Baloise-Holding AG Annual Report 2007

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FY2007 Annual Report · Baloise-Holding AG

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In the middle
of life

ANNUAL REPORT 2007

BALOISE KEY FIGURES

in CHF million

Business volume

Gross premiums written, nonlife

Gross premiums written, life

Sub-total of IFRS gross premiums written 1

Investment-type premiums

Total business volume

Business results

Segment income, nonlife 2

Segment income, life 2

Segment income, banking 2

Segment income other activities / corporate business 2

Proﬁ t for the period

Balance sheet

Investments 3

Technical reserves

Equity

Ratios in percent

Return on equity (RoE)

Combined ratio nonlife (gross)

Combined ratio nonlife (net)

New business margin, life

Investment performance

Embedded value life insurance

Embedded value

APE (annual premium equivalent)

Value of new business

Key share ﬁ gures

Shares issued in units

Proﬁ t for the period per share in CHF

Equity per share 4 in CHF

Price at year-end in CHF

Market capitalisation in CHF million

Dividend per share 5 in CHF

2006

2007

+/– %

3,065.1

3,651.4

6,716.5

774.7

7,491.2

542.2

246.2

63.6

89.4

707.1

3,190.6

3,677.8

6,868.4

1,069.2

7,937.6

516.5

418.9

69.1

30.2

813.8

59,357.1

46,521.8

4,986.5

61,770.0

47,811.0

4,865.6

15.3

90.2

94.0

7.3

4.5

16.9

93.0

95.1

9.5

3.0

2,627.8

3,230.6

217.2

15.9

212.5

20.3

55,307,150

54,000,000

12.93

91.0

121.80

6,736.4

3.80

15.48

92.2

111.50

6,021.0

4.50

4.1

0.7

2.3

38.0

6.0

– 4.7

70.1

8.6

– 66.2

15.1

4.1

2.8

– 2.4

19.7

1.3

– 8.5

– 10.6

18.4

1 Premiums written and policy fees gross.
2 Before taxes and borrowing costs.
3 Including assets for the account and at the risk of life insurance policyholders.
4 Calculated on consolidated equity before minority interests and average number of outstanding shares.
5 2007 based on the proposal to the Annual General Meeting.

BALOISE
AT A GLANCE

WHO WE ARE:
Th e Baloise Group is active in selected markets in continen-
tal Europe. With approximately 8,600 employees, Baloise
provides comprehensive insurance and retirement solutions
to private individuals and companies. Th e Group focuses on
high value-added customers and distribution partners. Th e
registered shares are included in the Swiss Market Index
and are traded under the abbreviation BALN.

OUR ACHIEVEMENTS IN 2007:
Record profi t of CHF 813.8 million, up 15.1% over the
previous record high of 2006.
Earnings per share of CHF 15.48, up 19.7% over the
previous year.
Return on equity of 16.9%.
Growth of business volume up by 6.0% to CHF 7,937.6
million.
Growth of 38.0% to CHF 1,069.2 million in the target
segment of investment-type life insurances.
Net combined ratio of 95.1% despite storm loss.
Embedded value of life insurances rose by CH 2,627.8
million to CHF 3,230.6 million, representing a return on
embedded value of 24.5%.

WHAT WE AIM TO ACHIEVE:
Th e year 2008 will be characterised by volatile fi nancial mar-
kets and a further increase in pricing and competitive pres-
sure. In this challenging environment, Baloise strives to
achieve good results at a high level. Over the cycle, Baloise
expects to see a return on equity of 15% and a steady increase
in earnings per share. In the nonlife business, it is our objec-
tive to keep the combined ratio signifi cantly below 100%.

CONTENT

BALOISE
Key Figures
At a Glance
Our Markets
Our Strategy

SHAREHOLDER INFORMATION
Letter to Shareholders: “We Want to Make an Active
Contribution to the Development”
Baloise Share: Resilient Baloise Share in
Volatile Financial Markets

REVIEW OF BUSINESS YEAR
Group: Another Record Result
and Accelerated Growth
Switzerland: Th oroughly Healthy and Profi table
Germany: Strengthened Sales Power
Belgium and Luxembourg: High Profi tability
Other Countries: Growth and Expansion

TRUSTED PARTNER
Switzerland: Comprehensive Support
in a Complex Environment
Germany: “Basler’s Doors are Always Open to Me”
Belgium: Excellently Supported by Mercator

SUSTAINABLE MANAGEMENT
Human Resources: Attractive Employer
with Prospects
Ecology: Long-Term Protection of the Environment
Risk Management: We Invest Constantly in Our
Advanced Risk Management

CORPORATE GOVERNANCE
Corporate Governance Report
including Compensation Report

ORGANISATIONAL STRUCTURE
Board of Directors
Management

MANAGEMENT INFORMATION
Consolidated Income Statement
Consolidated Balance Sheet
Business Volume, Premiums
and Combined Ratio
Technical Income Statement
Gross Premiums by Industries
Embedded Value
Banking Activities
Asset Performance

BÂLOISE-HOLDING
Income Statement
Balance Sheet
Notes
Appropriation of the Retained Earnings
as Proposed by the Board of Directors

GLOSSARY

ADDRESSES

BALOISE GROUP INFORMATION

Cover
Cover
4
6

16
20
21
22
23

26
28
30

34
38

76
77

80
82

83
85
86
87
90
91

94
95
96

101

102

106

107

KEY DATES AND CONTACTS

Cover

A safe and fulfi lling life with the right partner.

Change is often experienced as a challenge.
But change is also an expression of freedom.
Freedom to choose; the freedom of giving
life a particular direction, or to start all over
again.

You can rely on us as your trusted partner in
any of these situations. Looking at the lives of
our clients in all their richness, we offer them
support in decision-making situations –
wherever they are in life.

Going through
life together

OR RATHER ON YOUR OWN?

BALOISE
OUR MARKETS

OUR MARKETS

BALOISE FOCUSES ON MARKETS, CUSTOMERS, DISTRIBUTION CHANNELS AND PRODUCTS WITH HIGH

ADDED VALUE. WE PREFER CUSTOMERS WHO ARE PRIVATE INDIVIDUALS, SMALL AND MEDIUM-SIZED

BUSINESSES WITH FAVROUABLE RISK AND INCOME PROFILE AND SELECTED INDUSTRIAL CUSTOMERS.

In the Swiss home market, Baloise trades
SWITZERLAND
under the names “Basler Versicherungen” and “Baloise Bank
SoBa”. Th e Basler Switzerland is the largest business unit
within the Group. As a fi nancial services provider, it focuses
on comprehensive insurance and retirement solutions.
Customers are private individuals, small and medium-sized
businesses and selected industrial companies. Th e heart of
the Baloise distribution is the company’s own sales force,
which works closely with selected distribution partners for
individual product and customer segments, plus external
brokers and on the internet. In addition, Baloise Bank SoBa
off ers banking products through its insurance sales force to
accompany the range of retirement products. In the region
of northwest Switzerland, it has also positioned itself as a
full-service bank.

In the German market, Baloise is represented
GERMANY
by business units “Basler Versicherungen” and “Deutscher
Ring”. With its headquarters in Bad Homburg, Basler Ger-
many focuses on property insurance, providing insurance
and retirement solutions to private customers, small and
medium-sized businesses and selected industrial customers.
In sales, Basler Germany works primarily with the company’s
own sales force and external brokers.

Deutscher Ring in Hamburg specialises in retirement provi-
sions for private customers, with retirement and health care
as core products. Deutscher Ring is also present in Slovakia
and in the Czech Republic. Apart from its own sales force,
Deutscher Ring also works with distribution partners OVB
and ZEUS and external brokers.

KEY FIGURES SWITZERLAND

KEY FIGURES BASLER GERMANY

Full-time equivalents

Business volume in CHF million

Combined ratio (gross)
Basler Versicherungen in percent

2006

3,516.9

3,730.4

2007

3,449.7

3,742.7

87.8

88.6

Full-time equivalents

Business volume in CHF million

Combined ratio (gross)
Basler Versicherungen in percent

2006

1,152.3

1,067.4

2007

1,126.3

1,083.9

92.6

97.3

KEY FIGURES DEUTSCHER RING

Full-time equivalents

Business volume in CHF million

Combined ratio (gross)
Deutscher Ring in percent

2006

1,296.8

1,237.9

2007

1,354.2

1,299.8

94.4

97.2

BALOISE
OUR MARKETS

In the Belgian market, the Baloise Group is
BELGIUM
represented in Flanders by the brand “Mercator Verzeke-
ringen”. Mercator has established itself as preferred trusted
partner to local, professional brokers. Th e company provides
a comprehensive range of fi nancial protection and property
insurance products to private customers and small and
medium-sized businesses.

In Austria, “Basler Versicherungen” off ers in-
AUSTRIA
surance and retirement solutions to private customers and
small and medium-sized businesses. In sales, the business
unit relies primarily on its own sales force, plus a number of
selected brokers. Basler is one of the prime addresses in the
target segment medical practitioners and other medical per-
sonnel.

In the Grand Duchy, “Bâloise Assurances”
LUXEMBOURG
off ers a full range of products to meet the insurance, retire-
ment and wealth building needs of private and business cus-
tomers. Beyond its home market, Bâloise Luxembourg also
sells retirement and wealth-building products in many coun-
tries of the European Union, in cooperation with high-per-
formance banking partners.

Together with “Osiguranje Zagreb”,
CROATIA AND SERBIA
which was acquired in July 2007, “Basler Osiguranja” is the
fourth largest insurer in the Croatian market. Aft er opening
an offi ce in Serbia at the end of 2007, Baloise is now concen-
trating on the target segment medical practitioners and
dentists, which has already been highly successful in Aus-
tria and Croatia, as well as on banking sales.

KEY FIGURES BELGIUM

KEY FIGURES AUSTRIA

Full-time equivalents

Business volume in CHF million

Combined ratio (gross)
Mercator Verzekeringen in percent

2006

680.7

738.7

2007

689.7

792.8

92.7

94.3

Full-time equivalents

Business volume in CHF million

Combined ratio (gross)
Basler Versicherungen in percent

2006

235.8

127.9

2007

241.2

146.7

99.9

KEY FIGURES LUXEMBOURG

KEY FIGURES CROATIA AND SERBIA

Full-time equivalents

Business volume in CHF million

Combined ratio (gross)
Bâloise Assurances in percent

2006

128.0

535.2

2007

160.0

770.5

89.7

91.6

Full-time equivalents

Business volume in CHF million

Combined ratio (gross)
Croatia and Serbia in percent

2006

67.0

13.6

95.0

2007

693.7

62.5

117.6

BALOISE
OUR STRATEGY

OUR STRATEGY

THE FOCUS OF OUR STRATEGY IS OUR CUSTOMERS, WHOSE LASTING TRUST WE WANT

TO ACHIEVE. THIS PARTNERSHIP IS CHARACTERISED BY THE QUALIT Y OF THE RELATIONSHIP

AND THE ADDED VALUE.

WE FOCUS ON OUR CUSTOMERS

We want us and our products and services to excite our cus-
tomers and thus become their preferred and trusted partner.
Based on this long-term, trusting relationship, together with
the mutual generation of added value, we are able to achieve
long-term growth and above-average productivity. In turn,
this allows us to make investments that benefi t our custom-
ers, employees and investors, thus securing our future.

Organic growth in customer segments with a high value-
added potential will continue to be our primary focus. For
targeted acquisitions and strategic partnerships, we will
focus on the expansion of market positions in existing
markets.

For our most important reference groups this means:

Our target customers are responsible indi-
CUSTOMERS
viduals and businesses that take the protection of their
property and adequate provisions for the future seriously.
With comprehensive solutions, we provide them with
security for all situations in life. We are passionate about
being a service provider. Our prices and conditions are
based on risk assessment features and enable us to off er
detailed solutions.

SHAREHOLDERS We increase the business value for our
shareholders. With the entrusted capital, we aim at a return
that is signifi cantly higher than the average cost of capital.
We maintain an income-oriented distribution policy. We
provide regular und transparent updates to our sharehold-
ers on business trends and strategy implementation.

BALOISE
OUR STRATEGY

EMPLOYEES Th e success of our strategy is built on the
skills and capabilities of our competent, hard working and
loyal employees. We off er them an attractive working envi-
ronment with prospects for continuous further develop-
ment. We ensure targeted and sustained investment in the
skills of our employees. We are committed to working in a
fair partnership.

Depending on the market, we conduct
SALES PARTNERS
all or part of our business through sales partners. Th ey are as
strongly committed to outstanding customer management
and exceptional service quality as we are. We seek to main-
tain the same relationship of trust with our sales partners as
we do with our customers.

THE PUBLIC We are a responsible member of society. As
an insurance and pension provider, we contribute to the
functioning of national economies, communities and busi-
nesses on a daily basis.

Th anks to our sizable earning power, we contribute substan-
tially to the fi nancing of the public sector. Our sustainable
company policy makes us a reliable employer. We create and
maintain value-added jobs. We make responsible use of nat-
ural resources.

Renting a
place

OR OWNING YOUR OWN HOME?

There are different types of dwellings. The goal
is to create an environment that enables a
good life for everyone. Our lives keep changing
– thus, we periodically must adjust our living
arrangements.

The manifold forms of community require
strong partners, who are responsive to the
changing needs and conditions. Like Baloise.

SHAREHOLDER INFORMATION
LETTER TO SHAREHOLDERS

“WE WANT TO MAKE AN ACTIVE
CONTRIBUTION TO THE DEVELOPMENT”

DEAR SHAREHOLDERS

It is with great pleasure that we are able to report that the
Baloise Group has realised historical earnings of CHF 813.8
million and a 19.7% increase in earnings per share of
CHF 15.48 in the fiscal year 2007 – a clear indication that
Baloise is in excellent shape. This success confirms the
opinion of the Board of Directors and the Corporate Execu-
tive Committee that we have the right strategy and that we
will continue to efficiently implement it year after year. My
sincere thanks go to those who are responsible for this
achievement: to all employees, but also to you, dear share-
holders. The business results 2007 will allow us to recom-
mend a 18.4% higher dividend per share of CHF 4.50 to the
Annual General Meeting.

This record result – a milestone of a major phase of develop-
ment on our way to become a favoured trusted partner – is

Dr. Rolf Schäuble, Chairman of the Board of Directors
and CEO of Baloise Group

the interim high point of our five-year undertaking aimed
at attaining mastery in our core business. During this time,
we were able to steadily increase our earnings power. Today,
Baloise is a respected, highly profitable, financially strong
and competitive business, ranking among the leading insur-
ance companies in Europe.

Our guiding principle in the further implementation of our
strategy remains the continued striving for operational ex-
cellence in the insurance business. Financial management in
the years to come will continue to focus on the high demands
of our shareholders. This will include an attractive distribu-
tion policy and effective capital structure management,
among other things.

SHAREHOLDER INFORMATION
LETTER TO SHAREHOLDERS

Baloise – would offer them the opportunity to increase their
efficiency, plus excellent access to the capital market.

Th e year 2008 will be characterised by volatile fi nancial
markets and a further increase in pricing and competitive
pressure. In this challenging environment, Baloise strives to
achieve good results at a high level. Over the cycle, Baloise
expects to see a return on equity of 15% and a steady in-
crease in earnings per share. In the nonlife business, it is our
objective to keep the combined ratio signifi cantly below
100%.

On behalf of Baloise’s Board of Directors and the Corporate
Executive Committee, I would like to thank you for your
confi dence and faith in the company, now and in the fu-
ture.

Basel, March 2008

Rolf Schäuble,
Chairman of the Board of Directors and
CEO of Baloise Group

The European insurance industry is currently undergoing
a fundamental change; the consolidation is already a reality
today or is foreseeable in the future. With its strong stra tegic
positioning as well as its performance and financial strength,
Baloise is well prepared. And more than that. From a posi-
tion of strength, we want to – and are able to – actively con-
tribute to this consolidation process. We want to continue to
generate high earnings, while growing significantly at the
same time.

To achieve our goals, we will continue to grow organically
and, with a clear strategy in the market consolidation, we
will also consider acquisitions, strategic partnerships or
mergers. The prerequisites are already clearly defined: they
must be economically viable for our company and provide
clear, measurable and long-term financial benefits to our
shareholders, employees and customers. Acquisitions or
mergers for their own sake are not viable for us. Our focus
in the future is still on the markets in which we already op-
erate today. Here, we want to grow stronger and make an
active contribution to the development.

Actively contributing to the consolidation process does not
simply mean to join all the numerous other stakeholders in
the field. Such a step must serve a superordinate, strategic
interest. For Baloise, this interest is tantamount to main-
taining its freedom of action and making use of the available
room for manoeuvre. As the saying goes: Shape the future,
or the future will shape you.

A look at the European insurance map shows a heteroge-
neous picture: Many insurance markets are typical of the
numerous companies of national or regional significance.
Many of these companies are well established and have
a loyal customer base. But in an increasingly complex and
demanding environment they lack the knowledge and skills
in critical areas such as value and risk management, under-
writing and asset management, whereas Baloise has all these
attributes to a great extent. A merger with a financially
strong partner that is listed on the stock exchange – such as

SHAREHOLDER INFORMATION
BALOISE SHARE

RESILIENT BALOISE SHARE IN VOLATILE
FINANCIAL MARKETS

IN 2007, THE BALOISE SHARE REMAINED RELATIVELY CONSTANT IN A VOLATILE FINANCIAL MARKET

ENVIRONMENT COMPARED TO OTHER FINANCIAL INSTRUMENTS. THE SWISS INSURANCE INDUSTRY INDEX

CLOSED AT – 8.3%, ITS EUROPEAN EQUIVALENT AT – 12.1%. AT YEAR-END, THE BALOISE SHARE PRICE

WAS CHF 111.50, DOWN BY 8.5%.

In the fi rst quarter, the Baloise share performed stronger
than the market as a whole, but weaker than the Swiss in-
dustry index. By 31st March 2007, the Baloise share price had
gone up by 3.9%. In the same period, the SMI only increased
by 2.2%. With the insurance sector being stimulated by the
rising interest rate level in the fi rst three months, the Swiss
insurance sector index (SWX SP Insurance Price Index) rose
by 7.1%.

Th e increase in value in the fi rst half of the year could not be
sustained in the second half, due to the worsening of the US
mortgage crisis. At the end of September, the Baloise share
price was CHF 117.80; 3.3% lower than at the beginning of
the year. With a gain of only 1.7%, the SMI lost signifi cantly
in value compared to the fi rst half of the year.

At year-end, the SMI closed with –3.4%. At year-end, the
Swiss insurance sector index was 8.3% lower than at the be-
ginning of the year, while the European insurance sector
index was down by 12.1%. Th e Baloise share was unable to
escape the volatile environment and at year-end 2007 closed
at CHF 111.50; a drop of 8.5%, compared with the year-end
2006 closing price of CHF 121.80.

For the fi scal year
DISTRIBUTION TO SHAREHOLDERS
2007, the Board of Directors requests a cash dividend of
CHF 4.50 of the Annual General Meeting. Based on the
year-end closing price, this represents a cash dividend return
of 4.0%.

Th e share buy-back programme, announced in March 2006
(total volume: up to 5,530,715 shares) was continued in 2007.

A further 3,283,000 shares were acquired via the second
trading line. By the end of 2007, 78.8% of the buy-back pro-
gramme had been realised. In addition to the cash dividend,
shareholders thus received a total of CHF 390.6 million.

Buy-back
volume
(in units)

1,074,000

3,283,000

4,357,000

In % of maxi-
mum buy-back
volume of
5’530’715
shares

19.4

59.4

78.8

Year

2006

2007

Total

Buy-back volume
(in CHF million)

Average price
(in CHF)

113.8

390.9

504.7

105.84

119.00

115.80

Th e Anual General Meeting 2007 decided upon a capital re-
duction by cancelling 1,307,150 of the repurchased shares.

Th e current status of the share buy-back programme is avail-
able at:

www.baloise.com
share

Share buyback program

Investor Relations

Baloise

Baloise has a broadly diversi-
SHAREHOLDER STRUCTURE
fi ed shareholder base and is listed on the Swiss Market Index
(SMI). Th rough the share buy-back, Baloise exceeded the
disclosure threshold of 5% on 5th November 2007 and held
5.04% treasury shares. Th erefore, the SMI-relevant free-fl oat
has come to 94.96% as of March 2008. On 31st December
2007, Barclays Group held 10.25% of the shares (disclosure
report dated 28th August 2007). Th e table on page 100 gives
information on the largest registered shareholders as of 31st
December 2007.

SHAREHOLDER INFORMATION
BALOISE SHARE

INDEXED SHARE PRICE DEVELOPMENT1 BÂLOISE-HOLDING SHARE
REGISTERED 2003 – 2007

Tk, B: BALN; R: BALZn

CHF 0.10

1.241.051

CH0012410518

SWX Europe

100% registered shares

250

200

150

100

2003

2004

2005

2006

2007

1 31st Dezember 2002 = 100

Bâloise-Holding share registered
SWX SP Insurance Price Index (SMINNX)
Swiss Market Index

30.12.2003

30.12.2004

30.12.2005

29.12.2006

28.12.2007

51.65

63.20

25.45

52.50

63.10

45.75

76.75

77.00

52.70

1.70

30.90

0.86

3.90

13.46

0.83

7.30

10.51

0.97

121.80

126.70

76.40

6,736.4

12.90

9.40

1.34

111.50

135.00

104.90

6,021.0

15.48

7.20

1.21

55,307,150

54,000,000

414,303

1,176,237

887,879

1,849,548

3,997,308

54,892,847

54,130,913

54,419,271

53,457,602

50,002,692

BALOISE SHARE

Ticker symbol

Face value in CHF million

Securities number

ISIN

Listing

Share type

SHARE STATISTICS

Position

Price at year-end in CHF

High in CHF

Low in CHF

Earnings per share in CHF

Price / earnings ratio (P / E)

Price / carrying value ratio ( P / B )

Number of shares issued in units

./. Number of treasury shares in units

Number of shares in circulation in units

Market capitalisation in CHF million

2,856.6

2,903.6

4,244.8

Average number of shares outstanding 1

54,794,476.0

54,001,678.0

54,280,154.0

54,086,516

51,887,469

Dividends per share 2 in CHF

Payout ratio

Return on dividends 2

0.60

36.3

1.2

1.10

28.2

2.1

2.20

30.7

2.9

3.80

30.1

3.1

4.50

29.0

4.0

1 Relevant for the earnings per share calculation (see ﬁ nancial report page 82).

2003 before restatement due to inclusion of the Baloise Foundation for Employee Participation in the consolidation process as of 01.01.2004.

2 2007 based on proposal to Annual General Meeting.

New runabout

OR NEW TOOLBOX?

The decision for new acquisitions is based on
complex considerations. Nostalgia or technology,
familiar or new.

We frequently use our gut instinct when making
these decisions, even if we carefully weigh up
the costs and benefits. Baloise knows how to deal
with its customers’ rational and instinctive
decisions and how to find promising solutions.

REVIEW OF BUSINESS YEAR
GROUP

ANOTHER RECORD RESULT
AND ACCELERATED GROWTH

IN THE FISCAL YEAR 2007, THE BALOISE GROUP AGAIN EXCELLED WITH A RECORD RESULT AND REINFORCED

GROWTH MOMENTUM. RESULTS INCREASED BY 15.1% TO CHF 813.8 MILLION (PREVIOUS YEAR: CHF 707.1

MILLLION). WE PROPOSE A 18.4% HIGHER DIVIDEND OF CHF 4.50 PER SHARE FOR OUR SHAREHOLDERS.

In a demanding market environment, partly
OVERVIEW
supported by favourable currency eff ects, Baloise had a suc-
cessful year in the insurance business and with investments.
We noticed mounting pressure on prices and margins in all
our continental markets in the insurance sector. As
a quality insurer with a focus on customers with earning
potential and a low risk profi le, we respond by off ering our
target customers diff erentiated prices, plus attractive service
and product off erings.

Our focus on operational excellence and aligning sales ac-
tivities to best serve target customers, was refl ected in the
excellent 2007 results of the business units. Particularly out-
standing is the increased profi t contribution from the life
insurance sector.

Th e total business volume – including investment-type life
insurance – rose by 6.0% to CHF 7,937.6 million (previous
year: CHF 7,491.2 million). In local currency the increase
was of 3.6%. Premium income under IFRS amounted to
CHF 6,868.4 million (previous year: CHF 6,716.5 million),
an increase of 2.3%. Th e major growth impulses came from
investment-type life insurances. Belgium, Luxembourg and
Austria, in particular showed marked growth. Th e business
volume comprises a balanced mixture of business sectors,
with about 60% life insurance and 40% nonlife business.

Th e Baloise Group’s scope of consolidation was primarily
expanded by Osiguranje Zagreb in Croatia, the Winterthur
Europe Vie in Luxembourg and the newly formed compa-
nies in Liechtenstein and Serbia.

Th e result from investments in the unstable environment of
the capital markets rose by 9.5% to CHF 2,515.9 million,
thanks to our effi cient asset management. Primary contribu-
tors to the results were the 11.5% increase in current income
on top of the strategy-driven realisation policy. Th e propor-
tion of shares and equity-related investments in the insur-
ance business amounted to 13.1% (previous year: 14.1%). Th e
performance of 3.0% (previous year: 4.5%) refl ects largely
the negative impact of rising interest rates on the fair value of
fi xed-income securities. Investments in subprime and CDO
instruments amount to 0.04% of the investments.

