Baloise-Holding AG Annual Report 2003

FY2003 Annual Report · Baloise-Holding AG

Loading PDF…

Bâloise-Holding
Annual Report 2003

High aspirations, greater success:
create value, foster relations,
bring about change.

The Baloise

The essentials in brief

Profile
Headquartered in Basel (Switzerland) and with
operations in continental Europe, the Baloise
Group is a solution provider in the fields of insur-
ance and provision for the future. The Group’s
strategic focus is on sustainable, income-
oriented growth. Core markets are Switzerland,
Germany, Belgium, Austria and Luxembourg.
The Baloise Group employs a staff of around
8,700. Bâloise-Holding registered shares are
included in the Swiss Market Index (SMI) and
are traded on virt-x under the symbol BALN.

Our conduct guidelines

Create value
Value means nurturing and creating quality. We
care for the value of relationships and the value
to be found in change. We value ourselves and
others. We focus on the requirements of our
customers, our shareholders and our staff. We
employ our time, money and human resources
with great care. Creating and adding value are
our targets.

Foster relations
We live in a networked world which links us to a
lot of people. We care about these relationships.
We talk to others and we are prepared to listen.
We are honest, open and communicative. We
are critical and able to accept criticism. We
create unambiguous mutual expectations. We
stand by our word. Together we are strong.

Bring about change
The world is changing fast. It is changing us.
We change. The pressures of a changing world
are a call for action. We analyze. We decide. We
intervene and we implement. We deliver re-
sults. Changing in order to innovate and to add
value is our goal.

The Baloise Group registered a clearly improved
result for 2003 and is well positioned for the
future. The net profit of CHF 91 million (2002:
CHF - 634 million) underscores the success of
the numerous measures the Baloise took in all
its markets to enhance operational profitability.

Non-life insurance posted a profit before tax and
minority interests of CHF 91 million (2002: CHF
-203 million). The gross combined ratio (claims
paid and costs in relation to premiums) im-
proved by 7.6 percentage points to 97.6%. The
restructuring of various business portfolios in
Switzerland, Germany and Belgium is well under
way and will be pursued in 2004.

Life insurance recorded a profit before tax and
minority interests of CHF 69 million (2002: CHF
- 359 million). The embedded value overall ad-
vanced by 21.4% to CHF 1.98 billion. The value
of new business attained CHF 15.5 million. The
life sector has been successfully realigned to
the significantly changed market circumstances.

The banking sector achieved a profit before tax
and minority interests of CHF 37 million (2002:
CHF -100 million). The success is largely due to
Baloise Bank SoBa.

Investments achieved a performance of 4.6 %
as against - 0.9 % in 2002.

The net asset value was markedly reinforced: at
the end of 2003, capital and reserves amount-
ed to CHF 3.3 billion, up by 7.5% against 2002.

The Baloise maintained its shareholder-friendly
distribution policy with an increased dividend
compared to the previous year.

The most important figures at a glance

Profit development 1999 – 2003

8
1
5

4
3
6

4
0
4

1
9

750

500

250

-250

-500

-750

in CHF m

Income statement

Total premium income (gross)

Of which non-life

Of which life

Investment-type premiums

Consolidated net profit / loss

Balance sheet

Investments

Technical provisions

Capital and reserves

2003 Change in percent

2002

7,274.5

2,657.6

4,633.2

253.0

634.5

7,374.7

3,088.8

4,301.1

261.0

91.4

50,061.4

56,307.7

38,058.1

42,328.7

3,088.1

3,319.8

1.4

16.2

- 7.2

3.2

–

12.5

11.2

7.5

4
3
6
-

Assets under management

in CHF m

Total assets under management

56,544.5

65,551.1

15.9

Indexed share price development1 1999 – 2003

without unrealized gains / losses

Ratios

Return on equity (ROE)

160

140

120

100

Combined ratio non-life (net)

Combined ratio non-life (gross)

Technical reserve ratio non-life

in percent

Embedded value life insurance

Value of insurance portfolio

Adjusted capital and reserves

Solvency costs

Total

–

110.9

105.2

181.1

2.9

103.2

97.6

177.4

855.4

1,192.4

1,236.1

1,008.7

417.0

264.0

1,630.8

1,980.2

Bâloise-Holding, registered2

Of which value new business

–

15.5

Swiss Performance Index Insurance (SXIS)

in CHF m

Swiss Market Index

1 December 29, 1998 = 100

Key share data

2 adjusted after 1:10 split of July 24, 2001

Shares issued as at 12.31.

in units

55,307,150

Distributions 1999 – 2003

Consolidated net profit/loss per share in CHF

Capital and reserves per share as at 12.31.

in CHF

Price at year-end in CHF

Market capitalization as at 12.31.

in CHF m

Price-earnings ratio in percent

Number of staff

Total at 12.31.1

Of which Switzerland

Of which other countries

1 adjusted for degree of employment

600

500

400

300

200

100

in CHF m

1
4
1

6
3
1

0
5

1
1
1

5
3
3

3
9
2

3
3
1

2
2

Dividends paid

Nominal value repayments

Share repurchases

55.84

11.56

55.0

3,042

n.s.

8,703

3,976

4,727

60.02

1.67

51.65

2,857

30.9

8,745

3,774

4,971

–

7.5

–

- 6.1

–

0.5

- 5.1

5.2

Annual Report 2003
Contents

7
9
11

13
15

17
18
20
22
23
24
25
26

57
63

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dear Shareholders

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

How We Do Business
The Baloise approach
Pension provision – we stand by the Swiss
occupational pension system
Operational excellence – we know our core business
Risk management in demanding times

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Business Year 2003
Group
Switzerland
Germany
Benelux
Other countries
Capital investments
Risk management

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Corporate Governance

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Organization

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Human Resources

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sustainability

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Baloise Shares

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Management Information
Management information (incl. embedded value)
Five-year review

69
70
72
74
76
78
81
121

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Financial Statements
of the Baloise Group
Consolidated income statement
Consolidated balance sheet
Consolidated cash flow statement
Consolidated capital and reserves
Segment reporting by geographical segment
Segment reporting by business segment
Notes to the consolidated financial statements
Report of the Group auditors

123 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
124 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
127 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
128 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Statements of Bâloise-Holding 2003/2004
Income statement
Balance sheet
Notes to the financial statements
Proposed allocation of accumulated profit
Report of the statutory auditors

Bâloise-Holding Annual Report 2003 1

Rolf Schäuble, Chairman of the
Board of Directors (on the left),
and Frank Schnewlin, Chief
Executive Officer

Dear Shareholders
Our declared target is profitable growth

Things have been looking up for insurers and finan-
cial service providers since mid-2003. The Baloise
recorded a net profit of CHF 91 million in the 2003
business year. Rolf Schäuble, Chairman of the Board,
and CEO Frank Schnewlin present their views here
on the Baloise result, the market environment and
the future.

Rolf Schäuble: We set this priority very deliberately.
Given the volatility of the financial markets, our prof-
its will have to be generated primarily on the opera-
tional side in future. Operational earning power is the
essential prerequisite for sustainable growth. Our
declared target is profitable growth. This is under-
scored by the acquisition of Securitas in Germany.

Are you satisfied with the results?

Rolf Schäuble: We have fulfilled the promise given
last September that we would return to the profit zone
and have, in fact, exceeded expectations.

Frank Schnewlin: For the moment we can be satis-
fied. The success proves that we have taken the right
measures. But we haven’t reached our target yet and
will be striving to enhance our profitability and busi-
ness volume over the coming years.

How do you judge current market developments?

Rolf Schäuble: Conditions improved noticeably last
year. We are particularly pleased about the revival of
the stock markets, though nobody can tell whether
this upturn will prove sustainable. But there are still
conditions that are causing headaches. I’m thinking
of the increase in statutory regulations and the unre-
solved problems of the social security systems par-
ticularly in Switzerland and Germany.

Frank Schnewlin: The stock market collapse made it
clear to the entire industry that sustainability-minded
insurers must base their activities primarily on solid,
professional insurance craftsmanship. The phenom-
enal investment income of the stock market boom
years enabled many insurance companies to conceal
their operational weaknesses and engage in a price
battle. This is a thing of the past. Today, we all have
to get a grip on risks and, wherever necessary, adjust
our premiums. Many clients understand this, as a lot
of them are themselves business people and know
that a company needs profits to secure its future. The
Baloise, too, is obliged to restructure contracts and
raise prices. Unfortunately, our entire industry, in-
cluding the Baloise, was rather late in acting. Our
sometimes tough, but necessary measures did not
always meet with understanding.

In 2003 you focused on improving operational earn-
ing power. What did you undertake in concrete terms
and where do you stand today?

Frank Schnewlin: In all our companies and business
segments, we have restructured portfolios and re-
duced costs. Our broad-ranging program has clearly
proved successful. All segments are profitable, and
the combined ratio in non-life insurance (claims paid
and costs in relation to premiums) improved to 97.6%
gross. At the end of 2002, the gross combined ratio
was 105.2 %. The net figure also registered an ex-
cellent improvement by 7.7 percentage points. Major
progress was made in Switzerland with a combined
ratio of 95.9 % gross, and much was achieved in
Belgium, Germany, Austria, and Luxembourg too. On
the life insurance side, guarantees and bonus pay-
ments to policyholders were brought in line with
market realities. New business is nowadays only
concluded if it corresponds to our profitability expec-
tations. New life insurance concluded now has a posi-
tive profitability margin, as reflected in the embedded
value figures. In order to use our capital as efficiently
as possible, we have taken into account a reduction
in premium income in the life sector. The Baloise re-
mained a solid Group in 2003 with a strong solvency
margin of 241% (including imputed banking assets).
And I would like to add another aspect that is often
underestimated: At a very early stage, we prompted
a sense of urgency among our executives and staff,
encouraging them to go about their business with the
appropriate attitude. And finally, we strengthened
the top management in Germany, Belgium, and at
Basler Securitas in Germany.

« Our broad-ranging optimization
program has clearly proved successful.»

The Benelux segment with Mercator as its main unit
is the only one that still posted a loss. When will the
turnaround come here?

Frank Schnewlin: In Belgium, we were indeed forced
to take some tough measures. Significant parts of the
insurance portfolio were successfully streamlined
by the end of 2003, with the combined ratio in non-
life insurance down by an excellent 16.3 percentage
points to 98.1 % gross and only profitable new busi-

Bâloise-Holding Annual Report 2003 3

Dear Shareholders

ness being written on the life side. The investment
portfolio was also restructured as we continued to sell
off participating interests of no strategic value to us.
Mercator itself was thoroughly reorganized. A largely
new management team is now in place to tackle the
challenges of the future. In 2003, we managed to re-
duce the loss by roughly two-thirds. And the opti-
mization process is ongoing. We’re not there yet, but
we are expecting further significant improvements
in operational profitability in 2004.

The banking business was redimensioned. What
were the reasons behind this?

Rolf Schäuble: Our financial service provider busi-
ness model is functioning and remains applicable. In
Switzerland in particular, our “mobile banking” mod-
el, by which selected bank products are marketed
by the insurance sales force, achieved results that
were roughly 54 % above target. Yet a strategy must
also be adaptable to changing market circumstances.
Based on changes in the asset management environ-
ment, we redimensioned our private banking sector
in Switzerland in September 2003, closing the Zurich,
St. Gallen and Lausanne branches.

Frank Schnewlin: Banking operations developed fa-
vorably with a profit before tax and minority inter-
ests of CHF 37 million. Core business at Baloise
Bank SoBa registered a gratifying 25 % increase in
profits. Mercator Bank also posted a profit, and re-
structuring measures are on track at Bausparkasse
Deutscher Ring.

You mentioned the stock market recovery. How have
Baloise shares performed and how has the structure
of share ownership developed?

Rolf Schäuble: Over the year 2003, the Baloise share
price receded by 6.1%. Naturally, this does not please
us. The main reasons were the depressed stock
markets and our poor 2002 result. From March on-
wards, however, our share price rose rapidly on the
back of positive assessments by the market and the
Baloise’s healthy capital base. More telling and more
suited to the role of stocks as a means of invest-
ment is the long-term comparison over the past five
years. From 1999 to 2003, Baloise shares registered
the best performance of all primary insurers listed
in the Swiss Market Index (SMI). The year 2004 beg-
an with an encouraging performance of 8.1% (at
March 26, 2004). This is a top figure in comparison
with other listed insurance companies and is well
above the Swiss Market Index (SMI), which came to

all of 1.8 % over the same period. Following shifts in
the stakes of major shareholders, the Baloise is now
a broadly based listed company, as envisaged by
the Board of Directors, with a free float of 100 %. No
one shareholder reaches the 5% mark in share capi-
tal. The largest registered shareholder as at the end
of March 2004 holds 4.0 %. This, together with the
solid funding, adds to the stability of the Baloise.

What dividend is the Board of Directors going to pro-
pose to the General Meeting?

Rolf Schäuble: The result allows us to propose to
the General Meeting a cash dividend of CHF 0.60 per
share, up by 50 % on last year. The Baloise pursues
a distribution policy of regular dividend payments
aimed at long-term investors.

« We are striving for a return on equity
of at least 10 %.»

What are the mid-term strategic focal points?

Rolf Schäuble: Our top priority is to become one of the
most profitable financial service providers in conti-
nental Europe and to continue to grow. Two strategic
thrusts will enable us to do so. One is our aim to be
the partner of choice for our customers and distri-
bution partners and to gain their lasting loyalty and
trust, the other our striving for the utmost profession-
alism and efficiency in our core insurance and pen-
sion business. Taken together, they make for an
attractive investment outlook for investors and share-
holders.

Frank Schnewlin: Profitability for us is a clearly meas-
urable factor. We are striving for a return on equity of
at least 10 %. Regarding premium income, we have
set ourselves the target of growing faster than the
market in profitable segments. In non-life insurance,
the target until 2007 is a sustainably lower combined
ratio than the market average. It is with a convincing
performance and attitude that we want to gain the
loyalty of our customers and distribution partners.
The attitude is “win-win,” in other words true partner-
ship. We can convince our customers and distribution
partners through professionalism and reliability, and
they in turn enable us to make the requisite profits.

And what are the priorities and targets for 2004?

Rolf Schäuble: It is vital for us to have people with the
proper skill set in all key positions. One focal point
will no doubt be filling the vacancies on our Board of
Directors. I would like to thank our long-serving Vice
Chairman, Walter Frehner, for his loyalty to the Baloise
and his highly competent and telling contribution to
our company’s development. He will be stepping
down from the Board as at this year’s General Meet-
ing after reaching the age limit. As his successor, we
will propose Hansjörg Frei to the General Meeting.
Mr. Frei has a long track record as a proven insurance
specialist. He was formerly a member of the Executive
Board of Credit Suisse Financial Services and Chair-
man of the Swiss Insurance Association (SVV). We
were deeply shocked and saddened by the sudden
death of our highly valued Board member Dietrich J.J.
Forcart. We will remember him as a good colleague
and a man of competence and integrity.

« Our thoughts and actions are focused
on adding value.»

Frank Schnewlin: We made significant operational
progress in 2003, but this was just one stage on our
road to becoming one of the most profitable financial
service providers. Our prime emphasis is still on im-
proving the operating results in all our markets. In
the non-life sector, we are expecting a gross com-
bined ratio of 97 % for 2004, an ambitious target in
view of the comparatively low-loss 2003 business
year. As we want to further optimize the non-life busi-
ness quality, we anticipate organic premium growth
in line with the market average. In life insurance, the
framework conditions are likely to improve only he-
sitantly. We are counting on a slightly declining busi-
ness volume and a further improvement in the IFRS
result development. We remain cautiously optimistic
about financial market developments. All in all, we
are striving for a distinct improvement of the overall
net result.

What are your growth and expansion plans?

Rolf Schäuble: We have already outlined our targets
regarding profitability. Our thoughts and actions are
focused on adding value. We want to grow in areas
where this is realistically feasible. At present, the
emphasis is on expansion in the non-life business
sector. But we also see opportunities on the life side,

which we continue to consider as attractive in view
of its long-term growth potential. The growth we fore-
see will be organic and by acquisition when appro-
priate opportunities arise. A good example of the
latter is the acquisition of Securitas in Germany,
which operates primarily in the non-life field, and
which we were able to purchase at a very attractive
price. As far as our geographical reach is concerned,
our focus is on expansion in the countries we already
operate in. Progressing into new markets will only
be considered if we pinpoint an excellent opportunity
to generate added value for the company and thus
for the shareholders.

Bâloise-Holding Annual Report 2003 5

Change comes from the ability
to discover the possibilities
in a given environment.

How We Do Business
Founded on corporate values

The insurance industry is undergoing fundamental
change. When the stock market boom came to an
end, the industry had to refocus sharply on its core
business. The Baloise has actively assimilated this
paradigm shift. As an insurance and pension spe-
cialist, we have an important social responsibility to
fulfill, for which we need to gain the long-term trust
of our customers and distribution partners. We can
achieve this by living and reflecting our corporate
values: creating value, fostering relations with our
stakeholders, and demonstrating our strength in
implementation. The four short texts on the follow-
ing pages are meant to give an impression of how we
go about our business.

Bâloise-Holding Annual Report 2003 7

Openness, courage and trust
are the qualities with
which relations are formed.

How We Do Business
The Baloise approach

The insurance industry is undergoing fundamental
change. Until recently, many insurance corporations
pursued an aggressive policy of growth by acquisition
in order to achieve market domination. Accumulation
of assets was deemed the key to adding value and so
insurers sought to expand their life business. Banc-
assurance became the password to a golden future,
and great hopes were pinned on alternative distribu-
tion channels such as direct marketing, e-commerce
and insurance sold through bank outlets. Enticed by
soaring share prices and correspondingly high invest-
ment income, companies pushed the equity alloca-
tion of their capital investments to the limit. What got
sidelined was the core craft of any insurer, the under-
writing skills.

Then came the stock market crash and with it the big
disillusionment. Sheer size, which had been acquired
at a sometimes exorbitant price, in many cases turned
into a liability and contributed to the destruction of
value. Life business for its part had passed its peak,
with many a bancassurance concept failing to live up to
its promise. And the great majority of customers simply
did not warm to the alternative distribution channels
on offer. Finally, the sharp downturn in investment
income and the substantial reduction in capital and
reserves showed up the limits of asset management
as the key to running an insurance business.

The Baloise has actively assimilated this paradigm
shift. As an international, medium-sized corporation,
we see our road to success in the consistency of our
focus, the high degree of professionalism in our core
business, and our ability to act and implement deci-
sions swiftly.

For the Baloise, focus means:

(cid:2) The right choice of geographic markets and cus-
tomer segments: Already since the 1990s, the
Baloise has been concentrating on selected coun-
tries in Continental Europe. Its customer range
comprises private individuals and small and me-
dium-sized enterprises. The Baloise seeks to ex-
pand exclusively in existing markets and targeted
customer segments.

(cid:2) Positioning as partner of choice: The Baloise sees
its greatest potential in the long-lasting relations
based on trust with customers and distribution
partners, in conjunction with its consulting and
service expertise. Trust can only be built from per-
son to person. The Baloise therefore puts the
emphasis on personal sales services and aims
to strengthen this distribution line and enhance
its profile as a customer-focused company.

(cid:2) Expansion of non-life business: To reinforce its
profitability and to achieve a balance between
the life and non-life sectors, the Baloise plans to
expand its non-life operations. With this in mind,
we acquired the Securitas insurance company in
Germany in early 2003 and merged it with the
Basler Deutschland to form what is now the Basler
Securitas.

(cid:2) Insurance and pension banking: Banking for the
Baloise is a complementary line to its core
business of insurance and pension provision. It
is only pursued where the core business has reach-
ed a critical mass and the banking operations
prove profitable. In Switzerland, the distribution
of banking products via the insurance sales ser-
vice has expanded very encouragingly: Baloise
Bank SoBa’s volume of loans, custody accounts,
client assets and mortgages registered much
stronger growth in 2003 than anticipated.

(cid:2) Uncompromising focus on results: The Baloise
aims to figure among the most profitable financial
service providers in its core markets and is there-
fore striving for a return on equity of at least 10%.
In non-life business, the target is a combined ratio
(claims paid and costs in relation to premiums)
better than the market average. Further corner-
stones are – depending on the market – cost lead-
ership or ranking among the top 25 %. The target
for investment income is outperformance of the
relevant benchmarks. Marginal business activ-
ities and those whose return does not cover the
cost of capital in the medium term will be ter-
minated.

By high degree of professionalism in our core business
we mean the constant optimization of cost and op-
erating efficiency, in other words the enhancement
of product, customer and distribution profitability.
These are, when properly linked up, our most impor-
tant profit drivers. We have launched both group-
wide and market companyspecific projects whose
goals range from the standardization of evaluation
methods to the implementation of measures tailored
to individual markets.

Our third success factor is our implementation abil-
ity, in other words the ability to act and on decisions
swiftly and thoroughly, since results can only be
achieved by turning words into action. We are there-
by developing a culture of performance founded on
our corporate values. Our style and system of leader-
ship, performance management and the development
of our skills are all strictly aligned to this culture.

Bâloise-Holding Annual Report 2003 9

Values are not just there.
We have to foster them.
By concentration on
the essentials, focus on
core activities,
and with joint efforts.

How We Do Business
Pension provision – we stand by the Swiss occupational pension system

The Swiss national and occupational pension sys-
tems are at a crossroads. The aging of society, the
growing number of disability cases, adverse develop-
ments on the financial markets, and hesitant statu-
tory adjustments to the new financial and underwrit-
ing realities together pose a daunting challenge. To
date, this has led to reduced risk capabilities and
substantial undercoverage at numerous pension
funds. The excessive benefit obligations to customers
required by law are jeopardizing the stability of these
occupational benefit institutions.

The insurance industry bears a heavy burden of re-
sponsibility in the pension fund sector. Roughly 30%
of Switzerland’s 3.2 million registered employees are
insured with a private insurance company via col-
lective foundations. Most of these employees work
for small and medium-sized enterprises. There is a
change in trend noticeable among the 9,000 occupa-
tional benefit institutions to move from autonomy to
semi-autonomy by hedging a part or all of their risks.
An increasing number of small pension funds are
affiliating themselves to collective foundations.

Insurance companies for their part have reacted in
different ways to the altered market landscape and
the slow changes in statutory requirements. Some
have withdrawn completely from the group insurance
market, the remainder are adjusting their parameters.

The Baloise takes its role as one of the country’s lead-
ing life insurers seriously. However, the changing
legal, demographic and economic circumstances are
forcing us to adapt our occupational benefits (BVG)
model. To retain the trust of our customers, we are
taking great pains to effect these changes gradually
and transparently. Already in 2002, we introduced a
more restrictive underwriting policy – limiting the
volume of new business and the duration of contracts
– in order to protect existing customers and ensure
profitability. In reaction to the steady increase in dis-
ability cases, we have been gradually introducing
scaled premium rates since 2001, as claims levels
differ markedly from one business sector to the next.
For life insurance providers, too, it is becoming in-
creasingly important to know your customers, to tailor
products to their specific needs and to set rates that
are commensurate with the actual risks.

In a second step, premium rates have been adapted
to the altered market environment. As of January 1,
2004, this entailed an increase in premiums on exist-
ing and new contracts by an average of 10 %. Of this
figure, an average of 5% goes towards covering costs
while 3 % covers the increased risk of disability. 1%
each is needed to cover obligations resulting from

the unreasonably high statutory conversion rate and
the equally excessive minimum interest rate (both
with regard to the extra-mandatory part of insurance
cover). Having made these adjustments, we can con-
tinue to provide reliable and comprehensive group
insurance solutions. So that we can still give our
customers the choice between comprehensive and
partial insurance, we are considering the introduction
of a semi-autonomous collective foundation as an
option from January 1, 2005, by which investment
risks and the risk of longevity could be outsourced.
However, the comprehensive insurance model is also
being maintained and developed in line with the
changed framework conditions.

The Swiss government has set the minimum interest
rate at 2.25 % (previously 3.25 %) as of January 1,
2004. The Baloise for its part would like to see the
introduction of clear criteria for the setting of this
rate in future. The minimum rate should take into
account the accrued obligations in the BVG sector and
be based on a market-aligned model which makes
changes foreseeable and readily comprehensible,
which takes into account the return levels achievable
in the financial markets, and which leads to economi-
cally viable results. Mandatory BVG insurance still
operates with a conversion rate of 7.2%, which is far
too high in view of today’s market and demographic
realities and places a considerable burden on provid-
ers. The Baloise will only be able to lift its restric-
tions on the acquisition of new customers once the re-
gulatory conditions have been brought into line with
these realities.

The Baloise has also instituted cost-cutting measures
to contend with the tight financial circumstances.
Together with partner companies it has developed
new software solutions for the administration of oc-
cupational benefit contracts. These facilitate more
efficient management of existing and new contracts
and can be adapted to future changes in the regula-
tory environment. On the strength of such measures,
we are convinced that we can reinforce our position
as an efficient and fair provider in the group insur-
ance market. It is now up to Swiss legislators to set
this market on a sustainable track.

Bâloise-Holding Annual Report 2003 11

Relations thrive best
at a round table, without
chair person and fronts,
in a spirit of solidarity.

How We Do Business
Operational excellence – we know our core business

In times of persistently low returns on the financial
markets, the core business of financial service pro-
viders again moves sharply into focus. Operational
excellence becomes the cornerstone for sustained
profitability. And at the Baloise operational excellence
was indeed established as one of the main thrusts
of corporate strategy in 2003.

Top-rate performance in our business operations is
now essential if we want to become and remain the
partner of choice of our customers in insurance and
pension matters. Operational excellence means con-
stantly striving to add strategic and economic value,
to optimize processes and systems, and to simplify
structures. In our opinion, three conditions need to be
fulfilled to achieve this: a high degree of awareness
of customers’ true requirements, a high level of
business process awareness, and pronounced open-
ness to change.

create solutions that meet the customer’s specific
needs. Existing products are regularly subject to scor-
ing to assess their profitability, which enables im-
provements to be implemented at an early stage. New
products are only launched if required by law or if
there is a convincing business case for their introduc-
tion. With regard to the financial services provided
by Baloise Bank SoBa, we are retaining our strategy
of offering insurance and pension solutions from
a single source. This pooling of services has been
welcomed by many of our customers. Ultimately, op-
erational excellence can only be achieved by a com-
petent and committed workforce. We consider invest-
ments in the training and development of our staff
as vital investments in the future of our company.
Only motivated employees with up-to-date know-
ledge and skills are in a position to provide the kind
of services that lead to customer satisfaction and
loyalty.

By improving our services, the ongoing optimization
of our processes and structures raises the benefit
level for customers, thereby enhancing our profit-
ability. Through operational excellence, the Baloise
aims to rank among the most profitable insurance
and financial service providers in its target markets.
Already now, the Baloise boasts a better cost ratio
than any other player in its home market, Switzerland.

Generally speaking, solidarity among the insured is
on the decline. There are customers who call for in-
dividualized rate setting and are less and less pre-
pared to help shoulder the negative risk behavior of
other insured parties. This has contributed to more
precise customer segmentation in order to take the
differences in requirements and risk behavior into
account. A further important factor is the profitability
of a client relationship. Profitable relationships are
enhanced by continuous improvements to products
and services and by the furthering of mutual trust.
Unprofitable relationships, on the other hand, are
carefully scrutinized. In many cases, a customer’s risk
and loss situation can be improved substantially with
the help of focused advice – for the benefit of all
concerned. If these measures do not suffice, we have
to implement premium or other adjustments to bring
the premium / loss ratio back into balance.

Based on our partnership approach, the prime distri-
bution channels are our sales force and broker net-
work. Yet these too are subject to change. The focus
of the sales force is shifting increasingly to the ex-
pansion of existing customer relations rather than
the acquisition of new ones. Building on up-to-the-
minute electronic consultancy tools, we can target
each customer’s specific requirements and assemble
solutions that are customized accordingly. Brokers for
their part are especially interested in efficient pro-
cesses. The Baloise’s processes and structures are
therefore designed to provide the best possible sup-
port for its distribution partners.

Operational excellence also means building on a lim-
ited number of products and product modules, stan-
dardized as far as possible, that can be combined to

Bâloise-Holding Annual Report 2003 13

Trust is the key.
Living a relationship means
looking life in the eye.

How We Do Business
Risk management in demanding times

As an insurance company, the Baloise is a profession-
al risk manager. We bear the risks of our insureds
and thus shield millions of people from financial
harm. In order to accomplish this mission, the Baloise
assumes a large number of individual risks and man-
ages them by utilizing diversification effects and a
comprehensive system of limits. Assessing and pro-
perly handling risks is of prime importance both on
the underwriting and the capital investment side.

The risks insurers are faced with have grown consid-
erably. The costs of longevity, increasing strain on our
physical and mental well-being and correspondingly
higher risks of disability, ever more complex inter-
dependences in the business world, an increasing
population density and threats to the environment
are some of the factors involved, all of which the
Baloise takes into account in its risk management. In
fact, risk management plays a part in every phase
from product development and rate setting to initial
customer contact. Our staff’s impressive technical
know-how, underpinned by regular training, ensures
competent risk advice for customers and professional
risk assessment.

Each of our regional business units is responsible
for a comprehensive assessment and the ongoing
monitoring of the specific risks it bears. At corporate
level, we group the subsidiaries’ risk positions and
manage them globally. This global system is based
on various benchmarks and models that complement
one another. A “surcharge factor” model – similar to
the widespread rating models – enables us to swiftly
evaluate the risk level of important risk positions.
Furthermore, an internally designed, scenario-based
model not only provides detailed insights into key
risks involved, but also serves to optimize profitability.
Finally, regulatory requirements are met by constantly
monitoring solvency and coverage levels. Coverage in
Switzerland is assured by the “Sicherungsfonds”
(security fund), in Germany by the “Deckungsstock”
(coverage reserve).

Eventful business years such as 2003 require parti-
cularly attentive risk management. We adopted a
number of measures to keep business in line with
changing circumstance. Premiums were raised selec-
tively where required. Risk selection played an even
bigger part in our product development, leading to
rate adjustments. Like the rest of the insurance in-
dustry, we had to cut back surplus allocations to life
insurance policyholders due to capital market im-
ponderables.

To keep business profitable and give direction to our
sales efforts, we focused sharply on segments where

profitability is intact. Loss ceilings were reassessed
in several places. In our German industrial business,
for instance, this led to a reduction of underwriting
limits. In the life sector, we introduced further Asset
& Liability modules. These facilitate a finely tuned
balancing of insurance-related obligations and in-
vestments.

We contributed to the growth on the operational side
with market-aligned adjustments to our asset allo-
cation, including a reduction in equity exposure. An
important factor was the acquisition of Securitas
Versicherungen in Germany, which operates predo-
minantly in the non-life sector – an area we favor.
Risks were further limited by continuously tracking
volatility in the individual investment categories and
applying appropriate hedging instruments. The for-
eign exchange risk in connection with the US dollar
was reduced by hedging at the beginning of the year.
By partly re-classifying bonds from “Available for
sale” to “Held to maturity” we greatly reduced the
impact of fluctuating interest rates on the IFRS capital
and reserves.

In view of the increasingly complex regulatory envi-
ronment, we instituted a compliance structure both
at corporate level and at the individual business
units as a basis for minimizing legal and reputational
risks.

All these numerous measures were necessary for us
to master the challenges of the 2003 business year.
They helped ensure that the Baloise was able to safe-
guard its substance in turbulent times and retain
the ability to grow profitably in future, too.

Bâloise-Holding Annual Report 2003 15

Business Year 2003
A reinvigorated Baloise geared to the future

With a net profit of CHF 91 million in the 2003 finan-
cial year, the Baloise Group has demonstrated its
ability to boost its performance. This success is a re-
sult of consistent cost management, profit-oriented
underwriting and premium policies, and the thorough
restructuring of the business portfolio. Premium in-
come in the non-life business rose by 14.0 % in local
currencies, while falling by 8.1% in the life business.
The Baloise has significantly enhanced its operation-
al earning power. Further proof of this is the strong
improvement in the gross combined ratio to 97.6 %
and the positive embedded value in newly written
life insurance. In 2003, premium income came to CHF
7.4 billion, of which non-life accounts for CHF 3.1 bil-
lion and life for CHF 4.3 billion. Group solvency at
the end of 2003 was 241% (including imputed bank-
ing assets); capital and reserves rose by 7.5% to CHF
3.3 billion. This provides a solid foundation on which
the Baloise can build profitable growth in the future.

General market developments
After stagnating for a long period, the economy staged
a strong recovery in the second half of 2003. The USA
and Asia provided the major stimuli, and the euro
zone was also able to rise off its lows. Indicators of
economic growth point to further improvement in
2004. The negative current account balance and the
ballooning budget deficit in the USA, however, re-
main a cause of concern for the global economy. The
pronounced weakness in the US dollar vis-à-vis the
euro and the Swiss franc is tangible evidence of this.
In March 2003, global equity markets began to re-
cover. This development has been supported by per-
sistently expansive monetary policies on the part of
the leading industrialized countries and the result-
ing low interest rates.

In the year under review, the European insurance in-
dustry finally turned the corner. Companies took deci-
sive measures to prepare the ground for a sustainable
recovery. A number of these measures produced re-
sults quickly; others will take longer to bear fruit. This
development was supported by the rising financial
markets.

