Bâloise Holding Ltd ANNUAL REPORT 2015 Bâloise Holding Ltd
Annual Report 2015
Contents
BALOISE
Baloise key figures ���������������������������������������������������������������������������������� 4
At a glance �������������������������������������������������������������������������������������������������� 5
Letter to shareholders ��������������������������������������������������������������������������� 6
Interview ����������������������������������������������������������������������������������������������������� 8
Baloise shares ����������������������������������������������������������������������������������������� 12
Our four core markets ����������������������������������������������������������������������� 14
Brand ��������������������������������������������������������������������������������������������������������� 16
Strategy ����������������������������������������������������������������������������������������������������� 17
REVIEW OF OPERATING PERFORMANCE
Group ��������������������������������������������������������������������������������������������������������� 20
Switzerland ��������������������������������������������������������������������������������������������� 24
Germany ��������������������������������������������������������������������������������������������������� 25
Belgium ����������������������������������������������������������������������������������������������������� 26
Luxembourg ������������������������������������������������������������������������������������������� 27
Consolidated income statement ���������������������������������������������������� 28
Consolidated balance sheet ������������������������������������������������������������� 30
Business volume, premiums and combined ratio ����������������� 31
Technical income statement ����������������������������������������������������������� 33
Gross premiums by sector ���������������������������������������������������������������� 34
Banking activities �������������������������������������������������������������������������������� 35
Investment performance ������������������������������������������������������������������ 36
SUSTAINABLE BUSINESS MANAGEMENT
Responsibility ���������������������������������������������������������������������������������������� 40
Human resources ��������������������������������������������������������������������������������� 42
The environment ���������������������������������������������������������������������������������� 46
Risk management ��������������������������������������������������������������������������������� 50
Commitment to art ����������������������������������������������������������������������������� 54
CORPORATE GOVERNANCE
Corporate Governance Report
including Remuneration Report ��������������������������������������������������� 58
Report of the statutory auditor to the Annual
General Meeting of Bâloise Holding Ltd, Basel ��������������������� 96
FINANCIAL REPORT
Consolidated balance sheet ���������������������������������������������������������� 104
Consolidated income statement ������������������������������������������������� 106
Consolidated statement of comprehensive income ����������� 107
Consolidated cash flow statement ��������������������������������������������� 108
Consolidated statement of changes in equity ���������������������� 110
Notes to the consolidated annual financial statements ��� 112
Notes to the consolidated balance sheet ��������������������������������� 182
Notes to the consolidated income statement ����������������������� 230
Other disclosures ������������������������������������������������������������������������������ 242
Report of the statutory auditor to the Annual General
Meeting of Bâloise Holding Ltd, Basel ������������������������������������ 254
BÂLOISE HOLDING LTD
Income statement of Bâloise Holding �������������������������������������� 258
Balance sheet of Bâloise Holding ����������������������������������������������� 259
Notes to the financial statements of Bâloise Holding ������ 260
Appropriation of distributable profit as
proposed by the Board of Directors ����������������������������������������� 271
Report of the statutory auditor to the Annual
General Meeting of Bâloise Holding Ltd, Basel ������������������ 272
NOTES
Glossary ������������������������������������������������������������������������������������������������� 276
Addresses ���������������������������������������������������������������������������������������������� 280
Information on the Baloise Group �������������������������������������������� 281
Financial calendar and contacts ������������������������������������������������ 282
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)
2014
2015
Change (%)
3,358.8
3,816.8
7,175.6
2,130.2
9,305.8
422.7
481.1
73.7
– 48.9
711.9
3,050.0
3,783.4
6,833.4
2,085.1
8,918.6
395.5
277.3
80.8
– 34.4
511.1
48,738.9
45,765.8
5,831.0
5,462.3
13.5
93.7
93.6
15.0
6.9
9.3
92.5
93.3
9.8
1.8
3,610.2
3,876.2
389.6
58.6
367.0
36.1
50,000,000
50,000,000
15.15
14.63
123.4
127.80
6,390.0
5.00
10.96
10.65
116.2
127.60
6,380.0
5.00
– 9.2
– 0.9
– 4.8
– 2.1
– 4.2
– 6.4
– 42.4
9.6
– 29.7
– 28.2
– 6.1
– 6.3
–
–
–
–
–
7.4
– 5.8
– 38.4
0.0
– 27.7
– 27.2
– 5.8
– 0.2
– 0.2
0.0
1 Premiums written and policy fees (gross).
2 Of which deferred gains / losses from other operating segments (31 December 2014: CHF 0.6 million; 31 December 2015: CHF –3.3 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 2015 based on the proposal submitted to the Annual General Meeting.
4
Baloise
At a glance
At a glance
Net combined ratio of
93.3 per cent
3.3 per cent
higher business volume1
Profit of
CHF 512.1 million
(attributable to shareholders)
Dividend of
CHF 5.00 per share
(will be proposed to the Annual General Meeting on 29 April 2016)
Equity of
CHF 5,462.3 million
Return on equity
(RoE) of 9.3 per cent
Solvency I ratio of
341 per cent
New business margin of
9.8 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.
5
Baloise
Letter to shareholders
Dr Andreas Burckhardt, Chairman of the Board of Directors (right), and Dr Martin Strobel, Group CEO until 31 December 2015 (left).
Baloise meets its
targets in a challenging
environment
DEAR SHAREHOLDERS
Baloise has met its targets and has succeeded in consolidating
its operational profitability� The challenging, exceptional eco-
nomic environment had a significant impact on earnings� The
Swiss National Bank’s decision, on 15 January 2015, that it would
no longer support the minimum exchange rate against the euro,
caused the Swiss franc to strengthen� At the same time, interest
rates in Switzerland tumbled, not least because of the introduc-
tion of negative interest rates by the Swiss National Bank in an
attempt to weaken the Swiss franc� Under the influence of these
sharp fluctuations in exchange rates and interest rates, the cost
of hedging instruments also increased significantly� These three
factors – the stronger franc, lower interest rates and higher hedg-
ing costs – had a noticeable effect on Baloise’s earnings, so we
are delighted that we managed to generate a healthy profit in
2015 in spite of them�
Baloise has a sound capital base� In August 2015, Standard &
Poor’s acknowledged this quality by confirming our credit rat-
ing of ‘A’ with a stable outlook� The Company’s capital strength
in accordance with the Swiss solvency test remains in the green
zone� Last year, the Baloise Group demonstrated that its opera-
tional excellence and target customer management make it
extremely resilient� This strength was also reflected in its prof-
it of CHF 512�1 million� In view of the economic environment,
the fact that Baloise met the financial targets it had set for 2015
represents a great achievement�
The focus on attractive target segments in our four core
markets of Switzerland, Belgium, Germany and Luxembourg
that we maintained in 2015 has provided a firm basis on which
to build the future success of Baloise� While we are in a good
position to further expand profitable areas of our business in
Switzerland, Belgium and Luxembourg, the business in Ger-
many has not yet performed as we anticipated� The problems
have been identified and appropriate measures have been taken,
or are under way, but the impact has not yet been reflected in
the results� Nonetheless, we firmly believe in the importance of
the German insurance market and the opportunities it offers�
We also believe there are further attractive opportunities
in life insurance, although we will continue to prioritise in-
novative pension solutions in the future, such as the semi-au-
tonomous Perspectiva pension scheme in Switzerland� This will
enable us to ensure that our customers’ pensions remain safe
6
Baloise
Letter to shareholders
in today’s environment of low interest rates� In Switzerland,
demand for occupational pensions continues to grow in the
segment comprising small and medium-sized companies� Par-
ticularly in the current environment, our customers value the
fact that their pensions are guaranteed to be safe at all times�
Our Swiss insurance companies delivered very solid earn-
ings in their life business and reaffirmed their excellent profit-
ability in non-life business� Overall, the environment remained
competitive, not least because of the SNB’s decision and the
persistent upward pressure on costs� Earnings in our German
business were depressed by the exceptionally high level of large
claims in the non-life segment, the adverse impact of low inter-
est rates, and currency effects� The measures taken to optimise
the business are starting to take effect, but so far have not had
the anticipated impact on comprehensive income� There was
encouraging growth in the business volume in Belgium in local-
currency terms, particularly in investment-linked life insurance,
where the rate of growth showed that the alliances entered into
with banks and distribution partners are continuing to pay off�
In Luxembourg, as announced in early August, we further
strengthened our position in non-life business by acquiring
non-life insurer HDI-Gerling Assurances SA, which means we
are set to become one of the top three insurers in Luxembourg�
The profitability of Baloise’s portfolio was also reflected
in an excellent net combined ratio of 93�3 per cent� The chal-
lenging environment in the capital markets naturally impacted
on investment returns, but a net return of 2�9 per cent enabled
us to generate healthy earnings, which clearly reflects the qual-
ity of our asset management�
Executive Officer, is to stand down� Martin Strobel joined Basler
Switzerland in 1999 and has managed Baloise as its Group CEO
since 2009� The Board of Directors would like to express their
deep gratitude for his outstanding contribution� Under his lead-
ership, Baloise blossomed, achieving operational strength and
a high level of profitability, but the appointment in October of
his successor Gert De Winter, the current CEO in Belgium and
the ideal candidate, has laid the foundations for a new chapter
in our Company’s success�
In 2015, we generated healthy earnings that were in line
with expectations� So that our shareholders also benefit from
this success, we will propose to the Annual General Meeting
on 29 April 2016 that the dividend, which was increased last
year to CHF 5�00, be left unchanged at this attractive level� The
share buy-back programme launched in 2015 is also well on
course to achieve its volume of up to one million shares by 2017�
In 2015, we had already purchased more than half a million
shares, further concentrating our earnings power for the ben-
efit of our owners�
The insurance industry is facing game-changing chal-
lenges� The change in consumer behaviour resulting from dig-
itisation, for example, will influence how we meet the future
demands of our customers� It will become increasingly impor-
tant to innovate and break into new areas of business� The low-
interest-rate phase in Europe, and particularly the negative
interest rates in Switzerland and the strength of the Swiss franc,
pose additional challenges for us� Thanks to our focus on our
core markets, our operational excellence and our unrivalled
positioning in terms of safety, security and prevention, we are
able to meet these challenges from a position of strength�
“ We believe there are further attractive
opportunities in life insurance, but
we plan to prioritise the latest, innovative
pension solutions.”
Basel, March 2016
Dr Andreas Burckhardt
Dr Martin Strobel
Chairman of the Board of Directors
Group CEO
(until 31 December 2015)
We are very grateful to all of our employees, whose skills and
ability have made a major contribution to the fact that Baloise
remains one of the most profitable insurance companies in
Europe, despite the challenges posed by the strong franc and
globally low interest rates�
From an HR perspective, 2015 was also dominated by
the announcement in May that Martin Strobel, a long-standing
member of our Corporate Executive Committee and Chief
7
Baloise
Interview
“We have to create a customer experience.”
The Baloise Group has had a new Group CEO, Gert De Winter, since 1 January 2016. De Winter (49),
who is Belgian, has been with Baloise for eleven years. In his previous post, he was CEO of
Baloise Insurance Belgium. During this interview, he and the Chairman of the Board of Directors,
Andreas Burckhardt, explain what this new era means for the future and how Baloise is facing
up to the challenges in the insurance industry.
By appointing Gert De Winter, isn’t the Board of Directors
sticking to the tried-and-tested rather than bringing in a new
broom for Baloise?
Andreas Burckhardt (ABu): Not at all� That is certainly not how
the Board of Directors and I see this appointment� Gert De
Winter is obviously very familiar with the Baloise Group,
having been here for eleven years� He knows how we operate
and embodies our values� But that is not why he was appointed
as the new CEO� Gert De Winter beat the external candidates
in a lengthy and thorough selection process in which he con-
vinced the Board of Directors that he was the best person for the
job� His time as CEO in Belgium, his background and his ex-
perience of management in both IT and human resources means
he will indeed bring new ideas with him that will enable us to
begin a new chapter in Baloise’s success� In any case, it’s not as
if we were looking for, or needed, someone to usher in change�
Baloise is doing well� Gert De Winter should and will build on
our tried-and-tested approach, but will also bring the skills and
ideas needed to prepare the business for future challenges�
What are the challenges that you and the industry face?
ABu: Everyone is currently talking about digitisation� It will
undoubtedly have a long-term impact on the industry, but even
the most qualified experts are unable to tell us when or how�
The fact is that the core competence of insurance companies,
namely analysing data and using it for their core business of
bearing/taking on risk in return for premiums, will no longer
be the preserve of insurers� Companies in other industries now
collect far more data than the insurance sector and, at some
point, they will want to capitalise on this� That is why we as an
insurance company need to lay the foundations today so that
8
we can retain our lead when it comes to using data for our
customers� This raises the question of whether in future we want
to be an insurer that only bears risk or whether we want to
broaden our business model� Baloise, with its safety positioning,
has built up its expertise in the area of prevention over many
years� We are thus facing up to these future challenges from
a position of strength� Moreover, we still have to cope with the
difficult interest rate situation and the strength of the Swiss
franc, despite the signals sent by the US Federal Reserve at the
Gert De Winter, Group CEO from 1 January 2016.
Baloise
Interview
Gert De Winter (left), Andreas Burckhardt (right).
end of last year� We’ve also been concerned about the huge in-
crease in the time and expense required to deal with regulation
and the ever more restrictive nature of regulation� Although we
cannot influence the environment in which we operate, it is
possible for politicians – and therefore for us as citizens – to
attempt to fight back against this regulation� Particularly in
Switzerland, I would like there to be a better understanding and
relationship between business and politicians so that we as a
company can continue to compete against our rivals in other
countries�
What is the new CEO doing differently to his predecessor?
Gert De Winter (GDW): It’s not my place to make comparisons�
Everyone has their own personality, which in itself means that
we all approach things differently� Baloise has worked very well
over the past few years, as evidenced by the success and the
results it has achieved� So it’s not a matter of doing things
fundamentally differently� On the other hand, the industry is
facing huge challenges� My task will be to prepare Baloise for
these challenges and, at the same time, to explore new oppor-
tunities� I will give my all every day to demonstrate these op-
portunities to employees, customers, partners and shareholders�
I’ll champion these opportunities and make our stakeholders
enthusiastic about them too�
How do you plan to tackle the challenges mentioned?
GDW: As Andreas Burckhardt said, we find ourselves in a climate
shaped by the pressures of interest rates at unprecedented low
levels, fierce competition and increasing regulation� We pay
CHF 5�7 million just for supervisory fees, internal expenses
not included� But the market itself is shifting, too� The digital
revolution has changed consumer behaviour and will continue
to do so� This has an impact on our business as well� Customers
are looking for simplicity, flexibility and transparency but still
want maximum safety, and this means our services have to
deliver a lot� Baloise’s safety positioning is a first step, but we
can’t simply rely on it and rest on our laurels� The things that
have worked in the past aren’t necessarily a guarantee of success
9
Baloise
Interview
in the future� Going forward, we want to remain more than
simply an insurance company� Our emotional connection as a
partner to our customers is crucial in this regard� We have to
create a customer experience� Customers should sense every
day that we can perform our services easily, quickly and cor-
rectly and that, at the end of the day, we are making them safer�
This won’t work if we are only a bearer of risk� That’s why I see
our role as motivating employees and convincing them that
each and every one of them can create these customer experi-
ences, even in the supposedly emotionless world of insurance�
How are you going to achieve this?
GDW: Firstly, we must not neglect the core aspect of our business,
i�e� the things that we do best and where our expertise lies� We
therefore will not budge from our strategy of target customer
management: focusing on profitable target customers who want
to feel safe and appreciate it when we help them to ensure that
losses do not occur in the first place� Of course we also step up
if a loss event arises� In the interests of everyone who is insured
with us, however, we seek out customers who want to actively
contribute to minimising risk themselves and who don’t just
want to insure against a risk� This benefits everyone – the cus-
tomer and us as a company – in the long run� So offering insur-
ance policies alone isn’t enough� We don’t want to wait until
a loss occurs but rather provide services that go beyond the
policy itself and help customers to feel safe� These range from
safety services to active assistance and prevention� New lines
of business besides traditional insurance and chances for growth
could therefore emerge for Baloise in future�
Nonetheless, the core insurance business is under
pressure and the German market remains an issue.
How are you going to tackle this?
ABu: The life insurance business is not easy as a result of the
interest rate situation� It’s now almost impossible to give guar-
antees, or they are not appealing enough for customers� New
business from traditional life insurance can’t help but suffer in
these circumstances� But customers’ need for safety remains
the same� For a while now, we have therefore been offering in-
novative insurance solutions with lower or even no guarantees
10
Andreas Burckhardt
but which offer a basic level of security and enable us to respond
better and more quickly to market conditions and to invest
accordingly� This can result in very attractive surpluses for
policyholders, especially in the group life business� Small and
medium-sized enterprises particularly appreciate this� As far
as Germany is concerned, we firmly believe in its opportunities
and possibilities� Progress is slow – slower than we thought it
would be – but we can do well in this market� This can be seen
from the successes that we have notched up so far� Baloise is
well positioned with its core markets of Switzerland, Germany,
Belgium and Luxembourg, and this shouldn’t change�
GDW: My experience in Belgium has taught me that you can’t
hurry success� I can sometimes be impatient� But if a company
and, specifically, its employees, believe in its business model,
then success will come� Baloise has a track record of opera-
tional excellence� We have to play to this strength and pair it
with tenacity� When we launched our target customer manage-
ment approach some 15 years ago, we were often asked what
we were doing differently� All companies claim to focus on the
customer� What makes Baloise any different? The answer is
Baloise
Interview
simple: the difference is that we are resolutely pursuing one
objective, an objective to which every single employee is fully
committed� Ultimately, this is what has made us one of the most
profitable insurers in Europe�
Are you now promising the shareholders
a strategy of growth?
ABu: Growth for growth’s sake is not the direction that Baloise
is taking� We have been fostering profitable organic growth
for some time, supported by our target customer management�
If opportunities arise, we will continue to grow through acqui-
sitions, as has been the case in Belgium and Luxembourg in
the last few years� We examine acquisition opportunities on
the basis of strict criteria� They have to create added value� Our
success shows that we and our shareholders have been right in
recent years� A case in point is our attractive and sustainable
dividend policy� This shouldn’t change going forward, regard-
less of any challenges that we may encounter�
The interviewer was Dominik Marbet,
Head of Group External Communications�
Gert De Winter
Gert De Winter (1966, BE, MSc) studied ap-
plied economics at the University of Antwerp�
From 1988 to 2004 he performed various roles
at Accenture in Brussels, working as an analyst,
consultant, manager and finally partner for
issues relating to IT and business transforma-
tion management in the financial sector� In
2005 he joined the Baloise Group as Chief
Information Officer (CIO) of the Mercator
insurance company in Belgium� Since 2009
Gert De Winter has been Chief Executive
Officer of Baloise Insurance, which was formed
in 2011 from the merger of the three insurance
companies Mercator, Nateus and Avéro� As of
1 January 2016 Gert De Winter took up his
role as Chief Executive Officer of the Baloise
Group�
11
Baloise
Baloise shares
Sprint finish for Baloise shares
Baloise shares* were marked by volatility in 2015, although they remained at a high level.
The closing price of CHF 127.60 was on a par with the price at the start of the year.
Baloise shares thus outperformed the Swiss Market Index. A dividend yield of 3.9 per cent
represents another attractive payout for shareholders.
Stock markets experienced a challenging year in 2015� The
global sovereign debt crisis led to volatile price movements in
financial markets� On 15 January, the Swiss National Bank sur-
prised investors with its decision to unpeg the Swiss franc from
the euro following a long period of intensive intervention� This
came as a shock to the stock markets� The Swiss Market Index
fell by a total of 15 per cent within two days and had not recov-
ered by the end of the year, ultimately registering an overall
decrease of 1�8 per cent� Other events that influenced the
global economy were Greece’s default, an economic slowdown
in China, an even more expansionary monetary policy from
the European Central Bank and a first interest rate hike in the
United States�
Against this backdrop, Baloise shares shed almost 11 per
cent of their value in the first half of last year after delivering a
superb performance in previous years� The Swiss Leader Index
(SLI) and the Swiss insurance sector index fell by 0�9 per cent
and 4�7 per cent respectively�
In the second half of the year, Baloise shares climbed by
11�9 per cent, outperforming both the Swiss Leader Index (up
1�0 per cent) and the Swiss insurance sector index (up 4�6 per
cent)� Thanks, above all, to a strong recovery in the fourth quar-
ter, Baloise shares thus almost offset the decrease registered in
the first six months of the year� Closing at CHF 127�60, the shares
finished 2015 virtually where they had been at the start of the
year�
European insurance stocks fared better� The STOXX Eu-
rope 600 Insurance (SXIP) index for the European insurance
industry achieved an increase of 14�0 per cent compared with
its level at the beginning of 2015� Insurers’ profitability contin-
ues to be robust and their dividend yields remain attractive
owing to the environment of low interest rates in Europe�
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 29 April 2016 that another good
cash dividend of CHF 5�00 per share be paid for the 2015 finan-
cial year� This would represent an attractive dividend yield of
3�9 per cent of the year-end share price�
Under the share buy-back programme, which began in
April 2015, a total of 507,500 shares at an average price of CHF
116�36 had been acquired by the end of December 2015� As at
31 December 2015, the share buy-back programme was therefore
50�75 per cent complete�
Year (CHF million)
2011
2012
2013
2014
2015
Total
Cash dividends
Share buy-backs
Total
225.0
225.0
237.5
250.0
250.0
1,187.5
17.1
–
–
–
59.1
76.2
242.1
225.0
237.5
250.0
309.1
1,263.7
* Baloise shares = shares of Bâloise Holding Ltd.
All figures stated as at 31 December.
12
Baloise
Baloise shares
SHAREHOLDER STRUCTURE
The shares in Bâloise Holding Ltd are widely held and their free
float remains unchanged at 100 per cent� There were no disclo-
sures about changes to the Baloise shareholder base during
the financial year� Further information on Baloise’s significant
shareholders as at 31 December 2015 can be found in the table
on page 268�
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)
31.12.2011
31.12.2012
31.12.2013
31.12.2014
31.12.2015
64.40
103.30
60.15
78.50
80.56
58.30
113.60
113.60
80.75
127.80
129.90
101.60
3,220.0
3,925.0
5,680.0
6,390.0
1.30
1.29
49.54
0.78
9.32
9.08
8.42
0.76
9.65
9.38
11.77
1.10
15.15
14.63
8.44
1.04
127.60
136.30
109.60
6,380.0
10.96
10.65
11.64
1.10
50,000,000
50,000,000
50,000,000
50,000,000
50,000,000
Minus the number of treasury shares (units)
3,247,273
3,053,746
3,028,943
3,048,791
3,464,540
Number of shares in circulation (units)
Average number of shares outstanding2
Dividend per share3 (CHF)
Dividend payout ratio3
Dividend yield3
46,752,727
46,946,254
46,971,057
46,951,209
46,535,460
46,900,473
46,831,998
46,896,926
46,921,282
46,721,219
4.50
>100
7.0
4.50
48.3
5.7
4.75
49.2
4.2
5.00
33.0
3.9
5.00
49.0
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 239 of the Financial Report).
3 For 2015, 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 2010 – 2015
BALN
CHF 0.10
1.241.051
CH0012410517
SIX Swiss Exchange
100 % registered shares
150
100
50
2010
2011
2012
2013
2014
2015
1 31 December 2009 = 100.
Bâloise Holding registered shares (BLAN)
SWX SP Insurance Price Index (SMINNX)
Swiss Market Index (SMI)
13
Baloise
Core markets
Our four core markets
Hamburg
Antwerp
Brussels
BELGIUM
Business volume (CHF million)
Bad Homburg
Life: 144.5
Investment-type premiums: 412.2
Non-life: 888.3
Luxembourg
LUXEMBOURG
Business volume (CHF million)
Life: 73.9
Non-life: 108.6
Investment-type premiums: 1,308.4
Basel
Solothurn
SWITZERLAND
Business volume (CHF million)
Life: 3,087.6
Investment-type premiums: 162.4
Non-life: 1,315.5
GERMANY
Business volume (CHF million)
Life: 477.4
Non-life: 734.5
Investment-type premiums: 202.2
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 7,400 people.
14
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
2014
3,701
2015
3,657
Employees
Business volume (CHF million)
4,510.0
4,565.5
Business volume (CHF million)
Gross combined ratio (per cent)
83.9
83.2
Gross combined ratio (per cent)
2014
1,343
1,544.9
102.4
2015
1,297
1,445.0
95.4
GERMANY
Business volume (CHF million)
Life: 477.4
Non-life: 734.5
GERMANY
LUXEMBOURG
KEY FIGURES FOR GERMANY
KEY FIGURES FOR LUXEMBOURG
Employees
Business volume (CHF million)
Gross combined ratio (per cent)
2014
2,174
1,632.7
101.5
2015
2,036
Employees
2014
395
2015
397
1,414.1
Business volume (CHF million)
1,483.4
1,490.9
106.9
Gross combined ratio (per cent)
89.3
87.9
15
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 de-
pendable 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.
16
Baloise
Strategy
Excellence in safety
A strong foundation is further enhanced
17
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 approach sets new bench-marks for our industry. The systematic focus on risk-aware key customers 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 in Europe. 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. 4 Baloise
18 Review of operating performance
38 Sustainable business management
56 Corporate Governance
102 Financial Report
256 Bâloise Holding Ltd
274 Notes
Review of operating
performance
GROUP ���������������������������������������������������������������������������������������������������������� 20
Targets achieved in difficult conditions ��������������������������������������� 20
SWITZERLAND ������������������������������������������������������������������������������������������� 24
Solid results in a competitive environment �������������������������������� 24
GERMANY ���������������������������������������������������������������������������������������������������� 25
Profit and optimisation measures
adversely affected by large claims incurred �������������������������������� 25
BELGIUM ������������������������������������������������������������������������������������������������������ 26
Another higher profit contribution
from the strongest international market �������������������������������������� 26
LUXEMBOURG ������������������������������������������������������������������������������������������� 27
Set to become one of the top 3 ���������������������������������������������������������� 27
FINANCIAL INFORMATION �������������������������������������������������������������������� 28
Consolidated income statement ������������������������������������������������������� 28
Consolidated balance sheet ���������������������������������������������������������������� 30
Business volume, premiums and combined ratio �������������������� 31
Technical income statement �������������������������������������������������������������� 33
Gross premiums by sector ������������������������������������������������������������������� 34
Banking activities ����������������������������������������������������������������������������������� 35
Investment performance ��������������������������������������������������������������������� 36
Review of operating performance
Group
Targets achieved in difficult conditions
In 2015, Baloise generated a very healthy profit in its life business and achieved further
profitability improvements in its non-life business despite a backdrop of difficult conditions.
These solid foundations mean Baloise is ideally placed to deal with current challenges.
BUSINESS VOLUME IN 2015 1 (GROSS) BY STRATEGIC BUSINESS UNIT
As a percentage
Switzerland
Germany
Belgium
Luxembourg
51.2
15.9
16.2
16.7
There was encouraging growth in the EBIT generated by the
banking business, which rose by 9�6 per cent to CHF 80�8 mil-
lion�
Baloise’s balance sheet remained strong, although con-
solidated equity fell by 6�3 per cent to CHF 5,462�3 million� This
was mainly a result of currency effects and the marking to mar-
ket of available-for-sale financial assets� The repurchase of more
than half a million shares as part of the share buy-back pro-
gramme also had a negative impact on equity�
Capital strength in accordance with the Swiss solvency
test remains in the green zone�
BUSINESS VOLUME1
CHF million
Total business volume
Life
Non-life
Investment-type
premiums
2014
2015
+/– %
9,176.7
3,798.1
3,260.5
2,118.2
8,918.6
3,783.4
3,050.0
2,085.1
3.3
2.1
0.8
9.2
OVERVIEW
In 2015 Baloise achieved a healthy profit of CHF 512�1 million
in an uncertain market environment� This figure was 27�9 per
cent down on 2014� However, the previous year had been boost-
ed by a number of non-recurring effects such as the disposal of
Baloise’s shareholdings in Nationale Suisse and Helvetia and
the sale of Basler Austria, which accounted for additional rev-
enue of around CHF 160 million� In addition to the prolonged
phase of low and negative interest rates, the results for 2015 were
also subject to currency effects and to higher hedging costs,
which were mainly the result of the Swiss National Bank (SNB)
releasing the Swiss franc from its peg against the euro� At the
average exchange rate in 2014, Baloise’s profit would have been
around CHF 30 million higher�
The total volume of business generated by continuing op-
erations amounted to CHF 8�9 billion, which was equivalent to
an increase of 3�3 per cent in local-currency terms, but repre-
sented a year-on year decline of 2�8 per cent when reported in
Swiss francs� The non-life division generated a volume of pre-
mium income reported under IFRS from continuing operations
of CHF 3,050�00 million, an increase of 0�8 per cent in local-
currency terms� The life-insurance business in continuing op-
erations grew by 2�1 per cent in local-currency terms but con-
tracted by 0�4 per cent in Swiss-franc terms� Baloise’s life
business achieved an EBIT of CHF 277�3 million� The adverse
interest-rate situation particularly affected the capital-intensive,
traditional life business where earnings were down as the result
of lower investment returns�
Investments generated net income of CHF 1,841�3 million,
which was below the prior-year level of CHF 2,411�4 million,
although net income in 2014 had been boosted by non-recurring
effects� The net income generated in this very challenging en-
vironment equated to a healthy net return on insurance assets
of 3�1 per cent (2014: 4�2 per cent), which is in line with the
long-term trend� A reinvestment return of 1�9 per cent enabled
Baloise to generate sufficient income to meet the guarantees
provided on new business� By increasing the duration of invest-
ments, it was possible to reduce the interest-rate sensitivity of
Baloise’s life business�
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).
20
Review of operating performance
Group
NON-LIFE DIVISION:
LIFE DIVISION:
FURTHER PROFITABILIT Y IMPROVEMENTS
There was a small increase of 0�8 per cent in the premium income
for non-life business in continuing operations� Belgium and
Luxembourg generated the most encouraging growth rates of
5�1 per cent and 6�8 per cent respectively, while premium income
was down in Germany and Switzerland� In Switzerland, this
was mainly because of the restrictive underwriting policy� The
total volume of premium income declined by 6�5 per cent to
CHF 3,050�0 million due to currency effects� The quality of the
portfolio remained high� Partly because a much lower amount
was paid out for large claims, there was a year-on-year fall in
the insurance benefits paid, resulting in a lower gross claims
ratio� The division’s high level of profitability was reflected in
a 1�2 percentage point fall in its gross combined ratio, which
declined to 92�5 per cent� In net terms, the combined ratio was
0�3 percentage points lower at 93�3 per cent�
Baloise reported a 6�4 per cent fall in EBIT generated by
its non-life business, which amounted to CHF 395�5 million�
This was partly due to a year-on-year fall in net gains on invest-
ments�
NET COMBINED RATIO
As a percentage
2015
2014
2013
2012
2011
93.3
93.6
94.9
94.1
95.5
MODEST GROWTH
The life division reported growth of 2�1 per cent in continuing
operations in local-currency terms, compared with a contraction
of 0�4 per cent in Swiss-franc terms� Total premium income,
including investment-type premiums, amounted to CHF 5,868�5
million� In traditional life business, Switzerland and Belgium
reported growth in local-currency terms of 3�4 per cent and 4�5
per cent respectively, while business was down by 4�6 per cent
in Germany and by 3�7 per cent in Luxembourg� Group life
business performed particularly well in Switzerland where it
grew by 5�0 per cent, but individual life insurance declined by
4�8 per cent� Overall, the mix was further optimised towards
innovative life products in all countries, because of the particu-
larly adverse effect of the prolonged phase of low/negative inter-
est rates on earnings in traditional life business� Financial income
was down in this business, showing the extent to which the
unfavourable interest-rate situation has affected this capital-
intensive segment� Together with the modest increase in pre-
mium income, this resulted in a decline in EBIT in the life divi-
sion to CHF 277�3 million� In the previous year, EBIT in the life
division had also benefited from exceptionally high net savings
which had been boosted by the proceeds received from the re-
alisation of gains on investments, particularly the sale of Baloise’s
shareholdings in Nationale Suisse and Helvetia�
The positive operating income resulted in an increase in
the embedded value of the life insurance business from CHF
3,610�2 million to CHF 3,876�2 million in 2015, which is equiv-
alent to a return on embedded value of 8�3 per cent� The new
business margin fell to 9�8 per cent (2014: 15�0 per cent) due to
lower interest rates in Switzerland� The value of new business
amounted to CHF 36�1 million�
21
Review of operating performance
Group
BANKING DIVISION: ENCOURAGING EARNINGS GROWTH
The banking business generated strong earnings and succeeded
in maintaining its net interest income at around the same lev-
el as in 2014� Overall, its EBIT of CHF 80�8 million represented
an increase of 9�6 per cent on the previous year� The main
contributors were the two Baloise Asset Management units
(CHF 46�9 million) and Baloise Bank SoBa (CHF 25�0 million)�
EQUIT Y: BALOISE REMAINS WELL CAPITALISED
Baloise’s solid foundations continued to be underpinned by its
strong balance sheet and capitalisation� The 6�3 per cent decline
in its consolidated equity, which fell to CHF 5,462�3 million,
was mainly attributable to currency effects and the marking to
market of available-for-sale financial assets� Dividend payments
of CHF 235�1 million and the fact that more than 500,000 shares
had already been repurchased at a cost of almost CHF 60 million
as part of the share buy-back programme announced in 2015,
also had a correspondingly negative effect on equity� Capital
strength in accordance with the Swiss solvency test remains in
the green zone� Our reliable and attractive dividend policy is
not linked to potential capital reserves, but is based on our op-
erational profitability, which remains strong� The excellent pro-
gress that has already been made in the implementation of our
ongoing share buy-back programme provides further evidence
of the capital strength of Baloise�
SIGNIFICANT GAINS ON INVESTMENTS
The defining events in 2015 were the abandonment of the euro
exchange-rate floor by the Swiss National Bank (SNB) and the
introduction of negative interest rates� Quantitative easing car-
ried out by the European Central Bank (ECB) in the eurozone
also pushed interest rates to ultra-low levels� The US Federal
Reserve’s deferral of a change in interest-rate policy in Septem-
ber and concerns about the Chinese economy unsettled inves-
tors and resulted in a stock-market correction� In early Decem-
ber, the fact that the expansion in the ECB’s programme of
quantitative easing fell short of investors’ expectations height-
ened volatility prior to the markets rallying sharply following
the interest-rate hike in the US� The further fall in interest rates
in the Swiss market remains one of the medium-term chal-
lenges facing those investing and reinvesting insurance assets�
The net income generated by Baloise came to CHF 1,841�3
million, which was below the CHF 2,411�4 million reported for
2014 when it had been boosted by non-recurring effects� First-
ly, this was because recurring income amounted to CHF 1,521�8
million, which was significantly lower than the prior-year figure
PROPRIETARY INVESTMENTS BY CATEGORY1
INVESTMENT COMPONENTS IN 2015
2014
2015
+/– %
CHF million
Investment property
Equities
Alternative financial assets
5,962.9
4,028.5
1,341.2
6,251.9
4,357.5
1,259.6
Fixed-income securities
32,701.1
31,620.6
Mortgage assets
11,138.0
10,869.5
As a percentage
4.8
8.2
– 6.1
– 3.3
– 2.4
Fixed-income securities
Mortgage assets
Investment property
Policy loans and other loans
Equities
Policy loans and other loans
7,027.9
5,787.0
– 17.7
Cash and cash equivalents
Derivatives
341.0
363.2
Cash and cash equivalents
1,954.5
1,765.8
Total
64,495.0
62,275.3
6.5
– 9.7
– 3.4
Alternative financial assets
Derivatives
50.8
17.5
10.0
9.3
7.0
2.8
2.0
0.6
1 Excluding investments for the account and at the risk of life insurance policyholders and
third parties.
