Baloise-Holding AG Annual Report 2006

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FY2006 Annual Report · Baloise-Holding AG

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“

Growing with

our customers”

Bâloise-Holding
Annual Report 2006

CONTENTS

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Contents

Baloise at a glance

The essentials in brief

The Baloise’s markets

The strategy of the Baloise Group

To our shareholders

Rolf Schäuble and Frank Schnewlin on the record result

Baloise share

Illustrations in the Annual Report

Review of the business year

“Giardino all’italiana”,

a comprehensive work of art by Luciano Fabro*,

photos by Barbara Graf Horka.

Group

Switzerland

Germany

Belgium and Luxembourg

The Baloise strives for profitable growth –

Other countries

together with its customers, with whom it main-

tains a partnerlike relationship. The illustrations

Growing with our customers

in this report symbolize this ambition: human

Switzerland: Financial services provider

creation blends with nature in the “Giardino

Belgium: Gezinsplan

all‘italiana” in front of the Baloise Asset Man-

Germany: Customer retention

agement building in the heart of Basel. A piece

of authentic Baloise world.

Sustainable business conduct

Human resources: We want excellence in leadership

In the mid 1990s the Baloise commissioned

Ecology: Going easy on the environment

the renowned Italian artist Luciano Fabro with

Risk management: Risk is our business

an unusual project. Fabro transformed the sur-

Corporate governance: Transparency in management

roundings of the Baloise’s new ofﬁ ce situat-

ed on the Picassoplatz in the heart of Basel

Board of Directors and management structure

into a garden landscape. He called it “Giardino

Board of Directors

all’italiana”. In Fabro’s spatial design, the ofﬁ ce

Management structure

building seems to rise up out of a huge dark sur-

face. Like a sea at nighttime, it reﬂ ects the stel-

Management information

lar constellations of the southern hemisphere.

Consolidated income statement

Bright inlaid marble represents the Milky Way,

Consolidated balance sheet

electric lights mark the positions of the stars.

Business volume, premiums and combined ratio

Steles made of granite stand erect on this dark

Technical income statement

ground, cut like in the vineyards of Giornico in

Gross premiums by line of business

southern Switzerland.

■

Embedded value

Banking business

■* Luciano Fabro, born 1936 in Turin, lives in

Investment performance

Milan. He has had numerous solo exhibitions

Bâloise-Holding, income statement

in Europe and the USA to his name since the

Bâloise-Holding, balance sheet

mid 1960s. He has also published a large

Bâloise-Holding, notes

number of works on the theory of art and won

several international prizes and awards.

Addresses

BALOISE AT A GLANCE | THE ESSENTIALS IN BRIEF

+/– %

0.3

–3.5

–1.8

39.7

1.3

112.5

65.0

–17.4

86.3

75.2

5.1

3.6

13.6

Who we are
The Baloise Group operates in select-

ed markets of continental Europe. With

around 8,000 employees, the Baloise

provides comprehensive insurance and

pension solutions to individuals and com-

panies. To achieve sustainable and prof-

itable growth, the Group focuses on

high-value customers and distributors.

Bâloise-Holding registered shares are

included in the Swiss Market Index and

traded under the symbol BALN.

Highlights in 2006
■ Record proﬁ t of CHF 707.1 million.

■ 15.3% return on equity, goal reached

two years earlier than planned.

■ Net combined ratio of 94.0% thanks to

a focus on target customers and opera-

tional excellence.

■ Life insurance new business margin

of 7.3%.

■ 39.7% growth in targeted unit-linked

life insurance segment.

What we want to achieve
■ Assuming ongoing favorable market

conditions: return on equity of at least

15% and a combined ratio in the non-

life business of well below 100%.
■ Continuous increase of earnings per

share.

■ Overall business growth in line with

market average.

■ Above-average growth in high-value

target segments, including unit-linked

The essentials in brief

Business volume

Gross premiums written, nonlife

Gross premiums written, life

Subtotal of IFRS gross premiums written1

Investment-type premiums

Total business volume

in CHF million

Business results

Nonlife proﬁ t2

Life proﬁ t2

Banking proﬁ t2

Proﬁ t of other activities / corporate business2

Consolidated proﬁ t

in CHF million

Balance sheet

2005

3,055.4

3,783.7

6,839.1

554.4

7,393.5

255.1

149.2

77.0

48.0

403.5

2006

3,065.1

3,651.4

6,716.5

774.7

7,491.2

542.2

246.2

63.6

89.4

707.1

Investments (including unit-linked life insurance)

56,470.1

59,357.1

44,915.9

46,521.8

4,391.3

4,986.5

10.3

100.6

100.0

5.3

5.0

15.3

90.2

94.0

7.3

4.5

2,359.7

2,627.8

225.4

12.0

217.2

15.9

Technical reserves

Equity

in CHF million

Ratios

Return on equity (RoE)

Combined ratio, nonlife (gross)

Combined ratio, nonlife (net)

New business margin, life

Investment performance

in percent

Embedded value, life insurance

Embedded value

APE (annual premium equivalent)

Value of new business

in CHF million

Key share data

Shares issued in units

Consolidated proﬁ t per share in CHF

Equity per share in CHF3

Closing price in CHF

Market capitalization in CHF million

Dividend per share in CHF4

55,307,150

life insurance.

7.3

79.8

76.75

4,244.8

2.2

12.9

91.0

121.80

6,736.4

3.8

76.7

14.1

58.7

72.7

■ Focus on organic growth and targeted

acquisitions in existing markets in

continental Europe.

1 Premiums written and policy fees, gross
2 Before taxes and ﬁ nancing costs
3 Calculated on the basis of consolidated shareholders’ equity before minority interests and average number of outstanding shares
4 2006 based on proposal to the General Meeting

Bâloise-Holding Annual Report 2006

BALOISE AT A GLANCE | THE BALOISE‘S MARKETS

The Baloise’s markets

The Baloise focuses on markets,

customers, distribution

channels and solutions with

high value-adding potential.

Customers
Private individuals as well as small and

Regional markets
Switzerland, Germany, Belgium, Luxem-

medium-sized enterprises with a favorable

bourg, Austria and Croatia.

risk and return proﬁ le. Selected industrial

clients in Switzerland and in Germany.

Switzerland
In its home market of Switzerland the Baloise

Germany
The Baloise operates in Germany through

operates under the Basler Versicherungen

the Basler Versicherungen and Deutscher

and Baloise Bank SoBa brands. Basler Ver-

Ring units. Basler, based in Bad Homburg,

sicherungen is the corporation’s biggest

focuses on property insurance and offers

business unit. As a ﬁ nancial services pro-

ﬁ nancial security and retirement solutions

vider, it focuses on comprehensive insur-

for private individuals, small and medium

ance and pension solutions. Its customers

enterprises and selected industrial cus-

are private individuals, small and medium-

tomers. For distribution the Baloise main-

sized enterprises and selected industrial

ly relies on its own sales force and on bro-

corporations. The Baloise’s own sales staff

kers.

forms the heart of the distribution system.

Deutscher Ring in Hamburg is a pen-

Additionally there are selected agents for

sion and savings specialist for individuals.

speciﬁ c product and customer segments

The core of its offerings consists of retire-

as well as brokers and the internet. Baloise

ment and health-related ﬁ nancial prod-

Bank SoBa positions itself as a universal

ucts. Deutscher Ring is also represented

bank in the Solothurn region and supple-

in Slovakia and in Czech Republic. In addi-

ments the Baloise’s pension product range

tion to its own sales staff, Deutscher Ring

in a targeted fashion with bank products

works with OVB and ZEUS as agents and

sold through the insurance sales force.

with brokers.

Baloise Asset Management AG in Basel

provides various investment solutions for

institutional investors.

2005

2006

2005

2006

Full-time equivalents

3,578.9 3,516.9

Full-time equivalents

2,854.4 2,830.8

Business volume in CHF million 3,865.0 3,730.4

Business volume in CHF million 2,255.3 2,305.3

Combined ratio (gross)
Basler Versicherungen

in percent

113.3

87.8

Combined ratio (gross)
Basler Versicherungen

in percent

Combined ratio (gross)
Deutscher Ring

in percent

93.9

92.6

94.5

94.4

Bâloise-Holding Annual Report 2006

BALOISE AT A GLANCE | THE BALOISE‘S MARKETS

Core business
Solutions in insurance and pension. As a

Distribution channels
Baloise sales force in conjunction with

supplement to pension business: banking

selected distribution partners.

in Switzerland.

Belgium
In the Belgian market, the Baloise Group

Luxembourg
Baloise Assurances provides private and

Austria and Croatia
In Austria, Basler Versicherungen offers

operates in Flanders under the Mercator

business clients in the Grand Duchy with

insurance and pension solutions to pri-

Verzekeringen brand. Mercator sees itself

a comprehensive range of insurance, pen-

vate individuals and small and medium-

as a trusted partner of choice for local pro-

sion and asset-building products. Outside

sized enterprises. The unit’s distribution

fessional brokers. The company provides

its home market, Baloise Luxembourg also

is handled primarily by its own sales staff,

a comprehensive assortment of personal

sells pension and asset-building products

assisted by selected brokers. Basler is a

and property insurance products for indi-

in various European Union countries in col-

leader in its target market segment of phy-

viduals and for small to medium-sized

laboration with strong banking partners.

sicians and medical staff. Basler Osiguran-

companies.

je takes a similar approach in Croatia.

2005

2006

2005

2006

2005

2006

Full-time equivalents

709.2

680.7

Full-time equivalents

119.6

128.0

Full-time equivalents

286.3

302.8

Business volume in CHF million

757.6

738.7

Business volume in CHF million

342.2

535.2

Business volume in CHF million

127.9

141.5

Combined ratio (gross)
Mercator Verzekeringen

in percent

94.1

92.7

Combined ratio (gross)
Baloise Assurances

in percent

86.8

89.7

Combined ratio (gross)
Basler Österreich and Croatia

103.7

99.7

in percent

Bâloise-Holding Annual Report 2006

BALOISE AT A GLANCE | THE STRATEGY OF THE BALOISE GROUP

The strategy of the Baloise Group

Everything revolves around our customers

We want them to be enthusiastic about us and our services and – as a result – to be their

trusted partner of choice. Thanks to such long-term relationships based on mutual beneﬁ t

we are capable of sustained growth and above-average proﬁ ts. This in turn enables us to

invest in the welfare of our customers, staff and investors and in securing our own future.