Stock markets performance

January 1– December 31, 2003

7,000

7,500

6,000

5,500

5,000

4,500

4,000

200

175

150

125

100

SMI

1.1.2003

12.31.2003 MSCI

SMI

MSCI EMU

MSCI ROW

Development USD – CHF and EUR – CHF

January 1– December 31, 2003

EUR: 11.0 Swiss cents

USD: - 14.5 Swiss cents

1.6

1.55

1.5

1.45

1.4

1.35

1.3

1.25

1.2

1.15

1.1.2003

12.31.2003

Interest rate development

January 1– December 31, 2003

1.1.2003

12.31.2003

Yield on 10-year government bonds Germany in EUR

Yield on 10-year federal bonds Switzerland in CHF

However, a number of factors remain unresolved: the
trend in health care costs throughout Europe, the in-
crease in the number of disability cases, and the sta-
tutory framework governing state pension schemes.
The insurance industry is willing to do its share in
finding economically viable solutions. From a busi-
ness point of view, the most important concerns were
boosting the capital base and earning power and
tightening the “nuts and bolts,” i.e. actuarial and
underwriting techniques.

In 2003, all companies reported an improvement in
their non-life business. After years of cutthroat com-
petition, more and more insurers are now in a position
to set fair risk-aligned rates and charge realistic pre-
miums. This process has been helped by the restruc-
turing of unprofitable areas, as evidenced by the un-
derwriting results of non-life insurance companies.

At most insurance companies returns on investments
have also started to improve.

Bâloise-Holding Annual Report 2003 17

Business Year 2003

One burden facing the Swiss economy is the growing
significance of the state sector and the correspond-
ing tax increases that accompany this development.
These and the high level of prices are constraining
economic development. Once again, private con-
sumption proved an important economic engine. Vari-
ous insurers withdrew from group insurance; others
are increasingly selective in the new business they will
accept. Owing to the current unattractiveness of the
individual life business, premium income declined.

The German market has not yet benefited from the
modest revival in demand for insurance products.
The bureaucratic hurdles posed by the state-funded
direct-contribution pension scheme (“Riester” pen-
sion) and uncertainty about the tax treatment of life
insurance have contributed to the reticence of poten-
tial buyers of insurance. Despite the adverse econo-
mic environment, the German insurance industry ex-
pects premium growth of 3.9% in 2003, most of it on
the non-life side.

In Belgium, the insurance industry posted a marked
increase in premium income, despite overall econo-
mic stagnation. The non-life business accounted for
most of this growth, owing mainly to rate adjustments
to improve the underwriting result in all insurances
classes. The most notable development in the life
business was strong growth in group life insurance.

Baloise Group business activities
In the 2003 financial year, the Baloise Group regis-
tered a net profit of CHF 91 million (2002: loss of CHF
634 million). There has been a huge improvement in
all business lines and geographic markets. The posi-
tive business result is the consequence of numer-
ous measures adopted to strengthen operating earn-
ing power, particularly in Switzerland, Germany and
Belgium: a risk-aligned underwriting policy, consis-
tent portfolio restructuring, and tight cost manage-
ment. Other positive contributions were the favorable
development in the exchange rate of the euro and the
general absence of major losses. The sharply higher
operating performance was manifested in particular
in the combined ratio in non-life: compared with
2002, the gross value improved by 7.6 percentage
points to 97.6 %. The positive embedded value of
newly written life business documents the Baloise’s
success in turning this segment around. Group sol-
vency (also taking into account banking assets) of
241% and an increase of 7.5% in capital and reserves
prove that the financial health of the Baloise is as
sound as ever. We regard this achievement as a mile-
stone and will continue to enhance our operating per-
formance in the coming years.

In the 2003 financial year, the scope of consolidation
was widened to include the Bremen-based Securitas
Group. The integration of Securitas and Basler
Deutschland to form the new “Basler Securitas” is
proceeding successfully. A number of crucial steps
in the integration process have already been complet-
ed: company and management structures, the launch
of the new brand, the new distribution organization,
and the new product portfolio.

Premium income (gross) by regional segment 2002

in percent

Premium income (gross) by regional segment 2003

in percent

Switzerland

Germany

Benelux

Other countries

(incl. elimination)

Total

in CHF m

1 in local currency

2002

4,653

1,755

713

153

7,274

2003

4,269

2,200

745

161

7,375

Change
in percent1

- 8.2

20.9

0.7

2.5

- 0.1

Premium income amounted to CHF 7.4 billion as
against CHF 7.3 billion in 2002; this represents
growth of 1.4 % in CHF. The strong growth in non-life
exceeded expectations. Premium volumes in the life
sector on the other hand declined. Owing to unsatis-
factory profitability, the Baloise – in keeping with
the rest of the industry – was very selective in under-
writing new life business.

The breakdown of total premium volume shows a shift
from life to non-life in 2003: non-life accounted for
42% (2002: 36%) and life for 58% (2002: 64%). This
development is in keeping with the strategic focus
on non-life in future business expansion.

There was also a change in premium volumes by
country: Switzerland generated 58 % (2002: 64 %),
while Germany’s share rose to 30 % (2002: 24 %) on
the back of the acquisition of Securitas; at 10 %, the
Benelux countries were unchanged from the previous
year, as were the other countries. This shift reflects
the Baloise’s endeavors to increase diversification of
premium income by region.

Growth in non-life was greater than expected: pre-
mium income of CHF 3.1 billion (2002: CHF 2.6 bil-
lion) resulted in a rise of 14 .0 % in local currency.
Organic growth in local currencies amounted to 3 %,
the remaining growth coming from the acquisition of
Securitas Versicherungs-Gesellschaft. Thanks to the
consistent restructuring of portfolios, stringent cost
discipline, and the favorable development in claims
for major losses, this class posted a profit before tax
and minority interests of CHF 91 million (2002: loss
of CHF 203 million). The gross combined ratio of
97.6% as against 105.2% in the previous year under-
lines the enormous progress made in operational
efforts, in particular in Switzerland, Germany, and
Belgium. The improvement in the corresponding net
value of 7.7 percentage points is equally impressive.
The actual restructuring of business areas, particu-
larly in Germany and Belgium, has largely been com-
pleted; however, measures to further improve op-
erational efficiency will continue.

The life business also posted a positive result, pro-
ducing a profit before tax and minority interests of
CHF 69 million (2002: loss of CHF 359 million). Pre-
mium income in local currency declined by 8.1% to
CHF 4.3 billion (2002: CHF 4.6 billion). Excluding
acquisitions, premium income fell by 10.6 % in local
currency. This reduction reflects the underwriting
policy, which focuses strictly on profitability. In ad-
dition, single premium policies recorded a decline
due to the market situation. As all Group companies
quickly adjusted conditions to changed market real-
ities, new life policies have positive margins. Al-
though general business conditions remain challeng-
ing, the Baloise is convinced that the growth and
earnings potential of the life business remains at-
tractive in the long term; it will continue to pursue
profit-oriented underwriting.

The banking business produced a profit before tax
and minority interests of CHF 37 million (2002: loss

of CHF 100 million), largely owing to the Swiss Baloise
Bank SoBa. Thanks to improvements in its core
business the bank’s profit increased by 25%. Devel-
opments at the banks in Belgium and Germany
(Deutscher Ring Bausparkasse) were in line with ex-
pectations.

Components of Group result

Non-life

Life

Banking

Other activities

Profit / loss before tax

and minority interests

Tax on income

Minority interests

Consolidated net profit / loss

in CHF m

2002

- 203.3

- 358.7

- 100.1

- 52.2

- 714.3

82.7

2.9

- 634.5

2003

90.8

68.7

37.3

26.9

223.7

- 125.4

6.9

91.4

Owing to the realization of investments in spring 2003
aimed particularly at reducing the equity exposure,
realized investment losses rose by CHF 738 million
to CHF 1,862 million. Realized gains sank by CHF 59
million against the previous year to CHF 1,218 million.
Current income overall increased slightly and amount-
ed to CHF 2,105 million for the year under review.

The realized net gains and losses (including write-
back of impairments charged to income) amounted to
CHF - 41 million (2002: loss of CHF 807 million).

The Baloise Group’s capital and reserves on the cut-
off date amounted to CHF 3.3 billion (2002: ap-
proximately CHF 3.1 billion). The increase of 7.5 %
is primarily attributable to changes in the value of
capital investments, currency gains, and net profit.
At the end of 2003, consolidated Group solvency in
accordance with IFRS requirements was 241% (in-
cluding banking assets) and 214 % excluding bank-
ing assets.

The embedded value of the life business rose from
CHF 1,631 million to CHF 1,980 million in the year
under review. Factoring in the planned introduction
of the legal quote in the Swiss occupational bene-
fits business (BVG) led to a CHF 303 reduction in the
embedded value. Rate adjustments in group life in-
surance engendered an increase in the value of the
insurance portfolio of CHF 257 million. The financial
markets had a positive effect in 2003. The investment
income is likely to be lower in future, but this effect
can be offset by a reduction in policyholder bonuses.
The net effect is an increase in the embedded value
by around CHF 140 million.

Bâloise-Holding Annual Report 2003 19

Business Year 2003

Tax incurred in 2003 amounted to CHF 125.4 million
(2002: tax yield of CHF 82.7 million). Current tax on
income amounted to CHF 114.6 million (2002: CHF
33.7 million). The most influential factor – aside from
the positive annual result – is the changes in tax laws
for German life insurance companies. This makes it-
self felt in significant nonrecurring expenditures un-
related to the accounting period. Thus, the result of
the life business in particular must be seen in the
context of tax considerations.
(cid:2) Segment reporting, page 78

Because of the rise in unrealized gains, deferred tax
resulted in an expense of CHF 10.8 million (2002: tax
yield of CHF 116.4 million).
(cid:2) Notes to the consolidated financial statements,

page 105

Management was significantly strengthened in the
year under review. New Chief Executive Officers were
appointed at Baloise Switzerland (Martin Strobel),
Basler Securitas in Germany (Frank Grund) and Mer-
cator in Belgium (Jan De Meulder). These appoint-
ments mark an important step in the Baloise’s efforts
to reinforce local market companies and, hence, the
operations of the core insurance and pensions op-
erations.

We expect the economic recovery to continue in 2004,
which should lead to an improvement in framework
conditions. At the same time, we remain cautiously
optimistic about developments in the financial mar-
kets. We will focus primarily on further enhancing
operational earnings power in all markets with a view
to positioning ourselves for further growth. By the
end of 2004, we expect a gross combined ratio in
the non-life business of 97 %, which, given the ab-
sence of major losses in 2003, we view as an ambi-
tious target.

As far as the development of our business volumes
are concerned, we are sticking strictly to the principle
of “profit before growth.” As we want to further opti-
mize the non-life business quality, we anticipate or-
ganic premium growth in line with the market aver-
age. In the life business, the improvement in the
overall situation is likely to be gradual. Here we ex-
pect a slight reduction in premium volume accom-
panied by further improvement in the IFRS result.
All in all, we hope to post another strong increase in
profits.

Switzerland

Baloise Switzerland has recovered its earning power.
The Baloise’s largest business unit produced a profit
before tax and minority interests of CHF 62 million
(2002: loss of CHF 245 million). Aside from develop-
ments in the financial markets, this result can be at-
tributed to the numerous measures adopted to im-
prove the earning power of the insurance business:
strict cost management, a profit-oriented underwrit-
ing policy, and technically necessary adjustments to
premiums. Baloise Bank SoBa also recorded a posi-
tive development: it achieved a profit before tax of
CHF 13.8 million, which represents an increase of
25 % year-on-year.

In the 2003 financial year, Baloise Switzerland pro-
duced a solid operational performance. Accounting
for 58% of all premium income of the Baloise Group,
it posted a profit before tax and minority interests of
CHF 61.5 million (2002: loss of CHF 244.9 million).
Both insurance classes and the banking side contri-
buted to this marked improvement. Strict cost man-
agement and risk-oriented underwriting bore fruit:
the gross combined ratio improved noticeably to
95.9% (2002: 97.7%) and the gross cost ratio in non-
life fell to an exceptional 23.8 % (2002: 26.0 %). To-
tal premium volume amounted to CHF 4.3 billion
(2002: CHF 4.7 billion). The decline of 8.2% precisely
reflects management’s operating priorities. Pre-
mium volumes in the non-life business grew by 5.3%.
Because of insufficient investment income, we re-
duced interest rate guarantees and bonuses to pol-
icyholders on the life side. This step and the sub-
stantially lower demand for single premium policies
explain the sharp drop in premium income of 12.8%.
At the same time, the Baloise managed to noticeably
increase the profitability of its life business.

Non-life
Premium income for non-life came to CHF 1.24 bil-
lion (2002: CHF 1.17 billion), which represents a
5.3 % increase on the previous year (2002: 3.5 %).
This stems from the expansion of business and from
premium adjustments in general liability, property
and automobile insurance. The sales partnership with
Touring-Club Switzerland (TCS) once again played a
key part in the increase in premiums. By contrast,
there was a slight decline in premium income in the
transport, accident and health insurance segments.
Transport insurance was affected by the weakness
of the US dollar, and premiums for health insurance
were depressed by essential restructuring measures
and associated policy terminations.

In 2003, Baloise Switzerland was spared any extra-
ordinary losses attributable to natural causes. How-
ever, there was a rise in obligations arising from per-
sonal injury claims, particularly in the automobile
and accident insurance segments. A significant de-
crease in claims under group daily sickness allow-
ance policies contrasted with a sharp rise in cases of
long-term disability. Technical provisions in the non-
life sector were maintained at the same high level
as the previous year.

Key figures Switzerland

2002

2003

Change in
percent

Gross premium income

4,652.8

4,269.3

- 8.2

Of which life

3,477.9

3,031.6

-12.8

Of which non-life

1,174.9

1,237.7

5.3

Combined ratio non-life

(gross)1

97.7

Profit / loss before tax

- 244.9

95.9

61.5

–

Employees

in CHF m

1 in percent

3,976.0

3,774.0

- 5.1

Life
During the year under review, the life business was
dominated by the public debate over the future of
the occupational pensions system (BVG). Baloise
Switzerland is taking various measures to address
the continuing unfavorable market conditions and
the regulatory framework in the BVG sector. Among
other moves, premium rates for disability insurance
have been adjusted, cost premiums have been in-
creased and policyholder bonuses cut. In the extra-
mandatory part, a supplementary premium is being
levied to cover the excessively high conversion rate
and the equally excessive high interest rate guaran-
tee. One important instrument in the life business is
the restrictive underwriting policy which is designed
to ensure profitability.

After a record year in 2002, individual life policies
were back at the same level as in 2001. Premium
income amounted to CHF 1.1 billion (2002: CHF 1.5
billion). This decline is explained by the fact that
guaranteed interest rates and bonuses have been
reduced in order to ensure profitability and by the
generally difficult market environment.

For Baloise Switzerland’s life business as a whole, the
result was a premium volume of CHF 3 billion (2002:
CHF 3.5 billion), which represents a decline of 12.8%.
A sharp 45 % decrease in single premiums in the
individual life segment contrasted with an increase
in policies based on periodic payments. Numerous
measures have secured the profitability of the life

sector and the interest margin is positive both for
existing and new business. Technical provisions have
increased compared with the previous year.

Baloise Bank SoBa
Baloise Bank SoBa posted earnings before tax of CHF
13.8 million (2002: CHF 11 million). This represents
a 25% increase, although the banking business was
affected by keener competition and the sluggish
trend on the financial markets. One successful area
was Mobile Banking, i.e. sales of banking products
by the sales force of the insurance company. Com-
pared with 2002, Mobile Banking was 54 % above
target, which is a clear sign that its offerings are be-
coming more attractive as part of Baloise Switzer-
land’s focused financial service provider strategy.
Compared with 2002, net interest income decreased
by 3.8 % to CHF 92.8 million. The main reason for
this is the continuing switching of variable to fixed-
interest mortgages and the extensive interest-rate
hedging which this has made necessary. By contrast,
income from commission business and services was
increased by 0.5 % to CHF 20.8 million. Thanks to a
prudent lending and risk policy, value adjustments
on loans are following a favorable trend. In its core
market, Baloise Bank SoBa is still represented by 14
branches. However, the private banking operation
has undergone resizing, with the closure of the
branches in Zurich and St. Gallen. The Lausanne
branch has been downgraded to a representative
office. This means a significant reduction in expenses
related to the banking business. However, the cost-
cutting measures will only have their full impact in
2004. At the same time, IT services have been signi-
ficantly expanded. In 2004, the bank will begin op-
erating its new e-banking platform and a new loan
platform.

Baloise Switzerland’s strategy as a focused financial
service provider is reflected in the comprehensive fi-
nancial advice it provides for insurance and banking
customers, one example being the launch of the ad-
visory platform BALOISEHYPO PLUS – focused on
mortgage financing for home owners – and BALOISE-
LIFE PLUS – a combined life insurance and savings
product. These services met with a better-than-ex-
pected reception from customers.

Bâloise-Holding Annual Report 2003 21

Business Year 2003

Germany

On the German insurance market, demand for occu-
pational and private pension solutions was once again
slack. The companies of the Baloise Group concen-
trated on boosting their operating profitability. Ger-
man business posted earnings before tax and minor-
ity interests of CHF 77.1 million (2002: loss of CHF
25.6 million). Another key development was the in-
tegration of the insurance portfolios of the Securitas
Group and the Baloise branch to form the new Bad-
Homburg-based Basler Securitas. The integration pro-
cess is well on track.

The German insurance year was dominated by the
adverse economic environment, accompanied by cut-
throat competition. Life insurers still had to cope
with low returns on their investments, although the
situation eased toward the end of the year. Germany’s
social security system is facing some major chal-
lenges. The uncertainty hanging over the state pen-
sion insurance system will give added momentum
to occupational and private pensions, although the
expected new business has so far largely failed to
materialize. As of January 1, 2004, the life insurers
reduced their guaranteed interest rate from 3.25 %
to 2.75 %. There were no major losses from natural
causes of the type seen the previous year. For the
Baloise Group, the central event was the integration
of Securitas and its merging with the Baloise in Ger-
many. Since October 23, 2003, the new company has
been operating under the name “Basler Securitas”
based in Bad Homburg; in fiscal 2003, it was con-
solidated according to IFRS guidelines for the first
time. The new company is very well received by cus-
tomers and employees alike. The integration pro-
cess is making solid headway under the new CEO
Frank Grund.

Key figures Germany

2002

2003

Gross premium income

1,755.1

2,199.9

Of which life

Of which non-life

Combined ratio non-life

970.4

1,077.6

784.7

1,122.3

Change in
percent

25.3

11.0

43.0

(gross)1

116.7

Profit / loss before tax

25.6

101.1

77.1

–

Employees

in CHF m

1 in percent

2,794.0

3,249.0

16.3

Through comprehensive restructuring measures and
selective underwriting guidelines, the German com-
panies of the Baloise Group were able to significantly
increase their operating profitability and return to the

profit zone. Thanks mainly to the first-time consolida-
tion of the Securitas Group, premium volume in lo-
cal currency rose by 20.9 % to CHF 2.2 billion (2002:
CHF 1.8 billion). In organic terms, the result was a
2.1 % decline in local currency terms. The segment
posted earnings before tax and minority interests of
CHF 77.1 million (2002: loss of CHF 25.6 million).

Basler Securitas
In fiscal 2003, the integrated Basler Securitas posted
premiums amounting to CHF 1.1 billion. Acquisition-
related effects mean that comparisons with the previ-
ous year would be of little informative value. Securitas’
strategically insignificant legal protection business
was sold retroactively as at January 1, 2003. The inte-
gration of Securitas and the Baloise branch in Bad
Homburg is at an advanced stage. The new brand
“Basler Securitas” has been launched, the manage-
ment and sales structure is in operation and the prod-
uct portfolio has been aligned. Some of the cost sav-
ings resulting from the integration will take effect in
2004 and 2005 to become fully effective in 2006.

The property insurance segment accounts for pre-
mium income totaling CHF 901.1 million. Thanks to a
combination of measures taken to strengthen operat-
ing profitability and significantly lower claims paid,
the loss ratio was reduced from 99.6% to 69.3%. This
means there has been a considerable improvement
in the gross combined ratio which stands at 99.9 %
(2002: 127.0 %). In the automobile insurance seg-
ment, the premium rate adjustments from the begin-
ning of 2003 and the restructuring of the insurance
portfolio had a clear impact on the result. Further prog-
ress was made in the successful reorganization of the
commercial and industrial business, and the under-
writing limit for major industrial risks was halved.

Thanks to the acquisition of Securitas Gilde Lebens-
versicherung and as a result of a reinforced sales
drive, premium volume in the life business grew
slightly. Just as in the market as a whole, the expected
increase in occupational and private pension plans
failed to materialize. The result is on the same level
as the previous year.

Deutscher Ring
Deutscher Ring focused mainly on improving the pro-
fitability of its portfolio and on new business. At the
same time, it proved possible to significantly reduce
costs, and further progress was made in the restruct-
uring of Deutscher Ring Bausparkasse. The improve-
ment in the capital markets supported the positive
trend in the earnings situation.

The year under review saw the total premium volume
decline by 6.8 % in local currency to CHF 1 billion
(2002: CHF 1.1 billion). This was due to the market-
wide decline in single premium insurance. By con-
trast, unit-linked life insurance made gains. Further
cost savings were realized in 2003. The easing of
the situation on the financial markets led to an im-
provement in the financial result.

dampened by the restructuring effects. In 2002, the
restructuring process had led to a decline in premiums
as expected. The restructuring of the automobile and
fire insurance sectors showed a positive impact. The
loss ratio decreased by 15 percentage points to
67.7 %. Further cost-cutting measures and targeted
reduction of capacity resulted in a markedly improved
gross combined ratio of 98.1% (2002: 114.4 %).

In preparation for the future demand for occupational
pension solutions, Deutscher Ring set up an inde-
pendent pension fund. Direct property insurance busi-
ness achieved a gross combined ratio of 103.1 %.

Deutscher Ring Bausparkasse reported a very suc-
cessful trend of new business. The restructuring is
proceeding in line with our expectations. Thanks to
cooperation with Diba – Allgemeine Deutsche Direkt-
bank – the building loans business segment also
experienced appreciable growth.

The nonstrategic holding in Deutsche Pfand-Anstalt
(DePfa) was sold off.

Benelux

The Flemish Mercator Group – the main component
of the Benelux segment – made further significant
operational progress. Most of the actuarial restruc-
turing measures in the non-life sector were complet-
ed, although work is still under way with a view to
further optimizing the portfolio’s profitability. In the
life sector, benefits were reduced to a level com-
mensurate with returns on investments. The embed-
ded value of new life business is positive. In 2003,
Mercator’s investment losses continued to depress
the segment result. The loss before tax and minority
interests amounting to CHF 103.9 million represents
a clear improvement against the previous year (2002:
loss of CHF 373.0 million).

Key figures Benelux

Gross premium income

Of which life

Of which non-life

Combined ratio non-life

2002

713.2

154.0

559.2

2003

744.6

161.2

583.4

Change in
percent

4.4

4.7

4.3

(gross)1

114.1

98.3

Profit / loss before tax

- 373.0 - 103.9

-72.1

Employees

in CHF m

1 in percent

1,624.0

1,417.0

-12.7

In the non-life business, Mercator has introduced
systematic risk selection, which enables it to address
the general rise in the incidence of claims. In the sec-
ond half of the year, the sector approached break-
even level. Low interest rates and the fact that share
prices only recently began to pick up were the princi-
pal factors behind the renewed loss in life business,
albeit on a significantly lower level. In new business,
benefits were adjusted to an achievable level of re-
turn on investment, and premiums were increased
in line with the risk involved. This resulted in a posi-
tive value for newly written life business.

Mercator Bank ended fiscal 2003 with a profit. Oper-
ating efficiency and the margin in interest operations
are being improved on an ongoing basis.

We expect 2004 to see further significant improve-
ments in the operating profitability of the Mercator
Group.

Mercator, Belgium
Because of the low interest rate levels, coupled with
the fact that the stock markets have only recently
begun to improve, Belgian life insurers are conti-
nuing to suffer from excessively high guarantees
under existing life policies. In new business, the in-
dustry has adjusted its terms to market conditions.

Bâloise Assurances, Luxembourg
A slight improvement in the result for insurance
operations contrasts with comparatively high real-
ized losses in the equity portfolio, which led to a small
loss overall. The market share was stabilized at a
high level. Premium volume grew by 2.1% in local
currency terms to CHF 70.2 million (2002: CHF 66.3
million).

Against this background, Mercator Insurance posted
premium income amounting to CHF 674.4 million
(2002: CHF 646.9 million). This represents 0.6 %
growth in local currency, a figure which has been

Following the previous year’s substantial increase,
premium growth in the non-life sector stood at
around 2 %. As new business was not sufficient to

Bâloise-Holding Annual Report 2003 23

On the life insurance side, there was a 3.8% decline
in premiums in local currency – owing to a market-
related sharp drop in single premium business. Suc-
cess with pension products benefiting from state pro-
motion measures was not sufficient to compensate
for this decline. Basler Austria was furthermore suc-
cessful in its insurance business with medical prac-
titioners.

Key figures other countries

Gross premium income

Of which life

Of which non-life

Combined ratio non-life

(gross)1

Profit / loss before tax

Employees

in CHF m

1 in percent

2002

443.2

31.8

411.4

- 102.2

- 70.8

309.0

2003

441.0

30.8

410.2

72.4

189.0

305.0

Change in
percent

- 0.5

- 3.1

- 0.3

–

- 1.3

Basler osiguranje, Croatia
In Croatia, the Baloise works in conjunction with the
local medical and dental association to offer non-
life and life products to meet the specific needs of
medical practitioners and associated professional
groups. In the physicians’ segment, market share
stands at over 50 % thanks to an active sales force
and sales partnerships. The partnerships with banks
are being further expanded. The loss ratio for fiscal
2003 stands at just under 55 %.

Reinsurance, finance and participation companies
and consolidated operations
This sector includes reinsurance companies, special
forms of investment, financing operations and parti-
cipations, and consolidated operations. The positive
result is due to three principal factors. Firstly, con-
solidated business developed positively. Secondly,
the reinsurance companies benefited exceptionally
from the favorable situation as far as major claims
are concerned, and thirdly the holding companies
achieved currency gains.

Business Year 2003

compensate for the effects of the restructuring meas-
ures (particularly in the automobile fleet business),
the overall result was growth below the market aver-
age. Stable costs and a favorable loss experience
meant that the gross combined ratio improved by
8.8 percentage points year-on-year to 100.5%. Prod-
uct-related measures focused particularly on the
automobile sector – which accounted for 60% of non-
life premiums. In comprehensive vehicle insurance,
a number of activities were launched to boost rev-
enues. Further measures are planned for 2004. In
parallel with this, the systematic implementation of
the initiated efficiency-boosting measures for the
sales force is continuing.

Despite a difficult environment, the life sector is en-
joying a robust development. Only risk insurance ex-
perienced lower-than-average growth in premiums.
The trend remains positive in the group insurance
sector (second pillar), where Bâloise Assurances,
Luxembourg, has established itself as one of the few
local specialists in recent years. Cooperation with the
new local banking partner ING Bank has got off to a
good start and promises considerable potential.

In 2004, we expect higher-than-average premium
growth in Luxembourg, coupled with a further
strengthening of operating profitability.

Other countries

Basler Austria
Basler Austria again reduced its costs, improved the
result of insurance operations and significantly en-
hanced its sales capacity. The premium volume grew
by 6.2% in local currency terms to CHF 105.0 million
(2002: CHF 95.4 million).

State promotion of private pensions, which has been
introduced over a one-year period for the first time,
had a positive impact on business. The restructuring
of the policy portfolio through adjustments to pre-
miums rates was accompanied by systematic risk
selection. This made it possible to significantly im-
prove the loss experience. Costs were lowered by re-
ducing capacity in back-office services. At the same
time, the Baloise expanded its sales force, which
resulted in a higher volume of business.

In non-life business, the higher premium income,
differentiated underwriting policy and reduced costs
led to a significant improvement in the combined
ratio to 108.0 % (2002: 130.9 %).

Capital investments:
Turnaround on the financial markets

Own capital investments by category 2002

The business year 2003 was characterized by a turn-
around on the stock markets following the downslide
in the first quarter. This trend reversal, coupled with
a slight rise in bond yields, led to a shift in the invest-
ment strategy of the Baloise Group. As a result, in-
vestment performance was far better than in 2002.

The Iraq war and fears that the SARS epidemic could
spread pushed the stock market down at the begin-
ning of the year. This was followed in the second
quarter by the long-awaited rally as the tensions
passed and economic data improved. The leading
central banks retained their extremely expansive
monetary policies. This held interest rates at a low
level, although above the previous record lows. Price
pressure looks set to rise in the medium term as the
economy gains momentum, capacity utilization in-
creases and unemployment drops back, and this
should lift the yield curve.

The United States were once again the driving force
on the equity markets. Generous fiscal and monetary
impetus did the trick in the US economy and also
boosted the Asian and European economies through
demand for imports. Moving in tandem with Wall
Street, the Swiss Market Index (SMI) recovered from
its March low and was up roughly 50 % by year-end.
Year-on-year, it gained 18.5 %. The MSCI EMU – the
index of euro-zone equity markets – posted a per-
formance of 25.6 % while the Standard and Poor’s
500 index in the United States gained 26.4 %.

In the first half of the year the bond markets were
overshadowed by the deflationary fears triggered by
the Chairman of the Federal Reserve Board, Alan
Greenspan. As a consequence, yields dropped to new
lows in June. However, better economic data subse-
quently raised pressure both on the Swiss market and
to a lesser extent elsewhere, leading to a sharp 25
to 35 basis point hike in yields.

The foreign exchange markets were dominated by the
massive weakening of the US dollar against the euro
and the Swiss franc. Reasons included the widening
budget and current account deficits in the United
States and the resultant reversal of capital flows. The
Swiss National Bank adopted a policy of extremely
low interest rates to counter the initial upward pres-
sure on the franc as a safe haven for investments.

in percent

Own capital investments by category 2003

in percent

Fixed-interest securities

Investment property

Mortgage loans

Policy and other loans

Alternative financial investments

Other short-term capital investment,

cash and cash equivalents

Participating interests in associates < 1 percent

Derivatives < 1 percent

Own capital investments by category

2002

2003

Change
in percent

Fixed-interest securities

21,906.8

29,525.4

34.8

Derivatives

5,752.4

3,475.9

-39.6

212.8

292.9

37.6

Investment property

5,305.7

5,653.4

Mortgage loans

10,532.0

11,002.4

6.6

4.5

Policy and other loans

1,520.4

1,456.6

- 4.2

Participating interests

in associates

286.9

223.8

-22.0

Alternative financial

investments

1,039.0

1,337.9

28.8

Other short-term capital

investments, cash

The drop in share prices at the start of the year and
the subsequent turnaround on the financial markets
were reflected in the Baloise Group’s investment

and cash equivalents

3,505.4

3,339.4

- 4.7

Total

in CHF m

50,061.4

56,307.7

12.5

Bâloise-Holding Annual Report 2003 25

Business Year 2003

strategy. Equity hedges were raised in the first quarter
and the equity weighting was subsequently reduced
further on risk grounds. At the same time, undesired
foreign exchange risks, especially those resulting
from investments in US dollars, were hedged, chiefly
through foreign exchange derivatives. Proceeds from
the sale of equities and new inflows of funds were
initially “parked” in short-term investments and time
deposits. Once yields had risen they were shifted
into bonds.

To minimize the impact of rising yields on capital
and reserves as defined by the International Financial
Reporting Standards (IFRS), a large proportion of
bonds were transferred from “Available for sale” to
“Held to maturity.” Although this means that they
have to be held until they mature, they can be carried
at amortized cost, which steadily moves towards their
nominal value (100%) over time. Rising interest rates
and falling market value would therefore have no ef-
fect on capital and reserves.

Largely unaffected by the volatility of the equity mar-
kets, property investments once again made a stable
contribution to total investment results, with a per-
formance of around 4.8% in 2003 (2002: 4.9%). This
was essentially attributable to the strategy of focus-
ing on popular regions of Switzerland and the rental
housing market.

The mortgages and loans performance declined from
4.1% to 3.7 %, reflecting the persistently low inter-
est rates and far more aggressive terms offered by
Swiss banks. Given the widespread belief that inter-
est rates will rise in the mid-term, there is a clear
trend towards fixed-rate mortgages.

The assets managed by the Baloise Group, including
the investment funds, rose by 13.7 % to CHF 66 bil-
lion. This was due to the improvement in investment
performance, subscriptions to investment funds and
new clients and to the first-time consolidation of
Securitas. Thanks to the clear recovery on the equity
markets, the value of all BFI equity and strategy
funds rose considerably. The floor (guaranteed level)
of the BFI Capital Protect (EUR) fund issued in early
2003 was raised six times during the year and the
fund ended the year with an attractive “guaranteed”
performance of 4 %.

Integrated risk management as basis for success

In an environment of volatile financial markets and
rising insurance risks, the significance of risk man-
agement and risk control at the Baloise Group has in-
creased noticeably. Findings in this area have become
an important factor in the Group’s strategic decision-
making process. Consequently, risk management
processes and methods were again enhanced in the
year under review.

Risk management throughout the Baloise Group en-
sures that a stable balance is maintained between
risks borne and the available risk capital. Aspects
taken into account include economic factors, legal
and regulatory provisions and the demands of a va-
riety of stakeholders. Thanks to this broadly based
approach, various interests can be presented in a
transparent fashion, raising the quality of the deci-
sion-making process and thus benefiting the Group
as a whole. The relevant risk indicators are compiled
and monitored both at corporate and business unit
level.

The Group’s risk management is founded on three
pillars: business risk analysis, analysis on the basis
of rating-like models, and monitoring of regulatory
guideline figures. Only when these three factors are
properly combined can one speak of balanced and
appropriate risk management.

The following business risks are at the heart of the
quantitative analysis:

Insurance operations
(cid:2) Natural hazards
(cid:2) Major industrial risks
(cid:2) Liability risks
(cid:2) Personal risks

Investments
(cid:2) Market and price risks
(cid:2) Interest rate risks
(cid:2) Foreign exchange risks
(cid:2) Credit and insolvency risks

There are various instruments available to keep these
risks under control. Some are direct and immediately
effective, such as reinsurance or hedging, others in-
direct and slower to take effect, such as a carefully
focused underwriting policy, targeted Asset & Liability
Management (ALM), or profit-oriented growth strat-
egy in selected market areas.

