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Bâloise Holding Ltd ANNUAL REPORT 2014 01_JB_Die Baloise_en�indd 2
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Bâloise Holding Ltd
Annual Report 2014
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BALOISE
Baloise key figures ������������������������������������������������������������������������������������� 4
At a glance ����������������������������������������������������������������������������������������������������� 5
Letter to shareholders ������������������������������������������������������������������������������ 6
Baloise shares ����������������������������������������������������������������������������������������������� 8
Our four core markets �������������������������������������������������������������������������� 10
Brand ������������������������������������������������������������������������������������������������������������ 12
Strategy �������������������������������������������������������������������������������������������������������� 13
REVIEW OF OPERATING PERFORMANCE
Group ������������������������������������������������������������������������������������������������������������ 16
Switzerland ������������������������������������������������������������������������������������������������ 20
Germany ������������������������������������������������������������������������������������������������������ 21
Belgium ��������������������������������������������������������������������������������������������������������� 22
Luxembourg ���������������������������������������������������������������������������������������������� 23
Consolidated income statement ������������������������������������������������������� 24
Consolidated balance sheet ���������������������������������������������������������������� 26
Business volume, premiums and combined ratio �������������������� 27
Technical income statement �������������������������������������������������������������� 29
Gross premiums by sector ������������������������������������������������������������������� 30
Banking activities ����������������������������������������������������������������������������������� 31
Investment performance ��������������������������������������������������������������������� 32
SUSTAINABLE BUSINESS MANAGEMENT
Human resources ������������������������������������������������������������������������������������ 36
The environment ������������������������������������������������������������������������������������� 40
Risk management ������������������������������������������������������������������������������������ 42
CORPORATE GOVERNANCE
Corporate Governance Report
including Remuneration Report ������������������������������������������������������ 48
Report of the statutory auditor to the Annual
General Meeting of Bâloise Holding Ltd, Basel ������������������������ 84
FINANCIAL REPORT
Consolidated balance sheet ���������������������������������������������������������������� 92
Consolidated income statement ������������������������������������������������������� 94
Consolidated statement of comprehensive income ����������������� 95
Consolidated cash flow statement ��������������������������������������������������� 96
Consolidated statement of changes in equity ���������������������������� 98
Notes to the consolidated annual financial statements ������ 100
Notes to the consolidated balance sheet ������������������������������������ 170
Notes to the consolidated income statement �������������������������� 217
Other disclosures ��������������������������������������������������������������������������������� 229
Report of the statutory auditor to the Annual General
Meeting of Bâloise Holding Ltd, Basel ��������������������������������������� 242
BÂLOISE HOLDING LTD
Income statement of Bâloise Holding ����������������������������������������� 246
Balance sheet of Bâloise Holding �������������������������������������������������� 247
Notes to the financial statements of Bâloise Holding ��������� 248
Appropriation of distributable profit as
proposed by the Board of Directors �������������������������������������������� 255
Report of the statutory auditor to the Annual
General Meeting of Bâloise Holding Ltd, Basel ��������������������� 256
NOTES
Glossary ���������������������������������������������������������������������������������������������������� 260
Addresses ������������������������������������������������������������������������������������������������� 264
Information on the Baloise Group ����������������������������������������������� 265
Financial calendar and contacts ��������������������������������������������������� 266
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Baloise
Baloise key figures
Baloise key figures
CHF million
Business volume
Gross premiums written (non-life)
Gross premiums written (life)
Sub-total of IFRS gross premiums written1
Investment-type premiums
Total business volume
Operating profit (loss)
Profit / loss before borrowing costs and taxes
Non-life
Life2
Banking
Other activities
Profit for the period
Balance sheet
Technical reserves
Equity
Ratios (per cent)
Return on equity (RoE)
Gross combined ratio (non-life)
Net combined ratio (non-life)
New business margin (life)
Investment performance (insurance)3
Embedded value of life insurance policies
Embedded value (MCEV)
Annual premium equivalent (APE)
Value of new business
Key figures on the Company’s shares
Shares issued (units)
Basic earnings per share4 (CHF)
Diluted earnings per share4 (CHF)
Equity per share4 (CHF)
Closing price (CHF)
Market capitalisation (CHF million)
Dividend per share5 (CHF)
2013
2014
Change (%)
3,441.7
3,787.2
7,228.9
1,780.6
9,009.5
366.3
261.1
75.4
– 44.5
455.4
3,358.8
3,816.8
7,175.6
2,130.2
9,305.8
419.1
476.8
73.7
– 41.1
711.9
47,435.6
48,738.9
4,906.4
5,831.0
9.8
93.1
94.9
13.5
2.3
13.5
93.7
93.6
15.0
6.9
3,808.6
3,610.2
333.2
44.9
389.6
58.6
50,000,000
50,000,000
9.65
9.38
103.5
113.60
5,680.0
4.75
15.15
14.63
123.4
127.80
6,390.0
5.00
– 2.4
0.8
– 0.7
19.6
3.3
14.4
82.6
– 2.3
– 7.6
56.3
2.7
18.8
–
–
–
–
–
– 5.2
16.9
30.4
0.0
57.0
56.0
19.2
12.5
12.5
5.3
1 Premiums written and policy fees (gross).
2 Of which deferred gains / losses from other operating segments (31 December 2013: CHF –1.7 million; 31 December 2014: CHF 0.6 million).
3 Excluding investments for the account and at the risk of life insurance policyholders.
4 Calculation is based on the profit for the period attributable to shareholders and the equity attributable to shareholders.
5 2014 based on the proposal submitted to the Annual General Meeting.
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Baloise
At a glance
At a glance
Net combined ratio of
93.6 per cent
5.3 per cent
higher business volume 1
Profit of
CHF 711 million
Dividend increased from CHF 4.75 to
CHF 5.00 per share
(will be proposed to the Annual General Meeting on 30 April 2015)
Equity of
CHF 5,831.0 million
Return on equity
(RoE) of 13.5 per cent
Solvency ratio of
354 per cent
New business margin of
15.0 per cent
1 Calculated in local currency on a like-for-like basis and excluding discontinued operations (Austria, Croatia and Serbia).
What we want to achieve: By continuing to develop its solid insurance operations, Baloise
is once again firmly on track to meet its targets of a combined ratio of between 93 per
cent and 96 per cent, a new business margin in excess of 10 per cent and a return on equity
of between 8 per cent and 12 per cent. It will continue to pay attractive and consistent
dividends.
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Baloise
Letter to shareholders
Dr Andreas Burckhardt, Chairman of the Board of Directors (left), and Dr Martin Strobel, Group CEO (right).
Focused growth and
outstanding results
Baloise is building on
solid foundations
DEAR SHAREHOLDERS
The outstanding financial results achieved by Baloise in 2014
once again underscore its excellent operational profitability and
solid foundations� We are growing in attractive segments – which
we plan to expand further – over and above the market rate�
Our core insurance business is not the only segment that is
highly successful and profitable; Baloise has also generated an
excellent return on its investments�
The Company’s capitalisation remains strong� Standard &
Poor’s acknowledged this quality by upgrading our credit rating
to ‘A with a stable outlook’ in the middle of last year� The high-
ly focused Baloise Group is excellently placed to continue shap-
ing its future in a way that is geared towards bringing success�
The profit that Baloise earned in 2014 was the second-
best in its history – the best profit was reported in 2007 – and
advanced by 57�0 per cent year on year to CHF 710�7 million�
All business divisions and national Baloise companies contrib-
uted to this result� In addition to the Company’s improved
operating performance, the disposal of its shareholdings in
Nationale Suisse and Helvetia and the sale of Basler Austria
boosted this outstanding result by around CHF 160 million�
By focusing on attractive target segments in our four core
markets – Switzerland, Belgium, Germany and Luxembourg
– we have completed the process of consolidating our geograph-
ical footprint� We will now strengthen our profitability and
continue to grow in these units� We also plan to further expand
profitable business lines in which we are already well positioned�
Two of the ways in which we can achieve this are by using our
safety and security features to deliver attractive add-on ser-
vices in the field of intelligent prevention and by offering in-
novative pension solutions, such as the semi-autonomous pen-
sion scheme ‘Perspectiva’, that provide our customers with
financial security in their retirement even in today’s low-inter-
est-rate environment� The life insurance business conducted
by our Swiss unit clearly illustrates this point in the case of
occupational pensions, where small and medium-sized enter-
prises’ demand for our comprehensive insurance solutions remains
encouragingly strong� Our customers particularly value the fact
that the security of these benefits is guaranteed at all times� The
guarantees and services that we offer enable these companies
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Baloise
Letter to shareholders
to safeguard their employees’ pensions and concentrate on their
own business�
In Belgium our unit-linked life insurance business is grow-
ing well because we are meeting the specific needs of the local
market and have forged partnerships with banks� Another in-
novation that we have developed is a new combination of con-
ventional and unit-linked life insurance�
Focusing on highly profitable niche markets also means
being very selective when underwriting new premiums in less
profitable areas� This essentially means deciding to forego po-
tential premium income in some cases� In Germany we are
therefore exiting the motor vehicle fleet insurance market and
significantly scaling back our business with large industrial
enterprises in sectors where the risks are too high� Baloise has
reduced its net combined ratio by 1�3 percentage points to 93�6
per cent as a result of the benign claims environment and these
improvements in portfolio quality� It has also enhanced its
efficiency, as reflected in its lower expense ratio�
“The highly focused Baloise Group is
excellently placed to continue shaping
its future in a way that is geared towards
bringing success and adding long-term
value for its shareholders”
Our insurance operations and reliable, consistent management
of assets are our core competence� The net return that we achieved
on these in 2014 was an impressive 4�1 per cent, up by 0�8 per-
centage points on the previous year� Realised gains and book
gains have boosted the substantial gains on our in-
vestments, while the higher income earned from
equities and alternative investments has partially
compensated for the lower income received from
fixed-income securities� Interest rates have remained
at historically low levels in recent months� However,
we have learned how to adapt to this environment
and, several years ago, we established appropriate
hedging instruments to mitigate the effects of low
and falling interest rates�
Corporate Executive Committee in this report, represents
a significant investment in our Basel head-office site from 2015
onwards, creating some 2,000 state-of-the-art office workplac-
es for both Baloise and other organisations�
We achieved lasting improvements in our profitability in
2014 and want our shareholders to benefit directly from this
success� In view of our excellent financial results, we will pro-
pose to the Annual General Meeting on 30 April 2015 that our
dividend be raised to CHF 5�00 per share� By repurchasing up
to one million treasury shares over the next two years, we are
further consolidating our considerable earnings power for our
owners�
The Swiss insurance industry is contending with negative
interest rates and a strong Swiss franc� But Baloise is pursuing
an excellent strategy in operational terms and, despite these
difficult conditions, is in a good position� By focusing on our
core markets, rigorously implementing our target-customer
management policies and offering innovative supplementary
services around safety and security, we are confident of achiev-
ing our financial targets even in a challenging market�
Basel, March 2015
Dr Andreas Burckhardt
Dr Martin Strobel
Chairman of the Board of Directors
Group CEO
Knowledge and skills are crucial in a challeng-
ing market environment like the one we are cur-
rently experiencing� That is why our thanks go to all
Baloise employees, whose expertise and hard work
day in, day out make us one of the most profitable
insurance companies in Europe�
Starting from these solid foundations, we are
enthusiastically building Baloise’s future – quite
literally! The construction of Baloise Park, whose
architectural model serves as the backdrop to the
photographs of the Board of Directors and the
Model of the new buildings at Baloise Park.
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Baloise
Baloise shares
Baloise shares continue on their upward trajectory
Baloise shares* made further gains from an already high level in 2014, closing the year at
CHF 127.80, which amounted to an annual return of 12.5 per cent. They therefore comfortably
outperformed the Swiss Leader Index, ranking among the top ten of the 30 largest and most
liquid equities on the Swiss stock market.
The macroeconomic environment in 2014 was largely shaped
by central banks’ expansionary monetary policies, with finan-
cial markets mesmerised by the dramatic erosion of interest
rates� Equity markets fared well overall despite growing volatil-
ity� Insurance stocks also posted decent price gains on the back
of an impressive operating performance� Insurers’ profitability
is robust and their dividend yields remain attractive�
Having delivered a superb performance in 2013, Baloise
shares shed 8 per cent of their value in the first half of last year�
The Swiss Leader Index (SLI) and the Swiss insurance sector
index notched up gains of 3�4 per cent and 2�1 per cent respec-
tively�
However, the second half of the year saw Baloise shares
pick up momentum� The upgrade of the Company’s credit rat-
ing by Standard & Poor’s and the publication of its strong half-
year financial results boosted its share price� Baloise shares
jumped by 22�3 per cent, easily outperforming both the Swiss
Leader Index (up 2�4 per cent) and the Swiss insurance sector
index (up 13�4 per cent)�
Having closed the year at CHF 127�80, Baloise shares gen-
erated a return of 12�5 per cent for 2014 as a whole, comfortably
outperforming both the Swiss Market Index and the Swiss
Leader Index, which had added 9�5 per cent and 5�9 per cent
respectively since the beginning of the year� The robust price
performance delivered by Baloise’s shares reflects the Company’s
impressive operating performance during the reporting year�
The Swiss insurance sector index outperformed the broad mar-
ket, posting a return of 15�8 per cent� Its European counter-
part – STOXX Europe 600 Insurance Index (SXIP) – achieved
an increase of 9�8 per cent compared with its level at the begin-
ning of 2014�
* Baloise shares = shares of Bâloise Holding Ltd.
Baloise shares remain a member of the Swiss Leader Index
by virtue of their average market capitalisation and trading
volumes� This index comprises the 30 largest and most liquid
Swiss equities�
DIVIDENDS PAID TO SHAREHOLDERS
The Board of Directors of Bâloise Holding Ltd will propose to
the Annual General Meeting on 30 April 2015 that a cash div-
idend of CHF 5�00 per share be paid for the 2014 financial year�
This would represent a dividend yield of 3�9 per cent of the
year-end share price� In addition, the Company will start to
repurchase up to one million of its shares over the next two
years�
Year (CHF million)
2010
2011
2012
2013
2014
Total
Cash dividends
Share buy-backs
Total
225.0
225.0
225.0
237.5
250.0
34.7
17.1
–
–
–
259.7
242.1
225.0
237.5
250.0
1,162.5
51.8
1,214.3
All figures stated as at 31 December.
SHAREHOLDER STRUCTURE
The shares in Bâloise Holding Ltd are widely held and their free
float remains unchanged at 100 per cent� A few changes in
Baloise’s shareholder base took place during the 2014 financial
year� Several portfolios managed by Credit Suisse Funds AG
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Baloise
Baloise shares
together briefly exceeded the notifiable threshold of 3 per cent
on 9 July 2014 before falling back below this threshold on
17 July� The shareholding collectively owned by BlackRock, Inc�,
and its subsidiaries rose above the threshold of 5 per cent on
8 December 2014 and now amounts to 5�71 per cent� Further
information on Baloise’s significant shareholders as at 31 De-
cember 2014 can be found in the table on page 253�
STATISTICS ON BALOISE SHARES
Price at year-end (CHF)
High (CHF)
Low (CHF)
Market capitalisation (CHF million)
Basic earnings per share (CHF)
Diluted earnings per share (CHF)
Price / earnings (p / e) ratio1
Price / book (p / b) ratio1
Number of shares issued (units)
31.12.2010
31.12.2011
31.12.2012
31.12.2013
31.12.2014
91.00
97.85
74.15
64.40
103.30
60.15
78.50
80.56
58.30
113.60
113.60
80.75
4,550.0
3,220.0
3,925.0
5,680.0
9.14
8.89
9.96
1.05
1.30
1.29
49.54
0.78
9.32
9.08
8.42
0.76
9.65
9.38
11.77
1.10
127.80
129.90
101.60
6,390.0
15.15
14.63
8.44
1.04
50,000,000
50,000,000
50,000,000
50,000,000
50,000,000
Minus the number of treasury shares (units)
2,800,239
3,247,273
3,053,746
3,028,943
3,048,791
Number of shares in circulation (units)
Average number of shares outstanding2
Dividend per share3 (CHF)
Dividend payout ratio3
Dividend yield3
47,199,761
46,752,727
46,946,254
46,971,057
46,951,209
47,394,282
46,900,473
46,831,998
46,896,926
46,921,282
4.50
49.2
4.9
4.50
>100
7.0
4.50
48.3
5.7
4.75
49.2
4.2
5.00
33.0
3.9
1 Calculation is based on profit for the period and equity before non-controlling interests respectively.
2 Relevant for calculation of earnings per share (see page 223 of the Financial Report).
3 2014 based on the proposal submitted to the Annual General Meeting.
BALOISE SHARES
Security symbol
Nominal value
Security number
ISIN
Exchange
Security type
INDEXED SHARE PRICE PERFORMANCE 1 BÂLOISE HOLDING
REGISTERED SHARES 2009 – 2014
BALN
CHF 0.10
1.241.051
CH0012410517
SIX Swiss Exchange
100 % registered shares
150
100
50
2009
2010
2011
2012
2013
2014
1 31 December 2008 = 100.
Bâloise Holding registered shares (BLAN)
SWX SP Insurance Price Index (SMINNX)
Swiss Market Index (SMI)
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Baloise
Core markets
Our four core markets
Hamburg
Antwerp
Brussels
BELGIUM
Business volume (CHF million)
Bad Homburg
Non-life: 961.2
Luxembourg
Life: 157.2
Unit-linked: 426.5
LUXEMBOURG
Business volume (CHF million)
Life: 87.1
Non-life: 115.6
Unit-linked: 1’280.7
Basel
Solothurn
SWITZERLAND
Business volume (CHF million)
Life: 2,985.1
Unit-linked: 189.9
Non-life: 1,335.1
GERMANY
Business volume (CHF million)
Life: 568.8
Non-life: 842.9
Unit-linked: 221.0
Who we are: Headquartered in Basel, Switzerland, the Baloise Group is a European provider of
insurance and pension solutions. In Switzerland, the Group operates as a specialised financial
services provider, offering a combination of insurance and banking services. The Group also
has a market presence in Germany, Belgium and Luxembourg. Its sales network includes its own
sales organisation, as well as brokers and other partners. Baloise operates its innovative
pension plan business for private customers throughout Europe with its competence centre
in Luxembourg. Bâloise Holding Ltd shares are quoted in the main segment of the SIX Swiss
Exchange. The Baloise Group employs some 7,600 people.
10
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Baloise
Core markets
What we stand for: We want people to feel safe. To play our part in this respect, we created
the “Safety World”. Everything we do is aimed at safety. As such, we consciously go further
than other insurance companies - we combine insurance with smart prevention. In this way,
we help to ensure that losses do not occur in the first place. Should something happen never-
theless, then we’re right there. Fast and capable as always.
SWITZERLAND
BELGIUM
KEY FIGURES FOR SWITZERLAND
KEY FIGURES FOR BELGIUM
Employees
2013
3,746
2014
3,701
Employees
Business volume (CHF million)
4,363.1
4,510.0
Business volume (CHF million)
Gross combined ratio (per cent)
86.4
83.9
Gross combined ratio (per cent)
2013
1,362
1,393.5
93.5
2014
1,343
1,544.9
102.4
GERMANY
Business volume (CHF million)
Life: 568.8
Non-life: 842.9
GERMANY
LUXEMBOURG
KEY FIGURES FOR GERMANY
KEY FIGURES FOR LUXEMBOURG
Employees
Business volume (CHF million)
Gross combined ratio (per cent)
2013
2,274
1,727.3
104.1
2014
2,174
Employees
2013
314
2014
395
1,632.7
Business volume (CHF million)
1,284.0
1,483.4
101.5
Gross combined ratio (per cent)
83.9
89.3
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Baloise
Brand
Our promise - Your safety
The Baloise brand
“Making you safer” is our brand promise. Everything we do is geared towards enhancing
safety and security. We combine insurance with intelligent risk prevention to help ensure
losses do not occur in the first place.
BRAND VALUES OF THE BALOISE GROUP
BRAND ATTRIBUTES OF THE BALOISE GROUP
Swiss: Baloise is proud of its Swiss origins,
which date back to 1863. We link this to
reliability, a humanistic approach, solid
security, strong tradition, financial expertise
and impartiality.
Safety: Safety and security constitute our
core competences and lie at the heart of
all the products, services and benefits that
we offer. They act as an exhilarating and
energising force that unlocks huge potential.
Innovative: Our strong innovative capabili-
ties give us the necessary competitive edge.
This is illustrated by our unrelenting and
holistic focus on safety and security and by
the way we manage our customer relation-
ships. We create a climate of continuous
innovation across all product lines.
Partnership: Our focus on partnership is one
of our greatest emotional strengths and
is predicated on value creation and mutual
respect. We nurture and deepen our rela-
tionships with all our stakeholders to ensure
that we achieve the desired impact each
and every time.
Strength: Baloise is a strong partner –
strong in terms of its growth, profitability
and execution. You can rely on Baloise when
you really need it, because its strength
gives you the reassuring feeling of having
a dependable partner at your side.
Professionalism: Baloise stands for profes-
sionalism. This enables us to be successful
and deliver top-quality performance. We
excel at understanding our core business,
our customers and our sales channels
because we know that professional exper-
tise provides peace of mind.
12
01_JB_Die Baloise_en�indd 12
24�03�2015 13:16:49
Baloise
Strategy
Excellence in safety
A strong foundation is further enhanced
01_JB_Die Baloise_en�indd 13
13
24�03�2015 13:16:49
SAFETY WORLD“Making you safer” is the promise we make to our key cus-tomers. The smart combination of insurance and innovative safety solutions gives us a unique product range that winsover our risk-aware target customers. TARGET CUSTOMER MANAGEMENTOur target customer management sets new benchmarks for our industry. The systematic focus on risk-aware key custom-ers is deeply embedded in our culture, in terms of guiding behaviour, processes and remuneration schemes, and provides us with one of the most profitable insurance portfolios inEurope. HIGH CASH FLOW GENERATIONBy consistently implementing our strategy, we have created a robust business model that has ensured reliable profitabil-ity, even during the recent capital market crises.STRONG CAPITALISATIONThanks to the high reliability of our business model, our balance sheet and capitalisation are rock solid. This has also been the basis of our reliable and attractive dividend policy for more than a decade.GROWTH →Enhance target customer and target broker management →New pricing skills →New growth areas EFFICIENCY →Group-wide benchmarking to identify areas for improvement →Systematic business process optimisation →Structural improvements LIFE →Innovative products for affluent customers →Adapt new business to ongoing low-interest environment →Enhance value of the in-force businessNON-LIFE →Further strengthen operational excellence →Improve fraud detection and prevention →Further improvement of claims management processesBUILDING ON A STRONG FOUNDATIONFor more than 150 years, Baloise has made its customers safer. With its focus on risk-aware target customers and its unique selling proposition, the “Safety World”, Baloise operates from a solid platform with high cash flow generation and strong capi-talisation.FOUR FOCUS AREASThe focus areas form the next step in our strategic business development. Starting from the strong foundation we established over the past decade, we aim to expand our core strengths and drive growth and profitability to a new level. 02_JB_Geschaeftsgang_en�indd 14
24�03�2015 13:16:45
4 Baloise
16 Review of operating performance
36 Sustainable business management
48 Corporate Governance
92 Financial Report
246 Bâloise Holding Ltd
260 Notes
Review of operating
performance
GROUP ���������������������������������������������������������������������������������������������������������� 16
Focusing on attractive target segments ���������������������������������������� 16
SWITZERLAND ������������������������������������������������������������������������������������������� 20
Outstanding operating performance ��������������������������������������������� 20
GERMANY ���������������������������������������������������������������������������������������������������� 21
Improvements in portfolio quality �������������������������������������������������� 21
BELGIUM ������������������������������������������������������������������������������������������������������ 22
Encouraging growth and higher profit contribution ������������� 22
LUXEMBOURG ������������������������������������������������������������������������������������������� 23
Stronger market position ���������������������������������������������������������������������� 23
FINANCIAL INFORMATION �������������������������������������������������������������������� 24
Consolidated income statement ������������������������������������������������������� 24
Consolidated balance sheet ���������������������������������������������������������������� 26
Business volume, premiums and combined ratio �������������������� 27
Technical income statement �������������������������������������������������������������� 29
Gross premiums by sector ������������������������������������������������������������������� 30
Banking activities ����������������������������������������������������������������������������������� 31
Investment performance ��������������������������������������������������������������������� 32
02_JB_Geschaeftsgang_en�indd 15
24�03�2015 13:16:45
Review of operating performance
Group
Focusing on attractive target segments
In 2014, Baloise continued to generate above-average growth in attractive target segments
and achieved a further significant improvement in its operating performance, which made it
one of the most profitable insurance companies in Europe.
Earnings before interest and tax (EBIT) from the banking busi-
ness fell slightly year on year owing to the continuing low-in-
terest-rate environment and the resultant lower level of net
interest income.
Baloise has a strong balance sheet. Its consolidated eq-
uity grew by 18.8 per cent to CHF 5,831.0 million primarily on
the back of the outstanding profit for the period and the lower
level of interest rates, which resulted in higher valuation re-
serves for fixed-income securities. The solvency ratio reached
an impressive 354 per cent compared with 267 per cent at the
end of 2013.
BUSINESS VOLUME1
CHF million
Total business volume
Life
Non-life
Investment-type
premiums
2013
2014
+/– %
8,773.0
3,735.6
3,274.0
1,763.4
9,176.7
3,798.1
3,260.5
2,118.2
5.3
2.0
0.4
21.5
OVERVIEW
The profit that Baloise earned in 2014 was the second-best in its
history – the best profit was reported in 2007 – and advanced
by 57.0 per cent year on year to CHF 710.7 million. All business
divisions and national Baloise companies contributed to this
result. In addition to the Company’s improved operating per-
formance, the disposal of its shareholdings in Nationale Suisse
and Helvetia and the sale of Basler Austria boosted this out-
standing result by around CHF 160 million.
The volume of premiums1 reported under IFRS in the
non-life division grew by 0.4 per cent, while the value of pre-
miums written in the life insurance division increased by
a total of 2.0 per cent. The volume of business transacted in
unit-linked life insurance jumped by 21.5 per cent. The profit
contributed by non-life business rose by an impressive 14.4 per
cent to CHF 419.1 million, while the net combined ratio improved
by 1.3 percentage points to 93.6 per cent. Baloise significantly
improved the operating performance of its life insurance busi-
ness and raised its profit contribution by 82.6 per cent to CHF
476.8 million. The Group also achieved an excellent return on
its investments. Recurring income declined slightly year on year
as a result of persistently low interest rates. However, net income
came to CHF 2,411.4 million, which was well above the CHF
1,907.0 million reported for 2013. The higher income earned
from equities and alternative investments compensated par-
tially for the lower income received from fixed-income assets.
Book gains on interest-rate derivatives boosted the substantial
gains on our investments.
BUSINESS VOLUME IN 2014 1 (GROSS) BY STRATEGIC BUSINESS UNIT
As a percentage
Switzerland
Germany
Belgium
Luxembourg
49.1
17.8
16.8
16.2
1 The key figures on premiums and business volumes mentioned in the review of operating
performance in this annual report have been calculated in local currency on a like-for-like
basis and exclude discontinued operations (Austria, Croatia and Serbia).
16
02_JB_Geschaeftsgang_en.indd 16
26.03.2015 13:02:20
Review of operating performance
Group
NON-LIFE DIVISION:
STRONG PROFITABILIT Y
Baloise continued to improve the quality of its portfolio in the
non-life division� By pursuing a selective underwriting policy,
it reduced the volume of premiums in fairly unprofitable areas
and increased them in highly profitable target segments� In
Germany the Company continued to exit the motor vehicle fleet
insurance market and significantly scaled back its business with
large industrial enterprises in individual sectors with high risks�
In Switzerland, for example, it wrote fewer premiums in accident
insurance and daily sickness allowance insurance� Despite hav-
ing adjusted its portfolio and optimised its income, Baloise
expanded the volume of business in its non-life division (in-
demnity and personal insurance) by 0�4 per cent to CHF 3,260�5
million� The claims environment prevailing in 2014 was gener-
ally benign, which – especially in Switzerland – resulted in
a very low combined ratio� In Germany, too, the combined ra-
tio was lower than in the previous year because – despite a few
large claims in industrial business – the cost of basic claims
decreased� Hail storm Ela hit the Company’s Belgian non-life
business, but its effective external reinsurance and the lower
cost of basic claims mitigated this effect� Baloise reduced its
overall net combined ratio by 1�3 percentage points to 93�6 per
cent as a result of the benign claims environment and the im-
provements in portfolio quality� It also enhanced its efficiency,
as demonstrated by the 0�2-percentage-point fall in the expense
ratio�
Baloise raised its EBIT by 14�4 per cent to CHF 419�1 mil-
lion despite the low level of gains realised on its investments�
This was proof positive of the substantial and further improved
profitability of its property insurance business�
NET COMBINED RATIO
As a percentage
2014
2013
2012
2011
2010
93.6
94.9
94.1
95.5
95.2
LIFE DIVISION:
STRONG OPERATING ACTIVITIES
In the life insurance division Baloise generated excellent growth
of 21�5 per cent in its unit-linked life insurance business� The
volume of business in the life division as a whole expanded by
8�2 per cent to CHF 5,916�2 million� The main factor driving
the growth of conventional life insurance was business in Swit-
zerland� Demand for attractive and reliable group life insurance
solutions continued on an encouraging scale� The ongoing op-
timisation of the business mix towards the latest life products
also paid off� Baloise improved the operating performance of
its life insurance business and raised its profit contribution by
82�6 per cent to CHF 476�8 million� The sources of this success
were the Company’s strong risk result and its extraordinarily
high net savings� The latter were boosted by the proceeds received
from the realisation of gains on investments, especially from
the sale of Baloise’s shareholdings in Nationale Suisse and Hel-
vetia� In addition, the Company has established hedging instru-
ments in recent years to mitigate the effects of low and falling
interest rates�
The low level of interest rates depressed the financial
value of life insurance; consequently, the embedded value of
this business declined from CHF 3,808�6 million to CHF 3,610�2
million in 2014 despite the impressive level of operating income�
The return on embedded value came to minus 4�1 per cent� The
value of new business amounted to CHF 58�6 million, and the
new business margin was 15�0 per cent (2013: 13�5 per cent)�
02_JB_Geschaeftsgang_en�indd 17
17
24�03�2015 13:16:46
Review of operating performance
Group
BANKING DIVISION: GOOD EARNINGS DESPITE
LOW-INTEREST-RATE ENVIRONMENT
The EBIT reported by the banking division declined by 2�3 per
cent year on year to CHF 73�7 million� This modest decrease
can be attributed to the lower level of net interest income gen-
erated in the continuing low-interest-rate environment�
EQUIT Y: SOLID FOUNDATIONS
Baloise’s solid foundations are underpinned by its strong bal-
ance sheet and capitalisation� Its consolidated equity grew by
18�8 per cent to CHF 5,831�0 million on the back of the outstand-
ing profit for the period and the lower level of interest rates,
which had a positive impact on the valuation reserves of fixed-
income securities� The solvency ratio reached an impressive 354
per cent compared with 267 per cent at the end of 2013� Despite
the historically low level of interest rates, Baloise remained
within the requirements and in the ‘green zone’ of the Swiss
Solvency Test (SST)�
SUBSTANTIAL GAINS ON INVESTMENTS
All asset classes delivered an exceptionally strong performance
in 2014� Equity markets were boosted by the economic upturn
in the USA and by expansionary monetary policies, even though
share prices dipped briefly in October owing to concerns about
business activity in the European Union (EU)� A combination
of expansionary monetary policy and lower inflation expecta-
tions caused yields on fixed-income investments and credit
spreads on corporate bonds to fall� Baloise’s investments deliv-
ered an exceptional performance in this environment�
Net income came to CHF 2,411�4 million, which was well
above the CHF 1,907�0 million reported for 2013� The net return
on insurance assets came to 4�1 per cent (2013: 3�3 per cent)�
The strategy – which included investing more in high-quality,
high-dividend shares and introducing new fixed-income asset
classes (senior secured loans) – meant that the recurring income
declined only marginally from CHF 1,765�1 million in 2013 to
CHF 1,701�9 million in 2014� The increase in net income was
largely attributable to gains realised on equities and to book
gains on real estate and interest-rate derivatives� In addition,
the recent fall in risk-free interest rates caused the prices of the
bonds in our portfolio to rise sharply, with the corresponding
effect being recognised in equity� Consequently, the rate of re-
turn on insurance assets according to International Financial
Reporting Standards (IFRS) – which includes unrealised net
gains and losses on investments but excludes gains and losses
on held-to-maturity debt instruments – was 6�9 per cent, which
was well above the prior-year figure of 2�3 per cent�
PROPRIETARY INVESTMENTS BY CATEGORY1
INVESTMENT COMPONENTS IN 2014
2013
2014
+/– %
CHF million
Investment property
Equities
Alternative financial assets
5,685.9
3,143.3
1,255.0
5,962.9
4,028.5
1,341.2
Fixed-income securities
30,604.1
32,701.1
Mortgage assets
11,136.8
11,138.0
Policy loans and other loans
7,192.7
7,027.9
Derivatives
232.2
341.0
Cash and cash equivalents
1,992.2
1,954.5
Total
61,242.2
64,495.0
As a percentage
Fixed-income securities
Mortgage assets
Policy loans and other loans
Investment property
Equities
Cash and cash equivalents
Alternative financial assets
Derivatives
4.9
28.2
6.9
6.9
0.0
– 2.3
46.9
– 1.9
5.3
50.7
17.3
10.9
9.2
6.3
3.0
2.1
0.5
1 Excluding investments for the account and at the risk of life insurance policyholders and
third parties.
18
02_JB_Geschaeftsgang_en�indd 18
24�03�2015 13:16:47
Review of operating performance
Group
ASSETS HELD BY BALOISE
as at 31 December 2013
CHF million
Proprietary investments
Investment-linked life insurance1
Total recognised assets
Asset management for third parties
Total assets under management
as at 31 December 2014
CHF million
Proprietary investments
Investment-linked life insurance1
Total recognised assets
Asset management for third parties
Total assets under management
Non-life
Life
Banking
Total for the
Group
9,615.4
44,490.3
7,351.2
61,242.2
9,606.8
9,863.5
9,615.4
54,097.1
7,351.2
71,105.8
4,473.9
75,579.6
Total for the
Group
64,495.0
11,182.6
75,677.6
5,055.3
80,733.0
Non-life
Life
Banking
9,788.8
47,249.5
7,649.1
10,904.2
9,788.8
58,153.6
7,649.1
1 Including CHF 53.3 million (2013: CHF 47.3 million) in other assets (precious metal holdings from investment-linked life insurance policies).
Baloise increased its equity exposure further� Whereas private-
equity investments delivered an impressive performance, hedge
funds yielded only modest returns� The impairment losses rec-
ognised on financial instruments with characteristics of equity
totalled CHF 35�8 million (gross)� Investment property contin-
ued to yield stable returns and slightly higher valuations� The
values and income streams generated by our mortgages remained
consistent�
02_JB_Geschaeftsgang_en�indd 19
19
24�03�2015 13:16:47
Review of operating performance
Switzerland
Switzerland
Outstanding operating performance
Basel
Solothurn
KEY FIGURES FOR
SWITZERLAND
CHF million
Business volume
Of which: life
Of which: non-life
Gross combined ratio
(per cent)
Profit before borrowing
costs and taxes
2013
2014
+/– %
4,363.1
3,019.9
1,343.1
86.4
4,510.0
3,174.9
1,335.1
83.9
3.4
5.1
– 0.6
–
434.5
587.9
35.3
BASLER VERSICHERUNGEN SWITZERLAND
Our business in Switzerland underscored its strong market po-
sition by delivering an outstanding operating performance and
continued to impress the markets with its excellent profitabil-
ity and highly focused growth� Its profit before borrowing costs
and taxes jumped by more than 35�3 per cent to CHF 587�9
million� Its total volume of business grew by 3�4 per cent to CHF
4,510�0 million�
The benign claims environment and the low number of
natural disasters had a positive impact on the levels of claims
incurred� The excellent gross combined ratio of 83�9 per cent was
largely attributable to the lower volume of claims incurred and
the improved quality of the portfolio� The value of non-life insur-
ance premiums written contracted by a modest 0�6 per cent to
CHF 1,335�1 million owing to cautious underwriting of daily
sickness allowance insurance and accident insurance� By contrast,
the Basler Versicherungen companies in Switzerland achieved
above-average growth in target segments� This was partly due
to the availability of safety and security features – attractive
add-on services offered by Baloise in the field of prevention�
20
life: 66.2 %
non-life: 29.6 %
Unit-linked: 4.2 %
In the life insurance division, Basler Switzerland generated
growth in its unit-linked life insurance business, above all in
its occupational pension business� Its strong position in this
target segment was clearly illustrated by small and medium-
sized enterprises’ continuing demand for comprehensive insur-
ance solutions� A particularly appealing feature of these prod-
ucts for customers was that the security of pension benefits is
guaranteed at all times� The Basler Versicherungen companies
also achieved growth in term insurance business� The volume
of conventional product premiums written grew by 2�9 per cent
year on year to CHF 2,985�1 million� The Swiss unit expanded
the volume of its unit-linked life insurance business by an en-
couraging 59�6 per cent to CHF 189�9 million� Boosted by non-
recurring effects, the profit contribution from the life insurance
division went up by more than 60 per cent�
BALOISE BANK SOBA
Baloise Bank SoBa delivered a consistently impressive perfor-
mance� Although its interest margin narrowed, the firm raised
its profit for 2014 by 1�4 per cent to CHF 22�5 million (all figures
reported according to local accounting standards)� This earnings
improvement was largely attributable to the higher profitabil-
ity of the brokerage and services business and to the excellent
credit risk situation� The introduction of new private banking
services continued to strengthen the firm’s investment business�
Customer loans and client assets grew by CHF 927 million, or
4�4 per cent, in 2014�
The twin-track business model combining banking and
insurance expertise under one roof retained its considerable
appeal for customers in 2014� The volumes generated by the
insurance sales force grew by a further 5�5 per cent during the
reporting year to CHF 2�6 billion� Baloise Bank SoBa and Basler
Versicherung will be stepping up this successful collaboration
in 2015 in order to make best use of their combined expertise�
02_JB_Geschaeftsgang_en�indd 20
24�03�2015 13:16:47
BUSINESS VOLUME (CHF million),(as a percentage of the Group)4,510.0 (49.1 %) Review of operating performance
Germany
Germany
Improvements in portfolio quality
life: 34.8 %
non-life: 51.6 %
Unit-linked: 13.5 %
in one or two years’ time� Despite the higher level of large claims
incurred, Basler Versicherungen managed to lower the claims
ratio in its German business� The unit improved its combined
ratio by 2�6 percentage points to 101�5 per cent owing to the
lower cost of basic claims� Nonetheless, EBIT fell by 7�9 per cent
to CHF 62�6 million� Even though the targeted objectives have
not yet been met, the profit trajectory adjusted for the volume
of large claims incurred clearly demonstrates that Basler
Versicherungen is pursuing the right optimisation strategy in
Germany and that it will achieve the desired level of profitabil-
ity within the planned time frame�
Hamburg
Bad Homburg
KEY FIGURES FOR GERMANY
IN LOCAL CURRENCY
CHF million
Business volume
Of which: life
Of which: non-life
Gross combined ratio
(per cent)
Profit before borrowing
costs and taxes
2013
2014
+/– %
1,727.3
1,632.7
833.0
894.3
104.1
789.8
842.9
101.5
– 4.2
– 3.9
– 4.5
–
68.0
62.6
– 7.9
BASLER VERSICHERUNGEN IN GERMANY
Basler Versicherungen in Germany focused on the target seg-
ments and optimised its cost structure� It is on track with its
measures in this area� It continued to exit the motor vehicle
fleet insurance market and significantly scaled back its business
with large industrial enterprises in individual sectors where the
risks are too high� The volume of business generated by the unit
as a whole contracted by 4�2 per cent to CHF 1,632�7 million�
While the decrease in premiums in the non-life division was
attributable to improvements in both portfolio quality and the
business mix, the volume of life insurance business transacted
in this challenging environment was consistent with the shrink-
ing German life insurance market� Basler Versicherungen achieved
the right amount of growth in its target segments and is already
Germany’s third-largest insurer in the field of renewable
energy�
The volume of large claims grew year on year� However,
roughly 70 per cent of claims were attributable to policies that
had previously been terminated for reasons of profitability� The
improved quality of the portfolio should become clearly evident
02_JB_Geschaeftsgang_en�indd 21
21
24�03�2015 13:16:48
BUSINESS VOLUME (CHF million), (as a percentage of the Group)1,632.7 (17.8 %) Review of operating performance
Belgium
Belgium
Encouraging growth and higher profit contribution
Antwerp
Brussels
KEY FIGURES FOR BELGIUM
IN LOCAL CURRENCY
CHF million
Business volume
Of which: life
Of which: non-life
Gross combined ratio
(per cent)
Profit before borrowing
costs and taxes
2013
2014
+/– %
1,393.5
1,544.9
441.2
952.3
93.5
583.7
961.2
102.4
12.3
34.1
2.3
–
120.8
141.6
17.2
life: 10.2 %
non-life: 62.2 %
Unit-linked: 27.6 %
BALOISE INSURANCE BELGIUM
In Belgium, Baloise Insurance achieved highly encouraging
growth of 56�6 per cent in its unit-linked life insurance business�
It forged new banking partnerships and developed a new hybrid
product combining the features of conventional and unit-linked
life insurance� The total volume of business transacted was also
very pleasing, growing by 12�3 per cent to CHF 1,544�9 million�
Mainly hail storm Ela, which hit in June 2014, raised the
claims ratio by an aggregate 9�9 percentage points� Despite this
storm, Baloise Insurance improved its profitability in Belgium
on the back of its effective external reinsurance and the lower
cost of basic claims� The Belgian business raised its EBIT by an
impressive 17�2 per cent to CHF 141�6 million and made the
second-largest contribution to the Baloise Group’s profit for the
period after the Swiss unit�
22
02_JB_Geschaeftsgang_en�indd 22
24�03�2015 13:16:48
BUSINESS VOLUME (CHF million), (as a percentage of the Group)1,544.9 (16.8 %) Review of operating performance
Luxembourg
Luxembourg
Stronger market position
Luxembourg
life: 5.9 %
non-life: 7.8 %
KEY FIGURES FOR LUXEMBOURG
IN LOCAL CURRENCY
CHF million
Business volume
Of which: life
Of which: non-life
Gross combined ratio
(per cent)
Profit before borrowing
costs and taxes
2013
2014
+/– %
1,284.0
1,204.9
79.1
83.9
16.9
1,483.4
1,367.8
115.6
89.3
16.9
14.9
48.1
–
20.7
22.5
Unit-linked: 86.3 %
BÂLOISE ASSURANCES LUXEMBOURG
The business unit in Luxembourg completed its acquisition of
local firm P&V Assurances, significantly strengthening its po-
sition in the highly attractive Luxembourg market� It expanded
its share of this market to more than 10 per cent� The integration
of this acquisition progressed according to plan, and this busi-
ness performed very well�
The additional premium income arising from the acquisi-
tion made a substantial contribution to the strong growth of
48�1 per cent in non-life insurance� The combined ratio was an
excellent 89�3 per cent� The integration of P&V Assurances caused
the premiums written in conventional life insurance to jump
by 46�6 per cent� The value of conventional life insurance pre-
miums received by the Luxembourg entity would have increased
even without the acquisition�
The safety and security features on offer proved highly
popular with customers in Luxembourg as well� This business
unit raised its EBIT by 22�5 per cent to CHF 20�7 million�
02_JB_Geschaeftsgang_en�indd 23
23
24�03�2015 13:16:48
BUSINESS VOLUME (CHF million), (as a percentage of the Group)1,483.4 (16.2 %) Review of operating performance
Consolidated income statement
FIVE-YEAR OVERVIEW
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 investments2
Income from services rendered
Share of profit (loss) of associates
Other operating income
Income
Expense
2010
2011
2012 (restated)
2013
2014
6,854.3
– 168.2
6,686.1
1,811.2
501.6
283.4
– 0.5
202.7
6,806.9
– 176.3
6,630.6
1,766.5
– 943.4
158.6
10.2
140.1
6,731.1
– 176.5
6,554.6
7,212.7
– 167.9
7,044.8
1,782.2
1,765.1
852.9
125.0
16.5
92.0
670.3
119.0
40.5
107.9
7,168.1
– 163.6
7,004.5
1,701.9
1,362.5
110.7
8.1
185.2
9,484.5
7,762.6
9,423.2
9,747.5
10,372.8
Claims and benefits paid (gross)
– 5,212.9
– 5,311.5
– 5,449.4
– 5,439.7
Change in technical reserves (gross)
– 1,393.2
– 639.9
– 867.7
– 1,359.4
Reinsurance share of claims incurred
Acquisition costs
Operating and administrative expenses
for insurance business
Investment management expenses
Interest expenses on insurance liabilities
Gains or losses on financial contracts
Other operating expenses
Expense
47.5
– 491.5
– 856.0
– 64.8
– 61.2
– 219.8
– 625.4
53.3
– 576.8
– 847.0
– 61.3
– 51.6
324.0
– 507.9
113.2
– 651.0
– 900.0
– 59.0
– 50.5
– 577.8
– 363.2
75.5
– 500.5
– 897.1
– 70.6
– 47.3
– 368.9
– 481.3
– 8,877.3
– 7,618.7
– 8,805.4
– 9,089.3
– 9,444.3
– 5,666.4
– 1,469.5
146.6
– 569.6
– 866.5
– 66.9
– 42.6
– 462.6
– 446.8
Profit before borrowing costs and taxes
607.2
143.9
617.9
658.2
928.6
Borrowing costs
Profit before taxes
Income taxes
Profit for the period
Attributable to
Shareholders
Non-controlling interests
Earnings / loss per share
Basic (CHF)
Diluted (CHF)
Footnotes: see next page.
24
– 52.8
554.4
– 117.7
436.7
433.4
3.3
9.14
8.89
– 55.0
88.9
– 27.6
61.3
60.8
0.5
1.30
1.29
– 61.0
556.8
– 71.6
485.2
479.5
5.7
10.24
9.96
– 50.1
608.1
– 152.7
455.4
452.6
2.8
9.65
9.38
– 43.5
885.1
– 173.2
711.9
710.7
1.3
15.15
14.63
02_JB_Geschaeftsgang_en�indd 24
24�03�2015 13:16:48
Consolidated income statement Review of operating performance
Consolidated income statement
ADDITIONAL INFORMATION
CHF million
Gross premiums written and policy fees
Investment-type premiums
Total business volume
Investments for the account and at the risk
of life insurance policyholders
Gross combined ratio
Funding ratio (non-life) (per cent)
2010
2011
2012 (restated)
2013
2014
6,859.8
2,681.6
9,541.4
6,803.3
1,341.2
8,144.5
6,741.7
1,616.6
8,358.3
7,228.9
1,780.6
9,009.5
7,175.6
2,130.2
9,305.8
7,821.7
7,746.8
8,779.3
9,606.8
10,904.2
92.2
180.5
92.4
195.9
93.2
184.3
93.1
179.8
93.7
182.9
1 In line with the accounting principles applied by the Baloise Group, investment-type insurance premiums are not included in premiums earned and policy fees.
2 Including financial liabilities held for trading purposes (derivative financial instruments).
02_JB_Geschaeftsgang_en�indd 25
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24�03�2015 13:16:49
Review of operating performance
Consolidated balance sheet
Consolidated balance sheet
Financial instruments with characteristics of liabilities
25,840.5
28,917.5
32,513.3
32,327.1
FIVE-YEAR OVERVIEW
CHF million
Assets
Property, plant and equipment
Intangible assets
Investments in associates
Investment property
Financial instruments with characteristics of equity
Mortgages and loans
Derivative financial instruments
Other assets / receivables
Deferred tax assets
Cash and cash equivalents
Total assets
CHF million
Equity and liabilities
Equity
2010
2011
2012
(restated)
2013
2014
535.7
1,342.6
211.3
5,046.6
9,844.2
559.9
1,300.2
173.5
5,138.0
9,703.9
458.5
1,078.5
227.2
5,441.0
9,475.7
422.5
1,080.3
222.0
5,685.9
11,344.4
17,693.5
18,042.7
18,510.9
18,329.5
536.3
2,111.6
20.2
334.1
2,586.4
22.2
497.6
2,618.6
32.7
410.7
2,857.7
56.0
2,208.9
2,287.8
2,923.7
2,960.8
379.2
909.2
227.9
5,962.9
13,451.2
34,461.6
18,165.9
613.2
2,153.5
48.3
2,969.6
65,391.4
69,066.2
73,777.7
75,696.9
79,342.3
2010
2011
2012
(restated)
2013
2014
Equity before non-controlling interests
4,100.0
3,860.3
4,603.5
4,855.9
Non-controlling interests
33.5
33.3
37.8
50.5
5,791.3
39.7
Total equity
Liabilities
4,133.5
3,893.6
4,641.3
4,906.4
5,831.0
Gross technical reserves
43,445.7
45,561.9
46,591.9
47,435.6
Liabilities arising from banking business
and financial contracts
Derivative financial instruments
Other accounts payable
Deferred tax liabilities
Total liabilities
12,863.3
13,998.1
15,839.6
16,542.1
29.9
4,277.3
641.7
175.3
4,782.9
654.4
64.4
5,802.0
838.5
68.2
5,862.3
882.3
48,738.9
17,740.8
176.4
5,789.7
1,065.5
61,257.9
65,172.6
69,136.4
70,790.5
73,511.4
Total equity and liabilities
65,391.4
69,066.2
73,777.7
75,696.9
79,342.3
26
02_JB_Geschaeftsgang_en�indd 26
24�03�2015 13:16:49
Review of operating performance
Business volume,
premiums and combined ratio
Business volume, premiums
and combined ratio
BUSINESS VOLUME
2013
CHF million
Non-life
Life
Sub-total of IFRS gross premiums
written1
Investment-type premiums
Total business volume
Group
Switzerland
Germany
Belgium
Luxembourg
Other units2
3,441.7
3,787.2
7,228.9
1,780.6
9,009.5
1,343.1
2,900.9
4,244.0
894.3
609.3
952.3
165.2
1,503.6
1,117.5
119.0
223.7
276.0
4,363.1
1,727.3
1,393.5
79.1
60.1
139.3
1,144.8
1,284.0
167.7
51.6
219.3
17.2
236.5
2014
CHF million
Non-life
Life
Sub-total of IFRS gross premiums
written1
Investment-type premiums
Total business volume
Group
Switzerland
Germany
Belgium
Luxembourg
Other units2
3,358.8
3,816.8
7,175.6
2,130.2
9,305.8
1,335.1
2,985.1
4,320.1
842.9
568.8
961.2
157.2
1,411.7
1,118.3
189.9
221.0
426.5
4,510.0
1,632.7
1,544.9
115.6
87.1
202.7
1,280.7
1,483.4
98.2
18.8
117.0
12.0
129.0
1 Premiums written and policy fees (gross).
2 Other units: Austria (until 28th August 2014), Croatia and Serbia (until 11 March 2014).
02_JB_Geschaeftsgang_en�indd 27
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24�03�2015 13:16:49
Review of operating performance
Business volume,
premiums and combined ratio
GROSS COMBINED RATIO
2013
Group
Switzerland
Germany
Belgium
Luxembourg
Other units1
as a percentage of premiums earned
Claims ratio2
Expense ratio
Combined ratio
62.1
31.0
93.1
61.3
25.1
86.4
69.7
34.4
104.1
58.5
35.0
93.5
49.6
34.3
83.9
58.1
36.2
94.3
2014
Group
Switzerland
Germany
Belgium
Luxembourg
Other units1
56.8
32.5
89.3
2013
62.8
32.1
94.9
60.2
33.1
93.3
Net
2014
61.7
31.9
93.6
2013
2014
5,933.3
3,300.4
179.8
5,879.4
3,213.8
182.9
as a percentage of premiums earned
Claims ratio1
Expense ratio
Combined ratio
63.0
30.7
93.7
59.1
24.8
83.9
65.4
36.1
101.5
68.3
34.1
102.4
1 Other units: Austria (until 28 August 2014), Croatia and Serbia (until 11 March 2014).
2 Including the profit-sharing ratio.
2013
62.1
31.0
93.1
Gross
2014
63.0
30.7
93.7
GROSS AND NET COMBINED RATIO
as a percentage of premiums earned
Claims ratio1
Expense ratio
Combined ratio
FUNDING RATIO (NON-LIFE)
CHF million
Technical reserve for own account2
Premiums written and policy fees for own account
Funding ratio (per cent)
1 Including the profit-sharing ratio.
2 Not including capitalised settlement premiums.
28
02_JB_Geschaeftsgang_en�indd 28
24�03�2015 13:16:49
Review of operating performance
Technical income statement
Technical income statement
CHF million
Gross
Gross premiums written and policy fees
Change in unearned premium reserves
Premiums earned and policy fees (gross)
Claims and benefits paid (gross)
Change in technical reserves (gross)
Change in claims reserve / actuarial reserves1
Change in other technical reserves
Technical expenses
Total technical result (gross)
Ceded to reinsurers
Reinsurance premiums ceded
Claims and benefits paid
Reinsurers' share of claims incurred
Change in other technical reserves
Technical expenses
Total technical result of ceded business
For own account
Premiums earned and policy fees
Claims and benefits paid
Change in claims reserve / actuarial reserves1
Change in other technical reserves
Technical expenses
Total technical result for own account
Investment income (gross)
Realised gains and losses on investments2
Investment management expenses
Other financial expenses and income
Gains or losses on investments
Profit before borrowing costs and taxes
Borrowing costs
Income taxes
Profit for the period (segment result)
Non-life
2013
2014
2013
Life3
2014
3,441.7
– 16.2
3,425.5
3,358.8
3,787.2
3,816.8
– 7.5
–
–
3,351.3
3,787.2
3,816.8
– 2,073.7
– 2,050.6
– 3,366.0
– 3,615.8
– 52.1
– 59.1
– 61.6
– 14.9
– 1,096.9
– 1,061.9
– 833.7
– 414.9
– 372.9
– 1,006.0
– 387.1
– 460.6
143.7
162.2
– 1,200.3
– 1,652.7
– 148.3
67.6
3.2
0.3
7.7
– 69.5
– 143.3
– 19.5
– 20.3
120.5
13.2
0.1
6.2
– 3.3
4.7
– 0.8
0.8
3.3
8.0
2.7
2.2
1.8
– 11.5
– 5.6
3,277.1
3,208.0
3,767.7
3,796.5
– 2,006.1
– 1,930.1
– 3,361.3
– 3,607.8
– 48.9
– 58.8
– 48.4
– 14.8
– 1,089.2
– 1,055.8
74.2
276.2
118.1
– 22.2
– 79.9
292.1
366.3
–
– 75.3
291.0
158.9
259.9
63.2
– 22.6
– 40.1
260.3
419.1
–
– 88.7
330.4
– 834.5
– 414.1
– 369.6
– 1,003.3
– 384.9
– 458.8
– 1,211.8
– 1,658.2
1,349.4
532.1
– 88.3
– 320.3
1,472.9
261.1
–
– 65.8
195.3
1,312.6
1,276.0
– 89.7
– 363.9
2,135.0
476.8
–
– 88.5
388.2
1 Including change in reserve for claims handling costs.
2 Including financial liabilities held for trading purposes (derivative financial instruments).
3 Of which deferred gains / losses from other operating segments (31 December 2013: CHF –1.7 million; 31 December 2014: CHF 0.6 million).
02_JB_Geschaeftsgang_en�indd 29
29
24�03�2015 13:16:49
Review of operating performance
Gross premiums by sector
Gross premiums by sector
GROSS PREMIUMS BY SECTOR (NON-LIFE)
CHF million
Accident
Health
General liability
Motor
Property
Marine
Other
Inward reinsurance
Gross premiums written (non-life)
GROSS PREMIUMS BY SECTOR (LIFE)
CHF million
Business volume generated by single premiums
Business volume generated by periodic premiums
Investment-type premiums
Gross premiums written (life)
2013
2014
+/– %
442.1
131.8
361.3
1,129.4
1,065.6
185.1
78.7
47.7
418.1
124.9
347.1
1,111.9
1,055.8
174.8
81.6
44.7
3,441.7
3,358.8
– 5.4
– 5.2
– 3.9
– 1.5
– 0.9
– 5.6
3.7
– 6.3
– 2.4
2013
2014
+/– %
2,910.0
2,657.8
3,294.3
2,652.6
– 1,780.6
– 2,130.2
3,787.2
3,816.8
13.2
– 0.2
19.6
0.8
30
02_JB_Geschaeftsgang_en�indd 30
24�03�2015 13:16:49
Review of operating performance
Banking activities
Banking activities
PROFIT OR LOSS FROM BANKING ACTIVITIES
CHF million
Net interest income
Net fee and commission income
Trading profit
Other net income
Total operating income
Personnel expenses
General and administrative expenses
Total operating expenses
Gross profit
Net losses and impairment due to credit risk
Depreciation, amortisation and impairment of property, plant and equipment and of intangible assets
Profit before taxes
Income taxes
Profit for the period (segment result)
ADDITIONAL INFORMATION
CHF million
Assets managed for third parties
Risk-weighted assets of banking activities
ASSET ALLOCATION
CHF million
Investment property
Equities
Alternative financial assets
Fixed-income securities
Mortgage assets
Policy loans and other loans
Derivative financial instruments
Cash and cash equivalents
Total
2013
2014
91.2
67.0
– 1.1
5.9
87.6
72.4
0.0
2.6
162.9
162.6
– 58.8
– 13.9
– 72.7
90.2
4.3
– 19.1
75.4
– 13.8
61.6
– 60.6
– 14.4
– 75.0
87.6
4.6
– 18.6
73.7
– 12.5
61.2
2013
2014
4,473.9
3,290.1
5,055.3
3,239.0
2013
2014
–
8.2
–
435.1
6,454.8
235.5
7.2
210.4
–
8.2
–
388.0
6,535.5
273.1
6.6
437.7
7,351.2
7,649.1
02_JB_Geschaeftsgang_en�indd 31
31
24�03�2015 13:16:50
Review of operating performance
Investment performance
Investment performance
Fixed-income
securities
Equities
Investment
property
Mortgage
assets, policy
loans and
other loans
Alternative
financial assets,
derivatives,
cash and cash
equivalents
Total
891.2
192.0
88.3
79.7
253.3
127.0
521.6
26.2
10.8
– 214.2
1,765.1
210.7
– 795.1
203.8
–
–
49.7
– 541.7
2013 1
CHF million
Current income
Realised gains and losses
and impairment losses
recognised in profit or loss (net)
Change in unrealised gains and losses
recognised directly in equity
Investment management costs
Operating profit
– 27.6
260.4
– 4.1
367.7
– 8.7
371.6
– 16.8
531.0
Average investment portfolio
30,648.8
2,643.0
5,563.5
18,420.2
Performance (per cent)
0.8
13.9
6.7
2.9
1 Excluding investments for the account and at the risk of life insurance policyholders and third parties.
– 11.6
– 165.4
3,559.8
– 4.6
– 68.9
1,365.3
60,835.3
2.2
2014 1
CHF million
Current income
Realised gains and losses
and impairment losses
recognised in profit or loss (net)
Change in unrealised gains and losses
recognised directly in equity
Investment management costs
Operating profit
Fixed-income
securities
Equities
Investment
property
Mortgage
assets, policy
loans and
other loans
Alternative
financial assets,
derivatives,
cash and cash
equivalents
Total
835.5
147.4
112.7
249.7
256.0
129.3
480.0
58.5
17.6
190.2
1,701.9
775.1
1,703.5
– 50.8
–
–
– 116.8
1,535.9
– 29.5
2,656.8
– 4.6
307.1
– 7.8
377.6
– 15.0
523.5
– 8.6
82.3
– 65.6
3,947.3
Average investment portfolio
31,652.6
3,585.9
5,824.4
18,247.7
3,558.1
62,868.6
Performance (per cent)
8.4
8.6
6.5
2.9
2.3
6.3
1 Excluding investments for the account and at the risk of life insurance policyholders and third parties.
32
02_JB_Geschaeftsgang_en�indd 32
24�03�2015 13:16:50
Review of operating performance
Investment performance
CURRENT INCOME FROM INSURANCE 1
CHF million
Investment property
Equities
Alternative financial assets
Fixed-income securities
Mortgage assets
Policy loans and other loans
Derivative financial instruments
Cash and cash equivalents
Total current income
REALISED GAINS AND LOSSES IN INSURANCE 1
CHF million
Investment property
Equities
Alternative financial assets
Fixed-income securities
Mortgage assets
Policy loans and other loans
Non-life
Life
34.2
32.8
2.0
149.8
8.8
48.3
–
0.3
205.8
55.1
7.2
730.5
109.1
240.8
–
1.0
2013
Total
240.0
87.9
9.1
880.3
117.8
289.1
–
1.4
Non-life
Life
36.9
36.6
2.7
132.5
7.6
43.3
–
0.2
203.7
75.7
13.8
693.7
102.3
222.8
–
0.6
2014
Total
240.6
112.3
16.5
826.3
109.9
266.1
–
0.9
276.2
1,349.4
1,625.6
259.9
1,312.6
1,572.5
Non-life
Life
21.5
45.7
3.6
42.5
– 0.2
29.9
109.7
34.6
– 2.4
148.4
– 6.1
6.6
2013
Total
131.1
80.3
1.2
190.9
– 6.3
36.5
Non-life
Life
3.9
32.8
2.8
17.0
0.0
10.1
– 3.4
–
63.2
126.7
217.0
10.5
130.4
1.1
28.4
192.4
–
2014
Total
130.6
249.8
13.3
147.4
1.2
38.5
189.0
–
Derivative financial instruments
– 24.9
– 202.0
– 226.9
Cash and cash equivalents
Total capital gains and losses
–
118.1
–
88.8
–
206.9
706.5
769.7
ASSET ALLOCATION IN INSURANCE 1
CHF million
Investment property
Equities
Alternative financial assets
Fixed-income securities
Mortgage assets
Policy loans and other loans
Derivative financial instruments
Cash and cash equivalents
Non-life
Life
782.1
1,064.8
270.0
4,675.6
2,068.0
985.0
2013
Total
5,457.8
3,132.8
1,255.0
Non-life
Life
804.7
1,106.6
298.9
4,925.8
2,912.5
1,042.3
2014
Total
5,730.5
4,019.1
1,341.2
5,369.3
24,798.6
30,167.9
5,346.3
26,965.7
32,312.0
393.3
1,247.8
17.0
470.9
4,288.7
6,357.3
196.8
4,682.0
7,605.2
213.8
1,120.3
1,591.3
435.9
1,281.2
18.9
496.3
4,166.6
6,051.6
299.3
885.7
4,602.5
7,332.8
318.2
1,382.0
Total
9,615.4
44,490.3
54,105.7
9,788.8
47,249.5
57,038.3
1 Excluding investments for the account and at the risk of life insurance policyholders and third parties.
02_JB_Geschaeftsgang_en�indd 33
33
24�03�2015 13:16:50
03_JB_Nachhaltige_Geschaeftsfuehrung_en�indd 34
24�03�2015 13:16:55
4 Baloise
16 Review of operating performance
36 Sustainable business management
48 Corporate Governance
92 Financial Report
246 Bâloise Holding Ltd
260 Notes
Sustainable business
management
HUMAN RESOURCES ������������������������������������������������������������������������������ 36
Friendly, pleasant and fair: Baloise as an employer ���������������� 36
THE ENVIRONMENT ��������������������������������������������������������������������������������� 40
Protecting the environment over the long term ����������������������� 40
RISK MANAGEMENT �������������������������������������������������������������������������������� 42
Baloise’s risk management constitutes one of the
main pillars of its business model ��������������������������������������������������� 42
03_JB_Nachhaltige_Geschaeftsfuehrung_en�indd 35
24�03�2015 13:16:55
Sustainable business management
Human resources
Friendly, pleasant and fair:
Baloise as an employer
Sometimes it is important to see things from a different perspective if you want
to get a more accurate picture of reality.
KEY FIGURES
→ 7,617 people (6,876 FTEs) were working for the Baloise
Group on 31 December 2014 (end of 2013: 8,628).
→ 43.6 per cent of all staff members are women
(2013: 45.9 per cent).
→ The Baloise Group employs 206 (2013: 230) apprentices,
trainees and interns.
→ 60.9 per cent of staff members working in our main
market of Switzerland participated in our Employee
Share Ownership Plan in 2014 (2013: 58.2 per cent).
→ Baloise employees work at the Company for an average
of 14.2 years.
→ Staff turnover as at 31 December 2014 amounted
to 4.8 per cent (end of 2013: 4.9 per cent).
WHAT SETS BALOISE APART AS AN EMPLOYER
What is special about working for Baloise? The following answers
to this question were made – not only from our own members
of staff but also from applicants. The responses can be sum-
marised in the following four statements:
→ Baloise employees are highly trusted from an early stage.
They are given the responsibility they need in order to
perform their roles, which is an aspect they appreciate.
Baloise offers its staff something that is now a hallmark of
good employers: the freedom to make their own contribu-
tion to the Company’s success.
→ Baloise is regarded as a very balanced employer. It gives its
employees the same feeling that it conveys to its custom-
ers: “Making you safer”. It is not too young, not too old,
not too big and not too small. And it offers a wide range
of opportunities for its staff to advance their careers.
→ ‘Swissness’ is one of Baloise’s defining characteristics. It
is a Swiss company that operates in Europe. This is some-
thing that is highly valued by its workforce not only in
Switzerland but also in Germany, Belgium and Luxem-
bourg. The attributes associated with Switzerland are also
reflected in Baloise as an employer: high quality, solidity
and reliability.
→ Baloise is a friendly, pleasant and fair employer. The vast
majority of employees agree with this statement. People
like working for Baloise and are therefore motivated to go
the extra mile for customers and partners. This welcoming
atmosphere is reflected in Baloise’s general approach as an
employer, which centres on personal contact and dialogue
and stresses the importance of building close relationships.
“WE ADD VALUE THROUGH OUR PEOPLE”:
BALOISE’S VISION OF CUTTING-EDGE HR ACTIVITIES
In order to secure the Company’s lasting appeal for talented
individuals, thereby maintaining the high quality of its work,
in 2014 the HR heads of the Baloise Group and its national
subsidiaries devised a strategy that will shape the Company’s
HR activities over the coming years. By pursuing its vision of
adding value through its people, Baloise is aligning its HR ac-
tivities even more closely with its relevant business units and
its strategies to ensure that they make a substantial contribution
to the value creation process.
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Sustainable business management
Human resources
THE CORNERSTONES OF THE BALOISE GROUP’S HR STRATEGY ARE
THE BALOISE GROUP’S BEHAVIOURAL VALUES
→ to nurture an employee-focused corporate culture
→ to be the employer of choice in our sector
→ to be performance- and results-driven
→ to be a highly skilled, learning organisation
→ to have excellent skills in leadership and management
→ “Put yourself in the other’s shoes.”
→ “Act authentically and earn trust.”
→ “Develop and engage.”
TALENT, CULTURE AND LEADERSHIP:
IDENTIF YING, RECRUITING AND DEVELOPING TALENT:
THREE FACTORS THAT ARE CRUCIAL TO FUTURE SUCCESS
Highly skilled, talented individuals seek to improve their pros-
pects� In order to fulfil this justified aspiration and obtain
a realistic appraisal of its employees’ potential, Baloise has been
conducting talent evaluations since 2013� These are designed to
identify young and key talent, find potential successors and
agree staff development activities so that vacancies can ideally
be filled by candidates from within the Company�
The Company also remains fully focused on ensuring that
its behavioural values are applied� Surveys of staff members
have revealed that these values are already firmly embedded
within the organisation� However, this is no reason for the Com-
pany to rest on its laurels� Baloise will continue to integrate
these behavioural values into its activities going forward�
Baloise believes that another crucial factor for its future
success is the quality of its managerial staff and the way in which
leadership is practised within the organisation� In 2014 the
workforce in Switzerland was therefore asked to give their line
managers feedback on the subject of values-based leadership�
The resultant management dialogue sessions were then used to
identify specific measures that could exploit the potential for
improvement�
CREATING THE SPACE FOR INDIVIDUALS TO EVOLVE
Baloise’s most valuable asset is the skills and expertise of its
workforce� It therefore ensures that it develops and promotes
its staff in a way that reflects their individual performance and
potential and the extent to which its behavioural values are
implemented�
Baloise applies these principles to both its recruitment
process and its efficient talent management system� By doing
so, it ensures that it is always in a position to deploy the right
people in the right positions and retain the services of its key
employees�
Having a diversified workforce is crucial to Baloise’s last-
ing success� Striking the right work/life balance is also seen as
a key aspiration of the Baloise Safety World� By providing flex-
ible and part-time working, the option of working from home,
and facilities such as the Bal4Kids crèche in Basel, the Com-
pany offers a pleasant environment in which staff can develop
their full potential�
In 2010, Baloise became the first all-lines
insurer to be awarded the ‘Friendly Work
Space’ quality marque by the Swiss health
promotion board� This accolade is awarded
to firms that are engaged in corporate health
management over and above the legal re-
quirements� Baloise offers a working environment in which its
employees are happy, stay healthy and can therefore deliver an
excellent performance�
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Sustainable business management
Human resources
By additionally committing itself to the cause of corporate
health management in this way, Baloise is honouring its “Mak-
ing you safer” brand promise to its own staff.
