Earnings Release • Mar 17, 2008
Earnings Release
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This document was prepared by Helvetia Group and may not be copied, altered, offered, sold or otherwise distributed to anybody by the recipient without the consent of Helvetia Group. Although all reasonable effort has been made to ensure that the facts stated herein are correct and the opinions contained herein are fair and reasonable, this document is selective in nature and is intended to provide an introduction to and overview of the business of Helvetia Group. Where any information and statistics are quoted from any external source, such information or statistics should not be interpreted as having been adopted or endorsed as accurate by Helvetia Group. Neither Helvetia Group nor any of its directors, officers, employees and advisors nor any other person is liable in any way for any loss howsoever arising directly or indirectly from the use of this information. The facts and information contained in this document are as up to date as is reasonably possible and may be subject to revision in the future. Neither Helvetia Group nor any of its directors, officers, employees or advisors nor any other person makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this document.
This document may contain projections or other forward-looking statements related to Helvetia Group which by their very nature involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other outcomes described or implied in forward-looking statements will not be achieved. We caution you that a number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These 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 events; (8) the mortality and morbidity rates; (9) policy renewal and lapse rates. We caution you that the foregoing list of important factors is not exclusive; when evaluating forward-looking statements, you should carefully consider the foregoing factors and other uncertainties. All forward-looking statements are based on information available to Helvetia Group on the date of its publication and Helvetia Group assumes no obligation to update such statements unless otherwise required by applicable law.
The purpose of this document is to inform the Helvetia Group's shareholders and the public of the business activities of Helvetia Group during the financial year ending on 31.12.2007. This document does not constitute an offer or a solicitation to exchange, buy or subscribe to securities, nor does it constitute an offering circular as defined by Art. 652 a of the Swiss Code of Obligations or a listing prospectus as defined by the listing rules of the SWX Swiss Exchange. Should Helvetia Group make one or more capital increases in the future, investors should make their decision to buy or subscribe to new shares or other securities solely on the basis of the relevant offering circular.
This document is also available in German. The German version is binding.
Stefan Loacker, Group CEO
| Profitable growth |
Non-life premium growth: Combined ratio (net): |
7.1% (FX-adjusted: 4.0%) 94.5% |
|---|---|---|
| Life premium growth: |
2.2% (FX-adjusted: 1.2%) |
|
| Volume of new business (APE): |
+13.1% | |
| Embedded value yield: |
21.3% | |
| Solid financial strength |
Equity: + 4.1 % Stable solvency margin at: 217.4 % Interactive rating: "A-" with stable outlook |
|---|---|
| Attractive return on equity |
RoE after taxes: 14.4% (06: 16.2%) Pay out ratio of 54% Above-average dividend yield of 6.1% (excl. par value reduction: 3.7%) |
Paul Norton, Group CFO
Stable profit and capital position
| 2007 | 2006 | +/- % | |
|---|---|---|---|
| 2007 | 2006 | +/- % | |
| Gebuchte Bruttoprämien Profit for the period, after taxes Periodenergebnis, nach Steuern |
5'488.9 402.0 402.0 |
5'255.7 423.8 423.8 |
4.4 -5.1 -5.1 |
| Kapitalanlagen Return on equity Ergebnis aus Kapitalanlagen |
29'381.5 14.4% 1'040.0 |
28'927.7 16.2% 1'109.3 |
1.6 -1.8%-pt -6.2 |
| 1) solvency 1) Anlageperformance Group |
2.4% 217.4% |
3.1% 221.7% |
-0.7% Pkt -4.3%-pt |
| Technische Rückstellungen, netto 2) Investment performance Combined Ratio, netto |
25'924.7 2.4% 94.5 |
25'094.6 3.1% 94.1 |
3.3 -0.7%-pt +0.4% Pkt |
| Konsolidiertes Eigenkapital Gross premiums written Eigenkapitalrendite |
2'850.6 5'488.9 14.4% |
2'738.4 5'255.7 16.2% |
4.1 4.4 -1.8% Pkt |
| Gruppensolvabilität 2) Net combined ratio |
94.5% | 221.7% 94.1% |
X %Pkt +0.4%-pt |
(CHF million)
1) Calculated according to regulations of the lead regulator, the BPV