In fiscal 2003, the Baloise Group focused on a large
number of risk management topics, giving greater

weight to the corresponding tasks and projects. Prog-
ress was made in the corporate governance field
(cf. pages 29ff.) and further emphasis was placed on
ALM in life insurance, the management of corporate
investment risks, and further optimization of under-
writing risks.

Work in ALM field of the Life business was coordi-
nated in a group-wide project. This joint approach,
and the existence of a uniform Group platform, will
generate synergies in the area of software develop-
ment and operation as well as in analysis and in the
management of assets and liabilities.

By implementing specific measures, the Group was
able to realign investment risks to the given market
circumstances. The Group’s equity exposure was re-
duced from 12.5 % to 7.1% on the eve of the Iraq
war. Derivative hedging instruments were employed
to keep risks under control. Foreign exchange risks
in connection with the dollar were eliminated en-
tirely by means of forward selling, and equity risks
were reduced through put options until into the 4th
quarter 2003. The reclassification of 35 % of the
bonds from “Available for sale” to “Held to maturity”
meant that the influence of interest rate fluctuations
on the Group’s capital and reserves in accordance
with IFRS was lowered by around 50 %.

The implementation of rate adjustments, restructur-
ing measures and revised underwriting guidelines
have led to a sustainable improvement of the Group’s
risk situation. The enhanced quality of the insurance
portfolio will have a positive and lasting effect on
the Group’s risk position and profitability. The follow-
ing measures deserve special mention from the risk
perspective:

(cid:2) Underwriting limits in the German industrial

business halved

(cid:2) Enhanced risk selection with corresponding

rate modifications

(cid:2) Targeted premium adjustments
(cid:2) Selective portfolio restructuring
(cid:2) Reduction of bonus allocation to life insurance

policyholders

The measures are backed up by group-wide report-
ing procedures on risk and the development of risk
capital.

Taken together, these measures led to an appreciable
stabilization of the risk situation and strengthening
of profitability. This is evident, for example, from the
development of the Group’s consolidated solvency
margin: having stood at 231 %1 at the end of 2002,

this figure was boosted to 241%1 in 2003 despite
the additional requirements in connection with the
acquisition of Securitas Versicherung.

Solvency and capitalization banks

12.31.02 12.31.03

Liabilities insurance (Group)

Capital resources insurance (Group)

1,817

3,686

2,076

4,453

Solvency margin

Including banking assets

Excluding banking assets

231%

203 %

241 %

214 %

8% of risk weighted assets banks

Capital resources banks

Capital ratio

Liabilities (Group)

Capital resources (Group)

in CHF m

437

555

127 %

2,513

5,008

1 including imputed banking assets

Bâloise-Holding Annual Report 2003 27

Corporate Governance
Corporate governance at the Baloise

As a value-oriented company, the Baloise is com-
mitted to good corporate governance. In keeping with
the description of corporate governance in the Swiss
Code of Best Practice, we are convinced that – while
preserving management’s decision-taking competen-
cies and efficiency – transparency and checks and
balances are desirable goals that serve the interests
of our shareholders.

The first section of this chapter focuses on steps im-
plemented in 2003. The second section follows the
structure of the SWX guideline with the aim of increas-
ing transparency and hence comparability with other
companies.

Important changes
In 2003, the Baloise introduced a number of innova-
tions with important consequences for its corporate
governance.

The investment regulations of the Baloise Group,
which regulate the asset management and asset al-
location, were revised. The purpose of the investment
activities is to generate a risk-adjusted performance
on the basis of wide diversification and clear rules of
competence while fulfilling the provisions required of
the insurance business.

In 2003, the group-wide compliance function created
into 2002 was expanded and consolidated. Creating
a group-wide network of compliance officers has fa-
cilitated the task of introducing and implementing
compliance standards. On the basis of the analysis
of the compliance situation in the individual Group
companies, local concepts were drawn up in accor-
dance with the requirements of the Baloise Group.
A group-wide Code of Conduct was introduced in 2003
and distributed to all employees. It can be viewed on
the Internet. The Code of Conduct lays down mini-
mum standards of behavior for employees; additional
internal directives define these norms more precisely.
A practice-oriented concept has been drawn up to
train employees on how apply the Code of Conduct
and will be implemented on a group-wide basis in
2004. Using concrete conflict situations, employees
will be trained to recognize sensitive situations and
to apply the Code of Conduct.
(cid:2) www.baloise.com / Profile / Sustainability /

Corporate Culture

The willingness to question current practice, to be
open to new concepts and to develop solutions to-
gether are fundamental prerequisites for sustainable
change. In 2003, the Baloise made substantial in-
vestments in developing an employee-oriented cul-

ture of trust and efficiency. In line with the Group’s
corporate values, “Create value,” “Foster relations”
and “Bring about change,” all business units drew up
measures aimed at improving competitiveness and
sustaining it in the long term, thus securing the future
success of the Baloise.

At the beginning of 2003, the Baloise took another
step in developing its existing environmental man-
agement structures. The resulting sustainability net-
work encompasses the sections corporate ecology,
products/markets, capital investment, compliance,
human resources, communications, investor rela-
tions, and corporate development. The sustainability
network is responsible for: the further development
of the Baloise’s sustainability strategy, the internal
linking of sustainability measures, and the coordina-
tion of the company’s internal and external sustain-
ability communication activities.
(cid:2) Sustainability, page 51

1. Group structure and breakdown of shareholders

Group structure
The Baloise is organized as a joint-stock holding
company under Swiss law. The company has its
head office in Basel and is quoted on the SWX Swiss
exchange. As at December 31, 2003, the Baloise
Group had a market capitalization of CHF 2,856.6 mil-
lion. Further information on Baloise shares will be
found in the “Baloise Shares” section from page 53.
A list of important Group companies and partici-
pations as at December 31, 2003, can be found in the
Notes from page 119. Apart from Bâloise-Holding,
no Group companies have a stock exchange listing.

Segment reporting by business segments and regions
can be found from page 76 of the Annual Report.

The Group’s operational management structure is
presented on page 42.

Breakdown of shareholders

Changes in share ownership
Owing to major shareholders’ disposal of shares, the
distribution of shareholders and the trading liquidity
of Baloise shares improved noticeably in the past
year.

As at June 17, the stake held by the BZ had fallen be-
low the 5 % threshold. According to an announce-
ment made on July 17, the Dutch firm Strategic Money

Bâloise-Holding Annual Report 2003 29

Corporate Governance

Management was back below the 5 % threshold and
the shareholding of the Zurich Financial Services
Group had risen to 27%, of which 21.48% were held
in shares and 5.52 % through options. This share-
holding was subsequently sold on the broad mar-
ket, and the stake of Zurich Financial Services fell
back below the 5 % threshold again as at November
5, 2003.

As a widely held joint-stock company, the Baloise is
included in the Swiss Market Index (SMI) and features
in the SWX’s index calculations with a free float of
100 %.

Breakdown of shareholders
As at December 31, 2003, the most significant reg-
istered shareholder (Deutsche Bank Nominee) held
3.8% of the company’s outstanding shares, of which
2% were voting shares. No shareholder held a stake
in the company that was legally required to be dis-
closed as at the end of the year. As at December 31,
2003, 15,027 shareholders were recorded in the
Baloise’s share register. By comparison with the pre-
vious year, the number of registered shareholders
rose by 25.6 %.

The “Baloise Shares” section from page 53 of the An-
nual Report provides further information on the break-
down of our shareholders as at March 31, 2004.

Own shares
As at December 31, 2003, the Baloise held 414,303
of its own shares. These shares are used for, inter
alia, incentive and employee profit-sharing programs.

Cross-shareholdings
There are no cross-shareholdings either in terms of
capital or voting rights.

2. Capital structure

Distribution policy
The capital changes in recent years were marked by
a shareholder-friendly distribution policy. Since
1997 roughly CHF 1,875 million have been paid out
to shareholders in the form of cash dividends, share
buybacks and nominal value repayments.

Distributions to shareholders

Dividend
payments

Share
buybacks

Nominal value
repayments

Year

1997

1998

1999

2000

2001

2002

2003

Total

–

85.8

111.4

140.7

136.1

132.7

21.9

628.6

185.6

300.3

–

335.3

293.2

–

81.8

–

49.8

–

Total

267.4

386.1

111.4

476.0

479.1

132.7

21.9

1,114.4

131.6

1,874.6

in CHF m

always at March 31

Share splits in 1997 and 2001 considerably increas-
ed the trading liquidity of Baloise shares. Details of
all distributions and capital transactions in favor of
shareholders and the Baloise’s distribution policy
can be found on the Baloise website.
(cid:2) www.baloise.com / Investor Relations/Shares

Bâloise-Holding capital and reserves
The share buybacks and nominal value repayments in
2000 and 2001 had a strong impact on the Bâloise-
Holding’s capital and reserves. In the 1999 / 2000
and 2000 / 2001 reporting periods, share buybacks
led to a reduction of share capital by CHF 1.9 million
and CHF 1.4 million, respectively. The nominal value
repayment to the amount of CHF 9 per share in 2001
lowered the share capital by CHF 49.8 million to CHF
5.5 million at the end of the 2001/ 2002 financial
year.

Changes in Bâloise-Holding capital and reserves

Financial year Financial year Financial year
2003 / 2004
2002 / 2003

2001 / 2002

5.5

11.7

55.1

326.5

281.4

5.5

11.7

20.0

509.5

22.8

5.5

11.7

14.0

515.5

41.9

Share capital

General reserve

Reserve for treasury stock

Free reserve

Accumulated profit

Bâloise-Holding

capital and reserves

680.2

569.5

588.6

in CHF m

always at March 31

Since the 1:10 split in 2001, the ordinary share capi-
tal of Bâloise-Holding has consisted of 55,307,150
registered shares entitled to dividends with a nomi-
nal value of CHF 0.10 each. Further information on
Baloise shares can be found in the “Shareholders’
participation rights” section.
(cid:2) Shareholders’ participation rights, page 37

Authorized and conditional capital,
other financial instruments
Bâloise-Holding does not have any authorized or con-
ditional capital. Similarly, there are no participation
certificates, dividend rights certificates or convertible
bonds relating to participation rights of the com-
pany or options issued by it. Further details can be
found on page 125 of the Financial Statements and
in the Notes.

For full details on the development of the consoli-
dated capital and reserves in fiscal years 2000–2002,
please see the corresponding sections in the annual
reports for these years (Annual Report 2000: page
47, Annual Report 2001: page 64, Annual Report
2002: page 56).

For details on changes in the consolidated capital
and reserves in 2003, please see the corresponding
section on page 74.

Consolidated capital and reserves
of the Baloise
At end-2000, consolidated capital and reserves came
to CHF 7,372.8 million. The changes up to the end
of 2002 primarily reflect the hectic situation on the
capital markets. At the end of 2001, the Baloise
Group had consolidated capital and reserves of CHF
5,384.8 million. Subsequent price falls resulted in a
further decline to CHF 3,088.1 million by the end of
2002. Thanks to a more stable capital market situa-
tion coupled with operational counter-measures, con-
solidated capital and reserves rose to CHF 3,319.8
million by end-2003.

Share capital stood at CHF 56.7 million at end-2000,
but by end-2001 it had dropped back to CHF 5.5 mil-
lion owing to nominal value repayments amounting
to CHF 49.8 million and share buybacks totaling
CHF 1.4 million. At the end of 2002, nominal capital
was an unchanged CHF 5.5 million.

Capital reserves changed only slightly in the period
under review. At the end of 2000, capital reserves
totaled CHF 81.2 million. During 2001, they rose by
CHF 28.1 million to CHF 109.3 million owing to net
sales of treasury stock (own shares) but then edged
down again by CHF 0.4 million to CHF 108.9 million
owing to net purchases of treasury stock.

Accumulated profit decreased during 2001 from CHF
3,834 million (position as at December 31, 2000) to
CHF 3,810.5 million net owing to dividends, net profit
and the repurchase of shares. In 2002, the accumu-
lated profit declined – owing to the dividend pay-
ment and the net loss for the year – to CHF 3,043.3
million.

In 2000, the Baloise Group posted a consolidated
net profit of CHF 634.4 million, its best result so far.
Owing to the weak equity markets, the net profit for
the following year fell to CHF 404.4 million. With the
financial markets remaining bearish, and owing to
exchange rate losses and major claims payments in
the core German and Austrian markets, the Group
posted a loss of CHF 634.5 million in fiscal 2002.

Outstanding bonds
Bâloise-Holding and other companies in the Group
have issued bonds on public markets. As at Decem-
ber 31, 2003, five bonds floated by Bâloise-Holding
and other Group companies on public markets were
outstanding. Details about the outstanding bonds
can be found in the Notes to the Financial Statements
from page 103.

3. Board of Directors

Members of the Board of Directors

Name

Nationality

Age

Board Expiry of
term
of office

member
since

Rolf Schäuble, Chairman

CH 60

1993 2005

Walter G. Frehner,

Vice-Chairman

CH 71

1989 2004

Christoph J.C. Albrecht

CH 66

1985 2006

Andreas Burckhardt

Dietrich J. J. Forcart †

Gertrud Höhler

Klaus Jenny

Georg F. Krayer

Werner Kummer

Arend Oetker

Jean-Marc Rapp

Eveline Saupper

CH 53

1999 2006

CH 68

1973

–

D 63

1998 2004

CH 62

2003 2006

CH 61

1995 2004

CH 57

2000 2004

D 65

1996 2005

CH 53

1999 2004

CH 46

1999 2005

Only the Chairman of the Board of Directors has an
executive function. All the other members of the
Board of Directors are independent, nonexecutive
members. None of them held executive responsibil-
ities at any Group company in the past three financial
years and have any other substantive business rela-
tionships with the Group.

In the year under review, Christoph J.C. Albrecht,
Andreas Burckhardt and Dietrich J. J. Forcart † were
elected for a further three-year term of office. Klaus
Jenny, a noted financial expert, was elected as a new
member of the Board for a three-year term of office.

Bâloise-Holding Annual Report 2003 31

Corporate Governance

Gaudenz I. Staehelin, a member of the Chairman’s
Committee and Chairman of the Compensation Com-
mittee, retired from the Board of Directors. Klaus
Jenny took his seat in these two committees, while
Georg F. Krayer assumed the chairmanship of the
Compensation Committee. In conformity with the Ar-
ticles of Incorporation, the Vice-Chairman of the Board
of Directors, Walter G. Frehner, will resign from the
Board in 2004.

A proposal is being submitted to the 2004 Annual
General Meeting to elect Hansjörg Frei, an experi-
enced insurance industry expert, as a new Member
of the Board of Directors. Mr. Frei (born 1941, CH,
Dr. iur.) worked at Winterthur Insurance from 1982,
latterly as member of the Executive Board with re-
sponsibility for Swiss business; from 2000 until his
retirement in mid-2003, he worked for Credit Suisse
Financial Services as a member of this bank’s Execu-
tive Board (Head of International Country Manage-
ment). From 2000 to 2003, he was also the Chairman
of the Swiss Insurance Association (SVV).

Rolf Schäuble (born 1944, CH, Dr. oec., University
of St. Gallen) has been a Member of the Board of Di-
rectors since 1993 and Chairman since 1994. From
1996 to February 28, 2002, he was also Managing
Director and CEO. He graduated in economics and
obtained a doctorate from the University of St. Gallen.
From 1975 to 1993, Rolf Schäuble held various po-
sitions at the Zurich Insurance Group, Zurich, culmi-
nating in a seat on the Corporate Executive Board.

Walter G. Frehner (born 1933, CH) has been a Member
of the Board of Directors since 1989 and Vice-Chairman
since 1995. He graduated from commercial school
and completed a bank apprenticeship. From 1987 to
1993 Walter G. Frehner was CEO and subsequently,
until he reached retirement age in 1996, Chairman of
the Board of Directors of Swiss Bank Corporation
(today UBS AG). He was a Member of the Board of Di-
rectors of Novartis AG, Basel. Walter G. Frehner is an
independent, non-executive Member of the Board.

Christoph J.C. Albrecht (born 1938, CH, Dr. iur.) has
been a Member of the Board of Directors since 1985.
He graduated from the University of Basel with a doc-
torate in law. Today he works as an attorney at law
and notary with Joerin Hopf, Basel. Christoph J.C.
Albrecht is Chairman of the Board of Directors of
Thüring AG, Basel, and a Member of the Board of Di-
rectors of Interhaba AG, Basel. He is an independent,
non-executive Member of the Board.

studied law at the Universities of Basel and Geneva
and obtained a doctorate. From 1982 to 1987 he
worked for the Fides Treuhandgesellschaft and was
General Secretary of the Baloise Group. He has been
Director of the Chamber of Commerce of both Basel-
Landschaft and Basel-Stadt since 1994. Andreas
Burckhardt is an independent, non-executive Mem-
ber of the Board.

Dietrich J.J. Forcart †1 (born 1936, CH) was a Member
of the Board of Directors from 1973. He was a partner
in La Roche & Co Banquiers and Chairman of the Board
of Directors of La Roche & Co AG, Bern. Dietrich J. J.
Forcart was an independent, non-executive Member
of the Board.

Gertrud Höhler (born 1941, D, Prof. Dr. phil.) has been
a Member of the Board of Directors since 1998. She
is an economic and political consultant, and was a
professor of literature and German studies at the
University of Paderborn from 1976 to 1993. She stud-
ied literature and art history in Bonn, Berlin, Zurich
and Mannheim. From 1987 to 1990 Gertrud Höhler
was a PR consultant for Deutsche Bank AG, and from
1992 to 1995 a non-executive Member of the Board
of Grand Metropolitan PLC, London. She is a Member
of the Board of Directors of Ciba Specialty Chemicals,
AG, Basel, and Georg Fischer AG, Schaffhausen. She
is an independent, non-executive Member of the
Board.

Klaus Jenny (born 1942, CH, Dr. oec., University of
St.Gallen) has been a Member of the Board of Direc-
tors since 2003. He graduated with a doctorate in
economics from the University of St. Gallen. From
1987 Klaus Jenny was a member of the Executive
Board of Credit Suisse (later the Credit Suisse Group).
Before leaving the Credit Suisse Group, he was CEO
of the Credit Suisse Private Banking Business Unit.
Since 1999 he has worked as a financial advisor to
companies and private individuals. He is a Member of
the Board of Directors of Maus Frères SA and Huber
& Suhner, Herisau and Pfäffikon. Klaus Jenny is an
independent, non-executive Member of the Board.

Georg F. Krayer (born 1943, CH, Dr. iur.) has been a
Member of the Board of Directors since 1995. He
studied and obtained the doctorate in law. He is
Chairman of the Board of Directors of Bank Sarasin
& Cie AG, Basel, a Member of the Board of Directors
of Pirelli SpA, Milan, and was Chairman of the Swiss
Bankers Association until 2003. He is an indepen-
dent, non-executive Member of the Board.

Andreas Burckhardt (born 1951, CH, Dr. iur.) has been
a Member of the Board of Directors since 1999. He

1 We were deeply saddened by the death of Dietrich J. J. Forcart in January 2004.
Mr. Forcart was a highly respected member of the Board of Directors, on which
he served for many years.

Werner Kummer (born 1947, CH, Dipl.-Ing. ETH, MBA
Insead) has been a Member of the Board of Direc-
tors since 2000. From 1990 to 1994 he was CEO of
Schindler Elevator Corporation and then until 1998
member of the Executive Committee of the same com-
pany, responsible for the Asia Pacific region. From
1998 to March 2004 he was CEO of Forbo Holding
AG / Forbo International S.A. Werner Kummer is a
Member of the Board of Directors of WMH Walter
Meier Holding AG. He is an independent, non-execu-
tive Member of the Board.

Arend Oetker (born 1939, D, Dr. rer. pol.) has been a
Member of the Board of Directors since 1996. He
studied business management and political science
at the Universities of Hamburg, Berlin and Cologne,
obtaining a doctorate in political science from the
University of Cologne. He is Executive Partner of Dr.
Arend Oetker GmbH & Co., Berlin. Arend Oetker is
Chairman of the Supervisory Board of Schwartauer
Werke GmbH & Co. KGaA, Bad Schwartau, Chairman
of the Board of Directors of Hero AG, Lenzburg, mem-
ber of the Supervisory Board of Degussa AG, Düssel-
dorf, Member of the Supervisory Board and Board
of Partners of Merck KGaA, Darmstadt, and Deputy
Chairman of the Supervisory Board of KWS Saat AG,
Einbeck. He is an independent, non-executive Mem-
ber of the Board.

Jean-Marc Rapp (born 1951, CH, Prof. Dr. iur.) has
been a Member of the Board of Directors since 1999.
He gained his doctorate in law at the University of
Lausanne and obtained a postgraduate diploma in
Berkeley, USA. He is an attorney-at-law and has been
professor of commercial and contract law at the
University of Lausanne since 1989 and Principal of
the University of Lausanne since 1999. Jean-Marc
Rapp is an independent, non-executive Member of
the Board.

Eveline Saupper (born 1958, CH, Dr. iur.) has been a
Member of the Board of Directors since 1999. She
studied law at the University of St. Gallen, where she
obtained her doctorate. She is an attorney-at-law
and a certified Swiss federal tax expert. From 1983
to 1985 she worked for Peat Marwick Mitchell (today
KPMG Fides), Zurich, and from 1985 to 1992 for Baker
& McKenzie, Zurich and Chicago. In 1992 she joined
the firm Homburger Attorneys, Zurich, where she is
a partner. Eveline Saupper is Chairman of the Board
of Directors of BZ Bank AG, Freienbach, and Member
of the Board of Directors of Intershop Holding AG,
Winterthur. She is an independent, non-executive
Member of the Board.

Further information about the Members of the Board
of Directors can be found on the Internet.
(cid:2) www.baloise.com / Profile / Organization /

Board of Directors

Cross-shareholdings
There are no cross-shareholdings.

Elections and term of office
As at December 31, 2003, the Board of Directors con-
sisted of 12 members who are elected by the General
Meeting for a term of three years. Each year, one-third
of the members retire unless re-elected (staggered
renewal). Under an age restriction, board mandates
end at the latest at the General Meeting that follows
the member’s 70th birthday. The average age is cur-
rently about 60. Each Member of the Board of Direc-
tors is elected – and, at the shareholders’ request,
granted discharge – individually.

Internal organization

Functions of the Board of Directors
Subject to the decision-making powers of the share-
holders at the General Meeting, the Board of Directors
is the highest decision-making body of the company.
In principle, unless the organizational regulations de-
legate powers to the Chairman of the Board of Direc-
tors, the Board committees or the Corporate Execu-
tive Committee, decisions are taken by the Board of
Directors.

Under Art. 716a of the Swiss Code of Obligations and
Section 1 II of the organizational regulations, the
main tasks of the Board of Directors are to oversee
and supervise the company’s general and financial
operations and to determine its organization.
(cid:2) www.baloise.com/Profile/Corporate Governance/

Articles of Incorporation and Regulations

Committees of the Board of Directors
The Board of Directors has four committees to assist
it in its work. The committees report to the Board of
Directors and submit proposals; the Compensation
Committee in particular has its own decision-making
powers.
(cid:2) Board of Directors and Management Structure,

page 41

Bâloise-Holding Annual Report 2003 33

Corporate Governance

Committees of the Board of Directors

Invest-
Chairman’s
ment
Committee Committee Committee Committee

Compen-
sation

Audit

Name

Rolf Schäuble

Walter G. Frehner

Christoph J.C. Albrecht

Andreas Burckhardt

Dietrich J. J. Forcart †

Gertrud Höhler

Klaus Jenny

Georg F. Krayer

Werner Kummer

Arend Oetker

Jean-Marc Rapp

Eveline Saupper

C: Chairman; VC: Vice-Chairman; M: Member

The committees appointed by the Board of Directors
consist of at least four members reselected annually
by the Board of Directors. Further points to bear in
mind are that the Chairman and Vice-Chairman of
the Board of Directors are ex officio members of the
Chairman’s Committee and that the Chairman of the
Board of Directors cannot be a member of the Audit
Committee. The committees’ basic tasks are defined
by the organizational regulations and the written re-
gulations applicable to the committees.
(cid:2) www.baloise.com/Profile/Corporate Governance/

Articles of Incorporation and Regulations

The Chairman’s Committee is responsible for delib-
erating on particularly important business, especially
in connection with major decisions on strategy or
personnel. The Chairman’s Committee also functions
as the Nomination Committee and as the Investment
Committee, which approves the Group’s investment
policy and investments in real estate for the Group’s
own use at Head Office.

The Compensation Committee determines the struc-
ture and amount of compensation for Board mem-
bers and the salaries of the members of the Corpo-
rate Executive Committee. In the incentive plan, it
defines the overriding Group objectives and their at-
tainment, and it approves the rules governing com-
pensation for members of the Corporate Executive
Committee and monitors their correct application.

The Audit Committee assists the Board of Directors
in tasks that cannot be delegated relating to super-
vision and financial monitoring (Art. 716a Swiss Code
of Obligations) by forming its own judgment on the
organization and functioning of the internal and ex-
ternal monitoring systems and on the annual and
consolidated financial statements. Furthermore the

Audit Committee assesses the functioning of the in-
ternal monitoring system for risk management and
reviews the state of compliance. The Audit Committee
discussed the Group financial statements for the
2003 financial year with the management and the
external auditors. As a result, the Audit Committee
recommended that these audited annual statements
be incorporated into the Group’s Annual Report for
the financial year ended on December 31, 2003, that
is to be presented to the General Meeting. The Board
of Directors accepted this recommendation.

Meetings of the Board of Directors
and the committees
In accordance with the organizational regulations, the
full Board of Directors meets as often as business
requires, but at least four times a year.
(cid:2) www.baloise.com/Profile/Corporate Governance/

Articles of Incorporation and Regulations

In 2003, the full Board of Directors met four times.
Members’ attendance at the meetings was 93.7% in
2002 and 95.8 % in 2003.
(cid:2) www.baloise.com/Profile/Corporate Governance/

Organization/Board Attendance

In 2003 – as in every year – a seminar was held for
the Members of the Board of Directors. The subject
this year was “Life,” with the focus on group life and
individual life.

Last year, the Chairman’s Committee and the Invest-
ment Committee met eight times, the Audit Commit-
tee and the Compensation Committee four times
each. Meetings of the full Board of Directors are re-
gularly attended by members of the Corporate Exe-
cutive Committee, while meetings of the Audit Com-
mittee are attended mainly by the Group CEO, the
Group CFO, the Head of Group Internal Audit and rep-
resentatives of the external auditors.

Division of powers and duties between the Board
of Directors and the Corporate Executive Committee
The division of powers and duties between the Board
of Directors and the Corporate Executive Committee
is laid down primarily in the organizational and in-
vestment regulations. Both documents are regularly
reviewed to ensure their suitability and where neces-
sary adapted to changed circumstances. As a conse-
quence, the organizational regulations were revised
in 2002; the revised investment regulations entered
into force on July 1, 2003.
(cid:2) www.baloise.com/Profile/Corporate Governance/

Articles of Incorporation and Regulations

Auditing and monitoring the Corporate
Executive Committee
The ten internal Group auditors report directly to the
Chairman of the Board. Their specialist knowledge
covers the fields of underwriting, mathematics, fi-
nance and IT.

The significance of a well-functioning risk manage-
ment at an insurance group cannot be emphasized
enough, which is why this Report devotes a separ-
ate chapter to the risk management at the Baloise
(page 26).

4. Corporate Executive Committee

The management structure of the Baloise Group can
be found on page 42.

Frank Schnewlin (born 1951, CH, Dr ès sc. écon.,
Master of Science LSE, MBA Harvard) studied business
management at the University of St. Gallen and gra-
duated with a degree in economics (lic. oec. HSG),
majoring in insurance and risk management. After
gaining an M.Sc. at the London School of Econo-
mics, he took an MBA at Harvard Business School
in Boston. While a Research Fellow of the Harvard
Business School, Frank Schnewlin obtained his doc-
torate in economics at the University of Lausanne. He
worked at the Institut für Versicherungswirtschaft in
St. Gallen and at Citibank N.A., New York. From 1983
to 2002, he was employed at Zurich Financial Services
in various positions. In 1993 he was appointed a
Member of the Group Management Board with re-
sponsibility for the Business Division Southern
Europe, Asia/Pacific, Latin America, Middle East and
Africa. Since November 2000, he has been Head of
Corporate Center and a Member of the Executive
Committee of the Group Management Board. Since
March 2002, Frank Schnewlin has been Chief Execu-
tive Officer of the Baloise Group and Head of the
International Corporate Division.

Bruno Dallo (born 1957, CH, Dr. iur.) graduated from
the University of Basel with a doctorate in law. He is
an attorney-at-law. After a period in various law offices
and in the legal department of a major bank, he joined
the Baloise Group in 1986. From 1994 to 2001, he was
General Counsel (Head of Legal and Taxes); from 1999
to 2001, he was also secretary to the Board of Direc-
tors. He was in charge of various merger and acquisi-
tion projects. He has been a member of the Corporate
Executive Committee since 2001 (Head of Corporate
Center), responsible for corporate development,
human resources, legal, tax, compliance and runoff.

Bruno Dallo is Chairman of the Board of Trustees of
the Baloise Pension Foundation. Furthermore, he is
a member of the Basel-Stadt tax appeals committee
and the tax and finance committee of the Chamber
of Commerce of Basel-Stadt and Basel-Landschaft.

Wolfgang Drunk (born 1965, D, Dipl.-Phys., MBA In-
sead) studied physics, mathematics and business
management in the USA and Germany, and took an
MBA at the Insead Institute at Fontainebleau. From
1991 to 1998, he worked for McKinsey & Company
in different positions, initially as a management
consultant for insurance companies, banks and car
manufacturers in various European companies, and
subsequently as Project Manager in a range of pro-
jects for insurance companies. In this period he also
completed a number of advanced training courses
focusing on risk management, reinsurance, corporate
finance, and strategy and organization. In 1998 he
was appointed head of the risk management and
reinsurance units at the Baloise Group, and in 2001
he became a member of the Corporate Executive
Committee, responsible for financial relations, fi-
nancial management and financial accounting.

Martin Strobel (born 1966, D, Dr. rer. pol.) studied
computer science, business management and
business systems at the Universities of Kaiserslautern,
Windsor (Canada), and Bamberg, where he obtained
his doctorate. From 1993 to 1999, he worked for the
Boston Consulting Group, Düsseldorf, in different po-
sitions dealing with questions of strategic IT manage-
ment in the banking and insurance sectors. He joined
the Baloise Group at the beginning of 1999. He was
Head of IT at Baloise Switzerland and responsible for
large interdivisional projects in the fields of insurance
and finance. Since 2003, he has been a member
of the Corporate Executive Committee (Head of the
Switzerland Corporate Division). Martin Strobel is a
member of the Board of the Swiss Insurance Asso-
ciation (SVV) and a member of the “Finance Forum”
Advisory Committee.

Martin Wenk (born 1957, CH) graduated in law from
the University of Basel, before working for a large
bank in different positions between 1982 and 1992.
After initially working as an investment advisor to in-
stitutional clients, he went on to head a private bank-
ing group in New York and then became a sector head
in securities sales, attending primarily to the needs
of major institutionals. During this period, he com-
pleted further training courses in Switzerland and the
USA. From 1992 to 2000 he headed Portfolio Manage-
ment Switzerland at the Baloise Group, with respon-
sibility for managing the assets of various Baloise
companies in Switzerland and of the Group, including

Bâloise-Holding Annual Report 2003 35

Corporate Governance

pension funds. In 2001 he was appointed a member
of the Corporate Executive Committee, responsible for
Corporate Division Asset Management comprising
the units Baloise Asset Management, Real Estate and
Mortgages, and Baloise Fund Invest.

Further information about the members of the Corpo-
rate Executive Committee and about other activities
and interests can be found on the Internet. There are
no management agreements in which management
functions are transferred to third persons.
(cid:2) www.baloise.com / Profile / Organization /

Corporate Executive Committee

5. Compensation, shareholdings, loans

This section is divided into three parts:

(cid:2) the Members of the Board of Directors other

than the Chairman,

(cid:2) the Chairman of the Board of Directors and
(cid:2) the Corporate Executive Committee.

To facilitate assessment of the Baloise’s compensa-
tion policy, gross compensation figures are used
rather than tax figures.

Loans2

Mortgages and loans against

insurance policies

CHF 650,000

1 see “Change of control and countermeasures” page 38

2 Mortgages are granted at conditions that apply to employees (1% below the
interest rate paid by customers for variable-rate mortgages). There were no
loans against insurance policies.

The Chairman of the Board of Directors
and the Corporate Executive Committee
The nature and amount of the compensation paid to
the Chairman of the Board of Directors and the mem-
bers of the Corporate Executive Committee are de-
termined by the Compensation Committee of the
Board of Directors. It consists of a basic salary and an
incentive based on achieving corporate objectives
on the one hand and individual objectives on the
other up to a maximum amount equal to two-thirds
of the basic salary. 50% of the incentive must be
taken in the form of shares or options. The corporate
objectives for the coming year are determined in a
multistage process and approved by the Compensa-
tion Committee at the end of each year. Individual
objectives are directly related to the respective res-
ponsibilities of each member of the Corporate Ex-
ecutive Committee; they are set in consultation with
the superior and approved by the Compensation
Committee.

Members of the Board of Directors
With the exception of the Chairman, the members of
the Board of Directors receive flat-rate compensation
in cash, which is determined by the Compensation
Committee of the Board of Directors.