BUSINESS VOLUME 2007 (GROSS) BY REGIONAL SEGMENTS

in percent

Switzerland

Germany

Benelux

Other countries

47.2

30.0

19.7

3.1

REVIEW OF BUSINESS YEAR
GROUP

DISTRIBUTION INCOME

in CHF million

Total business volume

Life

Nonlife

Investment-type insurance
premiums

Income from services
rendered

COMBINED RATIO NET PERFORMANCE

2006

2007

+/– %

7,491.2

3,651.4

3,065.1

774.7

7,937.6

3,677.8

3,190.6

6.0

0.7

4.1

1,069.2

38.0

286.4

387.5

35.3

in percent

2007

2006

2005

2004

2003

95.1

94.0

100.0

97.5

103.2

NONLIFE SECTOR: EXCELLENT ACTUARIAL PRACTICE DESPITE
STORM LOSS Th anks to a strong operational perfor-
mance and a high-quality insurance portfolio, the nonlife
sector (indemnity and personal injury insurance) achieved a
strong result from investments and earnings before taxes
and borrowing costs of CHF 516.5 million (previous year:
CHF 542.2 million). Despite the fi nancial strain of approxi-
mately CHF 83 million gross due to winter storm “Kyrill”,
the results are only somewhat below the record result of the
previous year which had suff ered hardly any losses. Com-
bined ratio from 93.0% gross (previous year: 90.2%) and
95.1% net (previous year: 94.0%) are within the framework
of our objectives; without the “Kyrill eff ect”, the results
would have been on the same excellent level as the 2006 re-
sults. All strategic business units saw the combined ratio at
a very good level. Th e German and Belgian units in particu-
lar experienced large claims due to “Kyrill”.

Th e business volume (equal to the IFRS premium income)
amounted to CHF 3,190.6 million (previous year: CHF
3,065.1 million), an increase of 4.1%. Convincing growth,
given the mounting competition and the resulting drop in
prices in various segments. Above-average growth was
achieved in Belgium with 8.4%, Luxembourg with 11.5%
and in Austria with 17.4%. For years, Austria and Luxem-
bourg have been achieving double-digit growth rates, well
above the market average.

From 2005: excluding legally required interest on acturial reserves for pensions.

LIFE INSURANCE SECTOR: EARNINGS SURGE Th e life in-
surance sector achieved earnings before taxes and borrow-
ing costs of CHF 418.9 million (previous year: CHF 246.2
million), an increase of 70.1%. Factors contributing to this
outstanding performance are the increased operating effi -
ciency, a higher value of the business portfolio and the fa-
vourable trend in interest rates. Investments were key to the
results. Th e business volume – including investment-type
life insurances – amounted to CHF 4,747.0 million (previ-
ous year: CHF 4,426.1 million), an increase of 7.3%. Th e de-
mand for traditional endowment life insurance remained
weak due to continued low interest rates. Single life business
in the Swiss market saw a downward trend, while invest-
ment-type life insurances signifi cantly improved its market
position. Volume rose by 38.0% and for the fi rst time was
well over a billion with CHF 1,069.2 million (previous year:
CHF 774.7 million). Th ese products continue to be a sound
alternative to traditional life insurances, for which there is
still only weak demand. Particularly Bâloise Luxembourg,
Deutscher Ring and Baloise Switzerland recorded strong
growth in investment-type life insurances.

In order to take advantage of the many promising opportu-
nities for capital market-oriented products, we established
Baloise Life Liechtenstein in 2007, which develops innova-
tive product off erings in this sector.

REVIEW OF BUSINESS YEAR
GROUP

In the reporting period, the value of the life insurance portfo-
lio (embedded value) showed an increase from CHF 2,627.8
million to CHF 3,230.6 million which corresponds to an ex-
cellent return on embedded value of 24.5%. In addition, the
contribution from investment income, modelled at a higher
level for the future, amounted to CHF 454 million. Th e
better-than-expected trend on the capital markets in 2007 re-
sulted in a further positive contribution of CHF 80 million,
aft er taking into account surplus eff ects. Th e value of new
business amounted to CHF 20.3 million, while the margin in
new business improved to 9.5% (previous year: 7.3%).

EMBEDDED VALUE PERFORMANCE

in CHF million

2007

2006

2005

2004

2003

3,231

2,628

2,360

2,137

1,980

BANKING: INCREASE IN EARNING POWER Th e banking
sector achieved earnings before taxes and borrowing costs
of CHF 69.1 million (previous year: CHF 63.6 million), an
increase of 8.6%. Baloise Bank SoBa contributed the lion’s
share with an increase in earnings under IFRS of 2.8% to
CHF 30.4 million (previous year: CHF 29.5 million). Baloise
Asset Management realised earnings of CHF 18.5 million
(previous year: CHF 21.3 million). Th e Baloise Invest Fund
increased its earnings by 12.5% to CHF 8.1 million.

As of 31st December 2007, equity of the Baloise
EQUIT Y
Group amounted to a total of CHF 4,865.6 million (previous
year: CHF 4,986.5 million). Th e decrease was a result of the
share buy-backs, the dividend distribution and the capital
market development, which were almost compensated for
by the profi t for the period 2007. Group solvency at the end
of 2007 was an excellent 287% (previous year: 320%).

INVESTMENTS While stock exchanges worldwide were
still reporting strong growth in the fi rst half-year, shares, in
particular fi nancial instruments, headed downwards aft er

OWN INVESTMENTS
BY CATEGORIES 1

in CHF million

INVESTMENT COMPONENTS 2007

2006

2007

+/– %

in percent

Fixed-interest securities

24,231.6

24,227.3

Derivatives

Investment property

Mortgage assets

Policy and other loans

Alternative ﬁ nancial
investments

Cash equivalents

Total

6,046.2

75.8

5,312.6

9,941.4

7,860.2

2,214.6

– 0.0

– 5.8

5,695.5

54.2

– 28.5

5,269.5

– 0.8

10,234.8

8,164.4

3.0

3.9

2,145.7

– 3.1

698.1

1,611.7

130.9

56,380.5

57,403.1

1.8

1 Excluding assets for the account and at the risk of life insurance policyholders.

42.2

9.9

0.1

9.2

17.8

14.2

3.7

2.9

REVIEW OF BUSINESS YEAR
GROUP

BALOISE ASSETS AS OF 31.12.2006

in Mio. CHF

Own investments

Investment-type life insurance

Total recognised investments

Asset management for third parties

Total managed assets

BALOISE ASSETS AS OF 31.12.2007

in CHF million

Own investments

Investment-type life insurance

Total recognised investments

Asset management for third parties

Total managed assets

Nonlife

Life

Bank

Total Group

9,381.8

41,359.8

5,619.9

56,380.5

2,976.6

9,381.8

44,336.4

5,619.9

59,357.1

8,950.6

68,307.7

Nonlife

Life

Bank

Total Group

9,721.7

42,144.4

5,609.8

57,403.1

4,366.9

9,721.7

46,511.3

5,609.8

61,770.0

9,413.8

71,183.8

August in the escalating property and credit markets
crisis in the US. It is only due to the interest rate cuts by the
US central bank that most equity markets were able to re-
cover by the end of the year. Among the major share indices
recording a positive development, are Standard & Poor’s
with +3.5%, EuroStoxx50 with +6.8% and the MSCI Emerg-
ing Markets Free Index with +39.4%. Th e Swiss Performance
Index with – 0.1%, however, suff ered enormous setbacks in
the second half of the year and subsequently struggled to
reach the previous year-end results. Baloise was able to prof-
it from the volatile trend of prices, thanks to the above aver-
age equity exposure, the diversifi ca-tion in shares from the
European and emerging markets, together with the earn-
ings realisation, made primarily in the Swiss stock market
in the fi rst six months.

With our USD-denominated hedge funds and private equity
investments, we achieved a performance of 8.8% and 23.6%.

Infl ation, due to the price of raw materials, initially triggered
a marked interest rate rise in Europe and Switzerland, resul-

ting in a price decline for bonds. However, in the second half
of the year, the interest rate cuts caused by the credit crisis
led the Fed to set off a counter-movement, particularly in
USD bonds. European and Swiss bonds, however, still recorded
negative performance. With its substantial Eurobond invest-
ments, Baloise, as a Swiss franc investor, at least participated
in the rise of the euro (+2.8%), although nearly 75% of the
risk considerations were hedged.

Overall, we were able to increase the current revenue by
11.5%, thus further strengthening the stability of the fi nan-
cial result.

OUTLOOK Th e year 2008 will be characterised by volatile
fi nancial markets and a further increase in pricing and com-
petitive pressure. In this challenging environment, Baloise
strives to achieve good results at a high level. Over the cycle,
Baloise expects to see a return on equity of 15% and a steady
increase in earnings per share. In the nonlife business, it
is our objective to keep the combined ratio significantly
below 100%.

REVIEW OF BUSINESS YEAR
SWITZERLAND

THOROUGHLY HEALTHY
AND PROFITABLE

SEGMENT SWITZERLAND SIGNIFICANTLY INCREASED ITS EARNING POWER. COMPARED TO 2006, EARNINGS

ROSE BY 43.8% WITH A RECORD PERFORMANCE OF CHF 413.8 MILLION. MAIN GROWTH DRIVERS ARE THE

EXCELLENT OPERATING PERFORMANCE, INVESTMENTS AND THE FAVOURABLE TREND IN INTEREST RATES.

THE BUSINESS MODEL OF THE FOCUSED FINANCIAL SERVICE PROVIDER MANAGED TO SUSTAIN ITS

CONVINCING PERFORMANCE.

Another record performance
BASLER VERSICHERUNGEN
thanks to the business unit’s consequent focus on operating
excellence and target customers. In the target customer seg-
ments, we achieved above-average growth and a further in-
crease in profi t contribution. Productivity of distribution
channels rose as a result of improved effi ciency. Th is excel-
lent operating performance was the result of the measures
applied to increase operating excellence, primarily tariff s
commensurate with risk, refurbishment and improved loss
processes.

Th e business volume reached CHF 3,742.7 million (previous
year: CHF 3,730.4 million). While the slight increase of 0.3%
is due to the above-average growth in targeted segments,
pricing pressures slowed down the weak demand in indi-
vidual life business, with our selective underwriting policy
also curbing the growth momentum.

Th e nonlife sector achieved a business volume of CHF 1,285.9
million (previous year: CHF 1,280.5 million). With an in-
crease of 0.4% above market average, we were growing above
or with the market across all industries. Only in the motor
insurance sector was our growth below average, due to our
high demands on quality. Despite large claims, the sector
achieved a very strong operating performance. Th e combined
ratio gross was an excellent 88.6% (previous year: 87.8%),
bearing in mind that 2006 was a year with hardly any losses.

Aft er years of decline, the business volume of the life insur-
ance sector stabilised again. It rose by 0.3% to CHF 2,456.8
million (previous year: CHF 2,449.9 million). As focused fi -
nancial service provider, we were able to successfully link

life insurance products with bank off ers in the private cus-
tomers sector. Th e reinvestment ratio of expired insurance
funds amounted to a high 33%. With 20.5% above the mar-
ket average, we showed signifi cant growth in investment-
linked insurance products. Group life business achieved
strong growth of 3.6%. Th e legal quote was 92%, thus ex-
ceeding the statutory rate of 90% in favour of our custom-
ers.

Despite strong competition, Baloise
BALOISE BANK SOBA
Bank SoBa’s earnings under IFRS rose by 2.8% to CHF 30.4
million (previous year: CHF 29.5 million). Th is excellent re-
sult confi rms the Bank’s strategic focus on profi table target
customers and the improved effi ciency of business pro-
cesses. For the business model “Focused fi nancial service
provider”, which sells banking products via the insurance
sales force, we managed to increase the infl ow of net new
money to a new record high of CHF 540 million, with an
asset balance of CHF 1.9 billion. With this business model,
we now reach a customer base of approximately 21,000,
compared to 4,900 in 2003. Th is corresponds to average an-
nual growth of 43.9%.

KEY FIGURES SWITZERLAND

in CHF million

Business volume

Of which: life

Of which: nonlife

Combined ratio (gross)
Basler Versicherungen
in percent

Proﬁ t before tax

2006

2007

+/– %

3,730.4

2,449.9

1,280.5

3,742.7

2,456.8

1,285.9

0.3

0.4

87.8

88.6

287.8

413.8

43.8

REVIEW OF BUSINESS YEAR
GERMANY

STRENGTHENED
SALES POWER

IN A STRONGLY CONTESTED AND STAGNATING MARKET, THE TWO BUSINESS AREAS BASLER VERSICHERUNGEN

AND DEUTSCHER RING ACHIEVED COMBINED EARNINGS BEFORE TAXES AND BORROWING COSTS OF CHF 190.0

MILLION (PREVIOUS YEAR: CHF 169.1 MILLION). SUPPORTED BY FAVOURABLE EXCHANGE RATES, BOTH UNITS

GREW BY 12.4%.

its

trust

As a result of operational dis-
BASLER VERSICHERUNGEN
cipline, excellent investment income and the positive eff ect
of tax law changes, the business unit was able to increase its
profi t contribution considerably compared to the previous
year. Business volume increased by 16% to CHF 1,083.9 mil-
lion (previous year: CHF 1,067.4 million). Th e core business
area property insurance grew by 2.8% to CHF 866.2 million
(previous year: CHF 842.4 million). In the tough price war
in the German market, Basler Versicherungen continued to
put
technically sound, selective under-
writings, thus strengthening its position in marine, third
party liability and technical insurance, renewable energies
in particular. Th e combined ratio gross reached 97.3% (pre-
vious year: 92.6%). Th e higher fi gure is due to a claims
burden of CHF 49 million gross as a result of the storm
“Kyrill” in the fi rst six months of 2007. Th e life policy port-
folio recorded a slump due to expiring contracts. Despite a
market-driven new business, life insurance business volume
fell to CHF 217.7 million (previous year: CHF 225.0 mil-
lion).

(previous year: CHF 1,237.9 million), an increase of 5.0%.
In line with the strategy, the bulk of its growth stems to a
large extent from investment-type life insurance products,
which appreciated by 22.8% to CHF 256.5 million. Premium
income under IFRS amounted to CHF 1,043.3 million (pre-
vious year: CHF 1,029.1 million), an increase of 1.4%. In the
life insurance sector, investment products off set the weak
demand for conventional insurance products; with the sec-
tor achieving a business volume of CHF 1,076.6 million
(previous year: CHF 1,023.3 million), an increase of 5.2%.
Th e property insurance business achieved a business volume
of CHF 223.2 million (previous year: CHF 214.6 million), an
increase of 4.0% compared to 2006. Due to the large storm
damage the gross combined ratio was 97.2% (previous year:
94.4%). Stepping up its commitment in Eastern Europe
proved to be very successful for Allfi nanzvertrieb OVB.
Deutscher Ring has also been very successful with its distri-
bution in Slovakia and the Czech Republic. Overall, Deut-
scher Ring Bausparkasse also achieved a positive result aft er
taxes and borrowing costs.

In the fi scal year 2007, Deutscher Ring
DEUTSCHER RING
made a substantial contribution to the Baloise Group’s
earnings. In the stagnating German life insurance market,
only the “Riester” and “Rürup” pension schemes, subsidised
by tax concessions, recorded dynamic growth. In spring 2007,
Deutscher Ring successfully launched a new investment-type
“Riester” pension. Th is product resulted in excellent new
business, compared to other products in the market. Special
attention is also given to Eastern Europe, primarily because
of the selective expansion of the subsidiary OVB. Deutscher
Ring generated a business volume of CHF 1,299.8 million

KEY FIGURES GERMANY

in CHF million

Business volume

Of which: life

Of which: nonlife

Combined ratio (gross)
Basler Versicherungen
in percent

Combined ratio (gross)
Deutscher Ring in percent

Proﬁ t before tax

2006

2007

+/– %

2,305.3

1,248.3

1,057.0

2,383.7

1,294.3

1,089.4

3.4

3.7

3.1

92.6

97.3

94.4

169.1

97.2

190.0

12.4

REVIEW OF BUSINESS YEAR
BELGIUM AND LUXEMBOURG

HIGH PROFITABILITY

SEGMENT BENELUX WITH THE FLEMISH MERCATOR AND BÂLOISE LUXEMBOURG ACHIEVED EARNINGS

BEFORE TAXES AND BORROWING COSTS OF CHF 183.6 MILLION (PREVIOUS YEAR: CHF 231.1 MILLION).

MERCATOR FOCUSES ON PRODUCT INNOVATIONS, UTILISING TARGET BROKERS AND FURTHER BUSINESS

PROCESS IMPROVEMENTS. THERE WAS CONTINUED SIGNIFICANT GROWTH FOR BÂLOISE LUXEMBOURG.

During the fi scal year 2007, Mercator achieved
BELGIUM
excellent results. Its foundation is a good loss ratio – despite
storm losses of about CHF 16 million gross – and rising cur-
rent revenue from investments. Th e exceptionally high earn-
ings of the previous year also includes revenue from the sale
of participations, which did not meet our needs for a sus-
tainable investment policy. Business volume increased by
a pleasing 7.3% to CHF 792.8 million (previous year: CHF
738.7 million). Aft er several years, Mercator has managed to
achieve growth again, thanks to the improved sales per-
formance in the nonlife sector and increased broker sup-
port. Business volume increased by 8.4% to CHF 587.4 mil-
lion (previous year: CHF 541.7 million). Th e combined ratio
was 94.3% gross, primarily due to storm losses. Compared
with the 92.7% for the previous year, with hardly any storm
losses, this represents a substantial achievement. Launched
to stimulate cross-selling, bundled products “Gezinsplan”
(family plan) and “KMU-Plan” are selling successfully,
while also noticeably increasing the number of policies
per customer. The life insurance business volume in-
creased by 4.3% to CHF 205.4 million (previous year:
CHF 197.0 million). Traditional life insurance products de-
veloped at market average, while fi nancial products showed
a downward trend in a shrinking market.

Being very successful, Bâloise Luxembourg
LUXEMBOURG
doubled its earnings. Th e basis for this is the solid opera-
tional performance, plus positive earnings contribution from
the fair values of investment properties. Business volume in-
creased by 43.9% to CHF 770.5 million CHF (previous year:
535.2 million). Main drivers were again investment-type life
insurances, sold by Baloise, under the free movement of

services in the EU, primarily in France and Belgium. Even
without these products, premium volume under IFRS in-
creased by 5.3% to CHF 96.1 million (previous year: CHF
91.2 million). Particularly successful was the nonlife sector.
With 11.5%, its premium income rose signifi cantly above
the market average to CHF 53.4 million (previous year: CHF
47.9 million). Today, the business unit has a very compact
and effi cient distribution network and attractive products
such as the motor product Poly Care, aimed at target cus-
tomers. Th e combined ratio gross was an excellent 91.6%
(previous year: 89.7%). Th e life insurance division grew by
47.1% to CHF 717.1 million, thanks to booming investment
linked products (previous year: CHF 487.3 million). Th e ac-
quired Winterthur Europe Vie (now: Bâloise Europe Vie) is
part of this growth. Th e traditional life insurances, only sold
in Luxembourg, showed a downward trend in a stagnating
market, due to an extraordinary single premium in the pre-
vious year.

KEY FIGURES BENELUX

in CHF million

Business volume

Of which: life

Of which: nonlife

Combined ratio (gross)
Mercator Verzekeringen
in percent

Combined ratio (gross)
Bâloise Assurances in percent

Proﬁ t before tax

2006

2007

+/– %

1,273.9

1,563.3

684.3

589.6

922.5

640.8

22.7

34.8

8.7

92.7

94.3

89.7

231.1

91.6

183.6

– 20.6

REVIEW OF BUSINESS YEAR
OTHER COUNTRIES

GROWTH AND EXPANSION

DUE TO TARGETED, QUANTITATIVE AND QUALITATIVE BOOSTING OF SALES POWER, WE WERE ABLE TO

ACHIEVE SIGNIFICANT ABOVE-AVERAGE SALES GROWTH IN AUSTRIA. WITH THE ACQUISITION OF OSIGURANJE

ZAGREB, BALOISE BECAME THE FOURTH LARGEST INSURER IN THE CROATIAN MARKET.

Basler Österreich continued on its way to a cus-
AUSTRIA
tomer-value driven distribution management and the
strengthening of its own sales organisation. Th is resulted in
signifi cant growth in business volume by 14.8% to CHF
146.7 million (previous year: CHF 127.9 million). Premiums
under IFRS also increased by 13.4% to CHF 140.5 million
(previous year: CHF 123.9 million). Due to the strong com-
petition, the nonlife insurance market saw signifi cant price
reductions, which Basler could not completely escape in the
area of new business. However, the eff ect on result and
growth was insignifi cant due to an effi cient risk selection. In
the nonlife sector, Basler Österreich achieved a sizeable in-
crease of 17.4% to CHF 109.6 million (previous year: CHF
93.4 million), signifi cantly above market average. Despite
some large claims, the gross combined ratio remained at the
previous year’s gross value of 99.9%. Th ere is a strong com-
petitive pressure from banks in the Austrian life insurance
market. In this environment the Basler maintained its posi-
tion with growth in business volume of 7.7% to CHF 37.1
million (previous year: CHF 34.5 million). Sales of unit-
linked life insurance products increased by 57.9%. In future,
the focus lies on the further expansion of the prevention
program “Basler Sicherheitswelt” (Basler world of security)
and the increase of sales power.

CROATIA AND SERBIA With the acquisition of Osiguranje
Zagreb in the second half of 2007, Baloise considerably in-
creased its presence in the Croatian market and as fourth
largest insurer is now one of the leading providers. Th e com-
bined business volume of the two units during the fi scal year
2007 (for Osiguranje six months only) amounted to CHF
62.5 million, with CHF 26.2 million attributable to nonlife

business and CHF 36.3 million to life insurance. Due to the
acquisition growth, a comparison to the previous year would
not be expedient. At the beginning of 2008, we established
a new business unit in Serbia, focusing on the successful tar-
get segment physicians and dentists in Croatia.

REINSURANCE, FINANCE AND HOLDING COMPANIES Th is
section deals with reinsurance companies, individual in-
vestment schemes, fi nancing and participations and other
corporate business. Th e profi t contribution amounted to
CHF 247.3 million (previous year: CHF 253.4 million). Next
to the reinsurance units, the excellent result is mainly due to
the good performance of the private equity and hedge fund
companies.

KEY FIGURES AUSTRIA,
CROATIA, SERBIA
AND OTHER COUNTRIES

in CHF million

Business volume

Of which: life

Of which: nonlife

Combined ratio (gross)
Basler Österreich in percent

Combined ratio (gross)
Croatia and Serbia in percent

Proﬁ t before tax

1 After acquisition of Osiguranje Zagreb.

2006

2007

+/– %

181.6

43.6

138.0

247.9

73.4

174.5

36.6

68.8

26.5

99.9

95.0

253.4

117.61

247.3

– 2.4

With children?

OR RATHER WITHOUT?

Some decisions we make ourselves. Others
catch up with us. No life follows a straight
path – and perhaps this is what enriches our
lives and makes them worth living.

Change is part of life and offers opportunities
for growth. Baloise helps you meet these
challenges in a positive way. Again and again.

TRUSTED PARTNER
SWITZERLAND

COMPREHENSIVE SUPPORT
IN A COMPLEX ENVIRONMENT

AT LONG-ESTABLISHED HEGGLI REISEN UND TRANSPORTE AG IN KRIENS IN CENTRAL SWITZERLAND, THE

YOUNGER GENERATION HAS JUST TAKEN OVER THE HELM. FOR THE PAST NINE YEARS, BASLER VERSICHERUNGEN

HAS BEEN LOOKING AFTER THE NEEDS OF THE 114-YEAR OLD, FAMILY-OWNED BUSINESS – A RELATIONSHIP

OF TRUST THAT KEEPS GROWING.

BRIGITTE HEGGLI

BACHMANN:

“THE FRAMEWORK CONDITIONS

OF OUR BUSINESS ARE CONSTANTLY

CHANGING, BUT BALOISE IS

ALWAYS AT OUR SIDE WITH

COMPETENT SUPPORT.”

Heinrich Heggli’s retire-
BALOISE IS ALWAYS PART OF IT
ment is imminent. Th e owner of the Kriens-based transport
and travel company views the handover to the fi ft h genera-
tion with a relaxed attitude. Since early 2008, his daughter
Brigitte and his son Marcel have been the majority share-
holders. Both have been working in the family business for
several years ft er having earned their spurs working for other
companies.

In 1999, when Heinrich Heggli saw the recession coming, he
decided to switch his mortgages from a bank to insurance.
Being an astute business man, he then put the contract for
employee benefi ts out for tender – conditional on taking on
the mortgages as well. Th e contract was awarded to Basler.
Since 1999, Heggli has gradually taken on more insurance
products from Basler, at fi rst transport, baggage and travel
insurance and since 2008 also a sickness cash benefi t plan.
According to Heggli, Basler provides expert advice in the
legally complex area of transport insurance. Any time. He is
full of praise for his contact at the Basler General Agency in
Zug/Knonaueramt, stressing that conscientious support and
close personal contact are key factors of a trusting relation-
ship.

“Our tasks and framework conditions have changed greatly
over time,” says managing director Brigitte Heggli Bach-
mann. “And Basler has been supportive of us throughout,”
adds her brother. Established in 1894, the business has grown
from 30 to 200 employees since 1974. Well-known personali-
ties such as DJ Bobo, Miss India and the Princess of Th ailand
have been among their customers. What they did not know:
as a trusted partner, Basler was always at their side.

TRUSTED PARTNER
SWITZERLAND

HEGGLI AG, KRIENS, SWITZERLAND

TRAVEL AND TRANSPORT Heggli’s business
is legally complex. That’s why they trust in
Baloise..

FAMILY-OWNED SINCE 1894 Two generations of
Hegglis: Heinrich, Brigitte, Yvonne and Marcel.

COLOURFUL ‘CARREISEN’ In the region, Heggli is well-
known for its colourful cars and coaches. The picture
shows a luxurious double-decker coach, the India Coach
and the coach of football club FC Lucerne.

TRUSTED PARTNER
GERMANY

“BASLER’S DOORS ARE ALWAYS
OPEN TO ME.”

THE WEIGEL FAMILY LIVES IN A VILLAGE IN SOUTHWEST GERMANY, WITH A POPULATION OF ABOUT 2000.

FOR THE PAST FIVE YEARS THEY HAVE BEEN ENTRUSTING ALL THEIR BELONGINGS TO BASLER VERSICHERUNGEN.

THIS TRUSTING PARTNERSHIP IS BASED ON DIRECT PERSONAL CONTACT.

JÜRGEN WEIGEL:

“THE PERSONAL CONTACT,

PROVIDED BY BALOISE

HAS BECOME A RARIT Y

THESE DAYS.”