GOOD PERFORMANCE SHOULD BE REWARDED:
FAIR REMUNERATION PRINCIPLES AND BALOISE’S PERFOR-
MANCE MANAGEMENT SYSTEM
As part of its effective performance management system, Baloise
offers basic salaries in line with market rates, various forms of
variable remuneration, and attractive employee incentive and
retention plans.
Variable remuneration is based on both personal perfor-
mance by staff members and the success of the Company as
a whole. A systematic dialogue is maintained with employees
with the aim of agreeing personal performance and development
targets and ensuring that these targets are met.
Part of this remuneration is paid in the form of restricted
shares. Baloise strengthens staff loyalty by insisting that, com-
pared with other companies, senior managers receive a high
proportion of their variable remuneration in the form of shares.
In doing so, it aligns their remuneration with the Company’s
long-term success.
The remuneration paid by the Baloise Group is determined
by the following criteria:
→ Competitiveness in the marketplace;
→ Individual performance and the Company’s success;
→ Fairness and transparency;
→ Sustainability.
BALOISE CONTINUES TO EVOLVE
THROUGH THE CONSISTENT PURSUIT OF SHARED GOALS
Baloise uses its integrated performance and talent management
system to strengthen its culture of performance and trust and
encourage continuous learning within the Company. This pro-
cess involves managers and staff in an ongoing dialogue about
performance and development goals that provides guidance
and clarity about shared goals and continuous learning.
The Baloise Group uses its succession planning process
for strategic HR planning purposes. In 2014 it identified and
discussed more than 200 key roles and tried to find potential
short-term or long-term succession options for them. The Com-
pany also identified young and key talented individuals who
have the potential to take on more demanding roles and respon-
sibilities at Baloise. And the succession planning works. 50 per
cent of all vacant key positions were filled by internal candidates
last year.
TARGETED INVESTMENT IN CONTINUING PROFESSIONAL
DEVELOPMENT: BALOISE SEES LEADERSHIP AS MORE THAN
JUST A JOB DESCRIPTION
The Baloise Group’s decision to pool its executive development
resources in the Baloise Campus in 2013 was a strategy that was
successfully continued in 2014. This enables the Company to
communicate a uniform managerial philosophy and develop
a shared identity across all management levels and throughout
all corporate divisions. These too are firmly rooted in Baloise’s
behavioural values and Safety World.
The Company’s executive development activities include
more than just the Group-wide management programmes that
it offers at its Baloise Campus (Early Leadership Programme
[ELP], Advanced Leadership Programme [ALP] and Senior
Leadership Programme [SLP]).
Baloise invests in executive development at local level as
well. In 2014 it continued to support new managers in Switzer-
land by offering its Führung@Baloise programme.
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Sustainable business management
Human resources
BALOISE’S 7,617 EMPLOYEES IN 2014 BY COUNTRY
BALOISE GROUP HUMAN RESOURCES ON THE INTERNET
Career homepage:
→ www.baloise.com/career
Career blog:
→ www.baloisejobs.com
Facebook:
→ www.facebook.com/baloisegroup
YouTube:
→ youtube.com/baloisegroup
Xing:
→ xing.com/companies/baloisegroup
LinkedIn:
→ linkedin.com/company/baloisegroup
Twitter:
→ twitter.com/baloise_jobs
Pinterest:
→ pinterest.com/baloisejobs
Google+:
→ gplus.to/baloisejobs
Switzerland
Germany
Belgium
Luxembourg
Other
Per cent
Employees
48.6
28.5
17.6
5.2
0.0
3,701
2,174
1,343
395
4
AUTHENTIC, RELEVANT AND DISTINCTIVE:
SPREADING THE WORD ABOUT BALOISE AS AN EMPLOYER
In order to fulfil these aspirations and engage in a dialogue with
potential employees, the Baloise Group’s employer branding
approach focuses on the highly successful social media activi-
ties centred on the baloisejobs�com blog� The Company also
maintains a presence on Facebook, Twitter, Google+, Pinterest,
Xing and LinkedIn as part of its social media strategy�
However, Baloise pursues a dialogue-driven approach that
encompasses more than just the internet� The Employer Brand-
ing team’s revamped presence at trade fairs provides an op-
portunity for prospective employees to talk to someone about
what it is really like working for an insurance company�
NURTURING YOUNG TALENT AT BALOISE:
ATTRACTING SCHOOL-LEAVERS, STUDENTS AND THOSE
STARTING THEIR CAREERS
The Baloise Group offers a wide range of training opportunities
in Switzerland� It currently has more than 200 apprentices, in-
terns and temporary student employees across all its corporate
divisions�
The Company’s General and Insurance trainee programmes
remain highly popular with university graduates and at Baloise
itself� These programmes provide personalised training for
graduates starting their careers� These trainees are highly re-
garded within the Company and often find permanent employ-
ment with Baloise�
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Sustainable business management
The environment
Protecting the environment over the long term
As a signatory to the UNEP* declaration for the insurance industry, Baloise is committed –
among other things – to continuously reducing its carbon footprint. In 2014, further major
measures were put in place to achieve this goal.
SUSTAINABLE PLANNING OF REAL ESTATE
The three sustainability dimensions (environmental, econom-
ic and social factors) are examined in the case of all new builds
and maintenance projects and, where necessary, specific mod-
ifications are made in order to optimise them� When property
is being refurbished or built from scratch, for example, the op-
tion of using renewable energy sources is considered and, if
feasible, chosen� If heating systems are being overhauled, fuels
that generate low CO2 emissions are selected wherever possible�
A further key consideration here is the potential for making the
Company’s real estate portfolio more compact� Baloise is con-
stantly improving knowledge of sustainability by working
closely with universities on specific research projects and by
providing its staff with regular training and development in
this area�
BASEL WILL SOON BE HOSTING BALOISE PARK
In 2015 Baloise will be pulling down a hotel and two office
buildings at its headquarters in Basel and by 2019 plans to replace
them with a high-rise building and two office blocks offering
twice the gross floor area� The newly constructed site will be
called Baloise Park� This new complex will constitute a compact,
high-profile development in a central location near the train
station and will cover the same area of land� The fine architec-
ture and considerable flexibility of these new buildings will
ensure that they can be used over the long term and will main-
tain their value� Baloise is basing its designs for the buildings
on the standards for sustainable construction in Switzerland
(SNBS) which means it will comfortably exceed the legal require-
ments in terms of energy efficiency�
* UNEP = United Nations Environment Programme.
40
USING SOLAR POWER TO PROVIDE HEATING IN WINTER
The spring of 2015 will see solar panels with a total output of
21 kWp being installed on one of the flat roofs of the Company’s
head office building in Basel� The power generated by these pan-
els (around 21’400 kWh per year) will be used, among other
things, to heat the new entrance ramp to the building in winter�
ENERGY EFFICIENCY AT COMPUTER CENTRES
The Baloise Group has achieved lasting reductions in energy
consumption at its computer centres in Switzerland� Panels have
been added to the tops and sides of the open racks housing the
servers� This separates the cold and warm air zones, which has
sharply reduced the amount of air that needs to be cooled� In
addition, the energy consumed by our cooling, ventilation and
humidification systems in 2014 was cut by 730,000 kWh per
year – or 38 per cent – compared with 2013� This represents
7�2 per cent of the power used by our Group headquarters, which
has more than 2,000 workstations and includes the central
facilities of staff restaurant, auditorium and computer centres�
ADDING VALUE WITH BALOISE’S NEW WORKPLACE CONCEPTS
The new workplace concepts being planned by the Baloise Group
offer sufficient project spaces and workplaces in pleasant sur-
roundings where people can work in peace and quiet while hav-
ing enough room for communication and teamwork� Basler
Switzerland tested its new ‘Flex Office’ workplace concept in
the summer of 2014� In the autumn of that year it was decided
to introduce this new concept – which centres on the idea that
workstations are not permanently assigned to specific indi-
viduals – for 600 members of staff working at Basler Switzerland’s
head office� This more efficient use of space enables the Baloise
Group to significantly reduce its energy consumption and oc-
cupancy costs as well as the amount of office space that it requires�
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Sustainable business management
The environment
ENVIRONMENTAL AUDIT
Employees
Energy reference area
Locations
Electricity consumption
Heating consumption
Water consumption
Paper consumption
Paper types
Copy paper consumption
Amount of refuse
Types of refuse
Business travel
Mode of transport
2012 absolute
2013 absolute
2014 absolute
Relative Unit
4,975
141,578
12
5,315
141,032
13
5,173
137,276
12
headcount
ERA m2
number of buildings
23,312,615 kWh
20,712,643 kWh
19,983,237 kWh
3,863 kWh / employee
13,856,250 kWh
11,513,544 kWh
9,327,534 kWh
68 kWh / m2
58,113 m3
53,769 m3
52'752 m3
41 l / employee / day
822 t
510 t
490 t
95 kg / employee
4.0 % recycled
74.0 % chlorine-free-
bleached
23.0 % chlorine-bleached
81.9 million A4
sheets
71.9 million
A4 sheets
73.5 million
A4 sheets
14,212 A4 sheets /
employee
909 t
1,241 t
1,319 t
255 kg / employee
+/– %
– 2.6
– 2.6
– 1
– 3.5
– 19.0
– 1.9
– 3.9
2.2
6.2
40.0 % paper / cardboard
4.0 % other materials
1.0 % special waste
55.0 % misc. waste / refuse
21.82 million km
21.26 million km
16.55 million km
3,199 km / employee
– 22.1
26.0 % km by air
40.0 % km by road
34.0 % km by public
transport
CO2 emissions
17,855 t
16,020 t
14,246 t
2,754 kg / employee
– 11.0
ENERGY EFFICIENCY AT BALOISE
The total energy and resource consumption revealed by the en-
vironmental audit shows the amounts used by the Baloise Group’s
large office buildings and its computer centres� The figures re-
ported relate to the energy and resources consumed by 71 per
cent of the 7,617 people working for Baloise� By reconfiguring
and merging operating sites, we reduced the amount of heating
used per square metre of energy reference area by an impressive
20 per cent� Electricity use declined by 2�1 per cent overall� We
are therefore exceeding our target of cutting our electricity
consumption by between 1 per cent and 2 per cent each year
over the period 2014 to 2018� As a responsible corporate citizen,
Baloise is both obliged and motivated to use resources efficient-
ly in the face of climate change and rising energy costs�
→ www.baloise.com/sustainability
→ Ecology / environmental mission statement
→ Ecology / environmental audit
→ Risk management
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Sustainable business management
Risk management
Baloise’s risk management constitutes one of
the main pillars of its business model
Forming an integral part of our strategic management policies, risk management makes
a significant contribution to the positioning of the Baloise Group. As a European insurer with
Swiss roots, we possess a strong balance sheet and a high degree of operating earnings
power, which we have optimised in terms of the risks that we take and the upside potential
that we derive from our business.
Baloise’s risk management approach involves managing both
risk and value at the same time� Because our risk model is based
on innovative standards, we can always keep our promise of
“Making you safer”�
The Company’s enterprise risk management was once again
awarded Standard & Poor’s excellent “strong” rating in 2014�
This puts us among the top 15 per cent of all European insur-
ance companies�
Our risk management is a standardised strategic and
operational system that is applied throughout the Baloise Group
and covers the following areas:
→ Risk map: this forms the backbone of our risk strategy
and defines the fundamental risk issues, such as our
actuarial and market risk as well as the operational risk
arising from our business activities�
→ Risk governance and risk culture: this involves encourag-
ing risk awareness – how people perceive and respond
to risk – and establishing this mind-set throughout the
organisation�
→ Risk measurement: this is used to identify, quantify and
model the risks inherent in all financial and business
processes�
→ Risk processes: the organisation of risk and its pertinent
standards are key aspects of risk management and operate
in tandem with reporting, management and evaluation
processes�
→ Strategic risk management: its purpose is to optimise
the risks taken by the Baloise Group while maximising its
earnings potential�
RISK MAP
The risk map distinguishes between the following categories
of risk to which Baloise is exposed:
→ Actuarial risk;
→ Market risk;
→ Financial-structure risk;
→ Business-environment risk;
→ Operational risk;
→ Strategic & information risk�
A detailed description of these risks can be found in the Finan-
cial Report section on page 122�
The risk map is firmly embedded in the organisational
structure and responsibilities of the entire Baloise Group� Each
risk is assigned to a risk owner (with overall responsibility) and
to a separate risk controller (responsible for risk management
and control)�
RISK GOVERNANCE AND RISK CULTURE
The development and expansion of risk governance and risk
culture has a long tradition at Baloise� We are constantly work-
ing to enhance this culture across the entire organisation� Des-
ignated risk owners and risk controllers dealing with specific
risk issues are as much a part of this culture as committees that
meet regularly to discuss risks� At the same time, our risk mod-
els and processes are continually refined� The internal control
system (ICS) and the compliance function are further major
planks of this strategy�
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Sustainable business management
Risk management
The most senior decision-making body in Baloise’s risk organ-
isation is the Board of Directors of Bâloise Holding Ltd, while
ultimate responsibility for risk control lies with the Board of
Directors’ Audit and Risk Committee� The Chief Risk Officer
for the Baloise Group reports regularly to both of these bodies
and is partly personally responsible for risk-related issues�
The Board of Directors is empowered to determine the
risk strategy, which is derived from Baloise’s business strategy
and objectives and addresses issues around the Company’s risk
appetite and risk tolerance�
The Group Risk Committee and the local risk committees
in each business unit – which comprise members of the Cor-
porate Executive Committee and of the local senior management
teams respectively – decide how the risk strategy is developed
and designed and how the pertinent policies are implemented
in day-to-day business� Bodies specially set up to examine spe-
cific risk areas such as asset/liability management, compliance,
IT risk and the use of reserves also compile submissions for the
committees to facilitate their decision-making on these issues�
The Group Risk Management team works closely with the local
risk experts to complete the picture� This inclusive risk organ-
isation approach provides us with a platform for sharing and
constantly refining best practice�
Group Risk Management is responsible for
→ developing consistent, mandatory risk models for the
entire Baloise Group,
→ monitoring Group-wide standards,
→ reporting risks,
→ complying with risk processes and procedures, and
→ communicating with external partners such as auditors,
corporate supervisory bodies and credit rating agencies�
The business units are responsible for local implementation of
the standards and requirements specified by the Baloise Group�
Overall responsibility lies with the Baloise Group’s Chief
Financial Officer, followed by its Chief Risk Officer�
RISK MEASUREMENT
Our risk model standardises the process of quantifying our
business risks and financial market risks across all strategic
business units� It is consistent with the principles and calcula-
tion methods applied by the Swiss Solvency Test and with the
European Union’s Solvency II directives� As a ground breaking
risk management tool, it provides a firm foundation on which
management can make strategic and operational decisions�
The economic risk capital derived from Baloise’s models
is currently the most advanced market standard� To this end,
risk measurement metrics alone are used to calculate a target
capital figure – irrespective of any financial accounting treat-
ment or regulatory capital requirements under Solvency I – to
ensure that the Company remains solvent even in adverse cir-
cumstances and can meet its obligations to policyholders at all
times� We constantly compare this target capital figure with the
capital currently available (the “actual” capital)�
In addition to this holistic risk model we use the risk map
to identify, describe and evaluate specific risks in terms of their
likely impact on our operating profit or loss� Our corporate
database of specific risks – which contains a detailed description
of the risks concerned, their classification on the risk map and
early-warning indicators – is generated from this standardised
process� We use quantitative methods to supplement this de-
scription by measuring these risks’ probable financial impact
on the Company’s balance sheet� Each risk is documented
together with the measures needed to mitigate it� The database
is updated every six months�
This combination of a holistic risk model with analysis of
specific risks ensures that Baloise maintains an adequate over-
view of the prevailing risk situation at all times�
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Sustainable business management
Risk management
RISK PROCESSES
Group-wide risk management standards place the risk process
on a mandatory footing� These rules stipulate methods, rules
and limits that must be applied throughout the Baloise Group�
These standards determine how the various risk issues are
evaluated, managed and reported� A number of risk limits act
as early-warning indicators to mitigate the risks taken�
The Baloise Group uses a system of limits based on eco-
nomic risk capital in order to mitigate its risks holistically at an
aggregate level� This system tracks the risk capital held by the
Baloise Group and individual business units in real time� We
also monitor issue-specific risks individually by imposing lim-
its, as illustrated by the following examples:
→ Actuarial risk is determined by underwriting guidelines
on which local underwriters base their decisions� Risk
metrics analysis of the deductibles payable supplements
the Company’s key reinsurance strategies�
→ We use appropriate reporting procedures to monitor mar-
ket risk and financial-structure risk across all our invest-
ment units� In addition to upper limits on equity expo-
sures, for example, there are clear and binding guidelines
on bond ratings� The applicable “Basel” approach and
advanced statistical methods are used to assess credit
risk� In addition, we use our risk analysis to monitor the
overall solvency position once a month�
→ We capture business-environment risk, operational risk
and strategic risk on both a standardised and individual
basis, and we assess them in terms of their impact on our
capital�
Comprehensive semi-annual risk reports are discussed with the
relevant decision makers so that the necessary measures can be
devised� Reports submitted to regulatory authorities complete
the picture� In addition, risk managers’ assessment of the risk
situation is factored into the remuneration paid to executives�
The three criteria used to determine the performance pool pay-
ments awarded to individuals are the achievements, leadership
and conduct of the manager concerned� The individual perfor-
mance pool payment proposed by the respective line manager
is discussed by the relevant management team, compared with
other departments and divisions and adjusted where necessary�
This process ensures that risk-relevant behavioural attributes
are factored into the performance pool payments awarded to
individuals�
STRATEGIC RISK MANAGEMENT
Our internal risk model, which uses standard methods to quan-
tify all our business risks and financial market risks, forms the
basis for strategic discussions about Baloise’s risk appetite� The
capital requirements derived from this model constitute mini-
mum requirements for our “actual” capital�
This process provides a 360-degree view of our key stra-
tegic risks and how they are managed� Our strategic risk man-
agement offers the clear prospect of penetrating new business
lines and optimising the risk/return profile of our existing
business�
Profit targets for individual business units that factor in
their specific risk situation are a major aspect of this risk man-
agement system� These targets form part of the overall objectives
agreed with local management teams�
44
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24�03�2015 13:16:57
Our risk management will continue to evolve over the coming
years, reaffirming Baloise’s standing as a company with an out-
standing risk strategy and risk positioning�
Further information on risk management can be found
in the 2014 Financial Report (section 5, “Management of insur-
ance risk and financial risk”, on pages 120 to 162)�
Sustainable business management
Risk management
OUR PROFESSIONAL RISK MANAGEMENT DEMONSTRATED ITS
PROVEN STRENGTHS IN 2014
Baloise’s risk strategy principles are designed for the long term,
as shown by the Company’s excellent risk positioning in 2014�
Proof positive of this situation was the Baloise Group’s solven-
cy ratio, which remained very high at 354 per cent and bears
testimony to its financial strength�
Underwriting approaches that have been tried and tested
for many years were maintained in 2014:
→ The Baloise Group’s investment strategy continues to
focus on diversification and on the basic principle of only
investing in assets that we ourselves can fully and accu-
rately evaluate�
→ We continued to actively manage our credit risk and cur-
rency risk�
→ With a net equity exposure of 7�5 per cent at 31 December
2014, our equity investments in the reporting year lay
comfortably within our risk-bearing capacity�
→ The high quality of recurrent investment income gener-
ated by our stable real estate portfolio proved to be a valu-
able source of revenue�
→ Much of our focus is directed at managing our interest
rate risk� Wherever possible, we reconcile our payment
obligations to customers for future years with the income
earned from our investments� The high quality of recur-
rent investment income generated by our stable real estate
portfolio has proved very helpful in this respect� We also
invest in safe long-term bonds denominated in either
Swiss francs or euros and supplement this strategy by
using derivative financial instruments such as swaptions�
→ Our underwriting business has proved to be highly con-
sistent, with the Baloise Group’s net combined ratio of
93�6 per cent demonstrating our excellent capabilities in
underwriting and managing non-life risk�
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24�03�2015 13:13:17
4 Baloise
16 Review of operating performance
36 Sustainable Business Management
48 Corporate Governance
92 Financial Report
246 Bâloise Holding Ltd
260 Notes
E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C
Corporate
Governance
CORPORATE GOVERNANCE REPORT
INCLUDING REMUNERATION REPORT ��������������������������������������������� 48
Structure of the Baloise Group and shareholder base ������������ 48
Capital structure ������������������������������������������������������������������������������������� 49
Board of Directors ���������������������������������������������������������������������������������� 50
Corporate Executive Committee ����������������������������������������������������� 57
Remuneration Report ��������������������������������������������������������������������������� 61
Report of the statutory auditor to the Annual General
Meeting of Bâloise Holding Ltd, Basel ������������������������������������������� 84
Shareholder participation rights ������������������������������������������������������ 86
Changes of control and poison-pill measures ��������������������������� 87
External auditors ������������������������������������������������������������������������������������� 87
Significant amendments to the Articles of Association
submitted to the 2015 Annual General Meeting ���������������������� 88
Information policy ��������������������������������������������������������������������������������� 88
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Corporate Governance
Corporate Governance Report
including Remuneration Report
Transparent corporate governance
As a company that adds value, Baloise has always attached great importance to practising
sound, responsible corporate governance and continues this tradition today.
Operating in line with the Swiss Code of Best Practice and the
SIX Corporate Governance Guidelines, Baloise strives to foster
a corporate culture of high ethical standards that emphasises
the integrity of the Company and its employees� Baloise is con-
vinced that high-quality corporate governance has a positive
impact on its long-term performance� The Company therefore
rapidly and transparently implemented the new requirements
under the Swiss Ordinance Against Excessive Remuneration in
Listed Companies Limited by Shares (ERCO) and, in 2014, gave
shareholders the opportunity to hold a binding vote on the total
remuneration of the Board of Directors and the Corporate
Executive Committee�
This chapter reflects the structure of the SIX Corporate
Governance Guidelines as amended on 1 September 2014 in
order to enhance transparency and, consequently, improve
comparability with previous years and other companies� It in-
cludes economiesuisse’s Swiss Code of Best Practice for Corpo-
rate Governance and, in particular, Appendix 1 to the latter,
which contains recommendations on the remuneration paid to
the Board of Directors and the Executive Committee� Baloise
publishes its own remuneration report as item 5 of its Corporate
Governance Report, which meets the criteria specified in cir-
cular 2010/1 of the Swiss Financial Market Supervisory Author-
ity (FINMA)�
1. STRUCTURE OF THE BALOISE GROUP AND
SHAREHOLDER BASE
Structure of the Baloise Group
Headquartered in Basel, Switzerland, Bâloise Holding is a pub-
lic limited holding company that is incorporated under Swiss
law and listed on the Swiss Exchange (SIX)� The Baloise Group
had a market capitalisation of CHF 6,390 million as at 31 De-
cember 2014�
→ Information on Baloise shares can be found from page 8
onwards�
→ Significant subsidiaries, joint ventures and associates as at
31 December 2014 can be found from page 238 onwards in
the notes to the consolidated annual financial statements,
which form part of the Financial Report�
→ Segment reporting by region and operating segment can
be found from page 165 onwards in the notes to the con-
solidated annual financial statements within the Financial
Report section�
→ The Baloise Group’s operational management structure is
presented on page 60�
Shareholder base
As a public company with a broad shareholder base, Bâloise
Holding is a member of the SMI Mid (SMIM) Index and the
Swiss Leader Index (SLI)�
Shareholder structure
A total of 19,627 shareholders were registered in Bâloise
Holding’s share register as at 31 December 2014� The number
of registered shareholders had decreased by 5�5 per cent com-
pared with the previous year� The “Significant shareholders”
section on page 253 provides information on the structure of
the Company’s shareholder base as at 31 December 2014�
The reports that were submitted to the issuer and to SIX
Swiss Exchange AG’s disclosure office during the reporting year
in compliance with section 20 of the Swiss Federal Act on Stock
Exchanges and Securities Trading (BEHG) and were published
on the latter’s electronic reporting and publication platform in
compliance with section 21 BEHG can be viewed using the search
function at http://www�six-exchange-regulation�com/obliga-
tions/disclosure/major_shareholders_de�html
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including Remuneration Report
Treasury shares
Bâloise held 2,228,441 treasury shares (4�5 per cent of the issued
share capital) as at 31 December 2014�
Cross-shareholdings
There are no cross-shareholdings based on either capital owner-
ship or voting rights�
2. CAPITAL STRUCTURE
Dividend policy
Bâloise Holding pursues a policy of paying consistent, earnings-
related dividends� It uses other dividend instruments such as
share buy-backs and options to supplement conventional cash
dividends� Shareholders have received a total of CHF 1,214�3
million from cash dividends and share buy-backs over the last
five years� Baloise has therefore had a combined annual payout
rate of between 30 per cent and 50 per cent in recent years�
Year (CHF million)
2010
2011
2012
2013
2014
Total
Cash dividends
Share buy-backs
Total
225.0
225.0
225.0
237.5
250.0
34.7
17.1
–
–
–
259.7
242.1
225.0
237.5
250.0
1,162.5
51.8
1,214.3
All figures stated as at 31 December.
Bâloise Holding’s equity
The table below shows the changes in equity during the last
three reporting years�
CHANGES IN BÂLOISE HOLDING'S EQUIT Y
(BEFORE APPROPRIATION OF PROFIT)
2012
2013
2014
5.0
11.7
173.9
224.9
244.1
659.6
5.0
11.7
176.3
240.7
56.3
490.1
5.0
11.7
182.8
52.4
406.5
658.4
CHF million
Share capital
General reserve
Reserve for
treasury shares
Other reserves
Distributable
profit
Equity attribut-
able to Bâloise
Holding
All figures stated as at 31 December.
The share capital of Bâloise Holding has totalled CHF 5�0 million
since 29 April 2008 and is divided into 50,000,000 dividend-
bearing registered shares with a par value of CHF 0�10 each�
Authorised and conditional capital;
other financing instruments
Authorised capital
A resolution adopted by the Annual General Meeting on 2 May
2013 has authorised the Board of Directors until 2 May 2015 to
increase the Company’s share capital by up to CHF 500,000 by
issuing up to 5,000,000 fully paid-up registered shares with
a par value of CHF 0�10 each (see section 3 (4) of the Articles of
Association)�
→ www.baloise.com/rules-regulations
Conditional capital
The 2004 Annual General Meeting created conditional capital�
This capital enables the Company’s share capital to be increased
by up to 5,530,715 registered shares with a par value of
CHF 0�10 each (see section 3 (2) of the Articles of Association)�
This constitutes a nominal share capital increase of up to
CHF 553,071�50�
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Conditional capital is used to cover any option rights or conver-
sion rights granted in conjunction with bonds and similar se-
curities� Shareholders’ pre-emption rights are disapplied� Hold-
ers of the pertinent option rights and conversion rights are
entitled to subscribe for the new registered shares� The Board
of Directors may restrict or disapply shareholders’ pre-emption
rights when issuing warrant-linked bonds or convertible bonds
in international capital markets�
→ www.baloise.com/rules-regulations
Other equity instruments
The Company has no profit-participation certificates�
The Baloise Group’s consolidated equity
The Baloise Group’s consolidated equity amounted to CHF 5,831�0
million on 31 December 2014� Details of changes in consoli-
dated equity in 2013 and 2014 can be found in the consolidated
statement of changes in equity on pages 98 and 99 in the Finan-
cial Report section� All pertinent details relating to 2012 can be
found in the consolidated statement of changes in equity on page
96 in the Financial Report section of the 2013 Annual Report�
Bonds outstanding
Bâloise Holding and one other Baloise Group company have
issued bonds publicly� Bâloise Holding and one other Baloise
Group company had a total of nine public bonds outstanding
at the end of 2014� Details of outstanding bonds of Bâloise Hold-
ing can be found on pages 215 and 251 and on the internet�
→ www.baloise.com/bonds
Credit rating
Credit rating agency Standard & Poor’s upgraded Baloise Insur-
ance Ltd to ‘A’ with a stable outlook on 27 June 2014� S&P
awarded this rating in recognition of the firm’s very strong
capitalisation, its excellent operational profitability and its
solid competitive position in Baloise’s core markets� The agen-
cy also rated the firm’s risk management as strong� The rating
was awarded to Bâloise Holding Ltd’s Swiss subsidiary – Baloise
Insurance Ltd, which is a core company of the Baloise Group�
→ www.baloise.com/s&prating
3. BOARD OF DIRECTORS
Election and term of appointment
The Board of Directors consisted of nine members at the end
of 2014� Since the 2014 Annual General Meeting each member
of the Board of Directors has been elected for a term of one year
at a time�
The average age on the Board of Directors is currently 60�
Each member of the Board of Directors is elected individually�
Members of the Board of Directors
All members of the Board of Directors – including the Chair-
man – are non-executives� They were not involved in the day-
to-day management of any Baloise Group companies in any of
the three financial years immediately preceding the reporting
period, and they maintain no material business relationships
with the Baloise Group�
During the reporting year, Dr Michael Becker, Dr An-
dreas Beerli, Dr Georges-Antoine de Boccard, Dr Andreas
Burckhardt, Karin Keller-Sutter, Werner Kummer, Thomas
Pleines and Dr Eveline Saupper were re-elected as members of
the Board of Directors for a one-year term until the end of the
next ordinary Annual General Meeting� Dr Georg F� Krayer
announced that he was stepping down from the Board of Direc-
tors at the 2014 Annual General Meeting� Christoph B� Gloor
was newly elected to the Board of Directors�
Because their term of appointment is limited to one year,
all members of the Board of Directors will have to be re-elected
at the 2015 Annual General Meeting unless they are stepping
down from the Board� All members of the Board of Directors
are standing for re-election�
Further information on the members of the Board of Di-
rectors can be found on the internet�
→ www.baloise.com/board-of-directors
Statutory rules concerning the number of permitted activities
Section 12 (1) clause 1 of the Swiss Ordinance Against Excessive
Remuneration in Listed Companies Limited by Shares (ERCO)
states that the Articles of Association must contain legal provi-
sions concerning the number of permitted activities that the
members of the Board of Directors perform on the senior governing
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Corporate Governance Report
including Remuneration Report
or management bodies of legal entities that are required to be
entered in the Swiss commercial register or in an equivalent
foreign register and that are not controlled by the Company
and do not control the Company� The Board of Directors will
propose to the 2015 Annual General Meeting that a legal provision
to this effect be incorporated into the Articles of Association�
Interlocking directorates
There are no interlocking directorates�
MEMBERS
Dr Andreas Burckhardt, Chairman, Basel
Werner Kummer, Vice-Chairman, Küsnacht
Dr Michael Becker, Darmstadt
Dr Andreas Beerli, Oberwil-Lieli
Dr Georges-Antoine de Boccard, Conches
Christoph B. Gloor, Riehen
Karin Keller-Sutter, Wil
Thomas Pleines, Munich
Dr Eveline Saupper, Zurich
Chairman’s
Committee
Audit
Committee
Remuneration
Committee
Investment
Committee
Nationality
Born in
Appointed in
C
VC
M
M
C
DC
M
M
M
M
DC
C
C
M
M
DC
CH
CH
D
CH
CH
CH
CH
D
CH
1951
1947
1948
1951
1951
1966
1963
1955
1958
1999
2000
2010
2011
2011
2014
2013
2012
1999
C: Chairman, VC: Vice-Chairman, C: Chair, DC: Deputy Chair, M: Member.
BOARD AT TENDANCE IN 2014: MEETINGS OF THE FULL BOARD OF DIRECTORS
19.03.2014 24.04.2014 06.06.2014 23.06.2014 26.06.2014 26.08.2014 24.09.2014 16.12.2014
17.12.2014
Dr Andreas Burckhardt, Chairman
Dr Georg F. Krayer, Vice-Chairman
(until 24 April 2014)
Werner Kummer, Vice-Chairman
Dr Michael Becker
Dr Andreas Beerli
Dr Georges-Antoine de Boccard
Christoph B. Gloor
Karin Keller-Sutter
Thomas Pleines
Dr Eveline Saupper
x
x
x
x
x
x
x
x
x
x
x
x
n/a
n/a
x
x
x
x
x
x
x = present, 0 = absent, n / a = not applicable.
All members were attending the respective committee meetings.
x
n/a
x
n/a
x
n/a
x
n/a
x
n/a
x
n/a
x
n/a
x
x
x
x
0
x
x
x
x
x
x
0
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
51
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including Remuneration Report
Eveline Saupper (1958, Switzerland, Dr iur�, lawyer) has been
a member of the Board of Directors since 1999� She studied
jurisprudence at the University of St� Gallen� She is a lawyer
and a certified tax expert� She worked for Peat Marwick Mitch-
ell (now KPMG Fides), Zurich, from 1983 to 1985 and was em-
ployed by Baker & McKenzie, Zurich and Chicago, from 1985
to 1992� Until mid-2014 she was a partner at Homburger AG,
Zurich, where she is now ‘of counsel’� She sits on the Boards of
Directors at hkp group AG, Zurich, Syngenta AG, Basel, and
Stäubli Holding AG, Pfäffikon SZ, and chairs the Board of Di-
rectors at Mentex Holding AG, Schwyz� Since 18 March 2015
she is a member of the Board of Directors of Georg Fischer AG,
Schaffhausen� Dr Saupper is an independent non-executive
director�
Dr Andreas Burckhardt, Chairman of the Board of Directors (right), Dr Eveline Saupper (left).
Andreas Burckhardt (1951, Switzerland, Dr iur�, lawyer) has been
a member of the Board of Directors since 1999 and its Chairman
since 29 April 2011� He studied jurisprudence at the universities
of Basel and Geneva� He worked in the legal department of Fides
Treuhandgesellschaft from 1982 to 1987 and served as Secretary
General of the Baloise Group from 1988 to 1994� He was direc-
tor and head of the Basel Chamber of Commerce from 1994 to
April 2011� In this role he sat on various governing bodies of
national and regional business organisations� From 1981 to 2011
he performed political functions in Basel City, and from 1997
to 2011 he served on the Great Council of the Canton of Basel
City (as Chairman in 2006 and 2007)� He sits on the Board of
Directors of Carl Spaeter AG and is Vice-Chairman of the Board
of Governors of the Swiss Tropical and Public Health Institute,
Basel� He is a member of the Executive Committee of econo-
miesuisse and sits on the Executive Board of the Employers’
Federation for Basel and Regio Basiliensis� Dr Burckhardt per-
forms a non-executive function as Chairman of Baloise’s Board
of Directors�
52
Werner Kummer, Vice-Chairman of the Board of Directors (left), Dr Andreas Beerli (right).
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including Remuneration Report
Dr Michael Becker (left), Christoph B. Gloor (right).
Werner Kummer (1947, Switzerland, Dipl�-Ing� ETH Zurich, MBA
Insead) has been a member of the Board of Directors since 2000
and Vice-Chairman since 2014� From 1990 to 1994 he was CEO
of Schindler Aufzüge AG and subsequently, until 1998, sat on
Schindler’s Group Management Committee, where he was re-
sponsible for the Asia Pacific region� Until 2013 he was a mem-
ber of the Supervisory Board of Schindler Deutschland Holding
GmbH� He was CEO of Forbo Holding AG from 1998 until 2004�
He is a freelance management consultant, Chairman of the Board
of Directors at Gebrüder Meier AG, a member of other Super-
visory Boards of non-listed companies in Switzerland and abroad
and an executive director of the Zurich Chamber of Commerce�
Mr Kummer is an independent non-executive director�
Andreas Beerli (1951, Switzerland, Dr iur�) has been a member
of the Board of Directors since 2011� He studied law at the Uni-
versity of Basel� In 1979 he started working as an underwriter
for the German market at Swiss Re� From 1985 to 1993 he per-
formed various managerial roles at Baloise, with the main focus
on supervising and supporting several foreign units� He then
returned to Swiss Re, where he became a member of the Group
Executive Committee in 2000, first in the United States as Head
of Swiss Re Americas and, most recently, in Zurich as Chief
Operating Officer for the entire Swiss Re Group� Since 2009 he
has acted as an independent adviser on the Boards of Directors
and Advisory Boards of companies and professional associa-
tions� He is a member of the Board of Directors at Ironshore
Europe Inc�, Dublin; a member of the Advisory Board of Ac-
centure Schweiz, and Chairman of the Swiss Advisory Council
of the American Swiss Foundation� Dr Beerli is an independent
non-executive director�
Michael Becker (1948, Germany, Dr iur�) has been a member of
the Board of Directors since 2010� He studied law in Hamburg
and Tübingen and became Head of Accounting and Finance at
Merck KGaA, Darmstadt, in 1998� He was an executive director
and general partner at the publicly listed company Merck KGaA
from 2000 until the end of 2011, and he was an executive direc-
tor and general partner at E� Merck KG, Darmstadt, which holds
70 per cent of the share capital in Merck KGaA, from 2002
until the end of 2011� He also sits on the Supervisory Board at
Symrise AG, Germany� Dr Becker is an independent non-exec-
utive director�
Christoph B. Gloor (1966, Switzerland) has been a member of
the Board of Directors since 2014� He holds a university degree
in business economics and is Chief Executive Officer of Basel-
based private bank La Roche & Co AG� Prior to joining La Roche
& Co AG on 1 December 1998, he worked for Swiss Bank Cor-
poration (SBC) before moving to Vitra (International)� Christoph
B� Gloor served as president of the Association of Swiss Private
Banks from November 2013 to February 2015 and was a mem-
ber of the Board of Directors of the Swiss Bankers Association
from September 2013 to February 2015� He is a designated mem-
ber of the management board of the future Notenstein La Roche
Privatbank AG� Mr Gloor is an independent non-executive
director�
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including Remuneration Report
Dr Georges-Antoine de Boccard, Karin Keller-Sutter, Thomas Pleines (from left to right).
Georges-Antoine de Boccard (1951, Switzerland, Dr med�) has
been a member of the Board of Directors since 2011� He studied
medicine at the University of Geneva� He has been running his
own urological surgery practice in Geneva since 1987� He is
Vice-Chairman of the Board of Directors at Citadel Finance SA
and was Chairman of the Swiss Association of Urology from
2005 to 2006� He chairs the Board of Directors at Citadel Finance
SA and was Chairman of the Swiss Association of Urology from
2005 to 2006� He is a member of the Swiss Association of Urol-
ogy, the European Association of Urology and other profes-
sional bodies and associations and sits on the Boards of Direc-
tors of various foundations� Dr de Boccard is an independent
non-executive director�
Karin Keller-Sutter (1963, Switzerland), who holds a university
degree in translation and conference interpreting and has a
postgraduate qualification in education, has been a member of
the Board of Directors since 2013� In 1996 she was elected to
St� Gallen’s cantonal parliament and became Chairwoman of
the FDP (the Swiss Liberal Party) for the canton of St� Gallen
before being elected to St� Gallen’s cantonal governing council
in 2000� She was in charge of the security and justice depart-
ment until May 2012 and chaired the Governing Council in
2006/2007 and again in 2011/2012� She was elected to the Coun-
cil of States – the upper chamber of the Swiss parliament – in
the autumn of 2011� Ms Keller-Sutter sits on the Boards of
Directors at the NZZ media group and Pensimo Fondsleitung
AG� She is also a member of the Board of Directors at the ASGA
pension fund and chairs the Board of Trustees at the Pensimo
investment trust� She is Chairwoman of the Swiss Retail Fed-
eration and a member of the Executive Committee of the Swiss
Employers’ Federation� Ms Keller-Sutter is an independent non-
executive director�
Thomas Pleines (1955, Germany, lawyer) has been a member of
the Board of Directors since 2012� From 2003 to 2005 he was
CEO and delegate of the Board of Directors at Allianz Suisse,
Zurich, and from 2006 to 2010 was CEO of Allianz Versicherungs-
AG, Munich, and an executive director at Allianz Deutschland
AG, Munich� From 1998 to 2013 Mr Pleines sat on the
Supervisory Board of Bilfinger SE, Mannheim� Since 2011, he
has been Chairman of the Presidential Board at DEKRA e�V�,
Stuttgart, Chairman of the Supervisory Board of DEKRA SE,
Stuttgart, Chairman of the Supervisory Board at SÜDVERS
Holding GmbH & Co� KG, Au near Freiburg, and a member of
the Board of Directors at KABA Holding AG, Rümlang near
Zurich� Mr Pleines is an independent non-executive director�
Secretary to the Board of Directors:
Andreas Eugster, Oberwil (BL) (until 30 April 2015)
Dr Philipp Jermann, Buus (BL) (from 1 May 2015)
Head of Group Internal Audit: Rolf-Christian Andersen, Meilen
54
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Corporate Governance
Corporate Governance Report
including Remuneration Report
Internal organisation
Functions and responsibilities of the Board of Directors
Subject to the decision-making powers exercised by sharehold-
ers at the Annual General Meeting, the Board of Directors is
the Company’s ultimate decision-making body� Decisions are
taken by the Board of Directors unless authority has been del-
egated on the basis of the Organisational Regulations to the
Chairman of the Board of Directors, its committees, the Chief
Executive Officer or the Corporate Executive Committee�
Section 716a of the Swiss Code of Obligations (OR) and
clause A3 of the Organisational Regulations state that the Board
of Directors’ main functions and responsibilities are to act as
the Company’s ultimate managerial and supervisory body, to
oversee the Company’s finances and to determine its organi-
sational structures�
→ www.baloise.com/rules-regulations
Committees of the Board of Directors
The Board of Directors has four committees, which support it
in its activities� These committees report to the Board of Direc-
tors and submit the necessary proposals for their particular
areas of responsibility�
The committees appointed by the Board of Directors gen-
erally consist of four members, who are newly elected every year
by the Board of Directors� Since 2014, section 7 ERCO has re-
quired the members of the Remuneration Committee to be
elected by the Annual General Meeting� The Chairman and
Vice-Chairman of the Board of Directors are ex officio members
of the Chairman’s Committee� The Chairman of the Board of
Directors is not allowed to sit on the Audit and Risk Commit-
tee� The committees’ basic functions and responsibilities are
specified in the Organisational Regulations� Additional spe-
cific regulations applicable to individual committees also gov-
ern administrative and other aspects�
→ www.baloise.com/rules-regulations
Functions and responsibilities of the committees
The Chairman’s Committee provides advice on key transactions,
especially those involving important strategic or personnel-
related decisions� The Chairman’s Committee also performs the
function of a Nominations Committee and prepares personnel-
related matters that fall within the remit of the Board of Direc-
tors for subsequent approval by the latter�
The Investment Committee’s main responsibilities are to
oversee the Baloise Group’s investment activities, define the
basic principles of its investment policy, specify the asset alloca-
tion strategy for all strategic business units and devise the rel-
evant investment plan�
The Remuneration Committee proposes to the Board of
Directors – for subsequent approval by the Annual General
Meeting – the structure and amount of remuneration paid to
the members of the Board of Directors and of the salaries paid
to the members of the Corporate Executive Committee� Under
ERCO, the remuneration paid to the Board of Directors and the
Corporate Executive Committee has had to be approved by
the Annual General Meeting since 2014� The Remuneration
Committee approves the target agreements and performance
assessments that are applied to the Corporate Executive Com-
mittee members in order to determine their variable remu-
neration� It also sanctions the remuneration policies applicable
to the Corporate Executive Committee members and ensures
that they are being correctly implemented� It approves the
variable remuneration granted to individual members of the
Corporate Executive Committee; from 2014 this remuneration
has to be within the maximum amount approved by the An-
nual General Meeting� Furthermore, it specifies the total amount
available in the performance pool�
The Audit and Risk Committee supports the Board of
Directors in its non-delegable overarching supervisory and fi-
nancial oversight functions (section 716a OR) by ascertaining
whether the internal and external control systems, including
risk management, are well organised and function properly, by
assessing the situation with respect to compliance in the Com-
pany and by forming its own view of the Company’s separate
and consolidated annual financial statements� It receives regu-
lar reports on the work and findings of Group Internal Audit
and on cooperation with the external auditors�
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Meetings of the Board of Directors and its committees
The Organisational Regulations stipulate that the full Board of
Directors must meet as often as business requires, but no fewer
than four times a year�
→ www.baloise.com/rules-regulations
The full Board of Directors of Bâloise Holding met on nine oc-
casions in 2014� The table on page 51 shows Board of Directors
members’ attendance at these meetings� All members of the
relevant committee in each case attended every one of the ad-
ditional 15 committee meetings� This means that the Board of
Directors achieved an overall meeting attendance rate of 99 per
cent� One meeting of the Board of Directors was primarily used
to provide its members with further information on the latest
developments and trends in the sale of insurance products�
Meetings of the Board of Directors and its committees usually
last half a working day each�
→ www.baloise.com/board-attendance
The Chairman’s Committee convened six times in 2014, which
included one two-day strategy meeting� The Investment Com-
mittee met on three occasions� The Audit and Risk Committee
held four meetings, and the Remuneration Committee convened
twice�
Meetings of the Board of Directors are regularly attended
by members of the Corporate Executive Committee and the
Secretary to the Board of Directors� Meetings of the Chairman’s
Committee are usually attended by the Group CEO, the Chief
Financial Officer and the Secretary to the Board of Directors�
Those present at Audit and Risk Committee meetings are pri-
marily the Chief Financial Officer, the Head of the Corporate
Centre, the Head of Group Internal Audit, the Secretary to the
Board of Directors, and representatives of the external auditors
and, occasionally, the Chief Risk Officer, the Chief Investment
Officer and the Group Compliance Officer� The main attendees
at Remuneration Committee meetings are the Group CEO, the
Head of the Corporate Centre and the Head of Group Human
Resources� Meetings of the Investment Committee are usually
attended by the Group CEO, the Chief Investment Officer and
the Secretary to the Board of Directors�
56
Division of authorities, functions and responsibilities between
the Board of Directors and the Corporate Executive Committee
The division of authorities, functions and responsibilities be-
tween the Board of Directors and the Corporate Executive Com-
mittee is governed by law, the Articles of Association and the
Organisational Regulations� The latter are reviewed on an on-
going basis and updated as changing circumstances require�
→ www.baloise.com/rules-regulations
Tools used to monitor and obtain information on the Corporate
Executive Committee
Group Internal Audit reports directly to the Chairman of the
Board of Directors�
Effective risk management is essential for any insurance
group� This is why Baloise has devoted two entire chapters to
the subject of financial risk management from page 42 onwards
and in the Financial Report section starting on page 120�
The members of the Board of Directors receive copies of
the minutes of Corporate Executive Committee meetings for
their information� The Chairman of the Board of Directors may
attend meetings of the Corporate Executive Committee at any
time�
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Dr Martin Strobel, Group CEO (left), Dr Thomas Sieber, Head of Corporate Divsion Corporate Center (right).
4. CORPORATE EXECUTIVE COMMITTEE
Martin Strobel (1966, Germany / Switzerland, Dr rer� pol�) stud-
ied computer science, business management and business infor-
mation systems at the universities of Kaiserslautern, Windsor
(Canada) and Bamberg� From 1993 to 1999 he performed various
roles at Boston Consulting Group, Düsseldorf, dealing with stra-
tegic IT management issues in the banking and insurance sectors�
He joined the Baloise Group at the beginning of 1999� He was
initially Head of IT at Basler Switzerland and, within the Baloise
Group, was in charge of major cross-functional projects in the
areas of insurance and finance� From 2003 to 2008 he was
a member of the Corporate Executive Committee with respon-
sibility for Corporate Division Switzerland� He became Chief
Executive Officer on 1 January 2009� In addition, he headed up
Corporate Division International from 2013 to the end of 2014�
Thomas Sieber (1965, Switzerland, Dr iur�, M�B�L�, lawyer, SDM
mediator) studied law at the University of St� Gallen� At the
beginning of 1994 he qualified to practise as a lawyer in the
Swiss canton of Zurich� From 1999 to 2002 he lectured in cor-
porate law at the University of St� Gallen� After brief spells work-
ing at Landis & Gyr and Siemens he joined the Baloise Group
in 1997 as Deputy Head of Legal & Tax� He became Head of this
division in 2001 and, in addition, was secretary to Bâloise Hold-
ing’s Board of Directors until April 2012� Since 6 December
2007 he has been a member of the Corporate Executive Com-
mittee and, as Head of the Corporate Centre, is responsible for
Group Human Resources, Legal and Tax, Group Compliance,
Corporate Development, Run-Off Business and – since 2009
– Group Procurement� He also sits on the Board of Directors
at EuroAirport Basel-Mulhouse-Freiburg�
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Jan De Meulder, CEO of Basler Versicherungen in Germany (left), Michael Müller, Head of Corporate Division Switzerland (right).
Jan De Meulder (1955, Belgium) studied mathematics and actu-
arial mathematics at the universities of Antwerp and Leuven,
Belgium� From 1978 to 1992 he worked for De Vaderlandsche
Insurance, which was part of the ING Group in Antwerp� His
responsibilities here included life insurance product development
and production� After working for two years as General Man-
ager at Life Association of Scotland, he moved to the Fortis Group
in Brussels in 1994, where he performed various senior manage-
rial roles, eventually becoming CEO of Fortis Corporate Insur-
ance� In 2004 he joined the Baloise Group as CEO of the Belgian
subsidiary Mercator Verzekeringen (now Baloise Belgium NV)
in Antwerp� He has been a member of the Corporate Executive
Committee since 1 January 2009 and, in this function, headed
up Corporate Division International from 2009 to 2012� He has
been CEO of the insurance companies in Germany since 1 Jan-
uary 2013� Jan De Meulder has decided to retire on 30 April 2015�
Michael Müller (1971, Switzerland, lic� oec� publ�) graduated in
economics from the University of Zurich, specialising in insur-
ance and accounting/finance� He began his career with Basler
Versicherungen in 1997, starting as a management trainee, then
working in Group Finance and eventually becoming Deputy
Head and, in 2004, Head of Financial Accounting for the Baloise
Group� In 2009, as Head of Finance and Risk, he became a mem-
ber of the senior management team in Corporate Division Swit-
zerland, focusing on financial reporting and accounting, actu-
arial management of the insurance companies, risk management
and coordination of logistics processes and the pool of project
leaders� He has been a member of the Corporate Executive
Committee and CEO of Corporate Division Switzerland since
March 2011�
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Martin Wenk (1957, Switzerland, lic� iur�) held several posts at
a major bank from 1982 to 1992 after graduating in law from
the University of Basel� He started out as an investment
adviser to institutional clients before becoming a Group
Manager in private banking in New York and eventually work-
ing as Section Head of Securities Sales, where he primarily
covered key institutional clients� From 1992 to 2000 he headed
up portfolio management in Switzerland for the Baloise Group,
where he was responsible for managing the assets of several
Swiss companies, including their pension funds� In 2001 he was
appointed to the Corporate Executive Committee (as Head of
Corporate Division Asset Management) and, in this capacity,
is responsible for the Baloise Group’s asset management
activities, which include investment strategy and investment
control, Baloise Asset Management, real estate, and Baloise
Investment Services (investment fund business)� He sits on the
Board of Directors at Unigestion Holding, Geneva, and at the
Swiss Federal Social Security Funds, Geneva�
Martin Wenk, Head of Corporate Division Asset Management (left),
German Egloff, Head of Corporate Division Finance (right).
04_JB_Corporate_Governance_en�indd 59
German Egloff (1958, Switzerland, lic� oec� HSG) graduated in
business management from the University of St� Gallen� From
1985 onwards he held various managerial positions at Winter-
thur Insurance, Switzerland� In 1997, as an executive director,
he was put in charge of personal non-life insurance products,
which included responsibility for both Wincare and – as Chair-
man of the Board of Directors – Sanacare� From 1998 to 2002
he was Chief Financial Officer of Winterthur Switzerland and
sat on the Board of Directors of Wincare, becoming its Chair-
man in 2000� From 2002 to 2004 he was Chief Financial Of-
ficer at Zurich Financial Services, Switzerland� His responsi-
bilities here comprised finance, human resources, IT, logistics
and procurement� Since 1 December 2004 he has been a mem-
ber of the Corporate Executive Committee (heading up Cor-
porate Division Finance), where he oversees corporate com-
munications & investor relations, Group risk management,
Group accounting & finance, and corporate IT� The appointed
actuary for Baloise’s business in Switzerland also reports to
German Egloff�
Further information on the members of the Corporate Execu-
tive Committee can be found on the internet�
With the exception of Dr Thomas Sieber and Martin Wenk,
no Corporate Executive Committee members serve on the Boards
of Directors at companies outside the Baloise Group�
Statutory rules concerning the number of permitted activities
Section 12 (1) clause 1 of the Swiss Ordinance Against Excessive
Remuneration in Listed Companies Limited by Shares (ERCO)
states that the Articles of Association must contain legal provi-
sions concerning the number of permitted activities that the
members of the Corporate Executive Committee perform on
the senior governing or management bodies of legal entities
that are required to be entered in the Swiss commercial register
or in an equivalent foreign register and that are not controlled
by the Company and do not control the Company� The Board
of Directors will propose to the 2015 Annual General Meeting
that legal provisions to this effect be incorporated into the Articles
of Association�
There are no management agreements that assign execu-
tive functions to third parties�
→ www.baloise.com/corporate-executive-committee
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Management structure
(effective date: 31 December 2014)
GROUP CHIEF EXECUTIVE OFFICER
Martin Strobel, Dr rer� pol�*
Group Secretary
Markus von Escher, Dr iur�
SWITZERLAND
Michael Müller*
Product Management
Corporate Clients
Clemens Markstein
Product Management
Private Customers &
Specialised Financial
Services
Wolfgang Prasser
Sales & Marketing
Bernard Dietrich
Baloise Bank SoBa
Jürg Ritz
Operations & IT
Urs Bienz
Finance & Risk
Carsten Stolz,
Dr rer� pol�
Claims
Mathias Zingg
60
INTERNATIONAL
(until 31 December 2014)
Martin Strobel,
Dr rer� pol�*
Germany
Jan De Meulder*
Belgium
Gert De Winter
Luxembourg
Romain Braas
FINANCE
ASSET MANAGEMENT
CORPORATE CENTRE
German Egloff*
Martin Wenk*
Group Accounting &
Controlling
Investment Strategy &
Investment Controlling
Pierre Girard
Thomas Schöb
Corporate
Communications &
Investor Relations
Marc Kaiser
Baloise Asset
Management
Matthias Henny,
Dr phil�
Group Risk Management
Real Estate
Renato Piffaretti
Baloise Investment
Services
Robert Antonietti
Stefan Nölker,
Dr rer� nat�
Corporate IT
Olaf Romer
Appointed Actuary
Switzerland
Thomas Müller,
Dr sc� math�
Thomas Sieber,
Dr iur�*
Corporate Development
Sybille Fischer
Group Human
Resources
Stephan Ragg, Dr iur�
Group Legal and Tax
Andreas Burki
Group Compliance
Peter Kalberer
Run Off
Bruno Rappo
Group Procurement
Manfred Schneider,
Dr rer� nat�
* Member of the Corporate Executive Committee.
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5. REMUNERATION REPORT: REMUNERATION, SHARE OWNER-
SHIP AND LOANS GRANTED TO MEMBERS OF THE BOARD OF
and members of the Board of Directors and to the mem-
bers of the Corporate Executive Committee;
DIRECTORS AND THE CORPORATE EXECUTIVE COMMITTEE
This remuneration report relates to the 2014 financial year� It
describes the remuneration policies adopted and the remu-
neration systems in place, and it discloses the remuneration
paid to the Board of Directors and the Corporate Executive
Committee in 2014� The content and scope of these disclosures
are determined by sections 13 to 17 of the Ordinance Against
Excessive Remuneration in Listed Companies Limited by Shares
(ERCO), section 663c (3) of the Swiss Code of Obligations (OR),
the corporate governance information guidelines published by
the SIX Swiss Exchange, the Swiss Code of Best Practice for
Corporate Governance, and circular 10/1 of the Swiss Financial
Market Supervisory Authority (FINMA) concerning remu-
neration systems�
5.1 Remuneration Committee of the Board of Directors
The Remuneration Committee set up by the Board of Directors
in 2001 is consistent with the Swiss Code of Best Practice and
is tasked with helping the Board of Directors to frame the Com-
pany’s remuneration policies� The Remuneration Committee
has been vested with special decision-making powers and ensures,
among other things, that
→ the remuneration offered by Baloise is in line with the
going market rate and performance-related in order to
attract and retain individuals with the necessary skills
and character attributes;
→ the remuneration paid is demonstrably dependent on the
Company’s sustained success and individuals’ personal
contributions and does not create any perverse incentives;
→ the structure and amount of overall remuneration paid are
consistent with Baloise’s risk policies and encourage risk
awareness�
The Remuneration Committee’s main functions and responsi-
bilities are to
→ submit proposals to the Board of Directors on the struc-
ture of remuneration to be paid in the Baloise Group,
especially the remuneration to be paid to the Chairman
→ submit proposals to the Board of Directors – for approval
by the Annual General Meeting – on the amount of remu-
neration to be paid to the Chairman and members of the
Board of Directors and to the members of the Corporate
Executive Committee;
→ approve the basic salaries and the variable remuneration
paid to individual members of the Corporate Executive
Committee (in compliance with the pay caps stipulated by
the Annual General Meeting);
→ specify the total amount available in the performance pool
and the total amount set aside for the allocation of perfor-
mance share units (PSUs);
→ approve inducement payments and severance packages
that are granted to the most senior managers and which in
individual cases exceed CHF 100,000 (subject to the pro-
viso that no severance packages may be granted to mem-
bers of the Board of Directors or the Corporate Executive
Committee)�
The Remuneration Committee consists of at least three inde-
pendent members of the Board of Directors, who are elected
every year by the Annual General Meeting� Dr Eveline Saupper
(Deputy Chairman),
(Chairwoman), Thomas Pleines
Dr Georges-Antoine de Boccard and Karin Keller-Sutter were
elected to the Remuneration Committee by the Annual Gen-
eral Meeting on 24 April 2014� The Remuneration Committee
maintains an intensive dialogue with senior management
throughout the year and generally meets at least twice annu-
ally� In addition to the committee secretary being present, these
meetings are usually also attended by the Group CEO, the Head
of the Corporate Centre and the Head of Group Human Re-
sources, who participate in an advisory capacity� The individ-
ual members of the Group Executive Committee leave the meet-
ing if the Remuneration Committee is discussing or deciding
on their personal remuneration� The Chairwoman of the Re-
muneration Committee reports to the Board of Directors at its
next meeting on the committee’s activities� In addition, the
minutes of Remuneration Committee meetings are available
to the entire Board of Directors�
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5.2 Remuneration policies
Principles
The Company’s success is largely dependent on the skills,
capabilities and performance of its workforce� It is therefore
essential to recruit, develop and retain suitably qualified, high-
ly capable and highly motivated professionals and executives�
The level of remuneration offered by Baloise is in line with the
going market rate and performance-related� The clearly defined
caps approved by the Annual General Meeting for the pay
awarded to members of the Corporate Executive Committee
ensure that remuneration is not excessive�
Remuneration Guideline and Remuneration Policy
Responding to a request from the Remuneration Committee,
in 2010 the Board of Directors formally adopted a Remunera-
tion Guideline that formulates the remuneration principles
and parameters applied across the Baloise Group� This Remu-
neration Guideline applies to all employees throughout the
Baloise Group� They reflect the Company’s values and principles
and can be summarised as follows:
→ Competitiveness in the marketplace: Baloise aims to pay
basic salaries that are in line with the market – i�e� around
the market median – and to offer variable remuneration
packages in excess of the going market rate to reward out-
standing performance by individuals and the Company;
→ Remuneration that reflects individual and company-wide
performance: merit and achievement form the basis for
advancement and promotion;
→ Fairness and transparency: external market-based com-
parisons, fair pay and no discrimination;
→ Sustainability: high correlation between the interests of
managers and shareholders, long-term commitment, and
a high proportion of restricted shares�
The Board of Directors used this Remuneration Guideline as
the basis for the Remuneration Policy that it formally adopted
at the same time� These regulations apply to all employees in
Switzerland and, by analogy, to all members of staff throughout
the Baloise Group� By adopting this Remuneration Guideline
and Remuneration Policy, the Board of Directors has ensured
that all aspects of remuneration policy are centrally coordi-
nated� This regulatory framework underpins a remuneration
system that meets all the requirements of the Swiss Financial
Market Supervisory Authority and, in particular, ensures that
variable remuneration even more accurately reflects the value
added by the Company�
5.3 Remuneration system
Objectives
The objectives of the remuneration system are to further increase
the emphasis on performance at Baloise and to strengthen em-
ployees’ and executives’ loyalty and commitment to the or-
ganisation� The aim of Baloise’s remuneration policies is to pay
basic salaries in line with the going market rate� In addition,
the variable components of remuneration are structured in such
a way that it is possible to grant payments above the market
median for years in which individual performance and the
Company’s profitability have been good; equally, it is possible
to offer payments below the market median for years in which
performance and profitability have been poor� As a performance-
driven organisation, Baloise clearly and transparently aligns
individual employees’ targets with the Company’s targets, which
are derived from its strategic priorities� Target agreements, per-
formance assessments and remuneration are closely correlated�
The total remuneration package – which comprises basic sal-
ary and variable remuneration – offers a sophisticated way of
linking individuals’ performance to Baloise’s success and rec-
ognising both accordingly, and it is designed to reward employ-
ees for outstanding achievement without creating an incentive
for them to take inappropriate risks� Personal performance
provides our talented individuals with the necessary platform
for their development, advancement, career planning and pro-
motion� Baloise attaches considerable importance to retaining
high performers and managing its business sustainably� In ad-
dition to paying its staff in line with market rates and according
to individual achievement, the Company encourages its execu-
tives to focus on the long term and on its shareholders’ interests�
Consequently, it pays a substantial proportion of variable re-
muneration in the form of shares that are restricted for three
years� Furthermore, the three most senior management levels
receive performance share units, which means that a further
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component of their salaries is paid out as shares; these PSUs
must be held for three years before being converted into shares
as a form of deferred remuneration� As managers’ strategic re-
sponsibility and influence grow, the amount of their variable
remuneration is largely determined by the Company’s profit-
ability and economic value added (allowing for the level of risk
taken)� Short-term variable remuneration as a percentage of
total compensation as well as the proportion of remuneration
paid in the form of restricted shares (i�e� as deferred compensa-
tion) increase accordingly�
Performance management system
Baloise introduced a new performance management system for
short-term variable remuneration in 2011� In order to encourage
employees to focus relentlessly on performance and results while
also factoring in the Company’s success, this system comprises
two clearly distinct tools: performance-related remuneration
and the performance pool� Performance-related remuneration
is used to reward individual employees’ achievements, while
the performance pool as a whole takes account of the Company’s
performance and value added�
The performance management system applies to the most
senior level of management and to most other members of the
management team throughout the Baloise Group�
Experience has shown, however, that the individual targets
and objectives set for the members of the Corporate Executive
Committee essentially equate to the successful management of
their area of responsibility and, consequently, are largely iden-
tical with the Company’s targets� The target agreement and
performance assessment process has therefore been simplified,
and the performance-related remuneration paid to members of
the Corporate Executive Committee has been discontinued since
2014� Individual performance is factored into the measurement
of the performance pool�
Market comparisons
Baloise regularly compares the salaries paid to its senior ex-
ecutives with those paid in the wider market� To do so it uses
function-specific peer groups� Each function being compared
is assigned to one of three distinct peer groups� In assigning the
various functions to these peer groups, Baloise has to consider
the question of which companies it is competing against for the
skill-sets and qualifications needed in each case (i�e� recruitment
market) and which alternative employers – in theory, at least
– meet a certain function profile (i�e� competitors)�
The first peer group replicates Baloise’s core market and
comprises direct insurers in the respective country� This peer
group is used for conventional insurance and sales functions
and for the local CEOs, executive directors and senior manage-
ment functions� The second peer group supplements the core-
market group by including further companies from the banking
and financial services sector in the respective country� This group
is designed to compare functions that demand considerable
financial expertise but do not necessarily require an insurance
background� The third peer group consists of companies of
a similar size and structure from various sectors and is used for
interdisciplinary functions�
Baloise regularly compares the salaries paid in its insur-
ance-specific and insurance-related functions in Switzerland
with those of its relevant competitors and takes part in the Club
Survey that Kienbaum has been conducting since 1995� This
benchmarking survey of the salaries paid in the Swiss insurance
sector is constantly being optimised to ensure that it meets par-
ticipants’ high professional standards and quality requirements�
The comparison mainly covers insurance-specific functions up
to middle management level� It also examines insurance-relat-
ed, managerial and specialist functions performed by senior
executives� The findings of this benchmarking survey are fed
into the Company’s regular review of its salary structures�
Baloise also conducts market comparisons of its local
functions in the respective countries outside Switzerland as and
when required�
5.4 Components of remuneration
Baloise views its compensation packages in the round and there-
fore factors in not only the basic salary plus short- and long-term
variable remuneration but also other material and non-mate-
rial benefits such as pension contributions, additional benefits,
and staff development�
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Basic salary
The basic salary constitutes the level of remuneration that is
commensurate with the functions and responsibilities of the
position concerned as well as the employee skills and expertise
required in order to achieve the relevant business targets and
objectives� When determining the level of its basic salaries,
Baloise aims to position itself around the market median, al-
though the way in which this is done will vary depending on
local operating and market requirements� This remuneration
is paid in cash�
In order to ensure fairness and compliance with its code
of conduct when determining the level of basic salaries, Baloise
applies the internal fair-pay principle that people who do the
same job and have the same qualifications should be paid the
same amount� The Company’s clearly defined and market-based
salary structures help ensure fair pay both inside and outside
the organisation�
Short-term variable remuneration
The key factors determining the amount of short-term variable
remuneration paid are an employee’s individual performance
and the Company’s profitability and economic value added� The
consequent link between individual performance and the Com-
pany’s profits is designed to incentivise staff to achieve outstand-
ing results� Measurement of the variable remuneration paid to
employees who perform control functions (risk management,
compliance, Group Internal Audit) is structured in such a way
that it is not determined by the profitability of the unit being
monitored or by the profitability of individual products or trans-
actions�
The remuneration paid to the insurance sales force is, by
its very nature, strongly performance-related in line with the
system of commissions commonly used in the insurance indus-
try as a whole� However, these commissions constitute selling
expenses rather than being regarded as variable remuneration
in the strict sense of the term� Consequently, they are not dis-
cussed in this remuneration report�
Short-term variable remuneration is paid together with
the salary for March of the following year� Baloise attaches con-
siderable importance to managing its business sustainably and
ensuring a high correlation between the interests of its share-
holders and executives� It therefore pays a substantial proportion
of variable remuneration in the form of shares� Senior manag-
ers can choose what percentage of their remuneration is paid
out in cash and what proportion they receive in the form of
shares� This choice is limited for the most senior managers, who
are obliged to subscribe for shares on a sliding-scale basis: mem-
bers of the Corporate Executive Committee must receive at least
50 per cent of their short-term variable remuneration in the
form of shares, which account for at least 70 per cent of total
variable remuneration if the long-term effect of performance
share units is included (see page 66)� The shares subscribed in
this way are restricted for three years and during this period
are exposed to market risk� This mandatory purchase of shares
in particular ensures that as senior executives’ managerial re-
sponsibilities and total remuneration packages increase, a sig-
nificant proportion of their compensation is paid in the form
of deferred remuneration� This system also raises employees’
risk awareness and encourages them to maintain sustainable
business practices�
Two plans are available to individuals who wish to sub-
scribe for shares: the Share Subscription Plan and the Employ-
ee Share Ownership Plan (see ‘5�6� Share Subscription Plan and
Employee Share Ownership Plan’)�
The section below describes performance-related remu-
neration and the performance pool, which are available as short-
term variable remuneration tools�
Performance-related remuneration
Performance-related remuneration reflects individual employ-
ees’ performance and rewards the achievement of their per-
sonal targets� To this end, line managers consult their members
of staff once a year in order to define the latter’s key individual
targets and objectives and then – by no later than February of
the following year – assess the extent to which these targets and
objectives have been achieved� The target achievement scale
ranges from 0 per cent (not achieved) to a maximum of 150 per
cent (significantly over-achieved)� When setting these indi-
vidual targets, line managers and their staff ensure that they do
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not agree any targets or objectives that conflict with the Com-
pany’s business strategy�
The target figure agreed for performance-related remu-
neration depends on the employee’s basic salary and varies ac-
cording to his or her seniority in the management hierarchy�
Those entitled to receive performance-related remuneration are
the most senior management level in the Baloise Group (except
for the members of the Corporate Executive Committee), the
majority of senior managers in Switzerland and the correspond-
ing functions abroad� The members of the Corporate Executive
Committee do not receive any performance-related remunera-
tion� Instead, their individual performance is recognised in such
a way that the contribution made by each and every member of
the Corporate Executive Committee to the achievement of the
Company’s targets and objectives is factored into decisions af-
fecting the measurement of the performance pool�
Performance pool
The performance pool takes account of the entire Baloise Group’s
performance; its amount is determined by the Remuneration
Committee after the end of the financial year concerned, and
it factors in the following indicators resulting from systematic
analysis:
→ Business performance
The key metric for this criterion is the profit for the period�
→ Risks taken
The indicators used to gauge the success of the Company’s
business from a risk perspective are the Solvency I ratio,
the Swiss Solvency Test (SST) ratio, economic profit, the
credit rating awarded by Standard & Poor’s, and assess-
ments provided by the Chief Risk Officer and the Head of
Group Compliance�
→ Capital-markets perspective compared with competitors
The main metric used to evaluate this criterion is the per-
formance of Baloise’s share price compared with the
almost 40 European insurance companies represented in
the STOXX Europe 600 Insurance Index (the composition
of this index is shown in the table on page 66)�
→ Strategy implementation
The indicators used here are the changes in the combined
ratio and market-consistent embedded value (MCEV)
over time as well as the progress made on key strategic
initiatives and projects�
The assessments provided by the Chief Risk Officer and the
Head of Group Compliance and the evaluations of strategy im-
plementation are also based on qualitative criteria and non-
financial indicators such as senior managers’ risk behaviour,
compliance with procedures and regulations and the practising
of a genuine compliance culture, the effectiveness of the inter-
nal control system, and the efforts made in respect of talent
management and staff engagement�
Performance pool payments are awarded to individuals
at the discretion of the line manager concerned; no regulatory
target figures have been specified� The amount of these payments
is mainly determined by a holistic assessment consisting of in-
dividuals’ achievement of targets (gauged by the extent to which
they have achieved their personal targets and objectives) as well
as their leadership and conduct� The individual performance
pool payment proposed by the respective line manager is dis-
cussed by the relevant management team, compared with oth-
er departments and divisions, and adjusted where necessary�
This process ensures that risk-relevant behavioural attributes
are factored into the performance pool payments awarded to
individuals�
This chosen system is centred on senior managers’ overall
assessment and the validation of individuals’ performance pool
payments at roundtable discussions� The aim here is to give due
consideration to all aspects of an individual’s performance
rather than using just a few parameters to make an assessment
that may neglect other key factors�
The Remuneration Committee decides on the performance
pool payments awarded to the individual members of the Cor-
porate Executive Committee� The average expected value amounts
to 60 per cent of basic salary�
Those considered for performance pool payments are the
most senior management level in the Baloise Group, the major-
ity of senior managers in Switzerland and the corresponding
functions abroad� However, there is no fundamental entitlement
to receive payments from the performance pool�
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For the 2014 financial year the Remuneration Committee de-
cided on a factor of 137 per cent of the normally expected value
of performance pool payments� This decision was motivated by
the following considerations:
→ Excellent profitability on the back of exceptionally strong
operating activities
→ Also positive non-recurring effects arising from the sale
of the Company’s Austrian subsidiary and its disposal of
shares in Nationale Suisse and Helvetia
→ Impressive growth in its target segments
→ Key projects and initiatives are on track for completion
→ Strong balance sheet despite the adverse impact of low
interest rates�
The Remuneration Committee conducts a detailed assessment
of the Company’s performance once a year and adjusts the size
of the performance pool accordingly, as the table below shows
in the form of a comparison with the consolidated profit for the
period:
2011
2012
2013
2014
Performance pool
(as a percentage of
the normal
expected value
Consolidated profit
for the period (CHF
million)
70 %
100 %
120 %
137 %
61.3
485.2
455.4
711.9
Long-term variable remuneration: Performance share units
In addition, Baloise grants performance share units (PSUs) to
the most senior managers as a form of long-term variable re-
muneration� The PSU programme enables the top management
level to benefit even more from the Company’s performance
and helps Baloise to retain high performers in the long run�
At the beginning of each vesting period the participating
employees are granted rights in the form of PSUs, which entitle
them to receive a certain number of shares free of charge after
the vesting period has elapsed� The Remuneration Committee
specifies the grant date and applies its own discretion in decid-
ing which of the most senior management team members are
entitled to participate in the programme� It determines the to-
tal number of PSUs available and decides how many are to be
awarded to each member of the Corporate Executive Commit-
tee� PSUs are granted to the other programme participants on
the basis of the relevant line manager’s proposal, which must
be approved by the line manager’s manager�
The number of shares that can be subscribed after three
years – i�e� at the end of the vesting period – depends on the
performance of Baloise shares relative to a peer group� This
comparative performance multiplier can be anywhere between
0�5 and 1�5� The peer group comprises the leading European
insurance companies contained in the STOXX Europe 600 In-
surance Index�
One PSU generally confers the right to receive one share�
This is the case if Baloise shares perform in line with the me-
dian of their peer group� In this case the performance multi-
plier would be 1�0� Participants in the programme receive more
Companies in the STOXX 600 Europe Insurance Index (as at 31 December 2014)
Admiral Group plc
Delta Lloyd
NN Group
Aegon NV
Ageas
Allianz
Amlin plc
Assicurazioni Generali
Aviva plc
Axa
Bâloise Holding
Catlin Group
CNP Assurances
Direct Line Insurance Group
Old Mutual plc
Friends Life Group Ltd.