As published in accordance with the Guidelines, com-
pensation for the 11 nonexecutive Members of the
Board of Directors in 2003 was as follows:

In 2003, the company introduced the direct alloca-
tion of shares at a preferential price for all persons
entitled to incentives in all Group companies. The
subscription price at any time is 10% lower than the
market value at the time of subscription. Thus, shares
may henceforth be subscribed either directly or,
as in the past, linked to a loan on which interest
strengthens the impact of the shares allocated (lev-
erage effect).

Compensation in the year under review

Cash compensation

CHF 1,490,000

Allocation in the form of shares

Allocation in the form of options

Ownership of shares and options

Share ownership

Option ownership

Number

Year of allocation

Term to maturity

Subscription ratio

Exercise price in CHF

113,390 registered shares

Contractual option1

8,400

1999

5 years

1:10

CHF 125.80

The loan repayment after a three-year-blocking period
is hedged with a put option financed by the sale of
a corresponding call option. After expiry of the block-
ing period, employees receive the shares remaining
after repayment of the loan for their free disposal.
Finally, under the options plan, the options, quoted
on the stock market, are purchased by the Baloise
Group from third parties at market value. Options
subscribed may not be sold for two years.

Given the choice of taking the mandatory part of the
incentive in either shares or options, employees
chose shares without exception in 2003 (either di-
rectly or linked to a loan). In view of the imminent
changes in the law, the options plan will not be of-
fered as an incentive choice in 2004.

Chairman of the Board of Directors: Rolf Schäuble

6. Shareholders’ participation rights

Compensation in the year under review

Cash compensation

Allocation in the form of shares

Allocation in the form of options

Additional fees and payments

CHF 1,580,026

373,113

Maximum total compensation

CHF 1,953,139

Ownership of shares and options

Share ownership

20,286 registered shares

BALIX

BALUP

option1

Contractual

Number

Year of allocation

Term to maturity

Subscription ratio

Exercise price in CHF

444,557

2002

3 years

50:1

197.1

–

Loans2

Mortgages and loans against

insurance policies

CHF 500,000

1 see “Change of control and countermeasures” page 38

2 Mortgages are granted at conditions that apply to employees (1% below the
interest rate paid by customers for variable-rate mortgages). There were no
loans against insurance policies.

Members of the Corporate Executive Committee
The Corporate Executive Committee consists of five
members. No severance payments were made in 2003.

Compensation in the year under review

Cash compensation

Allocation in the form of shares

Allocation in the form of options

Additional fees and payments

CHF 3,447,288

CHF 846,411

Total compensation

CHF 4,293,699

Ownership of shares and options

Share ownership

26,349 registered shares

BALIX

BALUP

option1

Contractual

Number

514,814

Year of allocation

2002

Term to maturity

3 years

Subscription ratio

50:1

Exercise price in CHF

197.1

–

Loans2

Mortgages and loans against

insurance policies

CHF 1,586,000

Voting rights
The share capital of the Baloise consists exclusively
of registered shares. There are no shares with prefer-
ential voting rights. In order to ensure broad-based
shareholding and to protect minority shareholders,
no shareholder, regardless of the size of holding in-
volved, is registered with more than 2 % of voting
rights. The Board of Directors may approve exceptions
to this rule by a majority of two-thirds of all members
(Art. 5 of the Articles of Incorporation). There are no
exceptions at present.

Every share gives the right to one vote. In exercising
voting rights, no shareholder may, either directly or
indirectly by combining his own with proxy votes, hold
more than one-fifth of the shares with voting rights
at the General Meeting. Any shareholder may trans-
fer his / her voting rights to another shareholder by
written power of attorney (Art. 16 of the Articles of
Incorporation). Any annulment of statutory restric-
tions on voting, see the following section on statu-
tory quorums.
(cid:2) www.baloise.com/Profile/Corporate Governance/

Articles of Incorporation and Regulations

Statutory quorums
The General Meeting constitutes a quorum regardless
of the number of shareholders and represented votes
attending the Meeting unless there are compelling
statutory requirements to the contrary (Art. 17 of the
Articles of Incorporation).
(cid:2) www.baloise.com/Profile/Corporate Governance/

Articles of Incorporation and Regulations

Any annulment of statutory restrictions on voting
rights will require the agreement of at least three
quarters of the votes represented at the General
Meeting, and at the same time at least one-third of
all the shares issued by the company. This qualified
majority is also required in the cases envisaged in
Art. 17(3) a–h of the Articles of Incorporation. Other-
wise, subject to any compelling statutory require-
ments to the contrary, resolutions will be adopted by
a simple majority of votes cast (Art. 17 of the Articles
of Incorporation).
(cid:2) www.baloise.com/Profile/Corporate Governance/

Articles of Incorporation and Regulations

1 see “Change of control and countermeasures” page 38

2 Mortgages are granted at conditions that apply to employees (1% below the
interest rate paid by customers for variable-rate mortgages). There were no
loans against insurance policies.

Convening the General Meeting
As a rule, the General Meeting takes place in May, and
at the latest six months after the end of the financial
year. Bâloise-Holding’s financial year ends on March

Bâloise-Holding Annual Report 2003 37

Corporate Governance

31. Notice of the convening of the General Meeting
must be given at least 20 days before the appointed
date of the General Meeting. Each registered share-
holder receives a personal invitation that includes the
agenda of the Meeting. Invitation and agenda shall
also be published in the Swiss Commercial Gazette
(Schweizerisches Handelsamtsblatt), in various news-
papers and on the Internet.

Extraordinary General Meetings may be convened by
decision of the General Meeting, the Board of Direc-
tors or the external auditors. Furthermore, in accor-
dance with the statutory provisions, the Board of
Directors has to convene an extraordinary General
Meeting if requested to do so by shareholders (Art.
11 of the Articles of Incorporation). According to Ar-
ticle 699 (3) of the Swiss Code of Obligations, the
request must represent at least 10 % of the com-
pany’s share capital.
(cid:2) www.baloise.com/Profile/Corporate Governance/

Articles of Incorporation and Regulations

Including items on the agenda
Shareholders’ requests pursuant to Article 699 (3) of
the Swiss Code of Obligations for the inclusion of
items on the agenda may be submitted by one or
more shareholders representing at least 10 % of the
share capital or shares with a nominal value of at
least CHF 100,000. Such requests including the mo-
tions to be put to the General Meeting must be sub-
mitted to the Board of Directors in writing at least six
weeks before the annual General Meeting (Art. 14 of
the Articles of Incorporation).
(cid:2) www.baloise.com/Profile/Corporate Governance/

7. Change of control and countermeasures

Shareholders, whether acting alone or as a group by
agreement, that acquire 33 1/3% of all Baloise shares
are obliged to submit a take-over bid to all remain-
ing shareholders. The Baloise has never made use of
the possibility to deviate from or waive this regulation.
The Articles of Incorporation contain neither an opt-
out nor an opt-in clause as defined in the Federal
act on the stock exchanges and share trading (Stock
Exchange Law).

However, there are two different types of change of
control clauses:

Since 1999, agreements have been in force with the
members of the Board of Directors and the Corporate
Executive Committee that in the event of a change of
control they will be compensated for the intrinsic
value of their options (contractual options that expire
in 2004), subject to a guaranteed minimum. This
amounts to CHF 7.6 million for the Board of Directors
and the Corporate Executive Committee together.

Agreements also exist with the members of the Corpo-
rate Executive Committee and other members of sen-
ior management whereby severance payments will
be triggered if the employee is given notice (or, under
certain conditions, if the employee gives notice)
within a specified period of time following the change
of control. The amount of these payments will be in
conformity with market practice.

Articles of Incorporation and Regulations

8. Statutory auditors

Registration of shares
Shareholders entitled to vote at the General Meeting
are those who, on the reference date specified in the
invitation from the Board of Directors, a date a few
days ahead of the General Meeting, are entered in
the share register as shareholders with voting rights
(Art. 16 of the Articles of Incorporation).
(cid:2) www.baloise.com/Profile/Corporate Governance/

Articles of Incorporation and Regulations

The admissibility of nominee registrations, including
the relevant percentage clauses and conditions of
registration, is dealt with in Article 5 of the Articles of
Incorporation. The procedures and preconditions for
canceling or restricting transferability are laid down
in Articles 5 and 17 of the Articles of Incorporation.
(cid:2) www.baloise.com/Profile/Corporate Governance/

Articles of Incorporation and Regulations

PricewaterhouseCoopers (PwC) and its predecessor,
Schweizerische Treuhandgesellschaft / STG Coopers
& Lybrand, have been the statutory auditors of the
Baloise since 1962. The statutory auditors are chosen
by the General Meeting each year. The lead auditor,
Mr. Peter Lüssi, who assumed this office in 2002,
has worked on the Baloise audit since 1999.

The following fees were charged by Pricewaterhouse-
Coopers in the year under review; the figures refer
to its groupwide activities.

Fees of PricewaterhouseCoopers

2002

2003

Auditors’ fees

1,338,625

1,469,625

Fee for audit-related

activities

Consultancy fee

Total

in CHF

165,432

307,802

358,573

552,302

1,811,859

2,379,875

The Baloise has an Audit Committee made up of in-
dependent members qualified in finance and ac-
counting. The Audit Committee monitors the coordi-
nation of the internal audit, risk management, and
compliance with the external auditors. It also verifies
the independence of the external auditors.

9. Information policy

Information policy
The Baloise Group informs shareholders, potential
investors, employees, customers and the general
public as comprehensively, openly and regularly as
possible. This enables the Baloise to foster an under-
standing of its objectives, strategy and business ac-
tivities.

The Baloise is actively involved in committees and
bodies working towards the conception and imple-
mentation of accounting standards and drawing up
of concepts specifically for the insurance industry.

Information events
The Baloise provides detailed information on its
business activities in

(cid:2) Annual and Semi-Annual Reports
(cid:2) Annual and semi-annual media conferences
(cid:2) Meetings with financial analysts and

investors, and

(cid:2) the Annual General Meeting.

Media releases on important projects and initia-
tives are a further important form of communication.
At special events and roadshows the Baloise en-
gages in dialogue with investors and media repre-
sentatives.

Information about Baloise shares
Information about Baloise shares can be found from
page 53.

Financial calendar
Investors will find the most important dates for inves-
tors on the Internet, including the publication dates
of the Annual and Semi-Annual Reports. In connec-
tion with the General Meeting, the calendar contains
the date of the invitation to the General Meeting,
the closing of shareholder registration, and, if appli-
cable, the ex-dividend date.
(cid:2) www.baloise.com / Investor Relations / Calendar

Availability of documents
Shareholders can access media releases, disclosure
reports, presentations, addresses and Annual and
Semi-Annual Reports on the Internet. In 2004, the
Baloise published, for the first time, a Sustainability
Report that informs readers about the sustainable
business approach of the Baloise.

All documents can be obtained through Investor Re-
lations (see below) or ordered on the Internet.
(cid:2) www.baloise.com / Investor Relations /

Presentations

Contacts

Investor Relations

Carsten Stolz

Head of Financial Relations

Aeschengraben 21

4002 Basel

Phone + 41 61 285 83 65

Fax + 41 61 285 75 62

E-mail carsten.stolz @ baloise.com

Corporate Governance

Thomas Sieber

Secretary of the Board of Directors / Head of Legal and

Taxes

Aeschengraben 21

4002 Basel

Phone +41 61 285 86 48

Fax + 41 61 285 91 90

E-mail thomas.sieber @ baloise.com

www.baloise.com

Bâloise-Holding Annual Report 2003 39

Organization
Board of Directors and management structure

Board of Directors

Board committees

Rolf Schäuble, Chairman, Lenzburg
Walter G. Frehner, Vice Chairman, Riehen
Christoph J.C. Albrecht, Basel
Andreas Burckhardt, Basel
Dietrich J. J. Forcart †1, Riehen
Gertrud Höhler, Berlin
Georg F. Krayer, Basel
Werner Kummer, Küsnacht
Arend Oetker, Berlin
Jean-Marc Rapp, Lausanne
Eveline Saupper, Pfäffikon SZ
Klaus Jenny, Zurich

Secretary of the Board of Directors

Thomas Sieber, Rheinfelden

Internal audit

Erich Bernischke, Basel

Auditors

PricewaterhouseCoopers AG, Basel

Chairman’s Committee

Audit Committee

Compensation Committee

Investment Committee

Board committees and their members

Chairman’s Committee
Rolf Schäuble, Chairman
Walter G. Frehner, Vice-Chairman
Georg F. Krayer
Klaus Jenny

Audit Committee
Walter G. Frehner, Chairman
Christoph J.C. Albrecht, Vice-Chairman
Dietrich J. J. Forcart †1
Werner Kummer

Compensation Committee
Georg F. Krayer, Chairman
Walter G. Frehner, Vice-Chairman
Klaus Jenny
Gertrud Höhler

Investment Committee
Rolf Schäuble, Chairman
Walter G. Frehner, Vice-Chairman
Georg F. Krayer
Klaus Jenny

1 died in January 2004

Bâloise-Holding Annual Report 2003 41

Organization

Management structure on April 1, 2004

CEO

Frank Schnewlin*

Group / Regional

Performance

Management

Annemarie D’Hulster

Group Secretariat /

Corporate

Communications

Thomas Kähr

Switzerland

International

Finance

Asset Management

Corporate Center

Martin Strobel*

Frank Schnewlin*

Wolfgang Drunk*

Martin Wenk*

Bruno Dallo*

Individual

Customers

Franz Josef

Kaltenbach

Germany,

Financial Relations

Baloise Asset

Corporate

Basler Securitas

Carsten Stolz

Management

Development

Frank Grund

Reto Diezi

Thomas Wodrich

Financial

Germany,

Management

Real Estate /

Human Resources

Baloise Bank SoBa

Deutscher Ring

Annemarie D’Hulster

Mortgages

Frank Sigl

Alois Müller

Wolfgang Fauter

Urs Degen

Financial Accounting

Legal and Taxes

Michael Müller

Baloise Fund Invest

Thomas Sieber

Robert Antonietti

Compliance

Peter Kalberer

Runoff

Bruno Rappo

Sales Management

Daniel Fluri

Belgium,

Mercator

Jan De Meulder

Information Systems

and Logistics

Luxembourg,

René Güttinger

Bâloise

Accounting /

Controlling

Urs Bienz

André Bredimus

Austria,

Basler

Lothar Mayrhofer

* Member of the Corporate Executive Committee

“What is true of our inner, personal values also applies
to the values of our company. They drive our actions
and must be clearly reflected in what we do. The more
consistently I act in accordance with our values, the
more intensively and convincingly I live them, the
less I need to talk about them. I can be measured by
my actions. Last year, I initiated a focus program
with five key factors by which we can improve our
value creation. My vision is to transform the Baloise
into a gem in its field for customers, employees and
shareholders. As CEO I am responsible for the im-
plementation of this vision. The past year showed that
we are on the right track. We made good progress,
and I know we can improve further. I am optimistic,
and hopefully my optimism will inspire everyone at
the Baloise.”

Frank Schnewlin
CEO

Bâloise-Holding Annual Report 2003 43

Organization

“Playing a part in designing integration processes
and new structures, motivating managers on our road
to a common future, communicating the culture of our
company and establishing new partnerships are key
tasks for me. Setting up Basler Securitas in 2003 was
a case in point where we realized these targets in the
German market. We grow with such tasks. In this
context, the Baloise corporate values serve as a com-
pass for me.”

Bruno Dallo
Corporate Center

“Creating, measuring and optimizing value are part
of the day-to-day business of a performance-oriented
finance division. Value creation owes a lot to a com-
pany’s ability to relate and to change. We have there-
fore very consciously intensified our dialogue with
customers, employees and the sales force, as well
as our cooperation with investors and their represen-
tatives. For they all, like us, need value not as words,
but in the form of action and results. This is what we
are committed to.”

Wolfgang Drunk
Finance

Bâloise-Holding Annual Report 2003 45

Organization

“Within the framework of our high-earning power strat-
egy, our focusing on value has effected real change.
We have boosted value-adding activities and, after
thorough evaluation, put an end to value-reducing
ones. The earning-focused approach to all our activi-
ties was discussed and implemented at all levels. We
also put our ‘foster relations’ principle into action, for
instance by organizing customer events, which were
very well received owing to the clear and open infor-
mation we provided. Transparency makes for trust.
This also holds true for our in-house activities. A dia-
logue culture was fostered at staff events, departmen-
tal visits, the general agents’ tour and the Manage-
ment Summer School; a culture that has helped gear
the Baloise up for the challenges of the future.”

Martin Strobel
Switzerland

“Capital investment is basically about creating and
enhancing value for the benefit of customers, staff
and shareholders. Even if we primarily think of ma-
terial values, the past years have shown that sustain-
able success is only possible if higher and long-term
values serve as guidelines. That is why the introduc-
tion of the corporate values has met with such inter-
est at the Baloise. After analyzing the first surveys,
we immediately began with the implementation. At
various events we developed special measures and
activities with the aim of deliberately shaping our re-
lations and the change we are subject to. A beginning
has thus been made; the conditions for creating new
values are there. The program is being continued.”

Martin Wenk
Asset Management

Bâloise-Holding Annual Report 2003 47

Human Resources
Clear management structures and targeted skills development

It is our employees who make the most vital contri-
bution to the success of the Baloise. To support them
in their daily work and in the achievement of our
exacting common objectives, the Group continued
to invest heavily in the enhancement of corporate
culture, management structure and personnel skills
development in the year under review. The Baloise’s
corporate values, encapsulated as “Create value,”
“Foster relations” and “Bring about change,” served
as overall guidelines.

Create value: The Baloise strives for sustainable value
creation, which also involves long-term planning of its
personnel requirements. With the integration of the
German Securitas companies (which added around
540 people to our workforce as of January 2003)
and the ensuing setup of Basler Securitas (counting
a total staff of around 1,100), we registered signifi-
cant growth in Germany. However, the ongoing opti-
mization of structures and processes had repercus-
sions on the staff count in certain business areas, in
Switzerland particularly in the sales force and the
private banking sector. By means of a hiring freeze,
the internal filling of vacancies, natural fluctuations
and early retirement, the number of redundancies
was kept at a minimum. In Belgium, the workforce
had to be reduced by close to 200 employees from
all sectors of the business. By providing early retire-
ment solutions, which Belgian law allows from age
52, cases of hardship were largely avoided here,
too. The number of people employed at the Baloise
Group as at December 31, 2003, came to 8,745
(2002: 8,703).

Our staff are entitled to participate in the value of the
company. A well-endowed system of social and fringe
benefits is in force, and performance-related remu-
neration as part of the pay package serves as incen-
tive in particular at middle and senior management
level. 480 staff members were included in the in-
centive program. Performance-related pay made up
around 4.7 % of the overall wage costs.

Foster relations: The success of our company is built
on the performance of our staff. Their motivation,
dedication and job satisfaction are therefore prime
success factors, and these are closely linked to clear
management structures and a people-oriented cul-
ture of trust. In-house surveys show that what our
staff value most are interesting and challenging tasks,
sufficient creative freedom, and good and open re-
lations with colleagues and line managers.

Bring about change: The unwavering implementation
of our corporate strategy and the changes this often
necessitates places high demands on staff and man-

agement alike. In the annual objective-setting pro-
cess, the line manager formulates his / her expecta-
tions – ultimately derived from the corporate strategy
– and agrees with the individual staff members what
they are expected to contribute. Thus expectations
are clearly and transparently expressed. Reporting
lines between Head Office and the strategic business
units were also clarified and were actively developed
in several areas in 2003.

To become more competitive, it is essential that we
develop our staff’s skills in line with our strategic re-
quirements. A key skill to be fostered is the ability to
implement, i.e. the ability to attain operational ex-
cellence in all relevant fields. Both in Switzerland and
Germany, the Baloise maintains its own personnel
training and management development centers. In
addition, a large number of staff members make use
of external training opportunities, the costs of which
are usually borne by the company. In all, the Group
invested nearly CHF 13 million in personnel training
and development in 2003. Thanks to its well-estab-
lished and comprehensive management training prog-
rams, the Baloise was again able to recruit managers
at all levels from its own ranks – people who have
gained the technical knowledge, interpersonal skills
and high customer awareness necessary to make a
difference to the success of the company. Finally, 420
positions offered to apprentices, trainees and interns
throughout the Group prove that the Baloise also
takes its social responsibility for the education and
training of young people very seriously indeed.

Employees 2003

in percent

Switzerland

Germany

Benelux

Other countries

Total

2002

3,976

2,794

1,624

309

8,703

2003

3,7741

3,249

1,417

305

8,745

Change

-202

455

-207

Number of employees at December 31, 2003

1 of which 240 Group

Bâloise-Holding Annual Report 2003 49

Sustainability
Sustainability through professionalism in insurance operations

In early 2004, the Baloise became the first Swiss pri-
mary insurer to publish a Sustainability Report. It de-
monstrates how professionally conducted insurance
business and a sustainable corporate focus can com-
plement one another perfectly.

Insurance and financial services business is geared
towards long-term action. It is concerned with man-
aging the present and future risks to individuals, soci-
ety and the environment, and it focuses on safeguard-
ing the fundamentals of life. Successful insurance
and financial services business thus makes a major
contribution to a sustainable development of the
economic, social and ecological spheres of our life.

Following on from the first environmental audit in
2001, the Baloise Group has now produced a Sustain-
ability Report. In it, we examine our core business
from the point of view of sustainability, for example
commenting on the future of the European pension
systems or the role of the insurer in providing risk
advice to business customers. Members of the Cor-
porate Executive Committee and the Board of Direc-
tors answer questions in interviews and explain what
sustainability means for the Baloise in concrete terms.
Professor E. A. Brugger, one of Switzerland’s leading
experts on sustainability, sets out future challenges
facing the insurance industry from a sustainability
standpoint. Analysts, employees, customers and sup-
pliers of the Baloise explain what they want in the

long term from the Baloise. Pointers for the further
development of the Baloise’s own sustainability man-
agement come from external rating agencies such as
the Sustainable Asset Management Group (SAM),
which credits the Baloise with very good overall sus-
tainability performance compared to the sector as a
whole (see chart). As regards economic criteria, the
company has excellent corporate governance and
strong performance in risk management and crisis
management, placing it above the industry average.
The Baloise recorded a significant improvement in
environmental performance as compared with the
previous year. The Group is also above average when
it comes to social criteria. The Baloise’s commitment
to sustainability also meant that, in the year under re-
view, Baloise shares were included in the major sus-
tainability indices and funds, such as the Dow Jones
Sustainability Index and the FTSE4good index.

The Sustainability Report can be obtained from the
Baloise.
(cid:2) Contacts, inside cover flat

Further information about our activities in connection
with sustainability can be found on our website.
(cid:2) www.baloise.com / Profile / Sustainability

Bâloise’s sustainability performance

Economic Codes of conduct / Compliance / Corruption and Bribery

Environmental Environmental Reporting

Economic Corporate Governance

Economic Risk and Crisis Management

Economic Sustainability Expertise

100

Environmental Climate Change (Products and Services)

100

Social Human Capital Development

100

Social Stakeholder Engagement

100

Environmental Environmental Policy Management

Social Labor Practice Indicators

100

Environmental Environmental Performance (Eco-Efficiency)

Social Talent Attraction and Retention

100

Insurance industry average on a global basis

Bâloise-Holding

Above the industry average for eleven out of twelve
criteria: assessment of the Baloise’s sustainability
performance by SAM Research Inc.

Bâloise-Holding Annual Report 2003 51

Baloise Shares
Price recovery and markedly improved trading liquidity

Baloise shares registered a marked recovery in 2003
following the worldwide slump that had stock markets
in its grip until mid-March. Reductions in the stakes
of some major shareholders led to a broader spread
of share ownership and a distinct improvement in
trading liquidity.

Stock markets went through two phases in 2003: The
first quarter, which was overshadowed by the war in
Iraq, saw a massive price collapse on stock markets
around the globe. In the further course of the year,
markets recorded a substantial recovery. The Swiss
Market Index (SMI) closed 2003 with a year-on-year
performance of 18.5 %. The insurance industry also
recovered, as reflected in the Swiss Performance Index
Insurance (SXIS) figure of +13.4 %, yet underper-
formed the market as a whole.

The Baloise shares’ -6.1% performance year-on-year
reflects the plunge in the first quarter followed by a
vigorous recovery since. In the first quarter, the share
price plummeted by 42.6% amidst the general stock
market collapse. The low-water mark was reached in
mid-March. After that, towards the end of the Iraq
war and boosted by the Baloise’s strong capital base
and a positive assessment by the market, the share
price picked up significantly.

It closed the second quarter up 39.4 %, the third-
best quarterly performance of a Swiss insurance com-
pany. The trend continued in the third quarter, in
which the share price advanced by 11.6 %. The de-
velopment was again positive in the fourth quarter,
though the gain of 5.1 % was still somewhat below
the Swiss market average. The Baloise Group main-
tained its policy of consistent distributions and paid
a dividend of CHF 0.40 per share.

The spread of share ownership and trading liquidity
increased substantially over the year following a re-
duction in the stake of some major shareholders. BZ
Group’s holdings dropped under the 5 % threshold
as at June 17. Strategic Money Management B.V.
from the Netherlands fell below the 5 % mark as at
July 17 after selling its stake to Zurich Financial Ser-
vices. Following that transaction, Zurich Financial
Services for a while held 27 % of the Baloise –
21.48% in shares and 5.52% in options. The majority
of this stake was then placed across a broad range
of investors, leaving Zurich Financial Services below
the 5% threshold as of November 5, 2003. The table
on page 54 will inform you on the principal Baloise
shareholders and their respective stakes as at
March 31, 2004.

The Baloise is a publicly traded company with broad-
ly spread shareholdings and a 100 % free float. The
number of registered shareholders rose by 25.6 %
year-on-year to 15,027 (2002: 11,974).

Indexed share price development1 Bâloise-Holding,

registered, 1999 – 2003

160

140

120

100

Bâloise-Holding, registered2

Swiss Performance Index Insurance (SXIS)

Swiss Market Index (SMI)

1 December 29, 1998 = 100

2 adjusted after 1: 10 split of July 24, 2001

In line with the company’s long-standing policy of
regular, profit-linked distributions and in view of the
positive result of fiscal 2003, the Board of Directors
is proposing a cash dividend, up on the previous year,
of CHF 0.60 per stock. The proposal for this year’s
dividend will be submitted to shareholders for ap-
proval at the General Meeting on May 14, 2004.

Registration as Bâloise-Holding shareholder
There are no restrictions on the acquisition of Bâloise-
Holding shares. Shareholders who have purchased
shares under their own name and for their own ac-
count are entered in the share register with voting
rights up to a maximum of 2 % of all shares issued.
This also applies to shares held by nominee compa-
nies, provided the beneficial owner has been made
known to us (Art. 5 of the Articles of Incorporation).

Bâloise-Holding, registered

Ticker symbol: Tk, B: BALN; R: BALZn

Nominal value: CHF 0.10

Security no.: 1.241.051

ISIN: CH0012410517

Listing: virt-x

Bâloise-Holding Annual Report 2003 53

Baloise Shares

Significant shareholders at March 31, 2004

Chase Nominees

Fidelity Group

Deutsche Bank Nominees

Rolex Group

Boston Safe Deposit & Trust

Morgan Nominees

Landesbank Baden-Württemberg

Strategic Money Management B.V.

BZ Group

in percent

Total
holding

Share of
voting rights

4.0

2.5

2.3

2.0

< 2.0

< 5.0*

2.0

–

< 2.0

–

* pursuant to notification according to article 20, SESTA

Bonds issued

Issuer

CHF m Interest rate

Issue

Redemption

Baloise Finance

(Jersey) Ltd.

Bâloise-Holding

200

300

600

1.00 % 1998

4.7.2006

3.25 % 1998

4.7.2008

4.25 % 2000 9.28.2005

Baloise Bank SoBa

175 3.625 % 2002 6.12.2007

Bâloise-Holding

250 3.375 % 2003 12.15.2009

Contacts

Investor Relations

Carsten Stolz

Aeschengraben 21

CH-4002 Basel

Phone +41 61 285 83 65

Fax +41 61 285 75 62

E-mail investor.relations@baloise.com

www.baloise.com

Share statistics

Net profit per share1 in CHF

Consolidated capital and reserves per share2 in CHF

Dividend per share in CHF

19995

9.1

127.6

2.4

20005

11.2

130.0

2.4

20015

7.3

97.4

2.4

20025

- 11.6

55.8

0.4

20035

1.7

60.0

0.64

Total shares issued in units

58,620,000

56,704,000

55,307,150

Number of shares entitled to dividend in units

58,620,000

56,704,000

55,307,150

Time-weighted number of shares entitled to dividend in units

58,620,000

57,824,280

56,087,855

55,307,150

23.0

11,016

24.5

8,988

15.4

9,725

1,761,750

830,000

560,000

Daily volume traded shares in CHF m

Number of shareholders

Treasury stock in shares

Price at year-end in CHF

High in CHF

Low in CHF

Market capitalization in CHF m

Consolidated capital and reserves in CHF m

Ratio, market capitalization / consolidated capital and reserves

Ratio, market capitalization / gross premium in percent

Return on equity (ROE)

ROE on capital and reserves as shown in the balance sheet3 in percent

ROE on capital and reserves minus unrealized gains

and losses3 in percent

Dividend yield in percent

Price-earnings ratio in percent

Pay-out ratio in percent

All figures as per calendar year, at December 31

Figures rounded up / down; calculations based on precise figures.

1 see Notes to the Consolidated Financial Statements, section 25

5 adjusted due to share split

2 number of shares ranking for dividend at December 31

6 additional free put options

3 average of beginning and year-end values

7 not significant

4 to be proposed to the Annual General Meeting

125.3

146.0

109.4

7,345.1

7,477.6

98.2

120.7

7.4

17.2

1.9

14.2

27.1

178.0

186.0

123.4

10,093.3

7,372.8

136.9

150.6

8.5

19.0

1.3

15.9

29.566

21.4

11,974

702,540

55.0

155.5

46.3

3,041.9

3,088.1

98.5

41.8

23.6

15,027

414,303

51.65

63.2

25.45

2,856.6

3,319.8

86.0

38.7

153.0

182.6

110.0

8,461.9

5,384.8

157.2

127.6

6.3

- 15.0

2.9

10.5

1.6

20.1

32.8

- 18.3

0.7

n.s.7

2.9

1.24

30.9

36.3

Bâloise-Holding Annual Report 2003 55

Management Information

The same consolidation rules are applied for the man-
agement information as for the segment reports. This
means that, in line with IFRS requirements, group-
internal transactions between the segments are not
eliminated.

Combined ratio: non-life

Loss ratio

Expense ratio

Surplus sharing ratio

Combined ratio

as a percentage of premiums earned

2002

74.8

30.0

0.4

105.2

Gross

2003

67.3

29.9

0.4

97.6

2002

78.8

31.7

0.4

Net

2003

71.2

31.6

0.4

110.9

103.2

Combined ratio (gross)

Switzerland

Germany

Benelux

Other countries

by geographical segment

2002

2003

Loss ratio

Expense ratio

Surplus sharing ratio

Combined ratio

as a percentage of premiums earned

70.9

26.0

0.8

97.7

71.3

23.8

0.8

95.9

2002

81.6

35.0

0.1

2003

64.9

36.1

0.1

2002

81.7

32.4

0.0

2003

67.1

31.2

–

2002

78.2

24.0

0.0

116.7

101.1

114.1

98.3

102.2

2003

53.8

18.4

0.2

72.4

Reserve ratio: non-life

Technical provision for own account

Premiums written and policy fees for own account

Reserve ratio in percent

in CHF m

2002

2003

4,486.4

5,097.6

2,477.5

2,873.4

181.1

177.4

Bâloise-Holding Annual Report 2003 57

2002

4,633.2

–

Life

2003

4,301.1

–

4,633.2

4,301.1

- 2,962.5

- 2,240.6

- 5,203.1

39.7

- 512.6

- 1,042.8

39.8

32.8

–

5.0

2.0

4,593.4

- 5,170.3

39.7

- 507.6

- 1,044.8

1,359.9

- 498.9

41.0

- 133.9

686.1

- 358.7

31.5

0.0

- 327.2

- 3,600.1

- 1,096.6

- 4,696.7

- 428.1

- 301.6

- 1,125.3

53.0

49.0

–

4.3

0.3

4,248.1

- 4,647.7

- 428.1

- 297.3

- 1,125.0

1,491.2

90.4

45.2

- 161.9

1,193.7

68.7

41.7

0.0

27.0

Management Information

Technical income statement

Gross

Gross premiums written and policy fees

Change in unearned premiums reserves

Premiums earned and policy fees

Claims and benefits paid

Change in loss reserves / actuarial reserve

Claims and benefits paid

Policyholder bonuses paid

Technical costs

Total underwriting result (gross)

2002

2,657.6

26.2

2,631.4

- 2,082.2

114.5

- 1,967.7

10.6

- 788.9

- 135.8

Non-life

2003

3,088.8

4.0

3,084.8

- 1,969.2

- 108.4

- 2,077.6

12.7

- 921.8

72.7

Reinsurance ceded

Premiums earned and policy fees

- 179.4

- 218.6

Claims and benefits paid

Policyholder bonuses paid

Technical costs

36.6

0.0

12.1

38.5

0.3

15.7

Total underwriting result of business ceded

- 130.7

- 164.1

2,452.0

- 1,931.1

10.6

- 776.8

- 266.5

267.4

- 195.7

18.0

9.5

63.2

- 203.3

29.7

0.0

- 173.6

2,866.2

- 2,039.1

12.4

- 906.1

91.4

262.5

47.1

18.9

14.3

182.2

90.8

43.3

0.0

47.5

Net

Premiums earned and policy fees

Claims and benefits paid

Policyholder bonuses paid

Technical costs

Total underwriting result for own account

Investment income (gross)

Realized gains and losses on investments (net)

Investment expenses

Other non-technical income and expenses

Non-technical result

Profit / loss before tax and minority interests

Tax on income

Minority interests

Profit / loss after tax before minority interests

in CHF m

The reported technical costs comprise costs arising
from insurance operations which have been charged
in the fiscal year, including the change in the figure
for deferred acquisition costs. Claims processing
costs which relate to claims and benefits paid and
to loss reserves are not included; neither are other
costs of the Baloise Group (especially costs incurred
by Asset Management).