Our primary goal is proﬁ table growth. We see our development mainly in organic growth

in our preferred customer segments with high value-generating potential. In making

targeted acquisitions we concentrate on developing our market position in our existing

markets.

In carrying out this strategy
we rely strongly on our
own professional skills and
ability to execute. The focus
is on the quality of the
relationship with our stake-
holders.

Clients
Our target clients are responsible indi-

Shareholders
For our shareholders we grow the value

viduals and businesses who take protect-

of the corporation. We strive to provide a

ing their property and safeguarding their

return on the capital entrusted to us that

future seriously. We offer them compre-

signiﬁ cantly exceeds the cost of capital.

hensive solutions for all stages of life. They

We maintain an income-oriented distribu-

see us as service providers with a passion.

tion policy. We regularly and transparent-

We adjust our prices and terms to risk-

ly inform our owners of the course of busi-

determining characteristics, enabling us

ness and implementation of our strategy.

to offer a differentiated product range.

Bâloise-Holding Annual Report 2006

BALOISE AT A GLANCE | THE STRATEGY OF THE BALOISE GROUP

Within the framework of our strategic principles, our business units and local brands bear

full responsibility for their own markets. This keeps us close to the market and best able

to address its needs. At the corporate level, we maintain a balanced investment policy and

efﬁ ciently control risk and capital. We hold as much capital as needed to do business in

a sound and ﬂ exible manner.

For our major stakeholder groups, this means:

Employees
Capable, high-performing, loyal employ-

External distribution partners
Depending on the market, we conduct all

The public
We are a responsible member of society.

ees make up the core of our skill-based

or part of our business through distribu-

As an insurance and pension company, we

strategy. We offer them an attractive

tion partners. These are as strongly com-

help sustain the functioning of national

en vironment with development prospects

mitted to outstanding customer manage-

economies, societies and enterprises every

and the ability to continually expand and

ment and exceptional service quality as we

day. Thanks to our sizable earning power,

unfold their abilities. We make purposeful

are. We seek to maintain the same relation-

we contribute substantially to ﬁ nancing

and sustainable investments in the skills

ship of trust with our distribution partners

the public sector. Our sustainable corpo-

of our employees. We are fair and commit-

that we do with our preferred customers.

rate policy makes us a reliable employer.

ted to mutual partnership. In return, we

expect our employees to work hard and

have a sense of responsibility and a highly

developed passion for the customer.

We create and maintain value-generating

jobs. We make responsible use of natural

resources.

Bâloise-Holding Annual Report 2006

TO OUR SHAREHOLDERS
Rolf Schäuble and
Frank Schnewlin
on the record result

8
Baloise share 12

Bâloise-Holding Annual Report 2006

TO OUR SHAREHOLDERS | ROLF SCHÄUBLE AND FRANK SCHNEWLIN ON THE RECORD RESULT

Chairman of the Board Rolf Schäuble (left) and CEO Frank Schnewlin.

“Operationally strong, record results,

ﬁ t for the future”

Chairman of the Board Rolf

Did you reach your goals in 2006?

Schäuble and CEO Frank Schnewlin

take satisfaction in record earnings

of CHF 707 million. The Baloise is

ﬁ t for the future.

R O L F S C H Ä U B L E : The record results speak for themselves. Our performance was well

above our own expectations. We have increased proﬁ t signiﬁ cantly every year since 2002.

We are operationally strong, have just achieved record earnings and look forward to the

future. This is something we can be proud of. And we are ﬁ lled with gratitude toward our

customers, distribution partners, employees and investors.

F R A N K S C H N E W L I N : We have kept our promises. We even achieved our target return on

equity of 15% two years earlier than planned. Likewise the goal of keeping our combined

ratio under 100%. Admittedly the circumstances have helped by the absence of natural

disasters and major claims. But most of it we accomplished ourselves. We have also real-

ized our policy of adjusting our equity investments, which are comparatively high in the

industry, to developments on the capital market, and so further boosted our earnings. We

generated signiﬁ cant capital gains last year without reducing our allocation to equities.

And ﬁ nally, we have grown both in the target customer segments and in unit-linked life

insurance.

Bâloise-Holding Annual Report 2006

TO OUR SHAREHOLDERS | ROLF SCHÄUBLE AND FRANK SCHNEWLIN ON THE RECORD RESULT

What were the highlights of the past year?

R O L F S C H Ä U B L E : Our fantastic earnings are the reward for our ongoing development work.

We have been systematic in promoting operational excellence and focusing on risk-aware

clients. Now these efforts progressively paid off in 2006. These decisive advances are the

real highlights.

F R A N K S C H N E W L I N : We focused closely on operational excellence, on mastering

target customer management and on capturing new target segments. We largely

developed and built up these capabilities ourselves. There is a great deal of experience

behind what we are able to do today in sales management driven by customer value, target

risk selection, pricing and claims handling – skills we developed through numerous real-

world trials and tests that can’t simply be copied. In Luxembourg, for example, we applied

scoring methods to launch a successful motor vehicle insurance solution with pricing cor-

responding to new risk groups. The new capabilities are a sign that everyone in the corpo-

ration is learning from the experience and strengths of the individual units. This is some-

thing we will continue to pursue, so that we can further improve our operational margin

relative to the market.

“ The key advances

in target customer management

are the real success story.”

You have achieved the best earnings result and highest return on equity in the history

of the Baloise. What are these achievements worth?

R O L F S C H Ä U B L E : Our aim is and remains to make our income structure as sustainable

as possible. We want to remain predictable for our partners. We are convinced that we

will continue to be able to achieve high proﬁ t growth in the years to come, because our

earnings are substantially based on operating performance in our core business. Our suc-

cess makes us proud and happy, but not blind. We can also see that factors we have only

limited control over played some role in our record earnings – primarily claims levels and

the capital markets.

F R A N K S C H N E W L I N : We have always believed in our own power to move things in the right

direction. We will continue to do so in the future and will maintain our commitment to oper-

ational excellence, anchor target customer management even more ﬁ rmly and develop new

target segments for proﬁ table growth. I am convinced that there is great potential in this.

It will secure more advances in income in comparison with the market and make us less

dependent on economic cycles. As our proﬁ ts have steadily grown, we have continually

shored up our balance sheet. Today this puts us in a situation where we can largely ﬁ nance

our own future expansion.

You started a three-year share buyback program in 2006. Why?

R O L F S C H Ä U B L E : We only hold as much capital as we need for our business activities.

We return surplus capital to our shareholders, because they know best what they want

to do with it. Of course we also have the opportunity to put capital into expanding our

business instead of into buybacks, especially by investing in acquisitions. This is some-

thing we regularly consider. But acquisitions must be of value so that the money is always

working in the shareholders’ interest. If this is not the case, then the share buyback

remains the best alternative.

Bâloise-Holding Annual Report 2006

TO OUR SHAREHOLDERS | ROLF SCHÄUBLE AND FRANK SCHNEWLIN ON THE RECORD RESULT

Actual growth was rather moderate.

F R A N K S C H N E W L I N : The environment was challenging, and we did manage 1.3% growth.

In the nonlife business, intense competition is making it difﬁ cult right now to create growth

that generates value. Our principle of earnings before growth naturally limits prospects for

growth. In traditional life insurance, we’re not seeing much action due to low interest rates.

Unit-linked products, on the other hand, have a future. We grew nearly 40% in this area

and made some targeted acquisitions, like Moneymaxx in Germany and, most recently,

Winterthur-Europe Vie in Luxembourg in January 2007. Our Austria and Luxembourg units

also saw strong growth.

Where are you headed in terms of growth?

F R A N K S C H N E W L I N : Our focus is on proﬁ table growth. Organically, we are concentrating

on those target segments and business areas where we can generate exceptional value.

Growth in unit-linked life insurance, for example, is a priority. These products offer custom-

ers attractive retirement and investment solutions. For ourselves, we can achieve good

returns with a minimum of capital. We see considerable further potential in this sector.

We are also building new ﬁ elds of business in eastern and southeastern Europe along

with new customer, distribution and product segments in our existing markets with the

aim of securing proﬁ table growth. And ﬁ nally, we are also growing through targeted

acquisitions.

Are there additional areas where action is needed?

F R A N K S C H N E W L I N : Action is needed in controlling costs. Our declared goal is to steadily

reduce our unit costs over the next few years by further optimizing our business processes

and exploiting cross-border synergies, for example in IT.

“ Acquisitions are an integral part

of our strategy.”

What role will the Baloise play on the European insurance landscape in ﬁ ve years?

R O L F S C H Ä U B L E : The Baloise has proved that it can be very successful as a mid-sized

insurer with a selective presence in Europe based on strict value generation criteria. We

will continue along this path. As a “consolidation player” we will carefully observe market

developments and expand in a targeted fashion when we see good opportunities. That‘s

what we did when we acquired Securitas in Germany in 2003, Moneymaxx in 2005, and now

Winterthur-Europe Vie. The deciding factor is not the size of the portfolio but the intrinsic

value, the potential for integration and the strategic logic. Sheer size is not a determining

factor in our business. The ability to understand risks and opportunities correctly and act

accordingly is far more important. Based on these insights, our goal is to become one of the

most proﬁ table insurers in Europe.

What can we expect from the Baloise in 2007?

F R A N K S C H N E W L I N : In 2007 we will again experience a Baloise developing its capabilities

for its target customers and for new target segments. This puts us in a position to provide

effective solutions and exceptional service in this area. We will thereby generate growth

in the target customer segments and so enhance the quality of our insurance portfolio and

the operational income relative to the market on an ongoing basis. In general, 2007 is a

starting point for signiﬁ cant, proﬁ table growth in the years to come, with the goal of pro-

viding our investors with a return on their commitment to our company well above the cost

of capital.

Bâloise-Holding Annual Report 2006

TO OUR SHAREHOLDERS | ROLF SCHÄUBLE AND FRANK SCHNEWLIN ON THE RECORD RESULT

What can shareholders look forward to in 2007?

