Ladies and gentlemen, we are very glad to welcome you all to our Helvetia Capital Markets Day. According to COVID-nineteen, this pandemic produced many new Words and or meanings such as hybrid. According to the dictionary, hybrid stands for 2 different Meanings. Thus, a hybrid business is a company which has both An Internet front end and its physical bricks and premises. Hence, Helvetia is holding its Capital Markets Day in a hybrid format.
I say hello to all those being physically present in the Samsung Hall in Zurich as well as to all those people joining us via video conference. Right at the beginning, I would like to present you our management team, sitting here in the front rows. Since the last Capital Markets Day, there are 3 new colleagues who were joining Helvetia. Our new Chief Financial Officer, Annalise Lusher Hammeli, who joined Helvetia back in October 2020 Martin Jarrah, our new CEO, Switzerland, who joined Helvetia back in May 2020 And last but not least, our new Chief Investment Officer, Andre Kelleher, who joined Helvetia in 2019 on April 1. Now let me turn to the program.
After an introduction and a first view on Helvetia 2025 By our Chairwoman, we would like to present you our new acquisition in Spain, Casa. We then want to elaborate our strategy Helvetia 2025 along 5 different blocks, namely along the strategic priorities, the business segment strategies, the prerequisites for a successful accomplishment of our goals. We want to talk with you about corporate responsibility initiatives And last but not least, of course, about our financials. At the end and in between, we are ready to answer your questions in 2 Q and A sessions. Now before diving into the program, let me just make Three organizational remarks.
The first one, for all those people being present in this room, please make sure that your mobile phones And last but not least, I would like to remind you That this conference is being streamed. Now I would like to hand over to our Chairwoman, Doris Russi Schurter. Doris, unfortunately, cannot be present today for personal reasons. However, she would like to share her thoughts with all of you with a video message.
Ladies and gentlemen, in the next few minutes, I would like to share with you my thoughts on our new Helvetia 2025 strategy. With this strategy, we are pursuing a clear and ambitious goal. Helvetia wants to be the best partner for financial security. We want to set standards in customer convenience and customer Access. I'd like to compare this ambitious goal with a mountaineering tour.
Since I grew up in the mountains, This comparison is obvious to me. In fact, it takes staying power to reach a summit. The well known successful alpine mountaineer Reinhold Messner once said, when climbing a mountain, I never took 2 steps at once. If you want to shift boundaries, you have to do it slowly, steadily and calmly, Step by step. If you skip steps, you will stumble sooner or later.
This also applies to our strategy Helvetia 2025. We have defined clear priorities For the path to the summit, first of all, we want to be present where insurance needs arise. We will continue to focus on the right offer and profitable growth. Finally, We want to seize the opportunities for new business models. For our 3 market units, Switzerland, Europe and Specialty Markets, this means that we want to consolidate our position as the leading Swiss All line insurer in Switzerland.
The Swiss market is and remains very important to us. However, with the integration of the Spanish insurer, CasaR, we succeeded in massively expanding our European business and making Europe a second pillar in our group. Helvetia will become, as a result, an even more European oriented financial service provider. This Europeanization makes me personally Very proud. You will meet the CEO of Gasser in person today and can therefore also gain direct impressions of what is a very valuable acquisition for Helvetia.
Finally, in specialty markets, We are aiming for further profitable growth in international specialty insurance business and in active reinsurance. Our new strategy, therefore, is based on even broader diversification and thus sustainably increases Helvetia's success for investors, customers, employees and all other stakeholders. A strategy always involves financial goals too. We have set these goals just as ambitiously, focusing on profitability, operational efficiency and the sustainable ability to pay dividends. This will ensure that we remain a reliable partner for our shareholders In the future, we are aware that our mountain tour requires a lot of stamina and endurance And we want to move forward step by step, steadily and quietly, as Reinhold Messner defined it.
Thanks to a deep breeze and the appropriate patience, I am sure that we will reach our goal, the summit. I would be very pleased if you would join us on this climb. I would like to thank you very much
Ladies and gentlemen, Allow me a short view back on Helvetia 2020. We are glad to conclude that we were keeping our promise in terms of growth, profitability, capital strength and dividends. And of course, that's our aim for 2025 as well. We want to stick to our goals. Now with our new strategy, Helvetia 2025.
Helvetia is entering into a new era. From a Swiss insurance group with a couple of operations abroad to a financial services provider Anchored in Switzerland with a strong footprint in selected European markets, Global access through specialty markets and tremendous opportunities around asset management and ecosystems. Our group's profile changed Within the last few years, specialty markets and our European branches increased and thus also changed our group's profile. Talking about our group's profile. As you saw on this chart, The European segment increased from 32% to 38% in terms of volume within the last few years.
And what could better illustrate this enormous development Then the acquisition of a 70% stake of Castel in Spain. Back in January 2020, just before the outbreak of COVID-nineteen, We were announcing this transaction. And despite many challenges, but thanks to the trust of our investors, We could finance the deal and conclude the transaction by the end of June 20 20. Gasior did, to many and to a great extent, even exceed our expectations. And already for the 1st 6 months of the consolidation of this company, It paid off very well.
Who could better present this pearl In our group, then our Kasser CEO, Ignacio Erias Garcia de Vinuesa. Please Ignacio, Benvenidos and Switzer, welcome on stage.
Thank you very much, Philippe. For me, it's a real pleasure to introduce Caser and myself to all of you. Caser is definitely in the Spanish market, a 1st tier leading actor with a well diversified product structure as well as distribution channels. It does brings to Elbitia its strength on non life, together with bancassurance as well as a long standing experience on handling services related to the insurance ecosystems as well A very well known recognized positively brand name, together with a long lasting experienced team. You can see in the chart That bank assurance sorry, that non life accounts for 66% of the portfolio.
And even non life, the breakdown by progress It's a quite attractive one, both for Multiriz with a stake of more than 32% is well above the average market, But as well, the balance in presence of motor, small and medium enterprise, what we call corporate, health and other lines, brings a diversified and balanced portfolio. As well in Life, as you may see, 21% of risk premiums. But in services, I would like to highlight how Caser in the last 15 years has developed its presence on handling first hand Services related to the insurance ecosystems, that means homeowners, mobility, life cycle and health themselves. If we get into distribution, not only Vancasunas, but as well our presence in agents and brokers, more focus on agents and in brokers, As well as with the special designed up to customer agreements with large accounts brings as well a good diversification. If we get into the bancassurance itself, bancassurance accounts for 1 something like 50% of our portfolio in terms of premiums as well in profitability.
It can be said without any doubt that we are 1 of the leading players in Bancassurance, maybe among the 3 first one or the second one. That has been built With a network of more than 3 branches, which in exclusivity distribute Kacer Brothers, with a history of more than 30 years 40 agreements where Caser has been able to adapt our business system to the specific needs of those different banks, both in terms of product, systems, remuneration, training and most recently through the signing of exclusivity agreements, which permitted Kasher not only to warranty relevant volumes of premiums, but as well sales under a much more profitable circumstance. That drove us as well to the co creation of products, the agreed development of marketing campaigns and remuneration of the Sales force elements. In parallel to that bancassurance strength and non life big and diversified presence, Castel has been able in the last years to diversify our portfolio through the building within those ecosystems I already mentioned to the building of product oriented or client oriented products, such as the one I am introducing here. Let me explain some of the examples which are shown.
Cars, Homeowners Insurance and Mallores, it is the typical multi risk products Where it is mixed, the coverage of homeowner multi risk with the increasing needs of aged people for services and dependency help at home We've seen once more the life cycle of the persons. Together with reverse mortgage, when those people Owning a home, but lacking of the day to day cash can cash little by little their home and subsequently have a better pension scheme Or auto insurance, Cote for Cote, where the typical old car with very, very marginal end value In the case of a total loss, the indemnity is not paid as an amount, but as well as a similar car that the one that person is utilizing for whatever service All that diversification together with the initial strengths I already mentioned, non life, bancasuras, permitted cashier even in a year complicated as the year 2020 with the COVID slowdown of the market to almost multiply by 3 The growth of the market showing that those strengths permit us having, as I already mentioned, that first tier Leading position. Thank you very much.
Thank you, Ignacio. I would like to mention again in a nutshell what are the 3 elements which Make Gasser a unique position in our Helvetias Group portfolio. There is the first reason, It's a very profitable insurance company with a high Highly profitable non life portfolio. It is, 2nd, an insurance company which has unique market access, especially through the bank assurance channels and above that through new corporations and also new agents networks. And it is 3 model company for integrating A whole bunch of different ecosystems initiatives into its business model and thus scaling the insurance activities and improving and increasing the profitability.
Thanks a lot, Ignacio. You have a very well managed company. Now Let us turn to Helvetia 2025 and the current trends and opportunities. The world is changing and so is the insurance industry, which mirrors all those developments around us. The first one is The changing of the customer behavior, we want to even better focus on customer convenience within the next strategy period.
A next trend we have to face is The question, do we have the right offerings in a low interest environment for all our customers? And given the many challenges our customers have, do we have the right answers in our product portfolio? And we would like to talk about that as well. A third challenge is the pressure on margins, of course. Our answer is we want to even improve our technical excellence in order to ensure A profitable growth in our insurance portfolio, be it in life, be it in non life.
And last but not least, of course, insurance products, insurance policies might, to a certain extent, be or become a commodity. However, we are sure That our counseling of customers, our approaching the real customer needs is paying off in profitability, in also more closeness to our clients. And it's worth to invest in all those different developments. Of course, all What we do shall make sense. That's why we are Really thrilled by our purpose.
Life has its risks and opportunities, And we are there when it matters. To do so, we want to make sure that we are not only living our purpose, but on a day to daily basis, pursuing Our vision, which means to be the best partner for our clients, the best partner in financial security, setting standards in customer convenience and accessibility. Of course, by the end of the day, all what we do shall also pay off in terms of financials For our investors and for our clients, because they are trusting in having their insurance policies with a company which is rock solid. Clear financial objectives and financial targets means that we want to make sure that the quality of earnings and growth is kept on a traditionally high level. We are achieving a net combined ratio between 92% 94% and a new business margin in Life between 2% and 3%.
We want to increase our fee volume to as much as at least €350,000,000 by the end of 2025. And the fee volume shall contribute to our overall group profit by at least 5%, thus helping our to make our balance sheet even more resilient and mitigating our interest rate exposure in our balance sheet in the mid- and long term. Furthermore, we want to realize operational efficiency gains in the sum of at least €100,000,000 And of course, capital strength and dividends remain decisive in our industry and with Helvetia. Of course, we want to grow the business. Of course, we want to make sure that our live clients get their share.
But nevertheless, we want to make sure that we keep our single A rating. Notwithstanding our growth, we want to make sure that we can pay out at least 1 point €5,000,000,000 to our shareholders over the next 5 years and all that with a return on equity of between 8% and 11%. Making Helvetia 2025 a success story means living our purpose, pursuing our vision, Sticking to our financial goals, of course, and making sure that, Overall, we are not only making happy our clients, but also our investors by ensuring the profitability of our insurance group. Now I would like to dive into our strategic priorities. The first one is dealing with customer convenience.
As I said before, the customer needs are changing over time, of course, and there is not the Customer and the customer needs. The customers and their needs are and remain hybrid. And it is our duty to make sure that we are coping with as many needs as possible in a reasonable way. We want to be best partner in financial security setting standards, inconvenience and accessibility. What does that mean?
We want to be present at all those different points of sale when insurance needs might arise. We would like to present you now at the beginning of this section 2 videos. The first one dealing with Smile, the number one insurer in Switzerland and the second one dealing with a very efficient tool for our clients in the marine insurance called Pumar Speed. Please have a look.
Hi. My name is Pierre Angelo. I'm the CEO of Smile. Today, I'm going to show you why Smile is significantly contributing Helvetia's strategic priority, customer convenience. Smile is the leading online insurer in Switzerland, the oldest insurtech and the only insurance to be perceived by the Havas Brand Predictor study as a digital brand.
From the financial point of view, we look back on a strong development over the past years a record breaking year in 2020, where we exceeded the top line of CHF 100,000,000 and 150,000 customers in our portfolio Without compromising on profitability, which is reflected in a strong combined ratio, through this, we significantly contributed to Elevator's non life business, especially in the motor business. We have been named and awarded several times as the Netflix of Insurance. We truly believe that the only way to successfully compete in a digital environment is to reach a day to day relevance just like other consumer brands as Netflix, Amazon or Spotify. Let me now explain how we do that. 1st of all, and very important, customer centricity is our driver enabled by technology and not the other way We redefined the user experience with the mobile phone in focus and harvest the mobile potential by being a service champion and following rigorously customer centricity, like addressing consumers by first name, introducing a subscription model or gamification elements like Drive Smile Drive Coach.