Embedded Value
The embedded value of life insurance business com-
prises three elements: the adjusted capital and re-
serves for life insurance activities and the value of
insurance in force at the end of the period under re-
view, minus the solvency expenses. Embedded value
does not take into account any new business that
will be concluded in the future.

The adjusted capital and reserves are based on mar-
ket value for investments and statutory value for lia-
bilities from insurance operations. The sums of un-
realized investment gains and losses, which can be

subject to strong movements, represent the most
significant capital and reserves component. Declared
capital and reserves only are considered for the
embedded value in the case of the Baloise Group’s
business from Luxembourg, Austria and Croatia.

The value of insurance in force is understood to be
the earnings generated from this insurance in future,
established by discounting all the anticipated cash
flow. A large number of assumptions need to be made
to calculate this value, the most important of which
are listed in the table below.

Assumptions

Risk discount rate

Bond yields

Share returns

Return of investment property

Tax rate

in percent

2002

7.7

4.0

7.2

5.3

20.7

2003

7.6

3.5 – 3.9

7.2

5.1

23.7

Bâloise-Holding Annual Report 2003 59

2003

1,630.8

855.4

1,192.4

- 417.0

275.7

20.5

26.8

26.4

1,980.2

1,236.1

1,008.1

- 264.0

22.8

7.1

1,630.8

855.4

1,192.4

- 417.0

2002

–

2002

–

2003

1,980.2

- 7.2 /+ 8.4

+ 4.3 / - 4.8

+ 4.6 / - 7.6

+ 17.5 / - 17.6

2003

15.5

306.5

5.0

Management Information

Development of embedded value

Embedded value at January 1

Of which value of insurance in force

Of which adjusted capital and reserves

Of which solvency expenses

Operating income from insurance in force, adjusted capital and reserves,

and earnings from new business

2002

3,792.5

1,341.4

2,992.4

- 541.3

164.5

Economic changes, especially changes in unrealized gains and losses on investments

- 2,296.3

Dividends and capital movements

Differences arising from currency translation

Embedded value at December 31

Of which value of insurance in force

Of which adjusted capital and reserves

Of which solvency expenses

in CHF m, all figures “after tax”

Sensitivities

Base value in CHF m

+/- 1% change in discount rate

+/- 10 % change in market value of shares

+/- 10 % change in market value of property

+/- 0.5 % change in money market interest

in percent

New business

Value new business in CHF m

APE1 in CHF m

Ratio of new business to APE in percent

1 Annual Premium Equivalent = 100 % annual premium of new business + 10 %

single premium

External Review: Deloitte has reviewed the choice of methodology together with
the assumption and calculations made by Baloise Group in the calculation of the
embedded value results of its Life Business at December 31, 2003. Deloitte have
reported to Baloise that they consider that the methodology is appropriate,
Baloise’s assumptions are reasonable and that the embedded value results as
published above have been properly compiled on the basis of methodology and
assumptions chosen. For the purpose of this report, Deloitte have performed
certain checks on data provided by Baloise, but have not verified and have relied
on financial information underlying Baloise’s financial statements.

Investment performance in 2002

Current investment income

Realized gains

Realized losses

Change in unrealized gains and losses

taken to capital and reserves

Impairment in value charged to income (net)

Investment management costs

Operating profit

Average level of investments

Performance in percent

in CHF m

Investment performance in 2003

Current investment income

Realized gains

Realized losses

Change in unrealized gains and losses

taken to capital and reserves

Impairment in value charged to income (net)

Investment management costs

Operating profit

Average level of investments

Performance in percent

in CHF m

Fixed-interest
securities

987.0

172.0

297.7

724.3

26.9

26.1

1,532.6

21,238.1

7.2

Fixed-interest
securities

1,163.5

513.1

60.8

307.3

10.0

30.8

1,287.7

26,389.8

4.9

Mortgage loans,
policy loans
and other loans

Alternative
financial assets,
derivatives
and other

173.7

832.8

- 599.8

Investment
property

249.3

50.8

34.7

–

11.3

254.1

- 2,240.4

- 813.7

11.7

- 2,659.1

7,876.6

33.8

557.1

0.2

66.3

–

16.2

6.3

500.9

5,173.9

12,108.0

4.9

4.1

124.2

221.0

Total

2,091.3

1,276.8

- 126.0

- 1,124.5

- 162.9

- 1,679.0

- 134.4

11.8

89.9

4,026.5

2.2

958.8

67.2

461.4

50,423.1

0.9

95.0

462.4

Investment
property

259.9

44.1

- 1,426.2

28.3

642.4

607.6

–

8.7

9.8

Mortgage loans
policy loans
and other loans

505.8

21.0

79.8

–

18.4

10.2

372.5

4,642.6

8.0

265.9

5,510.4

4.8

455.2

12,398.7

3.7

Alternative
financial assets,
derivatives
and other

81.0

177.6

Total

2,105.2

1,218.2

- 267.1

- 1,862.2

180.2

33.3

16.4

122.0

5,127.9

2.4

515.3

602.7

75.9

2,503.3

54,069.4

4.6

Bâloise-Holding Annual Report 2003 61

Management Information

Results from banking business

Interest income

Due from banks

Loans to customers

Investments

Other

Total interest income

Interest payable

Due to banks

Due to customers

Medium-term fixed-rate notes, bonds and mortgage bonds

Other

Total interest payable

Net interest income

Result from commission business and services

Realized gains and losses on investments

Other income

Total income from banking business

Expenses related to banking business

Staff costs

Operating expenses

Total expenses related to banking business

Gross profit / loss

Losses and provisions relating to credit risks

Amortization of intangible assets and depreciation of tangible non-current assets

Profit / loss before tax and minority interests

Tax on income

Minority interests

Net profit / loss

in CHF m

Realized profits and losses on investments in busi-
ness year 2002 include a loss on structured invest-
ments in bonds at Mercator Banque S.A. amounting
to CHF 71.9 million.

Assets under management

Own investments

Investments for account and risk of life insurance policyholders

Assets managed for third parties

Total

in CHF m

Other sales

Sales other than premium-type, in particular sale of fund units

for unit-linked life insurance

in CHF m

2002

3.7

300.8

138.5

3.1

446.1

- 48.3

- 102.9

- 98.3

- 33.7

- 283.2

162.9

13.8

- 71.2

13.8

119.3

- 92.3

- 94.3

- 186.6

- 67.3

- 22.9

9.9

- 100.1

22.1

0.7

- 77.3

2003

1.9

261.6

128.8

1.0

393.3

- 23.0

- 84.9

- 99.5

- 27.7

- 235.1

158.2

8.3

55.6

8.8

230.9

- 93.9

- 73.5

- 167.4

63.5

- 16.6

9.6

37.3

- 15.0

0.0

22.3

2002

2003

50,061.4

56,307.7

550.5

5,932.6

798.2

8,445.2

56,544.5

65,551.1

2002

2003

451.0

541.8

Management Information
Five-year review

Consolidated income statement

Income

Gross premiums written and policy fees1

Reinsurance premiums ceded

Premiums written and policy fees for own account

Change in unearned premiums reserves for own account

Premiums earned and policy fees for own account

Investment income (net)

Realized gains and losses on investments (net)

Income from other services

Other income

Total income

Expenses

Note

7.1

7.3

1999

6,085.3

- 239.5

5,845.8

20.6

5,825.2

2000

6,701.2

- 230.8

6,470.4

14.3

6,484.7

2001

6,632.7

- 207.4

6,425.3

8.1

6,433.4

1,941.8

2,154.4

2,081.2

628.5

200.5

82.5

826.7

265.5

108.7

149.4

271.8

154.1

2002

7,274.5

- 203.6

7,070.9

24.9

7,046.0

2,024.1

- 806.5

249.4

183.7

2003

7,374.7

253.2

7,121.5

6.8

7,114.7

2,029.3

41.3

254.7

147.2

8,678.5

9,840.0

9,089.9

8,696.7

9,504.6

Claims incurred including processing costs (non-life)

Claims and benefits paid (life)

Change in actuarial reserve (life)

Surplus and profit allocations to policyholders

Acquisition costs

Administrative and other operating expenses

Interest payable

Amortization of intangible assets and depreciation

- 1,675.4

- 2,515.0

- 1,407.9

- 731.4

- 382.1

- 984.4

- 274.2

- 1,727.9

- 2,756.5

- 1,680.3

- 870.9

- 311.3

- 1,267.3

- 380.0

- 1,785.0

- 2,896.6

- 1,449.4

- 177.6

- 367.8

- 1,238.6

- 498.6

- 1,920.8

- 2,946.5

- 2,235.0

29.2

- 461.7

- 1,226.5

- 464.9

of tangible non-current asset

Total expenses

12 /13

61.8

- 8,032.2

- 113.7

- 9,107.9

- 153.3

- 8,566.9

- 184.8

- 9,411.0

Profit / loss before tax and minority interests

Tax on income

Minority interests

Consolidated net profit / loss

in CHF m

646.3

- 125.4

2.6

518.3

732.1

94.6

3.1

634.4

523.0

- 714.3

- 116.9

1.7

82.7

2.9

404.4

- 634.5

- 2,031.1

- 3,704.2

952.2

440.5

277.1

- 1,318.4

405.1

152.3

- 9,280.9

223.7

125.4

6.9

91.4

1 Additional information

Gross premiums written and policy fees

Investment-type premiums

Gross premiums, policy fees and investment-type premiums

6,085.3

137.1

6,222.4

6,701.2

176.4

6,877.6

6,632.7

248.4

6,881.1

7,274.5

253.0

7,527.5

7,374.7

261.0

7,635.7

in CHF m

Combined ratio (gross)

Reserve ratio non-life

in percent

In accordance with the accounting policies of the Baloise Group, investment-type
premiums are not included in gross premiums and policy fees.

108.6

185.6

104.7

186.0

105.7

184.3

105.2

181.1

97.6

177.4

Bâloise-Holding Annual Report 2003 63

Management Information

Consolidated balance sheet

Assets

Investments

Fixed-interest securities

Alternative financial assets

Derivatives

Investment property

Mortgage loans

Policy and other loans

Participating interests in associates

Other short-term investments

Cash and cash equivalents

Total investments

Investments for account and risk of life insurance policyholders

Goodwill / badwill

Deferred tax

Other assets

Total assets

Liabilities and capital and reserves

Capital and reserves

Minority interests

Liabilities

Unearned premiums reserves (gross)

Loss reserves (gross)

Actuarial reserve life (gross)

Policyholder bonuses credited and provision

for future policyholder bonuses

Technical provisions for account and risk

of life insurance policyholders

Payables arising from insurance operations

Deposit fund liabilities arising from reinsurance

Liabilities from banking business and loans

Derivatives

Non-technical provisions

Benefits due to employees

Deferred tax

Other liabilities and deferred income

Total liabilities

Total liabilities and capital and reserves

in CHF m

Note

12.31.1999

12.31.2000

12.31.2001

12.31.2002

12.31.2003

14,810.9

16,377.5

–

12.0

4,661.5

5,412.7

1,907.8

311.8

577.2

726.4

19,908.1

13,330.4

920.9

85.9

4,965.8

10,438.7

1,856.7

316.3

631.2

759.9

20,569.3

10,000.8

1,117.2

19.3

5,042.2

10,500.4

1,663.1

289.1

695.1

888.3

21,906.8

29,525.4

5,752.4

1,039.0

212.8

5,305.7

3,475.9

1,337.9

292.9

5,653.4

10,532.0

11,002.4

1,520.4

286.9

2,829.6

675.8

1,456.6

223.8

2,647.4

692.0

44,797.8

53,213.9

50,784.8

50,061.4

56,307.7

251.1

119.1

565.2

362.4

129.6

447.2

512.4

105.6

567.6

550.5

35.4

529.9

798.2

42.1

905.9

3,949.6

49,682.8

5,130.9

59,284.0

5,524.4

57,494.8

5,736.6

56,913.8

6,331.1

64,300.8

7,477.6

157.2

7,372.8

46.2

5,384.8

41.5

3,088.1

28.1

3,319.8

40.7

650.9

3,994.5

629.9

4,021.5

380.9

4,182.0

419.3

4,196.1

493.3

4,786.3

25,165.3

26,314.5

27,558.9

29,757.7

32,985.7

3,426.3

4,768.6

4,197.7

3,685.0

4,063.4

238.9

2,616.2

322.3

1,548.3

44.5

86.1

504.8

2,188.5

1,261.4

42,048.0

49,682.8

356.7

1,349.7

281.7

10,048.9

84.2

127.5

563.6

1,946.8

1,371.4

51,865.0

59,284.0

513.7

1,521.2

269.0

9,697.2

59.9

112.6

559.6

1,640.9

1,374.9

52,068.5

57,494.8

554.6

1,682.5

205.1

9,659.2

87.0

131.7

596.6

1,211.5

1,611.3

53,797.6

56,913.8

798.1

1,620.7

451.5

11,411.7

252.4

118.9

680.0

1,640.8

1,637.5

60,940.3

64,300.8

Bâloise-Holding Annual Report 2003 65

Financial Report 2003
Contents

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Financial Statements
of the Baloise Group
Consolidated income statement
Consolidated balance sheet
Consolidated cash flow statement
Consolidated capital and reserves

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Segment reporting by geographical segment
Segment reporting by business segment

69
70
72
74

76
78

81
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
121 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notes to the consolidated financial statements
Report of the Group auditors

Financial Statements of Bâloise-Holding 2003/2004
Income statement
Balance sheet
Notes to the financial statements
Proposed allocation of accumulated profit
Report of the statutory auditors

Bâloise-Holding Annual Report 2003 67

Financial Report 2003
Consolidated income statement

Income

Gross premiums written and policy fees1

Reinsurance premiums ceded

Premiums written and policy fees for own account

Change in unearned premiums reserves for own account

Premiums earned and policy fees for own account

Investment income (net)

Realized gains and losses on investments (net)

Income from other services

Other income

Total income

Expenses

Claims incurred including processing costs (non-life)

Claims and benefits paid (life)

Change in actuarial reserve (life)

Surplus and profit allocations to policyholders

Acquisition costs

Administrative and other operating expenses

Interest payable

Amortization of intangible assets and depreciation

of tangible non-current assets

Total expenses

Profit / loss before tax and minority interests

Tax on income

Minority interests

Consolidated net profit / loss

in CHF m

Note

7.1

7.3

2002

7,274.5

- 203.6

7,070.9

24.9

7,046.0

2,024.1

- 806.5

249.4

183.7

2003

7,374.7

- 253.2

7,121.5

6.8

7,114.7

2,029.3

41.3

254.7

147.2

8,696.7

9,504.6

- 1,920.8

- 2,946.5

- 2,235.0

29.2

- 461.7

- 1,226.5

- 464.9

- 2,031.1

- 3,704.2

- 952.2

- 440.5

- 277.1

- 1,318.4

- 405.1

12 /13

- 184.8

- 9,411.0

- 152.3

- 9,280.9

- 714.3

82.7

2.9

- 634.5

223.7

- 125.4

6.9

91.4

Earnings / loss per share (identical values for “basic” and “diluted”)

- 11.56

1.67

in CHF

1 Additional information

Gross premiums written and policy fees

Investment-type premiums

Gross premiums, policy fees and investment-type premiums

in CHF m

In accordance with the accounting policies of the Baloise Group, investment-type
premiums are not included in gross premiums and policy fees.

7,274.5

253.0

7,527.5

7,374.7

261.0

7,635.7

Bâloise-Holding Annual Report 2003 69

Financial Report 2003
Consolidated balance sheet

Assets

Investments

Fixed-interest securities

Held for trading

Held to maturity

Available for sale

Held for trading

Available for sale

Alternative financial assets

Derivatives

Investment property

Mortgage loans

Policy and other loans

Participating interests in associates

Other short-term investments

Held for trading

Held to maturity

Available for sale

Cash and cash equivalents

Total investments

Total investments for account and risk of life insurance policyholders

Other assets

Reinsurance assets

Receivables arising out of insurance operations

Receivables relating to employee benefits

Other receivables

Accrued investment income

Deferred acquisition costs

Goodwill / badwill

Other intangible asset

Property, plant and equipment for own use

Other non tangible non-current assets

Deferred tax

Other assets

Total other assets

Total assets

in CHF m

Note

12.31.2002

12.31.2003

462.6

158.5

21,285.7

159.9

5,592.5

1,039.0

212.8

5,305.7

334.3

10,348.6

18,842.5

200.6

3,275.3

1,337.9

292.9

5,653.4

10,532.0

11,002.4

1,520.4

286.9

1,456.6

223.8

0.7

1.2

2,390.5

1,840.7

438.8

675.8

805.5

692.0

50,061.4

56,307.7

550.5

798.2

425.0

1,487.5

53.0

1,138.7

662.5

810.5

35.4

127.5

618.7

86.8

529.9

326.4

737.1

1,289.0

41.2

1,385.6

798.2

985.9

42.1

164.4

605.3

91.4

905.9

233.0

6,301.9

56,913.8

7,194.9

64,300.8

Liabilities and capital and reserves

Capital and reserves

Share capital

Capital reserves

Less treasury stock

Unrealized gains and losses

Accumulated profit

Total capital and reserves

Minority interests

Liabilities

Unearned premiums reserves (gross)

Loss reserves (gross)

Actuarial reserve life (gross)

Policyholder bonuses credited and provision for future policyholder bonuses

Technical provisions for account and risk of life insurance policyholders

Payables arising from insurance operations

Deposit fund liabilities arising from reinsurance

Liabilities from banking business and loans

Derivatives

Non-technical provisions

Benefits due to employees

Deferred tax

Other liabilities and deferred income

Total liabilities

Total liabilities and capital and reserves

in CHF m

Note

12.31.2002

12.31.2003

5.5

108.9

84.8

15.2

3,043.3

3,088.1

28.1

5.5

90.3

49.7

161.1

3,112.6

3,319.8

40.7

419.3

4,196.1

493.3

4,786.3

29,757.7

32,985.7

3,685.0

554.6

1,682.5

205.1

9,659.2

87.0

131.7

596.6

1,211.5

1,611.3

53,797.6

56,913.8

4,063.4

798.1

1,620.7

451.5

11,411.7

252.4

118.9

680.0

1,640.8

1,637.5

60,940.3

64,300.8

Bâloise-Holding Annual Report 2003 71

Financial Report 2003
Consolidated cash flow statement

Cash flow from operating activities

Net profit / loss for the year before tax

Note

2002

714.3

2003

223.7

41.3

41.6

0.2

10.1

152.3

19.2

125.5

218.2

8.1

82.9

1,068.6

4.3

62.4

1,229.2

26.3

1,202.9

16.3

806.5

70.0

3.4

12.7

184.8

46.9

148.9

1.2

44.2

51.5

2,416.4

2.9

229.2

2,578.5

126.5

2,452.0

24.8

- 12,784.9

-19,007.7

11,797.0

13,976.1

- 8,383.0

- 5,094.2

9,719.6

373.6

102.5

7,890.9

462.8

305.3

- 4,105.0

- 9,735.6

1,521.6

94.1

5.9

6.5

9.3

–

73.8

8.9

9,256.2

138.8

47.8

–

115.1

37.5

94.4

9.1

- 2,674.7

- 2,936.9

29.5

28.3

Adjustments for

Realized gains and losses on the sale of investments

Income from participating interests in associates

Interest income on security deposits

Policy fees on investment-type products

Amortization of intangible assets and depreciation of tangible non-current assets

Foreign exchange gains and losses

Movements in operating assets and liabilities

Assets from reinsurance business

Deferred acquisition costs

Unearned premiums reserves

Loss reserves

Actuarial reserve (life)

Technical provisions for account and risk of insurance policyholders

Other movements in operating assets and liabilities

Cash flow from operating activities (gross)

Tax paid

Cash flow from operating activities (net)

Of which from joint ventures

Cash flow from investing activities

Purchase of fixed-interest securities and similar

Disposal of fixed-interest securities and similar

Purchase of shares

Disposal of shares

Purchase of investment property

Disposal of investment property

Purchase of other investments

Disposal of other investments

Acquisition of intangible assets and tangible non-current assets

Disposal of intangible assets and tangible non-current assets

Cash flow from increase in share of investments held

Acquisition of subsidiaries where there is no effect on cash and cash equivalents

Disposal of subsidiaries where there is no effect on cash and cash equivalents

Acquisition of participating interests in associates (net)

Dividends received from associates

Cash flow from investing activities (net)

Of which from joint ventures

in CHF m

Cash flow from financing activities

Note

2002

2003

Capital increases

Capital reductions

Cash inflow from investment-type products

Cash outflow from investment-type products

Increases in liabilities from banking business and loans

Decreases in liabilities from banking business and loans

Cash flow from own shares

Dividends paid

Cash flow from financing activities (net)

Of which from joint ventures

Effect of foreign exchange rate changes on cash and cash equivalents

Total movement in cash and cash equivalents

Cash and cash equivalents

As at January 1

Movement during year

As at December 31

in CHF m

Additional information on cash flow from operating activities

Other interest received

Dividends received

Interest paid

in CHF m

–

107.1

60.7

1,352.2

- 1,210.3

18.1

- 132.7

37.5

4.9

27.3

- 212.5

888.3

- 212.5

675.8

–

354.5

- 138.2

1,806.4

- 289.5

16.5

22.1

1,727.6

4.2

22.6

16.2

675.8

16.2

692.0

1,675.3

215.6

1,244.8

47.6

- 478.8

- 350.0

Bâloise-Holding Annual Report 2003 73

Financial Report 2003
Consolidated capital and reserves

Balance at December 31, 2001

Movement on unrealized gains and losses

on investments (gross)

Less movement on

Policyholder surplus

Deferred acquisition costs charged to capital and reserves

Deferred tax

Foreign exchange differences

Minority interests

Movement on unrealized gains and losses

on investments (net)

Dividends

Consolidated loss for the year

Purchase / sale of treasury stock

Balance at December 31, 2002

in CHF m

Share capital

Capital reserves

Less
treasury stock

5.5

109.3

- 67.1

–

5.5

–

0.4

108.9

- 17.7

- 84.8

Unrealized
gains and
losses (net)

1,526.6

- 1,679.0

23.8

97.7

270.3

- 180.3

3.7

- 1,511.4

Accumulated
profit

3,810.5

–

- 132.7

- 634.5

–

15.2

3,043.3

Total capital
and reserves

5,384.8

- 1,679.0

23.8

97.7

270.3

- 180.3

3.7

- 1,511.4

- 132.7

- 634.5

18.1

3,088.1

Continued

Balance at December 31, 2002

Movement on unrealized gains and losses

on investments (gross)

Less movement on

Policyholder surplus

Deferred acquisition costs charged to capital and reserves

Deferred tax

Foreign exchange differences

Minority interests

Movement on unrealized gains and losses

on investments (net)

Dividends

Consolidated net profit for the year

Purchase / sale of treasury stock

Balance at December 31, 2003

in CHF m

Share capital

Capital reserves

Less
treasury stock

5.5

108.9

- 84.8

–

5.5

–

- 18.6

90.3

35.1

- 49.7

Unrealized
gains and
losses (net)

15.2

515.3

- 141.2

- 99.1

- 13.6

- 115.3

0.2

145.9

Accumulated
profit

3,043.3

Total capital
and reserves

3,088.1

–

515.3

- 141.2

99.1

13.6

- 115.3

0.2

145.9

22.1

91.4

16.5

–

22.1

91.4

–

161.1

3,112.6

3,319.8

Bâloise-Holding Annual Report 2003 75

Financial Report 2003
Segment reporting by geographical segment

Income

Gross premiums written and policy fees

Reinsurance premiums ceded

Premiums written and policy fees for own account

Change in unearned premiums reserves for own account

Premiums earned and policy fees for own account

Investment income (net)

Realized gains and losses on investments (net)

Income from other services

Other income

Total income

Of which between geographical segments

Of which income from associates

Expenses

Claims incurred including processing costs (non-life)

Claims and benefits paid (life)

Change in actuarial reserve (life)

Surplus and profit allocations to policyholders

Acquisition costs

Administrative and other operating expenses

Interest payable

Amortization of intangible assets and depreciation

of tangible non-current asset

Total expenses

Profit / loss before tax and minority interests

Tax on income

Minority interests

Net profit / loss by region

Additional information

Assets by geographical segment

Of which investments

Of which participating interests

Liabilities by geographical segment

Of which technical provisions

Cash flow from operating activities (net)

Cash flow from investing activities (net)

Cash flow from financing activities (net)

Acquisition of real estate, equipment and furnishings

and intangible assets for own use

Impairment of value charged to income

Reinstatement of original value charged to income

in CHF m

2002

4,652.8

160.5

4,492.3

1.0

4,493.3

1,002.2

205.1

25.9

36.1

5,352.4

64.5

–

802.9

- 2,014.2

- 1,993.2

42.8

145.1

482.5

160.1

42.1

Switzerland

2003

4,269.3

169.2

4,100.1

5.9

4,094.2

939.5

38.3

27.3

28.2

5,050.9

75.4

0.1

836.7

- 2,372.1

962.5

126.8

83.0

483.9

75.8

48.6

2002

1,755.1

247.2

1,507.9

17.3

1,490.6

688.1

320.8

92.8

24.8

Germany

2003

2,199.9

269.6

1,930.3

10.6

1,940.9

769.0

82.1

96.8

46.6

1,975.5

2,771.2

208.0

68.1

373.3

825.4

136.5

12.5

177.9

324.0

112.0

39.5

179.6

48.9

606.4

- 1,096.1

6.7

346.9

30.8

470.0

114.7

35.9

- 5,597.3

- 4,989.4

- 2,001.1

- 2,694.1

244.9

12.6

–

232.3

33,041.2

28,815.1

0.1

30,221.7

22,845.7

2,309.7

- 2,209.7

434.7

4.1

612.8

130.4

61.5

0.6

–

62.1

34,481.6

30,055.1

0.1

31,287.8

23,847.2

722.2

- 1,161.8

114.0

33.0

57.1

502.7

25.6

12.9

2.9

15.6

14,347.6

12,090.7

120.5

14,097.1

11,958.6

74.2

36.6

26.7

0.6

238.0

55.0

77.1

87.4

6.8

17.1

18,193.9

15,255.7

118.7

17,691.2

14,883.5

132.7

182.5

90.7

17.9

73.2

219.8

2002

713.2

41.9

671.3

32.0

639.3

273.6

- 259.1

108.9

45.9

808.6

13.2

1.9

- 415.4

77.8

90.0

1.1

- 119.7

- 288.5

- 164.0

27.3

- 1,181.6

- 373.0

39.8

0.2

- 333.0

8,142.1

6,371.4

166.3

7,873.9

2,496.0

125.4

- 340.3

229.3

23.7

- 251.4

2.2

Benelux

Other countries

2003

744.6

56.7

687.9

4.3

683.6

268.9

46.3

102.8

48.1

1,057.1

13.5

7.2

386.8

204.5

15.0

36.6

141.4

256.1

181.4

42.4

2002

443.2

43.8

399.4

22.7

422.1

71.9

21.5

21.8

93.4

587.7

2003

441.0

37.8

403.2

7.6

- 395.6

57.1

125.4

27.8

33.7

639.6

- 313.2

0.0

- 282.7

0.0

- 339.4

- 209.2

18.6

14.8

1.8

83.2

67.9

56.9

75.9

23.6

10.6

3.4

56.2

74.5

47.7

25.4

- 1,161.0

- 658.5

- 450.6

103.9

18.2

0.2

121.9

10,100.6

7,753.6

104.8

9,891.4

2,829.3

53.2

- 1,039.4

1,054.2

32.9

119.9

135.4

70.8

17.4

0.2

53.6

3,516.2

3,088.1

0.0

3,739.0

1,060.0

57.3

96.6

84.9

7.8

44.2

–

189.0

20.4

0.3

168.3

3,473.3

3,327.6

0.2

4,018.5

1,107.8

299.5

- 328.2

239.0

48.9

13.4

8.4

2002

- 289.8

289.8

Elimination

2003

- 280.1

280.1

–

0.7

11.7

–

16.5

27.5

–

10.2

10.5

0.5

0.4

64.2

63.6

28.1

–

27.5

–

0.0

- 2,133.3

- 303.9

–

- 2,134.1

- 302.2

0.0

- 202.8

202.8

–

0.4

5.2

–

9.4

14.2

–

8.0

7.9

0.8

0.0

34.3

33.9

14.5

–

14.2

–

0.0

- 1,948.6

84.3

–

- 1,948.6

- 339.1

4.7

- 225.0

229.7

–

2002

7,274.5

203.6

7,070.9

24.9

7,046.0

2,024.1

806.5

249.4

183.7

Total

2003

7,374.7

253.2

7,121.5

6.8

7,114.7

2,029.3

41.3

254.7

147.2

8,696.7

9,504.6

–

70.0

–

41.6

- 1,920.8

- 2,946.5

- 2,235.0

29.2

461.7

- 1,226.5

464.9

184.8

- 2,031.1

- 3,704.2

952.2

440.5

277.1

- 1,318.4

405.1

152.3

- 9,411.0

- 9,280.9

714.3

82.7

2.9

634.5

56,913.8

50,061.4

286.9

53,797.6

38,058.1

2,452.0

- 2,692.8

55.6

35.0

- 1,146.4

187.6

223.7

125.4

6.9

91.4

64,300.8

56,307.7

223.8

60,940.3

42,328.7

1,202.9

- 2,936.9

1,727.6

34.9

263.6

866.3

Bâloise-Holding Annual Report 2003 77

Financial Report 2003
Segment reporting by business segment

Income

Gross premiums written and policy fees

Reinsurance premiums ceded

Premiums written and policy fees for own account

Change in unearned premiums reserves for own account

Premiums earned and policy fees for own account

Investment income (net)

Realized gains and losses on investments (net)

Income from other services

Other income

Total income

Of which between business segments

Of which income from associates

2002

2,657.6

- 180.1

2,477.5

25.5

2,452.0

249.4

- 195.7

0.2

81.2

2,587.1

35.4

1.6

Non-life

2003

3,088.8

215.4

2,873.4

7.2

2,866.2

243.6

47.1

0.0

54.5

2002

4,633.2

39.8

4,593.4

–

4,593.4

1,318.9

498.9

0.2

55.0

3,117.2

5,468.6

32.5

5.3

30.1

0.2

Expenses

Claims incurred including processing costs (non-life)

- 1,931.1

- 2,039.1

Life

2003

4,301.1

53.0

4,248.1

–

4,248.1

1,446.0

90.4

0.8

28.2

5,632.7

25.1

28.0

–

- 3,696.3

951.4

428.1

64.4

353.2

145.9

53.5

–

10.5

- 309.5

- 476.4

15.9

47.0

–

12.4

342.2

564.7

9.4

58.6

–

- 2,935.8

- 2,234.5

39.7

153.1

340.5

163.6

39.5

- 2,790.4

- 3,026.4

- 5,827.3

- 5,564.0

- 203.3

29.7

0.0

- 173.6

90.8

43.3

0.0

47.5

358.7

31.5

0.0

327.2

68.7

41.7

0.0

27.0

9,247.2

7,208.2

10,280.3

7,996.1

38,408.0

37,225.4

42,787.8

41,684.5

4.3

32.8

5.6

15.1

Claims and benefits paid (life)

Change in actuarial reserve (life)

Surplus and profit allocations to policyholders

Acquisition costs

Administrative and other operating expenses

Interest payable

Amortization of intangible assets and depreciation

of tangible non-current asset

Total expenses

Profit / loss before tax and minority interests

Tax on income

Minority interests

Net profit / loss by business segment

Additional information

Assets by business segment

Liabilities by segment

Acquisition of real estate, equipment and furnishings

and intangible assets for own use

in CHF m

Banking

2003

Other activities and
Group business

2002

2003

–

345.2

39.0

8.3

56.9

449.4

13.4

0.3

–

167.4

235.1

9.6

412.1

37.3

15.0

–

22.3

–

109.8

17.7

235.2

12.5

339.8

19.9

68.2

–

- 222.3

81.3

88.4

- 392.0

52.2

0.6

3.6

56.4

–

41.3

57.2

245.6

23.6

367.7

18.2

8.0

–

- 232.7

77.5

30.6

- 340.8

26.9

25.4

6.9

5.4

2002

–

399.5

94.2

13.8

60.5

379.6

7.0

0.0

–

186.6

283.2

9.9

479.7

100.1

22.1

0.7

77.3

2002

16.3

0.0

0.6

53.5

–

25.5

78.4

–

10.3

10.7

0.5

–

0.9

0.7

79.1

–

78.4

–

Elimination

2003

15.2

–

0.4

46.8

–

16.0

62.4

–

8.0

7.9

0.8

–

0.7

0.4

62.8

–

62.4

–

2002

7,274.5

203.6

7,070.9

24.9

7,046.0

2,024.1

806.5

249.4

183.7

Total

2003

7,374.7

253.2

7,121.5

6.8

7,114.7

2,029.3

41.3

254.7

147.2

8,696.7

9,504.6

–

70.0

–

41.6

- 1,920.8

- 2,946.5

- 2,235.0

29.2

461.7

- 1,226.5

464.9

184.8

- 2,031.1

- 3,704.2

952.2

440.5

277.1

- 1,318.4

405.1

152.3

- 9,411.0

- 9,280.9

714.3

82.7

2.9

634.5

223.7

125.4

6.9

91.4

11,239.8

10,587.7

13,059.4

12,282.8

1,689.2

2,446.7

1,591.1

2,394.7

- 3,670.4

- 3,417.8

56,913.8

53,797.6

64,300.8

60,940.3

3.8

4.5

21.3

17.5

–

35.0

34.9

Bâloise-Holding Annual Report 2003 79

Financial Report 2003
Notes to the consolidated financial statements

1. Basis of accounting

The Baloise Group operates solely in Europe. It com-
prises 14 insurance companies, which provide almost
all types of life and non-life insurance. The holding
company is Bâloise-Holding, a Swiss stock corpora-
tion (Aktiengesellschaft) which has its registered
office in Basel, Switzerland. The shares of Bâloise-
Holding are quoted on SWX Swiss Exchange. Its
subsidiaries operate in the insurance markets of
Switzerland, Germany, Belgium, Austria, Luxembourg
and Croatia. The banking business is carried out by
subsidiaries in Switzerland, Germany and Belgium.
The Baloise Group also has an investment fund
structure in Luxembourg.

