Helvetia is developing new sales channels through the partnership between Smile and Migros Bank
Migros Bank and Smile – Switzerland’s leading online insurer – will work closely together in future to sell car insurance. The partnership will focus on customers with a car loan who are looking for the right insurance coverage in addition to financing for their new vehicle. The insurance can be concluded entirely automatically. Customers who take out car insurance with Smile via the Migros Bank website will benefit from an attractive cash-back payment, which will be credited directly to their Smile app. Customer convenience is a key part of the Helvetia strategyConvenience for customers is at the heart of the Helvetia strategy, both in terms of its own sales as well as in cooperation with partners. Martin Tschopp, Chief Customer Officer at Helvetia Switzerland, comments: “The partnership between Smile and Migros Bank is a good example of how embedded insurance can help Helvetia to increase its presence wherever insurance needs arise and thus to greatly improve convenience for customers.”
Dr Axel Lehmann is not available for election to the Board of Directors of Helvetia Holding AG
Dr Axel Lehmann will not stand for election to the Board of Directors of Helvetia Holding AG at the next Shareholders’ Meeting. He has been appointed as Chairman of the Board of Directors of Credit Suisse Group.For this reason, Dr Axel Lehmann will also not stand for election as Chairman of the Board of Directors of Helvetia Holding AG from 2023. The Board of Directors of Helvetia Holding AG has already decided earlier that Dr Thomas Schmuckli should be elected as Chairman of the Board of Directors on an interim basis at the 2022 Shareholders’ Meeting. This will not change. The Board of Directors will analyse the situation and inform again in due course.
Helvetia (CH) Swiss Property Fund posts strong result for the 2021 financial year
The Helvetia (CH) Swiss Property Fund is reporting a very encouraging result for the second financial year. Underpinned by solid net income and an appreciation in the property portfolio, total income in 2021 came to CHF 24.2 million, representing an attractive investment yield of 5.5%.After transaction costs from the purchase of the initial portfolio of 29 properties impacted on the short first financial year (3.6.2020 to 30.9.2020), the 2021 financial year revealed the portfolio’s strong earning power over the twelve-month period. On the strength of the dominant residential component of 83% of the target rental income, the portfolio of the Helvetia (CH) Swiss Property Fund remained largely unscathed by the adverse effects of the COVID-19 pandemic in the second financial year too. Property income solid and rent default rate low
Rental income amounted to CHF 22.2 million, while the rent default rate was reduced to a low 2.5% within the space of a year. The EBIT margin increased to 66.3% and the fund operating expense ratio (TERREF GAV) was down to almost 0.8%. Net income generated in the 2021 financial year amounted to CHF 12.8 million, or CHF 2.84 per unit. Encouraging price trend and strong performance
Low interest rates and stable income on the Swiss property market ensured the continuing appeal of the real estate asset class and strong demand for investment properties in 2021 as well. Real estate investments with a high residential component profited in particular. In the period from 30.9.2020 to 30.9.2021 the Helvetia (CH) Swiss Property Fund reported a performance of 18.9% based on the price trend in over-the-counter trading, beating the benchmark SXI® Real Estate Funds Broad TR (relevant for listed Swiss real estate funds), which achieved a performance of 15.3% in the same period.
Increase in net asset value and high dividend yield
Last year the net asset value per unit increased by 5.5% from CHF 98.03 to CHF 103.40. The market value of the properties rose by around CHF 12.2 million (2.3%). After the decision not to distribute accrued income in the short first financial year, the initial distribution per unit was set at CHF 3.55. Based on the over-the-counter price of CHF 126.00 per unit, this represents a dividend yield of 2.8% as at the end of the 2021 financial year. Further expansion of real estate portfolio planned
The fund management company intends to expand the real estate portfolio substantially in the 2022 financial year. To this end, it is planning a new capital increase of approximately CHF 200 million as at end March 2022. The proceeds of the issue will again be used to purchase a broadly diversified real estate portfolio with a high residential component from Helvetia Group’s portfolio. A listing on SIX Swiss Exchange is planned in one to three years.
