-linked life insurance policies

See "unit-linked life insurance policies".

Gross premiums

The premiums written in the year under review before deduction of premiums ceded to reinsurers.

Group insurance

Insurance policy concluded for a company's personnel.

Indirect business

Companies involved in direct business – the original insurer – will often not wish to bear the entire risk alone, but will prefer to pass on some of it to a reinsurer. Like most companies active in the direct insurance business, Helvetia Patria also acts as a reinsurer, and assumes part of the risk from other original insurers. These reinsurance transactions are known as indirect business.

Individual insurance

Insurance policy concluded with one person.

Legal Quote

Legal or contractual obligation to credit the policyholder with a minimum amount of the income or profits from an insurance portfolio in form of dividends.

Net claims/benefits paid

The total of all insurance claims/benefits paid in the year under review, with due regard to changes in the reserves for claims outstanding.

Net expenditure on claims/benefits

Total of all claims/benefits paid in the course of the year and changes to reserves for claims outstanding in non-life business, plus reserves for claims outstanding in life business, less the portion of such claims assumed by reinsurers.

Net expense ratio

The ratio of net underwriting expenditure to net premiums written.

Net premiums earned

The net premiums earned from total business (i.e. gross premiums less premiums ceded to reinsurers) within a financial year, with due regard to changes in the reserves for unearned premiums.

Net premiums from total business

If a risk is reinsured, the reinsurer will receive a part of the gross premium in proportion to the extent of total risk assumed. Net premiums from total business thus correspond to gross premiums written less the premiums ceded to reinsurers in exchange for their bearing part of the overall risk.

Periodic premium

Premium paid on an insurance policy at regular intervals.

Premium

Amount paid by an insuree to an insurer for the protection and benefits provided.

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Premium reimbursement

Some insurance policies provide that part of the premium may be returned to the client as a policy dividend at times when few claims have incurred.

Reinsurance deposits

Original insurers always retain part of the reinsurance premium as a security for any claims they may themselves need to make. Since Helvetia Patria both assumes and cedes reinsurance, these items appear on the balance sheet under both assets and liabilities.

Reinsurance premium

Amount paid by an insurer to a reinsurer in exchange for the latter's assumption of part of a policy's risk.

Reinsurer

Insurance company that assumes part of the risk of an insurance concluded by another insurance company.

Required solvency (solvability)

The minimum amount of capital funds an insurance company is calculated to need to ensure that it can meet its liabilities from the policies in the long term.

Reserves

Amounts set aside on the balance sheet to meet likely future commitments.

Reserves for claims outstanding

Since not all claims will be settled by the end of the financial year in which they arise, provisions must be made on the balance sheet for the amounts these claims (or claims likely to be incurred but not yet received) may require. This item is known as the reserves for claims outstanding. Changes to the reserves for claims outstanding are shown in the profit and loss account.

Reserves for unearned premiums

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. That part of the premium relating to the next financial year will not have been earned by the end of the current one, even though the money has already been received. This amount must therefore be placed in the "reserves for unearned premiums", which appear on the balance sheet under underwriting reserves. All changes to reserves for unearned premiums are shown in the profit and loss account.

Results-linked and non-results linked policyholders' dividend

The positive difference between actual and guaranteed interest and between a policy's theoretical and actual benefits and costs is returned to the insuree in the form of a dividend. Dividends are particularly common in the life insurance business.

Return on equity (excluding revaluation reserve)

Profit/loss after taxation and minority interests as a proportion of shareholders' equity as shown on the consolidated balance sheet, excluding changes to the revaluation reserve.

Return on equity (including revaluation reserve)

Profit/loss after taxation and minority interests as a proportion of shareholders' equity as shown on the consolidated balance sheet, including changes to the revaluation reserve.

Revaluation reserve

The difference between the market value and the balance sheet value of shares, investment funds and real estate, which is taken directly to shareholders' equity after deferred taxation has been deducted.

Securities lending

The loaning of securities for a fixed or unlimited period, in exchange for adequate sureties and a commission fee.

Single premium

One-time premium paid when concluding an insurance to cover all future premiums.

Total benefits

Sum of all the benefits insured (used in particular in the life insurance business).

Total business

Direct and indirect business combined.

Underwriting reserves

Total amount of reserves for unearned premiums, life insurance reserves and annuity reserves, reserves for claims outstanding, reserves for premium reimbursements and other underwriting reserves, appearing under liabilities on the balance sheet.