The consolidated financial statements of the Baloise
Group are prepared on a historical cost basis, taking
into account adjustments resulting from regular re-
assessments of the fair market value of certain in-
vestments, and are established in accordance with
the International Financial Reporting Standards (IFRS).
They comply with Swiss legal requirements. As the
International Financial Reporting Standards do not
currently contain any insurance-specific guidelines,
insurance business has been valued in accordance
with the Generally Accepted Accounting Principles
in the United States (US GAAP).

2. Application of new accounting standards

In fiscal 2002 and 2003
In fiscal 2002 and 2003, no new IFRS or US GAAP
standards affecting the Baloise Group were intro-
duced, nor were any existing ones changed.

3. Accounting policies

3.1 Method of consolidation
The consolidated financial statements consist of the
financial statements of Bâloise-Holding and of its
subsidiaries. A subsidiary is consolidated where the
Baloise Group has over 50 % of the voting rights,
whether directly or indirectly, or exercises control over
it. All intragroup transactions or profits and losses
arising therefrom are eliminated.

Companies acquired in the course of the year under
review are included in the consolidation from the
date when effective control was acquired, while all
companies disposed of during the year are included
in the consolidation until the date of disposal. Com-

panies which are acquired for the purpose of resale
are held and accounted for as investments.

A joint venture is a contractual arrangement whereby
two or more parties undertake an economic activity
which is subject to joint control. Deutscher Ring
Beteiligungsholding is a joint venture in which the
Baloise Group has a direct 65% interest. The remain-
ing 35 % are held by Deutscher Ring Krankenversi-
cherungsverein, a mutual insurance company. The
contractual arrangements are such that the majority
shareholder does not have overall control. These com-
panies are consolidated on a proportionate basis,
therefore the Baloise Group reports only its share of
assets, liabilities, income and expenses.

Participating interests in associates are accounted
for under the equity method if the Baloise Group
has significant influence on the management of the
company and the company is not being held exclu-
sively with a view to its disposal in the near future.

3.2 Foreign currency translation
The financial statements of the Baloise Group are
stated in Swiss francs (CHF).

Foreign currency translation: The financial statements
of all business units which were not originally pre-
pared in CHF have been translated at year-end rates
(for balance sheet figures excluding goodwill) or at
average rates for the year (for the income statement).
The total exchange differences arising are taken di-
rectly to capital and reserves.

Assets and liabilities in foreign currencies in the ac-
counts of the individual companies are translated at
year-end rates. Income and expenses are translated
at the rate applicable on the transaction date or at
the average rate for the year. The resulting exchange
differences are taken to the income statement.

3.3 Investments

3.3.1 Financial assets
The business activities of the Baloise Group include
the issuing of insurance policies, as a result of which
the Group incurs financial liabilities and assumes
guarantees. To ensure that it is in a position to meet
its financial liabilities, the Baloise Group acquires
financial instruments which correspond as closely
as possible in type and maturity period to the expect-
ed level of claims and benefits paid. The composi-
tion of the investment portfolio is therefore deter-
mined mainly by the expected investment return for

Bâloise-Holding Annual Report 2003 81

Financial Report 2003

each type of investment by the type of liabilities aris-
ing from insurance business and by the availability of
risk capital, which is used to even out fluctuations
in the price of investments.

The following criteria are used to classify financial
assets: Financial assets which were acquired with
the purpose of realizing a short-term gain by taking
advantage of fluctuations in market price are shown
under the Held for trading heading. Financial assets
which are held for an indefinite period of time and
may be sold at any time to improve liquidity or to react
to changes in market conditions are shown as Avail-
able for sale. Financial assets with a fixed maturity date
are shown under the heading Held to maturity, provid-
ed the Baloise Group has the opportunity and inten-
tion of holding them until their maturity date. There
is also the possibility of classifying investments as
Originated by the Group. Investments are classified
under one of these headings when they are first re-
corded in the books. The classification is then re-
viewed at year-end to ensure that it is still appropriate.

Alternative financial assets such as private equity in-
vestments and hedge funds are held as Available
for sale.

Loans, policy loans and similar financial assets is-
sued by the Baloise Group are shown under the head-
ing Originated by the Group.

Financial assets under the headings Held for trading
and Available for sale are recorded in the balance
sheet at fair market value.

Financial assets under the headings Held to maturity
or Originated by the Group are valued at amortized
cost, less any necessary adjustments for permanent
diminution in value (impairment). The effective in-
terest method is used to amortize or write back the
difference between cost and the redemption value.
An adjustment is made for impairment if the present
value of expected future cash flows discounted at
the financial instrument’s original effective interest
rate, including the effect of any hedging transac-
tions, is lower than the book value and this situation
is not expected to be temporary.

All purchases and sales of financial assets are record-
ed at the trade date.

Changes in the value of financial assets under Held
for trading are recognized as realized book profits /
losses in the income statement in the period in which
they arise. Financial assets under Available for sale
are revalued at their market value, and unrealized

gains and losses are taken to capital and reserves. In
the case of monetary assets classified as Available
for sale, any foreign currency revaluation is credited
to income. Monetary assets include primarily fixed-
interest securities. Shares do not count as monetary
assets. For life insurance companies, deductions are
made from the unrealized gains and losses in view
of those amounts which will be used in future to
amortize acquisition costs and to pay bonuses and
dividends to policyholders (shadow accounting).

When financial assets are disposed of, any unrealized
gains or losses are transferred from capital and re-
serves to the income statement. The same applies
where an investment has suffered a permanent dimi-
nution in value (become impaired).

Changes to the fair values of financial assets which
are the subject of a fair value hedge are recognized,
regardless of classification, in the income statement
over the period of the hedge. Interest income from
fixed-interest investments which have been written
down is recognized when it is received.

3.3.2 Investment property
Investment property is shown at fair market value.
This is determined each year by a valuation based on
prevailing market conditions and carried out by in-
house specialists. The fair value of holdings is derived
principally from future cash flows, using mathemati-
cal calculations based on similar transactions. Exter-
nal valuation reports are obtained at regular intervals.
Scheduled depreciation is not charged on investment
property. Changes in value are immediately recog-
nized in the income statement, in the period of occur-
rence, as realized book gains / losses.

3.4 Permanent diminution in value (impairment)
The carrying values of assets are reviewed on a reg-
ular basis for recoverability. A permanent diminution
in value (impairment) loss arises if the recoverable
amount of an asset is less than its carrying amount.
The recoverable amount is the higher of an asset’s
net selling price (the estimated amount obtainable
from the sale of an asset less incremental costs di-
rectly attributable to the disposal of the asset) and
an asset’s value in use (the present value of esti-
mated future cash flows expected to arise from the
continuing use of an asset and from its disposal at
the end of its useful life).

The estimated future cash flows are based on reason-
able assumptions about the economic conditions
that will exist over the remaining useful life of the

asset and on cash flow projections and budgets/fore-
casts approved by the Corporate Executive Commit-
tee. Permanent diminutions in value are recognized
in the income statement.

The Baloise Group determines any impairment of fi-
nancial assets according to the following rules:

If the market value is more than 50 % below the pur-
chase value, an impairment entry must be booked
in any case. Provided the market value is more than
20 % but less than 50 % below purchase value, im-
pairment is to be considered and an entry made
where applicable. The impairment will be assessed
on the basis of reports by bank analysts and ratings
by ratings agencies. Dividend developments, under-
lying capital and other factors will also be taken
into account. The prime yardstick for the formation
of the impairment is, however, the appraisal by the
asset manager responsible. In forming the impair-
ment, the accumulated net loss recorded in the capi-
tal and reserves will be transferred to the income
statement.

3.5 Derivatives
The main tool for the management of investment risk
and return on the asset side of the balance sheet is
the strategic allocation of investments to the various
investment categories (asset allocation). Derivative
instruments are used to underpin this asset alloca-
tion. They are particularly useful for hedging invest-
ments, when preparing to purchase or sell invest-
ments, or to slightly increase investment income.
However, no trading or speculative business is under-
taken in derivatives. Derivative transactions are un-
dertaken only with counterparties who have at least
an A credit rating from Standard & Poor’s.

All derivatives are recorded in the balance sheet at
their market value. When the contract is concluded,
the derivative is classified either as a hedging instru-
ment against the market value of an asset or a liabi-
lity (fair value hedge), as a hedge against future trans-
actions (cash flow hedge) or as a trading instrument.
Derivatives which do not fulfill IFRS requirements for
hedging transactions are treated as trading instru-
ments, even if they have a hedging function accord-
ing to the Baloise Group’s own risk management re-
gulations.

Changes in the market value of derivatives which
have been classified as fair value hedging instru-
ments are shown in the income statement net, to-
gether with changes in the market value of the hedged
asset or liability.

Changes in the market value of derivatives which
have been classified as cash flow hedging instru-
ments are taken directly to capital and reserves. The
amounts accounted for in capital and reserves will
be recorded at a later date in the income statement
together with the hedged cash flows.

Changes in the market value of derivatives which
are classified as trading instruments or do not fulfill
the requirements of a hedging transaction are shown
in the income statement.

The Baloise Group keeps records of hedge effective-
ness and the aims and strategies pursued for each
hedging transaction. Hedge effectiveness is closely
monitored from the date the contract begins. Deriv-
atives which no longer meet the requirements for a
hedging instrument are reclassified as trading in-
struments.

Structured products are financial instruments, either
assets or liabilities, which consist of a host contract
and embedded derivatives. In the majority of cases,
the embedded derivatives are not separated from
the host contract and are classified in the trading
portfolio of the host business, with the effect that
unrealized gains and losses are recorded directly in
the income statement. Some derivatives are sepa-
rated from the host contract and are separately re-
corded, valued and disclosed. For this to be the case,
the following conditions must apply: that the eco-
nomic characteristics and risks of the embedded
derivative are not closely related to those of the host
contract and that the embedded derivative itself
would meet the definition of a derivative financial
instrument.

3.6 Intangible assets
Company acquisitions are accounted for using the pur-
chase method. Under this method, the purchase price
is compared on the date of acquisition with the fair
values of the assets and liabilities acquired, and the
balance is accounted for as goodwill. Goodwill relat-
ing to subsidiaries which do not prepare their financial
statements in Swiss francs is translated at the ex-
change rate applicable on the date of the acquisition.

Capitalized goodwill is amortized on a straight-line
basis over its expected useful life, which may not ex-
ceed 20 years. The period over which the goodwill is
to be amortized is determined mainly by the future
economic benefits expected to flow from the com-
pany acquired. These depend, among other things,
on the type of business acquired, the lifespan of the
insurance contracts, relationships with clients and

Bâloise-Holding Annual Report 2003 83

Financial Report 2003

sales channels. The value of the capitalized goodwill
is reviewed annually. If the book value of the good-
will is greater than the recoverable amount, the dif-
ference will be amortized via the income statement.

Badwill is offset against positive goodwill. Badwill
written of is credited to the income statement (offset
against the amortization expense) on a systematic
basis over the remaining average useful life of the
acquired, non-monetary assets, at most, however,
over 20 years.

The present value of profits from insurance contracts
acquired is amortized over the underlying period of
premium payments taken to income. The value of the
profits is reviewed on an annual basis. Other intan-
gible assets consist mainly of software and are writ-
ten off on a straight line basis over their estimated
useful life.

3.7 Tangible non-current assets
Tangible non-current assets are shown at cost less
accumulated depreciation. Depreciation is calculat-
ed on a straight line basis over the estimated useful
life of the asset, as follows: buildings for own use 25
to 50 years, equipment and furnishings 5 to 10 years,
computer hardware 3 to 5 years. Land is shown at
cost less any necessary provisions for impairment.
Repairs and maintenance are always charged to the
income statement.

3.8 Leasing
Lease agreements relating to real estate, fixtures, fit-
tings and other tangible non-current assets, whereby
basically all the risks and rewards relating to owner-
ship of the asset are transferred to the Baloise Group,
are defined and treated as finance leases. The fair
value of the leased property, or the cash value of the
leasing payments if lower, is disclosed as a tangible
non-current asset at the inception of the lease. Each
lease payment comprises a depreciation expense
for the asset and interest payment. The depreciation
expense is deducted from the liability for the leased
asset, which is shown under Liabilities from banking
business and loans. The value of the leased item is
reviewed on the balance sheet reference date. If the
cash value of the leasing payments is lower than
the book value of the leased item, the value will be
corrected via the income statement.

Other lease agreements are classified as operating
leases. Lease payments under an operating lease are
recognized as an expense in the income statement
on a straight line basis over the lease term.

3.9 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand,
demand deposits and short-term highly liquid in-
vestments with maturity periods of up to 24 hours.
Cash and cash equivalents are stated at their nominal
value. Term deposits are entered under Other short-
term investments.

3.10 Receivables
Receivables arising out of insurance operations and
other receivables are recognized and stated at amor-
tized cost. This generally corresponds to the nomi-
nal value of the amount receivable. Permanent dim-
inutions in value (impairment losses) are charged
directly to the income statement.

3.11 Life insurance
Premiums are accounted for as income when due.
Claims and benefits paid and costs are accounted
for so as to ensure that the profit from the contracts
is allocated equally over the anticipated term of the
policies. Premiums and services relating to invest-
ment-type products are accounted for as follows: the
risk and cost element is taken to the income state-
ment, while the savings element is directly credited
to or deducted from the policyholder’s deposit.

The actuarial reserve is calculated on the basis of
actuarial principles from the cash value of future
claims and benefits paid less the cash value of pre-
miums not yet paid. The calculation is made in ac-
cordance with the following Financial Accounting
Standards: FAS 60, FAS 97 or FAS 120. The accounting
principles (e.g. in respect of interest or mortality) vary
depending on the country, product and year of acqui-
sition and take country-specific empirical values into
consideration. Unearned premiums, unearned rev-
enue reserves and provisions for final policyholder
bonuses are included in the actuarial reserve.

Amounts for future surplus shares to policyholders
are fixed on the basis of local statutory and contrac-
tual regulations and are allocated to a separate pro-
vision. This provision also includes policyholders’
share of the unrealized gains and losses covered by
the IFRS shareholders’ equity and their share of the
higher or lower values recorded in the consolidated
financial statement – as compared with the statement
based on commercial law – and taken to income.
Statutory regulations and the rules set out in con-
tracts and company articles of incorporation are
authoritative in determining the share of future poli-
cyholder bonuses. Where there are no such statu-
tory regulations or rules set out in contracts and

company articles of incorporation – as in the case of
Belgium, Luxembourg and Switzerland – an alloca-
tion to policyholder bonuses will not apply.

Policyholder bonuses credited: Bonuses already al-
located which have been accrued on an interest-bear-
ing basis are included in Policyholder bonuses credit-
ed and provision for future policyholder bonuses.

This provision comprises the following

(cid:2) Sums irrevocably set aside for future policy-

holder bonuses,

(cid:2) Policyholders’ shares of the reported result,
(cid:2) Policyholders’ shares of unrealized profits and

losses on investments.

Investments and technical provisions relating to unit-
linked life policies: These amounts relate to invest-
ment-type products. With these products, it is the
policyholder who bears the investment risk in accor-
dance with specific investment aims. Current invest-
ment income and market price fluctuations are di-
rectly debited or credited to the policyholders. The
investments are held separately and are not available
to meet claims arising from other business activities
of the Baloise Group. Investments and liabilities are
stated at market value. Administrative and redemp-
tion costs charged to policyholders are recognized
as policy fee income.

3.12 Non-life insurance
The term gross is added to technical account head-
ings where these refer to business concluded by the
Baloise itself. The terms net or for own account are
used after deducting any reinsurance element.

Gross premiums written are recognized in the fiscal
year in which they fall due. They include an amount
required to cover the insurance risk and any loading.
Any part of the premium which relates to future fiscal
years is deferred under the contract and is included
in the unearned premiums reserves in the balance
sheet, together with any provisions for premium
shortfalls relating to the fiscal year. Premiums which
do relate to the fiscal year are referred to as premiums
earned. This figure comprises premiums written and
the change in the unearned premiums reserves.

Loss reserves and provisions for the associated
claims processing costs are set up for all losses
which have occurred before the end of the fiscal
year, whether or not these have been notified to the
Baloise Group.

These provisions represent a projection of all future
payments to be made in respect of these losses. Loss
reserves are calculated on the basis of prior year ex-
perience and expected developments in the future.
The process involves the application of mathemati-
cal, statistical methods and the expertise of claims-
handling specialists. The aim is to establish provi-
sions for outstanding claims and for claims processing
costs which are as realistic as possible. An additio-
nal provision is set for claims processing costs.

The combined loss reserves have three components.
The provisions calculated according to actuarial
methods form the basis of the combined provision;
a second component is provisions for those complex
special cases and events which do not lend them-
selves to purely mathematical calculations. These two
components are determined without discounting.
The third component is annuities, which are capita-
lized on the basis of technical principles such as
mortality rates, technical interest rates, etc.

The whole process of projecting the future can never
entirely eliminate the uncertainties inherent in future
developments. Therefore, future developments may
well be different to those projected. The provisions
established in a particular year are systematically re-
viewed, which means that variances can be control-
led. On the basis of such reviews, the projection pro-
cess can be adjusted if necessary. Surplus and profit
allocations to policyholders: insurance contracts
may provide for surplus sharing with a client arising
from the surplus on his contracts. Payments made
during the fiscal year and the change in the relevant
provisions combine to give the figure referred to in the
income statement as surplus and profit allocations
to policyholders.

3.13 Deferred acquisition costs
Costs which are directly associated with the acqui-
sition of insurance contracts (e.g. commissions) are
deferred and written off over the period of the con-
tract, or over the premium payment period, if shorter.
Deferred acquisition costs are reviewed when the
contract is acquired and thereafter on an annual basis
for recoverability.

3.14 Reinsurance
Reinsurance contracts are insurance contracts be-
tween insurance companies. If a transaction is to be
recognized as a reinsurance transaction, there must
be a transfer of risk as defined the US-GAAP, other-
wise the contract would be dealt with outside the
income statement as deposit accounting.

Bâloise-Holding Annual Report 2003 85

Financial Report 2003

Reinsurance assumed is recognized in the same ac-
counting period as the initial risk. The technical pro-
visions are included in liabilities under the headings
Unearned premiums reserves (gross) and Loss re-
serves (gross). These provisions are as realistic as
possible and are based on empirical values and the
most up-to-date information available.

Reinsurance ceded is business which has been ceded
to insurance companies outside the Group and com-
prises amounts which relate to direct life and non-
life business and reinsurance assumed which is to
be ceded.

Assets from reinsurance ceded are calculated on the
same basis and for the same period as the original
transaction and shown in assets from reinsurance.
Where deposits are at risk due to insolvency, appro-
priate write-downs are made in the income state-
ment.

Receivables and payables from deposit accounting
contracts are recognized mainly using the interest
method. The effective interest rate is calculated on
the basis of cash flows which have already occurred
or are expected in the future. Otherwise, the insur-
ance coverage financed by the deposit is amortized
over the expected term of the deposit. Liabilities
are included in Deposit fund liabilities arising from
reinsurance.

3.15 Own shares
Own shares (treasury stock) held by Bâloise-Holding
or by its subsidiaries are shown at cost in the con-
solidated financial statements as a deduction from
Capital and reserves. The shares are not restated at
their current market value. When the shares are sold,
the difference between cost and selling price is ad-
justed under Capital and reserves. Only Bâloise-
Holding shares are counted as own shares.

3.16 Liabilities from banking business and loans
Liabilities from banking business and loans are stated
at amortized cost. The effective interest rate method
is used to amortize or write back the difference be-
tween cost and redemption value. The cost figure also
includes transaction costs.

The convertible loan issued by Baloise Finance Jersey,
which confers the right to subscribe for shares in a
non-group company, consists of a liability and an
embedded option. When the loan was issued, the
market value of the embedded option was deter-
mined and shown separately as a derivative financial

instrument. The cost of the liability component is the
present value of future cash flows, which was calcu-
lated when the issue was made. The discount factor
applied is the market interest rate for similar loans
without conversion or option rights.

3.17 Financial provisions
Financial (non-technical) provisions are recognized
when the Baloise has a present obligation (legal or
de facto), when it is probable that an outflow of re-
sources will be required to settle the obligation and
when a reliable estimate can be made of the amount
of the obligation. The amount of the provision is based
on the best estimate of possible outcomes. If no re-
liable estimate can be made of the liability, it is dis-
closed as a contingent liability.

3.18 Tax
The provision for deferred tax in the consolidated fi-
nancial statements is calculated under the liability
method, i.e. based on current or future expected tax
rates. Deferred tax takes into account the income tax
effects of temporary differences between the assets
and liabilities carried in the consolidated balance
sheet and their fiscal base. When deferred tax is cal-
culated, unused tax losses are only carried forward to
the extent that it is probable that future taxable profit
will be available against which the tax losses can be
utilized.

3.19 Benefits due to employees
Amounts due from the Baloise Group to employees
include all types of employee benefits given in ex-
change for services rendered by employees or in spe-
cial circumstances.

The following amounts need to be established: short-
term benefits (such as wages), benefits due in the
long term (such as anniversary payments) and ben-
efits upon termination of employment (such as sever-
ance pay and benefits from redundancy schemes).

Because of the amounts involved, the following ben-
efits can be particularly significant:

Postemployment benefits: The main retirement ben-
efits are pensions and insurance contributions as-
sumed by the employer. The benefits are paid when
the employee ceases to be employed and are fi-
nanced during the period in which the employee is
working. The retirement pensions in the Baloise Group
are predominantly defined benefit plans. The present
value of the defined benefit obligation is discounted

using the Projected Unit Credit Method (accrued ben-
efit method prorated on service). Plan assets which
match the benefits payable are only recognized if they
are brought into an entity which is legally separate
from the employer, e.g. a foundation. The plan assets
are stated at market value. If a difference arises be-
tween the assets and liabilities when IAS 19 is used,
this is shown as an asset or liability in the consoli-
dated balance sheet. An asset is only recognized to
the extent that the Baloise controls a resource which
may be used to reduce future contributions or improve
future benefits, but this resource cannot be returned
to the employer.

Pension plans of the Baloise Group are tailor-made
for local circumstances as regards enrolment and
the extent of benefits. Benefits in the narrow sense
are pension benefits. Other plan benefits may be
subsidized premiums or contributions to health
insurance and are of minor significance. Payments
are made mainly by the employer and in some coun-
tries also by the employees. Pension plans are some-
times implemented within companies and some-
times in entities which are legally separate from the
employer.

Equity benefits: Employee shares, share participation
schemes, shares subscribed directly and shares
subscribed through options are equity benefits.

Employee shares: The Baloise Employee Trust set up
in 1989 gives the employees of various Group com-
panies the opportunity, subject to the rules issued
by the Trust’s Board, to acquire shares in Bâloise-
Holding, usually on an annual basis, at a preferential
subscription price. The Trust acquired the shares set
aside for this purpose from previous increases in
the share capital of Bâloise-Holding. Due to the low
acquisition cost of the shares held by the Trust and
the number of shares held, Bâloise-Holding will be
able to continue with this profit-sharing initiative in
the years to come. The Trust is managed by a Trust
Board which is independent of the Corporate Execu-
tive Committee, reports to the cantonal fund authority
of the city of Basel and is not consolidated.

Share participation scheme: Since May 2001, most
middle and senior managers working in Switzerland
can opt to have a freely determinable part of their
performance-related earnings (incentive) remitted
as shares instead of cash. To boost the effectiveness
of the share participation scheme, employees receive
a loan at a market rate of interest, enabling them to
purchase a far greater number of shares than pro-
vided by the incentive scheme. The loan repayment
after a three-year blocking period is hedged with a

put option that is financed by the sale of a corre-
sponding call option. After expiry of the three-year
blocking period, employees receive the shares re-
maining after repayment of the loan for their free dis-
posal. The Baloise does not incur any additional costs
by this share participation scheme.

Shares subscribed directly: Since January 2003, em-
ployees of all Group companies who are eligible for
incentives have been able to subscribe shares at a
preferential price as part of their variable, perform-
ance-related pay component (incentive). The sub-
scription price is always 10 % lower than the market
value at the time of subscription. The shares are com-
mitted to safe custody for a blocking period of three
years.

Option rights: The members of the Corporate Execu-
tive Committee and of the Executive Boards of the
subsidiaries, and other employees in key positions,
are granted options to purchase shares in Bâloise-
Holding as part of their remuneration. These options
are purchased from third parties by the Baloise Group
at market value and are quoted on the stock market.
The conditions which apply to the option rights are
specified at the beginning of the fiscal year. The
number of options alloted by the end of the financial
year depends on whether the parties concerned have
met their personal performace objectives. The allot-
ed share options may not be sold for two years. The
associated costs are already included in personnel
expenses.

3.20 Other liabilities
Other liabilities are recognized and stated at amortized
cost, which is generally the same as nominal value.

3.21 Fair value of financial assets and liabilities
The fair value of financial instruments is based on
quoted market values or on estimates (present value
method, etc.) and on the following assumptions:

Cash, cash equivalents and short-term investments:
The amounts shown in the balance sheet are stated
at market value (fair value).

Fixed-interest securities: The fair value is generally
based on quoted prices. If quoted prices are not avail-
able, the price is determined by independent valua-
tions or by comparing the market prices of similar fi-
nancial instruments.

Shares: Fair value is the quoted share price. If this
is not available, the fair value is estimated using gen-

Bâloise-Holding Annual Report 2003 87

Financial Report 2003

erally recognized methods and in light of the current
state of the market. If the value cannot be estimated
reliably, stocks are reported at acquisition value.

Mortgage loans, policy loans and other loans: The
fair values are determined by discounting the cash
flows, using the current interest rate applied by the
Baloise Group to similar loans. Derivatives are stated
at market prices as supplied by independent brokers
or in accordance with market practice.

Other financial assets: The fair value is generally a
quoted market price. If no market prices are available,
the market value is estimated. If the value cannot
be estimated reliably, financial assets are reported
at acquisition value.

Deposits and other amounts due to policyholders:
The fair values are determined by discounting the
cash flows, using the current interest rate applied by
the Baloise Group to similar financial instruments
with similar time remaining to maturity.

Liabilities from banking business and loans: The
fair values are determined by discounting the cash
flows, using the current interest rate payable by the
Baloise Group for similar financial instruments with
similar periods of time to maturity.

Other financial liabilities: The fair value is generally
a quoted market price. If no market prices are avail-
able, the market value is estimated. If the value can-
not be estimated reliably, financial liabilities will be
reported at acquisition value.

3.22 Offsetting assets and liabilities
Financial assets and liabilities are offset and the net
amount reported in the balance sheet when there is
a legally enforceable right to set off the recognized
amounts and the Baloise Group intends to realize
the asset and settle the liability simultaneously.

3.23 Use of accounting estimates
In order to prepare annual financial statements in
accordance with IFRS, it is necessary for the Corporate
Executive Committee to make assumptions and esti-
mates which have an effect on the amounts disclosed
in the balance sheet and income statement for the
current fiscal year. Therefore, it is possible that the
actual figures may differ from the estimates.

4. Foreign currency translation

4.1 Rates of exchange

Balance

Income statement /
cash flow statement

Currency

EUR (Euro)

USD (US Dollar)

GBP (Pound Sterling)

in CHF

2002

2003

2002

2003

1.45

1.38

2.23

1.56

1.24

2.21

1.47

1.56

2.33

1.52

1.34

2.20

4.2 Foreign exchange differences
Exchange differences arising from transactions in
foreign currencies included in the consolidated in-
come statement resulted in a gain of CHF 47.0 million
in fiscal 2003 (2002: loss of CHF 122.4 million). This
also comprises a foreign exchange gain of CHF 135.6
million resulting from monetary investments classi-
fied as Available for sale.

5. Acquisitions and disposals of subsidiaries

and other business units

5.1 Acquisitions and disposals of subsidiaries

and other business units in 2002

During the course of 2002, all 2.2% outstanding mi-
nority interests in Deutscher Ring Leben were pur-
chased for CHF 6.1 million. Deutscher Ring Leben is
now wholly owned by the Baloise Group.

No other significant acquisitions or disposals were
effected.

5.2 Acquisitions and disposals of subsidiaries

and other business units in 2003

The purchase of
the German insurance group
Securitas was formally and substantively completed
as of January 7, 2003. The Group was therefore con-
solidated at this time and is included in the present
statement figures. During the course of fiscal 2003
Securitas was merged with parts of the German
branch of the Baloise, Insurance Company Limited,
Basel, to form Basler Securitas Versicherungs-Aktien-
gesellschaft.

Gilde Lebensversicherungs AG which forms part of the
Securitas Group was acquired by the German branch
of the Baloise Life Insurance Company Ltd, Basel.

DePfa Beteiligungs-Holding II GmbH, Düsseldorf,
valued at equity, sold its participating interest to
DePfa Bank PLC, Dublin, through the stock market in
the second half of 2003.

During the year under review, the fully consolidated
real estate company Rubens 2000 N.V., Antwerp, was
sold for CHF 37.5 million.

The other activities and Group business segment in-
clude in particular investment and real estate com-
panies.

The accounting principles applied to the segment re-
porting are the same as apply to the entire financial
report. Transactions between business segments and
geographical segments within the Baloise Group are
conducted on the same terms as transactions with
third parties. Information analyzed by geographical
and business segments is given in the segment re-
ports, in the Management Information section and in
the following tables.

No other significant acquisitions or disposals were
effected in fiscal 2003.

Investments

Other assets

Securitas Group

1,919.6

343.6

Technical provisions

- 1,854.7

Other

21.2

–

Total

1,940.8

343.6

- 1,854.7

Other liabilities

- 257.8

- 6.9

- 264.7

Net assets acquired

150.7

14.3

165.0

Cost

107.3

21.7

129.0

Goodwill / badwill

43.4

7.4

36.0

Cost

Cash and cash

107.3

21.7

129.0

equivalents aquired

13.1

- 0.8

13.9

Cash and cash

equivalents used

to make the acquisitions

94.2

20.9

115.1

in CHF m

6. Information about geographical

and business segments

The Baloise Group has strategic operations in the fol-
lowing regions: Switzerland (including the Principality
of Liechtenstein), Germany, the Benelux and Other
countries.

The business segments are non-life insurance, life
insurance, banking (including asset management and
investment funds) and other activities and Group
business. Non-life insurance includes accident in-
surance, health insurance and products for liability,
automobile, property and transport lines of business.
The products are geared to the requirements of our
clients – mainly private clients – and the core com-
petencies of the companies in the Baloise Group.
On the life insurance side, a broad range of asset-
forming insurance, pure risk coverage and unit-linked
products is provided for private individuals and com-
panies. The banking segment comprises Baloise Bank
SoBa, an all-purpose bank operating in Switzerland,
Mercator Bank in Belgium, which is involved in all
types of savings business, principally financing real
estate and small and medium-sized enterprises,
and Deutscher Ring Bausparkasse in Germany, pre-
dominantly active in traditional real estate financing.

