Insurance companies Baloise increases profit and sets itself new targets
Baloise earned more in the first half of the year than in the previous year, thanks in part to the positive performance of the financial markets. The insurance group is also setting itself new medium-term targets and wants to make itself fit for the future.
12.09.2024, 09:01
SDA
Around 250 jobs are likely to be lost in the process. Baloise increased its consolidated profit by 7.6 percent to CHF 219.1 million in the months from January to June, as the Group announced on Thursday. The reasons for the increase were higher profit contributions from Germany and Belgium as well as from the life business. There, the operating profit EBIT increased by 40 percent to 145.5 million.
In contrast, EBIT in non-life insurance fell by more than a fifth to CHF 123.2 million. The early summer storms in various parts of Switzerland had an above-average impact of around CHF 80 million net on the results and led to a deterioration in the combined ratio in this segment by 3.1 percentage points to 90.4 percent. If this value is below 100 percent, the business is operationally profitable.
Meanwhile, the insurance group's business volume fell slightly by 0.9% to CHF 5.29 billion, although this would have resulted in an increase of 0.3% in local currencies. The non-life segment grew by 4.6 percent on an adjusted basis, also thanks to tariff increases, while the volume in the life business fell by just under 5 percent. The growth of semi-autonomous solutions in occupational pensions is only partially reflected in the premium development.
New goals and dividend promise
Looking ahead - and probably also as a result of increasing pressure from shareholders - Baloise has reviewed its strategy and set itself new targets for the years 2024 to 2027 under new CEO Michael Müller. The Group describes the new direction as a refocusing strategy. The aim is to build on existing strengths and increase profitability, according to the press release.
According to the statement, the new financial targets include a return on equity of 12 to 15 percent, strong cash generation of over 2 billion and a higher cash payout ratio of 80 percent or more. Cash of over 500 million is to be generated in the current year as the basis for a continued "attractive" dividend policy. In addition, a share buyback will probably be launched next spring.
Pressure on Baloise from shareholders has recently increased. The activist investor Cevian now plays an important role in the shareholder base with a stake of 9.4 percent. And at the Annual General Meeting at the end of April, zCapital celebrated a surprising success with its proposal to lift the 2 percent voting rights restriction.
Reduction of 250 jobs
In operational terms, Baloise is still aiming for a combined ratio of 90 percent in the non-life business in an average interest rate and claims environment, although new accounting standards are having a negative impact on this ratio. Meanwhile, the life business is expected to make a sustainable EBIT contribution of at least CHF 200 million. These targets already applied previously.
All in all, the insurer wants to increase cost discipline and achieve "sustainable profitable growth" in the target segments above the respective market growth. To this end, 250 jobs will also be cut. However, there is no question of withdrawing from a market. According to the press release, Baloise wants to be one of the leading insurers in its attractive target segments in Switzerland, Belgium, Germany and Luxembourg.
The last few years have been characterized by change, including in the management bodies of Baloise, according to Thomas von Planta, Chairman of the Board of Directors. "We are convinced that the refocusing strategy will put the company on a promising path to success."