Grosskarlbach is a sleepy little town not
LOCAL SUPPORT
far from Mannheim. Th e mayor, Ralf-Peter Riegel, is also
a partner in regional offi ce Riegel, Mayer & Hintenlang, the
local representative of Basler Versicherungen. He has a friend-
ly wave for everyone he meets, and takes visitors on a short
walk around the village. Aft er 48 years, the third generation is
about to join the business. Th ey all understand the value of be-
ing close to their clients and working locally: “Frequently, cli-
ents just come by in person with their concerns,” says Riegel.

For example, Jürgen Weigel, from nearby Gerolsheim, has
been insured with Basler for nearly fi ve years: cars, tractor,
caravan, personal liability insurance for the whole family,
horses and dogs, household and personal eff ects plus teeth,
legal protection, fi re und accident insurance. And he has
taken out special insurance for the house his son built in the
family’s garden. In one and a half years, the 23-year old
single-handedly built a house from scratch.

“For me, there is no insurance without trusted partners,” says
dad Jürgen Weigel. And here, local ties are important:
“I would never take out insurance over the Internet.” He
switched to Basler because he was fed up with the faceless,
impersonal support of his previous insurance. With Riegel
and his employees, he receives competent personal support.
Th ey are willing to go the extra mile. Invited by Riegel,
Weigel’s children Benjamin and Marlene took part in a road
safety training course at the Nürburgring, with great
success: already on the way home, Marlene had to dodge
a fox. Both survived the unexpected encounter unharmed.

TRUSTED PARTNER
GERMANY

THE WEIGEL FAMILY, GEROLSHEIM, GERMANY

PERSONAL CONTACT MATTERS The local oﬃ ce of Basler Ver-
sicherungen provides direct and individual support to the Weigel
family.

HOME, SWEET HOME Benjamin Weigel and his partner
posing in his parents’ garden in front of their self-built
home, ready to move in.

ROAD SAFET Y After Ralf-Peter Riegel of Basler Versicherungen
(centre) invited the young Weigels to the road safety training
course, he decided to take part as well.

TRUSTED PARTNER
BELGIUM

EXCELLENTLY SUPPORTED
BY MERCATOR

THE BELGIAN ESTATE AGENT SYSTEM HAS ITS OWN PECULIARITIES. ESTABLISHED 16 YEARS AGO,

INSURANCE BROKERS CORNELIS & PARTNERS IN LEDEBERG NEAR GHENT, HAVE BEEN WORKING CLOSELY

WITH MERCATOR FOR MANY YEARS. A LOOK AT BELGIUM.

JOËL CORNELIS:

“MERCATOR’S SUPPORT

THROUGH THE CONTACT CENTRE AND

SALES TEAMS IS INDISPENSABLE

FOR US.”

Joël Cornelis is a jovial
“I AM NOT READY TO RETIRE YET.”
man with a jam-packed diary. Together with his daughter
Karien, he founded a small insurance agency in 1992 on
a busy road to Ghent. At the time, they bought a small com-
pany of Noordstar (now Mercator Verzekeringen). Today,
with 28 employees, Cornelis & Partners realises half of its
turnover with Mercator. “I am not ready to retire yet,” he says,
“my work is my hobby. And I will keep going as long as I feel
that way.”

Insurance is still the agency’s core business, but with mort-
gages and properties they are now also concentrating on two
other related areas. Initially, they will off er an indemnity in-
surance package for an agreed monthly premium. Only
then, will the agency suggest an insurance company. Th ey
prefer broker insurance packages by their long-term partner
Mercator. “Th e excellent support we receive from the Con-
tact Centre and the sales team is indispensable. We can
process certain accounts ourselves with the trust they are
placing in us,” says Joël Cornelis.

In his view, the broker system has the advantage that clients
can rely on tailor-made products and services. In addition,
they all have their dedicated adviser who is even prepared to
visit them at home. “I am convinced that only larger bro-
kerage fi rms have a chance of survival,” predicts Joël Cor-
nelis. “Consequently, 2008 will again be dominated by
expansion.”

TRUSTED PARTNER
BELGIUM

CORNELIS & PARTNERS, GHENT, BELGIUM

INSURANCE FLEMISH ST YLE The Belgian broker system
allows for tailor-made insurance. This is what Joël Cornelis
expects from his trusted partner Mercator as well.

A DEDICATED ADVISER FOR EVERYBODY For Joël
Cornelis it is a matter of course that each client has
their own, personal adviser.

A SIGN OF EXPANSION Roughly 50%
of Cornelis & Partners’ turnover comes from
Mercator, with expansion planned for 2008.

Investing

OR DO-IT-YOURSELF?

Investments in building technology and structure
are expensive at the moment. Oft en it is only
the next generation that will draw the benefi t of
an energy-effi cient building method.

Yet, there are always people who are willing to
take the jump and try out new living arrange-
ments, for the sake of the environment and con-
venience. Baloise off ers a helping hand because
it views both as important.

SUSTAINABLE MANAGEMENT
HUMAN RESOURCES

ATTRACTIVE EMPLOYER
WITH PROSPECTS

LOYAL AND CAPABLE EMPLOYEES CONTRIBUTE CONSIDERABLY TO BALOISE’S ADDED-VALUE. WE OFFER

OUR EMPLOYEES NEW CHALLENGES AND CONTINUOUS PROFESSIONAL DEVELOPMENT. IN RETURN,

WE EXPECT COMMITMENT AND PERFORMANCE EXCELLENCE. WE PLACE REAL EMPHASIS ON WORKING

IN PARTNERSHIP.

KEY FIGURES

As of 31st December 2007, the Baloise Group had 8,643
employees (2006: 7,933).
91 new jobs were created in 2007.
In 2007, the Baloise Group invested CHF 20.8 million
in workforce training.
Employees attended a total of 21,684 days of training
and development (an average of 2.5 days per employee).
Baloise employed over 300 apprentices, trainees and
interns across the Group.
Employee turnover as of 31st December 2007 was 7.4%
(2006: 9.1%).
65% of those who left did so of their own accord.
In our main market Switzerland, 64% of employees took
advantage of our employee share ownership pro-
grammes.

COMPANY STRATEGY SUPPORTED BY PERSONNEL POLICY
Baloise’s vision is to become its customers’ trusted partner.
Our corporate values “Creating Value”, “Shaping Relation-
ships” and “Eff ecting Change” have been developed around
this vision. Th e business strategy of Baloise aims for sus-
tainable and above-average growth. Th is strategy is support-
ed by our personnel policy. Th e success of our strategy is
built on the skills and capabilities of our competent, hard-
working and loyal employees.

Baloise is positioning itself as an employer with three
guiding principles:

We are an attractive and forward-looking employer and
the best in our sector.
By retaining and recruiting outstanding employees, we
contribute to the company’s long-term success.
By developing and retaining employees, we are gaining
competitive advantage through performance-driven,
motivated and well-trained staff .

We are thus making a vital contribution to the company’s
added-value.

PARTNERSHIP IS ESSENTIAL TO BALOISE Th e Human Re-
sources strategy of Baloise is based on six key elements with
the objective of positioning the Group as a trusted partner
with current and future employees.

Th e elements of our strategy are as follows:

Preferred employer
Performance and results driven
Highly qualifi ed, learning organisation
Excellent leadership and management skills
Strong adaptability and fl exibility
Strong, employee-oriented corporate culture

Baloise’s objective is to be the best employer in the industry.
Th is is true for every stage of the employment relationship
‒ from recruitment, through performance management to
the development of employees and retaining talent.

SUSTAINABLE MANAGEMENT
HUMAN RESOURCES

We encourage high levels of commitment, initiative, respon-
sible and cost-conscious conduct to provide a solid base
from which to achieve high performance.

age individual responsibility. Employees receive regular
feedback on their performance. In 2007, 66% of all employ-
ees were given feedback.

PREFERRED EMPLOYER We are committed to becoming
a preferred employer and have already received seven exter-
nal confi rmations from diff erent countries in 2007.

Our commitment, for example, resulted in being rated No. 1
among Austria’s insurance industry in the 2007 “Great Place
to Work” survey. To sustain its status as best employer, Ba-
loise Austria has to maintain the change process and ensure
regular evaluation, with the outcome of the “Great Place to
Work” survey, in which it participated for the second time
in 2007, providing vital information. Th e response rate of
73% exceeded the result of the previous year (71%) and
Baloise Austria again secured a place among the top 25
employers in 2007.

In 2007, Baloise Switzerland was named “Best Climber
2007” in the “Universum Graduate Survey” by Swedish con-
sulting fi rm Universum. For this annual survey, students at
universities and technical colleges are asked about their ide-
al employer and working conditions.

In early 2007, Mercator in Belgium introduced the “Recruit-
ment Award” and the new “Employer Branding Campaign”,
with the objective of involving employees in the recruitment
of new employees. A company’s own employees are the most
trustworthy ambassadors and an indispensable source for
the search for new employees. Th is method was instrumen-
tal for fi lling several open positions in 2007, with further
candidates currently still undergoing the selection process.

PERFORMANCE AND RESULT DRIVEN Th e success of our
company is built on the skills and capabilities of our hard
working employees, who are committed to delivering excel-
lent results. To achieve this success, we expect and encour-

For the second time in a row, Mercator in Belgium or-
ganised workshops on “Effi cient Performance Appraisal In-
terviews” with the aim of increasing the benefi t of perform-
ance reviews. Th e workshops were attended by around 55%
of the total workforce. Th e topics included, among other
things, how to prepare for interviews, interview content and
communication behaviour. With a good performance ap-
praisal interview, employees and managers can better pre-
pare for the year ahead and contribute to the success of the
company and their own personal development.

At Baloise Switzerland, individual performance is measured
with the IPM(Individual Performance Management). IPM is
a tool for integrated management, evaluation and rewarding
of individual performances, with individual objectives de-
riving from superordinate company objectives. Via a multi-
plier, the company fi nancial performance aff ects the level of
performance-related pay (incentive/bonus).

Baloise
HIGHLY QUALIFIED LEARNING ORGANISATION
continually invests in executive personnel and employee
development.

In 2007, Basler Germany successfully conducted the fi rst
part of a series of seminars called “Taking the lead”. With a
total of 67 team leaders, the six seminars concentrated on
strengthening and developing of managerial skills within
the context of the guidelines that were drawn up by the ex-
ecutives in 2006. Topics included, in particular, information
and communication, dialogue and the ability to handle con-
fl ict, trusted partnership, performance and results orienta-
tion, employee motivation and employee development. Th e
series will be continued in 2008 with a second part on lead-
ership issues.

SUSTAINABLE MANAGEMENT
HUMAN RESOURCES

For us, leadership means broad experience and looking at
the wider picture. In this context, Deutscher Ring organised
the leadership development programme ‘ChangingPlaces’
in 2007. For one week, board members, division and depart-
ment heads exchanged their usual place of work at Deut-
scher Ring for a completely diff erent working environment.
Whether in a young off ender’s institution, in a specialist
alcohol detox clinic, in centres for the homeless or drug
abuse and AIDS counselling centres, impressions were in-
tense and formative.

EXCELLENT LEADERSHIP AND MANAGEMENT SKILLS
Baloise systematically identifi es and develops talented ex-
ecutive staff . In 2007, the continuing education programmes
“Strategic Leadership Programme” (SLP) and “Advanced
Management Programme” (AMP) were systematically
aligned with the implementation of corporate strategy.

To become a trusted partner, it takes more than just the de-
sire to grow profi tably. It takes the outstanding skills of each
individual and a consistent focus on the needs of our
customers - topics our managers were discussing at length
during the two training courses. Leadership means above
all, the strategy to serve, which in turn means serving our
customers. With the expansion of our abilities, we ensure
that we can improve each day with the help of our most
competent specialists and best managers.

introduced management-
In Switzerland, Baloise has
monitoring guidelines in 2007 to strengthen the focus on
leadership and development.

A business must
STRONG ADAPTABILIT Y AND FLEXIBILIT Y
be – and remain – adaptable. We create clear areas of re-
sponsibility and freedom for professional, dedicated and
creative action. At Baloise, we thus focus on change man-
agement and creating change. It is also important to us to
involve our competent and motivated employees in the
change process and to retain them. Of equal importance
next to development opportunities are employee satisfac-
tion and a good work-life balance.

Th e acquisition of Winterthur Europe Vie by Baloise Lux-
embourg in 2007 also meant keeping on all the original em-
ployees. On the whole, very few positions were fi lled twice as
a result of this acquisition. Yet there was still a sense of inse-
curity among employees of the former Winterthur and
Baloise employees with regard to their future roles in the
new structure. In intense discussions between the em-
ployees concerned and senior management, we were able to
resolve these uncertainties and questions. All key employees
subsequently were able to fi nd a position within the new
organisation that met their own requirements.

STRONG, EMPLOYEE-ORIENTED CORPORATE CULTURE
Refl ecting our value “Shaping Relationships”, the strong
corporate culture is one aspect that makes working for the
Baloise Group such a unique experience. We regularly con-
duct employee satisfaction surveys, asking our employees
for feedback on our development programmes. In 2006 and
2007, a total of 43% of employees participated in various
surveys.

Th e growth-oriented champion strategy is a new concept,
developed in 2007 by Deutscher Ring together with em-
ployees. While also acting as role model, this concept
describes the fundamental principles and values as well as
the maxims for cooperation and leadership, for example
partnership, performance orientation, personal responsibil-
ity and social commitment, trust culture, expecting and
encouraging. Binding service principles were also drawn up
for all employees.

SUSTAINABLE MANAGEMENT
HUMAN RESOURCES

Diversity among our em-
BALOISE PROMOTES DIVERSIT Y
ployees is an important factor in maintaining the ability to
off er new services and products, thus remaining a trusted
partner to our customers. Th e Baloise Group will not toler-
ate any form of discrimination. We support and promote
employees only for three reasons: performance, potential
and identifi cation with the values of the company.

Baloise employs people from many countries and cultural
backgrounds. In Switzerland alone, we employ staff from 40
diff erent countries.

Baloise is an attractive employer for men and women.
Women make up 46% of our staff , with 24% female exe-
cutives (2006: 21%).

ANNEMIE D’HULSTER AND BALOISE

Having joined Baloise in August 2002, Annemie D’Hulster
was appointed CEO of Baloise Liechtenstein on 1st January
2008. With a six-year old daughter, she is looking forward
to the new challenge. She enjoys working at Baloise because
of the following reasons:

the great atmosphere and friendly colleagues
the corporate culture leaves room for initiative
the size of Baloise allows a holistic approach to subjects
performance is rewarded
work still leaves her time to spend with the family

Delivering top performance requires a good work-life
balance. Hence, we off er our employees diff erent models for
working full-time, part-time or working from home, with
17% of employees opting for part-time. We are particularly
pleased with the childcare we provide for the children of our
employees. Th e day nursery set up in Switzerland in 2001
now looks aft er 80 children.

TOP LINKS

www.baloise.com/sustainability

Activity
Environmental mission statement
Environmental audit
Interview with Rolf Schäuble

SUSTAINABLE MANAGEMENT
RISK MANAGEMENT

WE INVEST CONSTANTLY
IN OUR ADVANCED RISK MANAGEMENT

DEALING WITH RISKS IS AT THE CORE OF OUR BUSINESS BECAUSE OUR CLIENTS EXPECT US TO MANAGE

THEIR RISKS EFFECTIVELY. RISK MANAGEMENT IS THEREFORE AN INTEGRAL PART OF BALOISE’S STRATEGIC

MANAGEMENT AND COVERS ALL PARTS OF THE COMPANY.

Risk management is developing more and more into risk
and value management. Our risk model is based on the
latest standards, so we can deliver on the promise we made
to our trusted partner at any time.

We see risk management as a single, uniform system, valid
throughout the strategic and operative system in the Group,
with the following sub-areas:

Risk map: forms the backbone of the risk considera-
tions, defi ning basic risk issues such as underwriting
and market risks and also the operational risks of the
business.
Risk governance and risk culture: fi rmly embedding
risk awareness, handling and perception within the
entire organisation.
Risk measurement: for risk identifi cation, quanti-
fi cation and modelling of all business and fi nancial
processes.
Risk processes: risk organisation and its standards are
other important aspects of risk management, together
with reporting and evaluation processes.
Strategic risk management: the continuous develop-
ment of the Group’s risk positions towards the target
value.

Overall risk management ensures that Baloise can bear its
risks at any time, while also utilising opportunities to
improve added-value.

THE RISK MAP
Risk Map distinguishes the following categories:

Baloise is exposed to diff erent risks. Th e

Actuarial risks
Market risks
Financial structure risks
Business environment risks
Operational risks
Strategic / information risks

(A more detailed presentation can be found in the fi nancial
report on page 26.)

Th e Risk Map is embedded in the organisation and respon-
sibilities of the entire Group. Each risk is allocated to a risk
owner (overall responsibility) and a risk controller
(responsible for risk monitoring and control). Th e two func-
tions are separate.

Baloise has a long
RISK GOVERNANCE AND RISK CULTURE
tradition of continuous risk governance and risk culture
development: we established a risk management division
within the Group as early as 1998. Since then we have been
continuously developing the culture throughout the organi-
sation. Th e designation of risk owners and risk controllers
for individual risk factors is as much part of it, as is the
membership in regularly sitting committees that deal with
risk issues. Th is development is accompanied by the con-
stant development of risk models and risk processes.

SUSTAINABLE MANAGEMENT
RISK MANAGEMENT

Solvency II directive and thus making the model a pioneer-
ing tool of risk management. As the Group standard, it pro-
vides the basis for strategic and operational decisions.

To be a reliable partner we consciously and consistently
align our model with the most up-to-date standards, both
internally and externally. Already today our model meets
future supervisory regulations of Switzerland and the Euro-
pean Union.

Baloise’s models are based on economic risk capital – cur-
rently the most advanced standard. For risk mathematical
considerations alone and regardless of the handling under
the fi nancial accounting or regulatory capital fl ow under
Solvency I, a debt capital is derived to enable the Company
to remain solvent, even under adverse circumstances and to
fulfi l its obligations to policyholders.

We constantly compare this debt capital with the existing
capital entrusted to us by our shareholders. Following are
the key questions we encounter each day:

Which business decisions do we take, based on
a comparison of debt capital with actual capital?
How do we achieve the best possible economic return
for our capital?

Of principal concern is the security of the capital position,
on the one hand, the best possible use of capital in the inter-
est of profi t optimisation, on the other.

Th e risk organisation of Baloise includes the Goup Risk
Committee and local risk committees in all business units.
Th ese committees consist of members of the Corporate
Executive Committee or members of local management.
Th ey are responsible for decisions in strategic and risk
management.

Special committees also prepare decision papers on each
risk area for these committees, such as asset liability
management, compliance, IT risks, and advance booking.
Th is is completed by regular meetings of the Group’s risk
management team with local risk specialists. Th is compre-
hensive risk organisation is the platform for the exchange of
ideas and continuous development of “best practice”.

Th e responsibility of corporate risk management includes:
the development of consistent and group-wide binding
risk models,
monitoring of group-wide standards,
reporting,
compliance with risk processes,
communication with external partners such as audit,
group monitoring and rating agencies.

Responsibility for the local implementation of the Group’s
specifi cations lies with the business units. Th e overall
responsibility lies with the Group’s Chief Financial Offi cer
and aft er him with the Head of Financial Management.

Th e ultimate decision on risk tolerance and business objec-
tives, risk management strategy and standards lies with the
Board of Directors of Bâloise-Holding.

Our risk model provides quantita-
RISK MEASUREMENT
tive standardisation of all business and fi nancial market
risks. We have continuously been developing this model
since 1998, following the principles and calculation meth-
ods of the Swiss Solvency Test and the European Union’s

SUSTAINABLE MANAGEMENT
RISK MANAGEMENT

In addition to this integrated risk model, we identify, de-
scribe and evaluate single risks on the basis of the risk map
with regard to their likely impact on the business results.
From this standard process, we develop our Group-wide
database on single risks. Individual risk-specifi c qualitative
data, such as the detailed description of risks, their place on
the risk map and early warning indicators are included in the
database. On the quantitative side, the description is comple-
mented by measuring the risks in their likely fi nancial
impact on the Company balance sheet. Each risk is set down
together with risk-minimising measures. Th e database is up-
dated twice a year.

Th e combination of overall risk model and individual risk
considerations provides Baloise with a reasonable overview
at any time.

Group-wide Risk Management Stand-
RISK PROCESSES
ards provide the binding basis for risk processes. Group-
wide binding methods, rules and limit values are laid down
in this set of rules. Constantly evolving, it is subject to the
Group’s risk management control, with the “Group-wide
Risk Management Standards” determining how diff erent
risk issues will be evaluated, controlled and reported.

Risks are restricted by a system of risk limits. For a compre-
hensive risk restriction, the Group uses a limit system at ag-
gregate level that is based on the economic risk capital. Th e
system tracks the risk capital of the Group and individual
business units in real time.

We also monitor individual risks, subject-specifi c and through
limits, detailed in the following examples:

Actuarial risks are based on underwriting guidelines
that are used by local underwriters for their decisions.
Mathematical deductible risk analysis accompanies the
key reinsurance decisions.
Market structure and fi nancial risks are controlled both
locally and centrally in the investment units, with
a number of reporting processes. In addition to limits
for share exposure, there are clear and binding guide-
lines for bond ratings. Credit risks are evaluated using
Basel II, but also by means of advanced statistical
methods.
Business environment risks and operational and
strategic risks are recorded individually using stand-
ardised procedures and we evaluate their eff ect on the
capital.

We produce extensive semi-annual risk reporting that we
discuss with decision makers. Th e resulting measures are an
important part of the risk process.

With our monthly INTEGRA Risk Report, we check our
overall risk position. Th e emphasis is on capital investments,
taking into account unfavourable fi nancial market scenarios,
plus reports to the regulatory authorities.

Our internal risk model
STRATEGIC RISK MANAGEMENT
already provides quantitative standardisation of all business
and fi nancial market risks and now off ers a basis for a stra-
tegic discussion on the willingness of Baloise to take risks.
Th e capital requirements derived from this model represent
the minimum requirements on debt capital.

Th ere is a clear view of strategic risks and their management:
for each risk, specifi c limits, methods and measuring sizes
are established. Examples:

SUSTAINABLE MANAGEMENT
RISK MANAGEMENT

Shares: Here a maximum share of the capital invest-
ments exists in agreement with the risk load capacity.
Risk is controlled by realisation and hedging.
Interest rate risk: Management of bond maturities in
accordance with the terms of the obligations of the life
insurance policies is done by sophisticated asset-
liability management techniques.

Th e strategic risk management includes a clear perspective
regarding the development of new business areas and the
risk-return optimisation of our existing business.

Our strategic risk management project “RM 2010” merges
the management of operational, business and fi nancial mar-
ket risks to a holistic management framework. Th e objective
is to further develop the conventional system into a value
and risk management.

A key element of this control are the result targets for indi-
vidual business units, taking their specifi c risk situation
into consideration. Th ese requirements are included in the
target agreements with local management.

IN 2007 OUR PROFESSIONAL RISK MANAGEMENT AGAIN
DELIVERED VISIBLE RESULTS Th e following concrete
examples show that professional risk management makes
a signifi cant contribution to added-value in the company.

Regular elementary damage analysis, carried out by
departments Group Reinsurance and Group Risk
Management, helps optimise our reinsurance structure.
Th anks to our proactive risk underwriting and reinsur-
ance policy, storm Kyrill, the largest single damaging
event of the past year, had only a slight negative eff ect
on Baloise’s results, with net damage of around
CHF 30 million.

Th e subprime crisis via CDO (collateral debt obliga-
tions) and similar structures from the USA have a
negligibly small direct impact on Baloise. Th e overall
investment policy regarding assets is extremely cautious
in relation to such tools.
Entering new business areas in the life insurance
industry by taking advantage of new market opportu-
nities – which subsequently led to the establishment of
Baloise Liechtenstein, is always accompanied by
thoughts of risk. Here, actuaries, investors and risk
managers work together at gaining market advantage
for Baloise in this promising area.

In summary, we can say that Baloise risk management pro-
vides an excellent basis for strategic business decisions. It
allows us to create value for the entire company, our policy-
holders and shareholders through concrete quantifi able
risk-return decisions. In 2008 and beyond, this risk man-
agement system will enable further growth for the Group.
Its fl exibility and capacity for future expansion makes the
handling of future challenges possible.

THE THREE MAIN ISSUES

Our advanced risk management is an integral part of
the strategic management.
Th e risk models already meet future regulatory criteria
today.
Professional risk management provides fi nancial
results.

Playing it safe

OR TAKING A RISK?

Some like the kick, others the sofa. Some
prefer bungee jumping, others prefer their
armchair. Our life is a constant balancing
act between taking risks and playing it safe.

The key task of a trusted partner in the
insurance and financial sector is to understand
a client’s needs in this area of conf lict.
Like Baloise.

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

TRANSPARENT
CORPORATE GOVERNANCE

AS A VALUES-DRIVEN COMPANY, BALOISE HAS ALWAYS BEEN COMMITTED TO THE HIGHEST STANDARDS

OF RESPONSIBLE CORPORATE GOVERNANCE – A TRADITION THAT WE CARRY FORWARD TODAY.

Against the backdrop of the Swiss Code of Best Practice and
the SWX Corporate Governance Directive, Baloise, above
all, adheres to a corporate culture with high ethical stan-
dards, with an emphasis on the integrity of company and
employees. Baloise is confi dent that outstanding corporate
governance will have a positive eff ect on the long-term
performance of the Company.

For more transparency and better comparability with the
previous years and other companies, this section follows
the structure of the SWX Corporate Governance guideline
in the version of 1st January 2007. Th e Swiss Code of Best
Practice has also been taken into account, in particular Ap-
pendix 1 regarding the recommendations for remuneration
levels published in 2007. In 2007, Baloise published an ac-
tual compensation report as Clause 5 of the Corporate Gov-
ernance Report.

On 6th December 2007, Rolf Schäuble, Chairman of the
Board of Directors, took on the additional responsibility of
Chairman of the Corporate Executive Committee (Chief
Executive Offi cer) of the Baloise Group. His dual mandate is
anticipated to end at the Annual General Meeting of
30th April 2009, at the latest.

