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Helvetia Holding AG / Key word(s): Strategic Company Decision
Helvetia builds on its strengths in its retail and specialty lines business with its new strategy
12-Dec-2024 / 07:00 CET/CEST
Release of an ad hoc announcement pursuant to Art. 53 LR
The issuer is solely responsible for the content of this announcement.
Ad hoc announcement pursuant to Art. 53 LR
St.Gallen, 12 December
At today's Capital Markets Day under the motto "Unleash our Potential", Helvetia will present its new strategy which will be implemented in rolling three-year cycles over a period of 10 years and focuses on two key strengths:
- The local retail customer business forms the foundation of the strategy:
- Helvetia leverages its strong customer relationships to accompany and support customers throughout their lives.
- The international specialty lines business is the second focus area of the strategy:
- In this area, Helvetia aims to achieve a leading role in the existing European markets in its specialty lines business.
- Helvetia uses existing expertise to further expand the international business selectively with a "smart follower" approach.
- In addition, Helvetia aims to improve operating efficiency and increase technical excellence. The goal is to improve operating efficiency by over CHF 200 million and the combined ratio by around 2 percentage points by the end of the first three-year cycle. The first major operational efficiency measure is the planned integration of Caser and Helvetia Seguros in Spain.
- The new ambitious financial targets for 2025-2027 are:
- Underlying ROE1 of 13-16%
- Underlying EPS compound annual growth rate2 of 9-11%
- Cumulative dividend payments3 of over CHF 1.2 billion. The dividend per share will always be at least equal to that which was paid in the previous year.4
- Strong balance sheet with an issuer rating of at least "A"
"In its almost 170-year history, Helvetia has developed into a successful international insurance company with strong Swiss roots. We have a good basis in our local markets thanks to close customer proximity. At today's Capital Markets Day under the motto 'Unleash our Potential', we present our new strategy. The future strategy with a time horizon until 2035 builds on Helvetia's strong foundation in retail and global specialty lines business. Meanwhile, it addresses emerging challenges such as the increase in natural catastrophes and the opportunities presented by technological developments and demographic trends. We are convinced that this unique approach for an insurance company of our size will enable us to continue to create sustainable added value for our customers, our shareholders and our employees in the future," explains Fabian Rupprecht, CEO of Helvetia Group, the new strategy, which will be implemented in rolling cycles of three years.
Strengthening customer proximity
Helvetia's success is based on direct contact in the retail customer business, its agent network in all markets and Smile as a direct insurer in Switzerland and Austria. Helvetia's new strategy builds on this and aims to support customers even more throughout their lives with targeted measures. Helvetia is positioning itself as a Local Customer Champion in the Switzerland, Spain and GIAM segments. This means that Helvetia will accompany its customers throughout their lives as the preferred provider with the ambition of increasing the services per customer. To achieve this, Helvetia is focusing on three areas:
- Direct contact, utilisation of existing sales channels and cross-selling: Helvetia is increasingly focusing on direct contact with its customers. To this end, existing sales networks are being utilised and expanded, while at the same time the customer experience is being enhanced through simplification and the targeted use of technology. Helvetia is promoting cross-selling by integrating services into its insurance offering and thus providing comprehensive solutions.
- Use of data and analytics: Helvetia will use innovative data analysis processes and CRM systems to develop tailored offers that enhance service quality. At the centre of this is Helvetia's commitment to "Swissness", which stands for trust and reliability in every interaction.
- Building long-term relationships with a focus on customers aged 50+: Helvetia is supporting customers over the long term with suitable insurance solutions in every phase of their lives. While Helvetia continues to attract young target groups, increased focus lies on the rapidly growing segment of customers over the age of 50 who often require tailored financial solutions due to their increased disposable income. Helvetia is making targeted use of its expertise in asset management to offer comprehensive pension and investment solutions.
Targeted growth in the global specialties business
The global specialties business forms the second pillar of the new strategy. In this area, Helvetia aims to establish a leading role in the existing European specialty lines business and develop additional international specialty lines in a targeted manner with a "smart follower" approach. In doing so, Helvetia is using its financial strength and fast decision-making processes and will focus on the following areas:
- Strategic growth and adaptive cycle management: Helvetia is expanding its global presence in markets with attractive returns. Lean structures and flexible operating processes ensure an agile way of working for rapid adjustments to changing market conditions.