2) Profit and loss and unrealised gains and losses in % of average invested capital (without unit-linked life insurance)
Record result in life business Strong non-life result in spite of bad weather
Combined ratio on course again
(in %)
Increase in EV 18.2% EV yield of 21.3%
New business profitabilty improved from 12.1% to 15.9%
Volume of new business: annual premium equivalent (new annual premiums + 10% of new single premiums)
| (CHF million) Premiums in Change |
|
|---|---|
| CHF million in % 5,255.7 5,488.9 |
|
| Life + 4.4 % |
|
| Group + 6.3 1,741.6 |
life |
| 2,832.4 Individual life 2,893.9 - 3.7 1,145.4 |
|
| + 2.2 % Unit-linked of which: + 20.8 189.7 life insurance |
|
| Non-life | |
| 962.3 + 6.8 Property |
|
| 763.7 + 4.2 Motor |
vehicle |
| 253.5 + 8.1 Liability |
|
| 2,423.3 2,595.0 229.6 + 3.4 Transport |
|
| + 7.1 % 232.7 + 23.4 Reinsurance |
|
| 153.2 + 6.8 2007 2006 |
Accident/health |
Excellent growth in Germany and Spain
| (CHF million) |
Change in | |||
|---|---|---|---|---|
| Life | 2007 | 2006 | % | |
| Switzerland | 2'206.7 | 2'217.0 | - 0.5 |
|
| EU | 680.3 | 610.9 | +11.4 | |
| - Germany |
297.9 | 211.3 | +40.9 | |
| - Italy |
117.8 | 157.8 | - 25.3 | |
| - Spain |
127.0 | 108.3 | + 17.3 |
|
| - Austria |
Individual life Group life Unit-linked |
137.6 | 133.5 | + 3.1 |
Strong growth in most markets
Valuable portfolio thanks to prudent investment strategy
Solid performance
1) Result through profit and loss and unrealised gains and losses in % of average invested capital (without unit-linked life insurance)
Reduction as a result of realised gains and market developments
Total dividend payout of CHF 215.5 million
Another good technical result by Helvetia Switzerland
Another excellent contribution to the result. Large allocation to reserves for policyholder dividends and bonuses.
Very good technical result with a combined ratio of 89.5%
| (CHF million) |
2007 | 2006 | +/- |
|---|---|---|---|
| Total premiums direct life |
2'206.7 | 2'217.0 | -0.5% |
| Total individual life |
620.3 | 661.7 | -6.3% |
| Regular premiums individual life |
412.7 | 415.1 | -0.6% |
| of which unit-linked (regular) |
54.7 | 49.5 | +10.5% |
| Single premiums individual life |
207.6 | 246.6 | -15.8% |
| Total group life |
1'586.4 | 1'555.3 | +2.0% |
| Regular premiums group life |
849.4 | 821.8 | +3.4% |
| Single premiums group life |
737.0 | 733.5 | +0.5% |
§ Individual life: Share of unit-linked life insurance products increased substantially as planned.
§ Group life: Strong income-oriented growth in regular premiums. Outstanding risk result allows allocation to reserves for policyholder dividends and bonuses.
Very profitable life business
| Contribution components |
Trend | Remarks |
|---|---|---|
| Whole life insurance |
+ | Consistent good results |
| Disability insurance |
++ | Good economic conditions, selective underwriting policy, active benefit management |
| Costs (surcharges) |
- | Worsening due to project related costs |
| Investments | ++ | Very good investment result in view of market turbulence |
| Embedded value |
Trend | Remarks |
| Development of EV |
++ | Embedded value improved by 18.0% |
| Value of new business |
+++ | Value of new business increased by 29.2% |
| New business profitability |
+++ | Profitability of new business increased by 26.7% |
(CHF million according to statutory financial statements)
| 2007 | 2006 | |||
|---|---|---|---|---|
| Gross income |
||||
| (for business subject to legal quota) |
497.2 | 100% | 476.5 | 100% |
| Benefits in favour of insured |
||||
| (for business subject to legal quota) |
456.8 | 92% | 439.0 | 92.1% |
| Profit on operating account |
||||
| (for business subject to legal quota) |
37.5 | |||
| Profit on operating account |
||||
| (for business not subject to legal quota) |
17.4 | 19.8 | ||
| Profit on operating account for group business |
||||
| in Sw itzerland |
57.8 | 57.3 |
Non-life growth better than market average
| (CHF million) |
|||
|---|---|---|---|
| 2007 | 2006 | +/- | |
| Total premiums non-life |
617.4 | 607.5 | +1.6% |
| Property | 334.2 | 332.5 | +0.5% |
| Transport | 37.5 | 36.4 | +3.0% |
| Motor vehicle |
167.9 | 162.4 | +3.4% |
| Liability | 77.8 | 76.2 | +2.1% |
| Net combined ratio |
89.5% | 89.1% | +0.4%-pt |
| Net claims ratio |
59.2% | 58.6% | +0.6%-pt |
| Net cost ratio | 30.3% | 30.5% | -0.2%-pt |
§ Excellent claims result in spite of some major claims.
§ Net combined ratio: Substantial improvement compared to end of 1st half (period effects in interim statement, excellent claims experience in 2nd half).
