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Group News

Helvetia improves profit as well as business volume and makes initial progress with the helvetia 20.20 strategy

Helvetia Group increased its underlying earnings in the 2016 financial year by 12% to CHF 492 million after tax. The business volume grew by 2.6% (in original currency) to CHF 8,513 million despite portfolio optimisations and a challenging environment. The result includes pre-tax synergies of CHF 118 million from the acquisitions of Nationale Suisse and Basler Austria. On this basis, the Board of Directors is proposing that the Shareholders' Meeting increase the dividend by 10% to CHF 21 per share. Helvetia is pushing ahead rapidly with the implementation of its helvetia 20.20 strategy. Herbert J. Scheidt is not standing for re-election to the Board of Directors.
Herzog & de Meuron Basel Ltd. / Helvetia Versicherungen / Erweiterungsbau West St. Gallen / Extension of Head Office, West Wing, St. Gallen, Switzerland
The most important key figures for the 2016 financial year at a glance:
  • Underlying earnings after tax: CHF 491.8 million (CHF 439.0 million; +12%)
  • IFRS result1 after tax (incl. acquisition effects): 376.6 million (2015: CHF 309.5 million; +21.7%)
  • Business volume: CHF 8,512.7 million (2015: CHF 8,235.3 million; +2.6% in original currency)
  • SST ratio (range2): 140% to 180% (2015: 150% to 200%)
  • Combined ratio (net): 91.6% (2015: 92.1%)
  • Equity (excluding preferred stock): CHF 4,812.6 million (2015: CHF 4,655.3 million)
  • Proposed dividend distribution: CHF 21.00 per share (2015: CHF 19.00 per share)
More key figures with comments are provided in the enclosure.
"We can look back on an intensive and extremely successful year. We are very satisfied with the underlying earnings. Another positive has been the quick and successful integration of Nationale Suisse. Also we are very much on course with the implementation of our new strategy", reports a delighted Philipp Gmür, CEO of Helvetia Group, on the solid business performance.
The insurance group increased its underlying earnings1 in 2016 compared to 2015 by 12% to CHF 491.8 million after tax. The IFRS result1, which was temporarily influenced by significant acquisition accounting effects, was CHF 376.6 million and thus 21.7% up on the previous year.
Non-life with improved net combined ratio and increase in profit
The non-life business made a particularly strong contribution to the pleasing result with a profit increase of 2.6% to CHF 340.5 million. This growth was driven by a strong technical performance, which is also reflected in the net combined ratio of 91.6%, down 0.5 percentage points relative to the previous year. This was due, in particular, to the positive trend in the claims ratio. The cost ratio also improved thanks to realised synergies. All market units reported a net combined ratio of below 100% and operated profitably.
Life business generates solid profit despite challenging environment
Underlying earnings for the life insurance segment remained stable at CHF 173.5 million (previous year: CHF 175.7 million) despite the challenging environment. The operating result improved on the previous year, driven by the interest result, which chiefly benefited from the reduction in the statutory minimum interest rate for the group life business. However, the interest result also reflected the success of various measures, including the focused sales of modern insurance products and the remission of traditional products. Helvetia implemented these measures during the course of the year in order to improve the profitability of the life business. The net investment result also improved compared to the previous year. However, the expenses for the interest-related strengthening of the reserves increased year-on-year, in particular in Switzerland and Germany.
Improved results in the "other activities" segment
The contribution to underlying earnings made by the "other activities" segment improved markedly from CHF -68.5 million in the 2015 financial year to CHF -22.2 million. This increase is attributable to the significantly higher technical result for Group Reinsurance, which was burdened in the previous year by a worse claims experience as well as losses from investments as a result of the SNB's decision to decouple the Swiss franc from the euro.
Significant increase in capital-efficient life products
In 2016, Helvetia generated a business volume at Group level of CHF 8,512.7 million, which corresponds to an increase of 2.6% in original currency. The greatest absolute growth was recorded by the Swiss home market (+3.1% to CHF 5,106.6 million), while the Speciality Markets segment also posted an increase (+13.3% to CHF 771.1 million). Due to optimisation measures, Helvetia recorded a slightly lower business volume in Europe (-1.2% to CHF 2,635.0 million on a currency-adjusted basis). Helvetia reported currency-adjusted growth of 3.4% in the life business. The growth in the individual life business with capital-efficient, modern products, which generated an increase of 18.3%, is worthy of particular mention here. This pleasing growth is also reflected in the 0.4 percentage point increase in the margin for new business. As planned, the premiums collected via traditional insurance solutions declined. In the non-life business, premiums increased in original currency Group-wide by 1.5% despite the fact that Helvetia carried out deliberate portfolio optimisations in certain countries.