Doris Russi Schurter will not stand again as Chairwoman of Helvetia’s Board of Directors – Dr Axel Lehmann expected to serve as Chairman from 2023
For personal reasons, the current Chairwoman of the Board of Directors Doris Russi Schurter will not stand for re-election at the next Shareholders’ Meeting of Helvetia Holding AG in April 2022. This decision is related to a blow of fate her family suffered in summer 2021. Doris Russi Schurter has been a member of the Board of Directors since 2008 and also served as its Vice-Chairwoman for several years. She has been Chairwoman since 2018. The Vice-Chairman Dr Thomas Schmuckli pays tribute to her services: “Under the stewardship of Doris Russi Schurter, Helvetia finalised the acquisition and integration of the Spanish insurance company Caser, among other things. This was a decisive move forward in Helvetia’s development into a European insurance company. We deeply regret the decision of Doris Russi Schurter, but have the greatest understanding for her situation. On behalf of the entire Board of Directors, I would like to warmly thank Doris Russi Schurter for her many years of service to our company. We wish her much strength for the future.” Dr Axel Lehmann will be proposed to the coming Shareholders’ Meeting as a new member of the Board of Directors. The plan is to propose Dr Axel Lehmann for election as Chairman of the Board of Directors to the 2023 Shareholders’ Meeting. Dr Axel Lehmann is a member of the Board of Directors and Chairman of the Risk Committee of Credit Suisse. Among other posts, Dr Axel Lehmann previously served as member of the Board of Directors of UBS Group AG and later as a member of the Group Executive Board as COO as well as President Personal & Corporate Banking and President UBS Switzerland. From 1996 to 2015, he worked in various functions at Zurich Insurance Group, and was a member of the Group Executive Committee for almost 14 years. He is Chairman of the Executive Committee of the Institute of Insurance Economics (I.VW-HSG) and adjunct professor at the University of St.Gallen. The 62-year-old Swiss earned his doctorate from and qualified as a professor at the University of St.Gallen. He also completed the Advanced Management Program of the Wharton School of the University of Pennsylvania. “In Axel Lehmann, Helvetia is gaining a profound expert in the insurance business as well as someone with proven management experience in national as well as international companies and long-standing experience in the financial sector”, says a delighted Dr Thomas Schmuckli. Dr Thomas Schmuckli expected to serve as Chairman of the Board of Directors until 2023The current Vice-Chairman Dr Thomas Schmuckli is expected to serve as Chairman of the Board of Directors from the 2022 Shareholders’ Meeting to the 2023 Shareholders’ Meeting. Dr Thomas Schmuckli will therefore be proposed for election as Chairman of the Board of Directors for this period to the 2022 Shareholders’ Meeting. Due to the maximum term of office, Prof. Christoph Lechner will leave the Board of DirectorsHaving reached the maximum term of office for members of the Board of Directors, Prof. Christoph Lechner will also not stand for re-election at the 2022 Shareholders’ Meeting. He has been a member of the Board of Directors since 2006 and has served as a member of various committees, in particular the Strategy and Governance Committee. Dr Thomas Schmuckli: “We would like to warmly thank Christoph Lechner for his valuable commitment to Helvetia. In the past 15 years, he played a major role in shaping the future of the company.” Nomination of Luigi Lubelli pays tribute to the importance of the European businessLuigi Lubelli will be nominated as a new member of the Board of Directors at the coming 2022 Shareholders’ Meeting. The 52-year-old Italian Luigi Lubelli lives in Spain and has long-standing operational and strategic experience in the insurance business in Italy and Spain, two of Helvetia’s important country markets. In particular, Luigi Lubelli was Group Chief Financial Officer at Assicurazioni Generali in Italy and Deputy General Manager for Risks and Capital Markets – Group CRO at Mapfre in Spain. Dr Thomas Schmuckli: “With the appointment of Luigi Lubelli, the composition of our Board of Directors will reflect Helvetia’s European orientation even more strongly.”
