Helvetia Baloise Holding Ag · SIX:HBAN
Helvetia Baloise — Helvetia Group — Investor Presentation (June 2023)
31 slides from Helvetia Baloise's investor presentation, Jun 27, 2023
Slide 1: Helvetia Group: Update on IFRS 17/9
27 June 2023 Helvetia Group Update on IFRS 17/9 Cover: Giacomo Santiago Rogado, "Spirit", 2015, Helvetia Kunstsammlung
Slide 2: IFRS 17/9 at Helvetia: Strength of underlying business confirmed by continued solid level of affected KPIs
IFRS 17/9 at Helvetia: Strength of underlying business confirmed by continued solid level of affected KPIs • Underlying business, financial strength and dividend policy not impacted by change in accounting regime ➢ No impact on underlying business fundamentals, cash flows or financial strength ➢ No
Slide 3: Transition to IFRS 17/9 is an accounting regime change not affecting financial strength and dividend policy
Transition to IFRS 17/9 is an accounting regime change not affecting Helvetia's financial strength and dividend policy Financial strength Dividend policy SST ratio S&P rating Targeted dividend payout Net economic dividend capacity 331% A+ >1.65 billion 0.8 billion (as of 01/01/2023) (in CHF, cumulat
Slide 4: The new accounting regime and its implications for Helvetia
The new accounting regime and its implications for Helvetia Balance sheet (simplified and illustrative) IFRS 9 IFRS 17 Financial instruments Insurance contracts Principles for asset classification Valuation principles (measurement 1 Balance sheet models) P&L measurement Investments Insurance Timing
Slide 5: 1. Balance sheet
Kapiteltrenner 1. Balance sheet oder Fazit auf Farbfläche Flexible Schriftgrösse Arial Black 0.9 ZA 5
Slide 6: Opening balance sheet: Transition to IFRS 17/9 applies to investments and insurance liabilities
Opening balance sheet: Transition to IFRS 17/9 applies to investments and insurance liabilities Balance sheet under IFRS 4 / IAS 39 Balance sheet under IFRS 17 / 9 (simplified, as of 01/01/2022, in CHF million) (simplified, as of 01/01/2022, in CHF million) 69,744 69,744 67,770 67,770 55,141 Insuran
Slide 7: Investments: Transition to IFRS 9 increases the share of FVTPL assets
Investments: Transition to IFRS 9 increases the share of FVTPL assets – market value fluctuations in life largely buffered in CSM Non-life: investments by category Life: investments by category (as of 01/01/2022) (as of 01/01/2022) 10% 19% 21% 29% FVTPL 49% FVOCI 70% 62% 56% AC1 Investment property
Slide 8: Change in equity at transition mainly due to valuation reserve for policyholder participation in life
Change in equity at transition mainly due to valuation reserve for policyholder participation in life moving to insurance liabilities Shareholders' equity (as of 01/01/2022, in CHF million) -2,270 -38% 5,927 -31% -7% • Decrease in shareholders' equity mainly 1,814 -1,814 driven by move of valuation
Slide 9: Shareholders' equity more stable under IFRS 17/9 due to a more economic valuation
Shareholders' equity more stable under IFRS 17/9 due to a more economic valuation of both assets and liabilities… Shareholders' equity – IFRS 4 / IAS 39 Shareholders' equity – IFRS 17/9 (in CHF million) (in CHF million) -1,995 (-34%) 5,927 575 -198 -2,367 (-5%) 3,932 3,657 -295 92 439 -423 3,459 -29
Slide 10: …which also brings IFRS closer to solvency valuation
…which also brings IFRS closer to solvency valuation Walk from IFRS equity1 to SST risk-bearing capital (as of 31/12/2022, in CHF million) SST ratio: 331% as of 01/01/2023 10,405 1,668 -785 8,737 1,803 7,719 CSM2 3,942 4,218 IFRS IFRS equity1 equity1 3,777 IFRS 4 / IAS 39 IFRS 17/9 Valuation differe
Slide 11: 2. Income statement / 2022 comparatives
Kapiteltrenner 2. Income statement / 2022 comparatives oder Fazit auf Farbfläche Flexible Schriftgrösse Arial Black 0.9 ZA 11
Slide 12: Change in 2022 net income after tax reflecting higher share of FVTPL investments in non-life and CSM buffering in life
Change in 2022 net income after tax reflecting higher share of FVTPL investments in non-life and the CSM buffering in life Net income after tax (FY 2022, in CHF million) -134 -22% 614 • Non-life: Difference to IFRS 4 / IAS 39 net income mainly due to influence of a higher share of FVTPL -84 investme
Slide 13: Non-life net income 2022: higher technical result under IFRS 17/9 offset by asset classification
Non-life net income 2022: higher technical result under IFRS 17/9 offset by influence of asset classification on investment result (in CHF million) FY 2022 Insurance revenue: • Similar to gross earned premiums under IFRS 4 Insurance revenue 6,357 Insurance service result: Insurance service expenses
Slide 14: Life net income 2022: Backed by a stable CSM release
Life net income 2022: Backed by a stable CSM release with fluctuations in market values buffered in the CSM (in CHF million) FY 2022 Insurance revenue: • Lower compared to premium volume under IFRS 4 as savings components Insurance revenue 1,800 are excluded from IFRS 17 insurance revenue thereof CS
Slide 15: Life: CSM buffers variances and CSM release is stable
Life: CSM buffers variances and CSM release is stable CSM walk 2022 • New business CSM from profitable business written in (in CHF million, gross of ceded reinsurance) the period • Operating variance 63 i. Differences between estimate and actual in current 226 -693 period 4,322 -24 ii. Assumption ch
