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ANNUAL REPORT 2016Baloise Group 01_JB_Die_Baloise_en 2
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Baloise Group
Annual Report 2016
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Contents
BALOISE
Baloise key figures ���������������������������������������������������������������������������������� 4
At a glance �������������������������������������������������������������������������������������������������� 5
Letter to shareholders ��������������������������������������������������������������������������� 6
Baloise shares �������������������������������������������������������������������������������������������� 8
Our four core markets ����������������������������������������������������������������������� 10
Strategy ����������������������������������������������������������������������������������������������������� 11
Brand ��������������������������������������������������������������������������������������������������������� 14
REVIEW OF OPERATING PERFORMANCE
Group ��������������������������������������������������������������������������������������������������������� 18
Switzerland ��������������������������������������������������������������������������������������������� 22
Germany ��������������������������������������������������������������������������������������������������� 23
Belgium ����������������������������������������������������������������������������������������������������� 24
Luxembourg ������������������������������������������������������������������������������������������� 25
Consolidated income statement ���������������������������������������������������� 26
Consolidated balance sheet ������������������������������������������������������������� 28
Business volume, premiums and combined ratio ����������������� 29
Technical income statement ����������������������������������������������������������� 31
Gross premiums by sector ���������������������������������������������������������������� 32
Banking activities �������������������������������������������������������������������������������� 33
Investment performance ������������������������������������������������������������������ 34
SUSTAINABLE BUSINESS MANAGEMENT
Responsibility ���������������������������������������������������������������������������������������� 38
Human resources ��������������������������������������������������������������������������������� 42
The environment ���������������������������������������������������������������������������������� 48
Risk management ��������������������������������������������������������������������������������� 52
Commitment to art ����������������������������������������������������������������������������� 56
CORPORATE GOVERNANCE
Corporate Governance Report
including Remuneration Report ��������������������������������������������������� 58
Report of the statutory auditor to the Annual
General Meeting of Bâloise Holding Ltd, Basel ������������������ 102
FINANCIAL REPORT
Consolidated balance sheet ���������������������������������������������������������� 110
Consolidated income statement ������������������������������������������������� 112
Consolidated statement of comprehensive income ����������� 113
Consolidated cash flow statement ��������������������������������������������� 114
Consolidated statement of changes in equity ���������������������� 116
Notes to the consolidated annual financial statements ��� 118
Notes to the consolidated balance sheet ��������������������������������� 188
Notes to the consolidated income statement ����������������������� 236
Other disclosures ������������������������������������������������������������������������������ 248
Report of the statutory auditor to the Annual General
Meeting of Bâloise Holding Ltd, Basel ������������������������������������ 260
BÂLOISE HOLDING LTD
Income statement of Bâloise Holding Ltd ����������������������������� 268
Balance sheet of Bâloise Holding Ltd �������������������������������������� 269
Notes to the financial statements of Bâloise Holding Ltd 270
Appropriation of distributable profit as
proposed by the Board of Directors ����������������������������������������� 281
Report of the statutory auditor to the Annual
General Meeting of Bâloise Holding Ltd, Basel ������������������ 282
GENERAL INFORMATION
Glossary ������������������������������������������������������������������������������������������������� 288
Addresses ���������������������������������������������������������������������������������������������� 292
Information on the Baloise Group �������������������������������������������� 293
Financial calendar and contacts ������������������������������������������������ 294
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Baloise Group Annual Report 2016
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 written 1
Investment-type premiums
Total business volume
Operating profit (loss)
Profit / loss before borrowing costs and taxes
Non-life
Life 2
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 share 4 (CHF)
Diluted earnings per share 4 (CHF)
Equity per share 4 (CHF)
Closing price (CHF)
Market capitalisation (CHF million)
Dividend per share 5 (CHF)
2015
2016
Change (%)
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
3,140.7
3,570.9
6,711.6
2,199.2
8,910.8
396.4
226.1
92.1
– 31.0
533.9
45,776.6
46,209.0
5,453.6
5,773.7
9.3
92.5
93.3
9.8
1.7
9.7
91.1
92.2
21.3
3.1
3.0
– 5.6
– 1.8
5.5
– 0.1
0.2
– 18.5
14.0
– 9.9
4.5
0.9
5.9
–
–
–
–
–
3,876.2
4,409.4
367.0
36.1
322.1
68.5
13.8
– 12.2
89.8
50,000,000
50,000,000
10.96
10.65
116.0
127.60
6,380.0
5.00
11.53
11.22
123.8
128.30
6,415.0
5.20
0.0
5.2
5.4
6.7
0.5
0.5
4.0
1 Premiums written and policy fees (gross).
2 Of which deferred gains / losses from other operating segments (31 December 2015: CHF – 3.3 million; 31 December 2016: CHF 2.0 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 2016, based on the proposal submitted to the Annual General Meeting.
4
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Baloise Group Annual Report 2016
Baloise
At a glance
At a glance
Equity of
CHF 5,773.7 million
Return on equity
(RoE) of
9.7 %
Profit of
CHF 534.8 million
(attributable to shareholders)
Dividend of
CHF 5.20 per share
(will be proposed to the
Annual General Meeting
on 28 April 2017)
5.5 %
higher business volume
with investment-type premiums
Net investment yield
of insurance assets
2.9 %
Net combined ratio of
New business margin of
92.2 %
21.3 %
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Baloise Group Annual Report 2016
Baloise
Letter to shareholders
Dr Andreas Burckhardt, Chairman of the Board of Directors (right), and Gert De Winter, Group CEO (left).
Baloise exceeds
expectations
DEAR SHAREHOLDERS
Baloise is ready for the future� We are relying on innovation,
agility and an entrepreneurial culture – without neglecting our
core insurance business� The Simply Safe strategy sets out am-
bitious targets for Baloise to achieve by 2021� At the Investor
Day in late October, Baloise presented the targets for the com-
ing five years, in which it will be focusing on employees, cus-
tomers and shareholders� Against a backdrop of changing con-
ditions in the insurance sector, Baloise is thus evolving into an
innovative provider of solutions that expand its core business
and extend beyond traditional insurance�
Gert De Winter joined as Group CEO in early 2016� He
has been tasked with looking after the existing business and,
at the same time, daring to embark on new ventures in order
to tackle the challenges of a changing environment� The Com-
pany’s track record over the past decade has been excellent�
6
Baloise has one of the most profitable non-life portfolios in
Europe, a strong market position in its core markets, cutting-
edge IT systems and digitalised processes, plus forward-looking
capital and risk management� These attributes and our share-
holder-friendly dividend policy have long made Baloise one of
the most attractive stocks in the sector� A fact that I am sure
you already appreciate as shareholders�
Building on its successful past, Baloise is further strength-
ening its core business and also stepping up its activities outside
the traditional insurance business in areas such as safety ser-
vices, active assistance and prevention� The Company is thus
equipping itself for the changing requirements of today’s cus-
tomers� On this journey, Baloise will measure its performance
using three clear and simple goals�
1� Baloise aims to become the first choice for people who
want to feel “simply safe”� By ensuring an even stronger
focus on customer needs, tailored omnichannel com-
munication and innovative products and services in the
areas of insurance, assistance and pensions, Baloise is
striving to attract an additional one million customers
by 2021� This equates to an increase of 30 per cent�
2� The workforce is key to implementing the new corpo rate
strategy� Baloise wants to become an employer of choice
in its industry� This will be measured in terms of how
strongly its employees recommend it as an employer�
Currently, Baloise is in the top third of the market
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Baloise Group Annual Report 2016
Baloise
Letter to shareholders
year on year due to a decline in the life business� Luxembourg
enjoyed a good year in 2016� Although earnings fell slightly (by
0�9 per cent), the business volume increased once again and the
profitability of the non-life business continues to be very good�
We owe a huge debt of gratitude to our employees for
achieving good results once again against a backdrop of con-
tinued uncertainty and challenging economic conditions� Day
in, day out, our employees contribute to Baloise’s success on
many different levels�
The profit that we generated in 2016 exceeded expectations�
For this reason, the Board of Directors will ask the Annual
General Meeting to raise the dividend to CHF 5�20� Moreover,
the share buy-back programme launched in 2015 has finished
earlier than planned� We have already announced a new pro-
gramme, in which up to three million shares are to be repurchased
over the next three years�
Under its new strategy, Baloise has set itself three clear
targets in respect of employees, customers and shareholders�
These will enable us to measure our performance over the next
five years� We believe the targets are ambitious, especially because
low interest rates and the strong Swiss franc continue to present
us with difficulties� In view of the challenges facing our industry,
we have to be innovative and dare to embark on new ventures�
However, we have the necessary strength with which to pursue
this strategy successfully� We believe Baloise is very well posi-
tioned to get through even difficult periods and achieve the
targets that it has set�
Basel, March 2017
Dr Andreas Burckhardt
Gert De Winter
Chairman of the Board of Directors
Group CEO
for European financial services providers� The aim is to
make it into the top 10 per cent�
3� Finally, you, our shareholders, are to benefit directly
from Baloise continuing to pursue an attractive dividend
policy and repurchasing up to three million more treas-
ury shares� At the same time, targeted capital investment
in new strategic projects will indirectly generate addi-
tional profits in existing and new areas of business� We
anticipate a cash inflow to Bâloise Holding of CHF 2
billion between now and 2021 that will pave the way for
this consistently attractive shareholder policy and profit-
bringing new capital expenditure�
“ The workforce is key to implementing
the new corporate strategy.”
However, 2016 was not just about the new strategy� Important
foundations for the future were laid in Germany� The strength-
ening of reserves in the German industrial and liability business,
the shift in the business mix towards profitable retail and SME
customers and measures to increase the company’s sales capa-
bility are putting the German business on a firm footing� This
strengthening of reserves reduced profit for the period by CHF 37�9
million net� In Switzerland, however, pension plan changes for
banking and insurance employees resulting from IAS 19 had
a positive impact� The profit for the period of CHF 534�8 million
was therefore 4�4 per cent higher than in 2015�
In the life business, our efforts to change the business mix
are already having an impact� Premiums from traditional life
business declined in all countries, whereas investment-type
premiums rose by 5�5 per cent across the Group� In the non-life
business, the rise was 3�0 per cent� The net combined ratio im-
proved by 1�1 percentage points year on year to 92�2 per cent�
The net return on insurance assets came to 2�9 per cent, which
was in line with the long-term trend (2015: 3�0 per cent)� This
is further proof of the stability of our asset management�
The Swiss business significantly increased its earnings
and remains highly profitable� Earnings from the German busi-
ness were influenced by the strengthening of reserves in non-life
insurance� The business volume in Germany remained stable�
Thanks to the steps taken, earnings are predicted to improve in
future� In Belgium, the volume of business and the profitability
of the non-life business grew� However, earnings were down
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Baloise Group Annual Report 2016
Baloise
Baloise shares
Baloise shares hold their own
despite challenging market conditions
In 2016, Baloise shares * fared well despite the difficult macroeconomic environment. This was
due in no small part to the Company’s good operating performance and the presentation of its
new strategy, which met with a very favourable response. Closing at CHF 128.30, Baloise shares
finished slightly higher than at the end of the prior year. This meant that they comfortably
outperformed the Swiss Market Index again in 2016.
The equity markets were confronted with a series of unexpect-
ed events last year� The United Kingdom’s vote to leave the
European Union and the surprising outcome of the US presi-
dential election shaped the macroeconomic environment in
2016� Although they were affected at the start of the year by
concerns about the general health of the global economy and
the slump in prices for energy commodities, the financial mar-
kets rallied strongly towards the end of the year� The main reason
for this trend was the anticipation of a more pro-business policy
in the United States under the newly elected Republican presi-
dent, Donald Trump� The markets are expecting the Trump
administration to deliver lower corporate taxes, deregulation
in the banking sector and generous infrastructure programmes,
factors that could lead to higher corporate profits and economic
growth� These more positive expectations also influenced the
bond markets, which eventually benefited from a rise in yields
in the fourth quarter� In view of the buoyant US economy, the
Federal Reserve raised the key interest rate by 25 basis points
in mid-December� This was the second rate hike by the Fed since
the start of the most recent financial crisis�
Nonetheless, the financial markets’ encouraging perfor-
mance after the US presidential election was able to only partly
offset the significant price falls experienced by many stocks in
the earlier quarters of the year� The particularly challenging
market situation in the first six months of 2016 caused Baloise
shares to drop by around 15 per cent compared with their price
at the start of the year� However, the share price responded very
well to the good results for the first half of the year and the
successful Investor Day in late October� As a result, the price
of Baloise shares closed 2016 at CHF 128�30, which was slightly
higher than at the end of 2015� Baloise shares thus generated a
return of 0�5 per cent for 2016 as a whole (excluding the dividend)�
By contrast, the STOXX Europe 600 Insurance Index (SXIP)
fell by 6�7 per cent overall during the same period� Switzerland’s
two main share indices also declined: the Swiss Market Index
8
and the Swiss Leader Index went down by 6�8 per cent and
2�6 per cent respectively over the year as a whole�
Baloise shares are 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 28 April 2017 that a cash div-
idend of CHF 5�20 per share be paid for the 2016 financial year,
an increase of CHF 0�20 compared with the dividend for 2015�
This would represent an attractive dividend yield of 4�1 per cent
of the year-end share price�
The share buy-back programme begun in April 2015 was
ended earlier than planned in late July 2016� Under this pro-
gramme, Bâloise Holding Ltd repurchased a total of 1,000,000
registered shares at an average price of CHF 113�83 using a
separate trading line in the SIX Swiss Exchange� This equates
to 2 per cent of the share capital of Bâloise Holding Ltd as entered
in the commercial register� The Board of Directors will ask the
upcoming Annual General Meeting to reduce the Company’s
share capital from CHF 5,000,000 to CHF 4,880,000 – a decrease
of CHF 120,000 – by cancelling 1,200,000 treasury shares with
a par value of CHF 0�10 each and to amend the Articles of
Association accordingly� The shares to be cancelled were repur-
chased under the share buy-back programmes in 2006, 2015
and 2016�
* Baloise shares = shares of Bâloise Holding Ltd.
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Baloise Group Annual Report 2016
Baloise
Baloise shares
Year (CHF million)
2012
2013
2014
2015
2016
Total
Cash dividends
Share buy-backs
Total
225.0
237.5
250.0
250.0
260.0 1
1,222.5
–
–
–
59.1
54.8
113.8
225.0
237.5
250.0
309.1
314.8
1,336.3
All figures stated as at 31 December.
1 Proposal to the Annual General Meeting on 28 April 2017.
STATISTICS ON BALOISE SHARES
SHAREHOLDER STRUCTURE
The shares in Bâloise Holding Ltd are widely held and their free
float remains unchanged at 100 per cent� The following notifi-
able changes to Baloise’s shareholder base took place during the
financial year: on 19 May 2016, several collective investments
managed by UBS Fund Management (Switzerland) AG together
fell below the notifiable threshold of 3 per cent pursuant to sec-
tion 120 of the Swiss Financial Market Infrastructure Act (FMIA)�
Further information on Baloise’s significant shareholders as at
31 December 2016 can be found in table 15 on page 278�
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) ratio 1
Price / book (p / b) ratio 1
Number of shares issued (units)
31.12.2012
31.12.2013
31.12.2014
31.12.2015
31.12.2016
78.50
80.56
58.30
113.60
113.60
80.75
127.80
129.90
101.60
127.60
136.30
109.60
3,925.0
5,680.0
6,390.0
6,380.0
9.32
9.08
8.42
0.76
9.65
9.38
11.77
1.10
15.15
14.63
8.44
1.04
10.96
10.65
11.64
1.10
128.30
131.00
103.20
6,415.0
11.53
11.22
12.24
1.10
50,000,000
50,000,000
50,000,000
50,000,000
50,000,000
Minus the number of treasury shares (units)
3,053,746
3,028,943
3,048,791
3,464,540
2,499,945
Number of shares in circulation (units)
Average number of shares outstanding 2
Dividend per share 3 (CHF)
Dividend payout ratio 3
Dividend yield 3
46,946,254
46,971,057
46,951,209
46,535,460
47,500,055
46,831,998
46,896,926
46,921,282
46,721,219
46,381,359
4.50
48.3
5.7
4.75
49.2
4.2
5.00
33.0
3.9
5.00
49.0
3.9
5.20
49.0
4.1
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 245 of the Financial Report).
3 2016, 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 2011 – 2016
BALN
CHF 0.10
1.241.051
CH0012410517
SIX Swiss Exchange
100 % registered shares
150
100
50
2011
2012
2013
2014
2015
2016
1 31 December 2010 = 100.
Bâloise Holding registered shares (BALN)
SWX SP Insurance Price Index (SMINNX)
Swiss Market Index (SMI)
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Baloise Group Annual Report 2016
Baloise
Core markets
Our four core markets
Hamburg
Antwerp
Brussels
BELGIUM
Bad Homburg
Luxembourg
Business volume (CHF million)
Life: 143.5
Non-life: 947.1
Investment-type premiums: 470.8
Employees: 1,274
Net combined ratio: 93.4 %
LUXEMBOURG
Business volume (CHF million)
Life: 81.9
Non-life: 116.4
Investment-type premiums: 1,407.3
Employees: 389
Net combined ratio: 93.9 %
Basel
Solothurn
GERMANY
SWITZERLAND
Business volume (CHF million)
Life: 466.2
Non-life: 755.9
Investment-type premiums: 209.0
Employees: 1,986
Net combined ratio: 109.7
Business volume (CHF million)
Life: 2,879.3
Non-life: 1,315.8
Investment-type premiums: 112.1
Employees: 3,621
Net combined ratio: 81.2 %
10
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22�03�2017 15:44:41
Baloise Group Annual Report 2016
Baloise
Strategy
The Simply Safe strategy is about more
than just insurance
Baloise is launching its new strategy and its targets up to 2021 under the banner of Simply Safe.
Against a backdrop of changing conditions in the insurance sector, Baloise is thus evolving into
an innovative provider of solutions that expand its core business and extend beyond traditional
insurance. Customer focus is at the core of the new strategy. But it’s not just about covering and
insuring risks; it’s about addressing the wider needs of customers in a changing society. In 2017
the Company is beginning its journey towards future growth with this clear perspective and
with three simple yet ambitious objectives focused on employees, customers and shareholders.
SUSTAINABLE BUSINESS MANAGEMENT
The key success factors in the new strategy will be the strong
core business and the unique corporate culture that exists among
the around 7,300 Baloise employees in Switzerland, Belgium,
Germany and Luxembourg� Baloise aims to establish an agile
and entrepreneurial corporate culture in which its employees,
on a daily basis, see the world through the eyes of the customer�
The idea is to develop services and solutions that go beyond the
traditional insurance business�
The new strategy is in line with principles of corporate
responsibility and sustainable business management, an approach
that Baloise has pursued for a number of years now� The new
focus on the customer goes beyond that of a traditional service
provider� For this reason, greater importance needs to be attached
to the society in which the customers – but also Baloise as a
Company – exist� Baloise believes that this new strategy will
bolster its efforts to make further improvements in the area of
sustainable business management�
CUSTOMERS
Baloise is becoming the first choice for people who want to feel
“simply safe”� An even stronger focus on customer needs, tailored
omnichannel communication and innovative products and
services in the areas of insurance, assistance and pensions will
help Baloise to attract an additional one million customers by
2021� This would represent an increase of 30 per cent on 2016�
EMPLOYEES
The workforce is key to implementing the new corporate strategy�
That is why Baloise wants to become an employer of choice in
its industry� Progress will be measured by a performance indicator
that shows how often Baloise is recommended as an employer�
SHAREHOLDERS
Thanks to sustained improvements in profitability in its business
in Germany, its life business and its banking business, as well
as innovative products and services such as the Mobile Insurer,
cash of CHF 2 billion will flow into Bâloise Holding between
now and 2021� This benefits shareholders directly because Baloise
will continue to pursue its attractive dividend policy and will
repurchase three million treasury shares� Indirectly, shareholders
will benefit from targeted capital investment in new strategic
projects that will generate additional profits in existing and new
areas of business�
01_JB_Die_Baloise_en 11
11
22�03�2017 15:44:42
GERMANY
Business volume (CHF million)
Life: 466.2
Non-life: 755.9
Employees: 1,986
Net combined ratio: 109.7
Baloise Group Annual Report 2016
Baloise
Strategy
The Simply Safe strategy at a glance
“Baloise has a strong base on which to transform its business model, evolving from
a historically oriented claims processor, a provider of pension and investment
products and a risk-taker into a customer-focused provider of assistance, pension
and prevention services.” Gert De Winter, Group CEO
OUR AMBITION BY 2021: BECOME THE TRUSTED CHOICE
FOR PEOPLE WHO WANT TO FEEL “SIMPLY SAFE”.
oice in the ind u str y
h
f c
o
r
e
y
o
l
p
m
e
YEES
O
L
P
M
E
SHAREHOL D E R S
c
a
s
h u
pstream of CHF 2 billio n i n t o B â l
an a
d
diti
o
n
a
l
o
n
e
m
i
l
l
i
o
n
c
u
s
t
o
m
e
r
s
C
U
S
T
O
M
E
R
S
(
+
3
0
%
)
o l d in g
e H
o i s
These attributes and the shareholder-friendly dividend policy
have long made Baloise one of the most attractive stocks in
the sector�
12
01_JB_Die_Baloise_en 12
22�03�2017 15:44:43
A BRIGHT FUTURE NEEDS A SOLID PAST: Baloise’s new ambitions are founded on its excellent track record over the past decade: one of the most profitable non-life portfolios in Europe, a strong market position in its core markets, cutting-edge IT systems and digitalised processes, plus forward-looking capital and risk management.
Baloise Group Annual Report 2016
Baloise
Strategy
←
Going beyond
traditional insurance
MOBILE INSURER “FRIDAY”
→ Insurance from a smartphone in just a few minutes
→ Ambition is to become the most popular mobile
insurer in Germany by 2021
→ www.friday.de
CUSTOMER JOURNEY
→ Customer journey: knowing what services
customers want
CONNECTED CARS – FOCUSING ON MOBILIT Y
→ “Pay how you drive” policies in Luxembourg
from 2017
→ First platform for mobility in Belgium
INSTITUTIONAL ASSET MANAGEMENT
→ New asset management services for Swiss pension
←
Leveraging
the core business
LIFE BUSINESS
→ Reduced need for capital owing to an improved
business mix
→ Contribution to EBIT from the life business of
CHF 200 million per year
funds from 2017
→ Increase assets under management by more than
CHF 5 billion by 2021
INVESTMENT PARTNERSHIP WITH ANTHEMIS GROUP
→ The cooperation with the investment and advisory firm
Anthemis Group aims to invest in strategically relevant
start-ups
→ Pipeline full of projects for taking the company forward
GERMANY
→ A combined ratio in Germany of below 100 per cent
from 2017
CAPITAL MANAGEMENT
→ Strong capitalisation
→ New share buy-back programme for up to three
million shares
→ Cash upstream of CHF 2 billion to the holding
company in the next five years
EMPLOYEES
→ Entrepreneurial and agile – evolving corporate culture
→ An employer of choice in the industry
01_JB_Die_Baloise_en 13
13
22�03�2017 15:44:43
Baloise Group Annual Report 2016
Baloise
Brand
The Baloise brand
Feeling safe made simple.
What is the ambition of the Baloise brand?
→ Baloise wants to be the first choice for all those who wish to feel safer. Our customers should
always have peace of mind and a sense of reassurance and safety. We want our customers
to feel completely safe with Baloise at their side as a reliable partner. This means that we have
to consistently align our services and products to the needs of our customers.
What does the brand promise?
→ The Baloise brand stands for safety, simplicity and partnership. Safety is the core promise
and provides the foundation for every benefit, every service and every product. Simplicity
expresses our ambition to offer an outstanding customer experience with simple products,
easy processes and clear communication. Partnership is one of our biggest emotional
strengths. It is based on appreciation and value creation. We nurture and strengthen our
relationships with all our stakeholder groups.
How does the brand want to be seen?
→ Our brand personality defines how Baloise acts and communicates: reliable, easy to interact
with and caring for you. We are competent and steadfast and act with quiet confidence and
honesty. This makes us a reliable partner who is there for our customers when they need us.
We communicate clearly and respond quickly to our stakeholder groups. We take a direct
approach and always try to make things easier. As a committed partner we want to under-
stand the needs of our customers and work to find suitable solutions.
14
01_JB_Die_Baloise_en 14
22�03�2017 15:44:43
Baloise Group Annual Report 2016
Baloise
Brand
“We make it simple to feel safe –
as a reliable partner, who’s easy to
interact with and truly cares.”
Brand promise
(what)
Brand personality
(how)
Brand essence
Brand benefit
Safety
Simplicity
Partnership
Feeling safe
made simple.
e
l
b
a
i
l
e
r
y
s
a
e
g
n
i
r
a
c
Appearance
Communication
Behaviour
Products / Services
Peace of mind
A feeling of relief,
reassurance and
security.