Unit-linked life insurance policies

Life insurance policies in which the insurer invests the insuree's savings capital on the account of and at the risk of the insuree. Most unit-linked life insurance policies are so-called "fund-linked products" in which the insurees can select the type of investment they desire from a range of investment funds.

Zillmering

Balancing of an account with part of the unamortized acquisition costs taken into consideration.

Additional information

The important addresses

Group Head Office

Helvetia Patria Holding, Dufourstrasse 40, CH-9001 St.Gallen
Phone +41 71 493 5111, Fax +41 71 493 51 00, www.helvetiapatria.com, info@helvetiapatria.com

Group Executive Management

Erich Walser	Chairman of the Board of Directors
	Chief Executive Officer Group
Roland Geissmann	Deputy CEO, Chief Financial Officer
Philipp Gmür	Chief Executive Officer Switzerland
Ralph-Thomas Honegger	Chief Investment Officer
Markus Isenrich	Head of Human Resources and Services
Tjarko Ullings	Chief Executive Officer Austria (until 30.4.2005)
Wolfram Wrabetz	Chief Executive Officer Germany
National offices
Helvetia Patria Versicherungen	Philipp Gmür	St. Alban-Anlage 26

Geschäftsleitung Schweiz Vorsitzender CH-4002 Basel Helvetia Versicherungen Wolfram Wrabetz Berliner Strasse 56–58 Direktion für Deutschland Hauptbevollmächtigter DE-60311 Frankfurt a.M. Helvetia Versicherungen Georg Krenkel Jasomirgottstrasse 2 Direktion für Österreich Hauptbevollmächtigter AT-1010 Wien Helvetia Assicurazioni Fabio de Puppi Via G.B. Cassinis 21 Direzione per l'Italia Rappresentante Generale IT-20139 Milano Helvetia Assurances Alain Tintelin 2, rue Sainte Marie

Direction pour la France Mandataire Général FR-92415 Courbevoie/Paris

Subsidiaries

Helvetia schweizerische	Wolfram Wrabetz	Berliner Strasse 56–58
Lebensversicherungs-AG	Vorstandsvorsitzender	DE-60311 Frankfurt a.M.
Helvetia International	Wolfram Wrabetz	Berliner Strasse 56–58
Versicherungs-AG	Vorstandsvorsitzender	DE-60311 Frankfurt a.M.
Der ANKER	Stefan Loacker (from 1.4.2005)	Treustrasse 35–43
Allgemeine Versicherungs-AG	Vorstandsvorsitzender	AT-1200 Wien
		From October: Hoher Markt 10–11
		AT-1011 Wien
Helvetia Vita Compagnia Italo	Franco Armeni	Via G.B. Cassinis 21
Svizzera di assicurazioni sulla Vita S.p.A.	Direttore Generale	IT-20139 Milano
Helvetia Life Compagnia Italo	Franco Armeni	Via G.B. Cassinis 21
Svizzera di assicurazioni sulla Vita S.p.A.	Direttore Generale	IT-20139 Milano
Helvetia Previsión Sociedad Anónima	Jozef M. Paagman	Paseo Cristóbal Colón, 26
de Seguros y Reaseguros	Director General	ES-41001 Sevilla
Helvetia Europe S.A.		22, parc d'Activité Syrdall
		LU-5365 Münsbach
Helvetia Finance		Le Gallais Chambers
		54, Bath Street, St.Helier,
		Jersey

Head Office for Switzerland

Helvetia Patria Versicherungen, St. Alban-Anlage 26, CH-4002 Basel Phone 0848 80 10 20, Fax 0848 80 10 21, www.helvetiapatria.ch, info@helvetiapatria.ch

Executive Management Switzerland

Philipp Gmür	Chief Executive Officer Switzerland
Donald Desax	Head of the "Group Life" Division
Markus Gemperle	Head of the "Information Technology" Division
Hans Peter Haller	Head of "Brand & Partnering" Division
René Stocker	Head of "Helvetia Patria Sales Management"
Hermann Sutter	Head of the "Indemnity Insurance" Division
Angela Winkelmann	Head of the "Individual Life" Division

