Nationale Suisse increases profits and records an excellent equity base, with a slight downward trend in premiums
Nationale Suisse generated an increased profit for 2013 and is reporting an even more robust equity base. The combined ratio continues to be very good at Group level. For these reasons Nationale Suisse shall propose a significantly higher dividend of CHF 2.50 per share to the Annual General Meeting (2012: CHF 1.70). As a result of the volatile specialty lines business and a fall in the foreign motor vehicle business, premiums experienced a slightly downward trend. Nationale Suisse is cautiously optimistic for 2014 and intends to take advantage of its excellent capital base and the “A-” (Excellent) rating from A.M. Best to achieve profitable growth.
Key figures of the 2013 annual result at a glance:
- Increase in consolidated profit by 1.0% to CHF 104.5 million (+8.1% without the pension fund changeover effect of the previous year)
- Good combined ratio of 93.1% once again (2012: 91.2%)
- Robust return on investment of 3.1% (2012: 3.2%) with a slightly higher return on current income of 2.6% (2012: 2.5%)
- Excellent equity base and high solvency 1 ratio again, at 275.9% (2012: 259.2%)
- Significantly higher dividend of CHF 2.50 per share (2012: CHF 1.70) to be proposed
- Fall in gross premiums of 1.8% in original currencies
- Pleasing growth in life premiums of 3.1% thanks to successful repositioning of the life business in Switzerland
- Decrease in non-life premiums of 2.7%, adversely impacted by motor vehicle business in foreign countries and volatility in specialty lines
- Fall in specialty lines premiums (–4.5% at constant exchange rates) due to cyclical Engineering and Credit Life specialty lines
Profit increase and stronger equity base once again
In 2013, the Nationale Suisse Group increased its profit by 1.0% to CHF 104.5 million. Excluding the positive effect from the adjustment to the pension fund in Switzerland in the previous year, the increase would be 8.1%. Due to the pleasing earnings situation, equity once again increased substantially to an even more robust CHF 955.7 million (+6.9%) and remains of a high quality. The solvency 1 ratio improved accordingly from 259.2% to 275.9%. “The solvency 1 ratio is testimony to Nationale Suisse’s excellent equity base”, says Hans Künzle, CEO of Nationale Suisse.
Downward trend in Group premiums – pleasing growth in the life business
In the financial year 2013, gross premiums received by Nationale Suisse fell by 1.8% at constant exchange rates to CHF 1 495.0 million. This reduction is due to low single-digit losses in both non-life segments. In Non-life Switzerland (–1.8% to CHF 850.2 million) it was primarily the international Engineering business booked in the segment that had a negative impact. It was affected noticeably by a reduction in government spending on infrastructure in the target markets and increased competition. The Non-life Foreign Countries segment (–4.6% in original currencies to CHF 391.6 million) experienced a decrease in volume on the back of portfolio restructuring in the motor vehicle business and a difficult market environment.
In contrast, life premiums saw an increase of 3.1% to CHF 253.2 million, underpinned by the traditional life business in Switzerland, which grew considerably thanks to the completion of the revamped product range in particular. The Belgian and Italian markets, on the other hand, experienced a double-digit decrease primarily due to the weak Credit Life business resulting from the economic situation. The whole life business now comes under a single profit responsibility. Accordingly, it is combined in one segment for the first time in the 2013 financial reporting.
Gross premiums in the specialty lines fell by 4.5% at constant exchange rates to CHF 476.3 million. Premiums in the cyclical Engineering and Credit Life specialty lines decreased. In contrast, Direct and Art were able to expand, and Marine and Travel also recorded growth in a difficult market environment. Nevertheless, the target of annual growth was not achieved. “The medium-term target for annual growth in the specialty lines remains unchanged”, states Hans Künzle.
Very good combined ratio once again, Non-life Foreign Countries impacted by substantial deterioration in claims ratio
At Group level, the net combined ratio increased from 91.2% to 93.1% in the reporting year and as such continues to be at a very good level. In the Non-life Switzerland segment the combined ratio improved from 87.6% to an excellent 85.2% – primarily as a result of the decrease in the claims ratio from 57.4% to 54.2% on the back of fewer major claims and a positive claims settlement. Nationale Suisse achieved a very good result in this segment: pre-tax profits rose from CHF 141.4 million in the previous year to CHF 170.8 million in 2013.
In the Non-life Foreign Countries segment the combined ratio climbed from 96.3% to a disappointing 114.1%. The primary reasons for this are a higher frequency of normal claims on average and the increased burden from major claims. Consequently, the claims ratio in this segment increased from 64.0% in 2012 to 77.1% in the reporting year. This deterioration in the claims ratio impaired the result in the Non-life Foreign Countries segment, leading to a pre-tax loss of CHF 28.2 million. “This result is disappointing. It is essential that profitability is increased systematically and consistently for the long term across all relevant units through augmented measures within the framework of our Programme 1+”, emphasises Hans Künzle. The focus here is on reducing the claims ratio, optimising costs, and profitable growth. The full effect of these measures on the result should be seen in the next two to three years.
New life products bring fresh momentum
The life business in Switzerland and abroad now comes under a single management with the creation of the Life Centre of Competence. In addition, the revamping of the product range in Switzerland was completed during the reporting year. This enabled the life business in Switzerland to experience growth once again. The earnings situation improved noticeably. Pre-tax profits in the Life segment increased overall from CHF 14.1 million to CHF 18.3 million.