01_JB_Die_Baloise_en 15
15
22�03�2017 15:44:43
02_JB_Geschaeftsgang_en 16
22�03�2017 15:46:32
4 Baloise
16 Review of operating performance
36 Sustainable business management
58 Corporate Governance
108 Financial Report
266 Bâloise Holding Ltd
286 General information
Review of operating
performance
GROUP ���������������������������������������������������������������������������������������������������������� 18
Strong profit despite uncertain economic policy ��������������������� 18
SWITZERLAND ������������������������������������������������������������������������������������������� 22
Excellent results ���������������������������������������������������������������������������������������� 22
GERMANY ���������������������������������������������������������������������������������������������������� 23
Foundations for a turnaround laid �������������������������������������������������� 23
BELGIUM ������������������������������������������������������������������������������������������������������ 24
Good growth and a good profit �������������������������������������������������������� 24
LUXEMBOURG ������������������������������������������������������������������������������������������� 25
Good growth and high profitability ����������������������������������������������� 25
FINANCIAL INFORMATION �������������������������������������������������������������������� 26
Consolidated income statement ������������������������������������������������������� 26
Consolidated balance sheet ���������������������������������������������������������������� 28
Business volume, premiums and combined ratio �������������������� 29
Technical income statement �������������������������������������������������������������� 31
Gross premiums by sector ������������������������������������������������������������������� 32
Banking activities ����������������������������������������������������������������������������������� 33
Investment performance ��������������������������������������������������������������������� 34
02_JB_Geschaeftsgang_en 17
22�03�2017 15:46:32
Baloise Group Annual Report 2016
Review of operating performance
Group
Strong profit despite uncertain economic policy
Baloise generated a strong profit in 2016. The year as a whole was shaped by economic policy
uncertainties stemming from the vote for Brexit and the US election. These uncertainties
im pact on the economy, which saw even lower interest rates and volatile stock markets in 2016.
From an operating perspective, the focus at Baloise was on the strengthening of reserves,
steps to improve the German non-life business, low interest rates and the continuing shift of
the business mix in the life business. The business volume grew in the two target segments:
non-life and investment-linked premiums. In the traditional life business, however, the volume
contracted. All operating segments contributed to the strong profit. In particular, the profit-
ability of the non-life business remained very good.
OVERVIEW
In 2016, Baloise generated a profit of CHF 534�8 million, which
was up by 4�4 per cent year on year� Although the climate of
persistently low, or even negative, interest rates and the strong
Swiss franc can now be considered normal, they are still an
ongoing challenge� Moreover, the strengthening of reserves in
the German non-life business reduced profit by CHF 37�9 million�
Conversely, profit was boosted by roughly the same amount as
a result of a positive accounting effect relating to provisions for
pensions and other post-employment benefits (IAS 19) in respect
of bank and insurance employees in Switzerland� The strength
of the Swiss franc barely changed compared with 2015, which
means that currency effects were negligible�
The volume of business generated was almost exactly the
same as in 2015 at CHF 8�9 billion� The non-life division gener-
ated premium income reported under IFRS of CHF 3,140�7 mil-
lion, an increase of 3�0 per cent� At CHF 396�4 million, the non-
life business’s profit before borrowing costs and taxes (EBIT)
was up slightly year on year, despite a higher level of large claims
incurred and the strengthening of reserves in Germany� A year-
on-year increase in the profit on claims reserves had a positive
impact� In the life division, the traditional life insurance busi-
ness declined as had been expected, falling by 5�6 per cent com-
pared with 2015� By contrast, investment-type premiums advanced
by 5�5 per cent� This trend reflects the strategy of further improving
the business mix in the life business� Reserves were strengthened
by a substantial amount of more than CHF 300 million in view
of the low interest rates� Despite this strengthening of reserves,
the life business also generated a healthy profit although, at
CHF 226�1 million, its EBIT was down slightly compared with
the very good prior-year figure�
The gains achieved on the investment of insurance assets amount-
ed to CHF 1,578�9 million, which was below the 2015 level of
CHF 1,685�4 million� The challenging interest rate environment
was reflected in the slightly lower recurring income of CHF 1,379�3
million (2015: CHF 1,418�0 million)� The gains on investments
achieved in these very challenging conditions equated to a net
return on insurance assets of 2�9 per cent (2015: 3�0 per cent)
and therefore remained broadly in line with the return seen in
recent years� The rate of return on insurance assets according
to IFRS – which includes unrealised net gains and losses on
investments but excludes gains and losses on held-to-maturity
debt instruments – was 3�1 per cent, representing an increase
on the 1�7 per cent net return in 2015�
BUSINESS VOLUME IN 2016 (GROSS) BY STRATEGIC BUSINESS UNIT
As a percentage
Switzerland
Germany
Belgium
Luxembourg
48.3
16.1
17.5
18.0
There was further encouraging growth in the EBIT generated
by the banking business, which rose by 14�0 per cent to CHF 92�1
million� The sharp increase was mainly attributable to a change
in the pension scheme at Baloise Bank SoBa, which took effect
in the first half of the year�
18
02_JB_Geschaeftsgang_en 18
22�03�2017 15:46:33
Baloise Group Annual Report 2016
Review of operating performance
Group
Baloise continues to have a very robust balance sheet� Con-
solidated equity went up by 5�9 per cent to CHF 5,773�7 million�
This figure was bolstered by the profit for the period and by
the gains from the sale of treasury shares after a convertible
bond, which had not been fully converted, reached maturity in
November 2016�
NET COMBINED RATIO
As a percentage
2016
2015
2014
2013
2012
92.2
93.3
93.6
94.9
94.1
BUSINESS VOLUME
CHF million
Total business volume
Life
Non-life
Investment-type
premiums
2015
2016
+ / – %
8,918.6
3,783.4
3,050.0
2,085.1
8,910.8
3,570.9
3,140.7
2,199.2
– 0.1
– 5.6
3.0
5.5
NON-LIFE DIVISION: INCREASED PROFITABILIT Y AND
STRENGTHENING OF RESERVES IN GERMANY
The volume of business rose by 3�0 per cent in the non-life divi-
sion� While the volume held steady in Switzerland due to the
selective underwriting policy for accident and health insurance,
Luxembourg (rise of 7�1 per cent), Belgium (rise of 6�6 per cent)
and Germany (rise of 2�9 per cent) contributed to the increased
volume, which reached a total of CHF 3,140�7 million� The amount
paid out for large claims was up on the prior year due to losses
across Europe in connection with flooding and hail, various
large claims in the industrial business (losses in connection
with fires in Germany and Switzerland) and large claims in the
Swiss accident business� The claims ratio was also adversely
affected by the strengthening of reserves in Germany� Nonethe-
less, the claims ratio went down overall and the combined ratio
improved by a further 1�1 percentage points compared with 2015�
One of the contributing factors was the year-on-year improvement
in the profit on claims reserves� The net combined ratio stood
at 92�2 per cent, underlining the excellent profitability of the
non-life business� At CHF 396�4 million, EBIT in the non-life
business was down slightly compared with 2015�
LIFE DIVISION: INTEREST RATE-RELATED STRENGTHENING
OF RESERVES AND CHANGING BUSINESS MIX
In the life insurance division, the business volume contracted
by 1�7 per cent� This decrease reflected the continuing shift in
the business mix away from classic life business, which is no
longer a focus because of the ongoing phase of low and, in some
cases negative, interest rates� Premium income from traditional
life business declined by 5�6 per cent, while investment-type
premiums were up by 5�5 per cent� Total premium income,
including investment-type premiums, amounted to CHF 5,770�1
million� In traditional life insurance, the business volume
decreased in Switzerland (by 6�7 per cent), Germany (by 2�3 per
cent) and Belgium (by 0�7 per cent) but increased in Luxembourg
(by 10�8 per cent)� The strong growth rate in Luxembourg was
primarily attributable to risk products that pay out in the event
of death� In contrast to the traditional life business, investment-
type premiums rose to CHF 2,199�2 million, with the volume
increasing by 3�4 per cent in Germany, by 14�2 per cent in Belgium
and by 7�6 per cent in Luxembourg� In Switzerland, Baloise
decided not to launch a second tranche product in view of the
extremely low interest rates� As a result, investment-type pre-
miums also declined� There were further encouraging increases
in the volume of partially autonomous solutions for occupational
pensions in Switzerland� Because interest rates were low, a sub-
stantial CHF 316�7 million was added to reserves in the life
business in total� Although EBIT in the life business was lower
than in 2015, it still amounted to a very healthy CHF 226�1
million� The positive operating income resulted in an increase
in the embedded value of the life insurance business from
CHF 3,876�2 million to CHF 4,409�4 million in 2016, which is
equivalent to a return on embedded value of 14�7 per cent� The
new business margin improved to 21�3 per cent (2015: 9�8 per
cent) owing to a higher margin in Switzerland� The value of new
business also rose, reaching CHF 68�5 million�
02_JB_Geschaeftsgang_en 19
19
22�03�2017 15:46:34
Baloise Group Annual Report 2016
Review of operating performance
Group
BANKING DIVISION: STABLE EARNINGS DESPITE
LOW-INTEREST-RATE ENVIRONMENT
The banking business achieved a good profit once again, raising
its EBIT by 14�0 per cent to CHF 92�1 million� This was due, in
particular, to a non-recurring effect in connection with the
change to the pension scheme of Baloise Bank SoBa� Profit would
have held steady without this one-off item� As usual, the main
contributors to profit were Baloise Asset Management (CHF 44�5
million) and Baloise Bank SoBa (CHF 41�7 million)�
EQUIT Y REMAINS ROBUST
Baloise is, and will continue to be, underpinned by a strong
capital base� Consolidated equity rose by 5�9 per cent year on
year, reaching CHF 5,773�7 million� This figure was bolstered
by the good profit for the period and by the gains from the sale
of treasury shares after a convertible bond, which had not been
fully converted, reached maturity in November 2016� The shares
held in reserve for conversion had been recognised at a low
purchase price� The total gains from the sale came to CHF 121�4
million� This resulted in an increase in capital reserves, although
this was partly offset by dividends paid of CHF 232�0 million
and other factors�
SIGNIFICANT GAINS ON INVESTMENTS
Following a significant stock market correction at the start of
the year, there was a turnaround at the end of February that
was largely the result of the European Central Bank increasing
its quantitative easing� Despite political uncertainties, such as
the Brexit referendum, the equity markets subsequently per-
formed well� The combination of expansionary monetary policy
and political uncertainties pushed interest rates to new lows
around the world in mid-2016� The unexpected outcome of the
US presidential election resulted in rising inflation expectations
that, in turn, led to a moderate increase in interest rates and
caused the equity markets to rally� Over the year as a whole, the
Swiss stock market fell sharply against its global counterparts�
Interest rates in Switzerland and the rest of Europe decreased
over 2016 as a whole, despite rising at the end of the year�
The gains achieved on the investment of insurance assets
amounted to CHF 1,578�9 million, which was below the 2015
level of CHF 1,685�4 million� The challenging interest rate environ-
ment was reflected in the lower recurring income of CHF 1,379�3
million (2015: CHF 1,418�0 million)� As reinvesting repaid bonds
has limited appeal in Europe, there was a preference for currency-
hedged US dollar investments and tangible assets offering reg-
ular income� The duration of the bond portfolio was further
PROPRIETARY INVESTMENTS BY CATEGORY 1
INVESTMENT COMPONENTS IN 2016
31.12.2015
31.12.2016
+ / – %
CHF million
Investment property
Equities
Alternative financial assets
6,251.9
4,357.5
1,259.6
6,817.5
4,055.3
1,304.1
Fixed-income securities
31,620.6
32,062.1
Mortgage assets
10,869.5
10,690.6
Policy loans and other loans
5,787.0
5,664.1
Derivatives
363.2
363.0
Cash and cash equivalents
1,765.8
1,935.5
Total
62,275.3
62,892.3
As a percentage
Fixed-income securities
Mortgage assets
Investment property
Policy loans and other loans
Equities
Cash and cash equivalents
Alternative financial assets
Derivatives
9.0
– 6.9
3.5
1.4
– 1.6
– 2.1
– 0.1
9.6
1.0
51.0
17.0
10.8
9.0
6.4
3.1
2.1
0.6
1 Excluding investments for the account and at the risk of life insurance policyholders
and third parties.
20
02_JB_Geschaeftsgang_en 20
22�03�2017 15:46:35
Baloise Group Annual Report 2016
Review of operating performance
Group
ASSETS HELD BY BALOISE
as at 31 December 2015
CHF million
Proprietary investments
Investment-linked life insurance 1
Total recognised assets
Asset management for third parties
Total assets under management
as at 31 December 2016
CHF million
Proprietary investments
Investment-linked life insurance 1
Total recognised assets
Asset management for third parties
Total assets under management
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
Non-life
Life
Banking
9,166.6
46,006.1
8,120.6
12,001.0
9,166.6
58,007.2
8,120.6
Total for
the Group
62,275.3
11,186.3
73,461.6
4,985.9
78,447.5
Total for
the Group
62,892.3
12,337.2
75,229.5
4,938.3
80,167.8
1 Including CHF 54.5 million (2015: CHF 40.2 million) in other assets (precious metal holdings from investment-linked life insurance policies).
2�9 per cent (2015: 3�0 per cent) and were therefore broadly
in line with the return seen in recent years� The volume of
unrealised gains improved� Consequently, the rate of return on
insurance assets according to IFRS – which includes unrealised
net gains and losses on investments but excludes gains and
losses on held-to-maturity debt instruments – was 3�1 per cent,
which was above the net return and the prior-year IFRS figure
of 1�7 per cent�
increased� Investment property is a stable source of income� The
same applies to mortgages�
The gains recognised in the income statement were lower
than in 2015 because it was not possible to increase the valua-
tions of investment property to the same extent as the previous
year� Moreover, impairment losses of CHF 108�2 million gross
had to be recognised on financial instruments with character-
istics of equity (2015: CHF 72�0 million)� The flagging Swiss
stock market was one of the contributing factors� In the life
companies, gains realised on bonds were used to strengthen
reserves and were at a lower level than in 2015� Currency effects
were much more positive than in the previous year; the currency-
related losses of CHF 99�8 million were virtually equal to the
currency hedging costs�
The gains on investments achieved in these very challeng-
ing conditions equated to a net return on insurance assets of
02_JB_Geschaeftsgang_en 21
21
22�03�2017 15:46:35
Baloise Group Annual Report 2016
Review of operating performance
Switzerland
Switzerland
Excellent results
Basel
Solothurn
Life: 66.8 %
Non-life: 30.5 %
Investment-type premiums: 2.6 %
by a higher profit on claims reserves than in the previous year� The
net combined ratio decreased by 6�0 percentage points year on
year to 81�2 per cent� This is another excellent result and reflects
the success of the strategy of targeting particular kinds of customer�
In the life division, premium income from classic life in-
surance reduced by 6�7 per cent year on year to CHF 2,879�3 mil lion�
One reason for this decrease was that the growth of comprehensive
BVG insurance contracts was deliberately restricted by means
of a selective underwriting policy� However, the partially au-
tonomous pension solution Perspectiva emerged as one of the
fast-growing collective foundations in the Swiss SME segment�
Individual life insurance business continued to contract,
declining by 5�8 per cent� The decrease was particularly strong
in the case of single premiums, which was the result of the re-
strictive underwriting policy� Annual premiums from new busi-
ness were on a par with 2015 thanks to the new Baloise Safe
Plan family� Business with investment-type premiums con-
tracted by a substantial 31�0 per cent� This was primarily because
it was decided not to launch a tranche product in view of the
persistently low interest rates� However, the proportion of insur-
ance assets reinvested was in excess of 30 per cent – an excellent
figure� Moreover, the combination of banking and insurance
products enables us to offer customers a broader range of sav-
ings products�
The banking business conducted by Baloise Bank SoBa
continued to perform very well� EBIT rose sharply to CHF 41�7
million� However, this was mainly due to plan changes in the
pension fund of Baloise Bank SoBa, which had a positive impact
under IAS 19� EBIT would have increased year on year even
without this effect, which is a very good achievement given the
economic environment�
KEY FIGURES FOR
SWITZERLAND
CHF million
Business volume
Of which: life
Of which: non-life
Net combined ratio
(per cent)
Profit before borrowing
costs and taxes
2015
2016
+ / – %
4,565.5
3,250.0
1,315.5
87.2
4,307.2
2,991.4
1,315.8
81.2
– 5.7
– 8.0
0.0
–
415.3
546.6
31.6
BASLER VERSICHERUNGEN SWITZERLAND
Profit from the non-life business in Switzerland was exception-
ally good, rising by 61�1 per cent compared with the excellent
prior-year figure� This improvement was due to a higher profit
on claims reserves than in 2015� In the life business, profit rose
only slightly because of the significant strengthening of reserves
required due to low interest rates� The EBIT of the Swiss entities
rose by a total of 31�6 per cent to CHF 546�6 million� This was
the second-best figure since the introduction of IFRS in 2000�
It included a positive non-recurring accounting effect under
IAS 19 resulting from changes to the pension funds for Baloise’s
own banking and insurance employees� The volume of business
fell by 5�7 per cent to CHF 4,307�2 million, primarily due to the
selective underwriting policy�
In the non-life division, premiums were on a par with
2015 at CHF 1,315�8 million� The selective underwriting policy
for accident and health insurance ultimately meant that premium
income held steady� Following a low level of claims in 2015, claims
incurred were up slightly in 2016, although this was mitigated
22
02_JB_Geschaeftsgang_en 22
22�03�2017 15:46:35
BUSINESS VOLUME (CHF million),(as a percentage of the Group)4,307.2 (48.3 %) Baloise Group Annual Report 2016
Review of operating performance
Germany
Germany
Foundations for a turnaround laid
Life: 32.6 %
Non-life: 52.8 %
Investment-type premiums: 14.6 %
Germany are definitely moving to the Frankfurter Leben Group�
The portfolio comprises around 130,000 life insurance policies
and investments amounting to some EUR 1�72 billion�
The total premium income in the non-life business ad-
vanced by 2�9 per cent to CHF 755�9 million� In this area, Basler
Germany is focusing more on products for retail customers and
SMEs rather than on industrial business� The net combined
ratio increased by 6�0 percentage points to 109�7 per cent� This
was also a consequence of the strengthening of reserves, which
had a net negative effect of 7�5 percentage points on the combined
ratio� The level of large claims was lower than in 2015 but, at
more than CHF 70 million, was still very high� On the basis of
the measures already initiated, the aim is to achieve a combined
ratio of below 100 per cent in the next few years�
Hamburg
Bad Homburg
KEY FIGURES FOR GERMANY
CHF million
Business volume
Of which: life
Of which: non-life
Net combined ratio
(per cent)
2015
2016
+ / – %
1,414.1
1,431.2
679.6
734.5
103.7
675.2
755.9
109.7
1.2
– 0.6
2.9
–
Profit before borrowing costs
and taxes
64.9
– 60.9
n.a.
BASLER VERSICHERUNGEN IN GERMANY
The strengthening of reserves by CHF 54�8 million gross, which
was carried out in the non-life business in the first half of the year,
meant that a loss was generated overall� However, this action
laid the foundations for a turnaround in 2017 as it will put the
German business on a stronger footing� The total volume of
business grew by 1�2 per cent to CHF 1,431�2 million in the year
under review� While classic life products decreased by 2�3 per
cent overall, despite a very encouraging rise relating to risk
products, investment-type premiums were up by 3�4 per cent�
The shift towards capital-efficient life products, i�e� risk and
unit-linked products, is intentional and is a strategy that has
already been pursued for a number of years in Germany� It is
proving very successful, and the growth in new business from
the new products is more than making up for the absence of
“Riester” business� The sale of the closed life insurance portfolio
of Direktion für Deutschland to the Frankfurter Leben Group
was approved by the relevant regulatory authorities at the start
of January 2017� The sale was completed on 3 February 2017,
which means that 87 employees of Basler Versicherungen in
02_JB_Geschaeftsgang_en 23
23
22�03�2017 15:46:36
BUSINESS VOLUME (CHF million), (as a percentage of the Group)1,431.2 (16.1 %) Baloise Group Annual Report 2016
Review of operating performance
Belgium
Belgium
Good growth and a good profit
Antwerp
Brussels
Life: 9.2 %
Non-life: 60.7 %
Investment-type premiums: 30.2 %
KEY FIGURES FOR BELGIUM
CHF million
Business volume
Of which: life
Of which: non-life
Net combined ratio
(per cent)
Profit before borrowing
costs and taxes
2015
2016
+ / – %
1,445.0
1,561.4
556.7
888.3
93.6
614.4
947.1
93.4
8.1
10.4
6.6
–
191.7
171.7
– 10.4
Growth in the life business has stabilised� Classic life business
declined by 0�7 per cent, which was primarily attributable to
the challenging environment of low interest rates� At 14�2 per
cent, the growth in investment-type premiums was particu-
larly encouraging in 2016�
In view of the low interest rates over the course of 2016,
the reserves in the life business were strengthened by an amount
of around CHF 50 million, which had a corresponding negative
impact on profit in the life business�
BALOISE INSURANCE BELGIUM
The Belgian business continues to generate impressive growth,
with premium income rising by 8�1 per cent overall to CHF 1,561�4
million� The non-life business and investment-type premiums
continue to be the growth drivers in Belgium�
Owing to the interest rate-related strengthening of reserves
in the life business, profit for 2016 was down on the exception-
ally good prior-year figure�
EBIT declined by CHF 20�0 million to CHF 171�7 million�
The non-life business grew by 6�6 per cent, which was
above the average for the Belgian market� Once again, there
were significant increases for transport and marine insurance�
Growth in business with SMEs and retail customers was also
encouraging� The net combined ratio fell slightly, by 0�2 percent-
age points, to 93�4 per cent� This was primarily thanks to the
improved claims ratio, which was achieved despite Belgium
being affected by storm and flood damage in the spring� These
results show that the steady growth of the non-life business is
not detrimental to profitability as this business continues to be
very profitable�
24
02_JB_Geschaeftsgang_en 24
22�03�2017 15:46:36
BUSINESS VOLUME (CHF million), (as a percentage of the Group)1,561.4 (17.5 %) Baloise Group Annual Report 2016
Review of operating performance
Luxembourg
Luxembourg
Good growth and high profitability
Luxembourg
Life: 5.1 %
Non-life: 7.3 %
Investment-type premiums: 87.7 %
2015
2016
+ / – %
1,490.9
1,382.3
108.6
94.7
1,605.5
1,489.1
116.4
93.9
7.7
7.7
7.1
–
In the traditional life business, the 10�8 per cent growth was
predominantly the result of products for biometric risk, while
classic savings products were discontinued� Investment-type
premiums also generated a strong increase of 7�6 per cent, the
main factor being the international life business, which is oper-
ated from Luxembourg� The growth of this business outstripped
that of the market�
KEY FIGURES FOR
LUXEMBOURG
CHF million
Business volume
Of which: life
Of which: non-life
Net combined ratio
(per cent)
Profit before borrowing costs
and taxes
23.5
23.3
– 0.9
BÂLOISE ASSURANCES LUXEMBOURG
The business unit in Luxembourg continues to grow, increasing
the business volume by 7�7 per cent to CHF 1,605�5 million� The
non-life business was up by 7�1 per cent� This growth was main-
ly attributable to the strong motor vehicle business� Baloise has
made a name for itself in this market, particularly among young
drivers, with its Game of Roads and Game of Roads Experience
apps, which analyse driving behaviour in a fun way� The net
combined ratio improved slightly, falling to 93�9 per cent� EBIT
was virtually unchanged�
02_JB_Geschaeftsgang_en 25
25
22�03�2017 15:46:36
BUSINESS VOLUME (CHF million), (as a percentage of the Group)1,605.5 (18.0 %) Baloise Group Annual Report 2016
Review of operating performance
Consolidated income statement
FIVE-YEAR OVERVIEW
CHF million
Income
2012
2013
2014
2015
2016
Premiums earned and policy fees (gross) 1
Reinsurance premiums ceded
Premiums earned and policy fees (net)
6,731.1
– 176.5
6,554.6
7,212.7
– 167.9
7,044.8
Investment income
1,782.2
1,765.1
Realised gains and losses on investments 2
Income from services rendered
Share of profit (loss) of associates
Other operating income
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
6,680.6
– 168.2
6,512.4
1,521.8
1,476.6
386.2
112.6
36.8
136.6
667.2
110.1
7.1
136.8
Income
Expense
Claims and benefits paid (gross)
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
9,423.2
9,747.5
10,372.8
8,877.9
8,910.2
– 5,449.4
– 5,439.7
– 5,666.4
– 5,352.4
– 5,664.2
– 867.7
– 1,359.4
– 1,469.5
– 1,241.9
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
97.9
– 472.4
– 761.3
– 60.4
– 34.1
– 0.9
– 333.1
– 669.1
108.2
– 502.9
– 763.9
– 60.3
– 30.5
– 342.9
– 300.9
– 8,805.4
– 9,089.3
– 9,444.3
– 8,158.6
– 8,226.6
Profit before borrowing costs and taxes
617.9
658.2
928.6
719.2
683.6
Borrowing costs
Profit before taxes
Income taxes
Profit for the period
Attributable to
Shareholders
Non-controlling interests
Earnings / loss per share
Basic (CHF)
Diluted (CHF)
Footnotes: see next page.