22
Review of operating performance
Group
ASSETS HELD BY BALOISE
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
as at 31 December 2015
CHF million
Proprietary investments
Investment-linked life insurance1
Total recognised assets
Asset management for third parties
Total assets under management
Non-life
Life
Banking
9,873.9
47,380.3
7,649.1
10,904.2
9,873.9
58,284.4
7,649.1
Non-life
Life
Banking
9,160.2
45,406.3
7,902.1
10,873.2
9,160.2
56,279.5
7,902.1
Total for the
Group
64,495.0
11,182.6
75,677.6
5,055.3
80,733.0
Total for the
Group
62,275.3
11,186.3
73,461.6
4,985.9
78,447.5
1 Including CHF 40.2 million (2014: CHF 53.3 million) in other assets (precious metal holdings from investment-linked life insurance policies).
of CHF 1,701�9 million� In addition to the persistently tough
investment situation in the low interest-rate environment, the
depreciation of the euro following the SNB’s abandonment of
the minimum exchange rate also took its toll on net income
because the income on foreign-currency investments generated
by both Baloise’s foreign entities and its Swiss entities were
translated at lower exchange rates than in 2014� Secondly, the
gains realised in 2015 were lower than in the previous year when
exceptionally large gains were realised� The net income gener-
ated in this very challenging environment equated to a healthy
net return on insurance assets of 3�1 per cent (2014: 4�2 per cent)
and is therefore broadly in line with the long-term trend� The
volume of unrealised gains was lower because of currency trans-
lation and a slight rise in eurozone interest rates and realised
gains� Consequently, the rate of return on insurance assets ac-
cording to IFRS – which includes unrealised net gains and
losses on investments but excludes gains and losses on held-to-
maturity debt instruments – was 1�8 per cent, which was below
the prior-year figure of 6�9 per cent�
The duration of our fixed-income investments, particu-
larly those held by the life companies, was increased signifi-
cantly� No impairment losses were recognised on debt instru-
ments� Baloise also further increased its equity exposure as
measured under IFRS� In terms of alternative financial assets,
we increased our position in senior secured loans� The impair-
ment losses recognised on financial instruments with charac-
teristics of equity totalled CHF 72�0 million (gross)� Investment
property continued to yield stable returns and slightly higher
valuations� The values and income streams generated by mort-
gages remained consistent�
23
Review of operating performance
Switzerland
Switzerland
Solid results in a competitive environment
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
2014
2015
+/– %
4,510.0
3,174.9
1,335.1
83.9
4,565.5
3,250.0
1,315.5
83.2
1.2
2.4
– 1.5
–
587.9
415.3
– 29.4
BASLER VERSICHERUNGEN SWITZERLAND
Our Swiss insurance companies reaffirmed their excellent prof-
itability in non-life business and delivered solid earnings in
their life business� Overall, the environment remained com-
petitive, not least because of the SNB’s decision and the persis-
tent upward pressure on costs� In non-life business, the high
level of the previous year was confirmed in the technical result,
but earnings fell as a consequence of lower investment income�
The SNB’s decision took its toll on life business and was only
partly offset� The profit before borrowing costs and taxes at-
tributable to the Swiss entities fell by 29�4 per cent to CHF 415�3
million, contrasting with the previous year that had been boost-
ed by exceptionally large gains on investments, the sale of share-
holdings in Nationale Suisse and Helvetia, and large profits on
claims reserves� The volume of business rose by 1�2 per cent to
CHF 4,565�5 million�
In the non-life division, premiums were down by 1�5 per
cent to CHF 1,315�5 million� The focus on improving profitabil-
ity took priority over premium growth, as a result of which
a conscious decision was taken to forego premium income in
accident and health insurance� Encouragingly, growth contin-
ued to be strong in motor vehicle and liability insurance as well
24
Life: 67.6 %
Non-life: 28.8 %
Investment-type premiums: 3.6 %
as in insurance add-ons� The favourable claims environment
resulted in a lower claims rate� The gross combined ratio of 83�2
per cent was evidence of the excellent quality of the Swiss non-
life portfolio�
In the life division, the volume of conventional life insur-
ance premiums grew by 3�4 per cent year on year to CHF 3,087�6
million� This increase was mainly attributable to the target cus-
tomer segments in the area of comprehensive BVG insurance
contracts in group life insurance� In addition, demand for par-
tially autonomous pension solutions such as the new Perspec-
tiva product line, continues to grow� Market conditions and the
political framework for traditional life insurance business are,
however, very challenging in view of the current level of inter-
est rates� In future, there will continue to be a shift in the busi-
ness mix towards partially autonomous solutions and risk in-
surance� Overall, premiums in group life insurance grew by 5�0
per cent�
Individual life insurance business contracted by 4�8 per
cent� Because of its low margins, this business was not prioritised
in 2015� The annual premiums declined because new business
in the current low-interest environment is unable to compensate
for the level of outflows from the portfolio resulting from
maturing policies� There was a particularly sharp fall of 14�5
per cent in business involving traditional single premiums
(investment-type premiums) as a result of the underwriting
restrictions following the SNB’s decision� Premiums for tranche
products also declined because, in contrast to 2014, no second
tranche was launched�
The banking business conducted by Baloise Bank SoBa
performed very well� The bank reported operating profit of CHF
38�0 million in its local financial statements, which constitutes
an increase of 6�2 per cent� Its profit from interest-earning busi-
ness, meanwhile, rose by 2�1 per cent to reach CHF 77�1 million�
BUSINESS VOLUME (CHF million),(as a percentage of the Group)4,565.5 (51.2 %) Review of operating performance
Germany
Germany
Profit and optimisation measures adversely
affected by large claims incurred
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)
2014
2015
+/– %
1,632.7
1,414.1
789.8
842.9
101.5
679.6
734.5
106.9
– 1.6
– 2.2
– 1.0
–
Profit before borrowing costs
and taxes
62.6
64.9
3.7
BASLER VERSICHERUNGEN IN GERMANY
The extremely high level of large claims in the non-life segment,
the adverse impact of low interest rates, and currency effects
depressed earnings in Baloise’s German business� The measures
to optimise the business that had been announced and have
already been implemented are starting to take effect, but so far
have not had the expected impact on comprehensive income�
Premium income fell by 1�6 per cent to CHF 1,414�1 million�
The focus on target customer segments worked well, with virtu-
ally all of these segments achieving above-average growth rates�
Business in non-life target segments outperformed the market
by around 1 per cent and the focus in life business was success-
fully switched from traditional products and ‘Riester’ state-
subsidised pension products to capital-efficient, unit-linked
products� The sale of the run-off portfolio of Baloise Life (Direk-
tion für Deutschland), consisting almost exclusively of tradi-
tional products, that had previously been announced supports
this focus on life business and is intended to reduce Baloise’s
interest-rate sensitivity� The sale requires the approval of the
Life: 33.8 %
Non-life: 51.9 %
Investment-type premiums: 14.3 %
financial supervisory authorities, whose checks that form part
of the normal approval process have yet to be completed�
Non-life premium income was down by 1�0 per cent to
CHF 734�5 million, despite the fact that significant growth of
more than 4�0 per cent was achieved in some target segments�
However, further profit-driven restructuring measures were also
carried out in 2015� The gross combined ratio rose by 5�4 per-
centage points to 106�9 per cent� This unsatisfactory outcome
was due to the fall in the volume of premium income as well as
the repeatedly high level of large claims paid� Of the total claims,
CHF 15�2 million alone related to two storm events and CHF
21�8 million to two fires at SMEs�
In life business, a year-on-year fall of 2�2 per cent was
reported in the volume of premium income, which declined to
CHF 679�6 million� In contrast to the contraction in tradition-
al life business, investment-type premiums followed an upward
trend, with growth of 4 per cent in local-currency terms� The
trend in new business in unit-linked products, however, could
not compensate for the decline in traditional life business�
The process of cutting 400 full-time equivalents by the
end of 2017 is going to plan and almost three quarters of the
job cuts have already been carried out� As planned, cost savings
of EUR 40 million have been achieved, but they have been off-
set by substantial IT expenses� Despite the operational progress
achieved and the measures taken, the earnings generated by
Baloise’s German business are not yet within the range antici-
pated� Further optimisation and other measures are required
in order to take better advantage of the opportunities offered
by this market�
25
BUSINESS VOLUME (CHF million), (as a percentage of the Group)1,414.1 (15.9 %) Review of operating performance
Belgium
Belgium
Another higher profit contribution from the
strongest international market
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
Life: 10.0 %
Non-life: 61.5 %
Investment-type premiums: 28.5 %
2014
2015
+/– %
1,544.9
1,445.0
583.7
961.2
102.4
556.7
888.3
95.4
6.3
8.4
5.1
–
141.6
191.7
35.4
business was reflected in a 7 percentage point fall in the gross
combined ratio, which improved to 95�4 per cent�
In its traditional life business, Baloise Insurance Belgium
generated strong growth of 4�5 per cent in a declining market,
thus also increasing its total share of the Belgian life insurance
market by a small margin� Innovative life-insurance products
were the main driver of this above-average growth rate, with
the volume of investment-type premiums rising by 9�8 per cent
in local-currency terms to a total of CHF 412�2 million�
BALOISE INSURANCE BELGIUM
There was a further improvement in the quality of the portfolio
in Belgium� In local-currency terms, the volume of premium
income grew by 6�3 per cent to CHF 1,445�0 million� Profit be-
fore borrowing costs and taxes jumped by more than 35 per
cent to CHF 191�7 million, which meant that Baloise’s Belgian
business significantly outperformed the market average in both
its life and non-life divisions� Isolated price increases and bun-
dled family and SME products were responsible for the growth
in its non-life business� The Belgian business continued to focus
on corporate business and regional expansion to Brussels and
Wallonia� In its marine business, Belgium benefited from an
alliance with Dutch Marine International, a specialist provider
of transport and marine insurance� Following the isolated non-
recurring effects such as hail storm ‘Ela’ that had an adverse
effect on the previous year, EBIT for non-life business rose to
CHF 112�3 million in 2015� As a result, the Belgian business
contributed around 28 per cent of the Baloise Group’s non-life
profit for the period� The high level of profitability in non-life
26
BUSINESS VOLUME (CHF million), (as a percentage of the Group)1,445.0 (16.2 %) Review of operating performance
Luxembourg
Luxembourg
Set to become one of the top 3
Luxembourg
Life: 5.0 %
Non-life: 7.3 %
Investment-type premiums: 87.8 %
KEY FIGURES FOR
LUXEMBOURG
IN LOCAL CURRENCY
CHF million
Business volume
Of which: life
Of which: non-life
Gross combined ratio
(per cent)
2014
2015
+/– %
1,483.4
1,367.8
115.6
89.3
1,490.9
1,382.3
108.6
87.9
11.9
12.4
6.8
–
The international life business, which is operated from Luxem-
bourg and mainly generates investment-type premiums, held
up well� The growth here was partly attributable to Baloise Life
Liechtenstein which is integrated into the Luxembourg business�
The total volume of premium income amounted to CHF 1,382�3
million, which represented an increase of 12�4 per cent� The
strong growth rate of 13�4 per cent in investment-type premiums
in local-currency terms more than compensated for the decline
of 3�7 per cent in traditional business�
Profit before borrowing costs
and taxes
20.7
23.5
13.5
BÂLOISE ASSURANCES LUXEMBOURG
The volume of premiums in the Luxembourg business unit grew
by almost 12 per cent in local-currency terms� In addition, Ba-
loise Luxembourg’s purchase of non-life insurer HDI-Gerling
Assurances SA consolidated its market position and is set to
put Baloise in the top three insurance companies in Luxembourg�
There was an encouraging increase in the volume of business
in the non-life division, which grew by the excellent rate of 6�8
per cent in local-currency terms� This growth was mainly at-
tributable to the motor vehicle division� The launch of the Game
of Roads app associated the name Bâloise Assurances with safe
driving, which is a perfect fit with the ‘Making you safer’ slogan�
However, the non-life division found itself confronted by a num-
ber of major claims in the reporting year; each was for between
one and two million euros and they were spread across all sec-
tors and impacted its profitability� Nonetheless, the gross com-
bined ratio improved slightly, falling by 1�4 percentage points
to a sound 87�9 per cent� This was proof that Luxembourg’s
non-life portfolio is now well diversified�
27
BUSINESS VOLUME (CHF million), (as a percentage of the Group)1,490.9 (16.7 %) 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
2011
2012
(restated)
2013
2014
2015
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
6,832.4
– 148.6
6,683.7
1,521.8
386.2
112.6
36.8
136.6
7,762.6
9,423.2
9,747.5
10,372.8
8,877.9
Claims and benefits paid (gross)
– 5,311.5
– 5,449.4
– 5,439.7
– 5,666.4
Change in technical reserves (gross)
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
– 639.9
– 867.7
– 1,359.4
– 1,469.5
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
146.6
– 569.6
– 866.5
– 66.9
– 42.6
– 462.6
– 446.8
– 5,352.4
– 1,241.9
97.9
– 453.3
– 780.5
– 60.4
– 34.1
– 0.9
– 333.1
– 7,618.7
– 8,805.4
– 9,089.3
– 9,444.3
– 8,158.6
Profit before borrowing costs and taxes
143.9
617.9
658.2
928.6
719.2
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.
28
– 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
– 40.0
679.3
– 168.2
511.1
512.1
– 1.0
10.96
10.65
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)
2011
2012
(restated)
2013
2014
2015
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
6,833.4
2,085.1
8,918.6
7,746.8
8,779.3
9,606.8
10,904.2
10,873.2
92.4
195.9
93.2
184.3
93.1
179.8
93.7
182.9
92.5
192.4
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).
29
Review of operating performance
Consolidated balance sheet
Consolidated balance sheet
Financial instruments with characteristics of liabilities
28,917.5
32,513.3
32,327.1
34,461.6
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
2011
2012
(restated)
2013
2014
2015
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
379.2
909.2
227.9
5,962.9
11,344.4
13,451.2
18,042.7
18,510.9
18,329.5
18,165.9
334.1
2,586.4
22.2
497.6
2,618.6
32.7
410.7
2,857.7
56.0
613.2
2,153.5
48.3
2,287.8
2,923.7
2,960.8
2,969.6
399.1
814.6
162.3
6,251.9
13,770.8
33,248.4
16,656.6
653.9
3,945.1
41.4
2,839.8
69,066.2
73,777.7
75,696.9
79,342.3
78,783.8
2011
2012
(restated)
2013
2014
2015
Equity before non-controlling interests
3,860.3
4,603.5
4,855.9
5,791.3
Non-controlling interests
33.3
37.8
50.5
39.7
5,427.6
34.7
Total equity
Liabilities
3,893.6
4,641.3
4,906.4
5,831.0
5,462.3
Gross technical reserves
45,561.9
46,591.9
47,435.6
48,738.9
Liabilities arising from banking business
and financial contracts
Derivative financial instruments
Other accounts payable
Deferred tax liabilities
Total liabilities
13,998.1
15,839.6
16,542.1
17,740.8
175.3
4,782.9
654.4
64.4
5,802.0
838.5
68.2
5,862.3
882.3
176.4
5,789.7
1,065.5
45,765.8
19,012.0
250.8
7,379.5
913.3
65,172.6
69,136.4
70,790.5
73,511.4
73,321.5
Total equity and liabilities
69,066.2
73,777.7
75,696.9
79,342.3
78,783.8
30
Review of operating performance
Business volume,
premiums and combined ratio
Business volume, premiums
and combined ratio
BUSINESS VOLUME
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
2015
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
3,050.0
3,783.4
6,833.4
2,085.1
8,918.6
1,315.5
3,087.6
4,403.2
734.5
477.4
888.3
144.5
1,211.9
1,032.8
162.4
202.2
412.2
4,565.5
1,414.1
1,445.0
108.6
73.9
182.5
1,308.4
1,490.9
–
–
–
–
–
1 Premiums written and policy fees (gross).
2 Other units: Austria (until 28 August 2014), Croatia and Serbia (until 11 March 2014).
31
Review of operating performance
Business volume,
premiums and combined ratio
GROSS COMBINED RATIO
2014
Group
Switzerland
Germany
Belgium
Luxembourg
Other units1
as a percentage of premiums earned
Claims ratio2
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
56.8
32.5
89.3
60.2
33.1
93.3
2015
Group
Switzerland
Germany
Belgium
Luxembourg
Other units1
62.6
32.8
95.4
Gross
2015
62.4
30.1
92.5
55.5
32.4
87.9
2014
61.7
31.9
93.6
–
–
–
Net
2015
62.1
31.2
93.3
2014
2015
5,879.4
3,213.8
182.9
5,614.9
2,918.9
192.4
as a percentage of premiums earned
Claims ratio1
Expense ratio
Combined ratio
62.4
30.1
92.5
57.7
25.5
83.2
72.0
34.9
106.9
1 Other units: Austria (until 28 August 2014), Croatia and Serbia (until 11 March 2014).
2 Including the profit-sharing ratio.
2014
63.0
30.7
93.7
GROSS AND NET COMBINED RATIO
as a percentage of premiums earned
Claims ratio1
Expense ratio
Combined ratio
1 Including the profit-sharing ratio.
FUNDING RATIO (NON-LIFE)
CHF million
Technical reserve for own account1
Premiums written and policy fees for own account
Funding ratio (per cent)
1 Not including capitalised settlement premiums.
32
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
2014
2015
2014
Life3
2015
3,358.8
3,050.0
3,816.8
3,783.4
– 7.5
– 1.1
–
–
3,351.3
3,048.9
3,816.8
3,783.4
– 2,050.6
– 1,854.0
– 3,615.8
– 3,498.4
– 61.6
– 14.9
– 47.6
– 7.7
– 1,061.9
– 936.3
– 1,006.0
– 387.1
– 460.6
– 741.1
– 445.6
– 353.7
162.2
203.3
– 1,652.7
– 1,255.4
– 143.3
– 129.5
– 20.3
– 19.1
120.5
13.2
0.1
6.2
– 3.3
70.6
18.9
0.0
8.5
8.0
2.7
2.2
1.8
5.1
2.3
0.9
1.5
– 31.5
– 5.6
– 9.3
3,208.0
2,919.4
3,796.5
3,764.4
– 1,930.1
– 1,783.3
– 3,607.8
– 3,493.3
– 48.4
– 14.8
– 28.7
– 7.7
– 1,055.8
– 927.8
– 1,003.3
– 384.9
– 458.8
– 738.7
– 444.7
– 352.3
158.9
265.6
61.9
– 22.7
– 41.0
263.8
422.7
–
– 89.6
333.0
171.8
221.4
30.4
– 22.1
– 6.0
223.7
395.5
–
– 74.9
320.6
– 1,658.2
– 1,264.6
1,320.2
1,275.9
– 90.1
– 366.7
2,139.3
481.1
–
– 90.1
391.0
1,196.5
348.3
– 87.6
84.7
1,541.9
277.3
–
– 62.2
215.0
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 2014: CHF 0.6 million; 31 December 2015: CHF –3.3 million).
33
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)
2014
2015
+/– %
418.1
124.9
347.1
1,111.9
1,055.8
174.8
81.6
44.7
365.8
117.2
323.8
1,007.8
960.3
180.8
68.8
25.5
3,358.8
3,050.0
– 12.5
– 6.2
– 6.7
– 9.4
– 9.0
3.4
– 15.7
– 43.0
– 9.2
2014
2015
+/– %
3,294.3
2,652.6
3,340.4
2,528.2
– 2,130.2
– 2,085.1
3,816.8
3,783.4
1.4
– 4.7
– 2.1
– 0.9
34
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
2014
2015
87.6
72.4
0.0
2.6
87.0
77.4
– 0.1
0.9
162.6
165.2
– 60.6
– 14.4
– 75.0
87.6
4.6
– 18.6
73.7
– 12.5
61.2
– 57.4
– 17.4
– 74.8
90.4
1.1
– 10.7
80.8
– 19.9
60.9
2014
2015
5,055.3
3,239.0
4,985.9
3,261.7
2014
2015
–
8.2
–
388.0
6,535.5
273.1
6.6
437.7
–
8.2
–
371.1
6,548.6
275.6
10.2
688.4
7,649.1
7,902.1
35
Review of operating performance
Investment performance
Investment performance
20141
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.
20151
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
721.4
28.6
133.9
43.5
248.3
112.7
405.0
72.4
13.3
122.0
1,521.8
379.1
– 657.6
– 27.8
–
–
– 67.1
– 752.6
– 25.4
66.9
– 4.6
144.9
– 8.1
352.8
– 13.8
463.6
– 7.6
60.5
– 59.6
1,088.7
Average investment portfolio
32,160.8
4,193.0
6,107.4
17,411.2
3,512.7
63,385.2
Performance (per cent)
0.2
3.5
5.8
2.7
1.7
1.7
1 Excluding investments for the account and at the risk of life insurance policyholders and third parties.
36
Review of operating performance
Investment performance
CURRENT INCOME FROM INSURANCE1
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
Non-life
Life
42.6
36.6
2.7
132.5
7.6
43.3
–
0.2
211.2
75.7
13.8
693.7
102.3
222.8
–
0.6
2014
Total
253.8
112.3
16.5
826.3
109.9
266.1
–
0.9
265.6
1,320.2
1,585.7
Non-life
Life
36.1
38.4
1.9
106.5
8.6
30.4
–
– 0.5
221.4
210.9
95.0
11.7
607.4
94.5
176.9
–
0.1
2015
Total
247.0
133.5
13.7
713.9
103.1
207.3
–
– 0.4
1,196.5
1,418.0
REALISED GAINS AND LOSSES IN INSURANCE1
Non-life
Life
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 capital gains and losses
ASSET ALLOCATION IN INSURANCE1
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
2014
Total
129.3
249.8
13.3
147.4
1.2
38.5
189.0
–
Non-life
Life
19.0
22.3
6.8
– 15.5
0.1
17.7
93.6
21.2
1.6
44.1
– 0.9
56.1
2015
Total
112.6
43.5
8.4
28.6
– 0.8
73.8
– 20.0
130.1
110.1
–
30.4
–
–
345.8
376.2
2.6
32.8
2.8
17.0
0.0
10.1
– 3.4
–
61.9
126.7
217.0
10.5
130.4
1.1
28.4
192.4
–
706.4
768.4
Non-life
Life
2014
Total
Non-life
Life
883.0
1,106.6
298.9
5,052.3
2,912.5
1,042.3
5,935.3
4,019.1
1,341.2
913.7
1,282.1
260.8
5,314.2
3,066.0
998.7
2015
Total
6,227.9
4,348.1
1,259.6
5,346.3
26,965.7
32,312.0
4,921.6
26,327.0
31,248.6
435.9
1,281.2
18.9
503.1
4,166.6
6,051.6
299.3
890.0
4,602.5
7,332.8
318.2
1,393.1
418.3
1,047.4
24.8
291.5
3,902.6
4,834.6
320.8
642.3
4,320.9
5,882.0
345.6
933.8
Total
9,873.9
47,380.3
57,254.2
9,160.2
45,406.3
54,566.5
1 Excluding investments for the account and at the risk of life insurance policyholders and third parties.
37
4 Baloise
18 Review of operating performance
38 Sustainable business management
56 Corporate Governance
102 Financial Report
256 Bâloise Holding Ltd
274 Notes
Sustainable business
management
RESPONSIBILIT Y �������������������������������������������������������������������������������������� 40
HUMAN RESOURCES ������������������������������������������������������������������������������ 42
Successful together: engaging in dialogue,
shaping the future, making a difference ��������������������������������������� 42
THE ENVIRONMENT ��������������������������������������������������������������������������������� 46
Environmental mission statement �������������������������������������������������� 46
Protecting the environment over the long term ����������������������� 48
RISK MANAGEMENT �������������������������������������������������������������������������������� 50
Baloise’s risk management is one of the main pillars
of its business model ������������������������������������������������������������������������������ 50
COMMITMENT TO ART ���������������������������������������������������������������������������� 54
The Baloise Group’s commitment to art ��������������������������������������� 54
Sustainable business management
Responsibility
Responsibility
BEING RESPONSIBLE
Responsible companies that give something back to society are
critical to the success of any economy, not least because their
actions help to build the necessary consensus between business
and wider society� The concept of companies acting as good
citizens is commonly known as corporate social responsibility
(CSR)� In spring 2015 the Swiss Federal Council adopted a po-
sition paper on corporate social responsibility� It makes the case
for responsible companies being a vital factor in the success of
the Swiss economy and sets out the government’s intention to
help shape the framework for CSR� The position paper also con-
tains an action plan featuring specific measures that are to be
implemented by the State Secretariat for Economic Affairs (SECO)�
Baloise supports these efforts in principle and aligns itself
with the position taken by the Federal Council so that it can
continually improve its CSR activities� However, it believes that
CSR is something that companies should take upon themselves
to put into practice and that it should not be prescribed by law�
The primary task of the state is – and has to be – to create a
legal and regulatory framework that will allow companies to
remain competitive and thereby fulfil their role as corporate
citizens through their own activities�
Baloise was embracing the idea of corporate social re-
sponsibility long before the term became popularised� Sustain-
ability is at the heart of everything that Baloise does� Because
every day, through its insurance and pension solutions, it helps
companies, economies and communities to function properly,
which in turn boosts economic and social stability� The com-
pany can look back on more than 150 years of history and since
the day it was founded has been there when its customers have
needed it the most� People put their trust in Baloise to look
after their futures and in return expect stability, security and a
sustainable approach� In life insurance, savings for old age and
company pensions for SMEs, Baloise has an investment horizon
that stretches several decades� It has to offer the sort of long-
term security that simply cannot be sustained by the pursuit of
short-term gains alone� Baloise therefore thinks and acts on a
long-term basis, examines risks that may arise in the future and
mitigates these in a thorough and professional manner�
Corporate social responsibility covers a broad range of activities
and involves a broad range of stakeholders – from employees
and shareholders to customers, partners and the wider public�
A RESPONSIBLE EMPLOYER
The concept of social partnership has a long tradition at Baloise
Insurance in Switzerland� In 2015 the Company’s employee
commission (MAKO) celebrated its 40th anniversary� The
Baloise MAKO was established long before 1993, when the Swiss
federal government passed a co-determination act that made it
law for employees to have a say in the workplace and to be giv-
en information on particular matters� To this day, the rights of
the MAKO go well beyond the provisions of this act� Baloise
has always fostered an employee-oriented corporate culture
across its organisation� It gives its staff scope to contribute to
the success of the Company and to develop both personally and
professionally, placing particular emphasis on training and
development� In doing so, Baloise secures not only its own long-
term viability but also the future employability of its staff in an
increasingly competitive economic environment� By giving young
people their first experience in the world of work – as trainees,
interns and temporary student employees – we are also making
an investment in the future of the Company and the employ-
ment markets of the countries in which we operate� Every year,
across the Baloise Group, we train over 200 people who are at
the start of their careers� The value that this adds both for these
young employees and the Company provides a solid basis for
the future and enables us to create new jobs and preserve exist-
ing ones�
RESPONSIBILIT Y TO THE CUSTOMER
Every day our customers benefit from the value that we add
through our intelligent prevention services� These help them to
avoid claims arising in the first place, making them feel safer
and more secure� Everything that Baloise’s employees do is geared
towards enhancing safety and security� But if something does
go wrong, Baloise will be on hand to help� Baloise strengthens
the insurance collective through its strategy of seeking out
customers who are cautious and careful and to whom safety
and security are as important as they are to Baloise� The more
40
Sustainable business management
Responsibility
carefully and considerately customers act, the stronger the effect
is for everyone insured� In its group life insurance business,
Baloise offers small and medium-sized enterprises security in
their occupational pension schemes� Security that they need in
order to focus on running their businesses successfully and
offering their employees a secure future in their jobs and in
retirement�
RESPONSIBILIT Y TO THE SHAREHOLDER
The capital that is made available to Baloise by its shareholders
is invested efficiently and in their interests� 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, Baloise pos-
sesses a strong balance sheet and strong operational profitabil-
ity, which have been optimised in terms of the risks taken and
the upside potential derived from the business� Baloise’s risk
management approach involves managing both risk and value
at the same time� Baloise’s risk model is based on innovative
standards so that it can always keep its promise of ‘Making you
safer’� This has enabled Baloise to pursue a sustainable dividend
policy for a number of years now� The strength of Baloise’s risk
management approach has been independently verified by Stand-
ard & Poor’s� In 2015 the rating agency reaffirmed its assessment
from the prior year of ‘A with a stable outlook’�
RESPONSIBILIT Y TO THE ENVIRONMENT
As a signatory to the declaration for the insurance industry
issued by the United Nations Environment Programme, Baloise
is committed to reducing its impact on the environment� The
Company uses natural resources prudently and responsibly�
This responsibility relates to its own energy requirements but
also extends to its investments and products� CO2 emissions
have been continually reduced� The Company’s focus on en-
ergy efficiency, particularly in its IT infrastructure, plays a key
part in this� Employees are encouraged to use public transport
wherever possible and separate their waste for recycling� Baloise
also applies the latest standards in energy efficiency to its real
estate� The three new buildings being erected at Baloise Park,
the Company’s new headquarters in Basel, meet the standards
for sustainable construction in Switzerland (SNBS) and sustain-
ability specialists have been involved in their design from the
outset� And because Baloise strives to learn from the best in
everything that it does, it participates in the ‘environmental
platform’, a business initiative of the Basel region� This platform
facilitates the sharing of knowledge among businesses and sup-
ports climate protection and sustainable development through
specific projects�
RESPONSIBILIT Y IN SOCIET Y
Baloise believes it has a responsibility to society in its role as a
corporate citizen and has long been a committed advocate of
Switzerland’s milizsystem, in which it falls to volunteers to run
public offices� In April 2015 Baloise became a signatory to the
declaration by economiesuisse (the umbrella organisation rep-
resenting Swiss business) and the Swiss Employers’ Association
that commits companies to offering flexible working conditions
and working time models that enable employees to participate
in the scheme� Baloise not only encourages its employees to
engage in voluntary activities but it also meets its own respon-
sibility to society as a commercial organisation� It creates and
preserves jobs that add value and it pays taxes from its profits
that help to fund the public sector� This enables Baloise to be
an active partner in many areas of society�
For example, the Company has promoted art through the
Baloise Art Prize for more than 15 years� Every year this pres-
tigious accolade is awarded to two talented young artists at the
Art Basel fair� The winning works are acquired by Baloise and
donated to two museums that each mount an exhibition
devoted to one of the artists� In 2015 it was the turn of the
Museum of Modern Art in Frankfurt am Main and MUMOK
in Vienna� The award has gained a formidable reputation over
the years� The fact that numerous winners of the Baloise Art
Prize have gone on to represent their country at the Biennale
Venice provides further evidence of its prestige� Many Baloise
Art Prize alumni are now established artists and credit the award
as being the springboard for their success� In addition, Baloise
maintains a long-standing collection of artworks that can be
seen not only by employees but also by the public at exhibitions
in the Art Forum at the Company’s headquarters�
The Baloise companies outside Switzerland also play their
part in social, sporting and cultural life in their regions by
supporting numerous institutions and events�
→ www.baloise.com/responsibility
41
Sustainable business management
Human resources
Successful together: engaging in dialogue, shaping
the future, making a difference
Baloise is only able to thrive in its challenging market because of the hard work and commit-
ment of its employees. It is therefore important to embed tried-and-proven activities and to
continue to develop the workforce and the organisation as a whole.