Phoenix Group Holding
Gjensidige Forsikring
Prudential plc
Swiss Re
Topdanmark A / S
Tryg Forsikring
Unipolsai
Hannover Rück
RSA Insurance Group
Vienna Insurance
Helvetia
Hiscox
Sampo OYJ
Scor
Lancashire Holdings
Standard Life plc
Legal & General Group plc
St. James's Place Capital
Mapfre SA
Münchener Rück
Storebrand ASA
Swiss Life
Zurich Insurance Group
Source: http://www.stoxx.com/indices/index_information.html?symbol=SXIP
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including Remuneration Report
amount of time remaining until the end of the vesting period�
In addition, the Remuneration Committee has the powers to
claw back some or all of the PSUs allocated to an individual or
to a group of programme participants if there are specific reasons
for doing so� Such specific reasons include, for example, serious
breaches of internal or external regulations, the taking of inap-
propriate risks that are within an individual’s control, and the
type of conduct or behaviour that would increase the risks to
Baloise�
The shares needed to convert the PSUs are purchased in
the market as and when required�
Measurement of the PSUs at their issue date is based on
a Monte Carlo simulation, which calculates a present value for
the payout expected at the end of the vesting period� This meas-
urement incorporates the following parameters:
→ Interest rate of 1 per cent
→ The volatilities of all shares in the peer group and their
correlations with each other (measured over a three-year
track record)
→ The expected dividend yields
→ Empirical data on how long eligible programme partici-
pants remain with the Company�
The value of PSUs is exposed to market risk until the end
of the vesting period and may, of course, fluctuate significant-
ly, as shown in the table below:
shares in exchange for their PSUs if Baloise shares outperform
their peer group� The multiplier reaches the maximum of 1�5 if
the performance of Baloise shares is in the top quartile of com-
panies in the peer group� The multiplier amounts to 0�5 if the
performance of Baloise shares is in the bottom quartile of com-
panies in the peer group� If the performance of Baloise shares
is in either of the two middle quartiles, a linear scale is used to
calculate the performance multiplier� The performance multi-
plier for the entire vesting period ended is based on the closing
stock market prices on the final trading day of the respective
vesting period�
Participants in the programme receive the pertinent num-
ber of shares once the vesting period has elapsed, which means
that for the PSUs allocated in 2014 they receive their shares on
1 March 2017� The arrangement applicable until 2013 was that
half of the converted shares were then subject to an additional
three-year closed period� This closed period has no longer applied
since 2014, which brings the deferral period more closely into
line with other such periods commonly found in the market�
The arrangement applicable until 2013 was that if an in-
dividual’s employment contract was terminated during the
vesting period (except in the case of retirement, disability or
death), the PSUs expired without the person concerned receiv-
ing any replacement or compensation� Since 2014 the arrange-
ment has been that if an employment contract is terminated in
such situations, only some of the PSUs expire provided that the
programme participant concerned does not join a rival com-
pany and is not personally at fault for the termination of the
contract� The number of PSUs expiring is proportional to the
PERFORMANCE SHARE UNIT
(PSU) PLAN
PSUs granted
PSUs converted
Change in value
2007
2008
2009
2010
2011
2012
2013
2014
Date
Price (CHF) 1
Date
Multiplier
Price (CHF) 1
Value (CHF) 2
01.03.2007
01.01.2008
01.01.2009
01.01.2010
01.01.2011
01.03.2012
01.03.2013
125.80
109.50
82.40
86.05
91.00
71.20
84.50
01.01.2010
01.01.2011
01.01.2012
01.01.2013
01.01.2014
01.03.2015
01.03.2016
01.03.2014
113.40
01.03.2017
1.182
1.24
0.64
0.58
0.77
4 1.44
4 1.50
4 1.50
86.05
91.00
64.40
78.50
113.60
4127.80
4127.80
4127.80
101.71
112.84
41.22
45.53
87.47
4 184.03
4 191.70
4 191.70
1 Price = price of Baloise shares at the PSU grant date or conversion date.
2 Value = value of one PSU at the conversion date (share price at the conversion date times the multiplier).
3 Change in value = difference between the value at the conversion date (multiplier times the share price at the conversion date) and the share price at the grant date,
expressed as a percentage of the share price at the grant date; example of the PSU plan in 2007: ([{1.182*86.05}–125.80] / 125.80) 100 = – 19 %.
4 Interim measurement as at 31 December 2014.
3
– 19 %
3 %
– 50 %
– 47 %
– 4 %
4 159 %
4 127 %
4 69 %
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Fringe benefits
Fringe benefits are generally defined as components of the total
remuneration package that are not dependent on either an in-
dividual’s function or performance or the Company’s perfor-
mance� By providing benefits in the form of retirement pensions,
subsidies, concessions, and staff training and professional de-
velopment, Baloise demonstrates the close partnership that it
maintains with its employees and the extent to which it values
their contribution� Fringe benefits are granted on a country-by-
country basis in line with prevailing local laws�
5.5 Employment contracts, change-of-control clauses,
inducement payments and severance packages
The employment contracts of senior managers in Switzerland
and – in most cases – in other countries as well have been con-
cluded for an indefinite period� They stipulate a notice period
of six months� The Chairman of the Board of Directors and all
six members of the Corporate Executive Committee have a no-
tice period of twelve months� The employment contract with
the Chairman of the Board of Directors will, with effect from 1
May 2015, no longer stipulate any notice period; the duration
of this contract will instead be determined by law and by the
term of appointment� Change-of-control clauses were discon-
tinued with effect from 1 January 2014�
The remuneration regulations adopted by the Board of
Directors contain clear guidance on inducement payments and
severance packages� Such remuneration may only be paid in
justified cases� No severance packages may be awarded to mem-
bers of either the Board of Directors or the Corporate Executive
Committee, and any inducement payments granted to such
persons – irrespective of their amount – must be approved by
the Remuneration Committee� Inducement payments and sev-
erance packages for the most senior managers must be approved
by the Remuneration Committee if they exceed CHF 100,000�
Each individual case is assessed on a discretionary basis�
5.6 Share Subscription Plan and Employee
Share Ownership Plan
Two plans are available to individuals who wish to subscribe
for shares as part of their short-term variable remuneration: the
Share Subscription Plan and the Employee Share Ownership
Plan�
Share Subscription Plan
Since January 2003 those who qualify as eligible persons at
Baloise Group companies in Switzerland – and, since 2008, the
members of the Executive Committees at companies outside
Switzerland as well – have been able to subscribe for shares at
a preferential price as part of their short-term variable remu-
neration� The subscription date is 1 March of each year; although
title to the shares passes to the relevant employees on this date
without any further vesting conditions having to be met, the
shares cannot be sold for the duration of a three-year closed
period�
The parameters used to determine the subscription price
are decided each year by the Remuneration Committee� The
subscription price is based on the closing price on the first day
of the subscription period, on which a discount of 10 per cent
is granted (please refer to the accompanying table for details)�
Once it has been calculated using this method, the subscription
price is published in advance on the intranet� The shares need-
ed for the Share Subscription Plan are purchased in the market
as and when required�
Applicable closing quotation
Subscription
price
from
CHF
CHF
09.01.2015
127.50
114.75
10.01.2014
114.20
102.78
Share Subscription Plan for
2015
(applies to variable
renumeration awarded for
the 2014 reporting period)
Share Subscription Plan for
2014
(applies to the variable
remuneration granted for
2013 and to the shares
subscribed by the chairman
and members of the Board
of Directors in 2014)
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Employee Share Ownership Plan
Since May 2001 it has been possible for most management team
members working in Switzerland to receive part of their short-
term variable remuneration in the form of shares from the Em-
ployee Share Ownership Plan instead of receiving cash� Within
certain limits they are free to choose what proportion of their
short-term variable remuneration they receive in the form of
such shares� The most senior management team members are
subject to upper limits; members of the Corporate Executive
Committee – who are obliged to receive at least half of their
short-term variable remuneration in the form of shares – are
not allowed to receive more than 50 per cent of their entitlement
in the form of shares from the Employee Share Ownership Plan�
The subscription date is 1 March of each year (the same as for
the Share Subscription Plan); although title to the shares pass-
es to the relevant employees on this date without any further
vesting conditions having to be met, the shares cannot be sold
for the duration of a three-year closed period�
The parameters used to determine the subscription price
are decided each year by the Remuneration Committee� The
subscription price is based on the closing price on the first day
of the subscription period, from which discounted dividend
rights are deducted over a period of three years (please refer to
the accompanying table for details)� Once it has been calcu-
lated using this method, the subscription price is published in
advance on the intranet� The shares needed for the Employee
Share Ownership Plan are purchased in the market as and when
required�
Applicable closing quotation
Subscription
price
from
CHF
CHF
09.01.2015
127.50
112.70
10.01.2014
114.20
100.87
Employee Share Ownership
Plan for 2015
(applies to variable
renumeration awarded for
the 2014 reporting period)
Employee Share Ownership
Plan for 2014
(applies to the variable
remuneration granted for
2013 and to the shares
subscribed by the chairman
of the Board of Directors in
2014)
04_JB_Corporate_Governance_en�indd 69
In order to increase the impact of this Employee Share Owner-
ship Plan, employees are granted loans on which interest is
charged at market rates, which enables them to subscribe for
shares whose value constitutes a multiple of the capital invest-
ed; these shares are purchased at their fair value net of dis-
counted dividend rights over a period of three years� Repayment
of these loans after the three-year closed period has elapsed is
hedged by put options, which are financed by the sale of offset-
ting call options� If the price of the shares is below the put op-
tions’ strike price when the closed period expires, programme
participants can sell all their shares at this strike price, which
ensures that they can repay their loans plus interest� In this
event, however, they lose all the capital that they have invested�
If, on the other hand, the price of the shares is above the call
options’ strike price, programme participants must pay the
commercial value of these options� Their upside profit potential
is thus limited by the call options� If, when the three-year closed
period elapses, the price of the shares is between the put options’
strike price and the call options’ strike price, once the loans
plus accrued interest have been repaid the employees concerned
receive the remaining shares to do with as they wish�
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EMPLOYEE INCENTIVE PLAN
Number of shares subscribed
Restricted until
Subscription price per share (CHF)
Value of shares subscribed (CHF million)
Fair value of subscribed shares on subscription date (CHF million)
Employees entitled to participate
Participating employees
Subscribed shares per participant (average)
2013
2014
167,147
174,810
31.8.2016
31.8.2017
50.30
8.4
16.5
3,239
1,851
90.3
57.30
10.0
20.9
3,187
1,949
89.7
5.7 Employee Incentive Plan
The Baloise Foundation for Employee Participation set up in
1989 offers members of staff working for various Baloise Group
companies in Switzerland the opportunity to purchase shares
in Bâloise Holding Ltd – usually once a year – at a preferential
price in compliance with the regulations adopted by the Board
of Foundation� This encourages employees to maintain their
commitment to the Company over the long term by becoming
shareholders� The subscription price is fixed by the Board of
Foundation at the beginning of the subscription period and is
then published on the intranet� It equals half of the volume-
weighted average share price calculated for the month of August
in each subscription year� In 2014 the subscription price amount-
ed to CHF 57�30 (2013: CHF 50�30) and a total of 174,810 shares
were subscribed (2013: 167,147)� Title to the subscribed shares
passes to the relevant employees with effect from 1 September
each year, and the shares are subject to a three-year closed period�
The Foundation acquired the underlying stock of shares
used in this plan from previous capital increases carried out by
Bâloise Holding Ltd� It supplements these shareholdings by
purchasing shares in the market� The existing shareholdings
will enable the Foundation to continue the Employee Incentive
Plan over the coming years� The Foundation is run by a Board
of Foundation that is predominantly independent of the Cor-
porate Executive Committee� The independent Board of Foun-
dation members are Peter Schwager (Chairman) and Professor
Heinrich Koller (lawyer); the third member of the Board of
Foundation is Andreas Burki (Head of Legal & Tax at Baloise)�
5.8 Pension schemes
Baloise provides a range of pension solutions, which vary from
country to country in line with local circumstances� In Swit-
zerland it offers different pension schemes for its insurance and
banking employees�
The Company provides its employees in Switzerland with
an attractive occupational pension solution (Pillar 2) that meets
the following objectives:
→ It covers its insured employees’ needs in the event of old
age, death or disability and mitigates the resultant finan-
cial consequences by offering an occupational pension
scheme based on the principle of social partnership�
→ It enables its retirees to maintain the standard of living to
which they are accustomed by providing them with a suf-
ficiently high level of income replacement (combination of
Pillar 1 and Pillar 2 benefits) to compensate for their loss
of earnings�
→ The employer makes a disproportionately high contribu-
tion to the funding of its occupational pension scheme�
→ Its pension solutions are future-proof, robust, predictable
and properly costed�
The Chairman of the Board of Directors and the members of
the Corporate Executive Committee are insured under the pen-
sion scheme run by Baloise Insurance Ltd� They are subject to
the same terms and conditions as all other insured office-based
members of staff�
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including Remuneration Report
5.9 Rules stipulated in the Articles of Association
Certain rules governing remuneration are stipulated in the
Articles of Association:
→ Section 30 Additional amount for the remuneration
paid to Corporate Executive Committee members
appointed since the last Annual General Meeting
→ Section 31 Annual General Meeting votes on
remuneration
→ Section 32 Principles of profit-related remuneration
→ www.baloise.com/rules-regulations
In compliance with the Swiss Ordinance Against Excessive Re-
muneration in Listed Companies Limited by Shares (ERCO)
the Annual General Meeting being held on 30 April 2015 will
be asked to approve further provisions in the Articles of Association
concerning loans, credit facilities and pension benefits granted
to members of the Board of Directors and the Corporate Executive
Committee as well as principles governing the granting of equity
instruments, conversion rights and warrants�
5.10 Remuneration paid to the members of the Board of
Directors
Please refer to the tables on pages 74 and 75�
The Chairman of the Board of Directors chairs the meet-
ings of both the Board of Directors and the Chairman’s Com-
mittee� He also chairs the Investment Committee� He represents
the Company externally and, acting in this capacity, maintains
contact with government agencies, trade associations and oth-
er Baloise stakeholders� The Chairman of the Board of Directors
liaises with the Group CEO in formulating proposals on Baloise’s
long-term objectives and its strategic direction and development,
and these proposals are then discussed and approved by the
Board of Directors as a whole� He works closely with the Cor-
porate Executive Committee to ensure that the Board of Direc-
tors is provided with timely information on all matters of mate-
rial importance to the decision-making and monitoring process
at Baloise� The Chairman of the Board of Directors is entitled
to attend meetings of the Corporate Executive Committee at
any time� He takes part in these meetings when necessary in
order to maintain a regular dialogue between himself and the
Corporate Executive Committee and whenever matters of stra-
tegic or long-term importance are being discussed�
The Chairman of the Board of Directors performs his various
functions on a full-time basis, in return for which he is paid
a fixed amount of remuneration� He is not entitled to any vari-
able remuneration and, consequently, he receives no performance-
related remuneration, no performance pool payments and no
allocation of PSUs� He is paid roughly a quarter of his remu-
neration in the form of shares, although he is free to choose
each year how many shares he receives under the Share Sub-
scription Plan and the Employee Share Ownership Plan respec-
tively� The shares that he receives under the Share Subscription
Plan are subject to a closed period of five years (instead of the
usual three years)�
The other members of the Board of Directors are paid
a lump sum as remuneration for their work on the Board of
Directors (CHF 125,000) and for additional functions that they
perform on the Board of Directors’ committees (CHF 70,000
for the Chairman and CHF 50,000 for members)� These amounts
provide appropriate compensation for the responsibility and
workload involved in their various functions and have remained
unchanged since 2008�
The table on page 75 includes for the first time (for the
2014 financial year) the contributions payable by the Company
into the state-run social security schemes (up to the pension-
able or insurable threshold in each case) and the pension fund
(applies only to the chairman of the Board of Directors)�
Since 2006 the members of the Board of Directors have
received 25 per cent of their annual remuneration in the form
of shares that are restricted for three years� Members of the
Board of Directors receive a 10 per cent discount on the shares’
market price in line with the Share Subscription Plan available
to senior executives� The members of the Board of Directors do
not participate in any share ownership programmes that are
predicated on the achievement of specific performance targets�
No amounts receivable from current or previous members
of the Board of Directors have been waived� No remuneration
was paid to former members of the Board of Directors�
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5.11. Remuneration paid to the members of the Corporate
Executive Committee
Please refer to the tables on pages 76 to 79�
In order to ensure compliance with the Swiss Ordinance
Against Excessive Remuneration at Publicly Listed Companies
(VegüV), which came into effect on 1 January 2014, some adjust-
ments have been made to the structure of the remuneration paid
to the Corporate Executive Committee�
Since 2014 the only short-term variable remuneration paid
to the members of the Corporate Executive Committee has been
allocated from the performance pool� The performance-related
remuneration awarded for the achievement of personal targets
and objectives has been discontinued� Individual performance
is factored into the measurement of the performance pool�
Because the expected performance pool value and the fixed
remuneration component have been increased to compensate
for the discontinuation of performance-related pay, the overall
level of remuneration paid to the Corporate Executive Com-
mittee has remained unchanged� The expected performance
pool payment now amounts to 60 per cent of basic salary instead
of 50 per cent� Even in cases of outstanding individual perfor-
mance and excellent performance by the Company as a whole,
this payment cannot exceed 90 per cent of basic salary (cap)�
The members of the Corporate Executive Committee con-
tinue to receive performance share units (PSUs) as a form of
long-term variable remuneration, which is expected to account
for 40 per cent of basic salary�
This new system complies with the latest Swiss legislation
and meets the European standard, which stipulates that the
ratio of fixed to variable remuneration should normally be one-
to-one (Capital Requirements Directive IV)�
In addition, the Annual General Meeting held on 24 April
2014 passed binding votes in which it set a cap on the variable
remuneration payable for 2014 and the amount of fixed remu-
neration to be paid for 2015�
The structure of remuneration paid to the Corporate Executive
Committee is laid down in the remuneration regulations� The
actual level of remuneration paid is determined as follows (see
table below)�
The members of the Corporate Executive Committee must
receive at least 50 per cent of their short-term variable remu-
neration in the form of shares in order to ensure that their own
interests are more strongly aligned with those of shareholders�
This mandatory purchase of shares coupled with the shares al-
located under the PSU programme ensures that, compared with
the market as a whole, a significant proportion of their com-
pensation is paid in the form of deferred remuneration� The
Corporate Executive Committee members’ remuneration is
disclosed on pages 76 to 79 in accordance with the accrual prin-
ciple� The table includes all forms of remuneration awarded for
performance in 2014 even if individual components are not paid
until a later date�
The total remuneration paid to the Corporate Executive
Committee in 2014 was slightly lower than in the previous year
(sum total of basic salary plus variable remuneration down by
1�1 per cent) despite the Company’s excellent financial results�
This can be attributed to several factors:
→ The aforementioned modifications made to the structure
of remuneration (discontinuation of performance-related
pay, increase in basic salary etc�) reduced the variable
component of total remuneration year on year from 130
per cent to 100 per cent of basic salary� Consequently, the
Company’s excellent profit for the year had less of an
impact on remuneration�
→ One member of the Corporate Executive Committee was
absent for a lengthy period in 2014 owing to illness� The
payment received from the performance pool was there-
fore merely awarded pro rata temporis and amounted to
only around one-third of the usual expected value
T YPE OF REMUNERATION
DECIDED BY
APPLICABLE PERIOD
Fixed remuneration
Annual General Meeting
For the next financial year
Variable remuneration
– cap
Annual General Meeting
For the current financial year
– individual payment
Remuneration Committee
(in compliance with the cap set by the Annual General Meeting)
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→ The factor used to calculate the performance pool pay-
ments awarded to the other members of the Corporate
Executive Committee was lower than that used for the
other management team members (an average of 130 per
cent or a weighted 129 per cent instead of 137 per cent)�
The tables on pages 78 and 79 also include for the first time
(for the 2014 financial year) the contributions payable by the
employer into the state-run social security schemes (up to the
pensionable or insurable threshold in each case)�
The Annual General Meeting held on 24 April 2014 ap-
proved a maximum amount of CHF 6�085 million for the vari-
able remuneration payable for 2014� A total of CHF 5�037 million
was paid out, which meant that – despite the Company’s excel-
lent financial results – only 83 per cent of the maximum amount
available was utilised�
5.12 Loans and credit facilities
Please refer to the table on page 80�
5.13 Shares and options held
Please refer to the tables on pages 81 and 82�
5.14 Amounts of total remuneration and variable remuneration
Please refer to the table on page 83�
As requested by circular 10/1 issued by the Swiss Finan-
cial Market Supervisory Authority on the subject of remune-
ration, Baloise has published in the table on page 83 the amounts
of total remuneration and variable remuneration and has dis-
closed the total amounts of outstanding deferred remunerati-
on and the inducement payments and severance packages
granted� These figures include all forms of remuneration awar-
ded for 2014 even if individual components are not paid until
a later date�
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REMUNERATION PAID TO THE MEMBERS OF THE BOARD OF DIRECTORS
2013
CHF
Basic
remuneration
Remuneration
for additional
functions
Total
remuneration
Pension
benefits
Total
Of which:
in shares
Number
of shares
Dr Andreas Burckhardt
1,320,000
0
1,320,000
230,646
1,550,646
311,955
4,393
Chairman of the Board of Directors
Dr Georg F. Krayer
125,000
291,667
0
291,667
81,177
1,104
Vice-Chairman of the Board of Directors
Chairman’s Committee
Investment Committee
Remuneration Committee (until 2 May 2013)
Dr Michael Becker
Investment Committee
Audit and Risk Committee
Dr Andreas Beerli
Chairman’s Committee
Audit and Risk Committee
Dr Georges-Antoine de Boccard
Remuneration Committee
Dr Hansjörg Frei (until 2 May 2013)
Chairman’s Committee
Audit and Risk Committee
Karin Keller-Sutter (since 2 May 2013)
Remuneration Committee
Werner Kummer
Chairman's Committee
Chair of the Audit and Risk Committee
Thomas Pleines
Audit and Risk Committee
Remuneration Committee
Dr Eveline Saupper
Investment Committee
Chair of the Remuneration Committee
50,000
50,000
50,000
16,667
50,000
50,000
33,333
50,000
50,000
25,000
25,000
33,333
50,000
70,000
33,333
50,000
50,000
70,000
125,000
125,000
125,000
62,500
83,333
125,000
125,000
125,000
225,000
5,743
230,743
56,177
764
208,333
5,743
214,076
43,677
594
175,000
5,743
180,743
43,677
112,500
0
112,500
56,177
594
764
116,666
5,743
122,409
0
0
245,000
0
245,000
61,177
832
208,333
5,743
214,076
43,677
594
245,000
5,743
250,743
61,177
832
Total for the Board of Directors
2,340,833
806,666
3,147,499
265,104
3,412,603
758,871
10,471
Explanatory notes to the table
Karin Keller-Sutter was voted in as a new member of the Board of Directors at the 2013 Annual General Meeting. Consequently, she only received a pro-rata share
of the usual remuneration. Hansjörg Frei left the Board of Directors at the same time, so he only received half of the usual remuneration.
Remuneration paid to former members and related parties No remuneration on a non-arm’s-length-basis was paid to individuals or companies who are related to
members of the Board of Directors. Related parties are spouses, life partners, children under 18 years; companies owned or controlled by directors, and legal entities
or individuals who act as trustees for them. No amounts receivable from these persons were waived.
Shares 25 per cent of contractually agreed overall remuneration is paid in shares which remain restricted for three years. They are recognised at market value less
10 per cent (CHF 73.53, in line with the Share Subscription Plan). Shares received by the Chairman of the Board of Directors amounted to 2,121 shares arising from the
Share Subscription Plan (CHF 155,957, with a closed period of five years instead of the usual three years) and 2,272 shares arising from the Employee Share Ownership
Plan (CHF 155,998). Baloise also paid the regulatory employer contributions to the pension fund (CHF 216,725).
Pension contributions The information disclosed for 2014 includes for the first time the contributions payable by the employer into the state-run social security
schemes (up to the pensionable or insurable threshold in each case) and the pension fund (only for the chairman of the Board of Directors).
In order to ensure that comparisons can be made with the prior year (2013), the table showing the prior-year figures has been adjusted accordingly and therefore differs
from the table published in last year’s remuneration report.
74
04_JB_Corporate_Governance_en�indd 74
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Corporate Governance
Corporate Governance Report
including Remuneration Report
REMUNERATION PAID TO THE MEMBERS OF THE BOARD OF DIRECTORS
2014
CHF
Basic
remuneration
Remuneration
for additional
functions
Total
remuneration
Pension
benefits
Total
Of which:
in shares
Number
of shares
Dr Andreas Burckhardt
1,320,000
0
1,320,000
230,646
1,550,646
311,907
3,064
Chairman of the Board of Directors
Dr Georg F. Krayer (until 24 April 2014)
62,500
137,500
0
137,500
68,657
668
Vice-Chairman of the Board of Directors
Chairman’s Committee
Investment Committee
Werner Kummer
Vice-Chairman of the Board of Directors
(since 24 April 2014)
Chairman's Committee
Chair of the Audit and Risk Committee
Dr Michael Becker
Investment Committee
Audit and Risk Committee
Dr Andreas Beerli
Chairman’s Committee
Audit and Risk Committee
Dr Georges-Antoine de Boccard
Remuneration Committee
Investment Committee (since 24 April 2014)
Christoph B. Gloor (since 24 April 2014)
Investment Committee
Karin Keller-Sutter
Remuneration Committee
Thomas Pleines
Audit and Risk Committee
Remuneration Committee
Dr Eveline Saupper
Chairman’s Committee (since 24 April 2014)
Chair of the Remuneration Committee
Investment Committee (until 24 April 2014)
125,000
125,000
125,000
125,000
83,333
125,000
125,000
125,000
25,000
25,000
25,000
33,333
50,000
70,000
50,000
50,000
50,000
50,000
50,000
33,333
33,333
50,000
50,000
50,000
33,333
70,000
16,667
278,333
0
278,333
61,154
595
225,000
0
225,000
56,221
547
225,000
5,743
230,743
56,221
547
208,333
5,743
214,076
43,682
425
116,666
5,743
122,409
0
175,000
5,743
180,743
43,682
225,000
5,743
230,743
56,221
0
425
547
245,000
5,743
250,743
61,154
595
Total for the Board of Directors
2,340,833
814,999
3,155,832
265,104
3,420,936
758,897
7,413
Explanatory notes to the table
Christoph B. Gloor was voted in as a new member of the Board of Directors at the 2014 Annual General Meeting. Consequently, he only received a pro-rata share
of the usual remuneration. Dr Georg F. Krayer left the Board of Directors at the same time, so he only received half of the usual remuneration.
Remuneration paid to former members and related parties No remuneration on a non-arm’s-length-basis was paid to individuals or companies who are related to
members of the Board of Directors. Related parties are spouses, life partners, children under 18 years; companies owned or controlled by directors, and legal entities
or individuals who act as trustees for them. No amounts receivable from these persons were waived.
Shares 25 per cent of contractually agreed overall remuneration is paid in shares which remain restricted for three years. They are recognised at market value less
10 per cent (CHF 102.78, in line with the Share Subscription Plan). Shares received by the Chairman of the Board of Directors amounted to 1,517 shares arising from the
Share Subscription Plan (CHF 155,917, with a closed period of five years instead of the usual three years) and 1,547 shares arising from the Employee Share Ownership
Plan (CHF 155,990).
Pension contributions The information disclosed for 2014 includes for the first time the contributions payable by the employer into the state-run social security
schemes (up to the pensionable or insurable threshold in each case) and the pension fund (only for the chairman of the Board of Directors).
04_JB_Corporate_Governance_en�indd 75
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Corporate Governance
Corporate Governance Report
including Remuneration Report
REMUNERATION PAID TO THE MEMBERS OF THE CORPORATE EXECUTIVE COMMIT TEE
Basic salary
Cash payment
(fixed)
Cash payment
Share Subscription Plan
Employee Share Ownership Plan
Performance share units (PSUs)
Total variable remuneration
Variable remuneration
remuneration
basic salary
Non-cash
benefits
Pension
Total
contributions
remuneration
Total basic
Variable
salary plus
remuneration as
variable
percentage of
CHF
CHF
Number of
shares
CHF
Number of
shares
1,000,000
469,501
4,568
469,499
544,167
217,514
3,174
326,224
772,724
304,628
2,962
304,434
600,000
284,408
2,767
284,392
0
0
0
0
CHF
0
0
0
0
Granted in 2013
Number of PSUs
CHF
CHF
CHF
Number of
shares
6,540
501,553
4,568
1,440,553
2,440,553
144 %
CHF
5,030
CHF
CHF
173,398
2,618,981
3,062
234,825
3,174
778,563
1,322,730
143 %
5,030
141,262
1,469,022
4,164
319,337
2,962
928,399
1,701,123
120 %
122,261
309,838
2,133,222
3,568
273,630
2,767
842,430
1,442,430
140 %
5,030
215,181
1,662,641
540,000
235,649
1,273
130,839
1,557
157,052
3,211
246,252
2,830
769,792
1,309,792
143 %
5,030
174,115
1,488,937
2013
Dr Martin Strobel
Group CEO
Michael Müller
Head of Corporate Division Switzerland
Jan De Meulder
Head of SBU Germany
German Egloff
Head of Corporate Division Finance
Dr Thomas Sieber
Head of Corporate Division Corporate Centre
Martin Wenk
600,000
283,147
2,753
282,953
0
0
3,568
273,630
2,753
839,730
1,439,730
140 %
5,030
215,181
1,659,941
Head of Corporate Division Asset Management
Total for the Corporate Executive Committee
4,056,891
1,794,847
17,497
1,798,341
1,557
157,052
24,113
1,849,227
19,054
5,599,467
9,656,358
138 %
147,411
1,228,975
11,032,744
Explanatory notes to the table
Remuneration is disclosed in accordance with the accrual principle. The table includes all forms of remuneration awarded for performance in 2013 even if individual
components are not paid until a later date. Amounts are gross, before deduction of social security contributions etc.
Remuneration paid to former members and related parties No remuneration on a non-arm’s-length basis was paid to companies or individuals who are related to
members of the Corporate Executive Committee. Related parties are spouses, life partners, children under 18 years, companies owned or controlled by directors,
and legal entities or individuals who act as trustees for them. No amounts receivable from these persons were waived.
Share Subscription Plan Proportion of variable remuneration received directly as shares, which are measured at market value less 10 per cent markdown. Subscription
price = CHF 102.78.
Employee Share Ownership Plan Proportion of variable remuneration received as shares (excluding loan-financed shares), which are measured at market value less
dividend rights discounted over three years. Subscription price = CHF 100.87.
Performance share units (PSUs) The remuneration report for 2013 showed that the PSUs granted to the members of the Corporate Executive Committee had for the first
time been measured at their value on the grant date rather than at their value on the vesting date. The table containing the prior-year figures had been restated
accordingly to ensure that a meaningful year-on-year comparison could be made. The prior-year table therefore shows the PSUs at their value on the grant date, which
means that this table differs from the list published in the remuneration report for the previous year.
76
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Corporate Governance
Corporate Governance Report
including Remuneration Report
REMUNERATION PAID TO THE MEMBERS OF THE CORPORATE EXECUTIVE COMMIT TEE
Basic salary
Cash payment
2013
Dr Martin Strobel
Group CEO
Michael Müller
Jan De Meulder
Head of SBU Germany
German Egloff
Head of Corporate Division Switzerland
Head of Corporate Division Finance
Dr Thomas Sieber
Head of Corporate Division Corporate Centre
Head of Corporate Division Asset Management
0
0
0
0
0
0
0
0
0
0
Variable remuneration
Total basic
salary plus
variable
remuneration
Variable
remuneration as
percentage of
basic salary
Non-cash
benefits
Pension
contributions
Total
remuneration
(fixed)
Cash payment
Share Subscription Plan
Employee Share Ownership Plan
Performance share units (PSUs)
Total variable remuneration
Granted in 2013
CHF
CHF
Number of
shares
CHF
Number of
shares
CHF
Number of PSUs
CHF
Number of
shares
CHF
CHF
1,000,000
469,501
4,568
469,499
6,540
501,553
4,568
1,440,553
2,440,553
144 %
CHF
5,030
CHF
CHF
173,398
2,618,981
544,167
217,514
3,174
326,224
3,062
234,825
3,174
778,563
1,322,730
143 %
5,030
141,262
1,469,022
772,724
304,628
2,962
304,434
4,164
319,337
2,962
928,399
1,701,123
120 %
122,261
309,838
2,133,222
600,000
284,408
2,767
284,392
3,568
273,630
2,767
842,430
1,442,430
140 %
5,030
215,181
1,662,641
540,000
235,649
1,273
130,839
1,557
157,052
3,211
246,252
2,830
769,792
1,309,792
143 %
5,030
174,115
1,488,937
Martin Wenk
600,000
283,147
2,753
282,953
3,568
273,630
2,753
839,730
1,439,730
140 %
5,030
215,181
1,659,941
Total for the Corporate Executive Committee
4,056,891
1,794,847
17,497
1,798,341
1,557
157,052
24,113
1,849,227
19,054
5,599,467
9,656,358
138 %
147,411
1,228,975
11,032,744
Explanatory notes to the table
Remuneration is disclosed in accordance with the accrual principle. The table includes all forms of remuneration awarded for performance in 2013 even if individual
components are not paid until a later date. Amounts are gross, before deduction of social security contributions etc.
Remuneration paid to former members and related parties No remuneration on a non-arm’s-length basis was paid to companies or individuals who are related to
members of the Corporate Executive Committee. Related parties are spouses, life partners, children under 18 years, companies owned or controlled by directors,
and legal entities or individuals who act as trustees for them. No amounts receivable from these persons were waived.
Share Subscription Plan Proportion of variable remuneration received directly as shares, which are measured at market value less 10 per cent markdown. Subscription
price = CHF 102.78.
Employee Share Ownership Plan Proportion of variable remuneration received as shares (excluding loan-financed shares), which are measured at market value less
dividend rights discounted over three years. Subscription price = CHF 100.87.
Performance share units (PSUs) The remuneration report for 2013 showed that the PSUs granted to the members of the Corporate Executive Committee had for the first
time been measured at their value on the grant date rather than at their value on the vesting date. The table containing the prior-year figures had been restated
accordingly to ensure that a meaningful year-on-year comparison could be made. The prior-year table therefore shows the PSUs at their value on the grant date, which
means that this table differs from the list published in the remuneration report for the previous year.
Non-cash benefits Based on all remuneration elements required to be declared on the Swiss salary certificate, including long-service awards, taxable benefits relating
to shares received in connection with the Employee Incentive Plan (maximum of 100 shares per annum), accommodation costs and non-cash benefits (use of a company
vehicle) granted to a Corporate Executive Committee member residing abroad.
Pension benefits These comprise the estimated employer contributions to the state-run social security schemes (up to the pensionable or insurable threshold in each
case) and the pension fund or, alternatively, a compensatory payment in lieu of employer and employee contributions to the Swiss social security scheme and the
pension fund (neither of these is payable if the person concerned is working outside Switzerland) and maintenance of disability insurance cover in the home country
of a Corporate Executive Committee member residing abroad.
In order to ensure that comparisons can be made with the prior year (2013), the table showing the prior-year figures has been expanded to include the employer
contributions to the state-run social security schemes and therefore differs from the table published in last year’s remuneration report.
04_JB_Corporate_Governance_en�indd 77
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Corporate Governance
Corporate Governance Report
including Remuneration Report
REMUNERATION PAID TO THE MEMBERS OF THE CORPORATE EXECUTIVE COMMIT TEE
Basic salary
Cash payment
(fixed)
cash payment
Share Subscription Plan
Employee Share Ownership Plan
Performance share units (PSUs)
Total variable remuneration
Variable remuneration
remuneration
of basic salary
Non-cash
benefits
Pension
Total
contributions
remuneration
Total basic
salary plus
Variable
remuneration
variable
as percentage
CHF
CHF
Number of
shares
CHF
Number of
shares
1,150,000
448,557
3,908
448,443
632,500
246,752
2,149
246,598
818,382
99,248
863
99,029
690,000
269,111
2,345
269,089
0
0
0
0
CHF
0
0
0
0
Granted in 2014
Number of PSUs
CHF
CHF
CHF
Number of
shares
4,037
460,016
3,908
1,357,016
2,507,016
118 %
CHF
4,320
CHF
CHF
173,398
2,684,734
2,221
253,083
2,149
746,433
1,378,933
118 %
4,320
141,262
1,524,515
2,953
336,494
863
534,771
1,353,153
65 %
102,586
317,772
1,773,511
2,423
276,101
2,345
814,301
1,504,301
118 %
4,320
215,181
1,723,802
621,000
260,913
1,363
156,404
926
104,323
2,180
248,411
2,289
770,051
1,391,051
124 %
4,320
179,123
1,574,494
2014
Dr Martin Strobel
Group CEO
Michael Müller
Head of Corporate Division Switzerland
Jan De Meulder
Head of SBU Germany
German Egloff
Head of Corporate Division Finance
Dr Thomas Sieber
Head of Corporate Division Corporate Centre
Martin Wenk
690,000
269,111
2,345
269,089
0
0
2,423
276,101
2,345
814,301
1,504,301
118 %
4,320
215,181
1,723,802
Head of Corporate Division Asset Management
Total for the Corporate Executive Committee
4,601,882
1,593,692
12,973
1,488,652
926
104,323
16,237
1,850,206
13,899
5,036,873
9,638,755
109 %
124,186
1,241,917
11,004,858
Explanatory notes to the table
Remuneration is disclosed in accordance with the accrual principle. The table includes all forms of remuneration awarded for performance in 2014 even if individual
components are not paid until a later date. Amounts are gross, before deduction of social security contributions etc.
Remuneration paid to former members and related parties No remuneration on a non-arm’s-length basis was paid to companies or individuals who are related to
members of the Corporate Executive Committee. Related parties are spouses, life partners, children under 18 years, companies owned or controlled by directors,
and legal entities or individuals who act as trustees for them. No amounts receivable from these persons were waived.
Share Subscription Plan Proportion of variable remuneration received directly as shares, which are measured at market value less 10 per cent markdown.
Subscription price = CHF 114.75.
Employee Share Ownership Plan Proportion of variable remuneration received as shares (excluding loans to purchase shares), which are measured at market value less
dividend rights discounted over three years. Subscription price = CHF 112.70.
Performance share units (PSUs) These have been disclosed at their value of CHF 113.95 at the grant date and measured using a Monte Carlo simulation, which
calculates a present value for the payout expected at the end of the vesting period.
78
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Corporate Governance
Corporate Governance Report
including Remuneration Report
REMUNERATION PAID TO THE MEMBERS OF THE CORPORATE EXECUTIVE COMMIT TEE
Basic salary
Cash payment
2014
Dr Martin Strobel
Group CEO
Michael Müller
Jan De Meulder
Head of SBU Germany
German Egloff
Head of Corporate Division Switzerland
Head of Corporate Division Finance
Dr Thomas Sieber
Head of Corporate Division Corporate Centre
Head of Corporate Division Asset Management
0
0
0
0
0
0
0
0
0
0
Variable remuneration
Total basic
salary plus
variable
remuneration
Variable
remuneration
as percentage
of basic salary
Non-cash
benefits
Pension
contributions
Total
remuneration
(fixed)
cash payment
Share Subscription Plan
Employee Share Ownership Plan
Performance share units (PSUs)
Total variable remuneration
Granted in 2014
CHF
CHF
Number of
shares
CHF
Number of
shares
CHF
Number of PSUs
CHF
Number of
shares
CHF
CHF
1,150,000
448,557
3,908
448,443
4,037
460,016
3,908
1,357,016
2,507,016
118 %
CHF
4,320
CHF
CHF
173,398
2,684,734
632,500
246,752
2,149
246,598
2,221
253,083
2,149
746,433
1,378,933
118 %
4,320
141,262
1,524,515
818,382
99,248
863
99,029
2,953
336,494
863
534,771
1,353,153
65 %
102,586
317,772
1,773,511
690,000
269,111
2,345
269,089
2,423
276,101
2,345
814,301
1,504,301
118 %
4,320
215,181
1,723,802
621,000
260,913
1,363
156,404
926
104,323
2,180
248,411
2,289
770,051
1,391,051
124 %
4,320
179,123
1,574,494
Martin Wenk
690,000
269,111
2,345
269,089
2,423
276,101
2,345
814,301
1,504,301
118 %
4,320
215,181
1,723,802
Total for the Corporate Executive Committee
4,601,882
1,593,692
12,973
1,488,652
926
104,323
16,237
1,850,206
13,899
5,036,873
9,638,755
109 %
124,186
1,241,917
11,004,858
Explanatory notes to the table
Remuneration is disclosed in accordance with the accrual principle. The table includes all forms of remuneration awarded for performance in 2014 even if individual
components are not paid until a later date. Amounts are gross, before deduction of social security contributions etc.
Remuneration paid to former members and related parties No remuneration on a non-arm’s-length basis was paid to companies or individuals who are related to
members of the Corporate Executive Committee. Related parties are spouses, life partners, children under 18 years, companies owned or controlled by directors,
and legal entities or individuals who act as trustees for them. No amounts receivable from these persons were waived.
Share Subscription Plan Proportion of variable remuneration received directly as shares, which are measured at market value less 10 per cent markdown.
Subscription price = CHF 114.75.
Employee Share Ownership Plan Proportion of variable remuneration received as shares (excluding loans to purchase shares), which are measured at market value less
dividend rights discounted over three years. Subscription price = CHF 112.70.
Performance share units (PSUs) These have been disclosed at their value of CHF 113.95 at the grant date and measured using a Monte Carlo simulation, which
calculates a present value for the payout expected at the end of the vesting period.
Non-cash benefits Based on all remuneration elements required to be declared on the Swiss salary certificate, including long-service awards, taxable benefits relating
to shares received in connection with the Employee Incentive Plan (maximum of 100 shares per annum), accommodation costs and non-cash benefits (use of a company
vehicle) granted to a Corporate Executive Committee member residing abroad.
Pension benefits These comprise the estimated employer contributions to the state-run social security schemes (up to the pensionable or insurable threshold in each
case) and the pension fund or, alternatively, a compensatory payment in lieu of employer and employee contributions to the Swiss social security scheme and the
pension fund (neither of these is payable if the person concerned is working outside Switzerland) and maintenance of disability insurance cover in the home country
of a Corporate Executive Committee member residing abroad.
04_JB_Corporate_Governance_en�indd 79
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Corporate Governance
Corporate Governance Report
including Remuneration Report
LOANS AND CREDIT FACILITIES GRANTED TO MEMBERS OF THE BOARD OF DIRECTORS AND THE CORPORATE EXECUTIVE COMMIT TEE
(AS AT 31 DECEMBER)
Mortgages
Loans pertaining
to the Employee
Share Ownership Plan
Other loans
2013
2014
2013
2014
2013
2014
2013
Total
2014
CHF
Dr Andreas Burckhardt
Chairman
Dr Georg F. Krayer
Vice-Chairman (until 24 April 2014)
Werner Kummer
Vice-Chairman (since 24 April 2014)
Dr Michael Becker
Member
Dr Andreas Beerli
Member
Dr Georges-Antoine de Boccard
Member
Christoph B. Gloor
0
0
0
0
0
0
Member (since 24 April 2014)
n/a
Karin Keller-Sutter
Member
Thomas Pleines
Member
Dr Eveline Saupper
Member
Total for the Board of Directors
Corporate Executive
Committee member
with the highest
outstanding loan
Dr Thomas Sieber
Head of Corporate Division Corporate
Centre
Other members of the
Corporate Executive
Committee
Total for the Corporate Executive
Committee
0
2,403,689
2,706,237
n/a
0
0
0
0
0
0
0
0
0
0
0
0
0
0
n/a
0
0
0
n/a
0
0
0
0
0
0
0
0
2,403,689
2,706,237
0
0
0
0
1,000,000
1,000,000
2,497,866
2,549,704
2,275,000
2,275,000
3,079,634
2,560,621
3,275,000
3,275,000
5,577,500
5,110,325
0
0
0
0
0
0
n/a
0
0
0
0
0
0
0
0
2,403,689
2,706,237
n/a
0
0
0
0
0
0
0
0
0
0
0
0
0
0
n/a
0
0
0
n/a
0
0
0
0
0
0
0
0
2,403,689
2,706,237
0
3,497,866
3,549,704
0
5,354,634
4,835,621
0
8,852,500
8,385,325
Explanatory notes to the table:
Loans and credit facilities No loans or credit facilities were granted at non-market terms and conditions
a) to former members of the Board of Directors or Corporate Executive Committee,
b) to individuals or companies related to members of the Board of Directors or Corporate Executive Committee. (Related parties are: spouses, life partners, children
under 18 years, companies owned or controlled by directors, or legal entities or individuals who act as trustees for them.)
Mortgages Mortgages of up to CHF 1 million are granted to staff at the following terms and conditions: 1 per cent below the customer interest rate for variable-rate
mortgages and at a preferential interest rate for fixed-rate mortgages.
Loans associated with the Employee Share Ownership Plan Loans to increase the effect of the Employee Share Ownership Plan (see ‘5.6. Share Subscription Plan and
Employee Share Ownership Plan’). Interest is charged on loans at a market rate (2014: 1 per cent), and they have a term of three years.
Other loans There are no policy loans.
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SHARES HELD BY MEMBERS OF THE BOARD OF DIRECTORS (AS AT 31 DECEMBER)
Discretionary shares
Restricted shares
Total share ownership
Percentage of issued share capital
2013
2014
2013
2014
2013
2014
2013
2014
Quantity
Dr Andreas Burckhardt
Chairman
Dr Georg F. Krayer
Vice-Chairman
(until 24 April 2014)
Werner Kummer
Vice-Chairman
(since 24 April 2014)
Dr Michael Becker
Member
Dr Andreas Beerli
Member
Dr Georges-Antoine de
Boccard
Member
Christoph B. Gloor
Member
(since 24 April 2014)
Karin Keller-Sutter
Member
Thomas Pleines
Member
Dr Eveline Saupper
Member
Total for the Board
of Directors
Percentage of issued
share capital
2,241
4,951
47,441
50,576
49,682
55,527
0.099 %
0.111 %
33,505
n/a
4,122
n/a
37,627
n/a
0.075 %
n/a
3,593
4,184
3,166
3,170
6,759
7,354
0.014 %
0.015 %
1,000
1,530
2,961
2,978
3,961
4,508
0.008 %
0.009 %
0
0
0
0
2,261
2,808
2,261
2,808
0.005 %
0.006 %
2,261
2,686
2,261
2,686
0.005 %
0.005 %
n/a
7,000
n/a
1,000
n/a
8,000
n/a
0.016 %
0
0
0
0
1,000
1,425
1,000
1,425
0.002 %
0.003 %
1,594
2,141
1,594
2,141
0.003 %
0.004 %
2,241
42,580
2,771
20,436
3,029
67,835
3,094
69,878
5,270
110,415
5,865
90,314
0.011 %
0.221 %
0.012 %
0.181 %
0.085 %
0.041 %
0.136 %
0.140 %
0.221 %
0.181 %
Explanatory notes to the table:
Shareholdings Includes shares held by related parties (spouses, life partners, children under 18 years; companies owned or controlled by directors, and legal entities
or individuals who act as trustees for them).
Restricted shares Shares received in connection with share-based remuneration programmes are subject to a closed period of three years. The closed period for
shares received by the Chairman of the Board of Directors in connection with the Share Subscription Plan is five years. Section 20 of the Articles of Association also
requires all members of the Board of Directors to lodge 1,000 shares with the Company for the duration of their term of appointment (qualifying shares).
Options Members of the Board of Directors do not hold any options on Baloise shares.
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SHARES HELD BY MEMBERS OF THE CORPORATE EXECUTIVE COMMIT TEE
(AS AT 31 DECEMBER)
Quantity
Dr Martin Strobel
Group CEO
Jan De Meulder
Head of SBU Germany
German Egloff
Discretionary shares
Restricted shares
Total share ownership
Percentage of issued
share capital
Prospective
entitlements (PSUs)
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
0
100
54,705
51,044
54,705
51,144
0.109 % 0.102 % 23,514
20,408
6,229
4,593
13,365
11,525
19,594
16,118
0.039 % 0.032 % 12,927
12,033
Head of Corporate Division Finance
15,858
7,583
20,811
19,280
36,669
26,863
0.073 % 0.054 % 10,453
9,854
Michael Müller
Head of Corporate Division Switzerland
2,837
2,679
8,908
10,632
11,745
13,311
0.023 % 0.027 %
7,461
8,654
Dr Thomas Sieber
Head of Corporate Division Corporate
Centre
Martin Wenk
Head of Corporate Division
Asset Management
Total for the members
of the Corporate Executive Committee
Percentage of issued
share capital
2,000
3,100
49,337
45,239
51,337
48,339
0.103 % 0.097 %
9,971
9,183
11,500
8,000
22,743
11,098
34,243
19,098
0.068 % 0.038 % 11,078
10,204
38,424
26,055 169,869 148,818 208,293 174,873
0.417 % 0.350 % 75,404
70,336
0.077 % 0.052 % 0.340 % 0.298 % 0.417 % 0.350 %
Explanatory notes to the table:
Shareholdings Includes shares held by related parties (spouses, life partners, children under 18 years; companies owned or controlled by directors, and legal entities
or individuals who act as trustees for them).
Restricted shares Includes loan-financed shares connected with the Employee Share Ownership Plan. Shares received in connection with share-based remuneration
programmes are subject to a closed period of three years.
Options Options held in connection with the Employee Share Ownership Plan are not reported here because they were written to hedge loans and do not originate from
a separate option plan. Each put option is also offset by a countervailing call option.
Prospective entitlements (PSUs) Number of allocated performance share units (granted as at 1 March 2012, 1 March 2013 and 1 March 2014).
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TOTAL AND VARIABLE REMUNERATION IN THE BALOISE GROUP
In cash
In shares
Prospective
entitlements
Total
In cash
In shares
Prospective
entitlements
2013
2014
Total
776.2
6.2
5.6
788.0
762.3
5.7
5.6
773.6
Total remuneration
CHF million
Total variable remuneration (total pool)
CHF million
Number of beneficiaries
167.0
5,590
6.2
151
5.6
69
178.8
172.3
5,353
5.7
148
5.6
64
183.6
Of which commission paid to insurance
sales force
CHF million
111.4
0.0
0.0
111.4
102.5
0.0
0.0
102.5
Of which other forms of variable
remuneration
CHF million
55.5
6.2
5.6
67.3
69.8
5.7
5.6
81.1
Total outstanding
deferred remuneration
CHF million
Debits / credits for remuneration
for previous reporting periods
recognised in profit or loss
0.0
93.4
19.9
113.3
0.0
100.5
17.5
118.0
CHF million
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Total inducement payments
made
CHF million
Number of beneficiaries
Total severance payments
made
CHF million
Number of beneficiaries
0.1
4
7.9
74
0.0
0
0.0
0
0.0
0
0.0
0
0.1
7.9
0.0
1
19.7
157
0.0
0
0.0
0
0.0
0
0.0
0
0.0
19.7
Explanatory notes to the table:
The table includes all forms of remuneration awarded for each year even if individual components are not paid until a later date.
Total remuneration All taxable benefits that the financial institution provides to persons directly or indirectly for the work they have performed for it in connection with
their employment or directorship. They include cash payments, non-cash benefits, expenditure that creates or increases entitlements to pension benefits, pensions,
allotment of shareholdings, conversion rights and warrants, and debt waivers.
Variable remuneration Part of total remuneration, the amount or payment of which is at the discretion of the financial institution or which depends on the occurrence
of agreed conditions. It includes performance-related and profit-based remuneration such as fees and commissions. Inducement and severance payments also fall
under the definition of variable remuneration.
Total pool All the variable remuneration that a financial institution allocates for a year regardless of its form, any contractual undertaking in respect of grant dates
or payout dates and any terms and conditions attached. Inducement and severance payments made in the relevant year should be included in the total pool.
Inducement payment One-off payment agreed when an employment contract is signed. Payments to compensate for lost entitlement to remuneration from a former
employer also count as inducement pay.
Severance payment Severance packages are paid only in individual, justified cases and are granted only to management team members and to employees, but not
to members of either the Board of Directors or the Corporate Executive Committee.
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Report of the statutory auditor
to the Annual General Meeting of
Bâloise Holding Ltd, Basel
STATUTORY AUDITOR’S REPORT ON THE REMUNERATION REPORT FOR 2014
We have audited the remuneration report (pages 74 to 80) of 20 March 2015 published by Bâloise Holding Ltd for
the year ended 31 December 2014�
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and fair presentation of the remuneration report in accordance
with Swiss law and the Ordinance Against Excessive Remuneration in Listed Companies Limited by Shares (ERCO)�
This responsibility includes drafting the Company’s remuneration principles and setting remuneration levels in
individual cases�
Auditor’s responsibility
Our responsibility is to express an opinion on the accompanying remuneration report based on our audit� We
conducted our audit in accordance with Swiss Auditing Standards� Those standards require that we comply with
professional codes of conduct and that we plan and perform the audit to obtain reasonable assurance about wheth-
er the remuneration report is consistent with Swiss law and sections 14 to 16 ERCO�
An audit involves performing procedures to obtain audit evidence about the remuneration report’s disclosures
on remuneration, loans and credit facilities in accordance with sections 14 to 16 ERCO� The procedures selected
depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the remu-
neration report, whether due to fraud or error� This audit also includes evaluating the appropriateness of the meth-
ods used to measure remuneration elements, as well as evaluating the overall presentation of the remuneration
report�
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion�
Opinion
In our opinion, the remuneration report of Bâloise Holding Ltd for the year ended 31 December 2014 is consistent
with Swiss law and sections 14 to 16 ERCO�
PricewaterhouseCoopers Ltd
Christian Konopka
Audit expert
Peter Lüssi
Audit expert
Auditor in charge
Basel, 20 March 2015
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This page has been left empty on purpose.
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6. SHAREHOLDER PARTICIPATION RIGHTS
Voting rights
The share capital of Bâloise Holding consists solely of registered
shares� Each share confers the right to one vote� No shares
carry preferential voting rights� To ensure a broad-based share-
holder structure and to protect minority shareholders, no share-
holder is registered as holding more than 2 per cent of voting
rights, regardless of the size of their shareholding� The Board
of Directors can approve exceptions to this provision if a major-
ity of two-thirds of all its members is in favour (section 5 of the
Articles of Association)� There are currently no exceptions� Each
shareholder can appoint a proxy in writing in order to author-
ise another shareholder or an independent proxy to exercise his
or her voting rights� When exercising voting rights, no share-
holder can accumulate more than one fifth of the voting shares
at the Annual General Meeting directly or indirectly for his or
her own votes or proxy votes (section 16 of the Articles of As-
sociation)�
The Board of Directors will propose to the 2015 Annual
General Meeting that a legal provision be incorporated into the
Articles of Association to the effect that electronic powers of
attorney and instructions may be given to an independent proxy
without requiring a qualifying electronic signature�
Statutory quorums
The Annual General Meeting is quorate regardless of the num-
ber of shareholders present or proxy votes represented, subject
to the mandatory cases stated by law (section 17 of the Articles
of Association)�
The consent of at least three-quarters of the votes repre-
sented at the Annual General Meeting is required to suspend
statutory restrictions on voting rights� The votes must also rep-
resent at least one third of the total shares issued by the Com-
pany� This qualified majority also applies to the cases specified
in section 17 (3) lit� a–h of the Articles of Association� Otherwise,
resolutions are adopted by a simple majority of the votes cast,
subject to compulsory legal provisions (section 17 of the Articles
of Association)�
Convening the Annual General Meeting
The Annual General Meeting generally takes place in April, but
must be held within six months of the end of the previous finan-
cial year� Bâloise Holding’s financial year ends on 31 December�
The Annual General Meeting is convened at least 20 days before
the date of the meeting� Each registered shareholder receives
a personal invitation, which includes the agenda� The invitation
and the agenda are published in the Swiss Official Gazette of
Commerce, in various newspapers and on the internet�
The Annual General Meeting, the Board of Directors or
the external auditors decide whether to convene extraordinary
general meetings� Furthermore, legal provisions also require
the Board of Directors to convene an extraordinary general
meeting if requested by the shareholders (section 11 of the Ar-
ticles of Association)� Article 699 (3) of the Swiss Code of Ob-
ligations (OR) states such requests must be made by sharehold-
ers who represent at least 10 per cent of the share capital�
Requesting agenda items
Article 699 (3) OR states that one or more shareholders who
together represent shares of at least CHF 100,000 can request
items to be put on the agenda for debate� Such requests must be
submitted in writing to the Board of Directors at least six weeks
before the ordinary Annual General Meeting is held, giving
details of the motions to be put to the AGM (section 14 of the
Articles of Association)�
Entry in the share register
Shareholders are entitled to vote at the Annual General Meeting
provided they are registered in the share register as sharehold-
ers with voting rights on the cut-off date stated by the Board of
Directors in the invitation� The cut-off date should be several
days before the Annual General Meeting (section 16 of the
Articles of Association)�
Section 5 of the Articles of Association determines wheth-
er nominee entries are permissible, taking into account any
percentage limits and entry requirements� The procedures and
requirements for suspending and restricting transferability are
set out in the provisions in section 5 and section 17�
→ www.baloise.com/rules-regulations
→ www.baloise.com/calendar
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7. CHANGES OF CONTROL AND POISON-PILL MEASURES
Shareholders or groups of shareholders acting together by agree-
ment are required to issue a takeover bid to all other sharehold-
ers when they have acquired 33 per cent of all Baloise shares�
Bâloise Holding has not made any use of the option to deviate
from or waive this regulation� There is no statutory opting-out
clause or opting-up clause as defined by the Swiss Federal Act
on Stock Exchanges and Securities Trading (Börsengesetz)�
The members of the Corporate Executive Committee and
the Chairman of the Board of Directors have a notice period of
twelve months� Bâloise has not agreed any arrangements in
respect of changes of control or non-compete clauses with mem-
bers of either the Board of Directors or the Corporate Executive
Committee�
8. EXTERNAL AUDITORS
The external auditors are elected annually by the Annual Gen-
eral Meeting� PricewaterhouseCoopers AG (PwC) or its prede-
cessor Schweizerische Treuhandgesellschaft / STG-Coopers
& Lybrand has audited Bâloise Holding since 1962� Mr Peter
Lüssi has held the post of auditor-in-charge since 2013� In ac-
cordance with article 730a (2) OR, the role of auditor-in-charge
is rotated every seven years� PwC has been the external auditing
firm for almost all Group companies since 2005�
PRICEWATERHOUSECOOPERS' FEES
CHF
(rounded to the nearest thousand, including
outlays and VAT)
Audit fees
Consulting fees
Tax consultancy and legal advice
Corporate finance
Insurance-specific consulting
Operational consulting
Business and IT consulting
2013
2014
5,330,000
5,186,000
663,000
533,000
83,000
22,000
15,000
10,000
608,000
269,000
0
54,000
175,000
110,000
Total
5,993,000
5,794,000
The audit fees include fees for engagements with a direct or indirect connection to a
current or future audit engagement and fees for audit-related activities (including support
with accounting issues, regulatory issues and statutory special audits).
At its meetings, the Audit and Risk Committee receives detailed
documentation about the external auditors’ findings, primarily
at meetings about the annual and half-year financial statements�
The performance of the external auditors and their inter-
action with Group Internal Audit, Risk Management and Com-
pliance are assessed by the Audit and Risk Committee� The
Audit and Risk Committee’s discussions with the external au-
ditors focus on the audit work the latter have undertaken, their
reports and the material findings and most important issues
raised during the audit�
The Audit and Risk Committee submits proposals to the
Board of Directors regarding the external auditors to be elect-
ed by the Annual General Meeting and makes recommendations
regarding their fees� Before the start of the annual audit, it re-
views the scope of the audit and suggests areas that require
special attention� The Audit and Risk Committee reviews the
external auditors’ fees on an annual basis�
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A written instruction requires material services unconnected
with audit work to be approved in advance by Group Internal
Audit� As part of the approval process for the engagement of
auditors, the guarantee of independence is first reviewed by the
auditor-in-charge and then verified by the head of Group In-
ternal Audit� The operational unit approves the engagement and
takes commercial responsibility for it�
9. SIGNIFICANT AMENDMENTS TO THE ARTICLES OF ASSOCIA-
TION SUBMITTED TO THE 2015 ANNUAL GENERAL MEETING
In connection with the Ordinance Against Excessive Remu-
neration in Listed Companies Limited by Shares (ERCO), which
came into force on 1 January 2014, various amendments to the
Articles of Association will be submitted to the 2015 Annual
General Meeting for approval� They largely relate to the follow-
ing points:
→ Independent proxies;
→ Agreements on remuneration;
→ Additional remuneration paid to newly appointed mem-
bers of the Corporate Executive Committee;
→ Consequences of the Annual General Meeting’s non-
approval of remuneration;
→ Principles governing the granting of shares and options;
→ Maximum number of external directorships and
→ Maximum amount of loans and credit facilities that can
be granted to members of the Board of Directors and the
Corporate Executive Committee�
10. INFORMATION POLICY
Information principles
The Baloise Group provides shareholders, potential investors,
employees, customers and the public with information on
a regular, open and comprehensive basis� All registered share-
holders each receive a summary of the annual report once
a year and a letter to shareholders every six months, which pro-
vide a review of business� The full annual report is sent to share-
holders on request� All publications are simultaneously avail-
able to the public� All market participants receive the same
information� Baloise uses technologies such as webcasting,
podcasting and teleconferences to make financial analysts’ meet-
ings generally accessible�
Information events
Baloise provides detailed information about its business
activities as follows:
→ Details about its financial performance, targets, strategies
and operations are provided at press conferences covering
its annual and half-year financial statements�
→ Teleconferences for financial analysts and investors take
place when the annual and half-year financial statements
are published� The events can then be downloaded as
podcasts�
→ Shareholders are informed about business during the year
at the Annual General Meeting�
→ Roadshows are regularly staged at various financial
centres�
Ongoing relationships are maintained with analysts, investors
and the media� Full details of individual Baloise events can be
accessed at www�baloise�com�
Information about Baloise shares
Information about Baloise shares begins on page 8�
→ www.baloise.com/baloise-share
Information about Baloise bonds
Information about Baloise bonds in circulation can be found
on pages 215 and 251�
→ www.baloise.com/bonds
Financial calendar
Important dates for investors are available at www�baloise�com�
This is where the publication dates for the annual and half-year
reports and the Q3 interim statement are listed and where the
date of the Annual General Meeting, the AGM invitation, the
closing date for the share register and any ex-dividend dates are
published�
→ www.baloise.com/calendar
Availability of documents
Annual and half-year reports, media releases, disclosures, recent
announcements, presentations and other documents are avail-
able to the public at www�baloise�com� Please register for the lat-
est corporate communications at www�baloise�com/mailinglist�
→ www.baloise.com/media
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Contact
Corporate Governance
Baloise Group
Andreas Eugster
Aeschengraben 21
4002 Basel, Switzerland
Tel� +41 (0)58 285 84 50
andreas�eugster@baloise�com
Investor Relations
Baloise Group
Marc Kaiser
Aeschengraben 21
4002 Basel, Switzerland
Tel� +41 (0)58 285 81 81
marc�kaiser@baloise�com
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05_FB_Kapitel_01_bis_02_en�indd 90
24�03�2015 13:12:18
4 Baloise
16 Review of operating performance
36 Sustainable business management
48 Corporate governance
92 Financial Report
246 Bâloise Holding Ltd
260 Notes
Financial Report
Consolidated balance sheet ���������������������������������������������������������������� 92
Consolidated income statement ������������������������������������������������������� 94
Consolidated statement of comprehensive income ����������������� 95
Consolidated cash flow statement ��������������������������������������������������� 96
Consolidated statement of changes in equity ���������������������������� 98
Reconciliation between the gross investment in financial
leases and the present value of minimum lease payments ��� 214
Financial liabilities ������������������������������������������������������������������������������ 215
Provisions ������������������������������������������������������������������������������������������������ 216
Insurance liabilities ����������������������������������������������������������������������������� 216
NOTES TO THE CONSOLIDATED ANNUAL
FINANCIAL STATEMENTS ������������������������������������������������������������������� 100
Basis of preparation ���������������������������������������������������������������������������� 100
Application of new financial reporting standards
and restatements ����������������������������������������������������������������������������������� 100
Consolidation principles and accounting policies ��������������� 102
Critical accounting principles and estimate uncertainties ��� 118
Management of insurance risk and financial risk ���������������� 120
Basis of consolidation ������������������������������������������������������������������������ 163
Information on operating segments (segment reporting) ��� 165
NOTES TO THE CONSOLIDATED BALANCE SHEET ������������������� 170
Property, plant and equipment ������������������������������������������������������ 170
Intangible assets ����������������������������������������������������������������������������������� 172
Investments in associates ����������������������������������������������������������������� 175
Investment property ��������������������������������������������������������������������������� 177
Financial assets ������������������������������������������������������������������������������������� 178
Mortgages and loans ��������������������������������������������������������������������������� 184
Derivative financial instruments �������������������������������������������������� 185
Receivables ���������������������������������������������������������������������������������������������� 186
Reinsurance assets ������������������������������������������������������������������������������� 187
Receivables from reinsurers ������������������������������������������������������������ 187
Employee benefits �������������������������������������������������������������������������������� 188
Deferred income taxes ����������������������������������������������������������������������� 200
Other assets �������������������������������������������������������������������������������������������� 202
Non-current assets held for sale
and discontinued operations ���������������������������������������������������������� 202
Share capital ������������������������������������������������������������������������������������������� 203
Technical reserves (gross) ���������������������������������������������������������������� 204
Liabilities arising from banking business
and financial contracts ������������������������������������������������������������������������ 213
NOTES TO THE
CONSOLIDATED INCOME STATEMENT ������������������������������������������ 217
Premiums earned and policy fees ������������������������������������������������� 217
Income from investments for
own account and at own risk ����������������������������������������������������������� 217
Realised gains and losses on investments ��������������������������������� 218
Income from services rendered ����������������������������������������������������� 222
Other operating income �������������������������������������������������������������������� 222
Classification of expenses ����������������������������������������������������������������� 223
Personnel expenses ������������������������������������������������������������������������������ 223
Gains or losses on financial contracts ���������������������������������������� 224
Income taxes ������������������������������������������������������������������������������������������� 225
Earnings per share ������������������������������������������������������������������������������� 226
Other comprehensive income �������������������������������������������������������� 227
OTHER DISCLOSURES ������������������������������������������������������������������������� 229
Acquisition and disposal of companies ������������������������������������� 229
Related party transactions ��������������������������������������������������������������� 230
Remuneration paid to the Board of Directors
and the Corporate Executive Committee ��������������������������������� 231
Contingent and future liabilities �������������������������������������������������� 232
Operating leases ����������������������������������������������������������������������������������� 235
Claim payments received from non-Group insurers ���������� 236
Events after the balance sheet date ���������������������������������������������� 236
Significant subsidiaries, joint ventures
and associates as at 31 December 2014 ��������������������������������������� 238
Changes to shareholdings ���������������������������������������������������������������� 240
Consolidated structured entities �������������������������������������������������� 241
Joint arrangements ������������������������������������������������������������������������������� 241
REPORT OF THE STATUTORY AUDITOR TO THE ANNUAL
GENERAL MEETING OF BÂLOISE HOLDING LTD, BASEL ������� 242
T
R
O
P
E
R
L
A
I
C
N
A
N
I
F
05_FB_Kapitel_01_bis_02_en�indd 91
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Financial Report
Consolidated balance sheet
Consolidated balance sheet
CHF million
Assets
Property, plant and equipment
Intangible assets
Investments in associates
Investment property
Financial instruments with characteristics of equity
Available for sale
Recognised at fair value through profit or loss
Financial instruments with characteristics of liabilities
Held to maturity
Available for sale
Recognised at fair value through profit or loss
Mortgages and loans
Carried at cost
Recognised at fair value through profit or loss
Derivative financial instruments
Receivables from financial contracts
Carried at cost
Reinsurance assets
Receivables from reinsurers
Insurance receivables
Receivables from employee benefits
Other receivables
Receivables from investments
Deferred tax assets
Current income tax assets
Other assets
Carried at cost
Recognised at fair value through profit or loss
Cash and cash equivalents
Non-current assets and disposal groups classified as held for sale
Total assets
The notes form an integral part of the consolidated annual financial statements.