26
– 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
– 38.0
645.6
– 111.7
533.9
534.8
– 0.9
11.53
11.22
02_JB_Geschaeftsgang_en 26
22�03�2017 15:46:37
Consolidated income statement Baloise Group Annual Report 2016
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)
2012
2013
2014
2015
2016
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
6,711.6
2,199.2
8,910.8
8,779.3
9,606.8
10,904.2
10,873.2
12,001.0
93.2
184.3
93.1
179.8
93.7
182.9
92.5
192.4
91.1
188.5
1 In line with the accounting principles applied by the Baloise Group, investment-type insurance premiums are not included in premiums earned and policy fees.
2 Including financial liabilities held for trading purposes (derivative financial instruments).
02_JB_Geschaeftsgang_en 27
27
22�03�2017 15:46:37
Baloise Group Annual Report 2016
Review of operating performance
Consolidated balance sheet
Consolidated balance sheet
Financial instruments with characteristics of liabilities
32,513.3
32,327.1
34,461.6
33,248.4
FIVE-YEAR OVERVIEW
as at 31.12.
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
as at 31.12.
CHF million
Equity and liabilities
Equity
2012
2013
2014
2015
(restated)
2016
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
399.1
838.2
162.3
5,962.9
6,251.9
11,344.4
13,451.2
13,770.8
18,510.9
18,329.5
18,165.9
16,656.6
497.6
2,618.6
32.7
410.7
2,857.7
56.0
613.2
2,153.5
48.3
653.9
3,921.5
39.8
2,923.7
2,960.8
2,969.6
2,839.8
349.3
836.1
160.4
6,817.5
14,305.6
33,766.5
16,354.7
757.3
4,024.3
69.3
3,173.3
73,777.7
75,696.9
79,342.3
78,782.3
80,614.3
2012
2013
2014
2015
(restated)
2016
Equity before non-controlling interests
4,603.5
4,855.9
5,791.3
5,418.9
Non-controlling interests
37.8
50.5
39.7
34.7
5,741.3
32.4
Total equity
Liabilities
4,641.3
4,906.4
5,831.0
5,453.6
5,773.7
Gross technical reserves
46,591.9
47,435.6
48,738.9
45,776.6
Liabilities arising from banking business
and financial contracts
Derivative financial instruments
Other accounts payable
Deferred tax liabilities
Total liabilities
15,839.6
16,542.1
17,740.8
19,012.0
64.4
5,802.0
838.5
68.2
5,862.3
882.3
176.4
5,789.7
1,065.5
250.8
7,379.5
909.7
46,209.0
20,317.7
299.0
7,070.0
944.9
69,136.4
70,790.5
73,511.4
73,328.7
74,840.6
Total equity and liabilities
73,777.7
75,696.9
79,342.3
78,782.3
80,614.3
28
02_JB_Geschaeftsgang_en 28
22�03�2017 15:46:37
Baloise Group Annual Report 2016
Review of operating performance
Business volume, premiums and combined ratio
Business volume, premiums
and combined ratio
BUSINESS VOLUME
2015
CHF million
Non-life
Life
Sub-total of IFRS gross premiums written 1
Investment-type premiums
Total business volume
2016
CHF million
Non-life
Life
Sub-total of IFRS gross premiums written 1
Investment-type premiums
Total business volume
1 Premiums written and policy fees (gross).
Group
Switzerland
Germany
Belgium
Luxembourg
3,050.0
3,783.4
6,833.4
2,085.1
8,918.6
1,315.5
3,087.6
4,403.2
162.4
4,565.5
734.5
477.4
1,211.9
202.2
1,414.1
888.3
144.5
1,032.8
412.2
1,445.0
108.6
73.9
182.5
1,308.4
1,490.9
Group
Switzerland
Germany
Belgium
Luxembourg
3,140.7
3,570.9
6,711.6
2,199.2
8,910.8
1,315.8
2,879.3
4,195.1
112.1
4,307.2
755.9
466.2
1,222.1
209.0
1,431.2
947.1
143.5
1,090.6
470.8
1,561.4
116.4
81.9
198.3
1,407.3
1,605.5
02_JB_Geschaeftsgang_en 29
29
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Baloise Group Annual Report 2016
Review of operating performance
Business volume, premiums and combined ratio
NET COMBINED RATIO
2015
as a percentage of premiums earned
Claims ratio 1
Expense ratio
Combined ratio
2016
as a percentage of premiums earned
Claims ratio 1
Expense ratio
Combined ratio
1 Including the profit-sharing ratio.
GROSS AND NET COMBINED RATIO
as a percentage of premiums earned
Claims ratio 1
Expense ratio
Combined ratio
1 Including the profit-sharing ratio.
FUNDING RATIO (NON-LIFE)
Group
Switzerland
Germany
Belgium
Luxembourg
62.1
31.2
93.3
60.6
26.6
87.2
68.0
35.7
103.7
59.9
33.7
93.6
60.7
34.0
94.7
Group
Switzerland
Germany
Belgium
Luxembourg
60.8
31.4
92.2
55.0
26.2
81.2
72.8
36.9
109.7
58.9
34.5
93.4
2015
62.4
30.1
92.5
Gross
2016
60.9
30.2
91.1
2015
62.1
31.2
93.3
64.0
29.9
93.9
Net
2016
60.8
31.4
92.2
CHF million
Technical reserve for own account 1
Premiums written and policy fees for own account
Funding ratio (per cent)
1 Not including capitalised settlement premiums.
2015
2016
5,614.9
2,918.9
192.4
5,637.2
2,990.8
188.5
30
02_JB_Geschaeftsgang_en 30
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Baloise Group Annual Report 2016
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 reserves 1
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
Non-life
2015
2016
2015
Life 3
2016
3,050.0
– 1.1
3,048.9
3,140.7
– 31.0
3,109.7
3,783.4
3,570.9
–
–
3,783.4
3,570.9
– 1,854.0
– 1,859.7
– 3,498.4
– 3,804.5
– 47.6
– 7.7
– 936.3
203.3
– 129.5
70.6
18.9
0.0
8.5
– 35.3
– 31.5
– 966.1
– 741.1
– 445.6
– 353.7
– 547.2
– 55.2
– 353.0
217.2
– 1,255.4
– 1,189.2
– 149.8
88.0
8.4
0.1
8.7
– 19.1
– 18.4
5.1
2.3
0.9
1.5
7.5
1.1
3.0
1.5
Total technical result of ceded business
– 31.5
– 44.6
– 9.3
– 5.2
For own account
Premiums earned and policy fees
Claims and benefits paid
Change in claims reserve / actuarial reserves 1
Change in other technical reserves
Technical expenses
Total technical result for own account
Investment income (gross)
Realised gains and losses on investments 2
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)
2,919.4
2,959.9
3,764.4
3,552.4
– 1,783.3
– 1,771.6
– 3,493.3
– 3,797.0
– 28.7
– 7.7
– 26.9
– 31.4
– 927.8
– 957.4
– 738.7
– 444.7
– 352.3
– 546.1
– 52.2
– 351.5
171.8
221.4
30.4
– 22.1
– 6.0
223.7
395.5
–
– 74.9
320.6
172.6
217.8
47.6
– 22.9
– 18.7
223.8
396.4
–
– 74.9
321.5
– 1,264.6
– 1,194.4
1,196.5
1,161.5
348.3
– 87.6
84.7
1,541.9
277.3
–
– 62.2
215.0
616.8
– 85.6
– 272.2
1,420.4
226.1
–
– 34.3
191.8
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 2015: CHF – 3.3 million; 31 December 2016: CHF 2.0 million).
02_JB_Geschaeftsgang_en 31
31
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Baloise Group Annual Report 2016
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)
2015
2016
+ / – %
365.8
117.2
323.8
366.2
116.4
330.6
1,007.8
1,036.6
960.3
180.8
68.8
25.5
987.8
196.5
74.0
32.7
3,050.0
3,140.7
0.1
– 0.7
2.1
2.9
2.9
8.7
7.6
28.2
3.0
2015
2016
+ / – %
3,340.4
2,528.2
3,241.6
2,528.4
– 2,085.1
– 2,199.2
3,783.4
3,570.9
– 3.0
0.0
5.5
– 5.6
32
02_JB_Geschaeftsgang_en 32
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Baloise Group Annual Report 2016
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
2015
2016
87.0
77.4
– 0.1
0.9
86.3
75.9
0.6
11.4
165.2
174.2
– 57.4
– 17.4
– 74.8
90.4
1.1
– 10.7
80.8
– 19.9
60.9
– 57.0
– 14.5
– 71.4
102.8
– 1.2
– 9.4
92.1
– 19.4
72.7
31.12.2015
31.12.2016
4,985.9
3,261.7
4,938.3
3,253.7
31.12.2015
31.12.2016
–
8.2
–
371.1
6,548.6
275.6
10.2
688.4
–
11.6
–
379.3
6,453.8
291.3
7.0
977.5
7,902.1
8,120.6
02_JB_Geschaeftsgang_en 33
33
22�03�2017 15:46:38
Baloise Group Annual Report 2016
Review of operating performance
Investment performance
Investment performance
2015 1
CHF million
Current income
Realised gains and losses
and impairment losses
recognised in profit or loss (net)
Change in unrealised gains and losses
recognised directly in equity
Investment management costs
Operating profit
Fixed-income
securities
Equities
Investment
property
Mortgage
assets, policy
loans and
other loans
Alternative
financial assets,
derivatives,
cash and cash
equivalents
Total
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.
Fixed-income
securities
Equities
Investment
property
Mortgage
assets, policy
loans and
other loans
Alternative
financial assets,
derivatives,
cash and cash
equivalents
Total
696.5
356.0
151.3
23.1
246.3
59.7
366.8
13.5
15.7
– 149.1
1,476.6
303.1
119.7
– 8.2
–
–
8.6
120.0
2016 1
CHF million
Current income
Realised gains and losses
and impairment losses
recognised in profit or loss (net)
Change in unrealised gains and losses
recognised directly in equity
Investment management costs
Operating profit
– 32.5
1,139.7
– 0.5
165.7
– 5.2
300.8
– 15.1
365.2
Average investment portfolio
31,841.4
4,206.4
6,534.7
16,505.7
Performance (per cent)
3.6
3.9
4.6
2.2
1 Excluding investments for the account and at the risk of life insurance policyholders and third parties.
– 5.6
– 130.5
3,495.6
– 3.7
– 58.9
1,840.8
62,583.8
2.9
34
02_JB_Geschaeftsgang_en 34
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Baloise Group Annual Report 2016
Review of operating performance
Investment performance
CURRENT INCOME FROM INSURANCE 1
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 current income
REALISED GAINS AND LOSSES
IN INSURANCE 1
CHF million
Investment property
Equities
Alternative financial assets
Fixed-income securities
Mortgage assets
Policy loans and other loans
2015
Total
247.0
133.5
13.7
713.9
103.1
207.3
–
– 0.4
Non-life
Life
37.7
43.8
2.5
100.9
8.1
25.1
–
– 0.3
217.8
207.6
107.1
13.8
588.3
88.4
156.5
–
– 0.2
2016
Total
245.3
150.9
16.2
689.3
96.5
181.6
–
– 0.5
1,196.5
1,418.0
1,161.5
1,379.3
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
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
Non-life
Life
10.9
12.3
2.7
71.4
– 0.1
1.9
48.3
10.7
17.5
283.9
0.4
28.5
2016
Total
59.1
23.0
20.2
355.4
0.3
30.4
Derivative financial instruments
– 20.0
130.1
110.1
– 51.4
– 130.1
– 181.6
Cash and cash equivalents
Total capital gains and losses
–
30.4
–
–
345.8
376.2
–
47.6
–
–
259.2
306.8
ASSET ALLOCATION IN INSURANCE 1
as at 31.12.
CHF million
Investment property
Equities
Alternative financial assets
Fixed-income securities
Mortgage assets
Policy loans and other loans
Derivative financial instruments
Cash and cash equivalents
Non-life
Life
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
Non-life
Life
917.4
1,251.3
280.2
5,875.3
2,791.0
1,023.9
2016
Total
6,792.7
4,042.3
1,304.1
4,921.6
26,327.0
31,248.6
4,852.9
26,829.2
31,682.0
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
427.3
1,092.5
21.7
323.4
3,809.5
4,847.2
332.8
497.4
4,236.8
5,939.7
354.5
820.8
Total
9,160.2
45,406.3
54,566.5
9,166.6
46,006.1
55,172.7
1 Excluding investments for the account and at the risk of life insurance policyholders and third parties.
02_JB_Geschaeftsgang_en 35
35
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22�03�2017 14:57:01
4 Baloise
16 Review of operating performance
36 Sustainable business management
58 Corporate Governance
108 Financial Report
266 Bâloise Holding Ltd
286 General information
Sustainable business
management
RESPONSIBILIT Y �������������������������������������������������������������������������������������� 38
HUMAN RESOURCES ������������������������������������������������������������������������������ 42
Entrepreneurial and agile ������������������������������������������������������������������� 42
THE ENVIRONMENT ��������������������������������������������������������������������������������� 48
Environmental mission statement �������������������������������������������������� 48
Protecting the environment over the long term ����������������������� 49
RISK MANAGEMENT �������������������������������������������������������������������������������� 52
Baloise’s risk management is one of the main pillars
of its business model ������������������������������������������������������������������������������ 52
COMMITMENT TO ART ���������������������������������������������������������������������������� 56
The Baloise Group’s commitment to art ��������������������������������������� 56
03_JB_Nachhaltige_Geschaeftsfuehrung_en 37
22�03�2017 14:57:01
Baloise Group Annual Report 2016
Sustainable business management
Responsibility
Responsibility
BEING RESPONSIBLE
Being a responsible Company is a core part of the strategy�
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 a number of countries, including Switzerland, the
concept is broadly accepted at a political level� The Swiss Fed-
eral Council, for example, makes the case for responsible com-
panies being a vital factor in the success of the Swiss economy
and sets out the government’s intention to help shape the frame-
work for CSR�
Baloise fundamentally supports these efforts 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 them-
selves to put into practice and that it should not be prescribed
by law� With its new strategy and new focus on customers, Baloise
is emphasising that aspects of sustainable business management
cannot be viewed in isolation from the commercial management
of a company�
Baloise was embracing the idea of corporate social responsibility
long before the term became popularised� Sustainability 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 Company 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 needs to offer the sort of long-term security that
simply cannot be sustained by the pursuit of short-term profits
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�
38
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Baloise Group Annual Report 2016
Sustainable business management
Responsibility
A RESPONSIBLE EMPLOYER
Baloise’s responsibility as an employer is manifested in the new
strategy with a clear employee-oriented objective� It wants to
position itself as one of the most attractive employers in its
industry� This involves continual improvement of the corporate
culture� Baloise’s past efforts have already created a stable basis
for achieving this goal� 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-determi-
nation act that made it law for employees to have a say in the
workplace and to be given information on particular matters�
To this day, the rights of the MAKO go well beyond the pro-
visions 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 eco-
nomic environment� By giving young people their first experi-
ence in the world of work – as trainees, interns and temporary
student employees – Baloise is also making an investment in
the future of the Company and the employment markets of the
countries in which it operates� Every year, across the group,
Baloise trains 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
Baloise to create new jobs and preserve existing ones�
RESPONSIBILIT Y TO THE CUSTOMER
Customer focus is central to Baloise’s new strategy� Baloise wants
to be more than just an insurer� It therefore needs to take account
of the wider social environment in which its customers exist�
Every day employees should be asking what they can do to make
the customer feel safer� To meet this requirement, services need
to be available that go beyond those offered by a traditional
insurer� 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 insur-
ance 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� But it’s not just about
providing security by covering a particular risk; it’s about giving
customers everyday peace of mind� Baloise wants to use the
means at its disposal to help make customers’ broader environ-
ment safer�
The collaboration with the Emilie Leus foundation in
Belgium illustrates how employees are thinking beyond the
traditional parameters of insurance� The foundation was estab-
lished to combat drink driving across Belgium as part of a broad-
ranging campaign� Baloise is contributing to this project at
various levels, from providing sponsorship and expertise and
raising awareness to lobbying for laws to be changed� And for
a number of years now Baloise has been carrying out preventive
work in Switzerland to help combat addiction among young
people� Several times a year, Baloise employees visit schools to
talk about this subject�
→ www.fondsemilieleus.be
→ www.cktgmbh.ch/themen/sucht/modul.php
→ Chapter “Sustainable business management /
Human Resources”
03_JB_Nachhaltige_Geschaeftsfuehrung_en 39
39
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Baloise Group Annual Report 2016
Sustainable business management
Responsibility
RESPONSIBILIT Y TO THE SHAREHOLDER
The capital that is made available to Baloise by its shareholders
is invested efficiently and in their interests� Risk management,
which forms an integral part of our strategic management
policies, makes a significant contribution to the positioning
of the Baloise Group� 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
innovative standards so that it can always keep its promise of
“Making you safer”� This has enabled Baloise to pursue an
attractive and sustainable dividend policy for a number of years
now� The strength of Baloise’s risk management approach has
been independently verified by Standard & Poor’s� In 2016 the
rating agency reaffirmed its assessments from the previous years
of “A” with a stable outlook, explicitly strengthening the im-
portance of risk management at Baloise in its rating�
→ Chapter “Sustainable business management /
Risk management”
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 energy
efficiency, particularly in its IT infrastructure, plays a key part
in this� Employees are encouraged to use public transport wher-
ever 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� Baloise is committed to environmental protec-
tion and is continually stepping up its efforts by launching new
initiatives� Baloise reports on the progress it is making in its
annual groupwide environmental audit�
→ Chapter “Sustainable business management /
The environment”
40
03_JB_Nachhaltige_Geschaeftsfuehrung_en 40
22�03�2017 14:57:02
Baloise Group Annual Report 2016
Sustainable business management
Responsibility
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
representing Swiss business) and the Swiss Employers’ Associa-
tion that commits companies to offering flexible working con-
ditions and working time models that enable employees to
participate in the scheme� Baloise not only encourages its em-
ployees to engage in voluntary activities by holding annual
inhouse events but it also meets its own responsibility 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� These are currently the Museum
of Modern Art in Frankfurt and the Musée d’Art Moderne in
Luxembourg� In addition, Baloise maintains a long-standing
collection of artworks that can be seen not only by employees
but also by the public at two exhibitions in the Art Forum at
the Company’s headquarters� These exhibitions are changed
each year� In Germany, Baloise opens its art collection to the
public once a year as part of the Kunst privat initiative�
The Baloise companies outside Switzerland also play their part
in social, sporting and cultural life in their regions by support-
ing numerous institutions and events� Here are some of the
many activities that they engage in:
→ Since 2012, employees in Switzerland have regularly
arried out CSR activities for the Just for Smiles foundation,
the Tierschutz beider Basel animal protection society
and the Entlebuch UNESCO Biosphere Reserve
→ Presenting sponsor of the Baloise Session, one of
Switzerland’s biggest music festivals
→ Sponsor of Topsport Vlaanderen-Baloise, a team
of young racing cyclists
→ Staff in Belgium regularly engage in CSR activities,
with each employee given one Friday a year for this
→ Environmental initiatives with Luxembourg’s
natur & umwelt organisation as part of a collaboration
running until 2020
→ Long-standing collaboration with Fondation Cancer in
Luxembourg� Baloise gets actively involved in the organi-
sation of Relais pour la vie, an annual 24-hour relay run:
www.relaispourlavie.lu
→ Support for the NordWest Natur foundation in Bremen,
Germany
→ Proceeds from the Christmas concerts in Hamburg,
Germany, are donated to charities
→ Sponsor of the Eschborn-Frankfurt – Rund um den
Finanzplatz cycle race in Germany
→ www.baloise.com/responsibility
03_JB_Nachhaltige_Geschaeftsfuehrung_en 41
41
22�03�2017 14:57:02
Baloise Group Annual Report 2016
Sustainable business management
Human resources
Entrepreneurial and agile
Evolving corporate culture
The new Simply Safe strategy, with its emphasis on the workforce, underlines how Baloise
will only be able to achieve its ambitious goals for future growth with the support of dedi -
cated employees. In 2016 the Company therefore focused on the transition to a growth culture
in which established practices are improved upon and new approaches are tried out.
KEY FIGURES
HERE ARE THE KEY POINTS OF THE EMPLOYEE FOCUS PART
OF THE STRATEGY:
→ 7,270 (2015: 7,387) employees (FTEs in 2016: 6,664).
→ 43.9 per cent of all employees are women
(2015: 43.9 per cent).
→ The Baloise Group employs 230 (2015: 212) apprentices,
trainees and interns.
→ 65.5 per cent of staff members working in our main
market of Switzerland participated in our
Share Participation Plan in 2016 (2015: 60.4 per cent).
→ Baloise employees work at the Company for an average
of 13.4 years.
→ Staff turnover as at 31 December 2016 amounted
to 5.4 per cent (end of 2015: 5.5 per cent).
BECOMING AN EMPLOYER OF CHOICE BY 2021
The workforce is key to implementing Baloise’s new Simply Safe
strategy, which is why the Company wants to become a leading
employer in its industry by 2021� This objective was announced
at the 2016 Investor Day� It is based on the conviction that hard-
working, entrepreneurially minded employees will cultivate
strong and loyal customer relationships that in turn will help
Baloise to achieve its financial targets�
→ The Baloise Group already has a clear focus on its employ-
ees� In line with the HR strategy launched in 2014,
“We add value through our people”, the Baloise Group
has, in recent years, fostered a culture of constructive
feed back that is characterised by respect, dialogue and
continuing personal development� However, Baloise
would now like to focus much more heavily on its employ-
ees so that it can be even more successful in future�
→ The Baloise Group aims to become an employer of choice
in its industry� To achieve this, it is looking to make
major improvements in the following two areas, one inter-
nally focused and one externally focused:
• engagement of existing employees
• reputation as an employer
→ In 2017 a programme of beacon projects is being launched
that will run until 2021 with the aim of achieving these
objectives�
→ Progress will be measured by a new performance indi-
cator that will be published regularly from 2017�
→ Established processes such as the managerial feedback
and culture of dialogue are being continued�
→ “Employee focus” is not an initiative that is being dictated
from above: it is built on the ideas of the employees and
their willingness to help shape the future and, in return,
promises to give them the freedom they need�
42
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22�03�2017 14:57:02
Baloise Group Annual Report 2016
Sustainable business management
Human resources
CHANGING THE ORGANISATION. AT ALL LEVELS.
Baloise operates in a challenging market with highly volatile
parameters� In 2015 this situation prompted the Company’s
decision to start concentrating more heavily on growth� So
in 2016, the focus in HR was on establishing a culture of growth
across the Group� Top-down measures were introduced as
a means of driving this cultural shift within the Company,
as were initiatives that are being driven from within the orga-
nisation itself and accompanying HR programmes�
CHANGING THE MANAGEMENT PHILOSOPHY.
UNDERSTANDING AND IMPLEMENTING THE CULTURE
OF GROWTH.
Across the Group, managers explained Baloise’s new corporate
strategy to their employees with the aid of cascade workshops�
The workshops were held to help staff understand the strategy
and to encourage them to play an active role in the process of
change� A lot of emphasis is placed on behaviours that are con-
ducive to growth, such as engagement and personal initiative,
trying out new ways of doing things and striving for improve-
ment� The specific aim is for management to lead by example
here� This will present challenges for the managers in particu-
lar as they will need to learn how to relinquish control, deal
with uncertainty and delegate more� To help them, a new format
was launched as part of the established Baloise Campus manage-
ment development programme� And in November 2016 the first
Baloise BarCamp took place� This two-day event, during which
the participants had to organise themselves, encouraged creat-
ing thinking and the development of radical new approaches
to problems�
DRIVERS THAT ARE LIBERATED FROM HIERACHIES:
VIRAL CHANGE AND PERSONAL INITIATIVE
The concept of viral change, which was deployed in 2015 in the
Belgium corporate division, was used to drive change from the
bottom up� This year, a select number of well-connected and
highly committed individuals will be embedding within the
organisation the behaviours that are necessary to implement
the culture of growth� The foundation for their work was laid
in 2016�
A prime example of personal initiative and an active con-
tribution by the workforce was the inaugural Baloise Hackathon
in 2016, which two employees took it upon themselves to plan
and organise�
03_JB_Nachhaltige_Geschaeftsfuehrung_en 43
Baloise BarCamp
→ 180 managers
→ 5 nations
→ 2 days
→ Approx� 70 Workshops
The first Baloise BarCamp took place in November
2016. The basic premise of a BarCamp is that
anyone is welcome who wants to contribute, have
a say in how things are done or learn something.
The objective of the Baloise BarCamp is to
facilitate informal networking and, through work-
shops organised by the participants, to develop
approaches for implementing change at Baloise.