We facilitate radical automation and turn data to value with a serverless technology and architecture in scope. We have ambitious plans and by 2025, we aim to double our customer base without compromising on profitability. Based on our success from the past, we know we're going to deliver. Simplicity, scalability and customer centricity are the foundations of Smile and will drive us also in the future to harvest a pure digital potential. With a unique complementary business model to Helvetia and differentiating value proposition, Smile does not only significantly contribute to Helvetia's strategic priority customer convenience, but also ensures new sources of growth and income for Helvetia.
And finally, thanks being part of the Helvetia, we can share our experiences across all parts of Helveza so that we can bring innovative approaches of smell to scale in our core business.
My name is Pascal Varvato I'm responsible for the global marine business at Helvetia. Helvetia is by far the largest marine insurer in Switzerland, With a range of transport insurance products tailored to their respective needs and thanks to our international network, we offer worldwide solutions. Our customers are logistic or transport companies as well as manufacturers and traders with the need to insure their own or third party goods during transportations worldwide against loss of damage. To increase the customer convenience, satisfaction and loyalty According to our strategic priorities, we have developed together with our customers a modern online solution. In less than 120 seconds, our customers can ensure the shipments online.
Whenever they want, the system is available 24 hours, 7 days a week and worldwide. With one simple click, also an insurance certificate is produced if required. The user interface is so simple that no training at all is needed. We have integrated a speedy calculator for costs including taxes so that our customers have an immediate information about the insurance premium. It is a cloud based and future oriented technology compatible with tablets.
Large data volumes are no problem at all and also international insurance programs can be displayed. We have Integrated compliance checks and a simple and secure login. The system can be adapted individually To all customer needs or country requirements, even an interface can be created to other systems to avoid double entry. Hundreds of satisfied users are already ensuring thousands of transports with Puma Speed at Helvetia. For the future, we will further develop the system with new features and integrate new business lines like art insurance.
Puma Speed is a unique solution and boosts customer convenience and therefore increases customer retention.
Apart from all those easy access tools, which should make the life of our customers more convenient. We are also developing more and more Tailormate insurance products with added value. Here is an example of Helvetia France, a Geolocation tool in yacht insurance. What is all that for? It first Helps all our clients prevent their damages because they know where their yachts are right at the thunderstorms.
And at the same time, it helps Helvetia mitigate their risks and better monitor the risks we have out there on the high sea. Now let me wrap up. What we want to do around customer convenience is we want to reduce complexity. And at the same time, we are sure that we are enhancing customer experience and by increasing efficiency, not only helping our clients to have a more convenient access to Helvetia, But for Helvetia to lower its costs. By the end of the day, we want to live our brand promise.
Simple, clear Helvetia. And all that shall, of course, pay off in terms of financials. Happy clients are clients who stay with Helvetia. Happy clients are clients who We can benefit from in terms of cross selling and happy clients are usually clients who help us keep a high profitability. By becoming more and more efficient, We are lowering our cost base and thus helping ensure our profitability and at the same time giving our customers the good feeling that they are insured with a good rocket solid company.
And by the end of the day, we want to make sure that all this profitability helps to pay our dividends and to keep Helvetia a rock solid company with a A rating, of course. Now Let me turn to the 2nd strategic priority, to the right offering. As I said before, fit for purpose offering is key in order to make sure that our clients have the feeling and the security that they are insured with the right company. In a low interest rate environment, it is a challenge to have this fit for purpose offerings, of course. We want to make sure that our products and services are part of a comprehensive offering for our clients that they come from a single source and that this solution pace of not only for the clients, but also for the company.
Now talking about Life business, I would like now to hand over to our Head of the Pension and Life Business in Switzerland, Hedrik Ullmer and to Andre Kelleher, our Chief Investment Officer. They're interviewed by Susanne Tangler, our Head of Investor Relations.
Hello, Hedwig and Andriy. It's a pleasure to have you here. I would like to take the opportunity to talk with about the Life business in light of the low interest environment. I have prepared a few questions And I'm curious what's Helvetia's strategy going forward and what is our value proposition. My first question is for Andre.
The low interest environment is putting pressure on life insurers and therefore also on Helvetia. How is Helvetia responding to the low interest rate environment on the investment side?
It is true. The low interest rate environment makes it difficult to generate attractive investment returns by historical standards. For this reason, we started to diversify the investment portfolio more broadly in recent years and to increase the share of private market investments, mainly investments in real estate, infrastructure and private debt. Even in the low interest rate environment, These asset classes still offer attractive return opportunities, especially compared to traditional investments.
Hedwig, what are the consequences of the low interest environment in terms of products and offerings?
On the offering side, we initiated the shift away from classic guarantees to investment linked products years ago, both in private pension and in occupational pension. In the occupational pension benefit scheme, Around half of the insured persons are already in so called semi autonomous solutions. This development will continue. We have also adjusted the occupational pension scheme as far as possible to the economic reality with low interest rates and increasing life expectancy and, for example, lowered conversion rates. Helvetia is first mover here.
The other insurance companies are now following.
What are the opportunities of this situation?
The trends towards semi autonomous solutions mentioned by Hedwig gives us the opportunity to make our investment expertise available to 3rd parties, whether for our own offers at Helvetia Collective and Investment Foundations or for other collective foundations.
And the state pension provision is perceived as insecure. The benefits of the occupational benefit scheme are increasing. As a consequence, the importance of private pension solutions is increasing. We fill this gap with savings and risk solutions. I see enormous opportunities for us here.
So what specific positioning does Helentia want to pursue in this environment then?
We offer life and pension solutions that enable our customers to protect the ones they love and a very free and independent life from a financial perspective. We offer products and solutions that gives customers the necessary leeway to adapt them very flexibly according to their life situation. In doing so, we will increasingly combine
Naturally, we support the development towards integrated Investment and Pension Solutions. With our Allegra Funds, we have developed a first solution for different risk profiles. With the Helvetia Swiss Property Fund, we also launched our own real estate fund in 2020, which we will continue to expand in the coming years. The focus on investment solutions and services for pension and third party customers will open up a new source of income for Helvetia in the fee business. These fee streams offer an attractive complement to insurance business due to their relative stability and high capital efficiency.
Another trend is sustainability. What is Helvetia doing here?
At Helvetia, we have increased our focus on integrating sustainability into our investment activities both in our own investment portfolios and in the product range in the area of pensions. For example, We launched Fair Future Lane in Austria, a unit linked life insurance policy that invests exclusively in sustainable securities.
My last question is for you, Hedwig. Are you sticking to full insurance in the occupational benefit scheme?
We are convinced of the benefits of the comprehensive security of full insurance for a small and medium enterprise, But the price for the security is currently high in the low interest rate environment and the legal framework conditions. We therefore also see the advantages of semi autonomous solutions. These offer clients with a good risk profile The opportunity to benefit from rising capital markets. Our customers have the choice between
Thank you very much for your time and your answers.
Had we just mentioned it, small and medium sized enterprises are key for Helvetia. Why do we think that this target group is of a big value for us? We think that the SMEs are more and more in a sandwich position between the retail customers and the big corporates. And that's where our value proposition shall jump in. We have for you 3 different use cases from Switzerland, Austria and From the third one, you will see it.
It's like a surprise, where you see what our SME offerings specifically add as a value for our customers. Have a look.
My name is Adrian Colecker. I'm the Head of Non Life Switzerland. More than 90% of the registered companies in Switzerland have less than 10 employees. SME customers have other priorities than insurance. They are not experts and insurance is a low interest product for them.
Therefore, they rely on their advisor and convenience is key. With more than 160,000 SME customers, the commercial non life business is attractive for Helvetia. We are a strong partner for SMEs. We have a growing market share, see a high customer loyalty and achieve good profitability. And there is further potential for profitable growth.
To achieve this, we deliver on our strong proposition roadmap. We have launched a new SME service product that addresses customer needs much more precisely. With the service product, we are able to increase average per customer and differentiate ourselves in the market. In January, we started a strategic partnership with the IFJ, the Institute For New Entrepreneurs. This partnership is unique in the industry and further strengthens our position in the SME segment as expert partners.
And in late summer, We are going to launch our SME ecosystem, Aplanto. Aplanto offers an integrated platform and marketplace for Swiss SMEs. With this offering, we allow SME to reduce administrative workload and to have access to value adding services. Atlanto is a unique value proposition in the Swiss financial sector, and we are very keen to its launch. We'll provide you with more information as soon as Atlanto has started.
Hello from Vienna. My name is Thomas Neusitler, and I am the CEO of Helvetia Austria. Within our strategic target to deliver the right offering For our customers, we in Austria are focusing on small commercial business. This is based on our good positioning with our distribution partners, which we have built up over the last few years with the best partner approach. We are now further enhancing this market access to expand our SME business.
The focus is on small businesses in almost all sectors, but also on larger commercial enterprises with a turnover of €1,000,000 and more. SMEs with special insurance needs such as cyber or special segments such as marine companies and SMEs with the need for transport insurance. Therefore, we have developed new products and services. We, in addition, are building on our existing strengths, Close relationships, thanks to our decentralized structure, building up SME knowledge Among our sales partners, top service and simple processes. In addition, we are increasingly relying on digitalization and automatization.
This is how we differentiate ourselves in the market. Shaping our profile in the commercial insurance segment will help us to deliver the Helvetia 2025
Hello. I'm Vincent Lautac, CEO of Hervetsia France. Until 2015, Eldecia France was positioned as a pure marine and transport insurer, known to be the number 2 in France and with a wider scope of offer. LVTIA considers the SME market as a profitable growth market with a 20% market share and the best technical results among our peers. LVTIA was in good starting position to widen our offer outside of Marine and Transport to be able to promote ourselves as a multi specialist insurer for medium sized companies.
Between 2016 2021, We have therefore continuously extended our product range in order to best serve our customers and distribution community of 3,000 brokers. We aim to be preferred by the customers and the distribution partners for excellent service based on knowledgeable and dedicated staff. We will also improve our position as a provider of international programs. Our efforts have paid off, and our business volume has increased from CHF 235,000,000 in 20 18 to 3 37% in 2020, while our combined ratio has declined below 93%, showing that our technical results are excellent and that our cost ratios have remained well under control. We project that by 2025, Our business volume will increase significantly that our new business lines will constitute 50% of our business and that we will be transacting with more than 4,000 brokers.
Ladies and gentlemen, you see that our SME initiatives throughout the group are amazingly underway and especially the last one we brought you as a surprise from France. Now, Of course, all those initiatives shall be paying off in terms of financials. We are sure that the capital light products help us to mitigate our risks in the balance sheet we have regarding the interest rate exposure. And at the same time, it helps our clients to benefit from new, of course, value propositions. For the SME business, we are sure that this profitable customer segment is very promising for Helvetia because it is a segment where the personal counsel, Be it by brokers, be it by agents, is still of a great value.
There are not robots yet counseling our clients. Now let me turn to the next strategic priority. It deals with the profitable growth. Of course, if we want to develop our group, Then it is decisive to profitably grow our business. We want to benefit from our number 3 position in Switzerland as an all line insurance company.
We want to benefit from our strong footprint In the European countries, in order to make the European segment the 2nd strong pillar in our group. And we want to benefit from the global access in specialty markets In order to make sure that we benefit in Actai Reinsurance and in many specialty lines Markus Gempellet, CEO, Europe Martin Jara, CEO, Switzerland and David Ribeau, CEO, Specialty Markets to present their respective strategic plans. Please go ahead.
Thank you. In Switzerland, we pursued a strategic priority of profitable growth by increasing customer value and by actively managing our margins in product and in portfolios. How do we increase customer value? By getting more customers for Helvetia and by getting more Helvetia per customer. It all starts with the value proposition and the differentiation by customer intimacy and by customer convenience.
Based on this, we can go and exploit the full potential of the omnichannel approach We got in Switzerland. This means simple sales processes and simple cross selling processes. Based on and steered by advanced analytics that tell us exactly when it's best and how it's best to address our customers with our value propositions. To get the full potential of the growth and of the increase of the customer value, We also have to expand in our customer access to new customers by partnerships. You will hear more about this in the B2B2C section afterwards.
