With premium growth of CHF 2,663.0 million in 2019, Helvetia Insurance saw its business with occupational pension plans grow by 2% compared with the previous year (2018 premiums: CHF 2,623.5 million). Regular premiums rose by 2.5% to CHF 1,301.0 million. Single premiums grew by 0.6% to CHF 1,362.0 million. In particular, semi-autonomous solutions contributed to this growth.
Higher participation in profits
In the business subject to the minimum distribution ratio, Helvetia provided benefits to policyholders of CHF 654.2 million. As a result, the distribution ratio increased from 90.5% in 2018 to 92.2% last year. A portion of this amount was used to strengthen reserves.
Helvetia continues to pursue its policy regarding surpluses, emphasising continuity and stability. In the business subject to the minimum distribution ratio, compulsory LOB insurance assets earned the minimum interest rate of 1%, while 1% was paid on assets in excess of the statutory requirements. In addition to an interest surplus for supplementary retirement savings, a risk surplus was also granted.
Lower operating expenses
Operating expenses per active policyholder were reduced by 8% to CHF 438 (2018: 477). Overall, operating expenses fell by CHF -2.3 million, or -2%, to CHF 101.1 million. Net performance based on market values was a pleasing 5.17%. In addition to the very positive development on the stock market, the further decline in interest rates and resulting increase in market values for bonds were responsible for the improvement compared with 2018.
The number of group contracts rose by 3% to 18,019 (2018: 17,498). The number of policyholders climbed by 5% to 247,411 (2018: 234,599). In light of the unrealistic framework conditions with a greatly excessive conversion rate for compulsory LOB insurance, Helvetia is continuing to pursue a restrictive underwriting policy.
Increase in non-system redistribution
These framework conditions continue to force all providers to make a high, non-system redistribution from active policyholders to pension recipients. Nearly CHF 185 million had to be redistributed last year, according to calculations made on the basis of Helvetia's portfolio. As a result, this figure was higher compared with the previous year (2018: CHF 166 million). In order to stabilise this redistribution in view of the impending retirements of large age cohorts while continuing to be able to offer a comprehensive range of solutions with full insurance and semi-autonomous collective foundations, Helvetia has taken advantage of its flexibility and introduced a new rate for Swiss group life insurance as at the start of the year. Key elements of the new rate include a gradual reduction of the conversion rate based on the principle of set-off and selective premium increases. The new rate will have a positive impact on Helvetia's SST ratio. At the same time, Helvetia expects a low double-digit decline in LOB premiums as a result of the new rate.
COVID-19 pandemic shows the need for a reform of the second pillar
The measures implemented by Helvetia do not change the fact that a reform of occupational benefit schemes is essential and urgent, as Hedwig Ulmer, Head of Actuarial Services Life Switzerland and, from July, Head of Group Life Switzerland and a member of the Executive Board in Switzerland, explains: "The framework conditions of the second pillar, such as the conversion rate and the minimum interest rate, must be adjusted in line with demographic changes and the extremely low interest rates. Only in this way can the systemic crisis involving the second pillar be overcome." Donald Desax, Head of Group Life Switzerland and a member of the Executive Board in Switzerland, adds: "Life insurers such as Helvetia assume the investment risks on the capital market in the second pillar for SMEs. The past few months have shown the value of such guarantees. In order for SMEs to continue to benefit from a seamless package in the form of a full insurance solution, the Federal Council must offer a reform proposal capable of achieving a majority."
The 2019 operating statement for Helvetia Switzerland’s occupational benefits can be found at www.helvetia.ch/facts-figures-lob
This media release is also available on our website www.helvetia.ch/media