Key data for the first half of 2015 at a glance:
Please see the Notes for other key data, including comments.
Additional remarks: Following the acquisitions, Helvetia's IFRS Group profit for the period is temporarily influenced considerably by special effects. Until the end of the 2017 financial year, Helvetia will emphasise "underlying earnings", which eliminates these temporary effects and thus reflects the operating performance of the new Helvetia Group. As part of the acquisitions, Helvetia has changed its organisational structure and now has the market areas "Switzerland", "Europe" and "Specialty Markets" as well as "Corporate" (for Group functions). In the first half of 2015 Helvetia is reporting for the first time on the basis of the adjusted IFRS segments, but is in its accounting also continuing to focus on the business activities "non-life", "life" and "other activities".
- Underlying earnings* after taxes: CHF 220.9 million (First half 2014: CHF 196.9 million; +12.2%)
- IFRS result after taxes (incl. acquisition effects): CHF 161.8 million (First half 2014: CHF 196.9 million; -17.8%)
- Business volume: CHF 5,293.6 million (2014: CHF 4,812.7 million; +15.1% in original currency)
- Solvency I ratio: 200% (2014: 216 %)
- Combined ratio (net): 92.4% (First half 2014: 94.0%)
- Equity (excluding preferred securities): CHF 4,391.4 million (2014: CHF 4,963.1 million)
Helvetia recorded a strong business performance for the first half of 2015, reflecting the successful acquisitions of Nationale Suisse and Basler Austria in the previous year. Stefan Loacker, CEO of Helvetia Group, is very pleased: "Overall, Helvetia can look back on an intense and successful first half of 2015. The integration of the new business units is progressing very well. With the results we have obtained we are right on track financially and strategically."
Strong increase in profits due to improved technical result and acquisitions
The insurance group generated underlying earnings*
of CHF 220.9 million after taxes in the first half of 2015. This represents an increase of 12.2% over the previous year. The IFRS result, which was temporarily significantly influenced by accounting acquisition effects, was CHF 161.8 million (previous year: CHF 196.9 million).
The non-life business, with a 45.6% increase in profits, made a particularly significant contribution to this result. Thanks to an improved technical result and the higher business volume due to the acquisitions, the Group generated profits of CHF158.2 million. The net combined ratio improved to 92.4% (previous year: 94.0%) due to a low claims ratio and a stable cost ratio. This was the best combined ratio within the last five years. In addition, all country markets achieved a combined ratio below 100%.
In the life business, underlying earnings also increased by 18% to CHF84.9 million in a difficult investment environment. In addition to a stable risk result, the improvement was mainly due to lower expenses for interest-related additional reserves in year-on-year comparison.
Only the result of the business area Other activities was below the previous year's figure, at CHF-22.2 million. This performance is primarily due to the lower result in Group reinsurance and additional acquisition-related effects.
By segment, the biggest contribution to earnings once again came from the home market of Switzerland, where profits rose by 45.8% to CHF 169.1 million. But also the segments Europe (CHF 53.6 million, +4.8%) and Specialty Markets (CHF20.1 million, +46.0%) were up significantly.
Dynamic growth driven by acquisitions
Due to the acquisitions, Helvetia increased business volume by 15.1% in original currency to CHF 5,293.6 million in the first half of 2015. A major boost to growth was provided by the lucrative non-life business, which increased by around 50% in original currency. Business volume in life insurance was 3.4% below the previous year due to the reduction in traditional business, although the trend in investment-linked insurance products was positive.
Geographically, Helvetia generated most growth in the Switzerland segment, which recorded a 15.3% increase. The Europe segment rose by 9.7% in original currency; in CHF terms, on the other hand, the business volume fell by 5.9% as a result of the unpegging of the minimum EUR exchange rate. In the Specialty Markets segment, Helvetia generated a significantly higher volume with an increase of 36.7% in original currency in year-on-year comparison. This was largely driven by the first-time consolidation of the business portfolio of Nationale Suisse.
Investment result influenced by interest rate environment and currency effects
The profit from Group financial assets and investment property was CHF 521.7 million, which was below the previous year (CHF 582.1 million) due to negative exchange rate development. Direct income declined slightly from CHF 510.1 million to CHF 503.2 million. The direct yield declined by around 40 basis points to an annualised 2.3%. This development is primarily due to the extremely low yields on new investments and reinvestments in fixed-income securities.
Continued solid capitalisation
Helvetia continues to have a strong capital position, with a Solvency I ratio of 200% on 30 June 2015 and an SST ratio in the target range between 150 and 200% at year-end 2014. However, equity declined from CHF 4,963.1 million at the end of 2014 to CHF 4,391.4 million. The main reasons for this were lower unrealised gains/losses than in the previous year, currency effects in the translation of the equity of the European market units and the change in pension liabilities in Switzerland. The annualised return on equity based on the half-year underlying earnings was 8.6%.
Integration fully on track
Helvetia can look back on major success in the integration of Nationale Suisse and Basler Austria in the first half of 2015. The consolidated organisational management has been established in all market units. In the second quarter Helvetia completed the legal and financial takeover of Nationale Suisse, and the operating legal entities in Switzerland have been merged. In Austria the merger of Helvetia and Basler took place in August. The integrated product range with attractive insurance and pension solutions was launched in Switzerland on 1 May 2015 under the Helvetia brand. The market launch under a single brand has also already been implemented in Germany and Austria. Italy and Spain will follow in stages from the second half of the year. The legal mergers in these two market units and in Germany should be completed by the end of 2016. Initial synergies of CHF 15 million have already been achieved through savings in personnel and other costs; this means that more than half of the synergy target for 2015 has been achieved. Overall, the integration is thus fully on track.
- A conference call in German for the media will be held today at 9.00 a.m. CEST and a conference call in English for analysts will be held today at 11.00 a.m CEST. The dial-in numbers are: +41 (0) 58 310 50 00 (Europe), +44 (0) 203 059 58 62 (UK), +1 (1) 866 291 41 66 (USA – toll-free)
- The English conference call can be followed online at www.helvetia.com (audio). A replay will be available at www.helvetia.com from about 4.30 p.m.
- The letter to shareholders, including the interim report, and the slide show for the media and analysts' conference calls are available online now at www.helvetia.com/en/ir-infokit.
- The most important key figures can be found in the factsheet in the annex.