Standard & Poor’s upgrades Helvetia’s rating to ‘A+’ with stable outlook
The rating agency S&P Global Ratings (S&P) has upgraded the rating of Helvetia Group to ‘A+’ and assigned a stable outlook. The positive rating action by S&P recognises Helvetia’s strong business position, where the European foothold has been further strengthened by the recent acquisition of Spanish insurance group Caser. The Group’s focus on solid capitalisation as well as Helvetia’s sound underlying profitability, particularly in the non-life business, further contributed to the assessment. Annelis Lüscher Hämmerli, Group CFO at Helvetia, is pleased with the S&P decision: “The upgrade reflects Helvetia’s ambition to continuously expand its strategic positioning with the segments Switzerland, Europe and Specialty Markets while maintaining a focus on strong capitalisation levels.” Adding further: “The rating acknowledges, amongst others, also the Group’s ability to integrate large operations swiftly and it underlines Helvetia’s proven underwriting capabilities.” The rating upgrade benefits the following rated entities of Helvetia Group:Helvetia Swiss Life Insurance Company Ltd – to ‘A+’Helvetia Swiss Insurance Company Ltd – to ‘A+’Helvetia Assurances SA – to ‘A+’ on a guaranteed basis
Helvetia increases its growth and earnings, benefits from Caser takeover and makes a successful start to the helvetia 20.25 strategy period (vid)
The most important details about the 2021 interim financial statements at a glance: Profitable growth in line with the strategy during the first half of the year
Helvetia increased its business volume in the first half of 2021 by 21.0 percent (in original currency) to CHF 6,940.6 million.
The non-life business grew by a total of 31.5 percent in original currency. This was thanks to both Caser and organically generated growth, which was broad-based across all segments and country markets.
The life business generated growth of 8.7 percent. In addition to the positive impact of Caser, capital-efficient investment-linked insurance products in the individual life business in all country markets performed pleasingly.
In line with the objectives of the helvetia 20.25 strategy, Helvetia posted strong growth in the fee business, primarily thanks to Caser.
The IFRS result after tax improved to CHF 262.4 million (first half of 2020: CHF -16.9 million) during the first half of 2021 due to a good investment result and solid technical results.
Acquisition of the Spanish insurance company Caser pays off
Caser made a positive contribution to the growth and earnings of the Helvetia Group during the first six months of 2021.
Summer storms show that Helvetia is there when it matters
Summer storms saw Helvetia receive around 50 000 claims across the Group, more than ever before in such a short period of time. The claims service worked intensively, living up to Helvetia’s purpose of being there when it matters.
In June, the storms led to a net claims burden of around CHF 70 million, primarily in Switzerland.
Dynamic start to the implementation of the helvetia 20.25 strategy
The business of all business units is performing dynamically.
In Italy, Helvetia has been able to further expand its banking cooperations, primarily in the digital space.
In Spain, Helvetia extended the “Health & Care” ecosystem of Caser with the acquisition of a further clinic.