Note
31.12.2013
31.12.2014
8
9
10
11
12
12
13
14
15
16
17
18
15
15
19
20
21
422.5
1,080.3
222.0
5,685.9
4,096.4
7,248.0
379.2
909.2
227.9
5,962.9
4,698.1
8,753.1
8,100.7
8,413.7
22,431.0
24,227.5
1,795.5
1,820.4
17,373.4
17,326.0
956.1
410.7
389.4
396.4
21.7
518.4
0.7
257.0
612.5
56.0
47.8
839.9
613.2
21.1
421.5
79.7
409.0
1.7
375.3
564.5
48.3
64.2
165.4
47.3
2,960.8
401.0
163.2
53.3
2,969.6
–
75,696.9
79,342.3
92
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Financial Report
Consolidated balance sheet
CHF million
Equity and liabilities
Equity
Share capital
Capital reserves
Treasury shares
Unrealised gains and losses (net)
Retained earnings
Equity before non-controlling interests
Non-controlling interests
Total equity
Liabilities
Technical reserves (gross)
Liabilities arising from banking business and financial contracts
With discretionary participation features
Measured at amortised cost
Recognised at fair value through profit or loss
Financial liabilities
Provisions
Derivative financial instruments
Insurance liabilities
Liabilities arising from employee benefits
Other accounts payable
Deferred tax liabilities
Current income tax liabilities
Other liabilities
Liabilities included in disposal groups classified as held for sale
Total liabilities
Total equity and liabilities
The notes form an integral part of the consolidated annual financial statements.
Note
31.12.2013
31.12.2014
22
23
24
26
27
14
28
18
19
21
5.0
233.1
– 240.8
– 68.1
4,926.7
4,855.9
50.5
5.0
246.6
– 250.0
375.8
5,413.9
5,791.3
39.7
4,906.4
5,831.0
47,435.6
48,738.9
1,492.7
7,258.4
7,791.1
1,697.6
129.4
68.2
2,118.0
989.5
445.2
882.3
50.2
78.6
353.9
1,766.5
7,342.0
8,632.3
1,702.4
119.3
176.4
1,780.3
1,455.6
571.8
1,065.5
86.7
73.8
–
70,790.5
73,511.4
75,696.9
79,342.3
05_FB_Kapitel_01_bis_02_en�indd 93
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24�03�2015 13:12:18
Financial Report
Consolidated income statement
Consolidated income statement
CHF million
Income
Premiums earned and policy fees (gross)
Reinsurance premiums ceded
Premiums earned and policy fees (net)
Investment income
Realised gains and losses on investments
Income from services rendered
Share of profit (loss) of associates
Other operating income
Income
Expense
Claims and benefits paid (gross)
Change in technical reserves (gross)
Reinsurers’ share of claims incurred
Acquisition costs
Operating and administrative expenses for insurance business
Investment management expenses
Interest expenses on insurance liabilities
Gains or losses on financial contracts
Other operating expenses
Expense
Profit before borrowing costs and taxes
Borrowing costs
Profit before taxes
Income taxes
Profit for the period
Attributable to:
Shareholders
Non-controlling interests
Earnings / loss per share
Basic (CHF)
Diluted (CHF)
The notes form an integral part of the consolidated annual financial statements.
94
Note
2013
2014
29
29
29
30
31
32
33
23
23
23
34
34
34
36
34
26
37
38
7,212.7
– 167.9
7,044.8
1,765.1
670.3
119.0
40.5
107.9
7,168.1
– 163.6
7,004.5
1,701.9
1,362.5
110.7
8.1
185.2
9,747.5
10,372.8
– 5,439.7
– 5,666.4
– 1,359.4
– 1,469.5
75.5
– 500.5
– 897.1
– 70.6
– 47.3
– 368.9
– 481.3
146.6
– 569.6
– 866.5
– 66.9
– 42.6
– 462.6
– 446.8
– 9,089.3
– 9,444.3
658.2
928.6
– 50.1
608.1
– 43.5
885.1
– 152.7
455.4
– 173.2
711.9
452.6
2.8
9.65
9.38
710.7
1.3
15.15
14.63
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Financial Report
Consolidated statement of comprehensive income
Consolidated statement
of comprehensive income
CHF million
Profit for the period
Items not to be reclassified to income statement
Change in reserves arising from reclassification of investment property
Change in reserves arising from assets and liabilities of post-employment benefits
(defined benefit plans)
Change arising from shadow accounting
Income taxes
Total items not to be reclassified to income statement
Items to be reclassified to the income statement
2013
2014
455.4
711.9
0.6
162.4
– 18.4
– 33.2
111.5
– 0.5
– 487.4
84.6
93.2
– 310.1
Change in unrealised gains and losses on available-for-sale financial assets
– 531.7
1,688.8
Change in unrealised gains and losses on associates
Change in hedging reserves for derivative financial instruments held as hedges
of a net investment in a foreign operation
Change in reserves arising from reclassification of held-to-maturity financial assets
Change arising from shadow accounting
Exchange differences
Income taxes
Total items to be reclassified to the income statement
Other comprehensive income
Comprehensive income
Attributable to:
Shareholders
Non-controlling interests
The notes form an integral part of the consolidated annual financial statements.
3.2
2.4
– 2.7
267.2
68.1
82.2
– 111.3
8.7
– 136.6
– 2.6
– 737.1
177.5
– 245.4
753.3
0.1
443.2
455.5
1,155.1
452.2
3.3
1,154.6
0.5
05_FB_Kapitel_01_bis_02_en�indd 95
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24�03�2015 13:12:19
Financial Report
Consolidated cash flow statement
Consolidated cash flow statement
CHF million
Summary
Cash flow from operating activities (net)
Cash flow from investing activities (net)
Cash flow from financing activities (net)
Total cash flow
Effect of changes in exchange rates on cash and cash equivalents
Reclassification to non-current assets and disposal groups classified as held for sale
Balance of cash and cash equivalents as at 1 January
Balance of cash and cash equivalents as at 31 December
Cash flow from operating activities
Profit before taxes
Adjustments for
Note
2013
2014
609.7
0.9
73.6
213.0
– 584.9
– 258.6
25.7
13.2
– 1.8
2,923.7
2,960.8
28.0
– 19.2
0.0
2,960.8
2,969.6
608.1
885.1
Depreciation, amortisation and impairment of property, plant and equipment
and of intangible assets
8 / 9
98.9
135.3
Realised gains and losses on property, plant and equipment
and on intangible assets
Income from investments in associates
Realised gains and losses on financial assets, investment property and associates
Changes in other financial contracts
Changes in technical reserves (gross), including unearned premium reserves
Interest expenses on reinsurance liabilities
Borrowing costs
Amortised cost valuation of financial instruments
Additions and disposals of assets and liabilities resulting in a cash flow
Purchase / sale of investment property
Purchase / sale of financial assets with characteristics of equity
Purchase / sale of financial assets with characteristics of liabilities
Addition / disposal of mortgages and loans
Addition / disposal of derivative financial instruments
Addition / disposal of financial contracts and liabilities from banking business
Other changes in assets and liabilities from operating activities
Taxes paid
Cash flow from operating activities (net)
The notes form an integral part of the consolidated annual financial statements.
26
0.7
– 41.2
– 669.4
245.3
1,065.5
0.3
50.1
11.3
– 0.1
– 8.1
– 1,356.8
336.6
1,353.5
0.9
43.5
8.0
– 93.0
– 183.3
– 1,078.9
– 1,508.5
– 534.3
– 520.9
293.0
– 56.3
231.6
545.8
– 67.8
609.7
45.3
– 16.8
589.7
384.9
– 114.7
73.6
96
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Financial Report
Consolidated cash flow statement
CHF million
Cash flow from investing activities
Purchase of property, plant and equipment
Sale of property, plant and equipment
Purchase of intangible assets
Sale of intangible assets
Acquisition of companies, net of cash and cash equivalents
Disposal of companies, net of cash and cash equivalents
Purchase of investments in associates
Sale of investments in associates
Dividends from associates
Cash flow from investing activities (net)
Cash flow from financing activities
Capital increases
Capital reductions
Additions to financial liabilities
Disposals of financial liabilities
Borrowing costs paid
Purchase of treasury shares
Sale of treasury shares
Cash flow attributable to non-controlling interests
Dividends paid
Cash flow from financing activities (net)
Total cash flow
Cash and cash equivalents
Balance as at 1 January
Change during the financial year
Reclassification to non-current assets and disposal groups classified as held for sale
Effect of changes in exchange rates on cash and cash equivalents
Balance as at 31 December
Breakdown of cash and cash equivalents at the balance sheet date
Cash and bank balances
Cash equivalents
Cash and cash equivalents for the account and at the risk of life insurance
policyholders
Balance as at 31 December
Of which: restricted cash and cash equivalents
Supplemental disclosures on cash flow from operating activities
Interest received
Dividends received
Interest paid
The notes form an integral part of the consolidated annual financial statements.
05_FB_Kapitel_01_bis_02_en�indd 97
Note
2013
2014
8
9
40
40
22
22
26
26
– 21.8
1.0
– 23.5
0.0
– 2.9
2.4
0.0
7.8
37.9
0.9
–
–
224.5
– 550.0
– 57.6
– 60.0
71.1
– 1.1
– 211.8
– 584.9
– 26.7
0.6
– 20.1
0.1
– 16.4
267.9
0.0
0.0
7.6
213.0
–
–
149.4
– 150.0
– 38.1
– 60.6
64.9
– 0.6
– 223.6
– 258.6
25.7
28.0
2,923.7
2,960.8
25.7
– 1.8
13.2
2,960.8
28.0
0.0
– 19.2
2,969.6
1,992.2
1,954.5
0.0
968.6
0.0
1,015.1
2,960.8
2,969.6
14.5
6.4
1,132.8
1,069.5
80.9
– 89.9
110.0
– 82.1
97
24�03�2015 13:12:19
Financial Report
Consolidated statement of changes in equity
Consolidated statement of changes in equity
2013
Balance as at 1 January 2013
Profit for the period
Other comprehensive income
Comprehensive income
Other changes in equity in 2013
Dividend
Capital increase / repayment
Purchase / sale of treasury shares
Cancellation of (treasury) shares
Increase / decrease in non-controlling
interests due to change in the scope of
consolidation
Increase / decrease in non-controlling
interests due to change in the percentage
of shareholding
Note
Share
capital
Capital
reserves
Treasury
shares
Other
changes in
equity
Retained
earnings
Equity before
non-con-
trolling
interests
Non-con-
trolling
interests
Total
equity
5.0
218.3
– 237.9
– 67.8
4,685.9
4,603.5
37.8
4,641.3
39
22
40
6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
13.9
– 2.8
–
0.9
–
–
–
–
–
452.6
– 0.3
– 0.3
–
452.6
452.6
– 0.3
452.2
2.8
0.5
3.3
455.4
0.1
455.5
–
–
–
–
–
–
– 211.8
– 211.8
– 1.1
– 213.0
–
–
–
–
–
–
11.1
–
0.9
–
–
–
–
–
11.1
–
0.9
–
10.5
10.5
Balance as at 31 December 2013
5.0
233.1
– 240.8
– 68.1
4,926.7
4,855.9
50.5
4,906.4
The notes form an integral part of the consolidated annual financial statements.
98
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Financial Report
Consolidated statement of changes in equity
2014
Balance as at 1 January 2014
Profit for the period
Other comprehensive income
Comprehensive income
Other changes in equity in 2014
Dividend
Capital increase / repayment
Purchase / sale of treasury shares
Cancellation of (treasury) shares
Increase / decrease in non-controlling
interests due to change in the scope of
consolidation
Increase / decrease in non-controlling
interests due to change in the percentage
of shareholding
Note
Share
capital
Capital
reserves
Treasury
shares
Other
changes in
equity
Retained
earnings
Equity before
non-con-
trolling
interests
5.0
233.1
– 240.8
– 68.1
4,926.7
4,855.9
Non-con-
trolling
interests
50.5
1.3
– 0.7
Total
equity
4,906.4
711.9
443.2
–
710.7
710.7
443.9
–
39
22
40
6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
13.4
– 9.2
–
–
–
–
–
–
443.9
443.9
–
–
–
–
–
–
710.7
1,154.6
0.5
1,155.1
– 223.6
– 223.6
– 0.6
– 224.2
–
–
–
–
–
–
4.2
–
–
–
–
–
–
–
4.2
–
– 10.7
– 10.7
–
–
Balance as at 31 December 2014
5.0
246.6
– 250.0
375.8
5,413.9
5,791.3
39.7
5,831.0
The notes form an integral part of the consolidated annual financial statements.
05_FB_Kapitel_01_bis_02_en�indd 99
99
24�03�2015 13:12:19
Financial Report
Notes to the consolidated annual financial statements
Notes to the consolidated
annual financial statements
Basis of presentation
1. BASIS OF PREPARATION
The Baloise Group is a European direct insurer comprising
eleven different insurance companies that operate in virtually
every segment of the life and non-life insurance business. Its
holding company is Bâloise Holding, a Swiss corporation based
in Basel whose shares are listed in the main segment of the Swiss
Exchange (SIX). Its subsidiaries are active in the direct insurance
markets in Switzerland, Liechtenstein, Germany, Belgium,
Luxembourg, Slovakia and the Czech Republic. Its banking
business is conducted by subsidiaries in Switzerland and Germany.
In addition, the Baloise Group has a fund management company
in Luxembourg.
The Baloise Group’s consolidated annual financial state-
ments are based on the historical cost principle and recognise
adjustments resulting from the regular fair value measurement
of investment property and of financial assets and financial
liabilities that are classified as available for sale or recognised
at fair value through profit or loss. These consolidated annual
financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS), which
comply with Swiss law. IFRS 4 deals with the recognition and
disclosure of insurance and reinsurance contracts. The measure-
ment of these contracts is based on local financial reporting
standards. All amounts shown in these consolidated annual
financial statements are stated in millions of Swiss francs
(CHF million) and have been rounded to one decimal place.
Consequently, the sum total of amounts that have been rounded
may in isolated cases differ from the rounded total shown in
this report.
At its meeting on 20 March 2015 the Bâloise Holding Board
of Directors approved the annual financial statements and the
Financial Report and authorised them for issue. The financial
statements have yet to be approved by the Annual General Meeting
of Bâloise Holding.
2. APPLICATION OF NEW FINANCIAL REPORTING STANDARDS
AND RESTATEMENTS
2.1 Newly applied IFRSs and interpretations
IAS 32 (adaption) Offsetting financial assets and
financial liabilities
This amendment relates to a situation in which two entities each
owe money to the other. In this case, both entities are required
to present their rights and obligations in respect of each other
as a net amount on their respective balance sheets, provided
that a range of strict conditions primarily focusing on the abso-
lute enforceability of contractual rights are all satisfied. If a net
amount is presented, disclosure requirements relating to rights
associated with the transaction and any other associated arrange-
ments must be satisfied. In addition, enhanced disclosures that
also show the theoretical potential for offsetting are required
(e. g. in cases of default). This amendment does not impact
materially on the Baloise Group’s balance sheet or income
statement.
2.2 Other standards and interpretations
Entities that qualify as investment entities under IFRS 10
Entities that qualify as investment entities under IFRS 10 enjoy
an exemption and are not required to consolidate the entities
that they control in their consolidated financial statements.
Instead, equity investments held solely for the purpose of
generating returns from capital appreciation, investment income
or both must be measured at fair value through profit or loss.
The Baloise Group is not affected by this exemption.
IFRIC 21 Levies
This interpretation provides guidance on how entities should
account for levies imposed by government agencies in their IFRS
financial statements, in particular at what point the liability
arising from the levy is first recognised. IFRIC 21 identifies the
obligating event for the recognition of a liability as the activity
that triggers the payment of the levy in accordance with the
relevant legislation. This interpretation does not impact mate-
rially on the Baloise Group’s balance sheet or income statement.
There are no requirements to apply any other standards
or interpretations that would have an impact – or a material
impact – on profit for the period or on balance sheet line items.
100
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Financial Report
Notes to the consolidated annual financial statements
2.3 New IFRSs and interpretations not yet applied
The following new standards and interpretations relevant to the
Baloise Group have been published by the IASB but have not
yet come into effect and, therefore, have not been applied in the
2014 consolidated annual financial statements:
Standard /
Inter-
pretation
IAS 19
IFRS 9
Content
Employee Benefits (Amendment)
Financial Instruments
IFRS 15
Revenue from Contracts with Customers
Applicable
to annual
periods
beginning
on or after
1.7.2014
1.1.2018
1.1.2017
IAS 19 Employee Benefits (amendment)
As a result of the amendment, contributions from employees
or third parties are recognised as a reduction in service cost in
the period in which they are paid, provided they are entirely
related to the employee’s service in that period� This may be the
case, in particular, with contributions that constitute a fixed
percentage of salary that is not dependent on the number of
years worked at the company by the employee� This change will
have no material impact on the Baloise Group’s balance sheet
or income statement�
IFRS 9 Financial Instruments
IFRS 9 introduces new requirements for the classification and
measurement of financial instruments� Classification of finan-
cial asstets is based on the entity’s business model and on the
contractual cash flow characteristics of the financial assets con-
cerned� If the criteria in respect of the business model and cash
flow characteristics for the carried-at-cost category are not met,
financial assets are measured at fair value through profit or loss,
although certain equity instruments may be measured at fair
value through other comprehensive income� As regards struc-
tured products with embedded derivatives, the standard now
only provides for separate recognition of non-financial host
contracts� Structured products with financial host contracts
must be classified and measured as combined instruments�
The existing requirements for financial liabilities have largely
been carried over into IFRS 9� The only material new feature
concerns financial liabilities for which the fair value option is
elected� The amount of change in a financial liability’s fair value
attributable to changes in its credit risk is presented in other
comprehensive income�
The new impairment model shifts the focus to providing
for expected credit losses by recognising loss allowances� IFRS 9
specifies three steps that determine the amount of expected
losses and interest revenue to be recognised in future� Credit
losses already expected at the time of initial recognition are
measured at the present value of the twelve-month expected
credit losses (step 1)� The loss allowance is increased to an amount
equal to full lifetime expected credit losses if the credit risk of
a financial liability has grown significantly since initial recog-
nition (step 2)� Where there is objective evidence of impairment,
the recognition of interest revenue is based on its net carrying
amount (step 3)�
As far as hedge accounting is concerned, IFRS 9 has lifted
many of the restrictions imposed by IAS 39 and has significantly
widened the range of transactions that may be designated as
hedges� However, hedging relationships may no longer be volun-
tarily discontinued� Such discontinuation is now only permit-
ted under IFRS 9 if the risk management objective of the hedging
relationship changes�
It is not yet possible to fully assess what impact this amend-
ment will have on the Baloise Group’s balance sheet and income
statement�
IFRS 15 Revenue from Contracts with Customers
IFRS 15 will replace IAS 18 (Revenue), IAS 11 (Construction
Contracts) and a number of other revenue-related interpretations
for annual periods beginning on or after 1 January 2017� Appli-
cation of IFRS 15 is mandatory for all IFRS users and governs
almost all contracts with customers� The main exemptions con-
cern leases, financial instruments and insurance contracts� For
those customer contracts that are not covered by the aforemen-
tioned exemptions, this new standard provides a single, prin-
ciples-based five-step model to be applied to the relevant contracts
with customers� It is not yet possible to fully assess what impact
this new standard will have on the Baloise Group’s balance sheet
and income statement�
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Financial Report
Notes to the consolidated annual financial statements
3. CONSOLIDATION PRINCIPLES AND ACCOUNTING POLICIES
3.1 Method of consolidation
3.1.1 Subsidiaries
The consolidated annual financial statements comprise the
financial statements of Bâloise Holding and its subsidiaries,
including any structured entities. A subsidiary is consolidated
if the Baloise Group controls it either directly or indirectly. As
a rule, this is the case if the Baloise Group has exposure or rights
to variable profit components as a result of its involvement with
the investee and, because of legal positions, has the ability to
influence the investee’s business activities that are critical to its
financial success and, therefore, to affect the amount of the
variable profit components.
Companies acquired during the reporting period are
included in the consolidated annual financial statements from
the date on which control is effectively assumed, while all com-
panies sold remain consolidated until the date on which control
is ceded. Acquisitions of entities are accounted for under the
acquisition method (previously known as the “purchase method”).
Transaction costs are charged to the income statement as an
expense. The identifiable assets and liabilities of the entity con-
cerned are measured at fair value as at the date of first-time
consolidation. Non-controlling interests arising from business
combinations are measured either at their fair value or accord-
ing to their share of the acquiree’s identifiable net assets. The
Baloise Group decides which measurement method to apply to
each individual business combination.
The acquisition cost corresponds to the fair value of the
consideration paid to the previous owners on the date of the
acquisition. If investments in the form of financial instruments
or associates were already held before control was acquired,
these investments are remeasured and any difference is recog-
nised in profit or loss. Any contingent consideration recognised
as part of the consideration paid for the acquiree is measured
at fair value on the transaction date. Any subsequent changes
in the fair value of a contingent consideration are recognised
in the income statement. If the acquisition cost exceeds the fair
value of assets and liabilities plus non-controlling interests, the
difference is recognised as goodwill. Conversely, if the identified
net assets exceed the acquisition cost then the difference is
recognised directly through profit or loss as other operating
income.
102
All intercompany transactions and the resultant gains and losses
are eliminated.
The consolidation of subsidiaries ends on the date on which
control is ceded. If only some of the shares in a subsidiary are
sold, the retained interest is measured at fair value on the date
that control is lost. Gains or losses on the disposal of (some of)
the subsidiary’s shares are recognised in the income statement
as either other operating income or other operating expenses.
The acquisition of additional investments in subsidiaries
after assuming control and the disposal of investments in sub-
sidiaries without ceding control are both recognised directly
in equity as transactions with owners.
3.1.2 Structured entities
Structured entities are consolidated. Their inclusion in the
consolidated financial statements is governed by the provisions
of IFRS 10.
3.1.3 Joint arrangements
Joint arrangements are contractual agreements over which two
or more parties have joint control. A joint arrangement is clas-
sified as either a joint operation or a joint venture. In a joint
operation, the involved parties have direct rights and obligations
in respect of the assets and liabilities and the income and expenses.
By contrast, the parties involved in a joint venture do not have
a direct entitlement to the assets and liabilities and, instead,
have rights in respect of the net assets of the joint venture owing
to their position as investors.
Joint ventures are accounted for using the equity method,
i.e. the Baloise Group initially recognises the joint ventures at
cost (fair value at the date of acquisition) and thereafter recog-
nises them under the equity method (the Baloise Group’s share
of the entity’s net assets and profit or loss for the period). In the
case of joint operations, the Baloise Group includes directly in
its consolidated financial statements the share of the assets,
liabilities, income and expenses of the joint operation that is
attributable to the Baloise Group.
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Financial Report
Notes to the consolidated annual financial statements
3.1.4 Associates
Associates are initially carried at cost (fair value at the date of
acquisition) and thereafter are measured under the equity method
(the Baloise Group’s share of the entity’s profit or loss for the
period and other comprehensive income) in cases where the
Baloise Group can exert a significant influence over the manage-
ment of the entity concerned. Changes in the fair value of associates
are generally recognised in profit or loss and take account of
any dividend flows. If the Baloise Group’s share of the losses
exceeds the value of the associate, no further losses are recog-
nised. Goodwill paid for associates is included in the carrying
amount of the investment.
3.2.3 Translation of functional currency into reporting currency
The annual financial statements of all entities that have not been
prepared in Swiss francs are translated as follows when the con-
solidated financial statements are being prepared:
→ Assets and liabilities at the closing rate
→ Income and expenses at the average rate for the year.
The resultant exchange differences are aggregated and recognised
directly in equity. When foreign subsidiaries are sold, the exchange
differences arising on the disposal are recognised in the income
statement as a transaction gain or loss.
3.2.4 Key exchange rates
3.2 Currency translation
CURRENCY
3.2.1 Functional currency and reporting currency
Each subsidiary prepares its annual financial statements in its
functional currency, which is the currency of its primary econo-
mic environment. The consolidated Financial Report is presented
in millions of Swiss francs (CHF), which is the Baloise Group’s
reporting currency.
3.2.2 Translation of transaction currency into functional
currency at Group companies
Income and expenses denominated in foreign currency are
translated either at the exchange rate prevailing on the trans-
action date or at the average exchange rate. Monetary and
non-monetary balance sheet items measured at fair value and
arising from foreign-currency transactions conducted by Group
companies are translated at the closing rate. Non-monetary
items measured at historical cost are translated at the historical
rate. Any resultant exchange differences are recognised in profit
or loss. This does not include exchange differences that form
part of cash flow hedges and are recognised directly in hedging
reserves or are used as hedges of a net investment in a foreign
operation.
Exchange differences arising on non-monetary financial
instruments recognised at fair value through profit or loss are
reported as realised gains or losses on these instruments. Exchange
differences on available-for-sale non-monetary financial instru-
ments are recognised in other comprehensive income. Exchange
differences arising on available-for-sale monetary financial
instruments are recognised in profit or loss.
CHF
1 EUR (euro)
1 USD (US dollar)
Balance sheet
Income statement
2013
2014
2013
2014
1.23
0.89
1.20
0.99
1.23
0.93
1.21
0.92
100 HRK (Croatian kuna)
16.10
15.71
16.24
15.99
3.3 Property, plant and equipment
Items of property, plant and equipment are measured at cost
less accumulated depreciation and any accumulated impairment
losses. The acquisition cost of property plant and equipment
includes all directly attributable costs. Subsequent acquisition
costs are only capitalised if future economic benefits associated
with the property, plant and equipment will flow to the entity
concerned and these costs can be measured reliably. All other
repairs and maintenance costs are expensed as incurred.
Land is not depreciated. Other items of property, plant
and equipment are depreciated on a straight-line basis over the
following estimated useful lives:
→ Owner-occupied buildings: 25 to 50 years
→ Office furniture, equipment, fixtures and fittings:
5 to 10 years
→ Computer hardware: 3 to 5 years.
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Financial Report
Notes to the consolidated annual financial statements
At each balance sheet date the Baloise Group tests all items of
property, plant and equipment for impairment and reviews the
suitability of their useful lives.
An impairment loss is immediately recognised on items
of property, plant and equipment if their recoverable amount
is lower than their carrying amount.
Gains or losses on the sale of property, plant and equipment
are immediately taken to the income statement as either other
operating income or other operating expenses.
3.4 Leases
3.4.1 The Baloise Group as a lessee
Finance leases: leases on real estate, office furniture, equipment,
fixtures, fittings and other tangible assets are classified and
treated as finance leases if they transfer to the Baloise Group
substantially all the risks and rewards incidental to ownership.
The fair value of the leased property or, if lower, the present
value of the lease payments is recognised as an asset at the
inception of the lease. All lease payments are apportioned between
the finance charge and the reduction of the outstanding liability.
The finance charge is allocated so as to produce a constant pe-
riodic rate of interest on the remaining balance of the liability;
this is reported on the Baloise Group’s balance sheet as liabilities
arising from banking business and financial contracts. Assets
held under finance leases are fully depreciated over the shorter
of the lease term and their useful life.
Operating leases: all other leases are classified as operating
leases. Lease payments under operating leases are expensed in
the income statement on a straight-line basis over the term of
the lease.
3.4.2 The Baloise Group as a lessor
Investment real estate let on operating leases is reported as
investment property on the consolidated balance sheet. The
Baloise Group was not involved as lessor in any other leases
during the reporting period.
3.5 Intangible assets
3.5.1 Goodwill
Goodwill represents the excess of an acquiree’s acquisition cost
over the fair value of its assets and liabilities plus the acquisi-
tion-date amount of any non-controlling interests in the acquiree
and the acquisition-date fair value of the acquirer’s previously
held equity interest in the acquiree. Goodwill is reported as an
intangible asset. Goodwill is tested for impairment in the second
half of each year. An impairment test may also be conducted in
the first half of the year if there are objective indications that
goodwill may be permanently impaired. When a new investment
is acquired, the date for conducting future impairment tests is
fixed and these tests are subsequently carried out at the same
time each year. When entities are sold, their share of goodwill
is recognised in their profit or loss. Goodwill is allocated to
cash-generating units (CGUs) for the purposes of impairment
testing.
3.5.2 Present value of future profits (PVFP)
on insurance contracts acquired
The present value of future profits on insurance contracts acquired
arises from the purchase of life insurance companies or life
insurance portfolios. It is initially measured in accordance with
actuarial principles and is amortised on a straight-line basis. It
is regularly tested for impairment as part of a liability adequacy
test (see section 3.18.2 for further details).
3.5.3 Deferred acquisition costs (DACs)
Costs directly incurred by the conclusion of insurance contracts
or financial contracts with discretionary participation features
(DPFs) – such as commissions – are capitalised and amortised
over the term of these contracts or, if shorter, over the premium
payment period. Deferred acquisition costs are tested for impair-
ment at each balance sheet date (see section 3.18.3 for further
details).
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Financial Report
Notes to the consolidated annual financial statements
3.5.4 Capitalised investment fees
Acquisition costs directly attributable to the generation of asset
management investment returns are recognised as intangible
assets provided that they can be individually identified and
reliably determined and they are likely to be recoverable. They
are amortised through profit or loss over the term of the under-
lying financial contract in proportion to the returns generated
and are tested annually for impairment.
3.5.5 Other intangible assets and internally developed assets
Other intangible assets essentially comprise software, external
IT consulting (in connection with software that has been devel-
oped), internally developed assets (such as software) and assets
identified during the acquisition of entities (such as brands and
customer relationships). These assets are recognised at cost and
are amortised on a straight-line basis over their useful lives.
Intangible assets with indefinite useful lives are not amortised
and are carried at cost less accumulated impairment losses.
All financing for intangible assets is generally obtained
from the Baloise Group’s own financial resources. If funding
from external sources is required, interest accrued during the
assets’ development is capitalised as incurred.
3.6 Investment property
Investment property comprises land and / or buildings held to
earn rental income or for capital appreciation (or both). If mixed-
use properties cannot be broken down into owner-occupied
property and property used by third parties, the entire property
is classified according to the purpose for which most of its floor
space is used. If, owing to a change of use, an investment property
held by the Baloise Group becomes the latter’s owner-occupied
property, it is reclassified as property, plant and equipment. Any
such reclassification is based on the property’s fair value at the
reclassification date. By contrast, if one of the Baloise Group’s
owner-occupied properties becomes an investment property
owing to reclassification, then, on the date this change of use
takes effect, the difference between the property’s carrying
amount and its fair value is recognised in profit or loss in the
event of an impairment; or, if the property’s fair value exceeds
its carrying amount, then the difference is recognised directly
in equity as an unrealised gain. If an investment property that
was reclassified in a previous period is sold, the amount recog-
nised directly in equity is reclassified to retained earnings.
Invest ment property is measured at fair value under the discounted
cash flow (DCF) method. The current fair value of a property
determined under the DCF method equals the sum total of all
net income expected in future and discounted to its present
value (before interest payments, taxes, depreciation and amor-
tisation) and includes capital expenditure and renovation costs.
The net income is determined individually for each property,
depending on the opportunities and risks associated with it,
and is discounted in line with market rates and on a risk- adjusted
basis. The measurement is carried out internally each year by
experts using market-based assumptions that have been verified
by respected consultancies. In addition, the properties are assessed
by external valuation specialists at regular intervals; roughly
10 per cent of the fair value of the real-estate portfolio is subject
to such assessments each year. Changes in fair value are taken
to income as realised accounting gains or losses in the period
in which they occur.
3.7 Financial assets
The term “investments” (Kapitalanlagen in German) is used in
some places and headings in the Financial Report for clarity’s
sake. The IFRSs themselves do not define the term “investments”
(or Kapitalanlagen). The term “investments” as used in the Finan-
cial Report covers financial assets, mortgages and loans, deriv-
ative financial instruments, cash and cash equivalents, and
investment property.
The asset classes covered by the term financial instruments
with characteristics of equity are equities, share certificates,
units held in equity, bond and real-estate funds; and alternative
financial assets such as private equity investments and hedge
funds. Financial instruments with characteristics of equity are
generally more frequently exposed to price volatility than finan-
cial instruments with characteristics of liabilities.
The term financial instruments with characteristics of
liabilities covers securities such as bonds and other fixed-income
securities. They are usually interest bearing and are issued for
a fixed or determinable amount.
The Baloise Group classifies its financial instruments with
characteristics of equity and its financial instruments with char-
acteristics of liabilities as either “recognised at fair value through
profit or loss”, “held to maturity” or “available for sale.” The
classification of the financial instruments concerned is deter-
mined by the purpose for which they have been acquired.
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Financial Report
Notes to the consolidated annual financial statements
Mortgages and loans are generally carried at cost. In pursuing
its strategy of using natural hedges, however, the Baloise Group
applies the fair value option to designate parts of its portfolio
as “recognised at fair value through profit or loss”. Appropri-
ately designated derivative financial instruments are used to
hedge these parts of the portfolio.
3.7.4 Recognition, measurement and derecognition
All customary purchases of financial assets are recognised on
the trade date. Financial assets are initially measured at fair
value. Transaction costs form part of the acquisition cost (with
the exception of financial assets recognised at fair value through
profit or loss).
Financial assets are derecognised if the rights pertaining
to the cash flows from the financial instrument have expired or
if the financial instrument has been sold and substantially all
the associated risks and rewards have been transferred. Cash
outflows from reverse repurchase (repo) transactions are offset
by corresponding receivables. The financial assets received as
collateral security from the transaction are not recognised. The
relevant transaction is recognised on the balance sheet on the
settlement date. The financial assets transferred as collateral
security under repurchase agreements continue to be recognised
as financial assets. The pertinent cash flows are offset by corre-
sponding liabilities. In its stocklending operations the Baloise
Group only engages in securities lending. The borrowed finan-
cial instruments continue to be recognised as financial assets.
The securities provided as cover for repos, reverse repos and
securities lending transactions are measured daily at their current
fair value.
Available-for-sale financial assets and financial assets
recognised at fair value through profit or loss are measured at
fair value. Held-to-maturity financial assets are measured at
amortised cost using the effective interest method. Realised and
unrealised gains and losses on financial assets recognised at
fair value through profit or loss are taken to income. Unrealised
gains and losses on available-for-sale financial assets are recog-
nised directly in equity. If available-for-sale financial assets are
sold or impaired, the cumulative amount recognised directly
in equity is recognised in the income statement as a realised
gain or loss on financial assets. Changes in the fair value of
financial assets’ risks that are covered by fair value hedges are
recognised in the income statement for the duration of these
hedges irrespective of the financial assets’ classification.
3.7.1 Financial assets recognised at fair value
through profit or loss
This category consists of two sub-categories: held-for-trading
financial assets (trading portfolio) and financial assets that are
designated to this category. Financial instruments are classified
in this category if they have principally been acquired with the
intention of selling them in the short term, or if they form part
of a portfolio for which there have recently been indications
that a gain could be realised in the short term, or if they have
been designated to this category. Derivative financial instruments
are classified as “held for trading” (trading portfolio) with the
exception of derivatives that have been designated for hedge
accounting purposes. Also designated to this category are struc-
tured products, i.e. equity instruments and debt instruments
which, in addition to the host contract, contain embedded
derivatives that are not bifurcated and measured separately.
Financial assets held under investment-linked life insurance
contracts are also designated as “recognised at fair value through
profit or loss”.
3.7.2 Held-to-maturity financial assets
Held-to-maturity financial assets are non-derivative financial
instruments involving fixed or determinable payments. However,
they do not include mortgages, loans (section 3.8) or receivables
(section 3.9) that the Baloise Group can – and intends to – hold
until maturity.
3.7.3 Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial
instruments that have been classified as “available for sale” or
have not been designated to any of the above-mentioned cate-
gories and are not classified as mortgages, loans or receivables.
Alternative financial assets – such as private equity invest-
ments and hedge funds – are mainly classified as “available for
sale”.
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Financial Report
Notes to the consolidated annual financial statements
The fair value of listed financial assets is based on prices in
active markets as at the balance sheet date. If no such prices are
available, fair value is estimated using generally accepted methods
(such as the present-value method), independent assessments
based on comparisons with the market prices of similar instru-
ments or the prevailing market situation.
Derivative financial instruments are measured using models
or on the basis of publicly quoted prices.
If no publicly quoted prices are available for private equity
investments, they are measured on the basis of their net asset
value using non-public information from independent external
providers. These providers use various methods for their esti-
mates (e.g. analysis of discounted cash flows and reference to
similar, fairly recent arm’s-length transactions between knowl-
edgeable, willing parties).
If the fair value of hedge funds cannot be determined on
the basis of publicly quoted prices, then prices quoted by inde-
pendent external parties are used for measurement purposes.
If such estimates do not enable financial assets to be reli-
ably measured, the assets are recognised at cost and disclosed
accordingly.
3.8 Mortgages and loans
Mortgages and loans (including policy loans) are non-derivative
financial instruments involving fixed or determinable payments
that are not traded in an active market. Mortgages and loans
classified as “carried at cost” are measured at amortised cost
using the effective interest method. They are regularly tested
for impairment.
Mortgages and loans held as part of fair value hedges (hedge
accounting) are designated as “at fair value through profit or loss”.
Present-value models are used to measure these portfolios.
3.9 Receivables
Other receivables are recognised at amortised cost less any
impairment losses recognised for non-performing receivables.
Amortised cost is usually the same as the nominal amount of
the receivables.
3.10 Permanent impairment
3.10.1 Financial assets measured under the amortised-cost
method (mortgages, loans, receivables and held-to-maturity
financial assets)
The Baloise Group determines at each balance sheet date whether
there is any objective evidence that a financial asset or a group
of financial assets may be permanently impaired. A financial
asset or a group of financial assets is only impaired if, as a result
of one or more events, there is objective evidence of impairment
that has an impact on the expected future cash flows from the
financial asset that can be reliably estimated. Objective evidence
of a financial asset’s impairment includes observable data on
the following cases:
→ Serious financial difficulties on the part of the borrower
→ Breaches of contract, such as a borrower in default or
arrears with the payment of principal and / or interest
→ Greater probability that the borrower will file for bank-
ruptcy or undergo some other form of restructuring
→ Observable data that indicates a measurable reduction
in the expected future cash flows from a group of financial
assets since their initial recognition
Analysts’ reports from banks and evaluations by credit rating
agencies are also used to assess the need for impairment losses.
If there is objective evidence that loans and receivables or
held-to-maturity financial assets may be permanently impaired,
the impairment loss represents the difference between the asset’s
carrying amount and the present value of future cash flows,
which are discounted using the financial asset’s relevant effec-
tive interest rate. If the amount of the impairment loss decreases
in a subsequent reporting period and if this decrease can be
attributed to an event that has objectively occurred since the
impairment was recognised, the previously recognised impair-
ment loss is reversed.
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Financial Report
Notes to the consolidated annual financial statements
The mortgage portfolio is regularly tested for impairment. If
there is objective evidence that the full amount owed under the
original contractual terms and conditions or the relevant proceeds
of a receivable cannot be recovered, an impairment loss is
recognised. Loan exposures are individually evaluated based
on the nature of the borrower concerned, its financial position,
its credit history, the existence of any guarantors and, where
appropriate, the realisable value of any collateral security.
3.10.2 Financial assets measured at fair value
The Baloise Group determines at each balance sheet date whether
there is any objective evidence that available-for-sale financial
assets may be permanently impaired. This category includes
financial instruments with characteristics of equity. An impair-
ment loss must be recognised on financial instruments with
characteristics of equity whose fair value at the balance sheet
date is more than 50 per cent below their acquisition cost or
whose fair value is consistently below their acquisition cost
throughout the twelve-month period preceding the balance sheet
date. The need for an impairment loss is examined and, where
necessary, such a loss is recognised on securities whose fair
value at the balance sheet date is between 20 per cent and 50
per cent below their acquisition cost.
If an impairment loss is recognised, the cumulative net
loss recognised directly in equity is taken to the income state-
ment.
Impairment losses on available-for-sale financial instru-
ments with characteristics of equity that have been recognised
in profit or loss cannot be reversed and taken to income. Any
further reduction in the fair value of financial instruments with
characteristics of equity on which impairment losses were
recognised in previous periods must be charged directly to the
income statement.
An impairment loss is recognised on available-for-sale
financial instruments with characteristics of liabilities if their
fair value is significantly impaired by default risk.
If the fair value of an available-for-sale financial instrument
with characteristics of liabilities rises in a subsequent reporting
period and this increase can be objectively attributed to an event
that has occurred since an impairment loss was recognised in
profit or loss, the impairment loss is reversed and taken to income.
3.10.3 Impairment losses on non-financial assets
Goodwill and any assets with indefinite useful lives are tested
for impairment at the same time each year or whenever there
is objective evidence of impairment. Goodwill is allocated to
cash-generating units (CGUs) for the purposes of impairment
testing. Insurance companies that sell both life and non-life
products (so-called composite insurers) test goodwill for impair-
ment at this level. When impairment tests are performed, a CGU’s
value in use is determined on the basis of the maximum dis-
counted future cash flows (usually dividends) that could poten-
tially be returned to the parent company. This process takes
appropriate account of legal requirements and internally spec-
ified capital adequacy limits. The long-term financial planning
approved by management forms the basis for this calculation
of the value in use. Permanent impairment losses are recognised
in the income statement as other operating expenses. All other
non-financial assets are tested for impairment whenever there
is objective evidence of such impairment.
Impairment losses recognised in previous reporting periods
on assets with finite useful lives are reversed if the estimates
used to determine the recoverable amount have changed since
the most recent impairment loss was recognised. This increase
constitutes a reversal of impairment losses. Impairment losses
recognised in previous reporting periods on goodwill are not
reversed. Impairment losses recognised in previous reporting
periods on assets with indefinite useful lives are reversed and
taken to income; however, the amount to which they are reversed
must be no more than the amount recognised prior to the
impairment losses less depreciation or amortisation.
3.11 Derivative financial instruments
Derivative financial instruments include swaps, futures, forward
contracts and options whose value is primarily derived from
the underlying interest rates, exchange rates, commodity prices
or share prices. The acquisition cost of derivatives is usually
either very low or non-existent. These instruments are carried
at fair value on the balance sheet. At the time they are purchased
they are classified as either fair value hedges, cash flow hedges,
hedges of a net investment in a foreign operation or trading
instruments. Derivative financial instruments that do not qualify
as hedges under IFRS criteria despite performing a hedging
function as part of the Baloise Group’s risk management pro-
cedures are treated as trading instruments.
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Notes to the consolidated annual financial statements
The Baloise Group’s hedge accounting system documents the
effectiveness of hedges as well as the objectives and strategies
pursued with each hedge. Hedge effectiveness is constantly
monitored from the time the pertinent derivative financial
instruments are purchased. Derivatives that no longer qualify
as hedges are reclassified as trading instruments.
3.11.1 Structured products
Structured products are equity instruments or debt instruments
that contain embedded derivatives in addition to the host con-
tract. Provided that the economic characteristics and risks of
the embedded derivative differ from those of the host contract
and that this derivative qualifies as a derivative financial instru-
ment, the embedded derivative is bifurcated from the host contract
and is separately recognised, measured and disclosed. If the
derivative and the host contract are not bifurcated, the structured
product is designated as a host contract that is recognised at
fair value through profit or loss.
3.11.2 Fair value hedges
When the effective portion of hedges is being accounted for,
changes in the fair value of derivative financial instruments
classified as fair value hedges – plus the hedged portion of the
fair value of the asset or liability concerned – are reported in
the income statement. The ineffective portion of hedges is
recognised separately in profit or loss.
3.11.3 Cash flow hedges
When the effective portion of hedges is being accounted for,
changes in the fair value of derivative financial instruments
classified as cash flow hedges are recognised directly in equity.
The amounts reported in equity as “unrealised gains and losses
(net)” are taken to the income statement at a later date in line
with the hedged cash flows. The ineffective portion of hedges is
recognised in profit or loss.
If a hedging instrument is sold, terminated or exercised
or it no longer qualifies as a hedge, the cumulative gains and
losses continue to be recognised directly in equity until the
forecasted transaction materialises. If the forecasted transaction
is no longer expected to materialise, the cumulative gains and
losses recognised in equity are taken to income.
3.11.4 Hedges of a net investment in a foreign operation
Hedges of a net investment in a foreign operation are treated as
cash flow hedges. When the effective portion of hedges is being
accounted for, gains or losses on hedging instruments are
recognised directly in equity. The ineffective portion of hedges
is recognised in profit or loss.
If the foreign operation – or part thereof – is sold, the gain
or loss recognised directly in equity is taken to the income
statement.
3.11.5 Derivative financial instruments that do not qualify
as hedges
Changes in the fair value of derivative financial instruments
that do not qualify as hedges are recognised in the income state-
ment as “realised gains and losses on investments”.
3.12 Netting of receivables and liabilities
Receivables and liabilities are offset against each other and shown
as a net figure on the balance sheet provided that an offsetting
option is available and the Baloise Group intends to realise these
assets and liabilities simultaneously.
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Financial Report
Notes to the consolidated annual financial statements
3.13 Non-current assets held for sale and
discontinued operations
Non-current assets (or disposal groups) held for sale that meet
the criteria stipulated in IFRS 5 “Non-current Assets Held for
Sale and Discontinued Operations” are shown separately on the
balance sheet. Those assets described in the standard are measured
at the lower of their carrying amount and fair value less costs
to sell. Any resultant impairment losses are taken to income.
Any depreciation or amortisation is discontinued from the
reclassification date.
Details of discontinued operations – where available – are
disclosed in the notes to the Financial Report.
3.14 Cash and cash equivalents
Cash and cash equivalents essentially consist of cash, demand
deposits and cash equivalents. Cash equivalents are predomi-
nantly short-term liquid investments and cheques that have yet
to be cashed.
3.15 Equity
Equity instruments are classified as equity unless the Baloise
Group is contractually obliged to repay them or to cede other
financial assets. Transaction costs relating to equity transactions
are deducted and all associated income tax assets are recognised
as deductions from equity.
3.15.1 Share capital
The share capital shown on the balance sheet represents the
subscribed share capital of Bâloise Holding, Basel. This share
capital consists solely of registered shares. No shares carry pref-
erential voting rights.
3.15.2 Capital reserves
Capital reserves include the paid-up share capital in excess of
par value (share premium), Bâloise Holding share options, gains
and losses on the purchase and sale of treasury shares, and
embedded options in Bâloise Holding convertible bonds.
3.15.3 Treasury shares
Treasury shares held either by Bâloise Holding or by subsidiaries
are shown in the consolidated financial statements at their
acquisition cost (including transaction costs) as a deduction
from equity. Their carrying amount is not constantly restated
to reflect their fair value. If the shares are resold, the difference
between their acquisition cost and their sale price is recognised
as a change in the capital reserves. Only Bâloise Holding shares
are classified as treasury shares.
3.15.4 Unrealised gains and losses (net)
This item includes changes in the fair value of available-for-sale
financial instruments, the net effect of cash flow hedges, the net
effect of hedges of a net investment in a foreign operation, exchange
differences and gains on the reclassification of the Baloise Group’s
owner-occupied property as investment property.
Deductions from these unrealised gains and losses include
the pertinent deferred taxes and, in the case of life insurance
companies, also the funds that will be used in future to amor-
tise acquisition costs and to finance policyholders’ dividends
(shadow accounting).
Any non-controlling interests are also deducted from these
items.
3.15.5 Retained earnings
Retained earnings include the Baloise Group’s undistributed
earnings and its profit for the period. Dividends paid to the
shareholders of Bâloise Holding are only recognised once they
have been approved by the Annual General Meeting.
3.15.6 Non-controlling interests
Non-controlling interests constitute the proportion of Group
companies’ equity attributable to third parties outside the Baloise
Group on the basis of their respective shareholdings.
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Financial Report
Notes to the consolidated annual financial statements
3.16 Insurance contracts
An insurance contract is defined as a contract under which one
party (the insurer) accepts a significant insurance risk from
another party (the policyholder) to pay compensation, should
a specified contingent future event (the insured event) adversely
affect the policyholder. An insurance risk is any directly insured
or reinsured risk that is not a financial risk.
The significance of insurance risk is assessed according
to the amount of additional benefits to be paid by the insurer if
the insured event occurs.
Contracts that pose no significant insurance risk are
financial contracts. Such financial contracts may include a discre-
tionary participation feature (DPF), which determines the
accounting policies to be applied.
The effective interest method is generally used to calculate
receivables and liabilities arising from financial contracts. The
effective interest rate is determined as the internal rate of return
based on the estimated amounts and timing of the expected
payments. If the amounts or timing of the actual payments dif-
fer from those expected or if expectations change, the effective
interest rate must be re-determined. The deposit account balance
is then remeasured as if this new effective interest rate had applied
from the outset, and the change in the value of the deposit account
is recognised as interest income or interest expense. Otherwise,
the insurance cover financed from the deposit account is amortised
over the expected term of the deposit account.
The Baloise Group considers an insurance risk to be sig-
nificant if, during the term of the contract and under a plausible
scenario, the payment triggered by the occurrence of the insured
event is 5 per cent higher than the contractual benefits payable
if the insured event does not occur.
A discretionary participation feature (DPF) exists if the
policyholder is contractually or legally entitled to receive benefits
over and above the benefits guaranteed and if
→ the benefits received are likely to account for a significant
proportion of the total benefits payable under the contract
→ the timing or amount of the benefits payable is contractu-
ally at the discretion of the insurer, and the benefits
received are contractually contingent on the performance
of either a specified portfolio of contracts or a specified
type of contract, on the realised and / or unrealised capital
gains on a specified portfolio of investments held by the
insurer, or on the profit or loss reported by the insurer.
Captive insurance policies are derecognised from the annual
financial statements. This also applies to contracts involving
proprietary pension plans, provided that the employees covered
by these plans work for the Baloise Group.
In addition, IFRS 4 makes exceptions for the treatment
of embedded derivatives that form part of insurance contracts
or financial contracts with discretionary participation features.
If such embedded derivatives themselves qualify as insurance
contracts, they do not have to be either separately measured or
disclosed. In the case of the Baloise Group this affects, among
other things, certain guarantees provided for annuity conversion
rates and further special exceptions such as specific guaranteed
cash surrender values for traditional policies.
3.17 Non-life insurance contracts
All standardised non-life products contain sufficient insurance
risk to be classified as insurance contracts under IFRS 4. The
non-life business conducted by the Baloise Group is broken
down into seven main segments:
→ Accident
All standard product lines typical of each relevant market
are available in the accident insurance business. The
Belgian market and Switzerland in particular also offer
specific government-regulated occupational accident
products that differ from the other products usually
available.
→ Health
The Baloise Group writes health insurance business in
Switzerland and Belgium only. The benefits paid by the
products in this segment cover the usual cost of treatment
and also include a daily sickness allowance; they are
available to individuals as well as small and medium-sized
businesses in the form of so-called group insurance.
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Financial Report
Notes to the consolidated annual financial statements
→ General liability
In addition to conventional personal liability insurance
the Baloise Group also sells third-party indemnity policies
for certain professions. In Switzerland and Germany it
offers policies – especially combined products – for small
and medium-sized enterprises and for industrial partners
that include features such as product liability.
→ Motor
The two standardised products common in the market –
comprehensive and third-party liability insurance – are
sold in this segment. In some countries there are also
products that have been specially designed for collabora-
tions with motoring organisations and individual auto-
motive companies.
→ Fire and other property insurance
In addition to conventional home contents insurance this
segment offers an extensive range of property policies that
include fire insurance, buildings insurance and water
damage insurance in all the varieties commonly available.
→ Marine
Marine insurance is mainly sold in Switzerland and
Germany. These products may include a third-party
liability component in addition to the usual cargo insur-
ance.
→ Miscellaneous
This category generally comprises small segments such as
credit protection insurance and legal expenses insurance.
Provided that financial guarantees qualify as insurance
contracts, they are treated as credit protection insurance
policies.
3.17.1 Premiums
The gross premiums written are the premiums that have fallen
due during the reporting period. They include the amount needed
to cover the insurance risk plus all surcharges. Premium con-
tributions that are attributable to future reporting periods are
deferred by contract and – together with health insurance reserves
for old age and any deferred unearned premiums – constitute
the unearned premium reserves shown on the balance sheet.
Owing to the specific nature of marine insurance, premiums
are deferred not by contract but on the basis of estimates. Premiums
that are actually attributable to the reporting period are recog-
nised as premiums earned. Their calculation is based on the
premiums written and the change in unearned premium reserves.
3.17.2 Claims reserves
At the end of each financial year the Baloise Group attaches
great importance to setting aside sufficient reserves for all claims
that have occurred by this date.
In addition to the reserves that it recognises in respect of
the payments to be made for claims that have occurred, it also
sets aside reserves to cover the costs incurred during the claims
settlement process. In order to calculate these reserves as real-
istically as possible, the Baloise Group uses the claims history
of recent years, generally accepted mathematical-statistical
methods and all the information available to it at the time –
especially knowledge about the expertise of those entrusted
with the handling of claims.
The total claims reserve consists of three components.
Reserves calculated using actuarial methods form the basis of
the total claims reserve. The second component comprises reserves
for those complex special cases and events that do not lend
themselves to purely statistical evaluation. These are generally
rare claims that are fairly atypical of the sector concerned –
usually sizeable claims whose costs have to be estimated by
experts on a case-by-case basis. Neither of these components is
subject to discounting. The third component consists of reserves
for annuities that are discounted using basic actuarial principles
such as mortality and the technical interest rate and are largely
derived from claims in the motor, liability and accident insur-
ance businesses.
Actuarial methods are used to calculate by far the largest
proportion of claims reserves. To this end, the Baloise Group
selects actuarial forecasting methods that are appropriate for
each sector, insurance product and existing claims history.
Additional market data and assumptions obtained from insur-
ance rates are used if the claims history available on a customer
is inadequate. The Baloise Group mainly applies the chain-ladder
method, which is the most widely used, tried-and-tested pro-
cedure. This method involves estimating the number and amounts
of claims incurred over time and the proportion of claims that
are reported to the insurer either with a time lag or after the
balance sheet date. The proportion of these so-called incurred-
but-not-reported (IBNR) claims is exceptionally important,
especially in operating segments involving third-party liability
insurance. These estimates naturally factor in emerging claims
trends as well as recoveries. The mean ratio of costs incurred to
claims actually paid is essentially used to calculate reserves for
claims handling costs.
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Financial Report
Notes to the consolidated annual financial statements
The forecasting methods used cannot eliminate all the uncer-
tainties inherent in making predictions about future develop-
ments and trends. Nonetheless, systematic monitoring of the
reserves recognised in a given financial year enables the Baloise
Group to spot discrepancies as soon as possible and, conse-
quently, to adjust the level of reserves and modify the forecasting
method where necessary. This analysis is based on the so-called
“run-off triangles” presented in aggregated form in section 5.4.5.
The relevant calculations for typical property policies such as
storm and tempest insurance or home contents insurance are
usually based on the payments made over the past ten years.
Larger amounts of data and, consequently, claims triangles that
go further back in time and are based on both payments and
expenses (payments plus reserves) are, of course, used for insurance
segments with longer run-off periods, such as third-party liability.
To supplement the Baloise Group’s various internal control
mechanisms, its reserves – and the methods used to calculate
them – are regularly reviewed by external specialists. Mention
should be made here of the liability adequacy test described in
detail in section 3.17.4. The Baloise Group takes great care to
ensure that it complies with the pertinent financial reporting
standard by performing the regularly required profitability
analysis and examining whether, at the balance sheet date, it
can actually meet all the liabilities that it has taken on as an
insurer. It immediately offsets any shortfall in its reserves that
it identifies.
3.17.3 Policyholders’ dividends and participation in profits
Insurance contracts can provide customers with a share of the
surpluses and profits generated by their policies (especially those
arising from their claims history). The expenses incurred
by policyholders’ dividends and participation in profits are
derived from the dividends paid plus the changes in the perti-
nent reserves.
3.17.4 Liability adequacy test
A liability adequacy test (LAT) is carried out at each balance
sheet date to ascertain whether – taking all known developments
and trends into consideration – the Baloise Group’s existing
reserves are adequate.
To this end, all existing reserves – both claims reserves (includ-
ing reserves for claims handling costs) and annuity reserves in
the non-life segment – are first analysed and, if a shortfall is
identified, the relevant reserves are then strengthened accord-
ingly. This analysis explicitly includes IBNR claims, thereby
ensuring that adequate reserves are available for all claims that
have already occurred.
The liability adequacy test required by IFRS must also
examine whether the Baloise Group has incurred any further
liabilities for subsequent periods (future business) besides all
its existing contracts maintained during the reporting period.
Such business arises, for example, when contracts are auto-
matically extended at the end of the year on the same terms and
conditions. Taking account of all the latest data and trends,
Baloise conducts a profitability analysis of its insurance business
during the reporting year in order to check whether an adequate
level of premiums has been charged and, implicitly, whether
these liabilities are therefore covered. This amounts to an analysis
of unearned premium reserves and an impairment test of deferred
acquisition costs at the same time. If a loss is expected to be
incurred (also applies to other loss-making insurance contracts
in existence at the balance sheet date), the deferred acquisition
costs are initially reduced by the respective amount. If the total
amount of deferred acquisition costs is insufficient or if the
resultant liability cannot be covered in full, a separate provision
for impending losses equivalent to the residual amount is rec-
ognised under other technical reserves.
3.18 Life insurance contracts and financial contracts
with discretionary participation features
IFRS 4 gives users the option of accounting for insurance contracts
and financial contracts with discretionary participation features
by continuing to apply the existing accounting policies described
in section 1 below to both liabilities and to the assets resulting
directly from the pertinent contracts (deferred acquisition costs
and present value of future profits from acquired business).
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Financial Report
Notes to the consolidated annual financial statements
The following life insurance products offered by the Baloise
Group contain sufficient insurance risk to be classified as insurance
contracts under IFRS 4:
→ Endowment policies (both conventional and unit-linked
life insurance)
→ Swiss group life business (BVG)
→ Term insurance
→ Immediate annuities
→ Deferred annuities with annuity conversion rates that are
guaranteed at the time the policy is purchased
→ All policy riders such as premium waiver, accidental death
and disability
The accounting policies applied by the Baloise Group are
described below.
3.18.1 General accounting policies
The accounting policies applied to traditional life insurance
vary according to the type of profit participation agreed. Pre-
miums are recognised as income and benefits are recognised as
expense at the time they fall due. The amount of reserves set
aside in each case is determined by actuarial principles or by
the net premium principle, which ensures that the level of reserves
generated from premiums remains consistent over time. The
actuarial assumptions used to calculate reserves at the time that
contracts are signed either constitute best estimates with explicit
safety margins for specific business lines or they are determined
in accordance with local loss reserving practice and thus also
factor in safety margins. The assumptions used are locked in
throughout the term of the contract unless a liability adequacy
test reveals that the resultant reserves need to be strengthened
after the deferred acquisition costs (DACs) and the present value
of future profits (PVFP) on acquired insurance contracts have
been deducted. Unearned premium reserves, reserves for final
dividend payments and certain unearned revenue reserves (URRs)
are also recognised as components of the actuarial reserve.
A liability adequacy test is performed on all life insurance
business at each balance sheet date. This involves calculating
a reserve at the measurement date that factors in all future cash
flows (such as insurance benefits, surpluses and contract- related
administrative expenses) based on the best estimates available
for the assumptions used at the time. If the minimum reserve
calculated in this way for individual business lines exceeds the
reserve available at the time, any existing deferred acquisition
cost or present value of future profits is reduced and, if this is
114
not enough, the reserve is immediately increased to the mini-
mum level and this increase is recognised in profit or loss.
3.18.2 Present value of future profits (PVFP)
on insurance contracts acquired
The present value of future profits on insurance contracts ac-
quired constitutes an identifiable intangible asset that arises
from the purchase of a life insurance company or life insurance
portfolio. It is initially measured in accordance with actuarial
principles and is amortised on a straight-line basis. It is regu-
larly tested for impairment as part of a liability adequacy test.
3.18.3 Deferral of acquisition costs
Acquisition costs are deferred. They are amortised either over
the premium payment period or over the term of the insurance
policy, depending on the type of contract involved. They are
tested for impairment as part of a liability adequacy test.
3.18.4 Unearned revenue reserve (URR)
The unearned revenue reserve comprises premiums that are
charged for services rendered in future periods. These premiums
are deferred and amortised in the same way as deferred acqui-
sition costs.
3.18.5 Policyholders’ dividends
A large proportion of life insurance contracts confer on poli-
cyholders the right to receive dividends.
Surpluses are reimbursed in the form of increased bene-
fits, reduced premiums or final policyholders’ dividends or are
accrued at interest to a surplus account. Surpluses already
distributed and accrued at interest are reported as policy-
holders’ dividends credited and reserves for future policyholders’
dividends (section 23). The relevant interest expense is reported
as interest expenses on insurance liabilities. Surpluses that have
been used to finance an increase in insurance benefits are rec-
ognised in actuarial reserves. All investment income derived
from unit-linked life insurance contracts is credited to the
policyholder.
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Financial Report
Notes to the consolidated annual financial statements
IFRS 4 introduces the concept of a discretionary participation
feature (DPF), which is of relevance not only for the classifica-
tion of contracts but also for the disclosure of surplus reserves
according to policyholders’ share of the unrealised gains and
losses recognised directly in equity under IFRS and their share
of the increases and decreases recognised in profit or loss in the
consolidated financial statements compared with the financial
statements prepared in accordance with local accounting stand-
ards. IFRS 4 states here that the portion of an insurance contract’s
liability that is attributable to a discretionary participation feature
(“DPF component”) must be reported separately. This standard
does not provide any clear guidance as to how this DPF com-
ponent should be measured and disclosed.
When accounting for contracts that contain discretionary
participation features, the Baloise Group treats measurement
differences that are attributable to such contracts and are cred-
ited to policyholders according to a legal or contractual minimum
quota as a DPF component. Distributable retained earnings and
eligible unrealised gains and losses of fully consolidated sub-
sidiaries are allocated pro rata to the DPF components of the
life insurance company concerned. The DPF component calcu-
lated in this way is reported as part of the reserves for future
policyholders’ dividends (section 23). These reserves include
policyholders’ dividends that are unallocated and have been set
aside as a reserve under local accounting standards.
If no legal or contractual minimum quota has been stip-
ulated, the Baloise Group defines a discretionary participation
feature as the currently available reserve for premium refunds
after allowing for final policyholders’ dividends. Unless a minimum
quota has been stipulated, all other measurement differences
between the local and IFRS financial statements are recognised
directly in equity.
The applicable minimum quotas prescribed by law, contract
or Baloise’s articles of association vary from country to country.
Life insurance companies operating in Germany and Austria
and in some areas of Swiss group life business are required by
law to distribute a minimum proportion of their profits to policy-
holders in the form of dividends.
Policyholders in Germany must receive a share of the profits
generated. Any losses incurred are borne by shareholders. Policy-
holders are entitled to 90 per cent of investment income (minus
the technical interest rate), 75 per cent of the net profit on risk
exposures and 50 per cent of other surpluses. The articles of
association of Basler Lebensversicherungs-AG, Germany, addi-
tionally stipulate a minimum quota of 95 per cent for part of
its insurance portfolio.
In Austria the minimum quota is stipulated in the terms
and conditions of each contract. It is usually 90 per cent.
Minimum quotas are also applied to some of the Baloise
Group’s Swiss occupational pensions (BVG) business, which is
subject to the legal quotas of 100 per cent for changes in liabil-
ities and 90 per cent for changes in assets.
3.19 Reinsurance
Reinsurance contracts are insurance contracts between insur-
ance companies and / or reinsurance companies. There must be
a transfer of risk for a transaction to be recognised as reinsur-
ance; otherwise the transaction is treated as a financial contract.
Inward reinsurance is recognised in the same period as
the initial risk. The relevant technical reserves are reported as
gross unearned premium reserves or gross claims reserves for
non-life insurance and as gross actuarial reserves for life insur-
ance. In non-life insurance they are estimated as realistically
as possible based on empirical values and the latest information
available, while in life insurance they are recognised as a reserve
to cover the original transaction. Outward reinsurance is the
business ceded to insurance companies outside the Baloise Group
and includes transactions ceded from direct life and non-life
business and from inward insurance.
Assets arising from outward reinsurance are calculated
over the same periods and on the same basis as the original
transaction and are reported as reinsurance assets (section 16).
Impairment losses are recognised in profit or loss for assets
deemed to be at risk owing to the impending threat of insol-
vency.
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Financial Report
Notes to the consolidated annual financial statements
3.20 Liabilities arising from banking business
and financial contracts
3.20.1 With discretionary participation features
Financial contracts with discretionary participation features
are capital accumulated by customers that entitles them to receive
policyholders’ dividends. The accounting principles applied to
these financial contracts are the same as those for life insurance
contracts; the accounting policies for life insurance are described
in section 3.18.
The convertible bond issued by Bâloise Holding comprises
a liability and an embedded option (right to convert the bond
into Bâloise Holding shares). The fair value of the embedded
option is determined at the balance sheet date and is recognised
separately in equity. The acquisition cost of the liability com-
ponent corresponds to the present value of future cash flows at
the time the bond is issued. The discount rate used is the market
interest rate applicable to similar bonds without any conversion
rights or warrants.
3.20.2 Measured at amortised cost
Liabilities measured at amortised cost include savings deposits,
medium-term bonds, mortgage-backed bonds, other liabilities
and financial guarantees that do not qualify as insurance contracts.
They are initially measured at their acquisition cost (fair value).
The difference between acquisition cost and redemption
value is recognised in profit or loss over the term of the liability
as “gains or losses on financial contracts” under the amortised-cost
method and the effective interest method.
3.20.3 Recognised at fair value through profit or loss
This item includes financial contracts for which the holder bears
the entire investment risk as well as banking liabilities that are
designated as “at fair value through profit or loss” as part of the
Baloise Group’s strategy of using natural hedges.
3.21 Financial liabilities
The financial liabilities reported under this line item comprise
the bonds issued in the capital markets (except for the bonds
issued by the Banking operating segment). Financial liabilities
are initially measured at their acquisition cost (fair value).
Acquisition cost includes transaction costs.