Baloise Hackathon
→ 35 Baloise employees
→ 4 students
→ 14 ideas
→ 30 hours
→ 7 functioning prototypes
The first Baloise Hackathon was held in Septem-
ber 2016 at a venue by Basel’s Rhine river docks.
Seven functioning prototypes for new apps and
products were developed at the event, which was
initiated by two employees.
BUILDING ON WHAT’S ALREADY THERE.
TRYING NEW THINGS OUT.
In 2016, to accompany these initiatives and further anchor the
new culture, various HR tools and processes were updated� The
basis for this is the new management philosophy, which was
developed in 2015� The resulting Baloise Leadership Compass
answered the key question of what skills are required in order
to successfully strive for growth� The answer comes in the form
of twelve new management competencies that are based on
Baloise’s three established behavioural values: “Put yourself
43
22�03�2017 14:57:02
Baloise Group Annual Report 2016
Sustainable business management
Human resources
in the other’s shoes!”, “Act authentically and earn trust!” and
“Develop and engage – yourself and others!” Brought together
in the Baloise Leadership Compass these give employees guid-
ance on their journey of change� They are also used in our
established HR instruments, such as the three dialogue formats
and the performance and talent development processes�
DIALOGUE AS A FOUNDATION OF THE BALOISE CULTURE.
INTEGRATING THE SKILLS NEEDED FOR GROWTH.
Our current culture is founded on the three hierarchy-tran-
scending dialogue formats that are based on our Baloise behav-
ioural values� These instruments were updated in line with the
Baloise Leadership Compass�
1� The twelve management competencies were integrated
into the talent assessment questionnaire� This ques-
tionnaire serves as a basis for the development dialogues
in which the specific skills of individual employees are
discussed� These one-to-one meetings between employees
and managers focus on continuous learning and helping
employees to make the most of the freedom they are given
in their work� They also serve to highlight the skills that
need to be developed in order for Baloise to achieve its
ambitious targets for future growth�
2� The management dialogues in which line managers
get feedback from their employees are being reviewed
and updated in 2017�
3� The employee engagement survey was also updated in line
with the Baloise Leadership Compass in 2016� The new
version of the survey was conducted on a groupwide basis
for the first time in November 2016� The results will be
used to derive a performance indicator that will be pub-
lished regularly going forward�
CHALLENGING AND DEVELOPING. TRUSTING PEOPLE
TO PERFORM.
Baloise cultivates a culture of performance and trust� A key
element of this culture is the performance and talent develop-
ment process, which focuses on continuous learning and on
helping employees to make the most of the freedom they are
given in their work� This process is made up of two components:
→ One-to-one meetings between managers and employees:
these provide guidance and clarity about the common
objectives and continuous learning� They are the central
element in an ongoing dialogue focused on performance
and development targets�
→ Talent development programme for high-potential em-
ployees: every year, Baloise identifies talented young
employees and key individuals, finds potential successors
and agrees staff development activities� In 2016 this
process was also brought into line with the management
competencies of the Baloise Leadership Compass� And
local measures were added that will make it easier to har-
ness the individual potential of the talented employees
who have been identified�
In 2016 we observed a correspondingly significant increase in
quality with regard to the intensity of the talent development
meetings and the specific action plans for the talented employees�
A WORKING ENVIRONMENT PROVIDING BALANCE FOR ALL.
EMPLOYEES ARE OUR MOST VALUABLE RESOURCE.
Our employees play a vital role in the success of our Company�
This statement lies at the heart of the new corporate strategy,
which puts the emphasis on our employees as one of three main
focal points� Baloise gives employees the chance to develop, to
give and receive honest feedback and to shape the future of the
Company� But we also want to offer a working environment
that allows our employees to balance their work lives and per-
sonal commitments� We provide the following options to help
people do this:
→ Flexible and part-time working arrangements
→ Remote working
→ Company crèche
→ Wide-ranging corporate health management service
44
03_JB_Nachhaltige_Geschaeftsfuehrung_en 44
22�03�2017 14:57:03
Baloise Group Annual Report 2016
Sustainable business management
Human resources
RECRUITING TALENTED INDIVIDUALS.
WITH RELEVANCE, AUTHENTICIT Y AND A PERSONAL TOUCH.
The Baloise Group wants to become an employer of choice in
its industry� The way it presents itself on the labour market will
play a key role in achieving this goal – all the more so because
competition for the best brains has toughened considerably
in recent years and, because of demographic change, will only
get tougher� Baloise is finding it particularly hard to recruit
IT workers, insurance specialists and apprentices for commer-
cial vocations�
It is therefore hugely important that people are made aware
of Baloise as a potential employer� One of the ways that the
Company is engaging with the public is via social media� It gets
in touch with potential new employees through a variety of
channels, giving tips on how to apply and using employee pro-
files and articles to provide an authentic picture of what it’s like
to work at Baloise� The Company is always looking for new ways
to reach potential recruits� In 2016, for example, Baloise launched
a bi-weekly podcast to accompany its careers blog and in autumn
successfully carried out its first two WhatsApp taster days for
apprenticeships in commercial vocations�
A lot of emphasis continues to be placed on one-to-one
dialogue with potential recruits� In Switzerland, Baloise exhibits
at numerous job fairs and regularly holds workshops for students�
These traditional face-to-face activities are used by HR to pre-
sent a realistic picture of what Baloise is like as an employer�
The Baloise Group also offers a wide range of attractive
training opportunities� Baloise currently employs around 230
apprentices, interns and temporary student workers� Its estab-
lished graduate trainee programme, meanwhile, gives participants
a deep insight into various parts of the business and thus provides
the ideal preparation for a management or specialist role� The
alumni of the programme, which has been running for 24 years,
are highly regarded within the Company�
Bal4Kids crèche
The Bal4Kids crèche at the Basel offices in Swit-
zerland celebrated its 15th anniversary in Septem-
ber 2016.
WhatsApp taster day for commercial
apprenticeships
→ 2 WhatsApp taster days
→ 101 participants
→ 62 % engagement
Baloise is trying out new approaches in an effort
to fill apprenticeship places. During two WhatsApp
taster days, current commercial apprentices told
schoolchildren about their day-to-day work and
answered lots of questions.
GLOBAL VISION. LOCAL FLEXIBILIT Y.
As well as the aforementioned groupwide activities, the HR
units for the individual countries also have regional responsi-
bilities� These are dictated not only by the requirements of the
local business but also by the local legal system�
Baloise in Switzerland prides itself on being a Friendly
Work Space, so re-certification under the scheme for the second
time was an important achievement� The Swiss Health Promotion
Foundation first awarded the Company its seal of quality in
2010� It recognises how Baloise goes above and beyond the legal
requirements to create a healthy working environment� Baloise
also goes to great lengths to ensure the quality of the advice that
it provides customers� At the end of 2015, for example, all of
Baloise’s customer advisors who have acquired a basic qualifica-
tion (VBV insurance broker or equivalent) and thereby met the
criteria for certification were added to the searchable Cicero
industry register� To maintain the quality of the advice they
provide, the registered advisors have to regularly attend courses�
In 2016, to allow our employees to earn the relevant Cicero
credits, a number of new inhouse training programmes were
accredited� And from 1 January 2016, in line with Ordinance 1
of the Swiss Labour Law (ArGV 1), the requirement to record
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Baloise Group Annual Report 2016
Sustainable business management
Human resources
the working hours of management staff in the inhouse sales
team was introduced� In 2017 the emphasis in Switzerland will
continue to be on the changing management philosophy, with
a focus on approaches such as “having the courage to let go”
and “trusting in employees”�
Activities in 2016 –
engaging with potential new recruits
→ 19 graduate fairs
→ 9 workshops
→ 89 blog articles
→ 19 podcasts
→ 216 Facebook posts
→ 190 LinkedIn posts
→ 161 Xing posts
Friendly Work Space
Baloise has been re-certified
as a Friendly Work Space for
the second time. With an im-
pressive score of 4.3 (out of
a possible 5), it is the leading
company in the financial ser-
vices / insurance sector.
In Germany, negotiations with the Group Works Council on
the efficiency-related restructuring measures were completed
in 2016� With regard to the transition to a culture of growth,
emphasis was put on encouraging employees to take the initia-
tive� In various groups and task forces, employees have made,
and are making, an active contribution in areas such as innova-
tion, employee focus and future visions� The feedback has been
very positive� An employee poll on the intranet based on last
year’s engagement survey identified the three most important
areas of action, working groups were established and initial
results were achieved� In addition, an agreement on remote
working was reached for the Bad Homburg site, giving employ-
ees greater flexibility in where they carry out their work� In 2017
attention will focus on the ongoing implementation of the future
vision� For example, we are encouraging the inhouse and field
sales teams to talk to each other more so that they gain a deeper
understanding of their counterparts’ processes and require-
ments� More work is also being done on the feedback culture�
Talent development remained the focus in Belgium� Cen-
tral to this was the development of managers, particularly with
regard to the subject of empowerment� We also created more
opportunities for talented individuals to develop and progress
within the organisation� Numerous positions have already been
filled by internal candidates, which shows that these efforts are
beginning to bear fruit� The groupwide measures aimed at driving
the change in culture were supported by local innovation train-
ing courses and initiatives� In 2017 greater emphasis is being
placed on the change in culture, for which measures to encourage
employees to show personal initiative are planned� Also in 2017,
a management trainee programme is being introduced that is
modelled on the existing programme in Switzerland�
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Baloise Group Annual Report 2016
Sustainable business management
Human resources
Because of the merger with HDI-Gerling Assurances at the be-
ginning of October 2015 Luxembourg continued to focus heavi-
ly on integration and fostering a shared corporate culture in
2016� In addition, considerable attention is being focused on
the development of talented individuals through the creation
of a dedicated training department and a mentoring programme�
This focus will be maintained in 2017 with efforts to increase
the national and international mobility of talented individuals�
BALOISE’S 7,270 EMPLOYEES IN 2016 BY COUNTRY
Switzerland
Germany
Belgium
Luxembourg
Per cent
Employees
49.8
27.3
17.5
5.3
3,621
1,986
1,274
389
FAIR PAY. IN LINE WITH PERFORMANCE AND THE MARKET.
Through the aforementioned activities, Baloise aims to offer
employees a working environment in which they can perform
to the best of their ability� This performance should be rewarded,
including through monetary compensation� Baloise therefore
offers performance- and target-oriented remuneration packages
that are based on fair principles and an established framework
of performance management� The packages consist of competi-
tive base salaries and a range of variable remuneration compo-
nents as well as attractive employee 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 performance
and the success of the Company as a whole� Employees regularly
hold meetings with their managers to make sure they are on track
to achieve the individual targets that have been agreed upon�
To help secure long-term success, part of employees’ remu-
neration 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 GROUP HUMAN RESOURCES ON THE INTERNET
Careers website:
→ www.baloise.com/careers
Careers blog:
→ www.baloisejobs.com
Facebook:
→ www.facebook.com/baloisegroup
YouTube:
→ www.youtube.com/baloisegroup
Xing:
→ www.xing.com/companies/baloisegroup
LinkedIn:
→ www.linkedin.com/company/baloisegroup
Twitter:
→ www.twitter.com/baloise_jobs
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Baloise Group Annual Report 2016
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 gener al
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 matters
and raises their awareness of the relevant issues� Its employees
are aware of the ecological targets and the most important ini-
tiatives for achieving them� They are kept regularly informed
about the implementation of the environmental mission state-
ment and encouraged to suggest measures of their own� Baloise
works hand in hand with other companies, organisations and
public authorities in finding solutions to environmental prob-
lems� It particularly encourages the sharing of information with
other insurance companies, maintains an open dialogue with
the public and regularly reports on environmental projects and
what has been achieved�
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
factors� It also advises industrial clients on risk reduction and
risk prevention�
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
designs 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�
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�
ORGANISATION
The Corporate Executive Committee bears ultimate responsi-
bility in environmental matters� Each Group company has a
coordination unit which implements the environmental mission
statement� This working group is made up of representatives
drawn from all key corporate functions�
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Baloise Group Annual Report 2016
Sustainable business management
The environment
Protecting the environment over the long term
Environmental protection at Baloise is focused on reducing CO2 emissions and promoting
alternative energy sources. The Company’s initiatives are guided by recognised directives.
It always pursues a pragmatic and practical approach and it helps the environment
because it believes this is the right thing to do. Baloise has set itself an ongoing objective
of making continual improvements in all areas.
CONTINUOUS REDUCTION OF CO2 EMISSIONS SINCE 2000
Since the issue of climate change has taken on increasing sig-
nificance as a result of the Kyoto conference in Japan in 1997,
Baloise has been publishing key figures on energy and resource
consumption, documenting sustainability measures in its an-
nual report, and calculating its absolute and relative CO2 emis-
sions in accordance with the directives issued by the Association
for Environmental Management and Sustainability in Financial
Institutions (VfU)� Both absolute and relative CO2 emissions
have been reduced massively at Baloise since the year 2000�
Over this period, Baloise cut absolute CO2 emissions from
53,580 tonnes to 14,257 tonnes� This is equivalent to a 73�4 per
cent reduction in CO2 emissions� CO2 emissions per employee
fell by 32�5 per cent over the same period, from four tonnes to
2�7 tonnes�
These reductions were mainly achieved through the systematic
use of new technologies, through improvements in the energy
efficiency of Company premises and through state-of-the-art
office concepts�
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
reported relate to the energy and resources used by 72�5 per
cent of the 7,300 people working for the Baloise Group� Consump-
tion of energy for heating and consumption of electricity per
employee were each reduced by a further 8�2 per cent�
TOTAL CO2 EMISSIONS IN TONNES
CO2 EMISSIONS PER EMPLOYEE IN TONNES
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
CO2 emissions, Group
CO2 emissions, Switzerland
CO2 emissions, Switzerland
CO2 emissions, Group
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Baloise Group Annual Report 2016
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
2014 absolute
2015 absolute 1
2016 absolute
Relative Unit
+ / – %
5,173
137,276
12
5,196
139,080
13
5,290
137,151
15
headcount
ERA m2
number of buildings
19,983,267 kWh
19,866,588 kWh
18,236,089 kWh
3,447 kWh / employee
9,327,534 kWh
8,821,860 kWh
10,380,219 kWh
76 kWh / m2
52,752 m3
48,237 m3
47,128 m3
36 l / employee / day
490 t
439 t
465 t
88 kg / employee
5.0 % recycled
72.0 % chlorine-free-
bleached
23.0 % chlorine-bleached
73.5 million
A4 sheets
68.7 million
A4 sheets
76.0 million
A4 sheets
14,341 A4 sheets /
employee
979 t
961 t
811 t
153 kg / employee
1.8
– 1.4
2
– 8.2
17.7
– 2.3
5.9
10.4
– 15.6
19.0 million km
19.1 million km
18.4 million km
3,486 km / employee
– 3.6
43.0 % paper / cardboard
10.0 % other materials
2.0 % special waste
45.0 % misc. waste / refuse
28.5 % km by air
41.6 % km by road
29.9 % km by public
transport
CO2 emissions
14,864 t
14,738 t
14,257 t
2,695 kg / employee
– 3.3
1 The 2015 figures for “Employees” and “Energy reference area” were adjusted in 2015 due to a mistake in consolidation.
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Baloise Group Annual Report 2016
Sustainable business management
The environment
BALOISE IS BUILDING SUSTAINABLE OFFICES
MEASURES UNDERTAKEN BY BALOISE IN BELGIUM
TO REDUCE TRAFFIC PROBLEMS
In Belgium, Baloise carried out a transport review in conjunc-
tion with the local authorities� Each employee’s journey from
home to work was analysed to determine how the route could
be optimised and what the best mode of transport for it would
be� To make the switch to emission-free modes of transport
more attractive, 100 new bicycle “parking spaces” were created,
20 of which can be used to charge electric bikes for free while
the employee is at work�
The employee vehicle fleet is gradually being moved over
to low-CO2 vehicles� As at the end of 2016 the average vehicle
in the fleet produced 117�7 g / km�
→ www.baloise.com/responsibility
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 at its headquarters in Basel� The buildings
are to be the defining landmark of the train station district and
reflect Baloise’s commitment to the city� The tower block being
built on Aeschengraben, which will be around 90 metres in
height, will mainly be occupied by a 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 sustainable
construction in Switzerland (SNBS), which means it will com-
fortably exceed the legal requirements in terms of energy effi-
ciency� An efficient energy centre will provide power for all three
buildings, which will be heated by 100 per cent renewable dis-
trict heating�
ONCE AROUND THE WORLD WITH SOLAR POWER
Since 2015, Baloise customers and employees have been able to
charge their electric vehicles at Baloise’s company headquarters
using solar power� The facility, which does not cost anything to
use, has proved very popular� In 2016 enough solar-generated
electricity was drawn from the “pumps” to power a total of
around 45,000 kilometres – equivalent to one emission-free trip
around the globe� Since 2016 customers and employees have
also been able to charge their electric vehicles for free at the
Zurich site� Among their number are the Company’s loss asses-
sors, who use eco-friendly electric bikes to get to local incidents�
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Baloise Group Annual Report 2016
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
innovative standards so that it can always keep its promise to
its customers�
The Company’s enterprise risk management was once
again awarded Standard & Poor’s excellent “strong” rating in
2016� 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
strategy 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 141�
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 models
and processes are continually refined� The internal control sys-
tem (ICS) and the compliance function are further major planks
of this strategy�
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Baloise Group Annual Report 2016
Sustainable business management
Risk management
The most senior decision-making body in Baloise’s risk organi-
sation 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 Corporate
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 specific
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
Financial 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 – to ensure that the Company remains solvent even in
adverse circumstances and can meet its obligations to policy-
holders at all times� This target capital figure is constantly com-
pared 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�
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Baloise Group Annual Report 2016
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 busi-
ness units� In addition to upper limits on equity expo-
sures, for example, there are clear and binding guidelines
on bond ratings� The applicable “Basel” approach and
advanced statistical methods are used to assess credit risk�
In addition, 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 indi-
vidual 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 man-
agers’ assessment of the risk situation is factored into the remu-
neration paid to executives� The three criteria used to determine
the performance pool payments awarded to individual manag-
ers are personal performance, leadership and conduct� The in-
dividual performance pool payment proposed by the respective
line manager is discussed by the relevant management team,
compared with other departments and divisions, and adjusted
where necessary� This process ensures that risk-relevant behav-
ioural 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 basis
for strategic discussions about Baloise’s risk appetite� The capital
requirements derived from this model constitute minimum
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�
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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
2016 Financial Report (section 5� “Management of insurance
risk and financial risk” pages 139 to 181)�
Baloise Group Annual Report 2016
Sustainable business management
Risk management
OUR PROFESSIONAL RISK MANAGEMENT DEMONSTRATED
ITS PROVEN STRENGTHS IN 2016
Baloise’s risk strategy principles are designed for the long term,
as shown by the Company’s excellent risk positioning in 2016�
Proof positive of this situation was again the Baloise Group’s
positive Standard & Poor’s rating of “A” with a stable outlook
and the upgrading of the significance of the enterprise risk
management to “high”�
Underwriting approaches that have been tried and tested
for many years were maintained in 2016:
→ 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 7�7 per cent at 31 December
2016, Baloise’s equity investments in the reporting year
lay comfortably within its risk-bearing capacity�
→ The high quality of recurrent investment income gener-
ated by Baloise’s stable real-estate portfolio proved to be
a valuable source of revenue�
→ Much of Baloise’s focus is directed at managing its interest-
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-es-
tate 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 92�2 per cent demonstrating its excellent capabilities
in underwriting and managing non-life risk�
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Baloise Group Annual Report 2016
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 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 collec-
tion today: outstanding artistic merit, inner depth and an un-
usual 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 possible 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 ac-
cessible 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� The new building in Baloise Park, which will be com-
pleted in 2020, will also offer this opportunity to display art�
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 statements 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 per-
suasive body of work that establishes a close emotional and
intellectual connection with the hopes and fears of our time�
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Baloise Group Annual Report 2016
Sustainable business management
Commitment to art
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�
BALOISE ART PRIZE
Every year since 1999 the Baloise Group has awarded two young
artists its Baloise Art Prize at the Statements sector of the Art
Basel fair� It is Baloise’s way of supporting the development of
young, rising talents� The level of interest from young galleries
in taking part in this sector at the Art Basel fair is increasing
with every year� For the 2016 Art Basel fair no fewer than 380
gal leries applied for the opportunity to showcase their artists�
The Art Basel committee has the challenging task of selecting
20 positions from a flood of applications, which are then pre-
sented to a global audience at the fair� From these 20 positions
a panel of judges made up of international experts selects two
winners, each receiving an award and prize money of CHF 30,000�
After the announcement at a press conference both the winners
and the galleries receive great attention at this event of global
significance�
In addition to this publicity, the artists are also given the
chance to have their works displayed in a distinguished art mu-
seum: Baloise acquires groups of works by the prize winners
and donates these to two leading European art museums (in
the locations of strategic business units), currently Frankfurt’s
Museum of Modern Art and the MUDAM in Luxembourg�
Baloise invites its top customers to these endowment and exhi-
bition events and uses them to strengthen links with the local
cultural media�
Every year, the company spends around a quarter of a mil-
lion Swiss francs on prize money, acquisitions of works and
funding for art statements (on the condition that the galleries
may only exhibit one position), and on arranging for works by
winners of its art prize to be exhibited at museums� No other
art prize offers this combination, making the Baloise Art Prize
a coveted and prestigious award�
Further information on Baloise’s art activities and on all
previous prize winners can be
found here:
→ www.baloise.com/art
→ www.baloiseartprize.com
The Baloise Art Forum
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22�03�2017 14:57:16
4 Baloise
16 Review of operating performance
36 Sustainable Business Management
58 Corporate Governance
108 Financial Report
266 Bâloise Holding Ltd
286 General information
E
C
N
A
N
R
E
V
O
G
E
T
A
R
O
P
R
O
C
Corporate
Governance
CORPORATE GOVERNANCE REPORT
INCLUDING REMUNERATION REPORT ��������������������������������������������� 60
1� Structure of the Baloise Group and shareholder base ���� 60
2� Capital structure ������������������������������������������������������������������������������ 61
3� Board of Directors ��������������������������������������������������������������������������� 62
4� Corporate Executive Committee ��������������������������������������������� 71
5� Remuneration Report �������������������������������������������������������������������� 78
Report of the statutory auditor to the Annual General
Meeting of Bâloise Holding Ltd, Basel ������������������������������� 102
6� Shareholder participation rights ������������������������������������������� 104
7� Changes of control and poison-pill measures ����������������� 105
8� External auditors �������������������������������������������������������������������������� 105
9� Amendments to the Articles of Association
submitted to the 2017 Annual General Meeting ����������� 105
10� Information policy ����������������������������������������������������������������������� 106
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Baloise Group Annual Report 2016
Corporate Governance
Corporate Governance Report
Transparent corporate governance
As a company that adds value, Baloise attaches great importance to practising sound,
responsible corporate governance.
Operating in line with the requirements of the Swiss Code of
Best Practice and the SIX Corporate Governance Guidelines,
Baloise strives to foster a corporate culture of high ethical stand-
ards that emphasises the integrity of the Company and its em-
ployees� Baloise is convinced that high-quality corporate gover-
nance 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 January 2016 in order
to enhance transparency and, consequently, improve compa-
rability with previous years and other companies� It includes
the requirements of economiesuisse’s Swiss Code of Best Prac-
tice for Corporate Governance and, in particular, Appendix 1
to the latter, which contains recommendations on the remu-
neration paid to the Board of Directors and the Executive Com-
mittee� Baloise publishes a remuneration report as item 5 of its
Corporate Governance Report, which meets the criteria speci-
fied in circular 2010 / 1 of the Swiss Financial Market Supervi-
sory 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 company that is incorporated under Swiss law and list-
ed on the Swiss Exchange (SIX)� The Baloise Group had a market
capitalisation of CHF 6,415 million as at 31 December 2016�
→ Information on Baloise shares can be found from page 8
onwards�
→ Significant subsidiaries, joint ventures and associates
as at 31 December 2016 can be found from page 256
onwards in the notes to the consolidated annual financial
statements, which form part of the Financial Report�
→ Segment reporting by region and operating segment
can be found from page 183 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 74�
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 21,189 shareholders were registered in Bâloise
Holding’s share register as at 31 December 2016� The number
of registered shareholders had increased by 2�2 per cent com-
pared with the previous year� The “Significant shareholders”
section on page 278 provides information on the structure of
the Company’s shareholder base as at 31 December 2016�
The reports that were submitted to the issuer and to SIX
Swiss Exchange AG’s disclosure office during the reporting year
in compliance with article 120 of the Federal Act on Financial
Market Infrastructures and Market Conduct in Securities and
Derivatives Trading (FinfraG) and were published on the latter’s
electronic reporting and publication platform in compliance
with article 124 FinfraG can be viewed using the search function
at www.six-exchange-regulation.com/en/home/publications/
significant-shareholders.html�
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Corporate Governance
Corporate Governance Report
Treasury shares
Bâloise held 1,829,345 treasury shares (3�659 per cent of the
issued share capital) as at 31 December 2016�
Bâloise Holding’s equity
The table below shows the changes in equity during the last
three reporting years�
Cross-shareholdings
There are no cross-shareholdings based on either capital owner-
ship or voting rights�
CHANGES IN BÂLOISE HOLDING’S EQUIT Y
(BEFORE APPROPRIATION OF PROFIT)
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�
CHF million
Share capital
General reserve
Reserve for
treasury shares
Free reserves
Distributable
profit
Treasury shares
Equity
attributable to
Bâloise Holding
31.12.2014 1
31.12.2015
31.12.2016
5.0
11.7
4.9
230.3
406.5
5.0
11.7
3.5
387.6
435.4
– 141.9
516.5
– 194.8
648.4
5.0
11.7
2.3
573.9
289.6
– 156.6
725.9
Cash dividends
Share buy-backs
Total
1 Restated in accordance with the new financial reporting legislation.
Year (CHF million)
2012
2013
2014
2015
2016
Total
225.0
237.5
250.0
250.0
260.0 1
1,222.5
–
–
–
59.1
54.8
113.8
225.0
237.5
250.0
309.1
314.8
1,336.3
All figures stated as at 31 December.
