Helvetia Baloise Unsp/Adr

Ladies and gentlemen, welcome to the Helvetia Healthcare Results 2025 conference call and live webcast. I am George, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Peter Elliott, Head of Investor Relations at Helvetia. Please go ahead.

Thank you very much, and good afternoon, everybody, or good morning to some, and welcome to Helvetia's conference call on our 2025 half-year results. We appreciate your time on what we realize is a busy day for you. We regret any clashes, but we've tried to manage those as well as possible. We have on the call today our group CEO, Fabian Rupprecht, and our CFO, Annelies Lucia-Hemmerle. Fabian will start by going through the development of the business before Annelies then takes us through the financials in more detail. There will then be an opportunity for Q&A. So with that, let me hand over to Fabian.

Thank you, Peter, and welcome everybody from my side. We're pleased to present our half-year 2025 results to you. The focus today is, of course, our standalone results. However, we remain focused on completing the merger we have announced with Paloas. This remains on track, and we're excited about a potential combined future together. We will come back to you in due course when the deal completes, and with a capital market day at the same time as our full year 2025 results to outline our new strategy and targets as a combined group. Let me now start on slide five with the highlights. We're delighted to report a 5% increase in our underlying earnings and a 7% increase in our underlying earnings per share. Improvement has been largely driven by our technical excellence initiative, and we see a strong underlying improvement in our combined ratio. The year-on-year improvement comes despite the first half of 2020 for already providing a very strong comparative. We consider we are fully on track to achieve our three-year targets, to which we remain committed. We'll, of course, come back on these if our intended merger with Baloise completes in light of the additional opportunities that the merger will provide. Of course, one significant event impacting our earnings in the first half of the year was the horrific landslide and flooding in the Valais village of Blaten. This is a good example of how important it is to us as Helvetia to be there when it matters for our customers. and we are very proud of our speedy response to the affected customers there. Despite this significant event, on a group level, we are well within our normal expectations for nutcuts, and we have made a material improvement in our underlying underwriting profitability. Our balance sheet remains in excellent shape. Our SST ratio is estimated to be at broadly the same high level that we enjoyed at the end of 2024. We continue to enjoy high ratings and low external financing costs. That AMBEST's rating is under review is a natural consequence of our possible merger with Paloas. We expect this to close in the fourth quarter of this year, so the under review rating will continue until AMBEST has assessed its impact on Helbizia's credit rating fundamentals. We have again demonstrated strong growth supported by our non-live business. Here, we are observing contrasting trends in our different markets. In our retail lines, we observe a continuation of the recent hard market. We're continuing to grow our profitable lines in this environment. As part of our technical excellence initiative, We've also reviewed our other segments and been ruthless at pruning the portfolio where necessary. We, for example, deliberately lost low double-digit million Swiss francs at Kassel and in Germany combined. Our reported growth in retail is lower than it might have been due to some one-time negative effects. For example, in Switzerland, we changed the policy due date for motor policies And because of Brexit, we temporarily did not have a B2B2C license, but this has since been restored. These two temporary effects combined account for further mid-double-digit million Swiss franc. Going forward, we expect the market trends to continue with a further hardening of the retail market. For example, the Swiss press has recently commented extensively that industry consensus is for motor premiums needing to rise significantly further. Our top line will benefit from this, even though we will also likely do a little bit more pruning in some areas. Longer term, we see significant growth opportunities. In our specialty and reinsurance businesses, we're seeing more competitive pressure. We've responded to the market pressure in specialty and reinsurance especially in property, engineering, netcat, and energy for reinsurance and corporate risks. We will already be aware of our decision to stop our UK marine portfolio. And we are shifting our business mix. For example, during the last 12 months, our active reinsurance cover has significantly shifted from proportional to non-proportional, where we see higher profitability and less complexity in the underlying risk. and we're expanding our share in life reinsurance. In specialties, we have increased our share in construction, where profitability remains high. So, in the short term, with a softening market, our focus will be on margins rather than top line. As announced in the CMD, we see nevertheless new opportunities for growth with the expansion in the mid-market in Europe and new lines in our global business. Now, in half-year 2025, our specialty volume growth is inflated by some one-off impacts like a new policy management system. And for the reason just mentioned, I'm more cautious on the top-line development going forward. Turning to slide six, we see strong improvement in margins consistent with the higher earnings. At group level, our underlying ROE is already well within our target range. There is some first half year seasonality in the