Th e Group division Corporate Center was established on
6th December 2007, uniting the business units Human Re-
sources, Legal and Taxes, Compliance, Corporate Develop-
ment and Run-off . Th e new Group division Corporate
Center is headed by new member of the Corporate Executive
Committee, Dr. Th omas Sieber, who previously was Head of
Legal, Tax and Compliance and Secretary of the Board of
Directors. Dr. Th omas Sieber will continue in his role as
Secretary of the Board.

1. GROUP STRUCTURE AND SHAREHOLDERS

GROUP STRUCTURE
Baloise is as a public limited company incorporated under
Swiss law as a holding company with its registered offi ce in
Basel. It is listed on the SWX Swiss exchange. As of 31st De-
cember 2007, the Baloise Group had a market capitalisation of
CHF 6,021.0 million.

For information on the Baloise share see page 12 ff of
the annual report.
Th e notes to the annual fi nancial statement in the
fi nancial report on pages 94 ff contain a list of key
affi liated companies and participations as of 31st
December 2007.
Th e segment reporting by geographic regions and
business areas is on pages 43 ff of the notes to the
annual fi nancial statement in the fi nancial report.
Page 77 of the annual report shows the operational
Group management structure.

SHAREHOLDERS

As a public company
CHANGES IN SHARE OWNERSHIP
with a broad shareholder base, Baloise is part of the Swiss
Market Index (SMI) and included in the SWX’s index calcu-
lation with 100% free-fl oat. As part of the SMI, the Baloise is
among the 20 largest and most liquid stocks of the SPI.

As of 31st December 2007, 10.25% of shares outstanding were
held by the Barclays Group (disclosure of 28th August 2007).

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

A total of 13,513 shareholders
SHAREHOLDER STRUCTURE
were recorded in the Baloise share register as of 31st Decem-
ber 2007. Compared to the previous year, the number of
shareholders increased by 0.9%. Th e detailed shareholder
composition as of 31st December 2007 can be found in sec-
tion “Baloise Share” on page 12 ff of the annual report.

In a disclosure notifi cation on 5th No-
TREASURY SHARE
vember 2007 under Article 20 of the Swiss Stock Exchange
Act, in connection with Article 9 and Article 17 of the Ordi-
nance of the Swiss Federal Banking Commission on Stock Ex-
changes and Securities Trading, Bâloise-Holding announced
that it holds 2,723,023 registered shares (inclusive of share
buy-back through second trade line). At time of disclosure,
this corresponded to 5.04% of voting rights. Th e threshold
value of 5% was exceeded on Monday, 5th November 2007. As
of 31s December 2007, Bâloise-Holding held 3,997,308
treasury shares (7.4%).

holders decided to reduce the share capital of CHF 5,530,715
by CHF 130,715 (corresponds to 2.4%) to CHF 5,400,000
through a capital reduction of 1,307,150 repurchased regis-
tered shares with a nominal value of CHF 0.10 per share. At
present, no decision has been made by Baloise regarding the
use of the repurchased registered shares: possible options
are to use the repurchased shares for capital reduction or
acquisitions or to resell them.

Since the beginning of the share buy-back programme in
May 2006, 4,357,000 shares in total were repurchased over
the second trade line, of which 1,074,000 shares were repur-
chased in 2006 and 3,283,000 shares in 2007. Th us, 78.8% of
the maximum buy-back volume of up to a maximum of
5,530,715 shares under the share buy-back programme has
been repurchased since the beginning of the programme.
Th e buy-back volume and prices are published weekly on the
internet.

CROSS SHAREHOLDINGS
ings of capital or voting rights with any other company.

Baloise has no cross sharehold-

2. CAPITAL STRUCTURE

DISTRIBUTION POLICY
Baloise pursues a policy of income-oriented, continuous
payments. Distribution methods such as share buy-backs
and options are used in addition to traditional cash divi-
dends. As a rule, about one-third of annual earnings is dis-
tributed, taking into account the Group’s self-fi nancing
needs.

SHARE BUY-BACK PROGRAMME
Th e Baloise Board of Directors resolved on 10th March 2006
to buy back up to 10% of issued share capital within the next
three years. Th is amounts to a maximum of 5,530,715 regis-
tered shares with a nominal value of CHF 0.10 each. Th e
shares will be repurchased through a separate trading line,
aft er redution of withholding tax. At the Annual General
Meeting of Bâloise-Holding on 27th April 2007, the share-

www.baloise.com
share

Share buyback program

Investor Relations

Baloise

PAYOUT TO SHAREHOLDERS
Th anks to our shareholder-friendly distribution policy, our
shareholders have enjoyed payments of CHF 952.7 million
through cash dividends and share buybacks over the past
fi ve years.

Year
in CHF million

2003

2004

2005

2006

2007

Total

Cash dividends

Share buybacks

Total

22.1

33.2

60.8

121.7

210.2

448.0

–/–

113.8

390.9

504.7

22.1

33.2

60.8

235.5

601.1

952.7

At the end of each ﬁ scal year on 31st March, and from 2005, each 31st December.

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

BÂLOISE-HOLDING EQUIT Y
Th e following table shows changes in shareholders’
equity over the last three reporting years.

CHANGES IN BÂLOISE-HOLDING EQUITY (BEFORE APPROPRIATION OF PROFIT)

in CHF million

Share capital

General reserves

Reserves for treasury shares

Unappropriated reserves

Retained earnings

Bâloise-Holding shareholders’ equity

At the end of each ﬁ scal year on 31st December.

On 27th April 2007, the Annual General Meeting passed the
resolution to reduce the share capital of CHF 5,530,715 by
CHF 130,715 to CHF 5,400,000 through a capital reduction
of 1,307,150 repurchased registered shares with a nominal
value of CHF 0.10 per share. It now amounts to CHF 5.4 mil-
lion divided into 54,000,000 dividend-entitled registered
shares with a nominal value of CHF 0.10.

AUTHORISED AND CONDITIONAL CAPITAL,

OTHER FINANCING INSTRUMENTS

AUTHORISED CAPITAL
capital.

Bâloise-Holding has no authorised

Contingent capital was created by
CONTINGENT CAPITAL
the Annual General Meeting 2004 (section 3 of the Articles
of Incorporation), thus allowing an increase of share capital
by up to a maximum of 5,530,715 registered shares with a
nominal value of CHF 0.10 each, an increase in nominal
share capital of up to a maximum of CHF 553,072.

Th e contingent capital is intended to secure potential con-
version rights or options that are granted in connection with
bonds or similar debt instruments. To date, no such fi nanc-

Fiscal year
2005

Fiscal year
2006

Fiscal year
2007

5.5

11.7

7.9

593.2

138.5

756.8

5.5

11.7

119.1

498.1

258.1

892.5

5.4

11.7

367.7

153.2

314.1

852.1

ing instruments have been issued. Shareholders’ subscrip-
tion rights shall be excluded. Th e right to buy these new reg-
istered shares is open to current holders of conversion rights
and option rights.

When issuing options and convertible bonds on international
capital markets, the Board of Directors may restrict or exclude
shareholders’ preferential subscription rights. Further details
on the structure of the conditional capital can be found in sec-
tion 3 of the Articles of Incorporation of Bâloise-Holding.
Corporate

www.baloise.com
governance

Responsibility
Rules and regulation

Baloise has not issued
OTHER FINANCING INSTRUMENTS
any participation certifi cates, bonus certifi cates or convert-
ible bonds for company participation rights or options is-
sued by the Company.

CONSOLIDATED EQUIT Y OF THE BALOISE GROUP
On 31st December 2007, the consolidated shareholders’
equity of the Baloise Group amounted to CHF 4,865.6 mil-
lion. Performance details for the years 2007 and 2006 are
provided on pages 8 and 9 of the fi nancial report in the con-

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

solidated statement of changes in shareholders’ equity. For
2005, all relevant details are provided in the consolidated
statement of changes in shareholders’ equity on page 8 of the
fi nancial report 2006.

BONDS OUTSTANDING
Bâloise-Holding and other Group companies have issued
bonds to the public. By the end of 2007, Bâloise-Holding and
other Group companies had a total of six public bonds out-
standing. Further information on the bonds outstanding
can be found in the notes to the fi nancial statement on page
102 of the fi nancial report and on the Internet.

www.baloise.com

Investor Relations

Bonds

RATING
Basler Versicherungs-Gesellschaft has been given a fi nancial
strength rating of “A-” with a positive rating outlook by
Standard & Poor’s Ratings Services. Th is refl ects the Baloise
Group’s strong competitive position, strong operating per-
formance and strong capitalisation, as well as its high fi nanc-
ing fl exibility.

3. BOARD OF DIRECTORS

Only the Chairman of the Board of Directors holds an ex-
ecutive position. Since 6th December 2007, he has also held
the position of Chairman of the Corporate Executive Com-
mittee, following the departure of Dr. Frank Schnewlin. His
dual mandate is anticipated to end at the Annual General
Meeting of Bâloise-Holding on 30th April 2009, at the latest.
In line with the Swiss Code of Best Practice and to ensure
adequate controls, the Board of Directors has appointed
Vice-Chairman Dr. Georg F.Krayer as its Lead Director.
Dr. Krayer is an experienced, non-executive member of the
Board of Directors. Th e Lead Director ensures that the
Board of Directors can operate independently of manage-
ment. Th e Lead Director is authorised, if necessary, to inde-
pendently call and chair a meeting of the Board of Directors.
Except for the Chairman, all other members of the Board of
Directors are non-executive and independent. During the
three years preceding the reporting period, they were not
involved with the management of any company of the Group
and have no material business relations with the Baloise
Group.

MEMBERS

Dr. Rolf Schäuble, Chairman

Dr. Georg F. Krayer, Vice-Chairman

Dr. Christoph J. C. Albrecht

Dr. Andreas Burckhardt

Dr. Hansjörg Frei

Prof. Dr. Gertrud Höhler

Dr. Klaus Jenny

Werner Kummer

Dr. Arend Oetker

Dr. Eveline Saupper

Nationality

Age

Appointed in

End of mandate

1993

1995

1985

1999

2004

1998

2003

2000

1996

1999

2008

2010

2009

2010

2009

2010

2008

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

In the reporting period, the following members were
confi rmed in offi ce for a new three-year term:

Dr. Georg F. Krayer,
Dr. Hansjörg Frei,
Prof. Dr. Gertrud Höhler, and
Werner Kummer.

Rolf Schäuble (1944, Swiss, Dr. oec. HSG) was awarded
the degree Dr. oec. HSG aft er completing his studies in Eco-
nomics at the University of St. Gallen. From 1975 to 1993, he
held various positions with the Zurich Insurance Group in
Zurich, most recently as a member of the Group Executive
Board. In 1993, Rolf Schäuble became a member of the Board
of Directors at Bâloise-Holding and was appointed Chair-
man in 1994. Between 1996 and 2002, he was also Managing
Director and CEO of the Baloise Group, and between 2002
and December 2007 he served solely as Chairman of the
Board of Directors. On 6th December 2007, he also took on
the role of interim CEO, to be eff ective until 30th April 2009
at the latest. Rolf Schäuble is also President of the Statis-
tische Volkswirtschaft liche Gesellschaft (Society of Eco-
nomics and Statistics) Basel.

Georg F. Krayer (1943, Swiss, Dr. iur.) has served on
the Board of Directors since 1995, as Vice-Chairman since
2004. He was appointed Lead Director on 6th December
2007. He studied Law and holds the degree of Dr. iur. Georg
F. Krayer is Chairman of the Board of Directors at Bank
Sarasin & Cie AG, Basel, and until 2003 was Chairman of
the Swiss Bankers Association. He is an independent non-
executive director.

3 Christoph J. C. Albrecht (1938, Swiss, Dr. iur.) has been
a member of the Board of Directors since 1985. He studied
Law at the University of Basel where he was awarded the de-
gree Dr. iur. He is a partner in the law fi rm of Joerin Hopf,
Basel, working as an attorney-at-law and notary. Christoph
J. C. Albrecht is Chairman of the Board of Directors of
Th üring AG, Basel, and sole member of the Board of Direc-
tors of Interhaba AG, Basel. He is an independent non-ex-
ecutive director.

4 Andreas Burckhardt (1951, Swiss, Dr. iur.) was appoint-
ed to the Board of Directors in 1999. He studied Law at the
universities of Basel and Geneva and was awarded the de-
gree Dr. iur. Between 1982 to 1987, he worked at Fides Treu-
handgesellschaft and served as General Secretary of the Ba-
loise Group from 1988 to 1994. Andreas Burckhardt is
Vice-President of the Swiss Association of Chambers of
Commerce. Since 1997 he has been a member of the Great
Council of the Canton of Basel-Stadt (President for
2006/2007). He is an independent non-executive director.

5 Hansjörg Frei (1941, Swiss, Dr. iur.) has been a member
of the Board of Directors since 2004. He studied Law at the
University of Zurich and was awarded the degree Dr. iur.
Hansjörg Frei was with Winterthur since 1982, most recently
as member of the Group Executive Board for Operations in
Switzerland. From 2000 until his retirement in mid-2003, he
was a member of the Executive Board (Head of International
Country Management) at Credit Suisse Financial Services.
From 2000 to 2003, he was Chairman of the Swiss Insurance
Association (SIA). Hansjörg Frei is a member of the Board of
Directors of Ems-Chemie Holding AG and Chairman of the
Pension Fund at the Ems Group. Since February 2006 he has
been president of the SVP (Swiss People’s Party) in Zurich
canton. He is an independent non-executive director.

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

6 Gertrud Höhler (1941, German, Prof. Dr. phil.) joined the
Board of Directors in 1998. She is a business and political con-
sultant and was Professor of Literature and German at the Uni-
versity of Paderborn from 1976 to 1993. She studied Literature
and Art History in Bonn, Berlin, Zurich and Mannheim. Be-
tween 1987 to 1990, Gertrud Höhler was public relations con-
sultant to Alfred Herrhausen, the Speaker (Chairman) of Deut-
sche Bank; and between 1992 and 1995 a non-executive Director
of the Grand Metropolitan PLC, London. She is a member of
the Board of Directors at Ciba AG, Basel and also of Georg
Fischer AG, Schaffh ausen. Gertrud Höhler is an independent
non-executive director.

7 Klaus Jenny (1942, Swiss, Dr. oec. HSG) has been a member
of the Board of Directors since 2003. He studied Economics at
the University of St. Gallen from where he was awarded the de-
gree Dr. oec. Klaus Jenny was a member of the General Direc-
torate of Schweizerische Kreditanstalt and a member of the
Credit Suisse Group Executive Board from 1987, most recently
as CEO of the business unit “Credit Suisse Private Banking”.
Since 1999 he has been an independent fi nancial advisor for
businesses and individuals. He is a member of the Board of Di-
rectors of Clariant AG, of Maus Frères SA and various other,
unlisted privately held companies. Klaus Jenny is an indepen-
dent non-executive director.

8 Werner Kummer (1947, Swiss, Dipl.-Ing. ETH, MBA In-
sead) has been a member of the Board of Directors since
2000. From 1990 to 1994 he chaired the Executive Board of
Schindler Aufzüge AG, and in 1998 joined the Schindler
Group Management Committee with responsibility for the
Asia Pacifi c region. From 1998 until March 2004, he was
CEO of Forbo Holding AG. Werner Kummer is an inde-
pendent business consultant, a member of the Board of Di-
rectors of Walter Meier AG, Chairman of the Board of Di-

rectors of Gebrüder Meier AG, member of the Supervisory
Board Committee of Schindler Germany Holding GmbH
and member of the board of the Zurich Chamber of Com-
merce. He is an independent non-executive director.

9 Arend Oetker (1939, German, Dr. rer. pol.) has been
a member of the Board of Directors since 1996. He studied
Management and Political Science at the universities of Ham-
burg, Berlin and Cologne and was awarded the degree Dr. rer.
pol. from the University of Cologne. He is Managing Partner
of Dr. Arend Oetker GmbH & Co. KG, Berlin. Arend Oetker is
Chairman of the Supervisory Board of Schwartauer Werke
GmbH & Co. KGaA, Bad Schwartau, Chairman of the Board
of Directors of Hero AG, Lenzburg, member of the Supervi-
sory Board of Merck KGaA, Darmstadt, and Deputy Chair-
man of the Supervisory Board of KWS Saat AG, Einbeck. He is
also Chairman of the German Council on Foreign Relations
and of the Founders Association for German Science. Arend
Oetker is an independent non-executive director.

10 Eveline Saupper (1958, Swiss, Dr. iur.) has been a member
of the Board of Directors since 1999. She studied Law at the
University of St. Gallen where she was awarded the degree Dr.
iur. Today she is an attorney-at-law and certifi ed tax expert.
From 1983 to 1985 she was with Peat Marwick Mitchell (now
KPMG Fides), Zurich, and from 1985 to 1992 with Baker &
McKenzie, Zurich and Chicago. Since 1992 she has been
a partner with Homburger AG, Zurich. Eveline Saupper is
a member of the Board of Directors of Intershop Holding AG,
Winterthur, and Homburger AG, Zurich. She is an independ-
ent non-executive director.

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

Further information about the members of the Board of Di-
rectors is available on the Internet.
About us

www.baloise.com

Organization

Board of Directors

CROSS-INVOLVEMENTS
Th ere are no cross-involvements.

ELECTIONS AND TERMS OF OFFICE
At the end of 2007, the Board of Directors was made up of
ten members. Members are elected by the Annual General
Meeting of Shareholders for a term of three years. Th e terms
of Directors are staggered so that roughly one-third of the
terms expire in any year, unless the member gets re-elected.
Due to age restrictions, the Board of Directors’ mandate
ends at the latest at the Annual General Meeting that follows
the completion of the member’s 70th birthday. At present,
the average age is about 63. Each member of the Board of
Directors is elected individually and, at the shareholders’
request, also granted individual discharge.

INTERNAL ORGANISATIONAL STRUCTURE

Subject to the deci-
TASKS OF THE BOARD OF DIRECTORS
sion-making authority of the shareholders at the Annual
General Meeting, the Board of Directors is the Company’s
highest decision-making body. As a rule, decisions are made
by the Board of Directors unless competencies have been
delegated to the Chairman of the Board of Directors, the
Committees, the Corporate Executive Committee or the
CEO under organisation regulations.

In compliance with section 716a of the Swiss Code of Obli-
gations and paragraph 1 II of the organisation regulations,
the main tasks of the Board of Directors are the general
management, overall and fi nancial supervision of the Com-
pany and determining of the organisational structure.
Corporate

www.baloise.com
governance

Responsibility
Rules and regulation

COMMITTEES OF THE BOARD OF DIRECTORS Th e Board of
Directors is supported by four committees. Th ese commit-
tees report to the Board of Directors and submit the propos-
als for their areas of responsibility. Th e Investment and
Compensation Committees in particular have their own
decision-making competencies.

Each of the committees appointed by the Board of Directors
consists of four members, who are elected annually by the
Board. Th e Chairman and Vice-Chairman of the Board of
Directors are ex offi cio members of the Chairman’s Com-
mittee. Th e Chairman of the Board of Directors may not be
a member of the Audit Committee. Th e key tasks of the
Committees are governed by the organisation regulations
and the written regulations for each committee.

www.baloise.com
governance

Responsibility
Rules and regulation

Corporate

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

OVERVIEW OF COMMITTEES

Dr. Rolf Schäuble

Dr. Georg F. Krayer

Dr. Christoph J. C. Albrecht

Dr. Andreas Burckhardt

Dr. Hansjörg Frei

Prof. Dr. Gertrud Höhler

Dr. Klaus Jenny

Werner Kummer

Dr. Arend Oetker

Dr. Eveline Saupper

C: Chairman, VC: Vice-Chairman, C: Chair, DC: Deputy Chair M: Member

Chairman’s
Committee

Audit Committee

Compensation
Committee

Investment
Committee

TASKS OF THE COMMITTEES Th e Chairman’s Committee
provides advice on key business transactions, particularly
key strategic and personnel decisions. Th e Chairman’s Com-
mittee also acts as Nomination Committee and Investment
Committee, approving the Group’s investment policy and
property investments for the Group’s own use at head of-
fi ce.

Th e Compensation Committee sets the structure and
amounts of compensation to members of the Board of Direc-
tors and the salaries of Corporate Executive Committee
members. Within the framework of the incentive plan it de-
termines the high-level corporate objectives and their attain-
ment. It approves compensation policies for Corporate Exec-
utive Committee members and oversees their correct
application. Th e Chairman of the Board of Directors is not a
member of the committee and in his dual function will only
attend meetings on selected topics.

Th e Audit Committee supports the Board of Directors in
those general and fi nancial supervisory duties that cannot
be delegated (section 716a, Swiss Code of Obligations), by
forming its own judgment of the organisational structure
and functioning of the internal and external auditing sys-
tem and the annual and consolidated fi nancial statements.
In addition, the Audit Committee evaluates the eff ective-
ness of the systems of internal control, including risk man-
agement and forms an independent opinion of the compli-
ance. Th e Audit Committee has discussed the fi nancial
statement for the reporting period 2007 with the manage-
ment and with the external auditors. On the basis of these
discussions, the Audit Committee recommended that the
audited annual fi nancial statements be incorporated into
the Group’s annual report for the reporting period ending
31st December 2007 and submitted to the Annual General
Meeting. Th e Board of Directors concurred with this pro-
posal.

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

In
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
compliance with the organisation regulations, the full Board
of Directors meets as oft en as business requires, but no less
than four times a year.
www.baloise.com
governance

Responsibility
Rules and regulation

Corporate

In 2007 the full Board of Directors met fi ve times. Th e fol-
lowing table shows the directors’ attendance at full Board
meetings. With one exception, all Committee members were
present at all of the additional 14 committee meetings. Board
attendance by members of the Baloise Board of Directors
was thus a respectable 97%.

In the previous year, the Chairman’s Committee met six
times, including for a two-day strategy meeting. Th e Invest-
ment Committee met once. Th e Audit Committee met four
times and the Compensation Committee three times.

Members of the Corporate Executive Committee are regu-
larly invited to meetings of the full Board of Directors. Meet-
ings of the Audit Committee generally are attended by the
Chief Executive Offi cer, the Chief Financial Offi cer, the Head
of Corporate Audit, the Secretary of the Board of Directors
and representatives of the external auditors.

www.baloise.com
governance

Board attendance

Responsibility

Corporate

BOARD ATTENDANCE 2007:
MEETINGS OF THE FULL BOARD OF DIRECTORS

Dr. Rolf Schäuble, Chairman

Dr. Georg F. Krayer, Vice-Chairman

Dr. Christoph J. C. Albrecht

Dr. Andreas Burckhardt

Dr. Hansjörg Frei

Prof. Dr. Gertrud Höhler

Dr. Klaus Jenny

Werner Kummer

Dr. Arend Oetker

Dr. Eveline Saupper

x = present, o = absent

9.3.07

27.4.07

31.8.07

5.12.07

6.12.07

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

DIVISION OF TASKS AND COMPETENCIES BETWEEN THE BOARD

4. CORPORATE EXECUTIVE COMMITTEE

OF DIRECTORS AND THE CORPORATE EXECUTIVE COMMITTEE
Th e division of tasks and competencies between the Board of
Directors and the Corporate Executive Committee is gov-
erned primarily by the organisation regulations and invest-
ment policies. Both documents are reviewed on an ongoing
basis and updated as changing circumstances require. With
the revision of the organisation regulations in 2007, the func-
tion of Lead Director and the Group division Corporate
Center were added.

www.baloise.com
governance

Responsibility
Rules and regulation

Corporate

Th e organisational structure of the Baloise Group can
be found on page 77.

CHANGES IN THE CORPORATE EXECUTIVE COMMITTEE
Dr. Frank Schnewlin stepped down as CEO to leave Baloise
on 6th December 2007. As of 6th December 2007, Dr. Rolf
Schäuble, Chairman of the Board of Directors, took over as
interim Chair of the Corporate Executive Committee. His
dual mandate will be eff ective until the Annual General
Meeting on 30th April 2009, at the latest.

TOOLS FOR THE AUDITING AND MONITORING OF THE

CORPORATE EXECUTIVE COMMITTEE
Th e Corporate Audit department, with its ten auditors, re-
ports directly to the Chairman of the Board of Directors.
Th e auditors are experts in underwriting, actuarial theory,
fi nance and information technology. For an insurance
group, effi cient risk management is of central importance.
We have thus dedicated a chapter each on the management
of fi nancial risks on page ff 40 of the annual report and on
page ff 24 of the fi nancial report.

With the Corporate Center, a new Group division was estab-
lished, uniting business units Human Resources, Legal and
Taxes, Compliance, Corporate Development and Run-off .
Eff ective 6th December 2007, the new Group division Corpo-
rate Center is headed by new member of the Corporate Ex-
ecutive Committee, Dr. Th omas Sieber, who previously was
Head of Legal, Tax and Compliance and Secretary of the
Board of Directors. Dr. Martin Strobel, German Egloff and
Martin Wenk continue as members of the Corporate Execu-
tive Committee.

Members of the Board of Directors receive the minutes of
the meetings of the Corporate Executive Committee for in-
spection. Th e Chairman of the Board of Directors and the
Lead Director may attend the meetings of the Corporate Ex-
ecutive Committee at any time.

Rolf Schäuble (1944, Swiss, Dr. oec. HSG) was awarded the
degree Dr. oec. HSG aft er completing his studies in Eco-
nomics at the University of St. Gallen. From 1975 to 1993 he
held various positions with the Zurich Insurance Group in
Zurich, most recently as a member of the Group Executive
Board. In 1993, Rolf Schäuble became a member of the Board
of Directors at Bâloise-Holding and was appointed Chair-
man in 1994. Between 1996 and 2002, he was also Managing
Director and CEO of the Baloise Group, and between 2002
and December 2007 he served solely as Chairman of the
Board of Directors. On 6th December 2007, he also took on
the role of interim CEO, to be eff ective until 30th April 2009
at the latest. Rolf Schäuble is also President of the Statis-
tische Volkswirtschaft liche Gesellschaft (Society of Eco-
nomics and Statistics) Basel.