Implementation of strategy 2010 going ahead at full speed
Stefan Loacker, Group CEO
Dynamic growth in spite of difficult market conditions
Continued high earning power
Life business drives growth
Ongoing improvement in profit contribution (AT) Stable competitive position in difficult market environment (F)
Stefan Loacker, Group CEO
Focus falls on four strategic programmes
Ambitious sales growth: Non-life in line with market Life better than market
Gains in non-life market share in CH, ES, IT and DE New life business + 13% (in APE), Great momentum in the EU
Focus on unit-linked and index-linked life products in foreign markets
Increase in unit-linked and indexlinked business in foreign markets by: CHF 36.7 m (+ 36.7% yoy ) to CHF 136.7 m in total.
Reduction of non-life cost ratio: Target: ≤ 30%.
Results for 2007 Cost ratio stable at 32.9% in spite of project-related special charges
(4) Optimisation of capital structure and M&A
Target ROE 15% after taxes, growth through acquisitions
Results for 2007 ROE after taxes of 14.4%
| Helvetia boosts its sales power in Italy |
Helvetia is taking over ENI Group's in-house non-life insurance n subsidiary «Padana Assicurazini S.p.A.» «ENI Group» is the leading Italian energy company with activities in n 70 countries, with 40,000 employees in Italy EUR 40 m premium volume (2008 forecast): n |
|---|---|
| About one-third - Group policy for ENI employees (accident n insurance) About two-thirds - Retail business with ENI employees, their n families and retired staff (other non-life) Subject to the relevant cartel and statutory insurance authorisations, n |
|
| the deal should be concluded in Q3 2008 |
| Padana offers strong growth potential |
Padana offers an attractive portfolio and growth opportunity in n Italy: |
|---|---|
| adds value to our non-life business by integrating a stable n and profitable book business |
|
| expanding the volume of Helvetia Italy by approximately 13 n percent |
|
| interesting growth potential (about 40,000 ENI employees in n Italy, their families and retired ENI staff) |
|
| allows us to develop worksite marketing as an alternative n distribution model |
|
| Helvetia Italy intends to be a high-quality insurance provider to n ENI employees |
|
All country markets at a good level again
(in %)
| CH | D | I | E | A | F | Reins. | Group | |
|---|---|---|---|---|---|---|---|---|
| Net claims ratio |
59.2 | 64.5 | 67.0 | 53.6 | 60.6 | 51.2 | 69.2 | 61.6 |
| Net cost ratio |
30.3 | 35.9 | 32.4 | 31.7 | 39.5 | 33.3 | 29.6 | 32.9 |
| Net combined ratio 2007 |
89.5 | 100.4 | 99.4 | 85.3 | 100.1 | 84.5 | 98.8 | 94.5 |
| Net combined ratio 2006 |
89.1 | 99.0 | 98.4 | 90.5 | 100.4 | 81.0 | 94.4 | 94.1 |
| Change from 2006 (in %-pt) |
+0.4 | +1.4 | +1.0 | -5.2 | -0.3 | +3.5 | +4.4 | +0.4 |
Combined ratio on course again
(in %)
Gross effectively limited by efficient reinsurance programme
| 2007 | 2006 | |
|---|---|---|
| Switzerland | ||
| Risk discount rate |
7.0% | 7.0% |
| Yield on bonds |
3.4%-3.7% | 2.8% |
| Yield on equities |
6.5% | 6.5% |
| Yield on real estate |
4.5% | 4.5% |
| EU | ||
| Risk discount rate |
8.0% | 8.0% |
| Yield on bonds |
4.7%-5.2% | 4.0%-4.2% |
| Yield on equities |
7.5% | 7.5% |
| Yield on real estate |
4.6% | 5.1% |
Legal quota in Switzerland exceeded again
Solid investment performance thanks to good market assessment
| (CHF million) |
2007 | 2006 | +/- |
|---|---|---|---|
| Interest and dividend income |
793.8 | 704.4 | +12.7% |
| Gains and losses on investments (net) |
130.2 | 291.4 | -55.3% |
| -Shares, inv. funds, alt. investments, derivatives |
101.5 | 224.4 | -54.8% |
| -Bonds | 27.0 | 63.4 | -57.4% |
| -Other | 1.7 | 3.1 | -45.2% |
| Income from investment property |
194.4 | 186.4 | +4.3% |
| -Rental income |
231.6 | 226.6 | +2.2% |
| -Realised and book gains and losses |
-37.2 | -40.2 | -7.5% |
| Profit or loss from associates |
2.8 | 1.8 | +55.6% |
| Investment management expenses | -81.2 | -74.7 | +8.7% |