How do we optimize our margins? This, at one hand, means a clear focus and also a rigidity on cost management, overall on administrative cost. At the other hand, We have to stay on top of the market regarding our technical capabilities in pricing, portfolio management and in claims handling. Martin Schopp, our Chief Customer Officer in Switzerland and Adrian Kolleker, Head of Non Life Switzerland, We'll go into these topics now. Let's have a look.
Hi, there. My name is Martin. I'm the CCO at Helvetia Switzerland and a member of its Executive Committee. Profitable growth in our core insurance businesses, life and non life, is a key strategic priority. Top line increase stems from 3 main sources: pushing cross selling and upselling to existing customers achieving higher retention by superior customer satisfaction and attracting new customers, of course.
Rigorous outside in thinking combined with a data driven approach and our distribution power, In particular, our strong tight agent network are the foundation of our growth agenda. We aspire to differentiate ourselves through customer intimacy and convenience. Intimacy results from personalized customer address and customized solutions, convenience from seamless end to end customer journeys and intuitive interactions at every touch point. I would like to illustrate the described approach with 2 specific examples. At Helvetia, for instance, we launched a marketing campaign focused on pension planning, which was built on both our capabilities in data analytics and our tight agent sales force.
Leads were sourced and prequalified by our data analytics team, while Segment specific go to market was designed by the marketing folks. The final results were convincing. We were able to increase conversion rates from leads to closing by an impressive 30%. As part of our mobile first strategy at Smile, a lifestyle app was introduced. In addition to pure insurance functionalities, the app enables payment and mobility services.
Drive Coach, for example, is an add on service fee, which analyzes drive style of a user, I. E, speed, acceleration and braking. Collected data is processed real time and an algorithm scores the driving and gives specific feedback On drive behavior, good driving is rewarded with Smile Points, which can be exchanged to cash or donated to a charity. As a result, the customer considers the interaction with the app as meaningful, which increases loyalty of existing customers and hopefully attracts new ones. Both examples illustrate nicely that analytics is neither intuition nor gut feel.
It is the result of consistent data gathering and rigorous number crunching. Consequent scaling of gained insights in all distribution channels is a key contribution to profitable growth.
My name is Adrian Kollegger. I'm the Head of Non Life Switzerland. The Swiss insurance market is quite saturated. Increasing competition puts further pressure on our margins. The digital transformation changes our business model.
Cost discipline is of utmost importance, and the use of data will be more important than ever. With our non life technical excellence program, we exploit the potential of data, stabilize and selectively improve our margins and assure competitiveness. The program is based on 2 pillars, pricing underwriting portfolio management as well as advanced claims management. Our technical pricing already integrates internal and external risk customer and market data. To stabilize or selectively increase our margins, we are building new pricing mechanisms using analytical capabilities.
This strategy has been jointly developed with Smile. We are able to benefit from Smile's specific experience in this area and can scale it in our core business across all distribution channels. Advanced claims management includes our efforts in digitization, Automation and straight through processing combined with the growing use of data and analytics. A good example for this is the automated Processing of cost estimates submitted by The Body Shops in case of a motor claim. Cost estimates are processed automatically.
An analytic service has been implemented to make the triage between straight through processing and individual reviews by an expert. Through machine learning, we trained the service and achieved best results in detecting irregularities. We are more efficient and achieve a significant contribution to margin improvement. Next focus areas to further strengthen our excellent market position are fraud and the claims partner management. To summarize, thanks to our technical excellence program, we address all potentials to stabilize and strengthen our margins in Swiss portfolio and thus enable profitable growth over the strategy period.
We have learned that, of course, innovation in products and services, they are needed. But they are not enough to sustainably differentiate in the markets. So therefore, Helvetia has implemented a kind of a change program, which we call the best partner approach, with the aim to create A specific proximity, also loyalty to our sales partners. This means a lot in the organization overcoming silos, a lot of commitment, A lot of accessibility also, especially in areas which are not used to work like this. So if you are a successful sales partner at Telvetsia, you are not just talking With some regional deputy sales manager, let's say, in Aper Bavaria.
You are talking with The responsible manager in the German management team or even the CEO because you are important. In addition to these, let's say, cultural elements, we, of course, are also delivering Hard facts like digital platforms, technical knowledge, local support or specific offerings, let's say, for SMEs and their owners. All this with the aim to create an alignment of interest together with our sales partners an alignment of objectives on Profitability of the portfolios, targeted segments or growth to sustainably develop our core business. So we have implemented that best partner approach in all our country markets. And I would now like to share with you a couple of examples out of different markets and different channels.
First, starting with Germany and Austria.
My name is Frode Steg. Since January 2015, I have been the CEO of Helvetia Germany. I'm delighted to be with you today and to have the opportunity to share our ideas on how to sustain and accelerate profitable growth. In addition to our titrations We are part of our Helvetia family. We also work closely together with Prokos, who are our main sales channel.
Today, I am focusing on our independent friends, namely brokers with our best partner concept. All of our sales partners benefit from this. Those who work more intensely together with us benefit even more. Depending on the size and quality of their business volume, BEST partners gain more individualized services and comprehensive support. Brokers expect quick and high quality responses to inquiries.
This will be reached by key accounts and sales, fast policy issuing, quick claim settlement and direct access to our team of underwriting specialists. Hardly digitalized processes allow us to serve a growing number of focus without losing personal contact. Individually, personalized service and digitization complement each other perfectly. In summary, fast response times, our personalized service and best fitting offer, Combined with competitive pricing, an important argument for being a best partner with Rivetsia Germany. We measure the success of a best partner approach by clear goals.
We want to be ranked among the top 5 insurance partners for our targeted progress based on sales volume. Thanks to our approach, we aim to expand our business in the next 5 years sustainably. Thank you for your attention and your interest in Helvetia Germany.
My name is Thomas Neusetler, CEO of Helvetia Austria. Regarding our strategic target profitable growth, Helvetia 2025, I'm pleased to present to you How we apply the best partner approach and what contribution we are making to the strategic initiative of profitable growth. Helvetia Austria offers independent agents various benefits. We stand out due to our short decision making paths. Thanks to our size, we are very agile and can respond to agent needs.
This is particularly interesting for those agents who want a great deal of freedom to make decisions. When advising customers so that they can play to their own strengths. This best partner approach Convinces many agents. In recent years, we have noticed a great willingness to transfer entire P and C portfolios to Helvetia. We have developed a structured approach to ensure the quality of the transferred portfolios and at the same time increase the loyalty of the agents.
This approach has been very successful. Helvetia Austria has been able to grow significantly above the market in each of the past years, while steadily improving the combined ratio. For this strategic period, we have Set ourselves the goal of growing again while maintaining the same profitability. This is our contribution to the strategic priority of profitable growth.
And of course, we have also implemented the best partner approach in Spain, with excellent results at Helvetia Seguros within their agents channel, always a clearly best in class approach for bank assurance at Casa. But on top of this, we are now approaching the Spanish market with 2 entities. The 2 CEOs, Inigo So to and Ignacio Arias, We'll now explain a bit more in detail how this works, especially also in the fields of digitization, Product offering and a bit specific, but for us very important because very profitable, the burial insurance business, where both companies already today are very well positioned.
Good afternoon. My name is Inigo So to, and I am the CEO of Helvetia Seguros Espana, which is a company that has, among other values, a large and very loyal network of agents and brokers that has been consolidated over the years. The strong and close relationship that the company has with its employees and that network It's our best competitive advantage, and it is also our base for the ambitious Targets of profitable growth that we have in the coming years.
My name is Ignacio Irides. I am the Managing Director of Caserseburos. Caser grow together with the Spanish former saving banks, Becoming a leader on the non life bancassurance distribution. Nowadays, Castel has developed altogether Agents, brokers, large accounts and any type of distribution having partners all around the different alternatives of our industry. In parallel, Casper has developed its presence in a large account of related to insurance services together with their life cycle.
In other words, shortage homes, hospitals, dental cabinets, the service and maintenance of buildings and any other value related to the different ecosystems where insurance is present.
Built mainly in our network of agents and brokers, Elvetia Seguro has a strong competitive position in the burial insurance business, where we also have significant volume of premiums Through a competitive, innovative and very profitable product, we have managed to reach Wide and diverse target in our market.
As well, CASA's presence in burial has a long story. Coming from a historic AS network from a company, Casa did buy, in the recent years, we as well developed our presence on telemarketing, bancassurance and agreements with large accounts. So that means that all together, we can profit from the critical mass of having a relevant enough size of market presence in burial and sugars.
Yes. The combinations of the volume of Helvetia and Casa will make the cost of the burial services more efficient. I am convinced that thanks to this cooperation, The burial business will bring steady and profitable growth far above our competitors in the coming years.
Casper has developed a unique expertise in Esinko has to do with employee benefits, working compensation and as well pensions. Most recently, with the evolution of the markets and the habit of the consumers, We did introduce our cash accessories financiers addressed to give information and to assessorate our clients on how to build the best offer.
In Ubertis Seguro, along the years, we have developed plans to train our agents in the fields of saving life business, also trying to give to our customer our personalized advice. Now we are working together to transfer the CASER pension capacities also to Elvetia network. What will bring us a better offer, ensuring offer in this kind of product?
For the future, we have clear that altogether, we can develop both niche strategies for given segments of Brades and Clientele as well as putting altogether our strengths, having a much more broad presence on the highly attractive high income individuals savings management.
Additionally, in the area of e business, both Casa and Herveta have developed their digital channels, offering an interesting variety of products. We are aware that the change in customer behaviors requires us to develop a multichanneling strategy, giving the customer, the users The possibility to freely flow from 1 digital channel to a physical one, maintaining the features of the products and the price offers and also giving priorities to our existing network of broker agents and bank Assurant.
Our shared willingness to develop and investigate new opportunities of developing our presence based on digitalization drives Caser to investigate tight ups within insurtechs with online brokers and new actors' presence through the digital channel. That is fully compatible with our presence on traditional insurance commercialization as well as with our will on keeping on developing
In Specialty Markets, we contribute to profitable growth by further developing existing business on the one hand and by underwriting new risks in selected niches on the other hand. Leveraging our existing infrastructure and experience, We are selectively expanding our product offering. This leads to a diversified growth an improvement market positioning as well as a greater cross selling potential. A few examples are the introduction and ongoing development of aviation, space, cyber as well as dedicated coverages for renewable energies. We are developing our niches internationally, which we champion with a dedicated presence in London, in Singapore for Asia and in Miami for Latin America.
These offices put us closer to the relevant customers and risks and enable us to capture the significant growth potential available globally. The business is acquired in close collaboration with our business units here in Switzerland, Hence allowing us to deploy the full expertise and technical excellence of our group in all regions. Our long standing lines of business also offer a great potential, in particular in a currently very favorable market environment. We can indeed increase our shares on existing policies, write business we previously turned down Because of unsatisfactory rates and conditions, all nearly see thanks to our much better profile as an international player. Ray Tokala, Head of Active Reinsurance will now give you in his video statement an overview of how we are growing profitably in reinsurance.
Other examples pertaining to engineering and aviation can be found in the Capital Markets Day section of our website.
Hello and welcome. My name is Rejvo Krog. I'm the CEO of the Active Reinsurance department at Helvetia. I joined Helveta in October 2019. But before that, I worked for more than 25 years in the reinsurance industry in various roles and functions on the buying and selling side of reinsurance.
I have the pleasure in the next couple of minutes to talk to you about our contribution to the group's overall 2025 strategy, and the focus lies on the topic of growth. But before doing that, I would like answer the question, why is Helvetia active in the assumed reinsurance business at all? Well, on one side, it gives us access to international risks, which are complementary to Helvetia's other activities. And on the other side, we are able to contribute to the sustainable profitability of the group. Active Reinsurance writes a business volume of around CHF730,000,000 per year.
And with that, we are responsible for 50% of the business originated within markets. That's a clear demonstration of our importance to the overall international footprint of EBITDA. So let's move on to the 2025 strategy and how do we fit into that. Well, we have started to being a following line reinsurer, and we will continue doing that. And we have also been on an expansion strategy for the last couple of years, and we will also continue doing that.
But the key focus for the next 5 years lies on the diversification of our portfolio. So how do we do that? We have specifically specified 5 initiatives, which help us to achieve that overall goal. Those five activities can be clustered in 2 One is the geographic dimension and the other one is the product dimension. On the geographic dimension, we have The leverage aspect in mind when it comes to the diversification of our footprint in the emerging markets, that's Latin America and Asia.