R O L F S C H Ä U B L E : Our record earnings will again enable us to distribute a very attrac-

tive cash dividend. We will propose to the shareholders’ meeting a dividend increase to

CHF 3.80. The Baloise will continue to pursue a policy, aimed at long-term investors, of

regularly paying attractive dividends. We will also propose to the shareholders’ meeting a

capital reduction of 2.4%, from which our shareholders will beneﬁ t by way of the resulting

concentration of proﬁ t. We will continue the ongoing three-year buyback program in 2007.

What is your view on acquisitions, and what prospects do you see for them?

R O L F S C H Ä U B L E : Acquisitions are an integral part of our strategy. Our focus here is on

existing markets. We look for takeover objects that will create a minimum of dilution

effects and ﬁ t into our strategic focus.

Where will the strategic focus lie in the future?
ROLF SCHÄUBLE: The long-term focus will continue to be on our commitment to being one
of the most proﬁ table insurers in Europe. The key to achieving this is exceptional quality of

operations, systematic organizational orientation toward high-value target clients and the

ability to maximize returns on the capital invested, i. e. to achieve a risk-adjusted return

on capital as high as possible above the cost of capital.

“ If circumstances remain favorable,

we will continue to aim

for a RoE of at least 15%.”

What are your medium-term goals in terms of growth and earning power?
FRANK SCHNEWLIN: Now the primary aim is to sustainably secure the high earning power.
Assuming ongoing favorable market conditions, we will aim for a return on equity of at

least 15% and a combined ratio in the nonlife business well below 100%. We want to

continuously increase earnings per share. Overall, we are aiming for business growth in

line with the market average. In our preferred high-value target segments, including unit-

linked life insurance, we intend to achieve above-average growth. We are concentrating on

organic growth in the existing markets in continental Europe, where we can also make use

of our ﬁ nancial strength for targeted acquisitions.

Bâloise-Holding Annual Report 2006

TO OUR SHAREHOLDERS | BALOISE SHARE

Best insurance stock in Switzerland

With a price surge of 58.7%, the

Outstanding corporate results and steeply rising share prices marked the ﬁ rst quarter of

Baloise’s share was the best-

performing insurance stock in

Switzerland in 2006 and

over the past three years. Our

the year 2006, followed by a massive drop in the second quarter. This interim dampener

was due to heightened fears of inﬂ ation and ensuing rises in interest rates.

The Baloise share developed very well in the ﬁ rst half of the year, appreciating by

22.4%. Over the same period, the Swiss Market Index (SMI) gained a mere 0.9%, where-

as the Swiss insurance industry index (SWX SP Insurance Price Index) decreased by 2.8%.

The Baloise share also clearly outperformed the corresponding European index (DJ STOXX

shareholders are due to

Insurance Supersector Price Index), which actually lost 0.2% in the ﬁ rst six months.

receive a dividend up 72.7%

against the previous year.

In addition to the dividend, we

will be paying CHF 114 million

Unexpectedly poor economic indicators contributed to the fact that interest rates

sank again in the third quarter. Although low interest rates have a negative impact on the

Baloise’s business, the company’s share nevertheless surged by 59.9% to CHF 122.70 in

those three months. Strong half-year ﬁ gures and a favorable loss experience led to the

achievement of the annual high-water mark of CHF 126.70.

The Baloise share closed at CHF 121.80 on December 29, 2006 after beginning at

back to our shareholders as part

CHF 76.75 on January 3. This translates into a 58.7% appreciation in the course of the year,

of our share buyback program.

an excellent performance in comparison with the Baloise’s peers at home and abroad: The

SMI closed at plus 15.8%, the Swiss insurance industry’s index at plus 17.7% and its Euro-

pean sister index at plus 17.2%.

Distribution to shareholders
The Board of Directors will propose to the Annual General Meeting the distribution of a

cash dividend of CHF 3.80 per share for ﬁ scal 2006. In terms of the year-end price, this is

equivalent to a dividend yield of 3.1%.

During the share buyback program announced in March 2006, 1,074,000 shares were

repurchased (1.94% of all outstanding shares) at an average price of CHF 105.84 between

May 22 and end of December 2006. Thus a further CHF 114 million in equity was repaid to

shareholders in addition to the dividend disbursement.

Information on the current status of the share buyback program can be found at

■ www.baloise.com (cid:74) Investor Relations (cid:74) Baloise share (cid:74) Share buyback program

Shareholding structure
On December 31, 2006, one shareholder subject to registration pursuant to stock exchange

law owned more than 5% of the outstanding Baloise shares. This was Barclays Group with

5.4% of the outstanding shares as at December 31, 2006.

As a broadly based listed company, the Baloise is included in the Swiss Market Index

(SMI) and continues to ﬁ gure in the SWX’s index calculations with a free ﬂ oat of 100%.

The following table shows the most signiﬁ cant registered shareholders.

Baloise share

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

Nominal value: CHF 0.10

Security no.: 1.241.051

ISIN: CH0012410517

Listing: virt-x

Share type: 100% registered shares

Bâloise-Holding Annual Report 2006

TO OUR SHAREHOLDERS | BALOISE SHARE

Indexed share price development1 Bâloise-Holding registered 2002 – 2006

120

100

2002

2003

2004

2005

2006

1 December 31 2001 = 100

Bâloise-Holding registered

SWX SP Insurance Price Index (SMINNX)

Swiss Market Index

Share statistics

Closing price in CHF

High in CHF

Low in CHF

2002

55.00

155.50

46.30

2003

51.65

63.20

25.45

2004

52.50

63.10

45.75

2005

76.75

77.00

52.70

2006

121.80

126.70

76.40

Market capitalization in CHF million

3,041.9

2,856.6

2,903.6

4,244.8

6,736.4

Total shares issued in units

Shareholders

Treasury shares

Earnings per share in CHF1

Price-earnings ratio

Dividend per share in CHF2

Dividend yield2

Pay-out ratio2

Consolidated equity per share in CHF

Ratio of market capitalization to consolidated equity

1 See Financial Report 2006, section 38
2 2006 based on proposal to the General Meeting
3 Not comparable

Signiﬁ cant shareholders as of 12/31/2006

Shareholders

Chase Nominees Group1

Barclays Group

Investors Bank & Trust1

Mellon Bank N. A.1

HSBC Overseas Nominee UK1

Nortrust Nominees Ltd.1

UBS Group

Cominvest Asset Management

in percent

55,307,150

11,974

15,027

16,251

14,614

13,386

702,540

414,303

1,176,237

887,879

1,849,548

–11.6

n. c.3

0.4

0.7

n.c.3

56.3

0.99

1.7

30.9

0.6

1.2

36.3

60.6

0.86

3.9

13.5

1.1

2.1

28.2

63.6

0.83

7.3

10.5

2.2

2.9

30.7

79.8

0.97

12.9

9.4

3.8

3.1

30.1

91.0

1.34

Total
holding at
12/31/2005

Share of
voting rights
12/31/2005

Total
holding at
12/31/2006

Share of
voting rights
12/31/2006

5.5

0.0

2.6

2.7

2.5

3.1

< 2.0

2.0

0.0

2.0

0.0

< 2.0

0.0

10.5

5.4

3.5

3.2

2.7

2.4

2.2

< 2.0

2.0

< 2.0

0.0

< 2.0

1 Custodian Nominees who hold shares in trust for third parties are considered as belonging to the free ﬂ oat pursuant to the Swiss Exchange (SWX) regulations.

Such shareholder groups are not subject to registration by stock exchange law.

Bâloise-Holding Annual Report 2006

RE VIE W OF THE
BUSINESS YE AR
Group 16
Switzerland 20
Germany 21
Belgium and Luxembourg 22
Other countries 23

Bâloise-Holding Annual Report 2006

REVIEW OF THE BUSINESS YEAR | GROUP

Record earnings thanks to strong core business

With a proﬁ t of CHF 707.1 million,

Overview

the Baloise Group achieved the best

earnings in its history in 2006, up

Each business unit’s earnings reﬂ ected the corporate focus on high-value target

customers and the outstanding quality of the core business achieved through operational

excellence. The Baloise also enjoys a high degree of geographic diversiﬁ cation of revenues,

75.2% from the previous year.

with each unit making a substantial contribution to the corporation’s earnings growth. The

A dividend increase to CHF 3.80 per

nonlife business was the star performer in 2006 with earnings before taxes and ﬁ nanc-

ing costs of CHF 542.2 million, over twice the previous year’s ﬁ gure. An absence of natu-

share will be proposed to the

ral disasters and major claims had a positive impact on earnings. The life insurance line

General Meeting. The Baloise has

signiﬁ cantly increased its operating

strength each year since 2002,

building an outstanding foundation

saw strong proﬁ t growth of 65.0% to CHF 246.2 million. Banking business earned a prof-

it of CHF 63.6 million. Thanks to excellent ﬁ nancial market conditions and efﬁ cient asset

management, investment income rose by 11.5% to CHF 2,297.5 million. Despite gains real-

ized and higher interest rates, the net ratio of unrealized gains in equity increased, too, by

17.5%. The proportion of investments in equities and equity-like instruments by the insur-

ance units amounted to 14.5% (2005: 13.9%). A major factor in the performance of 4.4%

for future proﬁ table growth.

(2005: 5.0%) was the negative impact of the interest rate rise on the fair value of ﬁ xed-

interest securities.

Total business volume, including unit-linked life insurance, grew by 1.3% to CHF 7,491.2

million (2005: CHF 7,393.5 million). Premium revenues according to IFRS accounting came

to CHF 6,716.5 million (2005: CHF 6,839.1 million), a decline of 1.8%. Business volume in

the nonlife line grew 0.3% while life insurance added 2.0%. The decisive boost came from

unit-linked life policies, which advanced by 39.7%. Growth occurred especially in Luxem-

bourg, Austria and Germany. The business volume is fairly evenly distributed by insurance

line, with life insurance accounting for 59.1% while nonlife make up 40.9%.

The Baloise Group’s scope of consolidation remained essentially unchanged in the year

under review.

Nonlife insurance
The nonlife (property insurance) line achieved earnings before taxes and ﬁ nancing costs

of CHF 542.2 million (2005: CHF 255.1 million), a gain of 112.5%, thanks to outstanding

operating performance, the high quality of the insurance portfolio and a sharp increase in

investment income. The very low level of claims, and particularly the absence of natural

disasters and other major loss events, had a favorable effect. The combined ratio sank to

a historic low of 90.2% gross (2005: 100.6%) and 94.0% net (2005: 100.0%). It should be

noted that the prior year ﬁ gures were impacted by severe ﬂ oods in Switzerland and Germa-

ny. All business units improved their underwriting result or maintained it at a very strong

level; most noteworthy was the improvement in Switzerland.