The difference between acquisition cost and redemption
value is recognised in profit or loss over the term of the liability
as borrowing costs under the amortised-cost method and the
effective interest method.
3.22 Employee benefits
The benefits that the Baloise Group grants to its employees com-
prise all forms of remuneration that is paid in return for work
performed or in special circumstances.
The benefits available include short-term benefits (such
as wages and salaries), long-term benefits (such as long-service
bonuses), termination benefits (such as severance pay and social
compensation plan benefits) and post-employment benefits. The
benefits described below may be especially significant owing to
their scale and scope.
3.22.1 Post-employment benefits
The main post-employment benefits provided are retirement
pensions, employer contributions to mortgage payments and
certain insurance benefits. Although these benefits are paid
after employees have ceased to work for the Baloise Group, they
are funded while the staff members concerned are still actively
employed. All the pension benefits currently provided by the
Baloise Group are defined benefit plans. The projected unit
credit method is used to calculate the pertinent pension liabilities.
Assets corresponding to these liabilities are only recognised
if they are ceded to an entity other than the employer (such as
a foundation). Such assets are measured at fair value. Changes
to assumptions, discrepancies between the planned and actual
returns on plan assets, and differences between the benefit
entitlements effectively received and those calculated using
actuarial assumptions give rise to actuarial gains and losses
that must be recognised directly in other comprehensive income.
The Baloise Group’s pension plan agreements are tailored
to local conditions in terms of enrolment and the range of
benefits offered.
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3.25 Revenue recognition
Revenue and income are recognised at the fair value of the con-
sideration received or receivable. Intercompany transactions
and the resultant gains and losses are eliminated. Recognition
of revenue and income is described below.
3.25.1 Income from services rendered
Income from services rendered is recognised in the period in
which the service is provided.
3.25.2 Interest income
Interest income from financial instruments that are not recog-
nised at fair value through profit or loss is recognised under the
effective interest method. If a receivable is impaired, it is written
down to its recoverable amount, which corresponds to the present
value of estimated future cash flows discounted at the contract’s
original interest rate.
3.25.3 Dividend income
Dividend income from financial assets is recognised as soon as
a legal entitlement to receive payment arises.
Financial Report
Notes to the consolidated annual financial statements
3.22.2 Share-based payments
The Baloise Group offers its employees and senior executives
the chance to participate in various plans under which shares
are granted as part of their overall remuneration packages. The
Employee Incentive Plan, Share Subscription Plan, Employee
Share Ownership Plan, performance quota and performance
share units (PSUs) are measured and disclosed in compliance
with IFRS 2 Share-based Payment. Plans that are paid in Bâloise
Holding shares are measured at fair value on the grant date,
charged as personnel expenses during the vesting period and
recognised directly in equity. Plans that are paid in cash and
whose amount is determined by the market value of Bâloise
Holding shares are recognised at fair value on the balance sheet
date and reported as a liability.
3.23 Provisions
Provisions for restructuring or legal claims are recognised for
present legal or constructive obligations when it is probable that
an outflow of resources embodying economic benefits will be
required to settle the obligations and a reliable estimate can be
made of the amounts of the obligations. The amount recognised
as a provision is the best estimate of the expenditure expected
to be required to settle the obligation. If the amount of the
obligation cannot be estimated with sufficient reliability, it is
reported as a contingent liability.
3.24 Taxes
Provisions for deferred income taxes are recognised under the
liability method, which means that they are based either on the
current tax rate or on the rate expected in future. Deferred
income taxes reflect the tax-related impact of temporary differ-
ences between the assets and liabilities reported in the IFRS
financial statements and those reported for tax purposes. When
deferred income taxes are calculated, tax loss carryforwards
are only recognised to the extent that sufficient taxable profit is
likely to be earned in future.
Deferred tax assets and liabilities are offset against each
other and shown as a net figure in cases where the criteria for
such offsetting have been met. This is usually the case if the
tax jurisdiction, the taxable entity and the type of taxation are
identical.
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Financial Report
Notes to the consolidated annual financial statements
4. CRITICAL ACCOUNTING PRINCIPLES
AND ESTIMATE UNCERTAINTIES
The Baloise Group’s consolidated annual financial statements
contain assumptions and estimates that can impact on the annual
financial statements for the following financial year. Estimates
and the exercise of discretion by management are kept under
constant review and are based on empirical values and other
factors – including expectations about future events – that are
deemed to be appropriate on the date that the balance sheet is
prepared.
4.1 Fair value of various balance sheet line items
Where available, prices in active markets are used to determine
fair value. If no publicly quoted prices are available or if the
market is judged to be inactive, fair value is either estimated
based on the present value or is determined using measurement
methods. These methods are influenced to a large extent by the
assumptions used, which include discount rates and estimates
of future cash flows. The Baloise Group primarily uses fair values;
if no such values are available, it applies its own models. Detailed
information about fair value measurement can be found in
section 5.10.
discounted cash flows and reference to similar, fairly
recent arm’s-length transactions between knowledgeable,
willing parties). If such estimates do not enable financial
assets to be reliably measured, the assets are recognised at
cost and disclosed accordingly. Publicly quoted prices are
used to determine the fair value of hedge funds. If no such
prices are available, prices quoted by independent third
parties are used to determine fair value.
→ Mortgages and loans (recognised at fair value through
profit or loss)
Mortgages and loans are designated as “at fair value
through profit or loss” as part of the Baloise Group’s
strategy of using natural hedges. Yield curves are used
to measure these portfolios.
The following financial liabilities are measured at fair value:
→ Liabilities arising from banking business and financial
contracts (recognised at fair value through profit or loss)
Liabilities arising from investment-linked life insurance
contracts involving little or no transfer of risk are
measured at fair value based on the capitalised invest-
ments underlying these liabilities.
→ Derivative financial instruments
The following asset classes are measured at fair value:
→ Investment property
Models or quoted market prices are used to determine the
fair value of derivative financial instruments.
The discounted cash flow (DCF) method is used to
determine the fair value of investment property. The
assumptions and estimates used for this purpose are
described in section 3.6.
→ Financial instruments with characteristics of equity
and financial instruments with characteristics of liabilities
(available for sale or recognised at fair value through
profit or loss)
Fair value is based on prices in active markets. If no
quoted market prices are available, fair value is estimated
using generally accepted methods (such as the present-val-
ue method), independent assessments based on compari-
sons with the market prices of similar instruments or the
pre-vailing market situation. Derivative financial instru-
ments are measured using models or on the basis of quoted
market prices. If no publicly quoted prices are available
for private equity investments, they are measured on the
basis of their net asset value using non-public information
from independent external providers. These providers
use various methods for their estimates (e.g. analysis of
118
4.2 Financial instruments with characteristics
of liabilities (held to maturity)
The Baloise Group applies the provisions of IAS 39 when classi-
fying non-derivative financial instruments with fixed or deter-
minable payments as “held to maturity”. To this end, it assesses
its intention and ability to hold these financial instruments to
maturity.
If – contrary to its original intention – these financial
instruments are not held to maturity (with the exception of
specific circumstances such as the disposal of minor investments),
the Baloise Group must reclassify all held-to-maturity financial
instruments as “available for sale” and measure them at fair
value. Section 12 contains information on the fair values of the
financial instruments with characteristics of liabilities that are
classified as “held to maturity”.
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Financial Report
Notes to the consolidated annual financial statements
4.3 Impairment
The Baloise Group determines at each balance sheet date whether
there is any objective evidence that financial assets may be
permanently impaired.
→ Financial instruments with characteristics of equity
(available for sale)
An impairment loss must be recognised on available-
for-sale financial instruments with characteristics of
equity whose fair value at the balance sheet date is more
than 50 per cent below their acquisition cost or whose fair
value is consistently below their acquisition cost through-
out the twelve-month period preceding the balance sheet
date. The Baloise Group examines whether it needs to
recognise impairment losses on securities whose fair value
at the balance sheet date is between 20 per cent and 50 per
cent below their acquisition cost. Such assessments of the
need to recognise impairment losses consider various
factors such as the volatility of the securities concerned,
credit ratings, analysts’ reports, economic conditions and
sectoral prospects.
→ Financial instruments with characteristics of liabilities
(available for sale or held to maturity)
Objective evidence of a financial asset’s impairment
includes observable data on the following cases:
– Serious financial difficulties on the part of the borrower
– Breaches of contract, such as a borrower in default or
arrears with the payment of principal and / or interest
– Greater probability that the borrower will file for
bankruptcy or undergo some other form of restructuring
– Observable data that indicates a measurable reduction in
the expected future cash flows from a group of financial
assets since their initial recognition
– Analysts’ reports from banks and evaluations by credit
rating agencies are also used to assess the need for
impairment losses
→ Mortgages and loans (carried at cost)
The mortgage portfolio is regularly tested for impairment.
The methods and assumptions used in these tests are also
regularly reviewed in order to minimise any discrepancies
between the actual and expected probabilities of default.
4.4 Deferred income taxes
Unused tax loss carryforwards and other deferred tax assets are
recognised if it is more likely than not that they will be realised.
To this end, the Baloise Group makes assumptions about the
recoverability of these tax assets; these assumptions are based
on the financial track record and future income of the taxable
entity concerned.
4.5 Estimate uncertainties specific to insurance
Estimate uncertainties pertaining to actuarial risk are discussed
from section 5.4 onwards.
4.6 Provisions
The measurement of provisions requires assumptions to be made
about the probability, timing and amount of any outflows of
resources embodying economic benefits. A provision is recog-
nised if such an outflow of resources is probable and can be
reliably estimated.
4.7 Employee benefits
In calculating its defined benefit obligations towards its employees,
the Baloise Group makes assumptions about the expected return
on plan assets, the economic benefits embodied in assets, future
increases in salaries and pension benefits, the discount rate
applicable and other parameters. The most important assump-
tions are derived from past experience of making estimates. The
assumptions factored into these calculations are discussed in
section 18.2.7.
4.8 Goodwill impairment
Goodwill is tested for impairment in the second half of each
year or whenever there is objective evidence of impairment.
Such impairment tests involve calculating a value in use that is
largely based on estimates such as the financial planning approved
by management and the discount rates and growth rates mentioned
in section 9.
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Financial Report
Notes to the consolidated annual financial statements
5. MANAGEMENT OF INSURANCE RISK AND FINANCIAL RISK
The companies in the Baloise Group offer their customers non-
life insurance, life insurance and banking products (the latter
in Switzerland and, on a restricted basis, in Germany). Conse-
quently, the Baloise Group is exposed to a range of risks.
The main risks in the non-life insurance sector are natural
disasters, major industrial risks, third-party liability and per-
sonal injury. The insurance business as a whole is examined
regularly by means of extensive analytical studies. The results
of this analysis are taken into account when setting aside reserves,
fixing insurance rates and structuring insurance products and
reinsurance contracts. In the non-life sector, studies focusing
on the risks arising from natural disasters have been carried
out in recent years. On some of them we worked with reinsurance
companies and brokers to determine the level of exposure to
these risks and the extent of risk transfer required.
The predominant risks in the life insurance sector are the
following biometric risks:
→ longevity risk (annuities and pure endowment policies),
→ mortality risk (whole-life and endowment life insurance),
→ disability risk (in the sense of the risk of premiums
proving insufficient due to an adverse disability claims
history).
Because the Group issues interest-rate guarantees, it is
also exposed to interest-rate risk. There are also implicit finan-
cial guarantees and options which also affect liquidity, invest-
ment planning and the income generated by Group companies;
they include guaranteed surrender prices when policyholders
cancel and guaranteed annuity factors on commencement of
the payout phase of annuities.
Longevity, mortality and disability rates are risks specific
to life insurance and are monitored on an ongoing basis. The
companies in the Baloise Group review and analyse mortality
rates among their local customer bases, along with the fre-
quency with which policies are cancelled, invalidated and
reactivated. For this analysis, they generally use standard mar-
ket statistics that are compiled by actuaries and include adequate
safety margins. The information they gather is used for ensur-
ing that rates are adequate and also for setting aside sufficient
reserves to meet future insurance liabilities. Because rates are
required by law to be calculated conservatively, and the sta-
tistical base is relatively good, the risks in this area are man-
ageable. In the field of annuities, there is an additional trend
risk in the form of a steady rise in life expectancy which is
resulting in ever longer annuity payout periods. This risk is
addressed by the addition of suitable factors to the basis for
calculation.
Managing participating insurance contracts is an addi-
tional method of mitigating risk. For example, bringing policy-
holders’ dividends into line with altered circumstances as far
as permitted by local regulations is one option that could be
taken if the risk situation were to change. However, the allocation
of surpluses between policyholders and the Company is not only
subject to local law, it is also governed by market expectations.
The main risk categories to which the Banking division
of the Baloise Group is exposed are credit risk, interest-rate risk
and liquidity risk. These risks are identified and managed locally
by the banks. The loan portfolio is reviewed and analysed on
an ongoing basis. A range of tools is used for this purpose,
including standardised credit regulations and procedures, scor-
ing and rating procedures, focusing on low-risk markets and
the use of an automated arrears system. The information obtained
is incorporated into credit decisions. Balance sheet risks (interest-
rate and liquidity risks) are managed by the banks’ asset and
liability management (ALM) committees. The data and key
figures required are determined and calculated using a specialist
IT application.
Deutscher Ring Bausparkasse AG is also exposed to what
is known as collective risk, which means that the building society
customers are collectively responsible for the fair allocation of
home savings contracts over the long term. Mathematical sim-
ulations are used to show that this collective responsibility can
be met, provided the fluctuation reserve remains at least greater
than zero over the long term. Deutscher Ring Bausparkasse uses
a simulation model to monitor and manage its collective risk.
The model makes a future projection of the building society’s
total collective holdings on an individual contract basis, incor-
porating new business scenarios and patterns of behaviour
observed in the past.
Triggered by the threat of a pandemic, the existing disas-
ter recovery plans for extraordinary events – such as natural
disasters, wildfires, terrorist attacks, etc. – have been reviewed
at all Group companies since 2007, and a pandemic scenario
has been added. Additional disaster recovery plans have been
created to ensure that business operations can be continued
with severely reduced staff numbers. Several pandemic contin-
gency exercises were carried out at our Swiss site in 2008. In
summer 2009, during the WHO phase 6 pandemic alert, all
employees in Switzerland were issued with a personal protection
kit, and Pandemic Web – the inhouse management and infor-
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Financial Report
Notes to the consolidated annual financial statements
mation system – went online. Since 2008, management decisions
before, during and after a crisis have been prepared by Group
Crisis Management, the head of which reports directly to the
Group CEO. The composition of the crisis management team
varies according to the type of risk involved (insurance, bank-
ing, financial, solvency, reputation). The crisis management team
was not convened in 2011 because the E. coli outbreak was
largely restricted to Germany and was officially declared at an
end in late July 2011. There were no occurrences of any note in
either 2012 or 2013. The autumn of 2014 saw the launch of
pre-crisis activities in a small core back-office unit to monitor
the development of Ebola (Baloise Group and Swiss entities)
and prepare communication measures and crisis plans. Towards
the end of the year the all-clear was given and these activities
were discontinued.
5.1 Organisation of risk management in the Baloise Group
The Baloise Group’s insurance and banking activities in various
European countries, as well as its global investments, expose it
to market risks such as currency risk, credit risk, interest-rate
risk and liquidity risk.
The Baloise Group has implemented a comprehensive,
Group-wide risk management system in all of its insurance and
banking entities. Its Group-wide Risk Management Standards
focus on the following areas:
→ Organisation and responsibilities
→ Methods, regulations and limits
→ Risk control
An overall set of rules governs all activities directly connected
with risk management and ensures that they are compatible
with one another.
At the highest level, internal and external risk bands restrict
and manage the overall risks incurred by the Group and the
individual business units.
At the level exposed to financial and business risk, various limits
and regulations restrict the individual risks that have been iden-
tified to a level that is acceptable for the Group, or eliminate
them completely.
Within the Group and within each business unit, a risk
owner is responsible for each individual risk that has been iden-
tified. Risk owners are allocated according to a hierarchy of
responsibility. The Group’s overall risk owner is the Chief
Executive Officer of the Baloise Group. Alongside the risk
owners, defined risk controllers are responsible for systematic
risk control and risk reporting. When selecting risk controllers,
particular care is taken to ensure that their role is independent
of the risk they control. Risk control within the Baloise Group
focuses on investment risk, business risk (actuarial and banking
risks), risks to the Group’s financial structure and compliance.
The Group’s overall risk controller is the Chief Executive Officer
of the Baloise Group.
The Baloise Group’s risk map is a categorisation of the
risks it has identified. The risks are divided into three levels:
→ Category of risk
→ Sub-category of risk
→ Type of risk
The business-risk, investment-risk and financial-structure-risk
categories relate directly to the Baloise Group’s core businesses.
These risks are deliberately incurred, managed and optimised
by the management team and various risk committees. Analy-
sis of these risks is model-based and it ultimately results in an
aggregate overview.
Business-environment risk, operational risk, and man-
agement and information risk arise as direct or indirect results
of the business operations, business environment or strategic
activities of each company. Risks of this type are also quantified,
assessed and managed.
Because all risks are quantified, it is possible to analyse
the relevance of each risk to the overall risk situation of the
Baloise Group and / or the individual companies.
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Financial Report
Notes to the consolidated annual financial statements
The Baloise Group’s central risk management team forms part
of Corporate Division Finance and reports to the Group Chief
Risk Officer, who in turn reports to the Group CFO. It coordi-
nates intra-Group policies, risk reporting and the technical
development of suitable risk-management processes and tools.
Every month, it tracks developments in the financial markets
and their impact on the risk portfolio and the individual risk
capacity of all the business units and the Group as a whole. The
relevant risk owners and risk controllers verify the figures that
have been computed and incorporate them into their manage-
ment decisions.
Non-diversifiable market risk is monitored and managed by
central and local units using means such as stochastic methods
and comprehensive scenario analysis.
Semi-annual reporting is undertaken for each identified
risk category. To this end, each business unit compiles an ORSA
(Own Risk and Solvency Assessment) report. Key figures for
the financial and actuarial risks incurred by the Group and each
strategic business unit are reported on a monthly basis using
a risk control application.
RISK MAP
Business risks
Investment risks
Financial
Business
Operational risks
Management /
structure risks
environment risks
information risks
Technical risks, Life
Market risks
Asset liability risks
Changes to regulations
Computer security
Structure of
→ Interest guarantee
→ Interest
→ Interest fluctuation
→ Data
organisation
→ Parameter risks
→ Shares
risk
Market / competitors
→ Software /
→ Worst-case scenario
→ Currencies
→ (Re) financing,
hardware /network
Corporate culture
→ Creation of
→ Real estate
liquidity
External events
→ Physical reliability
provisions
→ Market liquidity
Business portfolio
→ Derivatives
Regulatory provisions
Investors
Personnel risks
Technical risks, Non-life
→ Alternative
→ Skills / capacities
Merger and acquisitions
→ Premiums
→ Claims
investments
Risk capitalisation
→ Worst-case scenario
Credit risks
→ Creation of
provisions
Reinsurance
→ Premiums / rating
→ Default
→ Active reinsurance
Loan management
→ Knowledge availability
→ Incentive systems
External
Legal risks
→ Contracts
communication
Projection, plan,
→ Liability and litigation
budget
→ Tax
→ Pension fund
Project portfolio
Compliance
Management
→ Breach of standards
information
→ Fraud / illegal actions
Business processes
→ Process risks
→ Project risks
The risk map is currently being revised as part of an integrated analysis of operational risk in connection with the internal control system (ICS).
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Financial Report
Notes to the consolidated annual financial statements
5.2 Life and non-life underwriting strategies
The Baloise Group primarily underwrites insurance risk for
private individuals and small and medium-sized enterprises in
selected countries in mainland Europe. Industrial insurance in
the property and third-party liability, marine and technical
insurance sectors is largely provided by Baloise Insurance in
Basel or its branch in Bad Homburg (Germany) and our Belgian
business unit Baloise Insurance Belgium. In this particularly
high-risk segment, central management of industrial insurance
ensures consistent quality and a high degree of transparency
for the business underwritten.
Every business unit in the Baloise Group issues regulations
regarding underwriting and risk review. They include clear
authorisation levels and underwriting limits for each sector.
Underwriting limits are approved by a business unit’s highest
decision-making body, and the Corporate Executive Committee
is notified of them. In the industrial insurance unit, the maxi-
mum net underwriting limit for property insurance has been
set at CHF 100 million (2013: CHF 100 million) for Switzerland
and at EUR 60 million (2013: EUR 60 million) for Germany and
Belgium. The only other comparable underwriting limits in the
Group are for marine and liability insurance. Tools for setting
the basic premium and for risk-based management of the total
portfolio are also used to manage industrial insurance risk.
For its exposure to natural hazards the Baloise Group has
purchased reinsurance cover for the whole Group amounting
to CHF 250 million (2013: CHF 250 million).
5.3 Life and non-life reinsurance strategies
The Baloise Group’s non-life treaty reinsurance for all business
units in the Group is structured and placed in the market by
Group Reinsurance, part of Corporate Division Finance. When
structuring the programme, Group Reinsurance focuses on the
risk-bearing capacity of the Group as a whole. To date, the Group
has only placed non-proportional reinsurance programmes.
The Group’s maximum retention for cumulative claims was
CHF 20 million (2013: CHF 20 million). The retentions for in-
dividual claims were CHF 16 million (2013: CHF 16 million)
for property claims, CHF 15 million (2013: CHF 15 million) for
marine claims and CHF 13.7 million on a non-indexed basis
(2013: CHF 12.5 million) for third-party liability claims. The
local Baloise Group business units also use additional facul tative
reinsurance cover on a case-by-case basis. This type of reinsur-
ance is extremely dependent on the individual risk in each case
and it is therefore placed by the business units themselves.
Reinsurance contracts may only be entered into with counter-
parties that have been authorised in advance by Corporate
Division Finance. Reinsurers must generally have a minimum
rating of A– from Standard & Poor’s, but in exceptional cases
– and in specific circumstances – a BBB+ rating or a comparable
rating from another recognised rating agency is permitted.
However, these reinsurance contracts are only used for prop-
erty insurance business that can be settled quickly. This rule
does not apply to captives and pools that are active reinsurance
companies because they do not generally have ratings.
Reinsurer credit risk is reviewed on a regular basis. A watch
list is kept of reinsurers that are bankrupt or in financial diffi-
culties. The list contains details of all relationships the Group
has with these reinsurers, receivables due to the Group that are
outstanding or have been written off and provisions the Group
has recognised. The watch list is updated periodically.
The same requirements for reinsurers apply to life insur-
ance as to non-life insurance, although reinsurance is a less
important instrument for ceding risk in life insurance business.
5.4 Non-life
5.4.1 Actuarial risk
The Baloise Group primarily underwrites insurance risk for
private individuals and small and medium-sized enterprises in
selected countries in mainland Europe. Business with industrial
clients is also conducted in Switzerland and Germany. Under-
writing risk is limited by monitoring and adjusting rates and
maintaining underwriting policies and limits appropriate to
the size of each portfolio and the country in which it is located.
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Financial Report
Notes to the consolidated annual financial statements
5.4.2 Assumptions
→ Claims reserves and claims settlement
The portfolios on the Group’s books must be structured
in such a way that the data available is sufficiently homo-
geneous to enable the use of certain analytical actuarial
processes to determine the claims reserves required.
One of the assumptions made is that extrapolation of the
typical claims settlement pattern of recent years is
meaningful. Only cases such as extreme anomalies in
settlement behaviour require additional assumptions
to be made on a case-by-case basis.
→ Claims handling costs
The ratio of the average claims handling costs incurred in
recent years to the payouts made in the same period is
used to calculate the level of claims handling reserves to
be recognised based on current claims reserves.
→ Annuities
The factors on which annuity calculations are based
(mortality tables, interest rates, etc.) are normally specified
or approved by the authorities in each country. However,
because certain parameters can change relatively quickly,
the adequacy of these annuity reserves is reviewed every
year (by conducting a liability adequacy test or LAT) and,
if there is a shortfall, the reserves are strengthened
accordingly.
5.4.3 Changes to assumptions
The assumptions on which claims reserves are based generally
remain constant, but the factors on which annuity calculations
are based are adjusted from time to time over the years, particu-
larly with regard to the latest longevity data.
5.4.4 Sensitivity analysis
As well as the natural volatility inherent in insurance business,
there are parameters for determining technical reserves that
can significantly impact on the annual earnings and equity of
an insurance company. In the non-life sector, sensitivity anal-
ysis has been used to investigate the effect on consolidated annual
earnings and consolidated equity exerted by errors in estimat-
ing claims reserves – including claims incurred but not reported
(IBNR) – and reserves for run-off business.
At the end of 2014, the Baloise Group’s total reserves calcu-
lated using actuarial methods or recognised separately for spe-
cial claims (including large claims but not run-off or actuarial
reserves for annuities) amounted to CHF 4,596.3 million (2013:
CHF 4,644.2million). A variation of 10 per cent in either direc-
tion in the requirement for these reserves would result in a rise
or fall of around CHF 334.3 million (2013: CHF 338.4 million)
in claims payments (after taxes) before reinsurance.
The reserves in its run-off business mainly arose from
liabilities that the Baloise Group had incurred in the London
market since the early 1990s, largely third-party liability claims
relating to asbestos and environmental damage.
Because of the long settlement period, there is a high degree
of uncertainty associated with the calculation of these claims
reserves. Both the timing at which cases of this type are iden-
tified and their potential loss level are much less certain than
any other established claims patterns. Some reserves were calcu-
lated using external actuaries’ reports in which best-case and
worst-case scenarios were analysed. The Baloise Group’s minimum
reserves policy is based on the average of these two scenarios.
It is particularly difficult to assess the level of reserves required
for IBNR claims, so further fluctuations cannot be ruled out.
According to expert estimates, fluctuations of around 10 per
cent can be expected, which is equivalent to around CHF 7.0
million after taxes and before reinsurance (2013: CHF 6.8 mil-
lion) for this reserve.
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Financial Report
Notes to the consolidated annual financial statements
5.4.5 Claims settlement
Analysis of gross claims settlement (before reinsurance) broken down by strategic business unit
The proportion reinsured was low and would not affect the information given in the claims settlement tables below.
ESTIMATED CUMULATIVE CLAIMS INCURRED IN SWITZERLAND
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Total
Year in which the claims occurred
951.2
684.1
681.4
641.7
690.7
723.1
777.9
732.2
768.5
733.6
CHF million
At the end of the year
in which the claims
occurred
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Estimated claims
incurred
918.9
905.0
890.8
862.6
855.5
852.0
845.1
842.0
829.1
829.1
647.6
633.0
619.0
619.7
607.8
603.2
585.7
576.3
–
693.2
686.6
674.2
662.3
655.7
643.7
628.5
–
–
631.4
628.6
623.6
622.6
606.8
597.8
–
–
–
670.6
657.4
641.0
634.4
638.6
–
–
–
–
685.4
675.1
666.9
659.6
–
–
–
–
–
736.5
731.0
729.1
–
–
–
–
–
–
751.1
736.9
–
–
–
–
–
–
–
768.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
576.3
628.5
597.8
638.6
659.6
729.1
736.9
768.2
733.6
6,897.7
–
–
–
–
–
–
–
–
–
–
Claims paid
– 777.7
– 524.2
– 565.9
– 511.6
– 544.1
– 570.5
– 604.8
– 612.0
– 597.8
– 347.8 – 5,656.4
Gross claims reserves
51.4
52.1
62.6
86.2
94.5
89.1
124.3
124.9
170.4
385.8
1,241.3
Gross claims reserves
prior to 2005 (including
large claims and
assumed business)
Gross provision
for annuities
(non-life, including
IBNR)
Reinsurers’ share
Net claims reserves
07_FB_Kapitel_05_bis_05.7_en.indd 125
401.0
767.7
– 329.0
2,081.0
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Financial Report
Notes to the consolidated annual financial statements
For greater clarity, the following analysis of claims trends is shown in euros.
ESTIMATED CUMULATIVE CLAIMS INCURRED IN GERMANY
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Total
Year in which the claims occurred
292.2
283.8
306.7
298.2
288.0
302.5
290.8
297.4
382.9
319.3
EUR million
At the end of the year
in which the claims
occurred
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Estimated claims
incurred
279.9
285.8
276.5
272.9
269.4
268.1
269.4
269.8
270.1
270.1
288.7
283.7
278.8
276.9
277.5
275.6
277.3
280.0
–
303.0
295.5
294.1
293.1
299.3
299.8
303.0
–
–
296.2
299.7
300.3
301.2
300.6
301.4
–
–
–
286.4
289.0
294.6
294.8
295.1
–
–
–
–
299.7
305.6
305.8
306.0
–
–
–
–
–
297.6
300.9
306.6
–
–
–
–
–
–
298.4
302.5
–
–
–
–
–
–
–
384.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
280.0
303.0
301.4
295.1
306.0
306.6
302.5
384.7
319.3
3,068.7
–
–
–
–
–
–
–
–
–
–
Claims paid
– 266.5
– 273.6
– 299.0
– 295.3
– 287.6
– 296.2
– 288.5
– 279.4
– 312.3
– 146.5 – 2,744.9
323.8
299.4
107.5
– 181.8
548.9
Gross claims reserves
3.6
6.4
4.0
6.1
7.5
9.8
18.1
23.1
72.4
172.8
Gross claims reserves
prior to 2005 (including
large claims and
assumed business)
Gross provision
for annuities
(non-life, including
IBNR)
Reinsurers’ share
Net claims reserves
126
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Notes to the consolidated annual financial statements
ESTIMATED CUMULATIVE CLAIMS INCURRED IN BELGIUM
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Total
Year in which the claims occurred
203.5
188.9
203.2
205.7
228.0
235.1
308.7
1 412.4
2 403.6
483.7
216.3
213.1
208.7
211.1
185.0
182.6
182.6
179.5
179.9
201.1
188.7
187.4
184.0
181.4
182.3
1 222.6
2 222.5
250.7
1 181.0
2 221.8
226.7
287.1
1 395.1
2 426.5
402.5
1 308.0
2 392.2
421.9
248.5
252.2
215.2
212.3
216.5
1 264.5
2 304.0
387.9
1 223.0
2 254.0
308.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
189.9
217.8
226.7
250.7
308.1
387.9
421.9
402.5
483.7
3,075.0
Seven years later
1 182.1
2 187.4
217.8
Eight years later
2 186.2
189.9
–
–
–
–
–
–
Nine years later
Estimated claims
incurred
185.8
185.8
EUR million
At the end of the year
in which the claims
occurred
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
–
–
–
–
–
–
–
–
–
–
Claims paid
– 151.6
– 152.8
– 169.1
– 176.0
– 202.3
– 243.8
– 301.0
– 330.0
– 295.1
– 249.5 – 2,271.2
Gross claims reserves
34.2
37.1
48.7
50.7
48.4
64.3
86.9
91.9
107.4
234.2
Gross claims reserves
prior to 2005 (including
large claims and
assumed business)
Gross provision
for annuities
(non-life,
including IBNR)
Reinsurers’ share
Net claims reserves
1 The increase in the total estimated claims incurred is primarily due to the addition of Avéro Schadevezekering Benelux NV.
2 The increase in the total estimated claims incurred is primarily due to the addition of Nateus NV and Audi NV.
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803.8
284.7
147.9
– 257.0
979.4
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Notes to the consolidated annual financial statements
ESTIMATED CUMULATIVE CLAIMS INCURRED IN LUXEMBOURG
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Total
Year in which the claims occurred
11.4
12.7
14.2
15.0
17.5
1 25.0
1 23.6
24.0
23.6
2 36.8
11.0
10.7
10.4
10.3
10.2
1 13.6
13.5
13.5
2 27.9
27.9
12.0
11.9
11.7
11.6
1 16.4
16.3
16.3
2 29.3
–
29.3
13.6
13.0
12.9
1 18.9
18.7
18.6
2 35.0
–
–
14.9
15.1
1 20.8
21.1
20.9
2 37.9
–
–
–
16.9
1 21.5
21.3
21.1
2 36.2
–
–
–
–
1 22.0
21.8
21.7
2 37.0
–
–
–
–
–
22.7
22.6
2 35.3
–
–
–
–
–
–
24.5
2 36.5
–
–
–
–
–
–
–
2 37.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
35.0
37.9
36.2
37.0
35.3
36.5
37.8
36.8
349.7
–
–
–
–
–
–
–
–
–
–
EUR million
At the end of the year
in which the claims
occurred
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Estimated claims
incurred
Claims paid
– 27.3
– 28.6
– 34.2
– 36.6
– 34.7
– 35.2
– 33.0
– 33.5
– 32.6
– 22.4
– 318.1
Gross claims reserves
0.6
0.7
0.8
1.3
1.5
1.8
2.3
3.0
5.2
14.4
Gross claims reserves
prior to 2005 (including
large claims and
assumed business)
Gross provision
for annuities
(non-life,
including IBNR)
Reinsurers’ share
Net claims reserves
31.6
50.7
0.0
– 30.4
51.9
1 The increase in the total estimated claims incurred is primarily due to the addition of Bâloise Assurances Luxembourg S.A.
2 The increase in the total estimated claims incurred is primarily due to the addition of P & V Assurances.
Analysis of claims settlement for the “Other units” segment
A large proportion of the reserves relating to this segment is attributable to run-off business. Due to the special
nature of this business, it is difficult to conduct meaningful analysis on the basis of our own claims data alone, so
the reserves recognised for it are subject to significant uncertainty.
The survival ratio – the ratio of reserves to the average claims paid in the past three years – is a commonly
used measure for comparing the adequacy of reserves for asbestos and environmental claims. The ratio shows the
number of years for which the reserves will cover claims payments. At the end of the year under review the survival
ratio was 35 years (2013: 34.3 years).
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Notes to the consolidated annual financial statements
5.5 Life
5.5.1 Actuarial risk
Traditional life insurance is called fixed-sum insurance because payments are not made for losses. Instead, a fixed
sum is paid on occurrence of an insured event, which can be survival or death. In the case of term insurance, capital
and / or pension benefits are insured against premature death (whole-life insurance) or disability (disability insurance),
while capital redemption insurance focuses on savings for old age. Endowment life insurance combines risk protection
with savings.
AVERAGE TECHNICAL INTEREST RATE
31 December 2013
CHF million
Technical reserves
without guaranteed returns
Technical reserves
with 0 % guaranteed returns
Technical reserves
with guaranteed positive returns
Average technical interest rate
of guaranteed positive returns
31 December 2014
Technical reserves
without guaranteed returns
Technical reserves
with 0 % guaranteed returns
Technical reserves
with guaranteed positive returns
Average technical interest rate
of guaranteed positive returns
Switzerland
individual life
Switzerland
group life
Germany
Belgium
Luxembourg
Other units
582.8
1,265.0
3,057.5
702.3
706.0
136.3
63.6
95.6
217.5
115.0
87.3
20.2
7,974.9
13,391.1
9,415.1
2,883.7
275.1
204.4
2.7 %
2.0 %
3.4 %
3.7 %
2.7 %
3.2 %
Switzerland
individual life
Switzerland
group life
616.9
1,816.9
Germany
3,667.2
Belgium
Luxembourg
Other units
89.8
214.9
676.7
734.2
132.6
109.3
97.6
7,651.0
14,222.5
9,121.5
2,923.1
451.9
2.7 %
2.0 %
3.3 %
3.6 %
2.6 %
–
–
–
–
The guaranteed technical interest rate is one of the risks inherent in traditional life insurance and group life business.
If interest rates rise, there is the risk that more policies will be cancelled, and the payment of surrender values
could cause liquidity problems. This risk can be reduced by imposing surrender charges. In the past, no significant
correlation has been observed between rises in interest rates and the number of major policies cancelled.
When interest rates fall, there is the risk that investment income may no longer be sufficient to fund the
technical interest rate. This risk can be mitigated by means of asset and liability management (ALM) and, in some
cases, by adjusting policyholders’ dividends.
Unit-linked life insurance generally involves endowment life insurance or a deferred annuity in which the
policyholder has more flexibility regarding the investment process. During the deferment period, unit-linked annuities
behave in a similar way to endowment life insurance, but during the payout period the policy converts into
a traditional annuity.
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Notes to the consolidated annual financial statements
If the policyholder dies, the beneficiary receives the sum insured or the fund assets, if the latter exceed the sum
insured. A risk premium is periodically charged to the fund to finance the death benefit cover if there is capital at
risk (i.e. the positive difference between the sum insured and the fund assets).
Depending on the product, the fund underlying the savings process is selected from a range of funds that
match the policyholder’s investment profile. The policyholder usually bears the entire investment risk and may
benefit from a positive return.
Neither the cash surrender value nor the maturity value of unit-linked life insurance is guaranteed, but the
maturity value is partly secured by the choice of fund. The funds are typically those with the type of investment
strategy (e.g. the proportion of equities falls if share prices fall) that guarantees the maturity value for a specific
policy term. This type of business is offered in Switzerland and Germany. The guaranteed maturity value of these
specific life insurance policies may differ somewhat from the fund value because of the way the policies are struc-
tured. This risk has been factored into actuarial calculations.
In Switzerland, there is a closed sub-portfolio with a guaranteed interest rate. The guarantee was issued as
part of the statutory pension scheme (Pillar 3a). On the endowment date, the policyholder receives the value of the
fund units or the net investment premium plus accrued interest at the technical interest rate (3.25 per cent), which-
ever is the greater. The funds approved for these policies have a low equity ratio and are therefore not exposed to
high volatility. A corresponding actuarial reserve has been recognised for the guarantee.
Some closed-end funds in Belgium and Switzerland also offer a guaranteed maturity value. The funds are
managed and the guarantees are provided by banks outside the Baloise Group. In Switzerland there is also a closed-
end Baloise fund with a guaranteed maturity value which is hedged via investments in bonds issued by banks
outside the Group.
The Baloise Group offers variable annuities products including unit-linked and, in some cases, guaranteed
whole-life annuities via its units in Switzerland and Luxembourg / Liechtenstein. Financial hedges are provided
using external reinsurance.
Switzerland
Germany
Belgium
Luxembourg
Other units
31.12.2013
31.12.2014 31.12.2013
31.12.2014 31.12.2013
31.12.2014 31.12.2013
31.12.2014 31.12.2013
31.12.2014
484.8
583.9
1,634.7
1,798.7
13.5
16.0
284.8
279.6
103.3
–
CHF million
Actuarial reserves
from unit-linked
life insurance contracts
The major risks accruing from term insurance include epidemics and terrorist attacks but also changes in lifestyle
such as lack of exercise. Endowment policies incur significant risks arising from the increase in life expectancy,
which is likely to continue due to medical advances and rising living standards.
The risks listed above do not vary greatly within this area of activity.
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Notes to the consolidated annual financial statements
Our group life business in Switzerland and Belgium focuses on the provision of occupational pensions which, like
individual life insurance, covers the risks of death, disability and survival. The distinctive feature of group life
business is the influence of political decisions. In Switzerland, the government sets the minimum rate of interest to
be paid on savings, and the conversion rate at which accumulated capital is converted into an annuity to provide
a pension. However, these regulations only apply to the minimum portion of accumulated capital that is required
to provide initial finance for an annuity. For the remaining portion, actuarially appropriate annuity conversion
rates are used but any change to the minimum interest rate would also affect the existing statutory portfolio, not
just new business, which would normally be the case for individual life business. The technical interest rate for
Belgian group life business – unlike individual life business – is also set by the government. However, it is the
companies – and not their insurers – that are obliged to guarantee this technical interest rate. Baloise Belgium
has started to offer group life insurance policies with interest rates that are lower than the rate stipulated by the
government.
Most disability insurance consists of policy riders (supplementary insurance), i.e. premium waivers should
holders of life insurance policies that require periodic payments of premiums become disabled. Separate disability
insurance is of minor importance. Measured against total actuarial reserves, disability risk represents around 5 per
cent of our business.
Traditional insurance
Longevity risk
Mortality risk
Disability risk
BVG retirement assets
Sub-total
Unit-linked
Longevity risk
Mortality risk
Sub-total
Total
Actuarial reserves
31.12.2013
Actuarial reserves
31.12.2014
CHF
million
Share (%)
CHF
million
Share (%)
10,308.1
12,509.3
1,948.7
9,826.4
34,592.4
1,162.2
1,358.8
2,521.0
27.8
33.7
5.3
26.5
93.2
3.1
3.7
6.8
10,651.6
11,995.7
1,945.9
10,494.5
35,087.6
1,339.5
1,338.8
2,678.3
28.2
31.8
5.2
27.8
92.9
3.5
3.5
7.1
37,113.5
100.0
37,765.9
100.0
Actuarial reserves were allocated to the categories above by product, i.e. each product was assigned a risk category
and actuarial reserves were not split into different risks within one product. Allocation to a category was generally
determined by the mortality table used in each case.
5.5.2 Assumptions
Actuarial reserves are calculated in accordance with the factors that applied on the date a policy was signed. When
setting rates for life insurance products, safety margins are built into these factors to anticipate any adverse trends
in the future, principally with regard to technical interest rates and mortality tables. These built-in safety margins,
combined with counter-selection effects, explain why annuity tables differ from mortality tables. Cancellations are
not factored in when recognising reserves.
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Notes to the consolidated annual financial statements
The principles applied are reviewed on an ongoing basis by conducting liability adequacy tests (LATs) which ensure
that sufficient reserves have been set aside. The underlying assumptions for conducting these tests are best estimates.
The two main assumptions for these tests are expected future investment income and mortality rates. Expected
future investment income is calculated using the current investment portfolio and the target investment portfolio
(strategic asset allocation). The returns on new money invested are based on capital-market interest rates. Depending
on the size of the portfolio, mortality rates are based on publicly available tables adjusted to reflect our own experience
or on mortality tables produced inhouse.
Cancellations are factored into LATs using assumptions based on the experience of our companies. Changes
in assumptions regarding cancellations usually have a negligible impact on LATs.
5.5.3 Sensitivities
Sensitivity analysis shows the consequences of realistic changes in risk parameters to which the Baloise Group is
exposed at the balance sheet date. These consequences impact on its consolidated equity and its profit for the period.
When sensitivities were investigated, only the assumption being tested was varied. The other parameters were kept
constant. One exception to this rule was policyholders’ dividends, which were adjusted accordingly. In general,
sensitivities do not behave in a linear fashion. Because they relate to a specific balance sheet date, it is not possible
to extrapolate from them.
The following scenarios were run:
→ 10 per cent increase in mortality
→ 10 per cent fall in mortality (i. e. increase in longevity)
→ 50 basis-point increase in receipts of new money
→ 50 basis-point fall in receipts of new money
→ 10 per cent increase in mortality
A mortality increase of 10 per cent during liability adequacy testing had only a marginal effect in Germany,
Belgium and Luxembourg and at Baloise Life (Liechtenstein) AG. This was true of the impact on both the
income statement and on equity. A mortality increase in the Swiss life insurance business caused a lower
amount to be allocated to strengthen annuity reserves, which improved profitability overall by roughly
CHF 13 million (2013: by CHF 23 million). The resultant effects on equity were marginal.
→ 10 per cent fall in mortality
Similar to the aforementioned scenario of an increase in mortality, the effects of a reduction in mortality were
marginal for the life insurance companies in Germany, in Belgium and Luxembourg and for Baloise Life
(Liechtenstein) AG. This was true of the impact on both the income statement and on equity. A reduction in
mortality in the Swiss life insurance business – with policyholders’ dividends adjusted accordingly – had
a negative impact of approximately CHF 66 million (2013: CHF 26 million) on the income statement. In line
with the aforementioned scenario of an increase in mortality, the effect on equity in Switzerland was minor.
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Notes to the consolidated annual financial statements
→ 50 basis-point increase in receipts of new money
This scenario was based on the assumption that receipts of new money (including amounts reinvested) rose by
50 basis points. This situation therefore differed from the scenario presented in last year’s report (100 basis
points). When applied to the German units, this scenario resulted in a reversal of DAC write-downs, changes
in the financing of final policyholders’ dividends, and lower amounts being allocated to the provision
recognised for impending losses. This adverse impact was exacerbated by impairment losses on interest-rate
derivatives. The overall impact was substantially mitigated by the prevailing legal requirements governing the
distribution of surpluses. On balance there was a marginal negative effect on the German units’ profitability
in the reporting year (2013: negative effect of CHF 2 million). The negative impact on their equity amounted to
approximately CHF 5 million (2013: CHF 8 million).
In Belgium this scenario resulted in lower amounts being allocated to the provision recognised for impending
losses, which constituted a positive effect of roughly CHF 10 million on profitability (2013: marginal effect).
The negative effect on unrealised gains amounted to CHF 95 million (2013: CHF 150 million).
In Luxembourg this scenario produced a marginal impact on the income statement and an adverse effect of
roughly CHF 14 million (2013: CHF 13 million) on the unrealised gains and losses recognised in equity.
The resultant impact on the profitability and equity of Baloise Life (Liechtenstein) AG was negligible.
In Switzerland this scenario resulted in a reversal of DAC write-downs, a reduction in technical reserves, and
the offsetting effect of interest-rate hedges. This improved profitability overall by roughly CHF 10 million
(2013: CHF 16 million). The adverse impact on equity amounted to approximately CHF 154 million (2013:
CHF 253 million).
→ 50 basis-point fall in receipts of new money
This scenario was based on the assumption that receipts of new money (including amounts reinvested) fell by
50 basis points. This situation therefore differed from the scenario presented in last year’s report (100 basis
points). When applied to the German units, this scenario resulted in changes in DAC write-downs, changes in
the financing of final policyholders’ dividends, and the recognition of a provision for impending losses.
These adverse effects were partially compensated for by the increase in the fair value of interest-rate derivatives
in 2014. The overall impact was mitigated by the prevailing legal requirements governing the distribution of
surpluses. On balance there was a negative effect of roughly CHF 2 million on the German units’ profitability
in the reporting year (2013: negative effect of CHF 1 million). The positive impact on their equity amounted to
approximately CHF 6 million (2013: CHF 7 million).
In Belgium this scenario resulted in an additional DAC write-down and a provision for impending losses. The
impact on the income statement was greater than in other countries owing to the business model used. Overall
there was a negative effect of CHF 23 million on the income statement (2013: CHF 26 million). This adverse
impact was more than compensated for by the positive changes in unrealised gains and losses recognised in
equity. The positive effect on unrealised gains amounted to CHF 99 million (2013: CHF 155 million).
In Luxembourg this scenario produced a marginal impact on the income statement and a positive effect of
roughly CHF 14 million (2013: CHF 14 million) on the unrealised gains and losses recognised in equity.
The resultant impact on the profitability and equity of Baloise Life (Liechtenstein) AG was negligible.
In Switzerland this scenario resulted in a higher DAC write-down, an increased technical reserve, and the
offsetting effect of interest-rate hedges. On balance these interacting factors had an adverse effect of
CHF 56 million on the income statement (2013: positive effect of roughly CHF 1 million). The positive
impact on equity amounted to approximately CHF 153 million (2013: CHF 278 million).
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Notes to the consolidated annual financial statements
5.5.4 Changes to assumptions
Expected future investment income is constantly adjusted in line with market circumstances. It has fallen across
all units. Other assumptions, such as cancellation rates and mortality rates, are updated on an ongoing basis.
5.6 Management of market risk
Market risk is reflected by losses that arise from changes or fluctuations in market prices that may result in impair-
ment of the value of assets held. The degree of risk depends on the extent to which market prices fluctuate and on
the level of exposure.
As part of their life insurance business, the companies in the Baloise Group also provide investment-linked
life insurance contracts for the account of and at the risk of policyholders. The financial liabilities generated in this
connection are backed by assets – generally investment fund units – arising from these policies. Because the market
risk attaching to the assets underlying these contracts is borne by the policyholder, they are shown separately in the
notes to the consolidated annual financial statements.
The following sections specifically address the interest-rate risk, currency risk, credit risk, liquidity risk and
equity price risk that are relevant to assets held by the Group.
5.6.1 Interest-rate risk
Interest-rate risk is the risk that a company’s interest margin, and therefore its income, may be reduced by fluctua-
tions in money-market and capital-market interest rates (income effect), or that the fair value of a portfolio of
interest-rate sensitive products may decline (asset-price effect). As well as the financial risk generated by holding
assets and liabilities with non-matching maturities, variations in accounting policy may result in accounting risk.
Consequently, the impact of a movement in interest rates or in the interest-rate curve may be a significant
deterioration in terms and conditions if funding has to be rolled over. Benchmark-based maturity management is
practised in the non-life units, while maturity management in the life units is driven by liabilities.
As part of the Baloise Group-wide Risk Management Standards, investment planning and appropriate asset
and liability management ensure that any divergence in maturities and the interest-rate risk incurred are managed
within the risk capacity available.
Stress tests are also designed and run for this purpose. They act as an early-warning system and their impact
can be simulated for all areas of the Group and their performance.
The effect of stress testing key financial figures is measured on a monthly basis. The underlying stress scenario
(potential loss arising from a risk) is reviewed regularly and modified as necessary. The scale of a stress test is
generally based on the simple annual volatility of the financial risk under review, the once-in-a-hundred-years
occurrence of a business risk or standard international practice.
The life insurance companies in the Baloise Group manage their risk associated with changes in interest rates
directly, by means of appropriate strategic asset allocation. Specific factors such as risk-bearing capacity and the
ability to fund guarantees are taken into account when allocating assets. The decision-making process also incor-
porates the asset managers’ expectations regarding the capital markets and customers’ expectations regarding life
insurance.
The Baloise Group’s chief investment officer (CIO) reviews the strategic asset allocation undertaken by all
business units twice a year.
The banks also use an appropriate asset and liability management system to monitor and manage interest-
rate risk. Interest-rate risk is incurred only in proportion to business volume and business activities. Interest-rate
risk is measured using software based on value-at-risk, gap, duration and interest-rate sensitivity methods. The
asset and liability mismatch is actively managed by the use of appropriate interest-rate derivatives, generally fair
value hedges.
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Notes to the consolidated annual financial statements
If all interest rates had been 50 basis points lower on the balance sheet date but all other variables had remained
constant, the profit for the period (after deferred gains / losses and deferred taxes) would have been CHF 73 million
lower (31 December 2013 with interest rates 100 basis points lower: CHF 33 million lower). Including the impact
on profit for the period, equity (after shadow accounting, deferred gains / losses and deferred taxes) would have
risen by CHF 102 million (31 December 2013 with interest rates 100 basis points lower: rise of CHF 370 million).
If all interest rates had been 50 basis points higher on the balance sheet date but all other variables had remained
constant, the profit for the period (after deferred gains / losses and deferred taxes) would have been CHF 21 million
higher (31 December 2013 with interest rates 100 basis points higher: CHF 15 million higher). Including the impact
on profit for the period, equity (after shadow accounting, deferred gains / losses and deferred taxes) would have
fallen by CHF 199 million (31 December 2013 with interest rates 100 basis points higher: fall of CHF 485 million).
5.6.2 Currency risk
Currency risk describes the potential financial loss generated by changes in the exchange rates between currencies.
The extent of the effective currency risk depends on:
→ net foreign exchange exposure, i.e. the net position between assets and liabilities denominated
in foreign currencies,
→ the volatility of the currencies involved and
→ the correlation of currencies with other risk parameters in a portfolio.
Because the Baloise Group invests in foreign-currency bonds (particularly those denominated in euros) for investment
or diversification purposes, there may be currency effects in the income statement for both realised and unrealised
positions. To ensure compliance with the risk budget set for currency effects recognised in the income statement,
the foreign-exchange management team first calculates adequate target hedge ratios, then implements the necessary
hedging strategies taking into account these target hedge ratios and the discretionary ranges allowed. It also takes
advantage of phases when exchange rates are overreacting by deliberately underweighting or overweighting the
hedge ratios in relation to the defined benchmark. These hedging strategies are implemented using forward FX
contracts and FX options or combinations of options in which the selection of the instruments to be used in each
case depends on factors such as volatility and expected exchange-rates movements.
The currency effect of foreign-currency bonds or insurance-related foreign-currency liabilities and changes
in the fair value of derivative financial instruments held for hedging purposes are always recognised in the income
statement.
The Group-wide Risk Management Standards require currency risk and the effectiveness of the currency
derivatives transacted to be monitored on a continuous basis. The currency risk incurred must be proportionate to
the potential superior return generated by the diversification effect achieved in the portfolio.
The Swiss franc and the euro are used almost exclusively for the Baloise Group’s insurance activities, with the
result that technical reserves are also mainly in these currencies. There are also small technical liabilities in US
dollars and pounds sterling. These reserves are generally covered by investments in the same currencies (natural
hedges).
Assuming that all other variables remain constant, fluctuations between transactional currencies and the
functional currency in financial balance sheet items (after shadow accounting, deferred gains / losses and deferred
taxes) in the amount of + / – CHF 0.01 (1 centime) would have resulted in a change of + / – CHF 5.1 million (2013:
+ / – CHF 4.1 million) in the profit for the period and also in equity; a positive (+) change of CHF 0.01 would have
generated a currency gain and a negative (–) change of CHF 0.01 would have generated a currency loss.
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Financial Report
Notes to the consolidated annual financial statements
Derivative financial instruments used as currency hedges of a net investment in a foreign operation
The Group’s own companies, Baloise Alternative Investment Strategies Ltd., Jersey, and Baloise Private Equity Ltd.,
Jersey, manage substantial investments in alternative financial assets such as hedge funds and private equity.
The Baloise Group’s FX managers enter into currency hedging transactions in the form of forward contracts
to limit the currency risk exposure of its net investment in these two foreign entities whose reporting currency is
the US dollar. Restricting the implementation of hedging strategies to forward contracts makes it easier to demon-
strate the efficiency of the hedges and to show that hedge accounting is being used. Because hedge accounting is
applied, the change in the fair value of these derivatives is aggregated into a separate item under equity and only
derecognised via the income statement, together with the accrued currency effects on the net investment in these
foreign entities, when the relevant underlying asset is sold.
CHF million
Forward contracts
Swaps
OTC options
Other
Traded options
Traded futures
Total
Fair value assets
Fair value liabilities
2013)
2014
2013
2014
19.4
1.7
0.1
36.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
19.4
1.7
0.1
36.9
CHF million
Amount recognised directly in equity
Hedge ineffectiveness reclassified to the income statement
2013
2014
35.7
–
– 124.1
–
Because equity investments are actively managed, additions to and deductions from equity are carried out ona
regular basis during the year. Consequently, the year-on-year effects underlying hedge accounting and the recog-
nition of cash flows in profit or loss are recognised on a pro-rata basis.
For international diversification (risk-spreading), to enhance returns and because there is greater liquidity in
certain foreign financial markets, as at 31 December 2014 the Group’s Swiss companies did hold a net position in
euros equivalent to CHF 1,365.4 million (2013: 886.0) and a net position in US dollars equivalent to CHF 305.4 mil-
lion (2013: CHF 348.0 million).
The remaining foreign exchange positions, both assets and liabilities, were negli gible. During the year, the
hedge ratio for the net foreign exchange exposure in US dollars and euros ranged from 80 per cent to 100 per cent.
The foreign entities in the Baloise Group had no significant foreign-currency exposure.
136
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Financial Report
Notes to the consolidated annual financial statements
5.7 Credit risk
Credit risk relating to assets held by insurance companies refers to the total potential downside risk arising from a
deterioration in the credit quality of a borrower or issuer, or from impairment in the value of collateral. Credit risk
is managed by monitoring the credit quality of each individual counterparty and relying heavily on credit ratings.
Credit risk increases when counterparties become concentrated in a single sector or geographic region. Economic
trends that affect whole sectors or regions can jeopardise an entire group of otherwise unrelated counterparties.
For this reason, the Baloise Group tracks counterparty exposure at all times and monitors credit risk on a Group-
wide basis. The regional expertise of our business units is also incorporated into decisions about securities selection
or changes to the existing credit portfolio.
Because the credit risk incurred by the Baloise Group is spread across sectors and geographic regions and
among a large number of counterparties and customers, the Baloise Group is not exposed to material credit risk
arising from a single counterparty or a specific sector or geographic region.
In order to restrict the credit / accumulation risk in the Baloise Group, the proportion that may be invested
by Group companies in a single issuer or borrower is strictly limited in the Group-wide Risk Management Standards.
The relevant rules are explicitly defined in the Group investment policy.
Investments in the investment portfolio may only be made in bonds, loans or financial derivatives whose issuer
or borrower has a minimum A– rating from Standard & Poor’s, a comparable rating or is backed by a third-party
guarantee or mortgage. For other borrowers and issuers with at least a BBB rating from Standard & Poor’s (or similar),
and those with no rating, an additional overall limit of 15 per cent of all fixed-income securities – based on their
fair values – is applied. Exceptions require explicit approval.
Investments in pfandbriefs are backed by mortgages. The vast majority of investments in promissory notes
and registered bonds are secured by guarantees or covered by the deposit protection fund, which protects investors
against banks’ insolvency or inability to pay. These investments carry a reimbursement guarantee from financial
institutions. Mortgage loans are secured by property; there are limits on loan-to-value ratios.
Please refer to the table of secured financial instruments with characteristics of liabilities in section 12.
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Financial Report
Notes to the consolidated annual financial statements
FINANCIAL ASSETS EXCEEDING 10 % OF CONSOLIDATED EQUIT Y
CHF million
Federal Republic of Germany
Kingdom of Belgium
Swiss Confederation
Republic of France
Republic of Austria
European Investment Bank, Luxembourg
Kingdom of the Netherlands
Pfandbriefbank schweizerischer Hypothekarinstitute AG
Commerzbank AG
German federal state of Lower Saxony
German federal state of North Rhine-Westphalia
Pfandbriefzentrale der Schweizerischen Kantonalbanken AG
UBS AG
Free State of Bavaria
BNP Paribas
Credit Suisse Group AG
FINANCIAL ASSETS EXCEEDING 10 % OF CONSOLIDATED EQUIT Y
CHF million
Kingdom of Belgium
Swiss Confederation
Federal Republic of Germany
Republic of France
European Investment Bank, Luxembourg
Republic of Austria
Pfandbriefbank schweizerischer Hypothekarinstitute AG
Kingdom of the Netherlands
Commerzbank AG
Pfandbriefzentrale der Schweizerischen Kantonalbanken AG
German federal state of North Rhine-Westphalia
German federal state of Lower Saxony
BNP Paribas
138
2013
2,360.8
2,341.6
2,193.9
1,446.8
1,370.7
1,205.5
1,040.4
959.0
796.2
675.3
580.8
545.8
535.1
516.7
513.5
492.3
2014
2,644.3
2,611.5
2,366.3
1,697.5
1,299.4
1,189.4
1,148.6
1,094.5
806.4
759.9
699.7
667.6
587.3
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Financial Report
Notes to the consolidated annual financial statements
MA XIMUM DEFAULT RISK OF FINANCIAL ASSETS
CHF million
Financial assets with characteristics of liabilities
Public corporations
Industrial enterprises
Financial institutions
Other
Mortgages and loans
Mortgages
Policy loans
Promissory notes and registered bonds
Time deposits
Employee loans
Reverse repurchase agreements
Other loans
Derivative financial instruments
Receivables from financial contracts
Reinsurance assets
Receivables from reinsurers
Insurance receivables
Other receivables
Receivables from investments
Cash and cash equivalents
2013
2014
17,354.3
18,955.1
2,860.2
10,362.4
27.1
3,738.2
9,987.3
20.5
11,277.0
11,233.6
168.5
6,027.2
163.4
5,945.7
608.1
37.3
–
358.4
232.2
389.4
396.4
21.7
518.4
257.0
612.5
546.6
32.1
–
344.5
341.0
21.1
421.5
79.7
409.0
375.3
564.5
1,992.2
1,954.5
If no contractually irrevocable future loan commitments have been agreed, the maximum default risk of financial assets corresponds to the carrying amount of the
assets for own account and at own risk. In addition, guarantees and collateral for the benefit of third parties totalled CHF 508.5 million (2013: CHF 516.1 million).
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Financial Report
Notes to the consolidated annual financial statements
The management and control of credit risk arising from mortgage business are set out in instructions and written
procedures in which mandatory lending regulations are specified. These lending regulations lay down strict proce-
dures for the immediate identification, accurate assessment, proper authorisation and continuous monitoring of
credit risk. Standard credit documentation is used to record and review loan applications, which are all logged and
managed centrally. The relevant credit documentation reflects or incorporates all evaluation criteria and policies.
Because a running total of mortgage transactions is kept, it is possible to monitor compliance with credit
policy, and corrective action can be taken if necessary. All mortgages are also managed by periodically auditing
exposure, including records of overdue interest. Procedures and audit intervals are set out in a separate directive.
Senior management regularly receive detailed risk reports on the composition of the mortgage portfolio and risk
trends.
Policies, directives and authorisation levels set out the terms and conditions for granting mortgages, which
consist of the amount, the credit quality of the counterparty, collateral and the term of the transaction as well as
the specialist qualifications of the mortgage expert.
There are special instructions for valuing collateral and calculating loan-to-value ratios. The purpose of these
provisions is to ensure that a standard procedure is used to determine the applicable value of collateral when assessing
mortgages. The calculation of fair value and the loan-to-value ratio of real estate is of key importance, particularly
with regard to mortgage business. One of the objectives of the active management of mortgages is the early identi-
fication of potential downside risk.
The mortgage portfolio comprises loans to individuals and to legal entities. The type and degree of risk that
may be incurred, together with collateralisation and quality requirements, are set out in directives and authorisation
levels. To mitigate risk, the portfolio is as geographically diverse as possible.
140
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Financial Report
Notes to the consolidated annual financial statements
CREDIT RATINGS OF FINANCIAL ASSETS THAT WERE NEITHER OVERDUE NOR IMPAIRED AT THE BALANCE SHEET DATE IN 2013
AAA
AA
A
Lower than BBB
or no rating
BBB
Total
CHF million
Financial assets with characteristics
of liabilities
Public corporations
Industrial enterprises
Financial institutions
Other
Mortgages and loans
Mortgages
Policy loans
Promissory notes
and registered bonds
Time deposits
Employee loans
Reverse repurchase agreements
Other loans
Derivative financial instruments
Receivables from financial contracts
Reinsurance assets
Receivables from reinsurers
Insurance receivables
Other receivables
Receivables from investments
Cash and cash equivalents
6,270.9
35.4
5,094.4
–
96.8
–
9,108.3
521.5
2,266.8
13.4
895.1
1,642.5
1,831.8
13.5
974.3
8,401.1
–
–
205.0
1,552.7
3,858.9
–
–
–
1.9
92.2
–
1.0
0.0
0.0
3.1
171.5
162.3
179.5
261.7
–
–
27.4
42.4
–
107.6
1.7
8.8
18.5
170.3
335.9
–
–
106.6
74.3
–
97.3
9.6
48.7
100.7
55.9
1,384.4
806.9
649.2
953.2
–
890.8
–
126.6
–
–
–
101.8
8.0
–
0.7
0.2
0.1
13.8
33.9
10.9
273.2
11.7
214.5
0.2
639.0
168.5
283.9
166.9
37.3
–
83.3
15.2
389.4
186.7
10.3
350.3
111.6
158.9
98.7
17,354.3
2,860.2
10,360.8
27.1
11,002.0
168.5
6,027.2
608.1
37.3
–
320.9
232.2
389.4
393.4
21.7
407.9
247.5
590.5
1,992.2
Total
13,482.3
17,635.2
15,128.3
3,596.1
3,199.6
53,041.6
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Financial Report
Notes to the consolidated annual financial statements
CREDIT RATINGS OF FINANCIAL ASSETS THAT WERE NEITHER OVERDUE NOR IMPAIRED AT THE BALANCE SHEET DATE IN 2014
AAA
AA
A
Lower than BBB
or no rating
BBB
Total
CHF million
Financial assets with characteristics
of liabilities
Public corporations
Industrial enterprises
Financial institutions
Other
Mortgages and loans
Mortgages
Policy loans
Promissory notes
and registered bonds
Time deposits
Employee loans
Reverse repurchase agreements
Other loans
Derivative financial instruments
Receivables from financial contracts
Reinsurance assets
Receivables from reinsurers
Insurance receivables
Other receivables
Receivables from investments
Cash and cash equivalents
6,216.7
10,392.0
771.3
1,468.0
15.3
1,091.4
2,063.6
2,715.1
5.0
977.3
8,475.2
–
–
106.5
1,820.5
3,623.4
100.5
4,877.4
0.2
98.4
–
1,086.5
792.8
691.8
–
928.8
–
148.8
36.2
277.2
73.1
13.9
–
–
2.2
144.2
–
–
–
0.0
3.1
155.6
392.1
–
–
25.9
41.1
–
202.3
14.9
4.0
17.0
164.2
286.0
–
–
113.9
104.1
–
154.3
39.3
23.1
110.4
61.8
1,229.3
–
–
91.3
14.4
–
7.6
0.0
0.2
12.6
31.1
9.4
168.6
9.9
235.0
–
540.6
163.4
246.6
146.2
32.1
–
79.0
37.2
21.1
54.1
25.4
264.3
228.2
134.0
37.6
18,955.1
3,738.2
9,987.3
20.5
11,020.2
163.4
5,945.7
546.6
32.1
–
312.2
341.0
21.1
418.3
79.6
291.6
371.3
546.9
1,954.4
Total
13,847.0
18,279.6
16,366.2
3,829.3
2,423.4
54,745.5
Standard & Poor’s and Moody’s ratings are generally used to assess the credit quality of securities. The lower of the
two is used for disclosure.
Because the two agencies do not cover the entire Swiss financial market, the SBI composite rating is applied
as and when necessary. This consists of ratings issued by the two rating agencies and the following four Swiss banks:
Credit Suisse, UBS, Bank Vontobel and Zürcher Kantonalbank.
The credit quality of mortgage assets arising from Swiss insurance business is reviewed using risk-management
processes. Credit ratings are assigned on this basis. Mortgage assets that show no signs of impaired credit quality
receive an A rating. Those that show signs of impaired credit quality are rated lower than BBB or are not rated at all.
In 2014, financial assets amounting to CHF 2.0 million (2013: CHF 2.1 million) and cash and cash equivalents
of 0.2 million (2013: 0.2 million) from collateral received were used.
142
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Financial Report
Notes to the consolidated annual financial statements
FINANCIAL ASSETS IMPAIRED AT THE BALANCE SHEET DATE
CHF million
Financial assets with characteristics
of liabilities
Public corporations
Industrial enterprises
Financial institutions
Other
Mortgages and loans
Mortgages
Policy loans
Promissory notes and registered
bonds
Time deposits
Employee loans
Reverse repurchase agreements
Gross amount
Impairment
Carrying amount
Gross amount
Impairment Carrying amount
2013
–
–
1.6
–
–
3.0
12.5
–
–
– 3.0
– 12.5
–
2014
–
–
0.0
–
–
3.1
26.3
–
–
– 3.1
– 24.7
–
172.1
– 41.8
130.3
142.7
– 32.7
110.0
–
0.0
–
–
–
–
0.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Other loans
47.0
– 16.9
30.1
43.5
– 16.0
27.5
Receivables from financial contracts
Reinsurance assets
Receivables from reinsurers
Insurance receivables
Other receivables
Receivables from investments
Total
–
–
0.3
127.6
12.9
24.2
413.7
–
–
– 0.3
– 39.9
– 3.7
– 2.2
–
–
–
87.7
9.3
22.0
– 132.6
281.1
–
–
0.6
128.8
6.3
19.3
356.7
–
–
– 0.5
– 38.9
– 2.7
– 1.7
–
–
0.1
89.8
3.6
17.6
– 108.0
248.8
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Financial Report
Notes to the consolidated annual financial statements
FINANCIAL ASSETS OVERDUE BUT NOT IMPAIRED AT THE BALANCE SHEET DATE
Assets as at 31 December 2013
< 3 months
3 – 6 months
7 – 12 months
> 12 months
Total
CHF million
Financial assets with characteristics of liabilities
Public corporations
Industrial enterprises
Financial institutions
Other
Mortgages and loans
Mortgages
Policy loans
Promissory notes and registered bonds
Time deposits
Employee loans
Reverse repurchase agreements
Other loans
Receivables from financial contracts
Reinsurance assets
Receivables from reinsurers
Insurance receivables
Other receivables
Receivables from investments
Total
–
–
–
–
0.8
–
–
–
–
–
0.3
–
–
–
9.0
0.1
–
10.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5.5
0.0
–
5.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6.8
0.0
–
6.8
–
–
–
–
–
–
–
–
3.6
4.4
–
–
–
–
–
0.2
–
3.0
–
1.5
0.1
–
8.4
–
–
–
–
–
0.5
–
3.0
–
22.7
0.2
–
30.8
144
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Financial Report
Notes to the consolidated annual financial statements
Assets as at 31 December 2014
< 3 months
3 – 6 months
7 – 12 months
> 12 months
Total
CHF million
Financial assets with characteristics of liabilities
Public corporations
Industrial enterprises
Financial institutions
Other
Mortgages and loans
Mortgages
Policy loans
Promissory notes and registered bonds
Time deposits
Employee loans
Reverse repurchase agreements
Other loans
Receivables from financial contracts
Reinsurance assets
Receivables from reinsurers
Insurance receivables
Other receivables
Receivables from investments
Total
–
–
–
–
0.5
–
–
–
–
–
0.2
–
–
–
11.1
0.2
–
11.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7.8
0.1
–
7.9
–
–
–
–
–
–
–
–
–
–
–
–
3.0
4.3
7.7
–
–
–
–
–
0.0
–
–
–
6.2
0.0
–
9.3
–
–
–
–
–
0.1
–
3.2
–
2.5
0.1
–
10.2
–
–
–
–
–
0.3
–
3.2
–
27.6
0.4
–
39.2
5.8 Liquidity risk
Banks as well as insurance companies incur latent liquidity risk. This refers to the risk of rapid outflows of large
volumes of liquidity that cannot be offset by asset sales or for which alternative funding cannot be implemented
quickly enough. In extreme cases, a lack of liquidity can result in insolvency. Legal provisions apply and the Group-
wide Risk Management Standards require each business unit to plan its liquidity centrally. This is carried out with
the close collaboration of the investment, actuarial, underwriting and finance departments of each business unit.