And there, we are leveraging existing platforms we have there in Singapore and Miami. On the other side, we have intensified our activities in the European areas where we are underrepresented in certain areas like the Central and Eastern Europe part as well as the Nordics. On the product side, we have clear enhanced our activities and capabilities in the Nat Cat side, but we also have enhanced our capabilities in the biometric LIFRE segment, And we would like to benefit from the attractive opportunities in the specialty lines. So with all that, we are able to produce a very consolidated business approach and we are able to continue with the risk portfolio diversification and which helps us to continue with our profitability. So what's our ambition for the future and how can we succeed?
Well, we aim to execute on our 2025 strategy by leading up to our vision of being a long term value oriented technical competent reinsurer. We are supported by that by the Hefezia strong balance sheet and also by the experience and expertise of our employees. Together with that and our product dimensions, We feel that we have a convincing storyline to tell to our clients, and therefore, we are able to succeed there. We also are currently benefiting from the favorable conditions in the reinsurance market globally that is in particular on the rate side, but also on the terms and conditions side. And with all of that, we are convinced that we will succeed
Thanks to all of you. We are sure, and I mentioned it before, that profitably Growing our insurance business is the backbone of our group, of course. And We have to question ourselves. What is the profit contribution of all those different initiatives? The contribution lies in, 1st, the quality of earnings.
It is decisive To even better manage our insurance portfolios in all the different countries, be it in non life or life by, for instance, facing margin pressure by new means of technical excellence, as we saw before. It is decisive to make sure that our portfolio, be it life, be it non life or be it the whole portfolio, is and remains well balanced. And it is key, of course, to improve our operational efficiency In order to make sure that our backbone, the insurance portfolios remain in best shape. Now let us turn to the 4th strategic priority. It deals with The new opportunities.
Of course, you seldom see in a balance sheet of an insurance company a line which reads Research and Development. But we at Helvetia, we are sure that the recipes of today might not be the recipes of tomorrow. That is why we want to explore new business opportunities Anchored in a profitable insurance business with a resilient balance sheet, We have to make sure that we are facing the future and its tremendous opportunities around, for instance, ecosystems and asset management. What does that mean? We want in different pillars go forward in trying new business models, in looking for new opportunities and, of course, in integrating all those new models into our core business.
The first example we would like to share with you is the ecosystem home and its anchor, Money Park in Switzerland. You will see in this video clip Martin Chapp, our Chief Customer Officer and the Chairman of Money Park, together with Stefan Heitmann, Money Park's CEO and Founder.
Hi, my
name is Martin. I'm the Chief Customer Officer at Helvetia Switzerland and the Chairman of the Board of Directors at Money Park. A key strategic thrust of Helvetia is to tap to new revenue sources adjacent to its core insurance businesses in life and non life. As a spearhead to develop a corporate ecosystem around customer related to privately owned property, Helvetia acquired a majority stake in Money Park back in 2016. I would like to hand over now to Stefan, who will give you more background to our joint strategic vision.
Hello, my name is Stefan,
and I'm the Founder and CEO of Money Park. And I have the pleasure to briefly share with you the very strong development of the last year
as well as our vision
for the future. As Martin just mentioned, since 2016, Helvetia is a majority of Money Park and Money Park is the anchor of the Helvetia ecosystem home. We fit together very well, which benefits our customers, Helvetias and Moneyparks. We are closely interlinked in our core areas of expertise, mortgage advice, mortgage related pension planning and real estate. The year 2020 has shown that the ecosystem with Money Park as a strong anchor is already starting to prove itself very well.
Despite COVID, it was Money Park's best business year yet. Last year, we brokered well over 3,000,000,000 mortgages from over 150 different banking and mortgage providers, out of our 20 branches and together with our 300 plus colleagues, The fact that demand for homeownership and the desire for a house is such high, especially in the current situation, has certainly helped us here. In 2020, we also took the next big step in our short history. We got directly into the business of supporting our clients in buying and selling real estate. Why?
1st, because the same values that guide us are still lacking in today's real estate market, Transparency, independence, convenience and also because we have thousands of customers looking to buy and tens of 1,000 that we financed over the time, some of them will eventually want to sell as well. Therefore, we have created Switzerland's 1st big data platform currently unique in its kind. Compared to other offerings and platforms on the market, ours is by far the most developed and comprehensive, and we are constantly expanding it. We're currently unique in this market and our offer provides a completely new type of real estate and mortgage brokerage services, Helping customers from buying to owning into selling, from price assessment to value development, from searching to financing. Going forward, we want to become the number one choice for any customer in Switzerland dreaming of their own house and We want Money Park to become the information powerhouse in the Swiss real estate and banking market and in doing so, We connect previously separated worlds and break down silos in a property owner's customer journey.
Helvetia is a key partner for us in this journey. We see great potential going forward in this partnership. Many LVT customers deal with real estate. Many of them have ownership issues and at some point have questions Concerning their homes. And thanks to the cooperation between Money Park and Avizio, they will soon receive independent advice also in this regard.
New opportunities apart from orchestrating an ecosystem home in Switzerland. Casa, As we've heard several times this afternoon, it's orchestrating its own ecosystem around health and care in Spain, Thus, addressing new customer needs of an aging population, combining their needs with traditional insurance solutions and making a difference in the market. Have a look at the next video clip, how our people in Spain are orchestrating their specific Ecosystem Health and Care.
Good afternoon. My name is Miguel I'm the Health Business Manager at Cascia. My responsibility comprises the health insurance, our main activity in the field, but also all those other that complement and enhance it, what we call the health ecosystem. Let's start with the opportunity we foresee. Aging population and medical innovation will make us more relevant for the future.
This context, providing complete service to our clients forces us to go beyond the insurance, but this more customer centric approach makes a difference in our value proposal. Health insurance complements the public system in 2 principal ways: faster access and personalized attention. Only onefive of the Spanish population have a private health insurance. To give access to more people, we have a product for every need: a balanced omnichannel distribution through banks, agents, brokers, direct sales and affinities is a company's strength. It also allows us to get to all the different types of clients.
Focusing on families and SMAs requires an efficient communication with clients. Health products, both more than 20x more frequent contacts than other insurances, our Cascia Health app is in the epicenter of this servicing strategy. In telemedicine, Medicine comes first. An actual medical center has an integrated team under the supervision of a competent medical manager. Access to patients' medical records coordinated care, including medication, prescription and control, a complete virtual hospital.
Teleconsultation, video consultation and medical chat are all different modalities of connection, but always supported by the same medical staff. A powerful tool all along the care cycle from prevention to long term care. Health insurance marketing has 2 implications for us to consider. Firstly, it's you and your family who will receive the car included. Secondly, it has plenty of very important details to explain.
Specialization is crucial. By deploying Around sales network, Kasair has been able to focus on selected markets looking for growth potential and profitability. It also permits us concentrated effort in specific products, segments and campaigns. The network is integrated by more than 2 D type agents working from 12 branches, contributing 25% of our sales. There's a great opportunity for insurance companies in dental care not being covered by the public system.
Private market is a large one, more than €8000,000,000 and expanding, thanks to the medical innovation, the longevity, increasing interest for oral health and aesthetics. 7 years ago, we started deploying our own dental clinics chain, now integrated by 2 of them to help develop dental insurance. More than 60,000 clients benefit from the best dental treatments to reap. Not everything can be easily included in non insurance. CASA can help with those other health interests: maternity, nutrition, wellness, physical activity, genetics of our health clients being more present in their life and making it easier the cross selling, permitting motor, home or life clients approach to our health To make possible the use of private health with no insurance, more than 80 hospitals Partner with us for a real turnkey service.
Coordinating the previous checks, the surgeon, operations theater, anesthetics, Hospital and post surgical recovery, always with the best professional resources, fair and close price, warranty and Finally, we can conclude with our ecosystem motto, insurance
Ladies and gentlemen, new business opportunities. Managing an insurance company also means Thinking about what the future could look like, what new customer needs could look like, what our industry could look like. And that's why we were investing and setting up a venture fund a couple of years ago. The venture fund, Apellvetsia, gives us access to new business ideas, new people and new future. Have a look at the video clip of Michael Weiser, our managing partner for the Helvetia Venture Fund.
Startups are driving force in global innovation. The Helvetia venture fund invests in early stage startups that use new technologies, enter new markets and provide new customer experiences relevant to Helvetia's core business. In general, Helvetia Venture Fund aims for a minority stake and invests on average between CHF 500,000 CHF2 1,000,000 per financing round. Out of the 16 investments we have made so far, let me briefly introduce you to 1. With Fagen, Helvetia can increase its reach into the upcoming car subscription market.
Hi. My name is Daniel. I'm one of the founders of Fagen. Fagen enables automotive companies to offer car subscription services. We do this by offering a white label solution and a marketplace.
For consumers, it's very important that car subscription means that it's an all inclusive fee. And this also means that Insurance is part of the all in fee. And this is why we are very lucky to work with the Havitzia Venture Fund as a VC investor, but also with the Hebitze Insurance Company as a pan European corporation partner for the insurance part of this important topic.
The investment in Fagren was made a few weeks ago. Fagren and Helvetia are currently initiating cooperation, Daniel mentioned. Fagron is a good example of how we take advantage of new opportunities. The investment gives us access to the car subscription market, which has gained massively in importance over the last year. After 4 years of operation, we are on track with our strategic goal to partner with a number of technology firms and to enable more future revenue for Helvetia.
In addition, The Fund also pursues financial goals. The Helixia Venture Fund is performing well within good venture capital benchmarks. In the years ahead, we'll continue to focus on InsurTech and PropTech, and we'll increase our sourcing activities in Spain. In this way, we take advantage of new opportunities.
Life is actually full of risks and opportunities, and we want to be there when it matters, when new insurance needs might arise. It might be at the point of sale of a mortgage, of a car or of consumer goods. That's why we were investing quite a lot in our B2B2C initiatives. Daniel Ziegner, the Head of partnerships and B2B2C in Switzerland is sharing in the next video clips a couple of his thoughts,
My name is Daniel Signer, I'm responsible for the B2B2C business of Helvetia where we integrate our offering into the customer journeys of partners such as MediaMarkt, Polestar or furniture retailers. Let me briefly show you how Helveitze is exploiting new opportunities in the B2B2C market and make sure that we are there when it comes to insurance, consequently thought from a customer perspective. How does this market actually work? B2B2C models make tailor made insurance products available to end consumers at the point of sale. Helvetia is therefore cooperating with partners like vendors or manufacturers and is thus present whilst the need to protect a good is greatest.
This market is becoming increasingly important, on the one hand because it allows vendors to offer additional service components to the customer. On the other hand, digitalization simplifies the sale of products by a third party. Helvetia offers innovative and tailor made insurance products for goods and services in different industries as for electronic goods or sports equipment amongst many others. In April, we entered into a cooperation with the Swedish electric car manufacturer Polestar in the Swiss market. Helvetia's motor vehicle insurance can now be concluded directly via Polestar's digital sales platform.
With this cooperation, Helvetia is also successfully positioning itself in the area of motor vehicles, a market that will change accordingly in coming years as a result of changing mobility needs. Thanks to Helveitzer Liechtenstein, it is our USP In the market that we can offer our partners tailor made insurance products for their products across Europe and in Switzerland as well. Until the end of the strategic period, our ambition is to continue to grow profitably and to benefit from the increasing attractiveness and relevance of the A lean organization with minimal staff requirements allows us to ensure great economies of scale, And the very capital light portfolio delivers positive results regarding return on risk capital. We will continue to expand data analysis skills technical excellence to ensure that we deliver sustainable profitable growth in this very promising part of Helvetia's business. As you can see, This market is gaining importance and is very attractive.
Helvetia is ideally positioned to take advantage of this new opportunity.
Ladies and gentlemen, of course, you could challenge all that and ask us What's the burn rate of all that of all those initiatives you're undertaking? We are not talking about burn rates. We are talking about profit contribution around all those different initiatives, starting with Smile, which is not a startup burning any money, but a number one insurance solution in Switzerland with a combined ratio below 90% and thus contributing to our overall profit. Talking about new business ideas, of course, it also pays off in getting new ideas, in getting new business models. However, we want to make sure that all those initiatives are earning as much as at least CHF350 until the end of 2025 and that the profit contribution is at least 5% to the overall group's profit.
Now let me quickly summarize. We were starting with the presentation of Casa, our new pearl in Spain, which is a very profitable insurance company And furthermore, having tremendous opportunities around its ecosystems, health and care. And down there as well in Spain, this ecosystem is not coming out of any fantasy. It is working and generating profits. We then moved on in exploring our 4 strategic priorities, customer convenience, profitable growth, the right offering and new business opportunities.