KEY FIGURES
→ 7,387 people (6,754 FTEs) were working for the Baloise
Group on 31 December 2015 (end of 2014: 7,599).
→ 43.9 per cent of all staff members are women
(2014: 43.6 per cent).
→ The Baloise Group employs 212 (2014: 206) apprentices,
trainees and interns.
→ 60.4 per cent of staff members working in our main
market of Switzerland participated in our Employee
Share Ownership Plan in 2015 (2014: 60.9 per cent).
→ Baloise employees work at the Company for an average
of 14.2 years.
→ Staff turnover as at 31 December 2015 amounted
to 5.5 per cent (end of 2014: 4.8 per cent).
With its headquarters in Basel and its national companies in
western Europe, Baloise combines the best of two worlds� Swiss
characteristics such as quality, solidarity and integrity are
united with European openness, diversity and tolerance� The
focus is always on safety and security, but without losing sight
of the bigger picture�
THE CORNERSTONES OF THE BALOISE GROUP’S HR STRATEGY ARE
→ 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 possess outstanding leadership and management
capabilities.
FRIENDLY, ACCOMMODATING AND FAIR:
THE BALOISE GROUP AS AN EMPLOYER
Baloise uses its values to create a unique working environment
that enables its employees to make a contribution and actively
shape the future�
In line with the HR strategy launched in 2014, ‘We add value
through our people’, the Baloise Group fosters a culture of con-
structive feedback that is characterised by respect, dialogue and
continuing personal development� This collaborative working
environment is based on integrity and trust� It gives staff the
opportunity to take responsibility and the scope to make an
individual contribution to the success of the Company� At the
heart of this is a spirit of collaboration� Only by working to-
gether towards a common objective can challenges be overcome
and success achieved�
ENGAGING IN DIALOGUE
CONTINUOUS DEVELOPMENT AND A CONSENSUAL APPROACH
A cornerstone of the working environment at Baloise is the
culture of constructive feedback that tallies with our core value
‘Develop and engage – yourself and others!’, which is put into
practice across all hierarchy levels� Three formats are currently
available that allow managers and employees to engage in a
mutual, open and in-depth dialogue that is based on the behav-
ioural value ‘Put yourself in the other’s shoes!’� In addition to
individual development dialogues, where the focus is on the
employee, and management dialogues, in which managers are
given feedback by their staff, Baloise carries out an employee
engagement survey, the results of which are discussed within
the teams�
42
Sustainable business management
Human resources
All three formats are already firmly established in Switzerland�
In 2015 the management feedback process was piloted in Ger-
many, Belgium, Liechtenstein and Luxembourg� Full roll-out
is scheduled for 2016� The one-on-one meetings between man-
agers and employees have proven to be effective and the em-
ployee engagement survey was introduced at all national Baloise
companies back in 2013�
CHALLENGING AND DEVELOPING
STAFF WITH A VIEW TO ACHIEVING FUTURE SUCCESS
Baloise’s processes for developing skills and talent are a key part
of its trust- and performance-based corporate culture� The focus
is on continuous learning and on helping employees to make the
most of the freedom they are given in their work� One-on-one
meetings between managers and employees are the central element
in an ongoing dialogue regarding performance and development
targets� This gives guidance to employees and provides clarity
about shared objectives and continuous learning�
Baloise also runs a talent development programme for
high-potential employees� Its long-established talent evaluation
process is carried out each year and is designed to identify tal-
ented young employees and key individuals, find potential suc-
cessors and agree staff development activities� 2015 saw the start
of a new focus on the introduction of a skills assessment process
for talented young employees to help them decide the direction
they would like their career at Baloise to follow� In 2016 the
talent development programme will be supplemented by local
measures that will make it easier to focus on the individual
skills of the high-potential employees�
THE BALOISE GROUP’S BEHAVIOURAL VALUES
→ “Put yourself in the other’s shoes.”
→ “Act authentically and earn trust.”
→ “Develop and engage.”
CHANGING THE MANAGEMENT PHILOSOPHY
BALOISE’S BEHAVIOURAL VALUES – THE FOUNDATION FOR
LEADERSHIP@BALOISE
Baloise operates in an extremely challenging market with high-
ly volatile parameters� This situation prompted the Company’s
decision to start focusing on growth� After ten years of success-
fully striving for operational excellence, Baloise, and in par-
ticular its management philosophy, needed to undergo a process
of change that would establish the necessary ‘culture of growth’
within the Company� In 2015 we therefore pushed ahead with
work on the new managerial philosophy, Leadership@Baloise�
The approach is based on Baloise’s established behavioural val-
ues� But in future there will be an even greater focus on promot-
ing engagement, shaping the process of change and striving for
improvement and development in order to achieve better results�
In the coming years, the priority will be to embed behav-
iours in day-to-day management activities that are conducive
to growth� We will be adapting our HR processes accordingly
and deploying the Baloise Campus management development
programme that has been used across the Group for a number
of years�
TAKING ACCOUNT OF INDIVIDUAL COUNTRIES’ NEEDS,
PURSUING COMMON OBJECTIVES
In addition to the aforementioned Group-wide initiatives, the
country-specific HR units are focusing on activities that are
geared towards the regional requirements of their business and
the local legal system�
For example, the Corporate Division Switzerland made a
commitment to using the Swiss insurance industry’s Cicero
register and in doing so has underlined the importance of life-
long learning for sales staff� To become a member the advisor
must have a recognised qualification (VBV insurance broker or
equivalent) and regularly attend training courses� Continuing
professional development ensures that the advice given by the
brokers is up to the highest standard� At the end of 2015 Baloise
completed the roll-out of the programme by registering all its
advisors on Cicero� In 2015 preparations were also made for
re-introducing the requirement to record the working hours of
43
Sustainable business management
Human resources
management staff in the inhouse sales team� Baloise changed
the way in which working hours were recorded on 1 January
2016 so that it would be compliant with Ordinance 1 of the Swiss
Labour Law (ArGV 1)�
In Germany, a number of managers have been closely in-
volved in the development of a vision for the future� Fostering
a culture that takes consideration of cultural aspects but also
incentivises and recognises performance plays a key role in this�
The introduction of a structured feedback process between the
Executive Committee and the department heads represents a
further step in this direction� In addition, a standardised pro-
gramme of initial training was rolled out across all sites that is
ensuring a uniform quality of instruction�
Last year Belgium focused on changing its culture and
behavioural values� A concept of viral change was used in which
it fell to a select group of highly engaged and well-connected
individuals to embed the behavioural values in the organisation�
There was also a focus on talent development, whereby the de-
velopment plans of senior management were supplemented by
the management feedback process� Furthermore, a great deal
of attention was paid to succession planning�
Last year Luxembourg focused its energies heavily on
integrating the 90 or so employees who had come on board as
a result of Baloise’s acquisition of P&V� Because of the merger
with HDI-Gerling Assurances at the beginning of October 2015
the subject of integration and fostering a shared corporate cul-
ture will remain on the agenda in 2016 as well� Embedding the
values played an important role here, and these were commu-
nicated to all employees of the national companies using an
‘onboarding game’ that also focused on subjects such as the
Safety World and the Baloise philosophy� Great emphasis was
also placed on leadership training and on actively involving
rising talents in the various projects�
IN BALANCE:
EMPLOYEES ARE OUR MOST VALUABLE RESOURCE
The Baloise Group’s most valuable resource – and therefore the
one that is most crucial to its success – is its workforce and the
expertise and skills that they possess� This is why it is so crucial
to have a diverse workforce that is challenged and supported in
accordance with individual needs and abilities� Accordingly,
Baloise believes it is important that employees have a good work-
life balance� It helps them to achieve this by offering flexible
and part-time working, providing the option of working from
home, running facilities such as the Bal4Kids crèche in Basel
and providing a working environment that is conducive to good
health as well as a wide-ranging corporate health management
service�
In recent years Baloise’s case management
service in Switzerland has extended its sick-
ness-prevention activities� The benefits are
clear from the figures, with the absence rate
in 2015 having fallen, contrary to the prevail-
ing market trend� The Friendly Work Space quality seal award-
ed by the Swiss Health Promotion Foundation also illustrates
how Baloise goes above and beyond the legal requirements to
create a healthy working environment� Baloise has held this
accreditation since 2010 and will be recertified for the third
time in 2016�
THE COMPETITION FOR TOP TALENTS IS GETTING TOUGHER
PRESENCE, RELEVANCE AND AN AUTHENTIC VOICE
Employees are the most valuable resource for all companies,
not just Baloise� Which is why the competition for the best peo-
ple at various levels is getting tougher all the time� Just a few
years ago, apprenticeships were already filled by autumn with
highly skilled school-leavers; today the process lasts until well
into spring� And it is also proving more and more difficult to
recruit new, highly skilled staff in other vocations such as IT
and customer service�
To counteract this trend and make Baloise more visible
as an employer, the Company has been using social media�
Through the blog baloisejobs�com and accounts on Facebook,
Xing, LinkedIn, Twitter and Pinterest contact is being made
44
Sustainable business management
Human resources
with potential new employees who are given an authentic picture
of what it’s like to work at Baloise�
Investment continues to be made in traditional HR mar-
keting as well, whereby the focus is on engaging in dialogue
with potential employees� At job fairs, current Baloise employ-
ees are able to talk about their experiences and give a realistic
picture of what it’s like to work for the Company – all in line
with our philosophy of being friendly, accommodating and fair�
These efforts are complemented by an attractive range of
training opportunities� Baloise currently employs 200 appren-
tices, interns and temporary student workers� And for the past
23 years, it has been running a management trainee programme
whose alumni often go on to forge a career within the Com-
pany�
ACHIEVING RESULTS, REAPING REWARDS:
BALOISE PERFORMANCE MANAGEMENT
Many of the aforementioned activities are aimed at offering
employees a working environment in which they can perform
to the best of their ability� And if they do so, they should be
rewarded accordingly� Baloise offers performance- and target-
oriented remuneration packages that are based on fair principles
and an established framework of performance management�
The packages consist of competitive base salaries and a range
of variable remuneration components as well as attractive em-
ployee incentives and loyalty bonuses�
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
Variable remuneration is based on both individual per-
formance and the success of the Company as a whole� Through-
out the year, employees attend a series of meetings with their
managers to make sure they are on track to achieve the indi-
vidual targets that have been agreed upon�
To help secure long-term success, part of their remuner-
ation is paid in the form of restricted shares, with the senior
management team receiving a comparatively high proportion
of their pay in the form of shares� This form of remuneration
strengthens loyalty to Baloise and gives employees the oppor-
tunity to share in the Company’s success�
The packages also feature attractive fringe benefits that
are awarded regardless of function and seniority�
BALOISE’S 7,387 EMPLOYEES IN 2015 BY COUNTRY
Switzerland
Germany
Belgium
Luxembourg
Per cent
Employees
49.4
27.6
17.6
5.4
3,657
2,036
1,297
397
BALOISE GROUP HUMAN RESOURCES ON THE INTERNET
Careers website:
→ www.baloise.com/careers
Careers 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
45
Sustainable business management
The environment
Environmental mission statement
In 1995, Baloise became one of the first insurers to sign the insurance industry declaration
on sustainable development formulated by the United Nations Environment Programme (UNEP).
It drew up its own environmental guidelines in 1999 in order to give concrete form to this
general commitment. From the outset, it was deemed important to embed sustainability
throughout the Company and in all day-to-day business activities.
What are Baloise’s sustainability principles? Which issues take greatest priority? And what
are the key principles? The sustainability guidelines adopted in 1999 provide a framework for
action and form the basis of all environmental and social activities at Baloise.
PRINCIPLE
As a signatory to the UNEP declaration, Baloise strives for sus-
tainable development from an ecological, economic and social
point of view� As a primary insurer, Baloise is prepared to assume
responsibility for the preservation of the natural environment�
STAFF AND PUBLIC
Baloise trains its employees with regard to environmental mat-
ters and raises their awareness of the relevant issues� Its em-
ployees are aware of the ecological targets and the most impor-
tant initiatives for achieving them� They are kept regularly
informed about the implementation of the environmental mis-
sion statement and encouraged to suggest measures of their
own� Baloise works hand in hand with other companies, or-
ganisations and public authorities in finding solutions to envi-
ronmental problems� It particularly encourages the sharing of
information with other insurance companies, maintains an open
dialogue with the public and regularly reports on environmen-
tal projects and what has been achieved�
ENVIRONMENTAL FOOTPRINT
Baloise continually reduces its direct impact on the environment
by planning, building and operating its office buildings in a
resource-saving and energy-efficient manner� It observes the
same principles in the procurement and use of office equipment
and materials� In doing so, it pays particular attention to its
published energy mission statement and its environmental
audit�
PRODUCTS AND SERVICES
Baloise strives to take environmental aspects into account when
developing its products and services and fixing premiums and
levels of coverage� Its underwriting policy takes account of its
customers’ environmental management practices (e�g� ISO 14001)
on the basis of identifiable operational and product-related fac-
tors� It also advises industrial clients on risk reduction and risk
prevention�
46
Sustainable business management
The environment
INVESTMENT
Baloise’s investment policy is geared towards medium- to long-
term earnings targets and consciously incorporates environ-
mental criteria whenever possible, especially in the selection of
securities and real estate� It also promotes appropriate, envi-
ronmentally relevant proprietary and third-party financial
products� When it comes to investment in real estate, Baloise
pays particular attention to energy-saving and economical de-
signs and service systems, as well as the use of environmen-
tally friendly construction materials� The environmental audit
takes the entire life cycle of the real estate into consideration�
ORGANISATION
The Corporate Executive Committee bears ultimate responsibil-
ity in environmental matters� Each Group company has a co-
ordination unit which implements the environmental mission
statement� This working group is made up of representatives
drawn from all key corporate functions�
47
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 2015, further major
measures were put in place to achieve this goal.
BALOISE IS BUILDING SUSTAINABLE OFFICES THAT WILL
APPEAL TO EMPLOYEES AS WELL AS A STATE-OF-THE-ART
HOTEL
In a project scheduled for completion in 2020 Baloise is erecting
three new buildings in the area between Aeschengraben, Park-
weg and Nauenstrasse in Basel� The buildings are to be the de-
fining landmark of the train station district and reflect Baloise’s
commitment to the city� The area, which will be called Baloise
Park, will function as an open campus for Baloise employees,
third-party tenants and the local population� A public square
is being created where the Hilton hotel currently stands� The
tower being built on Aeschengraben, which will be around 90
metres in height, will mainly be occupied by the new hotel� The
top seven floors will be rented out as office space� Baloise is
basing its designs for the buildings on the standards for sustain-
able construction in Switzerland (SNBS), which means it will
comfortably exceed the legal requirements in terms of energy
efficiency�
A zero-emission electric minibus connects Baloise headquarters
with the temporary offices at which over 500 employees are
working while Baloise Park is being built�
SOLAR ENERGY FOR ELECTROMOBILIT Y AND HEATING
The spring of 2015 saw 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� As well as heating the new access ramp
to the building the panels generate enough additional electricity
to power around 55,000 km of electric vehicle journeys�
100 PER CENT OF BALOISE’S ELECTRICIT Y
WILL BE GENERATED BY HYDROPOWER FROM 2016
In 2015 an analysis was carried out of electricity consumption
at Baloise’s Swiss offices� This led to a decision being made to
run the larger offices using only Swiss-generated hydropower
from 1 January 2016� This underlines Baloise’s commitment
to sustainability and the Swiss brand value�
ELECTROMOBILIT Y FOR CUSTOMERS AND STAFF
Baloise is taking its first steps towards zero-emission travel� In
2015 an attractive package was introduced that enabled staff in
Switzerland to purchase or lease an electric car� Since 2015,
employees have also been able to charge their electric vehicles
for free during working hours� A total of 16 staff parking spac-
es in Basel have been equipped with charging facilities� Visitors
travelling to Baloise’s new customer centre in an electric car
can charge their vehicle for free at a fast-charging station in the
visitor car park� At the offices in Zurich and Bern charging
points will be made available in the first half of 2016�
SYSTEMATIC ROLL-OUT OF MODERN WORKSTATIONS
The new workstations that have been trialled since summer 2014
were rolled out at the headquarters of Basler Switzerland� Now
600 employees can find a desk where they can work quietly
as well as rooms for communicating and working efficiently as
a team�
Since last year, 400 of the more than 1,100 employees work-
ing at Baloise in Belgium have been working from home one
day a week� In addition to the positive effects resulting from the
more efficient use of office space and reduction in energy con-
sumption, employees are given a weekly break from their com-
mute, which in some cases can be very stressful�
* UNEP = United Nations Environment Programme.
48
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
2013 absolute
2014 absolute1
2015 absolute
Relative Unit
5,315
141,032
13
5,173
137,276
12
5,716
145,917
16
headcount
ERA m2
number of buildings
20,712,643 kWh
19,983,237 kWh
19,866,588 kWh
3,476 kWh / employee
11,513,544 kWh
9,327,534 kWh
8,821,860 kWh
60 kWh / m2
53,769 m3
52,752 m3
48,237 m3
34 l / employee / day
510 t
490 t
439 t
77 kg / employee
5.0 % recycled
72.0 % chlorine-free-
bleached
24.0 % chlorine-bleached
71.9 million
A4 sheets
1,241 t
73.5 million
A4 sheets
68.7 million
A4 sheets
12,020 A4 sheets /
employee
979 t
961 t
168 kg / employee
+ / – %
10.5
6.3
4
– 0.6
– 5.4
– 8.6
– 10.4
– 6.5
– 1.8
21.3 million km
19.0 million km
19.1 million km
3,347 km / employee
0.8
47.0 % paper / cardboard
4.0 % other materials
1.0 % special waste
47.0 % misc. waste / refuse
27.4 % km by air
43.5 % km by road
29.1 % km by public
transport
CO2 emissions
16,020 t
14,864 t
14,738 t
2,578 kg / employee
– 0.9
1 The 2014 figures for amount of refuse and business activity were adjusted in 2015 to take account of retrospective adjustments by external suppliers in individual national subsidiaries.
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 used by 77 per cent of
the 7,387 people working for the Baloise Group� Consumption
of energy for heating and consumption of electricity per em-
ployee were each reduced by a further 10 per cent� Optimisation
of internal business processes at all national Baloise companies
resulted in a further 15 per cent decrease in paper consumption�
As a responsible corporate citizen, Baloise is both obliged and
motivated to use resources efficiently in the face of environ-
mental changes�
→ www.baloise.com/responsibility
49
Sustainable business management
Risk management
Baloise’s risk management is one of the main
pillars of its business model
Risk management makes a significant contribution to the positioning of the Baloise Group
and forms an integral part of its strategic management policies. As a European insurer
with Swiss roots, Baloise possesses a strong balance sheet and strong operational profitability,
which have been optimised in terms of the risks taken and the upside potential derived from
the business.
Baloise’s risk management approach involves managing both
risk and value at the same time� Its risk model is based on in-
novative standards so that it can always keep its promise of
‘Making you safer’�
The Company’s enterprise risk management was once again
awarded Standard & Poor’s excellent ‘strong’ rating in 2015�
This puts it among the top 15 per cent of all European insurance
companies�
Risk management at Baloise is a standardised strategic
and operational system that is applied throughout the Group
and covers the following areas:
→ Risk map: this forms the backbone of Baloise’s risk strat-
egy and defines the fundamental risk issues, such as
actuarial and market risk as well as the operational risk
arising from business activities�
→ Risk governance and risk culture: this involves encourag-
ing risk awareness – how people perceive and respond
to risk – and establishing this mindset 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
earnings potential�
RISK MAP
The risk map distinguishes between the following categories of
risk to which Baloise is exposed:
→ Business risk
→ Investment risk
→ Financial-structure risk
→ Business-environment risk
→ Operational risk
→ Leadership and information risk�
A detailed description of the risk map can be found in the
Financial Report on page 134�
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� It is constantly working
to enhance this culture across the entire organisation� Desig-
nated 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, Baloise’s risk mod-
els and processes are continually refined� The internal control
system (ICS) and the compliance function are further major
planks of this strategy�
50
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� This inclusive risk organisation approach provides
Baloise 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 groupwide standards;
→ reporting risks;
→ complying with risk processes and procedures;
→ 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 Fi-
nancial Officer, followed by its Chief Risk Officer�
RISK MEASUREMENT
The Baloise risk model standardises the process of quantifying
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 groundbreaking
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� This target capital figure is constantly compared with
the capital currently available (the ‘actual’ capital)�
In addition to this holistic risk model, Baloise uses the
risk map to identify, describe and evaluate specific risks in terms
of their likely impact on its operating profit or loss� Baloise’s
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� Baloise uses quantitative methods to sup-
plement this description 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�
51
Sustainable business management
Risk management
RISK PROCESSES
Group-wide risk management standards place the risk process
on a mandatory footing� These standards stipulate methods,
rules and limits that must be applied throughout the Baloise
Group� They determine how the various risk issues are evalu-
ated, 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�
Issue-specific risks are monitored individually by imposing
limits, 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�
→ Appropriate reporting procedures are used to monitor
market risk and financial-structure risk across all business
units� In addition to upper limits on equity exposures, 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 addi-
tion, risk analysis is used to regularly monitor the overall
solvency position�
→ Baloise captures business-environment risk, operational
risk and strategic risk on both a standardised and individ-
ual basis, and assesses them in terms of their impact on
its capital�
The Own Risk and Solvency Assessment (ORSA), an annual
risk report, is discussed with the decision-makers so that suit-
able measures can be developed� The results of the ORSA are
also reported to the regulatory authority� 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 payments awarded to indi-
vidual managers are personal performance, leadership and
conduct� The individual performance pool payment proposed
by the respective line manager is discussed by the relevant man-
agement team, compared with other departments and divisions,
and adjusted where necessary� This process ensures that risk-
relevant behavioural attributes are factored into the individual
performance pool payments�
STRATEGIC RISK MANAGEMENT
The internal risk model, which uses standard methods to quan-
tify all business risks and financial market risks, forms the ba-
sis for strategic discussions about Baloise’s risk appetite� The
capital requirements derived from this model constitute mini-
mum requirements for Baloise’s ‘actual’ capital�
This process provides a 360-degree view of key strategic
risks and how they are managed� Strategic risk management
provides a clear picture of the risks involved in opening up new
business lines and of how to optimise the risk / return profile
of 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�
52
Sustainable business management
Risk management
OUR PROFESSIONAL RISK MANAGEMENT DEMONSTRATED
ITS PROVEN STRENGTHS IN 2015
Baloise’s risk strategy principles are designed for the long term,
as shown by the Company’s excellent risk positioning in 2015�
Proof positive of this situation was the Baloise Group’s solven-
cy I ratio, which remained very high at 341 per cent and is
testimony to its financial strength�
Underwriting approaches that have been tried and tested
for many years were maintained in 2015:
→ The Baloise Group’s investment strategy continues to
focus on diversification and on the basic principle of only
investing in assets that the Company can itself fully and
accurately evaluate through risk management�
→ Baloise continued to actively manage its credit risk and
currency risk�
→ With a net equity exposure of 8�1 per cent at 31 December
2015, Baloise’s equity investments in the reporting year lay
comfortably within its risk-bearing capacity�
→ The high quality of recurrent investment income generated
by Baloise’s stable real-estate portfolio proved to be a valu-
able source of revenue�
→ Much of Baloise’s focus is directed at managing its inter-
est-rate risk� Wherever possible, payment obligations to
customers for future years are reconciled with the income
earned from investments� The high quality of recurrent
investment income generated by Baloise’s stable real-estate
portfolio has proved very helpful in this respect� Baloise
also invests in safe long-term bonds denominated in either
Swiss francs or euros and supplements this strategy by
using derivative financial instruments such as swaptions�
→ Baloise’s underwriting business has proved to be highly
consistent, with the Baloise Group’s net combined ratio
of 93�3 per cent demonstrating its excellent capabilities in
underwriting and managing non-life risk�
Risk management at Baloise will continue to evolve over the
coming years, reaffirming its standing as a company with an
outstanding risk strategy and risk positioning�
Further information on risk management can be found in the
2015 Financial Report (section 5� ‘Management of insurance
risk and financial risk’ pages 132 to 174)�
53
Sustainable business management
Commitment to art
The Baloise Group’s commitment to art
Baloise’s art collection is the product of a long-standing commitment to the arts and plays an
important part in the Company’s culture. Baloise also sees investment in art as a responsibility:
works of art are created to be seen and to provoke discussion. It believes that the privilege of
owning art comes with an obligation to make it accessible to the wider public. Baloise’s commit-
ment also extends to providing recognition and support for contemporary artists.
Today the works of the new collection are categorised in three
groups that reflect key movements in contemporary art: the first
group is minimal and concept art, which since the 1960s has
been dominated by American artists� The second major focus
of the collection is the euphorically received art of the 1980s�
In Europe this period was dominated by a form of expressive
figurative art that led to the establishment of terms such as Neue
Wilde and Transavanguardia� The third part of the collection
is devoted to influential artists working in the medium of draw-
ings� In addition to its works on paper, Baloise maintains
a collection of works by artists who realise their artistic goals
through the medium of photography�
New acquisitions for the collection are made by the Baloise
art commission, which comprises six art-loving employees and
one external advisor� The items are purchased proactively on
an ongoing basis�
ART FORUM
The Baloise Art Forum mounts themed public exhibitions fea-
turing works taken from the Baloise collection and sometimes
also relevant loan works� It also hosts talks with artists and runs
guided tours for employees and external groups� Every year two
exhibitions are mounted�
ART COLLECTION
Collecting art has a long tradition at Baloise� It is part of the
Company’s very identity� The first acquisitions were made in
the late 1940s� These pieces, which were mainly by regional
artists, exhibited the same characteristics that define the col-
lection today: outstanding artistic merit, inner depth and an
unusual and often revolutionary form of expression for their
time� Two further components underpin the success of the
Baloise collection: a clearly defined focus – art created in Basel
during the first half of the 20th century – and wherever pos-
sible the acquisition of groups of works� Since it first began
collecting art in the immediate post-war period, Baloise has
remained true to its belief that the Company’s works of art should
be accessible both to employees and visitors�
Baloise displays its collection in foyers and corridors,
meeting rooms and offices, with a large number of works on
show in publicly accessible reception rooms at its group head-
quarters�
Today Baloise collects contemporary art, focusing on ac-
quiring works on paper by the artists of today� Works on paper
include drawings, gouaches, watercolours, oil on paper,
collages and photographic works� These are fully recognised
artistic media, which form part of the significant artistic state-
ments of the modern day� By deciding to focus on one specific
medium, Baloise intended to expand its horizon in its choice
of artists� The main criterion for selecting artists is the existence
of a persuasive body of work that establishes a close emotional
and intellectual connection with the hopes and fears of our
time�
54
Sustainable business management
Commitment to art
Many of the previous prize winners are now leading lights in
the international art scene and act as cultural ambassadors for
their country at the Venice Biennale�
Further information on Baloise’s art activities and on all
previous prize winners can be found online�
→ www.baloise.com/art
The Baloise Art Forum
BALOISE ART PRIZE
Every year since 1999 the Baloise Group has awarded two young
artists its Baloise Art Prize� It is Baloise’s way of supporting the
development of young, rising talents�
The two prizes of CHF 30,000 are presented in the State-
ments section of the Art Basel fair by a panel of judges compris-
ing international experts�
Baloise also acquires groups of works by the prize winners and
donates these to two leading European art museums, in 2016
to Frankfurt’s Museum of Modern Art and the MUDAM in
Luxembourg�
Every year, the Company spends around a quarter of a
million Swiss francs in prize money, acquisitions of works and
funding for statements, and on arranging for works by winners
of its art prize to be exhibited at museums�
The Baloise Art Prize has become a prestigious accolade�
The awards are presented to the winning artists and galleries
at the high-profile Art Basel international fair� In addition to
this publicity, the artists are also given the opportunity to have
their works displayed in a distinguished art museum�
55
4 Baloise
18 Review of operating performance
38 Sustainable Business Management
56 Corporate Governance
102 Financial Report
256 Bâloise Holding Ltd
274 Notes
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Corporate
Governance
CORPORATE GOVERNANCE REPORT
INCLUDING REMUNERATION REPORT ��������������������������������������������� 58
Structure of the Baloise Group and shareholder base ������������ 58
Capital structure ������������������������������������������������������������������������������������� 59
Board of Directors ���������������������������������������������������������������������������������� 60
Corporate Executive Committee ����������������������������������������������������� 69
Remuneration Report ��������������������������������������������������������������������������� 73
Report of the statutory auditor to the Annual General
Meeting of Bâloise Holding Ltd, Basel ������������������������������������������ 96
Shareholder participation rights ������������������������������������������������������ 98
Changes of control and poison-pill measures ��������������������������� 99
External auditors ������������������������������������������������������������������������������������� 99
Significant amendments to the Articles of Association
submitted to the 2015 Annual General Meeting ������������������� 100
Information policy ������������������������������������������������������������������������������ 100
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 requirements under
the Swiss Ordinance Against Excessive Remuneration in Listed
Companies Limited by Shares (ERCO)�
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
circular 2010/1 of the Swiss Financial Market Supervisory
Authority (FINMA)�
1. STRUCTURE OF THE BALOISE GROUP AND
SHAREHOLDER BASE
Structure of the Baloise Group
Headquartered in Basel, Switzerland, Bâloise Holding is a
public 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 6,380 million as
at 31 December 2015�
→ Information on Baloise shares can be found from page 12
onwards�
→ Significant subsidiaries, joint ventures and associates as
at 31 December 2015 can be found from page 250 onwards
in the notes to the consolidated annual financial state-
ments, which form part of the Financial Report�
→ Segment reporting by region and operating segment
can be found from page 177 onwards in the notes to the
consolidated annual financial statements within the
Financial Report section�
→ The Baloise Group’s operational management structure
is presented on page 72�
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 20,723 shareholders were registered in Bâloise
Holding’s share register as at 31 December 2015� The number
of registered shareholders had increased by 5�58 per cent com-
pared with the previous year� The “Significant shareholders”
section on page 268 provides information on the structure of
the Company’s shareholder base as at 31 December 2015�
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 https://www�six-exchange-regulation�com/en/home/
publications/significant-shareholders�html
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Treasury shares
Bâloise held 2,740,262 treasury shares (5�5 per cent of the issued
share capital) as at 31 December 2015�
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 1,263�7
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)
2011
2012
2013
2014
2015
Total
Cash dividends
Share buy-backs
Total
225.0
225.0
237.5
250.0
250.0
1,187.5
17.1
–
–
–
59.1
76.2
242.1
225.0
237.5
250.0
309.1
1,263.7
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)
2013
2014
2015
5.0
11.7
176.3
240.7
56.3
n/a
490.1
5.0
11.7
182.8
52.4
406.5
n/a
658.4
5.0
11.7
3.5
387.7
435.4
– 194.8
648.4
CHF million
Share capital
General reserve
Reserve for
treasury shares
Other reserves
Distributable
profit
Treasury shares
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
30 April 2015 has authorised the Board of Directors until
30 April 2017 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�
Conditional capital is used to cover any option rights or
conversion rights granted in conjunction with bonds and similar
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securities� Shareholders’ pre-emption rights are disapplied�
Holders 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 5,462�3
million on 31 December 2015� Details of changes in consoli-
dated equity in 2014 and 2015 can be found in the consolidated
statement of changes in equity on pages 110 and 111 in the Fi-
nancial Report section� All pertinent details relating to 2013 can
be found in the consolidated statement of changes in equity on
page 98 in the Financial Report section of the 2014 Annual
Report�
Bonds outstanding
Bâloise Holding has issued bonds publicly� Bâloise Holding had
a total of eight public bonds outstanding at the end of 2015 (of
which one is a convertible bond)� Details of outstanding bonds
of Bâloise Holding can be found on pages 228 and 266 and on
the internet�
→ www.baloise.com/bonds
Credit rating
On 18 August 2015, credit rating agency Standard & Poor’s con-
firmed Baloise Insurance Ltd’s rating of ‘A’ with a stable out-
look’� 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 agency also rated the firm’s risk management as strong�
The rating was awarded to Bâloise Holding Ltd’s Swiss sub-
sidiary, 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 2015� 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 61�
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 Andre-
as Beerli, Dr Georges-Antoine de Boccard, Dr Andreas Burck-
hardt, Christoph B� Gloor, 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�
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 2016 Annual General Meeting unless they are stepping
down from the Board� All members of the Board of Directors,
with the exception of Dr Eveline Saupper, are standing for re-
election� Dr Eveline Saupper will step down from the Board of
Directors at the 2016 Annual General Meeting� She has been
a member of the Board of Directors since 1999 and has chaired
the Remuneration Committee since 2012� She has made an out-
standing contribution to the Baloise Group�
The Board of Directors will propose Hugo Lasat (1964,
Belgium, Master in Economic Sciences, Master in Finance) for
election at the Annual General Meeting on 29 April 2016� He
has been CEO of Brussels-based Degroof Petercam Asset Man-
agement (formerly Petercam Institutional Asset Management)
since 2011� His managerial roles prior to that include CEO of
Amonis Pension Fund and CEO of Dexia Asset Management�
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He is a guest professor at Hogeschool-Universiteit Brussel (HU-
Brussel), Chairman of the Belgian Asset Management Associa-
tion (BEAMA) and a member of the Board of Directors of
the Belgian Financial Sector Federation (Febelfin)� He is also
a member of the Financial Committee of the Red Cross and the
Financial Committee of the King Baudouin Foundation� Mr
Lasat will be an independent, non-executive director�
Furthermore, Marie-Noëlle Venturi - Zen-Ruffinen (1975, CH,
Prof� Dr� iur�, lawyer) is to be elected as a new member of the
Board of Directors� She holds a PhD and master’s degree in
law and a master’s degree in philosophy from the University
of Fribourg� She is a lawyer and honorary professor at the
School of Economics and Management at the University of
Geneva, where she mainly lectures on corporate law� Professor
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
C: Chair, VC: Vice-Chairman, DC: Deputy Chairman, M: Member.
