Nationale Suisse achieves a pleasing increase in profit and premium growth in a challenging environment during the first half of 2014
Nationale Suisse has increased profits and premium income during the first half of 2014. All segments contributed towards this growth. The insurance group still enjoys an excellent equity base. The combined ratio at Group level remains good. The positive result for the first half of 2014 provides a solid base for good performance throughout the year as a whole. An Extraordinary General Meeting is to be held on 29 September 2014 in connection with the proposed merger with Helvetia.
Key figures from the 2014 semi-annual result at a glance:
- Pleasing increase in consolidated profit, up 7.1% to CHF 57.0 million
- Excellent equity base and very solid solvency 1 ratio of 294.4% (275.9% as at the end of 2013)
- Organic gross premium growth, up 3.1% to CHF 905.3 million at constant exchange rates
- Pleasing +11.4% movement in Life premiums thanks to big rise in traditional Life products
- Non-life premiums up by 1.9% at constant exchange rates
- Growth in speciality lines (2.5% at constant exchange rates) adversely affected by Credit Life, growth excluding Credit Life of 6.7% at constant exchange rates
- Combined ratio remains healthy at 93.6% (92.9% for the first half of 2013)
- Excellent investment result with an annualised return on investment of 3.8% (2013: 3.1%)
- High return on equity of 11.9% (2013: 12.0%)
Pleasing increase in profit, solvency 1 ratio remains very solid
Nationale Suisse achieved a pleasing increase in profit during the first half of 2014, up 7.1% to CHF 57.0 million. The insurance group continues to enjoy an excellent equity base: as of 30 June 2014, despite the high dividend level, Nationale Suisse has increased its equity to a new record high of CHF 971.6 million. At 11.9%, return on equity remains largely unchanged near the same high level as the same period last year (2013: 12.0%). This is also reflected in the very solid solvency 1 ratio, which is up again at 294.4% (275.9% as at the end of 2013). “The positive result and the excellent equity base make it quite clear: the proposed merger with Helvetia is being pursued from a position of strength”, says Hans Künzle, CEO of the Nationale Suisse Group.
Premium growth in Non-life business, very strong growth in Life segment
In an environment which remains challenging, Nationale Suisse managed to increase gross premium volume by 3.1% to CHF 905.3 million at constant exchange rates. Both the Life and the two Non-life segments contributed to this positive trend. Non-life Switzerland increased premium volume by 2.3% to CHF 566.8 million. This growth was widely spread, with Motor, Accident/Health and Travel insurance performing particularly well. The Non-life Foreign Countries segment was able to increase premium income by 1.1% to CHF 221.3 million at constant exchange rates. The story was ambiguous, however. The repercussions of portfolio adjustments continued to be felt abroad, causing premium volume to fall in the Motor business in particular. By contrast, Property insurance posted an above-average increase.
The Life segment recorded the highest rate of growth, increasing premium volume by 11.4% to CHF 117.3 million. The revision of the product range completed in 2013, with a new emphasis on capital-efficient life insurance products, was well received by the market and across all sales channels and is beginning to have an impact. Premium growth abroad suffered because Credit Life business is no longer being underwritten in Italy. This was offset in Italy, however, by the positive performance of the traditional Life business, which owes much in turn to the Life Centre of Competence set up last year at Group level.
Following a period of declining premium volume associated with market downturns, beginning with the Credit Life business, speciality lines recorded growth of 2.5% (2013: ‒7.2%) at constant exchange rates during the first half of 2014. Specialty lines would even have enjoyed an increase of 6.7% had it not been for the decline in Credit Life. The results for Marine, Travel and Direct were particularly pleasing. The decline in premium volume within the important Engineering business was halted and turned into growth. Again, almost 30% of the gross premium volume in the reporting period was generated by specialty lines.