Business volume (identical here to premium income under IFRS accounting rules) came

to CHF 3,065.1 million (2005: CHF 3,055.4 million), a slight gain of 0.3%. In general, height-

ened competition in all markets put a damper on prices and with them growth. We achieved

above-average growth in this line in Luxembourg at 11.3% and in Austria and Croatia

at 6.9%.

Premium income (gross)
by regional segment 2006

in percent

Switzerland

Germany

Benelux

Other countries (including elimination)

Bâloise-Holding Annual Report 2006

Combined ratio net performance

120%

110%

100%

90%

80%

70%

60%

0
1
1

3
0
1

7
9

0
0
1

4
9

2002

2003

2004

2005

2006

From 2005: excluding legally required interest on actuarial reserves for pensions

Life insurance
The life insurance line achieved earnings before taxes and ﬁ nancing costs of CHF 246.2

million (2005: CHF 149.2 million). Key factors were the further improvement of operat-

ing efﬁ ciency, greater value retention in the business portfolio and a favorable interest

rate trend. The disposal of participating interests in Belgium also contributed to earnings.

Business volume including unit-linked life insurance reached CHF 4,426.1 million (2005:

CHF 4.338.1 million), a gain of 2.0%. Demand for traditional asset building policies

remained weak due to continued low interest rates. The strong decline of over 12% in

single premiums in the Swiss market was more than offset by the increases in the other

business units, leading to almost 4% growth for the Group as a whole. In recurring annual

premiums, the Group posted slightly higher revenues than in the year before. Unit-linked

life policies, on the other hand, registered a steep increase, with volume rising by 39.7%.

Boosted by bullish equity markets, these products are becoming a compelling alternative

to traditional life insurance policies, which suffered from weak demand. Especially Baloise

Luxembourg and Deutscher Ring saw strong growth in this sector.

In the year under review, the embedded value of the life business rose from CHF 2,359.7

million to CHF 2,627.8 million. Investment income, modeled for the future at a slightly

higher rate, contributed CHF 83.4 million. The better than anticipated capital market devel-

opments in 2006 also had a positive impact, namely CHF 115.0 million, after consideration

of the effect on policyholder dividends. The value of new business amounted to CHF 15.9

million, its margin climbing to 7.3% (2005: 5.3%).

We expect further growth in demand for high-performing life insurance and pension

solutions in all our markets, with the greatest potential in capital market-based products

such as investment funds and unit-linked life policies. This is where our focus will be in

the coming years.

Embedded value performance

4000

3500

3000

2500

2000

1500

1000

in CHF million

1
3
6
1

0
8
9
1

7
3
1
2

0
6
3
2

8
2
6
2

2002

2003

2004

2005

2006

REVIEW OF THE BUSINESS YEAR | GROUP

Bâloise-Holding Annual Report 2006

REVIEW OF THE BUSINESS YEAR | GROUP

Bâloise-Holding Annual Report 2006

Banking
The banking segment achieved earnings before taxes and ﬁ nancing costs of CHF 63.6 mil-

lion (2005: CHF 77.0 million). The previous year’s earnings included a one-time gain from

a reversal of credit risk impairment charges at Deutscher Ring’s Bausparkasse. All units

reported an enhancement of their operational performance. Baloise Bank SoBa’s net proﬁ t

to CHF 29.5 million (local accounting) was particularly encouraging. The increase brought
Baloise Bank SoBa’s return on equity to 10.1%. Assets managed by Baloise Asset Manage-
ment augmented by 4.3% to CHF 39.4 billion and generated a proﬁ t of CHF 21.3 million, up

by 28.3% year on year.

Shareholders’ equity
The Baloise Group’s shareholders’ equity came to CHF 5.0 billion (2005: CHF 4.4 billion) as

of the balance sheet date. The increase – despite share buybacks – is attributable mainly

to the outstanding earnings performance. The group solvency ratio came to 320% at the

end of 2006 including banking assets (2005: 291%).

Outlook
Now the primary aim is to sustainably secure the high earning power. Assuming ongoing

favorable market conditions, we will aim for a return on equity of at least 15% and a com-

bined ratio in the nonlife business well below 100%. We want to continuously increase

earnings per share. Overall, we are aiming for business growth in line with the market

average. In our preferred high-value target segments, including unit-linked life insurance,

we intend to achieve above-average growth. We are concentrating on organic growth in

the existing markets in continental Europe, where we can also make use of our ﬁ nancial

strength for targeted acquisitions.

Investments
Thanks to economic growth and rising corporate earnings, international equity markets

continued to register impressive gains in 2006. Among the major indexes, the Swiss Mar-

ket Index at 15.8%, the EuroStoxx50 at 18%, the Standard & Poor’s 500 at 13.6% and the

MSCI Emerging Markets Free Index at 32.3% all performed exceptionally well. With 14.5%

of our insurance group’s investments allocated to equities (including equity-like instru-

ments), a relatively high ratio for the industry, along with a comparatively strong position

in emerging markets and good proﬁ t-taking timing, the Baloise was one of the big winners

of the bull market.

Since major central banks further raised short-term interest rates during the strong

economy, the interest rate curve ﬂ attened considerably in Switzerland and most other

countries. In bonds, there were substantial price drops at the short end and in the mid-

range maturity segment. Long maturity bonds saw less of a correction due to excess

demand and a continued moderate inﬂ ation outlook. Overall 2006 was not a good year for

bonds as the performance of both the Swiss Bond Index (SBI) and European bond index-

es was slightly negative. In the United States, too, treasury bonds came in below coupon

yields with a local performance of 3.2% due to market losses. From a CHF investor’s per-

spective, investments in the U.S. were unappealing in any case since the US dollar’s 7.4%

fall would entail a considerable exchange rate loss. Since the Baloise deliberately invest-

ed in American bonds only up to the amount of our dollar-denominated liabilities in recent

years, the dollar’s poor showing hardly affected us.

REVIEW OF THE BUSINESS YEAR | GROUP

2005

2006 +/– %

Own investments by category1 2006

in percent

4 3

■

Fixed-interest securities

21,219.7

22,894.3

Derivatives

5,716.2

6,046.2

48.6

75.8

56.0

Investment properties

5,581.7

5,312.6 –4.8

Mortgage loans

9,833.1

9,941.4

Policy and other loans

7,802.4

7,860.2

Alternative ﬁ nancial assets

2,122.8

2,214.6

Other short-term capital invest-
ment, cash and cash equivalents

Total

in CHF million

1,899.8

2,035.4

54,224.3 56,380.5

7.9

5.8

1.1

0.7

4.3

7.1

4.0

1 Excluding investments from unit-linked insurance

By contrast, the Baloise proﬁ ted somewhat from the euro’s 3.5% gain against the Swiss

franc thanks to its substantial position in EUR bonds, although two-thirds of this exposure

was hedged due to risk considerations and the already high average EUR/CHF exchange

rate over the course of the year.

In alternative investments, the Baloise’s approach of pursuing a diversiﬁ ed fund-of-

funds strategy again paid off. Both offshore companies, Baloise Alternative Investment

Strategies Ltd. (hedge funds) and Baloise Private Equity Ltd., performed well in the boom-

ing alternative investment market. Although most of our alternative investments were

denominated in US dollars and suffered from the greenback’s weakness, the Baloise was

able to offset a good portion of the exchange rate losses with corresponding gains on

derivatives through active hedging strategies.

On the Swiss property market, low mortgage interest rates coupled with a high num-

ber of residential units (40,000 ﬁ nished and 60,000 under construction) made it harder to

ﬁ nd enough tenants, especially for large units. Since the market for investment properties

has largely dried up owing to high demand from institutional investors, we are focusing our

investments mainly on our own properties under construction. The business units outside

Switzerland continued to diversify their portfolios.

In mortgages, ﬁ erce competition persisted as interest rates remained low, with the

banks seeking to play out their advantage by offering reﬁ nancing at lower rates.

The Baloise responded with its “Baloisehypo Plus” sales offensive. Through closer

co operation between the insurance sales force and Baloise Bank SoBa’s mortgage unit,

we succeeded in expanding the business without increasing risk in the portfolio.

Sales of the Baloise Fund Invest fund were again highly successful in 2006. Volume

grew from CHF 1.39 billion to CHF 1.61 billion, with the net inﬂ ow of new money and fund

FIVE KEY POINTS

per-formance each accounting for about half the gain. We further strengthened our position

■ Record profit of CHF 707.1 million.

in the warranty fund niche we set up in 2002 by ﬂ oating the new BFI Capital Protect PLUS

■ 15.3% return on equity, goal

(EUR) fund.

reached two years earlier than

planned.

■ Net combined ratio of 94.0% thanks

to a focus on target customers and

operational excellence.

■ Life insurance new business margin

of 7.3%.

■ 39.7% growth in targeted unit-

linked life insurance segment.

Bâloise-Holding Annual Report 2006

REVIEW OF THE BUSINESS YEAR | SWITZERLAND

Switzerland

The Switzerland segment achieved

record earnings of CHF 287.8

million, driven mainly by a system-

atic focus on target customers

and enhanced operating perfor-

Basler Versicherungen
The unit’s continuing focus on high-value target customers and operational excellence

brought signiﬁ cant earnings gains. Thanks to systematic target customer management,

we accelerated proﬁ table growth in the targeted segments far beyond market growth,

resulting in an encouraging boost in the contribution margin per customer. As a conse-

quence of various optimization measures in our own sales force and with our distribution

partners, sales channel productivity improved by about 10%. Measures to enhance opera-

mance supported by an absence of

tional excellence – namely risk-based rates, restructuring of non performing accounts and

major claims. Baloise Bank SoBa

achieved its proﬁ tability objec-

tive. The focused ﬁ nancial services

provider business model continued

optimized claims processes – led to outstanding operational earning power, very low claim

rates and an excellent combined ratio.

Business volume declined by 3.5% to CHF 3,730.4 million (2005: CHF 3,865.0 million),

due mainly to increasing price pressure, weak demand for traditional life insurance prod-

ucts and our value-oriented underwriting policy. Despite increasing price pressure, we are

committed to risk-based rates and underwriting to attain our revenue goals, without, how-

to prove highly successful.

ever, neglecting premium growth.