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
BOARD AT TENDANCE IN 2015: MEETINGS OF THE FULL BOARD OF DIRECTORS
Dr Andreas Burckhardt, Chairman
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
20.03.2015 30.04.2015 26.06.2015 25.08.2015 28.10.2015
16.12.2015
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
x
x
x
x
x
x
x
x
x
x
x = present, 0 = absent, n / a = not applicable.
All members were attending the respective committee meetings.
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Venturi - Zen-Ruffinen was a partner in the Geneva law firm
Tavernier Tschanz until 2012, and since that time has been of
counsel for the firm� She is president of the Swiss Board Institute
foundation and sits on the Board of Management of the Swiss
Institute of Directors� She will be an independent non-executive
director�
→ 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�
Further information on the members of the Board of
Directors can be found on the internet�
→ www.baloise.com/board-of-directors
Statutory rules concerning the number of permitted activities
The 2015 Annual General Meeting approved the addition of a
new section to the Articles of Association (section 33) concern-
ing the maximum number of directorships held outside the
Company� Section 1 stipulates the principle that the number of
external directorships held by members of the Board of Direc-
tors or Corporate Executive Committee must be compatible
with the commitment, availability, capabilities and independence
required of them in order to perform their duties as members
of the Board of Directors or Corporate Executive Committee�
Subsections 2 and 3 then specify numerical restrictions�
Interlocking directorates
There are no interlocking directorates�
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�
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 2015, 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
govern 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� The Remuneration Committee
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approves the target agreements and performance assessments
that are applied to the Corporate Executive Committee members
in order to determine their variable remuneration� It also sanc-
tions 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 Com-
mittee; this remuneration has to be within the maximum amount
approved by the Annual 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�
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 six oc-
casions in 2015� The table on page 61 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 19 committee meetings� This means that the Board of
Directors achieved an overall meeting attendance rate of 100
per cent� The Board of Directors held a seminar for the purpose
of training its members� Meetings of the Board of Directors and
its committees usually last half a working day each�
The Chairman’s Committee convened nine times in 2015,
which included one two-day strategy meeting� The Investment
Committee met on three occasions� The Audit and Risk Com-
mittee held four meetings, and the Remuneration Committee
convened three times�
Meetings of the Board of Directors are regularly attended by
members of the Corporate Executive Committee� Meetings of
the Chairman’s Committee are usually attended by the Group
CEO and the Chief Financial Officer� Those present at Audit
and Risk Committee meetings are primarily the Chief Financial
Officer, the Head of the Corporate Centre, the Head of Group
Internal Audit and, occasionally, representatives of the external
auditors, the Chief Risk Officer, the Chief Investment Officer
and the Group Compliance Officer� The main attendees at Re-
muneration Committee meetings are the Group CEO, the Head
of the Corporate Centre and the Head of Group Human Re-
sources� Meetings of the Investment Committee are usually
attended by the Group CEO, the Chief Investment Officer and
the Heads of Investment Strategy and Investment Control,
Baloise Asset Management and Real Estate� The Secretary to
the Board of Directors attends the meetings of the full Board
of Directors and those of its committees�
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 50 onwards
and in the Financial Report section starting on page 132�
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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←
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 director and head of the Basel Chamber of
Commerce from 1994 to April 2011� In this role he sat on various gov-
erning 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 Chairman of the Board of Governors of the
Swiss Tropical and Public Health Institute, Basel� He is a member of
the Executive Committee of economiesuisse and sits on the Executive
Board of the Employers’ Federation for Basel and Regio Basiliensis�
Dr Burckhardt performs a non-executive function as Chairman of
Baloise’s Board of Directors�
Andreas Burckhardt
→
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 respon-
sible for the Asia Pacific region� Until 2013 he was
a member 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 oth-
er supervisory 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�
Werner Kummer
64
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←
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 director and general partner at E� Merck KG,
Darmstadt, which holds 70 per cent of the share
capital in Merck KGaA, from 2002 until 2011� He sits
on the Supervisory Board at Symrise AG, Germany�
Dr Becker is an independent non-executive director�
Michael Becker
→
Andreas Beerli (1951, Switzerland, Dr iur�) has been a mem-
ber of the Board of Directors since 2011� He studied law at
the University of Basel� In 1979 he started working as an
underwriter for the German market at Swiss Re� From 1985
to 1993 he performed 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
advisor on the boards of directors and advisory boards
of companies and professional associations� He is a member
of the Board of Directors at Ironshore Europe Inc�, Dublin,
a member of the Advisory Board of Accenture Schweiz, and
Chairman of the Swiss Advisory Council of the American
Swiss Foundation� Dr Beerli is an independent non-executive
director�
Andreas Beerli
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→
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 sur-
gery practice in Geneva since 1987� Dr Georges-Antoine
de Boccard is Chairman of the Board of Directors of
Citadel Finance SA and Stellaria Holding SA, sits on
the Board of Directors of the Swiss International
Prostate Center 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 Urology, the European Association of Urology
and other professional bodies and associations and sits
on the boards of directors of various foundations�
Dr de Boccard is an independent non-executive
director�
Georges-Antoine de Boccard
←
Christoph B. Gloor (1966, Switzerland) has been a mem-
ber of the Board of Directors since 2014� He holds a
university degree in business economics and has been
a member of the Executive Committee of Notenstein
La Roche Privatbank AG, Basel, since November 2015�
He was previously Chief Executive Officer of Basel-
based private bank La Roche & Co AG� Prior to joining
La Roche & Co AG in 1998, he worked for Swiss Bank
Corporation (SBC) before moving to Vitra (Interna-
tional)� Christoph B� Gloor served as president of the
Association of Swiss Private Banks from November
2013 to February 2015 and was a member of the Board
of Directors of the Swiss Bankers Association from
September 2013 to February 2015� Mr Gloor is an in-
dependent non-executive director�
Christoph B. Gloor
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→
Karin Keller-Sutter (1963, Switzerland), who holds a university degree in
translation and conference interpreting and has a postgraduate qualifi-
cation 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 coun-
cil in 2000� She was in charge of the security and justice department
until May 2012 and chaired the Governing Council in 2006/2007 and
again in 2011/2012� She has been a member of the Council of States – the
upper chamber of the Swiss parliament – since 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
Federation and a member of the Executive Committee of the Swiss Em-
ployers’ Federation� Ms Keller-Sutter is an independent non-executive
director�
Karin Keller-Sutter
←
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 he 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 Super-
visory 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 Su-
pervisory Board at SÜDVERS Holding GmbH & Co�
KG, Au near Freiburg, Zurich� Mr Pleines is an inde-
pendent non-executive director�
Thomas Pleines
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Eveline Saupper
68
←
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 Mitchell (now KPMG Fides), Zurich, from
1983 to 1985 and was employed by Baker & McKenzie, Zurich and Chi-
cago, from 1985 to 1992� Until mid-2014, she was a partner at Hom-
burger AG, Zurich, where she is now of counsel� Dr Eveline Saupper
sits on the boards of directors of Syngenta AG, Basel, Georg Fischer AG,
Schaffhausen, Stäubli Holding AG, Pfäffikon SZ, and hkp group AG,
Zurich� She is also Vice Chairwoman of the Board of Directors of
Flughafen Zürich AG, Kloten, and chairs the Board of Directors of Men-
tex Holding AG, Schwyz� Dr Saupper is an independent non-executive
director�
Secretary to the Board of Directors:
Dr Philipp Jermann,
Buus (BL)
Head of Group Internal Audit:
Rolf-Christian Andersen,
Meilen (ZH)
Corporate Governance
Corporate Governance Report
including Remuneration Report
4. CORPORATE EXECUTIVE COMMITTEE
→
Martin Strobel (1966, Germany/Switzerland, Dr rer� pol�) studied com-
puter science, business management and business information 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 strategic 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 responsibility for Corporate
Division Switzerland� Dr Martin Strobel became Group CEO on 1 Janu-
ary 2009� He also headed up Corporate Division International from 2013
until the end of 2014� He sits on the boards of directors of the Basel
Chamber of Commerce and the Geneva Association� On 27 May 2015,
Martin Strobel announced that he would be stepping down on 30 April
2016� On 29 October 2015, the Board of Directors of Bâloise Holding Ltd
appointed Gert De Winter to succeed Martin Strobel� Gert De Winter
(49) will take up his role as CEO of the Baloise Group (Group CEO) on
1 January 2016� He was previously CEO of Baloise in Belgium and has
worked for Baloise since 2005�
Martin Strobel
←
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 Winterthur 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 Chairman 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 Chairman in 2000�
From 2002 to 2004 he was Chief Financial Officer at Zurich Financial
Services, Switzerland� His responsibilities here comprised finance,
human resources, IT, logistics and procurement� Since 1 December 2004,
he has been a member of the Corporate Executive Committee (heading
up Corporate Division Finance), where he oversees Group Accounting
& Finance, Corporate Communications & Investor Relations, Group
Risk Management, and Corporate IT� The actuary responsible for
Baloise’s business in Switzerland and the Head of Regulatory Affairs
also report to German Egloff�
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Corporate Governance Report
including Remuneration Report
→
Michael Müller (1971, Switzerland, lic� oec� publ�) graduated
in economics from the University of Zurich, specialising in
insurance and accounting/finance� He began his career with
Basler Versiche rungen 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 member of the senior management
team in Corporate Division Switzerland, focusing on finan-
cial reporting and accounting, actuarial 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�
Michael Müller is a member of the Board of Foundation
of Stiftung Finanzplatz Basel�
Michael Müller
←
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 corporate law at the University of St� Gallen� After brief
spells working 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 Holding’s Board of Directors until April
2012� Since 6 December 2007 he has been a member of the
Corporate Executive Committee and, as Head of the Corpo-
rate 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�
Thomas Sieber
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Corporate Governance Report
including Remuneration Report
→
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
advisor to institutional clients before becoming a Group
Manager in private banking in New York and eventually
working as Section Head of Securities Sales, where he pri-
marily 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 Manage-
ment) and, in this capacity, is responsible for the Baloise
Group’s asset management activities, which include invest-
ment strategy and investment control, Baloise Asset Manage-
ment, real estate, and Baloise Investment Services (investment
fund business)� He sits on the Board of Directors at Uniges-
tion Holding, Geneva, and compenswiss (the Swiss Federal
Social Security Funds), Geneva�
Martin Wenk
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�
There are no management agreements that assign executive
functions to third parties�
→ www.baloise.com/corporate-executive-committee
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Management structure
(as at: 31 December 2015)
GROUP CEO
Martin Strobel*
CORPORATE SECRETARY
Markus von Escher
REGIONAL MANAGER
Peter Zutter
FINANCE
ASSET
MANAGEMENT
CORPORATE
CENTER
SWITZERLAND
GERMANY
BELGIUM
LUXEMBOURG
German Egloff*
Martin Wenk*
Thomas Sieber*
Michael Müller*
Jürg Schiltknecht
Gert De Winter
Romain Braas
Group Accounting
& Controlling
Pierre Girard
Investment
Strategy &
Investment
Controlling
Corporate
Communications
& Investor
Relations
Thomas Schöb
Baloise Asset
Management
Marc Kaiser
Matthias Henny
Real Estate
Renato Piffaretti
Baloise
Investment
Services
Robert
Antonietti
Group Risk
Management
Stefan Nölker
Corporate IT
Olaf Romer
Appointed
Actuary
Switzerland
Thomas Müller
Regulatory
Affairs
Fabian Berger
72
Corporate
Development
Sibylle Fischer
Group Human
Resources
Stephan Ragg
Group Legal &
Tax
Andreas Burki
Group
Compliance
Peter Kalberer
Run-off
Bruno Rappo
Group
Procurement
Manfred
Schneider
Product
Management
Commercial
Clients
Clemens
Markstein
Product
Management
Private Custom-
ers & Focused
Financial
Services
Wolfgang Prasser
Sales &
Marketing
Bernard Dietrich
Baloise Bank
SoBa
Jürg Ritz
Operations & IT
Urs Bienz
Finance & Risk
Carsten Stolz
Claims
Mathias Zingg
Life &
Tied agents
Markus Jost
Finance/Asset
Management
Kay Bölke
Non-Life
Alexander
Tourneau
IT/Operations
Ralf Stankat
Non-Life Retail
Operations
Joris Smeulders
Daniel Frank
Life & Finance
Alain Nicolai
Non-Life
Claude Meyer
Non-Life
Enterprises
& Marine
Anne-Marie
Seeuws
Life / ICT
& General
Services
Erik Vanpoucke
Finance
Henk Janssen
* Member of the Corporate Executive Committee.
Corporate Governance
Corporate Governance Report
including Remuneration Report
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 2015 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 2015� 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 re-
sponsibilities 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
independent members of the Board of Directors, who are elect-
ed every year by the Annual General Meeting� Dr Eveline Saup-
per (Chairwoman), Thomas Pleines (Deputy Chairman), Dr
Georges-Antoine de Boccard and Karin Keller-Sutter were
elected to the Remuneration Committee by the Annual Gen-
eral Meeting on 30 April 2015� 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�
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5.2 Remuneration policies
5.3 Remuneration system
Principles
The Company’s success is largely dependent on the skills, ca-
pabilities and performance of its workforce� It is therefore es-
sential to recruit, develop and retain suitably qualified, highly
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 Board of Directors and 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� It reflects 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, which applies to all
employees in Switzerland and, by analogy, to all members of
staff throughout the Baloise Group� By adopting this Remu-
neration Guideline and Remuneration Policy, the Board of Di-
rectors has ensured that all aspects of remuneration policy are
centrally coordinated� 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�
Objectives
The objectives of the remuneration system are to further increase
the emphasis on performance at Baloise and to strengthen
employees’ 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
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�
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including Remuneration Report
100 %
75 %
50 %
25 %
0 %
Management level 3
Management level 2
Corporate Executive
Committee
Deferred variable remuneration
Cash portion of short-term variable remuneration
Basic salary
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 taking account of the Company’s success, this system com-
prises two clearly distinct tools: performance-related remu-
neration and the performance pool� Performance-related re-
muneration 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�
The individual performance of the members of the Cor-
porate Executive Committee 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� The Corporate
Key Position Benchmark survey conducted by Kienbaum uses
function-specific peer groups� Each function being compared
is assigned to one of three distinct peer groups� Assignment is
based on which companies Baloise is competing against for the
skill-sets and qualifications needed for each function (i�e� re-
cruitment market) and which alternative employers – in theo-
ry, 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� Functions not covered by the Kienbaum comparison
are regularly reviewed using Towers Watson’s Financial Services
Compensation Survey� The findings of these benchmarking
surveys are fed into the Company’s regular review of its salary
structures and presented to the Remuneration Committee�
Baloise also regularly conducts market comparisons of
its local functions in the countries outside Switzerland�
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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�
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,
although the way in which this is done will vary depending on
local operating and market requirements� This remuneration
is paid in cash by bank transfer� 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 prin-
ciple that people who do the same job and have the same qual-
ifications 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 directly by the profitability of the unit
being monitored or by the profitability of individual products
or transactions�
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
considerable importance to managing its business sustainably
and ensuring a high correlation between the interests of its
shareholders and executives� It therefore pays a substantial pro-
portion of variable remuneration in the form of shares� Senior
managers 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:
members 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 78)� 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
responsibilities and total remuneration packages increase, a
significant 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 subscribe
for shares: the Share Subscription Plan and the Employee 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 not agree any targets or objectives that conflict with the
Company’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
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and the importance of his or her function� 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 corresponding functions abroad�
The members of the Corporate Executive Committee do not
receive any performance-related remuneration� 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 affecting 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 78)�
→ 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 by the Chief Risk Officer and the Head
of Group Compliance of the risks taken and the evaluations by
the Head of Group Human Resources and others of strategy
implementation 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 tar-
get figures have been specified� The amount of these payments is
mainly determined by a holistic assessment consisting of indi-
viduals’ 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 discussed
by the relevant management team, compared with other depart-
ments 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�
For the 2015 financial year the Remuneration Committee
decided on a factor of 100 per cent of the normally expected
value of performance pool payments� This decision was moti-
vated by the following considerations:
→ Good and solid profit for the year that was in line
with expectations, despite a challenging environment;
→ Good operational profitability, resulting in a strong
combined ratio;
→ Encouraging growth in the target segments;
→ Key projects and initiatives on track for completion;
→ Stable balance sheet, despite negative interest-rate
environment and a strong Swiss franc�
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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
2015
Performance pool
(as a percentage of
the normal
expected value)
Consolidated profit
for the period (CHF
million)
70 %
100 %
120 %
137 %
100 %
61.3
485.2
455.4
711.9
511.1
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
eligible for 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 almost 40 leading
European insurance companies contained in the STOXX Europe
600 Insurance Index�
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� Programme participants 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 mul-
tiplier� 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�
Companies in the STOXX 600 Europe Insurance Index (as at 31 December 2015)
Admiral Group plc
Direct Line Insurance Group
Phoenix Group Holding
Unipol Gruppo Finanziario
Aegon NV
Ageas
Allianz
Amlin plc
Gjensidige Forsikring
Prudential plc
Unipolsai
Hannover Rück
RSA Insurance Group
Zurich Insurance Group
Helvetia
Hiscox
Sampo OYJ
Scor
Assicurazioni Generali
Lancashire Holdings
Standard Life plc
Aviva plc
Axa
Bâloise Holding
Beazly
CNP Assurances
Legal & General Group plc
St. James’s Place Capital
Mapfre SA
Münchener Rück
NN Group
Old Mutual plc
Swiss Life
Swiss Re
Topdanmark A / S
Tryg Forsikring
Source: http://www.stoxx.com/indices/index_information.html?symbol=SXIP
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Participants receive the pertinent number of shares once the
vesting period has elapsed, which means that for the PSUs al-
located in 2015 they receive their shares on 1 March 2018� If an
individual’s employment contract is terminated during the vest-
ing period, the PSUs expire without the person concerned re-
ceiving any consideration or compensation� This does not apply
if the employment contract ends due to retirement, disability
or death� It also does not apply if the contract is terminated but
the programme participant does not join a rival company or is
not personally at fault for the termination of the contract� In
the latter two cases, some of the allocated PSUs will still expire�
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�
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:
PERFORMANCE SHARE UNIT
(PSU) PLAN
PSUs granted
PSUs converted
Change in value
2007
2008
2009
2010
2011
2012
2013
2014
2015
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
01.03.2014
01.03.2015
125.80
109.50
82.40
86.05
91.00
71.20
84.50
113.40
124.00
01.01.2010
01.01.2011
01.01.2012
01.01.2013
01.01.2014
01.03.2015
01.03.2016
01.03.2017
01.03.2018
1.182
1.24
0.64
0.58
0.77
1.21
41.23
40.90
41.05
86.05
91.00
64.40
78.50
113.60
124.00
4127.60
4127.60
4127.60
101.71
112.84
41.22
45.53
87.47
150.04
4156.95
4114.84
4133.98
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 2015.
3
– 19 %
3 %
– 50 %
– 47 %
– 4 %
111 %
486 %
41 %
48 %
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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� All members of the Corporate Executive Com-
mittee have a notice period of twelve months� The employment
contract with the Chairman of the Board of Directors does not
stipulate any notice period; its duration is determined by the
term of appointment and by law� There are no change-of-control
clauses�
The Remuneration Policy adopted by the Board of Direc-
tors contains clear guidance on inducement payments and sev-
erance packages� Such remuneration may only be paid in justi-
fied cases� No severance packages may be awarded to members
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
08.01.2016
121.40
109.26
09.01.2015
127.50
114.75
Share Subscription
Plan for 2016
(applies to variable
remuneration awarded for
the 2015 reporting period)
Share Subscription
Plan for 2015
(applies to the variable
remuneration granted for
2014 and to the shares
subscribed by the Chairman
and members of the Board of
Directors in 2015)
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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 40 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
during 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
08.01.2016
121.40
106.59
09.01.2015
127.50
112.70
Employee Share Ownership
Plan for 2016
(applies to variable
remuneration awarded for
the 2015 reporting period)
Employee Share Ownership
Plan for 2015
(applies to the variable
remuneration granted for
2014 and to the shares
subscribed by the Chairman
of the Board of Directors in
2015)
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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Corporate Governance Report
including Remuneration Report
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)
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
of 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 2015 the subscription price amount-
ed to CHF 60�40 (2014: CHF 57�30) and a total of 172,796 shares
were subscribed (2014: 174,810)� 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)�
82
2014
2015
174,810
172,796
31.8.2017
31.08.2018
57.30
10.0
20.9
3,187
1,949
89.7
60.40
10.4
20.5
3,181
1,920
90.0
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
sufficiently 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
pension 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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Corporate Governance Report
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 and
the granting of equity instruments
→ Section 34 Loans and advances granted to members of the
Board of Directors and the Corporate Executive Committee
→ www.baloise.com/rules-regulations
5.10 Remuneration paid to the members of the Board of
Directors
Please refer to the tables on pages 86 and 87�
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�
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 88 to 91�
The short-term variable remuneration paid to the members
of the Corporate Executive Committee is allocated from the
performance pool� The individual performance of each member
in achieving the Company’s objectives is factored into the meas-
urement of the performance pool� The expected performance
pool value amounts to 60 per cent of basic salary� Even in cases
of outstanding individual performance and excellent perfor-
mance by the Company as a whole, this payment cannot exceed
90 per cent of basic salary (cap of 150 per cent of the expected
value)�
The members of the Corporate Executive Committee
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 system complies with 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 30 April
2015 passed binding votes in which it set a cap on the variable
remuneration payable for 2015 and the amount of fixed remu-
neration to be paid for 2016�
The structure of remuneration paid to the Corporate Ex-
ecutive Committee is laid down in the Remuneration Policy�
The actual level of remuneration paid is determined as follows
(see table below)�
The members of the Corporate Executive Committee must re-
ceive 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 88 to 91 in accordance with the accrual
principle� The table includes all forms of remuneration award-
ed for performance in 2015 even if individual components are
not paid until a later date�
The total remuneration paid to the Corporate Executive
Committee for 2015 was lower than in the previous year
(sum total of basic salary plus variable remuneration down by
16�0 per cent)� This can be attributed to several factors:
→ At 100 per cent, the performance pool is substantially
smaller overall than it was in 2014 (137 per cent),
which is reflected in the lower variable remuneration for
the members of the Corporate Executive Committee�
→ One member of the Corporate Executive Committee took
early retirement with effect from 30 April 2015� His total
remuneration was therefore only around 41�0 per cent of
his previous year’s remuneration�
Excluding the member of the Corporate Executive Com-
mittee who retired, the total remuneration of the other members
of the Corporate Executive Committee for 2015 was 7�7 per cent
lower than for 2014 because of the reduced variable remunera-
tion�
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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Corporate Governance
Corporate Governance Report
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The Annual General Meeting held on 30 April 2015 approved
a maximum amount of CHF 5�3 million for the variable remu-
neration payable for 2015� A total of CHF 4�0 million was paid
out, which meant that only around three-quarters of the max-
imum amount available was utilised�
5.12 Loans and credit facilities
Please refer to the table on page 92�
5.13 Shares and options held
Please refer to the tables on pages 93 and 94�
5.14 Amounts of total remuneration and variable remuneration
Please refer to the table on page 95�
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 95 the amounts
of total remuneration and variable remuneration and has dis-
closed the total amounts of outstanding deferred remunera-
tion and the inducement payments and severance packages
granted� These figures include all forms of remuneration award-
ed for 2015 even if individual components are not paid until
a later date�
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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
125,000
125,000
125,000
Dr Georges-Antoine de Boccard
125,000
Investment Committee (since 24 April 2014)
Remuneration Committee
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)
Investment Committee (until 24 April 2014)
Chair of the Remuneration Committee
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
33,333
50,000
33,333
50,000
50,000
50,000
33,333
16,667
70,000
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 in connection
with the Share Subscription Plan (CHF 155,917, with a closed period of five years instead of the usual three years) and 1,547 shares in connection with 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).
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Corporate Governance Report
including Remuneration Report
REMUNERATION PAID TO THE MEMBERS OF THE BOARD OF DIRECTORS
2015
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
231,607
1,551,607
311,940
2,743
Chairman of the Board of Directors
Werner Kummer
125,000
295,000
0
295,000
73,670
642
Vice-Chairman of the Board of Directors
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
125,000
125,000
Dr Georges-Antoine de Boccard
125,000
Investment Committee
Remuneration Committee
Christoph B. Gloor
Investment Committee
Karin Keller-Sutter
Remuneration Committee
Thomas Pleines
Audit and Risk Committee
Remuneration Committee
Dr Eveline Saupper
Chairman’s Committee
Chair of the Remuneration Committee
125,000
125,000
125,000
125,000
50,000
50,000
70,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
70,000
225,000
0
225,000
56,228
490
225,000
5,743
230,743
56,228
490
225,000
5,743
230,743
56,228
490
175,000
5,743
180,743
43,720
175,000
5,743
180,743
43,720
225,000
5,743
230,743
56,228
381
381
490
245,000
5,743
250,743
61,162
533
Total for the Board of Directors
2,320,000
790,000
3,110,000
266,065
3,376,065
759,121
6,640
Explanatory notes to the table
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 114.75, in line with the Share Subscription Plan). Shares received by the Chairman of the Board of Directors amounted to 1,359 shares in connection
with the Share Subscription Plan (CHF 155,945, with a closed period of five years instead of the usual three years) and 1,384 shares in connection with the Employee
Share Ownership Plan (CHF 155,995).
Pension contributions The information disclosed for 2015 includes 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).
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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
1,150,000
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.
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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.
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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
2015
Dr Martin Strobel
Group CEO
Michael Müller
CHF
CHF
Number of
shares
CHF
Number of
shares
1,150,000
310,592
2,841
310,408
632,500
123,053
2,625
286,808
Head of Corporate Division Switzerland
Jan De Meulder
255,762
143,142
0
0
CHF
0
0
0
Granted in 2015
Number of PSUs
CHF
CHF
CHF
Number of
shares
3,796
460,075
2,841
1,081,075
2,231,075
94 %
CHF
3,901
CHF
CHF
174,115
2,409,091
2,088
253,066
2,625
662,926
1,295,426
105 %
3,901
141,262
1,440,588
926
112,231
0
255,373
511,135
100 %
62,004
154,443
727,581
0
0
0
Head of SBU Germany (until 30 April 2015)
German Egloff
Head of Corporate Division Finance
Dr Thomas Sieber
Head of Corporate Division Corporate Centre
690,000
144,975
1,515
165,529
971
103,496
2,278
276,094
2,486
690,094
1,380,094
100 %
3,901
215,181
1,599,175
621,000
186,318
1,023
111,773
699
74,509
2,050
248,460
1,722
621,060
1,242,060
100 %
3,901
194,648
1,440,609
Martin Wenk
690,000
111,801
3,069
335,319
0
0
2,278
276,094
3,069
723,214
1,413,214
105 %
3,901
215,181
1,632,295
Head of Corporate Division Asset Management
Total for the Corporate Executive Committee
4,039,262
1,019,881
11,073
1,209,836
1,670
178,005
13,416
1,626,019
12,743
4,033,741
8,073,003
100 %
81,509
1,094,828
9,249,340
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 2015 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 109.26.
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 106.59.
Performance share units (PSUs) These have been disclosed at their value of CHF 121.20 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.
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REMUNERATION PAID TO THE MEMBERS OF THE CORPORATE EXECUTIVE COMMIT TEE
Basic salary
Cash payment
2015
Dr Martin Strobel
Group CEO
Michael Müller
Jan De Meulder
German Egloff
Head of Corporate Division Switzerland
Head of SBU Germany (until 30 April 2015)
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
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 2015
CHF
CHF
Number of
shares
CHF
Number of
shares
CHF
Number of PSUs
CHF
Number of
shares
CHF
CHF
1,150,000
310,592
2,841
310,408
3,796
460,075
2,841
1,081,075
2,231,075
94 %
CHF
3,901
CHF
CHF
174,115
2,409,091
632,500
123,053
2,625
286,808
2,088
253,066
2,625
662,926
1,295,426
105 %
3,901
141,262
1,440,588
255,762
143,142
0
0
926
112,231
0
255,373
511,135
100 %
62,004
154,443
727,581
690,000
144,975
1,515
165,529
971
103,496
2,278
276,094
2,486
690,094
1,380,094
100 %
3,901
215,181
1,599,175
621,000
186,318
1,023
111,773
699
74,509
2,050
248,460
1,722
621,060
1,242,060
100 %
3,901
194,648
1,440,609
Martin Wenk
690,000
111,801
3,069
335,319
2,278
276,094
3,069
723,214
1,413,214
105 %
3,901
215,181
1,632,295
Total for the Corporate Executive Committee
4,039,262
1,019,881
11,073
1,209,836
1,670
178,005
13,416
1,626,019
12,743
4,033,741
8,073,003
100 %
81,509
1,094,828
9,249,340
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 2015 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 109.26.
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 106.59.
Performance share units (PSUs) These have been disclosed at their value of CHF 121.20 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.
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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
2014
2015
2014
2015
2014
2015
2014
Total
2015
CHF
Dr Andreas Burckhardt
Chairman
Werner Kummer
Vice-Chairman
Dr Michael Becker
Member
Dr Andreas Beerli
Member
Dr Georges-Antoine de Boccard
Member
Christoph B. Gloor
Member
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
0
0
0
0
0
0
0
0
0
0
2,706,237
2,674,203
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2,706,237
2,674,203
1,000,000
1,000,000
2,549,704
2,399,986
2,275,000
1,850,000
2,560,621
897,885
3,275,000
2,850,000
5,110,325
3,297,871
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2,706,237
2,674,203
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2,706,237
2,674,203
0
3,549,704
3,399,986
0
4,835,621
2,747,885
0
8,385,325
6,147,871
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 (2015: 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
2014
2015
2014
2015
2014
2015
2014
2015
Quantity
Dr Andreas Burckhardt
Chairman
Werner Kummer
Vice-Chairman
Dr Michael Becker
Member
Dr Andreas Beerli
Member
Dr Georges-Antoine de
Boccard
Member
Christoph B. Gloor
Member
Karin Keller-Sutter
Member
Thomas Pleines
Member
Dr Eveline Saupper
Member
Total for the Board
of Directors
Percentage of issued
share capital
4,951
8,809
50,576
43,919
55,527
52,728
0.111 %
0.105 %
4,184
4,927
3,170
3,069
7,354
7,996
0.015 %
0.016 %
1,530
2,197
2,978
2,801
4,508
4,998
0.009 %
0.010 %
0
0
667
2,808
2,631
2,808
3,298
0.006 %
0.007 %
667
2,686
2,509
2,686
3,176
0.005 %
0.006 %
7,000
7,312
1,000
1,381
8,000
8,693
0.016 %
0.017 %
0
0
0
0
1,425
1,806
1,425
1,806
0.003 %
0.004 %
2,141
2,631
2,141
2,631
0.004 %
0.005 %
2,771
20,436
3,438
28,017
3,094
69,878
2,960
63,707
5,865
90,314
6,398
91,724
0.012 %
0.181 %
0.013 %
0.183 %
0.041 %
0.056 %
0.140 %
0.127 %
0.181 %
0.183 %
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
Michael Müller
Discretionary shares
Restricted shares
Total share ownership
Percentage of issued
share capital
Prospective
entitlements (PSUs)
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
100
100
51,044
28,960
51,144
29,060
0.102 % 0.058 % 20,408
14,373
Head of Corporate Division Switzerland
2,679
9,708
10,632
9,931
13,311
19,639
0.027 % 0.039 %
8,654
7,371
Jan De Meulder
Head of SBU Germany (until 30 April 2015)
4,593
7,724
11,525
8,607
16,118
16,331
0.032 % 0.033 % 12,033
8,043
German Egloff
Head of Corporate Division Finance
7,583
17,457
19,280
9,557
26,863
27,014
0.054 % 0.054 %
9,854
8,269
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
3,150
6,050
45,239
36,623
48,389
42,673
0.097 % 0.085 %
9,183
7,441
8,000
9,000
11,098
9,894
19,098
18,894
0.038 % 0.038 % 10,204
8,269
26,105
50,039 148,818 103,572 174,923 153,611
0.350 % 0.307 % 70,336
53,766
0.052 % 0.100 % 0.298 % 0.207 % 0.350 % 0.307 %
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 2013, 1 March 2014 and 1 March 2015).