And before having a break, we would now like to open for your questions. And for that, I hand over to Susanne Pingler.
Thank you, Filip. Ladies and gentlemen, you will now have the opportunity to ask questions on our strategic priorities. We have scheduled about 10 minutes for this session. We will start here in the room and then post the Q and A session To the live stream. In the live stream, I ask everybody who wants to ask a question to raise his or her hand and So we will start here with the questions in the room, and I would like to open The Q and A session to you.
So who is going to ask the first question? Anne Chantal, please.
Thank you. Antoine Rizal from Octavian. We have seen the 2 Sven, CEO, just before on screen, see that there's a beginning of Synergy between the Helvetia Spain and Casair with the product exchange or information exchange. It would be interesting to hear more about what's the next milestone about the integration of Kasserine in the group.
Yes. Thanks for that question. Obviously, not the first time that we have that question on the table. So it is clear for the time being, we do have a 70% stake at Casa. So we are not the Only owner of Casta, we do have our most important bank partners as shareholders still in the shareholding.
So therefore, we will approach the market with 2 separate entities. But we do have, of course, a specific plan To take synergies, of course, but not just cost synergies, we see a lot of opportunities to deal with that market. So for the time being, we do approach with 2 entities
in that market. When Ignacio is coming on stage, I can tell you that on a group level, we already could leverage, of course, Some synergies, for instance, in terms of internal financing, which is already concluded, we could Finance at better conditions, a couple of obligations Gasior had within our group. 2nd, we are Exploiting our group reinsurance policies together with Gasner. Gasner gives us with its Very profitable portfolio, new opportunities in better tailoring our reinsurance There are a couple of other synergies on the group level. But now back to the market.
Thank you very much, Phil and Markus. I think that with the adding of Castel and Elvetia Seguros, the position of Elvetia in Spain changed dramatically, Not only on some products to weather development, but as well in anything which has to do with the market position. Bargaining power in front of providers, Networks, actors, partners gives us Kassel the strong position of being part of Helvetia, having a solid partner, but as well improve our cost and bargaining and market position. We are playing like a 1st tier, number 7 in Non Life Actor, that changes totally the game work for both of us.
Any further questions? Yes, over there, please.
Yes. Good afternoon. Matthias Niklobitz with Handels Seitung. Do we have some more M and A plans like Casa or in other markets around Switzerland? And if yes, in which areas would you go, which typical size would it be a similar sized object?
Could you please give us some ideas on that? Thanks.
Thank you for this question. Of course, for the time being, it's about consolidating what we just acquired last year. If looking at M and A targets, then we are focusing on those markets we are already in. So there are no plans to go beyond, for instance, our European countries. If there are interesting specialty lines portfolios, of course, there are more on a global basis, but basically, we are looking for M and A targets within our European boundaries.
Any further questions from the room? Otherwise, I would switch to the live stream. Here I have one question from Will Hartcastle. So Will, please turn on your camera and go ahead.
Hi, everyone. Hopefully, you can hear me. Just really touching on the question on the commentary we made on the investment side. Just trying to sustain the perhaps the liquidity premium currently being achieved on the private debt and how this has changed over the past 18 months? And also how do the credit rating work on the private debt here?
Is it internal or is it based on an average rating?
I would ask Andre Kelleher, our Chief Investment Officer, to answer this question.
Thank you for the question.
So the liquidity premium, obviously, with the expensive monetary Policy has decreased over time. And as all financial markets are highly valued, also the illiquidity premium has decreased and private markets are more expensive as well. We still believe, considering valuations, that it's Compared to traditional markets attractive, but obviously expensive as well. So the second part as regards to internal rating. So we work also together with different advisors that support us in creating a rating, an internal light rating, but it's non rated in the disclosure.
If you have
a further question, Will, you have to unmute
Okay. I think There we go.
Can you just clarify how it's treated on FST? Is it given a blanket corporate rating?
In SST, it's mapped into similar category like a BB.
At the moment, so again in the room. It's for me to cut the nail, please.
Thank you. From Picti Asset Management, maybe on the reinsurance business, The strategic priorities, maybe a bit of color on the relationship with Kazaire, since they seem they will be underwriting some of the business there and the metrics that they use to be selective on the underwriting front.
There are no plans if you are talking about the Agtai for insurance, there are no plans that Gasar is underwriting Agtai for insurance. We are really sticking to a very rigid governance, so to say, in Agtai for insurance, Underwriting every contract out of Switzerland and it's only the reinsurance, the Act type reinsurance department, which is underwriting reinsurance policies. Of course, there are, so to say, a couple of front men positioned in Miami or Singapore, who do not have underwriting competencies, but they should have better access to the market. But There are no plans that any of our business units or segments or countries, markets whatsoever are underwriting Actai for insurance.
Not at all.
Okay. So I take a final question.
It's more about the synergy, sorry, of the group reinsurance As a buyer of reinsurance coverage, that's where we see synergies.
Okay. I'll take a final question from the And the next question comes from Rene Lochaux. So Rene, please turn on your camera and go ahead. We can see you, but we can't hear you at the moment.
Okay. That might be time for a break.
So, Rene, we take your question.
I'm sorry.
In the next round, sorry for that.
Okay. Ladies and gentlemen, Now it's time for a break. And we suggest that we are coming back into this room at 5 minutes past 4, 10 minutes past 4.
Yes, I would say 10 to 20 minutes.
10 minutes past 4. And I would ask all those people joining us on the video stream that Ladies and gentlemen, welcome back to our second part of Helvetia's Capital Markets Day. Here in the Samsung Hall in Zurich, welcome to all those being physically present as well as to all those joining us Via video conference. As we told you in our first section of this afternoon, We are glad to report and to conclude that Helvetia, looking back on 2020, was achieving All what we promised in terms of growth, profitability, capital strength and dividends. Now we are looking forward to Helvetia 2025.
Helvetia is entering into a new era from a Swiss insurance group with a couple of operations abroad to a financial services provider anchored in Switzerland With selected strong country markets giving a good footprint in Europe, global access through specialty markets and last but not least, tremendous opportunities around asset management and ecosystems. We were presenting to you our newly acquired pearl In Spain, Qatar, which was already paying off in a great amount, which exceeded our expectations. We are presenting to you our 4 strategic priorities around customer convenience, profitable growth, the right offering and new business models. And now in the next section, we want to present you our business segments. Helvetia is reporting its result apart from the corporate segment along 3 different segments, namely Switzerland, Europe and Specialty Markets.
And Our organizational setup looks alike. That's why I'm happy now that Martin, David and Markus joined me on stage in order to present to you their respective strategies. Of course, all those strategic priorities shall now be operationalized in the different business segments. I'm glad to hand over to you, Martin.
Thank you, Phil. Switzerland is the origin and Switzerland is the backbone of Evertzia Group. It's our home market. And as our home market, it will be important also in the next strategic period. We set ambitious targets for the Swiss operations for the strategic period.
To cope with these ambitious target. We can build on the successes and the excellent progress we made during the last strategic period. We strengthened our core business. We grew in non life up to a level of more than CHF 1 point CHF5 billion premium on a very profitable portfolio. And we shifted consequently The new business mix in life toward capital light product.
This strengthening of the core business will give us sustainable and strong profits also in the next strategic periods. In addition To the strengthening of the core business, we build up successful new business models. You saw already Smile, The number one direct insurer in Switzerland, you saw MoneyPark and you heard about the B2B2C Business where Helvetica Warranty is one strong anchor in. These new business models are ready to be scaled up in the next strategic period. And these new business models and the services of these new businesses, we can integrate into our value proposition At Helvetia, to differentiate from our competitors.
The strengthening of the core business and the new business models will allow us to master the challenges of the current environment and to take our chances in the opportunities. We have to adapt to a more and more hybrid customer behavior that has been accelerated during the COVID-nineteen crisis. We have to pace out new competitors by our value proposition for our customers And we have to compensate the FX we see from the low interest environment and from the pressure on margins in non life the Swiss market due to the competition we are facing. To consolidate Our top 3 position in this environment, we set 3 strategic focuses. One is to differentiate by customer intimacy and convenience.
2nd, to exploit the potential of our new business models and of our strong customer basis by more Helvetia per customer and third, by working hard on our cost position and on our productivity to strengthen the Cost position. You already heard from my colleagues in Switzerland in the different videos that we have a powerful range of measures in place to do so. These measures, we can cluster in 4 clusters and they contribute to the strategic focus areas. 1st, we are further developing our value proposition and our omnichannel access for our customers. Recent example for this are the new products in SME, Adrian Kolekke presented before or the relaunch of our motor product and its presentation in the direct business just yesterday, Monday in the Swiss market.
More is to come with the services in Atlanta for the SME business and with enhanced services in our ecosystem home with a strong anchor in Money Park. A second cluster of important measures is focusing on scaling up our technical excellence by portfolio measures, pricing measures and in the fraud and the claims handling processes, especially in the fraud detection part. To grow our business, we are not only focusing on the value proposition and the omni channel approach in our traditional businesses. We are also executing initiatives for new businesses and to go into new partnerships as you saw in the B2B2C section. 4th, it is important for us to keep an eye and to be clearly rigid on the productivity improvement by seamless processes to realize the cost reduction we integrated in our strategic plan.
In a nutshell, we are convinced that we have the right measures in place. We are pushing forward their implementation in Switzerland. And by doing so, Switzerland will also, in the next strategic period, deliver on its promises in Helvetia 25. Thank you for your attention.
Momentum, not exactly the word that you have top of mind thinking about Europe and Switzerland, But you should, at least at Helvetia. Some of you might remember last Capital Markets Day, When it just came out of an integration series in all our country markets in the starting blocks to Implement a new strategy and most of all, a common culture. And the results, I have to say I'm quite a bit proud What we altogether have reached, growing above market in Non Life and Capital Life Business and at the same time, improving year by year the technical margins, ending up with an increase of the Profit after tax of more than 50 percent up to €175,000,000 So you see, We have quite a momentum in our European country markets. It is extremely cool, Extremely motivating to work for a successful and winning company. Now how do we see the current environment?
First of all, let me say that our retail and SME based portfolios, Our relationships to the sales partners have also in the crisis, especially in the crisis, proven to be very stable. Even more, thanks to our best partner approach, We could still keep the growth path and, at the same time, reduce the lapse ratios. And thanks to Efficiency measures. Thanks to technical excellence. We also, in 2020, could improve the technical margins.
So, an excellent starting position to profit best out of the upcoming growth environment. European and country recovery plans will boost economy, investments and also private consumption. Sensitized clients are asking for a more comprehensive protection, individual as well as Corporate. And the COVID driven pace that we see in innovation and digitization is offering new marketplaces for our products and services. So where do we see our strategic focus in that environment?
First of all, let me say it is all about relevance, still or probably even more. Relevant for the independent sales partner, relevant for the individual client At the very concrete moment of truth could be a claim or a sales decision. So, it is not enough just to be Somewhere among top 10 position in a market. You have to be at the very top of a very short list, Top 3, probably top 5, depending on the business, but in the very concrete situation. And we have learned innovation in products and services, important, a prerequisite, yes, But not enough to differentiate.
But personal relationships, Being there when it matters, trust, common objectives, so in other words, our best partner approach. This is really what makes the difference. And yes, we do believe that Our SME and retail businesses are local ones still, but they are built on the same business strategy With the same business model, with the same underlying operational model to cash in synergies, of course, To establish common methods, extremely important, and to exchange best practices in the European segment. We do see 4 main fields for strategic measures. 1st, ongoing digitization initiatives to satisfy clients' and partners' need for speed, transparency, connectivity and at the same time, of course, internally always improving efficiency.
2nd, integrated in our best partner approach, we will set an additional focus on SME and their owners, the entrepreneurs, to leverage our excellent market proximity into that segment. 3rd, we use our ability to connect to individuals, partners and ecosystems to develop new business models for insurance and services. And last but not least, Let me say it is quite a challenge to grow above market year by year, especially with regard to profitability. So therefore, we are doing a lot, investing a lot and keep on striving for technical excellence to safeguard our margins. So, in a nutshell, profitable, well positioned, growing Retail and SME portfolios, a broad and performing market access, omnichannel proven ability to connect and a best partner approach as the differentiating factor.
That's Europe at Evertzia. Thank you.