The nonlife line achieved a business volume of CHF 1,280.5 million (2005: CHF 1,286.9

million), a slight decline of 0.5% in consequence of our “earnings before growth” busi-

ness policy, which remains ﬁ rmly in place. Accident and transport insurance saw advanc-

es while the other sectors recorded slight drops. The sales partnership with Touring Club

Switzerland again generated positive results, with the portfolio growing some 10% to

CHF 122.2 million. The number of policies sold over the Internet increased by 18%.

The nonlife line saw its best-ever operating performance in 2006 thanks also to the

exceptionally low claims volume. The gross combined ratio was an excellent 87.8% (2005:

113.3%). The previous year’s ﬁ gure had been inﬂ uenced by major ﬂ ood-related claims.

Business volume in the life insurance segment, including unit-linked life insurance,

declined by 5.0% to CHF 2,449.9 million (2005: CHF 2,578.1 million). IFRS premiums

shrank by 4.7%. Demand for traditional life insurance policies, particularly single premi-

ums, was weak due to low interest rates. Volume in the individual life business fell by 4.1%

Key ﬁ gures: Switzerland

in a contracting market. We were not yet able to participate fully in the growing unit-linked

2005

2006

life insurance market; although annual premiums saw encouraging gains, the single-pre-

Premium income (gross)

3,819.3 3,694.3

mium business declined. The group life volume fell by 4.9%, mainly because of a 12.5%

of which: life in CHF million

2,532.4 2,413.8

drop in single premiums due to changes in the co-insurance business. By contrast, annual

of which: nonlife in CHF million 1,286.9 1,280.5

premiums grew 4.0%. Thanks to the outstanding operating performance we were able to

Combined ratio (gross)
in percent

Proﬁ t before tax

in CHF million

make larger allocations to dividend provisions in both individual and group life. The dis-

113.3

87.8

bursement ratio in the group life business came to 92%, which means, for the beneﬁ t

of our customers, we exceeded the statutory disbursement requirement (legal quote)

96.6

287.8

of 90%.

Baloise Bank SoBa
Baloise Bank SoBa achieved a 35.5% advance in net proﬁ t at CHF 29.5 million (local account-

ing) despite intense competition. This outstanding result validates the bank‘s strategic

focus on high-revenue target customers and enhanced efﬁ ciency of business processes.

Baloise Bank SoBa strengthened its market position as a regional universal bank in north-

west Switzerland. With our “focused ﬁ nancial services provider” business model, in which

banking products are sold through the insurance company’s sales force, we increased the

inﬂ ow of new money by 7.1% over the previous year to CHF 463 million, bringing the bank’s

volume in the “focused ﬁ nancial services provider” portfolio to CHF 1,471.3 million. Over-

all we have already gained over 15,000 new clients with this business model.

Bâloise-Holding Annual Report 2006

REVIEW OF THE BUSINESS YEAR | GERMANY

Germany

Basler Versicherungen (Basler Securitas until January 31, 2007)
Since February 1, 2007 the former Basler Securitas has operated under the Basler Ver-

sicherungen brand. The unit achieved a business volume of CHF 1,067.4 million (2005: CHF

1,059.5 million) with a good overall earnings trend. Given the intense competition on the

The Basler Versicherungen and

Deutscher Ring units together

achieved earnings before taxes and

German market and our business policy of pursuing high-revenue target customers, this

ﬁ nancing costs of CHF 169.1

growth of 0.7% is satisfactory. The core property insurance line rose 0.9% while the life

insurance business volume was 0.2% above the previous year’s level. The combined ratio

million (2005: CHF 145.6 million)

at 92.6% gross (2005: 93.9%) was again an improvement over the previous year’s already

in a ﬁ ercely contested market.

Together the two units saw growth

of 2.2% in business volume.

very good ﬁ gure, achieved especially thanks to reinforced efforts in risk-based under-

writing, claims processing efﬁ ciency and target customer management. Costs developed

according to expectations; claims payments declined due to improved risk selection. Busi-

ness volume in life insurance was CHF 225.0 million (2005: CHF 224.5 million), with favor-

able performance in new business.

Deutscher Ring
In accordance with the good prospects in the German pension market, Deutscher Ring

positions itself as a specialist in unit-linked life insurance and investment fund sales.

It is responding to rising competition in sales by expanding its own sales force. Spe-

cial attention is given to attractive prospects in eastern Europe, particularly through a

focused expansion of its subsidiary OVB. Deutscher Ring achieved a business volume of

CHF 1,237.9 million (2005: CHF 1,195.8 million), a gain of 3.5%. Unit-linked life insurance

accounted for most of the growth, gaining 45.6%. The acquisition of Moneymaxx in 2005

had a positive impact. Moneymaxx was consolidated for the whole ﬁ scal year for the ﬁ rst

time in 2006. Premium revenues according to IFRS accounting came to CHF 1,029.1 mil-

lion (2005: CHF 1,052.4 million), 2.2% below the previous year’s ﬁ gure. In life insurance,

unit-linked products made up for weak demand for term life policies; business volume for

the life segment was CHF 1,023.3 million (2005: CHF 982.2 million), an increase of 4.2%.

The nonlife insurance line achieved a business volume of CHF 214.6 million (2005: CHF

213.6 million), outpacing the consequences of price competition in a shrinking market. The

Key ﬁ gures: Germany

gross combined ratio of 94.4% equaled the previous year’s good showing thanks to a low

2005

2006

claims level. Bancassurance distributor OVB was very successful in its expanded activities

Premium income (gross)

2,110.1 2,093.2

in eastern Europe. OVB went public in 2006 and will continue expanding in eastern Europe,

of which: life in CHF million

1,061.5 1,036.2

while Deutscher Ring is building up a selective presence in certain markets in the region.

of which: nonlife in CHF million 1,048.6 1,057.0

Home loan bank Deutscher Ring Bausparkasse reached break-even in the fourth quar-

ter of 2006. We expect a moderate proﬁ t here for 2007.

Combined ratio (gross)

in percent

Proﬁ t before tax

in CHF million

94.0

93.0

145.6

169.1

Bâloise-Holding Annual Report 2006

REVIEW OF THE BUSINESS YEAR | BELGIUM AND LUXEMBOURG

Belgium and Luxembourg

The Benelux segment, comprising

Mercator in Flanders and Baloise

Luxembourg, achieved earnings

Belgium
Enhanced operating efﬁ ciency, low claims, a renewed focus on carefully selected brokers

and capital gains from the sale of shareholdings and property helped Mercator signiﬁ cant-

ly boost its proﬁ t year on year. Low taxation was also a factor. Business volume declined

before taxes and ﬁ nancing costs of

2.5% to CHF 738.7 million (2005: CHF 757.6 million), mainly due to a sharp decline in unit-

CHF 231.1 million (2005: CHF 94.9

linked life insurance. IFRS premium volume, however, grew by a slight 0.3% to CHF 660.2

million (2005: CHF 658.1 million). In the nonlife line, Mercator achieved a business vol-

million). Mercator is focused on

ume of CHF 541.7 million (2005: CHF 539.8 million), holding steady in a ﬁ ercely contest-

innovative products, a concentra-

tion on targeted brokers and

further optimization of business

processes. Baloise Luxembourg

ed market. The growing proﬁ tability in the portfolio of small and medium enterprises also

had a damping effect on business volume. The combined ratio beneﬁ ted from a favor-

able claims environment with very few major loss events. Thanks to the low claims ratio,

the gross combined ratio was 92.7%, a further improvement against the previous year‘s

already good 94.1%. Mercator successfully launched its bundled Gezinsplan (family plan)

product. Sales of over 19,000 contracts signiﬁ cantly exceeded expectations. The unit

realized signiﬁ cant growth in

will continue to boost growth by launching similar products. The life insurance line was

existing and new ﬁ elds of business.

not able to keep up with growth in the Belgian market as a whole; business volume fell

9.6% to CHF 197.0 million (2005: CHF 217.8 million). Unit-linked life insurance saw a par-

ticularly sharp decline in volume of 21.1% due to the end of the distribution partnership

with Record Bank as well as a new life insurance tax. IFRS premium volume held steady at

CHF 118.5 million.

Luxembourg
Baloise Luxembourg had a very successful year. The unit focuses on high-value target

customers and develops products with rates in line with risk. Business volume rose 56.4%

to CHF 535.2 million (2005: CHF 342.2 million), again driven mainly by unit-linked life

insurance products, which the Baloise sells across national borders thanks to the EU’s

freedom of service provision. Even excluding these products, premium volume under IFRS

accounting standards grew 16.6% to CHF 91.2 million (2005: CHF 78.2 million). The nonlife

Key ﬁ gures: Benelux

line performed extremely well. Premium income rose 11.3%, handily outpacing the market

2005

2006

to reach CHF 47.9 million (2005: CHF 43.0 million). The gross combined ratio was 89.7%,

Premium income (gross)

736.3

751.4

slightly higher than the previous year’s exceptional 86.8%. A particular breakthrough was

of which: life in CHF million

153.5

161.8

achieved by PolyCare motor insurance, a product designed speciﬁ cally to attract target

of which: nonlife in CHF million

582.8

589.6

customers. The unit also gained market share in distribution through brokers and among

Combined ratio (gross)
in percent

Proﬁ t before tax

in CHF million

industrial customers. Life insurance grew 62.9% to CHF 487.3 million (2005: CHF 299.2

93.5

92.4

million) thanks to the boom in unit-linked products. We expect further growth in this sector

from the January 2007 acquisition of Winterthur-Europe Vie. Traditional life insurance also

94.9

231.1

performed well. Along with market share gains in employee pensions, this led to 23.1%

growth in the IFRS premium volume, which reached CHF 43.3 million (2005: CHF 35.2

million).