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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
2014
2015
Total
762.3
5.7
5.6
773.6
698.8
5.5
5.1
709.4
Total remuneration
CHF million
Total variable remuneration (total pool)
CHF million
Number of beneficiaries
172.3
5,353
5.7
148
5.6
64
183.6
154.7
5,230
5.5
168
5.1
62
165.3
Of which commission paid to insurance
sales force
CHF million
102.5
0.0
0.0
102.5
99.9
0.0
0.0
99.9
Of which other forms of variable
remuneration
CHF million
69.8
5.7
5.6
81.1
54.7
5.5
5.1
65.3
Total outstanding
deferred remuneration
CHF million
Debits / credits for remuneration
for previous reporting periods
recognised in profit or loss
0.0
100.5
17.5
118.0
0.0
94.1
15.5
109.6
CHF million
0.0
0.0
0.0
0.0
– 0.1
0.0
0.0
– 0.1
Total inducement payments
made
CHF million
Number of beneficiaries
Total severance payments
made
CHF million
Number of beneficiaries
0.0
1
19.7
157
0.0
0
0.0
0
0.0
0
0.0
0
0.0
19.7
0.2
3
14.7
137
0.0
0
0.0
0
0.0
0
0.0
0
0.2
14.7
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 Remuneration agreed in connection with the termination of an employment contract. 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.
95
Corporate Governance
Corporate Governance Report
including Remuneration Report
Report of the statutory auditor
to the Annual General Meeting of
Bâloise Holding Ltd, Basel
STATUTORY AUDITOR’S REPORT ON THE REMUNERATION REPORT FOR 2015
We have audited the remuneration report (pages 73 to 95) of 18 March 2016 published by Bâloise Holding Ltd for
the year ended 31 December 2015�
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 2015 is consistent
with Swiss law and sections 14 to 16 ERCO�
PricewaterhouseCoopers Ltd
Michael Stämpfli
Audit expert
Peter Lüssi
Audit expert
Auditor in charge
Basel, 18 March 2016
96
Corporate Governance
Corporate Governance Report
including Remuneration Report
This page has been left empty on purpose.
97
Corporate Governance
Corporate Governance Report
including Remuneration Report
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 2015 Annual General Meeting voted for a provision
in section 16 (2) of the Articles of Association to the effect that
powers of attorney and voting instructions may also be given
to an independent proxy electronically 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
Articles of Association)� Article 699 (3) of the Swiss Code of
Obligations (OR) states such requests must be made by share-
holders 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
98
Corporate Governance
Corporate Governance Report
including Remuneration Report
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�
A new invitation to tender was issued and the contract
awarded in anticipation of the new requirement to change ex-
ternal auditors on a regular basis� At the next Annual General
Meeting, the Board of Directors will propose that its sharehold-
ers elect Ernst & Young (EY), Basel, as the Company’s new ex-
ternal auditors�
PRICEWATERHOUSECOOPERS’ FEES
CHF
(rounded to the nearest thousand, including
outlays and VAT)
Audit fees
Consulting fees
Tax consultancy and legal advice
Insurance-specific consulting
Operational consulting
Business and IT consulting
2014
2015
5,186,000
5,049,000
608,000
269,000
54,000
175,000
110,000
953,000
229,000
2,000
489,000
233,000
Total
5,794,000
6,002,000
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�
99
Corporate Governance
Corporate Governance Report
including Remuneration Report
The Audit and Risk Committee submits proposals to the Board
of Directors regarding the external auditors to be elected by the
Annual General Meeting and makes recommendations regard-
ing their fees� Before the start of the annual audit, it reviews the
scope of the audit and suggests areas that require special atten-
tion� The Audit and Risk Committee reviews the external audi-
tors’ fees on an annual basis�
9. SIGNIFICANT AMENDMENTS TO THE ARTICLES OF ASSOCIA-
TION SUBMITTED TO THE 2016 ANNUAL GENERAL MEETING
No amendments to the Articles of Association will be submit-
ted to the 2016 Annual General Meeting�
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
10. INFORMATION POLICY
centres�
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�
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 12�
→ www.baloise.com/baloise-share
Information about Baloise bonds
Information about Baloise bonds in circulation can be found
on pages 228 and 266�
→ 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
latest corporate communications at www�baloise�com/mailinglist�
→ www.baloise.com/media
100
Corporate Governance
Corporate Governance Report
including Remuneration Report
Contact
Corporate Governance
Baloise Group
Philipp Jermann
Aeschengraben 21
4002 Basel, Switzerland
Tel� +41 (0)58 285 89 42
philipp�jermann@baloise�com
Investor Relations
Baloise Group
Marc Kaiser
Aeschengraben 21
4002 Basel, Switzerland
Tel� +41 (0)58 285 81 81
marc�kaiser@baloise�com
101
4 Baloise
18 Review of operating performance
38 Sustainable business management
56 Corporate governance
102 Financial Report
256 Bâloise Holding Ltd
274 Notes
Financial Report
Consolidated balance sheet ������������������������������������������������������������� 104
Consolidated income statement ���������������������������������������������������� 106
Consolidated statement of comprehensive income �������������� 107
Consolidated cash flow statement ������������������������������������������������ 108
Consolidated statement of changes in equity ������������������������� 110
Reconciliation between the gross investment in financial
leases and the present value of minimum lease payments ��� 227
Financial liabilities ������������������������������������������������������������������������������ 228
Provisions ������������������������������������������������������������������������������������������������ 229
Insurance liabilities ����������������������������������������������������������������������������� 229
NOTES TO THE CONSOLIDATED ANNUAL
FINANCIAL STATEMENTS ������������������������������������������������������������������� 112
Basis of preparation ���������������������������������������������������������������������������� 112
Application of new financial reporting standards
and restatements ����������������������������������������������������������������������������������� 112
Consolidation principles and accounting policies ��������������� 114
Critical accounting principles
and estimate uncertainties ���������������������������������������������������������������� 130
Management of insurance risk and financial risk ���������������� 132
Basis of consolidation ������������������������������������������������������������������������ 175
Information on operating segments (segment reporting) ��� 177
NOTES TO THE CONSOLIDATED BALANCE SHEET ������������������� 182
Property, plant and equipment ������������������������������������������������������ 182
Intangible assets ����������������������������������������������������������������������������������� 184
Investments in associates ����������������������������������������������������������������� 187
Investment property ��������������������������������������������������������������������������� 189
Financial assets ������������������������������������������������������������������������������������� 190
Mortgages and loans ��������������������������������������������������������������������������� 196
Derivative financial instruments �������������������������������������������������� 197
Receivables ���������������������������������������������������������������������������������������������� 198
Reinsurance assets ������������������������������������������������������������������������������� 199
Receivables from reinsurers ������������������������������������������������������������ 199
Employee benefits �������������������������������������������������������������������������������� 200
Deferred income taxes ����������������������������������������������������������������������� 212
Other assets �������������������������������������������������������������������������������������������� 214
Non-current assets held for sale
and discontinued operations ���������������������������������������������������������� 215
Share capital ������������������������������������������������������������������������������������������� 216
Technical reserves (gross) ���������������������������������������������������������������� 217
Liabilities arising from banking business
and financial contracts ������������������������������������������������������������������������ 226
NOTES TO THE
CONSOLIDATED INCOME STATEMENT ������������������������������������������ 230
Premiums earned and policy fees ������������������������������������������������� 230
Income from investments for
own account and at own risk ����������������������������������������������������������� 230
Realised gains and losses on investments ��������������������������������� 231
Income from services rendered ����������������������������������������������������� 235
Other operating income �������������������������������������������������������������������� 235
Classification of expenses ����������������������������������������������������������������� 236
Personnel expenses ������������������������������������������������������������������������������ 236
Gains or losses on financial contracts ���������������������������������������� 237
Income taxes ������������������������������������������������������������������������������������������� 238
Earnings per share ������������������������������������������������������������������������������� 239
Other comprehensive income �������������������������������������������������������� 240
OTHER DISCLOSURES ������������������������������������������������������������������������� 242
Acquisition and disposal of companies ������������������������������������� 242
Related party transactions ��������������������������������������������������������������� 243
Remuneration paid to the Board of Directors
and the Corporate Executive Committee ��������������������������������� 244
Contingent and future liabilities �������������������������������������������������� 245
Operating leases ����������������������������������������������������������������������������������� 248
Claim payments received from non-Group insurers ���������� 249
Significant subsidiaries, joint ventures
and associates as at 31 December 2014 ��������������������������������������� 250
Changes to shareholdings ���������������������������������������������������������������� 252
Consolidated structured entities �������������������������������������������������� 253
Joint arrangements ������������������������������������������������������������������������������ 253
Events after the balance sheet date ���������������������������������������������� 253
REPORT OF THE STATUTORY AUDITOR TO THE ANNUAL
GENERAL MEETING OF BÂLOISE HOLDING LTD, BASEL ������� 254
T
R
O
P
E
R
L
A
I
C
N
A
N
I
F
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
Recognised at fair value through profit or loss
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.
104
Note
31.12.2014
31.12.2015
8
9
10
11
12
12
13
14
15
16
17
18
15
15
19
20
21
379.2
909.2
227.9
399.1
814.6
162.3
5,962.9
6,251.9
4,698.1
8,753.1
4,443.3
9,327.5
8,413.7
8,549.5
24,227.5
23,024.6
1,820.4
1,674.3
17,326.0
15,912.6
839.9
613.2
21.1
–
421.5
79.7
409.0
1.7
375.3
564.5
48.3
64.2
744.0
653.9
9.9
–
410.8
52.3
389.4
1.1
317.5
491.3
41.4
49.5
163.2
53.3
2,969.6
–
164.4
40.2
2,839.8
2,018.7
79,342.3
78,783.8
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
31.12.2014
31.12.2015
22
23
24
26
27
14
28
18
19
21
5.0
246.6
– 250.0
375.8
5,413.9
5,791.3
39.7
5.0
253.2
– 305.4
– 216.5
5,691.4
5,427.6
34.7
5,831.0
5,462.3
48,738.9
45,765.8
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
–
1,930.1
8,299.2
8,782.8
1,707.8
94.8
250.8
1,650.4
1,355.6
440.6
913.3
85.8
81.6
1,962.9
73,511.4
73,321.5
79,342.3
78,783.8
105
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.
106
Note
2014
2015
29
29
29
30
31
32
33
23
23
23
34
34
34
36
34
26
37
38
7,168.1
– 163.6
7,004.5
1,701.9
1,362.5
110.7
8.1
185.2
6,832.4
– 148.6
6,683.7
1,521.8
386.2
112.6
36.8
136.6
10,372.8
8,877.9
– 5,666.4
– 5,352.4
– 1,469.5
– 1,241.9
146.6
– 569.6
– 866.5
– 66.9
– 42.6
– 462.6
– 446.8
97.9
– 453.3
– 780.5
– 60.4
– 34.1
– 0.9
– 333.1
– 9,444.3
– 8,158.6
928.6
719.2
– 43.5
885.1
– 40.0
679.3
– 173.2
711.9
– 168.2
511.1
710.7
1.3
15.15
14.63
512.1
– 1.0
10.96
10.65
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
2014
2015
711.9
511.1
– 0.5
– 487.4
84.6
93.2
– 310.1
0.8
33.1
– 39.1
– 8.5
– 13.6
Change in unrealised gains and losses on available-for-sale financial assets
1,688.8
– 882.9
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.
8.7
– 136.6
– 2.6
– 737.1
177.5
– 245.4
753.3
– 27.6
– 33.7
– 1.7
326.4
– 130.6
167.9
– 582.2
443.2
– 595.8
1,155.1
– 84.7
1,154.6
0.5
– 80.2
– 4.5
107
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
2014
2015
73.6
213.0
330.6
– 6.5
– 258.6
– 317.8
28.0
– 19.2
0.0
2,960.8
2,969.6
6.2
– 118.2
– 17.9
2,969.6
2,839.8
885.1
679.3
Depreciation, amortisation and impairment of property, plant and equipment
and of intangible assets
8 / 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 of an equity nature
Purchase / sale of financial assets of a debt nature
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
– 0.1
– 8.1
– 1,356.8
336.6
1,353.5
0.9
43.5
8.0
– 183.3
– 1,508.5
– 520.9
45.3
– 25.6
598.5
384.9
– 114.7
73.6
70.4
– 0.3
– 36.8
– 375.4
– 111.6
1,178.3
0.0
40.0
10.1
– 312.9
– 1,275.1
– 1,142.7
– 262.2
126.8
1,769.5
99.8
– 126.5
330.6
108
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
Note
2014
2015
8
9
40
40
22
22
26
26
– 26.7
0.6
– 20.1
0.1
– 16.4
267.9
–
–
7.6
213.0
–
–
149.4
– 150.0
– 38.1
– 60.6
64.9
– 0.6
– 223.6
– 258.6
– 31.4
1.6
– 28.9
0.1
– 6.1
–
–
22.7
35.4
– 6.5
–
–
–
–
– 34.0
– 107.1
58.4
– 0.5
– 234.7
– 317.8
28.0
6.2
2,960.8
2,969.6
28.0
0.0
– 19.2
2,969.6
6.2
– 17.9
– 118.2
2,839.8
1,954.5
1,765.8
–
1,015.1
2,969.6
6.4
1,069.5
110.0
– 82.1
–
1,074.0
2,839.8
89.8
926.7
126.0
– 61.1
The notes form an integral part of the consolidated annual financial statements.
109
Financial Report
Consolidated statement of changes in equity
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-
controlling
interests
Non-
controlling
interests
5.0
233.1
– 240.8
– 68.1
4,926.7
4,855.9
–
710.7
710.7
443.9
–
Total
equity
4,906.4
711.9
443.2
50.5
1.3
– 0.7
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.
110
Financial Report
Consolidated statement of changes in equity
2015
Balance as at 1 January 2015
Profit for the period
Other comprehensive income
Comprehensive income
Other changes in equity in 2015
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-
controlling
interests
Non-
controlling
interests
5.0
246.6
– 250.0
375.8
5,413.9
5,791.3
–
512.1
512.1
– 592.3
– 592.3
–
– 592.3
512.1
– 80.2
Total
equity
5,831.0
511.1
– 595.8
– 84.7
39.7
– 1.0
– 3.4
– 4.5
39
22
40
6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6.6
– 55.4
–
–
–
–
–
–
–
–
–
–
–
–
– 234.7
– 234.7
– 0.5
– 235.1
–
–
–
–
–
–
– 48.8
–
–
–
–
–
–
–
–
–
– 48.8
–
–
–
Balance as at 31 December 2015
5.0
253.2
– 305.4
– 216.5
5,691.4
5,427.6
34.7
5,462.3
The notes form an integral part of the consolidated annual financial statements.
111
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 Regulatory Standard for
Equity Securities (Sub-Standard: International Reporting) 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 manage-
ment 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 18 March 2016 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 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 has
no material impact on the Baloise Group’s balance sheet or
income statement�
2.2 Other standards and interpretations
Currently, there are no requirements to apply any other stand-
ards or interpretations that have a material impact on the profit
for the period or on balance sheet line items�
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
2015 consolidated annual financial statements:
Standard /
Inter-
pretation
IFRS 9
IFRS 15
IFRS 16
Content
Financial instruments
Revenue from contracts with customers
Leasing
Applicable
to annual
periods
beginning
on or after
1.1.2018
1.1.2018
1.1.2019
112
Financial Report
Notes to the consolidated annual financial statements
IFRS 9 Financial Instruments
IFRS 9 introduces new requirements for the classification and
measurement of financial instruments� Classification of finan-
cial assets is based on the entity’s business model and on the
contractual cash flow characteristics of the financial assets
concerned� The following change, for example, is relevant to the
carried-at-cost category: 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 structured 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 vol-
untarily discontinued� Such discontinuation is now only per-
mitted 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 2018� 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�
IFRS 16 Leases
IFRS 16 applies to all leases (including sub-leases), although
certain exceptions are possible� IFRS 16 governs the recognition,
measurement, reporting and disclosure requirements in respect
of leases in the financial statements of IFRS users� The standard
provides a single accounting treatment model for lessees� This
model requires lessees to recognise all lease assets and lease
liabilities on the balance sheet, unless the term of the lease is
twelve months or less or an asset is of low value� By contrast,
lessors will continue to distinguish between finance leases and
operating leases for accounting purposes� In this regard, the
accounting treatment model in IFRS 16 differs only insignifi-
cantly from the existing rules in IAS 17 (Leases)� 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�
113
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 recognised
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.
All intercompany transactions and the resultant gains
and losses are eliminated.
114
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 subsid-
iaries without ceding control are both recognised directly in
equity as transactions with owners.
3.1.2 Structured entities
Structured entities are consolidated provided the conditions of
IFRS 10 are met. 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 classified
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.
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 eco-
nomic environment. The consolidated Financial Report is presented
in millions of Swiss francs (CHF), which is the Baloise Group’s
reporting currency.
CHF
1 EUR (euro)
1 USD (US dollar)
Balance sheet
Income statement
2014
2015
2014
2015
1.20
0.99
1.09
1.00
1.21
0.92
1.07
0.96
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 transaction
date or at the average exchange rate. Monetary and non-mon-
etary 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.
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.
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.
115
Financial Report
Notes to the consolidated annual financial statements
3.4 Leases
3.5 Intangible assets
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 periodic
rate of interest on the remaining balance of the liability; this is
reported on the Baloise Group’s balance sheet as liabilities aris-
ing 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.
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
impairment at each balance sheet date (see section 3.18.3 for
further details).
116
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
developed), 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 invest-
ment property that was reclassified in a previous period is
sold, the amount recognised directly in equity is reclassified
to retained earnings. Invest ment property is measured at fair
value under the discounted cash f low (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 pay-
ments, taxes, depreciation and amortisation) 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 sub-
ject 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 estimates
(e.g. analysis of discounted cash flows and reference to similar,
fairly recent arm’s-length transactions between knowledgeable,
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 reliably
measured, the assets are recognised at cost (less allowance) 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
(natural hedges) 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.
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.
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Financial Report
Notes to the consolidated annual financial statements
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 statement.
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.
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Financial Report
Notes to the consolidated annual financial statements
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.
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 (DPF
included). The effective interest rate is determined as the inter-
nal rate of return based on the estimated amounts and timing
of the expected payments. If the amounts or timing of the actual
payments differ 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 insurance.
→ 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
insurance 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
procedure. 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 excep-
tionally 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 pertinent 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
(including 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
recognised 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 both to 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
cost or present value of future profits is reduced and, if this is
not enough, the reserve is immediately increased to the minimum
level and this increase is recognised in profit or loss.
unit-linked life insurance)
3.18.2 Present value of future profits (PVFP)
→ 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.
on insurance contracts acquired
The present value of future profits on insurance contracts acquired
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 regularly 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 policy-
holders 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’ divi-
dends (chapter 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 recognised in actuarial reserves. All investment income
derived from unit-linked life insurance contracts is credited
to the policyholder.
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
126
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 classifi cation
of contracts but also for the disclosure of surplus reserves according
to policyholders’ share of the unrealised gains and losses rec-
ognised directly in equity under IFRS and their share of the
increases and decreases recognised in profit or loss in the con-
solidated 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 credited
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 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.
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 insolvency.
127
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.
128
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.
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.
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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
chapter 5.10.
analysis of discounted cash flows and reference to similar,
fairly recent arm’s-length transactions between knowl-
edgeable, 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-value
method), independent assessments based on comparisons
with the market prices of similar instruments or the pre-
vailing market situation. Derivative financial instruments
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 infor-
mation from independent external providers. These
providers use various methods for their estimates (e.g.
130
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
determinable payments as “held to maturity”. To this end, it
assesses its intention and ability to hold these financial instru-
ments 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. Chapter 12 contains information on the fair values of the
financial instruments with characteristics of liabilities that are
classified as “held to maturity”.
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
throughout 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 chapter 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
chapter 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 chapter 9.
131
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 financial
guarantees and options which also affect liquidity, investment
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 frequency
with which policies are cancelled, invalidated and reactivated.
For this analysis, they generally use standard market statistics
that are compiled by actuaries and include adequate safety mar-
gins. The information they gather is used for ensuring 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 statistical base is relatively
good, the risks in this area are manageable. 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 additional
method of mitigating risk. For example, bringing policy holders’
dividends into line with altered circumstances as far as per-
mitted 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, scoring
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 bank’s asset and liability
management (ALM) committee. 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-
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
132
Financial Report
Notes to the consolidated annual financial statements
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. In June 2015, a staff notification about MERS
(Middle East Respiratory Syndrome coronavirus) was posted
on the intranet. No further action was required.
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
identified. 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. Analysis
of these risks is model-based and it ultimately results in an
aggregate overview.
Business-environment risk, operational risk, and manage-
ment 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.
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
133
Financial Report
Notes to the consolidated annual financial statements
coordinates 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
management decisions.
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
IT and data security
Structure of
→ Interest guarantee
→ Interest
→ Interest fluctuation
→ Data
organisation
→ Parameter risks
→ Shares
risk
Competitive risk
→ Software /
→ Worst-case scenario
→ Currencies
→ (Re) financing,
hardware / network
Corporate culture
→ Creation of
→ Real estate
liquidity
External events
→ Physical reliability
provisions
→ Market liquidity
→ End User Computing
Strategy
Technical risks, Non-life
→ Alternative
→ Accumulation/
Personnel risks
→ Risk steering
→ Derivatives
Concentration of risk
Investors
→ Business portfolio
→ Premiums
→ Claims
investments
cluster risk
→ Skills / capacities
→ Concentration risk
→ Knowledge availability
Merger and acquisitions
→ Worst-case scenario
Credit risks
→ Incentive systems
→ Creation of
provisions
Reinsurance
→ Premiums / rating
→ Default
→ Active reinsurance
Requirements for
balance-sheet structure
and capital
→ Solvency ratio
→ Other regulatory
requirements
Legal risks
→ Contracts
External
communication
→ Liability and litigation
Projection, plan,
→ Tax
budget
Compliance
Project portfolio
Business processes
Internal misinformation
→ Process risks
→ Project risks
→ In- / Outsourcing
Risk analysis and risk
reporting
→ Risk analysis and
risk assessment
→ Risk reporting
134
Financial Report
Notes to the consolidated annual financial statements
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.
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 150 million (2014: CHF 100 million) for Switzerland
and at EUR 100 million (2014: 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 (2014: 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 (2014: CHF 20 million). The retentions for in-
dividual claims were CHF 16 million (2014: CHF 16 million)
for property claims, CHF 15 million (2014: CHF 15 million) for
marine claims and CHF 13.7 million on a non-indexed basis
(2014: CHF 13.7 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
counterparties that have been authorised in advance by Cor-
porate Division Finance. Reinsurers must generally have a
minimum rating of A– from Standard & Poor’s, but in excep-
tional 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 property insurance business that can be settled quickly. This
rule does not apply to captives and pools that are active re-
insurance 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.
135
Financial Report
Notes to the consolidated annual financial statements
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.
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.
136
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 2015, the Baloise Group’s total reserves calcu-
lated using actuarial methods or recognised separately for special
claims (including large claims but not run-off or actuarial
reserves for annuities) amounted to CHF 4,372.5 million (2014:
CHF 4,596.3 million). A variation of 10 per cent in either direction
in the requirement for these reserves would result in a rise or
fall of around CHF 318.6 million (2014: CHF 334.3 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 6.6 million
after taxes and before reinsurance (2014: CHF 7.0 million) for
this reserve.
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
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Total
Year in which the claims occurred
684.1
681.4
641.7
690.7
723.1
777.9
732.2
768.5
733.6
707.8
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
647.6
633.0
619.0
619.7
607.8
603.2
585.7
576.3
569.2
569.2
693.2
686.6
674.2
662.3
655.7
643.7
628.5
625.6
–
631.4
628.6
623.6
622.6
606.8
597.8
594.3
–
–
670.6
657.4
641.0
634.4
638.6
632.8
–
–
–
685.4
675.1
666.9
659.6
653.0
–
–
–
–
736.5
731.0
729.1
722.7
–
–
–
–
–
751.1
736.9
726.3
–
–
–
–
–
–
768.2
764.1
–
–
–
–
–
–
–
715.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
625.6
594.3
632.8
653.0
722.7
726.3
764.1
715.7
707.8
6,711.5
–
–
–
–
–
–
–
–
–
–
Claims paid
– 526.9
– 567.5
– 517.1
– 553.7
– 575.9
– 613.4
– 624.6
– 646.2
– 545.3
– 355.7 – 5,526.3
Gross claims reserves
42.3
58.1
77.2
79.1
77.1
109.3
101.7
117.9
170.4
352.1
1,185.2
Gross claims reserves
prior to 2006 (including
large claims and
assumed business)
Gross provision
for annuities
(non-life, including
IBNR)
Reinsurers’ share
Net claims reserves
392.2
796.2
– 323.2
2,050.4
137
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
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Total
Year in which the claims occurred
283.8
306.7
298.2
288.0
302.5
290.8
297.4
382.9
319.3
319.0
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
288.7
283.7
278.8
276.9
277.5
275.6
277.3
280.0
279.7
279.7
303.0
295.5
294.1
293.1
299.3
299.8
303.0
304.2
–
296.2
299.7
300.3
301.2
300.6
301.4
301.2
–
–
286.4
289.0
294.6
294.8
295.1
297.1
–
–
–
299.7
305.6
305.8
306.0
307.9
–
–
–
–
297.6
300.9
306.6
309.8
–
–
–
–
–
298.4
302.5
304.3
–
–
–
–
–
–
384.7
385.9
–
–
–
–
–
–
–
330.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
304.2
301.2
297.1
307.9
309.8
304.3
385.9
330.5
319.0
3,139.6
–
–
–
–
–
–
–
–
–
–
Claims paid
– 274.6
– 300.1
– 296.5
– 289.4
– 298.0
– 294.7
– 288.8
– 342.9
– 257.3
– 150.2 – 2,792.5
347.1
368.5
130.7
– 291.0
555.3
Gross claims reserves
5.1
4.1
4.7
7.7
9.9
15.1
15.5
43.0
73.2
168.8
Gross claims reserves
prior to 2006 (including
large claims and
assumed business)
Gross provision
for annuities
(non-life, including
IBNR)
Reinsurers’ share
Net claims reserves
138
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
Financial Report
Notes to the consolidated annual financial statements
ESTIMATED CUMULATIVE CLAIMS INCURRED IN BELGIUM
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Total
Year in which the claims occurred
188.9
203.2
205.7
228.0
235.1
308.7
1 412.4
2 403.6
483.7
459.9
185.0
182.6
182.6
179.5
179.9
287.1
1 395.1
2 426.5
1 308.0
2 392.2
1 264.5
2 304.0
1 223.0
2 254.0
1 222.6
2 222.5
216.3
213.1
208.7
211.1
217.8
219.0
–
215.2
212.3
216.5
226.7
223.8
–
–
248.5
252.2
250.7
252.5
–
–
–
387.9
392.5
–
–
–
–
–
308.1
306.0
–
–
–
–
421.9
412.9
–
–
–
–
–
–
402.5
398.0
–
–
–
–
–
–
–
494.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
219.0
223.8
252.5
306.0
392.5
412.9
398.0
494.3
459.9
3,349.6
Six years later
1 181.0
2 221.8
Seven years later
2 187.4
Eight years later
Nine years later
Estimated claims
incurred
189.9
190.7
190.7
Claims paid
– 153.9
– 172.8
– 180.7
– 210.3
– 249.7
– 312.5
– 338.9
– 317.8
– 377.7
– 214.4 – 2,528.7
Gross claims reserves
36.8
46.2
43.1
42.2
56.3
80.0
74.0
80.2
116.6
245.5
Gross claims reserves
prior to 2006 (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.
820.9
295.1
153.7
– 281.6
988.1
139
–
–
–
–
–
–
–
–
–
–
Financial Report
Notes to the consolidated annual financial statements
ESTIMATED CUMULATIVE CLAIMS INCURRED IN LUXEMBOURG
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Total
Year in which the claims occurred
12.7
14.2
15.0
17.5
1 25.0
1 23.6
24.0
23.6
2 36.8
3 43.8
12.0
11.9
11.7
11.6
1 16.4
16.3
16.3
2 29.3
3 34.2
34.2
13.6
13.0
12.9
1 18.9
18.7
18.6
2 35.0
3 40.1
–
40.1
14.9
15.1
1 20.8
21.1
20.9
2 37.9
3 43.4
–
–
16.9
1 21.5
21.3
21.1
2 36.2
3 42.0
–
–
–
1 22.0
21.8
21.7
2 37.0
3 41.9
–
–
–
–
22.7
22.6
2 35.3
3 39.7
–
–
–
–
–
24.5
2 36.5
3 39.9
–
–
–
–
–
–
2 37.8
3 41.2
–
–
–
–
–
–
–
3 40.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
43.4
42.0
41.9
39.7
39.9
41.2
40.8
43.8
407.0
–
–
–
–
–
–
–
–
–
–
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
– 33.7
– 39.5
– 42.2
– 40.6
– 40.3
– 37.8
– 37.3
– 37.4
– 35.4
– 26.5
– 370.7
Gross claims reserves
0.5
0.6
1.2
1.4
1.6
1.9
2.6
3.8
5.4
17.3
Gross claims reserves
prior to 2006 (including
large claims and
assumed business)
Gross provision
for annuities
(non-life,
including IBNR)
Reinsurers’ share
Net claims reserves
36.3
51.7
0.0
– 36.9
51.1
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.
3 The increase in the total estimated claims incurred is primarily due to the addition of HDI Gerling Assurances S.A.
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 42.7 years (2014: 35 years).
140
Financial Report
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 2014
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 2015
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
616.9
1,816.9
3,667.2
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 %
–
–
–
–
Switzerland
individual life
Switzerland
group life
656.4
1,887.1
Germany
3,220.1
Belgium
Luxembourg
Other units
85.2
195.8
645.7
730.5
74.9
113.6
81.3
7,373.6
15,093.9
6,492.5
2,724.0
444.2
2.6 %
1.5 %
3.3 %
3.5 %
2.5 %
–
–
–
–
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.
141
Financial Report
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 structured.
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), whichever
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 has a number of variable annuities products including unit-linked and, in some cases,
guaranteed whole-life annuities in its units in Switzerland and in Luxembourg / Liechtenstein. Financial hedges are
provided using external reinsurance.
Switzerland
Germany
Belgium
Luxembourg
Other units
31.12.2014
31.12.2015 31.12.2014
31.12.2015 31.12.2014
31.12.2015 31.12.2014
31.12.2015 31.12.2014
31.12.2015
583.9
620.2
1,798.7
1,736.2
16.0
15.8
279.6
250.5
–
–
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.
142
Financial Report
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 Insurance in Belgium
offers 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
31.12.2014
Actuarial reserves
31.12.2015
CHF
million
Share (%)
CHF
million
Share (%)
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
9,818.0
10,266.7
1,888.2
11,186.4
33,159.2
1,328.1
1,294.6
2,622.7
27.4
28.7
5.3
31.3
92.7
3.7
3.6
7.3
37,765.9
100.0
35,781.9
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.
143
Financial Report
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, so it is not possible to extrapolate from them because they relate to
a specific balance sheet date. To identify sensitivities, we investigated the effect of changes in assumptions on profit
for the period and on equity, after shadow accounting, deferred gains / losses and deferred taxes (excluding reinsur-
ance effects which were immaterial) had been taken into account. The assumptions on which liability adequacy
testing is based were changed for each calculation.
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. In the Swiss life insurance business, an increase in mortality caused a lower
amount to be allocated to strengthen annuity reserves, which improved profitability overall by roughly
CHF 17 million (2014: by CHF 13 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, 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 69 million (2014: CHF 66 million) on the income statement. In line
with the aforementioned scenario of an increase in mortality, the effect on equity in Switzerland was minor.
144
Financial Report
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. 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 from the German units’ profitability
in the reporting year (2014: marginal negative effect). The negative impact on equity amounted to approximately
CHF 5 million (2014: CHF 5 million). In Belgium this scenario resulted in an increase in DACs and to slightly
lower amounts being allocated to the provision recognised for impending losses, which constituted a positive
effect of roughly CHF 2 million on profitability (2014: CHF 10 million). The negative effect on unrealised
gains amounted to CHF 86 million (2014: CHF 95 million). In Luxembourg this scenario produced a marginal
negative impact on the income statement and an adverse effect of roughly CHF 11 million (2014: CHF 14 mil-
lion) 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 5 million
(2014: CHF 10 million). The adverse impact on equity amounted to approximately CHF 188 million (2014:
CHF 154 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. 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 slightly more than compensated for by the increase in the fair value
of interest-rate derivatives in 2015. The overall impact was mitigated by the prevailing legal requirements
governing the distribution of surpluses. On balance there was a marginal positive effect from the German
units’ profitability in the reporting year (2014: negative effect of CHF 2 million). The positive impact on their
equity amounted to approximately CHF 4 million (2014: CHF 6 million).
In Belgium this scenario resulted in an additional DAC write-down and a larger 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 18 million on the income statement (2014: CHF 23 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 96 million (2014: CHF 99 mil-
lion). In Luxembourg this scenario produced a marginal impact on the income statement and a positive effect
of roughly CHF 13 million (2014: 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 increase in technical reserves, and the
offsetting effect of interest-rate hedges. On balance these interacting factors had an adverse effect of CHF 46 mil-
lion on the income statement (2014: CHF 56 million). The positive impact on equity amounted to approximately
CHF 188 million (2014: CHF 153 million).
145
Financial Report
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 incorporates
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 at Baloise Bank SoBa is also actively managed by the use of appropriate interest-rate deriv-
atives, generally fair value hedges.