1 Proposal to the Annual General Meeting on 28 April 2017.
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 in-
crease 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 article 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
04_JB_Corporate_Governance_en 61
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Corporate Governance
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each (see article 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
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 5,773�7
million on 31 December 2016� Details of changes in consolidated
equity in 2015 and 2016 can be found in the consolidated state-
ment of changes in equity on pages 116 and 117 in the Finan cial
Report section� All pertinent details relating to 2014 can be found
in the consolidated statement of changes in equity on page 110
in the Financial Report section of the 2015 Annual Report�
Bonds outstanding
Bâloise Holding has issued bonds publicly� As at the end of 2016,
a total of seven public bonds were outstanding� Details of out-
standing bonds of Bâloise Holding can be found on pages 233
and 276 and on the internet�
→ www.baloise.com/bonds
Credit rating
On 11 August 2016, credit rating agency Standard & Poor’s con-
firmed Baloise Insurance Ltd’s rating of “A” with a stable outlook�
S & P awarded this rating in recognition of Baloise’s very strong
capitalisation, its excellent operational profitability and its solid
competitive position in its core markets� The agency also rated
the firm’s risk management as strong� The rating was awarded
to Bâloise Holding Ltd’s Swiss subsidiary, Baloise Insurance Ltd,
which is a core company of the Baloise Group�
→ www.baloise.com/s&prating
3. BOARD OF DIRECTORS
Election and term of appointment
The Board of Directors consisted of ten members at the end of
2016� 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 59�
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 Andreas
Beerli, Dr Georges-Antoine de Boccard, Dr Andreas Burckhardt,
Christoph B� Gloor, Karin Keller-Sutter, Werner Kummer and
Thomas Pleines 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� Prior to the 2016 Annual General
Meeting, Dr Eveline Saupper announced that she would be step-
ping down from the Board of Directors� Professor Marie-Noëlle
Venturi - Zen-Ruffinen and Hugo Lasat were elected as new
members of the Board of Directors�
All existing members of the Board of Directors are to
stand for election at the 2017 Annual General Meeting, with
the exception of Dr Michael Becker, who is not putting himself
forward for re-election� Dr Becker has been a member of the
Board of Directors and of the Audit Committee (now known
as the Audit and Risk Committee) since 2010 and was a member
of the Investment Committee from 2012 until 2016� He has pro-
vided outstanding service to the Baloise Group�
The Board of Directors will propose Dr Thomas von Planta
(born in 1961 and qualified as a lawyer in Switzerland) for elec-
tion at the Annual General Meeting on 28 April 2017� He is the
founder and Principal of CorFinAd AG, a company specialising
in consultancy for M & A transactions and capital market finance�
He has sat on the Board of Directors of Bellevue Group AG since
2007, Bank am Bellevue AG since 2012 and Bellevue Asset Man-
agement AG since 2012, and has been Chairman of the Board
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Baloise Group Annual Report 2016
Corporate Governance
Corporate Governance Report
of Directors of all three companies since March 2015� Before
that, he had worked for Goldman Sachs in Zurich, Frankfurt
and London for around ten years and had been the interim Head
of Investment Banking and Head of Corporate Finance for the
Vontobel Group in Zurich between 2002 and 2006� He will be
an independent non-executive director�
Further information on the members of the Board of Directors
can be found on the internet�
→ www.baloise.com/board-of-directors
MEMBERS
Dr Andreas Burckhardt, Chairman (since 2011), Basel
Werner Kummer, Vice-Chairman (since 2014), Küsnacht
Dr Michael Becker, Darmstadt (D)
Dr Andreas Beerli, Oberwil-Lieli
Dr Georges-Antoine de Boccard, Conches
Christoph B. Gloor, Riehen
Karin Keller-Sutter, Wil SG
Hugo Lasat, Kessel-Lo (B)
Thomas Pleines, Munich (D)
Prof. Dr Marie-Noëlle Venturi - Zen-Ruffinen,
Crans-Montana
C: Chairman, VC: Vice-Chairman, C: Chair, DC: Deputy Chair, M: Member.
Chairman’s
Committee
Audit
Committee
Remuneration
Committee
Investment
Committee
Nationality
Born in
Appointed in
C
DC
M
M
C
VC
M
M
C
M
DC
M
CH
CH
D
CH
CH
CH
CH
B
D
CH
1951
1947
1948
1951
1951
1966
1963
1964
1955
1975
1999
2000
2010
2011
2011
2014
2013
2016
2012
2016
M
DC
C
M
BOARD AT TENDANCE IN 2016: 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
Hugo Lasat
Thomas Pleines
Dr Eveline Saupper
Prof. Dr Marie-Noëlle Venturi - Zen-Ruffinen
x = present, 0 = absent, n.a. = not applicable.
All members were attending the respective committee meetings.
18.03.2016
29.04.2016
24.06.2016
25.08.2016
9.12.2016
x
x
x
x
x
x
x
x
x
x
x
x
x
x
n.a.
n.a.
x
x
x
x
n.a.
n.a.
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
n.a.
x
n.a.
x
n.a.
x
04_JB_Corporate_Governance_en 63
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Statutory rules concerning the number of permitted activities
The 2015 Annual General Meeting approved the addition of a
new provision to the Articles of Association (article 33) concern-
ing the maximum number of directorships held outside the
Company� Subsection 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�
Article 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 organisa-
tional structures�
→ www.baloise.com/rules-regulations
Committees of the Board of Directors
The Board of Directors has four committees, which support it
in its activities� These committees report to the Board of Direc-
tors and submit the necessary proposals for their particular
areas of responsibility�
The committees appointed by the Board of Directors gen-
erally consist of four members, who are newly elected every year
by the Board of Directors� Since 2015, article 7 ERCO has required
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 Chair-
man’s Committee� The Chairman of the Board of Directors is
not allowed to sit on the Audit and Risk Committee� The com-
mittees’ basic functions and responsibilities are specified in the
Organisational Regulations� Additional specific 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 to be approved by the
Annual General Meeting� The Remuneration Committee ap-
proves the target agreements and performance assessments
that are applied to the Corporate Executive Committee mem-
bers in order to determine their variable remuneration� It also
sanctions the remuneration policies applicable to the Corpo-
rate Executive Committee members and ensures that they are
being correctly implemented� It approves the variable remu-
neration granted to individual members of the Corporate
Executive Committee; this remuneration has to be within the
maximum amount approved by the Annual General Meeting�
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Furthermore, it specifies the total amount available in the per-
formance pool�
The Audit and Risk Committee supports the Board of
Directors in its non-delegable overarching supervisory and
financial oversight functions (article 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
Company and by forming its own view of the Company’s sepa-
rate and consolidated annual financial statements� It receives
regular 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 five occa-
sions in 2016� The table on page 63 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 18 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 2016,
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 twice�
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 and the Group Compliance
Officer� The main attendees at Remuneration Committee meet-
ings are the Group CEO, the Head of the Corporate Centre and
the Head of Group Human Resources� Meetings of the Invest-
ment 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 meet-
ings of the full Board of Directors and those of its committees�
Self-evaluation
Every two years, a comprehensive self-evaluation is carried out
in the full Board of Directors and in the Audit and Risk Com-
mittee� The results are then discussed in each body�
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 ongoing
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 52 onwards
and in the Financial Report section starting on page 139�
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 responsible for
the Asia Pacific region� Until 2013 he was a member of
the Supervisory Board of Schindler Deutschland Hold-
ing GmbH� He was CEO of Forbo Holding AG from
1998 until 2004� He is a freelance management consul-
tant, Chairman of the Board of Directors at Gebrüder
Meier AG, a member of other 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-exec-
utive director�
Werner Kummer
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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-execu-
tive 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 chairs the Board at Stellaria Holding SA
and at the asset management companies of Citadel
Finance SA and GPP-Gestion Patrimoniale Personnal-
isée SA� He sits on the Board of Directors at the Swiss
International Prostate Center SA and was Chairman
of the Swiss Association of Urology from 2005 to 2006�
As well as remaining a member of the Swiss Association
of Urology, he is a member of the European Association
of Urology and other professional bodies and associa-
tions 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, St� Gallen, 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 (Inter-
national)� 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� He has been a mem-
ber of the Board of Managing Directors of the Basel
Banking Association since 2016� Mr Gloor is an inde-
pendent non-executive director�
Christoph B. Gloor
68
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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 sat on the Boards of Directors of the NZZ Media Group
until April 2016� She also sits on the Board of Directors of the ASGA
pension fund� In addition, she chairs the Board of Directors of Pensimo
Fondsleitung AG and the Pensimo investment foundation� She is Chair-
woman of the Swiss Retail Federation and a member of the executive
committee of the Swiss Employers’ Federation� Ms Keller-Sutter is an
independent non-executive director�
Karin Keller-Sutter
←
Hugo Lasat (1964, Belgium, Master in Economic
Sciences, Master in Finance) has sat on the Board of
Directors since 2016� He has been CEO of Brussels-
based Degroof Petercam Asset Management (former-
ly Petercam Institutional Asset Management) since
2011� His managerial roles prior to that include CEO
of Amonis Pension Fund and CEO of Candriam
In vestors Group (previously known as Dexia Asset
Management)� He is a guest professor at Hogeschool
Universiteit Brussel (HUBrussel) and VIVES Uni-
versity College, Chairman of the Belgian Asset Man-
agement Association (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 Belgian Red Cross and the
Financial Committee of the King Baudouin Foundation�
Mr Lasat is an independent, non-executive director�
Hugo Lasat
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←
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 Supervisory Board of Bilfinger SE, Mannheim� Since
2011, he has chaired the presidential boards of DEKRA e�V�, Stuttgart,
and DEKRA e�V� Dresden, as well as the supervisory boards of DEKRA
SE, Stuttgart, and SÜDVERS Holding GmbH & Co� KG, Au near Freiburg�
Mr Pleines is an independent non-executive director�
Thomas Pleines
→
Marie-Noëlle Venturi - Zen-Ruffinen (1975, Switzerland,
Prof� Dr iur�, lawyer) has been a member of the Board of
Directors since 2016� She holds a PhD and master’s degree
in law and a master’s degree in philosophy from the Uni-
versity of Fribourg� She is a lawyer and honorary profes-
sor at the School of Economics and Management at the
University of Geneva, where she mainly lectures on cor-
porate law� Professor Venturi - Zen-Ruffinen was a part-
ner 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� Professor Venturi - Zen-Ruffinen is an inde-
pendent non-executive director�
Marie-Noëlle Venturi - Zen-Ruffinen
Secretary to the Board of Directors:
Dr Philipp Jermann,
Buus (BL)
Head of Group Internal Audit:
Rolf-Christian Andersen,
Meilen (ZH)
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4. CORPORATE EXECUTIVE COMMITTEE
←
Gert De Winter (1966, Belgium, MSc) studied applied economics at the
University of Antwerp� From 1988 to 2004 he performed various roles
at Accenture in Brussels for issues relating to IT and business transfor-
mation management in the financial sector� He was made a partner at
the firm in the year 2000� In 2005 he joined the Baloise Group as Chief
Information Officer (CIO) and Head of HR of the Mercator insurance
company in Belgium� From 2009 to 2015 Gert De Winter was Chief
Executive Officer of Baloise Insurance, which was formed in 2011 from
the merger of the three insurance companies Mercator, Nateus and
Avéro� He has been Group Chief Executive Officer since 1 January 2016�
Since June 2016 he has been a member of the Management Board of the
Basel Chamber of Commerce�
Gert De Winter
→
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, Swit-
zerland� 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 Switzer-
land and the Head of Regulatory Affairs also report to German Egloff�
He has been a member of the Board of Directors of Absolutum AG, Bern,
since 2016� On 13 October 2016 German Egloff announced that he will
be stepping down from the Corporate Executive Committee with effect
from 30 April 2017� The Board of Directors of Bâloise Holding Ltd ap-
pointed Dr Carsten Stolz as his successor� Dr Stolz has worked for Baloise
since 2002� He has been Head of Finance and Risk and thus a member of
the Executive Committee of Basler Versicherungen Switzerland since 2011�
German Egloff
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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 and a member of the Manage-
ment Board of the Swiss Insurance Association (SVV)�
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 lec tured
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 Dr Sieber has been a member
of the Corporate Executive Committee and, as Head of the
Corporate Centre, is responsible for Group Human Re -
sources, Group Strategy and Digital Transformation, Legal
and Tax, Group Compliance, Group Procurement and Run-
off Business� He also sits on the Board of Directors at Euro
Airport Basel-Mulhouse-Freiburg�
Thomas Sieber
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→
Martin Wenk (1957, Switzerland, lic� iur�) held several posts
at a major bank from 1982 to 1992 after graduating in law
from the University of Basel� He started out as an investment
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 primar-
ily 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 Unigestion
Holding, Geneva, and compenswiss (the Swiss Federal Social
Security Funds), Geneva� On 13 October 2016 Martin Wenk
announced that he will be stepping down from the Corporate
Executive Committee with effect from 30 April 2017�
The Board of Directors of Bâloise Holding Ltd appointed
Dr Matthias Henny as his successor� Dr Henny joined Baloise
in 2012 as CEO of Baloise Asset Management�
Martin Wenk
Further information on the members of the Corporate Execu-
tive Committee can be found on the internet�
With the exception of the mandates listed above, 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 2016)
GROUP CEO
Gert De Winter *
CORPORATE SECRETARY
Markus von Escher
REGIONAL MANAGER
Peter Zutter
FINANCE
ASSET
MANAGEMENT
CORPORATE
CENTRE
SWITZERLAND
GERMANY
BELGIUM
LUXEMBOURG
German Egloff *
Martin Wenk *
Thomas Sieber *
Michael Müller *
Jürg Schiltknecht Henk Janssen
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
vacant
Baloise
Investment
Services
Robert
Antonietti
Group Risk
Management
Stefan Nölker
Corporate IT
Olaf Romer
Appointed
Actuary
Switzerland
Thomas Müller
Regulatory
Affairs
Fabian Berger
Group Strategy
& Digital
Transformation
Adrian Honegger
Group Human
Resources
Stephan Ragg
Group Legal
& Tax
Andreas Burki
Group
Compliance
Peter Kalberer
Run-off
Bruno Rappo
Group
Procurement
Manfred
Schneider
Life &
Tied Agents
Markus Jost
Finance / Asset
Management
Jürg Schiltknecht
a�i�
Non-Life
Alexander
Tourneau
IT / Operations
Ralf Stankat
Non-Life Retail
Sales
Joris Smeulders
Laurent Heiles
Operations
Daniel Frank
Life & Finance
Alain Nicolai
Non-Life
Claude Meyer
Non-Life
Enterprises
& Marine,
Marketing, Sales
Support, PR
Erik Vanpoucke
Finance
Gert Vernaillen
Life
Wim Kinnet
ICT & General
Services
Gerdy De Clercq
Risk, Compliance,
& Corporate Legal
Patrick
Van De Sype
Human Resources
Marc L’Ortye
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
74
* Member of the Corporate Executive Committee.
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Remuneration Report
Overview of remuneration
REMUNERATION GUIDELINE
REMUNERATION IN RELATION TO BUSINESS PERFORMANCE
Basic salary
→ Aim for a position around the market median
→ Reflection of the responsibilities of the role and the
individual’s long-term performance
Short-term variable remuneration
→ Influencing factors: the individual’s performance
and the Company’s economic value added
Performance pool
Total performance pool 2 for Corporate
Executive Committee
(CHF million)
Performance pool factor 2
(%)
2015
2.4
2016
2.4
100 %
107 %
→ Designed to incentivise staff to achieve outstanding
Profit vs. performance pool factor 2
results
Long-term variable remuneration
→ Supports the Company’s long-term development
→ Gives the top level of management a greater stake in the
performance of the Company
Fringe benefits
→ Not dependent on either an individual’s function
or performance or the Company’s performance
→ Demonstration of Baloise’s close partnership with
750
625
500
375
250
125
0
150 %
125 %
100 %
75 %
50 %
25 %
0 %
2012
2013
2014
2015
2016
employees and its respect for them
Profit (CHF million)
As a percentage of the expected value
Total shareholder return (TSR) vs. performance pool factor 2
62.5 %
50 %
37.5 %
25 %
12.5 %
0 %
150 %
125 %
100 %
75 %
50 %
25 %
0 %
5.3
4.0
4.8
4.0
TSR (%) (left axis)
As a percentage of the expected value (right axis)
2012
2013
2014
2015
2016
APPROVED REMUNERATION VS. AMOUNT PAID OUT
Approved
2015
Paid out
Approved
2016
Paid out
3.4
5.5
3.4
4.8
3.4
3.4
4.6
4.9 1
CHF million
Fixed remuneration of
Board of Directors
Fixed remuneration of
Corporate Executive
Committee
Variable remuneration of
Corporate Executive
Committee
1 Incl. CHF 0.452 million for the departing Group CEO, covered by the additional amount
pursuant to article 30 of the Articles of Association of Bâloise Holding Ltd.
2 The performance pool (PP) is the component of short-term variable remuneration that
depends on the Company’s performance: The Remuneration Committee of the Board of
Directors assesses the Company’s performance and success during the past financial year.
The performance pool factor is the ratio of the pool to its target value.
76
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REMUNERATION OF THE CORPORATE EXECUTIVE COMMITTEE
Gert De Winter
(from 1 Jan 2016)
Dr Martin
Strobel
Michael
Müller
German
Egloff
Dr Thomas
Sieber
Martin
Wenk
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
53 %
55 %
100 %
54 %
55 %
57 %
57 %
57 %
55 %
56 %
54 %
29 %
18 %
26 %
19 %
28 %
28 %
26 %
26 %
26 %
28 %
27 %
30 %
18 %
17 %
17 %
17 %
17 %
17 %
17 %
16 %
CHF 2.152 million
CHF 2.409 million
CHF 0.452 million
CHF 1.441 million
CHF 1.481 million
CHF 1.599 million
CHF 1.600 million
CHF 1.441 million
CHF 1.478 million
CHF 1.632 million
CHF 1.682 million
Fixed (comprising basic salar y, non-cash
remuneration and pension benefits)
Short-term variable remuneration (comprising share-based
and cash payments from the performance pool)
Long-term variable remuneration
(comprising allocations of share entitlements)
LONG-TERM VARIABLE REMUNERATION
Performance share units (PSUs)
Long-term variable remuneration for members of the Corporate
Executive Committee
Allocation
→ The total amount for the allocation of PSUs is
determined by the Remuneration Committee
→ The Remuneration Committee decides on the alloca-
tion of PSUs to each individual Corporate Executive
Committee member
Conversion
Vesting period
Peer group
Upper quartile
Median
Lower quartile
p
u
o
r
g
r
e
e
P
Performance
multiplier
1.5
1.0
0.5
n
o
i
s
r
e
v
n
o
c
U
S
P
→ Performance criterion: profit for shareholders relative
to the peer group (EURO STOXX 600 Insurance) after
three years
Overview of ended and current plans
(as at 31 December 2016)
→ PSUs are a performance instrument, enabling
2010 to 2016 plans
clear differentiation using a performance multiplier
of between 0�5 and 1�5
1 Jan 2010 – 31 Dec 2012
– 38 %
– 9 %
1 Jan 2011 – 31 Dec 2013
– 29 %
25 %
2016 plan (ended)
Plan term: 1 March 2013 – 29 February 2016
1 Mar 2013
29 Feb 2016
100 %
100 %
50 %
75 %
Profit for shareholders: 1 March 2013 – 29 February 2016
1 Mar 2013
29 Feb 2016
100 %
100 %
50 %
17 %
100 %
225 %
100 %
167 %
1 Mar 2012 – 28 Feb 2015
1 Mar 2013 – 29 Feb 2016
74 %
50 %
37 %
75 %
1 Mar 2014 – 28 Feb 2017
– 6 %
13 %
1 Mar 2015 – 28 Feb 2018
6 %
21 %
1 Mar 2016 – 28 Feb 2019
– 49 %
– 1 %
– 47 %
– 4 %
111 %
125 %
7 %
27 %
– 51 %
Share value at start
of PSU programme
Change in share value
during programme term
Performance
multiplier
Dividend payments
Change in share value
(measured
as at 31 Dec 2016)
Performance multiplier
(measured
as at 31 Dec 2016)
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Baloise Group Annual Report 2016
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Remuneration Report
5. REMUNERATION REPORT: REMUNERATION, SHARE OWNER-
SHIP AND LOANS GRANTED TO MEMBERS OF THE BOARD
OF DIRECTORS AND THE CORPORATE EXECUTIVE COMMITTEE
This remuneration report relates to the 2016 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 2016� The content and scope of these disclosures
are determined by articles 13 to 17 of the Ordinance Against
Excessive Remuneration in Listed Companies Limited by Shares
(ERCO), article 663c (3) of the Swiss Code of Obligations (OR),
the corporate governance information guidelines published by
the SIX Swiss Exchange, the Swiss Code of Best Practice for
Corporate Governance, and circular 10 / 1 of the Swiss Financial
Market Supervisory Authority (FINMA) concerning remu-
neration systems�
5.1 Remuneration Committee of the Board of Directors
The Remuneration Committee set up by the Board of Directors
in 2001 is consistent with the Swiss Code of Best Practice and
is tasked with helping the Board of Directors to frame the Com-
pany’s remuneration policies� The Remuneration Committee
has been vested with special decision-making powers and ensures,
among other things, that:
→ the remuneration offered by Baloise is in line with the
going market rate and performance-related in order
to attract and retain individuals with the necessary skills
and character attributes;
→ the remuneration paid is demonstrably dependent on the
Company’s sustained success and individuals’ personal
contributions and does not create any perverse incentives;
→ the structure and amount of overall remuneration paid
are consistent with Baloise’s risk policies and encourage
risk awareness�
The Remuneration Committee’s main functions and responsi-
bilities are to:
→ submit proposals to the Board of Directors on the struc-
ture of remuneration to be paid in the Baloise Group,
especially the remuneration to be paid to the Chairman
and members of the Board of Directors and to the mem-
bers of the Corporate Executive Committee;
→ 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
performance 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 proviso that no severance packages may be granted
to members of the Board of Directors or the Corporate
Executive Committee)�
The Remuneration Committee consists of at least three inde-
pendent members of the Board of Directors, who are elected
every year by the Annual General Meeting� Thomas Pleines
(Chairman), Karin Keller-Sutter (Deputy Chairwoman),
Dr Georges-Antoine de Boccard and Prof� Dr Marie-Noëlle
Venturi - Zen-Ruffinen were elected to the Remuneration Com-
mittee by the Annual General Meeting on 29 April 2016� The
Remuneration Committee maintains an intensive dialogue
with senior management throughout the year and generally
meets at least twice annually� In addition to the committee
secretary being present, these meetings are usually also at-
tended by the Group CEO, the Head of the Corporate Centre
and the Head of Group Human Resources, who participate in
an advisory capacity� The individual members of the Group
Executive Committee leave the meeting if the Remuneration
Committee is discussing or deciding on their personal remu-
neration� The Chairwoman of the Remuneration Committee
reports to the Board of Directors at its next meeting on the
committee’s activities�
78
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Remuneration Report
5.2 Remuneration policies
5.3 Remuneration system
Principles
The Company’s success is largely dependent on the skills, capabil-
ities and performance of its workforce� It is therefore essential
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 Remuneration
Guideline that formulates the remuneration principles and pa-
rameters applied across the Baloise Group� This Remuneration
Guideline applies to all employees throughout the Baloise Group�
It reflects the Company’s values and principles and can be sum-
marised 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
comparisons, 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 through-
out the Baloise Group� By adopting this Remuneration Guide-
line and Remuneration Policy, the Board of Directors has ensured
that all aspects of remuneration policy are standardised for the
entire group� 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 em-
ployees’ and executives’ loyalty and commitment to the orga-
nisation� 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 salary
and variable remuneration – offers a sophisticated way of link-
ing individuals’ performance to Baloise’s success and recognis-
ing both accordingly, and it is designed to reward employees
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 promotion�
Baloise attaches considerable importance to retaining high
performers and managing its business sustainably� In addition
to paying its staff in line with market rates and according to
individual achievement, the Company encourages its executives
to focus on the longer 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
responsibility 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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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 remuneration
and the performance pool� Performance-related remuneration
is used to reward individual employees’ achievements, while
the performance pool as a whole takes account of the Company’s
performance and value added�
The performance management system applies to the most
senior level of management and to most other members of the
management team throughout the Baloise Group�
The members of the Corporate Executive Committee are
not entitled to performance-related remuneration� Their indi-
vidual performance is factored into the allocation of payments
from the performance pool�
Market comparisons
Baloise regularly compares the salaries paid to its senior execu-
tives with those paid in the wider market� The Corporate Key
Position Benchmark survey conducted by Kienbaum uses func-
tion-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� recruit-
ment market) and which alternative employers – in theory, at
least – meet a certain function profile (i�e� competitors)�
The first peer group replicates Baloise’s core market and
comprises direct insurers in the respective country� This peer
group is used for conventional insurance and sales functions
and for the local CEOs, executive directors and senior manage-
ment functions� The second peer group supplements the core-
market group by including further companies from the banking
and financial services sector in the respective country� This group
is designed to compare functions that demand considerable
financial expertise but do not necessarily require an insurance
background� The third peer group consists of companies of
a similar size and structure from various sectors and is used for
interdisciplinary functions�
Baloise regularly compares the salaries paid in its insur-
ance-specific and insurance-related functions in Switzerland
with those of its relevant competitors and takes part in the
Club Survey that Kienbaum has been conducting since 1995�
This benchmarking survey of the salaries paid in the Swiss
insurance sector is constantly being optimised to ensure that
it meets participants’ high professional standards and quality
requirements� The comparison mainly covers insurance-spe-
cific functions up to middle management level� It also examines
insur ance-related, managerial and specialist functions per-
formed by senior executives� Functions not covered by the
Kienbaum comparison are regularly reviewed using Willis
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 pre-
sented 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 oper-
ating and market requirements� This remuneration is paid 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 principle that people who
do the same job and have the same qualifications should be paid
the same amount� The Company’s clearly defined and market-
based salary structures help ensure fair pay both inside and
outside the organisation�
Short-term variable remuneration
The key factors determining the amount of short-term variable
remuneration paid are an employee’s individual performance
and the Company’s profitability and economic value added�
The consequent link between individual performance and the
Company’s profits is designed to incentivise staff to achieve
outstanding results� Measurement of the variable remuneration
paid to employees who perform control functions (risk manage-
ment, 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 industry
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 discussed in this
remuneration report�
Short-term variable remuneration is paid together with
the salary for March of the following year� Baloise attaches con-
siderable importance to managing its business sustainably and
ensuring a high correlation between the interests of its share-
holders and executives� It therefore pays a substantial proportion
of variable remuneration in the form of shares� Senior managers
can choose what percentage of their remuneration is paid out
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 83)� 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 remu-
neration� This system also raises employees’ risk awareness and
encourages them to maintain sustainable business practices�
Two plans are available to individuals who wish to sub-
scribe for shares: the Share Subscription Plan and the Share
Participation Plan (see 5�6 Share Subscription Plan and Share
Participation Plan)�
The section below describes performance-related remu-
neration and the performance pool, which are available as short-
term variable remuneration components�
Performance-related remuneration
Performance-related remuneration reflects individual employees’
performance and rewards the achievement of their personal
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 fol-
lowing year – assess the extent to which these targets and objec-
tives 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 individual
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
and the importance of his or her function� Those entitled to
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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 Cor-
porate Executive Committee to the achievement of the Com-
pany’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
performance of Baloise’s share price compared with the
36 European insurance companies represented in the
STOXX Europe 600 Insurance Index (the composition
of this index is shown in the table on page 83)�
→ 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 implementa-
tion 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 internal control
system, and the efforts made in respect of talent management
and staff engagement�
Performance pool payments are awarded to individuals
at the discretion of the line manager concerned; no regulatory
target figures – except for members of the Corporate Executive
Committee – have been specified� The amount of these payments
is mainly determined by a holistic assessment consisting of
individuals’ 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 perfor-
mance pool payment proposed by the respective line manager
is discussed by the relevant management team, compared with
other departments and divisions, and adjusted where necessary�
This process ensures that risk-relevant behavioural attributes
are factored into the performance pool payments awarded to
individuals�
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 Corporate
Executive Committee� The average expected value amounts to
60 per cent of basic salary; the maximum amount that can be
allocated per member of the Corporate Executive Committee is
90 per cent of the basic salary, or 150 per cent of the expected value�
Those considered for performance pool payments are the
most senior management level in the Baloise Group, the majority
of senior managers in Switzerland and the corresponding functions
abroad� However, there is no entitlement to receive payments
from the performance pool�
For the 2016 financial year the Remuneration Committee
decided on a factor of 107 per cent of the normally expected
value of performance pool payments� This decision was moti-
vated by the following considerations:
→ A substantial profit for the period overall – higher than the
budgeted figure despite the strengthening of reserves in
Germany and the current environment of low interest rates;
→ Confirmation of the good risk position;
→ Above-average share price performance;
→ Successful start to implementation of the Simply Safe
strategy�
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The Remuneration Committee conducts a detailed assessment
of the Company’s performance once a year on the basis of the
various criteria mentioned above and adjusts the size of the
performance pool accordingly� As the table below illustrates in
the form of a comparison with the consolidated profit for the
period, when the performance pool factor is set in this way, it
goes up or down in line with the Company’s success, although
it is not directly derived from this key figure alone:
2011
2012
2013
2014
2015
2016
Performance pool
(as a percentage of
the normal
expected value)
Consolidated profit
for the period
(CHF million)
70 %
100 %
120 %
137 %
100 %
107 %
61.3
485.2
455.4
711.9
511.1
533.9
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 vest-
ing period has elapsed� The Remuneration 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 avail-
able 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 man-
ager’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 36 leading European
insurance companies contained in the STOXX Europe 600
Insurance Index�
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
remuneration� 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�
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 per-
Companies in the STOXX 600 Europe Insurance Index (as at 31 December 2016)
ADMIRAL GRP
DELTA LLOYD
OLD MUTUAL
SWISS LIFE HLDG
DIRECT LINE INSURANCE GROUP
PHOENIX GROUP HDG.