Bâloise-Holding Annual Report 2006

GESCHÄFTSGANG | OTHER COUNTRIES

Other countries

Austria and Croatia
Basler Austria and its Croatian subsidiary Basler Osiguranje continued their growth thanks

to systematic and consistent target customer focus and expansion of the sales force. Basler

Austria’s business volume (including Croatia) rose by a good 10.6% to CHF 141.5 million

Basler Austria and Basler Osigu-

ranje in Croatia are successfully

pursuing their growth course thanks

(2005: CHF 127.9 million) while premiums according to IFRS accounting gained 7.5% to

to consistent focus on target

reach CHF 137.5 million (2005: CHF 127.9 million). In the medical practitioner’s segment,

where we hold an especially strong position in both Austria and Croatia, we again achieved

customers and the expansion of

double-digit growth. The Croatian Basler Osiguranje segment made substantial progress

distribution capacity.

in the life business. At 6.9%, Basler Austria (including Croatia) advanced in excess of the

market average in nonlife insurance with revenues of CHF 97.9 million (2005: CHF 91.6 mil-

lion). Thanks to a signiﬁ cantly lower loss ratio, the gross combined ratio improved to 99.7%

(2005: 103.7%). Business volume in the life insurance line increased by 20.0% to CHF 43.6

million (2005: CHF 36.3 million). Similarly to other Baloise Group markets, single premiums

declined due to weak demand while recurring premiums saw gains. Starting in 2007, we

will implement a new approach to prevention in Austria called “Baloise World of Security”

which will allow us to realize our loss prevention function in a more comprehensive fash-

ion. We expect this approach to enhance our appeal in the coming years and lead to further

positive growth.

Reinsurance, ﬁ nancing companies and equity holdings
This segment comprises companies for reinsurance, special investments and ﬁ nancing as

well as equity holdings and further corporate business.

The contribution of the segment “Other countries” to earnings before taxes advanced to

CHF 253.4 million (2005: CHF 192.2 million). The increase is largely attributable to the

good performance of the reinsurance units thanks to low claims along with solid returns

on alternative investments.

Key ﬁ gures: Other countries

2005

2006

Premium income (gross)

173.4

177.6

of which: life in CHF million

36.3

39.6

of which: nonlife in CHF million

137.1

138.0

Combined ratio (gross)

in percent

Proﬁ t before tax

in CHF million

70.3

89.8

192.2

253.4

Bâloise-Holding Annual Report 2006

GROWING WITH
OUR CUSTOMERS

Switzerland: Financial

services provider 26
Belgium: Gezinsplan 29
Germany: Customer retention 30

Bâloise-Holding Annual Report 2006

GROWING WITH OUR CUSTOMERS | SWITZERLAND

Our customers receive the best of banking and insurance

T H E B A N C A S S U R A N C E D R E A M pursued by many banks and insurance companies dis-

integrated several years ago. The Baloise’s “Focused Financial Services Provider” model

on the other hand has proved successful. What is it that Basler Versicherungen and Baloise

Bank SoBa do differently or better? And how do customers beneﬁ t? Christian Andrik (Head

of the Baloise Bank SoBa branch in Basel) and Jürg Graf (Basler Versicherungen customer

adviser in the Bernese Oberland) have the answers.

Baloise Insurance and Baloise Bank SoBa have positioned themselves as focused

ﬁ nancial services providers. What does this mean?

C H R I S T I A N A N D R I K : We generate added value for our customers by providing compre-

hensive advice as well as seeking and ﬁ nding individual solutions in insurance, pension,

asset management and ﬁ nancing matters. Unlike conventional bancassurance strategies,

we market only selected banking products via our customer advisors.

J Ü R G G R A F : Our customers receive the best of banking and insurance. And they have a

single point of contact for all issues around money and ﬁ nancial security. This is an increas-

ingly important point for many customers.

Over the past years the bancassurance strategies of other banks and insurers have

failed. What is it that you do differently or better?

C H R I S T I A N A N D R I K : Our two lines don’t compete, we complement one another with our

respective strengths. After all, we both have a common target: to ﬁ nd the best solutions

for our customers. In the end, it doesn’t matter whether this is a banking, an insurance or

a combined solution.

J Ü R G G R A F : Depending on the situation at hand, I might recommend to the customer a cer-

tain investment to place some recently drawn insurance beneﬁ ts, or a restructuring of the

securities portfolio – a banking service, although I’m actually an insurance specialist. At

the end of the day, it is the value added for the customer that counts.

Insurance and banking products are, to a certain extent, in competition with one another.

How is this in your case?

G R A F : We don’t clash. Whether I recommend a banking or an insurance product has no impact

on my pay package. Therefore I am free to advise my customers in a solution-oriented and not

product-oriented fashion. So that customers get what they really need, no more and no less.

Our measure of success is customer satisfaction.

C H R I S T I A N A N D R I K : Our banking and insurance products complement one another in an

ideal way. Let me give you an example: A customer wants to invest a certain amount, let’s

say CHF 30,000. He can either use the sum as a single premium for a life insurance policy

or put it into a savings account. It all depends which solution is best suited to his ﬁ nancial

needs. With us, he can obtain either solution from a single source.

Mr Graf, you work as a customer advisor for Basler Versicherungen.

What are the advantages of the focused ﬁ nancial services provider model for you?

J Ü R G G R A F : As a banker who subsequently trained to become an insurance specialist, the

answer is clear to my mind. We have combined the respective strengths of a bank and an

insurance company to the advantage of our clients. I have been living this philosophy for

nearly ﬁ ve years now.

Basler Versicherungen in

Switzerland and Baloise Bank

SoBa are highly successful

with their “Focused Financial

Services Provider” model

Bâloise-Holding Annual Report 2006

And for you, Mr Andrik, as Head of the Baloise Bank SoBa branch in Basel?

C H R I S T I A N A N D R I K : This model has helped us expand our network, and it has also given

us access to new customers. Moreover, I can now rely on my customers always having a

competent local contact, irrespective of where they live. Another very important aspect

for me is the possibility of know-how exchange among the Baloise’s customer advisors.

Again, it is the customers who ultimately proﬁ t.

How else do customers beneﬁ t from this cooperation?

C H R I S T I A N A N D R I K : Their added value is primarily the possibility of obtaining custom-

ized solutions for insurance, pensions, asset management and ﬁ nancing from a single

port of call.

J Ü R G G R A F : In order to provide comprehensive advice, we need all the relevant informa-

tion from the customers, for example on existing pension schemes or mortgages, as well

as documents such as a tax return form including asset statement. The more we know

about their personal and ﬁ nancial situation, the more in-depth advice and added value we

can provide.

What added value do you generate in concrete terms?

C H R I S T I A N A N D R I K : Besides competent advice and solutions from a single source, the

added value lies primarily in our bundled solutions. These consist of intelligently linked

banking and insurance products. BALOISELIFE PLUS is an example of this, the ideal combi-

nation of insurance protection and saving. Customers can pay in in a ﬂ exible way and still

withdraw assets at an early stage, for instance to ﬁ nance residential property.

J Ü R G G R A F : Another case in point is the recently introduced BALOISELIFE KIDS, a unique

product in the Swiss market, combining a savings account for children with preferential

interest and risk insurance.

With just one contact for customers, how can you ensure that they receive competent

advice in matters as diverse as insurance, investment, ﬁ nancing and pensions?

J Ü R G G R A F : This is ensured primarily by the training and experience of each individual cus-

tomer advisor. And if I happen to be at a loss for a particular answer, I can always draw on

the advice and knowledge of one of my specialist colleagues. Knowledge exchange within

the Baloise Group is crucial for me and helps me develop my competence as an advisor.

C H R I S T I A N A N D R I K : The ﬁ rst port of call for a customer is always the advisor who is

responsible for them and knows them best. If this is the insurance advisor and the custom-

er wants an analysis of his securities portfolio, the advisor can always obtain information

from his banking colleague and so ensure that he always has the latest information and

recommendations to pass on to the customer.

What can a customer wanting comprehensive advice expect?

J Ü R G G R A F : First of all, we sit down and analyze his or her current situation. Then we

together deﬁ ne the targets. On this basis, we draw up customized solutions enabling

them to reach these targets. This process is repeated once every ﬁ ve years, unless

there is a signiﬁ cant change in the customer’s professional or family-related situation

beforehand.

C H R I S T I A N A N D R I K : We work through a checklist to make sure that nothing gets forgot-

ten. On a ﬁ le up to twelve pages long, we record information on the customer’s personal

and ﬁ nancial situation. This demands a large degree of openness and trust on the part of

the customer. For that, they will receive 360-degree advice with regard to their ﬁ nancial

matters. And all of this free of charge …

GROWING WITH OUR CUSTOMERS | SWITZERLAND

Bâloise-Holding Annual Report 2006

Let’s take a concrete example: Your customer is planning to buy a house. What will

he have to take into consideration? And what do you need to know in order to provide

competent advice?

C H R I S T I A N A N D R I K : The most important question of course is whether he can and real-

ly wants to afford it. We help him calculate whether the ﬁ nancial burden to be incurred is

reasonable in terms of income and assets. If the answer is yes, then we advise him on how

best to ﬁ nance the house, also from a tax point of view. He may also need to factor in future

events such as an anticipated inheritance or premature retirement.

J Ü R G G R A F : For house purchases in particular, it is crucial for us to know as much as

possible about the client’s ﬁ nancial situation. If for instance the customer shows us his

tax return forms, we can demonstrate the impact that the purchase will have on his ﬁ s-

cal situation.

Next comes the question of ﬁ nancing the purchase. What do you usually suggest?

J Ü R G G R A F : The answer here is as varied as the people posing the question. There is

no one-size-ﬁ ts-all solution. It takes individual counselling – something we gladly take

enough time for.

Nowadays change is the only constant factor in many people’s lives. How ﬂ exible is your

ﬁ nancing?

C H R I S T I A N A N D R I K : This is where our advice becomes particularly valuable. We have

products to suit every life situation and are well aware of how quickly circumstances can

sometimes change. That’s why we are ﬂ exible and ready to support our customers to the

greatest possible extent.

J Ü R G G R A F : Open communication is key here, since only then can we provide the tailored

advice that customers rightly expect of us. We for our part are open and honest too. It can

happen, for example, that we advise against a purchase if we realize that it would stretch

the customer beyond their ﬁ nancial means.

Residential property is a form of provision for the future. Does this make sense – or do

you have alternatives for someone who wants to remain ﬁ nancially ﬂ exible?

C H R I S T I A N A N D R I K : Residential property is actually a very sensible form of provision for

the future. But not necessarily for everyone. There are numerous alternatives ranging from

a savings account or life insurance policy through to a securities portfolio possibly com-

bined with an asset management mandate. The customers’ personal and ﬁ nancial circum-

stances as well as their preferences, hopes and dreams are the decisive factors.

