Helvetia Group: 2020 in review

2020 in review.

Analyst conference call Annelis Lüscher Hämmerli, CFO

Helvetia Group

29 January 2021

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Disclaim er: Analyst Presentation

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Agenda

	Topic
01	Trends for business volume
02	Investment trends
03	Combined ratio trends (non-life)
04	Trends for the new business margin (life)
05	Trends for net income
06	Impact of Caser acquisition
07	Dividend

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Ongoing solid growth in non-life, life impacted by new tariff in Swiss group life

	2019	Drivers in 2019
	(in CHF million)
Business volume	9,454

Non-life	4,675	Strong growth in Specialty Markets
		Substantial growth in Europe in all
		countries and lines of business
		Slight growth in Switzerland driven by
		the expansion of B2B2C business
Life	4,779	Strong growth in investment-linked
		individual life products in Switzerland,
		Germany and Italy
		Growth in Swiss group life driven by
		new capital-efficient business

Trends in 2020

• Positive volume effect due to the consolidation of Caser in the second half-year (details on Caser on slide 9)
• Strong growth trends in Specialty Markets seen in H1 continuing; ongoing growth in partner business in Switzerland; growth in Europe although motor under pressure due to pandemic in most country markets
• Shift to investment-linked business in individual life continuing, although weakened compared to the first half
• Expected decline in Swiss group life due to the introduction of a new tariff as planned

4 |

Losses on investments compensated to a large part in second half-year

	2019	Drivers in 2019
	(in CHF million)
Investment income	1,403	Current income almost on prior-year

Substantial gains mainly thanks to a strong performance of equity markets

Trends in 2020

• Current income positively affected by Caser while focus on capital-efficient life products and low interest rate environment reduce income
• Slightly negative contribution from gains and losses on investments
• H1 losses largely compensated by par- ticipating in rising equity markets in H2

Stock markets (price performance)

Interest rates

FX rate CHF/EUR

150
140
130
120
110
100
90
80
01/01/2019	01/01/2020
SMI Index	MSCI World Index	Source: Bloomberg

1.50%
1.00%
0.50%
0.00%
-0.50%
-1.00%
-1.50%
Q4 2018		Q4 2019	Q2 2020	Q4 2020
5Y CHF	5Y EUR	10Y CHF	10Y EUR	30Y CHF	30Y EUR

(as of 31 December)

2020

CHF 1.08

2019

CHF 1.09

5 |

Impact of COVID-19 claims on combined ratio mitigated by resilient portfolio

	2019	Drivers in 2019
	(in %)
Combined ratio	92.3	Higher claims ratio mainly driven by
(net)		Switzerland as a positive development
	of the current year claims ratio was
		unable to fully compensate for a
		decline in run-off profits
		Slight improvement in Europe mainly
		due to higher premium volume
		Increase in cost ratio attributable to
		higher acquisition costs due to shifts in
		the sales channel and product mix and
		higher project costs

Trends in 2020

• Net COVID-19 claims burden on Group level stable compared to half-year figure (based on current best estimate) - however considerable uncertainties around reinsurance recoveries remain
• Positive effect from a lower claims frequency in individual lines as seen in H1
• Portfolio of Caser not impacted by COVID-19 losses
• Project costs and the inclusion of Caser leading to a higher cost ratio

6 |

New business margin influenced by lower interest rates and a new tariff in Swiss group life

						2019	Drivers in 2019
						(in % PVNBP)
New business	2.9	Positive effect from model changes
margin		that led to lower capital requirements,
	in particular benefiting Swiss group life

Additional benefits from a more advantageous business mix in Swiss group life due to higher growth in new business with more profitable capital- efficient solutions

Trends in 2020

• Expected lower new business volume as a result of the new tariff in Swiss group life as planned
• Ongoing pressure on new business margin from lower interest rates
• Positive effects resulting from a further improved new business mix

7 |

Net income partly recovering in second half-year

$	2019	Drivers in 2019
	(in CHF million)
Net income	538	Investment result in both life and
		non-life business benefiting from
		strong equity market performance
		Solid technical results in both life
		and non-life
		Positive one-off tax effect from the
		revaluation of deferred tax
		provisions as a result of tax
		reductions in Switzerland (CHF 93
		million)

Trends in 2020

• Decline of gains and losses on investments resulting from equity market crash in first half partly compensated in second half-year
• Expected net COVID-19 claims burden stable compared to half-year figure; positive effect of lower claims frequency in individual lines of business as seen in H1
• Life: lower gains and losses on investments can partly be compensated by lower expenses for additional reserve strengthening and policyholder participation
• Other activities negatively affected by COVID-19 claims in Group Reinsurance and costs mainly related to the Caser transaction

8 |

Caser: beneficial acquisition and robust business development in 2020

Beneficial ROE from acquisition expected after full consolidation

• Pro rata consolidation in 2020 - full impact in 2021
• Return of acquisition on raised equity expected to be within Helvetia's ROE target range of 8-11%after full consolidation
• IFRS profits will be negatively impacted by acquisition accounting

Growth of risk premiums above market

• Solid growth of risk premiums (non-life & life risk) above market expected for 2020 despite COVID-19 crisis (HY 20201): EUR 660 million based on local GAAP figures)

Resilient technical results in non-life

> Non-lifetechnical results not impacted by COVID-19 losses

Please note:

Due to the fact that Caser reported its HY 2020 results based on local GAAP, its figures are only comparable to Helvetia's numbers to a limited extent. However, they can give a broad indication of the results under Helvetia IFRS accounting policies. These figures should not be tak en as guidance for future performance. IFRS acquisition accounting will reduce profits in the following years.

• Good level of net combined ratio for 2020 expected (HY 20201): 90.3% based on local GAAP figures)
• 1. Caser HY 2020 results have no impact on Helvetia Group results; all numbers in Spanish GAAP

9 |

Unchanged dividend policy despite crisis

Dividend per share			Net economic
	(in CHF)			dividend capacity
				(in CHF)
				31/12/2019:
4.60	4.80	5.00		CHF 0.7 billion
				31/12/2018:
2017 1)	2018 1)	2019	2020	CHF 0.6 billion
> No change in or deviation from stated dividend policy in 2020
1) Figures for 2017 and 2018 adjusted for the new number of shares resulting from the share split (1:5) of 13 May 2019

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Q&A.