Pleasing overall result with significant profit growth. Profitability in the life- and non-life business strengthened. Firm capital base after increase of shareholders' equity. Proposal to further raise the dividend.
ST. GALLEN, Switzerland, April 7, 2005 (PRIMEZONE) -- The Europe-wide active Helvetia Patria (Stockholm:HEPN) reports an after-tax profit for the business year 2004 in the amount of CHF 158.7 million (prior-year: CHF 92.4 million) which translates into a growth rate of 71.8 per cent. The life- and the non-life business have both contributed to this result. The consolidated shareholders' equity stood at CHF 1'417.1 million (2003: CHF 1'155.3 million), an increase by 22.7 per cent. In view of the excellent result a proposal to raise the dividend by CHF 1.50 to CHF 5.50 per share will be submitted to the Shareholders' Meeting.
The result before taxes increased by 38.8 per cent on the previous year and reached CHF 204.5 million. The non-life business contributed CHF 142.8 million, the life-business generated CHF 38.4 million while CHF 27 million came from the overall non-underwriting account.
Profitability precedes growth
The profit growth took place against the backdrop of a slightly declined premium volume of CHF 5'104.8 million (2003: CHF 5'392.6 million). Premium income in local currency decreased in the direct business by 10.8 per cent. This was mainly caused by the life sector's decline by 19.8 per cent in local currency to the amount of CHF 2'497.8 million. Responsible for this development was the Swiss business which seemed to be less attractive to investors due to the low interest rates. It also remained marked by a cautious underwriting policy. The non-life business, however, reported a further growth in premium income by 2.4 per cent in original currency to a total of CHF 2'176.4 million.
Result in non-life business again strong
The largest profit contribution comes from the non-life business that added CHF 142.8 million (+ 8.2 per cent) to the overall profit. This pleasing result is even more significant due to the fact that the good loss experience allowed endowing the local equalisation reserves with an additional amount of CHF 35.3 million. The claims ratio declined further and stood at 65.8 per cent thanks to a cautious underwriting policy and the absence of larger-scale natural disasters. Our strict cost management achieved a further reduction of the expense ratio. The net combined claims/expense ratio (combined ratio "all in") receded further from 99.9 per cent to 99.2 per cent.
Better underwriting result in the life business
The life segment reaped the benefits of both, the better framework in the occupational benefits segment in Switzerland and the restructuring measures initiated in the prior year. A sector result of CHF 38.4 million (+ 29.8 per cent) after taxes is proof of the significant progress achieved. This result contains various elements. An amount of CHF 20.9 million for increased expenditure on results-linked and non-results-linked policyholders' dividends is included. The interest rates applied to the calculation of the actuarial reserves were adjusted to the changed capital market conditions, where necessary. Additionally, we further strengthened the underwriting reserves by anticipating the "liability adequacy test" required by the International Financial Reporting Standards (IFRS).
Premiums in the direct life business decreased by 19.9 per cent in the balance sheet currency for the year under review. This was largely due to the development in Switzerland where - in 2004 as well - more than 80.3 per cent of the premium volume was generated.
As a consequence of the restrictive underwriting policy in the group life business, which had already been tightened in 2003, the Swiss group life segment fell by 25.7 per cent in the past year. For the year 2004, Helvetia Patria has forwarded 92 per cent of the income from that business segment to the policyholders and thus exceeds the statutory "legal quote" of 90 per cent.
The volume in the individual life business in Switzerland decreased by a rate of 24.3 per cent due to the low capital market interest rates. On the other hand, the life premiums in Spain (+ 12.7 per cent), in Italy (+ 42.5 per cent) and in Germany (+ 8.2 per cent) experienced a significantly dynamic drive. The business abroad gained consequently in ground.
Higher performance in the investment business
Funds under management increased in 2004 by about CHF 498 million and reached an amount of CHF 26 billion at year's end. Asset allocation experienced a shift towards fixed-interest-rate securities with 52.4 per cent invested in that category at 31.12.2004 while the equity allocation fell to 8.8 per cent. Although the investment volume was increasing the continuously low coupon yields caused the direct investment income to decrease by CHF 32.4 million to the reach a total of CHF 900.8 million. The investment performance, however, improved from 3.5 per cent to 4.3 per cent. The contribution to the Group result from the investment business after deduction of the interest assigned to life- and non-life business underwriting activities fell from CHF 142.8 million in 2003 to CHF 23 million in 2004. Reasons for the decrease were a lower ordinary income and higher depreciation of investments.
First-time application of ARR 23
The noticeable income- and expenditure changes on the previous year in the last three items of the non-underwriting account are largely caused by the first-time application of ARR 23. They partially compensate for the declining investment result.