SWISS REINSURANCE COMPANY
AEGON
AGEAS
ALLIANZ
GJENSIDIGE
HANNOVER RUECK
POSTE ITALIANE
PRUDENTIAL
ASSICURAZIONI GENERALI
HELVETIA HLDG
RSA INSURANCE GRP
AVIVA
AXA
BALOISE
BEAZLEY
HISCOX
LEGAL & GENERAL GRP
MAPFRE
MUENCHENER RUECK
CNP ASSURANCES
NN GROUP
Source: http://www.stoxx.com/index-details?symbol=SXIP
SAMPO
SCOR
ST. JAMES’S PLACE CAPITAL
STANDARD LIFE
STOREBRAND
TOPDANMARK
TRYG
UNIPOLSAI
ZURICH INSURANCE GROUP
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formance of Baloise shares is in the top quartile of companies
in the peer group� The multiplier amounts to 0�5 if the perfor-
mance of Baloise shares is in the bottom quartile of companies
in the peer group� If the performance of Baloise shares is in
either of the two middle quartiles, a linear scale is used to calculate
the performance multiplier� The performance multiplier for the
entire vesting period ended is based on the closing stock market
prices on the final trading day of the respective vesting period�
Participants receive the pertinent number of shares once
the vesting period has elapsed, which means that for the PSUs
allocated in 2016 they receive their shares on 1 March 2019� If
an individual’s employment contract is terminated during the
vesting period, the PSUs expire without the person concerned
receiving any consideration or compensation� This does not
apply if the employment contract ends due to retirement, dis-
ability or death� It also does not apply if the contract is termi-
nated but the programme participant does not join a rival com-
pany 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
PERFORMANCE SHARE UNIT
(PSU) PLAN
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 significantly, as
shown in the table below:
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
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
01.03.2016
125.80
109.50
82.40
86.05
91.00
71.20
84.50
113.40
124.00
126.00
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
01.03.2019
1.182
1.24
0.64
0.58
0.77
1.21
1.50
4 0.95
4 1.20
4 0.50
86.05
91.00
64.40
78.50
113.60
124.00
126.00
4 128.30
4 128.30
4 128.30
101.71
112.84
41.22
45.53
87.47
150.04
189.00
4 121.72
4 153.33
4 64.15
3
– 19 %
3 %
– 50 %
– 47 %
– 4 %
111 %
124 %
4 7 %
4 24 %
4 –49 %
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 2016.
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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 indi-
vidual’s function or performance or the Company’s performance�
By providing voluntary benefits in the form of retirement pen-
sions, subsidies, concessions, and staff training and professional
development, 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 Committee
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
severance packages� Such remuneration may only be paid in
justified 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 sever-
ance 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 Share
Participation 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 Share Participation 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 remuner-
ation� 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 before 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 needed
for the Share Subscription Plan are purchased in the market as
and when required�
Applicable closing quotation
Subscription
price
from
CHF
CHF
10.01.2017
129.30
116.37
08.01.2016
121.40
109.26
Share Subscription Plan
for 2017
(applies to variable
remuneration awarded for
the 2016 reporting period)
Share Subscription Plan
for 2016
(applies to the variable
remuneration granted for
2015 and to the shares
subscribed by the Chairman
and members of the Board of
Directors in 2016)
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Share Participation 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 Share
Participation 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 Share Participation Plan� The subscription
date is 1 March of each year (the same as for the Share Subscrip-
tion 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 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 before 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 Share Par-
ticipation Plan are purchased in the market as and when required�
In order to increase the impact of this Share Participation 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�
Applicable closing quotation
Subscription
price
from
CHF
CHF
10.01.2017
129.30
114.49
08.01.2016
121.40
106.59
Share Participation Plan
for 2017
(applies to variable
remuneration awarded for
the 2016 reporting period)
Share Participation Plan
for 2016
(applies to the variable
remuneration granted for
2015 and to the shares
subscribed by the Chairman
of the Board of Directors in
2016)
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EMPLOYEE INCENTIVE PLAN
Number of shares subscribed
Restricted until
Subscription price per share (CHF)
Value of shares subscribed (CHF million)
Fair value of subscribed shares on subscription date (CHF million)
Employees entitled to participate
Participating employees
Subscribed shares per participant (average)
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 2016 the subscription price amounted
to CHF 56�40 (2015: CHF 60�40) and a total of 183,678 shares
were subscribed (2015: 172,796)� 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)�
2015
2016
172,796
183,678
31.08.2018
31.08.2019
60.40
10.4
20.5
3,181
1,920
90.0
56.40
10.4
21.5
3,098
2,029
90.5
5.8 Pension schemes
Baloise provides a range of pension solutions, which vary from
country to country in line with local circumstances� In Switzerland
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
financial 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 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� Until May 2016, the pension con-
tributions were also paid on behalf of the Chairman of the Board
of Directors, who is also insured� Since June 2016, he has not
been entitled to have contributions paid to the pension fund,
nor have such contributions been paid to him�
The other members of the Board of Directors have never
been entitled to have contributions paid to the pension fund,
nor have such contributions been paid to them�
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5.9 Rules stipulated in the Articles of Association
Certain rules governing remuneration are stipulated in the
Articles of Association:
→ Article 30 Additional amount for the remuneration paid
to Corporate Executive Committee members appointed
since the last Annual General Meeting
→ Article 31 Annual General Meeting votes on remuneration
→ Article 32 Principles of profit-related remuneration and
the granting of equity instruments
→ Article 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 92 and 93�
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 other
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 Corporate
Executive Committee to ensure that the Board of Directors is
provided with timely information on all matters of material
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 strategic 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 variable
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 remuneration
in the form of shares, although he is free to choose each year
how many shares he receives under the Share Subscription Plan
and the Share Participation Plan respectively� 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 94 to 97�
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 measure-
ment 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 performance
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 29 April 2016
passed binding votes in which it set a cap on the variable remu-
neration payable for 2016 and the amount of fixed remuneration
to be paid for 2017�
The structure of remuneration paid to the Corporate
Executive 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 receive
at least 50 per cent of their short-term variable remuneration
in the form of shares in order to ensure that their own interests
are more strongly aligned with those of shareholders� This man-
datory purchase of shares coupled with the shares allocated
under the PSU programme ensures that, compared with the
market as a whole, a significant proportion of their compensa-
tion is paid in the form of deferred remuneration�
The Corporate Executive Committee members’ remuneration
is disclosed on pages 94 to 97 in accordance with the accrual
principle� The table includes all forms of remuneration awarded
for performance in 2016 even if individual components are not
paid until a later date�
The total remuneration paid to the Corporate Executive
Committee for 2016 was lower than in the previous year (sum
total of basic salary plus variable remuneration down by 4�4 per
cent)� This can be attributed to several factors:
→ Upon Jan De Meulder’s retirement in 2015, the Corporate
Executive Committee decreased from six to five members�
→ The basic salary of the Group CEO, Gert De Winter, is
CHF 200,000 less than that of his predecessor�
The lower level of fixed remuneration also reduced the total
amount of variable remuneration paid�
T YPE OF REMUNERATION
DECIDED BY
APPLICABLE PERIOD
Fixed remuneration
Annual General Meeting
For the next financial year
Variable remuneration
cap
Annual General Meeting
For the current financial year
individual payment
Remuneration Committee
(in compliance with the cap set by the Annual General Meeting)
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The Annual General Meeting held on 30 April 2015 approved
a maximum amount of CHF 4�627 million for the fixed remuner-
ation (including pension contributions) payable to the Corporate
Executive Committee for 2016� The sum paid was CHF 4�427 million
(excluding the fixed remuneration of the departing Group CEO)�
During his handover period, which ended on 30 April 2016, the
departing Group CEO was paid fixed remuneration (including
pension contributions) totalling CHF 0�452 million� The amount,
which exceeded the total amount originally requested, is covered
by article 30 of the Articles of Association of Bâloise Holding Ltd
(additional amount for the remuneration of newly appointed
members of the Corporate Executive Committee: If the Board
of Directors appoints a new Group CEO or one or more new
members of the Corporate Executive Committee between two
Annual General Meetings, the total amount of Corporate Execu-
tive Committee remuneration approved by the Annual General
Meeting will be increased� In the case of the Group CEO, the
increase may not exceed the remuneration of the incumbent�)�
The Annual General Meeting held on 29 April 2016 also
approved a maximum amount of CHF 4�840 million for the
variable remuneration (including pension contributions) pay-
able for 2016� A total of CHF 3�951 million was paid out, which
meant that only around four-fifths of the maximum amount
available was utilised�
5.12 Loans and credit facilities
Please refer to the table on page 98�
5.13 Shares and options held
Please refer to the tables on pages 99 and 100�
5.14 Amounts of total remuneration and variable remuneration
Please refer to the table on page 101�
As requested by circular 10 / 1 issued by the Swiss Financial
Market Supervisory Authority on the subject of remuneration,
Baloise has published in the table on page 101 the amounts of
total remuneration and variable remuneration and has disclosed
the total amounts of outstanding deferred remuneration and
the inducement payments and severance packages granted� These
figures include all forms of remuneration awarded for 2016 even
if individual components are not paid until a later date�
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REMUNERATION PAID TO THE MEMBERS OF THE BOARD OF DIRECTORS
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 connec-
tion 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 Share
Participation Plan (CHF 155,995).
Pension contributions The information disclosed for 2015 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).
92
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REMUNERATION PAID TO THE MEMBERS OF THE BOARD OF DIRECTORS
2016
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
100,076
1,420,076
311,906
2,890
Chairman of the Board of Directors
Werner Kummer
125,000
295,000
0
295,000
73,641
674
Vice-Chairman of the Board of Directors
Chairman’s Committee
Chair of the Audit and Risk Committee
Dr Michael Becker
Investment Committee (until 29 April 2016)
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
Audit and Risk Committee (since 29 April 2016)
Karin Keller-Sutter
Remuneration Committee
Hugo Lasat (since 29 April 2016)
Investment Committee
Thomas Pleines
Audit and Risk Committee (until 29 April 2016)
Remuneration Committee (until 29 April 2016)
Chair of the Remuneration Committee
(since 29 April 2016)
Chairman’s Committee (since 29 April 2016)
125,000
125,000
83,333
125,000
Dr Eveline Saupper (until 29 April 2016)
62,500
Chairman’s Committee
Chair of the Remuneration Committee
Prof. Dr Marie-Noëlle Venturi - Zen-Ruffinen
(since 29 April 2016)
50,000
50,000
70,000
16,667
50,000
50,000
50,000
50,000
50,000
50,000
33,333
50,000
33,333
16,667
16,667
46,667
33,333
25,000
35,000
191,667
0
191,667
56,160
514
225,000
5,966
230,966
56,160
514
225,000
5,966
230,966
56,160
514
208,333
5,966
214,299
43,704
400
175,000
5,966
180,966
43,704
400
116,667
5,619
122,286
0
0
238,333
5,966
244,299
56,160
514
122,500
5,683
128,183
61,186
560
83,333
116,667
5,619
122,286
0
0
Remuneration Committee
33,333
Total for the Board of Directors
2,424,167
810,000
3,234,167
146,827
3,380,994
758,779
6,980
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 109.26, in line with the Share Subscription Plan). Shares received by the Chairman of the Board of Directors amounted to 1,427 shares in connection
with the Share Subscription Plan (CHF 155,914, with a closed period of five years instead of the usual three years) and 1,463 shares in connection with the Share
Participation Plan (CHF 155,992).
Pension contributions The information disclosed for 2016 includes the contributions that the employer is required by law to pay into the state-run social security
schemes (up to the pensionable or insurable threshold in each case) and into the pension fund (only for the chairman of the Board of Directors until May 2016). Neither
the Chairman (since June 2016) nor the members of the Board of Directors are entitled to have contributions paid to the pension fund, nor have such contributions been
paid to the Chairman or the members of the Board of Directors.
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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
Share Participation Plan
Performance share units (PSU)
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
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 PSU
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 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 109.26.
Share Participation 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
Share Participation Plan
Performance share units (PSU)
Total variable remuneration
Granted in 2015
CHF
CHF
Number of
shares
CHF
Number of
shares
CHF
Number of PSU
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 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 109.26.
Share Participation 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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REMUNERATION PAID TO THE MEMBERS OF THE CORPORATE EXECUTIVE COMMIT TEE
Basic salary
Cash payment
(fixed)
Cash payment
Share Subscription Plan
Share Participation Plan
Performance share units (PSU)
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
Dr Martin Strobel (until 30 April 2016)
383,333
0
0
0
632,500
125,245
2,511
292,205
CHF
CHF
Number of
shares
CHF
Number of
shares
950,000
313,616
2,693
313,384
CHF
0
0
0
Granted in 2016
Number of
shares
Number of PSUs
CHF
CHF
CHF
CHF
CHF
CHF
2,929
380,038
2,693
1,007,038
1,957,038
106 %
194,871
2,151,908
0
0
0
0
383,333
0 %
68,934
452,268
1,950
253,013
2,511
670,463
1,302,963
106 %
4,183
174,338
1,481,483
0
0
0
0
0
690,000
207,067
711
82,739
1,085
124,194
2,128
276,108
1,796
690,108
1,380,108
100 %
4,183
215,404
1,599,695
621,000
164,019
1,056
122,887
1,074
122,954
1,915
248,471
2,130
658,331
1,279,331
106 %
4,183
194,871
1,478,385
2016
Gert De Winter
Group CEO
Departing Group CEO
Michael Müller
Head of Corporate Division Switzerland
German Egloff
Head of Corporate Division Finance
Dr Thomas Sieber
Head of Corporate Division Corporate Centre
Martin Wenk
690,000
124,300
3,201
372,500
0
0
2,128
276,108
3,201
772,908
1,462,908
112 %
4,183
215,404
1,682,495
Head of Corporate Division Asset Management
Total for the Corporate Executive Committee
3,966,833
934,246
10,172
1,183,716
2,159
247,148
11,050
1,433,738
12,331
3,798,848
7,765,681
96 %
16,732
1,063,821
8,846,234
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 116.37.
Share Participation 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 114.49.
Performance share units (PSUs) These have been disclosed at their value of CHF 129.75 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
2016
Gert De Winter
Group CEO
Departing Group CEO
Michael Müller
Head of Corporate Division Switzerland
German Egloff
Head of Corporate Division Finance
Dr Thomas Sieber
Head of Corporate Division Corporate Centre
Head of Corporate Division Asset Management
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
Share Participation Plan
Performance share units (PSU)
Total variable remuneration
Granted in 2016
CHF
CHF
Number of
shares
CHF
Number of
shares
CHF
Number of PSUs
CHF
Number of
shares
CHF
CHF
CHF
CHF
CHF
Dr Martin Strobel (until 30 April 2016)
383,333
0
0
0
0
0
0
0
383,333
0 %
950,000
313,616
2,693
313,384
2,929
380,038
2,693
1,007,038
1,957,038
106 %
0
0
194,871
2,151,908
68,934
452,268
632,500
125,245
2,511
292,205
1,950
253,013
2,511
670,463
1,302,963
106 %
4,183
174,338
1,481,483
690,000
207,067
711
82,739
1,085
124,194
2,128
276,108
1,796
690,108
1,380,108
100 %
4,183
215,404
1,599,695
621,000
164,019
1,056
122,887
1,074
122,954
1,915
248,471
2,130
658,331
1,279,331
106 %
4,183
194,871
1,478,385
Martin Wenk
690,000
124,300
3,201
372,500
2,128
276,108
3,201
772,908
1,462,908
112 %
4,183
215,404
1,682,495
Total for the Corporate Executive Committee
3,966,833
934,246
10,172
1,183,716
2,159
247,148
11,050
1,433,738
12,331
3,798,848
7,765,681
96 %
16,732
1,063,821
8,846,234
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).
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.
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 116.37.
Share Participation 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 114.49.
Performance share units (PSUs) These have been disclosed at their value of CHF 129.75 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.
0
0
0
0
0
0
0
0
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LOANS AND CREDIT FACILITIES GRANTED TO MEMBERS OF THE BOARD OF DIRECTORS AND THE CORPORATE EXECUTIVE COMMITTEE (AS AT 31 DECEMBER)
Mortgages
Loans pertaining
to the Share
Participation Plan
Other loans
2015
2016
2015
2016
2015
2016
2015
Total
2016
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
Hugo Lasat
Member
Thomas Pleines
Member
Dr Eveline Saupper
Member
Prof. Dr Marie-Noëlle
Venturi - Zen-Ruffinen
Member
0
0
0
0
0
0
0
0
0
Total for the Board of Directors
0
0
0
0
0
0
0
0
0
0
0
0
0
2,674,203
2,623,656
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
0
2,674,203
2,623,656
0
0
0
0
0
0
0
0
0
0
0
0
0
2,674,203
2,623,656
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
2,674,203
2,623,656
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
1,000,000
1,000,000
2,399,986
1,887,700
1,850,000
1,600,000
897,885
574,474
2,850,000
2,600,000
3,297,871
2,462,174
0
0
0
0
3,399,986
2,887,700
0
2,747,885
2,174,474
0
6,147,871
5,062,174
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 Share Participation Plan Loans to increase the effect of the Share Participation Plan (see “5.6 Share Subscription Plan and Share
Participation Plan”). Interest is charged on loans at a market rate (2016: 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
2015
2016
2015
2016
2015
2016
2015
2016
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
Hugo Lasat
(since 29 April 2016)
Member
Thomas Pleines
Member
Dr Eveline Saupper
(until 29 April 2016)
Member
Prof. Dr Marie-Noëlle
Venturi - Zen-Ruffinen
(since 29 April 2016)
Member
Total for the Board
of Directors
Percentage of issued
share capital
8,809
13,983
43,919
38,611
52,728
52,594
0.105 %
0.105 %
4,927
5,192
3,069
2,911
7,996
8,103
0.016 %
0.016 %
2,197
2,961
2,801
2,551
4,998
5,512
0.010 %
0.011 %
667
1,261
2,631
2,551
3,298
3,812
0.007 %
0.008 %
667
1,261
2,509
2,429
3,176
3,690
0.006 %
0.007 %
7,312
7,312
1,381
1,781
8,693
9,093
0.017 %
0.018 %
0
0
0
0
1,806
2,206
1,806
2,206
0.004 %
0.004 %
1,000
1,000
0.002 %
594
2,631
2,551
2,631
3,145
0.005 %
0.006 %
3,438
5,270
2,960
1,688
6,398
6,958
0.013 %
0.014 %
0
28,017
37,834
63,707
1,000
59,279
91,724
1,000
97,113
0.183 %
0.002 %
0.194 %
0.056 %
0.076 %
0.127 %
0.119 %
0.183 %
0.194 %
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)
Discretionary shares
Restricted shares
Total share ownership
Percentage of issued
share capital
Prospective
entitlements (PSUs)
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
Quantity
Gert De Winter
Group CEO
Dr Martin Strobel (until 30 April 2016)
13,527
3,013
16,540
0.033 %
5,852
Departing Group CEO
100
100
28,960
11,517
29,060
11,617
0.058 % 0.023 % 14,373
7,833
Jan De Meulder (until 30 April 2015)
Head of SBU Germany
Michael Müller
7,724
8,607
16,331
0.033 %
8,043
Head of Corporate Division Switzerland
9,708
16,209
9,931
8,248
19,639
24,457
0.039 % 0.049 %
7,371
6,259
German Egloff
Head of Corporate Division Finance
17,457
12,054
9,557
13,293
27,014
25,347
0.054 % 0.051 %
8,269
6,829
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
6,050
7,100
36,623
24,819
42,673
31,919
0.085 % 0.064 %
7,441
6,145
9,000
9,533
9,894
8,467
18,894
18,000
0.038 % 0.036 %
8,269
6,829
50,039
58,523 103,572
69,357 153,611 127,880
0.307 % 0.256 % 53,766
39,747
0.100 % 0.117 % 0.207 % 0.139 % 0.307 % 0.256 %
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 Share Participation 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 Share Participation 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 2014, 1 March 2015 and 1 March 2016).