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

German Egloff (1958, Swiss, lic. oec. HSG) graduated in
Business Economics from the University of St. Gallen. Since
1985 he has held various management positions at Winter-
thur Insurance, Switzerland. Between 1990 and 1995, he was
Head of Management Support, where his responsibilities in-
cluded the development of a new management information
system. In 1997, as member of the Executive Board, he be-
came responsible for individual non-life insurances and, as
Chairman of the Board of Sancare, also for the management
of Wincare. From 1998 to 2002, German Egloff was Chief
Financial Offi cer of Winterthur Switzerland and member of
the Board of Directors of Wincare, since 2000 as their chair-
man. From 2002 to 2004, he was Chief Financial Offi cer of
Zurich Financial Services, Switzerland, with responsibility
for fi nance, human resources, IT, logistics and procurement.
Since 1st December 2004, German Egloff has been a member
of the Corporate Executive Committee (Head of Corporate
Finance), with responsibility for fi nancial relations, fi nan-
cial management and fi nancial accounting and with eff ect of
6th December 2007 also for performance management.

Th omas Sieber (1965, Swiss, Dr. iur., M.B.L., lawyer) gradu-
ated with a degree in Law (lic. iur.) from the University of
St. Gallen. At the beginning of 1994, he qualifi ed to practice
law in the Canton of Zurich. Subsequently, he spent a year
on a Swiss National Science Foundation scholarship at the
University of California in Berkeley while working on his
thesis. He received a “summa cum laude” distinction for his
thesis and the Walther Hug Prize. From 1999 until 2002, he
was a lecturer in Corporate Law at the University of St. Gal-
len. Th omas Sieber joined the Baloise Group in 1997 as Dep-
uty Head of Legal and Taxes. Since 2001, he has been head-
ing the division, while also holding the position of Secretary
of the Board of Directors of Bâloise-Holding. In 2005, he
took on the additional responsibility for Group Compliance.
Th omas Sieber has headed several strategic projects at the
Baloise Group. During the revision of the Swiss Insurance
Supervision Act, he ran the “Supervisory Authority” task
force of the Swiss Insurance Association (SIA). Before join-
ing Baloise, Th omas Sieber held roles in a Swiss court, in an

international corporate law fi rm (Lenz & Staehelin, Zurich),
and at the Institute for European Law at the University
of St. Gallen, and with the corporate law division of
Landis & Gyr later integrated into Elektrowatt/Siemens. On
6th December 2007, Th omas Sieber was appointed Head of
the Group division Corporate Center with responsibility for
Human Resources, Legal and Taxes, Compliance, Corporate
Development and Run-off .

Martin Strobel (1966, German, Dr. rer. pol.) studied Com-
puter Science, Business Management and Business Informa-
tion Systems at the universities of Kaiserslautern, Windsor
(Canada) and Bamberg before being awarded his doctorate
(Dr. rer. pol.). From 1993 to 1999 he held various positions at
Boston Consulting Group, Düsseldorf, in the fi elds of strate-
gic IT management in the banking and insurance sector. He
joined the Baloise Group at the beginning of 1999, initially
as Head of IT Baloise Switzerland, with responsibility for
major cross-division projects in the insurance and fi nance
divisions of the Baloise Group. He has been on the Corpo-
rate Executive Committee since 2003, with responsibility
for the Switzerland division. Martin Strobel is a board mem-
ber of the Swiss Insurance Association (SIA) and a member
of the Board of Directors of Prevo-System AG, Basel.

Martin Wenk (1957, Swiss, lic. iur.) graduated from the Uni-
versity of Basel with a Law degree (lic. iur.) before he took up
a number of positions with a major bank between 1982 and
1992. He initially worked as an investment advisor to insti-
tutional clients, then went on to head a private banking
group in New York and subsequently became a sector head
in securities sales, where he primarily looked aft er major in-
stitutional clients. During this time, he attended several
professional training courses in Switzerland and the United
States. Between 1992 and 2000, he headed the Portfolio
Management Switzerland of the Baloise Group with respon-
sibility for the Asset Management of various companies in
Switzerland und within the Group, including the Pension
Fund. He has been a member of Corporate Executive Com-
mittee (Head of Corporate Asset Management) since 2001,

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

Th is chapter deals with the compensation system of Baloise,
disclosing remuneration and loans to the members of the
Board of Directors and the Corporate Executive Committee
as well as their participations. Th e legal basis for the con-
tents and range of this disclosure are sections 663bbis and
663c of the Swiss Code of Obligations, the SWX Directive on
Information Relating to Corporate Governance (the SWX
Directive) and the Swiss Code of Best Practice for Corporate
Governance.

Under the provisions of these regulations, certain informa-
tion has to be disclosed in the notes to the balance sheet
with further information to be provided in the section on
Corporate Governance. Baloise regards this chapter as inte-
grated reporting and has therefore decided to publish the
Compensation Report within the annual report and to a
large extent also within the fi nancial report.

with responsibility for Asset Management with the units In-
vestment Strategy and Investment Controlling, Baloise As-
set Management, Real Estate and Baloise Fund Invest units.
Martin Wenk is Chairman of the Investment Commission
of the Swiss Insurance Association (SIA) and serves on the
boards of Unigestion Holding, Geneva, and HW Finanz AG,
Pratteln.

Further information about the members of the Corporate
Executive Committee is available on the Internet.

With the exception of Martin Strobel and Martin Wenk,
none of the members of the Corporate Executive Committee
serve on boards outside the Baloise Group.

Th ere are no management contracts that assign executive
functions to third parties.
www.baloise.com

Organization

About us

Corporate Executive Committee

5.1. REMUNERATION SYSTEM: BASIC SALARY AND INCENTIVES

5. COMPENSATION REPORT: COMPENSATIONS, PARTICIPA-

TIONS AND LOANS TO MEMBERS OF THE BOARD OF DIREC-

TORS AND THE CORPORATE EXECUTIVE COMMITTEE

Baloise is an attractive employer and aims to retain talented
employees and executive personnel on a long-term basis
while also attracting well-qualifi ed and motivated new em-
ployees. Th e success of Baloise is dependent on the skills and
commitment of its employees. We strive for a high perform-
ing, results-oriented workforce and reward our employees
accordingly. Th e foundation of our market-based remunera-
tion system is thus the recognition and reward of a consis-
tent and lasting performance. As part of a competitive remu-
neration, Baloise also off ers attractive incentive/bonus plans
together with long-term employee shareholding schemes.

STARTING POINT MARKET AND FUNCTION VALUE SYSTEM
Baloise regularly compares the salaries of upper level execu-
tives with relevant competitors (Dow Jones STOXX Insur-
ance Index and local job markets) and endeavours to pay
market-related remuneration. To ensure internal compara-
bility, Baloise employs a function value system for upper
level executives within the Group and for other employees
in Switzerland. Th is allows the evaluation and weighting of
the demands placed on the employee with regard to abilities,
knowledge and experience for a specifi c function/position.
Similarly weighted positions are combined into function
levels. Th e classifi cation level of a particular function is de-
cisive for the determination of the applicable salary range,
fringe benefi ts and other contractual components and the
allocation to individual executive levels.

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

Th e function value system of Baloise covers 9 function levels
(FL); levels 1-3 apply to the whole Group, levels 4-9 only ap-
ply within Switzerland:

BASIC SALARY Th e basic salary amount is determined by
the salary bandwidth in the market and is set out in the con-
tract. Th e competitiveness of the remuneration is regularly
reviewed.

FL 1:

FL 2 to 4:
FL 5 and 6:

FL 7 and 8:
FL 9:

member of the Corporate
Executive Committee
(incl. Chairman)
member of the management
executive staff
(specialists and team leaders)
administrative staff
other employees

REMUNERATION SYSTEM
Th e diagram shows the remuneration system at Baloise:

All employees of function levels 1 to 5 are entitled
BONUS
to a bonus. For the Chairman of the Board of Directors and
the Chair of the Corporate Executive Committee, the regu-
lations of function level 1 apply with regard to bonuses.

As a variable and performance-related salary component,
a bonus is dependent on meeting particular objectives. Indi-
vidual performance is measured in line with the “Individual
Performance Management” process (IPM) that was intro-
duced in 2006. Line managers are to defi ne set annual objec-
tives with their employees annually and meet by March of
the following year at the latest to assess to what extent these
objectives have been met.

ELEMENTS OF THE REMUNERATION SYSTEM

e
l
b
a
i
r
a
v

d
e
x
ﬁ

Performance Share Units

Long-term equity instruments

Performance quota

Discretionary additional variable and
performance-related salary component

Incentive

Variable performance-related salary component

Retirement provisions

Pension payouts

Fringe beneﬁ ts

Beneﬁ t in kind/fringe beneﬁ ts

Salary

Fixed salary component

3
–
1
L
F
t
n
e
m
e
g
a
n
a
m
p
o
t
d
n
a
r
o
n
e
S

5
–
1
L
F
s
e
v
i
t
u
c
e
x
E

9
–
1
L
F

s
e
e
y
o
p
m
e
l
l

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

With an overall achievement rate of 100%, bonuses can
reach the following levels (target bonus):

FL 1: 54% of basic salary
FL 2: 38% of basic salary
FL 3: 30% of basic salary
FL 4: 22% of basic salary
FL 5: 14% of basic salary

Apart from meeting individual objectives, the bonus level is
determined by the Group’s overall performance. Based on
the annual earnings, the Compensation Committee deter-
mines a factor (Operational Performance Management,
OPM) that is determined by total shareholder value, earn-
ings performance, growth and market trends and multiplied
by the result of the individual performance. For members of
the Corporate Executive Committee and function levels 2
and 3, this OPM factor can range between 0.8 and 1.3, while
the range for function levels 4 and 5 can be 0.9 to 1.2.

EXAMPLE FOR A MEMBER OF THE MANAGEMENT (FL4)

Basic salary: CHF 100,000
Target incentive: 22% of basic salary
Achievement rate for objectives: 80%
OPM factor (Operational Performance Management): 1.1
Bonus = CHF 100,000 x 0.22 x 0.8 x 1.1 = CHF 19,360

For the purchase of shares, they can choose between two
plans: Share Subscription Scheme and Employee Share
Ownership Plan (cf sections Share Subscription Scheme and
Employee Share Ownership Plan).

EMPLOYMENT CONTRACTS, SEVERANCE PAYMENTS,

CHANGE OF CONTROL CLAUSE
Executive employment contracts are of unlimited duration,
with a standard notice period of six months.
Four members of the Corporate Executive Committee have a
notice period of 12 months. In the event of change of control
or a merger, these four members of the Corporate Executive
Committee are entitled to a lump sum payment equal to 12
months salary (incl. bonus) in addition to the agreements un-
der their employment contract (notice period of 12 months),
if their contracts are terminated by the employer (or under
certain circumstances by the employee) within 12 months
aft er a take-over or merger. Similar rules apply to seven other
members of the top management. Th e notice period for the
Chairman of the Board of Directors/Chair of the Corporate
Executive Committee is six months. Th ere is no a control
change clause.

5.2. OVERVIEW OF SHARE-BASED REMUNERATION SCHEMES

Th e Baloise Group has off ered employees and top manage-
ment members various plans in which shares can be granted
as part of the overall remuneration for some time now.

Bonuses are paid out together with the June salary. In Swit-
zerland, employees are off ered a choice of taking part of their
bonus in cash and part of it in company shares. Only senior
and top management (FL 1 to 3) must take their bonus in
shares: members of the Corporate Executive Committee
must take 50% of their bonus in form of company shares.

Employee Incentive Plan for all function levels
(cf. section 5.3.)
Share Subscription Scheme and Employee Share
Ownership Plan for function levels 1 to 5
(cf. section 5.4.)
Performance quota and performance share units
for the function levels 1 to 3 (cf. section 5.5)

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

5.3. EMPLOYEE INCENTIVE PLAN

5.4. SHARE SUBSCRIPTION SCHEME (SSS) AND EMPLOYEE

Established in 1989, the Baloise Foundation for Employee
Participation off ers employees of the diff erent Group compa-
nies in Switzerland the opportunity to acquire shares of
Bâloise-Holding according to the regulations set by the
Board of Trustees, as a rule annually and at a preferential
rate. Th e subscription price is determined by the Board of
Trustees at the beginning of the subscription period and
published on the intranet. Th is corresponds to 50% of the
average share price for the month of August in the subscrip-
tion year. Th e subscribed shares are always transferred by 1st
September and are subject to a lock-up period of three years.

Th e foundation acquired the basic stock for these shares
through a previous capital increase of Bâloise-Holding and
can regulate the share portfolio through acquisitions if re-
quired. Th e low cost price of the shares held and the current
holdings allow the foundation to continue with the partici-
pation programme in the years to come.

Th e Foundation is led by a Board of Trustees that is prepon-
derantly independent of the Corporate Executive Committee.
Th e independent trustees are Peter Schwager (Chairman) and
Prof. Dr. Heinrich Koller (Legal Counsel), with Andreas
Burki as third trustee (deputy trustee for legal matters and
taxes).

EMPLOYEE INCENTIVE PLAN

Number of subscribed shares

Restricted until

Subscription price per share in CHF

Value of subscribed shares
in CHF million

Market value of subscribed shares as
of subscription date in CHF million

Entitled employees

Participating employees

Subscribed shares per participant
(average)

2006

188,901

31.8.09

2007

178,345

31.8.10

49.10

9.3

19.5

3,268

2,146

88.0

54.60

9.7

19.9

3,173

2,018

88.4

SHARE OWNERSHIP PLAN (ESOP)

For the part of the bonus subscribed in shares, employees in
Switzerland have two plans to choose from: the Share Sub-
scription Scheme (SSS) and the Employee Share Ownership
Plan (ESOP).

SHARE SUBSCRIPTION SCHEME (SSS)
Since January 2003, all employees of the Group companies
who qualify for incentives can acquire their bonus shares at
a preferential rate. Subscription day is always 1st June. Each
year, the subscription price is determined by the Corporate
Executive Committee and published in advance on the in-
tranet. On 23rd April 2007, the Corporate Executive Com-
mittee resolved, that the subscription price for this report-
ing period would be based on the average market price
between 7th – 11th May 2007. A discount of 10% is granted on
the average market price calculated in this way.
The subscribed shares are subject to a three-year lock-up
period.

SHARE SUBSCRIPTION SCHEME (SSS)

Number of subscribed shares

Restricted until

Subscription price per share in CHF

Value of subscribed shares
in CHF million

Market value of subscribed shares as
of subscription date
in CHF million

Entitled employees (FL 1 – 5)

Participating employees

SSS portion of incentive

2006

32,154

31.5.09

83.90

2.7

3.0

491

13%

2007

26,628

31.5.10

114.80

3.0

3.4

521

14%

EMPLOYEE SHARE OWNERSHIP PLAN (ESOP)
Since May 2001, the majority of executives in Switzerland
have had a choice of receiving part of their bonus in shares
instead of cash. Th ere are upper limits for senior and top
management (FL 1 to 3); members of the Corporate Execu-

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

tive Committee may only take up to 50% of their bonus en-
titlement under the Employee Share Ownership Plan in
shares. As with the Share Subscription Scheme, subscription
day is always 1st June. Each year, the subscription price is
determined by the Corporate Executive Committee and
published in advance on the intranet. On 23rd April 2007,
the Corporate Executive Committee resolved, that the sub-
scription price for this reporting period would be based on
the average market price between 7th – 11th May 2007.

To make the most of the share ownership plan, employees are
off ered loans with interest charged at prevailing interest
rates, which allows them to receive a multiple of their bonus
in shares at fair value, net of the discounted dividend right
over three years. Th e repayment of the loan aft er the expiry
of the three-year lock-up period is hedged through the pur-
chase of a put option fi nanced by the sale of a call option.
Aft er expiry of the three-year lock-up period and aft er exer-
cising their options and repayment of the loan with accrued
interest, employees have the remaining shares at their free
disposal.

EMPLOYEE SHARE OWNERSHIP PLAN (ESOP)

Number of subscribed shares 1

Restricted until

Subscription price per share 2 in CHF

Value of subscribed shares 2
in CHF million

Market value of the subscribed shares
as of subscription date in CHF million

Entitled employees (FL 1 – 5)

Participating employees

ESOP portion of incentive

1 Incl. shares ﬁ nanced by loans.
2 Less the discounted dividend right over three years.

2006

259,683

31.5.09

83.53

21.7

24.2

491

157

22%

2007

212,345

31.5.10

115.55

24.5

27.1

521

162

19%

5.5. PERFORMANCE QUOTA AND PERFORMANCE SHARE UNITS

(PSU)

Competitor and market comparisons for remuneration at
senior and top management levels (FL 1 to 3) have shown
that up to 2006 variable salary components at Baloise were
signifi cantly below market standards and that Baloise has
no long-term retaining measures. Based on these fi ndings,
two new incentive elements were introduced in 2007 for em-
ployees at this level: prformance quota and performance
share units.

PERFORMANCE QUOTA
Introduced in 2007 for employees of FL 1 to 3 (incl. Chair-
man of the Board of Directors), the performance quota is a
discretionary, fl exible tool of the Compensation Committee
of the Board of Directors. It allows this group of individuals
to participate in the Group’s success and leads to greater
variability in remuneration. Th e tool takes into account the
management performance delivered and is determined – as
part of the total amount provided by the Compensation
Committee – by the employee’s fi rst line or second line man-
ager. Th e individual amounts will be established in April
and paid out with the June salary. Part of the amount award-
ed must be taken in shares; the remainder will be paid in
cash (the same provisions for mandatory shares apply as
with the bonus). For the part taken in shares, the provisions
of the Share Subscription Scheme apply.

PERFORMANCE QUOTA

Participating employees (FL 1 – 3)

Total paid out in CHF million

Number of subscribed shares

Subscription price per share in CHF

Value of subscribed shares in CHF million

Market value of subscribed shares
as of subscription date in CHF million

In cash in CHF million

2006

–

2007

2.1

8,358

114.80

1.0

1.1

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

PERFORMANCE SHARE UNITS (PSU)
In 2007, the Performance Share Units programme was in-
troduced as a tool for participation in the long-term success
of the Group and to retain top performers. As long as they
stay with Baloise, senior and top management (FL 1 to 3
incl. Chairman of the Board of Directors) may benefi t from
the increase in the Group’s long-term value. In this way, the
PSU programme establishes an alignment of interests be-
tween shareholders and management.

Participating employees are allocated entitlements in form
of performance share units (PSU) at the beginning of a per-
formance period, entitling them to a specifi ed number of
free shares at the end of the performance period. Each year,
the total amount is determined by the Compensation Com-
mittee, which also is responsible for the initial distribution
to the participants.

Th e number of shares that may be subscribed to aft er three
years, i.e. at the end of the performance period, depends on
the total shareholder return of Bâloise-Holding shares as
compared to industry peers. Values of this comparative per-
formance multiplier can be in the range of 0.5 to 1.5. Th is
peer group includes the 35 leading European insurance
companies listed in the Dow Jones EURO STOXX Insur-
ance. One PSU in principle gives the right to subscribe to
one share. Th is is then the case when the value development
of the Baloise share corresponds to the median of the peer
group, the performance multiplier in this case being 1.0.
Participants in the scheme receive more shares for their
PSU, if the shareholder return of Bâloise-Holding shares
exceeds peer group performance. Th e multiplier reaches a
maximum of 1.5 if the value development of the Bâloise-
Holding share lies in the top quarter of the peer group com-
panies. Th e multiplier is 0.5 if it lies in the bottom quarter of
the peer group companies. If the value development of the
Bâloise-Holding share lies in the two middle quarters, the
performance multiplier is computed on a linear scale. Th e
performance multiplier is defi ned using the closing ex-

change prices on the last trading day of the performance pe-
riod concerned for the entire expiring period.

Participating employees receive the respective number of
shares at the end of the performance period (“vesting”), i.e.
on 31.12.2009 for the PSU allocated for 2007. In the event of
a termination of employment (other than retirement, disa-
bility or death) during the benefi t period, the PSU are ren-
dered invalid without substitution or compensation. To un-
derline the long-term character of the programme, 50% of
the assigned shares are subject to a three-year lock-up peri-
od at the end of the performance period.

As a rule, the PSU programme runs over a three-year pe-
riod. When the scheme was fi rst introduced in 2007, the
performance period was shortened, as the PSU were not is-
sued until aft er the resolution of the Board of Directors of
9th March 2007.

It is at the discretion of the Compensation Committee who
among senior and top management (FL 1 to 3) can partici-
pate in the programme. Th e Compensation Committee can
also specify the total number of PSUs and the allocation
date.

PERFORMANCE SHARE UNITS (PSU)

Entitled employees (FL 1 – 3)

Number of allocated PSU

Of which: expired without
compensation (departures)

Number of active PSU
as of 31.12.2007

Value of allocated PSU
as of issue date in CHF million

Expense for the Baloise Group
in CHF million

2006

–

2007

37,018

– 1,003

36,015

4.2

1.6

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

5.6. PENSION BENEFIT SCHEMES

RETIREMENT SOLUTIONS/PENSION FUND
Baloise has a variety of retirement solutions that are struc-
tured according to country-specifi c requirements. In Swit-
zerland, there are diff erent pension schemes for insurance
and banking employees.

Basler Versicherungen off ers its employees in Switzerland
an attractive solution within the second pillar of the Swiss
social security system that meets the following objectives:

It meets the needs of the insured at the occurrence of
a risk event (age, death or disability) and takes care of
the resulting economic consequences through the
occupational pension scheme.
It allows a continuation of the current standard of
living at a suffi ciently high level of income replacement
(combination of pillar 1 and pillar 2 benefi ts) to
compensate for the loss of income. Th e employer makes
a higher contribution towards the occupational pension
fund than employees.
It is forward-looking, solid, predictable and cost-
eff ective.

Th e solution, valid until the end of 2007, can be described as
follows:

two separate pension funds for offi ce-based and
fi eld-based employees
benefi t plan with a retirement benefi t of 80%
of the fi nal salary pension
standard annual income: basic salary without bonus
(for offi ce-based employees) or the fi ve-year average
of the contractual remuneration (for fi eld-based
employees)
contribution ratio employer/employee 73% : 27%
hedging of the risks age, death and disability through
two collective insurance contracts with the Basler
Lebensversicherungsgesellschaft

Th e Chairman of the Board of Directors and members of the
Corporate Executive Committee are covered by the pension
fund for offi ce-based employees. Th ey are subject to the
same conditions as for all other insured persons.

FROM DEFINED BENEFIT PLAN TO DEFINED CONTRIBUTION
Aft er extensive preparatory work, Balo-
PENSION PLANS
ise Pension Foundation Board of Trustees and the Corpo-
rate Executive Committee resolved to make the retirement
solution fi t for the future. Th e goal: more fl exibility, more
individuality, alignment with social and demographic de-
velopments. On 1st January 2008, a comprehensive reorgani-
sation therefore came into force, which is characterised by
the change from defi ned benefi t plan to defi ned contribu-
tion pension plans.

With the system change, employees will be off ered a range of
retirement solutions from age 30. On top of the basic plan,
they can make additional contributions to the pension fund
as part of the Pension Plan Plus or the Pension Plan Ultra to
boost their retirement assets. Th e insured person can switch
the elected retirement plan annually.

Th e interest rate of the retirement fund is determined by the
Board of Trustees at the end of the year, taking into account
the BVG minimum rate set by the Swiss Federal Council.
Th e applied interest rate will not be split between the BVG
and the voluntary area. And the conversion rate for all pen-
sion plans will be a standard 6.2%.

Offi ce-based employees will see an improvement regarding
their relevant annual income, since the portion of their bo-
nus subject to AHV (Swiss mandatory retirement pension
and survivors’ insurance) is now also covered by the insur-
ance. Th e variable salary components of fi eld-based employ-
ees were already previously covered by the insurance.

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

Th e contribution ratio between employers and workers
based on the basic plan remains unchanged.

5.7. REMUNERATION FOR THE MEMBERS OF THE BOARD OF

DIRECTORS (EXCL. CHAIRMAN)

Th e pension funds for offi ce-based and fi eld-based em ployees
administered separately up to now will be merged. Th is will
further simplify administration and accounting.

Th e members of the Board of Directors, with the exception
of the Chairman, receive a lump sum compensation in cash
that is determined by the Compensation Committee.

Since 2006, the members of the Board of Directors have re-
ceived 25% of their annual fee in shares, with a lock-up pe-
riod of three years. As under the Share Subscription Scheme
for management, the members of the Board of Directors are
granted a discount of 10% on the market price.

No non-standard or other remuneration has been paid to
former members of the Board of Directors pertaining to
previous governing body activities in Baloise.

Th ere have been only minor changes in the total amount of
remuneration paid out to members, compared to the previ-
ous year (pro rata entitlement of Lead Director Dr. G. F.
Krayer from 6th December 2007). In the reporting period,
the following remuneration was paid out to the nine non-
executive members of the Board of Directors:

Th e “new” pension fund will provide autonomous cover
against the risks of old age, death and disability; the existing
collective insurance contracts will be liquidated.

Th e one-off cost of the conversion amounts to CHF 136 mil-
lion. Th e cost will be divided equally between the Baloise
Pension Foundation and Baloise.

Under the rules applicable until
BONUSES NOT COVERED
the end of 2007, bonuses were not covered by the pension
fund, and FL 1 to 3 employees (incl. the Chairman of the
Board of Directors) thus had additional mixed single pre-
mium life insurances until recently, i.e. voluntary life insur-
ance, taken out on the ordinary retirement age. As insured
party, the insurance money was of the employees free dis-
posal when benefi ts became payable. Th e single premium is
calculated as a percentage of the bonus entitlement, graded
according to function level (3.75% for members of the Cor-
porate Executive Committee).

Two-thirds of the premium was paid by the employer and
one-third by employees. Th ese amounts are shown as remu-
neration element in the table on page 67.

As part of the reorganisation of the pension fund, in par-
ticular the inclusion of the bonus portion subject to AHV in
the relevant annual income, this service is to be discontin-
ued as of 1st January 2008.