Sound return on investment of 3.1% with slightly higher return on current income
Current net investment income grew by CHF 4.5% to CHF 132.1 million. This was made possible by a slight increase in the average investment volume, an increase in the share of higher-interest corporate bonds and a slightly larger share portfolio with better returns. Investment management costs were also lower in 2013. These factors resulted in a return on current income of 2.6%, up slightly on the 2.5% achieved in the previous year. On the back of lower gains on financial instruments, the item “Gains and losses on investments through profit and loss” decreased from CHF 33.6 million to CHF 27.3 million. Consequently there was a small year-on-year reduction in return on investment from 3.2% to a sound 3.1%.
Dividend of CHF 2.50 per share proposed and continuation of authorised share capital
Due to the financial strength of Nationale Suisse, the Board of Directors raised the band for the target payout ratio to 40% to 60% (previously 35% to 50%) of the Group profit attributable to shareholders. A significantly higher dividend of CHF 2.50 per share (2012: CHF 1.70) can therefore be proposed to the Annual General Meeting. A continuation of the authorised share capital shall also be requested.
Elections to the Board of Directors and consultative vote on compensation report
Furthermore, the Board of Directors will propose to the Annual General Meeting that Gabriela Maria Payer, Head of Education and a member of the Management Board of the Swiss Finance Institute as well as Managing Director of the consultancy firm PAYERPARTNER, is elected to the Board of Directors. Bruno Meyenhofer is not available for re-election. The Chairman of the Board Andreas von Planta and the other current members of the Board of Directors are standing for re-election individually for a term of office lasting until the 2015 ordinary Annual General Meeting. Likewise, the Board of Directors shall propose that the current members of the Nomination & Compensation Committee are endorsed for the same term of office in individual elections and that Gabriela Maria Payer is also elected to it.
As in previous years, the Annual General Meeting will vote on the 2013 compensation report on a consultative basis. All the requirements of the new Swiss Ordinance against excessive pay in stock exchange listed companies (VegüV) will have been implemented by the end of 2015, on time and in accordance with the law.
A significant improvement is needed in the Non-life Foreign Countries result in 2014
Nationale Suisse is expecting market conditions to remain difficult in 2014. Nevertheless, the renewals concluded in Switzerland at the start of the year were positive in line with expectations. A significant improvement is needed in the Non-life Foreign Countries result. To this end, the transformation process in the foreign subsidiaries was reviewed, as announced in the presentation of the 2013 semi-annual financial result. On the back of this review the successful differentiation strategy is being continued in Germany, Italy and Spain where operational challenges are being addressed vigorously with Programme 1+. In Belgium, the review of the transformation process is still ongoing; an update will follow in due course. “Overall, our outlook for 2014 is one of cautious optimism. We intend to take advantage of our excellent capital base, our greater presence in the emerging markets and the ‘A-‘ (Excellent) rating with a positive outlook from the agency A.M. Best to achieve profitable growth”, says Hans Künzle.
Proposed by the Board of Directors to the Annual General Meeting for election as a member of the Board of Directors and of the Nomination & Compensation Committee:
Gabriela Maria Payer
Dr phil (University of Zurich)
Born 1962, Swiss citizen
Gabriela Maria Payer held numerous management roles at UBS AG from 1993 to 2012. After holding the function of Head of Marketing Retail Banking she headed up the reorganisation of the Region Switzerland and its distribution channels, set up e-banking for the bank and in 2004 took on worldwide responsibility for education and personnel development. In 2005 she became Head of Human Resources for Global Wealth Management & Business Banking and in 2009 founded the UBS Business University, for which she had responsibility throughout the whole Bank. Since 2012 she has been Head of Education and a member of the Management Board of the Swiss Finance Institute and manages the consultancy firm PAYERPARTNER for strategic business development. She is also a member of the Advisory Boards of CEO Positions AG and MakingScienceNews AG.
The 2013 annual report can be downloaded at:
Nationale Suisse is an innovative, international and independent Swiss insurance group providing first-rate risk and pension solutions in non-life and life business as well as a growing number of tailored specialty lines products. Consolidated gross premiums came to CHF 1.5 billion in 2013. The Group comprises the parent company and about 20 subsidiaries and branch offices for focused product lines in Switzerland, Italy, Spain, Germany, Belgium, Liechtenstein, Turkey, Asia and Latin America. The headquarters of Swiss National Insurance Company Ltd are in Basel. Nationale Suisse is listed on the SIX Swiss Exchange (NATN). On 31 December 2013, the Group employed 1 918 staff (full-time equivalents).
Disclaimer and exclusion of liability
The purpose of this press release is to inform the public about certain events or developments arising from the company's business. The information published in this article is not an advertisement, offer or recommendation to engage in transactions involving securities or other products of Nationale Suisse or any other type of transaction. This press release may contain certain forward-looking statements. Even if these forward-looking statements reflect the opinion and expectations of Nationale Suisse, a number of risks, uncertainties and other important factors may lead to actual developments and results differing strongly from the expectations of Nationale Suisse. It is pointed out expressly that the statements and projections contained in this press release are selective in nature. Nationale Suisse provides no guarantee, either explicitly or implicitly, regarding the accuracy and completeness of the statements and forecasts published in this press release. Neither Nationale Suisse nor its executive bodies or senior managers accept any liability for any damage or losses arising directly or indirectly from the use of this press release. Unless otherwise provided by applicable binding law Nationale Suisse is under no obligation to update or amend the statements contained in this press release, be it in response to new information, future events or any other reasons.
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