J Ü R G G R A F : There is no such thing as the perfect provision for the future. Not least,

because most forms of pension provision will have an impact on the customer’s tax bill,

both before and after retirement. Pension planning must match the individual in question,

not vice versa. In fact, this applies to all our solutions. That is why it is so important that

we take enough time for every single customer. Ultimately, it takes tailored solutions to

make a perfect ﬁ t.

GROWING WITH OUR CUSTOMERS | SWITZERLAND

THREE KEY POINTS

■ Together with customers, we seek

individualized solutions in matters

of insurance, pensions, financing

and asset building.

■ Our customers have a single point

of contact for all their money and

security related issues.

■ We advise our customers in a

solution-oriented way.

Bâloise-Holding Annual Report 2006

GROWING WITH OUR CUSTOMERS | BELGIUM

Innovation for the Belgian market

Mercator, the Baloise’s Belgian subsidiary, is a well-established insurance group that oper-

Mercator’s family plan generates

ates exclusively in the Flemish part of the country. This means it has in-depth knowledge

of the local market. A knowledge that has helped Mercator expand its market position, so

that it now makes a considerable contribution to the Baloise Group’s consolidated proﬁ t.

recognizable added value for cus-

tomers, brokers and the Baloise.

Antwerp-based Mercator aims to grow and to strengthen customer retention. In early

From the beginning, this innovative

2006 it launched an innovative product tailored to the characteristics of the Flemish mar-

ket, yet distinct from comparable rival products. The product is called Gezinsplan (fam-

product was a success. It was sold

ily plan) and is targeted at all private individuals living in the same household. Custom-

over 19,000 times in 2006.

ers must have three nonlife insurance policies to their name to qualify for a Gezinsplan.

As usual in Belgium, the services of various independent brokers are a prerequisite for

sustainable growth. Brokers represent by far the most signiﬁ cant distribution channel for

insurance products.

Support for brokers
Mercator is now focusing predominantly on brokers interested in in-depth and long-term

cooperation. One such broker is Steve Van Bael, who works for the family ﬁ rm Groep Save-

mak. “Mercator is my most important partner. It provides customized support for my mar-

keting planning and implementation, both ﬁ nancially and in administrative matters. Mer-

cator not only pays bonuses to successful brokers, it also offers training sessions which

provide detailed information on the characteristics and advantages of the company’s prod-

ucts. Mercator also organizes workshops at which I can give my own input and so partici-

pate in the ongoing process of improving products in line with client requirements.”

The Gezinsplan’s added value for customers is that it gives them a better overview

of their state of insurance. New policies can be included in the plan or superﬂ uous ones

removed at any time. The advantage of the Gezinsplan for Mercator is that it noticeably

reduces the administrative workload and thus costs. Moreover, Gezinsplan policyholders

can have their monthly premiums debited directly to their bank or post ofﬁ ce account.

Target exceeded
With its Gezinsplan, Mercator has found an ideal solution for all parties involved: custom-

ers, brokers, and the Baloise.

And the strategy is paying off. When launching the product at the beginning of 2006,

Mercator’s management set the target of selling 18,000 such plans within two years. This

target was already surpassed by the end of 2006. On average, one additional Mercator pol-

icy was concluded with every customer contact resulting from the introduction of the Gez-

insplan. This translates into an acquisition rate of 100%!

In the words of experienced broker Steve Van Bael: “Mercator launched an innovative

product that has gone down very well with my demanding clientele.” After all, Van Bael is

THREE KEY POINTS

out to sell not the cheapest, but the best products. And this is where Mercator deﬁ nitely

■ The Gezinsplan is aimed at all

has an edge over its rivals, in his opinion.

individuals living in the same

household.

■ Customers obtain a better over-

view of their insurance affairs.

■ Brokers receive individualized sup-

port from Mercator for the planning

and implementation of marketing

measures.

Bâloise-Holding Annual Report 2006

GROWING WITH OUR CUSTOMERS | GERMANY

In permanent contact with customers

With a variety of measures,

Deutscher Ring stays in contact

with its customers – also

M A R E N M Ä H L M A N N is usually sceptical about such special offers. A 5% discount on the

packages of nearly all German travel agents. Can this be true? She is well aware of how

tight margins are in the travel industry. All the same, 36-year-old Ms Mählmann books a

week’s hiking holiday for two on the Canary Islands including half board at a wonderful

after conclusion of the contract.

resort hotel. And in doing so saves over 100 euros. There’s a reason behind her trust in this

speciﬁ c offer: Urlaubsplus, the travel agent, works closely together with Deutscher Ring,

where she recently took out a life insurance policy.

Retaining customer interest
Urlaubsplus is part of a network built up last year by the Baloise’s largest foreign subsid-

iary in connection with its new customer management program. Target: to tie the roughly

1.6 million Deutscher Ring customers more closely to the company. “Many customers for-

get about their insurer pretty fast,” explains Michael Hagemann, the man responsible for
dialog marketing at the Deutscher Ring headquarters in Hamburg. “Once the insurance con-

tract is concluded, the policy is put into some folder and often retrieved only years later.

That’s usually it as far as direct customer relations are concerned. The insurer simply no

longer exists in the customer’s mind.”

This is precisely what Deutscher Ring wants to prevent. Hagemann explains how: “We

want the dialog with our customers to continue, we want to add variety and, from time to

time, surprise our customers. Then we as a company and the advisor responsible will not

be forgotten so fast.”

“We want to retain our customer’s interest and trust by offering added value that goes

far beyond what they have normally come to expect from an insurance company,” con-

tinues Michael Hagemann. Just a run-of-the-mill marketing ploy? Not at all. It is the result

of intelligently built relationships interwoven with special measures. Measures that, at

the end of the day, generate value all round – for the customers, the network partners and

Deutscher Ring itself. A win-win-win situation.

Numerous advantages thanks to RingCard and the customer magazine
Two weeks after concluding her insurance contract, Maren Mählmann received the Ring-

Card mail informing her, among other things, of the ﬁ ve percent travel discount. The let-

ter also contained her personal customer card, the RingCard, which gives her access to a

variety of services, information and advice in insurance matters, round the clock, 365 days

a year. The card also opens the door to offers with exclusive discounts from selected

cooperation partners which she can consult and take up via a website accessible only to

Deutscher Ring customers.

With such beneﬁ ts extended, clients are usually willing to ﬁ ll out the questionnaire

enclosed with the RingCard mail. This in turn provides Deutscher Ring with valuable infor-

mation on its new clients, in particular on any further insurance needs they may still have.

Good relationships are always a matter of give and take, and customer relationships are no

exception. One out of every six new customers ﬁ lls out and returns the questionnaire – a

high return rate in this line of business. “Satisﬁ ed customers are the prerequisite for main-

taining and expanding successful customer relations,” says Michael Hagemann, “ﬁ rst we

give them individual, high-quality advice and subsequently offer them comprehensive ser-

vices. As a result, customers come to feel they have chosen the right insurance company.

Even well after the policy has been concluded.”

Bâloise-Holding Annual Report 2006

GROWING WITH OUR CUSTOMERS | GERMANY

Besides the RingCard mailing, clients have, since 2006, also been sent the magazine

“DerRing” four times a year. The subtitle “Mehr wissen, besser leben” (know more, live

better) expresses the philosophy behind it in a nutshell. The magazine – created by expe-

rienced journalists – contains 32 pages of useful information on topics such as asset man-

agement, pensions, health and leisure. Numerous service elements and a strong focus on

dialog enhance its value. Readers can for example swiftly obtain or access further-going

information or arrange a meeting with an advisor via a postcard, a phone number or an

internet address from the magazine. Requests are directed to Deutscher Ring’s inhouse

Service Center with its 100 or so insurance specialists. These inform the distribution part-

ner responsible, who immediately contacts the client in question. This ensures that cus-

tomers will always end up talking to their personal advisors, irrespective of the channel

through which they have voiced their request. And Deutscher Ring quite literally gives face

time to its client.

The very ﬁ rst issue of “DerRing” won Europe’s highly coveted silver “Best of Corporate

Publishing” award in the building society and ﬁ nancial services provider category. And not

only experts appreciate the magazine. According to a representative survey, it is read by

a full 81% of Deutscher Ring’s customers. An outstanding ﬁ gure.

Ascertained higher customer satisfaction
A further element in the integrated communication concept is the “thank-you-very-much-

for-your-trust” mailing. Each client who concludes a further contract receives a letter with

a ﬂ ower voucher worth ﬁ ve euros. So Deutscher Ring expresses its gratitude both in words

and through ﬂ owers.

The personal RingCard with its numerous advantages, the attractive customer maga-

zine, the ﬂ oral greetings, the regular service and product information and the availabili-

ty of a local, personal contact – all this adds up to greater customer satisfaction. Michael

Hagemann draws the conclusion: “The more satisﬁ ed a customer is, the greater the like-

lihood that he or she will again opt for Deutscher Ring when a new insurance need aris-

es. Both the satisfaction value and the number of contracts have been shown to lead to

higher customer retention.” With this modern service concept, Hagemann and his col-

leagues are obviously on the right track, as underscored by a study conducted by the Swiss

Handelsblatt and the University of St. Gallen, which nominated Deutscher Ring Germany’s

most customer-oriented health insurer.

By the way, Maren Mählmann will be receiving another letter from Deutscher Ring at the

end of July. No insurance proposal this time, no magazine, but a birthday card. She is turn-

THREE KEY POINTS

ing 37 on July 30. Happy birthday!

■ Deutscher Ring impresses clients

with its comprehensive range of

services.

■ Thanks to RingCard clients have

round-the-clock access to services,

information and advice in insur-

ance matters.

■ The magazine “DerRing” is a valu-

able provider of information and

advice on issues around pensions,

asset building, health and leisure.

Bâloise-Holding Annual Report 2006

SUSTAINABLE
BUSINESS CONDUC T
Human resources 34
Ecology 38
Risk management 40
Corporate governance 42

Bâloise-Holding Annual Report 2006

SUSTAINABLE BUSINESS CONDUCT | HUMAN RESOURCES

“We want excellence in leadership”

The Baloise strategy is customer

The Baloise aims to be the trusted partner of choice not only for its business partners

oriented. There is however a close

link between customer satisfaction

and investors, but also for its employees. What is it that makes the Baloise an attractive

employer today?