Very good return on shareholders' equity
The shareholders' equity increased in the year under review by 0.26 billion to 1.42 billion (+ 22.7 per cent). The return on shareholders' equity rose from 8.4 per cent to an excellent 12.3 per cent. The capital increase in December of 2004 brought an inflow of CHF 295 million in new capital. The change in the GAAP ARR 24 standard requiring that own shares be newly reported as a negative position in the shareholders' equity resulted in a reduction of the shareholders' equity by CHF 44.5 million. At the same time, the new regulations regarding the "legal quote" stipulated that those revaluation reserves affected by the "legal quote" be separated from the shareholders' equity which led to a further decrease of the latter by CHF 129.1 million. On the other hand, the valuation margin on the fixed-interest-rate securities of about CHF 471 million - according to their valuation at amortized cost - is not recorded in the shareholders' equity but is set aside as undisclosed reserves in the investments.
Change in the Board of Directors and new Group auditor
Peter Wagner, former Member of the Board of Directors of Patria Mutual and since 2002 Member of the Board of Directors of Helvetia Patria Holding, will resign from his office at the Shareholders' Meeting 2005. Dr. Urs Widmer, designated Chairman of the Board of Vontobel Holding AG, will be proposed to succeed him as a new Member.
The year-end financial statements for 2004 are the last ones that we have prepared in accordance with the accounting rules Swiss GAAP ARR. Future reporting will follow the rules of the International Financial Accounting Standards (IFRS) to meet the regulations of the Swiss Stock Exchange SWX. This is the point in time when - in accordance with good corporate governance - a change in mandate should be considered after a competent activity with Ernst & Young AG for several years. The Board of Directors therefore submits to the Shareholders' Meeting the proposal to elect KPMG Fides Peat as statutory auditor and as Group Auditor for the next auditing period.
Proposal to further increase the dividend
In view of the positive result the Board of Directors will submit a proposal for a higher dividend of CHF 5.50 (+ CHF 1.50 per share or + 37.5 per cent) to the Shareholders' Meeting. We thus continue to adhere to our reliable and sustainable dividend policy of the past years.
"The excellent result of the last year demonstrates again the operating strength of our Group," comments Erich Walser, Chairman of the Board of Directors and CEO. "We are on the right course for implementing our strategy and we will continue optimising the quality of our insurance portfolio and paying close attention to a strict cost management."
Infokit Helvetia Patria:
http://www.helvetiapatria.com/en/index/ir-jahresergebnis/ir-infokit-jahresergebnis.htm
Media information and key consolidated figures 2004 (PDF):
http://www.newsbox.ch/public/2893/att/2808_mediainformationandkeyconsolidatedfigurespdf.pdf
Please note:
-- Today, a financial analysts' meeting will take place at
9.00 am and a media conference at 11.00 am, both in German.
-- The Shareholders' Letter as well as the latest presentation are
available on the internet as of now: http://www.helvetiapatria.com
-- Please see attachment for Key Figures.
Helvetia Patria Group
The Helvetia Patria is a Europe-wide active insurance service provider with core competencies in risk management (life and non-life insurance business, reinsurance) as well as in private pensions. The Group is active in Central - and Southern Europe through its regional offices, subsidiaries and associated companies. The Group headquarters are located in St.Gallen/Switzerland while the headquarters for Switzerland are in Basle. Helvetia Patria provides with 4'700 employees services to more than two million customers in six European countries. About 2'200 employees are working for the insurer in Switzerland. The Group generated a premium volume of over CHF 5.1 billion in 2004 and a net profit of CHF 159 million. The registered shares of Helvetia Patria Holding are part of the Swiss Performance Index (SPI) and are traded at the Swiss Stock Exchange (SWX) under the symbol HEPN.
Cautionary statement regarding forward-looking information
This document is made by Helvetia Patria Group and may not be copied, altered, offered, sold or otherwise distributed to any other person by any recipient without the consent of Helvetia Patria Group. Although all reasonable effort has been made to ensure the facts stated herein are accurate and that the opinions contained herein are fair and reasonable, this document is selective in nature and is intended to provide an introduction to, and overview of, the business of Helvetia Patria Group. 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 by Helvetia Patria Group as being accurate. Neither Helvetia Patria 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 herein are as up to date as is reasonably possible and may be subject to revision in the future. Neither Helvetia Patria 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 Patria Group which by their very nature, involve inherent risks and uncertainties, both general and specific, and risks exist 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 claim events; (8) the mortality and morbidity experience; (9) policy renewal and lapse rates. We caution you that the foregoing list of important factors is not exclusive; 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 Patria Group on the date of its posting and Helvetia Patria Group assumes no obligation to update such statements unless otherwise required by applicable law. The purpose of this document is to inform Helvetia Patria Group's shareholders and the public of Helvetia Patria Group's business activities for the year ended December 31, 2004. This document does not constitute an offer or a solicitation to exchange, buy or subscribe for securities and it does not constitute an offering circular within the meaning of Art. 652a of the Swiss Code of Obligations or a listing prospectus within the meaning of the listing rules of SWX Swiss Exchange. Should Helvetia Patria Group make in the future one or more capital increases, investors should make their decision to buy or to subscribe for new shares or other securities solely based on the relevant offering circular.
This document is also available in German, French and Italian. The German version is binding.