In the last strategic period, specialty markets doubled its business volume, while always delivering positive technical results. This was achieved thanks to targeted growth initiatives coupled with a disciplined underwriting approach. Had we not been disciplined by the way, we would have grown much, much more. Key enablers for this successful development were the introduction of new products, The recruitment of bespoke professionals in underwriting and as a result thereof, an improved profile of Helvetia as an international niche player. This significant growth was met with the reinforcement of various technical and finance functions to further ensure technical excellence as well as an appropriate governance, I.
E, safeguarding our margins. As previously mentioned, the currently positive market environment still offers growth opportunities. We therefore intend to expand our product offering and international footprint further. In addition, we will increase our effectiveness and make use of new technology to serve our business partners and customers better than we do today. Specialty Markets accordingly aims at growing further, leveraging its technical excellence and maintaining a clear strategic focus.
You have already heard from Raita Colle and Vincent Latac How Active Reinsurance and Helvetia France are to develop their positions as competent and reliable business partners in their respective markets. They have great teams and I am fully convinced that they will achieve their ambitious objectives. The 3rd business unit in specialty markets, specialty lines Switzerland and International is to strengthen its number one position in Switzerland as a specialty lines insurer and pursue the international development of its business. For this, we can rely on an agile team of dedicated professionals, excellent relationships with our brokers and customers globally as well as the strong brand of Helvetia. And that's a USP.
We combined the strength of a big company, the financial strength of a big company with the agility of SME and this is what has allowed us to grow and outperform the market. In a nutshell, The overall focus looking at 2025 rely on the improvement of business processes and customer experience, The extension of our product offering, selective international growth, always safeguarding our margin, as well as the controlled increase of our risk appetite.
Thank you very much to Martin, Markus and David. Ladies and gentlemen, in order to make Helvetia 2025 a success story, We need some prerequisites. It's about people, partner and performance. In the next two videos, we would like to share with you The thought of our Head of Human Resources, Roland Pentelie and of our Chief Technology Officer, Achim Baumstark. First, we would like to answer the question, what does it take for our employees to really contribute to the success of Helvetia 2025?
And second, what does it take in terms of digitalization, for instance,
My name is Roland Bently, and I'm heading the Corporate Center Organization of the Helvetia Group. It's a pleasure to talk about our most important asset we have at Televizia, our people. To enable the successful group wide execution of our corporate strategy, Elevator 20 25, We invest into the following two key priorities. 1st, we invest into our culture. We promote our entrepreneurial and performance driven corporate culture and align it across our group.
This group wide cultural identity is inspired by our 3 shared values trust, drive and enthusiasm. These values shape how we lead, collaborate and organize value creation at Helvetia. We call it the Helvetia Way. 2nd, we strongly invest into new skills that our employees will need in the future, such as working agile, digital, networked and in a customer focused way. All of them are preconditional to get closer to our group wide vision of setting standards in customer convenience.
Furthermore, we continuously develop our leaders and employees and use our more and more international setup to share the experiences of our over 11,000 employees across our markets. Overall, As a recognized top employer, we expect a lot and we offer a lot. We are proud of our effective organization and attractive workplace. With us, everyone can mobilize her or his full potential in contributing to our strategy, Helvetia 2025.
Hello. My name is Achim Baumstrik. I'm the CTO at Helvetia. And as such, I'm accountable for technology and IT. When we talk about our new business strategy at Helvetia, we talk a lot about customer intimacy, customer convenience, efficiency and ecosystems.
And whilst we have already a number of innovative business model in place that fit that context, we do acknowledge we have to modernize our core businesses in order to live up to these strategic imperatives. Let me give you a couple of examples that hopefully demonstrate how we deploy technology to achieve exactly that. Firstly, and at the core of our technology strategy, we push very hard towards the cloud. At this moment, we've already moved 40% of our corporate and Swiss application landscape into the cloud. The first wave of this push focuses on what we call the front domain, applications that are at the interface to our customers and to our sales force.
These applications are being rebuilt into the cloud to provide superior user experience. And as an example for this, The new offering solutions for motor and private customers are scheduled to go live just now at the end of June. Our second focus area is analytics as most of our strategic goals heavily depend on better utilization of data. Consequently, we've already started to invest in a new analytics platform that brings along state of the art analytics and AI tools. And it is built in a way that it helps us to deliver data more quickly to the analysts and deploy new insight easily back into our processes.
This new platform has proven itself in a large number of use cases already in the areas of geoanalytics, churn value, customer value models and others. For the new strategy, we've now started to rebuild our data warehouse landscape into a cloud native data management solution, which will help greatly with data integrity and data quality. Together with analytics platform, Both will put Helvetia in a much better position to utilize data as required by our strategy. Thirdly, and to make it all work as a whole, we put a lot of emphasis on integration. For example, we have already deployed modern data streaming technologies to technically decouple our applications while still being able to integrate our processes seamlessly across the main.
For the new strategy, we will now extend These integration solutions to stretch beyond the borders of the enterprise in order to offer better connectivity to partners and ecosystems. I am convinced that this will be a key capability of Helvetia in the future. So in summary, alongside the new business strategy, There is a significant modernization effort with the aim to benefit from state of the art technologies, and I mentioned three examples,
I was mentioning 3 prerequisites in order to make Helvetia 2025 a success story. It's about people, partners and of course, about performance. We have been setting forth Four strategic priorities. We have been setting forth 3 business segment strategies. We have been setting forth ambitious financial targets.
We have been setting forth a great purpose, A challenging ambition, a big vision being best partner, being ready when it matters, setting standards in terms of convenience and accessibility. And in order to cope with all that, We need to improve our own performance culture at Helvetia. We want to be measured by The results, we want to be measured by what we deliver on a daily basis. And let me add this, We are underway of implementing a new compensation policy, which should get into force within the next 1 to 2 years in order to make sure that all what we do is in accordance with what our strategic goals look like. It's not only about, of course, doing business in a reasonable way.
It's about technical excellence. It's about recruiting the best people. It's about developing our talents. It's about living And not only talking about a performance culture. And of course, it's also About a long time perspective in all what we do.
And that brings me to the next chapter This afternoon, it's about corporate responsibility. Overarching, all those strategies, All those plans, all those initiatives is, of course, the corporate rental responsibility. ESG, environmental, social, governance, shall not only be a buzzword. We at Helvetia are convinced that as an insurance company, we have to take A long time perspective in underwriting, in asset management, in developing our business in general. If not, we cannot survive.
We are convinced that specifically for an insurance industry, Specifically for Helvetia, it is decisive to live this long time perspective. Now we are proud that we did not start with all those initiatives yesterday only Because it's in everyday's mouth today, all those ESG criteria. We We're implementing those criteria again and again within the last few years. And let me Just talk about 2 accomplishments of the last few years. The first one deals with our reduction of the CO2 emissions with our carbon neutrality.
The second one deals with our MSCI ESG A rating. It's, I hope for Andre, much more complicated to pronounce than to live. Those two examples are best showing that we are not starting right away, but that we have been undertaking a long journey in this respect. For a Deep dive. I would now like to hand over to our Chief Investment Officer, Andre Koehler, who will explain his Thoughts and his view on ESG, on corporate responsibility and specifically Unresponsible Investments.
Please, Andre.
Thank you, Filip.
It is a pleasure to introduce you to Helvetia's Responsible Investment Strategy. Over the past years, Helvetia has made great strides in adopting responsible investing and ESG criteria in the investment process. As we enter now Helvetia Strategy 2025, we have set 2 main strategic responsible investment goals. The first is an overarching goal to manage the Helvetia's investment portfolio with few considerations for sustainability risks and opportunities. The second is a specific goal to transition the investment portfolio towards a net zero emissions target by 2,050.
So how are we going to reach these goals? The responsible investment strategy relies on 4 pillars. 1st, It will be the comprehensive integration of ESG criteria in the investment process. With the aim to improve the long term financial and non financial outcomes. 2nd, stewardship.
So we will actively engage with companies and stakeholders on sustainable business practices and ESG issues 3rd, Exclusions, which we will apply in specific areas. This is a strict measure, which We will apply in areas where we see clear downside risks or violations of international conventions. And 4th, it is managing towards sustainability outcomes with the aim to create financial values while having a positive impact on people and the environment. So for the coming years, we have an exciting path ahead of us. And our focus will be on carrying out a set of actions that are directly linked to reaching these 2 strategic goals.
Let's start with governance and Comprehensively integrating ESG criteria requires a clear governance structure across the company and from the Board of Directors level to selecting individual securities because this governance structure provides The framework and the boundaries to make ESG considerate investment decisions. As I already mentioned, ESG will be comprehensively integrated into our daily investment activities. And this means also across the whole investment process. It means from setting strategic asset allocation over manager and fund selection to portfolio management and reporting. As an active owner, we will also engage with companies and interest groups on Material sustainability issues.
This especially relates to climate change, which is one of the greatest challenges facing the world today. And And very important climate related action will be the transition of the investment portfolio towards the net zero emissions goal. And for that purpose, we will define specific decarbonization pathways, which will guide The execution of asset class specific measures and actions. Recognizing the harmful impact of on the climate of thermal coal And unconventional oil and gas activities, we have developed a very structured approach, which uses screening and exclusions in order to align the portfolio with our goals and requirements. So let me summarize.
As a responsible investor, we believe that considering ESG criteria will lead to better informed investment decisions and thereby enhance the value creation of the investment portfolio. In carrying out this set of actions and this strategy, we will achieve another important milestone On Helvetia's Responsible Investment Journey. Thank you.
Thank you, Andre. So as you see, ESG is not a project, which has a specific starting point and a specific end. It's like a long journey and We are undertaking it with and taking the challenge, of course. Now during the last sections, we were talking about many initiatives, many strategies, Many new ideas and we were always linking those different Initiatives to our financials. In the next section, we would now like to go A step further in order to make you more familiar with our financial targets.
And for that, I ask Annalise Lucer Hammeli, our CFO, to come on stage and to present you our financial targets in that way.
Thank you, Philippe. A warm welcome also from my side. As mentioned, of course, I will try to shed some light on the strategy with a financial eye. And so The aim of this last session is to give you specific key insights from the financial perspective. I will do that by explaining you one important aspect of each of the 3 financial objectives.
Before, our center of attention was on the strategic priorities and how each of the business segments and market units is on the way of implementing them. Now I will focus in my session on how the implementation will result in ambitious financial targets. In summary, I will focus on 3 key insights. The first one is that in setting an ambitious combined ratio range and for the first time setting goals for fee business, We ensure not only to focus on profitable growth, but also to diversify our income streams towards fee business. This is keeping us not only profitable, but also more resilient for the future.
The second insight is that an important part of HealthAsia 2025 is to leverage on operational efficiency. And we will do that by realizing recurring cost efficiencies of CHF 100,000,000 by 2025. This will strengthen our competitive position. The 3rd and Important last insight is that we will increase the dividend by 50% compared to the last strategy period Or in absolute terms, we will pay out at least CHF 1,500,000,000 in these 5 years. This, of course, will be based on a strong capitalization under S and P as well as under Assisting.
By that, you see that our shareholders will benefit from the successful implementation of the strategy in the form of a reliable and attractive dividend. Now let's dive into these three key insights. Let us first look at the first Key insight concerning the combined ratio range and the fee business targets. We want to achieve a combined ratio, which is to our investors. All business segments, Switzerland, Europe and Specialty Markets are contributing to this goal.
To write profitable business is key in our strategies. And the various initiatives you have seen mentioned by my colleagues sitting here or mentioned in the videos will contribute to this goal. In addition, of course, also our cost efficiency program is beneficial to the combined ratio goal. Going forward, the result in Switzerland is important for Health Asia as a group, of course. However, the other segments, Europe and Specialty Markets, also contribute to the combined ratio To ensure an attractive combined ratio in Switzerland, we have introduced 2 effective measures for the strategy period.
We have launched strategic initiatives in the area of technical excellence And on the growth side, and as already mentioned, we have introduced a cost efficiency program, which should raise cost efficiencies of CHF 60,000,000 in Switzerland. Note here that these initiatives with recurring impact will, to a certain extent, be offset by temporary effects, namely 2 of them. With the acquisition of Alba, Phoenix and Naturale Suisse, we have benefited from positive reserves effects in the Swiss business out of synergies with Helvetia. These special effects will expire in this strategy period. In addition, Positive effects from the settlement of the HWS, the whiplash reserves are also expiring.