Combined ratio remains healthy
The combined ratio for the Group in terms of Non-life business was still a healthy 93.6% during the first half of 2014 (2013: 92.9%). The combined ratio for the Non-life Switzerland segment increased from 85.5% net to 88.5%, which is still outstanding. The increase can be attributed to the higher claims ratio of 57.3% (2013: 54.2%), although this remains at a very satisfactory level. The cost ratio decreased slightly from 31.3% to 31.2%. Although it may have been down slightly, Nationale Suisse achieved a very good result in this segment, with profit before taxes for the half-year standing at CHF 85.7 million (2013: CHF 87.8 million).
The combined ratio for the Non-life Foreign Countries segment was reduced from 110.7% to 106.9%. Portfolio restructuring measures had a positive impact on the claims ratio, which was reduced from 74.9% to 65.9%, although the falling volumes meant that the cost ratio increased from 35.8% to 41.0%. The pre-tax loss in this segment was an improvement on last year, falling from CHF 9.8 million to CHF 5.9 million. “We have always stressed that it will take several years before the measures adopted abroad deliver a positive result. The improvement that has been made, however, is a step in the right direction”, explains Hans Künzle.
Pleasing pre-tax profit for Life segment
The Life segment – also thanks to a good investment result – enjoyed a pleasing pre-tax profit of CHF 7.9 million compared with CHF 8.3 million for the same period of the previous year.
Excellent investment result thanks to higher net gains from financial instruments
The Nationale Suisse investment portfolio, which remains largely unchanged in terms of its composition, has again shown great stability. Income from investments improved by 26.9% to CHF 99.1 million in net terms after deduction of administrative costs. Despite the low interest rates, current income remained practically unchanged from the previous year at CHF 67.1 million net (‒1.9%) thanks to higher dividend income and a greater emphasis on corporate bonds. This equates to a current return on investment of 2.6% compared with 2.7% for the same period of the previous year. Gains and losses on investments through profit and loss increased from CHF 9.7 million to CHF 32.0 million. Profit opportunities were mainly associated with shares and fixed-income securities, with gains and losses on financial instruments through profit and loss seeing a net increase from CHF 6.1 million to CHF 29.7 million. The resulting return on investment figure was 3.8% compared with 3.1% during the first half of 2013.
Extraordinary General Meeting on 29 September 2014
On 7 July 2014, Helvetia and Nationale Suisse confirmed they were interested in merging to form a new insurance group. The offer period for tendering shares started over a week ago. The Board of Directors of Nationale Suisse welcomes the offer from Helvetia and feels the price is reasonable. As such, it is unanimous in recommending that shareholders accept the public takeover bid.
Nationale Suisse is calling an Extraordinary General Meeting for 29 September 2014. The agenda envisages changes to the Articles of Association in terms of lifting the restrictions applicable to both registration and voting proxies. There will also be new elections for the Board of Directors and elections for the Nomination and Compensation Committee (the changes to the Articles of Association and the elections are dependent on the offer being completed). Erich Walser, Stefan Loacker and Philipp Gmür – nominated by Helvetia – are standing for election. Existing members Dr Andreas von Planta and Dr Balz Hösly are to remain on the Nationale Suisse Board of Directors. Assuming this offer is actually completed, the other existing members of the Nationale Suisse Board of Directors will resign from the Board of Directors at the time of completion. Invitations will be sent to shareholders a few days after the results for the first half of 2014 are published.
First half of the year provides a solid base for positive results in 2014 as a whole
The economic situation remains uncertain, although there are positive signs. The first half of the year provides a solid base for the insurance business to enjoy positive results, in operational terms, for 2014. “Programme 1+ remains on track across the Group, with an increased focus on cost optimisation measures, and is making an important contribution to the financial success of Nationale Suisse. The financial statements for the half-year also augur well for the underwriting business in 2014 as a whole", believes Hans Künzle. The proposed merger between Nationale Suisse and Helvetia is expected to have an adverse impact on the annual results for 2014 as a result of one-off restructuring expenses.
The interim report for the first half of 2014 is available at:
Nationale Suisse is an innovative, international and independent Swiss insurance group providing first-class 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 30 June 2014, the Group employed 1 903 staff (full-time equivalents).
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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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