Bâloise-Holding Annual Report 2003 89

Life

Elimination

3,477.9

970.4

154.0

31.8

0.9

4,633.2

–

- 16.3

Life

Elimination

3,031.6

1,077.6

161.2

30.8

0.1

4,301.1

–

- 15.2

2002

17.1

1.9

- 1.0

- 21.4

10.0

Total

4,652.8

1,755.1

713.2

443.2

- 289.8

7,274.5

Total

4,269.3

2,199.9

744.6

441.0

- 280.1

7,374.7

Total

2003

- 8.2

20.9

0.7

2.5

- 0.1

Financial Report 2003

6.1 Gross premiums by geographical

and business segments

6.1.1 Gross premiums by geographical

and business segments 2002

Switzerland

Germany

Benelux

Other countries

Elimination

Total

in CHF m

6.1.2 Gross premiums by geographical

and business segments 2003

Switzerland

Germany

Benelux

Other countries

Elimination

Total

in CHF m

Non-life

1,174.9

784.7

559.2

411.4

- 272.6

2,657.6

Non-life

1,237.7

1,122.3

583.4

410.2

- 264.8

3,088.8

6.2 Change in gross premiums by geographical

and business segments 2003

2002

3.5

10.2

0.2

- 22.2

3.1

Non-life

2003

5.3

38.0

0.6

4.1

14.0

2002

22.6

- 3.9

- 5.1

- 18.0

14.4

Life

2003

- 12.8

7.1

1.0

- 3.8

- 8.1

Switzerland

Germany

Benelux

Other countries

Total

in percent of original currency

6.3 Gross premiums by line of business

Non-life

Accident

Health

General liability

Automobile

Transport

Property

Other

Reinsurance assumed

Total

Life

Single premiums

Recurring premiums

Premiums for investment-type products

Total

in CHF m

2002

430.3

121.9

249.2

866.3

116.4

733.4

38.5

101.6

2003

448.1

122.5

317.2

979.5

164.5

914.3

39.6

103.1

2,657.6

3,088.8

2,464.2

2,422.0

- 253.0

4,633.2

1,932.4

2,629.7

- 261.0

4,301.1

Change
in percent

4.1

0.5

27.3

13.1

41.3

24.7

2.9

1.5

16.2

- 21.6

8.6

3.2

- 7.2

6.4 Investments by business segments 2002

Fixed-interest securities

Alternative financial assets

Derivatives

Investment property

Mortgage loans

Policy and other loans

Participating interests in associates

Other short-term investments

Cash and cash equivalents

Total

in CHF m

Non-life

3,158.0

1,381.9

78.0

13.7

967.4

422.2

72.2

77.5

42.7

182.0

6,395.6

Life

15,745.6

4,089.9

145.8

163.5

3,950.2

4,635.2

1,168.4

83.4

2,510.8

135.9

Other

3,003.2

280.6

815.2

35.6

388.1

Total

21,906.8

5,752.4

1,039.0

212.8

5,305.7

5,474.6

10,532.0

279.8

126.0

276.1

357.9

1,520.4

286.9

2,829.6

675.8

32,628.7

11,037.1

50,061.4

Bâloise-Holding Annual Report 2003 91

Non-life

4,579.0

634.6

60.7

47.7

1,025.9

396.6

62.5

29.4

526.8

244.4

Life

20,914.2

2,587.7

75.8

166.9

4,077.7

4,818.7

1,088.0

153.4

1,874.7

145.9

Other

4,032.2

253.6

1,201.4

78.3

549.8

Total

29,525.4

3,475.9

1,337.9

292.9

5,653.4

5,787.1

11,002.4

306.1

41.0

245.9

301.7

1,456.6

223.8

2,647.4

692.0

7,607.6

35,903.0

12,797.1

56,307.7

2002

987.0

173.7

8.4

–

249.3

480.3

76.8

70.0

45.8

2003

1,163.5

95.0

7.5

–

259.9

431.8

74.0

41.6

31.9

2,091.3

2,105.2

67.2

2,024.1

75.9

2,029.3

70.0

41.6

Financial Report 2003

6.5 Investments by business segments 2003

Fixed-interest securities

Alternative financial assets

Derivatives

Investment property

Mortgage loans

Policy and other loans

Participating interests in associates

Other short-term investments

Cash and cash equivalents

Total

in CHF m

7. Profits arising from investments

7.1 Investment income

Fixed-interest securities

Alternative financial assets

Derivatives

Investment property

Mortgage loans

Policy and other loans

Participating interests in associates

Other short-term investments, cash and cash equivalents

Total (gross)

Investment management costs

Total (net)

Of which from associates

in CHF m

Investment income of CHF 58.1 million (2002: CHF
65.2 million) from value-adjusted mortgage loans
and policy and other loans has accrued as at Decem-
ber 31, 2003, but has not been recognized in the in-
come statement.

7.2 Realized gains and losses: 2002

Realized gains on disposal and book gains

Held for trading

Available for sale

Held to maturity

Originated by the Group

Subtotal

Realized losses on disposal and book losses

Held for trading

Available for sale

Held to maturity

Originated by the Group

Subtotal

Impairment of value charged income

Available for sale

Held to maturity

Reinstatement of original value charged to income1

Available for sale

Held to maturity

Total

Fixed-interest
securities

26.6

145.4

–

1.3

831.5

–

Investment
property

–

50.8

–

Other

175.1

45.9

–

0.2

Total

203.0

1,073.3

–

0.2

172.0

832.8

50.8

221.2

1,276.8

- 10.2

- 287.5

0.0

–

- 38.3

- 561.5

–

- 34.7

–

- 297.7

- 599.8

- 34.7

- 112.6

- 13.5

–

- 66.2

- 192.3

- 161.1

- 897.2

0.0

66.2

-1,124.5

- 29.2

- 914.9

0.0

2.3

–

- 152.6

–

101.2

–

- 580.7

–

- 134.6

- 67.7

-1,078.7

67.7

0.3

83.8

103.8

83.8

16.1

- 89.3

- 806.5

Cumulative impairment of value charged to income (net)

30.1

942.6

–

511.0

1,483.7

in CHF m

7.3 Realized gains and losses: 2003

Realized gains on disposal and book gains

Held for trading

Available for sale

Held to maturity

Originated by the Group

Subtotal

Realized losses on disposal and book losses

Held for trading

Available for sale

Held to maturity

Originated by the Group

Subtotal

Fixed-interest
securities

22.9

490.2

–

40.4

422.0

–

513.1

462.4

- 29.4

- 31.4

–

3.3

- 1,422.9

–

Investment
property

–

44.1

–

44.1

–

- 28.3

–

- 60.8

- 1,426.2

- 28.3

Impairment of value charged income

Available for sale

Held to maturity

Reinstatement of original value charged to income1

3.6

- 128.9

–

Available for sale

Held to maturity

Total

13.6

0.0

462.3

736.5

–

- 356.2

15.8

- 163.2

Cumulative impairment of value charged to income (net)

22.1

356.9

–

545.3

924.3

in CHF m

1 Upon disposal of financial instruments, any impairment in value charged to the
income statements of former periods is registered as reinstatement of original
value in the income statement. The difference between the original purchase
value and the income from sale is recorded as profit or loss.

Bâloise-Holding Annual Report 2003 93

Other

81.6

96.0

–

20.9

198.5

- 217.5

- 49.5

–

- 79.8

- 346.8

Total

144.9

1,052.3

–

20.9

1,218.1

- 250.2

-1,532.1

–

79.8

-1,862.1

- 63.5

- 67.6

- 196.0

67.6

30.2

86.0

780.3

86.0

41.3

Financial Report 2003

7.4 Unrealized gains and losses

(included in capital and reserves)

Fixed-interest securities

Alternative financial assets

Derivatives held for cash flow hedges

Investment property

Mortgage loans

Policy and other loans

Participating interests in associates

Other short-term investments

Subtotal (gross)

Less amounts relating to

Deferred acquisition costs (life)

Surplus shares to policyholders (life)

Minority interests

Deferred tax

Foreign exchange differences

Total (net)

in CHF m

12.31.2002

12.31.2003

Movement in
business year

997.9

- 321.0

105.8

10.6

–

- 11.0

0.8

781.5

- 140.2

- 134.6

0.3

- 115.5

- 376.3

15.2

690.6

321.4

138.4

96.6

–

50.0

0.2

1,296.8

- 239.3

- 275.8

0.1

- 129.1

- 491.6

161.1

- 307.3

642.4

32.6

86.0

–

61.0

0.6

515.3

- 99.1

- 141.2

0.2

- 13.6

- 115.3

145.9

In fiscal 2003, some fixed-interest securities classi-
fied as Available for sale were reclassified as Held to
maturity. At the time of the reclassification, the un-
realized gains and losses on the relevant securities
position amounted to CHF 262.6 million.

As of December 31, 2003, the fixed-interest securities
classified as Available for sale do not include any se-
curities valued at purchase value (2002: CHF 38,836).

During the year 2003, no fixed-interest securities
without market value were sold. The change in book

value is due to the reclassification of securities for
which, in the meantime, reliable market values have
become available.

Shares not stated at market value to the amount of
CHF 89.2 million (2002: CHF 66.7 million) are includ-
ed in the financial statements at December 31, 2003.
It was not possible to establish a market price or
make a reliable estimate of the value of these shares.
They have been entered at purchase value, or lower if
there are justifiable reasons for this.

7.5 Movement in unrealized gains and losses

(included in capital and reserves)

Balance at January 1 (gross)

Movement in unrealized gains and losses on financial assets available for sale

Movement on unrealized gains and losses on associates

Movement on hedging reserve relating to derivatives held for cash flow hedges

Balance at December 31 (gross)

in CHF m

2002

2,460.5

- 1,603.7

90.5

15.2

781.5

2003

781.5

368.3

61.0

86.0

1,296.8

8. Investment property

Balance at January 1

Additions

Additions due to changes in composition of consolidated Group

Disposals

Disposals due to changes in composition of consolidated Group

Reclassification

Change in market value

Foreign exchange differences

Balance at December 31

in CHF m

As a result of various restructuring measures in
Germany and Belgium, vacated properties for the
company’s own use were converted to investment
properties (see also table 13.2., Property, plant and
equipment for own use). Most of the investment pro-
perty is located in Switzerland.

9. Participating interests in associates

2002

5,042.2

373.4

0.2

2003

5,305.7

464.9

84.5

- 100.3

- 288.2

0.3

–

9.9

19.4

5,305.7

28.6

29.1

6.2

92.2

5,653.4

DePfa Beteiligungs-Holding II GmbH, Düsseldorf

Brinvest N.V., Antwerp

Rec-Hold, Brussels

Roland Rechtsschutz Versicherungs-AG, Cologne

Other

Total

in CHF m

2002

94.9

54.0

44.3

18.9

74.8

286.9

Book value

Share of profit

2003

89.9

61.4

–

20.3

52.2

2002

59.2

1.1

0.0

1.5

8.2

223.8

70.0

2003

39.8

- 4.8

–

1.5

5.1

41.6

2002

40.0 %

31.2 %

30.7 %

25.0 %

–

Holding

2003

40.0 %

31.2 %

–

25.0 %

–

There are no significant amounts due from or to as-
sociates.

In fiscal 2003, the stake in Rec-Hold, Brussels, was
exchanged for stocks of the exchange-listed N.V.
Recticel SA, Brussels, and is hence classified as
Available for sale.

In connection with the business restructuring, undis-
closed reserves at DePfa Beteiligungs-Holding II
GmbH were realized and to the greatest extent paid to
the parent company in 2002. The distributed amount
of CHF 59.2 million was repaid to the share premium
account of DePfa Beteiligungs-Holding II GmbH in
the course of the same year.

Further information about associates is given in
Note 34, Significant subsidiaries and participating
interests at December 31, 2003.

Bâloise-Holding Annual Report 2003 95

Contract values

Fair value: assets

Fair value: liabilities

2002

–

3,716.9

–

2003

–

3,539.7

582.0

–

0.2

–

2002

–

35.8

–

2003

–

135.3

10.0

–

2002

–

24.4

–

2003

–

125.2

–

0.0

–

3,716.9

4,121.9

35.8

145.3

24.4

125.2

–

4,641.2

1,281.3

5.8

–

1.4

–

4,647.0

1,282.7

49.5

41.9

642.5

–

222.7

22.6

4,635.9

–

733.9

9,097.8

4,881.2

10,285.8

–

170.4

0.0

–

170.4

0.4

–

6.2

–

6.6

212.8

–

3.7

0.0

–

3.7

32.8

–

111.1

–

143.9

292.9

–

56.9

0.5

–

57.4

0.4

2.6

2.2

–

5.2

87.0

2002

101.0

384.3

61.7

3.5

550.5

–

31.2

0.1

–

31.3

36.8

1.3

57.8

–

95.9

252.4

2003

101.3

599.9

93.1

3.9

798.2

Financial Report 2003

10. Derivatives

Interest rate instruments

Forward transactions

Swaps

OTC options

Other

Traded options

Traded futures

Subtotal

Equity instruments

Forward transactions

OTC options

Traded options

Traded futures

Subtotal

Foreign exchange instruments

Forward transactions

Swaps

OTC options

Traded options

Traded futures

Subtotal

Total

in CHF m

11. Investments for account and risk
of life insurance policyholders

Fixed-interest securities

Other short-term investments

Cash and cash equivalents

Total

in CHF m

For technical reasons, it is possible that there may
be slight differences between the investments for ac-
count and risk of life insurance policyholders and the
corresponding liabilities.

12. Intangible assets

12.1 Intangible assets 2002

Book value at January 1

Additions arising from changes in composition

of consolidated Group

Additions arising from changes in share of investments held

Additions from internal development

Disposals

Disposals arising from changes in composition

of consolidated Group

Subsequent goodwill adjustment

Amortization / write-backs

Impairment of value charged to income

Reinstatement of original value charged to income

Deferred interest

Foreign exchange differences

Book value at December 31

Cost

Accumulated amortization and write-downs

Balance at December 31 (net)

in CHF m

12.2 Intangible assets 2003

Book value at January 1

Additions arising from changes in composition

Goodwill

143.4

7.5

6.1

–

1.0

–

- 89.9

–

Badwill

- 37.8

–

4.5

–

11.6

–

66.1

- 30.7

587.5

- 521.4

66.1

- 103.2

72.5

- 30.7

Present value
of profits
from insurance
contracts acquired

–

Further
intangible assets

117.5

–

49.1

3.6

–

Total

223.1

7.5

1.6

49.1

3.6

1.0

–

- 33.5

- 111.8

0.7

–

1.3

127.5

279.3

- 151.8

127.5

Goodwill

66.1

Badwill

- 30.7

Present value
of profits
from insurance
contracts acquired

Further
intangible assets

–

127.5

0.7

–

1.3

162.9

763.6

- 600.7

162.9

Total

162.9

7.6

–

58.6

of consolidated Group

7.4

- 43.4

28.3

Additions arising from changes in share of investments held

Additions from internal development

Disposals

Disposals arising from changes in composition

of consolidated Group

Subsequent goodwill adjustment

Amortization / write-backs

Impairment of value charged to income

Reinstatement of original value charged to income

Deferred interest

Foreign exchange differences

Book value at December 31

Cost

Accumulated amortization and write-downs

Balance at December 31 (net)

in CHF m

–

3.9

–

- 15.3

- 37.6

–

15.3

- 1.8

–

16.7

- 58.8

26.5

591.0

- 574.3

16.7

- 146.6

87.8

- 58.8

28.3

- 1.8

26.5

0.1

–

58.6

- 15.0

–

- 37.5

0.7

–

4.9

137.9

327.9

- 190.0

137.9

3.9

–

- 39.3

- 38.3

–

4.9

122.3

800.6

- 678.3

122.3

On the basis of impairment testing, a further CHF
20.0 million have been written down to zero in ad-
dition to the planned amortization of goodwill from
the participation in Mercator Verzekeringen N.V. in
the business year 2003.

During the year under review, goodwill arising from
various smaller shareholdings was the subject of
unscheduled write-downs amounting to CHF 17.6
million based on impairment tests.

Bâloise-Holding Annual Report 2003 97

Financial Report 2003

13. Tangible non-current assets

13.1 Property, plant and equipment

for own use: 2002

Cost

Accumulated depreciation and write-downs

Balance at December 31 (net)

Land

93.2

–

93.2

Buildings

753.2

- 268.1

485.1

Plant and
equipment

93.5

- 53.1

40.4

Total

939.9

- 321.2

618.7

Of which assets under finance leases

–

133.2

–

133.2

in CHF m

13.2 Property, plant and equipment

for own use: 2003

Book value at January 1

Additions

Additions arising from changes in composition

of consolidated Group

Disposals

Disposals arising from changes in composition

of consolidated Group

Reclassification

Depreciation

Impairment of value charged to income

Reinstatement of original value charged to income

Foreign exchange differences

Book value at December 31

Cost

Accumulated depreciation and write-downs

Balance at December 31 (net)

Land

93.2

1.3

4.1

- 2.7

–

- 0.7

–

1.4

96.6

–

96.6

Buildings

485.1

6.9

21.6

- 12.8

–

- 28.4

- 24.3

–

23.5

471.6

764.0

- 292.4

471.6

Plant and
equipment

40.4

7.7

–

2.4

–

- 10.8

–

2.2

37.1

101.0

- 63.9

37.1

Total

618.7

15.9

25.7

- 17.9

–

- 29.1

- 35.1

–

27.1

605.3

961.6

- 356.3

605.3

Of which assets under finance leases

–

139.8

–

139.8

in CHF m

13.3 Other tangible non-current assets: 2002

Cost

Accumulated depreciation and write-downs

Balance at December 31 (net)

Machinery / furniture /
motor vehicles

102.2

- 54.5

47.7

IT equipment

121.1

- 82.0

39.1

Total

223.3

- 136.5

86.8

Of which assets under finance leases

0.1

5.5

5.6

in CHF m

13.4 Other tangible non-current assets: 2003

Book value at January 1

Additions

Additions arising from changes in composition of consolidated Group

Disposals

Disposals arising from changes in composition of consolidated Group

Machinery / furniture /
motor vehicles

IT equipment

47.7

28.2

2.1

5.9

–

39.1

16.1

1.7

1.5

–

Total

86.8

44.3

3.8

7.4

–

Depreciation

- 15.4

- 24.2

- 39.6

Impairment of value charged to income

Reinstatement of original value charged to income

Foreign exchange differences

Book value at December 31

Cost

Accumulated depreciation and write-downs

Balance at December 31 (net)

–

2.0

58.7

128.6

- 69.9

58.7

–

1.5

32.7

138.9

- 106.2

32.7

–

3.5

91.4

267.5

- 176.1

91.4

Of which assets under finance leases

0.1

0.7

0.8

in CHF m

14. Deferred acquisition costs

Balance at January 1

Deferred during the year under review

Written off in the year under review

Written off in the year under review due to anticipated loss

Change as a result of unrealized gains and losses

on investment (shadow accounting)

Disposals arising from changes in composition

of the consolidated Group

Foreign exchange differences

Balance at December 31

in CHF m

2002

135.5

251.7

- 229.6

2.4

–

1.3

153.9

Non-life

2003

153.9

266.5

- 249.3

2.3

–

5.7

174.5

2002

588.6

134.3

- 152.9

–

Life

2003

656.6

135.4

71.4

–

2002

724.1

386.0

- 382.5

2.4

Total

2003

810.5

401.9

- 177.9

2.3

95.9

- 89.6

95.9

- 89.6

–

9.3

656.6

–

37.6

811.4

–

- 10.6

810.5

–

43.3

985.9

Bâloise-Holding Annual Report 2003 99

2002

4,182.0

- 353.7

3,828.3

2003

4,196.1

- 280.8

3,915.3

1,900.8

20.0

1,920.8

2,017.2

13.9

2,031.1

- 933.8

- 808.3

- 1,742.1

- 996.7

- 885.6

- 1,882.3

–

91.7

239.7

129.4

369.1

3,915.3

4,433.2

3,915.3

280.8

4,196.1

4,433.2

353.1

4,786.3

Financial Report 2003

15. Loss reserves including
claims processing costs

Balance at January 1 (gross)

Amount attributable to reinsurers

Loss reserves for own account

Claims incurred (including claims processing costs)

For current year

For prior years

Total

Payments made for loss and claims processing costs

For current year

For prior years

Total

Other movements

Changes in composition of consolidated Group

Exchange differences

Total

Balance at December 31 (net)

Loss reserves for own account

Amount attributable to reinsurers

Loss reserves at December 31 (gross)

in CHF m

Particular attention is paid to environmental claims
relating to disposal sites, waste, asbestos material
and, in general, substances which are harmful to hu-
mans and to the environment. Ascertaining when
such cases might arise and determining the potential
extent of such claims involves much greater uncer-
tainty than in all traditionally used claims models.
Therefore, the provisions set up for these claims are
surrounded by a higher level of uncertainty. At the
end of 2002, these gross provisions, which are in-
cluded in the total provision, amounted to CHF 353.9
million, and they stood at CHF 320.1 million at the
end of 2003. The decline by 33.8 million is due to
claims processing amounting to CHF 12.3 million and
currency effects amounting to CHF 21.5 million, as a
large part of the provisions are held in foreign cur-
rencies.

100

16. Actuarial reserve: life

Long-term contracts

Contracts with surplus sharing

Contracts without surplus sharing

Total

in CHF m

17. Policyholder bonuses credited and provision

for future policyholder bonuses

Policyholder bonuses credited

Provision for future policyholder bonuses

Total

in CHF m

18. Reinsurance

18.1 Technical provisions and assets

from reinsurance

2002

2003

29,618.1

32,847.5

139.6

138.2

29,757.7

32,985.7

2002

3,238.9

446.1

3,685.0

2003

3,214.1

849.3

4,063.4

Unearned premiums reserves

Loss reserves

Actuarial reserve (life)

Policyholder bonuses credited and provision

for future policyholder bonuses

Total technical provisions

Deposits and assets from reinsurance

Impairment of value accounted for in income statement

Total reinsurance assets

in CHF m

2002

419.3

4,196.1

29,757.7

Gross

2003

493.3

4,786.3

32,985.7

3,685.0

38,058.1

4,063.4

42,328.7

–

Reinsurance assets

2003

4.3

353.1

294.7

0.0

652.1

85.0

–

737.1

2002

6.4

280.8

136.7

0.0

423.9

1.1

–

425.0

2002

412.9

3,915.3

29,621.0

Net

2003

489.0

4,433.2

32,691.0

3,685.0

37,634.2

4,063.4

41,676.6

–

No single reinsurer or reinsurance contract is so ma-
terial to the Group that its loss would have a signifi-
cant effect on consolidated net profit.

In 2003, 3.7 % of gross premiums and policy fees
were ceded to external reinsurers (2002: 3.0%). 69%
(2002: 67 %) of reinsurance is ceded to reinsurers
rated AA (Standard & Poor’s) or better.

Bâloise-Holding Annual Report 2003 101

Life

Elimination

Non-life

2,531.3

100.2

2,631.5

4,633.1

–

4,633.1

- 179.5

2,452.0

39.7

4,593.4

Life

Elimination

Non-life

2,982.7

102.1

3,084.8

4,301.1

–

4,301.1

- 218.7

2,866.1

52.9

4,248.2

0.0

- 15.6

16.2

0.6

0.0

- 14.8

15.2

0.4

2002

8.8

- 0.1

8.7

3.1

- 11.7

0.0

0.1

0.3

- 0.2

Total

7,164.4

84.6

7,249.0

- 203.0

7,046.0

Total

7,283.8

87.3

7,371.1

- 256.4

7,114.7

2003

0.3

- 0.2

0.1

41.0

- 0.2

1.1

42.0

54.3

- 12.3

Financial Report 2003

18.2 Premiums earned and policy fees

18.2.1 Premiums earned and policy fees: 2002

Direct gross premiums earned

Indirect gross premiums earned

Total gross premiums earned

Reinsurance ceded

Total net premiums earned

in CHF m

18.2.2 Premiums earned and policy fees: 2003

Direct gross premiums earned

Indirect gross premiums earned

Total gross premiums earned

Reinsurance ceded

Total net premiums earned

in CHF m

18.3 Deposit assets and liabilities
from deposit accounting

Deposit assets

Deposit liabilities

Balance at January 1

Increases in deposits

Redemptions

Foreign exchange differences

Balance at December 31

Of which deposit assets

Of which deposit liabilities

in CHF m

102

19. Liabilities from banking business and bonds

19.1 Liabilities from banking business

and financing operations

Amounts due to banks

Fixed-term deposits payable

Loans

Mortgages

Savings and bank customer deposits

Medium-term fixed-rate notes

Mortgage bonds

Bonds

Liabilities under finance leases

Total

in CHF m

Of these, CHF 106.3 million (2002: CHF 96.2 million)
relate to subordinated liabilities as at December 31,
2003.

19.2 Bonds

Balance at January 1

Initial offer price of newly issued bonds

Embedded derivative

Deferred tax portion

Additions (subtotal)

Disposals / redemptions

Interest expense

Nominal interest

Accrued interest (subtotal)

Balance at December 31

in CHF m

2002

802.1

96.2

81.8

0.4

4,698.2

1,936.1

614.2

1,266.0

164.2

9,659.2

2003

1,313.8

106.3

14.1

0.4

5,513.9

2,064.1

709.0

1,519.9

170.2

11,411.7

2002

1,088.1

175.2

–

175.2

–

43.4

40.7

2.7

2003

1,266.0

251.1

–

251.1

–

42.2

39.4

2.8

1,266.0

1,519.9

Bâloise-Holding Annual Report 2003 103

Financial Report 2003

19.3 Terms applicable to the bonds outstanding

Nominal value in CHF m

Interest rate

Effective interest rate

Advance redemption date

Redemption amount

Conversion rights

Year of issue

Redemption date

Security number

Baloise Finance (Jersey) Ltd.

Bâloise-Holding

Baloise Bank SoBa

Bâloise-Holding

200

1.0 %

3.2 %

–

100 %

in UBS shares

1998

300

3.25 %

–

100 %

1998

600

4.25 %

–

100 %

2000

175

3.625 %

–

100 %

2002

250

3.375 %

–

100 %

2003

4.7.2006

4.7.2008

9.28.2005

6.12.2007

12.15.2009

SWX 858858

SWX 858851 SWX 1123532 SWX 1422292 SWX 1726032

19.4 Reconciliation between minimum lease and
their present value for financial leasing

Lease period

< 1 year

1 – 5 years

> 5 years

Total minimum lease payments

Future finance expenses

Total present value

in CHF m

20. Financial provisions for the year 2003

Balance at January 1

Addition due to changes in composition of consolidated Group

Currency translation

Additional provisions charged to income

Unused amounts reversed and released to income

Amounts used not charged to income

Increase owing to mark-up for interest

Balance at December 31

in CHF m

Restructuring

40.1

–

0.8

- 6.2

- 12.8

–

22.7

2002

13.9

40.0

193.1

247.0

- 82.8

164.2

Other

91.6

17.9

5.1

15.4

- 26.7

- 7.1

–

96.2

2003

10.2

45.3

195.4

250.9

- 80.7

170.2

Total

131.7

17.9

5.9

16.2

- 32.9

- 19.9

–

118.9

104

21. Tax on income

21.1 Current and deferred tax on income

Switzerland

Current tax

Deferred tax

Subtotal

Germany

Current tax

Deferred tax

Subtotal

Benelux

Current tax

Deferred tax

Subtotal

Other countries

Current tax

Deferred tax

Subtotal

Total: all countries

Current tax

Deferred tax

Total

in CHF m

2002

2003

21.3

- 33.9

- 12.6

0.5

- 12.4

- 12.9

4.6

- 44.3

- 39.7

8.3

- 25.8

- 17.5

33.7

- 116.4

- 82.7

18.8

- 19.3

0.6

71.0

16.4

87.4

3.3

14.9

18.2

21.5

1.2

20.3

114.6

10.8

125.4

Bâloise-Holding Annual Report 2003 105

2002

- 166.8

7.2

–

88.3

0.3

7.6

7.8

–

2.5

- 82.7

2003

39.9

- 5.1

- 1.7

43.5

–

- 3.4

59.1

–

- 6.9

125.4

Financial Report 2003

21.2 Expected and actual tax on income

Expected tax on income

Increase / decrease due to

Tax-exempt interest and dividend credits

Tax-exempt gains from shares and participating interests

Non-deductible losses from shares and participating interests

Withholding tax for dividends

Change in interest rates

Tax elements unrelated to accounting period

Disposal of enterprises

Other factors

Actual tax on income

in CHF m

The expected average tax rate of the Baloise Group
came to 23.3% in 2002 and to 17.8% in 2003. These
rates correspond to the weighted average of the tax
rates of those countries in which the Baloise Group
operates. The decrease in the average tax rate is at-
tributable to the differences in different regions’
contributions to the result – in comparison with the
preceding years.

The non-deductible losses from shares and partici-
pating interests amounting to CHF 43.5 million (2002:
CHF 88.3 million) were mainly incurred by the Belgian
companies.

The tax elements unrelated to the accounting period
amounting to CHF 59.1 million are essentially attri-
butable to changes in tax legislation affecting life in-
surance companies in Germany.

106

21.3 Deferred tax assets and liabilities

Reasons for deferred tax assets

Unearned premiums reserves

Loss reserves

Actuarial reserve (life)

Unrealized losses on investments

Losses carried forward

Other

Total

Reasons for deferred tax liabilities

Deferred acquisition costs

Unearned premiums reserves

Loss reserves

Actuarial reserve (life)

Unrealized gains on financial investments

Depreciable assets

Other intangible assets

Other

Total

Total (net)

in CHF m

The tax on income payable at the end of 2002 and
2003, which is included in the balance sheet under
Other liabilities and deferred income, amounted to
CHF 29.6 million and 108.5 million respectively. At
December 31, 2003, the Baloise Group capitalized
losses brought forward that can be offset against tax
amounting to CHF 143.4 million (subject to statu-
tory regulations; 2002: CHF 151.8 million). All expire
after five years or more.

As at December 31, 2003 no tax assets were capita-
lized on losses carried forward amounting to CHF
584.3 million (2002: CHF 411.2 million). Of these,
CHF 20.8 million expire after one year, a further CHF
0.8 million expire after two to four years and CHF
562.7 million expire after five or more years.

2002

19.9

3.9

146.9

0.5

52.2

306.5

529.9

191.8

28.0

132.5

103.2

120.8

36.5

1.7

2003

24.7

8.5

362.5

0.4

45.9

463.9

905.9

404.2

29.3

183.3

132.1

134.3

67.3

2.4

597.0

1,211.5

681.6

687.9

1,640.8

734.9

Bâloise-Holding Annual Report 2003 107

Financial Report 2003

22. Number of employees and personnel costs

The Baloise Group had 8,745 employees on Decem-
ber 31, 2003; on December 31, 2002, the number of
employees was 8,703. Total personnel costs for the
fiscal year 2003 amounted to CHF 1,100.6 million,
compared with CHF 1,105.1 million in the previous
year.

23. Benefits due to employees

The most significant part of total personnel costs
consists of actual direct benefits provided to employ-
ees. These are divided into the following categories:
short-term and long-term benefits, postemployment
benefits, termination benefits and equity benefits.

23.1 Assets and liabilities relating

to employee benefits

Assets relating to

Short-term benefits

Postemployment benefits: defined contribution plans

Postemployment benefits: defined benefit plans

Other long-term benefits

Termination benefits

Equity benefits

Total

in CHF m

Assets relating to
employee benefits

Liabilities relating to
employee benefits

2003

8.6

–

30.2

–

2.4

–

41.2

2002

158.2

2.1

387.6

20.5

28.2

–

596.6

2003

110.4

2.8

491.9

23.6

51.3

–

680.0

2002

11.8

–

39.0

–

2.2

–

53.0

23.2 Benefits from occupational benefit plans
Benefits from occupational benefit plans comprise
all amounts provided for current employees and pen-
sioners. The following table aggregates pension plans
under Pensions and shows other benefits (such as
subsidized mortgages) under Other benefits.

108

23.2.1 Liabilities relating to defined benefit plan

Present value of funded obligations

Fair value of plan assets

Funding surplus / shortfall

Present value of unfunded obligations

Unrecognized actuarial gains or losses

Net pension obligation

Liabilities relating to other benefits

Net liabilities relating to defined benefit plans

Of which disclosed as liabilities

Of which disclosed as assets

Of which not disclosed as assets

in CHF m

In countries in which pension plans are effected by
means of separate funds into which contributions are
made, it is possible that funding surpluses or short-
falls may arise, as evidenced in the table above. Such
surpluses are only capitalized and recognized as
assets to the extent that they represent future cost
savings to the Baloise Group.

23.2.2 Expenses relating to defined benefit plans

Current service costs

Interest costs

Expected return on plan assets

Redemption of actuarial losses or gains

Effect of any changes and use restrictions

Employees’ contributions

Total expense for pension benefits

Expense for other benefits

Total expense relating to defined benefit plans

in CHF m

23.2.3 Income from plan assets

Expected return on plan assets

Gains or losses on plan assets

Total income from plan assets

in CHF m

2002

- 1,759.5

1,706.8

52.7

- 365.8

211.7

- 206.8

20.8

- 227.6

2003

- 1,785.1

1,716.0

69.1

- 458.5

200.9

- 326.7

37.6

- 364.3

- 387.6

- 491.9

39.0

121.0

30.2

97.4

The plan assets include shares in Bâloise-Holding
which had a market value of CHF 55.1 million at De-
cember 2002 and CHF 38.4 million at December 2003.
The plan assets do not include property leased to the
Baloise Group.

2002

62.1

84.9

- 73.1

- 1.5

2.8

- 12.7

62.5

1.5

64.0

2002

- 73.1

170.8

97.7

2003

66.1

90.3

- 50.7

2.6

- 20.5

- 13.0

74.8

18.4

93.2

2003

- 50.7

- 2.3

- 53.0

Bâloise-Holding Annual Report 2003 109

Financial Report 2003

23.2.4 Net obligations in respect
of pension benefits

Balance at January 1

Foreign exchange differences

Addition due to changes in composition of consolidated Group

Disposal due to changes in composition of consolidated Group

Amount recognized in income statement

Payments by employer

Balance at December 31

in CHF m

23.2.5 Actuarial assumptions

Discount rate

Expected rate of return on plan assets

Expected increases in wages and salaries

Expected increases in pension benefits

in percent

2002

323.5

7.2

–

62.5

- 51.0

327.8

2003

327.8

29.0

49.4

0.5

74.8

- 56.4

424.1

2002

2003

4.1

4.0

2.2

1.2

4.1

3.0

2.2

1.2

Actuarial and other assumptions are used in calcu-
lating expenditure and obligations relating to defined
benefit plans, by company and by country. The as-
sumptions set out above are weighted averages.

CHF 23.6 million (2002: CHF 20.5 million). No plan
assets were deducted for long-term benefits. Other
long-term employee benefits amounting to CHF 3.0
million (2002: CHF 2.2 million) are included in the
income statement.

23.3 Other long-term employee benefits
Benefits payable to current employees twelve months
or more after the end of the fiscal year are disclosed
separately in accordance with specific requirements.
The requirements are similar to those applying to
pension obligations. Most of the benefits are em-
ployee service anniversary benefits. At December
31, 2003, the present value of the obligation was

23.4 Equity benefits: employee shares
During the year under review, 212,744 shares (2002:
80,491 shares) were purchased through the Baloise
Employee Trust set up in 1989 at a price of CHF 23.10
(2002: CHF 42.50). The fair market value of the
shares subscribed amounted to CHF 45.90 (2002:
CHF 78.75).

