Helvetia’s first half was heavily impacted by the corona pandemic. The insurer today told investors that a write-down will push it into the red in the reporting period.
The St. Gallen-based insurer is due to publish detailed figures for the first half of 2020 on September 15. On Tuesday, Helvetia prepared the market for some negative news to come. A one-off write-down of around 40 million Swiss francs ($44 million) that related to a multi-year program for the renewal of back-end systems will lead to a half-year loss of about 20 million francs, the company said in a statement.
And that’s not it for the negative news. Helvetia in June had issued a first statement relating to the effects of corona on its business. The non-life division proved fairly resilient, with all country organizations reporting a profit and the combined ratio below 100 percent.
But net damage claims as a consequence of the pandemic will reach the high double-digit millions (before tax). Most of the claims payments Helvetia has incurred due to Covid-19 have been in connection with business interruption cover and travel and assistance insurance, primarily in Switzerland.
New Hedging Strategy
What’s worse, the crash that followed the emergence of the pandemic impacted heavily on the company’s investment result. Helvetia expects a negative impact on the group result in the low three-digit millions before tax. To avoid further losses, Helvetia adapted its hedging strategy at the time of the substantial losses on the equity markets, making more use of futures instead of options.
The hedging strategy meant that Helvetia was only able to participate in upturn to a limited extent, it said in today’s statement.
Helvetia continues to be solidly capitalized. According to estimates, the SST ratio remained within the strategic target range of 180 percent to 240 percent as of the end of June.