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

Remuneration
for additional
functions

Additional
remuneration

Total

of which:
in cash

of which:
in shares

–/–

235,833

178,333

57,500

REMUNERATION TO THE MEMBERS OF THE BOARD OF DIRECTORS

in CHF

Dr. Georg F. Krayer
Vice-Chairman Board of Directors
and (as of 6.12.2007) Lead Director
Chair Compensation Committee
Deputy Chair Chairman’s Committee
and Investment Committee

Dr. Christoph J. C. Albrecht
Member of the Board of Directors
Deputy Chair Audit Committee

Dr. Andreas Burckhardt
Member of the Board of Directors
Member Audit Committee

Dr. Hansjörg Frei
Member of the Board of Directors
Member Chairman’s Committee and Investment Committee
Member Audit Committee

Prof. Dr. Gertrud Höhler
Member of the Board of Directors
Member Compensation Committee

Dr. Klaus Jenny
Member of the Board of Directors
Member Chairman’s Committee and Investment Committee
Deputy Chair Compensation Committee

Werner Kummer
Member of the Board of Directors
Chair Audit Committee

Dr. Arend Oetker
Member of the Board of Directors

Dr. Eveline Saupper
Member of the Board of Directors
Member Compensation Committee

Total Board of Directors (excl. Chairman)

Base salary

100,000

55,833
30,000
50,000

30,000

50,000
30,000

30,000

50,000
30,000

50,000

100,000

–/–

100,000

900,000

30,000

465,833

–/–

130,000

97,500

32,500

–/–

130,000

97,500

32,500

–/–

180,000

135,000

45,000

–/–

130,000

97,500

32,500

–/–

180,000

135,000

45,000

–/–

150,000

112,500

37,500

–/–

100,000

75,000

25,000

130,000

97,500

32,500

–/–

1,365,833

1,025,833

340,000

Explanatory notes to table
Remuneration to former members of the Board and closely related individuals
No remuneration was paid to
a) former members of the Board of Directors, pertaining to previous governing body activities in Baloise, or that is non-standard.
b) individuals or companies with close family ties to members of the Board of Directors and that is non-standard (persons with close family ties: spouse, civil partner, unmarried partner, children).
Cash compensation
Remuneration as per contract (lump-sum compensation).
Shares
25% of the contractually agreed remuneration will be paid in shares which are locked-up for three years. Intrinsic value: fair value minus 10% (as with SSS).
Additional remuneration
No additional remuneration was disbursed.

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

5.8. REMUNERATION TO THE CHAIRMAN OF THE BOARD OF

DIRECTORS AND MEMBERS TO THE CORPORATE EXECUTIVE

COMMITTEE

Th e Compensation Committee determines the type and
amount of compensation for the Chairman of the Board of
Directors and the members of the Corporate Executive
Committee. It consists of the basic salary and the bonus,
which is dependent on meeting the Group’s and individual
objectives. Th e target bonus is 54% of the basic salary, rising
to up to a maximum of 70% for outstanding performance. In
addition, the Compensation Committee may take into ac-
count the Group’s results under the OPM factor (Operation-
al Performance Management) of at least 0.8 and up to
a maximum of 1.3.

50% of the bonus must be taken in shares (cf section 5.4
Share Subscription Scheme and Employee Share Ownership
Plan).

Th e Group’s objectives are developed in a multi-level pro cess
and approved by the Compensation Committee for the year
to come. Target values are consolidated profi t, combined
ratio and the shareholder value (performance of Baloise
shares in comparison to STOXX Insurance).

Individual goals are closely linked to the areas of responsi-
bility of each member of the Corporate Executive Commit-
tee. Th ey are determined together with the line managers
and also approved by the Compensation Committee.

As of 6th December 2007, Dr. Frank Schnewlin, Chairman of
the Corporate Executive Committee, has stepped down
from this function. His employment ends on 31st January
2009, which according to the regulations allows him to take
early retirement. Th us, the 5,962 Performance Share Units
allocated to him in March 2007 will not expire. Until the
termination of his employment, Frank Schnewlin is due his
contractual entitlements. For the year 2007, this amounted
to CHF 2.123 million from performance quota and bonus.

Th is amount was held back and will be recompensed together
with the payments to other employees entitled to a bonus in
2008. Including his basic salary, Dr. Schnewlin’s entitlement
for the years 2008 and 2009 amounts to a total of CHF 3.082
million.

No non-standard or other remuneration has been paid to
former members of the Corporate Executive Committee
pertaining to previous governing body activities in the
Baloise.

Compared to the previous year, the total amount of remu-
neration has gone up, adapting to the median of the compa-
rable positions in the market. Th is is due to the following
factors:

In accordance with legal requirements valid as of
1st January 2007, pension provisions will be added to
the total remuneration package.
With the introduction in 2006 of the IPM process
(Individual Performance Management), the bonus will
become more variable. As of now, any outstanding
performance will be rated with a target value of 130%
(currently up to a maximum of 100%).
Since 2006, it has been possible to increase or reduce
the bonus with the OPM factor, in line with the Group’s
performance. Given the excellent results of Baloise in
the reporting period 2006, the Compensation Commit-
tee has set the OPM at a maximum of 1.3.
As new bonus element, the performance quota was fi rst
introduced in 2007.

Th e variable parts of the total remuneration will be deter-
mined in the spring of each year as part of the Individual
Performance Management process (cf. 5.1 section Remu-
neration system: Basic salary and incentives). Th e following
table contains the basic salary and retirement benefi ts for
the year 2007, and in the reporting period, the variable re-
muneration elements for the previous year.

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

Pro-
spective
entitle-
ments

Non-cash
beneﬁ ts

Pension beneﬁ ts

Total
remuneration

Pension
fund

Indivi-
dual life
policies

REMUNERATION TO THE CHAIRMAN OF THE BOARD OF DIRECTORS
AND THE MEMBERS OF THE CORPORATE EXECUTIVE COMMITTEE

Cash remuneration

Em-
ployee
Incentive
Plan

Incentive
(variable)

Share
Subscription
Scheme

Share
Ownership
Plan

Basic remuneration (ﬁ xed)

In % of
total
remunera-
tion

CHF

1,600,000

45%

886,921

3,927

905,004

CHF

–/–

Number
of PSU

6,359

CHF

–/–

CHF

144,126

36,505

3,576,483

Dr. Rolf
Schäuble,
Chairman of
the Board of
Directors and (as of
6.12.2007) CEO
of Baloise Group

Dr. Frank
Schnewlin CEO of
Baloise Group (until
6.12.2007)

Other
members of
the Corporate
Executive
Committee

Total
Corporate
Executive
Committee

1,500,000

46%

771,746

3,927

125,006

663,443

5,962

–/–

128,826

33,170

3,226,118

1,855,000

42%

598,804

11,781

1,090,390

224,976

7,194

12,500

581,933

35,168

4,410,552

3,355,000

44% 1,370,550

15,708

1,215,396

888,419

13,156

12,500

710,759

68,338

7,636,670

Explanatory notes to table
Other members of the Corporate Executive Committee: includes Dr. Thomas Sieber, who was appointed member of the CEC on 6.12.2007.
Remuneration to former members and persons with close family ties
No non-standard remuneration has been paid to individuals or companies with close family ties to the Chairman of the Board of Directors or the members of Corporate Executive Committee.
(persons with close family ties: spouse, civil partner, unmarried partner, children under 18). No non-standard or other remuneration has been paid to former members of the Board of Directors
pertaining to previous governing body activities in Baloise.
Basic salary
Basic salary as per contract (gross).
Incentive
Variable, performance related portion of total remuneration paid in cash (gross).
Employee Incentive Plan
Portion of remuneration resulting from subscription for company shares at a preferential rate (2007: CHF 54.60). Computation: Market value minus subscription price = beneﬁ t in kind.
Share Subscription Scheme (SSS)
Portion of incentive received directly in shares. Computation: Fair value minus 10% reduction.
Employee Share Ownership Plan (ESOP)
Portion of incentives received in shares (exclusive of shares ﬁ nanced by loans).
Prospective entitlements (PSU)
Entitlements that confer a right to acquire shares at a future date, subject to achieving pre-determined performance conditions (cf. section 5.5. Performance Share Units (PSU)). The accrued
value of share awards will only be added to the total remuneration at the conversion into actual shares (i.e. at the end of the three-year performance period), only then can a reliable estimate be
provided and only then will they actually have been earned.
Non-cash beneﬁ ts
Basis: All elements of remuneration in compliance with the new Swiss salary certiﬁ cate. The listed amount is a long service gift to a member of the CEC.
Pension beneﬁ ts
Employer contributions to the pension fund plus premium payments for single life policies for incentives not insured under the pension fund. Contributions to single life policies will be
discontinued in 2008.

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

5.9. LOANS TO GOVERNING BODIES

Th e following credits and loans to members of the Board of
Directors and the Corporate Executive Committee are still
outstanding:

CREDITS AND LOANS TO MEMBERS OF THE BOARD OF DIRECTORS
AND THE CORPORATE EXECUTIVE COMMITTEE

in CHF

Dr. Rolf Schäuble, Chairman of the Board of directors
and (as of 6.12.2007) CEO of Baloise Group

Dr. Georg F. Krayer, Vice-Chairman of the Board of Directors
and (as of 6.12.2007) Lead Director

Dr. Christoph J. C. Albrecht, Member

Dr. Andreas Burckhardt, Member

Dr. Hansjörg Frei, Member

Prof. Dr. Gertrud Höhler, Member

Dr. Klaus Jenny, Member

Werner Kummer, Member

Dr. Arend Oetker, Member

Dr. Eveline Saupper, Member

Total Board of Directors

Loans connected
with the share
ownership plan

Mortgages

Other loans

Total

650,000

–/–

650,000

Dr. Frank Schnewlin, CEO of Baloise Group (until 6.12.2007)

7,645,550

Other members of the Corporate Executive Committee

1,000,000

4,195,230

7,645,550

5,195,230

Total Corporate Executive Committee

1,000,000

11,840,780

–/–

12,840,780

Explanatory notes to table
Credits and loans
No non-standard loans and credits have been granted to
a) former members of the Board of Directors and the Corporate Executive Committee
b) individuals or companies with close family ties to members of the Board of Directors (persons with close family ties: spouse, civil partner, unmarried partner, children).
Mortgages
Employees are granted mortgages at preferential rates: 1% below standard variable interest rate for clients, preferential rate for ﬁ xed interest mortgages. The mortgage granted to Dr. A. Burckhardt
is charged interest at market conditions since at the time of the conclusion of the contract no employee conditions were granted yet.
Loans connected with the Employee Share Ownership Plan
Loans to fund leveraged share ownership plan (cf. section 5.4. Share Ownership Plan). Interest is charged at prevailing interest rates (2007: 3%) over a term of three years.
Other loans
There are no policy loans.

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

5.10. PARTICIPATIONS AND OPTIONS

Th e following registered shares of Bâloise-Holding are
owned by members of the Board of Directors and the Cor-
porate Executive Committee or persons close to them (incl.,
in the reporting year, allocated/subscribed shares from the
share-based bonus programmes):

SHARES HELD BY MEMBERS OF THE BOARD OF DIRECTORS EXCLUDING CHAIRMAN

Number

Dr. Georg F. Krayer, Vice Chairman and (as of 6.12.2007) Lead Director

Dr. Christoph J. C. Albrecht, Member

Dr. Andreas Burckhardt, Member

Dr. Hansjörg Frei, Member

Prof. Dr. Gertrud Höhler, Member

Dr. Klaus Jenny, Member

Werner Kummer, Member

Dr. Arend Oetker, Member

Dr. Eveline Saupper, Member

Total Board of Directors (excl. Chairman)

Percentage of issued share capital

Discretionary
shares

Restricted shares

Share ownership
total

in %
of the share
capital issued

23,500

8,020

–/–

1,000

–/–

18,000

–/–

2,000

–/–

52,520

0.097%

2,186

1,670

1,928

1,670

1,928

1,774

1,516

1,670

16,012

0.030%

25,686

9,690

1,670

2,928

1,670

19,928

1,774

3,516

1,670

68,532

0.127%

0.048%

0.018%

0.003%

0.005%

0.003%

0.037%

0.003%

0.007%

0.003%

0.127%

Explanatory notes to table
Share-holdings
Incl. shares held by individuals or companies with close family ties to members of the Board of Directors (spouse, civil partner, unmarried partner, children under the age of 18).
Discretionary shares
Shares held in personal custody accounts.
Restricted shares
Shares subscribed for through share-based remuneration schemes are subject to a three-year lock-up period. Under section 20 of the articles of incorporation, each member of the Board of
Directors must deposit 1,000 shares with the Company for the term of his / her oﬃ ce (qualifying shares).
Options
Members of the Board of Directors do not hold options on Baloise shares.

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

SHARES HELD BY THE CHAIRMAN OF THE BOARD OF DIRECTORS
AND MEMBERS OF THE CORPORATE EXECUTIVE COMMITTEE

Number

Dr. Rolf Schäuble,
Chairman of the Board of Directors and (as of 6.12.2007)
CEO of Baloise Group

Dr. Frank Schnewlin, CEO of Baloise Group (until 6.12.2007)

German Egloﬀ , CFO of Baloise

Dr. Martin Strobel, CEO of Basler Switzerland

Martin Wenk, CIO of Baloise

Dr. Thomas Sieber, Head of Corporate Center (as of 6.12.2007)

Total Chairman of the Board of Directors and members
of the Corporate Executive Committee

Discretionary
shares

Restricted shares

Share ownership
total

in %
of the share
capital issued

Prospecitve
entitlements

30,566

25,802

56,368

0.104%

6,359

100

–/–

800

–/–

117,627

117,727

26,591

7,973

28,198

15,745

26,591

7,973

28,998

15,745

31,466

221,936

253,402

0.218%

0.049%

0.015%

0.054%

0.029%

0.469%

5,962

2,186

2,623

2,385

857

20,372

Percentage of issued share capital

0.058%

0.411%

0.469%

Explanatory notes to table
Shares-holdings
Incl. shares held by individuals or companies with close family ties to members of the Board of Directors (spouse, civil partner, unmarried partner, children under the age of 18).
Discretionary shares
Shares held in personal custody accounts
Restricted shares
Incl. shares subscribed for through the Employee Share Ownership Plan (ESOP) and ﬁ nanced by loans. Shares subscribed for through share-based remuneration schemes are subject to a
three-year lock-up period. As per section 20 of the Articles of Incorporation, each member of the Board of Directors must deposit 1,000 shares with the Company for the term of his / her oﬃ ce
(qualifying shares).
Options
Options held in relation to the Employee Share Ownership Plan are not listed here, as they do not originate from their own option plan but have been written to secure the loan. In addition,
each put option has a call option as counterpart.
Prospective entitlements (PSU)
Number of PSUs allocated (allocation as of 9.3.2007).

6. SHAREHOLDER PARTICIPATION RIGHTS

VOTING RIGHT
Baloise’s share capital consists solely of registered shares.
Th e are no shares with preferred voting rights. In order to
maintain a broad shareholder base and protect minority
shareholders, no shareholder is registered with more than
2% of voting rights, regardless of the number of shares held.
Th e Board of Directors may approve exceptions to this rule
by a two-thirds majority of all members (section 5, Articles
of Incorporation). Currently there are no exceptions.

Each share carries the right to one vote. In exercising voting
rights, no shareholder may directly or indirectly combine his
/her own and proxy votes for a total of more than one-fi ft h of
the shares entitled to vote at the Annual General Meeting.
Each shareholder may assign the exercise of his/her voting
right to another shareholder by a written proxy (section 16,
Articles of Incorporation).
www.baloise.com
governance

Responsibility
Rules and regulation

Corporate

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

STATUTORY QUORUMS
Th e Annual General Meeting has a quorum regardless of the
number of shareholders and proxy votes present, subject to
the obligatory cases prescribed by law (section 17, Articles of
Incorporation).

Waiver of statutory voting rights limitations requires the quo-
rum of at least three-quarters of the votes present at the An-
nual General Meeting, which must also comprise at least one-
third of all shares issued by the Company. Th e same qualifi ed
majority applies to other cases specifi ed in section 17, para-
graph 3 a–h, Articles of Incorporation. In other cases, resolu-
tions are adopted by a simple majority of shares voted (section
17, Articles of Incorporation), subject to mandatory provi-
sions of law.

www.baloise.com
governance

Responsibility
Rules and regulation

Corporate

CONVENING THE ANNUAL GENERAL MEETING
As a rule, the Annual General Meeting is held in April, but
no later than six months aft er the end of the reporting year.
Th e Bâloise-Holding reporting period ends on 31st
December. At least 20 days’ notice shall be given of an An-
nual General Meeting. Each registered shareholder receives a
personal invitation with the agenda. Invitation and agenda
are published in the Schweizerisches Handelsamtsblatt, in
various newspapers and on the Internet.

Extraordinary Annual General Meetings may be convened by
resolution of the Annual General Meeting, the Board of Direc-
tors or external auditors. At the request of the shareholders, the
Board of Directors must also call an extraordinary General
Meeting, in compliance with applicable law (section 11, Arti-
cles of Incorporation). In compliance with section 699, para-
graph 3, Swiss Code of Obligations, these shareholders must
represent at least 10% of the share capital.
Responsibility
www.baloise.com
governance Rules and regulation

Corporate

AGENDA ITEMS
Under section 699, paragraph 3, Swiss Code of Obligations,
one or more shareholders who together represent shares
with a face value of at least CHF 100,000 may apply for items
to be placed on the agenda. Such applications must be sub-
mitted to the Board of Directors in writing, stating the
matters to be brought before the Annual General Meeting
no later than six weeks before the regular Annual General
Meeting (section 14, Articles of Incorporation).

www.baloise.com
governance

Responsibility
Rules and regulationn

Corporate

ENTRY IN THE SHARE REGISTER
Entitled to vote at the Annual General Meeting are share-
holders who are registered in the share register with voting
rights at the cut-off-date stated in the invitation sent out by
the Board of Directors, which will be a few days before the
Annual General Meeting (section 16, Articles of Incorpo-
ration).

Admissibility of nominee registrations, with reference to
any possible percent clauses and the registration require-
ments are governed by section 5 of the Articles of Incorpo-
ration. Procedures and requirements to revoke or restrict
transferability are governed by the provisions of sections 5
and 17.

www.baloise.com
governance

Responsibility
Rules and regulation

Corporate

7. CHANGE OF CONTROL AND DEFENCE MEASURES

Upon acquiring 33% of all Baloise shares, shareholders or
groups of shareholders acting in collusion have an obliga-
tion to extend a takeover off er to all remaining shareholders.
Baloise has not opted to modify or waive this rule. Th ere is
neither a statutory opting-out nor an opting-up clause as
specifi ed in the Federal Act on Stock Exchanges and Securi-
ties Trading (SESTA).

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

Four members of the Corporate Executive Committee have
a notice period of 12 months. In addition, as with seven oth-
er members of management, they have a claim to a settle-
ment in the amount of one annual salary (including bonus),
if aft er a change in control or a merger the employer (or un-
der certain circumstances the employee) terminates the
working relationship within 12 months since the takeover
or the merger. For the Chairman of the Board of Directors/
CEO of Baloise, the notice period is six months. Th ere is no
change of control clause.

8. AUDITORS

PricewaterhouseCoopers (PwC) and its predecessor Schwei-
zerische Treuhandgesellschaft /STG-Coopers & Lybrand have
been Baloise’s external auditors since 1962, elected annually
by the Annual General Meeting. With the start of the report-
ing period 2007, Mr. Martin Frei has been appointed lead
auditor. PWC has been external auditor for almost all Group
companies since 2005.

Th e Audit Committee evaluates the performance of the ex-
ternal auditors and their cooperation with Internal Audit,
Risk Management and Compliance. Primarily, the Audit
Committee discusses with the external auditors the ongoing
audit and audit reports and any problems, results, reserva-
tions or issues arising from the audit.

Before the start of the annual audit, the Audit Committee
reviews the scope of the examination and proposes areas
warranting special attention. Th e Audit Committee subse-
quently assesses the independence of the external auditors
and proposes the external auditors to the Board of Directors
for election by the Annual General Meeting and makes rec-
ommendations concerning the auditors’ fees. Th e Audit
Committee reviews the external auditors’ fees annually. Th e
Audit Committee reviews the adequacy of the external audi-
tors’ services that are performed outside the scope of their
auditing activities. Th ere is a written directive, stipulating
that material services not related to auditing activities re-
quire prior approval by Internal Audit.

FEES PRICEWATERHOUSECOOPERS

in CHF (rounded to the nearest thousand)

2006

2007

Audit fee

5,723,000

5,873,000

Fees for audit-related services

313,000

810,000

Th e rise in consulting fees, compared to the previous year, is
primarily due to the utilisation of the auditors for advice on
key projects in Switzerland and for tax consultancy and the
audit in Germany.

Consulting fee

Total

1,313,000

1,855,000

7,349,000

8,538,000

9. INFORMATION POLICY

Th e Baloise Audit Committee is made up of independent
members qualifi ed in fi nance and accounting. During the re-
porting period, the Audit Committee met four times, each
time with external auditors in attendance. At these meetings,
the Audit Committee received detailed documentation on
the fi ndings of the external auditors, particularly when dis-
cussing the annual and semi-annual fi nancial statements.

INFORMATION PRINCIPLES
Th e Baloise Group provides regular, transparent and com-
prehensive information to shareholders, potential investors,
employees, clients and the general public. All registered
shareholders receive annual and semi-annual reports that
provide a commentary on the review of the business year.
Th e fi nancial report will be sent to shareholders upon re-
quest. All publications are made available to all shareholders
simultaneously.

CORPORATE GOVERNANCE
CORPORATE GOVERNANCE REPORT
INCLUDING COMPENSATION REPORT

All investors enjoy equal information rights. To make our
meetings with financial analysts generally accessible, we
use technologies such as webcasts, podcasts and telecon-
ferences.

INFORMATION EVENTS
Baloise provides comprehensive business information at:

Press conferences: Business results and activities, objec-
tives and strategies are presented and explained at media
conferences (annual and semi-annual media conferences).
Financial analysts meetings: Financial analysts meetings
take place at the close of each year and semi-annually,
with parallel webcast and teleconference. Th e events are
subsequently available for download as a podcast.
Annual General Meeting: Th e Annual General Meeting
provides shareholders with a review of the business
year.
Road shows: Regular road shows are organised at nu-
merous fi nancial centres.
Investor conferences: Key business and strategy topics
are reviewed in detail.
Individual meetings with analysts, investors and media
representatives: ongoing cultivation of relationships
with analysts, investors and the media.

AVAILABLE DOCUMENTS
Media releases, disclosures, presentations, annual reports,
fi nancial reports, semi-annual reports and other documents
are publicly available on the Internet at www.baloise.com.
All documents are available through Investor Relations or
for download from the internet.

www.baloise.com

Media Relations

Media kits

CONTACTS

CORPORATE GOVERNANCE
Th omas Sieber
Aeschengraben 21
CH-4002 Basel
Telephone +41 61 285 86 48
E-mail thomas.sieber@baloise.com

INVESTOR RELATIONS
Carsten Stolz
Aeschengraben 21
CH-4002 Basel
Telephone +41 61 285 83 65
E-mail carsten.stolz@baloise.com

All information on individual Baloise events is available at
www.baloise.com

www.baloise.com

INFORMATION ON THE BALOISE SHARE
For information regarding the Baloise share, see page 12 ff of
the annual report.

www.baloise.com

Responsibility

TOP LINKS

Investor Relations

Baloise

Corporate governance

Rules and regulation

www.baloise.com
share

FINANCIAL CALENDAR
Important data for investors can be found at www.baloise.
com. including publication dates of the annual and semi-an-
nual fi nancial statements. Date and invitation to the Annual
General Meeting, the closure date of the share register and
the ex-dividend date, if any, are also published.

www.baloise.com

Investor Relations

IR agenda

Investor Relations
Share buyback program

www.baloise.com
Baloise share
Bonds
Presentations
IR agenda

www.baloise.com

Media Relations

Media kits
Calendar

Employed?

OR RUNNING YOUR OWN BUSINESS?

A career takes a new direction. It adapts to job
opportunities, changing life circumstances,
people around us, the blows that fate deals, you
and the zeitgeist.

But ultimately, it is the individuals who make
the decisions and take charge of their lives and
careers − with Baloise as a partner at their side.

ORGANISATIONAL STRUCTURE
BOARD OF DIRECTORS

BOARD OF DIRECTORS

MEMBERS
Rolf Schäuble, Dr. oec., Chairman, Lenzburg
Georg F. Krayer, Dr. iur., Vice-Chairman, Basel
Christoph J. C. Albrecht, Dr. iur., Basel
Andreas Burckhardt, Dr. iur., Basel
Hansjörg Frei, Dr. iur., Mönchaltorf
Gertrud Höhler, Prof. Dr. phil., Berlin
Klaus Jenny, Dr. oec., Zürich
Werner Kummer, Küsnacht
Arend Oetker, Dr. rer. pol., Berlin
Eveline Saupper, Dr. iur., Pfäffi kon

SECRETARY TO THE BOARD OF DIRECTORS
Th omas Sieber, Dr. iur., Rheinfelden

INTERNAL AUDIT
Rolf-Christian Andersen, Meilen

AUDITORS
PricewaterhouseCoopers AG, Basel

BOARD COMMITTEES

CHAIRMAN’S COMMITTEE
Rolf Schäuble, Dr. oec., Chairman
Georg F. Krayer, Dr. iur., Vice Chairman
Hansjörg Frei, Dr. iur.
Klaus Jenny, Dr. oec.

AUDIT COMMITTEE
Werner Kummer, Chair
Christoph J. C. Albrecht, Dr. iur., Deputy Chair
Andreas Burckhardt, Dr. iur.
Hansjörg Frei, Dr. iur.

COMPENSATION COMMITTEE
Georg F. Krayer, Dr. iur., Chair
Klaus Jenny, Dr. oec., Deputy Chair
Gertrud Höhler, Prof. Dr. phil.
Eveline Saupper, Dr. iur.

INVESTMENT COMMITTEE
Rolf Schäuble, Dr. oec., Chair
Georg F. Krayer, Dr. iur., Deputy Chair
Hansjörg Frei, Dr. iur.
Klaus Jenny, Dr. oec.

ORGANISATIONAL STRUCTURE
MANAGEMENT

MANAGEMENT

(AS OF 1ST MARCH 2008)

RICHTIGES BILD FOLGT NOCH

From left to right: Martin Strobel, Rolf Schäuble,
German Egloﬀ , Martin Wenk, Thomas Sieber

GROUP CEO

Rolf Schäuble, Dr. oec.* (as of 6.12.2007)

CORPORATE SECRETARY

Markus von Escher, Dr. iur.