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Financial Report
Notes to the consolidated annual financial statements
Liquidity management must take account of the maturity structure of liabilities as follows:
MATURITIES OF FINANCIAL LIABILITIES 1
Liquidity risk as at 31 December 2013
‹ 1 year 2
1 – 3 years
4 – 5 years
> 5 years
Total Carrying amount
CHF million
Liabilities arising from banking business
and financial contracts
With discretionary participation
features
Measured at amortised cost
Recognised at fair value
through profit or loss
Financial liabilities
Financial provisions
Derivative financial instruments
Insurance liabilities
Other liabilities
Contingent liabilities
and capital commitments
Total
1,492.7
–
–
–
1,492.7
1,492.7
5,604.0
2,996.6
188.0
59.6
16.5
1,534.2
476.6
975.5
514.3
13.7
336.6
36.3
9.6
582.4
46.3
3.0
541.3
–
599.2
4,780.8
7,258.8
7,791.1
7,258.4
7,791.1
275.7
1,139.6
1,939.9
1,697.6
5.9
17.5
0.2
0.0
0.8
27.6
24.5
1.2
0.9
20.8
129.4
68.2
2,118.0
523.8
1,000.1
129.4
68.2
2,118.0
523.8
–
–
13,343.6
1,542.2
841.4
6,594.6
22,321.9
Liquidity risk as at 31 December 2014
‹ 1 year 2
1 – 3 years
4 – 5 years
> 5 years
Total Carrying amount
CHF million
Liabilities arising from banking business
and financial contracts
With discretionary participation
features
Measured at amortised cost
Recognised at fair value
through profit or loss
Financial liabilities
Financial provisions
Derivative financial instruments
Insurance liabilities
Other liabilities
Contingent liabilities
and capital commitments
Total
1,758.5
0.6
1.1
6.2
1,766.5
1,766.5
5,535.5
3,273.3
34.6
52.5
109.1
1,090.2
601.2
979.8
388.7
15.2
560.8
43.3
25.6
689.0
43.2
12.1
520.5
–
897.2
5,343.8
7,342.0
8,632.3
7,342.0
8,632.3
175.0
1,148.4
1,918.8
1,702.4
9.2
19.4
0.2
0.2
13.3
14.3
22.3
1.0
1.0
1.6
119.3
176.4
1,780.3
645.6
1,006.9
119.3
176.4
1,780.3
645.6
–
–
13,434.8
1,778.5
738.8
7,435.9
23,388.0
1 Based on undiscounted contractual cash flows.
2 All demand deposits are included in the first maturity band.
Please refer to the tables in section 23 for the residual terms and maturities of technical reserves.
146
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Notes to the consolidated annual financial statements
In accordance with the Group-wide Risk Management Standards, asset and liability management committees have
been introduced in all strategic business units in the Baloise Group. These asset and liability management commit-
tees analyse maturity schedules and the income generated by assets or required for liabilities.
As part of tactical and strategic investment planning, care is taken when allocating the assets held by the
individual life and non-life insurance units in the Baloise Group to ensure that sufficient liquidity is available to
carry out investment activity and for the operational settlement of all business processes. The level of liquidity
required is determined on the basis of the maturity structure of investments versus the payout schedule for insur-
ance-related liabilities. The average historical pattern of incoming and outgoing cash management payments over
the previous five years is also taken into account. Investment planning explicitly includes exceptionally large incoming
or outgoing payments that are known in advance. Careful maintenance of liquidity levels and recourse to reinsur-
ance provide sufficiently large reserves for payments needed at short notice, such as large claim settlements. Cash
pooling among the Baloise Group’s Swiss companies also ensures that excess liquidity in one unit can be used to
offset a temporary liquidity squeeze at another unit via an intra-Group interest-bearing overdraft facility.
If these precautions fail to meet the need for liquidity, the Baloise Group holds financial assets that can be
sold at short notice without significant price losses. They include all equities (excluding long-term equity invest-
ments). Because the Group holds a substantial portfolio of government and quasi-government bonds, it is possible
to sell relatively large holdings of available-for-sale bonds even in crisis situations. Mortgages and loans are gener-
ally held to maturity; early redemption is not considered at present. In terms of alternative financial assets, 75 per
cent of hedge funds can be sold within three months. Private-equity investments have to be considered illiquid in
this context, and it is not possible to sell investment property to generate immediate liquidity.
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Notes to the consolidated annual financial statements
5.9 Equity price risk
The Baloise Group is exposed to equity price risk because it holds financial instruments with characteristics of
equity classed as “recognised at fair value through profit or loss” and “available for sale”. Equity price risk is signif-
icantly reduced by means of international diversification, i.e. by spreading risk across sectors, countries and cur-
rencies. Active overlay management using derivatives also mitigates equity price risk if certain intervention levels
are reached or the market and / or risk indicators that are continuously tracked by Baloise suggest heightened
hedging activity.
Most financial instruments with characteristics of equity are publicly listed.
If the market price of all financial instruments with characteristics of equity were to move by + / – 10 per cent
on the balance sheet date, the following impact would be observed – after shadow accounting, deferred gains / losses,
deferred taxes, derivative hedges and the effect of the impairment rules mentioned in section 3.10.2:
CHF million
Market price plus 10 %
Market price minus 10 %
Impact on profit for the period
Impact on equity
(including profit for the period)
2013
2014
2013
2014
5.8
– 24.1
33.3
– 57.1
206.9
– 212.8
262.1
– 264.2
Because these impairment criteria produce different effects due to assumed changes in market prices if there is a rise
compared with an analogous fall, these effects are divergent. The compensatory effects of hedging using derivatives
behave in a similar manner.
Adjustments in the fair value of financial instruments with characteristics of equity that are classed as “recognised
at fair value through profit or loss” have an impact on the profit for the period. Unrealised gains and losses vary due
to changes in the fair value of financial instruments with characteristics of equity which are classed as “available
for sale”. In a life insurance company, policyholders participate in the firm’s profits, depending on their policy and
local circumstances (see section 3.18.5.). The table above takes account of this profit-sharing scheme.
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Notes to the consolidated annual financial statements
5.10 Fair value measurement
Where available, quoted market prices are used to determine the fair value of assets and liabilities. They are defined
as available if quoted prices can be obtained easily and frequently on an exchange, from a dealer, broker, trade
association, pricing service or regulatory authority, provided these prices are current and represent regularly occurring
arm’s-length transactions in the market.
If no quoted market prices are available (e.g. because a market is inactive), the fair value is determined using
a market-based measurement process. Market-based means that the measurement method is based on a significant
quantity of observable market data (as available).
Fair value measurement is divided into the following three hierarchy levels:
→ Fair value determined by publicly quoted prices (level 1)
Fair value is based on prices in active markets on the balance sheet date and it is not adjusted or compiled
in any other way.
→ Fair value determined by using observable market data (level 2)
Fair value is estimated using generally recognised methods (discounted cash flow etc.). In this case, measure-
ment incorporates a significant quantity of observable market data (interest rates, index performance, etc.).
→ Fair value determined without the use of observable market data (level 3)
Fair value is estimated using generally recognised methods (discounted cash flow, etc.), although it is meas-
ured without reference to any observable market data (or only to a very minor degree), either because this data
is not available or because it does not permit any reliable conclusions to be drawn with regard to fair value.
Detailed information about measurement principles and the measurement methods used can be found in sections
3.7, 3.8, 3.9, 3.11, 3.20 and 4.1.
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Notes to the consolidated annual financial statements
Details of the methods used to measure level 2 and level 3 assets and liabilities
The table below gives an overview of the measurement methods that the Baloise Group uses to determine the fair
value of balance sheet line items classified as level 2 or level 3. The table shows the individual measurement methods,
the key input factors used for measurement purposes and – where practicable – the range within which these input
factors vary.
Balance sheet line item
Measurement method
Key input factors used for
measurement purposes
Range of input factors
Level 2
Financial instruments
with characteristics of equity
Available for sale
At fair value through profit or loss
Financial instruments
with characteristics of liabilities
Internal measurement
methods
Price of underlying instrument,
liquidity discount, balance sheet
and income statement figures
Net asset value
Net asset value
n / a
n / a
Available for sale
Present-value model
Yield curve, swap rates, default risk
At fair value through profit or loss
Present-value model
Interest rate, credit spread,
market price
Mortgages and loans
At fair value through profit or loss
Present-value model
LIBOR, swap rates
Black-Scholes option
pricing model
Black-76 option
pricing model
Money market interest rate, volatility,
price of underlying instrument,
exchange rates
Volatility, forward interest rate
Stochastic
present-value model
Present-value model
Investment fund prices, interest
rates, cancellation rate
LIBOR, swap rates
Derivative financial instruments
Liabilities arising from banking business
and financial contracts
At fair value through profit or loss
Level 3
Financial instruments
with characteristics of equity
Available for sale
At fair value through profit or loss
Investment property
–
–
–
–
–
–
–
–
–
–
Net asset value
Net asset value
DCF method
n / a
n / a
n / a
n / a
Discount rate 1
3.5 % – 5.5 % 3
Rental income 2 290 – 320 CHF million 3
Vacancy costs 1
5 – 15 CHF million 3
Running costs 1
22 – 25 CHF million 3
Maintenance costs 1
25 – 28 CHF million 3
Capital expenditure 2
40 – 70 CHF million 3
Inflation rate 2
0 % – 2 % 3
1 The lower these key input factors, the higher the fair value of the investment property.
2 The higher these key input factors, the lower the fair value of the investment property.
3 The input factor ranges shown essentially relate to the real-estate portfolios held by the Baloise Group’s Swiss entities.
150
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Financial Report
Notes to the consolidated annual financial statements
Determining the fair value of assets and liabilities classified as level 3
The Baloise Group organises its operating activities into strategic business units, which are generally combined
under a single management team for each region. The financial and management information needed for all relevant
executive decisions is held by these strategic business units. This organisational structure is also used to delegate
authority and responsibility for proper implementation of, and compliance with, financial reporting standards
within the Baloise Group to the individual strategic business units.
The organisation of these individual units varies in terms of how they determine the fair value of financial
instruments classified as level 3. This process essentially involves the regular discussion of measurement methods,
measurement inconsistencies and classification issues by formal or informal committees at each reporting date.
Appropriate adjustments are made where necessary.
Financial instruments with characteristics of equity classed as “available for sale” or “recognised at fair value
through profit or loss” and classified as level 3 are primarily private-equity investments and alternative investments
held by the Baloise Group as well as non-controlling interests in real-estate companies. The fair value of such invest-
ments is usually determined by fund managers (external providers) based on their net asset value (NAV). These
external providers generally use non-public information to calculate the individual investments’ NAV.
The measurement of investment property classified as level 3 is carried out internally each year by experts
using market-based assumptions that have been verified by respected external consultancies. This property is also
assessed by external valuation specialists at regular intervals.
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FAIR VALUE OF ASSETS AND LIABILITIES FOR OWN ACCOUNT AND AT OWN RISK
Total carrying
amount
Total fair value
Level 1
Level 2
Level 3
2013
CHF million
Assets measured on a recurring basis
Financial instruments with characteristics of equity
Available for sale
Recognised at fair value through profit or loss
Financial instruments with characteristics of liabilities
Held to maturity
Available for sale
4,096.4
4,096.4
302.0
302.0
2,272.6
145.2
8,100.7
8,709.4
8,709.4
22,431.0
22,431.0
22,373.6
Recognised at fair value through profit or loss
72.4
72.4
36.9
Mortgages and loans
Carried at cost
Recognised at fair value through profit or loss
Derivative financial instruments
Receivables from financial contracts
Carried at cost
Other receivables
Carried at cost
Receivables from investments
Carried at cost
Investment property
17,373.4
18,102.8
956.1
232.2
956.1
232.2
389.4
389.4
257.0
258.2
–
–
0.3
–
–
612.5
612.5
5,685.9
5,685.9
317.9
–
864.8
156.8
–
57.4
35.5
959.0
–
–
–
–
–
18,102.8
956.1
231.9
–
–
0.9
–
–
–
389.4
258.2
293.7
5,685.9
Total assets measured on a recurring basis
60,509.0
61,848.3
33,855.8
2,303.4
25,689.1
Liabilities measured on a recurring basis
Liabilities arising from banking business
and financial contracts
Measured at amortised cost
7,258.4
7,287.7
105.8
7,029.9
151.9
Recognised at fair value through profit or loss
Derivative financial instruments
Financial liabilities
Total liabilities measured on a recurring basis
210.7
68.2
1,697.6
9,234.9
210.7
68.2
1,804.4
9,370.9
–
13.5
1,804.4
1,923.7
210.7
54.7
–
–
–
–
7,295.3
151.9
The Baloise Group is obliged to apply accounting standard IFRS 5 (Non-current Assets Held for Sale and Discon-
tinued Operations) owing to the disposal of its Croatian and Serbian units. The Baloise Group has assets and liabilities
measured at fair value on a non-recurring basis as part of the disposal group recognised for this purpose. Information
on the fair value of the disposal group can be found in note 21.
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FAIR VALUE OF ASSETS AND LIABILITIES FOR OWN ACCOUNT AND AT OWN RISK
Held to maturity
Available for sale
8,413.7
10,024.2
24,227.5
24,227.5
Recognised at fair value through profit or loss
59.9
59.9
2014
CHF million
Assets measured on a recurring basis
Financial instruments with characteristics of equity
Available for sale
Recognised at fair value through profit or loss
Financial instruments with characteristics of liabilities
Mortgages and loans
Carried at cost
Recognised at fair value through profit or loss
Derivative financial instruments
Receivables from financial contracts
Carried at cost
Other receivables
Carried at cost
Receivables from investments
Carried at cost
Investment property
Total carrying
amount
Total fair value
Level 1
Level 2
Level 3
4,698.1
4,698.1
671.6
671.6
2,766.5
242.7
10,024.2
24,188.7
37.4
–
–
13.6
–
–
17,326.0
18,806.8
839.9
341.0
839.9
341.0
21.1
21.1
375.3
404.2
564.5
564.5
5,962.9
5,962.9
354.5
–
938.7
428.9
–
38.8
22.5
993.0
–
–
–
–
–
18,806.8
839.9
327.4
–
–
2.2
–
–
–
21.1
404.2
207.8
5,962.9
Total assets measured on a recurring basis
63,501.4
66,621.7
37,627.6
2,598.4
26,395.8
Liabilities measured on a recurring basis
Liabilities arising from banking business
and financial contracts
Measured at amortised cost
7,342.0
7,488.7
103.1
7,258.2
127.5
Recognised at fair value through profit or loss
Derivative financial instruments
Financial liabilities
Total liabilities measured on a recurring basis
244.3
176.4
1,702.4
9,465.1
244.3
176.4
1,875.8
9,785.2
–
18.6
1,875.8
1,997.5
244.3
157.9
–
–
–
–
7,660.3
127.5
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FAIR VALUE OF ASSETS AND LIABILITIES FOR THE ACCOUNT AND AT THE RISK OF LIFE INSURANCE POLICYHOLDERS
AND THIRD PARTIES
2013
CHF million
Assets measured on a recurring basis
Financial instruments with characteristics of equity
Total carrying
amount
Total fair value
Level 1
Level 2
Level 3
Recognised at fair value through profit or loss
6,946.1
6,946.1
6,861.2
–
84.9
Financial instruments with characteristics of liabilities
Recognised at fair value through profit or loss
1,723.1
1,723.1
1,692.8
30.3
Mortgages and loans
Recognised at fair value through profit or loss
Derivative financial instruments
Other assets
–
178.5
–
178.5
Recognised at fair value through profit or loss
47.3
47.3
–
28.8
47.3
Total assets measured on a recurring basis
8,894.9
8,894.9
8,630.1
Liabilities measured on a recurring basis
Liabilities arising from banking business
and financial contracts
Recognised at fair value through profit or loss
7,580.3
7,580.3
7,577.7
Derivative financial instruments
–
–
–
Total liabilities measured on a recurring basis
7,580.3
7,580.3
7,577.7
–
149.7
–
180.0
2.6
–
2.6
–
–
–
–
84.9
–
–
–
154
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Notes to the consolidated annual financial statements
FAIR VALUE OF ASSETS AND LIABILITIES FOR THE ACCOUNT AND AT THE RISK OF LIFE INSURANCE POLICYHOLDERS
AND THIRD PARTIES
2014
CHF million
Assets measured on a recurring basis
Financial instruments with characteristics of equity
Total carrying
amount
Total fair value
Level 1
Level 2
Level 3
Recognised at fair value through profit or loss
8,081.5
8,081.5
7,905.0
–
176.5
Financial instruments with characteristics of liabilities
Recognised at fair value through profit or loss
1,760.5
1,760.5
1,729.0
31.5
Mortgages and loans
Recognised at fair value through profit or loss
Derivative financial instruments
Other assets
–
272.1
–
272.1
Recognised at fair value through profit or loss
53.3
53.3
–
63.8
53.3
Total assets measured on a recurring basis
10,167.5
10,167.5
9,751.1
Liabilities measured on a recurring basis
Liabilities arising from banking business
and financial contracts
Recognised at fair value through profit or loss
8,388.1
8,388.1
8,388.1
Derivative financial instruments
–
–
–
Total liabilities measured on a recurring basis
8,388.1
8,388.1
8,388.1
–
208.4
–
239.9
–
–
–
–
–
–
–
176.5
–
–
–
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Notes to the consolidated annual financial statements
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS FOR OWN ACCOUNT AND AT OWN RISK AND CLASSIFIED AS
LEVEL 3
2013
CHF million
Assets and liabilities measured on a recurring basis
Balance as at 1 January
Additions
Additions arising from change in the scope of consolidation
Additions arising from change in the percentage of shareholding
Disposals
Disposals arising from change in the scope of consolidation
Disposals arising from change in the percentage of shareholding
Reclassified to level 3 1
Reclassified from level 3 1
Reclassification to non-current assets and disposal groups classified
as held for sale
Changes in fair value recognised in profit or loss 2
Changes in fair value not recognised in profit or loss 3
Exchange differences
Balance as at 31 December
Changes in fair value of financial instruments held at the balance sheet date
and recognised in profit or loss
Financial
instruments with
characteristics
of equity
Available for
sale
Investment
property
Recognised at
fair value
through
profit or loss
Total
714.0
96.5
–
–
5,441.0
6,155.0
228.6
13.0
–
325.1
13.0
–
– 61.5
– 135.6
– 197.1
–
–
280.3
– 65.4
– 1.7
–
8.5
– 0.4
– 1.7
–
288.8
– 65.7
–
– 9.3
– 9.3
– 14.4
11.8
– 2.4
959.0
127.0
0.6
14.0
112.6
12.4
11.6
5,685.9
6,645.0
– 14.4
126.7
112.4
1 Any reclassification of financial instruments either to or from level 3 during the reporting period was mainly attributable to market inactivity coupled with
unobservable inputs or to the cancellation of the lock-up period applicable to certain hedge funds. Investment property reclassified either to or from Level 3
essentially related to real estate that had been repurposed.
2 Changes in fair value recognised in profit or loss arise from realised gains and losses on investments, impairment losses or the reversal of impairment losses.
3 Changes in fair value not recognised in profit or loss arise from unrealised gains and losses on investments.
156
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Notes to the consolidated annual financial statements
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS FOR OWN ACCOUNT AND AT OWN RISK
AND CLASSIFIED AS LEVEL 3
2014
CHF million
Assets and liabilities measured on a recurring basis
Balance as at 1 January
Additions
Additions arising from change in the scope of consolidation
Additions arising from change in the percentage of shareholding
Disposals
Disposals arising from change in the scope of consolidation
Disposals arising from change in the percentage of shareholding
Reclassified to level 3
Reclassified from level 3
Reclassification to non-current assets and disposal groups classified
as held for sale
Changes in fair value recognised in profit or loss 1
Changes in fair value not recognised in profit or loss 2
Exchange differences
Balance as at 31 December
Changes in fair value of financial instruments held at the balance sheet date
and recognised in profit or loss
Financial
instruments with
characteristics
of equity
Available
for sale
959.0
66.1
–
–
– 87.5
–
–
–
–
–
Total
Investment
property
Recognised at
fair value
through
profit or loss
5,685.9
6,645.0
323.9
36.7
–
– 140.5
– 30.1
–
–
–
390.0
36.7
–
– 228.1
– 30.1
–
–
–
– 24.9
– 24.9
– 9.9
49.3
16.0
993.0
129.3
–
– 17.4
5,962.9
119.4
49.3
– 1.4
6,955.9
– 9.9
113.2
103.3
1 Changes in fair value recognised in profit or loss arise from realised gains and losses on investments, impairment losses or the reversal of impairment losses.
2 Changes in fair value not recognised in profit or loss arise from unrealised gains and losses on investments.
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Notes to the consolidated annual financial statements
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS FOR THE ACCOUNT
AND AT THE RISK OF LIFE INSURANCE POLICYHOLDERS AND THIRD PARTIES AND CLASSIFIED AS LEVEL 3
2013
CHF million
Assets and liabilities measured on a recurring basis
Balance as at 1 January
Additions
Additions arising from change in the scope of consolidation
Additions arising from change in the percentage of shareholding
Disposals
Disposals arising from change in the scope of consolidation
Disposals arising from change in the percentage of shareholding
Reclassified to level 3 1
Reclassified from level 3 1
Reclassification to non-current assets and disposal groups classified as held for sale
Changes in fair value recognised in profit or loss 2
Exchange differences
Balance as at 31 December
Financial
instruments with
characteristics of
equity
Recognised at
fair value
through
profit or loss
86.3
3.1
–
–
Total
86.3
3.1
–
–
– 2.7
– 2.7
–
–
–
–
–
– 2.6
0.8
84.9
–
–
–
–
–
– 2.6
0.8
84.9
Changes in fair value of financial instruments held at the balance sheet date
and recognised in profit or loss
– 2.6
– 2.6
1 No financial instruments were reclassified either to or from level 3 during the reporting period.
2 Changes in fair value recognised in profit or loss arise from realised gains and losses on investments, impairment losses or the reversal of impairment losses.
158
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Notes to the consolidated annual financial statements
ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS FOR THE ACCOUNT
AND AT THE RISK OF LIFE INSURANCE POLICYHOLDERS AND THIRD PARTIES AND CLASSIFIED AS LEVEL 3
2014
CHF million
Assets and liabilities measured on a recurring basis
Balance as at 1 January
Additions
Additions arising from change in the scope of consolidation
Additions arising from change in the percentage of shareholding
Disposals
Disposals arising from change in the scope of consolidation
Disposals arising from change in the percentage of shareholding
Reclassified to level 3 1
Reclassified from level 3 1
Reclassification to non-current assets and disposal groups classified as held for sale
Changes in fair value recognised in profit or loss 2
Exchange differences
Balance as at 31 December
Changes in fair value of financial instruments held at the balance sheet date
and recognised in profit or loss
Financial
instruments with
characteristics
of equity
Recognised at
fair value
through
profit or loss
84.9
94.4
–
–
Total
84.9
94.4
–
–
– 1.0
– 1.0
–
–
–
–
–
–
–
–
–
–
0.0
– 1.8
176.5
0.0
– 1.8
176.5
0.0
0.0
1 No financial instruments were reclassified either to or from level 3 during the reporting period.
2 Changes in fair value recognised in profit or loss arise from realised gains and losses on investments, impairment losses or the reversal of impairment losses.
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Notes to the consolidated annual financial statements
Reclassification of assets and liabilities from level 1 to level 2 and vice versa
Assets and liabilities measured at fair value are generally reclassified from level 1 to level 2 if there is no longer
deemed to be an active market in these instruments owing to their low daily trading volumes or lack of liquidity or
if the instruments concerned have been de-listed. Financial instruments are reclassified from level 2 to level 1 for
the exact opposite reasons.
No significant amounts of assets or liabilities measured at fair value were reclassified from level 1 to level 2 or
vice versa during the reporting period or in 2013.
Discrepancy between a non-financial asset’s highest and best use and its current use
The fair value of investment property is determined on the basis of its highest and best use.
This periodic analysis – which was based on criteria such as the potential to increase a property’s market
value by converting it into apartments, the repurposing of some or all of an existing property, the availability of
a significant amount of land for further building and development, and the unlocking of added value by demolishing
an existing property and building a new one revealed for the reporting period that the highest and best use of only
individual investment properties in the Swiss portfolio differed from their current use.
In 2013 the fair value of certain items of investment property in the Swiss portfolio was revised upwards –
based on the aforementioned criteria – as a result of the first-time adoption of IFRS 13.
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Notes to the consolidated annual financial statements
5.11 Capital management
The general parameters regarding the amount of capital employed are set by regulatory requirements and internal
risk-management policies. While the aim of regulatory requirements is primarily the protection of policyholders,
internal policies are largely derived from the risk-based management of operating activities.
The solvency margin of the Baloise Group for pure insurance business of CHF 2,167 million (2013: CHF 2,160
million) was met in 2013 and 2014. The cover ratio for the capital adequacy requirement in available funds was
354 per cent as at 31 December 2014 (2013: 267 per cent). The capital currently available consists of IFRS equity,
unallocated policyholders’ dividends and the final policyholders’ dividend reserve. Liabilities are also recognised
as capital in accordance with the corresponding options for solvency coverage at individual company level. Deduc-
tions from equity include planned dividend payments and intangible assets. Individual Group companies are also
subject to regulation under local legislation which in some cases permits different methods for defining equity. The
ability of the business units, and therefore also of the parent company, to pay dividends is closely linked to the
priority placed on meeting these local requirements. Compliance with local solvency requirements is monitored on
an ongoing basis. Appropriate action is taken if solvency falls short of these regulations.
The relevant requirements for the banking operations of Baloise Bank SoBa are defined by Basel III regulations.
The regulatory capital adequacy requirements applicable to Deutscher Ring Bausparkasse AG is the Capital
Requirements Regulation (CRR).
The Swiss Solvency Test (SST) came into force on 1 January 2011 as a new statutory requirement alongside
Solvency I. In this context, the Baloise Group defines its risk-bearing capital and capital required for the SST using
an inhouse model that takes into account the Baloise Group’s business model. All activities and processes for
developing and structuring the inhouse model are gathered together in the Baloise Internal Solvency System (BISS)
and coordinated and managed by Group Risk Management.
The inhouse model, which is based on the Swiss Solvency Test (SST), is used to calculate risk-bearing capital.
IFRS equity forms the basis for this calculation. The remeasurement of items and the additional incorporation of
individual assets and liabilities as well as off-balance-sheet information enable equity to be determined at fair value.
As a result, all capital items that can be deployed to cover losses in the event of adverse business developments are
taken into consideration.
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Financial Report
Notes to the consolidated annual financial statements
Risk-bearing capital is compared with risk-adjusted capital and the capital requirement formulated inhouse. The
capital requirement covers actuarial risk, market risk, credit risk and other risks. The capital requirement is deter-
mined by means of a correlation-based expected-shortfall method. The actuarial capital requirement is a measure-
ment of the operational funding required to cover actuarial risk. The claims risk is modelled using distributions of
normal and large claims, including the prevailing reinsurance structure. At the same time, the investment required
to smooth fluctuations in investment value and returns for a given probability is also calculated. Analysis of these
risks is based on quantitative models that use statistical methods to evaluate historical data and place it in the
context of current exposure. Various scenarios are simulated by means of stress tests, and their potential impact on
risk-bearing capacity is analysed. The ratio of risk-bearing capital to risk-adjusted capital is calculated for the stra-
tegic business units and the Group. The Group’s risk position is not determined by simply adding together individual
risk positions; it also takes into account diversification and consolidation effects. The current ratios of risk-bearing
capital to risk-adjusted capital are set with reference to the global risk-management limits laid down in the Group-
wide Risk Management Standards. These limits are monitored on an ongoing basis.
The risk owner and risk controller responsible for each business unit and for the Group as a whole participate
in a regular reporting process. Key figures relating to Solvency I and the inhouse risk model are reported on a monthly
basis, which enables the solvency situation to be monitored in a timely manner, providing the basis for risk-based
management decisions within the whole organisation. It also enables the Baloise Group to meet external reporting
requirements at all times.
162
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Financial Report
Notes to the consolidated annual financial statements
6. BASIS OF CONSOLIDATION
6.1 2013 financial year
6.1.1 Acquisitions
The company FIPOP S.A. was acquired in Luxembourg during the reporting year. Goodwill of CHF 0.6 million was
recognised in respect of this acquisition.
6.1.2 Disposals
Belgian company AXIS Life was sold in the first half of 2013. Also in Belgium, the companies Esplan NV and Hermes
Verzekeringsgroep NV were disposed of in the second half of the year. In Germany, the firm Partner in Life S.A.
was sold in the first half of 2013. The transactions in Belgium and Germany have had a minor impact on the Baloise
Group’s profit for the reporting period.
The Baloise Group disposed of 35 per cent of its shareholdings in Luxembourg-based Barosa S.à.r.l., which
had been founded in 2012.
6.1.3 Other changes in the group of consolidated companies
Belgian companies Nateus Life NV and Nateus NV were merged with Mercator Verzekeringen NV with effect from
1 January 2013; these businesses have all been operating in the market under the name of “Baloise Insurance” since
the beginning of 2013. Audi NV – another Belgium-based firm – was merged with Euromex NV with effect from
the above date. The German companies Avetas Versicherungs-AG and Deutscher Ring Sachversicherungs-AG were
merged with the company Basler Securitas Versicherungs-AG retrospectively from 1 January 2013. These companies
have been renamed Basler Sachversicherungs-AG. In addition, the company Apoll Vermittlungs-GmbH was merged
with IMAS Gesellschaft für Vermögensbildung und -sicherung mbH. And in Germany, a number of property
companies have been merged to form a single company.
The section on segment reporting broken down by strategic business unit now shows the company Baloise
Life Liechtenstein as part of the “Luxembourg” segment rather than – as previously – in the “Other units” segment.
The section on segment reporting by operating segment now shows the Belgian company NoordSter NV as part of
the “Life” segment rather than – as previously – in the “Other activities” segment. The firm Deutscher Pensions-
ring AG is now reported as part of the “Other activities” (Germany) segment. The prior-year comparative figures
have been restated accordingly to ensure the comparability of segment reporting.
The application of the new standard IFRS 10 (Consolidated Financial Statements) for annual periods beginning
on or after 1 January 2013 means that in future the Baloise Group will also have to recognise in its consolidated
financial statements those units of its investment fund vehicle Baloise Fund Invest (BFI fund) that have been sold
to entities outside the Group. In the past it has only had to recognise those fund units that had been sold to clients
as part of its investment-linked life insurance business as well as units that Baloise Group companies themselves
had acquired as an investment or as seed capital. The application of this standard has no overall impact on the
Baloise Group’s profitability.
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Financial Report
Notes to the consolidated annual financial statements
6.2 2014 financial year
6.2.1 Acquisitions
The Baloise Group acquired the Brussels-based real-estate company Singel Office Antwerpen NV in Belgium during
the first half of the reporting year. This transaction did not give rise to any goodwill.
The net assets of the firm P&V Assurances were acquired in Luxembourg. This transaction gave rise to good-
will of CHF 8.5 million.
6.2.2 Disposals
All of Baloise’s Croatian and Serbian subsidiaries were sold to the Austria-based UNIQA Group on 11 March 2014.
All of its Austrian subsidiaries were then sold to the Helvetia Group on 28 August 2014. Information on the
accounting treatment of these disposals can be found in note 21.
In Luxembourg the remaining 65 per cent shareholding in the company Barosa S.à.r.l. was sold during the
first half of the reporting year.
6.2.3 Other changes in the group of consolidated companies
Further real-estate companies in Germany were merged with existing companies as planned, continuing the process
that had begun in 2013. Basler Financial Services GmbH and GROCON Grundstücks- und Beteiligungsgesellschaft
GmbH were merged in the second half of the year under review. These mergers had no net impact on the Baloise
Group’s profit for the period.
164
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Financial Report
Notes to the consolidated annual financial statements
7. INFORMATION ON OPERATING SEGMENTS (SEGMENT REPORTING)
The Baloise Group organises its operating activities into strategic business units, which are generally combined
under a single management team for each region. The financial and management information needed for all relevant
executive decisions is held by these strategic business units. This is also the organisational level at which the chief
operating decision-makers are situated. Regardless of where they are headquartered, all Baloise Group entities are
therefore assigned to one of the reportable segments
→ Switzerland
→ Germany
→ Belgium
→ Luxembourg
→ Other units 1.
The “Other units 1” segment contains the strategic business units that do not meet the size criteria for disclosure
under IFRS 8. These are the Baloise Group entities that have been assigned to
→ Austria
→ Croatia
→ Serbia.
The “Germany” segment also includes the regional branches of Basler Sachversicherungs-AG and Basler Lebens-
versicherungs-AG in the Czech Republic and Slovakia. The “Luxembourg” segment also includes the Baloise Life
Liechtenstein unit.
The “Group business” segment comprises the units engaged in intercompany reinsurance and financing, as
well as corporate IT and the holding companies.
The revenue generated by the Baloise Group is broken down into the Non-Life, Life, Banking (including asset
management) and Other Activities operating segments. The Non-Life segment offers accident and health insurance
as well as products relating to liability, motor, property and marine insurance. These products are tailored to the
specific needs of our customers – primarily retail clients – and the core competences of the relevant companies in
the Baloise Group. The Life segment provides individuals and companies with a wide range of endowment policies,
term insurance, investment-linked products and private placement life insurance. The Banking segment essentially
comprises Baloise Bank SoBa, which acts as a universal bank in Switzerland, and Deutscher Ring Bausparkasse,
which operates in Germany mainly as a conventional building society.
The “Other Activities” operating segment includes equity investment companies, real-estate firms and financ-
ing companies.
The accounting policies applied to the presentation of the operating segments (segment reporting) are those
used throughout the rest of the Financial Report. No intersegment relationships recognised either on the balance
sheet or in the income statement – with the exception of income from long-term equity investments – are offset
against each other.
1 Owing to the disposal of Baloise’s Croatian and Serbian subsidiaries (completed on 11 March 2014) and the disposal of its Austrian entities (completed on
28 August 2014), the reportable “Other units” segment is expected to be discontinued after the 2016 reporting period.
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Financial Report
Notes to the consolidated annual financial statements
7.1 Segment reporting by strategic business unit
CHF million
Income
Premiums earned and policy fees (gross)
Reinsurance premiums ceded
Premiums earned and policy fees (net)
Investment income
Realised gains and losses on investments
Income from services rendered
Share of profit (loss) of associates
Other operating income
Income
Intersegment income
Income from associates
Expense
Claims and benefits paid (gross)
Change in technical reserves (gross)
Reinsurers’ share of claims incurred
Acquisition costs
Investment management expenses
Interest expenses on insurance liabilities
Gains or losses on financial contracts
Other operating expenses
Expense
Operating and administrative expenses for insurance business
– 431.1
– 425.9
Switzerland
Germany
Belgium
Luxembourg
Other units
Sub-total
Group business
Eliminated
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
4,249.4
4,328.7
1,504.5
1,416.9
1,104.2
1,112.1
– 173.9
– 173.6
– 97.4
– 92.1
– 70.0
– 75.9
4,075.6
4,155.2
1,407.2
1,324.8
1,034.3
1,036.2
927.8
137.1
41.6
0.0
52.8
929.0
470.1
38.4
0.0
61.8
503.4
270.9
35.6
41.2
38.9
465.4
437.6
34.0
8.1
45.7
270.1
30.3
2.7
– 0.7
13.9
264.0
116.0
1.6
0.0
11.9
5,234.7
5,654.5
2,297.1
2,315.7
1,350.5
1,429.6
69.9
0.0
67.5
0.0
47.1
40.9
48.4
8.1
30.8
0.3
30.6
0.0
– 3,279.8
– 3,418.0
– 1,279.1
– 1,313.3
– 671.1
– 753.3
– 63.6
– 103.6
– 139.6
– 69.7
– 5,433.3
– 5,658.0
– 150.3
– 184.5
176.0
– 5,439.7
– 5,666.4
– 849.3
– 861.5
– 416.2
– 391.2
– 87.1
– 166.2
– 9.8
– 1,373.7
– 1,486.1
– 2.2
– 1,359.4
– 1,469.5
139.5
– 17.3
122.2
16.3
196.0
12.6
–
21.2
368.2
1.1
–
– 4.3
2.2
– 12.9
– 40.0
– 0.9
– 0.2
202.2
– 20.2
182.0
21.4
317.8
13.3
–
20.3
554.7
2.5
–
– 57.4
8.4
– 20.0
– 48.0
– 1.2
– 0.4
217.7
– 77.3
140.4
30.8
15.0
8.1
–
4.2
198.3
71.5
–
– 16.7
44.5
– 38.5
– 9.7
– 2.5
– 0.5
– 0.3
113.0
– 49.1
7,215.4
7,172.8
– 435.9
– 410.7
63.9
6,779.5
6,762.0
– 268.3
– 247.4
7,212.7
7,168.1
268.3
0.0
247.3
– 167.9
– 163.6
0.0
7,044.8
7,004.5
1,748.3
1,687.3
– 2.3
– 1.9
1,765.1
1,701.9
150.0
146.1
– 131.6
– 125.2
– 42.2
– 53.7
9,448.8
10,040.0
513.7
– 176.0
– 180.8
9,747.5
10,372.8
196.0
– 396.3
– 376.9
176.0
180.8
Total
2014
670.3
119.0
40.5
107.9
–
41.2
1,362.5
110.7
8.1
185.2
–
8.1
265.6
– 0.3
265.2
19.1
21.2
19.2
474.7
–
–
– 33.4
– 3.2
– 27.9
0.2
– 12.5
–
242.7
– 0.1
242.5
16.4
13.1
–
95.5
–
18.8
– 3.1
– 19.2
– 0.3
– 11.1
–
649.1
100.5
40.5
130.9
220.3
41.2
1,349.4
89.8
8.1
143.4
8.1
270.4
– 500.9
– 869.0
– 90.7
– 47.6
– 354.7
– 422.5
323.5
– 570.3
– 846.3
– 89.1
– 42.9
– 446.2
– 406.2
– 191.7
– 173.8
75.5
19.9
– 500.5
– 19.9
– 897.1
33.3
0.3
2.0
145.2
– 70.6
– 47.3
– 368.9
– 481.3
146.6
– 569.6
– 866.5
– 66.9
– 42.6
– 462.6
– 446.8
– 222.7
– 304.4
– 8.7
– 7.5
– 48.5
– 16.6
– 18.5
– 199.4
– 185.9
–
–
–
–
–
–
–
–
143.9
47.7
28.4
– 28.4
32.6
0.3
2.4
140.7
176.0
–
–
–
–
–
–
–
–
7.5
7.9
2.5
–
3.8
85.5
47.1
–
26.7
– 16.5
– 4.7
– 1.4
– 0.7
– 0.2
– 3.5
–
5.7
– 1.5
4.3
– 4,800.2
– 5,066.6
– 2,229.1
– 2,253.0
– 1,229.6
– 1,288.0
– 351.3
– 534.1
– 211.9
– 79.7
– 8,822.1
– 9,221.5
– 443.2
– 403.6
180.8
– 9,089.3
– 9,444.3
– 221.4
– 148.9
– 14.5
– 0.7
– 54.1
– 52.2
– 239.0
– 126.9
– 13.7
– 0.9
– 55.9
– 65.7
– 43.1
– 4.8
– 59.5
– 42.5
– 2.7
– 60.2
106.4
– 192.4
– 239.2
– 29.8
– 41.3
– 18.2
– 205.2
– 240.7
– 30.3
– 38.3
– 25.5
96.9
– 35.7
57.9
– 89.6
– 193.8
– 224.1
– 119.3
– 105.4
96.8
20.4
133.6
Profit / loss before borrowing costs and taxes
434.5
587.9
68.0
62.6
120.8
141.6
16.9
20.7
– 13.5
5.7
626.7
818.5
31.5
110.0
658.2
928.6
Borrowing costs
Profit / loss before taxes
Income taxes
Profit / loss for the period (segment result)
–
–
434.5
587.9
–
68.0
– 87.0
347.6
– 112.4
475.5
– 15.8
52.2
–
62.6
– 6.3
56.3
–
–
120.8
141.6
– 40.4
80.5
– 53.9
87.7
–
16.9
– 2.5
14.4
–
–
20.7
– 13.5
– 2.3
18.4
– 8.1
– 21.7
–
–
626.7
818.5
– 50.1
– 18.6
– 43.5
66.6
– 153.8
– 176.4
1.1
472.9
642.1
– 17.5
3.2
69.8
– 50.1
608.1
– 43.5
885.1
– 152.7
– 173.2
455.4
711.9
Segment assets
40,370.7
42,745.5
16,264.8
16,704.3
9,189.9
9,649.4
8,161.2
9,346.3
975.6
–
74,962.2
78,445.5
1,871.6
1,952.1
– 1,136.9
– 1,055.3
75,696.9
79,342.3
166
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24.03.2015 13:13:00
7.1 Segment reporting by strategic business unit
CHF million
Income
Premiums earned and policy fees (gross)
Reinsurance premiums ceded
Premiums earned and policy fees (net)
Investment income
Realised gains and losses on investments
Income from services rendered
Share of profit (loss) of associates
Other operating income
Income
Intersegment income
Income from associates
Expense
Claims and benefits paid (gross)
Change in technical reserves (gross)
Reinsurers’ share of claims incurred
Acquisition costs
Investment management expenses
Interest expenses on insurance liabilities
Gains or losses on financial contracts
Other operating expenses
Expense
Borrowing costs
Profit / loss before taxes
Income taxes
Profit / loss for the period (segment result)
4,249.4
4,328.7
1,504.5
1,416.9
1,104.2
1,112.1
– 173.9
– 173.6
– 97.4
– 92.1
– 70.0
– 75.9
4,075.6
4,155.2
1,407.2
1,324.8
1,034.3
1,036.2
929.0
470.1
38.4
0.0
61.8
67.5
0.0
503.4
270.9
35.6
41.2
38.9
47.1
40.9
465.4
437.6
34.0
8.1
45.7
48.4
8.1
270.1
30.3
2.7
– 0.7
13.9
30.8
0.3
264.0
116.0
1.6
0.0
11.9
30.6
0.0
5,234.7
5,654.5
2,297.1
2,315.7
1,350.5
1,429.6
– 849.3
– 861.5
– 416.2
– 391.2
– 87.1
– 166.2
96.8
20.4
133.6
57.9
– 89.6
– 42.5
– 2.7
– 60.2
106.4
– 192.4
– 239.2
– 29.8
– 41.3
– 18.2
– 205.2
– 240.7
– 30.3
– 38.3
– 25.5
– 221.4
– 148.9
– 14.5
– 0.7
– 54.1
– 52.2
– 239.0
– 126.9
– 13.7
– 0.9
– 55.9
– 65.7
927.8
137.1
41.6
0.0
52.8
69.9
0.0
96.9
– 35.7
– 43.1
– 4.8
– 59.5
Financial Report
Notes to the consolidated annual financial statements
Switzerland
Germany
Belgium
Luxembourg
Other units
Sub-total
Group business
Eliminated
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
Total
2014
139.5
– 17.3
122.2
16.3
196.0
12.6
–
21.2
368.2
1.1
–
202.2
– 20.2
182.0
21.4
317.8
13.3
–
20.3
554.7
2.5
–
217.7
– 77.3
140.4
30.8
15.0
8.1
–
4.2
198.3
71.5
–
113.0
– 49.1
7,215.4
7,172.8
– 435.9
– 410.7
63.9
6,779.5
6,762.0
1,748.3
1,687.3
649.1
100.5
40.5
130.9
1,349.4
89.8
8.1
143.4
9,448.8
10,040.0
7.5
7.9
2.5
–
3.8
85.5
47.1
–
– 268.3
– 247.4
7,212.7
7,168.1
265.6
– 0.3
265.2
19.1
21.2
242.7
– 0.1
242.5
16.4
13.1
268.3
0.0
– 2.3
–
247.3
– 167.9
– 163.6
0.0
7,044.8
7,004.5
– 1.9
1,765.1
1,701.9
–
670.3
119.0
40.5
107.9
1,362.5
110.7
8.1
185.2
150.0
146.1
– 131.6
– 125.2
–
95.5
–
–
– 42.2
– 53.7
–
19.2
474.7
513.7
– 176.0
– 180.8
9,747.5
10,372.8
220.3
41.2
196.0
– 396.3
– 376.9
176.0
180.8
8.1
–
–
–
–
–
41.2
–
8.1
Operating and administrative expenses for insurance business
– 431.1
– 425.9
– 3,279.8
– 3,418.0
– 1,279.1
– 1,313.3
– 671.1
– 753.3
– 63.6
– 103.6
– 139.6
– 69.7
– 5,433.3
– 5,658.0
– 150.3
– 184.5
– 193.8
– 224.1
– 119.3
– 105.4
– 8.7
– 7.5
– 48.5
– 4.3
2.2
– 12.9
– 40.0
– 0.9
– 0.2
– 57.4
8.4
– 20.0
– 48.0
– 1.2
– 0.4
– 222.7
– 304.4
– 16.7
44.5
– 38.5
– 9.7
– 2.5
– 0.5
– 0.3
– 9.8
– 1,373.7
– 1,486.1
26.7
– 16.5
– 4.7
– 1.4
– 0.7
– 0.2
– 3.5
270.4
– 500.9
– 869.0
– 90.7
– 47.6
– 354.7
– 422.5
323.5
– 570.3
– 846.3
– 89.1
– 42.9
– 446.2
– 406.2
– 33.4
– 3.2
– 27.9
0.2
– 12.5
–
18.8
– 3.1
– 19.2
– 0.3
– 11.1
–
– 16.6
– 18.5
– 199.4
– 185.9
Profit / loss before borrowing costs and taxes
434.5
587.9
68.0
62.6
120.8
141.6
16.9
20.7
– 13.5
5.7
626.7
818.5
31.5
110.0
– 4,800.2
– 5,066.6
– 2,229.1
– 2,253.0
– 1,229.6
– 1,288.0
– 351.3
– 534.1
– 211.9
– 79.7
– 8,822.1
– 9,221.5
– 443.2
– 403.6
–
–
434.5
587.9
–
68.0
– 87.0
347.6
– 112.4
475.5
– 15.8
52.2
–
62.6
– 6.3
56.3
–
–
120.8
141.6
– 40.4
80.5
– 53.9
87.7
–
16.9
– 2.5
14.4
–
–
20.7
– 13.5
– 2.3
18.4
– 8.1
– 21.7
–
5.7
– 1.5
4.3
–
–
626.7
818.5
– 50.1
– 18.6
– 43.5
66.6
– 153.8
– 176.4
1.1
472.9
642.1
– 17.5
3.2
69.8
143.9
47.7
176.0
– 5,439.7
– 5,666.4
– 2.2
– 1,359.4
– 1,469.5
– 191.7
– 173.8
75.5
28.4
– 28.4
32.6
0.3
2.4
140.7
176.0
–
–
–
–
–
19.9
– 500.5
– 19.9
– 897.1
33.3
0.3
2.0
145.2
– 70.6
– 47.3
– 368.9
– 481.3
146.6
– 569.6
– 866.5
– 66.9
– 42.6
– 462.6
– 446.8
180.8
– 9,089.3
– 9,444.3
–
–
–
–
–
658.2
928.6
– 50.1
608.1
– 43.5
885.1
– 152.7
– 173.2
455.4
711.9
Segment assets
40,370.7
42,745.5
16,264.8
16,704.3
9,189.9
9,649.4
8,161.2
9,346.3
975.6
–
74,962.2
78,445.5
1,871.6
1,952.1
– 1,136.9
– 1,055.3
75,696.9
79,342.3
09_FB_Kapitel_07_bis_17_en.indd 167
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24.03.2015 13:13:00
Financial Report
Notes to the consolidated annual financial statements
7.2 Segment reporting by operating segment
CHF million
Income
Premiums earned and policy fees (gross)
Reinsurance premiums ceded
Premiums earned and policy fees (net)
Investment income
Realised gains and losses on investments
Income from services rendered
Share of profit (loss) of associates
Other operating income
Income
Intersegment income
Income from associates
Expense
Claims and benefits paid (gross)
Change in technical reserves (gross)
Reinsurers’ share of claims incurred
Acquisition costs
Operating and administrative expenses for insurance business
Investment management expenses
Interest expenses on insurance liabilities
Gains or losses on financial contracts
Other operating expenses
Expense
2013
3,425.5
– 148.3
3,277.1
276.2
118.1
17.5
0.0
39.7
3,728.6
– 48.3
0.0
Non-life
2014
3,351.3
– 143.3
3,208.0
259.9
63.2
18.7
0.0
75.3
3,625.1
– 53.7
0.0
2013
3,787.2
– 19.5
3,767.7
1,349.4
532.1
13.8
32.7
79.6
5,775.4
– 31.7
32.7
Life
2014
3,816.8
– 20.3
3,796.5
1,312.6
1,276.0
13.8
2.9
127.2
6,529.0
– 33.0
2.9
– 2,073.7
– 2,050.6
– 110.8
70.8
– 464.4
– 582.8
– 22.2
– 0.7
– 0.8
– 76.4
133.7
– 461.1
– 562.0
– 22.6
– 1.0
– 0.8
– 177.7
– 3,362.3
– 165.0
– 3,205.9
– 3,366.0
– 1,248.6
– 3,615.8
– 1,393.1
4.7
– 36.1
– 314.3
– 88.3
– 46.6
– 302.5
– 116.6
12.9
– 108.5
– 304.5
– 89.7
– 41.6
– 388.7
– 123.3
– 5,514.3
– 6,052.3
Profit / loss before borrowing costs and taxes
366.3
419.1
261.1
476.8
– 44.5
– 41.1
658.2
928.6
Borrowing costs
Profit / loss before taxes
Income taxes
Profit / loss for the period (segment result)
–
366.3
– 75.3
291.0
–
419.1
– 88.7
330.4
–
261.1
– 65.8
195.3
–
476.8
– 88.5
388.2
168
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2013
2013
2014
2013
2014
2013
Other activities
Eliminated
Banking
2014
143.4
3.5
124.6
–
6.4
277.9
– 60.7
–
–
–
–
–
–
–
–
–
–
– 72.7
– 108.4
– 204.2
73.7
–
73.7
– 12.5
61.2
154.1
– 1.2
116.9
–
9.8
279.5
– 55.0
–
–
–
–
–
–
–
–
–
–
– 67.0
– 115.3
– 204.1
75.4
–
75.4
– 13.8
61.6
16.4
21.3
183.3
7.7
21.2
249.9
– 151.0
8.5
–
–
–
–
–
–
–
–
–
17.4
19.9
163.5
5.1
20.1
226.0
– 137.7
5.1
–
–
–
–
–
–
–
–
–
– 30.8
– 255.5
– 294.5
– 32.0
– 229.5
– 267.1
– 50.1
– 94.7
2.3
– 92.4
– 43.5
– 84.5
16.5
– 68.0
– 21.7
– 23.0
– 8.2
– 5.6
– 30.9
– 31.4
1,765.1
– 212.6
– 209.9
– 42.4
– 285.8
285.8
– 43.9
– 285.2
285.2
9,747.5
10,372.8
– 5,439.7
– 1,359.4
– 5,666.4
– 1,469.5
0.0
69.8
32.1
183.9
285.8
0.0
74.1
31.7
179.4
285.2
– 9,089.3
– 9,444.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,212.7
– 167.9
7,044.8
670.3
119.0
40.5
107.9
–
41.2
75.5
– 500.5
– 897.1
– 70.6
– 47.3
– 368.9
– 481.3
– 50.1
608.1
– 152.7
455.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
2014
7,168.1
– 163.6
7,004.5
1,701.9
1,362.5
110.7
8.1
185.2
–
8.1
146.6
– 569.6
– 866.5
– 66.9
– 42.6
– 462.6
– 446.8
– 43.5
885.1
– 173.2
711.9
Financial Report
Notes to the consolidated annual financial statements
7.2 Segment reporting by operating segment
CHF million
Income
Premiums earned and policy fees (gross)
Reinsurance premiums ceded
Premiums earned and policy fees (net)
Investment income
Realised gains and losses on investments
Income from services rendered
Share of profit (loss) of associates
Other operating income
Income
Intersegment income
Income from associates
Expense
Claims and benefits paid (gross)
Change in technical reserves (gross)
Reinsurers’ share of claims incurred
Acquisition costs
Investment management expenses
Interest expenses on insurance liabilities
Gains or losses on financial contracts
Other operating expenses
Expense
Borrowing costs
Profit / loss before taxes
Income taxes
Profit / loss for the period (segment result)
Operating and administrative expenses for insurance business
2013
2013
Non-life
2014
3,351.3
– 143.3
3,208.0
259.9
63.2
18.7
0.0
75.3
3,625.1
– 53.7
0.0
– 76.4
133.7
– 461.1
– 562.0
– 22.6
– 1.0
– 0.8
–
419.1
– 88.7
330.4
3,787.2
– 19.5
3,767.7
1,349.4
532.1
13.8
32.7
79.6
5,775.4
– 31.7
32.7
4.7
– 36.1
– 314.3
– 88.3
– 46.6
– 302.5
– 116.6
–
261.1
– 65.8
195.3
Life
2014
3,816.8
– 20.3
3,796.5
1,312.6
1,276.0
13.8
2.9
127.2
6,529.0
– 33.0
2.9
12.9
– 108.5
– 304.5
– 89.7
– 41.6
– 388.7
– 123.3
–
476.8
– 88.5
388.2
3,425.5
– 148.3
3,277.1
276.2
118.1
17.5
0.0
39.7
3,728.6
– 48.3
0.0
– 110.8
70.8
– 464.4
– 582.8
– 22.2
– 0.7
– 0.8
–
366.3
– 75.3
291.0
– 2,073.7
– 2,050.6
– 3,366.0
– 1,248.6
– 3,615.8
– 1,393.1
Profit / loss before borrowing costs and taxes
366.3
419.1
261.1
476.8
– 177.7
– 3,362.3
– 165.0
– 3,205.9
– 5,514.3
– 6,052.3
2013
–
–
–
154.1
– 1.2
116.9
–
9.8
279.5
– 55.0
–
–
–
–
–
–
– 21.7
–
– 67.0
– 115.3
– 204.1
75.4
–
75.4
– 13.8
61.6
Banking
2014
–
–
–
143.4
3.5
124.6
–
6.4
277.9
– 60.7
–
–
–
–
–
–
– 23.0
–
– 72.7
– 108.4
– 204.2
73.7
–
73.7
– 12.5
61.2
Other activities
Eliminated
2013
2014
2013
2014
2013
–
–
–
16.4
21.3
183.3
7.7
21.2
249.9
– 151.0
8.5
–
–
–
–
–
– 8.2
–
– 30.8
– 255.5
– 294.5
–
–
–
17.4
19.9
163.5
5.1
20.1
226.0
– 137.7
5.1
–
–
–
–
–
– 5.6
–
– 32.0
– 229.5
– 267.1
– 44.5
– 41.1
– 50.1
– 94.7
2.3
– 92.4
– 43.5
– 84.5
16.5
– 68.0
–
–
–
– 30.9
–
– 212.6
–
– 42.4
– 285.8
285.8
–
–
–
–
–
0.0
69.8
–
32.1
183.9
285.8
–
–
–
–
–
–
–
–
– 31.4
–
– 209.9
–
– 43.9
– 285.2
285.2
–
–
–
–
–
0.0
74.1
–
31.7
179.4
285.2
–
–
–
–
–
Total
2014
7,168.1
– 163.6
7,004.5
1,701.9
1,362.5
110.7
8.1
185.2
7,212.7
– 167.9
7,044.8
1,765.1
670.3
119.0
40.5
107.9
9,747.5
10,372.8
–
41.2
–
8.1
– 5,439.7
– 1,359.4
– 5,666.4
– 1,469.5
75.5
– 500.5
– 897.1
– 70.6
– 47.3
– 368.9
– 481.3
146.6
– 569.6
– 866.5
– 66.9
– 42.6
– 462.6
– 446.8
– 9,089.3
– 9,444.3
658.2
928.6
– 50.1
608.1
– 152.7
455.4
– 43.5
885.1
– 173.2
711.9
09_FB_Kapitel_07_bis_17_en.indd 169
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Financial Report
Notes to the consolidated annual financial statements
Notes to the consolidated balance sheet
8. PROPERT Y, PLANT AND EQUIPMENT
8.1 Property, plant and equipment in 2013
2013
CHF million
Carrying amount as at 1 January
Additions
Additions arising from change
in the scope of consolidation
Disposals
Disposals arising from change
in the scope of consolidation
Reclassification
Reclassification to non-current assets
and disposal groups classified as held
for sale
Depreciation and impairment
Depreciation
Impairment losses recognised
in profit or loss
Reversal of impairment losses
recognised in profit or loss
Exchange differences
Carrying amount as at 31 December
Acquisition costs
Accumulated depreciation
and impairment
Balance as at 31 December
Of which:
Assets held under finance leases
Land
Buildings
Operating
equipment
Machinery,
furniture
and vehicles
IT equipment
Total
95.2
0.0
–
–
–
– 1.9
– 0.1
–
0.0
–
0.4
93.6
95.5
– 2.0
93.6
–
266.8
0.9
–
– 0.3
–
– 5.3
– 11.4
– 12.7
– 1.2
0.9
2.7
240.5
616.9
– 376.4
240.5
–
43.8
8.3
–
0.0
– 0.2
– 0.5
–
– 8.1
–
–
0.1
43.4
121.2
– 77.8
43.4
–
30.1
5.0
0.3
– 0.5
– 0.1
– 0.5
– 1.9
– 6.8
0.0
–
0.3
25.9
76.6
22.7
7.6
–
– 0.1
0.0
0.0
– 0.7
– 10.5
–
–
0.1
19.1
90.3
– 50.7
– 71.2
25.9
–
19.1
–
458.5
21.8
0.3
– 0.9
– 0.3
– 8.1
– 14.1
– 38.0
– 1.2
0.9
3.7
422.5
1,000.5
– 578.1
422.5
–
Depreciation and impairment form part of other operating expenses.
170
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Financial Report
Notes to the consolidated annual financial statements
8.2 Property, plant and equipment in 2014
2014
CHF million
Carrying amount as at 1 January
Additions
Additions arising from change
in the scope of consolidation
Disposals
Disposals arising from change
in the scope of consolidation
Reclassification
Reclassification to non-current assets
and disposal groups classified as held
for sale
Depreciation and impairment
Depreciation
Impairment losses recognised
in profit or loss 1
Reversal of impairment losses
recognised in profit or loss
Exchange differences
Carrying amount as at 31 December
Acquisition costs
Accumulated depreciation
and impairment
Balance as at 31 December
Of which:
Assets held under finance leases
Land
Buildings
Operating
equipment
Machinery,
furniture
and vehicles
IT equipment
Total
93.6
0.0
240.5
0.9
43.4
6.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 12.3
– 25.3
– 9.2
– 1.6
–
–
– 0.4
93.1
95.1
– 1.9
93.1
–
– 2.7
201.1
614.0
– 412.9
201.1
–
– 0.1
38.7
124.2
– 85.5
38.7
–
25.9
7.6
0.7
– 0.5
0.0
–
– 1.7
19.1
12.0
0.2
0.0
–
–
–
– 6.3
– 10.3
–
–
– 0.3
25.4
67.8
–
–
– 0.1
20.9
92.2
422.5
26.7
0.9
– 0.5
0.0
–
– 1.7
– 38.2
– 26.8
–
– 3.7
379.2
993.3
– 42.4
– 71.3
– 614.0
25.4
–
20.9
–
379.2
–
1 The impairment losses on buildings largely relate to those recognised on owner-occupied property in connection with the reconfiguration and redesign of Baloise’s
buildings at its headquarters in Basel (Baloise Park).
Depreciation and impairment form part of other operating expenses.
09_FB_Kapitel_07_bis_17_en.indd 171
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Financial Report
Notes to the consolidated annual financial statements
9. INTANGIBLE ASSETS
9.1 Intangible assets in 2013
2013
CHF million
Carrying amount as at 1 January
Additions arising from change
in the scope of consolidation
Additions
Capitalisation of acquisition costs
Disposals
Disposals arising from change
in the scope of consolidation
Reclassification
Reclassification to non-current assets
and disposal groups classified as held
for sale 2
Amortisation and impairment
Amortisation
Write-ups
Impairment losses recognised
in profit or loss
Reversal of impairment losses
recognised in profit or loss
Changes due to impending losses
Change due to unrealised gains
and losses on financial instruments
(shadow accounting)
Exchange differences
Carrying amount as at 31 December
Acquisition costs
Accumulated amortisation
and impairment
Balance as at 31 December 1
Intangible assets by segment
Switzerland
Germany
Belgium
Luxembourg
Other units
Group business
Total for geographic regions
Present value
of gains on
insurance
contracts
acquired
Deferred
acquisition
cost
(life)
Deferred
acquisition
cost
(non-life)
Other
intangible
assets
Internally
developed
intangible
assets
Goodwill
73.4
0.6
–
–
–
–
–
62.0
595.2
154.0
–
–
–
–
–
–
–
–
–
–
72.2
240.4
–
–
–
–
–
–
193.7
–
23.4
–
– 0.8
– 0.1
0.0
– 1.9
0.3
–
0.1
–
–
0.0
–
–
– 10.5
– 15.3
– 3.8
– 0.9
Total
1,078.5
0.6
23.5
312.6
– 0.8
– 0.1
0.0
– 32.4
–
–
–
–
–
–
1.0
64.6
210.2
– 145.7
– 5.6
–
– 0.6
–
–
–
1.0
41.4
–
–
– 31.9
1.1
–
–
– 0.4
17.0
7.0
656.6
–
–
– 242.7
– 37.4
– 0.2
– 317.8
–
–
–
3.3
–
1.5
155.6
–
–
–
– 16.7
–
–
–
1.8
162.0
482.2
– 320.2
–
–
–
–
–
0.0
0.2
10.1
– 9.9
1.1
– 17.4
–
2.9
17.0
12.4
1,080.3
–
–
64.6
41.4
656.6
155.6
162.0
0.2
1,080.3
–
32.7
17.0
14.8
–
–
64.6
–
17.3
24.1
–
0.0
–
41.4
137.1
470.0
14.6
13.0
21.9
–
51.6
19.6
62.4
3.1
19.0
–
42.7
8.4
93.4
9.7
0.5
7.3
656.6
155.6
162.0
–
–
–
–
–
0.2
0.2
231.3
548.0
211.5
40.6
41.4
7.5
1,080.3
1 With the possible exception of goodwill, the Baloise Group has no intangible assets with indefinite useful lives.
2 The goodwill recognised on the Croatian unit has been reclassified to the disposal group owing to the application of IFRS 5 (Non-current Assets Held for Sale
and Discontinued Operations). Pertinent details can be found in section 21.
172
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Financial Report
Notes to the consolidated annual financial statements
9.2 Intangible assets in 2014
2014
CHF million
Carrying amount as at 1 January
Additions arising from change
in the scope of consolidation
Additions
Capitalisation of acquisition costs
Disposals
Disposals arising from change
in the scope of consolidation
Reclassification
Reclassification to non-current assets
and disposal groups classified as held
for sale
Amortisation and impairment
Amortisation
Write-ups
Impairment losses recognised
in profit or loss
Reversal of impairment losses
recognised in profit or loss
Changes due to impending losses
Change due to unrealised gains
and losses on financial instruments
(shadow accounting)
Exchange differences
Carrying amount as at 31 December
Acquisition costs
Accumulated amortisation
and impairment
Balance as at 31 December 1
Intangible assets by segment
Switzerland
Germany
Belgium
Luxembourg
Other units
Group business
Present value
of gains on
insurance
contracts
acquired
Deferred
acquisition
cost
(life)
Deferred
acquisition
cost
(non-life)
Other
intangible
assets
Internally
developed
intangible
assets
41.4
656.6
155.6
Goodwill
64.6
8.5
–
–
–
–
–
–
–
–
–
–
–
–
– 1.3
71.8
217.4
– 145.6
–
–
–
–
–
–
–
– 4.3
–
– 22.5
–
–
–
– 0.5
14.1
–
–
–
–
–
–
61.9
237.3
–
–
–
–
–
–
162.0
9.1
20.1
–
– 0.1
–
–
– 20.3
– 18.7
– 0.4
– 103.7
– 236.5
1.7
–
–
– 3.4
– 41.0
– 9.1
542.7
–
–
–
–
–
– 0.5
–
– 1.7
135.5
–
–
– 34.0
–
– 9.4
–
–
–
– 2.1
145.0
485.9
– 340.9
71.8
14.1
542.7
135.5
145.0
0.2
909.2
Total
1,080.3
17.6
20.1
299.2
– 0.1
–
–
– 39.5
0.2
–
0.0
–
–
–
–
–
– 0.1
– 378.6
–
–
–
–
–
–
0.2
10.0
– 9.8
1.7
– 32.0
–
– 3.9
– 41.0
– 14.8
909.2
–
–
–
–
–
–
–
0.2
0.2
169.4
509.1
170.2
54.4
–
6.1
909.2
173
–
32.1
16.7
23.0
–
–
–
14.1
–
–
–
–
89.7
439.3
3.1
10.6
–
–
52.8
16.5
62.0
4.2
–
–
26.9
7.2
88.3
16.7
–
5.9
Total for geographic regions
71.8
14.1
542.7
135.5
145.0
1 With the possible exception of goodwill, the Baloise Group has no intangible assets with indefinite useful lives.
09_FB_Kapitel_07_bis_17_en.indd 173
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Impairment losses totalling CHF 16.7 million were recognised on other intangible assets in respect of large-scale
IT projects in 2013.
In 2014 an impairment loss of CHF 9.4 million was recognised on other intangible assets in respect of a large-
scale IT project.
9.3 Assumptions used to test the impairment of significant goodwill items
Assumptions used to forecast future business developments and trends have been reviewed by the local management
teams and take account of macroeconomic conditions.
Zeus Vermittlungsgesellschaft mbH
Basler Financial Services GmbH
Bâloise Vie Luxembourg S.A.
Bâloise Assurances Luxembourg S.A.
Baloise Belgium NV
Goodwill
Discount rate
Growth rate
2013
14.9
15.5
1.9
12.3
17.0
2014
14.7
15.2
7.6
14.8
16.7
2013
9.4
7.7
–
9.3
7.0
2014
10.4
8.3
8.5
8.5
7.0
2013
2014
1.0
1.0
–
2.6
2.6
1.0
1.0
2.5
2.5
2.6
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10. INVESTMENTS IN ASSOCIATES
10.1 Significant investments in associates
OVB Holding AG is a European sales company for risk cover, retirement pension and healthcare products as well
as wealth-building products. It also brokers Basler Versicherungen products. The company is strategically important
because it constitutes a significant distribution channel.
The financial information reflects the amounts reported in the financial statements of the associate rather
than the share of those amounts that is attributable to the Baloise Group. The associate’s financial statements are
prepared in accordance with IFRS. OVB Holding is included in the Baloise Group’s consolidated annual financial
statements under the equity method. Because the publicly traded OVB Holding’s relevant financial year-end closing
information, which is used for measurement purposes, had not been published by the time the Financial Report
was being prepared, measurement has been based in each case on the financial closing data for the period ended
30 September of the reporting year.
SIGNIFICANT INVESTMENTS IN ASSOCIATES
CHF million
Investments
Other assets
Receivables and assets
Cash and cash equivalents
Actuarial liabilities
Other accounts payable
Net assets
Premiums earned and policy fees (net)
Insurance benefits and expenses arising from insurance and asset management business
Gains on investments
Other income and expenses
Borrowing costs
Income taxes
Profit for the period
Other comprehensive income
Comprehensive income
Dividends paid to the Baloise Group
OVB Holding
2013
2014
49.4
25.5
70.8
37.5
–
– 84.3
98.9
173.1
– 114.3
0.8
– 50.6
–
– 2.4
6.6
0.0
6.6
3.1
47.6
25.6
62.4
44.0
–
– 81.5
98.1
174.8
– 114.1
0.6
– 50.7
–
– 2.8
7.8
0.0
7.8
3.1
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RECONCILIATION OF SUMMARY FINANCIAL INFORMATION ON SIGNIFICANT INVESTMENTS
IN ASSOCIATES
CHF million
Net assets as at 1 October
Profit for the period
Other comprehensive income
Net assets as at 30 September
Baloise Group’s interest (per cent)
Carrying amount as at 30 September
Fair value as at 30 September
OVB Holding
2013
2014
97.3
10.0
– 8.4
98.9
98.9
11.1
– 11.9
98.1
32.57 %
32.57 %
73.2
114.5
72.2
96.7
10.2 Non-significant investments in associates
The Baloise Group holds investments in a number of non-significant associates.