Slide 16: 3. Key performance indicators
Kapiteltrenner 3. Key performance indicators oder Fazit auf Farbfläche Flexible Schriftgrösse Arial Black 0.9 ZA 16
Slide 17: Transition to IFRS 17/9 leads to redefinition of some KPI – recalibration of financial targets to follow
Transition to IFRS 17/9 leads to redefinition of some KPI – recalibration of affected financial targets to follow with HY 2023 Financial targets 2025 Redefinition of KPI Recalibration of financial targets based on IFRS 4 / IAS 39 based on IFRS 17/9 based on IFRS 17/9 Profitability: Focus of today's
Slide 18: Non-life combined ratio: Solid level based on new methodology confirms high portfolio quality
Non-life combined ratio: Solid level based on new methodology confirms high portfolio quality IFRS 4 combined ratio IFRS 17 combined ratio (net / net) (net / gross) • Reinsurance effects fully considered in claims ratio; gross insurance revenue as Total expenses denominator (net/gross definition) To
Slide 19: Life new business value and new business margin updated for IFRS 17
Life new business value and new business margin updated for IFRS 17 improving economic measurement and steering Differences between NB CSM2 and NBV2… (FY 2022, in CHF million) New business value (NBV) 218 New business 5 -23 -67 133 margin (NBM) New business volume (PVNBP1) NB CSM2 Scope Ceded Non-fu
Slide 20: Return on equity slightly higher under IFRS 17/9 driven by lower shareholders' equity
Return on equity slightly higher under IFRS 17/9 driven by a lower level of shareholders' equity Return on Net income after tax1 11.6% 11.0% equity IFRS 4 / IAS 393 Average shareholders' equity2 IFRS 17/9 • 2022 return on equity slightly higher under IFRS 17/9 driven by a lower average shareholders'
Slide 21: Business volume slightly adapted – main change from deduction of reinsurance commissions
Business volume slightly adapted – main change from deduction of reinsurance commissions paid by ARI • Business volume remains a KPI to measure growth and the effectiveness of sales and distribution Premiums received Business • Small adaptation of definition using premiums received instead + of gros
Slide 22: Introduction of underlying earnings enables a comprehensive view on underlying operating performance
Introduction of underlying earnings enables a comprehensive view on the underlying operating performance of the Group → Underlying earnings reflect the underlying operating Non-operating items excluded from underlying earnings: performance of the Group by eliminating the impact of financial market v
Slide 23: 4. Key messages
Kapiteltrenner 4. Key messages oder Fazit auf Farbfläche Flexible Schriftgrösse Arial Black 0.9 ZA 23
Slide 24: IFRS 17/9 at Helvetia: Strength of underlying business confirmed
IFRS 17/9 at Helvetia: Strength of underlying business confirmed by continued solid level of affected KPIs Underlying business, financial strength and dividend policy not impacted by change in accounting regime Balance sheet reflects more economic view and remains strong IFRS 17/9 net income of CHF
Slide 25: Appendix
Kapiteltrenner Appendix. oder Fazit auf Farbfläche Flexible Schriftgrösse Arial Black 0.9 ZA 25
Slide 26: Major performance drivers in non-life measured at PAA
Major performance drivers in non-life measured at PAA Non-life income statement simplified and illustrative Insurance revenue • Similar to gross earned premiums: renewal and new business volume Insurance service expenses • Incurred claims (discounted current year claims) • Adjustments to LIC (prior
Slide 27: Major performance drivers in life mostly measured at VFA
Major performance drivers in life mostly measured at VFA simplified and illustrative Life income statement ▪ CSM release ▪ Risk adjustment release Insurance revenue ▪ Expected claims (excl. non-distinct investment components) ▪ Expected (other) fulfilment expenses (incl. IACF1 for the period) Insura
Slide 28: Life: CSM walk for HY 2022
Life: CSM walk for HY 2022 CSM walk HY 2022 (in CHF million, gross of ceded reinsurance) 139 -278 -164 4,447 -193 4,254 4,750 CSM as of New business CSM Operating variance Economic variance CSM before release CSM release (to P&L) CSM as of 01/01/2022 30/06/2022 28
Slide 29: Timeline for transition to IFRS 17/9
Timeline for transition to IFRS 17/9 27/09/2023 Publication of HY 2023 results: 01/01/2023 IFRS 17/9 06/03/2023 ✓ Publication of FY 2022 First reporting under IFRS 17/9, financial targets recalibrated to effective results under IFRS 4 IFRS 17/9 30/01/2023 ✓ 27/06/2023 ✓ Further IFRS 17/9 information
Slide 30: Glossary
Glossary AC Amortised cost – investment classification (valuation at amortised cost) BBA Building block approach – default measurement approach under IFRS 17 based on four building blocks CSM Contractual service margin – future profits of in-force business under IFRS 17 DAC Deferred acquisition cost
Slide 31: Calendar and contact
Calendar and contact Important dates − 27/09/2023 Publication of half-year results 2023 − 11/04/2024 Publication of financial results 2023 Contact details Investor Relations Corporate Communications Philipp Schüpbach Rachael Burri Jonas Grossniklaus Head of Investor Relations Investor Relations Mana