“Helvetia can look back on a good first half of the year. The contribution made by Caser to the interim financial statements shows that the Spanish insurance company that we acquired in 2020 is delivering on what we promised. Helvetia has likewise performed strongly at an organic level. We also benefited from good capital market developments as well as solid technical results in the first half of 2021. We are pleased about the broad-based growth and robust earnings”, explains Philipp Gmür, Group CEO of Helvetia, with respect to the 2021 interim financial statements. The IFRS result after tax increased in the first half of 2021 to CHF 262.4 million (first half of 2020: CHF -16.9 million). Stronger investment results, which benefited from the strong equity market performance in the first half of 2021, were a key driver of this improvement. The purchase of Caser paid off: the Spanish insurance company, which was acquired in mid-2020, made a contribution of CHF 32.1 million to the interim financial statements. In the non-life and life businesses, Helvetia once again posted solid technical results. The non-life business significantly improved its IFRS result after tax to CHF 194.6 million (first half of 2020: CHF -0.5 million). The result of the life business increased considerably relative to the prior-year period to CHF 122.3 million (first half of 2020: CHF 22.9 million). The result for other activities in the first half of 2021 stood at CHF -54.5 million (first half of 2020: CHF -39.3 million). Solid combined ratioThe net combined ratio in the non-life business in the first half of 2021 was 94.5 percent (first half of 2020: 95.9 percent). Compared to the previous year, the absence of COVID-19 claims had a positive impact. The Swiss business also recorded a one-off special effect. This can be attributed to a periodic review of the reserve level, on the basis of which reserves were released. On the other hand, the storms in June 2021 gave rise to an increased claims burden from natural catastrophes, primarily in Switzerland. Improved new business margin in the life businessIn the life business, the new business margin improved relative to the prior-year period by 0.3 percentage points to 3.0 percent (first half of 2020: 2.8 percent) and thus stood at the upper end of the strategic target range of 2 to 3 percent. This increase can primarily be attributed to product adjustments, improved cost assumptions and higher investment returns. Strong growth of 21 percent thanks to Caser – as well as a strong organic performanceIn the first half of 2021, Helvetia continued its focussed growth strategy. The business volume amounted to CHF 6,940.6 million (first half of 2020: CHF 5,657.0 million). On a currency-adjusted basis, this represents an increase of 21.0%. A considerable part of this growth can be attributed to Caser, which is being included in the income statement of the interim financial statements for the first time. At an organic level, Helvetia generated pleasing growth of 5.2 percent in original currency during the first half of 2021. The non-life business, which posted growth of 31.5 percent in original currency, was a strong growth driver. In addition to the contribution of Caser, which was responsible for around two-thirds of the growth, successful organic growth was also observed here. This was broad-based across all segments and country markets. In Switzerland, the growth of the B2B2C business and the online insurer Smile is particularly notable. Life insurance also increased its business volume by 8.7 percent in original currency. In addition to the contribution of Caser, the business with capital-efficient investment-linked insurance products in the individual life business also performed very well. Helvetia generated considerable growth rates with these products in all country markets. Income from the fee business contributed CHF 165.8 million and grew considerably thanks to Caser and its non-insurance activities. Investment result benefits from strong equity market performanceCurrent income from investments remained stable relative to the prior year at CHF 461.4 million (first half of 2020: CHF 457.3 million) due to the additional income from the portfolio of the acquired Spanish insurance company Caser. The direct yield declined slightly to 0.8 percent (first half of 2020: 0.9%, neither figure annualised) due to the lower yield generated by the acquired Caser portfolio owing to acquisition effects. The overall investment result of the Group increased to 872.3 million (first half of 2020: CHF 92.4 million), primarily thanks to book profits stemming from the strong equity market performance. Consistently solid capitalisationHelvetia’s capital position remains strong. Helvetia estimates that its SST ratio at the end of June 2021 stood at above 220 percent (end of 2020: 193 percent). Here too, Helvetia benefited from the positive capital market performance in the first half of 2021. Successful start to strategy implementationHelvetia presented its new helvetia 20.25 strategy at the start of the year. With this strategy, Helvetia wants to become the best partner for financial security and to set standards in the areas of customer convenience and customer access. The new strategy period has got off to a successful start. The investments in customer convenience are increasingly paying off, as can be seen, for example, in the fact that agency sales and B2B2C channels grew strongly and Smile increased its growth to around 12 per cent compared to the previous year. In Italy, Helvetia further expanded its bank sales, with CiviBank, the digital distribution platform YOLO and Helvetia agreeing to develop a simple digital insurance offering. A partnership with illimity, a digital bank listed on the Italian stock exchange, has already existed for some time. During the first half of the year, illimity and Helvetia added a fully digital life insurance product to their offering. In Spain, Helvetia further extended the “Health & Care” ecosystem. With the acquisition of a further clinic for Grupo Hospitales Parque, a subsidiary company of Caser, this ecosystem now brings together six hospitals, 22 nursing homes as well as 22 dental clinics. “We have already been able to record initial successes in the implementation of our strategy during the first half of the year. We now want to take this momentum with us and work vigorously to develop Helvetia into a European financial services provider for insurance and pension provision”, says Philipp Gmür with respect to the implementation of the helvetia 20.25 strategy.
