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.
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In over 160 years, the Helvetia Group has grown from a number of Swiss and foreign insurance companies into a successful international insurance group. Today, Helvetia has subsidiaries in its home market Switzerland as well as in the countries that make up the Europe market area: Germany, Italy, Austria and Spain. With its Specialty Markets market area, Helvetia is also present in France and in selected regions worldwide. Some of its investment and financing activities are managed through subsidiaries and fund companies in Luxembourg. The Group is headquartered in St.Gallen, Switzerland.
Helvetia is active in the life and non-life business, and also offers customised specialty lines and reinsurance cover. Its business activities focus on retail customers as well as small and medium-sized companies and larger corporates. With some 6,800 employees, the company provides services to more than 5 million customers. With a business volume of CHF 9.45 billion, Helvetia generated an IFRS result after tax of CHF 538.1 million in financial year 2019. The registered shares of Helvetia Holding are traded on the SIX Swiss Exchange under the symbol HELN.
This document was prepared by Helvetia Group and may not be copied, altered, offered, sold or otherwise distributed to any other person by any recipient without the consent of Helvetia Group. The German version of this document is decisive and binding. Versions of the document in other languages are made available purely for information purposes. Although all reasonable effort has been made to ensure that the facts stated herein are correct and the opinions contained herein are fair and reasonable, where any information and statistics are quoted from any external source such information or statistics should not be interpreted as having been adopted or endorsed as accurate by Helvetia Group. Neither Helvetia Group nor any of its directors, officers, employees and advisors nor any other person shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this information. The facts and information contained in this document are as up to date as is reasonably possible but may be subject to revision in the future. Neither Helvetia Group nor any of its directors, officers, employees or advisors nor any other person makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this document.
This document may contain projections or other forward-looking statements related to Helvetia Group which by their very nature involve inherent risks and uncertainties, both general and specific, and there is a risk that predictions, forecasts, projections and other outcomes described or implied in forward-looking statements will not be achieved. We caution you that a number of important factors could cause results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include: (1) changes in general economic conditions, in particular in the markets in which we operate; (2) the performance of financial markets; (3) changes in interest rates; (4) changes in currency exchange rates; (5) changes in laws and regulations, including accounting policies or practices; (6) risks associated with implementing our business strategies; (7) the frequency, magnitude and general development of insured events; (8) mortality and morbidity rates; (9) policy renewal and lapse rates as well as (10), the realisation of economies of scale as well as synergies. We caution you that the foregoing list of important factors is not exhaustive; when evaluating forward-looking statements, you should carefully consider the foregoing factors and other uncertainties. All forward-looking statements are based on information available to Helvetia Group on the date of its publication and Helvetia Group assumes no obligation to update such statements unless otherwise required by applicable law.