- Utilising specialist expertise and expanding the product range: Helvetia is using its specialist expertise in the specialty lines business to offer customised solutions for SMEs in existing markets. Helvetia can offer SMEs services that larger competitors cannot offer as efficiently. At the same time, the product range is being expanded in order to optimally serve customer needs and utilise existing cross-selling potential.
- Technology and innovation: The use of technology, data and AI supports innovation and efficiency. Customers are offered state-of-the-art solutions.
Improving operational efficiency by over CHF 200 million by the end of 2027
To achieve the targets in the local retail customer business and global specialty lines business, the new strategy contains various supporting measures and strategies in the areas of asset management, sustainability and employee development. Over the next three years, Helvetia is concentrating on further enhancing technical excellence and increasing operational efficiency by leveraging new technologies and synergies within the Helvetia Group. Helvetia has set itself the goal of improving operating efficiency by over CHF 200 million per year until the end of 2027. Part of these efficiency gains will offset anticipated inflation. At the same time, Helvetia assumes that the cost ratio will improve by around 0.5 percentage points. Overall, the combined ratio is expected to improve by around 2 percentage points, which would put the combined ratio in the previous guidance range of 92 to 94%. Helvetia anticipates that the combined ratio will reach the lower end of this range by the end of the three-year period. The combined ratio now takes into account the result of internal Group reinsurance.
Planned integration of Caser and Helvetia Seguros
One measure to increase operational efficiency is the planned integration of Helvetia Seguros and Caser. Juan Estallo, CEO Spain, will also be taking on the role of CEO of Caser from 1 January 2025. Iñigo Soto Garcia-Junco stays CEO of Helvetia Seguros. By integrating the activities in Spain, further synergies will be unlocked and the service for customers will improve.
Financial targets for the next three years
Helvetia has set itself the following ambitious financial targets for the period 2025 to 2027, the first three years of the strategy implementation:
- Underlying ROE1 of 13-16%
- Underlying EPS compound annual growth rate2 of 9-11%.
- Cumulative dividend payments3 of over CHF 1.2 billion. As before, the dividend per share will always be at least equal to that which was paid in the previous year.4
- Strong balance sheet with an issuer rating of at least "A".
Helvetia expects underlying earnings of around CHF 520 million for the 2024 financial year, which forms the starting point of the growth target. Within this, it expects the life division's contribution to be lower than in 2023 as this included about CHF 45 million that Helvetia does not assume recurs. However, net income for the life business is expected to be higher than underlying earnings, both in 2024 and in future years.
Helvetia is changing its reporting segmentation to reflect the importance of Spain as its second most important market. From the publication of the 2024 annual figures, the previous Europe segment will be divided into the Spain and GIAM (German, Italian and Austrian Markets) segments. In addition, internal Group reinsurance will now be recognised in the Life and Non-Life business divisions instead of the "Other business" division. An overview with the financial figures for 2023 adjusted to the new reporting system will be made available.
1 For the period 2025-2027; Underlying return on equity = (Underlying earnings – financing costs net of tax – interest on preferred securities net of tax – minorities) / (average IFRS shareholders' equity excluding fair value reserve and excluding insurance finance reserve).
2 Target CAGR based on underlying earnings forecast for 2024 of approximately CHF 520 million.
3 Dividend paid out in the following year.
4 At least at the previous years’ level in very adverse years.
About the Helvetia Group
Helvetia Insurance Group, with its headquarters in St. Gallen, has grown since 1858 to become a successful international insurance group with strong Swiss roots, over 13,800 employees and more than 7.2 million customers. It has always been there for its customers when it matters.
In the Swiss, Spain and GIAM (German, Italian and Austrian Markets) segments, Helvetia positions itself as a Local Customer Champion and supports its customers throughout their lives as their preferred provider. It also focuses on the rapidly growing segment of customers over 50. In all of its segments, and in the Specialty Markets segment in particular, Helvetia strives to generate growth as a global specialist in the international specialty lines business and in reinsurance. Thanks to its lean and flexible structures, Helvetia is able to focus on profitability in a cyclical business. At the same time, Helvetia uses its expertise in its European retail markets to offer specialty solutions to SME customers.
With a business volume of CHF 11.3 billion, Helvetia generated underlying earnings of CHF 372.5 million and an IFRS period result of CHF 301.3 million in the 2023 financial year. The shares of Helvetia Holding AG are traded on SIX Swiss Exchange.
Cautionary note
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.
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