2013
Carrying amount
Baloise’s share of
CHF million
Total
2014
CHF million
Total
profit or loss for
the period from
continuing
operations
profit or loss for
the period from
discontinued
operations
other
comprehensive
income
comprehensive
income
148.7
4.3
0.0
0.5
4.8
Carrying
amount
Baloise’s share of
profit or loss for
the period from
continuing
operations
profit or loss for
the period from
discontinued
operations
other
comprehensive
income
comprehensive
income
155.7
10.5
0.0
0.6
11.1
There were no contingent liabilities arising from investments in associates and no substantial unrecognised shares
of the losses of associates as at either 31 December 2014 or 31 December 2013.
As at 31 December 2013, the Baloise Group held more than 20 per cent of the capital of three companies but
does not have any influence over these companies’ management. As a result, they are not reported as associates.
176
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11. INVESTMENT PROPERT Y
CHF million
Balance as at 1 January
Additions
Additions arising from change in scope of consolidation
Disposals
Disposals arising from change in scope of consolidation
Reclassification
Reclassification to non-current assets and disposal groups classified as held for sale
Change in fair value
Exchange differences
Balance as at 31 December
Operating expenses arising from investment property that generates rental income
Operating expenses arising from investment property that does not generate rental income
2013
2014
5,441.0
5,685.9
228.6
13.0
– 135.6
– 1.7
8.1
– 9.3
127.7
14.0
323.9
36.7
– 140.5
– 30.1
–
– 24.9
129.3
– 17.4
5,685.9
5,962.9
70.1
0.5
68.5
0.6
The increase in the portfolio during the reporting year was largely attributable to real estate acquired by the Belgian
and Luxembourg units. The investment property held by the Croatian and Serbian units that have been sold was
reclassified as non-current assets and disposal groups classified as held for sale.
The increase in the portfolio during the reporting year was largely attributable to real estate acquired by
Baloise’s Swiss entities. Information on the disposal of the investment property relating to the Austrian entities sold
during the second half of the reporting year can be found in the line item “Reclassification to non-current assets
and disposal groups classified as held for sale”.
Information on the disposal of the remaining 65 per cent shareholding in the company Barosa S.à.r.l. can be
found in the line item “Disposals arising from change in the scope of consolidation”.
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12. FINANCIAL ASSETS
CHF million
Financial assets with characteristics of equity
Available for sale
Recognised at fair value through profit or loss
Financial assets with characteristics of liabilities
Held to maturity
Available for sale
Recognised at fair value through profit or loss
Financial assets for own account and at own risk
Financial assets for the account and at the risk of life insurance policyholders
Recognised at fair value through profit or loss 1
Financial assets as reported on the balance sheet
2013
2014
4,096.4
302.0
4,698.1
671.6
8,100.7
8,413.7
22,431.0
24,227.5
72.4
59.9
35,002.4
38,070.8
8,669.1
9,842.0
43,671.5
47,912.8
1 Of which financial assets totalling CHF 114.7 million (2013: CHF 72.9 million) involved insurance policies that had not been fully reviewed by the balance sheet date.
178
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FINANCIAL ASSETS FOR OWN ACCOUNT AND AT OWN RISK
CHF million
Financial assets with characteristics of equity
Publicly listed
Not publicly listed
Total
Financial assets with characteristics of liabilities
Publicly listed, fixed interest rate
Publicly listed, variable interest rate
Not publicly listed, fixed interest rate
Not publicly listed, variable interest rate
Total
IMPAIRMENT OF HELD-TO-MATURIT Y FINANCIAL ASSETS WITH CHARACTERISTICS OF LIABILITIES
CHF million
Balance as at 1 January
Usage not recognised in profit or loss
Unused provisions reversed through profit or loss
Increases and additional provisions recognised in profit or loss
Disposal arising from change in scope of consolidation
Reclassification to non-current assets and disposal groups classified as held for sale
Currency translation
Balance as at 31 December
Held to maturity
Available for sale
Recognised at fair value
through profit or loss
Total
Trading portfolio
Designated
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2,225.5
1,870.9
4,096.4
2,788.4
1,909.7
4,698.1
22,191.4
24,067.6
153.8
85.6
0.2
133.5
26.3
–
22,431.0
24,227.5
0.5
–
0.5
–
–
–
–
–
0.7
–
0.7
–
–
–
–
–
35.6
265.9
301.5
0.1
36.8
35.5
–
72.4
242.0
428.9
670.9
0.1
37.3
22.5
–
59.9
2,261.5
2,136.8
4,398.4
3,031.1
2,338.6
5,369.7
30,231.7
32,426.0
190.6
181.6
0.2
170.8
104.2
–
30,604.1
32,701.1
–
–
–
–
–
–
8,040.2
8,358.3
–
60.5
–
–
55.4
–
8,100.7
8,413.7
2013
2014
–
–
–
– 0.3
–
0.3
–
–
–
–
–
–
–
–
–
–
180
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FINANCIAL ASSETS FOR OWN ACCOUNT AND AT OWN RISK
Financial assets with characteristics of equity
CHF million
Publicly listed
Not publicly listed
Total
Financial assets with characteristics of liabilities
Publicly listed, fixed interest rate
Publicly listed, variable interest rate
Not publicly listed, fixed interest rate
Not publicly listed, variable interest rate
Total
Held to maturity
Available for sale
Recognised at fair value
through profit or loss
Total
Trading portfolio
Designated
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
–
–
–
–
–
–
–
–
–
–
8,040.2
8,358.3
60.5
55.4
8,100.7
8,413.7
2,225.5
1,870.9
4,096.4
2,788.4
1,909.7
4,698.1
22,191.4
24,067.6
153.8
85.6
0.2
133.5
26.3
–
22,431.0
24,227.5
0.5
–
0.5
–
–
–
–
–
0.7
–
0.7
–
–
–
–
–
35.6
265.9
301.5
0.1
36.8
35.5
–
72.4
242.0
428.9
670.9
0.1
37.3
22.5
–
59.9
2,261.5
2,136.8
4,398.4
3,031.1
2,338.6
5,369.7
30,231.7
32,426.0
190.6
181.6
0.2
170.8
104.2
–
30,604.1
32,701.1
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FINANCIAL ASSETS FOR OWN ACCOUNT AND AT OWN RISK
CHF million
Type of financial asset
Equities
Equity funds
Mixed funds
Bond funds
Real-estate funds
Private equity
Hedge funds
Financial assets with characteristics of equity
Public corporations
Industrial enterprises
Financial institutions
Other
Financial assets with characteristics of liabilities
Held to maturity
Available for sale
Recognised at fair value
through profit or loss
Trading portfolio
Designated
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,997.0
24.0
1,052.7
26.9
8,100.7
7,335.0
24.0
1,034.4
20.3
8,413.7
Total
8,100.7
8,413.7
26,527.3
28,925.6
0.5
0.7
373.9
730.8
35,002.4
38,070.8
Secured financial assets with characteristics of liabilities
Public corporations
Industrial enterprises
Financial institutions
Other
Total
–
–
870.2
–
870.2
30.4
–
880.5
–
910.9
Secured financial instruments with characteristics of liabilities are fixed-income securities for which a mortgage or
a government bond has been securitised as collateral.
4,096.4
4,698.1
0.5
0.7
301.5
670.9
4,398.4
5,369.7
2,070.3
168.5
97.9
79.2
425.4
571.8
683.2
2,463.0
260.2
149.9
83.8
400.0
640.9
700.3
10,335.0
11,598.9
2,836.1
9,259.6
0.2
3,714.2
8,914.2
0.2
22,431.0
24,227.5
203.4
–
386.2
–
5,932.0
5,805.0
0.2
0.2
6,135.5
6,191.4
–
0.1
0.3
0.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.2
0.5
0.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21.9
273.9
5.7
0.0
–
–
22.3
50.1
–
–
72.4
0.1
0.0
–
–
0.1
Total
293.7
777.7
94.1
400.0
640.9
700.3
2,070.3
2,463.0
190.6
372.1
84.9
425.5
571.8
683.2
–
33.4
627.3
10.3
0.0
21.1
38.8
–
–
–
–
–
–
–
–
–
17,354.3
2,860.2
10,362.4
27.1
18,955.1
3,738.2
9,987.3
20.5
59.9
30,604.1
32,701.1
203.4
–
416.6
–
6,802.2
6,685.5
0.2
0.2
7,005.8
7,102.3
182
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FINANCIAL ASSETS FOR OWN ACCOUNT AND AT OWN RISK
CHF million
Type of financial asset
Equities
Equity funds
Mixed funds
Bond funds
Real-estate funds
Private equity
Hedge funds
Public corporations
Industrial enterprises
Financial institutions
Other
Total
Other
Total
Public corporations
Industrial enterprises
Financial institutions
Financial assets with characteristics of equity
Financial assets with characteristics of liabilities
Secured financial assets with characteristics of liabilities
Held to maturity
Available for sale
Recognised at fair value
through profit or loss
Total
Trading portfolio
Designated
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2,070.3
168.5
97.9
79.2
425.4
571.8
683.2
2,463.0
260.2
149.9
83.8
400.0
640.9
700.3
4,096.4
4,698.1
10,335.0
11,598.9
2,836.1
9,259.6
0.2
3,714.2
8,914.2
0.2
22,431.0
24,227.5
–
0.1
0.3
0.0
–
–
–
0.5
–
–
–
–
–
–
0.2
0.5
0.0
–
–
–
0.7
–
–
–
–
–
–
21.9
273.9
5.7
0.0
–
–
–
33.4
627.3
10.3
0.0
–
–
2,070.3
2,463.0
190.6
372.1
84.9
425.5
571.8
683.2
293.7
777.7
94.1
400.0
640.9
700.3
301.5
670.9
4,398.4
5,369.7
22.3
–
50.1
–
72.4
21.1
–
38.8
–
59.9
17,354.3
2,860.2
10,362.4
27.1
18,955.1
3,738.2
9,987.3
20.5
30,604.1
32,701.1
8,100.7
8,413.7
26,527.3
28,925.6
0.5
0.7
373.9
730.8
35,002.4
38,070.8
203.4
–
386.2
–
5,932.0
5,805.0
0.2
0.2
6,135.5
6,191.4
–
–
–
–
–
–
–
–
–
–
0.1
–
0.0
–
0.1
–
–
–
–
–
203.4
–
416.6
–
6,802.2
6,685.5
0.2
0.2
7,005.8
7,102.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,997.0
24.0
1,052.7
26.9
8,100.7
7,335.0
24.0
1,034.4
20.3
8,413.7
30.4
–
–
870.2
880.5
870.2
910.9
Secured financial instruments with characteristics of liabilities are fixed-income securities for which a mortgage or
FAIR VALUE OF FINANCIAL ASSETS CLASSIFIED AS HELD TO MATURIT Y
a government bond has been securitised as collateral.
CHF million
Public corporations
Industrial enterprises
Financial institutions
Other
Total
Carrying amount
Fair value
2013
2014
2013
2014
6,997.0
7,335.0
7,553.9
8,830.2
24.0
24.0
25.8
25.6
1,052.7
1,034.4
1,102.2
1,146.9
26.9
20.3
27.6
21.5
8,100.7
8,413.7
8,709.4
10,024.2
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13. MORTGAGES AND LOANS
CHF million
Mortgages and loans
carried at cost
Mortgages
Policy loans
Promissory notes and
registered bonds
Time deposits
Employee loans
Reverse repurchase
agreements
Other loans
Sub-total
Mortgages and loans
recognised at fair value
through profit or loss
Mortgages
Policy loans
Sub-total
Gross amount
Impairment
Carrying amount
Fair value
2013
2014
2013
2014
2013
2014
2013
2014
10,222.9
10,331.1
– 41.8
– 32.7
10,181.1
10,298.4
10,460.7
10,808.3
168.1
6,027.2
163.1
5,945.7
608.1
37.3
–
546.6
32.1
–
–
0.0
–
–
–
–
–
–
–
–
168.1
6,027.2
163.1
5,945.7
175.8
6,456.5
175.9
6,872.5
608.1
37.3
–
546.6
32.1
–
608.1
38.5
–
549.0
32.8
–
368.5
356.0
17,432.1
17,374.6
– 16.9
– 58.7
– 16.0
– 48.7
351.5
340.0
363.3
368.2
17,373.4
17,326.0
18,102.8
18,806.8
955.7
0.4
956.1
839.6
0.3
839.9
–
–
–
–
–
–
955.7
0.4
956.1
839.6
0.3
839.9
955.7
0.4
956.1
839.6
0.3
839.9
Mortgages and loans
18,388.2
18,214.5
– 58.7
– 48.7
18,329.5
18,165.9
19,058.9
19,646.7
IMPAIRMENT OF MORTGAGES AND LOANS
CHF million
Balance as at 1 January
Usage not recognised in profit or loss
Unused provisions reversed through profit or loss
Increases and additional provisions recognised in profit or loss
Disposal arising from change in scope of consolidation
Reclassification
Reclassification to non-current assets and disposal groups classified as held for sale
Currency translation
Balance as at 31 December
2013
2014
– 68.7
9.3
12.1
– 12.2
–
–
1.3
– 0.6
– 58.7
– 58.7
6.1
9.3
– 5.4
–
–
0.0
0.1
– 48.7
184
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14. DERIVATIVE FINANCIAL INSTRUMENTS
CHF million
Derivative financial instruments for own account and at own risk
Derivative financial instruments for the account and at the risk of life insurance
policyholders
232.2
178.5
341.0
272.1
Derivative financial instruments as reported on the balance sheet
410.7
613.2
68.2
–
68.2
176.4
–
176.4
Fair value assets
Fair value liabilities
2013
2014
2013
2014
CHF million
Interest-rate instruments
Forward contracts
Swaps
OTC options
Other
Traded options
Traded futures
Sub-total
Equity instruments
Forward contracts
OTC options
Traded options
Traded futures
Sub-total
Foreign-currency instruments
Forward contracts
Swaps
OTC options
Traded options
Traded futures
Sub-total
Total
Of which: designated as fair value hedges
Of which: designated as cash flow hedges
Of which: designated as hedges
of a net investment in a foreign operation
Contract value
Fair value assets
Fair value liabilities
2013
2014
2013
2014
2013
2014
–
1,156.8
1,201.4
0.0
–
–
–
881.9
1,110.8
0.5
–
–
–
33.9
119.7
5.4
–
–
–
24.0
192.7
52.1
–
–
–
45.5
–
1.0
–
–
–
56.4
25.8
8.8
–
–
2,358.2
1,993.2
159.0
268.9
46.5
91.1
–
1,484.2
640.2
–
–
1,959.7
954.6
–
2,124.3
2,914.3
4,933.3
–
517.7
–
1,358.3
1,050.8
–
–
–
–
–
31.9
0.3
–
32.2
40.6
–
0.4
–
–
6,291.6
1,568.5
41.0
–
50.4
13.6
–
64.0
5.0
–
3.1
–
–
8.1
10,774.1
6,475.9
232.2
341.0
–
–
–
–
–
–
1,037.3
70.0
19.4
–
–
1.7
–
9.8
9.0
–
18.8
1.5
–
1.3
–
–
2.9
68.2
–
–
0.1
–
5.3
14.0
–
19.3
63.0
–
3.0
–
–
66.0
176.4
–
–
36.9
The contract value or notional amount is used for derivative financial instruments whose principal may be swapped
at maturity (options, futures and currency swaps) and for instruments whose principal is only nominally lent or
borrowed (interest-rate swaps). The contract value or notional amount is disclosed in order to express the aggregate
amount of derivative transactions in which the Baloise Group is involved.
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Financial Report
Notes to the consolidated annual financial statements
15. RECEIVABLES
CHF million
Receivables carried
at cost
Receivables from
financial contracts 1
Other receivables
Receivables from
investments
Receivables
Gross amount
Impairment
Carrying amount
Fair value
2013
2014
2013
2014
2013
2014
2013
2014
389.4
21.1
260.7
614.8
378.0
566.1
1,264.8
965.2
–
– 3.7
– 2.2
– 5.9
–
389.4
21.1
389.4
21.1
– 2.7
– 1.7
257.0
612.5
375.3
564.5
258.2
612.5
404.2
564.5
– 4.4
1,259.0
960.9
1,260.1
989.8
1 The decrease in receivables from financial contracts was primarily attributable to the cancellation of a major financial reinsurance contract in Baloise’s Belgian
life business.
IMPAIRMENT OF RECEIVABLES
CHF million
Balance as at 1 January
Usage not recognised in profit or loss
Unused provisions reversed through profit or loss
Increases and additional provisions recognised in profit or loss
Disposal arising from change in scope of consolidation
Reclassification to non-current assets and disposal groups classified as held for sale
Currency translation
Balance as at 31 December
2013
2014
– 6.7
0.2
2.7
– 2.2
–
0.2
0.0
– 5.9
– 5.9
1.0
1.9
– 1.4
–
–
0.0
– 4.4
186
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Financial Report
Notes to the consolidated annual financial statements
16. REINSURANCE ASSETS
CHF million
Reinsurers’ share of technical reserves as at 1 January
Change in unearned premium reserves
Benefits paid
Interest on and change in liability
Additions / disposals arising from change in scope of consolidation
Impairment
Reclassification to non-current assets and disposal groups classified as held for sale
Exchange differences
Reinsurers’ share of technical reserves as at 31 December
17. RECEIVABLES FROM REINSURERS
CHF million
Reinsurance deposits as at 1 January
Additions
Disposals
Additions / disposals arising from change in scope of consolidation
Reclassification to non-current assets and disposal groups classified as held for sale
Exchange differences
Reinsurance deposits as at 31 December
Other reinsurance receivables as at 1 January
Additions
Disposals
Additions / disposals arising from change in scope of consolidation
Reclassification to non-current assets and disposal groups classified as held for sale
Exchange differences
Other reinsurance receivables as at 31 December
Impairment of receivables from reinsurers as at 1 January
Usage not recognised in profit or loss
Unused provisions reversed through profit or loss
Increases and additional provisions recognised in profit or loss
Disposal arising from change in scope of consolidation
Reclassification to non-current assets and disposal groups classified as held for sale
Currency translation
Impairment of receivables from reinsurers as at 31 December
2013
2014
398.6
– 7.1
– 72.3
74.6
–
–
– 3.0
5.6
396.4
396.4
1.7
– 128.5
144.4
17.6
–
– 4.7
– 5.4
421.5
2013
2014
7.0
1.1
– 0.4
–
–
0.1
7.8
22.5
1.8
– 10.3
–
–
0.2
14.2
– 0.3
0.0
0.0
0.0
–
–
–
– 0.3
7.8
0.9
– 0.3
–
–
– 0.2
8.3
14.2
134.7
– 77.1
–
–
0.0
71.8
– 0.3
1.1
0.0
– 1.4
–
–
0.0
– 0.5
Receivables from reinsurers as at 31 December
21.7
79.7
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Financial Report
Notes to the consolidated annual financial statements
18. EMPLOYEE BENEFITS
18.1 Receivables and liabilities arising from employee benefits
Receivables from
employee benefits
Liabilities arising from
employee benefits
2013
2014
2013
2014
CHF million
Type of benefit
Short-term employee benefits
0.7
1.7
Post-employment benefits – defined contribution plans
Post-employment benefits – defined benefit plans
Other long-term employee benefits
Termination benefits
Total
–
–
–
–
–
–
–
–
0.7
1.7
132.0
–
813.6
32.6
11.3
989.5
129.5
–
1,280.8
33.5
11.7
1,455.6
18.2 Post-employment benefits – defined benefit plans
The Baloise Group provides a range of pension benefits, which vary from country to country in line with local
circumstances. The funded – or partially funded – liabilities relate to the occupational pension provision offered in
Switzerland and that of the former Avéro Schadeverzekering Benelux NV.
Switzerland has the largest plans. The employer and employee each contribute to these plans; the contributions
are used to cover benefits paid in the event of death or invalidity as well as being saved up to fund a pension. The
employee has the option of receiving all or part of the accumulated capital as a one-off payment. Some of the benefits
granted in this way are governed by binding statutory regulations that are applicable to all Swiss employers and, in
particular, stipulate certain minimum benefits. The pensions are the responsibility of separate legal entities (foun-
dations) that are run by a committee consisting of employer and employee representatives.
In other countries, the benefits are either granted by the employer directly or covered by an insurance policy
that, as a rule, is funded by the employer. Directly granted benefits are particularly relevant in Germany, where
benefits are agreed between the employer and the employee representatives.
The pension benefits on offer also comprise special benefits that the Baloise Group grants to retirees (especially
those in Switzerland). These benefits include subsidised mortgages. These benefits and concessions are classified as
defined benefit pension obligations under IAS 19.
188
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Financial Report
Notes to the consolidated annual financial statements
18.2.1 Fair value of plan assets
CHF million
Balance as at 1 January
Interest-rate effect
Return on plan assets
Employees’ savings and purchases
Exchange differences
Employer contribution
Employee contribution
Benefits paid
Cash flow between Baloise Group and plan assets
(excl. benefits paid to employees and employer contribution)
Additions / disposals arising from change in scope of consolidation
Reclassification to non-current assets and disposal groups classified as held for sale
Gains and losses on plan settlements
Balance as at 31 December
18.2.2 Partially funded liabilities under defined benefit plans
CHF million
Balance as at 1 January
Current service cost
Interest-rate effect
Employees’ savings and purchases
Actuarial gains / losses on defined benefit obligations arising from
changes in financial assumptions
changes in demographic assumptions
experience adjustments
Exchange differences
Unrecognised past service cost
Benefits paid
Additions / disposals arising from change in scope of consolidation
Reclassification to non-current assets and disposal groups classified as held for sale
Gains and losses on plan settlements
Balance as at 31 December
2013
2014
2,068.6
2,183.0
37.3
90.5
25.5
0.2
55.0
29.1
48.1
120.1
24.1
– 0.2
56.2
29.4
– 123.1
– 123.2
–
–
–
–
–
–
–
–
2,183.0
2,337.4
2013
2014
– 2,277.7
– 2,261.1
– 76.0
– 39.9
– 25.5
88.0
– 5.1
– 47.0
– 0.3
– 0.7
123.1
–
–
–
– 73.7
– 53.0
– 24.1
– 438.1
12.0
– 1.1
0.4
– 5.9
123.3
–
–
–
– 2,261.1
– 2,721.3
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Financial Report
Notes to the consolidated annual financial statements
18.2.3 Unfunded liabilities under defined benefit plans
CHF million
Balance as at 1 January
Current service cost
Interest-rate effect
Employees’ savings and purchases
Actuarial gains / losses on defined benefit obligations arising from
changes in financial assumptions
changes in demographic assumptions
experience adjustments
Exchange differences
Unrecognised past service cost
Benefits paid
Additions / disposals arising from change in scope of consolidation
Reclassification to non-current assets and disposal groups classified as held for sale
Gains and losses on plan settlements
Balance as at 31 December
18.2.4 Net actuarial liabilities under defined benefit plans
CHF million
Fair value of plan assets
Present value of (partially) funded liabilities
Present value of unfunded liabilities
Effect of the asset ceiling
Net actuarial liabilities under defined benefit plans
2013
2014
– 756.4
– 735.6
– 16.3
– 21.5
–
44.3
–
– 5.6
– 11.0
1.2
29.1
0.6
–
–
– 15.1
– 23.1
–
– 188.2
– 2.4
– 3.4
14.4
– 1.9
29.2
– 3.3
32.5
–
– 735.6
– 896.9
2013
2014
2,183.0
2,337.4
– 2,261.1
– 2,721.3
– 735.6
– 896.9
–
–
– 813.6
– 1,280.8
190
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Financial Report
Notes to the consolidated annual financial statements
18.2.5 Asset allocation
CHF million
Cash and cash equivalents
Real estate
Equities and investment funds
publicly listed
not publicly listed
Fixed-interest assets
publicly listed
not publicly listed
Mortgages and loans
Derivatives
publicly listed
not publicly listed
Other
Fair value of plan assets
Of which: Bâloise Holding Ltd shares (fair value) and convertible bonds (fair value)
Of which: real estate leased to the Baloise Group
The investment funds are mainly fixed-income funds.
18.2.6 Expenses for defined benefit plans recognised in the income statement
CHF million
Current service cost
Net interest cost
Unrecognised past service cost
Gains and losses on plan settlements
Expected return on reimbursement rights
Regular employee contribution
Total expenses for defined benefit plans recognised in the income statement
2013
2014
145.5
377.3
108.6
409.4
1,137.6
79.1
1,289.8
128.2
134.7
–
292.6
–
0.3
16.0
99.1
–
288.8
–
– 0.8
14.3
2,183.0
2,337.4
25.1
–
29.7
–
2013
2014
– 92.2
– 24.1
0.5
–
–
29.8
– 86.0
– 88.9
– 28.1
– 7.8
–
–
30.2
– 94.5
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Financial Report
Notes to the consolidated annual financial statements
18.2.7 Actuarial assumptions
Per cent
Discount rate
Expected wage and salary increases
Expected increase in pension benefits
Weighted annuity option take-up rate
Years
Average life expectancy of a 65-year-old woman
Average life expectancy of a 65-year-old man
2013
2014
2.4
1.7
0.4
84.5
23.6
20.7
1.0
1.7
0.4
81.4
23.9
21.0
When calculating liabilities and expenses for defined benefit plans, the Baloise Group is required to make actuar-
ial and other assumptions that are determined on a company-by-company and country-by-country basis. The as-
sumptions shown above are weighted averages.
18.2.8 Sensitivity analysis for liabilities under defined benefit plans
Total defined benefit obligation as shown
Discount rate plus 1.0 % age points
Discount rate minus 1.0 % age points
Expected wage and salary increases plus 0.5 % age points
Expected wage and salary increases minus 0.5 % age points
Expected pension benefits increases plus 0.5 % age points
Expected pension benefits increases minus 0.5 % age points
Mortality probabilities for 65-year-olds plus 10.0 % age points
Mortality probabilities for 65-year-olds minus 10.0 % age points
Weighted share of annuity option plus 10.0 % age points
2013
2014
2,996.6
3,618.2
– 330.4
– 446.7
409.7
31.1
– 31.4
150.1
– 28.3
– 70.7
76.9
6.4
487.0
40.1
– 37.5
203.9
– 39.8
– 90.4
99.4
19.7
The Baloise Group determines the sensitivities of liabilities under defined benefit plans by recalculating them using
the same models as used for the calculation of the effective value. In this calculation, only one parameter of the base
scenario is changed. Possible interaction between individual parameters is not taken into consideration. The effect
resulting from various parameters occurring simultaneously may vary from the sum total of individually determined
differences.
The sensitivity is only calculated for the liability. A possible simultaneous impact on plan assets is not inves-
tigated.
192
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Financial Report
Notes to the consolidated annual financial statements
18.2.9 Funding of plan benefits
The plan assets of the Swiss plans are funded jointly by the employer and employee. The amount of individual
contributions depends largely on an employee’s remuneration and age. Statutory regulations require employers to
contribute a minimum of 50 per cent of the total contributions for part of the insured benefits.
18.2.10 Estimated employer contribution
The employer’s contribution for the following year can only be predicted with a limited degree of certainty. The
Baloise Group expects to pay employer contributions of approximately CHF 61.6 million for the 2015 financial year.
18.2.11 Maturity profile
The maturity profile of liabilities under pension plans differs depending on whether benefits are prospective or
current entitlements. For prospective benefit entitlements, the average expected remaining service period is 10.46
years; the average present value factor for current benefit entitlements under pension commitments is 16.25 years.
18.3 Other long-term employee benefits
Benefits granted to current employees that are payable twelve months or more after the end of the financial year are
accounted for separately and according to specific rules. The accounting policies applied are similar to those used
for pension liabilities, except that actuarial gains and losses are recognised in profit or loss.
Long-service bonuses constitute the principal benefit paid. The present value of liabilities as at 31 December
2014 totalled CHF 33.5 million (2013: CHF 32.6 million). There were no disposals of plan assets for long-term
employee benefits. Benefits paid out amounted to CHF 4.5 million (2013: CHF 4.4 million).
18.4 Share-based payment plans
For some time now, the Baloise Group has offered employees and management team members the chance to partici-
pate in various plans under which shares are granted as part of their overall remuneration packages. The Employee
Incentive Plan, the Share Subscription Plan and the Employee Share Ownership Plan are all cash-settled remuner-
ation programmes. Performance share units (PSUs) are an equity-settled remuneration programme. In 2014, a sum
of CHF 22.3 million (2013: CHF 20.0 million) was recognised as an expense in profit or loss in connection with the
following share-based payment plans.
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Financial Report
Notes to the consolidated annual financial statements
18.4.1 Employee Incentive Plan
The Baloise Foundation for Employee Participation set up in 1989 offers members of staff working for various Baloise
Group companies in Switzerland the opportunity to purchase shares in Bâloise Holding Ltd – usually once a year
– at a preferential price in compliance with the regulations adopted by the Board of Foundation. This encourages
employees to maintain their commitment to the Company over the long term by becoming shareholders. The sub-
scription price is fixed by the Board of Foundation at the beginning of the subscription period and is then published
on the intranet. It equals half of the volume-weighted average share price calculated for the month of August in the
subscription year and amounts to CHF 57.30 for the reporting year (2013: CHF 50.30). 174,810 shares were purchased
in the subscription period (2013: 167,147) Title to the subscribed shares passes to the relevant employees with effect
from 1 September each year, and the shares are subject to a three-year closed period.
The Foundation acquired the underlying stock of shares used in this plan from previous capital increases
carried out by Bâloise Holding Ltd. It supplements these shareholdings by purchasing shares in the market. The
existing shareholdings will enable the Foundation to continue the Employee Incentive Plan over the coming years.
The Foundation is run by a Board of Foundation that is predominantly independent of the Corporate Executive
Committee. The independent Board of Foundation members are Peter Schwager (Chairman) and Professor Heinrich
Koller (lawyer); the third member of the Board of Foundation is Andreas Burki (Head of Legal & Tax at Baloise).
EMPLOYEE INCENTIVE PLAN
Number of shares subscribed
Restricted until
Subscription price per share (CHF)
Value of shares subscribed (CHF million)
Fair value of subscribed shares on subscription date (CHF million)
Employees entitled to participate
Participating employees
Subscribed shares per participant (average)
2013
2014
167,147
174,810
31.8.2016
31.8.2017
50.30
8.4
16.5
3,239
1,851
90.3
57.30
10.0
20.9
3,187
1,949
89.7
194
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Financial Report
Notes to the consolidated annual financial statements
18.4.2 Share Subscription Plan
Since January 2003 those who qualify as eligible persons at Baloise Group companies in Switzerland – and, since
2008, the members of the Executive Committees at companies outside Switzerland as well – have been able to sub-
scribe for shares at a preferential price as part of their short-term variable remuneration. The subscription date is
1 March of each year; although title to the shares passes to the relevant employees on this date without any further
vesting conditions having to be met, the shares cannot be sold for the duration of a three-year closed period.
The parameters used to determine the subscription price are decided each year by the Remuneration Com-
mittee. The subscription price is based on the closing price on the first day of the subscription period, on which
a discount of 10 per cent is granted. Once it has been calculated using this method, the subscription price is published
in advance on the intranet. The shares needed for the Share Subscription Plan are purchased in the market as and
when required.
SHARE SUBSCRIPTION PLAN (SSP)
Number of shares subscribed
Restricted until 1
Subscription price per share (CHF)
Value of shares subscribed (CHF million)
Fair value of subscribed shares on subscription date (CHF million)
Employees entitled to participate
Participating employees
SSP portion of variable remuneration
2013
55,830
2014
46,688
29.2.2016
28.2.2017
73.53
102.78
4.1
4.7
870
115
15 %
4.8
5.3
889
100
16 %
1 The closed period during which shares allocated to the Chairman of the Board of Directors is five years instead of three. This means that the shares are restricted
until 28 February 2017 and 28 February 2018 respectively.
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Financial Report
Notes to the consolidated annual financial statements
18.4.3 Employee Share Ownership Plan
Since May 2001 it has been possible for most management team members working in Switzerland to receive part of
their short-term variable remuneration in the form of shares from the Employee Share Ownership Plan instead of
receiving cash. Within certain limits they are free to choose what proportion of their short-term variable remuner-
ation they receive in the form of such shares. The most senior management team members are subject to upper
limits; members of the Corporate Executive Committee – who are obliged to receive at least half of their short-term
variable remuneration in the form of shares – are not allowed to receive more than 50 per cent of their entitlement
in the form of shares from the Employee Share Ownership Plan. The subscription date is 1 March of each year (the
same as for the Share Subscription Plan); although title to the shares passes to the relevant employees on this date
without any further vesting conditions having to be met, the shares cannot be sold for the duration of a three-year
closed period.
The parameters used to determine the subscription price are decided each year by the Remuneration Com-
mittee. The subscription price is based on the closing price on the first day of the subscription period, from which
discounted dividend rights are deducted over a period of three years. Once it has been calculated using this method,
the subscription price is published in advance on the intranet. The shares needed for the Employee Share Ownership
Plan are purchased in the market as and when required.
In order to increase the impact of this Employee Share Ownership Plan, employees are granted loans on which
interest is charged at market rates, which enables them to subscribe for shares whose value constitutes a multiple
of the capital invested; these shares are purchased at their fair value net of discounted dividend rights over a period
of three years. Repayment of these loans after the three-year closed period has elapsed is hedged by put options,
which are financed by the sale of offsetting call options. If the price of the shares is below the put options’ strike
price when the closed period expires, programme participants can sell all their shares at this strike price, which
ensures that they can repay their loans plus interest. In this event, however, they lose all the capital that they have
invested. If, on the other hand, the price of the shares is above the call options’ strike price, programme participants
must pay the commercial value of these options. Their upside profit potential is thus limited by the call options. If,
when the three-year closed period elapses, the price of the shares is between the put options’ strike price and the
call options’ strike price, once the loans plus accrued interest have been repaid the employees concerned receive the
remaining shares to do with as they wish.
EMPLOYEE SHARE OWNERSHIP PLAN (ESOP)
Number of shares subscribed 1
Restricted until
Subscription price per share 2 (CHF)
Value of shares subscribed 2 (CHF million)
Fair value of subscribed shares on subscription date (CHF million)
Employees entitled to participate
Participating employees
ESOP portion of variable remuneration
1 Including shares financed by loans.
2 Net of the discounted dividend right over three years.
196
2013
185,409
2014
94,389
29.2.2016
28.2.2017
68.67
100.87
12.7
15.6
870
118
7 %
9.5
10.7
889
88
5 %
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Financial Report
Notes to the consolidated annual financial statements
18.4.4 Performance share units
At the beginning of each vesting period the participating employees are granted rights in the form of PSUs, which
entitle them to receive a certain number of shares free of charge after the vesting period has elapsed. The Remuner-
ation Committee specifies the grant date and applies its own discretion in deciding which of the most senior man-
agement team members are entitled to participate in the programme. It determines the total number of PSUs
available and decides how many are to be awarded to each member of the Corporate Executive Committee. PSUs
are granted to the other programme participants on the basis of the relevant line manager’s proposal, which must
be approved by the line manager’s manager.
The number of shares that can be subscribed after three years – i.e. at the end of the vesting period – depends
on the performance of Baloise shares relative to a peer group. This comparative performance multiplier can be
anywhere between 0.5 and 1.5. The peer group comprises the leading European insurance companies contained in
the STOXX Europe 600 Insurance Index.
Companies in the STOXX 600 Europe Insurance Index (as at 31 December 2014)
Admiral Group plc
Delta Lloyd
NN Group
Swiss Re
Aegon NV
Ageas
Allianz
Amlin plc
Assicurazioni Generali
Aviva plc
Axa
Bâloise Holding
Catlin Group
CNP Assurances
Direct Line Insurance Group
Old Mutual plc
Topdanmark A / S
Friends Life Group Ltd.
Phoenix Group Holding
Tryg Forsikring
Gjensidige Forsikring
Prudential plc
Unipolsai
Hannover Rück
RSA Insurance Group
Vienna Insurance
Helvetia
Hiscox
Sampo OYJ
Scor
Lancashire Holdings
Standard Life plc
Legal & General Group plc
St. James’s Place Capital
Mapfre SA
Münchener Rück
Storebrand ASA
Swiss Life
Zurich Insurance Group
Source:http://www.stoxx.com/indices/index_information.html?symbol=SXIP
One PSU generally confers the right to receive one share. This is the case if Baloise shares perform in line with the
median of their peer group. In this case the performance multiplier would be 1.0. Participants in the programme
receive more shares in exchange for their PSUs if Baloise shares outperform their peer group. The multiplier reaches
the maximum of 1.5 if the performance of Baloise shares is in the top quartile of companies in the peer group. The
multiplier amounts to 0.5 if the performance of Baloise shares is in the bottom quartile of companies in the peer
group. If the performance of Baloise shares is in either of the two middle quartiles, a linear scale is used to calculate
the performance multiplier. The performance multiplier for the entire vesting period ended is based on the closing
stock market prices on the final trading day of the respective vesting period.
Participants in the programme receive the pertinent number of shares once the vesting period has elapsed,
which means that for the PSUs allocated in 2014 they receive their shares on 1 March 2017. The arrangement appli-
cable until 2013 was that half of the converted shares were then subject to an additional three-year closed period.
This closed period has no longer applied since 2014, which brings the deferral period more closely into line with
other such periods commonly found in the market.
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Financial Report
Notes to the consolidated annual financial statements
The arrangement applicable until 2013 was that if an individual’s employment contract was terminated during the
vesting period (except in the case of retirement, disability or death), the PSUs expired without the person concerned
receiving any replacement or compensation. Since 2014 the arrangement has been that if an employment contract
is terminated in such situations, only some of the PSUs expire provided that the programme participant concerned
does not join a rival company and is not personally at fault for the termination of the contract. The number of PSUs
expiring is proportional to the amount of time remaining until the end of the vesting period. In addition, the
Remuneration Committee has the powers to claw back some or all of the PSUs allocated to an individual or to
a group of programme participants if there are specific reasons for doing so. Such specific reasons include, for
example, serious breaches of internal or external regulations, the taking of inappropriate risks that are within an
individual’s control, and the type of conduct or behaviour that would increase the risks to Baloise.
The shares needed to convert the PSUs are purchased in the market as and when required.
The value of PSUs is exposed to market risk until the end of the vesting period and may, of course, fluctuate
significantly, as shown in the table below:
PERFORMANCE SHARE UNIT
(PSU) PLAN
2007
2008
2009
2010
2011
2012
2013
2014
PSUs granted
PSUs converted
Change in value
Date
Price (CHF) 1
Date
Multiplier
Price (CHF) 1
Value (CHF) 2
01.03.2007
01.01.2008
01.01.2009
01.01.2010
01.01.2011
01.03.2012
01.03.2013
125.80
109.50
82.40
86.05
91.00
71.20
84.50
01.01.2010
01.01.2011
01.01.2012
01.01.2013
01.01.2014
01.03.2015
01.03.2016
01.03.2014
113.40
01.03.2017
1.182
1.24
0.64
0.58
0.77
4 1.44
4 1.50
4 1.50
86.05
91.00
64.40
78.50
113.60
4 127.80
4 127.80
4 127.80
101.71
112.84
41.22
45.53
87.47
4 184.03
4 191.70
4 191.70
3
– 19 %
3 %
– 50 %
– 47 %
– 4 %
4 159 %
4 127 %
4 69 %
1 Price = price of Baloise shares at the PSU grant date or conversion date.
2 Value = value of one PSU at the conversion date (share price at the conversion date times the multiplier).
3 Change in value = difference between the value at the conversion date (multiplier times the share price at the conversion date) and the share price at the grant date,
expressed as a percentage of the share price at the grant date; example of the PSU plan in 2007: ([{1.182 * 86.05} – 125.80] / 125.80) * 100 = – 19 %.
4 Interim measurement as at 31 December 2014.
198
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Financial Report
Notes to the consolidated annual financial statements
Measurement of the PSUs at their issue date is based on a Monte Carlo simulation, which calculates a present value
for the payout expected at the end of the vesting period. This measurement incorporates the following parameters:
→ Interest rate of 1 per cent
→ The volatilities of all shares in the peer group and their correlations with each other
(measured over a three-year track record)
→ The expected dividend yields
→ Empirical data on how long eligible programme participants remain with the Company.
PERFORMANCE SHARE UNITS (PSUs)
Employees entitled to participate at launch of programme
Number of allocated PSUs
Of which: expired without compensation (departures in 2012)
Number of active PSUs as at 31 December 2012
Of which: expired without compensation (departures in 2013)
Number of active PSUs as at 31 December 2013
Of which: expired without compensation (departures in 2014)
Number of active PSUs as at 31 December 2014
Value of allocated PSUs on issue date (CHF million)
PSU expense incurred by the Baloise Group for 2012 (CHF million)
PSU expense incurred by the Baloise Group for 2013 (CHF million)
PSU expense incurred by the Baloise Group for 2014 (CHF million)
2012 Plan
2013 Plan
2014 Plan
72
89,116
– 5,132
83,984
– 2,247
81,737
– 5,336
76,401
6.4
1.5
2.0
1.7
69
65
72,600
49,144
–
–
– 1,859
70,741
– 5,026
65,715
5.6
–
1.2
1.6
–
–
–
–
– 2,308
46,836
5.6
–
–
1.3
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Financial Report
Notes to the consolidated annual financial statements
19. DEFERRED INCOME TAXES
19.1 Deferred income taxes
CHF million
Deferred tax assets
Deferred tax liabilities
Total (net)
Of which: recognised as deferred tax assets
Of which: recognised as deferred tax liabilities
19.2 Deferred tax assets and liabilities
DEFERRED TA X ASSETS
2013
CHF million
Technical reserves
Financial assets
Insurance liabilities
Other investments
Insurance receivables
Unrealised losses recognised directly in equity
Tax losses carried forward
Other 1
Total
2014
CHF million
Technical reserves
Financial assets
Insurance liabilities
Other investments
Insurance receivables
Unrealised losses recognised directly in equity
Tax losses carried forward
Other 1
Total
2013
2014
1,319.2
1,575.3
– 2,145.4
– 2,592.5
– 826.3
– 1,017.3
56.0
48.3
– 882.3
– 1,065.5
Carrying
amount as
at 1 January
Change
recognised in
profit or loss
Change
recognised
directly in
equity
Carrying
amount as
at 31 December
395.3
57.3
498.1
40.5
5.1
86.7
53.6
204.0
1,340.5
20.7
– 26.0
16.9
– 1.7
– 3.9
–
– 17.1
49.5
38.4
–
–
–
–
–
– 59.8
–
–
– 59.8
416.0
31.3
515.1
38.7
1.2
26.9
36.5
253.5
1,319.2
Carrying
amount as
at 1 January
Change
recognised in
profit or loss
Change
recognised
directly in
equity
Carrying
amount as
at 31 December
416.0
31.3
515.1
38.7
1.2
26.9
36.5
253.5
1,319.2
44.1
14.5
86.1
– 22.2
4.3
–
7.0
29.6
163.4
–
–
–
–
–
92.7
–
–
460.1
45.8
601.2
16.5
5.5
119.6
43.5
283.1
92.7
1,575.3
1 “Other” essentially comprises deferred taxes on liabilities arising from banking business and financial contracts as well as liabilities arising from employee benefits.
200
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Notes to the consolidated annual financial statements
DEFERRED TA X LIABILITIES
2013
CHF million
Deferred acquisition costs
Technical reserves
Unrealised gains recognised directly in equity
Investment property
Depreciable assets
Other intangible assets
Financial assets
Other investments
Insurance receivables
Other 1
Total
2014
CHF million
Deferred acquisition costs
Technical reserves
Unrealised gains recognised directly in equity
Investment property
Depreciable assets
Other intangible assets
Financial assets
Other investments
Insurance receivables
Other 1
Total
Carrying
amount as
at 1 January
Change
recognised in
profit or loss
Change
recognised
directly in
equity
Carrying
amount as
at 31 December
217.5
950.3
331.7
295.0
4.5
20.1
52.7
76.1
3.2
195.0
2,146.3
12.6
124.1
–
34.9
– 0.4
– 5.3
2.2
– 29.2
4.0
– 33.7
109.2
–
–
– 110.0
–
–
–
–
–
–
–
– 110.0
230.1
1,074.4
221.7
329.9
4.1
14.9
54.9
46.9
7.2
161.4
2,145.4
Carrying
amount as
at 1 January
Change
recognised in
profit or loss
Change
recognised
directly in
equity
Carrying
amount as
at 31 December
230.1
1,074.4
221.7
329.9
4.1
14.9
54.9
46.9
7.2
161.4
2,145.4
– 15.2
143.4
–
22.7
0.0
– 10.0
48.4
42.7
– 6.0
– 24.9
201.0
–
–
246.1
–
–
–
–
–
–
–
246.1
215.0
1,217.8
467.8
352.5
4.0
4.9
103.3
89.6
1.2
136.4
2,592.5
1 “Other” essentially comprises deferred taxes on investments and provisions.
The Baloise Group reports its deferred taxes on a net basis. Deferred tax assets and liabilities are offset against each
other in cases where the criteria for such offsetting have been met. This is usually the case if the tax jurisdiction,
the taxable entity and the type of taxation are identical.
The Baloise Group had recognised deferred tax assets on tax loss carryforwards totalling CHF 172.1 million
as at 31 December 2014 (2013: CHF 155.3 million). Of this total, CHF 0.1 million will expire after one year and
CHF 171.7 million will expire after five years or more.
No deferred tax assets had been recognised on tax loss carryforwards amounting to CHF 291.2 million as at
31 December 2014 (2013: CHF 481.8 million) because the relevant offsetting criteria had not been met. Of this total,
CHF 2.9 million will expire after one year, a further CHF 8.8 million will expire after two to four years and CHF 279.5
million will expire after five years or more.
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Financial Report
Notes to the consolidated annual financial statements
20. OTHER ASSETS
“Other assets” include the fair value of precious metals amounting to CHF 53.3 million in connection with private
placement life insurance (2013: CHF 47.3 million). The insurance policyholder bears the price risk attaching to these
precious metal holdings.
21. NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
The disposal group reported for 2013 includes the assets and associated liabilities of all Croatian and Serbian sub-
sidiaries. A total impairment loss of CHF 31.7 million was recognised on the assets in this disposal group as at
31 December 2013. The disposal of the Croatian and Serbian units was completed on 11 March 2014.
The disposal group shown in the 2014 half-year report (but not presented here) includes the assets and asso-
ciated liabilities of all Austrian subsidiaries. The disposal of these entities was completed on 28 August 2014. Infor-
mation on the disposal of these entities can be found in table 40 “Acquisition and disposal of companies”.
CHF million
Property, plant and equipment
Intangible assets
Investment property
Financial assets
Other investments
Receivables
Other assets
Total assets
Technical reserves
Liabilities arising from banking business and financial contracts
Other financial obligations
Other liabilities
Total equity and liabilities
Unrealised losses directly associated with non-current assets
and disposal groups classified as held for sale
Disposal groups
Non-current assets
31.12.2013
31.12.2014
31.12.2013
31.12.2014
–
19.9
9.2
350.0
–
21.9
–
401.0
335.4
0.7
12.2
5.5
353.9
39.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
202
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Financial Report
Notes to the consolidated annual financial statements
22. SHARE CAPITAL
Balance as at 1 January 2013
Purchase / sale of treasury shares
Capital increases
Share buy-back and cancellation
Balance as at 31 December 2013
Balance as at 1 January 2014
Purchase / sale of treasury shares
Capital increases
Share buy-back and cancellation
Balance as at 31 December 2014
Number of
treasury shares
Number of
shares in
circulation
Number of
shares issued
Share capital
(CHF million)
3,053,746
46,946,254
50,000,000
– 24,803
24,803
–
–
–
–
–
–
–
3,028,943
46,971,057
50,000,000
5.0
–
–
–
5.0
Number of
treasury shares
Number of
shares in
circulation
Number of
shares issued
Share capital
(CHF million)
3,028,943
46,971,057
50,000,000
19,848
– 19,848
–
–
–
–
–
–
–
3,048,791
46,951,209
50,000,000
5.0
–
–
–
5.0
The share capital of Bâloise Holding totals CHF 5.0 million and is divided into 50,000,000 registered, fully paid-up
registered shares with a par value of CHF 0.10 each (2013: CHF 0.10). As far as individuals, legal entities, and
partner ships are concerned, entry in the share register with voting rights is limited to 2 per cent of the registered
share capital entered in the commercial register. The Baloise Group buys and sells its own shares as part of its
ordinary investing activities and for employee share ownership programmes.
The Annual General Meeting held on 24 April 2014 voted to pay a gross dividend of CHF 4.75 per share for
the 2013 financial year. This amounted to a total dividend distribution of CHF 237.5 million. Excluding the treasury
shares held by Bâloise Holding at the time that the dividend was paid, the total distribution effectively amounted
to CHF 223.6 million.
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Financial Report
Notes to the consolidated annual financial statements
23. TECHNICAL RESERVES (GROSS)
CHF million
Unearned premium reserves (gross)
Claims reserve (gross)
Other technical reserves
Technical reserves (non-life)
Actuarial reserves (gross)
Policyholders’ dividends credited and provisions for future policyholders’ dividends (gross)
Technical reserves (life)
Technical reserves (gross)
23.1 Technical reserves (non-life)
2013
2014
617.6
5,527.7
97.1
605.8
5,517.6
89.5
6,242.4
6,212.8
37,721.9
38,399.1
3,471.4
4,126.9
41,193.3
42,526.1
47,435.6
48,738.9
CHF million
Unearned premium reserves
Claims reserve
Provision for claims handling costs
Gross
Reinsurance
assets
Gross
Reinsurance
assets
Net
2013
617.6
4,964.6
563.1
6.1
623.7
–
–
–
–
605.8
4,955.0
562.6
4.0
–
–
Net
2014
609.8
–
–
Claims reserve
5,527.7
– 379.4
5,148.3
5,517.6
– 400.5
5,117.1
Other technical reserves
97.1
– 0.1
97.0
89.5
– 0.1
89.4
Total technical reserves (non-life)
6,242.4
– 373.3
5,869.0
6,212.8
– 396.6
5,816.3
204
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Financial Report
Notes to the consolidated annual financial statements
23.1.1 Maturity structure of technical reserves
CHF million
Unearned premium reserves
Up to 1 year
More than 1 year
No determinable residual term
Total unearned premium reserves
Claims reserve
Up to 1 year
More than 1 year
No determinable residual term
Total claims reserve
Gross
Reinsurance
assets
581.8
10.2
25.5
617.6
5.6
0.5
–
6.1
Net
2013
587.4
10.8
25.5
623.7
Gross
Reinsurance
assets
593.3
10.8
1.7
605.8
3.5
0.5
–
4.0
Net
2014
596.8
11.3
1.7
609.8
949.1
3,473.9
1,104.8
5,527.7
– 49.9
– 76.0
– 253.5
– 379.4
899.1
3,397.9
851.3
5,148.3
1,046.4
3,298.8
1,172.4
5,517.6
– 42.0
– 78.9
– 279.6
– 400.5
1,004.4
3,219.9
892.8
5,117.1
All figures relating to maturities are based on best estimates. The line item “No determinable residual term” mainly
comprises old-age health insurance reserves and annuity reserve funds.
23.1.2 Unearned premium reserves
CHF million
Balance as at 1 January
Netted premiums
Less: premiums earned during
the reporting period
Additions arising from acquisition
of policy portfolios and insurance
companies
Disposals arising from sale of policy
portfolios and insurance companies
Reclassification to non-current assets
and disposal groups classified as held
for sale
Exchange differences
Balance as at 31 December
Gross
Reinsurance
assets
Gross
Reinsurance
assets
Net
2013
612.5
– 1.6
610.8
617.6
6.1
3,441.7
– 141.3
3,300.4
3,358.8
– 145.0
Net
2014
623.7
3,213.8
– 3,425.5
148.3
– 3,277.1
– 3,351.3
143.3
– 3,208.0
–
–
–
–
–
–
8.5
– 0.1
8.4
–
–
–
– 18.7
0.7
– 18.0
– 18.2
– 0.3
– 18.5
7.6
617.6
– 0.1
6.1
7.6
623.7
– 9.7
605.8
– 0.1
4.0
– 9.7
609.8
Apart from the actual unearned premium reserves, this item includes health insurance reserves for old age and
deferred unearned premiums.
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Financial Report
Notes to the consolidated annual financial statements
23.1.3 Other technical reserves
CHF million
Balance as at 1 January
Less: expenditures during
the reporting period
Additional provisions recognised
and unused provisions reversed
through profit or loss
Additions arising from acquisition
of policy portfolios and insurance
companies
Disposals arising from sale of policy
portfolios and insurance companies
Reclassification to non-current assets
and disposal groups classified as held
for sale
Exchange differences
Balance as at 31 December
Gross
Reinsurance
assets
58.0
– 20.1
– 0.1
0.3
Net
2013
58.0
– 19.8
Gross
Reinsurance
assets
97.1
– 22.3
– 0.1
0.1
Net
2014
97.0
– 22.1
59.1
– 0.3
58.8
14.9
– 0.1
14.8
–
–
–
0.0
97.1
–
–
–
–
– 0.1
–
–
–
0.0
–
–
0.0
97.0
– 0.3
89.5
–
–
–
–
– 0.1
0.0
–
–
– 0.3
89.4
206
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Financial Report
Notes to the consolidated annual financial statements
23.1.4 Claims reserve (including claims handling costs)
CHF million
Balance as at 1 January (gross)
Reinsurers’ share
Balance as at 1 January (net)
Claims incurred (including claims handling costs)
For the reporting period
For previous years
Total
Payments for claims and claims handling costs
For the reporting period
For previous years
Total
Other changes
Additions / disposals arising from changes in scope of consolidation
Reclassification to non-current assets and disposal groups classified as held for sale
Exchange differences
Total
Balance as at 31 December (net)
Reinsurers’ share
Balance as at 31 December (gross)
2013
2014
5,478.7
– 373.2
5,105.5
5,527.7
– 379.4
5,148.3
2,135.1
– 80.1
2,014.7
– 36.2
2,055.0
1,978.5
– 1,008.9
– 914.1
– 997.2
– 1,016.0
– 2,006.1
– 1,930.1
–
– 40.2
34.1
– 6.1
50.5
– 92.6
– 37.6
– 79.7
5,148.3
5,117.1
379.4
400.5
5,527.7
5,517.6
The Baloise Group pays particular attention to cases of environmental pollution involving landfill sites, refuse,
asbestos or any other materials harmful to human beings or the environment.
The relevant net reserves included in the total amounted to CHF 90.4 million at the end of 2014 (2013: CHF 88.1
million). Because the bulk of these provisions is held in foreign currency (US dollars), the slight increase can be
attributed to currency effects.
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Financial Report
Notes to the consolidated annual financial statements
23.2 Technical reserves (life)
CHF million
Actuarial reserves from non-unit-linked life insurance contracts 1
Actuarial reserves from unit-linked life insurance contracts
Reserves for final policyholders’ dividends
Unearned revenue reserve
Structure of actuarial reserves (life)
Policyholders’ dividends credited and provisions for future policyholders’ dividends
Total technical reserves (life)
1 The actuarial reserves include unearned premium reserves and claims reserves.
2013
2014
34,592.4
35,087.6
2,521.0
2,678.3
270.2
338.3
274.1
359.1
37,721.9
38,399.1
3,471.4
4,126.9
41,193.3
42,526.1
208
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Financial Report
Notes to the consolidated annual financial statements
23.2.1 Maturity structure of technical reserves
CHF million
Actuarial reserves from non-unit-linked life insurance contracts
Up to 1 year
1 to 5 years
5 to 10 years
More than 10 years
No determinable residual term
Business from Swiss occupational pension plans 1
2013
2014
1,163.0
3,967.2
3,793.5
7,275.7
8,566.7
9,826.4
1,131.8
3,849.9
3,712.8
7,060.3
8,838.4
10,494.5
Total actuarial reserves from non-unit-linked life insurance contracts
34,592.4
35,087.6
Actuarial reserves from unit-linked life insurance contracts
Up to 1 year
1 to 5 years
5 to 10 years
More than 10 years
No determinable residual term
Total actuarial reserves from unit-linked life insurance contracts
Policyholders’ dividends credited
Up to 1 year
1 to 5 years
5 to 10 years
More than 10 years
No determinable residual term
Total policyholders’ dividends credited
Provisions for future policyholders’ dividends
Up to 1 year
No determinable residual term
Total provisions for future policyholders’ dividends
109.0
240.5
328.3
460.5
1,382.7
2,521.0
111.9
374.6
358.5
532.7
281.2
66.6
282.5
376.1
396.0
1,557.1
2,678.3
102.7
354.2
314.4
462.0
279.9
1,658.9
1,513.2
166.6
1,645.8
1,812.5
119.5
2,494.2
2,613.7
1 The Swiss pensions business is disclosed separately owing to its specific features. It comprises group contracts which may be cancelled annually by either party,
whereas the coverage period for the individuals enrolled is significantly longer.
All figures relating to maturities are based on the residual terms of contracts. The line item “No determinable residual
term” mainly comprises deferred and current annuities.
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Financial Report
Notes to the consolidated annual financial statements
23.2.2 Actuarial reserves from non-unit-linked life insurance contracts
CHF million
Balance as at 1 January
Change in actuarial reserves
Additions arising from acquisition of policy portfolios and insurance companies
Disposals arising from sale of policy portfolios and insurance companies
Reclassification to non-current assets and disposal groups classified as held for sale
Exchange differences
Balance as at 31 December
2013
2014
33,991.4
34,592.4
693.6
–
–
– 276.4
183.7
757.1
151.4
–
– 195.0
– 218.4
34,592.4
35,087.6
The actuarial reserves include unearned premium reserves and claims reserves.
The actuarial reserves for DPF business as at 31 December 2014 amounted to CHF 34,788.4 million (31 December 2013: CHF 34,322.0 million),
while for non-DPF business they totalled CHF 299.2 million (31 December 2013: CHF 270.4 million).
The actuarial reserves for assumed business (inward reinsurance) as at 31 December 2014 came to CHF 7.4 million (31 December 2013: CHF 6.8 million).
23.2.3 Actuarial reserves from unit-linked life insurance contracts
CHF million
Balance as at 1 January
Additions
Disposals
Fees
Interest on and change in liabilities
Additions arising from acquisition of policy portfolios and insurance companies
Disposals arising from sale of policy portfolios and insurance companies
Reclassification to non-current assets and disposal groups classified as held for sale
Exchange differences
Balance as at 31 December
2013
2014
2,258.0
265.9
– 219.7
– 4.4
196.1
–
–
0.0
25.1
2,521.0
2,521.0
320.3
– 243.0
– 4.9
235.6
0.0
–
– 113.2
– 37.5
2,678.3
210
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Financial Report
Notes to the consolidated annual financial statements
23.2.4 Reserve for final policyholders’ dividends
CHF million
Balance as at 1 January
Adjustment arising from unrealised gains and losses as at 1 January (shadow accounting)
Interest on and change in liability
Final policyholders’ dividends paid
Additions arising from acquisition of policy portfolios and insurance companies
Disposals arising from sale of policy portfolios and insurance companies
Reclassification to non-current assets and disposal groups classified as held for sale
Adjustment arising from unrealised gains and losses as at 31 December (shadow accounting)
Exchange differences
Balance as at 31 December
2013
2014
311.6
– 11.9
– 21.3
– 21.3
–
–
– 0.4
9.5
3.9
270.2
270.2
– 9.5
36.1
– 30.2
–
–
– 0.1
11.5
– 4.0
274.1
Final policyholders’ dividends, which are only paid upon contract expiry, are funded and accrued over the duration of the policy in proportion to the profits
attributable to the contract.
23.2.5 Unearned revenue reserve
CHF million
Balance as at 1 January
Reserved during the reporting period
Change in balance
Change due to unrealised gains and losses on investments (shadow accounting)
Additions arising from acquisition of policy portfolios and insurance companies
Disposals arising from sale of policy portfolios and insurance companies
Reclassification to non-current assets and disposal groups classified as held for sale
Exchange differences
Balance as at 31 December
2013
2014
302.6
30.6
0.9
0.0
–
–
–
4.2
338.3
338.3
30.8
9.8
– 0.6
–
–
– 12.6
– 6.5
359.1
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Financial Report
Notes to the consolidated annual financial statements
23.2.6 Policyholders’ dividends credited and reserves for future policyholders’ dividends
CHF million
Policyholders’ dividends credited as at 1 January
Dividends credited to policyholders during the reporting period
Policyholders’ dividends paid
Additions arising from acquisition of policy portfolios and insurance companies
Disposals arising from sale of policy portfolios and insurance companies
Reclassification to non-current assets and disposal groups classified as held for sale
Exchange differences
Balance as at 31 December
Provisions for future policyholders’ dividends as at 1 January
Adjustment arising from unrealised gains and losses as at 1 January
Additions
Withdrawals
Change in measurement differences between IFRS and national accounting standards recognised
in profit or loss
2013
2014
1,740.3
1,658.9
87.0
79.7
– 188.0
– 185.2
–
–
– 0.6
20.1
–
–
– 18.1
– 22.2
1,658.9
1,513.2
1,838.7
– 683.0
204.6
– 214.3
205.2
1,812.5
– 452.9
152.9
– 175.3
226.3
Adjustment arising from unrealised gains and losses as at 31 December (shadow accounting)
452.9
1,067.6
Additions arising from acquisition of policy portfolios and insurance companies
Disposals arising from sale of policy portfolios and insurance companies
Reclassification to non-current assets and disposal groups classified as held for sale
Exchange differences
Balance as at 31 December
Policyholders’ dividends credited and provisions for future policyholders’ dividends
as at 31 December
–
–
–
8.4
0.1
–
– 4.1
– 13.4
1,812.5
2,613.7
3,471.4
4,126.9
212
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Financial Report
Notes to the consolidated annual financial statements
24. LIABILITIES ARISING FROM BANKING BUSINESS AND FINANCIAL CONTRACTS
CHF million
With discretionary participation features (DPFs)
Financial contracts with discretionary participation features (DPFs) 1
Sub-total
Measured at amortised cost
Liabilities to banks
Repurchase agreements
Liabilities arising from time deposits
Loans
Mortgages
Savings and customer deposits
Medium-term bonds
Mortgage-backed bonds
Bonds
Liability for future financial lease payments (present value)
Other financial contracts
Sub-total
Recognised at fair value through profit or loss (designated)
Other financial contracts
Sub-total
Carrying amount
Fair value
2013
2014
2013
2014
1,492.7
1,492.7
1,766.5
1,766.5
–
–
–
–
156.9
300.0
19.9
0.0
–
5,172.7
298.4
1,078.9
99.7
97.3
34.6
157.9
150.0
17.2
–
–
5,335.1
250.2
1,221.6
99.9
86.4
23.7
156.9
300.0
20.0
0.0
–
5,161.4
306.5
1,105.1
105.8
97.3
34.6
158.0
150.0
17.3
–
–
5,368.2
276.0
1,305.9
103.1
86.4
23.7
7,258.4
7,342.0
7,287.7
7,488.7
7,791.1
7,791.1
8,632.3
8,632.3
7,791.1
7,791.1
8,632.3
8,632.3
Total liabilities arising from banking business and financial contracts
16,542.1
17,740.8
–
–
1 There are currently no internationally accepted mathematical methods available for determining the fair value of financial contracts
with discretionary participation features (DPFs).
Savings deposits and customer deposits essentially consist of savings accounts, business accounts and deposit
accounts held by Swiss banking clients. The mortgage-backed bonds reported have all been issued by Pfandbriefbank
schweizerischer Hypothekarinstitute AG.
The other financial contracts designated as at fair value through profit or loss largely relate to the life insurance
liability arising from investment-linked life insurance contracts involving little or no transfer of risk. The year-on-
year change in this liability consists entirely of the funds flowing into and out of the pertinent investment portfolio,
the latter’s market-related price fluctuations and exchange-rate movements.
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Financial Report
Notes to the consolidated annual financial statements
TERMS & CONDITIONS GOVERNING BONDS OUTSTANDING
Issuer
Type of bond
Face value (CHF million)
Interest rate
Early redemption date
Repayment
Conversion right
Issued
Repayment
ISIN
25. RECONCILIATION BET WEEN THE GROSS INVESTMENT IN FINANCIAL LEASES AND
THE PRESENT VALUE OF MINIMUM LEASE PAYMENTS
CHF million
Lease term < 1 year
Lease term 1 to 5 years
Lease term > 5 years
Total minimum lease payments
Future borrowing costs
Total liability for future financial lease payments (present value)
Baloise Bank SoBa
Senior bond
100
3.000 %
–
100 %
no
2007
12.6.2015
CH0030870445
2013
2014
0.0
97.7
–
97.7
– 0.4
97.3
0.0
86.7
–
86.7
– 0.2
86.4
214
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Financial Report
Notes to the consolidated annual financial statements
26. FINANCIAL LIABILITIES
SENIOR DEBT
CHF million
Balance as at 1 January
Issue price of newly issued bonds
Embedded derivative
Additions (sub-total)
Disposals / repayments / conversions
Interest expenses
Nominal interest rate
Interest costs (sub-total)
Balance as at 31 December
2013
2014
2,017.6
224.5
–
224.5
– 550.0
50.1
– 44.6
5.5
1,697.6
149.4
–
149.4
– 150.0
43.5
– 38.0
5.4
1,697.6
1,702.4
Bâloise Holding Ltd issued a new bond totalling CHF 150 million (1.125 per cent, 2014 to 2024, ISIN CH0261399064)
at an issue price of 100.628 per cent on 19 November 2014 (paid-up on 19 December 2014). A further bond amount-
ing to CHF 150 million (3.5 per cent, 2007 to 2014, ISIN CH0035539334) was repaid on 19 December 2014.
The fair value of financial liabilities at the balance sheet date totalled CHF 1,875.8 million (2013: CHF 1,804.4
million).
TERMS & CONDITIONS GOVERNING SENIOR DEBT OUTSTANDING
Issuer
Bâloise Holding
Bâloise Holding
Bâloise Holding
Bâloise Holding
Bâloise Holding
Bâloise Holding
Bâloise Holding
Bâloise Holding
Type of bond
Face value
(CHF million)
Interest rate
Early redemption date
Repayment
Issued
Repayment
ISIN
Convertible
bond
Senior bond
Senior bond
Senior bond
Senior bond
Senior bond
Senior bond
Senior bond
242.5
300
250
175
225
150
225
150
1.500 %
2.875 %
3.000 %
2.250 %
1.000 %
2.000 %
1.750 %
1.125 %
on or after
8.12.2014
100 %
2009
–
–
–
–
–
–
–
100 %
2010
100 %
2011
100 %
2012
100 %
2012
100 %
2012
100 %
2013
100 %
2014
17.11.2016
14.10.2020
07.07.2021
01.03.2019
12.10.2017
12.10.2022
26.4.2023
19.12.2024
CH0107130822
CH0117683794
CH0131804616
CH0148295014
CH0188295536
CH0194695083
CH0200044821
CH0261399064
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Financial Report
Notes to the consolidated annual financial statements
27. PROVISIONS
Restructuring
Other
Total
Restructuring
Other
CHF million
Balance as at 1 January
10.7
Addition arising from
change in scope of consolidation
Disposal arising from
change in scope of consolidation
Reclassification to non-current assets
and disposal groups
classified as held for sale
Increases and additional provisions
recognised in profit or loss
Unused provisions reversed through
profit or loss
Usage not recognised in profit or loss
Unwinding of discount
Exchange differences
Balance as at 31 December
2013
92.4
–
81.7
–
0.0
0.0
– 2.8
– 2.8
22.7
–
–
–
106.7
0.4
–
–
–
–
–
Total
2014
129.4
0.4
–
–
15.2
53.7
69.0
22.0
67.7
89.7
0.0
– 6.5
– 6.6
– 0.2
– 11.3
– 11.6
– 3.3
–
0.1
22.7
– 20.0
– 23.3
–
0.6
–
0.7
106.7
129.4
– 9.6
0.0
– 0.5
34.3
– 78.0
–
– 0.6
85.0
– 87.6
0.0
– 1.1
119.3
The balance shown for other provisions includes the usual amounts for legal advice and litigation risks. Other pro-
visions utilised but not recognised in profit or loss are primarily attributable to Baloise’s Belgian and Swiss entities.
The recognition of restructuring provisions in profit or loss largely relates to the German entities.
28. INSURANCE LIABILITIES
CHF million
Liabilities to policyholders
Liabilities to brokers and agents
Liabilities to insurance companies 1
Other insurance liabilities
Total insurance liabilities
2013
2014
1,350.0
1,458.9
122.5
619.9
25.5
122.9
176.4
22.1
2,118.0
1,780.3
1 The decrease in liabilities to insurance companies was primarily attributable to the cancellation of a major financial reinsurance contract
in Baloise’s Belgian life business.