146
Financial Report
Notes to the consolidated annual financial statements
If all interest rates had fallen by 50 basis points 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 lower by CHF 69 mil-
lion (31 December 2014: CHF 73 million). Including the impact on profit for the period, equity (after shadow accounting,
deferred gains / losses and deferred taxes) would have risen by CHF 146 million (31 December 2014: CHF 102 million).
If all interest rates had risen by 50 basis points 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 higher by CHF 5 million
(31 December 2014: CHF 21 million). Including the impact on profit for the period, equity (after shadow accounting,
deferred gains / losses and deferred taxes) would have fallen by CHF 241 million (31 December 2014: CHF 199 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 deferred gains / losses and deferred taxes) in the amount of
+ / – CHF 0.01 (1 centime) would have resulted in a change of + / – CHF 2.4 million (31 December 2014: + / –CHF 5.1 mil-
lion) 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.
147
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
2014
2015
2014
2015
1.7
7.2
36.9
10.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.7
7.2
36.9
10.5
CHF million
Amount recognised directly in equity
Hedge ineffectiveness reclassified to the income statement
2014
2015
– 124.1
–
– 0.2
–
Because equity investments are actively managed, additions to and deductions from equity are carried out on
a 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 2015 the Group’s Swiss companies did hold a net position
in euros equivalent to CHF 643.8 million (2014: 1,365.4) and a net position in US dollars equivalent to
CHF – 11.2 million (2014: CHF 305.4 million). The remaining foreign exchange positions, both assets and liabilities,
were negli gible.
During the year, the aggregated hedge ratio for the net foreign exchange exposure in US dollars and euros
ranged from 80 per cent to 100 per cent.
Except for the German business unit no other foreign entity in the Baloise Group had a significant foreign-
currency exposure.
148
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 interest-bearing securities or loans must have an investment-grade issue rating or be backed
by a corresponding third-party guarantee or mortgage. A total limit of 15 per cent of all interest-bearing securities
and loans is set for investments with a rating of less than “A –” and investments with no rating. Sub-investment-grade
investments are not permitted. If any financial instrument in the portfolio becomes sub-investment grade due to
a ratings downgrade, it must be sold within twelve months. Approval is required for any exceptions. Financial
derivatives are only permitted to be transacted with issuers holding a rating of at least “A –” or with whom there is
a special collateral agreement.
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. 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 chapter 12.
149
Financial Report
Notes to the consolidated annual financial statements
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
FINANCIAL ASSETS EXCEEDING 10 % OF CONSOLIDATED EQUIT Y
CHF million
Swiss Confederation
Kingdom of Belgium
Federal Republic of Germany
Pfandbriefbank schweizerischer Hypothekarinstitute AG
Republic of France
European Investment Bank, Luxembourg
Pfandbriefzentrale der Schweizerischen Kantonalbanken AG
Kingdom of the Netherlands
Republic of Austria
150
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
2015
3,639.1
2,522.9
2,193.3
1,657.6
1,567.5
982.6
921.2
865.2
567.1
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
2014
2015
18,955.1
18,838.6
3,738.2
9,987.3
20.5
4,950.7
7,815.9
15.4
11,233.6
10,999.7
163.4
5,945.7
141.0
4,382.5
546.6
32.1
–
344.5
341.0
21.1
421.5
79.7
409.0
375.3
564.5
917.8
28.1
–
323.7
363.2
9.9
410.8
52.3
389.4
317.5
491.3
1,954.5
1,765.8
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 524.3 million (2014: CHF 508.5 million).
151
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 procedures
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 identification
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.
152
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
1,820.5
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
36.2
–
–
2.2
144.2
–
–
–
0.0
3.1
155.6
392.1
6,216.7
10,392.0
771.3
1,468.0
15.3
1,091.4
2,063.6
2,715.1
5.0
1,086.5
792.8
691.8
–
100.5
4,877.4
0.2
98.4
–
977.3
8,475.2
–
3,623.4
277.2
–
–
25.9
41.1
–
202.3
14.9
4.0
17.0
164.2
286.0
–
106.5
73.1
–
–
113.9
104.1
–
154.3
39.3
23.1
110.4
61.8
1,229.3
928.8
–
148.8
13.9
–
–
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
153
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 2015
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
7,114.9
153.0
4,835.2
0.2
99.1
–
Promissory notes and registered bonds
1,563.4
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
22.9
–
–
2.3
131.9
–
–
–
0.0
34.6
136.5
663.1
9,507.8
1,199.6
859.3
–
1,163.8
2,484.8
1,214.6
15.2
988.0
8,490.5
–
2,464.1
225.9
–
–
28.5
48.3
–
202.7
16.2
4.9
20.6
118.9
412.1
–
43.0
47.2
–
–
112.4
94.7
–
154.6
21.2
24.5
110.3
44.7
607.6
988.3
1,104.8
627.6
–
904.7
–
82.5
–
–
–
80.1
43.5
–
2.8
–
0.7
15.4
30.3
14.0
63.7
8.5
279.2
–
268.0
141.0
229.5
621.9
28.1
–
69.6
44.8
9.9
47.1
14.8
236.6
132.9
141.3
69.1
18,838.6
4,950.7
7,815.9
15.4
10,750.3
141.0
4,382.5
917.8
28.1
–
293.0
363.2
9.9
407.2
52.2
266.8
313.9
471.6
1,765.8
Total
14,757.1
16,096.9
14,629.1
3,894.8
2,406.0
51,783.9
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 2015, financial assets amounting to CHF 1.8 million (2014: CHF 2.0 million) and cash and cash equivalents
of 0.1 million (2014: 0.2 million) from collateral received were used.
154
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
2014
–
–
0.0
–
2015
–
–
–
–
–
2.7
0.4
–
–
– 2.7
– 0.4
–
–
3.0
12.5
–
–
– 3.0
– 12.5
–
142.7
– 32.7
110.0
146.1
– 31.2
114.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Other loans
43.5
– 16.0
27.5
38.2
– 13.7
24.5
Receivables from financial contracts
Reinsurance assets
Receivables from reinsurers
Insurance receivables
Other receivables
Receivables from investments
Total
–
–
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
–
–
0.1
126.3
6.0
21.4
341.3
–
–
– 0.1
– 38.0
– 2.5
– 1.7
– 90.3
–
–
0.0
88.3
3.5
19.7
251.0
155
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 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
156
Financial Report
Notes to the consolidated annual financial statements
Assets as at 31 December 2015
< 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
–
–
–
–
0.2
–
–
–
–
–
0.1
–
–
–
12.7
0.0
–
13.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9.3
0.0
–
9.3
–
–
–
–
–
–
–
–
–
–
–
–
1.9
2.1
4.3
–
–
–
–
–
0.0
–
–
–
8.7
0.1
–
10.8
–
–
–
–
–
0.1
–
3.7
–
3.7
0.0
–
9.5
–
–
–
–
–
0.2
–
3.7
–
34.4
0.1
–
42.6
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.
157
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 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
532.1
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
229.1
1,123.0
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
1,749.8
792.9
7,410.5
23,388.0
Liquidity risk as at 31 December 2015
‹ 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
1,866.7
4.8
5.5
53.1
1,930.1
1,930.1
6,348.2
3,203.9
277.1
52.6
156.6
929.4
455.6
1,055.0
371.8
–
284.6
16.5
42.0
720.4
40.2
14.1
468.6
42.8
528.4
22.4
8.7
0.0
3.5
110.8
1,110.5
5,536.0
8,299.2
8,782.8
8,299.2
8,782.8
807.1
1,897.2
1,707.8
3.2
43.6
0.6
22.9
2.0
94.8
250.8
1,650.4
522.2
1,182.0
94.8
250.8
1,650.4
522.2
–
–
14,345.1
1,494.5
1,190.9
7,579.0
24,609.5
1 Based on undiscounted contractual cash flows.
2 All demand deposits are included in the first maturity band.
158
Financial Report
Notes to the consolidated annual financial statements
Please refer to the tables in chapter 23 for the residual terms and maturities of technical reserves.
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
committees 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. Maintenance of liquidity levels and access to further liquidity via
the repo market ensure sufficiently high reserves for payments needed at short notice, such as large claim settlements,
until such as time as the reinsurer assumes the costs. 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 investments).
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 generally 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.
159
Financial Report
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 significantly
reduced by means of international diversification, i.e. by spreading risk across sectors, countries and currencies.
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)
2014
2015
2014
2015
33.3
– 57.1
54.2
– 75.0
264.0
– 265.9
266.8
– 266.3
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.
160
Financial Report
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, in sufficient volume 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.
161
Financial Report
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
3.2 % – 5.7 %3
Rental income 2 290 – 320 CHF million 3
Vacancy costs 1
10 – 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.
162
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.
163
Financial Report
Notes to the consolidated annual financial statements
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
376.3
564.5
564.5
5,962.9
5,962.9
428.1
–
938.7
428.9
–
38.8
22.5
993.0
–
–
–
–
–
18,806.8
839.9
327.4
–
–
2.2
–
–
–
21.1
376.3
134.2
5,962.9
Total assets measured on a recurring basis
63,501.4
66,593.8
37,701.2
2,598.4
26,294.3
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
164
Financial Report
Notes to the consolidated annual financial statements
FAIR VALUE OF ASSETS AND LIABILITIES FOR OWN ACCOUNT AND AT OWN RISK
Held to maturity
Available for sale
8,549.5
10,007.4
23,024.6
23,024.6
Recognised at fair value through profit or loss
46.6
46.6
2015
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
4,443.3
1,173.8
4,443.3
1,173.8
2,627.7
285.7
10,007.4
23,001.3
28.3
–
–
11.0
–
–
15,912.6
16,929.6
744.0
363.2
744.0
363.2
9.9
9.9
317.5
318.5
491.3
491.3
6,251.9
6,251.9
359.7
–
872.5
888.1
–
23.3
18.3
943.1
–
–
–
–
–
16,929.6
744.0
352.2
–
–
1.8
–
–
–
9.9
318.5
129.9
6,251.9
Total assets measured on a recurring basis
61,328.2
63,804.1
36,321.0
2,900.1
24,583.0
Liabilities measured on a recurring basis
Liabilities arising from banking business
and financial contracts
Measured at amortised cost
Recognised at fair value through profit or loss
Derivative financial instruments
Financial liabilities
8,299.2
8,484.0
322.2
250.8
322.2
250.8
1,707.8
1,864.2
Total liabilities measured on a recurring basis
10,580.0
10,921.2
–
–
22.1
1,864.2
1,886.3
8,438.4
45.6
322.2
228.7
–
–
–
–
8,989.3
45.6
The Baloise Group has applied accounting standard IFRS 5 (non-current assets and disposal groups held for sale
and discontinued operations) owing to the disposal of the portfolio of life insurance policies held by the German
branch of Baloise Life Ltd (Basler Leben DfD [Direktion für Deutschland]). 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.
165
Financial Report
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
–
–
–
166
Financial Report
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
2015
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
8,153.7
8,153.7
8,011.7
–
142.1
Financial instruments with characteristics of liabilities
Recognised at fair value through profit or loss
1,627.7
1,627.7
1,607.8
19.9
Mortgages and loans
Recognised at fair value through profit or loss
Derivative financial instruments
Other assets
–
290.7
–
290.7
Recognised at fair value through profit or loss
40.2
40.2
–
28.0
40.2
Total assets measured on a recurring basis
10,112.3
10,112.3
9,687.7
Liabilities measured on a recurring basis
Liabilities arising from banking business
and financial contracts
Recognised at fair value through profit or loss
8,460.6
8,460.6
8,460.6
Derivative financial instruments
–
–
–
Total liabilities measured on a recurring basis
8,460.6
8,460.6
8,460.6
–
262.7
–
282.6
–
–
–
–
–
–
–
142.1
–
–
–
The Baloise Group has applied accounting standard IFRS 5 (non-current assets and disposal groups held for sale
and discontinued operations) owing to the disposal of the portfolio of life insurance policies held by the German
branch of Baloise Life Ltd (Basler Leben DfD [Direktion für Deutschland]). 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.
167
Financial Report
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
Financial
instruments with
characteristics
of equity
Available for
sale
Investment
property
Recognised at
fair value
through
profit or loss
Total
959.0
66.1
–
–
– 87.5
–
–
–
–
–
– 9.9
49.3
16.0
993.0
5,685.9
6,645.0
323.9
36.7
–
– 140.5
– 30.1
–
–
–
– 24.9
129.3
–
– 17.4
5,962.9
390.0
36.7
–
– 228.1
– 30.1
–
–
–
– 24.9
119.4
49.3
– 1.4
6,955.9
Changes in fair value of financial instruments held at the balance sheet date
and recognised in profit or loss
– 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.
168
Financial Report
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
2015
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
Financial
instruments with
characteristics
of equity
Available
for sale
993.0
112.6
–
–
Total
Investment
property
Recognised at
fair value
through
profit or loss
5,962.9
394.9
6,955.9
507.5
–
–
–
–
Disposals
– 96.7
– 82.0
– 178.7
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
–
–
–
–
– 7.8
– 6.1
14.8
– 66.7
943.1
–
–
28.2
– 75.5
–
112.7
0.8
– 90.1
6,251.9
–
–
28.2
– 75.5
– 7.8
106.6
15.6
– 156.8
7,195.1
Changes in fair value of financial instruments held at the balance sheet date
and recognised in profit or loss
– 6.1
107.9
101.8
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.
169
Financial Report
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
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
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 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.
170
Financial Report
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
2015
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
Changes in fair value recognised in profit or loss 1
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
176.5
3.1
–
–
Total
176.5
3.1
–
–
– 20.1
– 20.1
–
–
–
–
–
–
–
–
– 4.1
– 13.4
142.1
– 4.1
– 13.4
142.1
– 4.1
– 4.1
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.
171
Financial Report
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 2014.
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.
For 2014, this revealed that the highest and best use of a small number of investment properties in the Swiss
portfolio differed from their current use.
172
Financial Report
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
5.11.1 Solvency I ratio at Group level
The solvency ratio (calculated on the basis of the legal requirements in force on 30 June 2015) for pure insurance
business of CHF 2,126 million (2014: CHF 2,167 million) was met in 2014 and 2015. The cover ratio for the capital
adequacy requirement in available funds was 341 per cent at 31 December 2015 (31 December 2014: 354 per cent).
The capital currently available consists of IFRS equity, unallocated policyholders’ dividends and the final policy-
holders’ dividend reserve. Liabilities are also recognised as capital in accordance with the corresponding options
for solvency coverage at individual company level. Deductions from equity include planned dividend payments and
intangible assets.
5.11.2 Requirements under local legislation
Individual Group companies are also subject to regulation under local legislation which in some cases imposes
different solvency rules and 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 requirement applicable to Deutscher Ring Bausparkasse AG is the Capital Require-
ments Regulation (CRR).
5.11.3 Swiss Solvency Test
The Swiss Solvency Test (SST) came into force as a new statutory requirement on 1 January 2011. In this context,
the Baloise Group defines its risk-bearing capital and capital required for the SST using an inhouse model which
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.
173
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 determined
by means of a correlation-based expected-shortfall method. The actuarial capital requirement is a measurement 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 strategic 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.
5.11.4 Monitoring the solvency situation
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, Solvency II and the inhouse risk model (SST) 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.
174
Financial Report
Notes to the consolidated annual financial statements
6. BASIS OF CONSOLIDATION
6.1 2014 financial year
6.1.1 Acquisitions
The Baloise Group acquired the Brussels-based real-estate company Singel Office Antwerpen NV in Belgium during
the first half of 2014. 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 goodwill
of CHF 8.5 million.
6.1.2 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 2014.
6.1.3 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 2014. These mergers had no net impact on the Baloise Group’s profit for
the period.
175
Financial Report
Notes to the consolidated annual financial statements
6.2 2015 financial year
6.2.1 Acquisitions
HDI-Gerling Assurances, based in Leudelange, Luxembourg, was acquired during the year under review and was
merged with Baloise Assurances Luxembourg S.A. in the same year. This transaction, in which all of its shares were
acquired, gave rise to a small amount of goodwill.
6.2.2 Disposals
No companies were sold during the year under review.
6.2.3 Other changes in the group of consolidated companies
The two Gloucester-based companies Lennox Underwriting Agencies and Lennox Underwriting Management were
liquidated in the second half of 2015. There were no other changes to the basis of consolidation.
176
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. For 2014, 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
financing 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.
177
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
Operating and administrative expenses for insurance business
– 425.9
– 434.5
Switzerland
Germany
Belgium
Luxembourg
Other units
Sub-total
Group business
Eliminated
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
4,328.7
4,408.6
1,416.9
1,205.9
1,112.1
1,041.6
– 173.6
– 167.4
– 92.1
– 83.5
– 75.9
4,155.2
4,241.2
1,324.8
1,122.4
1,036.2
929.0
470.1
38.4
0.0
61.8
884.6
104.3
39.5
0.0
72.3
465.4
437.6
34.0
8.1
45.7
370.3
320.8
32.5
36.8
38.6
264.0
116.0
1.6
0.0
11.9
– 73.2
968.4
238.2
78.8
1.5
0.1
21.6
5,654.5
5,341.9
2,315.7
1,921.4
1,429.6
1,308.6
67.5
0.0
57.8
0.0
48.4
8.1
46.4
36.8
30.6
0.0
31.3
0.1
– 3,418.0
– 3,458.2
– 1,313.3
– 1,142.0
– 753.3
– 651.6
– 861.5
– 764.7
– 391.2
– 320.1
– 166.2
– 124.6
202.2
– 20.2
182.0
181.5
– 19.6
161.9
113.0
– 49.1
63.9
21.4
18.6
317.8
– 104.2
13.3
–
20.3
554.7
2.5
–
– 103.6
– 57.4
8.4
– 20.0
– 48.0
– 1.2
– 0.4
– 304.4
– 7.5
– 534.1
–
20.7
– 2.3
18.4
14.9
–
20.5
111.7
0.1
–
– 99.0
– 39.3
10.1
– 16.9
– 43.2
– 1.3
– 0.1
113.8
– 12.2
– 88.2
–
23.5
– 2.0
21.5
7.5
7.9
2.5
–
3.8
85.5
47.1
–
– 69.7
– 9.8
26.7
– 16.5
– 4.7
– 1.4
– 0.7
– 0.2
– 3.5
– 79.7
5.7
–
5.7
– 1.5
4.3
Total
2015
386.2
112.6
36.8
136.6
–
36.8
97.9
– 453.3
– 780.5
– 60.4
– 34.1
– 0.9
– 333.1
189.9
– 247.4
– 195.1
7,168.1
6,832.4
247.3
0.0
195.1
– 163.6
– 148.6
0.0
7,004.5
6,683.7
– 1.9
– 1.7
1,701.9
1,521.8
– 125.2
– 129.1
– 53.7
– 48.7
1,362.5
110.7
8.1
185.2
–
8.1
373.8
– 180.8
– 179.5
10,372.8
8,877.9
135.7
– 376.9
– 315.2
180.8
179.5
36.8
–
7,172.8
6,837.6
– 410.7
– 343.8
6,762.0
6,493.9
1,687.3
1,511.8
1,349.4
399.7
89.8
8.1
88.3
36.8
143.4
153.0
10,040.0
8,683.5
196.0
8.1
263.6
– 453.8
– 779.1
– 81.6
– 34.3
323.5
– 570.3
– 846.3
– 89.1
– 42.9
– 446.2
– 406.2
242.7
– 0.1
242.5
16.4
13.1
146.1
95.5
513.7
–
–
18.8
– 3.1
– 19.2
– 0.3
– 11.1
–
–
–
818.5
695.4
– 43.5
66.6
– 176.4
– 167.6
642.1
527.8
3.2
69.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.0
189.8
11.7
– 13.5
153.5
–
32.3
– 51.6
– 0.4
– 0.5
– 0.3
– 9.8
–
– 7.1
– 40.0
– 16.2
– 0.5
– 16.7
–
–
–
–
–
–
–
–
176.0
– 2.2
19.9
– 19.9
33.3
0.3
2.0
145.2
180.8
– 5,658.0
– 5,350.7
– 184.5
– 108.7
107.1
– 5,666.4
– 5,352.4
– 1,486.1
– 1,248.7
58.4
– 1,469.5
– 1,241.9
– 173.8
– 165.4
146.6
2.1
– 18.5
– 305.5
– 185.9
– 171.7
1.1
– 1.1
31.0
0.2
4.2
144.1
– 569.6
– 866.5
– 66.9
– 42.6
– 462.6
– 446.8
– 43.5
885.1
– 40.0
679.3
– 173.2
– 168.2
711.9
511.1
–
–
–
–
–
–
–
–
– 162.6
– 199.2
– 22.0
– 31.5
– 22.9
– 77.9
– 239.0
– 126.9
– 13.7
– 0.9
– 55.9
– 65.7
– 216.8
– 102.2
– 14.6
– 0.2
– 52.2
– 37.7
– 5,066.6
– 4,926.5
– 2,253.0
– 1,856.4
– 1,288.0
– 1,116.9
– 9,221.5
– 7,988.0
– 403.6
– 350.1
179.5
– 9,444.3
– 8,158.6
– 42.5
– 2.7
– 60.2
– 43.8
– 2.4
– 36.6
– 205.2
– 240.7
– 30.3
– 38.3
– 25.5
57.9
– 89.6
48.9
– 57.5
96.8
121.9
133.6
82.8
– 224.1
– 177.6
– 105.4
Profit / loss before borrowing costs and taxes
587.9
415.3
62.6
64.9
141.6
191.7
20.7
23.5
818.5
695.4
110.0
23.8
928.6
719.2
Borrowing costs
Profit / loss before taxes
Income taxes
Profit / loss for the period (segment result)
–
–
587.9
415.3
– 112.4
475.5
– 86.4
329.0
–
62.6
– 6.3
56.3
–
64.9
–
–
141.6
191.7
– 24.3
40.6
– 53.9
87.7
– 54.9
136.7
Segment assets
42,745.5
44,490.9
16,704.3
15,102.5
9,649.4
9,043.6
9,346.3
9,349.2
–
78,445.5
77,986.1
1,952.1
1,841.7
– 1,055.3
– 1,044.0
79,342.3
78,783.8
178
Investment management expenses
Interest expenses on insurance liabilities
Gains or losses on financial contracts
Other operating expenses
Expense
Financial Report
Notes to the consolidated annual financial statements
Switzerland
Germany
Belgium
Luxembourg
Other units
Sub-total
Group business
Eliminated
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
Total
2015
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
465.4
437.6
34.0
8.1
45.7
48.4
8.1
370.3
320.8
32.5
36.8
38.6
46.4
36.8
264.0
116.0
1.6
0.0
11.9
30.6
0.0
– 73.2
968.4
238.2
78.8
1.5
0.1
21.6
31.3
0.1
5,654.5
5,341.9
2,315.7
1,921.4
1,429.6
1,308.6
– 3,418.0
– 3,458.2
– 1,313.3
– 1,142.0
– 753.3
– 651.6
– 861.5
– 764.7
– 391.2
– 320.1
– 166.2
– 124.6
96.8
121.9
133.6
82.8
– 205.2
– 240.7
– 30.3
– 38.3
– 25.5
– 162.6
– 199.2
– 22.0
– 31.5
– 22.9
– 77.9
– 239.0
– 126.9
– 13.7
– 0.9
– 55.9
– 65.7
– 216.8
– 102.2
– 14.6
– 0.2
– 52.2
– 37.7
– 224.1
– 177.6
– 105.4
– 5,066.6
– 4,926.5
– 2,253.0
– 1,856.4
– 1,288.0
– 1,116.9
929.0
470.1
38.4
0.0
61.8
67.5
0.0
57.9
– 89.6
– 42.5
– 2.7
– 60.2
884.6
104.3
39.5
0.0
72.3
57.8
0.0
48.9
– 57.5
– 43.8
– 2.4
– 36.6
Operating and administrative expenses for insurance business
– 425.9
– 434.5
4,328.7
4,408.6
1,416.9
1,205.9
1,112.1
1,041.6
– 173.6
– 167.4
– 92.1
– 83.5
– 75.9
4,155.2
4,241.2
1,324.8
1,122.4
1,036.2
202.2
– 20.2
182.0
181.5
– 19.6
161.9
113.0
– 49.1
63.9
21.4
18.6
317.8
– 104.2
13.3
–
20.3
554.7
2.5
–
– 103.6
– 57.4
8.4
– 20.0
– 48.0
– 1.2
– 0.4
– 304.4
– 7.5
– 534.1
14.9
–
20.5
111.7
0.1
–
– 99.0
– 39.3
10.1
– 16.9
– 43.2
– 1.3
– 0.1
113.8
– 12.2
– 88.2
Profit / loss before borrowing costs and taxes
587.9
415.3
62.6
64.9
141.6
191.7
20.7
23.5
Borrowing costs
Profit / loss before taxes
–
–
587.9
415.3
–
64.9
–
–
141.6
191.7
Income taxes
Profit / loss for the period (segment result)
– 112.4
475.5
– 86.4
329.0
– 24.3
40.6
– 53.9
87.7
– 54.9
136.7
–
62.6
– 6.3
56.3
–
20.7
– 2.3
18.4
–
23.5
– 2.0
21.5
7.5
7.9
2.5
–
3.8
85.5
47.1
–
– 69.7
– 9.8
26.7
– 16.5
– 4.7
– 1.4
– 0.7
– 0.2
– 3.5
– 79.7
5.7
–
5.7
– 1.5
4.3
Segment assets
42,745.5
44,490.9
16,704.3
15,102.5
9,649.4
9,043.6
9,346.3
9,349.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.0
189.8
11.7
– 13.5
153.5
–
32.3
– 51.6
– 0.4
– 0.5
– 0.3
– 9.8
–
– 7.1
7,172.8
6,837.6
– 410.7
– 343.8
6,762.0
6,493.9
1,687.3
1,511.8
1,349.4
399.7
89.8
8.1
88.3
36.8
143.4
153.0
10,040.0
8,683.5
242.7
– 0.1
242.5
16.4
13.1
146.1
–
95.5
513.7
189.9
– 247.4
– 195.1
7,168.1
6,832.4
247.3
0.0
– 1.9
–
195.1
– 163.6
– 148.6
0.0
7,004.5
6,683.7
– 1.7
1,701.9
1,521.8
–
1,362.5
– 125.2
– 129.1
–
–
– 53.7
– 48.7
110.7
8.1
185.2
386.2
112.6
36.8
136.6
196.0
8.1
135.7
– 376.9
– 315.2
180.8
179.5
36.8
–
–
–
–
–
8.1
–
36.8
373.8
– 180.8
– 179.5
10,372.8
8,877.9
– 5,658.0
– 5,350.7
– 184.5
– 108.7
– 1,486.1
– 1,248.7
176.0
– 2.2
107.1
– 5,666.4
– 5,352.4
58.4
– 1,469.5
– 1,241.9
– 173.8
– 165.4
146.6
263.6
– 453.8
– 779.1
– 81.6
– 34.3
18.8
– 3.1
– 19.2
– 0.3
– 11.1
–
323.5
– 570.3
– 846.3
– 89.1
– 42.9
– 446.2
– 406.2
2.1
– 18.5
– 305.5
– 185.9
– 171.7
– 9,221.5
– 7,988.0
– 403.6
– 350.1
818.5
695.4
110.0
23.8
–
–
818.5
695.4
– 43.5
66.6
– 176.4
– 167.6
642.1
527.8
3.2
69.8
– 40.0
– 16.2
– 0.5
– 16.7
19.9
– 19.9
33.3
0.3
2.0
145.2
180.8
–
–
–
–
–
1.1
– 1.1
31.0
0.2
4.2
144.1
– 569.6
– 866.5
– 66.9
– 42.6
– 462.6
– 446.8
97.9
– 453.3
– 780.5
– 60.4
– 34.1
– 0.9
– 333.1
179.5
– 9,444.3
– 8,158.6
–
–
–
–
–
928.6
719.2
– 43.5
885.1
– 40.0
679.3
– 173.2
– 168.2
711.9
511.1
78,445.5
77,986.1
1,952.1
1,841.7
– 1,055.3
– 1,044.0
79,342.3
78,783.8
179
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
2014
3,351.3
– 143.3
3,208.0
265.6
61.9
20.3
0.0
76.8
3,632.5
– 53.7
0.0
Non-life
2015
3,048.9
– 129.5
2,919.4
221.4
30.4
20.8
7.4
76.5
3,276.0
– 50.3
7.4
2014
3,816.8
– 20.3
3,796.5
1,320.2
1,275.9
13.8
2.9
127.2
6,536.5
– 33.0
2.9
Life
2015
3,783.4
– 19.1
3,764.4
1,196.5
348.3
16.2
25.1
86.8
5,437.2
– 36.7
25.1
– 2,050.6
– 1,854.0
– 76.4
133.7
– 461.1
– 562.0
– 22.7
– 1.0
– 2.6
– 55.3
89.5
– 389.8
– 509.2
– 22.1
– 0.2
– 0.8
– 167.0
– 3,209.8
– 138.6
– 2,880.5
– 3,615.8
– 1,393.1
– 3,498.4
– 1,186.6
12.9
– 108.5
– 304.5
– 90.1
– 41.6
– 390.4
– 124.3
8.3
– 63.5
– 271.3
– 87.6
– 33.8
48.6
– 75.6
– 6,055.4
– 5,159.9
Profit / loss before borrowing costs and taxes
422.7
395.5
481.1
277.3
– 48.9
– 34.4
928.6
719.2
Borrowing costs
Profit / loss before taxes
Income taxes
Profit / loss for the period (segment result)
–
422.7
– 89.6
333.0
–
395.5
– 74.9
320.6
–
481.1
– 90.1
391.0
–
277.3
– 62.2
215.0
Because the management approach within the Belgium strategic business unit has been re-assessed, a small number
of long-term equity investments in the “Other activities” segment have been assigned to the “Non-life” and “Life”
segments. These reclassifications have had no impact on the profit for the period. The figures for comparative
periods have been restated for the purpose of comparability.
180
2014
2014
2015
2014
2015
2014
Other activities
Eliminated
Banking
2015
126.3
3.3
130.5
–
5.5
265.6
– 64.0
–
–
–
–
–
–
–
–
–
–
– 59.5
– 103.3
– 184.8
80.8
–
80.8
– 19.9
60.9
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
10,372.8
8,877.9
4.1
21.2
161.9
5.1
18.7
211.1
– 137.7
5.1
–
–
–
–
–
–
–
–
–
2.5
4.3
160.1
4.3
18.8
190.0
– 139.9
4.3
–
–
–
–
–
–
–
–
–
– 28.5
– 226.4
– 260.0
– 15.3
– 204.6
– 224.4
– 43.5
– 92.4
19.0
– 73.4
– 40.0
– 74.3
– 11.1
– 85.5
– 31.4
– 25.0
– 209.9
– 215.0
– 43.9
– 285.2
285.2
– 51.0
– 291.0
291.0
0.0
74.1
31.7
179.4
285.2
75.9
26.1
189.0
291.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,168.1
– 163.6
7,004.5
1,701.9
1,362.5
110.7
8.1
185.2
–
8.1
– 5,666.4
– 1,469.5
146.6
– 569.6
– 866.5
– 66.9
– 42.6
– 462.6
– 446.8
– 9,444.3
– 43.5
885.1
– 173.2
711.9
Total
2015
6,832.4
– 148.6
6,683.7
1,521.8
386.2
112.6
36.8
136.6
–
36.8
– 5,352.4
– 1,241.9
97.9
– 453.3
– 780.5
– 60.4
– 34.1
– 0.9
– 333.1
– 8,158.6
– 40.0
679.3
– 168.2
511.1
– 23.0
– 22.0
– 5.1
– 4.6
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
2014
2014
Non-life
2015
3,048.9
– 129.5
2,919.4
221.4
30.4
20.8
7.4
76.5
3,276.0
– 50.3
7.4
– 55.3
89.5
– 389.8
– 509.2
– 22.1
– 0.2
– 0.8
–
395.5
– 74.9
320.6
Life
2015
3,783.4
– 19.1
3,764.4
1,196.5
348.3
16.2
25.1
86.8
5,437.2
– 36.7
25.1
8.3
– 63.5
– 271.3
– 87.6
– 33.8
48.6
– 75.6
–
277.3
– 62.2
215.0
3,816.8
– 20.3
3,796.5
1,320.2
1,275.9
13.8
2.9
127.2
6,536.5
– 33.0
2.9
12.9
– 108.5
– 304.5
– 90.1
– 41.6
– 390.4
– 124.3
–
481.1
– 90.1
391.0
3,351.3
– 143.3
3,208.0
265.6
61.9
20.3
0.0
76.8
3,632.5
– 53.7
0.0
– 76.4
133.7
– 461.1
– 562.0
– 22.7
– 1.0
– 2.6
–
422.7
– 89.6
333.0
– 2,050.6
– 1,854.0
– 3,615.8
– 1,393.1
– 3,498.4
– 1,186.6
Profit / loss before borrowing costs and taxes
422.7
395.5
481.1
277.3
– 167.0
– 3,209.8
– 138.6
– 2,880.5
– 6,055.4
– 5,159.9
Because the management approach within the Belgium strategic business unit has been re-assessed, a small number
of long-term equity investments in the “Other activities” segment have been assigned to the “Non-life” and “Life”
segments. These reclassifications have had no impact on the profit for the period. The figures for comparative
periods have been restated for the purpose of comparability.
