Release Date: September 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Helvetia Holding AG (XSWX:HELN, Financial) achieved underlying earnings of CHF285 million, demonstrating stable profitability compared to the prior year.
- The return on equity increased to 13.4%, nearing the upper end of the company's target range.
- The company's SST ratio stands at an excellent 300%, reflecting strong financial resilience.
- Non-life premium volume growth exceeded market averages in key markets such as Switzerland, Spain, Germany, and Austria.
- Fee business revenues grew by 10.4%, driven by the expansion of non-insurance services in Spain, contributing positively to overall profitability.
Negative Points
- The combined ratio in non-life was above the target range at 95.4%, primarily due to higher claims from natural catastrophes.
- Underlying earnings in the Life business were slightly below the prior year, impacted by lower results from changes in the loss component.
- The non-life business in Switzerland was adversely affected by higher claims from natural catastrophes and lower gains from prior year claims development.
- The new business margin in life decreased in Europe, despite an increase in Switzerland, due to updated assumptions and model changes.
- The company's IFRS net income was influenced by non-operating effects, including a one-off impairment in the prior year, which did not recur in the current period.
Q & A Highlights
Helvetia Holding AG (XSWX:HELN) Half Year 2024 Earnings Call Highlights
Q: Can you discuss the measures to improve technical profitability in motor pricing in Switzerland and Germany?
A: We increased motor prices in Switzerland by around 8% without experiencing higher lapse rates. In Germany, prices were increased even beyond 8%, partly reaching double digits, which compensated for inflationary trends. (Fabian Rupprecht, CEO)
Q: With strong solvency and capitalization, what are your thoughts on capital repatriation?
A: Our priority is providing regular, predictable, and sustainably increasing dividends. We aim to distribute more than CHF1.65 billion in dividends over the strategy period. We also look at opportunities for profitable growth and efficiency initiatives. (Annelis Haemmerli, CFO)
Q: Can you elaborate on the holdco cash and the increase in remittance sales?
A: The cash remittance includes regular operative cash and one-off payments, such as from Swiss Life business. This cash is available for deployment within the group. (Annelis Haemmerli, CFO)
Q: What is your M&A strategy? Are you looking for bolt-on acquisitions or larger deals?
A: Our focus is currently on growing our own business and internal growth. We will look opportunistically at any opportunities, but our primary focus is on internal growth. (Fabian Rupprecht, CEO)
Q: Can you provide more insight into the positive effects in the "Other Activities" segment?
A: The positive effects include the non-recurrence of a CHF27 million impairment from 2023, a beneficial group reinsurance result, reduced operative costs, and a positive fee result. (Annelis Haemmerli, CFO)
Q: Is the combined ratio target of 92% to 94% for 2024 still achievable?
A: We aim to achieve the target range by 2025. The combined ratio depends on various factors, including net CAT events and discounting effects, which are hard to forecast. (Fabian Rupprecht, CEO)
Q: What are the main drivers for the 10% year-on-year decrease in underlying earnings in Life?
A: The volatility mainly comes from the Spanish Life products, which are accounted for under BBA, leading to more volatility. Additionally, there was a positive one-off effect in 2023 that did not recur in 2024. (Annelis Haemmerli, CFO)
Q: Will the creation of free deployable funds impact your debt leverage position?
A: The free deployable funds are part of our capital management toolbox. We optimize between various options, including refinancing debt, based on multiple financial considerations. (Annelis Haemmerli, CFO)
Q: Is there room for further growth in the fee result?
A: Yes, we expect the fee result to further increase in the coming years, especially with new service units in Spain. We will provide more details at our Capital Market Day on December 12. (Fabian Rupprecht, CEO)
Q: Will the trend of improving investment income in Non-Life continue?
A: We have no basis to assume that the interest margin in Non-Life will deteriorate over time. The higher the risk-free rates, the higher the expected interest margin. (Annelis Haemmerli, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