216
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Financial Report
Notes to the consolidated annual financial statements
Notes to the consolidated income statement
29. PREMIUMS EARNED AND POLICY FEES
CHF million
Gross premiums written and policy fees
Change in unearned premium reserves
Premiums earned and policy fees (gross)
Reinsurance premiums ceded
Reinsurers’ share of change
in unearned premium reserves
Total premiums earned
and policy fees (net)
Non-life
Life
3,441.7
– 16.2
3,425.5
– 141.3
– 7.1
3,787.2
–
3,787.2
– 19.5
–
Total
2013
7,228.9
– 16.2
7,212.7
– 160.8
– 7.1
Non-life
Life
3,358.8
3,816.8
– 7.5
3,351.3
– 145.0
1.7
–
3,816.8
– 20.3
–
Total
2014
7,175.6
– 7.5
7,168.1
– 165.2
1.7
3,277.1
3,767.7
7,044.8
3,208.0
3,796.5
7,004.5
30. INCOME FROM INVESTMENTS FOR OWN ACCOUNT AND AT OWN RISK
CHF million
Investment property
Financial assets with characteristics of equity
Available for sale
Recognised at fair value through profit or loss
Financial assets with characteristics of liabilities
Held to maturity
Available for sale
Recognised at fair value through profit or loss
Mortgages and loans
Carried at cost
Recognised at fair value through profit or loss
Cash and cash equivalents
2013
2014
253.3
256.0
97.2
0.2
247.9
639.2
4.1
501.2
20.4
1.6
117.1
12.2
234.9
596.4
4.2
460.2
19.9
1.1
Total investment income for own account and at own risk
1,765.1
1,701.9
Income from investment property consists mainly of rental income. Income from financial instruments with char-
acteristics of equity primarily comprises dividend income, while income from financial instruments with charac-
teristics of liabilities essentially contains interest income and net income from the recognition and reversal of
impairment losses owing to application of the effective interest method. Income from mortgages and loans and from
cash and cash equivalents is mainly derived from the interest paid on these assets.
Interest income of CHF 3.4 million had been recognised on impaired investments at the balance sheet date
(2013: CHF 4.2 million).
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Financial Report
Notes to the consolidated annual financial statements
31. REALISED GAINS AND LOSSES ON INVESTMENTS
REALISED GAINS AND LOSSES ON INVESTMENTS AS RECOGNISED IN THE INCOME STATEMENT
CHF million
Realised gains and losses on investments for own account and at own risk
Realised gains and losses on investments for the account and at the risk of life insurance policyholders
Realised gains and losses on investments as recognised in the income statement
2013
2014
210.7
459.6
670.3
775.1
587.4
1,362.5
218
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Financial Report
Notes to the consolidated annual financial statements
31.1 Realised gains and losses on investments in 2013 for own account and at own risk
2013
CHF million
Realised gains on sales and book profits
Investment property
Held to maturity 1
Available for sale
Recognised at fair value
through profit or loss
Carried at cost
Sub-total
Realised losses on sales and book losses
Investment property
Held to maturity 1
Available for sale
Recognised at fair value
through profit or loss
Carried at cost
Sub-total
Impairment losses recognised
in profit or loss
Held to maturity
Available for sale
Carried at cost
Reversal of impairment losses
recognised in profit or loss
Held to maturity
Available for sale
Carried at cost
Sub-total
Total realised gains and losses
on investments
Financial
assets with
characteristics
of equity
Financial
assets with
characteristics
of liabilities
Investment
property
Mortgages
and loans
Derivative
financial
instruments
221.3
–
–
–
–
221.3
– 94.2
–
–
–
–
–
–
171.9
9.5
–
181.4
–
–
– 61.8
– 6.0
–
29.9
188.6
3.7
–
222.2
–
– 1.4
– 27.4
– 2.0
–
–
– 94.2
– 67.8
– 30.8
Total
221.3
29.9
360.5
136.3
38.7
786.7
– 94.2
– 1.4
– 89.1
–
–
–
–
–
–
0.1
123.0
38.7
38.8
–
123.0
–
–
–
–
–
–
– 7.3
– 338.4
– 353.6
– 5.3
– 12.5
–
– 338.4
– 5.3
– 543.7
–
–
–
–
–
–
–
–
– 32.7
–
–
–
–
– 32.7
– 0.3
– 0.5
–
–
1.4
–
0.5
–
–
– 12.2
–
–
12.1
– 0.1
–
–
–
–
–
–
–
– 0.3
– 33.2
– 12.2
–
1.4
12.1
– 32.3
127.0
80.9
192.0
26.2
– 215.4
210.7
1 Currency effects relating to held-to-maturity financial assets with characteristics of liabilities are reported as realised book profits and / or realised book losses.
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Financial Report
Notes to the consolidated annual financial statements
31.2 Realised gains and losses on investments in 2014 for own account and at own risk
2014
CHF million
Realised gains on sales and book profits
Investment property
Held to maturity 1
Available for sale
Recognised at fair value
through profit or loss
Carried at cost
Sub-total
Realised losses on sales and book losses
Investment property
Held to maturity 1
Available for sale
Recognised at fair value
through profit or loss
Carried at cost
Sub-total
Impairment losses recognised
in profit or loss
Held to maturity
Available for sale
Carried at cost
Reversal of impairment losses
recognised in profit or loss
Held to maturity
Available for sale
Carried at cost
Sub-total
Total realised gains and losses
on investments
Financial
assets with
characteristics
of equity
Financial
assets with
characteristics
of liabilities
Investment
property
Mortgages
and loans
Derivative
financial
instruments
190.9
–
–
–
–
190.9
– 61.6
–
–
–
–
–
–
331.4
48.5
–
379.8
–
–
– 75.6
– 5.5
–
2.8
236.4
2.9
–
242.1
–
– 33.4
– 70.7
– 1.5
–
–
– 61.6
– 81.1
– 105.7
–
–
–
16.9
40.8
57.7
–
–
–
–
–
–
355.9
–
–
–
0.0
– 179.0
– 3.1
– 3.1
–
– 179.0
–
40.8
355.9
1,226.5
–
–
–
–
–
–
–
–
– 35.8
–
–
–
–
– 35.8
–
–
–
–
10.9
–
10.9
–
–
– 5.4
–
–
9.3
3.9
–
–
–
–
–
–
–
129.3
263.0
147.4
58.5
177.0
775.1
Total
190.9
2.8
567.8
424.3
– 61.6
– 33.4
– 146.3
– 186.0
– 3.1
– 430.4
–
– 35.8
– 5.4
–
10.9
9.3
– 20.9
1 Currency effects relating to held-to-maturity financial assets with characteristics of liabilities are reported as realised book profits and / or realised book losses.
220
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Financial Report
Notes to the consolidated annual financial statements
31.3 Impairment losses on financial assets recognised in profit or loss
CHF million
Impairment losses on financial assets with characteristics of equity recognised in profit or loss
Equities
Equity funds
Mixed funds
Bond funds
Real-estate funds
Private equity
Hedge funds
Sub-total
Impairment losses on financial assets with characteristics of liabilities recognised in profit or loss
Public corporations
Industrial enterprises
Financial institutions
Other
Sub-total
Impairment losses on mortgages and loans recognised in profit or loss
Mortgages
Policy loans
Promissory notes and registered bonds
Time deposits
Reverse repurchase agreements
Other loans
Sub-total
2013
2014
– 12.5
– 1.0
–
–
– 6.6
– 8.0
– 4.6
– 24.3
–
–
0.0
– 5.1
– 5.9
– 0.4
– 32.7
– 35.8
–
– 0.3
– 0.5
–
– 0.9
–
–
–
–
–
– 11.2
– 5.2
–
–
–
–
– 1.0
– 12.2
–
–
–
–
– 0.1
– 5.4
Total impairment losses on financial assets recognised in profit or loss
– 45.7
– 41.1
31.4 Currency gains and losses
Excluding exchange-rate losses on transactions involving financial instruments that are recognised at fair value
through profit or loss, a currency loss of CHF – 77.0 million was reported for 2014 (2013: gain of CHF 26.5 million).
A gross currency gain of CHF 175.5 million was recognised directly in equity for the reporting year (2013:
gain of CHF 67.4 million). Allowing for hedges of a net investment in a foreign operation (hedge accounting), a net
gain of CHF 38.9 million was recognised for 2014 (2013: net gain of CHF 69.8 million).
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Financial Report
Notes to the consolidated annual financial statements
32. INCOME FROM SERVICES RENDERED
CHF million
Asset management
Services
Banking services
Investment management
Income from services rendered
33. OTHER OPERATING INCOME
CHF million
Interest income from insurance and reinsurance receivables
Other interest income
Gains on the sale of
property, plant and equipment
intangible assets
Currency gains on assets and liabilities
Reversal of impairment losses recognised on receivables
External income from owner-occupied property
Other income 1
Other operating income
1 The 2014 reporting year includes the gain on the disposal of the Austrian entities.
2013
2014
30.6
34.2
43.6
10.6
35.4
22.4
44.2
8.6
119.0
110.7
2013
2014
12.3
2.8
1.2
–
4.4
7.5
10.6
69.1
107.9
11.0
2.5
0.2
–
9.6
7.3
10.9
143.8
185.2
222
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Financial Report
Notes to the consolidated annual financial statements
34. CLASSIFICATION OF EXPENSES
CHF million
Personnel expenses (excluding loss adjustment expenses)
– 854.2
– 834.0
2013
2014
Marketing and advertising
Depreciation and impairment of property, plant and equipment
Amortisation and impairment of intangible assets
IT and other equipment
Expenses for rent, maintenance and repairs
Losses arising from exchange differences in respect of assets and liabilities
Commission and selling expenses
Fees and commission for financial assets and liabilities not recognised at fair value
Fees and commission expenses for assets managed for third parties
Expenses arising from non-current assets and disposal groups classified as held for sale
Other
Total
1 This includes changes in deferred acquisition costs recognised in profit or loss, as shown in table 9.
– 40.0
– 39.3
– 60.5
– 61.6
– 59.1
– 14.1
– 32.9
– 65.0
– 70.4
– 78.2
– 55.0
– 11.2
– 557.3
– 526.9
– 25.6
– 3.3
– 31.7
– 17.0
– 3.7
–
– 202.7
– 255.3
– 1,949.4
– 1,949.8
35. PERSONNEL EXPENSES
Total personnel expenses for 2014 came to CHF 959.4 million (2013: CHF 967.1 million).
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Financial Report
Notes to the consolidated annual financial statements
36. GAINS OR LOSSES ON FINANCIAL CONTRACTS
CHF million
With discretionary participation features (DPFs)
Financial contracts with discretionary participation features (DPFs)
Sub-total
Measured at amortised cost
Interest on loans
Interest due
Interest arising from banking business
Interest expenses on repurchase agreements
Acquisition costs in banking business
Interest expenses on bonds
Expenses arising from financial contracts
Sub-total
Recognised at fair value through profit or loss (designated)
Change in fair value of other financial contracts
Sub-total
Total gains or losses on financial contracts
Of which: gains on interest rate hedging instruments
Interest rate swaps: cash flow hedges, balance carried forward from cash flow hedge reserves
Interest rate swaps: fair value hedges
Total gains on interest rate hedging instruments
2013
2014
– 42.7
– 42.7
– 0.4
– 9.8
– 39.6
0.0
– 5.7
– 3.2
– 17.7
– 76.5
– 44.3
– 44.3
– 0.3
– 9.7
– 33.6
0.0
– 15.6
– 3.2
– 17.0
– 79.4
– 249.7
– 249.7
– 338.8
– 338.8
– 368.9
– 462.6
–
–
–
–
–
–
224
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Financial Report
Notes to the consolidated annual financial statements
37. INCOME TAXES
37.1 Current and deferred income taxes
CHF million
Current income taxes
Deferred income taxes
Total current and deferred income taxes
2013
2014
– 82.2
– 70.5
– 152.7
– 135.4
– 37.8
– 173.2
37.2 Expected and current income taxes
The expected average tax rate for the Baloise Group was 26.78 per cent in 2013 and 24.73 per cent in 2014. These
rates correspond to the weighted average tax rates in those countries where the Baloise Group operates.
CHF million
Profit before taxes
Expected average tax rate (per cent)
Expected income taxes
Increase / reduction owing to
tax-exempt profits and losses
non-deductible expenses
withholding taxes on dividends
change in tax rates
tax items related to other reporting periods
non-taxable measurement differences
other impacts 1
Current income taxes
2013
2014
608.1
26.78 %
– 162.8
885.1
24.73 %
– 218.9
2.5
– 13.1
– 2.4
– 0.4
7.0
9.5
6.9
36.0
– 10.2
– 2.6
– 0.3
4.7
2.2
15.9
– 152.7
– 173.2
1 “Other impacts” essentially comprise the offsetting of profits against loss carryforwards for which no deferred tax assets were recognised, the non-capitalisation of
losses from the reporting period and the recognition of losses carried forward from previous years. This item also includes the differences between the Baloise
Group’s tax rate and the tax rates applied to each individual company (and, in the year 2013, the effect arising from the application of IFRS 5 [Non-current Assets Held
for Sale and Discontinued Operations]).
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Financial Report
Notes to the consolidated annual financial statements
38. EARNINGS PER SHARE
Profit for the period attributable to shareholders (CHF million)
Average number of shares outstanding
Basic earnings per share (CHF)
Profit for the period attributable to shareholders (CHF million)
Adjustment of interest expenses on convertible bonds, including tax effects (CHF million)
Adjusted profit for the period attributable to shareholders (CHF million)
Average number of shares outstanding
Adjustment due to theoretical conversion of convertible bond
Adjustment due to theoretical exercise of share-based payment plans
Adjustment due to theoretical exercise of put options
Adjusted average number of shares outstanding
Diluted earnings per share (CHF)
2013
452.6
2014
710.7
46,896,926
46,921,282
9.65
15.15
2013
452.6
7.7
460.3
2014
710.7
7.9
718.6
46,896,926
46,921,282
2,000,000
1,999,712
183,086
203,833
–
–
49,080,012
49,124,827
9.38
14.63
The dilution of earnings in 2013 as well as in 2014 was attributable to the Performance Share Units (PSU) share-
based payment plan and the convertible bond issued by Bâloise Holding.
226
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Financial Report
Notes to the consolidated annual financial statements
39. OTHER COMPREHENSIVE INCOME
39.1 Other comprehensive income
CHF million
Items not to be reclassified to the income statement
Change in reserves arising from reclassification of investment property
Change in reserves arising from assets and liabilities of post-employment benefits
(defined benefit plans)
Change arising from shadow accounting
Income taxes
Total items not to be reclassified to the income statement
Items to be reclassified to the income statement
Available-for-sale financial assets:
Gains and losses arising during the reporting period
Gains and losses reclassified to the income statement
Total available-for-sale financial assets
Investments in associates
Gains and losses arising during the reporting period
Gains and losses reclassified to the income statement
Total investments in associates
Hedging reserves for derivative financial instruments held as hedges of a net investment
in a foreign operation:
Gains and losses arising during the reporting period
Gains and losses reclassified to the income statement
Total hedging reserves for derivative financial instruments held as hedges of a net investment
in a foreign operation
Reserves arising from reclassification of held-to-maturity financial assets:
Gains and losses arising during the reporting period
Gains and losses reclassified to the income statement
Total reserves arising from reclassification of held-to-maturity financial assets:
Change arising from shadow accounting
Change arising from exchange differences
Income taxes
Total items to be reclassified to the income statement
2013
2014
0.6
162.4
– 18.4
– 33.2
111.5
– 0.5
– 487.4
84.6
93.2
– 310.1
– 301.6
– 230.1
– 531.7
2,141.4
– 452.6
1,688.8
3.2
–
3.2
8.7
–
8.7
35.7
– 33.4
2.4
– 124.1
– 12.5
– 136.6
0.1
– 2.8
– 2.7
267.2
68.1
82.2
– 111.3
– 0.1
– 2.5
– 2.6
– 737.1
177.5
– 245.4
753.3
Total other comprehensive income
0.1
443.2
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Financial Report
Notes to the consolidated annual financial statements
39.2 Income taxes on other comprehensive income
CHF million
Items not to be reclassified
to the income statement
Change in reserves arising from
reclassification of investment property
Change in reserves arising from assets
and liabilities of post-employment
benefits (defined benefit plans)
Change arising from shadow accounting
Total items not to be reclassified
to the income statement
Amount
before taxes
Tax expense /
tax income
Amount net
of taxes
Amount
before taxes
Tax expense /
tax income
Amount net
of taxes
2013
2014
0.6
0.0
0.6
– 0.5
0.1
– 0.5
162.4
– 39.1
123.3
– 487.4
120.1
– 367.3
– 18.4
144.6
5.9
– 33.2
– 12.5
111.5
84.6
– 403.3
– 27.0
93.2
57.6
– 310.1
Items to be reclassified
to the income statement
Available-for-sale financial assets
– 531.7
Investments in associates
Hedging reserves for derivative financial
instruments held as hedges of a net
investment in a foreign operation
Reserves arising from reclassification
of held-to-maturity financial assets
Change arising from shadow accounting
Change arising from
exchange differences
Total items to be reclassified
to the income statement
3.2
2.4
148.3
1.4
– 0.6
– 383.4
1,688.8
– 459.1
1,229.7
4.6
1.8
8.7
– 136.6
– 2.6
27.6
6.1
– 109.0
– 2.7
0.8
– 1.9
– 2.6
0.6
– 2.0
267.2
68.1
– 67.6
–
199.6
68.1
– 737.1
177.5
188.3
–
– 548.8
177.5
– 193.5
82.2
– 111.3
998.7
– 245.4
753.3
Total
– 48.9
49.1
0.1
595.4
– 152.2
443.2
228
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Financial Report
Notes to the consolidated annual financial statements
Other disclosures
40. ACQUISITION AND DISPOSAL OF COMPANIES
CHF million
Investments
Other assets
Receivables and assets
Cash and cash equivalents
Actuarial liabilities
Other accounts payable
Non-controlling interests
Net assets acquired / disposed of
Funds used / received for acquisitions and disposals
Cash and cash equivalents
Offsetting
Transfer of assets
Directly attributable costs
Equity instruments issued
Reclassification of investments in associates
Acquisition / disposal price
Net assets acquired / disposed of
Other comprehensive income 1
Goodwill / negative goodwill or proceeds from disposals
Cash and cash equivalents used / received
for acquisitions and disposals
Cash and cash equivalents acquired / disposed of
Outflow / inflow of cash and cash equivalents
1 This includes primarily historical cumulative exchange differences.
Cumulative
acquisitions
Cumulative
disposals
2013
2014
2013
2014
13.0
0.3
0.0
0.0
– 10.2
– 0.8
–
2.3
270.6
10.0
53.9
16.2
– 228.2
– 98.5
–
24.1
1.7
0.5
69.6
1.0
– 65.9
– 3.7
–
3.2
30.1
988.0
0.2
1.1
0.0
– 870.8
– 10.9
137.7
2.9
32.6
3.4
269.0
–
–
–
–
–
2.9
– 2.3
–
0.6
–
–
–
–
–
32.6
– 24.1
–
8.5
– 2.9
– 32.6
0.0
– 2.9
16.2
– 16.4
–
–
–
–
–
3.4
– 3.2
0.1
0.3
3.4
– 1.0
2.4
–
–
–
–
–
269.0
– 137.7
– 65.8
65.5
269.0
– 1.1
267.9
The company FIPOP S.A. was acquired in Luxembourg in 2013.
Belgian company AXIS Life was sold in the first half of 2013. Also in Belgium, the companies Esplan NV and
Hermes Verzekeringsgroep NV were disposed of in the second half of 2013. In Germany the firm Partner in Life S.A.
was sold.
During the first half of the reporting year the Baloise Group acquired the Brussels-based real-estate company
Singel Office Antwerpen NV in Belgium and the net assets of the firm P & V Assurances in Luxembourg.
All of Baloise’s Croatian and Serbian subsidiaries were sold to the Austria-based UNIQA Group on 11 March 2014.
All of its Austrian subsidiaries were then sold to the Helvetia Group on 28 August 2014. In Luxembourg the remaining
65 per cent shareholding in the company Barosa S.à.r.l. was sold during the first half of the reporting year.
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Financial Report
Notes to the consolidated annual financial statements
41. RELATED PART Y TRANSACTIONS
As part of its ordinary operating activities the Baloise Group conducts transactions with associates and with members
of Bâloise Holding’s Board of Directors and Corporate Executive Committee. The terms and conditions governing
such transactions can be found in the chapter on corporate governance, which forms an integral part of the Financial
Report.
The executive management team consists of the members of Bâloise Holding’s Board of Directors and Corporate
Executive Committee.
RELATED PART Y TRANSACTIONS
Associates
Executive management
Other related parties
2013
2014
2013
2014
2013
2014
2013
Total
2014
14.1
0.0
0.4
– 0.4
–
14.2
–
0.9
0.0
– 0.7
– 3.8
– 3.6
15.8
0.0
0.4
– 0.4
–
0.1
0.1
0.2
– 14.4
–
0.2
0.1
0.2
– 14.5
–
15.7
– 14.1
– 14.1
–
0.0
0.0
– 0.7
– 4.5
– 5.2
11.3
11.1
–
–
–
–
–
–
–
–
11.3
11.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
14.2
15.9
0.1
0.6
0.1
0.6
– 14.8
– 14.9
–
0.1
11.3
0.9
0.0
– 0.7
– 3.8
7.6
–
1.6
11.1
0.0
0.0
– 0.7
– 4.5
5.9
–
–
CHF million
Included in the
income statement
Premiums earned and
policy fees
Investment income /
expenses
Other income
Expenses
Impairment losses
on bad debts
Total income statement
Included
on the balance sheet
Mortgages and loans
Insurance receivables
Other receivables
Impairment losses
on bad debts
Other accounts payable
Total
on the balance sheet
Off-balance-sheet
transactions
Guarantees granted
230
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Financial Report
Notes to the consolidated annual financial statements
EXECUTIVE MANAGEMENT REMUNERATION
CHF million
Short-term employee benefits
Post-employment benefits
Payments under share-based payment plans
Total
2013
2014
8.4
1.5
4.6
14.4
8.8
1.5
4.2
14.5
28,720 shares worth CHF 3.1 million were repurchased from members of the Corporate Executive Committee in
2014 (2013: CHF 4.4 million) under the Employee Share Ownership Plan (section 18.4.3).
42. REMUNERATION PAID TO THE BOARD OF DIRECTORS AND THE CORPORATE EXECUTIVE COMMITTEE
The information to be disclosed in accordance with sections 663b and 663c of the Swiss Code of Obligations (OR)
is contained in the Remuneration Report, which can be found on pages 61 to 83 of the chapter on corporate gov-
ernance. The key information disclosed here includes:
→ Remuneration paid to the members of the Board of Directors
→ Remuneration paid to the members of the Corporate Executive Committee
→ Loans and credit facilities granted to members of the Board of Directors and
the Corporate Executive Committee
→ Shares held by members of the Board of Directors and the Corporate Executive Committee
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Financial Report
Notes to the consolidated annual financial statements
43. CONTINGENT AND FUTURE LIABILITIES
43.1 Contingent liabilities
43.1.1 Legal disputes
The companies in the Baloise Group are regularly involved in litigation, legal claims and lawsuits, which in most
cases constitute a normal part of its operating activities as an insurer.
The Corporate Executive Committee is not aware of any new circumstances having arisen since the last balance
sheet date that could have a material impact on the consolidated annual financial statements for 2014.
43.1.2 Guarantees and collateral for the benefit of third parties
The Baloise Group has issued guarantees and provided collateral to third parties. These include obligations – in
contractually specified cases – to make capital contributions or payments to increase the amount of equity, provide
funds to cover principal and interest payments when they fall due, and issue guarantees as part of its operating
activities. The Baloise Group is not aware of any cases of default that could trigger such guarantee payments.
2013
2014
CHF million
Guarantees
Collateral
Total guarantees and collateral for the benefit of third parties
Of which: for the benefit of partners in joint ventures
Of which: from joint ventures
Of which: for the benefit of joint ventures
CREDIT RATINGS OF GUARANTEES AND COLLATERAL
63.8
452.3
516.1
–
–
–
AAA
–
–
AAA
–
–
AA
–
–
AA
–
–
A
37.3
0.2
A
32.4
0.2
Lower than BBB
or no rating
BBB
–
–
26.5
452.1
Lower than BBB
or no rating
BBB
–
–
16.7
459.2
2013
CHF million
Guarantees
Collateral
2014
CHF million
Guarantees
Collateral
232
49.1
459.4
508.5
–
–
–
Total
63.8
452.3
Total
49.1
459.4
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Financial Report
Notes to the consolidated annual financial statements
43.1.3 Pledged or ceded assets, securities-lending assets and collateral held
CARRYING AMOUNTS OF ASSETS PLEDGED OR CEDED AS COLLATERAL
CHF million
Financial assets under repurchase agreements
Financial assets in the context of securities lending
Investments
Pledged intangible assets
Pledged property, plant and equipment
Other
Total
FAIR VALUE OF COLLATERAL HELD
CHF million
Financial assets under reverse repurchase agreements
Financial assets in the context of securities lending
Other
Total
Of which: sold or repledged
– with an obligation to return the assets
– with no obligation to return the assets
2013
2014
284.7
–
1,575.5
142.4
3,362.8
1,716.8
–
–
–
–
–
–
1,860.1
5,222.1
2013
2014
67.7
–
–
61.4
4,206.5
–
67.7
4,267.9
–
–
–
–
The Baloise Group engages in securities-lending transactions that may give rise to credit risk. Collateral is required
in order to hedge these credit risks by more than covering the underlying value of the securities that are being lent
(mainly bonds). The value of the counterparty’s lending securities is regularly measured in order to minimise the
credit risk involved. Additional collateral is immediately required if this value falls below the value of cover provided.
The Baloise Group retains control over the loaned securities throughout the term of its lending transactions.
The income received from securities lending is recognised in profit or loss.
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Financial Report
Notes to the consolidated annual financial statements
43.2 Future liabilities
43.2.1 Capital commitments
CHF million
Commitments undertaken for future acquisition of
investment property
financial assets
property, plant and equipment
intangible assets
Total commitments undertaken
Of which: in connection with joint ventures
Of which: own share of joint ventures’ capital commitments
CREDIT RATINGS OF CAPITAL COMMITMENTS
2013
2014
14.8
449.4
–
19.7
484.0
–
–
40.4
443.9
–
14.1
498.4
–
–
2013
CHF million
Capital commitments
2014
CHF million
Capital commitments
AAA
18.8
AAA
12.6
AA
0.8
AA
0.3
A
Lower than BBB
or no rating
BBB
Total
61.4
18.3
384.7
484.0
A
Lower than BBB
or no rating
BBB
Total
33.0
14.4
438.1
498.4
Obligations undertaken by the Baloise Group to make future purchases of investments include commitments in
respect of private equity, which constitute unfunded commitments to invest directly in private equity or to invest
in private equity funds.
234
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Financial Report
Notes to the consolidated annual financial statements
44. OPERATING LEASES
44.1 The Baloise Group as a lessee
The Baloise Group has entered into non-cancellable leasing arrangements to lease buildings, vehicles and operating
equipment. The average residual term of its leases is between three and five years.
DUE DATES OF LEASE PAYMENTS
CHF million
Due within one year
Due after one to five years
Due after five years or more
Total
Minimum lease payments
Contingent lease payments
Leasing expenses
Income from sub-leases during the reporting period
Future income from sub-leases
Contingent lease payments are made in cases where the lease is indexed.
2013
2014
– 3.1
– 4.2
–
– 7.3
– 3.8
–
– 3.8
–
–
– 3.2
– 3.4
–
– 6.6
– 4.0
–
– 4.0
–
–
44.2 The Baloise Group as a lessor
The Baloise Group has entered into operating leasing arrangements in order to lease its investment property to third
parties. The average non-cancellable residual term of its leases is between four and six years. There were no further
leasing arrangements at the balance sheet date.
DUE DATES OF CONTRACTUALLY STIPULATED LEASING INCOME
CHF million
Due within one year
Due after one to five years
Due after five years or more
Total
Minimum lease payments
Contingent lease payments
Leasing income
2013
2014
35.5
56.1
11.5
103.1
41.1
0.1
41.3
33.3
49.4
9.9
92.6
40.4
0.0
40.4
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Financial Report
Notes to the consolidated annual financial statements
45. CLAIM PAYMENTS RECEIVED FROM NON-GROUP INSURERS
The companies in the Baloise Group received claim payments totalling CHF 0.1 million in 2014 (2013: CHF 0.1 mil-
lion) from non-Group insurers in connection with insurance contracts under which the Baloise Group companies
are themselves policyholders. Most of these claim payments were made for damage to buildings in Switzerland
where, depending on the building’s location, mandatory insurance cover is provided by government agencies.
46. EVENTS AFTER THE BALANCE SHEET DATE
On 15 January 2015 the Swiss National Bank announced that it was abandoning its minimum exchange-rate target
of 1.20 Swiss francs to the euro with immediate effect. The amounts published in these consolidated annual finan-
cial statements do not reflect exchange-rate changes that have occurred since 31 December 2014. Because the Swiss
franc is the functional currency used in the Baloise Group’s consolidated financial statements, any weakening of
foreign currencies against the Swiss franc gives rise to negative exchange differences. Section 5.6 of the Financial
Report describes how the Baloise Group manages market risks (including sensitivity analysis).
By the time that these consolidated annual financial statements had been completed on 20 March 2015, we
had not become aware of any further events that would have a material impact on the consolidated annual financial
statements as a whole.
236
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Notes to the consolidated annual financial statements
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Notes to the consolidated annual financial statements
47. SIGNIFICANT SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES AS AT 31 DECEMBER 2014
Group’s
share of
voting
rights /
capital
(per cent) 2
Direct
share of
voting
rights /
capital
(per cent) 2
Primary
activity
Operating
segment 1
Method of
consoli-
dation 3
Currency
Share
capital
(million)
Total
assets
(million)
Gross
premi-
ums /
policy fees
(million)
Material
interests
as defined
by IFRS 4
Switzerland
Bâloise Holding Ltd, Basel
Baloise Insurance Ltd, Basel
Baloise Life Ltd, Basel
Baloise Bank SoBa AG, Solothurn
Haakon AG, Basel
Baloise Asset Management Schweiz AG,
Basel
Baloise Asset Management
International AG, Basel
Holding
Non-life
Life
Banking
Other
Investment
manage-
ment
Investment
consulting
O
NL
L
B
O
B
Holding
Holding
100.00
100.00
100.00
100.00
100.00
100.00
74.75
74.75
100.00
100.00
B
100.00
100.00
Germany
Basler Versicherung
Beteiligungen B.V. & Co KG, Hamburg
Basler
Lebensversicherungs-Aktiengesellschaft,
Hamburg
Basler Versicherungsgesellschaft,
Bad Homburg
Deutscher Ring Bausparkasse
Aktiengesellschaft, Hamburg
Basler
Beteiligungsholding GmbH, Hamburg
DePfa Beteiligungs-Holding II GmbH,
Düsseldorf
Basler
Financial Services GmbH, Hamburg
OVB Holding AG, Cologne
Roland Rechtsschutz
Beteiligungs GmbH, Cologne
Roland Rechtsschutz Versicherungs AG,
Cologne
ZEUS Vermittlungsgesellschaft mbH,
Hamburg
Holding
O
100.00
100.00
Life
L
100.00
100.00
Non-life
NL
100.00
100.00
Banking
Holding
Other
Other
Other
Other
Other
Other
B
O
–
O
–
O
–
O
65.00
65.00
100.00
100.00
26.00
26.00
100.00
100.00
32.57
60.00
32.57
60.00
15.01
25.02
100.00
100.00
1 L: Life, NL: Non-life, B: Banking, O: Other activities / Group business.
2 Shares stated as a percentage are rounded down.
3 F: Full consolidation, E: Equity-accounted investment.
4 Material interest required to be disclosed under IFRS 12.
F
F
F
F
F
F
F
F
F
F
F
F
E
F
F
F
E
F
–
–
–
–
–
CHF
CHF
CHF
CHF
CHF
CHF
5.0
2,293.0
–
75.0
5,317.4
1,343.5
50.0 30,499.3
2,985.1
50.0
7,135.1
0.2
1.5
27.1
30.9
CHF
1.5
16.4
EUR
94.7
399.2
EUR
22.0
9,585.5
376.7
EUR
15.1
1,474.6
600.2
EUR
12.8
546.2
EUR
12.8
233.1
EUR
EUR
EUR
EUR
EUR
–
1.5
–
0.1
–
–
5.9
–
34.1
–
EUR
0.5
13.2
–
–
–
–
–
–
–
–
X
X
X
X
X
X
X
X
X
238
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Notes to the consolidated annual financial statements
Group’s
share of
voting
rights /
capital
(per cent) 2
Direct
share of
voting
rights /
capital
(per cent) 2
Primary
activity
Operating
segment 1
Method of
consoli-
dation 3
Currency
Share
capital
(million)
Total
assets
(million)
Gross
premi-
ums /
policy fees
(million)
Material
interests
as defined
by IFRS 4
Belgium
Baloise Belgium NV, Antwerp
Euromex NV, Antwerp
Merno-Immo NV, Antwerp
Luxembourg
Bâloise (Luxembourg) Holding S.A.,
Bertrange (Luxembourg)
Bâloise Assurances Luxembourg S.A.,
Bertrange (Luxembourg)
Bâloise Vie Luxembourg S.A.,
Bertrange (Luxembourg)
Baloise Fund Invest Advico,
Bertrange (Luxembourg)
Bâloise Delta Holding S.à.r.l.,
Bertrange (Luxembourg)
Life and
non-life
Non-life
Other
L / NL
100.00
100.00
NL
O
100.00
100.00
100.00
100.00
Holding
O
100.00
100.00
Non-life
NL
100.00
100.00
Life
Other
L
B
100.00
100.00
100.00
100.00
Holding
O
100.00
100.00
Baloise Life (Liechtenstein) AG, Balzers
Life
L
100.00
100.00
Other territories
Bâloise Participations Holding,
Amsterdam
Baloise Insurance Company
(Bermuda) Ltd., Hamilton (Bermuda)
Baloise Alternative Investment
Strategies Limited,
St. Helier (Jersey / Channel Islands)
Baloise Finance (Jersey) Ltd.,
St. Helier (Jersey / Channel Islands)
Baloise Private Equity Limited,
St. Helier (Jersey / Channel Islands)
Holding
O
100.00
100.00
Reinsur-
ance
Investment
manage-
ment
Other
NL
100.00
100.00
L / NL
100.00
100.00
O
100.00
100.00
Investment
L / NL
100.00
100.00
manage-
ment
1 L: Life, NL: Non-life, B: Banking, O: Other activities / Group business.
2 Shares stated as a percentage are rounded down.
3 F: Full consolidation, E: Equity-accounted investment.
4 Material interest required to be disclosed under IFRS 12.
F
F
F
F
F
F
F
F
F
F
F
F
F
F
EUR
215.2
7,887.9
865.7
X
EUR
EUR
2.7
17.1
153.6
25.6
CHF
250.0
1,171.1
57.3
–
–
EUR
9.8
288.1
95.2
EUR
32.7
5,098.5
70.2
EUR
0.1
10.4
EUR
224.3
290.9
–
–
CHF
7.5
2,856.0
1.8
EUR
10.9
0.8
–
CHF
5.0
1,036.9
188.8
USD
0.0
809.7
CHF
1.3
202.8
USD
0.0
485.1
–
–
–
X
X
X
X
X
x
X
11_FB_Kapitel_24_bis_Bericht_en.indd 239
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Financial Report
Notes to the consolidated annual financial statements
48. CHANGES TO SHAREHOLDINGS
CHF million
Carrying amount of interests acquired or sold (transactions with non-controlling interests)
Amount of the consideration received from or paid to non-controlling interests
Net effect of the purchase or sale of non-controlling interests recognised directly in equity
2013
2014
10.5
10.5
–
–
–
–
The Baloise Group sold 35 per cent of its shareholding in the Luxembourg-based company Barosa S.à.r.l. in 2013.
The remaining 65 per cent shareholding was sold during the reporting year. Information on this disposal can be
found in notes 6.2 and 40.
In 2014 and in 2013 there were no transactions involving non-controlling interests that led to the loss of
control over a subsidiary.
240
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Financial Report
Notes to the consolidated annual financial statements
49. CONSOLIDATED STRUCTURED ENTITIES
The Baloise Group held one consolidated structured entity – Baloise Fund Invest (Lux) – at the end of the reporting
year. Baloise Fund Invest (Lux) is a Luxembourg-based firm in the legal form of an investment company with variable
capital (SICAV managed by a third party). Baloise Fund Invest (Lux) is an umbrella fund consisting of various pools
of assets and liabilities (or “sub-funds”), with each sub-fund pursuing its own investment policy. Baloise Fund Invest
(Lux) and its sub-funds collectively constitute a legal entity. However, each sub-fund is deemed to be a separate
entity as far as the legal relationship between unitholders is concerned. A sub-fund’s assets are liable to third parties
only for the liabilities and obligations relating to this sub-fund.
The prime objective of Baloise Fund Invest (Lux) is to enable unitholders to benefit from professional manage-
ment strategies based on the principle of risk diversification in line with each sub-fund’s specified investment
policy.
The holding of units in Baloise Fund Invest (Lux) does not give rise to any contractual obligations. There are
no arrangements that oblige the Baloise Group to provide financial support to the consolidated entity Baloise Fund
Invest (Lux), and no voluntary financial or other support was provided during the reporting year.
50. JOINT ARRANGEMENTS
There were no joint arrangements in 2013 and in 2014.
11_FB_Kapitel_24_bis_Bericht_en.indd 241
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Financial Report
Report of the statutory auditor
Report of the statutory auditor
to the Annual General Meeting of
Bâloise Holding Ltd, Basel
REPORT OF THE STATUTORY AUDITOR ON THE FINANCIAL STATEMENTS
As statutory auditor, we have audited the consolidated financial statements of Bâloise Holding Ltd, which comprise
the consolidated balance sheet, consolidated income statement, consolidated statement of comprehensive income,
consolidated cash flow statement, consolidated statement of changes in equity and notes to the consolidated financial
statements (pages 92 to 241), for the year ended 31 December 2014.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial state-
ments in accordance with the International Financial Reporting Standards (IFRS) and the requirements of Swiss
law. This responsibility includes designing, implementing and maintaining an internal control system relevant to
the preparation and fair presentation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate
accounting policies and making accounting estimates that are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with Swiss law and Swiss Auditing Standards as well as the International Standards
on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether
the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assess-
ment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers the internal control system relevant to the entity’s prepa-
ration and fair presentation of the consolidated financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and
the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated
financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements for the year ended 31 December 2014 give a true and fair view
of the financial position, the results of operations and the cash flows in accordance with the International Financial
Reporting Standards (IFRS) and comply with Swiss law.
242
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Financial Report
Report of the statutory auditor
REPORT ON OTHER LEGAL REQUIREMENTS
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and
independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our
independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an
internal control system exists, which has been designed for the preparation of consolidated financial statements
according to the instructions of the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
PricewaterhouseCoopers Ltd
Christian Konopka
Audit expert
Peter Lüssi
Audit expert
Auditor in charge
Basel, 20 March 2015
11_FB_Kapitel_24_bis_Bericht_en.indd 243
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24.03.2015 13:13:31
12_FB_Holding_enindd 244
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4 Baloise
16 Review of operating performance
36 Sustainable business management
48 Corporate Governance
92 Financial Report
246 Bâloise Holding Ltd
260 Notes
Bâloise Holding Ltd
Income statement of Bâloise Holding 246
Balance sheet of Bâloise Holding 247
Notes to the financial statements of Bâloise Holding 248
Appropriation of distributable profit
as proposed by the Board of Directors 255
Report of the statutory auditor to the
Annual General Meeting of Bâloise Holding Ltd, Basel 256
12_FB_Holding_enindd 245
24032015 13:13:41
G
N
I
D
L
O
H
E
S
I
O
L
Â
B
Financial Report
Income statement of Bâloise Holding
Income statement of Bâloise Holding
CHF million
Income from long-term equity investments
Income from interest and securities
Other income
Total income
Administrative expenses
Interest expenses
Depreciation, amortisation and impairment
Other expenses
Total expenses
Tax expense
Profit for the period
Note
2013
2014
2
3
4
5
284.9
15.5
8.0
308.4
– 53.2
– 44.6
– 151.1
– 3.9
– 252.8
481.2
15.1
8.1
504.4
– 52.4
– 38.0
–
– 8.0
– 98.4
– 0.1
– 0.2
55.5
405.8
246
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Financial Report
Balance sheet of Bâloise Holding
Balance sheet of Bâloise Holding
CHF million
Assets
Cash and cash equivalents
Treasury shares
Receivables from Group companies
Receivables from third parties
Prepaid expenses
Current assets
Long-term equity investments
Loans to Group companies
Other financial assets
Non-current assets
Total assets
Equity and liabilities
Share capital
Statutory reserve
General reserve
Reserve for treasury shares
Other reserves
Distributable profit
Equity
Liabilities to Group companies
Liabilities to third parties
Bonds
Provisions
Deferred income
Liabilities
Total equity and liabilities
Note
31.12.2013
31.12.2014
93.7
139.4
70.2
4.0
41.9
349.2
58.8
141.9
70.6
4.0
217.0
492.3
1,837.3
1,730.4
77.0
–
102.0
100.0
1,914.3
1,932.4
2,263.5
2,424.7
5.0
5.0
11.7
176.3
240.7
56.3
490.1
15.1
0.0
11.7
182.8
52.4
406.5
658.4
0.7
0.0
6
8
7
10
9
1,717.5
1,717.5
8.0
32.8
9.6
38.5
1,773.4
1,766.3
2,263.5
2,424.7
12_FB_Holding_enindd 247
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Financial Report
Notes to the financial statements of Bâloise Holding
Notes to the financial statements
of Bâloise Holding
1. ACCOUNTING POLICIES
The annual financial statements of Bâloise Holding have been prepared in compliance with Swiss stock company
law They were prepared in accordance with the transitional provisions of the new financial reporting legislation
based on the provisions of the Swiss Code of Obligations concerning bookkeeping and accounting, which had applied
until 31 December 2012
Cash and cash equivalents
Cash and cash equivalents include bank deposits and cash equivalents such as call money, fixed-term deposits and
money market instruments provided that these assets’ original maturity period is less than 90 days
Treasury shares
Treasury shares are measured at the lower of cost and fair value
Receivables
Receivables are recognised at their nominal amount less any impairment losses
Prepaid expenses and accrued income
This line item includes expenses relating to the new financial year that have been paid in advance and income from
the reporting year that will not be received until a later date It also comprises dividends approved by subsidiaries’
annual general meetings at the balance sheet date, which Bâloise Holding reports as dividends receivable
Long-term equity investments
Long-term equity investments are recognised at cost less any impairment losses
Loans to Group companies
These loans are measured at their nominal amount less any impairment losses Specific write-downs are recognised
for all identifiable risks in accordance with the prudence principle
Other financial assets
Marketable securities are recognised at the lower of cost and fair value
Liabilities
Liabilities are recognised at their nominal amount
Bonds
Bonds are shown at their par value Issuance costs – less any premiums – are charged in full to the income statement
at the time the bonds are issued
Provisions
Provisions are recognised with due care and diligence to cover any risks that may arise
Deferred income and accrued expenses
This line item comprises income relating to the new financial year that has already been received as well as expenses
relating to the reporting year that will not be paid until a later date
248
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Financial Report
Notes to the financial statements of Bâloise Holding
NOTES TO THE INCOME STATEMENT
2. INCOME FROM INTEREST AND SECURITIES
CHF million
Income from treasury shares
Interest on loans to Group companies
Income from other financial assets
Other interest receivable
Total income from interest and securities
3. ADMINISTRATIVE EXPENSES
CHF million
Personnel expenses
Other administrative expenses
Total administrative expenses
4. INTEREST EXPENSES
CHF million
Interest on bonds
Other interest expenses
Total interest expenses
2013
2014
8.5
5.7
1.2
0.1
15.5
9.5
3.2
2.3
0.1
15.1
2013
2014
– 38.6
– 14.6
– 53.2
– 38.2
– 14.2
– 52.4
2013
2014
– 44.6
0.0
– 44.6
– 38.0
0.0
– 38.0
12_FB_Holding_enindd 249
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Financial Report
Notes to the financial statements of Bâloise Holding
5. DEPRECIATION, AMORTISATION AND IMPAIRMENT
CHF million
Impairment of long-term equity investments
Impairment of treasury shares
Total depreciation, amortisation and impairment
2013
2014
– 151.1
–
– 151.1
–
–
–
In 2013 the Company recognised a one-off impairment loss of CHF 1511 million on the long-term equity invest-
ments in its Croatian and Serbian units, which were due to be sold
NOTES TO THE BALANCE SHEET
6. PREPAID EXPENSES AND ACCRUED INCOME
The annual general meeting of Haakon AG, Basel, held on 4 March 2015, the AGMs of Baloise Bank SoBa AG,
Solothurn, of Baloise Asset Management Schweiz AG and of Baloise Asset Management International AG, Basel,
held on 6 March 2015, and the AGM of Basler Versicherung AG, Basel, held on 20 March 2015 voted to recognise
the dividends receivable for the 2014 financial year as accrued income (2014: CHF 2168 million / 2013: CHF 418
million)
7. LOANS TO GROUP COMPANIES
CHF million
Subordinated loans to Baloise Bank SoBa
Subordinated loans to Bâloise (Luxembourg) Holding S.A.
Total loans to Group companies
2013
2014
40.0
37.0
77.0
40.0
62.0
102.0
250
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Financial Report
Notes to the financial statements of Bâloise Holding
8. LONG-TERM EQUIT Y INVESTMENTS
Company
Basler Versicherung AG, Basel
Basler Leben AG, Basel
Baloise Bank SoBa AG, Solothurn
Baloise Asset Management Schweiz AG, Basel
Baloise Asset Management International AG, Basel
Haakon AG, Basel
Baloise Life (Liechtenstein) AG, Balzers
Basler Saturn Management B.V., Amsterdam
Bâloise (Luxembourg) Holding S.A., Bertrange (Luxembourg)
Bâloise Delta Holding S.à.r.l., Bertrange (Luxembourg)
Baloise Fund Invest Advico, Bertrange (Luxembourg)
Baloise Insurance Company (Bermuda) Ltd., Hamilton, Bermuda
Baloise Finance (Jersey) Ltd, St. Helier, Jersey
Basler osiguranje Zagreb d.d., Zagreb
Neživotno osiguranje “Basler” a.d.o., Belgrade
Životno osiguranje “Basler” a.d.o., Belgrade
1 Investments stated as a percentage are rounded down.
Total
shareholding
as at
31.12.2013
Total
shareholding
as at
31.12.2014
Share capital
as at
31.12.2014
(per cent) 1
(per cent) 1
Currency
(million)
100.00
100.00
100.00
100.00
100.00
74.75
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
74.75
100.00
100.00
100.00
100.00
100.00
100.00
100.00
–
–
–
CHF
CHF
CHF
CHF
CHF
CHF
CHF
EUR
CHF
EUR
EUR
CHF
CHF
HRK
RSD
RSD
75.0
50.0
50.0
1.5
1.5
0.2
7.5
0.0
250.0
224.3
0.1
5.0
1.3
–
–
–
Further information on the long-term equity investments held directly by Bâloise Holding can be found on pages
238 and 239 in the Financial Report section
9. BONDS
AMOUNT
CHF 242.5 million (convertible bond)
CHF 225 million
CHF 175 million
CHF 300 million
CHF 250 million
CHF 150 million
CHF 225 million
CHF 150 million
Interest rate
Issued
Maturity date
1.500 %
1.000 %
2.250 %
2.875 %
3.000 %
2.000 %
1.750 %
1.125 %
2009
2012
2012
2010
2011
2012
2013
2014
17.11.2016
12.10.2017
01.03.2019
14.10.2020
07.07.2021
12.10.2022
26.04.2023
19.12.2024
12_FB_Holding_enindd 251
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Financial Report
Notes to the financial statements of Bâloise Holding
10. CHANGES IN EQUIT Y
CHF million
Share capital
Balance as at 1 January
Reduced through cancellation of treasury shares as per AGM resolution
Total share capital
Statutory reserves
General reserve
Balance as at 1 January
Allocated
Total general reserve
Reserve for treasury shares
Balance as at 1 January
Reduced through cancellation of treasury shares as per AGM resolution
Withdrawn (transferred to other reserves)
Allocated (transferred from other reserves)1
Total reserve for treasury shares
Total statutory reserves
Other reserves
Balance as at 1 January
Allocated from distributable profit
Withdrawn for distributable profit
Allocated (transferred from reserve for treasury shares)
Withdrawn (transferred to reserve for treasury shares)
Total other reserves
Distributable profit
Balance as at 1 January
Dividend distributed
Allocated to other reserves
Withdrawn from other reserves
Profit for the period
Total distributable profit
Total equity
31.12.2013
31.12.2014
5.0
–
5.0
11.7
–
11.7
5.0
–
5.0
11.7
–
11.7
173.9
176.3
–
–
2.4
176.3
–
–
6.5
182.8
188.0
194.5
224.9
18.2
–
–
– 2.4
240.7
244.1
– 225.0
– 18.2
–
55.5
56.3
240.7
–
– 181.9
–
– 6.5
52.4
56.3
– 237.5
–
181.9
405.8
406.5
490.1
658.4
1 Baloise Group companies purchased a total of 246,055 shares (not including the share buy-back via the secondary trading line) at an average price of CHF 112 during
the reporting year. During this period they sold 201,442 shares at an average price of CHF 114 and together held a total of 1,954,876 Bâloise Holding shares as at
31 December 2014. As in the previous year, the number of Bâloise Holding shares acquired via the secondary trading line amounted to 223,565 shares. These shares
are reported as “treasury shares” on the balance sheet.
252
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Financial Report
Notes to the financial statements of Bâloise Holding
11. SIGNIFICANT SHAREHOLDERS
The information available to the Company reveals that the following significant shareholders and shareholder groups
linked by voting rights held long-term equity investments in the Company within the meaning of section 663c of
the Swiss Code of Obligations (OR) as at 31 December 2014:
Per cent
Shareholders
Chase Nominees Ltd. 1
Black Rock Inc.
UBS Fund Management AG
LSV Asset Management
Mellon Bank N.A. 1
Nortrust Nominees Ltd. 1
Bank of New York Mellon N.V. 1
Credit Suisse Funds AG
Total
shareholding
as at
31.12.2013
Share of
voting rights
as at
31.12.2013
Total
shareholding
as at
31.12.2014
Share of
voting rights
as at
31.12.2014
7.3
<5.0
>3.0
>3.0
3.3
3.0
2.0
<3.0
2.0
0.0
<2.0
0.0
0.0
0.0
0.0
<2.0
6.1
>5.0
>3.0
>3.0
3.2
2.9
2.1
<3.0
2.0
<2.0
<2.0
0.0
0.0
0.0
0.0
<2.0
1 Custodian nominees who hold shares in trust for third parties are counted as part of the free float under the SIX Exchange regulations.
Such shareholder groups are not subject to disclosure requirements under Swiss stock market legislation.
12. CONTINGENT LIABILITIES
CHF million
Collateral, guarantee commitments
2013
2014
203.2
164.4
Bâloise Holding has issued the following letter of comfort:
As the owner of Baloise Life (Liechtenstein) AG, Bâloise Holding, Basel, undertakes to ensure that its sub-
sidiary Baloise Life (Liechtenstein) AG is at all times in a financial position to meet in full its liabilities to its
customers arising from the contracts relating to its RentaSafe, BelRenta Safe, RentaProtect and RentaSafe Time
products, especially its guarantee commitments Since October 2012 this letter of comfort has also applied to
customers with contracts relating to its RentaProtect Time, RentaSafe Time (D-CHF), RentaSafe Time Italy and
RentaProtect Performance products The maximum liability corresponds to the actuarial reserves recognised for
these products on the balance sheet of Baloise Life (Liechtenstein) AG as at 31 December 2014
Bâloise Holding is jointly and severally liable for the value added tax (VAT) owed by all companies that form
part of the tax group headed by Baloise Insurance Ltd
12_FB_Holding_enindd 253
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Financial Report
Notes to the financial statements of Bâloise Holding
13. CEDED ASSETS
Bâloise Holding lends some of its treasury shares to Baloise Insurance Ltd every year under a securities lending
agreement These shares are used in the Employee Share Ownership Plan run by Baloise Insurance Ltd No assets
had been ceded at the balance sheet date (2013: none)
14. REMUNERATION PAID TO THE BOARD OF DIRECTORS AND THE CORPORATE EXECUTIVE COMMITTEE
The information to be disclosed in accordance with sections 663b and 663c of the Swiss Code of Obligations (OR)
is contained in the Remuneration Report, which can be found on pages 61 to 83 of the chapter on corporate governance
The key information disclosed here includes
→ remuneration paid to the members of the Board of Directors,
→ remuneration paid to the members of the Corporate Executive Committee,
→ loans and credit facilities granted to members of the Board of Directors and
the Corporate Executive Committee,
→ shares and options held by members of the Board of Directors and the Corporate Executive Committee
15. INFORMATION ON THE PERFORMANCE OF RISK ASSESSMENT
Information on the performance of risk assessments can be found in section 5, “Management of insurance risk and
financial risk”, of the Baloise Group’s consolidated annual financial statements
16. EVENTS AFTER THE BALANCE SHEET DATE
On 15 January 2015 the Swiss National Bank announced that it was abandoning its minimum exchange-rate target
of 120 Swiss francs to the euro with immediate effect For further information please refer to note 46 of the
consolidated annual financial statements
By the time that these annual financial statements had been completed on 19 March 2014, we had not become
aware of any further events that would have a material impact on the annual financial statements as a whole
254
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Financial Report
Proposal by the Board of Directors
Appropriation of distributable profit
as proposed by the Board of Directors
DISTRIBUTABLE PROFIT AND APPROPRIATION OF PROFIT
The profit for the period amounted to CHF 405,812,67561
The Board of Directors will propose to the Annual General Meeting that the Company’s distributable profit
be appropriated as shown in the table below
CHF
Profit for the period
Profit carried forward from the previous year
Distributable profit
Proposals by the Board of Directors
Allocated to other reserves
Withdrawn from other reserves
Dividend
Profit to be carried forward
2013
2014
55,480,024.92
405,812,675.61
841,315.08
721,340.00
56,321,340.00
406,534,015.61
–
– 156,000,000.00
181,900,000.00
–
– 237,500,000.00
– 250,000,000.00
721,340.00
534,015.61
The appropriation of profit is consistent with section 30 of the Articles of Incorporation Each share confers the
right to receive a dividend of CHF 500 gross or CHF 325 net of withholding tax
12_FB_Holding_enindd 255
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Financial Report
Report of the statutory auditor
Report of the statutory auditor
to the Annual General Meeting of
Bâloise Holding Ltd, Basel
REPORT OF THE STATUTORY AUDITOR ON THE FINANCIAL STATEMENTS
As statutory auditor, we have audited the financial statements of Bâloise Holding Ltd, which comprise the income
statement, balance sheet and notes (pages 246 to 254), for the year ended 31 December 2014
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation of the financial statements in accordance with the require-
ments of Swiss law and the Company’s articles of incorporation This responsibility includes designing, implementing
and maintaining an internal control system relevant to the preparation of financial statements that are free from
material misstatement, whether due to fraud or error The Board of Directors is further responsible for selecting
and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit We conducted our
audit in accordance with Swiss law and Swiss Auditing Standards Those standards require that we plan and perform
the audit to obtain reasonable assurance whether the financial statements are free from material misstatement
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements The procedures selected depend on the auditor’s judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error In making those risk
assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity’s internal control system An audit also includes evalu-
ating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as
well as evaluating the overall presentation of the financial statements We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit opinion
Opinion
In our opinion, the financial statements for the year ended 31 December 2014 comply with Swiss law and the
Company’s articles of incorporation
256
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Financial Report
Report of the statutory auditor
REPORT ON OTHER LEGAL REQUIREMENTS
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and
independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our
independence
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an
internal control system exists which has been designed for the preparation of financial statements according to the
instructions of the Board of Directors
We further confirm that the proposed appropriation of retained earnings complies with Swiss law and the
Company’s articles of incorporation We recommend that the financial statements submitted to you be approved
PricewaterhouseCoopers Ltd
Christian Konopka
Audit expert
Peter Lüssi
Audit expert
Auditor in charge
Basel, 20 March 2015
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4 Baloise
16 Review of operating performance
36 Sustainable business management
48 Corporate Governance
92 Financial Report
246 Bâloise Holding Ltd
260 Notes
Notes
GLOSSARY ������������������������������������������������������������������������������������������������ 260
ADDRESSES ��������������������������������������������������������������������������������������������� 264
INFORMATION ON THE BALOISE GROUP ������������������������������������ 265
FINANCIAL CALENDAR AND CONTACTS ��������������������������������������� 266
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Notes
Glossary
Glossary
→ Actuarial reserves
Actuarial reserves are the reserves set aside to cover current
life insurance policies�
costs incurred by the processing of claims, and changes in
related reserves�
→ Annual premium equivalent
The annual premium equivalent (APE) is the insurance indus
try standard for measuring the volume of new life insurance
business� It is calculated as the sum of the annual premiums
earned from new business plus 10 per cent of the single
premiums received during the reporting period�
→ Claims ratio
The total cost of claims settled as a percentage of total pre
miums�
→ Claims reserve
A reserve for claims that have not been settled by the end of
the year�
→ Assets managed for third parties
→ Combined ratio
These are assets held in trust for clients and partners�
→ Baloise
“Baloise” stands for “the Baloise Group”, and “Bâloise Hold
ing” means “Bâloise Holding Ltd”� Baloise shares are the shares
of Bâloise Holding Ltd�
→ Broker
Insurance brokers are independent intermediaries� These are
firms or individuals who are not restricted to any particular
insurance companies when selling insurance products� They
are paid commission for the insurance policies that they sell�
→ Business volume
The total volume of business comprises the premium income
earned from nonlife and life insurance and from investment
linked life insurance policies during the reporting period�
The accounting principles used by the Baloise Group do not
allow premium income earned from investmentlinked life
insurance to be reported as revenue in the consolidated
financial statements�
→ Claims incurred
Claims incurred comprise the amounts paid out for claims
during the financial year, the reserves set aside to cover un
settled claims, the reversal of reserves for claims that no
longer have to be settled or do not have to be paid in full, the
A nonlife insurance ratio that is defined as the sum of the
cost of claims settled (claims ratio), total expenses (expense
ratio) and profit sharing (profitsharing ratio) as a percentage
of total premiums� This ratio is used to gauge the profitabil
ity of nonlife insurance business�
→ Deferred taxes
Probable future tax expenses and tax benefits arising from
temporary differences between the carrying amounts of as
sets and liabilities recognised in the consolidated financial
statements and the corresponding amounts reported for tax
purposes� The pertinent calculations are based on country
specific tax rates�
→ Embedded value
The marketconsistent embedded value (MCEV) measures
the value of a life insurance portfolio for shareholders at the
balance sheet date� Please also refer to the separate MCEV
report�
→ Expense ratio
Nonlife insurance business expenses as a percentage of total
premiums�
→ Fixed-income securities
Securities (primarily bonds) that yield a fixed rate of interest
throughout their term to maturity�
260
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Notes
Glossary
→ Gross
→ Investment-linked premium
The gross figures shown on the balance sheet or income state
ment in an insurance company’s annual report are stated
before deduction of reinsurance�
→ Group life business
Insurance policies taken out by companies or their employee
benefit units for the occupational pension plans of their entire
workforce�
→ International Financial Reporting Standards
Since 2000 the Baloise Group has been preparing its con
solidated financial statements in compliance with Inter national
Financial Reporting Standards (IFRS), which were previ
ously called International Accounting Standards (IAS)�
→ Impairment
An asset writedown that is recognised in profit or loss� An
impairment test is carried out to ascertain whether an asset’s
carrying amount is higher than its recoverable amount� If this
is the case, the asset is written down to its recoverable amount
and a corresponding impairment loss is recognised in the in
come statement�
→ Insurance benefit
Premium income from life insurance policies under which
the insurance company invests the policyholder’s savings
for the latter’s own account and at his or her own risk� The
International Financial Reporting Standards applied by the
Baloise Group do not allow the savings component of this
premium income to be recognised as revenue on the income
statement�
→ Legal quota
A legally or contractually binding percentage requiring life
insurance companies to pass on a certain share of their prof
its to their policyholders�
→ Minimum interest rate
The minimum guaranteed interest rate paid to savers under
occupational pension plans�
→ Operating segments
Similar or related business activities are grouped together in
operating segments� The Baloise Group’s operating segments
are NonLife, Life, Banking (which includes asset manage
ment), and Other Activities� The “Other Activities” operating
segment includes equity investment companies, real estate
firms and financing companies�
The benefits provided by the insurer in connection with the
occurrence of an insured event�
→ Net
The net figures shown on the balance sheet or income state
ment in an insurance company’s annual report are stated
after deduction of reinsurance�
→ New business margin
The value of new business divided by the annual premium
equivalent (APE)�
→ Investments
Investments comprise investment property, equities and
alter native financial assets (financial instruments with char
acteristics of equity), fixedincome securities (financial in
struments with characteristics of liabilities), mortgage assets,
policy loans and other loans, derivatives, and cash and cash
equivalents� Precious metals in connection with investment
linked insurance are reported as “other assets�”
→ Investment-linked life insurance
Life insurance policies under which policyholders invest their
savings for their own account and at their own risk�
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Notes
Glossary
→ Performance of investments
→ Reinsurance
Performance in this context is defined as the rates of return
that Baloise generates from its investments� It constitutes the
gains, losses, income and expenses recognised in the income
statement plus changes in unrealised gains and losses as
a percentage of the average portfolio of investments held�
If an insurance company itself does not wish to bear the full
risk arising from an insurance policy or an entire portfolio
of policies, it passes on part of the risk to a reinsurance com
pany or another direct insurer� However, the primary insurer
still has to indemnify the policyholder for the full risk in all
cases�
→ Periodic premium
Periodically recurring premium income (see definition of
“premium”)�
→ Policyholder’s dividend
An annual, nonguaranteed benefit paid to life insurance
policyholders if the revenue generated by their policies is
higher and / or the risks and costs associated with their poli
cies are lower than the assumptions on which the calculation
of their premiums was based�
→ Premium
The amount paid by the policyholder to cover the cost of
insurance�
→ Premium earned
The proportion of the policy premium available to cover
the risk insured during the financial year, i�e� the premium
minus changes in unearned premium reserves�
→ Profit after taxes
Profit after taxes is the consolidated net result of all income
and expenses, minus all borrowing costs as well as current
and deferred income taxes� Profit after taxes includes non
controlling interests�
→ Profit-sharing ratio
Total profit sharing as a percentage of total premiums; profit
sharing is defined as the reimbursement of amounts to non
life policyholders to reflect the profitability of insurance
policies�
→ Reserves
A measurement of future insurance benefit obligations aris
ing from known and unknown claims that are reported as
liabilities on the balance sheet�
→ Return on equity
A calculation of the percentage return earned on a company’s
equity capital during a financial year; it represents the profit
generated in a given financial year divided by the company’s
average equity during that period�
→ Risk scoring
Risk scoring uses analytical statistical methods to derive risk
assessments from collected data based on empirical values�
Insurance companies use this kind of scoring to ensure that
the premiums they charge reflect the risks involved�
→ Run-off business
An insurance policy portfolio that has ceased to accept new
policies and whose existing policies are gradually expiring�
→ Segment
Financial reporting in the Baloise Group is carried out in
accordance with International Financial Reporting Standards
(IFRSs), which require similar transactions and business
activities to be grouped and presented together� These aggre
gated operating activities are presented in “segments”, broken
down by geographic region and business line�
262
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Notes
Glossary
→ Share buy-back programme
→ Technical result
Procedure approved by the Board of Directors under which
Baloise can repurchase its own outstanding shares� Compa
nies in Switzerland open a separate trading line in order to
carry out such buybacks�
Baloise calculates its technical result by netting all income
and expenses arising from its insurance business� Its tech
nical result does not include income and expenses unrelated
to its insurance business or the net gains or losses on its
investments�
→ Shares issued
The total number of shares that a company has issued; multi
plying the total number of shares in issue by their face value
gives the company’s nominal share capital�
→ Unearned premium reserves
Deferred income arising from premiums that have already
been paid for periods after the balance sheet date�
→ Single premium
→ Unrealised gains and losses (recognised directly in equity)
Unrealised gains and losses are increases or decreases in
value that are not recognised in profit or loss and arise from
the measurement of assets� They are recognised directly in
equity after deduction of deferred policyholders’ dividends
(life insurance) and deferred taxes� These gains or losses are
only taken to income if the underlying asset is sold or if
impairment losses are recognised�
→ Value of new business
The value added by new business transacted during the
reporting period; this figure is measured at the time the
policy is issued�
Single premiums are used to finance life insurance policies
at their inception in the form of a oneoff payment� They are
mainly used to fund wealthbuilding life insurance policies,
with the prime focus on investment returns and safety�
→ Swiss Leader Index
The Swiss Leader Index (SLI) comprises the 30 largest and
most liquid equities on the Swiss stock market�
→ Solvency
Minimum capital requirements that the regulatory authori
ties impose on insurance companies in order to cover their
business risks (investments and claims)� These requirements
are usually specified at a national level and may vary from
country to country�
→ Technical reserve
Insurers disclose on their balance sheets the value of the ben
efits that they expect to have to provide in future under their
existing insurance contracts� This value is calcu lated from a
current perspective in accordance with generally accepted
principles�
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Notes
Addresses
Addresses
SWITZERLAND
LUXEMBOURG
Bâloise Assurances
23, rue du Puits Romain
Bourmicht
L-8070 Bertrange
Telephone + 352 290 190 1
Fax + 352 290 190 9001
info@baloise.lu
www.baloise.lu
BELGIUM
Baloise Insurance
Posthofbrug 16
B-2600 Antwerp
Telephone + 32 3 247 21 11
Fax + 32 3 247 27 77
info@baloise.be
www.baloise.be
Basler Versicherungen
Aeschengraben 21
CH-4002 Basel
Telephone + 41 58 285 85 85
Fax + 41 58 285 70 70
kundenservice@baloise.ch
www.baloise.ch
Baloise Bank SoBa
Amthausplatz 4
CH-4502 Solothurn
Telephone + 41 58 285 33 33
Fax + 41 58 285 03 33
bank@baloise.ch
www.baloise.ch
GERMANY
Basler Versicherungen
Basler Strasse 4
Postfach 1145
D-61345 Bad Homburg
Telephone + 49 61 72 130
Fax + 49 61 72 13 200
info@basler.de
www.basler.de
264
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Notes
Information on the Baloise Group
Information on the Baloise Group
The 2014 Annual Report is published in German and English�
The German version is authoritative in the event of any discrep
ancy� The Financial Report section contains the audited 2014
annual financial statements together with detailed information�
AVAILABILIT Y AND ORDERING
The 2014 Annual Report and the Summary of the 2014 Annual
Report will be available on the internet at www�baloise�com/
annualreport from 26 March 2014�
Corporate publications can be ordered either on the inter
net or by post from the Baloise Group, Corporate Communi
cations, Aeschengraben 21, 4002 Basel, Switzerland�
INFORMATION FOR SHAREHOLDERS
AND FINANCIAL ANALYSTS
Detailed information and data on Baloise shares, the IR agenda,
the latest presentations and how to contact the Investor Rela
tions team can be found on the internet at www�baloise�com/
investors� This information is available in German and English�
INFORMATION FOR MEMBERS OF THE MEDIA
You will find the latest media releases, presentations, reports,
images and podcasts of various Baloise events as well as media
contact details at www�baloise�com/media�
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
This publication is intended to provide an overview of Baloise’s
operating performance� It contains forwardlooking statements
that include forecasts of future events, plans, goals, business
developments and results and are based on Baloise’s current
expectations and assumptions� These forwardlooking state
ments should be noted with due caution because they inher
ently contain both known and unknown risks, are subject to
uncertainty and may be adversely affected by other factors�
Consequently, business performance, results, plans and goals
could differ substantially from those presented explicitly or
implicitly in these forwardlooking statements� Among the
influencing factors are (i) changes in the overall state of the
economy, especially in key markets; (ii) financial market per
formance; (iii) competitive factors; (iv) changes in interest rates;
(v) exchange rate movements; (vi) changes in the statutory and
regulatory framework, including accounting standards; (vii)
frequency and magnitude of claims as well as trends in claims
history; (viii) mortality and morbidity rates; (ix) renewal and
expiry of insurance policies; (x) legal disputes and administra
tive proceedings; (xi) departure of key employees; and (xii)
negative publicity and media reports�
Baloise accepts no obligation to update or revise these
forwardlooking statements or to allow for new information,
future events, etc� Past performance is not indicative of future
results�
© 2015 Bâloise Holding Ltd, 4002 Basel, Switzerland
Publisher Baloise, Corporate Communications & Investor Relations
Concept, design Eclat, Erlenbach (ZH)
Photography Marc Wetli, Zurich
Publishing Multimedia Solutions AG, Zurich
English translation LingServe Ltd (UK)
Printing Gremper AG, Pratteln
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Notes
Financial calender and contacts
Financial calendar and contacts
26.3.2015 Annual financial results:
media conference
conference call for analysts
30.4.2015 Annual General Meeting of
Bâloise Holding Ltd
27.8.2015 Half-year financial results:
conference call for analysts
and the media
22.3.2016 Annual financial results:
media conference
conference call for analysts
29.4.2016 Annual General Meeting of
Bâloise Holding Ltd
Corporate Governance
Baloise Group
Andreas Eugster
Aeschengraben 21
4002 Basel, Switzerland
+ 41 58 285 84 50
andreas.eugster@baloise.com
Investor Relations
Baloise Group
Marc Kaiser
Aeschengraben 21
4002 Basel, Switzerland
+ 41 58 285 81 81
investor.relations@baloise.com
Media Relations
Baloise Group
Dominik Marbet
Aeschengraben 21
4002 Basel, Switzerland
+ 41 58 285 84 67
media.relations@baloise.com
www.baloise.com
266
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24.03.2015 15:21:56
BÂLOISE HOLDING LTD
Aeschengraben 21
CH-4002 Basel
www.baloise.com
Making you safer.
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