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
Banking
2015
–
–
–
126.3
3.3
130.5
–
5.5
265.6
– 64.0
–
–
–
–
–
–
– 22.0
–
– 59.5
– 103.3
– 184.8
80.8
–
80.8
– 19.9
60.9
Other activities
Eliminated
2014
2015
2014
2015
2014
–
–
–
4.1
21.2
161.9
5.1
18.7
211.1
– 137.7
5.1
–
–
–
–
–
– 5.1
–
– 28.5
– 226.4
– 260.0
–
–
–
2.5
4.3
160.1
4.3
18.8
190.0
– 139.9
4.3
–
–
–
–
–
– 4.6
–
– 15.3
– 204.6
– 224.4
– 48.9
– 34.4
– 43.5
– 92.4
19.0
– 73.4
– 40.0
– 74.3
– 11.1
– 85.5
–
–
–
– 31.4
–
– 209.9
–
– 43.9
– 285.2
285.2
–
–
–
–
–
0.0
74.1
–
31.7
179.4
285.2
–
–
–
–
–
–
–
–
– 25.0
–
– 215.0
–
– 51.0
– 291.0
291.0
–
–
–
–
–
–
75.9
–
26.1
189.0
291.0
–
–
–
–
–
Total
2015
6,832.4
– 148.6
6,683.7
1,521.8
386.2
112.6
36.8
136.6
7,168.1
– 163.6
7,004.5
1,701.9
1,362.5
110.7
8.1
185.2
10,372.8
8,877.9
–
8.1
–
36.8
– 5,666.4
– 1,469.5
146.6
– 569.6
– 866.5
– 66.9
– 42.6
– 462.6
– 446.8
– 9,444.3
– 5,352.4
– 1,241.9
97.9
– 453.3
– 780.5
– 60.4
– 34.1
– 0.9
– 333.1
– 8,158.6
928.6
719.2
– 43.5
885.1
– 173.2
711.9
– 40.0
679.3
– 168.2
511.1
181
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 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.
182
Financial Report
Notes to the consolidated annual financial statements
8.2 Property, plant and equipment in 2015
2015
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
– 26.2
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
–
–
–
–
– 2.2
65.1
66.8
– 1.7
65.1
–
Depreciation and impairment form part of other operating expenses.
Land
Buildings
93.1
0.4
201.1
1.9
–
–
–
–
–
–
73.4
–
– 14.8
– 3.2
–
– 12.7
245.7
536.9
– 291.2
245.7
–
Operating
equipment
Machinery,
furniture
and vehicles
IT equipment
Total
38.7
10.9
–
25.4
6.4
0.0
20.9
11.7
0.0
– 0.1
– 0.4
– 0.7
–
–
–
–
–
–
–
–
–
– 7.2
– 5.1
– 9.5
–
–
– 1.7
24.7
65.8
–
–
– 0.5
21.9
86.8
–
–
– 0.6
41.7
118.0
– 76.3
41.7
–
379.2
31.4
0.0
– 1.2
–
47.2
–
– 36.6
– 3.2
–
– 17.7
399.1
874.3
– 41.1
– 64.9
– 475.3
24.7
–
21.9
–
399.1
–
183
Financial Report
Notes to the consolidated annual financial statements
9. INTANGIBLE ASSETS
9.1 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
–
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.
184
Financial Report
Notes to the consolidated annual financial statements
9.2 Intangible assets in 2015
2015
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
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
14.1
542.7
–
–
–
–
–
–
–
–
53.3
–
–
–
– 1.9
– 12.7
135.5
0.1
–
214.2
–
–
–
–
145.0
–
28.8
–
– 0.1
–
–
– 2.7
0.2
–
0.1
–
–
–
–
–
Total
909.2
2.4
28.9
267.5
– 0.1
–
–
– 17.3
– 1.7
–
– 1.1
–
–
–
– 1.4
7.9
–
–
– 38.4
2.0
–
–
– 26.8
4.9
– 44.1
480.9
–
–
– 216.3
– 27.6
– 0.1
– 284.2
–
–
–
0.8
–
– 8.0
126.3
–
–
–
–
–
–
–
– 11.0
132.3
469.0
–
–
–
–
–
–
0.1
9.2
– 336.7
– 9.0
2.0
– 1.1
–
– 26.0
4.9
– 71.5
814.6
–
–
Goodwill
71.8
2.3
–
–
–
–
–
–
–
–
–
–
–
–
– 6.9
67.1
212.7
– 145.6
67.1
7.9
480.9
126.3
132.3
0.1
814.6
–
29.0
15.1
23.0
–
–
67.1
–
7.9
–
–
–
–
94.4
376.5
0.5
9.4
–
–
53.1
15.4
53.7
4.1
–
–
26.0
2.7
84.5
13.6
–
5.5
7.9
480.9
126.3
132.3
–
–
–
–
–
0.1
0.1
173.5
431.6
153.7
50.1
–
5.7
814.6
185
1 With the possible exception of goodwill, the Baloise Group has no intangible assets with indefinite useful lives.
Financial Report
Notes to the consolidated annual financial statements
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
2014
14.7
15.2
7.6
14.8
16.7
2015
13.2
13.8
6.9
15.6
15.1
2014
10.4
8.3
8.5
8.5
7.0
2015
10.4
8.2
8.5
8.5
7.0
2014
2015
1.0
1.0
2.5
2.5
2.6
1.0
1.0
2.5
2.5
2.6
186
Financial Report
Notes to the consolidated annual financial statements
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
2014
2015
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
48.7
20.8
52.3
45.4
–
– 77.2
90.0
165.2
– 109.4
0.4
– 44.9
–
– 3.4
7.8
0.3
8.1
3.4
187
Financial Report
Notes to the consolidated annual financial statements
RECONCILIATION OF SUMMARY FINANCIAL INFORMATION ON SIGNIFICANT INVESTMENTS
IN ASSOCIATES
CHF million
Net assets as at 1 October (2014)
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
2014
2015
98.9
11.1
– 11.9
98.1
98.1
10.2
– 18.4
90.0
32.57 %
32.57 %
72.2
96.7
65.7
85.7
10.2 Non-significant investments in associates
The Baloise Group holds investments in a number of non-significant associates.
2014
Carrying amount
Baloise’s share of
CHF million
Total
2015
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
155.7
10.5
0.0
0.6
11.1
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
96.6
6.1
0.0
0.4
6.5
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 2015 or 31 December 2014.
As at 31 December 2015, 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.
188
Financial Report
Notes to the consolidated annual financial statements
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
2014
2015
5,685.9
323.9
36.7
– 140.5
– 30.1
–
– 24.9
129.3
– 17.4
5,962.9
394.9
–
– 82.0
–
– 47.2
–
113.5
– 90.1
5,962.9
6,251.9
68.5
0.6
68.8
0.7
The increase in the portfolio in 2014 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 2014 can be found in the line item “Reclassification to non-current assets and disposal groups classified as held
for sale”.
Information on the disposal in 2014 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”.
The increase in the portfolio during the reporting year was largely attributable to real estate acquired by
Baloise’s Swiss entities. The reclassification from the investment property portfolio was largely attributable to the
change of use of one property within the German real-estate portfolio.
189
Financial Report
Notes to the consolidated annual financial statements
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 equity
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
2014
2015
4,698.1
671.6
4,443.3
1,173.8
8,413.7
8,549.5
24,227.5
23,024.6
59.9
46.6
38,070.8
37,237.7
9,842.0
9,781.5
47,912.8
47,019.2
1 Of which financial assets totalling CHF 98.8 million (2014: CHF 114.7 million) involved insurance policies that had not been fully reviewed by the balance sheet date.
190
Financial Report
Notes to the consolidated annual financial statements
This page has been left empty on purpose.
191
Financial Report
Notes to the consolidated annual financial statements
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 equity
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
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
–
–
–
–
–
–
8,358.3
8,549.5
–
55.4
–
–
–
–
8,413.7
8,549.5
2,788.4
1,909.7
4,698.1
2,651.2
1,792.1
4,443.3
24,067.6
22,992.4
133.5
26.3
–
8.9
23.3
–
24,227.5
23,024.6
0.7
–
0.7
–
–
–
–
–
–
–
–
–
–
–
–
–
242.0
428.9
670.9
0.1
37.3
22.5
–
59.9
285.7
888.1
1,173.8
3,031.1
2,338.6
5,369.7
2,936.9
2,680.2
5,617.1
0.1
28.2
18.3
–
46.6
32,426.0
31,541.9
170.8
104.2
–
37.1
41.6
–
32,701.1
31,620.6
No impairment losses had to be recognised on held-to-maturity financial instruments with characteristics of liabilities,
during either the reporting year or the prior year.
192
Financial Report
Notes to the consolidated annual financial statements
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 equity
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
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
–
–
–
–
–
55.4
8,358.3
8,549.5
8,413.7
8,549.5
–
–
–
–
–
–
2,788.4
1,909.7
4,698.1
2,651.2
1,792.1
4,443.3
24,067.6
22,992.4
133.5
26.3
–
8.9
23.3
–
24,227.5
23,024.6
0.7
–
0.7
–
–
–
–
–
–
–
–
–
–
–
–
–
242.0
428.9
670.9
0.1
37.3
22.5
–
59.9
285.7
888.1
1,173.8
3,031.1
2,338.6
5,369.7
2,936.9
2,680.2
5,617.1
0.1
28.2
18.3
–
46.6
32,426.0
31,541.9
170.8
104.2
–
37.1
41.6
–
32,701.1
31,620.6
193
Financial Report
Notes to the consolidated annual financial statements
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
Total
Trading portfolio
Designated
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,335.0
24.0
1,034.4
20.3
8,413.7
7,475.8
18.0
1,040.5
15.2
8,549.5
Total
8,413.7
8,549.5
28,925.6
27,467.8
0.7
730.8
1,220.4
38,070.8
37,237.7
Secured financial assets with characteristics of liabilities
Public corporations
Industrial enterprises
Financial institutions
Other
Total
30.4
–
880.5
–
910.9
27.3
–
975.8
–
1,003.1
Secured financial instruments with characteristics of liabilities are fixed-income securities for which a mortgage or
a government bond has been securitised as collateral.
194
4,698.1
4,443.3
0.7
670.9
1,173.8
5,369.7
5,617.1
2,463.0
2,596.1
260.2
149.9
83.8
400.0
640.9
700.3
35.3
145.2
51.6
355.4
587.6
672.0
11,598.9
11,344.6
3,714.2
8,914.2
0.2
4,932.7
6,747.0
0.2
24,227.5
23,024.6
386.2
–
306.3
–
5,805.0
4,369.3
0.2
0.2
6,191.4
4,675.8
–
0.2
0.5
0.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
33.4
627.3
10.3
0.0
21.1
38.8
59.9
–
–
–
–
–
–
–
–
–
1,134.9
–
25.7
13.2
0.0
2,463.0
293.7
777.7
94.1
400.0
640.9
700.3
2,596.1
61.0
1,280.2
64.8
355.4
587.6
672.0
18.1
18,955.1
18,838.6
28.4
3,738.2
9,987.3
20.5
4,950.7
7,815.9
15.4
46.6
32,701.1
31,620.6
416.6
–
333.6
–
6,685.5
5,345.1
0.2
0.2
7,102.3
5,678.9
–
–
–
–
–
–
–
–
–
Financial Report
Notes to the consolidated annual financial statements
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
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2,463.0
2,596.1
260.2
149.9
83.8
400.0
640.9
700.3
35.3
145.2
51.6
355.4
587.6
672.0
4,698.1
4,443.3
11,598.9
11,344.6
3,714.2
8,914.2
0.2
4,932.7
6,747.0
0.2
24,227.5
23,024.6
–
0.2
0.5
0.0
–
–
–
0.7
–
–
–
–
–
8,413.7
8,549.5
28,925.6
27,467.8
0.7
386.2
–
306.3
–
5,805.0
4,369.3
0.2
0.2
6,191.4
4,675.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,335.0
24.0
1,034.4
20.3
8,413.7
7,475.8
18.0
1,040.5
15.2
8,549.5
30.4
27.3
880.5
975.8
910.9
1,003.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
33.4
627.3
10.3
0.0
–
–
–
25.7
1,134.9
13.2
0.0
–
–
2,463.0
293.7
777.7
94.1
400.0
640.9
700.3
2,596.1
61.0
1,280.2
64.8
355.4
587.6
672.0
670.9
1,173.8
5,369.7
5,617.1
21.1
–
38.8
–
59.9
18.1
–
28.4
–
46.6
18,955.1
18,838.6
3,738.2
9,987.3
20.5
4,950.7
7,815.9
15.4
32,701.1
31,620.6
730.8
1,220.4
38,070.8
37,237.7
–
–
–
–
–
–
–
–
–
–
416.6
–
333.6
–
6,685.5
5,345.1
0.2
0.2
7,102.3
5,678.9
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
2014
2015
2014
2015
7,335.0
7,475.8
8,830.2
8,822.3
24.0
18.0
25.6
19.2
1,034.4
1,040.5
1,146.9
1,149.5
20.3
15.2
21.5
16.3
8,413.7
8,549.5
10,024.2
10,007.4
195
Financial Report
Notes to the consolidated annual financial statements
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
2014
2015
2014
2015
2014
2015
2014
2015
10,331.1
10,157.1
– 32.7
– 31.2
10,298.4
10,125.9
10,808.3
10,644.2
163.1
5,945.7
140.7
4,382.5
546.6
32.1
–
917.8
28.1
–
–
–
–
–
–
–
–
–
–
–
163.1
5,945.7
140.7
4,382.5
175.9
6,872.5
152.6
4,856.1
546.6
32.1
–
917.8
28.1
–
549.0
32.8
–
919.4
28.6
–
356.0
331.4
17,374.6
15,957.5
– 16.0
– 48.7
– 13.7
– 44.9
340.0
317.7
368.2
328.7
17,326.0
15,912.6
18,806.8
16,929.6
839.6
0.3
839.9
743.7
0.3
744.0
–
–
–
–
–
–
839.6
0.3
839.9
743.7
0.3
744.0
839.6
0.3
839.9
743.7
0.3
744.0
Mortgages and loans
18,214.5
16,701.5
– 48.7
– 44.9
18,165.9
16,656.6
19,646.7
17,673.6
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
2014
2015
– 58.7
– 48.7
6.1
9.3
– 5.4
–
–
0.0
0.1
1.3
5.6
– 5.7
–
–
0.0
2.5
– 48.7
– 44.9
196
Financial Report
Notes to the consolidated annual financial statements
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
Fair value assets
Fair value liabilities
2014
2015
2014
2015
341.0
272.1
363.2
290.7
176.4
–
250.8
–
Derivative financial instruments as reported on the balance sheet
613.2
653.9
176.4
250.8
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
2014
2015
2014
2015
2014
2015
–
881.9
1,310.8
0.5
–
–
–
971.9
1,121.6
0.2
–
–
–
24.0
192.7
52.1
–
–
–
63.5
158.2
43.0
–
–
–
56.4
25.8
8.8
–
–
–
88.6
13.3
21.2
–
–
2,193.2
2,093.6
268.9
264.7
91.1
123.1
–
1,959.7
954.6
–
–
2,402.8
607.8
–
2,914.3
3,010.6
517.7
6,900.6
–
–
1,050.8
1,149.7
–
–
–
–
1,568.5
8,050.3
–
50.4
13.6
–
64.0
5.0
–
3.1
–
–
8.1
–
54.4
11.0
–
65.5
31.5
–
1.5
–
–
–
5.3
14.0
–
19.3
63.0
–
3.0
–
–
–
4.9
17.0
–
21.9
104.3
–
1.6
–
–
33.1
66.0
105.8
6,675.9
13,154.6
341.0
363.2
176.4
250.8
–
–
–
–
70.0
49.2
–
–
1.7
–
–
7.2
–
–
–
–
36.9
10.5
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.
197
Gross amount
Impairment
Carrying amount
Fair value
2014
2015
2014
2015
2014
2015
2014
2015
21.1
9.9
378.0
566.1
320.0
493.0
965.2
822.9
–
– 2.7
– 1.7
– 4.4
–
21.1
9.9
21.1
9.9
– 2.5
– 1.7
375.3
564.5
317.5
491.3
376.3
564.5
318.5
491.3
– 4.2
960.9
818.7
961.9
819.8
2014
2015
– 5.9
1.0
1.9
– 1.4
–
–
0.0
– 4.4
– 4.4
0.1
0.9
– 1.1
–
0.0
0.2
– 4.2
Financial Report
Notes to the consolidated annual financial statements
15. RECEIVABLES
CHF million
Receivables carried
at cost
Receivables from
financial contracts
Other receivables
Receivables from
investments
Receivables
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
198
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
2014
2015
396.4
1.7
– 128.5
144.4
17.6
–
– 4.7
– 5.4
421.5
421.5
1.5
– 75.7
97.0
5.2
–
– 1.7
– 36.9
410.8
2014
2015
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
8.3
1.0
– 0.8
–
–
– 0.8
7.8
71.8
79.0
– 105.5
–
–
– 0.8
44.6
– 0.5
–
0.4
0.0
–
–
0.0
– 0.1
Receivables from reinsurers as at 31 December
79.7
52.3
199
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
2014
2015
2014
2015
CHF million
Type of benefit
Short-term employee benefits
1.7
1.1
Post-employment benefits – defined contribution plans
Post-employment benefits – defined benefit plans
Other long-term employee benefits
Termination benefits
Total
–
–
–
–
–
–
–
–
129.5
–
111.7
–
1,280.8
1,200.5
33.5
11.7
30.8
12.7
1.7
1.1
1,455.6
1,355.6
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.
200
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
2014
2015
2,183.0
2,337.4
48.1
120.1
24.1
– 0.2
56.2
29.4
17.7
20.2
32.3
– 1.2
57.4
30.2
– 123.2
– 120.8
–
–
–
–
–
–
–
–
2,337.4
2,373.2
2014
2015
– 2,261.1
– 2,721.3
– 73.7
– 53.0
– 24.1
– 438.1
12.0
– 1.1
0.4
– 5.9
123.3
–
–
–
– 90.0
– 20.8
– 32.3
– 33.7
–
– 46.0
2.2
–
120.8
–
–
–
– 2,721.3
– 2,821.2
201
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
2014
2015
– 735.6
– 896.9
– 15.1
– 23.1
–
– 188.2
– 2.4
– 3.4
14.4
– 1.9
29.2
– 3.3
32.5
–
– 16.7
– 12.9
– 1.0
63.7
– 0.4
– 1.4
82.5
– 0.3
27.8
– 0.7
3.8
–
– 896.9
– 752.5
2014
2015
2,337.4
2,373.2
– 2,721.3
– 2,821.2
– 896.9
– 752.5
–
–
– 1,280.8
– 1,200.5
202
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
2014
2015
108.6
409.4
51.4
430.6
1,289.8
128.2
1,368.2
140.5
99.1
–
288.8
–
– 0.8
14.3
98.3
–
292.4
–
– 4.0
– 4.1
2,337.4
2,373.2
29.7
–
29.4
–
2014
2015
– 88.9
– 28.1
– 7.8
–
–
30.2
– 94.5
– 106.7
– 16.1
– 0.3
–
–
30.9
– 92.2
203
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
2014
2015
1.0
1.7
0.4
81.4
23.9
21.0
0.9
1.4
0.3
81.3
23.9
21.0
When calculating liabilities and expenses for defined benefit plans, the Baloise Group is required to make actuarial
and other assumptions that are determined on a company-by-company and country-by-country basis. The assump-
tions 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
2014
2015
3,618.2
3,573.7
– 446.7
– 431.8
487.0
40.1
– 37.5
203.9
– 39.8
– 90.4
99.4
19.7
413.6
36.0
– 34.1
200.2
– 31.3
– 88.4
96.6
22.7
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
investigated.
204
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 61.9 million for the 2016 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 10.29
years; the average present value factor for current benefit entitlements under pension commitments is 15.83 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 2015
totalled CHF 30.8 million (2014: CHF 33.5 million). There were no disposals of plan assets for long-term employee
benefits. Benefits paid out amounted to CHF 4.0 million (2014: CHF 4.5 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 2015, a sum
of CHF 20.8 million (2014: CHF 22.3 million) was recognised as an expense in profit or loss in connection with the
following share-based payment plans.
205
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
each subscription year. In 2015 the subscription price amounted to CHF 60.40 (2014: CHF 57.30) and a total of
172,796 shares were subscribed (2014: 174,810). 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)
2014
2015
174,810
172,796
31.8.2017
31.08.2018
57.30
10.0
20.9
3,187
1,949
89.7
60.40
10.4
20.5
3,181
1,920
90.0
206
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
subscribe 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 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. 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
2014
46,688
2015
38,386
28.2.2017
28.02.2018
102.78
114.75
4.8
5.3
889
100
16 %
4.4
4.8
908
85
15 %
1 The closed period during which shares are 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 2019 and 29 February 2020 respectively.
207
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 40 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 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. 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.
208
2014
94,389
2015
79,817
28.2.2017
28.02.2018
100.87
112.70
9.5
10.7
889
88
5 %
9.0
9.9
908
69
5 %
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
management team members are eligible for 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 roughly 40 leading European insurance companies
contained in the STOXX Europe 600 Insurance Index.
Companies in the STOXX 600 Europe Insurance Index (as at 31 December 2015)
Admiral Group plc
Direct Line Insurance Group
Phoenix Group Holding
Unipol Gruppo Finanziario
Aegon NV
Ageas
Allianz
Amlin plc
Gjensidige Forsikring
Prudential plc
Unipolsai
Hannover Rück
RSA Insurance Group
Zurich Insurance Group
Helvetia
Hiscox
Sampo OYJ
Scor
Assicurazioni Generali
Lancashire Holdings
Standard Life plc
Aviva plc
Axa
Bâloise Holding
Beazly
CNP Assurances
Legal & General Group plc
St. James’s Place Capital
Mapfre SA
Münchener Rück
NN Group
Old Mutual plc
Swiss Life
Swiss Re
Topdanmark A / S
Tryg Forsikring
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. Programme participants 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.
209
Financial Report
Notes to the consolidated annual financial statements
Participants receive the pertinent number of shares once the vesting period has elapsed, which means that for the
PSUs allocated in 2015 they receive their shares on 1 March 2018. If an individual’s employment contract is terminated
during the vesting period, the PSUs expire without the person concerned receiving any consideration or compen-
sation. This does not apply if the employment contract ends due to retirement, disability or death. It also does not
apply if the contract is terminated but the programme participant does not join a rival company or is not personally
at fault for the termination of the contract. In the latter two cases, some of the allocated PSUs will still expire. 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
2015
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
01.03.2014
01.03.2015
125.80
109.50
82.40
86.05
91.00
71.20
84.50
113.40
124.00
01.01.2010
01.01.2011
01.01.2012
01.01.2013
01.01.2014
01.03.2015
01.03.2016
01.03.2017
01.03.2018
1.182
1.24
0.64
0.58
0.77
1.21
4 1.23
4 0.90
4 1.05
86.05
91.00
64.40
78.50
113.60
124.00
4 127.60
4 127.60
4 127.60
101.71
112.84
41.22
45.53
87.47
150.04
4 156.95
4 114.84
4 133.98
3
– 19 %
3 %
– 50 %
– 47 %
– 4 %
111 %
4 86 %
4 1 %
4 8 %
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 2015.
210
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 (PSU)
Employees entitled to participate at launch of programme
Number of allocated PSUs
Of which: expired (departures in 2013)
Number of active PSUs as at 31 December 2013
Of which: expired (departures in 2014)
Number of active PSUs as at 31 December 2014
Of which: expired (departures in 2015)
Number of active PSUs as at 31 December 2015
Value of allocated PSUs on issue date (CHF million)
PSU expense incurred by the Baloise Group for 2013 (CHF million)
PSU expense incurred by the Baloise Group for 2014 (CHF million)
PSU expense incurred by the Baloise Group for 2015 (CHF million)
2013 plan
2014 plan
2015 plan
69
72,600
– 1,859
70,741
– 5,026
65,715
– 2,339
63,376
5.6
1.2
1.6
1.7
65
62
49,144
42,162
–
–
– 2,308
46,836
– 1,129
45,707
5.6
–
1.3
1.9
–
–
–
–
0
42,162
5.1
–
–
1.4
211
Financial Report
Notes to the consolidated annual financial statements
19. DEFERRED INCOME TAXES
19.1 Deferred tax assets and liabilities
DEFERRED TA X ASSETS
2014
CHF million
Technical reserves
Financial assets
Insurance liabilities
Other investments
Insurance receivables
Unrealised losses recognised directly in equity
Tax losses carried forward
Liabilities arising from banking business and financial contracts
Liabilities arising from employee benefits
Other
Total
2015
CHF million
Technical reserves
Financial assets
Insurance liabilities
Other investments
Insurance receivables
Unrealised losses recognised directly in equity
Tax losses carried forward
Liabilities arising from banking business and financial contracts
Liabilities arising from employee benefits
Other
Total
212
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
117.8
78.1
57.7
1,319.2
44.1
14.5
86.1
– 22.2
4.3
–
7.0
38.7
– 1.5
– 7.6
163.4
–
–
–
–
–
92.7
–
–
–
–
460.1
45.8
601.2
16.5
5.5
119.6
43.5
156.4
76.6
50.1
92.7
1,575.3
Carrying
amount as
at 1 January
Change
recognised in
profit or loss
Change
recognised
directly in
equity
Carrying
amount as
at 31 December
460.1
45.8
601.2
16.5
5.5
119.6
43.5
156.4
76.6
50.1
1,575.3
4.0
– 14.2
52.4
2.5
1.6
– 13.0
– 30.9
– 7.6
– 3.3
– 8.5
– 0.8
464.1
31.6
653.6
19.0
7.1
118.8
30.6
125.5
69.0
46.8
– 0.8
1,566.0
Financial Report
Notes to the consolidated annual financial statements
DEFERRED TA X LIABILITIES
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
Long-term equity investments
Other
Total
2015
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
Long-term equity investments
Other
Total
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
100.9
60.5
2,145.4
– 15.2
143.4
–
22.7
0.0
– 10.0
48.4
42.7
– 6.0
– 35.0
10.1
201.0
–
–
246.1
–
–
–
–
–
–
–
–
215.0
1,217.8
467.8
352.5
4.0
4.9
103.3
89.6
1.2
65.9
70.6
246.1
2,592.5
Carrying
amount as
at 1 January
Change
recognised in
profit or loss
Change
recognised
directly in
equity
Carrying
amount as
at 31 December
215.0
1,217.8
467.8
352.5
4.0
4.9
103.3
89.6
1.2
65.9
70.6
2,592.5
– 22.9
55.9
– 19.5
– 0.5
– 1.6
8.8
– 1.1
0.2
– 11.5
0.1
7.9
– 162.5
192.0
1,273.7
305.3
333.0
3.6
3.3
112.1
88.5
1.5
54.4
70.6
– 162.5
2,437.9
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.
213
Financial Report
Notes to the consolidated annual financial statements
The Baloise Group had recognised deferred tax assets on tax loss carryforwards totalling CHF 130.4 million as at
31 December 2015 (2014: CHF 172.1 million). Of this total, CHF 0.1 million will expire after one year, 0.2 million
after two to four years and CHF 130.1 million will expire after five years or more.
No deferred tax assets had been recognised on tax loss carryforwards amounting to CHF 238.2 million as at
31 December 2015 (2014: CHF 291.2 million) because the relevant offsetting criteria had not been met.
Of this total, CHF 3.3 million will expire after one year, a further CHF 27.0 million will expire after two to
four years and CHF 208.0 million will expire after five years or more.
19.2 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
2014
2015
1,575.3
1,566.0
– 2,592.5
– 2,437.9
– 1,017.3
48.3
– 1,065.5
– 871.9
41.4
– 913.3
20. OTHER ASSETS
“Other assets” include the fair value of precious metals amounting to CHF 40.2 million in connection with private
placement life insurance (2014: CHF 53.3 million). The insurance policyholder bears the price risk attaching to these
precious metal holdings.
214
Financial Report
Notes to the consolidated annual financial statements
21. NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
The sale to the Frankfurter Leben Group of the portfolio of life insurance policies, which had been in run-off since
the end of 2011, held by the German branch of Baloise Life Ltd (Basler Leben DfD [Direktion für Deutschland]) was
formally completed on 16 September 2015. The portfolio that had been held for sale, and the associated assets and
liabilities, have been treated as a disposal group in accordance with IFRS 5.
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
31.12.2014
31.12.2015
31.12.2014
31.12.2015
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
17.6
–
1,963.1
–
30.3
7.7
2,018.7
1,938.8
–
15.0
9.0
1,962.9
– 3.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
215
Financial Report
Notes to the consolidated annual financial statements
22. SHARE CAPITAL
Balance as at 1 January 2014
Purchase / sale of treasury shares
Capital increases
Share buy-back and cancellation
Balance as at 31 December 2014
Balance as at 1 January 2015
Purchase / sale of treasury shares
Capital increases
Share buy-back and cancellation
Balance as at 31 December 2015
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
Number of
treasury shares
Number of
shares in
circulation
Number of
shares issued
Share capital
(CHF million)
3,048,791
46,951,209
50,000,000
415,749
– 415,749
–
–
–
–
–
–
–
3,464,540
46,535,460
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 (2014: 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 30 April 2015 voted to pay a gross dividend of CHF 5.00 per share for
the 2014 financial year. This amounted to a total dividend distribution of CHF 250.0 million. Excluding the treasury
shares held by Bâloise Holding at the time that the dividend was paid, the total distribution effectively amounted
to CHF 234.7 million.
As part of the share buy-back programme that has been running since 16 April 2015, a total of 507,500 shares
in Bâloise Holding had been repurchased for a total of CHF 59.1 million by the reporting date (31 December 2015).
216
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)
2014
2015
605.8
5,517.6
89.5
562.7
5,306.7
77.6
6,212.8
5,947.0
38,399.1
36,331.9
4,126.9
3,486.9
42,526.1
39,818.8
48,738.9
45,765.8
CHF million
Unearned premium reserves
Claims reserve
Provision for claims handling costs
Gross
Reinsurance
assets
Gross
Reinsurance
assets
Net
2014
605.8
4,955.0
562.6
4.0
609.8
–
–
–
–
562.7
4,777.6
529.1
2.0
–
–
Net
2015
564.8
–
–
Claims reserve
5,517.6
– 400.5
5,117.1
5,306.7
– 389.6
4,917.1
Other technical reserves
89.5
– 0.1
89.4
77.6
– 0.1
77.5
Total technical reserves (non-life)
6,212.8
– 396.6
5,816.3
5,947.0
– 387.6
5,559.4
217
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
569.1
10.8
25.9
605.8
3.5
0.5
–
4.0
Net
2014
572.6
11.3
25.9
609.8
Gross
Reinsurance
assets
528.6
9.6
24.5
562.7
1.6
0.4
–
2.0
Net
2015
530.3
10.0
24.5
564.8
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
867.3
3,233.7
1,205.7
5,306.7
– 47.6
– 79.6
– 262.4
– 389.6
819.7
3,154.1
943.3
4,917.1
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
2014
617.6
6.1
623.7
605.8
4.0
3,358.8
– 145.0
3,213.8
3,050.0
– 131.1
Net
2015
609.8
2,918.9
– 3,351.3
143.3
– 3,208.0
– 3,048.9
129.5
– 2,919.4
8.5
– 0.1
8.4
1.8
– 0.2
1.7
–
–
–
– 18.2
– 0.3
– 18.5
–
–
–
–
–
–
– 9.7
605.8
– 0.1
4.0
– 9.7
609.8
– 45.9
562.7
– 0.3
2.0
– 46.2
564.8
Apart from the actual unearned premium reserves, this item includes health insurance reserves for old age and
deferred unearned premiums.
218
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
97.1
– 22.3
– 0.1
0.1
Net
2014
97.0
– 22.1
Gross
Reinsurance
assets
89.5
– 18.4
– 0.1
0.0
Net
2015
89.4
– 18.3
14.9
– 0.1
14.8
7.7
0.0
7.7
0.0
–
–
– 0.3
89.5
–
–
–
–
– 0.1
0.0
–
–
–
–
–
– 0.3
89.4
– 1.3
77.6
–
–
–
–
– 0.1
–
–
–
– 1.3
77.5
219
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)
2014
2015
5,527.7
– 379.4
5,148.3
5,517.6
– 400.5
5,117.1
2,014.7
– 36.2
1,835.6
– 23.5
1,978.5
1,812.0
– 914.1
– 1,016.0
– 860.1
– 923.3
– 1,930.1
– 1,783.3
50.5
– 92.6
– 37.6
– 79.7
5.9
–
– 234.6
– 228.7
5,117.1
4,917.1
400.5
389.6
5,517.6
5,306.7
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 84.7 million at the end of 2015 (2014: CHF 90.4
million). The slight decrease was attributable to commutations of reserves and currency effects.
220
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.
2014
2015
35,087.6
33,159.2
2,678.3
2,622.7
274.1
359.1
201.5
348.5
38,399.1
36,331.9
4,126.9
3,486.9
42,526.1
39,818.8
221
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
Total actuarial reserves from non-unit-linked life insurance contracts
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
2014
2015
1,131.8
3,849.9
3,712.8
7,060.3
8,838.4
1,004.5
3,275.0
3,265.1
6,316.7
8,111.6
10,494.5
11,186.4
35,087.6
33,159.2
66.6
282.5
376.1
396.0
1,557.1
2,678.3
102.7
354.2
314.4
462.0
279.9
66.4
260.1
405.5
366.7
1,524.0
2,622.7
63.8
257.5
220.8
329.1
239.8
1,513.2
1,111.0
119.5
2,494.2
2,613.7
79.7
2,296.2
2,375.9
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.