Now let's turn to the fee goal of this first key insight. In the Strategy 2025, we are For the first time, setting forth a fee volume goal. The diversification towards fee business combines today's Customer needs beautifully with our capabilities and out of our offerings. I think this was demonstrated really nicely by Carcer. Our fee business does not come from one source, but from 4 different sources, as you may have seen in our full year results.
These four sources are the fee business comes out of asset management Through our 3rd party offering, it comes out of health and elderly care, as shown by Kasar. It comes from distribution services, for example, from Money Park. And CertiT comes from assistance services in insurance related fields. So by strategically focusing on fee goals, We leverage and expand our core business. And as a result, we ensure to be more diversified in our income streams and hence also less dependent on capital market developments.
So this was some more insight on the first Key insight. Now let's turn to the second one. By 2025, we aim to raise recurring cost efficiencies of CHF 100,000,000. This is illustrated here on the right side on the graph, where you see that we will raise these cost efficiencies in the way that our top line growth is growing at a much faster rate than our costs are increasing. So that is what we mean by raising cost efficiencies.
And it's very important to note here that we do not carry out general cost reductions, But rather, we reduce costs in a very targeted manner. And thus, we enable ourselves to become more efficient, but still be able to fund growth opportunities where we see a profitable business. We expect efficiency gains of around onethree being related to personnel costs and about to around 2 thirds being related to non personnel costs. The main measures to achieve our cost targets and cost efficiencies is the optimization of processes in our core insurance operations. 2nd, we will review our IT landscape, which will lead to decommissioning of some systems.
And third, we expect some efficiency gains out of optimizations in the area of procurement. So to sum up on the second insight, by realizing recurring cost efficiencies of €100,000,000 by 2025, we will strengthen our future competitive position. So now let's turn to the 3rd and last insight on capital and dividend. Healthetia has been and will be a very reliable and attractive dividend payer. So for this strategy period, we have set the cumulative dividend for the fiscal year until the fiscal year 2025 to at least CHF1.5 billion or 50% more than in the last strategy period.
Our ability to generate distributable cash is demonstrated by the solid and sustainable operating cash production you see here on the right side in the last few years. Each year, HASEXIO was able to fully cover its external dividend by its internal operating cash production. Increase the dividend year by year or in exceptional years to at least keep it stable on absolute terms. And let me note here that for 2020, Casa has already contributed CHF 26,000,000 to our operating cash production. Our sustainable external dividend is also backed by Helvetia's resilient net economic dividend capacity.
Our net economic dividend capacity has been very stable even during COVID-nineteen, And it covers our external dividend 2 to 3 times. It's on the right side in the graph on the bottom, the line. We are fully committed to the seamless continuation of our successful dividend policy. And of course, we are also fully committed to our ambitious targets of paying out the cumulative dividend of at least €1,500,000,000 for the next 5 years. Now our ability to be a reliable and committed dividend payer is backed by a very solid capital position and strength.
Helvetia's solid capitalization and disciplined balance sheet management is absolutely key. This is reflected in our financial target for the strategy period where we want to have a standard and Poor's rating of at least single A. As the asset ratio can be subject To temporary large fluctuations, we have to decided not to communicate a target range anymore. However, a solid capitalization also under SSD is absolutely key. And in the next few minutes, I will show you how we manage the balance sheet and the asset ratio.
And please note here that the lower limit of 130% remained completely unchanged, So nothing changed there. We safeguard and manage our solid capitalization by our asset liability management approach, where we are most importantly a liability driven investor with the goal to maximize economic value. 2nd, we, of course, optimize on capital efficiency of different asset classes. And third, we have to optimize under the given boundary conditions such as tied asset coverage or other local statutory or regulatory constraints. This means that the SSD balance sheet management is a continuous process where we continuously develop measures to improve the ratio should this become necessary.
And we also anticipate regulatory trends or new risks. Allow me at this point a short side note. On the graph on the left in the picture, Be aware that asset ratios and Solvency II cannot be directly compared or it's Yes, the interpretation is difficult. Why is that? For example, for our Helvetia European Entities, The difference between for the same entity between the SSD solvency ratio and the SSD solvency ratio is around 90 percentage points.
That means that at least for Helvetia, it makes no sense to compare the asset ratio with that of Solvency II ratio of European peers. The main driver of this difference is the how the 2 solvency regimes are treating European government bonds. In Solvency II, the European government bonds, they do not get the risk charge independent of their credit rating. And under SST, European government bonds are treated as every other bond. So if You have for example a Greek government bond, it gets a high risk charge and the German Bund gets a low risk charge.
So that's the reason the main reason of this difference. Now let me come back shortly to our asset liability management approach. As a liability driven investor, as we said, we structure our asset portfolio to meet our Life and non life insurance obligations when they come due and at the same time we want to maximize economic value. For that, we have 3 main tools. So we aim to keep the duration gap narrow.
This fits very well with our long term nature of our cash flows. 2nd, we have a really close eye on the direct yield and on the interest margin on our life book. And 3rd, as I said, we optimized the asset allocation according to capital efficiency. Using this approach, we then Also take into account all the constraints there are on local statutory on regulatory areas or for example, we also optimize for Solvency II for our European entities. And as you have just heard from our group CEO, we also include responsible investment consideration.
This allows us not only to manage physical and transition risks out of climate change, but also to adhere to our social responsibility, which is inherent in the long term nature of the insurance business. So what are my 3 take home messages for you? The implementation of our Helvetia 2025 strategy by our business segments, Switzerland, Europe and Specialty Markets will be measured and tightly tracked via our financial targets. And this will ensure that first, we are profitable and resilient for the future through the focus on profitable growth and diversification into fee business. 2nd, we strengthened our future competitive position by ensuring operational and cost efficiencies.
And third, we ensured an attractive and reliable dividend income by increasing the cumulative dividend by at least 50% compared to the last strategy period. With that, I hand back to our Group CEO.
Thank you, Anurice, for this insight into our financial targets. We would now like to open for a second Q and A session. And for the technical details. Again, I ask Susan for her explanations.
Exactly. So we will now have our final Q and A round, Q and A session and we will proceed similarly to the first one. That means that we start here in the room and then hand over to the Livestream and the first question in the Livestream will then be from Rene Lohr, who sent me His question by e mail because he has a bad Internet connection, but I would like to start here in the room. Simon Trussmeyer.
Thank you. It's Simon from Pfonzorgen. A question for the CFO or CEO. The financial targets by 2025, you will report under IFRS 17. And it is terribly hard for us to see if you actually achieve your target or not because everything will be different.
I fully understand that you cannot set targets under a new accounting regime that is not fully clear yet. But I was just wondering what your thoughts are. And question 1b, Since I see the Chief Actuary, I might as well ask a question. In life insurance, do you see any long term impact on Mortality
as a result from COVID-nineteen.
Or is it too early to say anything? Thank you.
Okay. Let's start with the, I would say, the easy question, IFRS 17, Annalise.
Yes, sure. Easy. Good one. Now it's clear that some of our financial targets will be impacted by the new accounting standard. However, not all of them.
For example, the Standard and Poor's rating not also not the cumulative dividend as we pay dividend
out of the local
results, not the results, not the higher for us. This is always important to note. And we are At the moment, of course, in high times with our IFRS 17 project like everybody else. And there will, in my opinion, probably be a sort of translation at some point of The financial targets, there is no other way. I mean, we are at the moment not able to exactly say what the difference will be, but the definition of the combined ratio will slightly change.
That's clear. And in life, a lot will change.
But the goal of Profitably grow our business remains the same. Now our Chief Actuary, Peart Muller, Please come on stage so that everybody can see you.
And the answer to the question 1b is easy, No. No, maybe you have also read in newspaper or heard In television or radio, for example, in Switzerland, we had a little bit more mortality last year in March, April, but this had not been more than I think they are in the year 20 2018 something like that where we had a lot of vaccination a lot What other things in the winter? And we had a little bit more mortality at the end of the year from, I think November 2 to December. But I think this has been a one off effect, and We will not see, because of COVID now, a long time effect on mortality. Therefore, no.
Okay. Any further questions? Yes, Mr. Mikkowitz, please.
Yes. Thank you. Coming back to the IFRS 17 stuff, I've just one follow-up question in 3 parts. One is about the costs. 2nd, about external expertise.
And third question, do you feel comfortable to meet To finish that project on time? Or do you expect probably extension by 1 year or so?
Let me start with the 3rd question. Yes, I feel comfortable with finishing on time And also on scope, and it will be hard. We will not have, let's say, parallel runs covering Several time frames, but we will I'm very confident that we will manage it, yes.
Costs.
On costs, I have to look to Susan if we Do comment on costs? We have
not disclosed we will come back to you. We have disclosed costs, I think last year, but in general, they are part of our project portfolio.
Yes. They are part of our project portfolio. And Our project portfolio is after policyholders and shareholders split. And after tax, it's around €50,000,000 to €70,000,000 per year. And what was your question on expertise?
Hiring people or it's about external expertise. If you have, for instance, External whatever big four support and so on and so forth, what I would assume giving this cost base of Double digit millions.
Yes. So this cost base is not only the IFRS 17 project. It's the whole project portfolio of Helvetia Group, just to be clear. Of course, as for every program, we have external expertise Hired, be it really on the subject side, but also, of course, on project support and so on, This is no different to any other large project.
Yes, Mr. Castano? Only 1. Yes.
Q for the next one. To change from IFRS 17 capital allocation policy, your deal and policy great appreciated and will absorb hopefully a good part of your remittance. So if you were to make acquisitions, Again, I think the model of Kazaire is the model that we have to understand for the future, the type of financing that you had. Or Would you put aside some of the remittance for, let's say, a bolt on acquisition strategy?
Well, It depends a bit on the size of the acquisition. Smaller size, of course, we are able to pay out of the pocket, but larger size, we would for sure look for an optimized financing such It was for Kasser.
Okay. Any Yes. I'm Chantal, and then I move to the live stream.
I have a question
more for the segment strategy. And basically, we have heard a lot about your product and niche. I read in your corporate brochure, you mentioned several times the cyber Cyber tailor made product. So my question is what's your risk appetite in this domain? And also if you you give us a bit what is also your risk assessment expertise in this domain?
Because we have seen also in
the U.
S, 1 hacker or a group of hacker can just dry out the whole East Coast. And I guess the cost is Probably difficult to estimate. So what is your appetite and expertise in evaluating this domain?
I ask Taffy Dribo, our CEO of Specialty Markets, to answer this question. And maybe our Chief Actuary has then To add a comment, who knows?
Thanks. Yes, cyber is a new lines of business and many questions Remained to be answered. So what is a war exclusion in cyber? What is an event? Those questions have not been answered.
And this is why we are very cautious when it comes to cyber. Nevertheless, our customers have a need and we need to find the right balance between covering those needs and on the other hand, not exposing our balance sheet to inconsiderate risks. So what have we done so far? In all the countries where we are present, We have developed cyber coverages for SMEs and for personal customers With very limited coverages, however, they cover the need of standard customers. We are now also Entering the space of more complex cybercovages.
In Switzerland, we have a few large customers, but we're doing this very cautiously and gradually and insist on certain exclusions because otherwise as I mentioned previously, it would expose us to very high exposures. So we need to be in that space, but we need to do it very carefully.
Maybe only one additional remark. Also, we control the exposure to cyber very closely on group level. That will say every quarter, we collect data of every country. And there, we have it Really under control.
We were specifically also looking at so called sleeping cyber coverages in different contracts. So we are carefully looking at that
Good. Then I would like to post the Q and A session into the live stream. And there just to remind you, please Raise your hand and switch on your camera. But before I have 2 questions already on my screen, I would like to read the one that Rene Loja sent me. He has a question on the Swiss market for Martin Jar, and his question is exactly like that.
As Martin spent many years in the Swiss insurance market, I was wondering if he could give us some insight on how the Swiss non life market has developed over the past years and what we should expect in the next 5 to 10 years, especially with regard to the combined ratio, meaning is a combined ratio that we saw in the past still sustainable for the future.
Yes. Maybe I can start and give you some Aspects about the combined ratio, as I mentioned in my speech, of course, we are focusing in Switzerland very much on an attractive combined ratio for our investors. This is achieved via various measures On the technical excellence side, on the growth side and as you heard also, a large part of our cost efficiency program will affect Switzerland. And also note, as I said, and it's important to repeat it here, we have temporary effects On the reserves running out, which will not be beneficial anymore in the future. So they are beneficial now, but they are running out in the strategy period.