numbers, but it remains a very solid result on which we can build. Our combined ratio has also recovered and for the first time is well within our guidance range of 92 to 94% with a very strong improvement of 1.2 percentage point in the current year claims ratio, excluding net cuts and discounting. We think this can improve further, as I will explain shortly. Our live new business margin is maintained, despite a 13% increase in new business volumes. Annelies will later provide you with many more details on these results. Starting on page seven, over the following few slides, I will provide an overview of our strategy implementation. I will begin with a brief reminder of the key points which we presented at the end of last year. We have defined our four strategic approaches. In the medium to long term, our goal is to leverage our customer access to achieve further profitable growth. As part of this, we focus particular on the 50-plus target group. We summarize these strategic initiatives in the retail market under local customer champion. A second mid- to long-term approach is to grow globally in selected lines of the specialty and commercial business by adopting a smart follower approach. At the same time, we intend to promote these lines of business more strongly in our European markets. We call this initiative Global Specialist. Our short-term focus is on margin improvement. We're committed to improving this through enhancing our technical capabilities and via efficiency gains. On the following slides, I will show you what we have achieved in these four areas so far. I will start with the local customer champion on slide eight. In order to achieve our long-term ambitions in our retail markets, we have established an ambitious group-wide target picture that defines how we want to use data and technology to maximize the value of our own customer base. The aim of the target picture is to make full use of our direct access to customers. To achieve this, we intend to adopt even more state-of-the-art practices in customer knowledge, advice, and experience across all market units. We're currently developing locally tailored pathways in each market unit in order to achieve our target picture. We can draw on a large portfolio of initiatives to strengthen direct customer access. You can find some examples on the slide. As mentioned on the previous slide, the age group of over 50 is one of our areas of focus. This group is becoming increasingly important. We already have many customers in it, and we're seeing greater demand for insurance and pension products. We've also implemented initial initiatives in the market units to provide this group with an even better service. Examples of initiatives from Switzerland, Spain, Austria, and Italy, can be found on the slide. Our goal is to learn from successful initiatives and to scale them across market units. Now I would like to talk about the implementation matters in the global specialist area. So let's move on to slide nine. As mentioned previously, we're pursuing two main strategies here. Firstly, we intend to continue growing within our existing global lines using a smart follower approach. This approach enables us to prioritize profitability. We achieve this through rigorous cycle management. As mentioned at the beginning of my presentation, rates have come under pressure in some lines. In such cases, we are very selective when it comes to underwriting the business. Thanks to our lean structure, we have no pressure to underwrite additional business. Nevertheless, we have ambitions to grow in the specialty business, and as the slide shows, this has been possible in certain areas. Secondly, our goal is to achieve a leading position in the local market for specialty and commercial lines in our European markets. We have laid a solid foundation in Spain and made good progress in other units. Key enablers such as dedicated technical support, capacity, and access to an international network are being put in place. Establishment of an underwriting and claims academy will further enhance capabilities. Define gross written premium targets across markets, support ambitions, and set the stage for future growth of market units. Turning to technical excellence on slide 10, I would like to emphasize that measures are already visible in our results with a significant improvement of 1.2 percentage points in the current year claims ratio, including NAPCATs and discounting. Our focus within the field of technical excellence is on portfolio management, non-life pricing, and claims. For portfolio management, we have established a set of common standards for all market units and lines of business. We've implemented virtuous circles and common guidelines in all market units, aligned the prospective portfolio steering approach, for example, using loss ratio works, and developed an annual portfolio management review framework between the group and market units. Finally, we rolled out an updated net cap budgeting process. Our portfolio management is based on this framework. One example of this is the adjustment of tariffs for underpriced subportfolios, which we are prepared to lose if the targeted profitability is not achieved. Another example is general tariff adjustments in motor and household insurance to compensate for adverse cost developments. All measures are defined in advance, and their success is regularly monitored. The second area of focus is pricing non-life. Here, rate changes are reported quarterly according to a new group-wide methodology, which allows for a view on exposure-adjusted rate development. Furthermore, we rolled out common group pricing software and implemented a technical risk price framework. With regards to claims, we conducted a benchmarking exercise and compared four market units with the wider market. As a result, we have increased the