100
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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
2015
2016
Total
698.8
5.5
5.1
709.4
705.3
5.7
5.3
716.3
Total remuneration
CHF million
Total variable remuneration (total pool)
CHF million
Number of beneficiaries
154.7
5,230
5.5
168
5.1
62
165.3
153.4
5,176
5.7
176
5.3
69
164.4
Of which commission paid to insurance
sales force
CHF million
99.9
0.0
0.0
99.9
101.1
0.0
0.0
101.1
Of which other forms of variable
remuneration
CHF million
54.7
5.5
5.1
65.3
52.3
5.7
5.3
63.2
Total outstanding
deferred remuneration
CHF million
Debits / credits for remuneration
for previous reporting periods
recognised in profit or loss
0.0
94.1
15.5
109.6
0.0
87.1
15.0
102.2
CHF million
– 0.1
0.0
0.0
– 0.1
– 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
0.2
3
14.7
137
0.0
0
0.0
0
0.0
0
0.0
0
0.2
14.7
0.1
9
9.6
80
0.0
0
0.0
0
0.0
0
0.0
0
0.1
9.6
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.
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Ernst & Young Ltd
Aeschengraben 9
P.O. Box
CH-4002 Basle
Phone
Fax
www.ey.com/ch
+41 58 286 86 86
+41 58 286 86 00
To the General Meeting of
Bâloise Holding AG, Basel
Basle, 17 March 2017
Report of the statutory auditor on the remuneration report
We have audited the remuneration report of Bâloise Holding AG (pages 78 - 101) for the year
ended 31 December 2016.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of the
remuneration report in accordance with Swiss law and the Ordinance. The Board of Directors
is also responsible for designing the remuneration system and defining individual remuneration
packages.
Auditor’s responsibility
Our responsibility is to express an opinion on the remuneration report. We conducted our audit
in accordance with Swiss Auditing Standards. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the remuneration report complies with Swiss law and articles 14 – 16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in
the remuneration report with regard to compensation, loans and credits in accordance with
articles 14 – 16 of the Ordinance. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatements in the remuneration report,
whether due to fraud or error. This audit also includes evaluating the reasonableness of the
methods applied to value components of remuneration, as well as assessing 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 opinion.
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Opinion
In our opinion, the remuneration report for the year ended 31 December 2016 of Bâloise
Holding AG complies with Swiss law and articles 14 – 16 of the Ordinance.
Other Matter
The remuneration report of Bâloise Holding AG for the year ended 31 December 2015 was
examined by another statutory auditor who expressed an unmodified opinion on the
remuneration report on 18 March 2016.
Ernst & Young Ltd
Stefan Marc Schmid
Licensed audit expert
(Auditor in charge)
Christian Fleig
Licensed audit expert
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6. SHAREHOLDER PARTICIPATION RIGHTS
Voting rights
The share capital of Bâloise Holding consists solely of registered
shares� Each share confers the right to one vote� No shares
carry preferential voting rights� To ensure a broad-based share-
holder structure and to protect minority shareholders, no share-
holder is registered as holding more than 2 per cent of voting
rights, regardless of the size of their shareholding� The Board
of Directors can approve exceptions to this provision if a majority
of two-thirds of all its members is in favour (article 5 of the
Articles of Association)� There are currently no exceptions� Each
shareholder can appoint a proxy in writing in order to authorise
another shareholder or an independent proxy to exercise his or
her voting rights� When exercising voting rights, no shareholder
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 (article 16 of the Articles of Association)�
Powers of attorney and voting instructions may also be
given to an independent proxy electronically without requiring
a qualifying electronic signature (article 16 [2] of the Articles
of Association)�
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 (article 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
represent at least one third of the total shares issued by the
Company� This qualified majority also applies to the cases
specified in article 17 (3)(a) to (h) of the Articles of Association�
Otherwise, resolutions are adopted by a simple majority of the
votes cast, subject to compulsory legal provisions (article 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 (article 11 of the Articles
of Association)� Article 699 (3) of the Swiss Code of Obligations
(OR) states such requests must be made by shareholders 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 (article 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 shareholders
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 (article 16 of the Articles
of Association)�
Article 5 of the Articles of Association determines whether
nominee entries are permissible, taking into account any per-
centage limits and entry requirements� The procedures and
requirements for suspending and restricting transferability are
set out in the provisions in article 5 and article 17�
→ www.baloise.com/rules-regulations
→ www.baloise.com/calendar
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7. CHANGES OF CONTROL AND POISON-PILL MEASURES
Shareholders or groups of shareholders acting together by agree-
ment are required to issue a takeover bid to all other shareholders
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 Federal Act on Financial
Market Infrastructures and Market Conduct in Securities and
Derivatives Trading (FinfraG)�
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
members of either the Board of Directors or the Corporate
Executive Committee�
8. EXTERNAL AUDITORS
The external auditors are elected annually by the Annual General
Meeting� Ernst & Young AG (EY), Basel, have been the external
auditing firm for Bâloise Holding since 2016� Stefan M� Schmid
has held the post of auditor-in-charge since 2016� In accordance
with article 730a (2) OR, the role of auditor-in-charge is rotated
every seven years� EY is the external auditing firm for almost
all Group companies�
In 2016, CHF 101,062 of the additional fees for consultancy
services were attributable to tax consultancy and legal advice
and CHF 46,274 to operational advice� The remainder related
to business and IT consultancy and to insurance-specific advice�
The services were rendered in accordance with the relevant
provisions on independence set forth in the Swiss Code of
Obligations, the Swiss Audit Supervision Act and FINMA-
Circular 2013 / 3 on “auditing”�
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 auditors
focus on the audit work the latter have undertaken, their reports
and the material findings and most important issues raised
during the audit�
The Audit and Risk Committee submits proposals to the
Board of Directors regarding the external auditors to be elected
by the Annual General Meeting and makes recommendations
regarding their fees� Before the start of the annual audit, it reviews
the scope of the audit and suggests areas that require special
attention� The Audit and Risk Committee reviews the external
auditors’ fees on an annual basis�
AUDITORS FEES
CHF
(including outlays and VAT)
Audit fees
Consulting fees
Total
2015
2016
9. AMENDMENTS TO THE ARTICLES OF ASSOCIATION
5,049,000
4,706,926
953,000
223,944
6,002,000
4,930,870
SUBMITTED TO THE 2017 ANNUAL GENERAL MEETING
The Board of Directors will ask the Annual General Meeting
on 28 April 2017 to cancel 1,200,000 shares at CHF 0�10 par
value each and to thereby reduce the share capital by CHF 120,000
to CHF 4,880,000 (amendment to article 3 [1] of the Articles of
Association), and to extend the term of the authorised capital
of CHF 500,000�00 to 30 April 2019 (amendment to article 3 [4]
of the Articles of Association)�
Audit fees paid to EY (2015: PwC) include fees for engagements
with a direct or indirect connection to a particular audit engage-
ment and fees for audit-related activities (namely, the MCEV
Review, ISAE 3401 reports and statutory and regulatory special
audits)�
04_JB_Corporate_Governance_en 105
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22�03�2017 14:58:07
Information about Baloise shares
Information about Baloise shares begins on page 8�
→ www.baloise.com/baloise-share
Information about Baloise bonds
Information about Baloise bonds in circulation can be found
on pages 233 and 276�
→ www.baloise.com/bonds
Baloise Group Annual Report 2016
Corporate Governance
Corporate Governance Report
10. INFORMATION POLICY
Information principles
The Baloise Group provides shareholders, potential investors,
employees, customers and the public with information on
a regular, open and comprehensive basis� All registered share-
holders each receive a summary of the annual report once a year
and a letter to shareholders every six months, which provide
a review of business� The full annual report is sent to shareholders
on request� In addition, a presentation is created for every set
of financial statements that summarises the financial year or
period for financial analysts and investors� All publications are
simultaneously available to the public� All market participants
receive the same information� Baloise offers teleconferences,
podcasts, videos and live streaming in order to make informa-
tion generally and easily accessible�
Information events
Baloise provides detailed information about its business activities
as follows:
→ Details about its financial performance, targets, strategies
and operations are provided at press conferences covering
its annual and half-year financial statements�
→ Teleconferences for financial analysts and investors take
place when the annual and half-year financial statements
are published� The events can then be downloaded as
podcasts�
→ Shareholders are informed about business during the year
at the Annual General Meeting�
→ Roadshows are regularly staged at various financial
centres�
→ At its regular Investor Days, the Company presents its
corporate strategy and targets as well as any other matters
relevant to its business� The documents used for this and
the recording of the event are made publicly available on
various media�
Ongoing relationships are maintained with analysts, investors
and the media� Full details of individual Baloise events can be
accessed at www.baloise.com�
106
04_JB_Corporate_Governance_en 106
22�03�2017 14:58:08
Baloise Group Annual Report 2016
Corporate Governance
Corporate Governance Report
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 available
to the public at www�baloise�com� Please register for the latest
corporate communications at www.baloise.com/mailinglist.
→ www.baloise.com/media
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
04_JB_Corporate_Governance_en 107
107
22�03�2017 14:58:08
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22�03�2017 14:59:46
4 Baloise
16 Review of operating performance
36 Sustainable business management
58 Corporate governance
108 Financial Report
266 Bâloise Holding Ltd
286 General information
Financial Report
Consolidated balance sheet ������������������������������������������������������������� 110
Consolidated income statement ���������������������������������������������������� 112
Consolidated statement of comprehensive income �������������� 113
Consolidated cash flow statement ������������������������������������������������ 114
Consolidated statement of changes in equity ������������������������� 116
24� Liabilities arising from banking business
and financial contracts ���������������������������������������������������������������� 232
25� Financial liabilities ���������������������������������������������������������������������� 233
26� Provisions ����������������������������������������������������������������������������������������� 234
27� Insurance liabilities ��������������������������������������������������������������������� 234
NOTES TO THE CONSOLIDATED ANNUAL
FINANCIAL STATEMENTS ������������������������������������������������������������������� 118
1� Basis of preparation ��������������������������������������������������������������������� 118
2� Application of new financial reporting standards
and restatements ��������������������������������������������������������������������������� 118
3� Consolidation principles and accounting policies �������� 121
4� Key accounting judgements,
estimates and assumptions �������������������������������������������������������� 137
5� Management of insurance risk and financial risk ��������� 139
6� Basis of consolidation ����������������������������������������������������������������� 182
7� Information on operating segments
(segment reporting) ���������������������������������������������������������������������� 183
NOTES TO THE CONSOLIDATED BALANCE SHEET ������������������� 188
8� Property, plant and equipment ���������������������������������������������� 188
9� Intangible assets ���������������������������������������������������������������������������� 190
10� Investments in associates ���������������������������������������������������������� 193
11� Investment property ������������������������������������������������������������������� 195
12� Financial assets ������������������������������������������������������������������������������ 196
13� Mortgages and loans ������������������������������������������������������������������� 202
14� Derivative financial instruments ������������������������������������������ 203
15� Receivables ��������������������������������������������������������������������������������������� 204
16� Reinsurance assets ����������������������������������������������������������������������� 205
17� Receivables from reinsurers ���������������������������������������������������� 205
18� Employee benefits ������������������������������������������������������������������������� 206
19� Deferred income taxes ��������������������������������������������������������������� 218
20� Other assets ������������������������������������������������������������������������������������� 220
21� Non-current assets held for sale
and discontinued operations ��������������������������������������������������� 221
22� Share capital ������������������������������������������������������������������������������������ 222
23� Technical reserves (gross) �������������������������������������������������������� 223
NOTES TO THE CONSOLIDATED INCOME STATEMENT ���������� 236
28� Premiums earned and policy fees ����������������������������������������� 236
29� Income from investments for
own account and at own risk ��������������������������������������������������� 236
30� Realised gains and losses on investments ������������������������� 237
31� Income from services rendered ��������������������������������������������� 241
32� Other operating income ������������������������������������������������������������ 241
33� Classification of expenses ��������������������������������������������������������� 242
34� Personnel expenses ���������������������������������������������������������������������� 242
35� Gains or losses on financial contracts �������������������������������� 243
36� Income taxes ����������������������������������������������������������������������������������� 244
37� Earnings per share ����������������������������������������������������������������������� 245
38� Other comprehensive income ������������������������������������������������� 246
OTHER DISCLOSURES ������������������������������������������������������������������������� 248
39� Acquisition and disposal of companies ����������������������������� 248
40� Related party transactions ������������������������������������������������������� 249
41� Remuneration paid to the Board of Directors
and the Corporate Executive Committee ������������������������� 250
42� Contingent and future liabilities ������������������������������������������� 251
43� Operating leases ���������������������������������������������������������������������������� 254
44� Claim payments received from non-Group insurers ��� 255
45� Significant subsidiaries, joint ventures
and associates ��������������������������������������������������������������������������������� 256
46� Changes to shareholdings ��������������������������������������������������������� 258
47� Consolidated structured entities ������������������������������������������� 258
48� Joint arrangements ���������������������������������������������������������������������� 258
49� Events after the balance sheet date ��������������������������������������� 258
REPORT OF THE STATUTORY AUDITOR TO THE ANNUAL
GENERAL MEETING OF BÂLOISE HOLDING LTD, BASEL ������� 260
T
R
O
P
E
R
L
A
I
C
N
A
N
I
F
05_FB_Kapitel_01_bis_02_en 109
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Baloise Group Financial Report 2016
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
Note
31.12.2015
(restated)
31.12.2016
8
9
10
11
12
12
13
14
15
16
17
18
15
15
19
20
21
399.1
838.2
162.3
349.3
836.1
160.4
6,251.9
6,817.5
4,443.3
9,327.5
4,357.1
9,948.5
8,549.5
8,224.6
23,024.6
23,806.7
1,674.3
1,735.2
15,912.6
15,457.7
744.0
653.9
9.9
–
410.8
52.3
389.4
1.1
317.5
491.3
39.8
49.5
897.0
757.3
4.2
–
415.2
47.5
383.5
0.8
463.1
451.6
69.3
54.1
140.8
40.2
2,839.8
2,018.7
187.6
54.5
3,173.3
1,962.0
78,782.3
80,614.3
110
05_FB_Kapitel_01_bis_02_en 110
22�03�2017 14:59:46
Baloise Group Financial Report 2016
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 non-current assets and disposal groups
classified as held for sale
Total liabilities
Total equity and liabilities
Note
31.12.2015
(restated)
31.12.2016
22
23
24
25
26
14
27
18
19
5.0
253.2
– 305.4
– 216.5
5,682.7
5,418.9
34.7
5.0
317.3
– 248.1
– 318.4
5,985.5
5,741.3
32.4
5,453.6
5,773.7
45,776.6
46,209.0
1,930.1
8,299.2
8,782.8
1,707.8
94.8
250.8
1,650.4
1,355.6
440.6
909.7
85.8
81.6
2,317.4
8,000.9
9,999.4
1,470.4
80.0
299.0
1,565.2
1,463.9
456.6
944.9
44.3
81.3
21
1,962.9
1,908.3
73,328.7
74,840.6
78,782.3
80,614.3
05_FB_Kapitel_01_bis_02_en 111
111
22�03�2017 14:59:46
Baloise Group Financial Report 2016
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)
112
Note
2015
2016
28
28
28
29
30
31
32
23
23
23
33
33
33
35
33
25
36
37
6,832.4
– 148.6
6,683.7
6,680.6
– 168.2
6,512.4
1,521.8
1,476.6
386.2
112.6
36.8
136.6
667.2
110.1
7.1
136.8
8,877.9
8,910.2
– 5,352.4
– 5,664.2
– 1,241.9
97.9
– 472.4
– 761.3
– 60.4
– 34.1
– 0.9
– 333.1
– 669.1
108.2
– 502.9
– 763.9
– 60.3
– 30.5
– 342.9
– 300.9
– 8,158.6
– 8,226.6
719.2
683.6
– 40.0
679.3
– 38.0
645.6
– 168.2
511.1
– 111.7
533.9
512.1
– 1.0
10.96
10.65
534.8
– 0.9
11.53
11.22
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Baloise Group Financial Report 2016
Consolidated statement of comprehensive income
Consolidated statement
of comprehensive income
CHF million
Profit for the period
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
Deferred income taxes
Total items not to be reclassified to the income statement
Items to be reclassified to the income statement
Change in unrealised gains and losses on available-for-sale financial assets
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
Deferred income taxes
Total items to be reclassified to the income statement
Other comprehensive income
Comprehensive income
Attributable to:
Shareholders
Non-controlling interests
2015
2016
511.1
533.9
0.8
33.1
– 39.1
– 8.5
– 13.6
– 882.9
– 27.6
– 33.7
– 1.7
326.4
– 130.6
167.9
– 582.2
7.9
– 153.7
40.5
27.2
– 78.1
126.6
– 0.4
– 15.3
– 1.1
– 117.3
– 2.5
– 14.8
– 24.9
– 595.8
– 103.0
– 84.7
430.9
– 80.2
– 4.5
433.0
– 2.0
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Baloise Group Financial Report 2016
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
Depreciation, amortisation and impairment of property, plant and equipment
and of intangible assets
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
Net change in operating assets and liabilities
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
Note
2015
2016
330.6
– 6.5
715.9
– 58.4
– 317.8
– 307.5
6.2
– 118.2
– 17.9
2,969.6
2,839.8
350.0
– 16.6
–
2,839.8
3,173.3
679.3
645.6
8/9
25
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
63.1
– 0.3
– 7.1
– 667.0
240.3
708.9
– 0.1
38.0
9.9
– 404.2
– 252.0
– 168.5
249.8
– 237.4
874.1
Other changes in assets and liabilities from operating activities
99.8
– 225.4
Taxes paid
Cash flow from operating activities (net)
– 126.5
330.6
– 151.7
715.9
114
05_FB_Kapitel_01_bis_02_en 114
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Baloise Group Financial Report 2016
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
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
2015
2016
8
9
39
39
25
25
– 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
– 16.4
0.6
– 26.6
0.1
– 22.3
–
–
–
6.2
– 58.4
–
– 163.2
– 33.4
– 116.5
237.9
– 0.3
– 232.0
– 307.5
6.2
350.0
2,969.6
6.2
– 17.9
– 118.2
2,839.8
2,839.8
350.0
–
– 16.6
3,173.3
1,765.8
1,935.5
–
–
1,074.0
1,237.8
2,839.8
89.8
3,173.3
105.3
926.7
126.0
– 61.1
857.3
141.4
– 57.4
05_FB_Kapitel_01_bis_02_en 115
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Baloise Group Financial Report 2016
Consolidated statement of changes in equity
Consolidated statement of changes in equity
2015
CHF million
Balance as at 1 January 2015
Profit for the period
Other comprehensive income
Comprehensive income
Other changes in equity
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
38
22
39
6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6.6
– 55.4
–
–
–
–
–
–
Note
Share
capital
Capital
reserves
Treasury
shares
Other
changes in
equity
Retained
earnings
(restated)
Equity
before non-
controlling
interests
(restated)
Non-
controlling
interests
Total
equity
(restated)
5.0
246.6
– 250.0
375.8
5,405.2
5,782.6
–
512.1
512.1
– 592.3
– 592.3
–
– 592.3
512.1
– 80.2
39.7
– 1.0
– 3.4
– 4.5
5,822.2
511.1
– 595.8
– 84.7
–
–
–
–
–
–
– 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
5,682.7
5,418.9
34.7
5,453.6
116
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Baloise Group Financial Report 2016
Consolidated statement of changes in equity
2016
CHF million
Balance as at 1 January 2016
Profit for the period
Other comprehensive income
Comprehensive income
Other changes in equity
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
(restated)
Equity
before non-
controlling
interests
(restated)
Non-
controlling
interests
Total
equity
(restated)
5.0
253.2
– 305.4
– 216.5
5,682.7
5,418.9
–
534.8
534.8
– 101.9
– 101.9
–
– 101.9
534.8
433.0
34.7
– 0.9
– 1.1
– 2.0
5,453.6
533.9
– 103.0
430.9
38
22
39
6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
64.1
57.3
–
–
–
–
–
–
–
–
–
–
–
–
– 232.0
– 232.0
– 0.3
– 232.2
–
–
–
–
–
–
121.4
–
–
–
–
–
–
–
–
–
121.4
–
–
Balance as at 31 December 2016
5.0
317.3
– 248.1
– 318.4
5,985.5
5,741.3
32.4
5,773.7
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
Notes to the consolidated
annual financial statements
Basis of presentation
2. APPLICATION OF NEW FINANCIAL REPORTING STANDARDS
AND RESTATEMENTS
2.1 Newly applied IFRSs and interpretations
Currently, there are no requirements to apply any newly applied
standards or interpretations that have a material impact on the
profit for the period or on balance sheet line items�
2.2 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
2016 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
1. BASIS OF PREPARATION
The Baloise Group is a European direct insurer comprising nine
different insurance companies that operate in virtually every
segment of the life and non-life insurance business� Its holding
company is Bâloise Holding Ltd, 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 man-
agement 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 meas-
urement 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 17 March 2017 the Bâloise Holding Ltd
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 Ltd�
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
It is not yet possible to fully assess what impact the amendments
to IFRS 9 will have on the Baloise Group’s balance sheet and
income statement from 2021�
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 concern
leases, financial instruments and insurance contracts� For those
customer contracts that are not covered by the aforementioned
exemptions, this new standard provides a single, principles-based
five-step model to be applied to the relevant contracts with
customers� The Baloise Group will apply this standard from
1 January 2018 and currently does not anticipate any material
effect on its consolidated financial statements owing to the
exemptions for insurance contracts and financial instruments�
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� Long-term
leases on real estate are covered by the definitions in IFRS 16
and, in future, will have to be recognised with a right of use�
The Baloise Group plans to apply this standard from 1 January 2019�
It is not yet possible to fully assess what impact these amend-
ments will have on the Baloise Group’s balance sheet and income
statement� The Baloise Group will assess the effect on the balance
sheet and income statement in 2017�
IFRS 9 Financial Instruments
IFRS 9 introduces new requirements for the classification and
measurement of financial instruments� Classification of financial
assets is based on the entity’s business model and on the contractual
cash flow characteristics of the financial assets concerned�
IFRS 9 introduces a new impairment model and 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)�
On 12 September 2016, the IASB issued Applying IFRS 9
“Financial Instruments” with IFRS 4 “Insurance Contracts”
(Amendments to IFRS 4)� The amendments address concerns
arising from implementing the new financial instruments Standard
IFRS 9 before implementing the replacement Standard that the
Board is developing for IFRS 4�
The amendments introduce two approaches: an overlay
approach and a deferral approach� The amended Standard will:
→ give all companies that issue insurance contracts the
option to recognise in other comprehensive income, rather
than profit or loss, the volatility that could arise when
IFRS 9 is applied before the new insurance contracts
Standard is issued; and
→ give companies whose activities are predominantly
connected with insurance an optional temporary exemp-
tion from applying IFRS 9 until 2021� The entities that
defer the application of IFRS 9 will continue to apply the
existing financial instruments Standard IAS 39�
The Baloise Group intends to apply the deferral approach for
IFRS 9 with effect from 1 January 2018, which will enable it
to adopt IFRS 9 and IFRS 17 simultaneously with effect from
1 January 2021� Analysis has already been carried out to clarify
whether the Baloise Group fulfils the conditions for applying
this approach� The outcome was positive, and there are no
indications that would prevent this exemption being applied�
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
2.3 Restatement
The concept for the calculation of the deferred policyholders’
dividends in Germany (reserve for premium refunds) was subject
to a comprehensive review as at 30 June 2016 and was re-evaluated
and adapted� This resulted in a retrospective restatement amount-
ing to CHF 8�7 million, which was recognised in other compre-
hensive income in the prior period in accordance with IAS 8�
The prior-year figures stated on the balance sheet, in the
statement of changes in equity and in the notes to these financial
statements have been restated accordingly�
In the German non-life business, the method for calculating
deferred acquisition costs was further harmonised in the individual
portfolios, which resulted in assets being transferred between
intangible assets and other assets on the balance sheet� In the
income statement, these effects were recognised for the first
time under acquisition costs� This reclassification has no impact
on the Group’s equity or profit for the period� For the purposes
of comparison, the prior-year figures have also been reclassified�
RECONCILIATION OF THE RESTATED IFRS FIGURES: CORRECTION PROVISION FOR PREMIUM REFUNDS
Consolidated balance sheet as at 1 January 2015
Consolidated balance sheet as at 31 December 2015
prior to
restatement
correction
according to
IAS 8
after
restatement
prior to
restatement
correction
according to
IAS 8
after
restatement
48.3
– 1.6
46.7
41.4
– 1.6
39.8
79,294.1
79,342.3
5,831.0
48,738.9
1,065.5
23,706.9
79,342.3
–
79,294.1
78,742.4
–
78,742.4
– 1.6
79,340.8
78,783.8
– 1.6
78,782.3
– 8.7
10.7
– 3.6
5,822.2
5,462.3
48,749.7
45,765.8
1,061.9
913.3
– 8.7
10.7
– 3.6
5,453.6
45,776.6
909.7
–
23,706.9
26,642.4
–
26,642.4
– 1.6
79,340.8
78,783.8
– 1.6
78,782.3
CHF million
Balance sheet items
Deferred tax assets
Other assets
Total assets
Equity
Technical reserves (gross)
Deferred tax liabilities
Other liabilities
Total liabilities
120
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
The consolidation of subsidiaries ends on the date on which
control is ceded. If only some of the shares in a subsidiary are
sold, the retained interest is measured at fair value on the date
that control is lost. Gains or losses on the disposal of (some of)
the subsidiary’s shares are recognised in the income statement
as either other operating income or other operating expenses.