CORPORATE COMMUNICATIONS

Th omas Kähr

SWITZERLAND

INTERNATIONAL

FINANCE

ASSET MANAGEMENT

CORPORATE CENTER

Martin Strobel,
Dr. rer. pol.*

Rolf Schäuble, Dr. oec.*
(as of 6.12.2007)

German Egloff *

Martin Wenk*

Th omas Sieber, Dr. iur.*
(as of 6.12.2007)

PRIVATE AND CORPORATE
CUSTOMERS
Franz J. Kaltenbach,
Dr. rer. nat.

BALOISE BANK SOBA
Alois Müller

SALES AND MARKETING
Daniel Fluri

INFORMATION SYSTEMS
AND LOGISTICS
René Güttinger

ACCOUNTING/
CONTROLLING
Urs Bienz

BASLER GERMANY
Frank Grund, Dr. iur.

FINANCIAL ACCOUNTING
Michael Müller

FINANCIAL RELATIONS
Carsten Stolz,
Dr. rer. pol.

FINANCIAL MANAGEMENT
Stefan Nölker,
Dr. rer. nat.

PERFORMANCE
MANAGEMENT
Martin Kampik
Karl Signer

DEUTSCHER RING
GERMANY
Wolfgang Fauter

MERCATOR BELGIUM
Jan De Meulder

BÂLOISE LUXEMBOURG
André Bredimus

BASLER AUSTRIA
Otmar Bodner, Dr. iur.

CROATIA AND SERBIA
Lothar Mayrhofer,
Dr. Mag. oec.

INVESTMENT STRATEGY
AND INVESTMENT
CONTROLLING
Bernhard Casar

BALOISE ASSET
MANAGEMENT
Reto Diezi, Dr. oec. publ.

REAL ESTATE
Hans-Peter Bissegger

BALOISE FUND INVEST
Robert Antonietti

BALOISE LIFE
(LIECHTENSTEIN)
Annemie D’Hulster
(as of 1.1.2008)

CORPORATE
DEVELOPMENT
Th omas Wodrich

CORPORATE HUMAN
RESOURCES
Christoph K. Th oma

LEGAL AND TAX
Andreas Eugster

COMPLIANCE
Frank Marti

RUN OFF
Bruno Rappo

* Member of the Corporate Executive Committee

Aiming high
right away

OR STARTING OFF SMALL?

Some love to work part-time. Others start
blooming when they have a demanding
leading position.

The balance between work and private life,
between performance and recreation, is as
unique as people’s life plans. Whatever their
decision, Baloise will support them.

MANAGEMENT INFORMATION
CONSOLIDATED INCOME STATEMENT

CONSOLIDATED
INCOME STATEMENT

FIVE-YEAR OVERVIEW (RESTATED FROM 2004)

in CHF million

Income

Premiums earned and policy fees (gross) 1

Reinsurance premiums ceded

Premiums earned and policy fees (net)

Investment income

Realised gains and losses on investments 2

Income from services rendered

Results from investments in associates

Other operating income

Income

Expenses

Claims and beneﬁ ts paid (gross)

Change in actuarial reserves (gross)

Losses incurred ceded to reinsurers

Acquisition costs

Operating and administrative expenses for insurance business

Investment expenses

Interest expense on insurance liabilities

Expense from ﬁ nancial contracts

Other operating expenses

Expenses

Borrowing costs

Proﬁ t before tax

Income taxes

Proﬁ t for the period

Allocated to:

Shareholders

Minority interests

Earnings / loss per share in CHF

Diluted

Undiluted

2003

2004

2005

2006

2007

7,371.1

– 256.4

7,114.7

6,936.0

– 211.2

6,724.8

6,835.1

– 197.3

6,637.8

6,706.6

– 187.5

6,519.1

6,880.2

– 207.9

6,672.3

2,063.8

1,862.1

1,794.5

1,823.7

2,033.1

– 32.7

319.0

26.4

157.7

265.2

312.2

3.7

137.1

549.4

211.9

35.5

74.3

702.8

286.4

62.0

144.3

598.1

387.5

8.3

125.6

9,648.9

9,305.1

9,303.4

9,538.3

9,824.9

– 5,561.3

– 1,645.4

– 5,418.4

– 1,251.4

– 5,772.1

– 1,094.6

– 5,325.0

– 1,080.8

78.7

– 277.1

– 835.6

– 75.9

– 98.9

– 296.4

– 671.1

51.6

– 475.3

– 806.4

– 75.9

– 90.1

– 248.9

– 612.9

189.7

– 524.8

– 815.1

– 88.1

– 78.5

– 130.0

– 460.6

43.4

– 493.8

– 847.8

– 93.9

– 67.0

– 156.5

– 575.5

– 5,597.9

– 833.6

107.6

– 524.8

– 938.3

– 104.3

– 76.1

– 162.3

– 660.5

– 9,383.0

– 8,927.7

– 8,774.1

– 8,596.9

– 8,790.2

– 42.2

223.7

– 125.4

98.3

91.4

6.9

1.7

– 52.6

324.8

– 101.5

223.3

210.0

13.3

3.9

– 53.4

475.9

– 72.4

403.5

395.8

7.7

7.3

– 28.2

913.2

– 206.1

707.1

699.4

7.7

12.93

– 28.4

1,006.3

– 192.5

813.8

803.3

10.5

15.48

MANAGEMENT INFORMATION
CONSOLIDATED INCOME STATEMENT

ADDITIONAL INFORMATION

in CHF million

Gross premiums written and policy fees

Investment-type premiums

Gross premiums written, policy fees and investment-type premiums

Assets for the account and at the risk of life insurance policyholders

Combined ratio (gross) 3 in percent

Funding ratio nonlife in percent

2003

2004

2005

2006

2007

7,374.7

261.0

7,635.7

798.2

97.6

177.4

6,941.3

443.0

7,384.3

6,839.1

554.4

7,393.5

6,716.5

774.7

7,491.2

6,868.4

1,069.2

7,937.6

1,143.6

2,245.8

2,976.6

4,366.9

93.0

179.6

100.6

187.0

90.2

194.8

93.0

195.6

1 In line with the accounting principles used at Baloise Group, investment-type insurance premiums are not included in the premiums earned and policy fees.
2 Inclusive ﬁ nancial liabilities held for trading (derivative ﬁ nancial instruments).
3 From 2005, exclusive legally required interest on actuarial reserves for annuities.

MANAGEMENT INFORMATION
CONSOLIDATED BALANCE SHEET

CONSOLIDATED BALANCE SHEET

FIVE-YEAR OVERVIEW (RESTATED FROM 2004)

2003

2004

2005

2006

2007

in CHF million

Assets

Property, plant and equipment

Intangible assets

Investments in associates

Investment property

Financial assets of an equity nature

Financial assets of a debt nature

Mortgages and loans

Derivative ﬁ nancial instruments

Other assets / receivables

Deferred tax assets 1

Cash and cash equivalents

Total assets

696.8

1,091.0

241.0

5,653.4

5,413.7

32,367.0

12,459.1

292.9

4,484.1

905.9

695.9

647.5

1,223.1

152.6

5,619.2

6,757.4

23,208.8

16,995.5

264.9

2,516.9

999.7

698.0

626.3

1,357.2

174.7

5,581.7

9,839.0

22,915.1

17,635.5

48.6

2,652.3

34.5

450.2

638.3

1,357.5

175.0

5,312.6

10,902.3

24,523.3

17,801.6

75.8

2,478.8

25.8

741.5

672.6

1,601.7

177.6

5,269.5

12,137.8

24,288.9

18,399.2

54.2

2,722.3

51.3

1,620.4

64,300.8

59,083.6

61,315.1

64,032.5

66,995.5

in CHF million

Equity and liabilities

Equity

Equity before minority interests

Minority interests

Total equity

Liabilities

Technical reserves (gross)

Liabilities from banking business and ﬁ nancial contracts

Derivative ﬁ nancial instruments

Accruals and other liabilities

Deferred tax liabilities 1

Total liabilities

2003

2004

2005

2006

2007

3,319.8

40.7

3,360.5

3,433.9

63.9

3,497.8

4,330.4

60.9

4,391.3

4,921.9

64.6

4,986.5

4,781.9

83.7

4,865.6

43,521.2

42,825.8

44,915.9

46,521.8

47,811.0

9,904.1

252.4

5,621.8

1,640.8

5,493.9

160.3

5,395.7

1,710.1

6,062.5

243.4

4,965.1

736.9

6,744.0

44.6

4,929.3

806.3

8,079.1

34.9

5,511.7

693.2

60,940.3

55,585.8

56,923.8

59,046.0

62,129.9

Total equity and liabilities

64,300.8

59,083.6

61,315.1

64,032.5

66,995.5

1 From 2005, deferred tax assets and liabilities have been netted oﬀ against each other - provided the IFRS oﬀ setting requirements have been met.

MANAGEMENT INFORMATION
BUSINESS VOLUME, PREMIUMS AND COMBINED RATIO

BUSINESS VOLUME,
PREMIUMS AND COMBINED RATIO

BUSINESS VOLUME 2006

Group

Switzer-
land

Germany

Benelux

Other countries

Basler
Deutsch-
land

Deutscher
Ring

Total

Belgium

3,065.1

1,280.5

3,651.4

2,413.8

842.4

221.7

214.6

1,057.0

814.5

1,036.2

6,716.5

3,694.3

1,064.1

1,029.1

2,093.2

541.7

118.5

660.2

Luxem-
bourg

47.9

43.3

91.2

Austria,
Croatia
and Serbia

97.9

39.6

137.5

Total

589.6

161.8

751.4

in CHF million

Nonlife

Life

Subtotal of IFRS gross
premiums written 1

Investment-type premiums

774.7

36.1

3.3

208.8

212.1

78.5

444.0

522.5

4.0

Total business volume

7,491.2

3,730.4

1,067.4

1,237.9

2,305.3

738.7

535.2

1,273.9

141.5

Other 2

Total

40.1

–/–

40.1

–/–

40.1

138.0

39.6

177.6

4.0

181.6

BUSINESS VOLUME 2007

Group

Switzer-
land

Germany

Benelux

Other countries

Basler
Deutsch-
land

Deutscher
Ring

Total

Belgium

3,190.6

1,285.9

3,677.8

2,413.3

866.2

211.0

223.2

1,089.4

820.1

1,031.1

6,868.4

3,699.2

1,077.2

1,043.3

2,120.5

587.4

123.5

710.9

Luxem-
bourg

53.4

42.7

96.1

Austria,
Croatia
and Serbia

135.8

67.2

203.0

Total

640.8

166.2

807.0

in CHF million

Nonlife

Life

Subtotal of IFRS gross
premiums written 1

Investment-type premiums

1,069.2

43.5

6.7

256.5

263.2

81.9

674.4

756.3

6.2

Total business volume

7,937.6

3,742.7

1,083.9

1,299.8

2,383.7

792.8

770.5

1,563.3

209.2

Other 2

Total

38.7

–/–

38.7

–/–

38.7

174.5

67.2

241.7

6.2

247.9

1 Premiums written and policy fees (gross).
2 Group business, run-oﬀ .

MANAGEMENT INFORMATION
BUSINESS VOLUME, PREMIUMS AND COMBINED RATIO

COMBINED RATIO GROSS,
NONLIFE, 2006 1

Group

Switzer-
land

Basler
Deutsch-
land

Deutscher
Ring

as a percentage of premiums earned

Loss ratio

Expense ratio

Proﬁ t-sharing ratio

Combined ratio

59.4

30.1

0.7

90.2

62.0

24.5

1.3

87.8

61.8

30.3

0.5

92.6

41.3

53.1

–/–

94.4

Germany

Benelux

Other countries

Total

Belgium

57.7

34.9

0.4

93.0

59.2

33.5

0.0

92.7

Luxem-
bourg

51.1

38.5

0.1

89.7

Austria,
Croatia
and Serbia

59.2

40.5

–/–

99.7

Total

58.6

33.8

0.0

92.4

Other 2

Total

47.4

16.8

1.3

65.5

55.8

33.6

0.4

89.8

COMBINED RATIO GROSS,
NONLIFE, 2007 1

Group

Switzer-
land

Germany

Benelux

Other countries

Basler
Deutsch-
land

Deutscher
Ring

as a percentage of premiums earned

Loss ratio

Expense ratio

Proﬁ t-sharing ratio

Combined ratio

61.0

31.5

0.5

93.0

62.8

24.9

0.9

88.6

66.0

30.9

0.4

97.3

43.6

53.6

–/–

97.2

Total

Belgium

61.4

35.5

0.4

97.3

57.6

36.7

0.0

94.3

Luxem-
bourg

55.9

35.7

–/–

91.6

COMBINED RATIO NONLIFE 1

as a percentage of premiums earned

Loss ratio

Expense ratio

Proﬁ t-sharing ratio

Combined ratio

RESERVE RATIO NONLIFE

in CHF million

Technical reserve for own account

Premiums written and policy fees for own account

Reserve ratio in percent

1 Excluding legally required interest on annuity reserves.
2 Group business, run-oﬀ .

Total

57.5

36.6

0.0

94.1

2006

59.4

30.1

0.7

90.2

Austria,
Croatia
and Serbia

63.5

40.4

–/–

103.9

Other 2

Total

42.6

17.1

0.3

60.0

55.3

34.2

0.1

89.6

Gross

2007

61.0

31.5

0.5

93.0

Net

2006

2007

61.6

31.6

0.8

94.0

61.6

33.0

0.5

95.1

2006

2007

5,624.0

5,892.9

2,886.6

3,012.7

194.8

195.6

MANAGEMENT INFORMATION
TECHNICAL INCOME STATEMENT

2006

3,065.1

– 9.9

3,055.2

Nonlife

2007

3,190.6

11.8

3,202.4

2006

Life

2007

3,651.4

3,677.8

–/–

0.0

3,651.4

3,677.8

– 1,801.9

– 1,882.0

– 3,523.1

– 3,715.9

– 42.3

– 21.4

– 925.2

264.4

– 167.7

132.6

– 97.8

0.1

9.0

– 123.8

– 101.6

– 15.4

– 1,010.2

– 585.6

– 431.6

– 508.1

– 161.1

– 554.7

– 551.2

193.2

– 1,397.0

– 1,305.1

– 182.7

– 19.8

– 25.2

113.2

– 17.0

– 0.8

12.1

– 75.2

6.2

1.6

0.8

3.9

3.3

6.6

1.5

4.4

– 7.3

– 9.4

2,887.5

3,019.7

3,631.6

3,652.6

– 1,669.3

– 1,768.8

– 3,516.9

– 3,712.6

– 140.1

– 21.3

– 916.2

140.6

296.6

121.6

– 19.8

3.2

401.6

–/–

542.2

– 92.4

– 118.6

– 16.1

– 998.1

118.1

340.6

141.3

– 21.0

– 62.5

398.4

–/–

516.5

– 70.0

– 584.0

– 430.8

– 504.2

– 154.5

– 553.2

– 546.8

– 1,404.3

– 1,314.5

1,368.2

1,507.2

474.3

– 73.6

– 118.4

1,650.5

–/–

246.2

– 80.1

438.8

– 79.8

– 132.8

1,733.4

–/–

418.9

– 79.9

449.8

446.5

166.1

339.0

TECHNICAL
INCOME STATEMENT

in CHF million

Gross

Gross premiums written and policy fees

Change in unearned premium reserves

Premiums earned and policy fees (gross)

Claims and beneﬁ ts paid (gross)

Change in technical reserves (gross)

Change in loss reserve / actuarial reserves 1

Expense for surplus participation of policyholders

Technical expenses

Total technical result (gross)

Ceded to reinsurers

Reinsurance premiums ceded

Claims and beneﬁ ts paid

Reinsurance share in losses paid

Expense for surplus participation of policyholders

Technical expenses

Total technical result of ceded business

For own account

Premiums earned and policy fees

Claims and beneﬁ ts paid

Change in loss reserve / actuarial reserves 1

Expense for surplus participation of policyholders

Technical expenses

Total technical result for own account

Investment income (gross)

Realised gains and losses on investments 2

Investment expenses

Other ﬁ nancial expense and income

Result from investment income

Borrowing costs

Proﬁ t before tax

Income taxes

Proﬁ t for the period

1 Including change in loss adjustment expenses provisions.
2 Including ﬁ nancial liabilities held for trading (derivative ﬁ nancial instruments).

MANAGEMENT INFORMATION
GROSS PREMIUMS BY INDUSTRIES

GROSS PREMIUMS BY INDUSTRIES

NONLIFE

in CHF million

Accident

Health

General liability

Motor

Marine

Property

Other

Active reinsurance

Gross premiums written, nonlife

LIFE

in CHF million

Single premiums

Periodic premiums

Investment-type premiums

Gross premiums written, life

2006

2007

+/– %

444.8

107.4

340.8

477.9

112.9

353.0

1,002.1

1,028.0

148.0

926.1

42.3

53.6

148.4

968.3

49.4

52.7

3,065.1

3,190.6

7.4

5.1

3.6

2.6

0.3

4.6

16.8

– 1.7

4.1

2006

2007

+/– %

1,697.5

2,728.5

– 774.6

3,651.4

1,972.6

2,774.4

– 1,069.2

3,677.8

16.2

1.7

38.0

0.7

EMBEDDED VALUE

DEVELOPMENT OF EMBEDDED VALUE

in CHF million; all ﬁ gures “after tax”

Embedded value as of 1 st January

Operating proﬁ t from policy portfolio, adjusted equity plus earnings from new business

Economic changes, including changes in unrealised gains and losses on investments (shares and properties)

Dividend and capital movements

Exchange diﬀ erences

Embedded value as of 31 st December

Of which: value of policy portfolio

Of which: adjusted equity

Of which: cost of solvency

NEW BUSINESS

Value of new business (VNB) in CHF million

APE 1 in CHF million

Sensitivities of new business value at risk discount rate (+/– 1.0%) in percent

Ratio VNB to APE in percent

SENSITIVITIES

in percent

+/– 1% change in risk discount rate

+/– 10% change in the market value of shares

+/– 10% change in the market value of properties

+/– 0.5% change in new money rate

1 Annual Premium Equivalent = 100% new annual premiums + 10% of single premiums.

MANAGEMENT INFORMATION
EMBEDDED VALUE

2006

2007

2,359.7

2,627.8

134.7

178.1

– 60.2

15.4

253.0

372.7

– 40.6

17.7

2,627.8

3,230.6

1,096.2

2,011.1

– 479.6

1,416.8

2,272.7

– 458.8

2006

15.9

217.2

2007

20.3

212.5

– 31.9 / + 33.9

– 30.3 / + 35.1

7.3

9.5

2006

2007

– 6.3 / + 7.2

– 6.1 / + 7.1

+ 6.3 / –6.3

+ 5.0 / – 5.0

+ 4.5 / –4.5

+ 3.8 / – 3.8

+ 3.8 / –4.1

+ 3.9 / – 4.4

MANAGEMENT INFORMATION
EMBEDDED VALUE

Th e embedded value of life insurance business consists of
three elements: fi rstly, the adjusted shareholders’ equity of
life insurance activities and secondly, the value of in-force
business at the end of the reporting period, with the cost of
solvency being deducted. Th e embedded value excludes any
value that may be attributed to future new business.

For investments, the adjusted shareholders’ equity is based
on fair values, while statutory rates were used for actuarial
liabilities. Th e most important components of the share-
holders’ equity are the sums of unrealised gains and losses
on investments (shares and properties), which can be sub-
ject to strong fl uctuations. For business from Luxembourg,

Austria and Croatia, Serbia and Liechtenstein and for the
German company Deutscher PensionsRing, only the em-
bedded value disclosed under IFRS will be taken into ac-
count.

Th e value of the insurance portfolio is equivalent to the re-
sultant future earnings that are determined by discounting
all expected cash fl ows. Th is requires a large number of as-
sumptions; the key assumptions are itemised in the table
below.

Th e cost of solvency is equivalent to the cost of funding the
solvency requirements of the business.

ASSUMPTIONS

in percent

Group

Risk discount rate

Return on bonds (1 st pojected annual return – long term return)

Return on shares

Return on properties

Switzerland

Risk discount rate

2006

2007

7.6

2.85 – 2.85

3.6 – 3.8

7.2

4.8

7.5

7.2

4.8

7.5

Return on bonds (1 st pojected annual return – long term return)

2.65 – 2.65

3.4 – 3.6

Return on shares

Return on properties

Risk discount rate

Return on bonds (1 st pojected annual return – long term return)

Return on shares

Return on properties

7.0

4.75

8.3

7.0

4.70

8.3

4.0 – 4.0

4.6 – 4.8

8.0

5.2

8.0

5.2

External audit: Deloitte & Touche LLP has examined the calculation method chosen by the Baloise Group and the assumptions and calculations applied to the computation of the embedded
value in the life business as of 31st December 2007. Deloitte considers the calculation method and assumptions used by Baloise to be appropriate and reasonable and the disclosures on
embedded value, using the chosen methodology and assumptions, to be properly prepared. For the purpose of this report, Deloitte has examined on a test basis some of the data provided by
Baloise, relying, however, on the ﬁ nancial information published in the ﬁ nancial report.

MANAGEMENT INFORMATION
EMBEDDED VALUE

2006

2007

2,242.0

861.7

1,756.5

– 376.2

451.4

234.5

320.3

2,646.0

1,107.6

1,891.1

– 352.7

655.8

309.2

452.8

– 103.4

– 106.2

– 65.7

2,627.8

– 71.2

3,230.6

2006

10.2

10.9

106.4

4.5

5.0

2007

14.9

14.1

94.7

5.2

6.1

110.8

117.8

GEOGRAPHIC SPREAD OF EMBEDDED VALUE

in CHF million; all ﬁ gures “after tax”

Switzerland

Of which: value of policy portfolio

Of which: adjusted equity

Of which: cost of solvency

Other

Of which: value of policy portfolio

Of which: adjusted equity

Of which: cost of solvency

Consolidation

Embedded value as of 31 st December

GEOGRAPHIC SPREAD OF NEW BUSINESS

New business margin Switzerland in percent

Value of new business in CHF million

APE in CHF million

New business margin EU in percent

Value of new business in CHF million

APE in CHF million

MANAGEMENT INFORMATION
BANKING ACTIVITIES

BANKING ACTIVITIES

RESULTS BANKING ACTIVITIES

in CHF million

Total interest income

Total interest expense

Net interest income

Net commission and fee income

Trading income

Other income

Total operating income

Personnel expenses

Material expenses

Total operating expenses

Gross proﬁ t

Losses and impairments due to credit risks

Depreciation of intangible assets and property, plant and equipment

Proﬁ t before tax and minority interests

Income taxes

Proﬁ t for the period

ADDITIONAL INFORMATION

in CHF million

Assets managed for third parties

Risk weighted assets of banking activities

ASSET ALLOCATION

in CHF million

Fixed-interest securities

Derivative ﬁ nancial instruments

Alternative ﬁ nancial investments

Investment properties

Mortgage assets

Policy and other loans

Cash and cash equivalents

Total

2006

2007

181.5

– 81.2

100.3

69.2

– 1.7

3.1

170.9

– 49.5

– 48.1

– 97.6

73.3

– 5.6

– 4.1

63.6

– 12.3

51.3

195.0

– 90.8

104.2

58.8

– 0.4

6.4

169.0

– 51.2

– 38.6

– 89.8

79.2

– 4.4

– 5.7

69.1

– 10.0

59.1

2006

2007

8,950.6

3,443.7

9,413.8

3,415.5

2006

2007

331.2

300.2

1.7

12.4

–/–

0.0

1.7

18.3

–/–

4,909.0

4,913.5

270.7

94.9

267.8

108.3

5,619.9

5,609.8

MANAGEMENT INFORMATION
ASSET PERFORMANCE

ASSET PERFORMANCE

INVESTMENT PERFORMANCE 2006 1

in CHF million

Current income

Realised gains and losses and impairment loss
recognised in proﬁ t or loss (net)

Change in unrealised gains and losses on equity

Cost of investment management

Operational proﬁ t

Fixed-interest
securities

747.7

73.3

– 446.5

– 33.1

341.4

139.9

462.6

396.3

– 8.6

990.2

Investment
properties

Mortgage assets,
policy loans
and other loans

Alternative
ﬁ nancial assets,
derivatives
and cash and
cash equivalents

231.1

80.5

– 13.7

297.9

683.3

– 11.8

– 12.2

659.3

21.7

– 37.1

222.9

– 26.1

181.4

Total

1,823.7

567.5

172.7

– 93.7

2,470.2

Average investment portfolio

23,464.7

5,881.2

5,447.1

17,718.6

2,790.8

55,302.4

Performance in percent

1.5

16.8

5.5

3.7

6.5

4.5

INVESTMENT PERFORMANCE 2007 1

in CHF million

Current income

Realised gains and losses and impairment loss
recognised in proﬁ t or loss (net)