Key figures
Helvetia issues hybrid bond and successfully completes financing of Caser acquisition
Helvetia Europe, a Luxembourg subsidiary of Helvetia Swiss Insurance Company Ltd in St.Gallen, has issued a subordinated hybrid bond amounting to EUR 600 million with a first optional call date 2031. The bond has a fixed coupon until its first optional call date of 2.75%. The hybrid bond serves to complete the financing of the majority holding in the Spanish insurance company Caser (Caja de Seguros Reunidos, Compañía de Seguros y Reaseguros S.A.) after Helvetia already successfully issued new shares as part of a capital increase on 19 June 2020. “Despite a challenging market environment, Helvetia has made use of the current positive market dynamics to implement its announced financing strategy for the acquisition of Caser”, explains Paul Norton, Chief Financial Officer of the Helvetia Group. The proceeds from the hybrid bond will largely be used to finance the acquisition of Caser and for general corporate purposes. Helvetia expects to be able to complete the acquisition of Caser by the end of June. The acquisition will further strengthen the European business as a second pillar, significantly expand the attractive non-life business and increase the company’s sales reach in Spain. Deutsche Bank, UBS, Credit Suisse, Natixis and Morgan Stanley have acted as joint lead managers for the transaction.
Helvetia’s SST ratio remains strong
Helvetia has published its Financial Condition Report (FCR) for the 2019 financial year.
As at 1 January 2020, the Group has a strong SST ratio of 235%. This corresponds to an increase over the previous year of 13 percentage points (1 January 2019: 222%). Helvetia has benefited from market developments such as the strong performance on the equity markets and lower credit spreads. The good business results in 2019 also proved beneficial. Moreover, Helvetia generated positive effects through an improved business mix attributable to more profitable new business and the new tariff applicable to the Swiss group life business. Capitalisation remains solid despite pandemic
Helvetia’s capitalisation remains solid even in the current COVID-19 situation. The SST ratio declined to around 200% by mid-March owing to market trends, in particular the increase in credit spreads and lower share prices. The ratio has since improved somewhat and is now above 200%. This is due to increased hedging of equity positions and other positive effects. The SST ratio thus remains comfortably within the strategic target range of 180-240%. The Financial Condition Report and the accompanying set of slides are available on the Helvetia website at www.helvetia.com/annual-results.
Adresta becomes an independent start-up
Helvetia Insurance is spinning off the start-up Adresta. The fledgling enterprise launched under the Helvetia Kickbox programme makes all the key stages of the watch lifecycle accessible to manufacturers, merchants and buyers on a blockchain. This eliminates counterfeit and stolen goods and increases transparency on the watch market.