And these effects, They are all important and reach. And in total, on group level, we are Very confident that our 92% to 94% range is a very attractive range for HealthAsia Group for our yes, our business.
Thank you, Andelis. For the general development in the Swiss market, We see that competition is much higher than it was some years ago when I experienced first The competition in the Swiss market, this comes from one side for a much higher competition, for example, also between brokers Because also there, the market is now saturated. And we see there in the SME business that the broker market is in a much higher more intense competition than it was before. And we see new competitors that are entering the high margin market in Switzerland. There, I think we have very good positions at Sellvia as we are the number one direct insurer and we have all capabilities for Omnichannel approach in Switzerland, together with the technical experience and The data analytics capabilities we have, I think we are very, very good prepared for this much more intense and also diverse competition we see in the Swiss market compared to just some years ago.
This is my short, in a nutshell, conclusion on the Swiss market. Thank you.
Good. Then the next question comes from Peter Eliot
Thank you very much, Leonard. So my question actually was on the expense Saving the efficiency savings, and thank you very much for the additional detail, Annalise. I guess There's a lot of helpful information there. I guess the one thing that would still be helpful for me to understand is the extent to which we should expect The savings to be split between shareholders and policyholders, so perhaps how much of it is falling in Life or Non Life? And I guess you also mentioned the review of the IT landscape.
Obviously, we had some slightly disappointing upstate there at the half year results. Was wondering if you could give us any sort of update on developments there, whether you're sort of sorting 3rd party platforms, etcetera, are all yes, there's a progress update there. Thank you.
Yes. For sure, I can start with the 3rd part first part of your question about the Allocation of the cost efficiencies to different segments. We have just started the cost efficiency program. And one of the points I mentioned where we see potential is, for example, in the optimization of procurement. However, the analysis there is just starting.
And before we know Which parts of the procurement deliver the savings, we only then we know how much is allocated to Non Life and Life and Group and so on. So at this point in time, it's too early To say what is affected and by how much. However, it's clear that Non life will be affected or will benefit life will benefit, but some efficiencies will also concern group costs, For example,
the The question dealing with IT, I would ask our Chief Technology Officer, Achim, to very quickly answer this question with regards to the IT landscape, where we are standing now and what's Maybe the core of the question, how we dealt with what you were calling a bad surprise.
A bad surprise and a mishap last year. Yes, we have refocused our efforts to modernize the Non life landscape in Switzerland. And currently, we follow a two way approach to achieve that. 1st, We consolidate our back office onto just one contract management system and one claims system. And second, we freed up some resources to invest more on the front end.
And I mentioned front end investments earlier. So at the moment, we have Heavy investments in improving
our ability to live
up to the ambition of customer convenience and better front ends to customers in sales force. The consolidation in the back office is Centered around the idea to reduce complexity first and then potentially modernize on a more consolidated landscape, We have started to look at the potential replacement of the non life claims solution, but that is just ongoing and is not yet decided.
Okay. The next question comes from Thomas Buttermans from Berenberg. So Thomas, please turn on your camera and go ahead.
Hi, good afternoon. Thanks for taking my question. And can you give any more details on the reserve releases? I'm just thinking how much they were contributing to the combined ratio beforehand. And following on from that, can you just talk about what the margin improvement is above loss cost inflation
So the question about reserve?
It's prior year development.
Prior year development, Maybe Annalise and then some explanations on the specialty markets given by David.
Yes. So in prior year development, we have On a you can simplify it and say you have 3 main effects in there. 1 is from The growing of the active reinsurance and the different accounting logic there, so The underwriting year accounting distorts somehow this number. Here On this slide, you see our prior year development, Including active reinsurance, it's the gray area and without active reinsurance, That's the green area. And if you would then deep dive in the green area, then there There's the positive effect from the normal runoff.
And what I mentioned in addition are the additional special effects we have from the synergies out of the past transaction of AlbaPhoenix and Nacional Swiss. They are also in there and they are expiring. So these are the three parts. But The prior year development without the special effect, without active reinsurance will still be Beneficial, of course, for the combined ratio.
Now maybe David, Please.
Yes. So in the past year, we have seen significant rate increases, Generally speaking, they vary a lot by business line and by region. We haven't quantified them exactly. What I can tell you is they range on average probably between, let's say, 10% 15 percent. And we will earn through these rate changes over the next few years.
Now if you look at the combined ratio, it's impacted by different things. First of all, you have claims and they're volatile. But other than that, we also have new business that we were writing. And as Helvetia and we are a cautious company, we tend to reserve new business carefully. So you have, let's say, a negative impact of the new business, you're right, because you reserve it conservatively.
And then you have the positive effect of rate increases, which you are earning through, which will help us to maintain attractive combined ratio or even lower it slightly. But don't expect any large swings
Are there any further questions from the live stream? Because currently, I do not see any hand raised. If not, I'll get back to the room. And we have one question here from Mr. Nikolaevitz.
Yes. My very last one for tonight for today. Coming back to your SME business, I couldn't read my handwriting anymore, it's something with Atlantic or so.
Could you please
elaborate that a little bit more? What Would you like to do? What would you like to offer?
It's a question which is addressing an initiative we are undertaking in Switzerland. That's why I asked Martin to answer.
Yes. We entered into a cooperation with the IF Yacht, which is the institute for Jurgen and Emen, where we developed a range of services we're offering SMEs now, for example, the business case service. With Atlanta, we are going to enter in a more back office servicing For SMEs, where we give them the possibility to do out of their accountants, all the deliveries, for example, For the salary declarations, all the CRM support for smaller entities To execute, for example, on our platform, direct marketing campaigns with a tool that we provide them for a monthly fee. So it is basically enabling smaller SME businesses in their back office from the beginning And thereby making the links to our systems also that we eased the administration of the insurance business with us, but we give also the interfaces to other providers like CRM providers so that they can easily access their services too.
So in other words, you're starting to some extent Some sort of CRM hosting for SMEs and so on and so forth?
It is more It is an enabling on the back office services, a typical smaller enterprise needs in Switzerland. CRM is one part of it and will be one of the first services we are launching on it. But there will come other services like the declaration for insurance, for example.
Okay. And we have another question.
Yes. On specialty market, again, follow-up. On the commercial side, on what was asked before, due to claim inflation, I mean, do I understand correctly that You expect this positive development on the underwriting side of the new business to be kind of neutral on the combined ratio. But what about The existing business and some inflation that could actually potentially create a raise on the reserves, if you could include that. And maybe 1 B, since the Q is not too long, on the reinsurance side.
You presented by saying you want to diversify On your underwriting strategy, can you say where and how diversified?
David Ribo again, our CEO of Specialty Markets.
Yes. So the second question, diversification. We saw that there are different initiatives 5 that aim at developing specialties within reinsurance nat cat business and biometric risks in life reinsurance. That's something we didn't do. In addition, we want to increase our business volume in Asia through our Singapore office as well as in Latin America to Miami.
And in certain countries where we are underrepresented in Europe, We also make want to make a step forward, Nordics and some countries in Eastern Europe. And with that, we would diversify geographically as well as in terms of product line. Also something I should mention is that In the past, we have grown fairly significantly in U. S. Liability.
This due to different acquisitions and the restructuring of reinsurance programs of large groups. And we said, okay, This is too much U. S. Liability business in terms of what we consider ideal. And we've now started to reduce that exposure.
So We have now renewed €60,000,000 less of U. S. Liability business and we nevertheless achieved a growth. But that's what I said. Hadn't we been disciplined in terms of our underwriting, we'd be looking at much more than 1,500,000,000 today as PM.
So that addresses the second question. What was the first question again?
Maybe just on a follow-up.
Oh, thanks
inflation. Yes. But since you were kind enough on the U. S. Liability, do you see there a risk?
Because now COVID is finished and the court in the U. S. Will start again to work. So is there a risk? Do you see a risk In U.
S. Liability?
Well
On the reserve side, just follow-up on the
Risks, I mean, it sounds a bit mundane, but risks assuring risk is our business. So do I see An extreme risk or a risk that I wouldn't want to take? No. I think we the exposure is under control. However, I think we wanted a well diversified portfolio be in terms of lines of business and geography.
And that wasn't exactly the case With that U. S. Diabetes business that's why we're reducing the exposure, but not because we think it's going to develop negatively in the future. Now, yes, the first question related to claims inflation. As of today, we're not seeing any particular claims inflation.
It's true that in I mean, timber has the price of timber have increased. Concrete, the prices have increased as well. There's a certain shortage, but that's something that's not unusual in the construction industry. And so far, we have not seen any inflation materializing. So we're fairly relaxed about that aspect for the time being.
But we're looking at it on a weekly basis and we would react with price increases should we see that claims inflation is arising.
And of course, we are very carefully looking at a reasonable business mix in The Actai Free Insurance, not only in terms of business lines, but also in terms of geographies. So we do not want to have the same exposures we have in our direct insurance business. That's why, for instance, we are adding some Nordics where we are not active in the direct business. And the shares, we are usually underwriting there between 1% to 5% maybe per risk in a and it's to like It's like 80% is a proportional exposure. So it's Well under control.
Okay. And then we have a follow-up question from Peter Elliott Out of the live stream, Peter, please.
Thanks a lot for the other opportunity. I just wanted to come back on Casair, actually, and it's probably a very obvious question. But you mentioned that it exceeded your expectations. So I'm just wondering if you could, yes, spell out for us the main areas that it has exceeded your expectations from before the deal.
Maybe it's me to answer this question rather than Ignacio, who was himself exceeding the It exceeded our expectations in different ways. First, we were Positively surprised by the growth rates this company could accomplish even in the midst of the COVID-nineteen crisis last year. The growth rates they were able to bring is proof for very sound business access, be it through their banks, be it through many other corporation partners. Then the second one, the second expectation, which was exceeded, of course, was In terms of profitability and also the cash production analysts mentioned, we knew about The earnings power, but within the 1st 6 months before we could really have a look at every Each and every single detail, it was very astonishing, the earnings power of Gas Air. And the third point is What we saw about integrating ecosystems into the core business, benefiting One from the other is just I have to say that great.
We can learn a lot. We've not seen any kind of this in, for instance, other markets we are active in. It's really great what they accomplished.
That's great. Thank you. Could I be cheeky and have a quick
follow-up on that
It gives me the opportunity to ask on that cash number, which seems great, the 26,000,000 Just to be clear, that's for the second half of the year only. And I'm just wondering how that compares because, I mean, that sort of suggests So remittance ratio must be around 100% or even higher. Are those the right numbers? How do we think about that?
No, not exactly. So the EUR 26,000,000 is really the dividend that has been paid out in 20
Okay. We have no further questions from the live stream. So we have room for 1 final questions out of the room, If there is one left. If not, Philippe Shipbach, my colleague from the IR department and myself will always be at your disposal if you have further questions. And with that, I would like to hand back to Philippe.
Thank you, Susan, and thank you for all those interesting questions, which are a great value for ourselves in order to know what your interests could look like. Now ladies and gentlemen, let me quickly summarize this At Helvetia, we are looking back at a, we think a convincing track record concerning sticking to our promises. We were delivering again and again what we promised in terms of growth, in terms of profitability, capital strength and dividend. We are, 2nd, proud of successfully integrating many different companies in different countries within the last few years. And Again, we think that our portfolio, our Helvetia Group changed a lot within the last 5 years.
We are underway from a Swiss insurance group with a couple of operations abroad To a financial services advisor, who is, of course, anchored in Switzerland with a strong backbone here in the home market, But with a strong footprint in selected European countries, with global access through specialty markets and with tremendous opportunities around asset management and ecosystems. And we hope that we could give you some insights This afternoon in what our plans look like. And we are sure that making Helvetia 2025 A success story means, 1st, living our purpose, I. E, being there for our customers when it matters. 2nd, proving our vision, which means being best partner, setting standards in convenience and inaccessibility.
3rd, pursuing our strategy, which means focusing and sticking to our goals and of course, most important for all our investors, keeping our Promise, which means deliver what we are promising again and again. I like to repeat it. Being a reliable dividend player and a reliable dividend payer, being a company which is rather under promising and over performing than the opposite. I thank you very much for your attention. I thank all my colleagues for participating in this Capital Markets Day.
I thank all those people who were joining us on the video stream and, of course, all those people helping us with the technique and all those different tools here in this room. And I would now like to invite all those who are still sitting in the room to join us for an aperitif outside. And for all those Who were joining us on the video stream, please, next time, be physically present Again, here in Switzerland, we would like to share our thoughts with you in person. Stay healthy and