Change in unrealised gains and losses on equity

Cost of investment management

Operational proﬁ t

Fixed-interest
securities

849.9

– 54.8

– 538.4

– 34.8

221.9

164.2

641.5

– 383.8

– 11.9

410.0

Investment
properties

Mortgage assets,
policy loans
and other loans

Alternative
ﬁ nancial assets,
derivatives
and cash and
cash equivalents

256.4

– 22.2

– 16.5

217.7

710.9

0.6

– 13.4

698.1

51.7

22.0

130.8

– 27.7

176.8

Total

2,033.1

587.1

– 791.4

– 104.3

1,724.5

Average investment portfolio

24,229.5

5,870.7

5,291.1

18,126.9

3,400.1

56,918.3

Performance in percent

0.9

7.0

4.1

3.9

5.2

3.0

1 Excluding assets for the account and at the risk of life insurance policyholders

MANAGEMENT INFORMATION
ASSET PERFORMANCE

CURRENT INCOME, INSURANCE 1

in CHF million

Fixed-interest securities

Derivative ﬁ nancial instruments

Alternative ﬁ nancial investments

Investment properties

Mortgage assets

Policy and other loans

Cash and cash equivalents

Total current income

Nonlife

Life

160.3

29.6

–/–

2.5

44.3

11.3

44.0

4.6

571.9

109.6

–/–

5.0

181.6

167.6

324.6

7.9

2006

Total

732.2

139.2

–/–

7.5

225.9

178.9

368.6

12.5

Nonlife

Life

186.6

33.7

–/–

4.1

49.1

12.1

43.2

11.8

643.8

130.0

–/–

15.1

202.6

169.9

328.7

17.1

2007

Total

830.4

163.7

–/–

19.2

251.7

182.0

371.9

28.9

296.6

1,368.2

1,664.8

340.6

1,507.2

1,847.8

REALISED GAINS AND LOSSES, INSURANCE 1

Nonlife

Life

in CHF million

Fixed-interest securities

Derivative ﬁ nancial instruments

Alternative ﬁ nancial investments

Investment properties

Mortgage assets

Policy and other loans

Cash and cash equivalents

Total capital gains and losses

ASSET ALLOCATION, INSURANCE 1

in CHF million

Fixed-interest securities

Derivative ﬁ nancial instruments

Alternative ﬁ nancial investments

Investment properties

Mortgage assets

Policy and other loans

Cash and cash equivalents

Total

2006

Total

73.6

430.5

76.7

313.4

– 109.8

– 121.1

69.7

1.8

– 2.8

4.5

–/–

85.4

3.6

– 4.8

7.9

–/–

– 3.1

117.1

– 11.3

15.7

1.8

– 2.0

3.4

–/–

121.6

353.5

475.1

Nonlife

Life

5,244.6

1,258.5

1.7

356.7

942.3

371.3

973.3

233.4

18,309.0

4,763.6

23.2

1,819.6

4,203.2

4,661.1

7,324.8

255.3

2006

Total

23,553.6

6,022.1

24.9

2,176.3

5,145.5

5,032.4

8,298.1

488.7

9,381.8

41,359.8

50,741.6

Nonlife

Life

– 18.6

154.4

– 16.7

22.2

1.2

0.2

– 1.4

–/–

141.3

– 35.5

478.2

– 116.6

135.1

– 26.6

0.5

– 1.7

–/–

433.4

Nonlife

Life

5,421.5

1,124.3

2.0

357.1

912.5

404.3

1,025.6

474.4

9,721.7

18,275.3

4,553.1

22.8

1,746.9

4,211.6

4,917.1

7,522.4

895.2

2007

Total

– 54.1

632.6

– 133.3

157.3

– 25.4

0.7

– 3.1

–/–

574.7

2007

Total

23,696.8

5,677.4

24.8

2,104.0

5,124.1

5,321.4

8,548.0

1,369.6

1 Excluding assets for the account and at the risk of life insurance policyholders.

42,144.4

51,866.1

Bâloise-Holding

BÂLOISE-HOLDING
INCOME STATEMENT

INCOME STATEMENT
BÂLOISE-HOLDING

in CHF million

Income from participating interests

Interest and securities income

Other income

Total income

Administrative expenses

Interest expense

Depreciation

Other expense

Total expenses

Tax expenditure

Proﬁ t for the period

Note

2006

2007

296.4

30.4

2.0

328.8

– 3.7

– 27.2

– 30.0

– 8.7

– 69.6

– 1.8

257.4

399.0

19.8

2.8

421.6

– 25.9

– 27.5

– 50.5

– 3.9

– 107.8

– 0.3

313.5

BALANCE SHEET
BÂLOISE-HOLDING

in CHF million

Assets

Cash and cash equivalents

Treasury shares

Receivables from Group companies

Receivables from third parties

Accruals

Current assets

Participations

Loans to Group companies

Financial assets

Non-current assets

Total assets

Equity and Liabilities

Liabilities to Group companies

Liabilities to third parties

Bonds

Provisions

Accruals

Liabilities

Share capital

Legal reserves

General reserves

Reserves for treasury shares

Other reserves

Retained earnings

Equity

Total equity and liabilities

BÂLOISE-HOLDING
BALANCE SHEET

Note

31.12.2006

31.12.2007

165.3

113.8

60.0

0.3

66.0

405.4

16.3

340.1

69.9

1.3

49.1

476.7

1,416.1

1,575.3

30.0

11.8

30.0

0.2

1,457.9

1,605.5

1,863.3

2,082.2

34.3

13.7

900.0

9.1

13.7

970.8

5.5

11.7

119.1

498.1

258.1

892.5

4.9

0.2

1,200.0

10.7

14.3

1,230.1

5.4

11.7

367.7

153.2

314.1

852.1

1,863.3

2,082.2

BÂLOISE-HOLDING
NOTES

NOTES
BÂLOISE-HOLDING

1. ACCOUNTING STANDARDS
Baloise’s annual accounts are produced in accordance with
the regulations of the Swiss Code of Obligations.

Valuation of the loans was
LOANS TO GROUP COMPANIES
made at nominal value taking into account the necessary
amortisation. Individual impairments were conducted ac-
cording to the prudence principle for all recognisable risks.

Cash and cash equivalents
CASH AND CASH EQUIVALENTS
include cash in banks as well as cash equivalents such as
call-, time deposits or money market paper if these have an
original maturity of fewer than 90 days.

OTHER FINANCIAL ASSETS Marketable securities are ei-
ther recognised at the purchase price or at the fair value,
with the lower of the two being applied.

Treasury shares acquired as part of
TREASURY SHARES
the share buy-back programme are posted at the buy-back
price or at the lower fair value.

RECEIVABLES
net of the impairments necessary.

Receivables are carried at nominal value

Accruals take into account both expenses paid
ACCRUALS
in advance for the new fi scal year as well as revenue from the
current fi scal year which is only received later. Included un-
der the same heading are dividends decided on the balance
sheet date by the Annual General Meeting of the subsidiary
companies, which are carried in Bâloise-Holding as divi-
dend claims.

PARTICIPATIONS
tion value net of the amortisation necessary.

Participations are recognised at acquisi-

NOTES TO THE INCOME STATEMENT AND THE BALANCE SHEET

2. INCOME FROM INTEREST AND SECURITIES

in CHF million

Income from treasury shares (previous year: income / earnings from securities)

Interest on loans to Group companies

Income from other ﬁ nancial assets

Other interest receivables

Total interest and securities income

LIABILITIES

Liabilities are recognised at nominal value.

Bonds are recognised at nominal value. Th e emis-
BONDS
sion costs, reduced by the premium, are charged in full to
the income statement upon issue of the bond.

PROVISIONS
according to the principles of prudent management.

Provisions are accrued to cover any risks

Accruals include revenue already received
ACCRUALS
regarding the new fi scal year and expenses for the fi scal
year, which will only be paid later.

2006

25.3

0.1

0.5

4.5

30.4

2007

6.0

1.0

10.9

1.9

19.8

BÂLOISE-HOLDING
NOTES

2006

2.0

0.0

2.0

2006

1.4

2.3

3.7

2006

26.5

0.7

27.2

2006

30.0

–/–

30.0

2006

1.6

7.1

8.7

2007

1.9

0.9

2.8

2007

15.2

10.7

25.9

2007

26.8

0.7

27.5

2007

29.6

20.9

50.5

2007

1.4

2.5

3.9

3. OTHER INCOME

in CHF million

Income from services rendered

Other ﬁ nancial income

Total other income

4. ADMINISTRATIVE EXPENSES

in CHF million

Personnel expenses

Other administrative expenses

Total administrative expenses

5. INTEREST EXPENSES

in CHF million

Interest from bonds

Other interest expenses

Total interest expenses

6. DEPRECIATION

in CHF million

Depreciation on participations

Depreciation on treasury shares

Total Depreciation

7. OTHER EXPENSES

in CHF million

Expenses incurred for services rendered

Other expenses

Total other expenses

BÂLOISE-HOLDING
NOTES

8. PARTICIPATIONS

Company

Basler, Versicherungs-Gesellschaft, Basel

Basler Lebens-Versicherungs-Gesellschaft, Basel

Baloise Bank SoBa, Solothurn

Baloise Asset Management Schweiz AG, Basel

Baloise Asset Management International AG, Basel

Haakon AG, Basel

Baloise Life (Liechtenstein) AG, Balzers

Basler Versicherung Beteiligungsges. mbH, Hamburg

Baloise Beteiligungs-Holding GmbH, Bad Homburg

Bâloise (Luxembourg) Holding S.A., Bertrange (Luxembourg)

Bâloise Delta Holding S.A.R.L., Bertrange (Luxembourg)

Baloise Fund Invest Advico, Bertrange (Luxembourg)

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

Baloise Insurance Company (Bermuda) Ltd., Hamilton, Bermuda

Baloise Finance (Jersey) Ltd., St. Helier, Jersey

Osiguranje Zagreb d.d., Zagreb

Nezivotno osiguranje Basler a.d.o., Beograd

Zivotno osiguranje Basler a.d.o., Beograd

Th e percentage of interest is rounded up to the nearest per-
cent. For additional details of participations owned directly
by Bâloise-Holding see pages 94 and 95 of the fi nancial re-
port for 2007.

9. LOANS TO GROUP COMPANIES

in CHF million

Subordinated loan to Baloise Bank SoBa

Holding at
31.12.2006
in %

Holding at
31.12.2007
in %

Shares / holdings
at 31.12.2007
in million

Currency

100

–/–

100

–/–

100

–/–

100

–/–

100

CHF

EUR

CHF

EUR

CHF

HRK

RSD

75.0

50.0

1.5

0.2

5.0

–/–

0.0

249.9

150.0

0.1

31.2

5.0

1.3

44.8

245.4

174.9

2006

30.0

2007

30.0

10. ACCRUALS
Due to resolutions of the Annual General Meeting of 14th Feb-
ruary 2008 of Baloise Fund Invest Advico, Luxembourg, of
28th February 2008 of Baloise Asset Management Schweiz AG,
Basel, and the Baloise Asset Management International AG,
Basel, of 29th February 2008 of Haakon AG, Basel, and of
11th March 2008 of Baloise Bank SoBa, Solothurn, the accrued
dividend claims (income from participating interests) for the
fi scal year 2007 were taken into account as deferred expenses.

11. BONDS

AMOUNT

CHF 300 million

CHF 250 million

CHF 350 million 1

CHF 150 million

Interest rate

3.250%

3.375%

2.375%

3.250%

3.500%

Issued

1998

2003

2004

2007

Repayment

7.4.2008

15.12.2009

20.12.2010

19.6.2012

19.12.2014

1 Increased by CHF 100 million in 2005

BÂLOISE-HOLDING
NOTES

31.12.2006

31.12.2007

5.5

–/–

5.5

11.7

–/–

11.7

7.8

–/–

111.3

119.1

130.8

593.2

16.2

– 111.3

498.1

138.6

– 121.7

– 16.2

257.4

258.1

5.5

– 0.1

5.4

11.7

–/–

11.7

119.1

– 143.6

392.2

367.7

379.4

498.1

47.3

– 392.2

153.2

258.1

– 210.2

– 47.3

313.5

314.1

892.5

852.1

12. CHANGES IN EQUIT Y

in CHF million

Share capital

As of 1 st January

Reduction through cancellation of treasury shares as per AGM resolution

Total share capital

Legal reserves

General reserve

As of 1 st January

Allocation

Total general reserve

Reserve for treasury shares

As of 1 st January

Reduction through cancellation of treasury shares as per AGM resolution

Allocation (carry forward from other reserves) 1

Total reserve for treasury shares

Total legal reserves

Other reserves

As of 1 st January

Allocation

Withdrawal (carry forward to reserve for treasury shares)

Total other reserves

Retained earnings

As of 1 st January

Dividend distribution

Additional contributions to unappropriated reserves

Proﬁ t for the period

Total retained earnings

Total equity

1 The members of the Baloise Group purchased a total of 267,331 shares (without share buy-back via the second trading line) at an average price of CHF 127. During the reporting period

they sold 260,831 shares at an average price of likewise CHF 127 and as of 31st December 2007 together hold 102,060 shares in Bâloise-Holding. In addition, Bâloise-Holding bought back
3,283,000 shares via a second trading line at an average price of CHF 119. These shares are posted under the item “Treasury Shares”. The average buying rate including the shares bought
back via the second trading line amounts to CHF 120.
At the ordinary Annual General Meeting of Bâloise-Holding on 27th April 2007 it was decided to reduce the share capital by means of a capital reduction to the tune of 1,307,150 registered
shares.

100

BÂLOISE-HOLDING
NOTES

13. SIGNIFICANT SHAREHOLDERS
As of 31st December 2007 one individual shareholder held
more than 5% of the outstanding Baloise shares. As of 31st De-
cember 2007 this was the Barclays Group with 10.25% of the
outstanding shares.

Th e table below provides information on the current com-
position of the shareholders as of 31st December 2007.

SHAREHOLDERS

in percent

Barclays Group

Chase Nominees Group 1

HSBC Overseas Nominee UK 1

Investors Bank & Trust 1

Mellon Bank N. A. 1

Nortrust Nominees Ltd. 1

UBS Group

Total holding
at 31.12.2006

Share of
voting rights
31.12.2006

Total holding
at 31.12.2007

Share of
voting rights
31.12.2007

5.4

10.5

2.7

3.5

3.2

2.4

2.2

<2.0

2.0

0.0

<2.0

10.3

9.2

5.5

4.4

2.8

<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 pursuant to stock exchange law.

15. PAYMENTS IN ACCORDANCE WITH OR (OBLIGATIONEN-

RECHT) ART. 663B AND ART. 663C
Information on payments to the Board of Directors or per-
sons entrusted in whole or in part by the Board of Directors
with management are carried in the Baloise Group’s con-
solidated annual accounts.

14. CONTINGENT LIABILITIES
The guarantee liabilities on 31st December 2007 were
CHF 136.1 million (previous year: CHF 214.9 million).

In addition, a purchase price retention of EUR 5 million was
agreed for any guarantee claims with the sellers in the pur-
chase agreement regarding the acquisition of Osiguranje
Zagreb. Th e sum is deposited in escrow at a bank. Further-
more, an earnout was agreed in this purchase agreement
with the sellers, the amount of which depends on the in-
crease in the premium growth and in net profi ts in 2007,
2008 and 2009. However, the back payment is at most EUR
20 million.

Bâloise-Holding is jointly liable for the value-added tax due
with all companies, which, under the leadership of the Basler
Versicherungs-Gesellschaft , are subject to group taxation.

BÂLOISE-HOLDING
APPROPRIATION OF RETAINED EARNINGS

101

APPROPRIATION OF THE RETAINED EARNINGS
PROPOSED BY THE BOARD OF DIRECTORS

RETAINED EARNINGS AND APPROPRIATION OF EARNINGS
Retained earnings amount to CHF 313.5 million.
Th e Board of Directors proposes to the Annual General
Meeting the appropriation of the retained earnings in
accordance with the table below.

in CHF million

Proﬁ t of the period

Earnings carried forward

Retained earnings

Proposals by the Board of Directors

Appropriation to unappropriated reserves

Dividends

Retained earnings to be carried forward

Th e distribution of profi ts complies with the provisions of
§ 30 of the Articles of Incorporation. Th ere is a distribution
per share of CHF 4.50 gross or CHF 2.92 net of the with-
holding tax.

2006

2007

257.4

0.7

258.1

– 47.3

– 210.2

0.6

313.5

0.6

314.1

– 70.4

– 243.0

0.7

102

GLOSSARY

Actuarial reserves
Actuarial reserves refer to the provisions for future
cash fl ows under current insurance contracts in life
insurance.

Annual Premium Equivalent (APE)
Th e annual premium equivalent is the industry standard
for measuring new business distribution in life insur-
ance. It is calculated as the sum of all annual premiums
from new business and a tenth of single premiums dur-
ing the reporting period.

Assets managed for third parties
Assets, held in trust for customers and partners.

Claims incurred
Claims incurred are insurance claims paid out during
the reporting period, plus establishing of provisions re-
lated to unsettled claims, reversal of provisions for
claims that no longer have to be settled or not settled in
full, plus cost of processing claims and the performance
of related provisions.

Combined ratio
Ratio of non-life insurance business, expressing the sum
of claims incurred (loss ratio), costs (expense ratio) and
profi ts-sharing (profi t-sharing ratio) in relation to pre-
miums. Th is ratio is used to assess the profi tability of the
non-life insurance business.

Brokers
Insurance agents, also called brokers, are independent
insurance brokers. Th ey are companies or individuals
who are not tied to any insurance company when placing
contracts. Th ey receive a commission on each insurance
product they sell.

Deferred tax assets and liabilities
Estimated future tax assets and liabilities, resulting from
temporary diff erences between book value of assets and
liabilities, as disclosed in the consolidated fi nancial
statements, and their tax value. Computation is based on
local, and if known, future tax.

Business areas
Similar or related operating activities are grouped to-
gether in business areas. Th ey are: Non-life, Life, Bank-
ing (incl. Asset Management) and Other Activities /
Corporate Business. Business area “Other activities/cor-
porate business” includes, in particular, holding, prop-
erty and investment companies.

Business volume
Th e business volume includes premium income from
non-life and life insurance business and from unit-
linked life insurances during the accounting period.
Due to the underlying accounting principles of the
Baloise Group, the latter may not be disclosed as income
in the consolidated fi nancial statements.

Embedded value
Th e embedded value determines the value of the life in-
surance in-force business for the shareholder on the re-
porting date. It is calculated using the three following
components:
adjusted shareholders’ equity
value of in-force life business
less solvency costs

Expense ratio
Th e ratio between the cost of non-life insurance business
to premiums, expressed in percent.

GLOSSARY

103

Fixed-income securities
Securities (primarily bonds), yielding interest at a fi xed
rate during the whole term.

Gross
In the annual report of an insurance company, “Gross”
generally stands for a balance sheet or income statement
item before the deduction of the business ceded to the
reinsurer.

Group life business
Insurance, taken out by companies or their Employee
Benefi t Units on behalf of their employees as part of their
occupational pension planning.

IFRS
Since 2000, the Baloise Group has prepared its consoli-
dated annual fi nancial statements in accordance with in-
ternational accounting standards IFRS (International
Financial Reporting Standards, formerly IAS).

Insurance benefi ts
Th e benefi ts provided by the insurer in connection with
the occurrence of an insured event.

Investment performance
Th e performance measures the economic success of in-
vestments, including gains, losses, income, expenses and
changes to not yet realised gains and losses as set out in
the income statement against the average balance of in-
vestments at fair value.

Investment-type life insurance
Life insurance contracts that allow policyholders to
invest their savings/capital for their own account and
at their own risk.

Investment-type premiums
Premium income from life insurance, where insurance
companies invest policyholder’s savings for their own
account and at their own risk. In accordance with the
international accounting standards applied by the
Baloise Group, the savings portion of the premium in-
come may not be disclosed as income on the income
statement.

Legal quote
Fixed statutory or contractual percentage. It requires life
insurance companies to pass on a certain percentage of
the profi ts to the policyholders.

Loss ratio
Th e ratio between claims paid or payable to premiums,
expressed in percent.

Loss reserve
Provisions for claims that have not been settled at
year-end.

Minimum interest rate
Minimum required interest rate for mandatory saved
pension capital in occupational pension plans.

Net
In the annual report of an insurance company “Net”
generally stands for a balance sheet or income statement
item aft er the deduction of the business ceded to the
reinsurer.

New business margin
Value of new business divided by the Annual Premium
Equivalent (APE).

104

GLOSSARY

Premium
Th e amount paid by the policyholder for insurance. Th e
premium consists of three elements: risk premium, costs
and a savings element.

Premiums earned
Th e proportion of the policy premium allocated to the
risk covered by an insurer, i.e. premium less change in
unearned premium reserves.

Profi t aft er tax
Th e profi t aft er tax is the fi nal summary of all revenue
and expenses, less the borrowing costs and the current
and deferred income taxes. Th e profi t aft er tax includes
the shares of minority shareholders in the result.

Profi t-sharing ratio
A key fi gure, expressing the profi t-sharing/premium
ratio. Profi t-sharing is a rebate granted to policyholders
in the non-life business due to profi table business.

Provisions
Evaluation of future insurance benefi ts from identifi ed
and not yet identifi ed damages, which are disclosed as
liabilities in the balance sheet.

Periodic premiums
Periodically recurring premium income (see defi nition
of “premium”).

Reinsurance
If the insurance company does not want to carry the full
risk from an insurance contract, they pass on part of the
risk to a reinsurance company or another direct insurer.
However, the primary insurer still has to indemnify the
policyholder for the full risk.

Return on equity
Computed return on the shareholders’ equity of a com-
pany during the reporting period. Return on equity is
calculated by taking the earnings generated during the
reporting period and dividing them by the average
shareholders’ equity for that year.

Run-off business
Policy portfolio, that has ceased to enter into new con-
tracts, with existing contracts expiring successively.

Segment
Financial reporting at the Baloise Group is carried out in
accordance with international fi nancial accounting
standards (IFRS), which requires similar transactions
and business activities to be grouped and presented
together. Th e grouped business activities are presented
in “segments”, by geographic regions and business
areas.

Share buy-back programme
Procedure passed by the Board of Directors under which
the company itself may repurchase outstanding shares.
In Switzerland, buybacks are carried out over a second
trading line, primarily for tax reasons.

Shares issued
Total number of shares that a company has issued. Th e
total number of shares issued, multiplied by their face
value is the nominal share capital of a company.

Single premium
Single premium insurance policies are funded through
a one-off single premium at commencement of the con-
tract. Primarily used as a fi nancing tool for asset-build-
ing life insurance, with special emphasis on profi tability
and security aspects.

GLOSSARY

105

SMI
Swiss Market Index (SMI). Main index for the SWX
Swiss Exchange.

Value of new business
Th e value of new business created during the reporting
period, valued at the time the policy is issued.

Solvency
Required minimum capital for insurance companies
specifi ed by the regulatory authorities, to cover business
risks (investments, claims, etc.). As a rule, requirements
are specifi ed at the national level and may diff er from
country to country.

Surplus participation
Annual, not guaranteed policyholder benefi ts of a life
insurance, which are granted when – compared with the
assumptions that underlie the premium calculation –
revenue is higher and/or risk and cost behaviour
patterns are more favourable.

Technical reserves
On the balance sheet, insurers disclose the value of
future benefi ts they expect from the existing insurance
contracts, calculated at the present time. Th e value is
computed using recognised principles.

Technical result
Technical result includes a comparison of all expenses
and income from the insurance business. Expenses and
income unrelated to the insurance business and revenue
from investments are not included in the technical
result.

Unearned premium reserve
Th ose parts of the written premiums that have been
charged for periods aft er the reporting date.

106

ADDRESSES

SWITZERLAND
Basler Versicherungen
Aeschengraben 21
CH-4002 Basel
Telephone +41 61 285 85 85
Fax +41 61 285 70 70
insurance@baloise.ch
www.baloise.ch

Baloise Bank SoBa
Amtshausplatz 4
CH-4502 Solothurn
Telephone +41 32 626 02 02
Fax +41 32 623 36 92
bank@baloise.ch

www.baloise.ch

GERMANY
Basler Versicherungen
Basler Strasse 4
P.O. Box 1145
D-61345 Bad Homburg
Telephone +49 61 7213 0
Fax +49 61 7213 200
info@basler.de

www.basler.de

Deutscher Ring
Ludwig-Erhard-Strasse 22
D-20459 Hamburg
Telephone +49 40 3599 7711
Fax +49 40 3599 2500
service@deutscherring.de
www.deutscherring.de

AUSTRIA
Basler Versicherungen
Brigittenauer Lände 50–54
A-1203 Vienna
Telephone +43 1 33 160 0
Fax +43 1 33 160 200
offi ce@basler.co.at

www.basler.co.at

LUXEMBOURG
Bâloise Assurances
Atrium Business Park
23, rue du Puits Romain
Bourmicht
L-8070 Bertrange
Telephone +352 290 190 1
Fax +352 290 592
info@baloise.lu

www.baloise.lu

BELGIUM
Mercator Verzekeringen
Desguinlei 100
B-2018 Antwerp
Telephone +32 3 247 21 11
Fax +32 3 247 27 77
info@mercator.be

www.mercator.be

CROATIA
Basler Osiguranja
Ulica Grada Vukovara 269 d/I
HR-10 000 Zagreb
Telephone +385 1 48 17 808
Fax +385 1 48 16 932
info@basler.hr

www.basler.hr

Osiguranje Zagreb
Ožegoviceva 16
HR-10 000 Zagreb
Telephone +385 1 2392 999
Fax +385 1 2392 992
osiguranje-zagreb@osiguranje-
zagreb.hr

www.osiguranje-zagreb.hr

SERBIA
Basler Osiguranja
Resavska 29
RS-11 000 Belgrade
Telephone +381 11 324 7716
Fax +381 11 334 29 03
offi ce@basler.co.yu

www.basler.co.yu

BALOISE GROUP INFORMATION

107

BALOISE
GROUP INFORMATION

Th e Annual Report 2007 is published in German, English
and French.

Th e Financial Report 2007 contains the audited 2007 annual
fi nancial statements with detailed information. It is
available in German and in English. Th e German version is
binding.

The Annual Report 2007 and
FINDING AND ORDERING
the Financial Report 2007 are available on the Internet at
www.baloise.com/annualreport. Th ey can be ordered through
the Internet or at Bâloise-Holding, Corporate Communica-
tions, Aeschengraben 21, CH-4002 Basel.

INFORMATION FOR SHAREHOLDERS AND FINANCIAL ANALYSTS
You will fi nd detailed information and data on the Baloise
stock, the IR agenda, dividends, the latest presentations and
contacts with Investor Relations on the Internet at www.balo-
ise.com/investors. Th e information is available in German
and English.

At
INFORM ATION FOR MEDIA REPRESENTATIVES
www.baloise.com/media you will fi nd the latest media kit
containing media releases, presentations, reports, pictures
and podcast fi les of various Baloise events as well as the me-
dia contact details.

Published by Baloise, Corporate Communications
Concept, design Eclat AG, Erlenbach/Zurich
Pictures Gérard Pétremand, Geneva
Publishing System Multimedia Solutions AG, Zurich
Printing Werner Druck AG, Basel

Bâloise-Holding
Aeschengraben 21
CH-4002 Basel

www.baloise.com

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