| Investment income (gross) |
1'040.0 | 1'109.3 | -6.2% |
| yield 1) Direct |
3.3% | 3.1% | +0.2%-pt |
| Investment performance 2) | 2.4% | 3.1% | -0.7%-pt |
1) Current income from capital investments in % of average invested capital (without unit-linked life insurance)
2 ) Profit and loss and unrealised gains and losses in % of average invested capital (without unit-linked life insurance)
No direct subprime or CDO exposure
CHF EUR USD Other 10.0/ 57% 7.1 / 41% 0.3 / 1% 0.2 / 1% (CHF billion)
(CHF million)
| Life | Non-life | Other | |
|---|---|---|---|
| Interest and dividend income |
639.8 | 141.8 | 12.2 |
| Gains and losses on investment (net) |
86.1 | 26.1 | 18.0 |
| -shares, inv. funds, alt. investments, derivatives | 62.1 | 22.2 | 17.1 |
| -Bonds | 23.7 | 3.8 | -0.4 |
| -Other | 0.3 | 0.1 | 1.3 |
| Income from investment property |
157.6 | 38.6 | -1.8 |
| Profit or loss from associates |
1.7 | 1.1 | 0.0 |
| Investment management expenses | -67.8 | -12.0 | -1.4 |
| Investment income | 817.4 | 195.6 | 27.0 |
(CHF million)
| Switzerland | Germany | Italy | Spain | Other | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2007 | +/- | 2007 | +/- | 2007 | +/- | 2007 | +/- | 2007 | +/- | |
| Individual life |
545.4 | -5.5% | 123.0 | 3.7% | 81.8 | -40.5% | 72.5 | 11.0% | 133.0 | -0.4% |
| Group life |
1,586.4 | 2.0% | 78.8 | 175.5% | 36.0 | 76.5% | 40.4 | 16.8% | - | - |
| Unit-linked | 74.9 | -11.5% | 96.1 | 49.9% | - | - | 14.1 | 67.9% | 4.6 | 100.0% |
| Reinsurance | 6.9 | 53.3% | ||||||||
| Total life |
2,206.7 | -0.5% | 297.9 | 40.9% | 117.8 | -25.3% | 127.0 | 17.3% | 144.5 | 4.7% |
| Property | 334.2 | 0.5% | 295.8 | 10.4% | 92.8 | 18.8% | 163.6 | 8.0% | 75.9 | 6.9% |
| Transport | 37.5 | 3.0% | 67.7 | 12.6% | 4.7 | 2.2% | 26.3 | 14.3% | 93.4 | -4.7% |
| Motor vehicle |
167.9 | 3.4% | 153.7 | 3.1% | 204.9 | 0.8% | 157.4 | 9.2% | 79.8 | 7.5% |
| Liability | 77.8 | 2.1% | 75.6 | 4.7% | 35.5 | 14.5% | 34.0 | 17.2% | 30.6 | 17.1% |
| Accident/health | 0.0 | 0.0% | 40.2 | 7.2% | 53.4 | 11.3% | 39.9 | 2.6% | 19.7 | 3.2% |
| Reinsurance | 232.7 | 23.3% | ||||||||
| Total non-life |
617.4 | 1.6% | 633.0 | 7.9% | 391.3 | 7.2% | 421.2 | 9.0% | 532.1 | 11.5% |
| Total | 2,824.1 | 0.0% | 930.9 | 16.6% | 509.1 | -2.6% | 548.2 | 10.8% | 676.6 | 10.0% |
| (CHF million according to statutory financial statements) |
2007 |
|---|---|
| Profit or loss from savings process Profit or loss from risk process Profit or loss from cost process |
53.7 43.7 0.6 |
| Gross profit (for business subject to legal quota) |
98.0 |
| Reserve reinforcement Allocation to reserves for future profit participation |
-8.4 -49.2 |
| Profit on operating account (for business subject to legal quota) |
40.4 |
Helvetia is an all-line insurance carrier active in all of Europe. It focuses on risk management (life and non-life business, reinsurance) and employee benefits, and has branch offices and partly-owned subsidiaries in Central and Southern Europe. The Group is headquartered in St. Gallen, while the Swiss company's headquarters are located in Basel. With approximately 4,600 employees, Helvetia provides services to more than two million customers in six European countries. Around 2,300 people work for the company in Switzerland. During the previous financial year, the Group reported a premium volume of CHF 5.5 billion and earned a net profit of CHF 402.0 million. The Helvetia Holding registered share is listed on the SWX Swiss Exchange under the code HELN and is included in the Swiss Performance Index (SPI).
| Investor Relations: |
Nicola Breitschopf Helvetia Group Dufourstrasse 40 CH-9001 St.Gallen |
|---|---|
| Tel. +41 (0)58 280 56 04 Fax +41 (0)58 280 55 89 E-mail:[email protected] |
|
| Corporate Communications: |
Martin Nellen Helvetia Group Dufourstrasse 40 CH-9001 St.Gallen |
| Tel. +41 (0)58 280 56 88 Fax +41 (0)58 280 55 89 E-mail: [email protected] |
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