As part of its helvetia 20.20 strategy, Helvetia Insurance set up a corporate incubator programme. The aim is to develop new business models through to the stage where they are ready for market. Adresta is another start-up from this programme to gain its independence. Adresta’s aim is to digitalize the luxury watch lifecycle. This involves using blockchain technology to make all the key stages of the watch lifecycle available to manufacturers, merchants and buyers in digital form. Second-hand buyers in particular are often uncertain about the authenticity and origin of a watch. Adresta provides certainty and confidence. Every watch made by an Adresta partner can be identified beyond doubt and verified as an original. At the same time, counterfeit and stolen goods are identified and eliminated from the watch market. All parties benefit from increased transparency
It is not just watch buyers who gain from Adresta; the new technology offers benefits for all parties. It enables manufacturers to better forecast revenues and unit sales. And during the manufacture of specific models, errors can be identified and more swiftly rectified. Insurance companies, on the other hand, have easier access to the origin and specifications of an expensive luxury watch. These benefits have already won over the first watchmaker, with Adresta gaining its first customer in Czapek & Cie. Developed at Helvetia
Helvetia employee Michal Behr and other team members submitted the idea for Adresta under the Helvetia Kickbox programme. The conceptual design was then worked out by the later founders Mathew Chittazhathu and Nicolas Borgeaud and the original team. The team developed an initial technical solution together with the ETH juniors. Leonie Flückiger, the project manager at ETH juniors, subsequently joined the founder team as CTO. “The internal support given to new business ideas also makes Helvetia more innovative and is part of an extensive working relationship with start-ups and fledgling enterprises. This enables Helvetia to develop its core business, tap new business models and make targeted use of innovations”, says Martin Tschopp, Head of Corporate Development at Helvetia.
Caption: The founders of Adresta: Mathew Chittazhathu, Leonie Flückiger and Nicolas Borgeaud
Helvetia’s Annual General Meeting to take place without physical participation of shareholders
In view of the current situation regarding coronavirus the Annual General Meeting of Helvetia Holding will be held without the physical participation of shareholders. In general, Helvetia considers itself well prepared for the changed conditions: Solvency and capitalisation according to the S&P capital model are currently within the strategic target range. The dividend is not at risk. The latest developments also do not change the fundamental considerations regarding financing the acquisition of Caser. The Annual General Meeting will be held in accordance with the provisions of Ordinance 2 of the Federal Council of 13 March 2020 (as of 21 March 2020) on measures to combat coronavirus (COVID-19). The Annual General Meeting will therefore take place on April 24, 2020 at 10:00 a.m. at the Company’s headquarters, Dufourstrasse 40, 9001 St. Gallen, Switzerland. Shareholders cannot be granted access to the meeting on site. Voting is only possible via the independent proxy. Shareholders will receive further details with the information letter on the Annual General Meeting. Creation of share capital of 15 percent for the acquisition of Caser
In January, Helvetia announced its intention to acquire around 70 per cent of the Spanish insurer Caser. The purchase price for a stake of almost 70 percent in Caser is approximately EUR 780 million. While in January the transaction was expected to be completed by the end of May 2020, delays in the regulatory approval process are now possible as a result of the corona virus. It is therefore difficult to estimate the exact date of approval and the associated initial consolidation of Caser into Helvetia Group. Helvetia expects to close the transaction in the course of the summer. The financing mix communicated in January for the acquisition of Caser continues to be the preferred option: One third of the financing is to be provided by equity and two-thirds by hybrid capital. In this context, the Annual General Meeting will also decide on the creation of authorized capital amounting to 15 percent of the outstanding share capital. The anchor shareholder, Patria Genossenschaft, unreservedly supports this acquisition and the proposed financing. Patria Genossenschaft has also announced its intention to acquire new shares in the event of a capital increase at least to the extent of its current percentage shareholding. Should the capital markets make the intended financing structure more difficult, Helvetia has sufficient liquidity to bridge periods of extreme market distortions. Unchanged solid capitalisation – dividend in the planned scope
The basis for the financing of Caser is the continued solid capitalisation of Helvetia: The communicated strategic target range of the SST coverage of Helvetia Group of 180 to 240 per cent takes into account a pandemic scenario. The SST ratio as of mid-March remains solid at around 200 per cent and thus still within the strategic target range. The capitalisation according to the S&P capital model is also currently in the strategic target range and that required for the A rating. The impact of COVID-19 on statutory equity and the income statement is significantly lower than on IFRS capital. Furthermore, Helvetia has sufficient economic dividend capacity that can be used for future dividend payments.