23.5 Equity benefits: share participation scheme

Number of shares subscribed to

Blocked until

Subscription price per share in CHF

Value of shares subscribed to in CHF m

Market value of subscribed shares at time of subscription in CHF m

2002

2003

106,760

382,601

5.31.2005

5.31.2006

123.31

13.2

14.0

38.98

14.9

16.4

110

23.6 Equity benefits: share participation sheme

Number of shares subscribed to

Blocked until

Subscription price per share

Value of shares subscribed to in CHF m

Market value of subscribed shares at time of subscription in CHF m

23.7 Equity benefits: share option sheme

Stock exchange designation for options

Number of options issued

Blocked until

Number of underlying Bâloise-Holding shares

Exercise price in CHF

Expiry date

Expenses of the Baloise Group in CHF m

Given the choice of taking the mandatory part of the
incentive in either shares or options, employees
chose shares without exception in 2003 (either direct-
ly or linked to a loan).

24. Capital and reserves

24.1 Share capital

Balance at December 31, 2002

Balance at December 31, 2003

in CHF m

The Bâloise-Holding registered shares are fully paid
up and have a nominal value of CHF 0.1 (2002: CHF
0.1). A total of 702,540 shares at December 31, 2002
and 414,303 shares at December 31, 2003 were held
by Group companies. Entry in the share register is
limited to 2 % of voting rights for individuals and
bodies corporate. In the course of its normal invest-
ment business, the Baloise Group purchases and
sells its own shares.

Capitalization regulations: Under supervisory law,
minimum capital regulations (solvency regulations)
apply to subsidiaries which carry out insurance busi-
ness. At December 31, 2002 and December 31, 2003,
the subsidiaries complied with all relevant super-
visory regulations in respect of capitalization.

2003

45,613

5.31.2006

36.63

1.7

2.0

2001

BALUP

2002

BALIX

6,666,040

2,088,103

6.1.2003

6.1.2004

66,660

167.8

41,762

197.1

6.15.2005

1.6

1.3

Number of shares

Share capital

55,307,150

5.5

Bâloise-Holding Annual Report 2003 111

Financial Report 2003

24.2 Dividends
Dividends proposed are not paid until they have been
approved by the Annual General Meeting. At the An-
nual General Meeting on May 14, 2004, a dividend
of CHF 0.60 per share (2002: CHF 0.40) will be pro-
posed for the 2003 fiscal year, a total figure of CHF
33.2 million (2002: CHF 22.1 million). The proposed
dividend has not been included in the consolidated
financial statements for the 2003 fiscal year. It will

be charged to accumulated profit following the adop-
tion of the resolution at the 2004 Annual General
Meeting.

Restrictions on dividend payments by subsidiaries:
Subsidiaries of the Baloise Group which carry out in-
surance business are subject to certain supervisory
restrictions relating to dividend payments.

25. Earnings / loss per share

Consolidated net profit / loss in CHF m

Average number of outstanding shares

Earnings / loss per share in CHF

2002

- 634.5

2003

91.4

54,837,865

54,794,476

- 11.56

1.67

The diluted net earnings coincide with the basic earn-
ings per share because no option rights exist (either
for capital market transactions or for employee share
schemes) that could raise the current number of out-
standing shares.

26. Minority interests

Balance at January 1

Share of consolidated net profit

Change in share of unrealized gains and losses in capital and reserves

Addition / disposal due to changes in share of investment held

Addition / disposal due to changes in composition of consolidated Group

Foreign exchange differences

Balance at December 31

in CHF m

27. Interest payable

Interest on policyholder bonuses credited

Savings and customer deposits

Medium-term fixed-rate notes

Mortgage bonds

Bonds

Other interest

Total

in CHF m

112

2002

41.5

2.9

3.7

- 21.5

–

1.5

28.1

2002

103.9

151.2

91.9

6.4

43.5

68.0

2003

28.1

6.9

- 0.2

3.8

–

2.1

40.7

2003

84.3

107.9

90.3

9.2

42.2

71.2

464.9

405.1

28. Related-party transactions

30. Market risk relating to financial instruments

The Baloise Group conducts insurance business in
various European countries and holds investments
worldwide and is therefore exposed to financial risks,
such as currency risk, credit risk, interest rate risk,
liquidity risk and market risk.

In 1998, the Baloise Group implemented compre-
hensive, group-wide risk management at all levels
to control these risks. This involves both the active
operational management of individual and portfolio
risks on the finance and insurance side, and the de-
velopment of general risk-based business manage-
ment systems. Not only does this provide security
for shareholders and clients; it also leads to a posi-
tive rating on the capital market. By benchmarking
all activities based on their contribution to value
added (measured by the return on risk-adjusted ca-
pital), it is possible to focus on the most profitable
segments.

Decentralized risk management units track economic
market developments on a monthly basis and the
effects of these on the risk portfolio and individual
risk capacity. In addition, they ensure that limits are
being adhered to and market-derived benchmarks
monitored, thus ensuring that financial risk is restrict-
ed to market risk that cannot be dealt with by diver-
sification. Stochastic and other methods (value at
risk for operational short-term management, extreme
value methods for long-term management) and ex-
tensive scenario analyses are used to manage the
remaining market risk. By applying this risk manage-
ment concept, the Baloise Group is in a position to
react quickly to changes in the market environment
and to optimize its strategic long-term-position profit-
ably.

In the course of its ordinary business activities, the
Baloise Group conducts transactions with associated
companies and with members of the Board of Di-
rectors and the Corporate Executive Committee of
Bâloise-Holding. Deutscher Ring Krankenversiche-
rung, a mutual insurance company, is not included
in the consolidation of the Baloise Group, yet is
linked with Deutscher Ring Lebensversicherung and
Deutscher Ring Sachversicherung through an orga-
nization agreement and is therefore considered to be
a related party. These transactions are not material
to the Baloise Group either individually or in aggre-
gate and are conducted at market conditions.

Included in balance sheet

and income statement

Mortgage loans

Policy and other loans

Receivables arising out

of insurance operations

Other receivables

Other liabilities

Gross premiums written

and policy fees

Investment income

Other income

in CHF m

2002

6.7

4.1

4.3

0.5

33.3

0.1

3.0

0.3

2003

2.7

7.7

1.2

0.2

–

0.1

3.5

0.4

Remuneration remitted to the members of the Board
of Directors and the Corporate Executive Committee
amounted to CHF 7.7 million in the year under re-
view (2002: CHF 6.8 million).

29. Supplemental cash flow disclosure

Cash and bank balances

Cash equivalents

Total

in CHF m

2002

662.6

13.2

675.8

2003

691.9

0.1

692.0

Bâloise-Holding Annual Report 2003 113

Financial Report 2003

30.1 Derivatives: fair value hedges

Interest rate instruments

Forward transactions

Swaps

OTC options

Other

Traded options

Traded futures

Total

in CHF m

30.2 Derivatives: cash flow hedges

Interest rate instruments

Forward transactions

Swaps

OTC options

Other

Traded options

Traded futures

Subtotal

Foreign exchange instruments

Forward transactions

Swaps

OTC options

Other

Traded options

Traded futures

Subtotal

Total

in CHF m

Contract values

Fair value: assets

Fair value: liabilities

2002

–

2003

–

201.6

582.0

–

783.6

2002

–

2003

–

6.5

10.1

–

16.6

2002

2003

–

Contract values

Fair value: assets

Fair value: liabilities

2002

–

2003

–

3,032.3

2,748.8

–

2002

–

34.0

–

2003

–

28.8

–

2002

–

0.2

–

2003

–

14.3

–

3,032.3

2,748.8

34.0

28.8

0.2

14.3

–

1,313.3

–

1,313.3

–

110.9

–

110.9

–

3,032.3

4,062.1

34.0

139.7

0.2

14.3

114

30.3 Currency risk
The insurance activities of the Baloise Group are con-
ducted almost entirely in Swiss francs and in euro,
and therefore the technical provisions are also in
these two currencies. Most of the provisions are cur-
rency-matched by investments. In order to increase
income, the Swiss companies hold a net euro posi-
tion of CHF 4,119.7 million (2002: CHF 3,255.6 mil-
lion), a net US dollar position of CHF 237.6 million
(2002: 2,142.5 million) and a net Japanese yen po-
sition of CHF 11.0 million (2002: CHF 81.4 million).
The remaining currency excess positions are of little
significance. For risk reasons, USD foreign currency
exposure was almost fully hedged and EUR exposure
hedged to around one third.

30.4 Credit risk
Credit risk is defined as the risk that one party or
counterparty to a financial instrument will fail to dis-
charge an obligation. The risk is managed by review-
ing the creditworthiness of each individual counter-
party, setting high standards as regards their rating.
As the credit risk of the Baloise Group is spread
over a large number of counterparties, clients, etc.,
the Baloise Group has no significant credit risk with
a single counterparty.

Credit risk grows as the concentration of counter-
parties in a single line of business or geographical
area increases. Economic developments which affect
entire lines of business or geographical areas can put
at risk the debt-paying ability of a whole group of
otherwise independent counterparties. For this rea-
son, the Baloise Group permanently reviews its port-
folios of counterparties on a group-wide basis.

2002

680.7

1,429.3

1,737.6

515.0

408.0

250.1

243.9

437.2

497.5

–

247.9

2003

2,714.8

1,507.4

1,105.9

745.5

560.6

506.4

497.2

491.6

398.3

371.7

334.0

30.5 Concentration of credit risks

Shares and fixed-interest investments > 10% of consolidated capital and reserves

Kingdom of Belgium

Federation of Switzerland

UBS AG, Zurich / Basel

Federal Republic of Germany

Landesbank Baden-Württemberg, Stuttgart

Eurohypo AG, Frankfurt a. M.

Republic of Italy

Republic of Austria

CS Group, Zurich

WestLB AG, Düsseldorf /Münster

Pfandbriefzentrale der schweiz. Kantonalbanken

in CHF m

Time deposits make up CHF 668.0 million of the total
amount placed with UBS AG, Zurich / Basel (2002:
CHF 1,252.0 million).

30.6 Interest rate risk of financial instruments
Interest rate risk refers to the potential fluctuations
in the market value of assets and liabilities as a re-
sult of changes in market interest rates. In the Baloise
Group, the interest rate risk for fixed-interest securi-
ties is controlled by regular, active, benchmark-orien-
ted reviews of maturity dates.

Bâloise-Holding Annual Report 2003 115

Due in:

< 1 year

13,551.6

–

Due in:

1– 5 years

15,618.6

–

> 5 years

11,962.5

–

Total

41,132.7

15,781.1

- 9,145.8

- 2,540.7

- 2,282.4

- 13,968.9

–

- 39,828.7

4,405.8

13,077.9

9,680.1

3,116.2

Due in:

< 1 year

3,341.7

4,588.9

436.0

2,582.7

4,438.5

–

Due in:

1– 5 years

13,728.3

4,731.1

471.3

64.7

0.5

–

Due in:

> 5 years

12,455.4

1,682.4

549.3

–

15,387.8

18,995.9

14,687.1

Total

29,525.4

11,002.4

1,456.6

2,647.4

4,439.0

15,230.0

64,300.8

- 5,196.1

- 2,109.6

- 1,743.4

–

- 2,276.2

- 3,939.4

- 11,411.7

4.1

55.8

–

0.3

- 2,114.0

518.3

- 2,317.5

–

- 45,097.1

- 9,049.1

- 2,336.1

- 4,458.0

- 60,940.3

6,338.7

16,659.8

10,229.1

3,360.5

Book value

Market value

2002

158.5

10,532.0

1,520.4

9,659.2

2003

10,348.7

11,002.4

1,456.6

11,411.7

2002

165.7

10,846.7

1,536.7

9,896.6

2003

10,371.0

11,376.7

1,509.7

11,548.8

Financial Report 2003

30.7 Liquidity risks

30.7.1 Liquidity risk at December 31, 2002

Assets with due date

Assets without fixed due date

Liabilities with due date

Liabilities without fixed due date

Net liquidity risk

in CHF m

30.7.2 Liquidity risk at December 31, 2003

Fixed-interest securities

Mortgage loans

Policy and other loans

Other investments

Other assets

Assets without fixed due date

Total

Liabilities from banking business and loans

Payables arising out of insurance operations

Other liabilities

Liabilities without fixed due date

Total

Net liquidity risk

in CHF m

30.8 Market value of financial assets
and liabilities and market risks

Fixed-interest securities held to maturity

Mortgage loans

Policy and other loans

Liabilities from banking business and loans

in CHF m

The foregoing table contains information on the book
and market values of significant financial assets and
liabilities which are not shown in the balance sheet
at market or fair value.

116

31. Companies consolidated
on a proportionate basis

Included in balance sheet and income statement

Investments

Intangible assets and tangible non-current assets

Liabilities

Capital and reserves

Income

Expenses

in CHF m

32. Contingent liabilities and commitments

32.1 Legal disputes
The Baloise Group and its subsidiaries are constant-
ly faced with legal disputes, claims and complaints
which in most cases stem from normal insurance
operations. No new facts in this respect have been
reported to the Corporate Executive Committee since
the last balance sheet date that could have a signifi-
cant impact on the consolidated annual accounts
2003.

32.2 Capital commitments

Commitments entered into for the future purchase of

Investments

Tangible non-current assets

Intangible assets

Total commitments entered into

Of which relating to joint ventures

Of which own share of joint venture capital commitments

in CHF m

32.3 Warranties and guaranties for the benefit

of third parties

The Baloise Group has issued warranties and incurred
obligations to third parties, associates, partnerships
and joint ventures. These include obligations under
contracts to pay capital contributions or contributions
to capital and reserves or to allocate funds to cover
redemptions or interest payments due. The Baloise
Group is not aware of any cases of default which could
have an effect on warranties.

2002

756.4

10.5

718.6

113.4

200.8

140.2

2003

768.9

31.7

758.0

158.8

149.5

131.6

2002

616.8

–

2003

469.5

–

616.8

469.5

–

Bâloise-Holding Annual Report 2003 117

Financial Report 2003

32.4 Warranties and guaranties for the

benefit of third parties

Warranties

Guaranties

Total warranties and guaranties for the benefit of third parties

Of which for the benefit of partners in joint ventures

Of which from joint ventures

Of which for the benefit of joint ventures

in CHF m

32.5 Assets assigned or pledged
and securities lending

Investments

Tangible non-current assets

Intangible assets

Other assets

Total

in CHF m

32.6 Obligations under operating leases

2004

2005

2006

2007

2008 and later

Total

in CHF m

33. Events after the balance sheet date

Up to the completion of the present consolidated fi-
nancial statements on March 24, 2004, we were not
aware of any events that would have a significant
effect on the financial statements as a whole.

2002

837.4

5.7

843.1

–

2003

634.3

328.3

962.6

–

2002

3,325.2

–

Assets

2003

4,030.6

–

Amount of hedged
obligation

2002

1,208.9

2003

1,665.6

–

3,325.2

4,030.6

1,208.9

1,665.6

5.6

1.9

1.3

0.4

0.3

9.5

118

34. Significant subsidiaries and participating

interests at December 31, 2003

Switzerland

Bâloise-Holding, Basel

Baloise Insurance Company, Basel

Baloise Life Insurance Company, Basel

Baloise Bank SoBa, Solothurn

Haakon AG, Basel

Prevo-System AG, Basel

Principal activity

Holding

Non-life

Life

Banking

Other

Baloise Asset Management Switzerland AG, Basel

Asset management

Baloise Asset Management International AG, Basel

Investment advice

Germany

Basler Versicherung Beteiligungsgesellschaft mbH, Hamburg

Baloise Beteiligungs-Holding GmbH, Bad Homburg

Deutscher Ring Lebensversicherungs-AG, Hamburg

Securitas-Gilde Lebensversicherungs AG, Bremen

Deutscher Ring Sachversicherungs-AG, Hamburg

Basler Securitas Versicherungs-Aktiengesellschaft,

Bad Homburg

Deutscher Ring Bausparkasse AG, Hamburg

Deutscher Ring Beteiligungsholding GmbH, Hamburg

DePfa Beteiligungs-Holding II GmbH, Düsseldorf

Deutscher Ring Financial Services GmbH, Hamburg

Grocon Erste Grundstücksgesellschaft mbH, Hamburg

Grocon Zweite Grundstücksgesellschaft mbH, Hamburg

OVB Vermögensberatung AG, Cologne

Roland Rechtsschutz Beteiligungs GmbH, Cologne

Roland Rechtsschutz Versicherungs-AG, Cologne

Zeus Vermittlungsgesellschaft mbH, Hamburg

Holding

Life

Non-life

Banking

Other

Belgium

Mercator Verzekeringen N.V., Ghent/Antwerp

Life and non-life

Amazon Insurance N.V., Antwerp

Mercator, Re N.V., Antwerp

Euromex N.V., Antwerp

Mercator Banque S.A., Antwerp

Corluy en C° Beurvennootschap N.V., Antwerp

Amid N.V., Ghent

Antwerp Real Estate N.V., Antwerp

Automobielcenter Gent N.V., Ledeberg

Belcar N.V., Aartselaar

Brinvest N.V., Antwerp

Hondius N.V., Antwerp

Mercarios N.V., Antwerp

Merno-Immo N.V., Ghent

Plastic Investment Company, Kortrijk

Sogaplim N.V., Ghent

Non-life

Reinsurance

Non-life

Banking

Other

1 F: fully consolidated, P: consolidated on a proportionate basis, E: stated at equity valuation

Holding
in percent

Holding

100.00

74.75

26.00

100.00

65.00

40.00

100.00

57.70

60.00

25.02

90.10

100.00

37.50

97.16

84.00

97.38

75.00

31.19

100.00

50.00

99.75

29.00

50.00

Method of
inclusion1

Share/
company capital
in millions

Currency

Total assets
in millions

1,852.2

Gross
premiums /
policy fees
in millions

–

5,414.9

1,237.7

25,088.1

3,031.6

5,203.8

44.4

–

9.4

4.4

249.4

95.5

7,939.6

959.4

587.0

890.2

609.8

327.6

–

6.6

19.6

16.3

62.6

22.6

–

20.7

–

550.7

78.0

168.8

486.1

–

5.5

75.0

50.0

0.2

–

1.5

20.5

0.0

22.0

4.1

50.0

15.1

12.8

–

0.1

0.7

1.5

12.4

0.1

–

0.5

105.0

2,545.7

409.4

3.7

1.2

2.5

19.3

5.1

48.3

14.7

0.0

19.3

37.0

3,700.1

–

0.5

1.2

0.3

0.1

–

2.5

0.1

14.5

–

4.2

–

2.9

4.3

4.4

15.3

–

13.8

2.4

19.5

–

26.3

–

F / P

CHF

EUR

Bâloise-Holding Annual Report 2003 119

Method of
inclusion1

Share /
company capital
in millions

Currency

Total assets
in millions

873.5

116.1

285.8

3.3

Gross
premiums /
policy fees
in millions

–

25.6

20.6

–

313.0

7.5

12.5

0.1

CHF

EUR

HRK

EUR

5.1

18.0

15.0

14.5

436.3

43.4

27.3

47.9

66.3

15.6

5.3

–

CHF

31.2

381.6

CHF

USD

CHF

USD

EUR

5.0

0.0

1.4

0.0

18.0

491.5

857.6

512.6

265.3

17.5

–

Financial Report 2003

Continued

Luxembourg

Bâloise (Luxembourg) Holding S.A., Luxembourg

Bâloise Assurances Luxembourg S.A., Luxembourg

Bâloise Vie Luxembourg S.A., Luxembourg

Principal activity

Holding

Non-life

Life

Baloise Fund Invest Advico, Luxembourg

Investment advice

Holding
in percent

100.00

Austria

Basler Versicherungs-Aktiengesellschaft

in Österreich, Vienna

Basler Osiguranje d.d., Zagreb

Basler Zivotno Osiguranje d.d., Zagreb

Basler Immobilien GmbH, Vienna

Life and non-life

100.00

Non-life

Life

97.00

Other

100.00

Other countries

Baloise Insurance Co. (I.O. M.) Ltd.,

Douglas / Isle of Man/British Isles

Baloise Insurance Company (Bermuda) Ltd.,

Reinsurance

100.00

Hamilton / Bermuda

Reinsurance

100.00

Baloise Alternative Investment Strategies Ltd.,

Grand Cayman, Cayman Islands

Asset management

100.00

Baloise Finance (Jersey) Ltd.,

St. Helier / Jersey / Channel Islands

Other

Baloise Private Equity Ltd., Cayman Islands

Asset management

Bâloise (España) S.A., Madrid

Other

1 F: fully consolidated, P: consolidated on a proportionate basis, E: stated at equity valuation

100.00

120

Financial Report 2003
Report of the Group auditors

Report of the Group auditors to the General Meeting
of Bâloise-Holding, Basel

As auditors of the Group, we have audited the con-
solidated financial statements (income statement,
balance sheet, cash flow statement, statement of
changes in capital and reserves, and notes to the fi-
nancial statements, pages 69 to 120)1 of the Baloise
Group for the year ended December 31, 2003.

These consolidated financial statements are the re-
sponsibility of the Board of Directors. Our responsi-
bility is to express an opinion on these consolidated
financial statements based on our audit. We confirm
that we meet the legal requirements concerning pro-
fessional qualification and independence.

Our audit was conducted in accordance with auditing
standards promulgated by the Swiss profession and
with the International Standards on Auditing, which
require that an audit be planned and performed to
obtain reasonable assurance about whether the con-
solidated financial statements are free from material
misstatement. We have examined on a test basis evi-
dence supporting the amounts and disclosures in
the consolidated financial statements. We have also
assessed the accounting principles used, significant
estimates made and the overall consolidated finan-
cial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements
give a true and fair view of the financial position, re-
sults of operations and the cash flows in accordance
with International Financial Reporting Standards
(IFRS) and comply with Swiss law.

We recommend that the consolidated financial state-
ments submitted to you be approved.

PricewaterhouseCoopers AG

Edgar Fluri

Peter Lüssi

Basel, March 24, 2004

1 The German version of the Financial Report is binding.

Bâloise-Holding Annual Report 2003 121

Financial Report 2003
Income statement: Bâloise-Holding

Income

Income from participating interests

Interest on loans to Group companies

Other interest receivable

Realized gains on investments

Other income

Total income

Expenses

Administrative expenses

Interest payable

Amortization of / losses from capital investments

Other expenses

Total expenses

Overall result

Total income

Total expenses

Total profit before tax

Tax on income and capital

Net profit

in CHF

2002 / 2003

2003 / 2004

136,822,483

169,615,616

6,369,215

6,563,784

1,854,630

53,340,146

37,101,262

2,798,352

5,357,325

612,677

19,710,756

3,480,670

242,051,520

201,575,396

2,647,419

5,347,099

- 48,498,465

- 40,391,024

- 166,393,960

- 114,499,511

2,249,356

- 219,789,200

- 160,237,672

242,051,520

201,575,396

- 219,789,200

- 160,237,672

22,262,320

41,337,724

292,460

119,795

21,969,860

41,217,929

Bâloise-Holding Annual Report 2003 123

Financial Report 2003
Balance sheet: Bâloise-Holding

Assets

Bank balances

Receivables from Group companies

Other receivables

Accruals deferrals

Current assets

Participating interests

Loans to Group companies

Other investments

Non-current assets

Total assets

Liabilities and capital and reserves

Short-term liabilities

Payables to Group companies

Long-term liabilities

Bonds

Provisions

Accruals deferrals

Liabilities

Share capital

General reserve

Reserve for own shares

Free reserve

Accumulated profit

Capital and reserves

Total liabilities and capital and reserves

in CHF

Note

3.31.2003

3.31.2004

2,716

6,523

58,821,404

183,956,724

1,174,651

661,920

1,804,309

589,920

60,660,691

186,357,476

1,325,502,411

1,418,884,115

220,000,000

–

173,404,517

162,625,973

1,718,906,928

1,581,510,088

1,779,567,619

1,767,867,564

66,492

214,336,587

70,000,000

12,769

3,051,111

–

900,000,000

1,150,000,000

321,850

73,200

25,325,732

26,118,457

1,210,050,661

1,179,255,537

5,530,715

11,724,001

20,045,540

5,530,715

11,724,001

14,005,321

509,457,702

515,497,921

22,759,000

41,854,069

569,516,958

588,612,027

1,779,567,619

1,767,867,564

124

Financial Report 2003
Notes to the financial statements of Bâloise-Holding

1. Bonds outstanding

Amount

CHF 300 million

CHF 600 million

CHF 250 million

2. Participating interests

Company

Baloise Insurance Company, Basel

Baloise Life Insurance Company, Basel

Baloise Bank SoBa, Solothurn

Baloise Asset Management Switzerland AG, Basel

Baloise Asset Management International AG, Basel

Haakon AG, Basel

Basler Versicherung Beteiligungsges. mbH, Hamburg

Baloise Beteiligungs-Holding GmbH, Bad Homburg

Bâloise (Luxembourg) Holding S.A., Luxembourg

Globinvest AG, Luxembourg

Baloise Fund Invest Advico, Luxembourg

Baloise Insurance Co. (I.O.M.) Ltd., Isle of Man

Baloise Insurance Company (Bermuda) Ltd., Bermuda

Baloise Finance (Jersey) Ltd., Jersey

The holdings have been rounded to the nearest per-
cent. Additional information about the participating
interests of Bâloise-Holding is given on pages 119
to 120.

Interest rate

Issued Maturity date

3.25 %

4.25 %

3.375 %

1998

2000

2003

4.7.2008

9.28.2005

12.15.2009

Holding at
3.31.2003
in percent

Holding at
3.31.2004
in percent

Share / company
capital at 3.31.2004
in millions

Currency

100

–

100

CHF

EUR

CHF

–

EUR

CHF

75.0

50.0

1.5

0.2

20.5

0.0

360.4

–

0.1

31.2

5.0

1.4

Bâloise-Holding Annual Report 2003 125

Financial Report 2003

3. Significant shareholders

Owing to major shareholders’ disposal of shares, the
distribution of shareholders and the trading liquidity
of Baloise shares improved noticeably in the past year.

BZ Group’s holdings dropped under the 5% threshold
as at June 17. Strategic Money Management B.V.
from the Netherlands fell below the 5 % mark as at
July 17 after selling its stake to Zurich Financial Ser-
vices. Following that transaction, Zurich Financial
Services for a while held 27% of the Baloise – 21.48%

in shares and 5.52 % in options. The majority of this
stake was then placed across a broad range of in-
vestors, leaving Zurich Financial Services below the
5% threshold as of November 5, 2003.

As a widely held joint stock company, the Baloise is
Index (SMI) and
included in the Swiss Market
features in the SWX’s index calculations with a free
float of 100 %.

The following table provides a current breakdown of
shareholders as at March 31, 2004.

Shareholders

Chase Nominees

Fidelity Group

Deutsche Bank Nominees

Rolex Group

Boston Safe Deposit & Trust

Morgan Nominees

Landesbank Baden-Württemberg

Strategic Money Management B.V.

BZ Group

in percent

* pursuant to notification according to article 20, SESTA

Total
holding at
3.31.2003

Share of
voting rights
3.31.2003

Total
holding at
3.31.2004

Share of
voting rights
3.31.2004

3.4

< 2.0

4.0

3.7

2.7

21.0*

8.2*

0.8

< 2.0

–

2.0

–

4.0

2.5

2.3

2.0

< 2.0

< 5.0*

2.0

–

< 2.0

–

4. Contingent liabilities

5. Own shares

At March 31, 2004, warranty obligations amounted
to CHF 435.8 million (prior year: CHF 443.6 million).
Of these, CHF 204.0 million relate to the warranty
in respect of the convertible bond issued by Baloise
Finance (Jersey) Ltd. The securities needed for hedg-
ing are recognized as other investments.

The companies in the Baloise Group bought a total
of 502,214 shares at an average price of CHF 40 per
share during the year under review, and sold 476,396
shares at an average price of CHF 41. At March 31,
2004, they together held a total of 179,458 Bâloise-
Holding shares.

Bâloise-Holding is jointly and severally liable for
value-added tax payable with all the companies in the
tax group set up by the Baloise Insurance Company.

At March 31, 2004, an amount of CHF 6.0 million was
transferred from the reserve for own shares to the
free reserve of Bâloise-Holding.

6. Personnel expenses

Administrative costs include CHF 1.1 million relat-
ing to personnel expenses in the year under review
(2002: CHF 1.1 million).

126

Financial Report 2003
Proposed allocation of accumulated profit

Included in balance sheet and income statement

Net profit for the year

Retained profit carried forward

Accumulated profit

Dividend distribution required by Articles of Incorporation

Available for distribution by the shareholders at General Meeting

Proposed by the Board of Directors

Allocation to free reserve

Additional dividend distribution

Retained profit carried forward

in CHF

The above distribution is in accordance with the pro-
visions of Article 30 of the Articles of Incorporation
and results in a distribution of CHF 0.60 gross per
share (CHF 0.39 after deduction of withholding tax).

2002 / 2003

21,969,860

789,140

22,759,000

276,536

22,482,464

2003 / 2004

41,217,929

636,140

41,854,069

276,536

41,577,533

–

-21,846,324

636,140

- 8,000,000

-32,907,754

669,779

Bâloise-Holding Annual Report 2003 127

Financial Report 2003
Report of the statutory auditors

Report of the statutory auditors to the General Meet-
ing of Bâloise-Holding, Basel

As statutory auditors, we have audited the accounting
records and the financial statements (income state-
ment, balance sheet and notes to the financial state-
ments, pages 123 to 126)1 of Bâloise-Holding for the
financial year ended March 31, 2004.

These financial statements are the responsibility of
the Board of Directors. Our responsibility is to ex-
press an opinion on these financial statements based
on our audit. We confirm that we meet the legal re-
quirements concerning professional qualification and
independence.

Our audit was conducted in accordance with audit-
ing standards promulgated by the Swiss profession,
which require that an audit be planned and performed
to obtain reasonable assurance about whether the
financial statements are free from material misstate-
ment. We have examined on a test basis evidence
supporting the amounts and disclosures in the fi-
nancial statements. We have also assessed the ac-
counting principles used, significant estimates made
and the overall financial statement presentation. We
believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the accounting records and financial
statements and the proposed appropriation of the
accumulated profit comply with Swiss law and the
Company’s Articles of Incorporation.

We recommend that the financial statements submit-
ted to you be approved.

PricewaterhouseCoopers AG

Edgar Fluri

Peter Lüssi

Basel, April 2, 2004

1 The German version of the Financial Report is binding.

128

Belgium
Mercator Verzekeringen
Desguinlei 100
B-2018 Antwerp
Phone +32 3 247 21 11
Fax +32 3 247 27 77
E-mail info@mercator.be
www.mercator.be

Mercator Bank
Desguinlei 102
B-2018 Antwerp
Phone +32 3 247 52 11
Fax +32 3 247 53 99
E-mail communicatie@mercator.be
www.mercator.be

Luxembourg
Bâloise Assurances
1, rue Emile Bian
L-1235 Luxembourg
Phone +352 290 190 1
Fax +352 290 591
E-mail info@baloise.lu
www.baloise.lu

Croatia
Basler osiguranje
Trg bana Josipa Jelacˇic´a 4
HR-10000 Zagreb
Phone +385 1 48 17 808
Fax +385 1 48 16 932
E-mail info@basler.hr
www.basler.hr

Addresses

Switzerland
Basler Versicherungen
Aeschengraben 21
CH-4002 Basel
Phone +41 61 285 85 85
Fax +41 61 285 70 70
E-mail insurance@baloise.ch
www.baloise.ch

Baloise Bank SoBa
Amthausplatz 4
CH-4502 Solothurn
Phone +41 32 626 02 02
Fax +41 32 623 36 92
E-mail bank@baloise.ch
www.baloise.ch

Germany
Basler Securitas Versicherungen
Basler Strasse 4, Postfach 1145
D-61281 Bad Homburg
Phone +49 61 7213 0
Fax +49 61 7213 200
E-mail info@basec.de
www.basler-securitas.de

Deutscher Ring
Versicherungsunternehmen
Ludwig-Erhard-Strasse 22
D-20459 Hamburg
Phone +49 40 3599 0
Fax +49 40 3599 2500
E-mail Service@DeutscherRing.de
www.DeutscherRing.de

Austria
Basler Versicherungen
Brigittenauer Lände 50 –54
A-1203 Vienna
Phone +43 1 33 160 0
Fax +43 1 33 160 200
E-mail office@basler.co.at
www.basler.co.at

Publishing details

Bâloise-Holding
Annual Report 2003

Published by
Baloise, Corporate Communications

Concept, design
Ramstein Ehinger Associates, Basel

Text
Baloise, Corporate Communications
Ivo Cathomen / Illux, Birrwil

Photographs
Markus Bühler / LOOKAT
Getty Images, Prisma, Zefa Blueplanet

Lithography
Blue Horizon AG, Zurich

Printing
Werner Druck AG, Basel

Paper
Environmentally friendly, wood-free offset
paper, bleached without chlorine

This Annual Report ist also available
in German and French.
The German version is binding.

The Annual Report can be found under
www.baloise.com

Key dates and contacts

5.14.2004
Annual General Meeting Bâloise-Holding

9.9.2004
Publication of Semi-Annual Report 2004

9.9.2004
Half-Year Media Conference

9.9.2004
Meeting of Financial Analysts

4.6.2005
Annual Media Conference

4.6.2005
Meeting of Financial Analysts

5.18.2005
Annual General Meeting Bâloise-Holding

Investor Relations
Carsten Stolz
Aeschengraben 21
CH-4002 Basel
Phone +41 61 285 83 65
Fax +41 61 285 75 62
E-mail investor.relations @ baloise.com

Media Relations
Philipp Senn
Aeschengraben 21
CH-4002 Basel
Phone +41 61 285 84 67
Fax +41 61 285 90 06
E-mail media.relations @ baloise.com

www.baloise.com

Bâloise-Holding

Aeschengraben 21

CH-4002 Basel