Good investment performance despite challenging circumstances
The investment portfolio reached CHF 49.6 billion at the end of the year and thus grew year on year by CHF 1.6 billion. Current investment income increased by CHF 11.2 million to CHF 999.6 million. With an investment result recognized in the income statement of CHF 1.1 billion, Helvetia generated a performance of 2.5%. In view of the overall performance of the equity markets and record-low interest rates, this amounts to a good result.
Capital base remains strong
Helvetia's capital base remains strong. The SST ratio at the end of June 2016 was in the range of 140% to 180%, which corresponds to the new target range defined in the financial objectives a year ago. Despite paying an attractive dividend, equity rose compared to the end of 2015 from CHF 4,655.3 million to CHF 4,812.6 million, mainly owing to the company profit. The return on equity calculated on the basis of underlying earnings increased from 8.9% in the 2015 financial year to 9.7% in the year under review.
Almost completed integration and significantly higher dividend
The integration of Nationale Suisse and Basler Austria, which were acquired in 2014, is almost fully completed. The successful integration is also reflected in the achievement of the synergy goals. The underlying earnings include realised pre-tax synergies of CHF 118.3 million. Synergies of CHF 45.3 million had been realised in the previous year. Helvetia is thus ahead of its own schedule.
Shareholders should also participate in the significant progress made in terms of the integration. The Board of Directors is therefore proposing that the Shareholders' Meeting increase the dividend from CHF 19 per share to CHF 21, an increase of more than 10%.
Integrated corporate structure operational since the start of the year
One year ago, the insurance group introduced the helvetia 20.20 strategy. To ensure efficient strategy implementation, Helvetia established an integrated corporate structure. This new structure has been operational since the start of the year. The positions in the newly created Non-Life Switzerland and IT Executive Management areas as well as in the Corporate Development support function have been filled with very strong new additions. With the new set-up, Helvetia is stepping up the collaboration between different areas within the organisation and optimising the basis for digitalisation and innovations – and is also closer to the market and its customers.
Innovative offers thanks to successful digital transformation
In order to push ahead with digitalisation, Helvetia has – amongst other initiatives – acquired a majority stake in Switzerland's biggest technology-based mortgage broker MoneyPark last December. With MoneyPark, Helvetia has also added a new, independent business model to its current portfolio and laid a first strong foundation stone for a "home" ecosystem. At the start of the year, Helvetia also launched its own venture fund, which over the coming years will invest a total of CHF 55 million in around 25 insurance-related start-ups.
At the same time, Helvetia is also expanding its digital offerings for its growing number of online-savvy customers. With the Swiss direct insurance company smile.direct, the insurance group already has a successful online model. Among other initiatives, Helvetia also launched to market a new fully digital household insurance offering in Germany in 2016. "These examples show that we have already accomplished considerable feats during the first year. We are now systematically continuing on our chosen path. In doing so, we will generate added value for everybody. Our customers will receive modern products and services, we will offer our employees attractive jobs and we will work to generate greater profits and dividends for our shareholders", emphasises Philipp Gmür.
Herbert J. Scheidt not standing for re-election to the Board of Directors
Because of his election last year as Chairman of the Swiss Bankers Association and the respective workload, Herbert J. Scheidt will not stand for re-election to the Board of Directors at the Shareholders' Meeting of Helvetia Holding AG. Herbert J. Scheidt joined the Board of Directors of the insurance group in 2011 and was also a member of the Audit Committee and the Investment and Risk Committee. Pierin Vincenz, Chairman of the Board of Directors, says: "On behalf of the whole company, I would like to warmly thank Herbert J. Scheidt for his many years of commitment to Helvetia. He decisively shaped the company in the last few years with his profound expertise in financial, investment and risk matters and thus made an important contribution to the success of Helvetia."

Contact information
Helvetia Group
Susanne Tengler
Head of Investor Relations
Dufourstrasse 40
CH-9001 St.Gallen
Phone: +41 58 280 57 79
Helvetia Group
Jonas Grossniklaus
Media Relations Manager
St. Alban-Anlage 26
CH-4002 Basel
Phone: +41 58 280 50 33