222
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
2014
2015
34,592.4
35,087.6
757.1
151.4
–
– 195.0
– 218.4
686.5
–
–
– 1,462.8
– 1,152.0
35,087.6
33,159.2
The actuarial reserves include unearned premium reserves and claims reserves.
The actuarial reserves for DPF business as at 31 December 2015 amounted to CHF 32,876.1 million (31 December 2014: CHF 34,788.4 million),
while for non-DPF business they totalled CHF 283.1 million (31 December 2014: CHF 299.2 million).
The actuarial reserves for assumed business (inward reinsurance) as at 31 December 2015 came to CHF 7.6 million (31 December 2014: CHF 7.4 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
2014
2015
2,521.0
320.3
– 243.0
– 4.9
235.6
0.0
–
– 113.2
– 37.5
2,678.3
2,678.3
266.6
– 189.0
– 4.6
79.0
–
–
– 13.2
– 194.5
2,622.7
223
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
2014
2015
270.2
– 9.5
36.1
– 30.2
–
–
– 0.1
11.5
– 4.0
274.1
274.1
– 11.5
10.0
– 26.7
–
–
– 31.2
8.0
– 21.2
201.5
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
2014
2015
338.3
30.8
9.8
– 0.6
–
–
– 12.6
– 6.5
359.1
359.1
26.5
– 0.9
– 0.2
–
–
– 2.2
– 33.8
348.5
224
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
2014
2015
1,658.9
1,513.2
79.7
66.3
– 185.2
– 155.1
–
–
– 18.1
– 22.2
1,513.2
1,812.5
– 452.9
152.9
– 175.3
226.3
–
–
– 199.3
– 114.0
1,111.0
2,613.7
– 1,067.6
101.3
– 128.8
338.0
Adjustment arising from unrealised gains and losses as at 31 December (shadow accounting)
1,067.6
722.2
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
0.1
–
– 4.1
– 13.4
2,613.7
–
–
– 127.6
– 75.4
2,375.9
4,126.9
3,486.9
225
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
2014
2015
2014
2015
1,766.5
1,766.5
1,930.1
1,930.1
–
–
–
–
157.9
150.0
17.2
–
–
5,335.1
250.2
1,221.6
99.9
86.4
23.7
287.7
975.0
8.1
–
–
5,375.1
190.7
1,425.4
–
0.0
37.2
158.0
150.0
17.3
–
–
5,368.2
276.0
1,305.9
103.1
86.4
23.7
287.8
975.0
8.2
–
–
5,437.0
197.6
1,541.1
–
0.0
37.4
7,342.0
8,299.2
7,488.7
8,484.0
8,632.3
8,632.3
8,782.8
8,782.8
8,632.3
8,632.3
8,782.8
8,782.8
Total liabilities arising from banking business and financial contracts
17,740.8
19,012.0
–
–
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.
The bond of Baloise Bank SoBa amounting to CHF 100 million (3.00 per cent, 2007 – 2015, ISIN CH0030870445)
was repaid on 12 June 2015.
226
Financial Report
Notes to the consolidated annual financial statements
25. RECONCILIATION BETWEEN 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)
2014
2015
0.0
86.7
–
86.7
– 0.2
86.4
0.0
–
–
0.0
–
0.0
227
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
2014
2015
1,697.6
149.4
–
149.4
– 150.0
43.5
– 38.0
5.4
1,702.4
–
–
–
0.0
40.0
– 34.6
5.4
1,702.4
1,707.8
No new bonds were issued in the year under review and no bonds were redeemed.
The fair value of financial liabilities at the balance sheet date totalled CHF 1,864.2 million (2014: CHF 1,875.8
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
228
Financial Report
Notes to the consolidated annual financial statements
27. PROVISIONS
CHF million
Balance as at 1 January
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
Restructuring
Other
Total
Restructuring
Other
22.7
–
–
–
106.7
0.4
–
–
2014
129.4
0.4
–
–
34.3
–
–
–
85.0
1.1
–
–
Total
2015
119.3
1.1
–
–
22.0
67.7
89.7
5.0
15.5
20.5
– 0.2
– 11.3
– 11.6
– 1.5
– 8.9
– 10.4
– 9.6
0.0
– 0.5
34.3
– 78.0
–
– 0.6
85.0
– 87.6
0.0
– 1.1
119.3
– 16.0
– 13.3
– 29.3
0.0
– 3.5
18.4
–
– 2.9
76.4
0.0
– 6.4
94.8
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. Other provisions
recognised in profit or loss were primarily attributable to Baloise’s German entities and those utilised but not
recognised in profit or loss were primarily attributable to its Swiss entities.
28. INSURANCE LIABILITIES
CHF million
Liabilities to policyholders
Liabilities to brokers and agents
Liabilities to insurance companies
Other insurance liabilities
Total insurance liabilities
2014
2015
1,458.9
1,329.2
122.9
176.4
22.1
117.9
182.8
20.6
1,780.3
1,650.4
229
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
3,358.8
3,816.8
7,175.6
3,050.0
3,783.4
Non-life
Life
Non-life
Life
Total
2014
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)
– 7.5
3,351.3
– 145.0
1.7
–
3,816.8
– 20.3
–
– 7.5
7,168.1
– 165.2
1.7
– 1.1
3,048.9
– 131.1
1.5
–
3,783.4
– 19.1
–
3,208.0
3,796.5
7,004.5
2,919.4
3,764.4
6,683.7
Total
2015
6,833.4
– 1.1
6,832.4
– 150.2
1.5
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
2014
2015
256.0
248.3
117.1
12.2
234.9
596.4
4.2
460.2
19.9
1.1
117.3
30.2
214.5
503.7
3.3
387.4
17.7
– 0.4
Total investment income for own account and at own risk
1,701.9
1,521.8
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 characteristics
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 3.1 million had been recognised on impaired investments at the balance sheet date
(2014: CHF 3.4 million).
230
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 and third parties
2014
2015
775.1
587.4
379.1
7.1
Realised gains and losses on investments as recognised in the income statement
1,362.5
386.2
231
Financial Report
Notes to the consolidated annual financial statements
31.1 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.
232
Financial Report
Notes to the consolidated annual financial statements
31.2 Realised gains and losses on investments in 2015 for own account and at own risk
2015
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
180.9
–
–
–
–
180.9
– 68.2
–
–
–
–
–
–
247.1
32.5
–
279.6
–
–
– 106.8
– 48.9
–
0.1
537.4
0.0
–
537.4
–
– 177.5
– 339.5
– 2.5
–
–
– 68.2
– 155.7
– 519.5
Total
180.9
0.1
784.4
967.4
–
–
–
–
–
–
3.1
931.8
74.4
77.5
–
74.4
931.8
2,007.2
–
–
–
–
–
–
– 3.7
– 818.2
– 68.2
– 177.5
– 446.3
– 873.2
– 1.3
– 5.0
–
– 1.3
– 818.2
– 1,566.6
–
–
–
–
–
–
–
–
– 72.0
–
–
–
–
– 72.0
–
–
–
–
10.7
–
10.7
–
–
– 5.7
–
–
5.6
– 0.1
–
–
–
–
–
–
–
–
– 72.0
– 5.7
–
10.7
5.6
– 61.5
112.7
51.9
28.6
72.4
113.6
379.1
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.
233
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
2014
2015
– 24.3
– 46.1
–
–
0.0
– 5.1
– 5.9
– 0.4
– 35.8
–
–
–
–
–
0.0
– 1.4
–
– 12.4
– 6.5
– 5.7
– 72.0
–
–
–
–
–
– 5.2
– 5.5
–
–
–
–
– 0.1
– 5.4
–
–
–
–
– 0.2
– 5.7
Total impairment losses on financial assets recognised in profit or loss
– 41.1
– 77.8
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 377.3 million was reported for 2015 (2014: loss of CHF 77.0 million).
A gross currency loss of CHF 127.0 million was recognised directly in equity for the reporting year (2014: gain
of CHF 175.5 million). Allowing for hedges of a net investment in a foreign operation (hedge accounting), a net loss
of CHF 160.7 million was recognised for 2015 (2014: net gain of CHF 38.9 million).
234
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 gain on the disposal of the Austrian entities is included in the 2014 financial year.
2014
2015
35.4
22.4
44.2
8.6
41.1
20.3
43.2
8.0
110.7
112.6
2014
2015
11.0
2.5
0.2
–
9.6
7.3
10.9
143.8
185.2
13.1
2.2
0.4
–
26.8
6.4
5.5
82.3
136.6
235
Financial Report
Notes to the consolidated annual financial statements
34. CLASSIFICATION OF EXPENSES
CHF million
Personnel expenses (excluding loss adjustment expenses)
– 834.0
– 759.2
2014
2015
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.
– 32.9
– 65.0
– 70.4
– 78.2
– 55.0
– 11.2
– 33.6
– 39.8
– 30.6
– 72.6
– 50.2
– 16.8
– 526.9
– 462.2
– 17.0
– 3.7
–
– 14.1
– 2.8
–
– 255.3
– 145.3
– 1,949.8
– 1,627.2
35. PERSONNEL EXPENSES
Total personnel expenses for 2015 came to CHF 875.2 million (2014: CHF 959.4 million).
236
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
2014
2015
– 44.3
– 44.3
– 0.3
– 9.7
– 33.6
0.0
– 15.6
– 3.2
– 17.0
– 79.4
– 338.8
– 338.8
– 50.3
– 50.3
– 0.1
– 9.3
– 20.1
2.3
– 15.7
– 1.5
– 16.0
– 60.4
109.8
109.8
Total gains or losses on financial contracts
– 462.6
– 0.9
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
–
–
–
–
–
–
237
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
2014
2015
– 135.4
– 37.8
– 173.2
– 139.0
– 29.1
– 168.2
37.2 Expected and current income taxes
The expected average tax rate for the Baloise Group was 24.73 per cent in 2014 and 26.97 per cent in 2015. 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
2014
2015
885.1
24.73 %
– 218.9
679.3
26.97 %
– 183.2
36.0
– 10.2
– 2.6
– 0.3
4.7
2.2
15.9
– 173.2
12.3
– 7.6
– 0.5
7.8
15.9
– 1.1
– 11.6
– 168.2
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]).
238
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)
2014
710.7
2015
512.1
46,921,282
46,721,219
15.15
10.96
2014
710.7
7.9
718.6
2015
512.1
8.0
520.1
46,921,282
46,721,219
1,999,712
2,012,374
203,833
115,822
–
–
49,124,827
48,849,415
14.63
10.65
The dilution of earnings in 2014 as well as in 2015 was attributable to the Performance Share Units (PSU) share-based
payment plan and the convertible bond issued by Bâloise Holding.
239
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
2014
2015
– 0.5
– 487.4
84.6
93.2
– 310.1
0.8
33.1
– 39.1
– 8.5
– 13.6
2,141.4
– 452.6
1,688.8
– 411.1
– 471.8
– 882.9
8.7
–
8.7
– 124.1
– 12.5
– 136.6
– 0.1
– 2.5
– 2.6
– 737.1
177.5
– 245.4
753.3
– 27.6
–
– 27.6
– 0.2
– 33.5
– 33.7
– 0.3
– 1.4
– 1.7
326.4
– 130.6
167.9
– 582.2
Total other comprehensive income
443.2
– 595.8
240
Financial Report
Notes to the consolidated annual financial statements
39.2 Income taxes on other comprehensive income
Amount
before taxes
Tax expense /
tax income
Amount net
of taxes
Amount
before taxes
Tax expense /
tax income
Amount net
of taxes
2014
– 0.5
0.1
– 0.5
0.8
– 0.2
– 487.4
120.1
– 367.3
33.1
– 20.8
2015
0.7
12.3
84.6
– 403.3
– 27.0
93.2
57.6
– 310.1
– 39.1
– 5.2
12.5
– 8.5
– 26.6
– 13.6
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
Items to be reclassified
to the income statement
Available-for-sale financial assets
1,688.8
– 459.1
1,229.7
8.7
– 136.6
– 2.6
27.6
6.1
– 109.0
– 882.9
– 27.6
– 33.7
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
– 2.6
0.6
– 2.0
– 1.7
Change arising from shadow accounting
– 737.1
188.3
– 548.8
Change arising from exchange differences
Total items to be reclassified
to the income statement
177.5
998.7
–
– 245.4
177.5
753.3
326.4
– 130.6
– 750.1
240.2
– 642.7
7.0
6.8
0.5
– 86.5
–
167.9
– 20.6
– 27.0
– 1.2
239.9
– 130.6
– 582.2
Total
595.4
– 152.2
443.2
– 755.3
159.5
– 595.8
241
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
2014
2015
2014
2015
270.6
10.0
53.9
16.2
– 228.2
– 98.5
–
24.1
13.7
0.1
6.4
0.5
– 13.0
– 3.4
–
4.3
30.1
988.0
0.2
1.1
0.0
– 870.8
– 10.9
137.7
32.6
6.6
269.0
–
–
–
–
–
32.6
– 24.1
–
8.5
–
–
–
–
–
6.6
– 4.3
–
2.3
–
–
–
–
–
269.0
– 137.7
– 65.8
65.5
– 32.6
– 6.6
269.0
16.2
– 16.4
0.5
– 6.1
– 1.1
267.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
In 2014, 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.
HDI-Gerling Assurances, based in Leudelange, Luxembourg, was acquired during the year under review and
was merged with Baloise Assurances Luxembourg S.A. in the same year.
No companies were sold during the reporting period.
242
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
Associates
Executive management
Other related parties
2014
2015
2014
2015
2014
2015
2014
Executive Committee.
RELATED PART Y TRANSACTIONS
CHF million
Included in the
income statement
Premiums earned and
policy fees
Investment
income / expenses
Other income
Expenses
Impairment losses
on bad debts
15.8
0.0
0.4
– 21.1
–
0.6
32.4
0.6
– 23.5
–
0.2
0.1
0.2
– 14.5
–
0.2
0.1
0.1
– 12.6
–
Total income statement
– 5.0
10.2
– 14.1
– 12.2
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
–
0.0
0.0
– 0.7
– 4.5
– 5.2
–
0.0
0.0
–
– 9.2
– 9.1
11.1
8.8
–
–
–
–
–
–
–
–
11.1
8.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
2015
0.9
32.5
0.7
– 36.1
–
15.9
0.1
0.6
– 35.6
–
– 19.1
– 2.0
11.1
0.0
0.0
– 0.7
– 4.5
5.9
8.8
0.0
0.0
–
– 9.2
– 0.3
–
–
243
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
2014
2015
– 8.8
– 1.5
– 4.2
– 7.5
– 1.4
– 3.8
– 14.5
– 12.6
48,008 shares worth CHF 6.0 million were repurchased from members of the Corporate Executive Committee in
2015 (2014: CHF 3.1 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 73 to 95 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 held by members of the Board of Directors and the Corporate Executive Committee
244
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 2015.
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.
In the normal course of its insurance business, the Baloise Group provided contractually binding collateral, mainly
joint collateral relating to insurance-backed construction guarantees, and professional and commercial surety bonds.
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
2014
CHF million
Guarantees
Collateral
2015
CHF million
Guarantees
Collateral
AAA
–
–
AAA
–
–
AA
–
–
AA
–
–
A
32.4
0.2
A
30.3
0.2
2014
2015
49.1
459.4
508.5
–
–
–
Lower than BBB
or no rating
BBB
–
–
16.7
459.2
Lower than BBB
or no rating
BBB
–
–
14.7
479.1
45.0
479.3
524.3
–
–
–
Total
49.1
459.4
Total
45.0
479.3
245
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
2014
2015
142.4
3,362.8
1,716.8
811.1
3,173.1
1,979.7
–
–
–
–
–
–
5,222.1
5,963.9
2014
2015
61.4
61.3
4,206.5
3,913.9
–
–
4,267.9
3,975.2
–
–
–
–
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.
246
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
2014
2015
40.4
443.9
–
14.1
498.4
–
–
84.6
573.0
–
–
657.7
–
–
2014
CHF million
Capital commitments
2015
CHF million
Capital commitments
AAA
12.6
AAA
110.0
AA
0.3
AA
0.4
A
Lower than BBB
or no rating
BBB
Total
33.0
14.4
438.1
498.4
A
Lower than BBB
or no rating
BBB
Total
42.0
17.1
488.0
657.7
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.
247
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.
2014
2015
– 3.2
– 3.4
–
– 6.6
– 4.0
–
– 4.0
–
–
– 2.4
– 2.1
–
– 4.4
– 3.4
–
– 3.4
–
–
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
248
2014
2015
33.3
49.4
9.9
92.6
40.4
0.0
40.4
29.7
39.4
9.7
78.7
36.1
0.0
36.1
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 0.2 million in 2015 (2014: CHF 0.1 million)
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.
249
Financial Report
Notes to the consolidated annual financial statements
46. SIGNIFICANT SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES AS AT 31 DECEMBER 2015
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
premiums /
policy fees
(million)
Material
interests
as defined
by IFRS 4
–
–
–
–
–
CHF
CHF
CHF
CHF
CHF
CHF
5.0
2,305.6
–
75.0
5,169.9
1,323.2
50.0 32,067.5
3,087.6
50.0
7,465.7
0.2
1.5
27.5
33.0
CHF
1.5
14.9
EUR
94.7
406.2
EUR
22.0
9,576.4
361.2
EUR
15.1
1,561.4
599.7
EUR
12.8
546.7
EUR
12.8
234.4
EUR
–
–
EUR
1.5
13.8
EUR
EUR
EUR
–
0.1
–
–
35.7
–
EUR
0.5
15.6
–
–
–
–
–
–
–
–
X
X
X
X
X
X
X
X
X
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
250
Financial Report
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
Life and
non-life
Non-life
Other
L / NL
100.00
100.00
NL
NL
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
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)
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.
Method of
consoli-
dation 3
Currency
Share
capital
(million)
Total
assets
(million)
Gross
premiums /
policy fees
(million)
Material
interests
as defined
by IFRS 4
F
F
F
F
F
F
F
F
F
F
F
F
F
F
EUR
215.2
8,152.8
910.2
X
EUR
EUR
2.7
17.1
164.4
25.2
CHF
250.0
1,177.3
58.7
–
–
EUR
15.8
316.6
101.7
EUR
32.7
5,696.1
68.0
EUR
0.1
14.0
EUR
224.3
278.9
–
–
CHF
7.5
2,805.5
1.2
EUR
10.9
0.8
–
CHF
5.0
831.4
147.3
USD
0.0
748.1
CHF
1.3
174.8
USD
0.0
467.5
–
–
–
X
X
X
X
X
X
X
X
X
X
251
Financial Report
Notes to the consolidated annual financial statements
47. CHANGES TO SHAREHOLDINGS
In 2015 and in 2014 there were no transactions involving non-controlling interests that led to the loss of control
over a subsidiary.
48. 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.
49. JOINT ARRANGEMENTS
There were no joint arrangements in 2014 and in 2015.
50. EVENTS AFTER THE BALANCE SHEET DATE
By the time that these consolidated annual financial statements had been completed on 18 March 2016, we had not
become aware of any events that would have a material impact on the consolidated annual financial statements as
a whole.
252
Financial Report
Notes to the consolidated annual financial statements
This page has been left empty on purpose.
253
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 104 to 253), for the year ended 31 December 2015.
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 that 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 2015 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.
254
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
Michael Stämpfli
Audit expert
Peter Lüssi
Audit expert
Auditor in charge
Basel, 18 March 2016
255
4 Baloise
18 Review of operating performance
38 Sustainable business management
56 Corporate Governance
102 Financial Report
256 Bâloise Holding Ltd
274 Notes
Bâloise Holding Ltd
Income statement of Bâloise Holding ����������������������������������������� 258
Balance sheet of Bâloise Holding �������������������������������������������������� 259
Notes to the financial statements of Bâloise Holding ��������� 260
Appropriation of distributable profit
as proposed by the Board of Directors ��������������������������������������� 271
Report of the statutory auditor to the
Annual General Meeting of Bâloise Holding Ltd, Basel ���� 272
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
Depreciation, amortisation and impairment
Interest expenses
Other expenses
Total expenses
Tax expense
Profit for the period
Note
2014
2015
2
3
4
5
6
481.2
15.1
8.1
504.4
– 52.4
–
– 38.0
– 8.0
– 98.4
328.1
16.6
210.4
555.1
– 35.1
– 45.5
– 34.8
– 3.8
– 119.2
– 0.2
– 1.0
405.8
434.9
258
Financial Report
Balance sheet of Bâloise Holding
Balance sheet of Bâloise Holding
CHF million
Assets
Cash and cash equivalents
Receivables from Group companies
Receivables from third parties
Prepaid expenses and accrued income
Current assets
Financial assets
Loans to Group companies
Other financial assets
Long-term equity investments
Non-current assets
Total assets
Equity and liabilities
Current liabilities
Liabilities to Group companies
Liabilities to third parties
Deferred income
Non-current liabilities
Bonds
Provisions
Liabilities
Share capital
Statutory retained earnings
General reserve
Reserve for treasury shares 1
Voluntary retained earnings
Other reserves 1
Distributable profit
Treasury shares 1
Equity
Total equity and liabilities
Note
31.12.2014
31.12.2015
7
8
9
10
58.8
70.6
4.0
217.0
350.4
102.0
100.0
1,730.4
1,932.4
58.6
2.0
4.1
167.6
232.3
102.0
194.8
1,874.9
2,171.7
2,282.8
2,404.0
0.7
0.0
38.5
0.1
0.1
28.2
11
1,717.5
1,717.5
9.6
9.7
1,766.3
1,755.6
5.0
11.7
4.9
230.3
406.5
– 141.9
516.5
5.0
11.7
3.5
387.6
435.4
– 194.8
648.4
2,282.8
2,404.0
12
13
1 The comparative prior-year figure has been restated in accordance with the new classification; see notes to the financial statements.
259
Financial Report
Notes to the financial statements of Bâloise Holding
Notes to the financial statements
of Bâloise Holding
1. ACCOUNTING POLICIES
General
These annual financial statements of Bâloise Holding Ltd domiciled in Basel have been prepared in accordance with
the provisions of Swiss accounting law (Title 32 of the Swiss Code of Obligations)� The main policies applied which
are not prescribed by law are described below� The comparative prior-year figures have been restated in accordance
with the new classification criteria�
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�
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 individually at cost less any impairment losses�
260
Financial Report
Notes to the financial statements of Bâloise Holding
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� Items recognised at fair value are reported
separately�
Liabilities
Liabilities are recognised at their nominal amount�
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�
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 to cover any risks that may arise are recognised in accordance with the principles of risk-based management
and are charged to the income statement�
Treasury shares
Treasury shares are recognised at cost on the date of acquisition as deductions from equity� If the shares are subsequently
sold, any gains or losses are recognised in profit or loss as financial income or expense�
261
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. OTHER INCOME
CHF million
Write-up on long-term equity investment
Sundry other income
Total other income
2014
2015
9.5
3.2
2.3
0.1
15.1
10.4
3.7
2.6
– 0.1
16.6
2014
2015
–
8.1
8.1
203.5
6.9
210.4
In connection with the implementation of the new financial reporting standards, the principle of itemised measurement
applies to long-term equity investments for the first time� The application of this new ruling resulted in the reversal
of an impairment loss under commercial law of CHF 203�5 million on the long-term equity investment in Baloise
(Luxembourg) Holding in the 2015 annual financial statements�
4. ADMINISTRATIVE EXPENSES
CHF million
Personnel expenses 1
Other administrative expenses
Total administrative expenses
1 Bâloise Holding AG has no direct employees. All staff members are employed by Baloise Insurance Ltd, Basel.
2014
2015
– 38.2
– 14.2
– 52.4
– 22.7
– 12.4
– 35.1
262
Financial Report
Notes to the financial statements of Bâloise Holding
5. DEPRECIATION, AMORTISATION AND IMPAIRMENT
CHF million
Impairment losses on long-term equity investments
Total impairment losses on long-term equity investments
2014
2015
–
–
– 45.5
– 45.5
In connection with the implementation of the new financial reporting standards, the principle of itemised measurement
applies to long-term equity investments for the first time� The application of this new ruling resulted in the recognition
of an impairment loss of CHF 45�5 million on the long-term equity investment in Baloise Life (Liechtenstein) AG
in the 2015 annual financial statements�
6. INTEREST EXPENSES
CHF million
Interest on bonds
Other interest expenses
Total interest expenses
2014
2015
– 38.0
0.0
– 38.0
– 34.6
– 0.2
– 34.8
263
Financial Report
Notes to the financial statements of Bâloise Holding
NOTES TO THE BALANCE SHEET
7. PREPAID EXPENSES AND ACCRUED INCOME
The annual general meeting of Haakon AG, Basel, held on 1 March 2016, the AGMs of Baloise Bank SoBa AG,
Solothurn, of Baloise Asset Management Schweiz AG and of Baloise Asset Management International AG, Basel, held
on 3 March 2016, and the AGM of Basler Versicherung AG, Basel, held on 18 March 2016 voted to recognise the
dividends receivable for the 2015 financial year as accrued income (2015: CHF 167�4 million / 2014: CHF 216�8 million)�
8. 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
9. OTHER FINANCIAL INSTRUMENTS
CHF million
Call money
Fixed-term deposits
Total other financial instruments
2014
2015
40.0
62.0
102.0
40.0
62.0
102.0
2014
2015
–
100.0
100.0
124.8
70.0
194.8
264
Financial Report
Notes to the financial statements of Bâloise Holding
10. LONG-TERM EQUIT Y INVESTMENTS
Total
shareholding
as at
31.12.2014
(with voting
rights)
Total
shareholding
as at
31.12.2015
(with voting
rights)
Share capital
as at
31.12.2015
Capital share
(per cent) 1
(per cent) 1
Currency
(million)
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
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
74.75
100.00
100.00
100.00
100.00
100.00
100.00
Baloise Finance (Jersey) Ltd, St. Helier, Jersey
100.00
100.00
1 Investments stated as a percentage are rounded down.
CHF
CHF
CHF
CHF
CHF
CHF
CHF
EUR
CHF
EUR
EUR
CHF
CHF
75.0
50.0
50.0
1.5
1.5
0.2
7.5
0.0
75.0
50.0
50.0
1.5
1.5
0.1
7.5
0.0
250.0
250.0
224.3
224.3
0.1
5.0
1.3
0.1
5.0
1.3
Further information on the long-term equity investments held directly by Bâloise Holding can be found on pages
250 and 251 in the Financial Report section�
265
Financial Report
Notes to the financial statements of Bâloise Holding
11. 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
Further information on the financial liabilities issued directly by Bâloise Holding can be found on page 158 in the
Financial Report section�
12. TREASURY SHARES
Number of registered shares
Balance on 1 Jan. 2015
Purchases
Sales
Low
in CHF
High
in CHF
Average
share price
(CHF)
Number
2,133,376.0
110.2
–
127.7
–
116.3
537,256.0
–
Disposals in connection with employee share ownership programmes
Balance on 31 Dec. 2015
– 97,912.0
2,572,720.0
266
Financial Report
Notes to the financial statements of Bâloise Holding
13. 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)
Total reserve for treasury shares 1
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 1
Distributable profit
Balance as at 1 January
Dividend distributed
Allocated to other reserves
Withdrawn from other reserves
Profit for the period
Total distributable profit
Treasury shares (deductions from equity) 1
Transfer from assets
Purchases
Sales
Disposals from employee incentive plans
Total treasury shares
31.12.2014
31.12.2015
5.0
–
5.0
11.7
–
11.7
176.3
–
–
6.5
182.8
5.0
–
5.0
11.7
–
11.7
182.8
–
– 179.3
–
3.5
194.5
15.2
240.7
–
– 181.9
–
– 6.5
52.4
56.3
– 237.5
–
181.9
405.8
406.5
52.4
156.0
–
179.3
–
387.7
406.5
– 250.0
– 156.0
–
434.9
435.4
– 141.9
– 62.4
–
9.5
– 194.8
Total equity 1
658.4
648.4
1 In accordance with new financial reporting legislation, treasury shares were transferred from assets to equity and liabilities in 2015. For the same reason,
the reserve for treasury shares associated with these treasury shares was reversed. The comparative prior-year figures still reflect the old classification.
267
Financial Report
Notes to the financial statements of Bâloise Holding
14. 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 2015:
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
31.12.2014
Share of
voting rights
as at
31.12.2014
Total
shareholding
as at
31.12.2015
Share of
voting rights
as at
31.12.2015
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
6.0
>5.0
>3.0
>3.0
3.1
2.6
2.8
<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.
268
Financial Report
Notes to the financial statements of Bâloise Holding
15. CONTINGENT LIABILITIES
CHF million
Collateral, guarantee commitments
2014
2015
164.4
58.4
Bâloise Holding has furthermore 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) 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 2015�
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�
16. 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 (2014: none)�
17. 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 73 to 95 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�
269
Financial Report
Notes to the financial statements of Bâloise Holding
18. NET REVERSAL OF HIDDEN RESERVES
In 2015, hidden net reserves totalling CHF 203�5 million were reversed (see note 3)�
19. EXEMPTIONS DUE TO PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
Because Bâloise Holding Ltd has prepared consolidated financial statements in accordance with recognised financial
reporting standards (IFRS), in accordance with statutory provisions (article 961d (1) of the Swiss Code of Obligations
(OR)), it has dispensed with the notes on long-term interest-bearing liabilities and audit fees as well as the presentation
of a cash flow statement or a management report in these annual financial statements�
20. EVENTS AFTER THE BALANCE SHEET DATE
By the time that these annual financial statements had been completed on 18 March 2016, we had not become aware
of any events that would have a material impact on the annual financial statements as a whole�
270
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 434,861,183�39�
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
2014
2015
405,812,675.61
434,861,183.39
721,340.00
534,015.61
406,534,015.61
435,395,199.00
– 156,000,000.00
– 185,000,000.00
–
–
– 250,000,000.00
– 250,000,000.00
534,015.61
395,199.00
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 5�00 gross or CHF 3�25 net of withholding tax�
271
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 258 to 270), for the year ended 31 December 2015�
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements
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 evaluating
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 2015 comply with Swiss law and the
Company’s articles of incorporation�
272
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
Michael Stämpfli
Audit expert
Peter Lüssi
Audit expert
Auditor in charge
Basel, 18 March 2016
273
4 Baloise
18 Review of operating performance
38 Sustainable business management
56 Corporate Governance
102 Financial Report
256 Bâloise Holding Ltd
274 Notes
Notes
GLOSSARY ������������������������������������������������������������������������������������������������ 276
ADDRESSES ��������������������������������������������������������������������������������������������� 280
INFORMATION ON THE BALOISE GROUP ������������������������������������ 281
FINANCIAL CALENDAR AND CONTACTS ��������������������������������������� 282
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�
276
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
The benefits provided by the insurer in connection with the
occurrence of an insured event�
→ 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�
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
profits to their policyholders�
→ Minimum interest rate
The minimum guaranteed interest rate paid to savers under
occupational pension plans�
→ 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)�
→ 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�
277
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�
278
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�
279
LUXEMBOURG
Bâloise Assurances
23, rue du Puits Romain
Bourmicht
L-8070 Bertrange
Tel + 352 290 190 1
Fax + 352 290 190 9001
info@baloise.lu
www.baloise.lu
BELGIUM
Baloise Insurance
Posthofbrug 16
B-2600 Antwerp
Tel + 32 3 247 21 11
Fax + 32 3 247 27 77
info@baloise.be
www.baloise.be
Notes
Addresses
Addresses
SWITZERLAND
Basler Versicherungen
Aeschengraben 21
CH-4002 Basel
Tel + 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
Tel + 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
Tel + 49 61 72 130
Fax + 49 61 72 13 200
info@basler.de
www.basler.de
280
Notes
Information on the Baloise Group
Information on the Baloise Group
The 2015 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 2015
annual financial statements together with detailed information�
The annual report contains all of the elements that, in
accordance with section 961c of the Swiss Code of Obligations,
make up the management report�
AVAILABILIT Y AND ORDERING
The 2015 Annual Report and the Summary of the 2015 Annual
Report will be available on the internet at www�baloise�com/
annualreport from 22 March 2016�
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�
© 2016 Bâloise Holding Ltd, 4002 Basel, Switzerland
Publisher Baloise, Corporate Communications & Investor Relations
Concept, design Eclat, Zurich
Photography Dominik Plüss, Basel / Marc Wetli, Zurich
Publishing Multimedia Solutions AG, Zurich
English translation LingServe Ltd (UK)
Printing Gremper AG, Pratteln
281
Notes
Financial calender and contacts
Financial calendar and contacts
22.03.2016 Annual financial results:
media conference
conference call for analysts
29.04.2016 Annual General Meeting of
Bâloise Holding Ltd
30.08.2016 Half-year financial results:
conference call for analysts
and the media
23.03.2017 Annual financial results:
media conference
conference call for analysts
28.04.2017 Annual General Meeting of
Bâloise Holding Ltd
Corporate Governance
Baloise Group
Philipp Jermann
Aeschengraben 21
4002 Basel, Switzerland
+ 41 58 285 89 42
philipp.jermann@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
282
BÂLOISE HOLDING LTD
Aeschengraben 21
CH-4002 Basel
www.baloise.com
Making you safer.