Helvetia Group in Italy

In Italy, Helvetia operates as an all-lines insurer in the economically interesting northern provinces of the country. Helvetia Italy serves approximately 350,000 customers with around 310 employees and a distribution network comprising 334 non-exclusive agencies and 130 brokers.

For the first half of the year, Helvetia Italy can look back on successful acquisitions that echo the strategy of profitable growth. The acquisitions of the non-life insurer Padana Assicurazioni and the life insurance company Chiara Vita will double Helvetia's sales power in Italy from 2009. The declining growth experienced by the Italian life insurance market in the first semester and the strong competition in the motor vehicle business had a negative impact on Helvetia Italy's premium volume, which dropped 6.4 percent (growth in CHF: -8.3 percent) year-on-year to CHF 222.9 million. The segment result, however, improved by 39 percent to CHF 14.6 million.

Slowdown in economic growth
The Italian economy is confronted by rising energy prices, high inflation and restrained consumer spending. As a result, GDP growth is forecast at only 0.4 percent. These factors coupled with the financial market trends particularly affect the life insurance market, which shrank by 16 percent in the first quarter of 2008. At -0.3 percent, the non-life market also contracted, mainly as a result of fierce competition, particularly in motor vehicle insurance.

New growth potential in life segment
Helvetia Italy generated a premium volume of CHF 38.7 million in the life segment, which is still on the decline under pressure from market conditions, even though Helvetia's agency business did extremely well in a sector comparison. Another tranche of index-linked products was launched successfully in the first semester, and these sales will boost business volumes from the second semester. As regards the coming years, the acquisition of 70 percent of Chiara Vita and the resulting cooperation programme with Banco di Desio will give us access to the bank sales channels, which cover around 60 percent of the Italian life market.  Business volumes will already start rising significantly next year, boosted by unit- and index-linked products and traditional insurance products.

Stable non-life business in a slowing market environment
Supported by its successful sales partnerships, Helvetia Italy posted excellent growth in its property insurance business of 13.9 percent (growth in CHF: 11.5 percent). As a result, the non-life business grew by 0.6 percent (growth in CHF: -1.5 percent) in spite of continued strong competitive pressure in the motor vehicle segment. The cost ratio improved to 30.9 percent thanks to successful measures to cut administrative costs. The claims ratio, however, increased year-on-year, as we do not yet have any claims handling figures for the new sector-wide system of settling motor vehicle claims in Italy and therefore had to take a very cautious approach in setting up reserves. The net combined ratio of 102.9 percent is therefore higher year-on-year. The acquisition of the new non-life company gives Helvetia Italy access to the approximately 40,000 employees of the ENI Group and their families.

Successful strategy of profitable growth
Following the two acquisitions, the second half of the year will be overshadowed by the integration of the two new companies. The acquisition of Padana Assicurazioni announced on 14 March 2008 was finalised on 1 August 2008 after receiving the go-ahead from the supervisory authority.