proportion of claims that are actively managed in our partner networks in certain markets. This has led to a further reduction in claims costs. We've also expanded our systematic fraud detection capabilities, thereby increasing our earnings. Finally, we're using AI in our market units to implement applications that will increase efficiency. And many more things to come. I will now move on to operational efficiency on slide 11. In our capital market day last December, we announced plans to improve operational efficiency by over 200 million Swiss francs between 2025 and 2027. To achieve this goal, we have defined more than 360 initiatives. Many of these initiatives are already underway. For example, Spain implemented an internal sourcing model leading to an annual run rate reduction of 1.4 million Swiss francs Group IT optimized capacity in relocated workloads, achieving a similar reduction of the run rate. France optimized the office space utilization, which resulted in a reduction of the run rates by almost 1 million Swiss francs. In Austria, we have reorganized the structures and processes of the regional sales force. As a result, the annual run rate will be reduced by 0.4 million Swiss francs in 2025, and by 1 million Swiss francs by the end of 2026. As I said before, these are just a few examples. For all initiatives, we have established a group-wide, rigid tool-based tracking process to ensure that goals are met by each market unit and group function. We guided that 20% of the savings would be achieved by 2025. Progress in the first half of 2025 is in line with that. We will continue working hard to deliver on the remaining savings, which of course will sustainably improve earnings at the expense of some one-off costs. You see these in the half-year numbers in respect of these operational efficiency improvements, our Spanish integration and MA activities. We expect more of these one-off costs at the full year. One of the measures we have taken to increase operational efficiency is the planned integration of our two companies in Spain. Here, we have made good progress during the first half of 2025. The merger of Casa and Helvetia Seguros has been approved by the local general shareholders meeting. Minority shareholders, who will remain shareholders, albeit with lower participation, have also expressed their support. And we have submitted the merger application to the Spanish regulator. Approval is expected by the end of this year. We have defined the target operating model for the merged company and selected and communicated the members of the new executive board. The following slide, slide number 12, will provide a brief update on the planned merger with Baloise. We're extremely confident that this merger of equals is the right step for Helvetia's future. Following the announcement and approval by both extraordinary general meetings, we are working on obtaining the necessary approvals from supervisory and antitrust authorities and regulators. In August, the European Commission approved the planned merger of Helvetia and Baloise. Further approvals are still pending, including at European level and from the Swiss Competition Commission. We are confident that we will receive all the necessary approvals in the coming weeks and months. enabling us to complete the transaction towards the end of the year. Until the closing, as you all know, we operate under the restrictions of the antitrust law and continue to behave like independent companies. We're well on our way in the preparation for post-closing day one, readiness through a structured approach. Degraded teams are actively engaged in this process. A comprehensive plan has been prepared to facilitate a seamless transition post-closing with full adherence to all local and regulatory obligations. As soon as the formal merger has been completed, we will implement the new group structure and functional organizations. We're very confident that by closing, we will have determined candidates for all positions down to a level of group executive committee minus three. This discipline planning process underscores our commitment to operational continuity, compliance, and long-term value creation. We'll provide an update on the financial targets of Helvetia Valois at a capital markets, day together with our full year 2025 results. We would like to remind you that we promise that both IFRS and cash remittance will remain important KPIs. To conclude my presentation, I would like to give a brief outlook on slide 30. Firstly, Helvetia has reported strong half-year results for 2025. Above all, we are proud to have supported our customers, particularly those in Blatter. We're continuing our track record of sustainable and earnings growth. All key metrics are improving. We have further enhanced our diversification and maintained our excellent capitalization and liquidity. Despite pruning and some more difficult markets, Helvetia reports further strong non-life growth. Secondly, we're successfully implementing our new strategy. We made good progress on local customer champion and global specialist. Our initiatives to improve technical excellence are already having a significant impact and we're seeing the early signs of improved operational efficiency. Integration of our two entities in Spain is underway. Overall, we remain very confident that we will achieve our targets including the underlying earnings per share growth of 9 to 11%. Thirdly, we're working hard on the intended merger with Baloas. We're all excited about the new opportunities it will offer our customers, employees, and shareholders. We're making progress according to the plan we previously communicated. Subject to regulatory approvals, the closing is expected to take place towards the end of the year. With this, I hand over to Annelies, who will present the financials in more detail.