There are three main reasons for this. First, the Baloise is a successful company. For

and employee satisfaction. Both

employees, success is a form of recognition of their own input. Success makes them proud

are a pillar of business success and

of their company and stimulates them to perform well. Second, there’s the size of the

Baloise. It is large enough to offer its staff a highly professional structure and a wide range

so both deserve in-depth attention

of development opportunities in various markets and functions. But it is also small enough

and a systematic approach, accor-

ding to Markus Jordi, Head of Corpo-

rate Human Resources.

to have a human face and enable personal exchange of knowledge and best practice expe-

rience on the basis of what I would call the “Baloise spirit.” Third, there is its distinct cul-

ture built on a solid past, tradition, emotion and an above-average focus on staff and staff

development. I realize time and again that these are the very characteristics that top peo-

ple on the job market are looking for.

Are these criteria also reﬂ ected in staff satisfaction surveys?

Achieving a high level of staff satisfaction is one of the key targets of our HR work and ulti-

mately a basis for business success. Empirical studies in recent years have shown that

there is a close link between staff and customer satisfaction. So the relevance of this issue

can be derived directly from our strategy. We regularly measure staff satisfaction. The

results are very good in comparison with our direct competitors. This does not, however,

prevent us from casting a self-critical eye on any weaknesses that surface in our surveys.

We will continue to seek feedback from our employees on a regular basis as a way of ensur-

ing our credibility. This credibility is reﬂ ected not only by the surveys we carry out, but

also in other indicators such as the periodic staff interviews, performance reviews and the

appraisal of line managers which evaluates management quality in an anonymous form.

Indeed, the quality of leadership is one of the prime factors of staff satisfaction. This is

also why we place such emphasis on excellence in leadership.

Satisﬁ ed staff need both challenges and support. Is that what they get?

Focus on staff and their development is one of the pillars of our corporate culture. Our

cross-border feedback platforms in the Advanced Management and Strategic Leadership

programs give us very good insight into where we stand.

Skills development is one of our prime focal points, both at organizational and indi-

vidual level. In collective exchange and learning processes, we identify and develop skills

and seek to implement them in our core business. How can we set up a scoring/pricing

system? How can we improve our claims handling? What can we learn from past experienc-

es? And of course we support individual employees in the development of their speciﬁ c

skills. Each country provides its own systematic development measures. Our Belgian unit

for example draws up requirement proﬁ les and then makes target/actual comparisons.

Deutscher Ring Group has a longstanding tradition in talent and management develop-

ment. Basler Deutschland in Bad Homburg, too, has a professional management develop-

ment program for talented staff and puts a lot of work into the quality of its management

team. Our colleagues in Austria and Luxembourg work systematically on improving strate-

gically relevant skillsets. In Switzerland, staff portfolio analysis, strategic personnel plan-

ning and systematic skills development are all applied to bring about a longterm “upskill-

ing” of our workforce.

Bâloise-Holding Annual Report 2006

SUSTAINABLE BUSINESS CONDUCT | HUMAN RESOURCES

Human Resources has the difﬁ cult task of reconciling rapid changes in society with

a given corporate strategy. What successes can you list in this context?

In a difﬁ cult economic environment, the Baloise has successfully evolved into a highly prof-

itable enterprise. This is evidence for me that our human capital is well aligned with our

strategy. We have worked intensively at developing our skillsets over the past few years,

viewing ourselves as a learning organization. Particularly in the ﬁ eld of target customer

management, we have made enormous progress. Never before has the Baloise known its

clients as well as it does today.

Does the Baloise also know its employees?

Our strategy is customer driven. That’s why we will continue to work at our customer rela-

tionship competencies. I believe, however, that just as much attention must be paid to

the employer-employee relationship and that our staff also deserve nothing less than a

methodical and systematic approach to this relationship. This is another reason why we

place such emphasis on the quality of our management portfolio: to ensure that our man-

agers are capable of guiding and supporting their staff in the demanding development

processes. Our healthy corporate culture is now being enriched by a reinforced focus on

targets, performance and implementation. A willingness to put in above-average perfor-

mance has become indispensable. It’s like in sports: success motivates, unleashes pas-

sion and creates a fresh dynamic.

PREPARING FOR A POSSIBLE
PANDEMIC

Prevention means a lot to us, not

You say that a strong culture, excellence in leadership and high performance levels are

only for our insurance business, but

the foundations of the Baloise’s success. What then are the top-most priorities for HR?

also in view of threats we ourselves

Excellence in leadership is no doubt the strategic priority. It comprises three elements.

are faced with, such as an influenza

First, there is the targeted identiﬁ cation and recruitment process. Then come systematic

pandemic. Our groupwide prevention

support and empowerment through the appropriate development measures. And third, we

strategy is based on the following

strive for longterm staff retention by means of a performance and success-based culture

pillars:

and attractive employment terms. We use feedback processes as well as a Group wide pro-

gram which helps staff on the road to leadership through learning, exchange of knowledge

■ PROTECTION OF STAFF

and experience, and enhanced self-awareness. It is the same kind of process that also

Besides protection offered by the

enables people to become true specialists in their ﬁ elds. We will support the identiﬁ cation

state and private providers, all

process in an increasingly pragmatic way and expand the exchange of talented staff within

employees will receive additional

the Baloise Group. To promote not only strategic knowledge and business competence, but

means of protection such as

also excellence in leadership, we also need to have a common cross-border understanding

masks, gloves and in certain cases,

within the Group of what we mean by excellent leadership.

subject to local permission and in

cooperation with the authorities,

Common procedure, common targets. How can this be aligned with the maxim claiming

Tamiflu®, a medicament.

that all business is local?

We need strong local HR organizations that are represented on the executive management

■ SAFEGUARDING BUSINESS

teams and are integrated in the management processes. Corporate Human Resources

deﬁ nes uniform strategic impulses and promotes understanding of how we can put our

PROCESSES
To ensure that business processes

business strategy into operation at HR level on the basis of local circumstances. Ultimate-

are upheld, we have revised the

ly, it’s about adding value for the Group by jointly developing skills, systems, tools, mini-

local contingency plans, supple-

mum standards and the sharing of best practice.

menting them with the pandemic

scenario. Regular information on

measures taken has been made

available internally since 2006.

Bâloise-Holding Annual Report 2006

SUSTAINABLE BUSINESS CONDUCT | HUMAN RESOURCES

The following case examples provi-

de an insight into how the key com-

petencies stipulated by the HR stra-

tegy are developed and put into

practice in the various countries.

High-level performance and result orientation
Basler Switzerland introduced its Individual Performance Management (IPM) system in

January 2006. The comprehensive performance agreement for each employee now in-

cludes not only the annual targets but also the main tasks and responsibilities. The agree-

ment process includes a discussion of the skills required for the speciﬁ c tasks, a conduct

analysis and a catalogue of measures to be taken. IPM stands for the process by which the

Baloise assesses, steers and rewards each employee’s contribution to the company’s suc-

cess. It also provides the link between the targets and strategies of the company and the

targets and tasks of the individual staff member.

Highly qualiﬁ ed learning organization
For Mercator in Belgium, the start of the “function exercise@mercator” project in 2006

represented a ﬁ rst step on the road to becoming a learning organization. One of the proj-

ect targets is to establish a competence proﬁ le for each function. It is derived from the

result-oriented function description and includes both technical knowledge and soft skill

requirements. The proﬁ le will form the basis for the employee’s further career develop-

ment. It also facilitates efﬁ cient communication between staff and line managers.

Excellent leadership and management skills
Deutscher Ring launched the second edition of its demanding two-year development pro-

gram for future departmental heads and in-house project managers in 2006. The aim of

the program is to retain high-potential staff members, develop management talent within

the company’s own ranks and enhance the company’s management quality over the long

term. Participants are accompanied by mentors from top management throughout the pro-

gram. The program builds on individualized learning and development plans with a strong

link to the candidate’s practical work. Six out of the nine graduates assumed management

or project management functions already before the end of the program.

Pinpointing management potential
Basler Deutschland applied its Personnel Portfolio Conference successfully for the second

time in 2006. It is used to measure the performance and potential of senior managers. In

the course of the conference, each company board introduced its top managers and their

appraisals. Through a common, transparent decision-taking process, there emerged an

overall view of Basler’s top management potential and the necessary individual steps to

be taken to exploit this potential. A clear take of the company’s leadership potential auto-

matically make it easier to handle transition processes successfully.

High standing in the job market
Basler Switzerland developed its Insurance Trainee Program in 2006 in addition to the

existing General Trainee Program (GTP). The aim is to gain talented and highly qualiﬁ ed

young people for the core insurance business and to prepare them for managerial, spe-

cialist or project management functions. The individual training modules are held in vari-

ous insurance segments at head ofﬁ ce. A module involving stints with the sales teams can

also be selected.

Bâloise-Holding Annual Report 2006

SUSTAINABLE BUSINESS CONDUCT | HUMAN RESOURCES

Corporate culture focused on staff and customers
A project team from Basler Austria initiated workshops in 2006 aimed at fostering corpo-

rate culture in 2006 for staff from all sectors and hierarchic levels of the company. The

target was to improve communication and enhance cooperation between the different

departments and functions. Through team and conﬁ dence building activities, the partici-

pants swiftly got to know and understand one another better.

KE Y FIGURES

■ The Baloise Group‘s staff count amounted to 7,459 as at December 31, 2006 (2005:

7,548). Note: Since the Annual Report 2005, staff ﬁ gures have been stated in terms

of full time equivalents (FTE).

■ The staff turnover rate decreased slightly by 0.5% in 2006, coming to a little over

9%.

■ The number of younger staff members increased somewhat in 2006. Overall, the

average age went up, reﬂ ecting the general demographic trend.

■ Around 18% of the workforce opted for part-time work in 2006. Even though the

number of men in this category rose slightly, part-time positions were still pre-

dominantly held by women.

■ About CHF 20 million was spent on staff training and development in 2006. Staff

members spent a total of 21,499 days on basic and advanced training courses.

■ 320 positions were offered to apprentices, trainees and interns throughout the

Group. This reﬂ ects the signiﬁ cance that the Baloise attaches to the education and

training of young people.

Workforce by gender

in percent