Helvetia Patria Versicherungen regional offices in Switzerland

5400 Baden	Mellingerstrasse 1	056 200 54 11	Hanspeter Koch
4010 Basel 1	Aeschengraben 6	061 284 36 11	Alexander Ebi
4010 Basel 2	Aeschengraben 6	061 284 36 22	Max Lieberherr
3001 Bern	Länggassstrasse 7	031 309 03 11	Daniel-Henri Günther
2501 Biel	J. Verresiusstrasse 18	032 329 24 11	Nicolas Dumont
3900 Brig	Kronengasse 6	027 922 07 11	Andreas Schmid
5033 Buchs (AG)	Mitteldorfstrasse 37	062 836 03 11	Bruno Wälle
7001 Chur	Bahnhofstrasse 7	081 255 38 11	Felix Hunger
2800 Delémont	Route de l'Avenir 2	032 421 93 11	Franco Della Corte
8501 Frauenfeld	Altweg 16	052 728 49 11	Adolf Koch
1211 Genève	Bd Georges-Favon 18	022 809 13 11	Claude Kuhne
1762 Givisiez	Route du Mont Carmel 2	026 460 42 42	René Aebischer
8302 Kloten	Schaffhauserstrasse 121	044 800 79 11	Andreas Naef
1001 Lausanne	Avenue de la Gare 1	021 341 47 11	Roland Duvoisin
4410 Liestal	Wasserturmplatz 1	061 926 28 11	Hanspeter Geiger
6901 Lugano	Via d'Alberti 1	091 911 61 11	Giordano Zeli
6002 Luzern	Winkelriedstrasse 36	041 227 54 11	Lothar Arnold
2000 Neuchâtel	Rue du Concert 6	032 722 75 11	Patrick Riquen
8640 Rapperswil	Kniestrasse 29	055 220 75 11	Pascal Diethelm
9445 Rebstein	ri.nova Impulszentrum, Postfach	071 775 86 11	Jürg Schwarber
1950 Sion	Rue de la Dent-Blanche 20	027 324 77 22	Jean-Maurice Favre
4501 Solothurn	Dornacherplatz 7	032 624 45 11	René Hohl
9001 St.Gallen	Rosenbergstrasse 20	071 493 44 11	Ulrich Bänziger
3601 Thun	Hinter der Burg 2	033 227 86 11	Kurt Nyffenegger
8401 Winterthur	Lagerhausstrasse 9	052 268 66 66	Helmuth Kunz
6302 Zug	Baarerstrasse 133	041 726 64 11	Heinz Schumacher
8048 Zürich 1	Hohlstrasse 560	043 843 87 11	René Vuille-dit-Bille
8048 Zürich 2	Hohlstrasse 560	043 843 85 85	Peter Bickel
Broker Centers Switzerland
8048 Zürich	Hohlstrasse 560	043 843 83 33
1762 Givisiez	Route du Mont Carmel 2	026 460 42 84
6901 Lugano	Via d'Alberti 1	091 911 61 11
Helvetia Patria Consulting AG
9001 St.Gallen	Dufourstrasse 40, Postfach	071 493 53 63	Peter Bächtiger
Patria Anlagestiftung
4002 Basel	St. Alban-Anlage 26	061 280 21 73	Dunja Schwander
Patria Consulta Gesellschaft für Vorsorgeberatung
4002 Basel	St. Alban-Anlage 26	061 280 23 52	Dominique Koch

A historical overview

1858	Founding of Allgemeine Versicherungs-Gesellschaft Helvetia
1861	Founding of Helvetia Schweiz. Feuerversicherungsgesellschaft
1862	Establishment of branch offices in Germany
1878	Founding of the Mutual "Patria, Schweizerische Lebensversicherungsgesellschaft", in Basel
1920–1962	Founding of branch offices and subsidiaries of the 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	Founding of Helvetia Patria Holding
1998	Acquisition of La Vasco Navarra (Spain); Acquisition of the portfolio of NCD (Italy)
1999	Merger between the companies La Vasco Navarra and Cervantes Helvetia to Helvetia CVN, Madrid/Pamplona
2000	Acquisition of the Spanish insurer Previsión Española, Seville
2001	Acquisition of Norwich Union Vita, Milan; renamed in Helvetia Life
2002	Acquisition of Royal & SunAlliance's transport portfolio in France
2003	Merger of subsidiaries Previsión Española and Helvetia CVN into Helvetia Previsión with headquarters in Seville
2004	Acquisition of two transport insurance portfolios in France