The acquisition of additional investments in subsidiaries
after assuming control and the disposal of investments in sub
sidiaries without ceding control are both recognised directly
in equity as transactions with owners.
3.1.2 Structured entities
Structured entities are consolidated provided the conditions of
IFRS 10 are met.
3.1.3 Joint arrangements
Joint arrangements are contractual agreements over which two
or more parties have joint control. A joint arrangement is clas
sified as either a joint operation or a joint venture. In a joint
operation, the involved parties have direct rights and obligations
in respect of the assets and liabilities and the income and expenses.
By contrast, the parties involved in a joint venture do not have
a direct entitlement to the assets and liabilities and, instead,
have rights in respect of the net assets of the joint venture owing
to their position as investors.
Joint ventures are accounted for using the equity method,
i.e. the Baloise Group initially recognises the joint ventures at
cost (fair value at the date of acquisition) and thereafter recog
nises them under the equity method (the Baloise Group’s share
of the entity’s net assets and profit or loss for the period). In the
case of joint operations, the Baloise Group includes directly in
its consolidated financial statements the share of the assets,
liabilities, income and expenses of the joint operation that is
attributable to the Baloise Group.
3. CONSOLIDATION PRINCIPLES AND ACCOUNTING POLICIES
3.1 Method of consolidation
3.1.1 Subsidiaries
The consolidated annual financial statements comprise the finan
cial statements of Bâloise Holding Ltd and its subsidiaries,
includ ing 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 in
cluded 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 firsttime
consolidation. Noncontrolling interests arising from business
combinations are measured either at their fair value or accord
ing to their share of the acquiree’s identifiable net assets. The
Baloise Group decides which measurement method to apply to
each individual business combination.
The acquisition cost corresponds to the fair value of the
consideration paid to the previous owners on the date of the
acquisition. If investments in the form of financial instruments
or associates were already held before control was acquired,
these investments are remeasured and any difference is recog
nised in profit or loss. Any contingent consideration recognised
as part of the consideration paid for the acquiree is measured
at fair value on the transaction date. Any subsequent changes
in the fair value of a contingent consideration are recognised
in the income statement. If the acquisition cost exceeds the fair
value of assets and liabilities plus noncontrolling interests, the
difference is recognised as goodwill. Conversely, if the identified
net assets exceed the acquisition cost then the difference is rec
ognised directly through profit or loss as other operating income.
All intercompany transactions and the resultant gains and losses
are eliminated.
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Baloise Group Financial Report 2016
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 asso
ciates 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 Currency translation
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 pre
sented in millions of Swiss francs (CHF), which is the Baloise
Group’s reporting currency.
3.2.2 Translation of transaction currency into
functional currency at Group companies
Income and expenses denominated in foreign currency are
translated either at the exchange rate prevailing on the trans
action date or at the average exchange rate. Monetary and
nonmonetary balance sheet items measured at fair value and
arising from foreign currency transactions conducted by Group
companies are translated at the closing rate. Nonmonetary
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 nonmonetary financial
instruments recognised at fair value through profit or loss are
reported as realised gains or losses on these instruments. Exchange
differences on availableforsale nonmonetary financial instru
ments are recognised in other comprehensive income. Exchange
differences arising on availableforsale monetary financial
instruments are recognised in profit or loss.
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
CURRENCY
CHF
1 EUR (euro)
1 USD (US dollar)
Balance sheet
Income statement
31.12.15
31.12.16
Ø 2015
Ø 2016
1.09
1.00
1.07
1.02
1.07
0.96
1.09
0.99
3.3 Property, plant and equipment
Items of property, plant and equipment are measured at cost
less accumulated depreciation and any accumulated impairment
losses. The acquisition cost of property plant and equipment
includes all directly attributable costs. Subsequent acquisition
costs are only capitalised if future economic benefits associated
with the property, plant and equipment will flow to the entity
concerned and these costs can be measured reliably. All other
repairs and maintenance costs are expensed as incurred.
Land is not depreciated. Other items of property, plant
and equipment are depreciated on a straightline basis over the
following estimated useful lives:
→ Owneroccupied buildings: 25 to 50 years
→ Office furniture, equipment, fixtures and fittings:
5 to 10 years
→ Machinery, furniture and vehicles: 4 to 10 years
→ Computer hardware: 3 to 5 years
122
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
At each balance sheet date the Baloise Group tests all items of
property, plant and equipment for impairment and reviews the
suitability of their useful lives.
An impairment loss is immediately recognised on items
of property, plant and equipment if their recoverable amount
is lower than their carrying amount.
Gains or losses on the sale of property, plant and equipment
are immediately taken to the income statement as either other
operating income or other operating expenses.
3.4 Leases
3.4.1 The Baloise Group as a lessee
Finance leases: leases on real estate, office furniture, equipment,
fixtures, fittings and other tangible assets are classified and
treated as finance leases if they transfer to the Baloise Group
substantially all the risks and rewards incidental to ownership.
The fair value of the leased property or, if lower, the present
value of the lease payments is recognised as an asset at the
inception of the lease. All lease payments are apportioned between
the finance charge and the reduction of the outstanding liabil
ity. The finance charge is allocated so as to produce a constant
periodic rate of interest on the remaining balance of the liabil
ity; this is reported on the Baloise Group’s balance sheet as
liabilities arising from banking business and financial contracts.
Assets held under finance leases are fully depreciated over the
shorter of the lease term and their useful life.
Operating leases: all other leases are classified as operat
ing leases. Lease payments under operating leases are expensed
in the income statement on a straightline 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 Intangible assets
3.5.1 Goodwill
Goodwill represents the excess of an acquiree’s acquisition cost
over the fair value of its assets and liabilities plus the acquisition
date amount of any noncontrolling interests in the acquiree and
the acquisitiondate fair value of the acquirer’s previously held
equity interest in the acquiree. Goodwill is reported as an intan
gible 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 cashgenerating
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 straightline basis. It
is regularly tested for impairment as part of a liability adequa
cy 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 pay
ment period. Deferred acquisition costs are tested for impairment
at each balance sheet date (see section 3.18.3 for further details).
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
3.5.4 Other intangible assets and internally developed assets
Other intangible assets essentially comprise software, external
IT consulting (in connection with software that has been devel
oped), internally developed assets (such as software) and assets
identified during the acquisition of entities (such as brands and
customer relationships). These assets are recognised at cost and
are amortised on a straightline 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 owneroccupied
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 owneroccupied
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
owneroccupied properties becomes an investment property
owing to reclassification, then, on the date this change of use
takes effect, the difference between the property’s carrying amount
and its fair value is recognised in profit or loss in the event of
an impairment; or, if the property’s fair value exceeds its carrying
amount, then the difference is recognised directly in equity as
an unrealised gain. If an investment property that was reclassified
in a previous period is sold, the amount recognised directly in
equity is reclassified to retained earnings. Investment property
is measured at fair value under the discounted cash flow (DCF)
method. The current fair value of a property determined under
the DCF method equals the sum total of all net income expected
in future and discounted to its present value (before interest
payments, taxes, depreciation and 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 riskadjusted basis. The measure
ment is carried out internally each year by experts using market
based assumptions that have been verified by respected con
124
sultancies. In addition, the properties are assessed by external
valuation specialists at regular intervals; roughly 10 per cent
of the fair value of the real estate portfolio is subject to such
assessments each year. Changes in fair value are taken to income
as realised accounting gains or losses in the period in which
they occur.
3.7 Financial assets
The term “investments” (Kapitalanlagen in German) is used in
some places and headings in the Financial Report for clarity’s
sake. The IFRSs themselves do not define the term “investments”
(or Kapitalanlagen). The term “investments” as used in the Finan
cial Report covers financial assets, mortgages and loans, deriv
ative financial instruments, cash, cash equivalents and invest
ment 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 fixedincome
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.
Mortgages and loans are generally carried at cost. In pur
suing 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”.
Appropriately designated derivative financial instruments are
used to hedge these parts of the portfolio.
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
3.7.1 Financial assets recognised at fair value
through profit or loss
This category consists of two subcategories: heldfortrading
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 deriv
atives that are not bifurcated and measured separately. Financial
assets held under investmentlinked life insurance contracts
are also designated as “recognised at fair value through profit
or loss”.
3.7.2 Held-to-maturity financial assets
Heldtomaturity financial assets are nonderivative 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
Availableforsale financial assets are nonderivative financial
instruments that have been classified as “available for sale” or
have not been designated to any of the abovementioned 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”.
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.
Availableforsale financial assets and financial assets
recognised at fair value through profit or loss are measured at
fair value. Heldtomaturity 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 availableforsale financial assets are rec
ognised directly in equity. If availableforsale 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
finan cial 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.
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 presentvalue method), independent assess
ments based on comparisons with the market prices of similar
instruments or the prevailing market situation.
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Notes to the consolidated annual financial statements
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 nonpublic information from independent external
providers. These providers use various methods for their esti
mates (e.g. analysis of discounted cash flows and reference to
similar, fairly recent arm’slength transactions between knowl
edgeable, willing parties).
If the fair value of hedge funds cannot be determined on
the basis of publicly quoted prices, then prices quoted by inde
pendent external parties are used for measurement purposes.
If such estimates do not enable financial assets to be reli
ably measured, the assets are recognised at cost (less allowance)
and disclosed accordingly.
3.8 Mortgages and loans
Mortgages and loans (including policy loans) are financial instru
ments 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 (nat
ural hedges) are designated as “at fair value through profit or
loss”. Presentvalue models are used to measure these portfolios.
3.9 Receivables
Other receivables are recognised at amortised cost less any
impair ment losses recognised for nonperforming 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
heldtomaturity financial assets may be permanently impaired,
the impairment loss represents the difference between the asset’s
carrying amount and the present value of future cash flows,
which are discounted using the financial asset’s relevant effec
tive interest rate. If the amount of the impairment loss decreases
in a subsequent reporting period and if this decrease can be
attributed to an event that has objectively occurred since the
impairment was recognised, the previously recognised impair
ment loss is reversed.
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Notes to the consolidated annual financial statements
The mortgage portfolio is regularly tested for impairment. If
there is objective evidence that the full amount owed under the
original contractual terms and conditions or the relevant pro
ceeds of a receivable cannot be recovered, an impairment loss
is recognised. Loan exposures are individually evaluated based
on the nature of the borrower concerned, its financial position,
its credit history, the existence of any guarantors and, where
appropriate, the realisable value of any collateral security.
3.10.2 Financial assets measured at fair value
The Baloise Group determines at each balance sheet date whether
there is any objective evidence that availableforsale 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 twelvemonth 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 availableforsale 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 availableforsale
financial instruments with characteristics of liabilities if their
fair value is significantly impaired by default risk.
If the fair value of an availableforsale 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
cashgenerating units (CGUs) for the purposes of impairment
testing. Insurance companies that sell both life and nonlife
products (socalled 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 discounted
future cash flows (usually dividends) that could potentially be
returned to the parent company. This process takes appropriate
account of legal requirements and internally specified capital
adequacy limits. The longterm financial planning approved by
management forms the basis for this calculation of the value in
use for a period of at least three years and no more than five
years. These values are extrapolated for the subsequent period
using an annual growth rate. The growth rate is based on the
expected inflation rates of the individual countries. The discount
rates include the risk markups for the individual operating
segments. 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 impair
ment losses less depreciation or amortisation.
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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 nonexistent. 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 rec
ognised 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 rec
ognised 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 statement
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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Notes to the consolidated annual financial statements
3.13 Non-current assets held for sale and
discontinued operations
Noncurrent assets (or disposal groups) held for sale that meet
the criteria stipulated in IFRS 5 “Noncurrent 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 shortterm liquid investments with residual terms of no
more than three months.
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 Ltd, 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 paidup share capital in excess of
par value (share premium), Bâloise Holding Ltd share options,
gains and losses on the purchase and sale of treasury shares and
embedded options in Bâloise Holding Ltd convertible bonds.
3.15.3 Treasury shares
Treasury shares held either by Bâloise Holding Ltd or by subsid
iaries 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 Ltd
shares are classified as treasury shares.
3.15.4 Unrealised gains and losses (net)
This item includes changes in the fair value of availableforsale
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
owneroccupied 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 noncontrolling 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 Ltd are only recognised once
they have been approved by the Annual General Meeting.
3.15.6 Non-controlling interests
Noncontrolling 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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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 timing or amount of the benefits payable is contrac
tually 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.
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 finan
cial contracts. Such financial contracts may include a discretionary
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 internal
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 redetermined. 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 ben
efits 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
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 nonlife products contain sufficient insurance
risk to be classified as insurance contracts under IFRS 4. The
nonlife 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 governmentregulated 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 mediumsized
businesses in the form of socalled group insurance.
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
→ General liability
In addition to conventional personal liability insurance
the Baloise Group also sells thirdparty indemnity policies
for certain professions. In Switzerland and Germany it
offers policies – especially combined products – for small
and mediumsized enterprises and for industrial partners
that include features such as product liability.
→ Motor
The two standardised products common in the market –
comprehensive and thirdparty 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 thirdparty liabil
ity component in addition to the usual cargo insurance.
→ Miscellaneous
This category generally comprises small segments such
as credit protection insurance and legal expenses insur
ance. 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 contrib
utions 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 recognised 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 mathematicalstatistical
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 casebycase basis. Neither of these components is
subject to discounting. The third component consists of reserves
for annuities that are discounted using basic actuarial principles
such as mortality and the technical interest rate and are largely
derived from claims in the motor, liability and accident insur
ance businesses.
Actuarial methods are used to calculate by far the largest
proportion of claims reserves. To this end, the Baloise Group
selects actuarial forecasting methods that are appropriate for
each sector, insurance product and existing claims history.
Additional market data and assumptions obtained from insur
ance rates are used if the claims history available on a customer
is inadequate. The Baloise Group mainly applies the chain ladder
method, which is the most widely used, triedandtested pro
cedure. This method involves estimating the number and amounts
of claims incurred over time and the proportion of claims that
are reported to the insurer either with a time lag or after the
balance sheet date. The proportion of these socalled incurred
butnotreported (IBNR) claims is exceptionally important,
especially in operating segments involving thirdparty 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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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 socalled
“runoff 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 insur
ance segments with longer runoff periods, such as thirdparty
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 prof
itability 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 nonlife 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 automat
ically 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 lossmaking insurance contracts
in existence at the balance sheet date), the deferred acquisition
costs are initially reduced by the respective amount. If the total
amount of deferred acquisition costs is insufficient or if the
resultant liability cannot be covered in full, a separate provision
for impending losses equivalent to the residual amount is rec
ognised under other technical reserves.
3.18 Life insurance contracts and financial contracts
with discretionary participation features
IFRS 4 gives users the option of accounting for insurance contracts
and financial contracts with discretionary participation features
by continuing to apply the existing accounting policies described
in section 1 below 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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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 mini
mum level and this increase is recognised in profit or loss.
unitlinked 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 port folio.
It is initially measured in accordance with actuarial principles
and is amortised on a straightline basis. It is regularly tested
for impairment as part of a liability adequacy test.
The accounting policies applied by the Baloise Group are de
scribed 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
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 benefits,
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 policyholders’ dividends
credited and reserves for future policyholders’ dividends (chap
ter 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.
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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 accord
ing to policyholders’ share of the unrealised gains and losses
recognised directly in equity under IFRS and their share of the
increases and decreases recognised in profit or loss in the 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 component 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 min
imum quota has been stipulated, all other measurement differ
ences between the local and IFRS financial statements are rec
ognised 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 policyholders
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 LebensversicherungsAG, 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
nonlife insurance and as gross actuarial reserves for life insur
ance. In nonlife 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 nonlife
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.
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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.
3.20.2 Measured at amortised cost
Liabilities measured at amortised cost include savings deposits,
mediumterm bonds, mortgagebacked 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 amortisedcost
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). Acqui
sition 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 amortisedcost 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 shortterm benefits (such
as wages and salaries), longterm benefits (such as longservice
bonuses), termination benefits (such as severance pay and social
compensation plan benefits) and postemployment benefits. The
benefits described below may be especially significant owing to
their scale and scope.
3.22.1 Post-employment benefits
The main postemployment 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 entitle
ments effectively received and those calculated using actuarial
assumptions give rise to actuarial gains and losses that must be
recognised directly in other comprehensive income.
The Baloise Group’s pension plan agreements are tailored
to local conditions in terms of enrolment and the range of
benefits offered.
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Baloise Group Financial Report 2016
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, Share Partici
pation Plan and Performance Share Units (PSUs) are measured
and disclosed in compliance with IFRS 2 Sharebased Payment.
Plans that are paid in Bâloise Holding Ltd shares are measured
at fair value on the grant date, charged as personnel expenses
during the vesting period and recognised directly in equity.
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 taxrelated 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 juris
diction, 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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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
4. KEY ACCOUNTING JUDGEMENTS, ESTIMATES
AND ASSUMPTIONS
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 con
stant 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.
The following asset classes are measured at fair value:
→ Investment property
The 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 com
parisons with the market prices of similar instruments
or the prevailing 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 nonpublic
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’slength 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 investmentlinked life insurance
contracts involving little or no transfer of risk are meas
ured at fair value based on the capitalised investments
underlying these liabilities.
→ Derivative financial instruments
Models or quoted market prices are used to determine
the fair value of derivative financial instruments.
4.2 Financial instruments with characteristics of liabilities
(held to maturity)
The Baloise Group applies the provisions of IAS 39 when clas
sifying nonderivative 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 heldtomaturity 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”.
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Baloise Group Financial Report 2016
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 per
manently impaired.
→ Financial instruments with characteristics of equity
(available for sale)
An impairment loss must be recognised on availablefor
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
twelvemonth 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.
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Baloise Group Financial Report 2016
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 personal
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
margins. 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 policyholders’
dividends into line with altered circumstances as far as permit-
ted 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, includ-
ing 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 incor-
porated 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 simu-
lations 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.
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
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 identified to a level that is acceptable for the Group, or
eliminate them completely.
Within the Group and within each business unit, a risk
owner is responsible for each individual risk that has been iden-
tified. Risk owners are allocated according to a hierarchy of
responsibility. The Group’s overall risk owner is the Chief Executive
Officer of the Baloise Group. Alongside the risk owners, defined
risk controllers are responsible for systematic risk control and
risk reporting. When selecting risk controllers, particular care
is taken to ensure that their role is independent of the risk they
control. Risk control within the Baloise Group focuses on invest-
ment risk, business risk (actuarial and banking risks), risks to
the Group’s financial structure and operational risks including
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
140
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
coordinates intra-Group policies, risk reporting and the tech-
nical development of suitable risk management processes and
tools. Every month, it tracks developments in the financial mar-
kets 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 man-
agement decisions.
An 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 con-
trol application.
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
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
→ Parameter risks
→ Interest
→ Interest fluctuation
→ Data
organisation
→ Worst-case scenario
→ Shares
risk
Competitive risk
→ Software /
→ Currencies
→ (Re) financing,
hardware / network
Corporate culture
Technical risks, Non-Life
→ Real estate
liquidity
External events
→ Physical reliability
→ Premiums
→ Claims
→ Market liquidity
→ End User Computing
Strategy
→ Derivatives
Concentration of risks
Investors
→ Business portfolio
→ Worst-case scenario
→ Alternative
→ Accumulation risks
Personnel risks
→ Risk steering
→ Creation of
provisions
Reinsurance
→ Premiums / rating
→ Default
→ Active reinsurance
investments
→ Cluster risks
→ Skills / capacities
→ Knowledge availability
Merger and acquisitions
Credit risks
Requirements for
→ Incentive systems
balance-sheet structure
and capital
→ Solvency ratio
→ Other regulatory
requirements
Legal risks
→ Contracts
External
communication
→ Liability and litigation
Financial statement,
→ Tax
forecast, plan
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
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
5.2 Life and non-life underwriting strategies
The Baloise Group primarily underwrites insurance risk for
private individuals and small and medium-sized enterprises in
selected countries in mainland Europe. Industrial insurance in
the property and third-party liability, marine and technical
insurance sectors is largely provided by Baloise Insurance in
Basel or its branch in Bad Homburg (Germany) and our Belgian
business unit Baloise Insurance Belgium. In this particularly
high-risk segment, central management of industrial insurance
ensures consistent quality and a high degree of transparency
for the business underwritten.
Every business unit in the Baloise Group issues regulations
regarding underwriting and risk review. They include clear
authorisation levels and underwriting limits for each sector.
Underwriting limits are approved by a business unit’s highest
decision-making body, and the Corporate Executive Committee
is notified of them. In the industrial insurance unit, the maximum
net underwriting limit for property insurance amounts to
CHF 150 million for Switzerland and EUR 100 million for Ger-
many 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 insur-
ance risk.
For its exposure to natural hazards the Baloise Group has
purchased reinsurance cover for the whole Group amounting
to CHF 250 million and cover for earthquakes amounting to
CHF 350 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 is
CHF 20 million. The retentions for individual claims are
CHF 16 million for property claims, CHF 15 million for marine
claims and CHF 13.7 million on a non-indexed basis for third-
party liability claims. The local Baloise Group business units
also use additional facultative reinsurance cover on a case-by-
case basis. This type of reinsurance 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 Corporate
Division Finance. Reinsurers must generally have a minimum
rating of A – from Standard & Poor’s, but in exceptional cases
– and in specific circumstances – a BBB + rating or a comparable
rating from another recognised rating agency is permitted.
However, these reinsurance contracts are only used for prop-
erty insurance business that can be settled quickly. This rule
does not apply to captives and pools that are active reinsurance
companies because they do not generally have ratings.
Reinsurer credit risk is reviewed on a regular basis. A watch
list is kept of reinsurers that are bankrupt or in financial diffi-
culties. The list contains details of all relationships the Group
has with these reinsurers, receivables due to the Group that are
outstanding or have been written off and provisions the Group
has recognised. The watch list is updated periodically.
The same requirements for reinsurers apply to life insur-
ance as to non-life insurance, although reinsurance is a less
important instrument for ceding risk in life insurance business.
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Baloise Group Financial Report 2016
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, particularly
with regard to the latest longevity data.
5.4.4 Sensitivity analysis
As well as the natural volatility inherent in insurance business,
there are parameters for determining technical reserves that
can significantly impact on the annual earnings and equity of
an insurance company. In the non-life sector, sensitivity analysis
has been used to investigate the effect on consolidated annual
earnings and consolidated equity exerted by errors in estimating
claims reserves – including claims incurred but not reported
(IBNR) – and reserves for run-off business.
At the end of 2016, the Baloise Group’s total reserves cal-
culated using actuarial methods or recognised separately for
special claims (including large claims but not run-off or actu-
arial reserves for annuities) amounted to CHF 4,324.4 million
(2015: CHF 4,372.5 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 316.2 million (2015: CHF 318.6 mil-
lion) 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 identified
and their potential loss level are much less certain than any
other established claims patterns. Some reserves were calculated
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 6.5 million
after taxes and before reinsurance (2015: CHF 6.6 million) for
this reserve.
07_FB_Kapitel_05_bis_05.7_en 143
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Baloise Group Financial Report 2016
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
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Total
Year in which the claims occurred
681.4
641.7
690.7
723.1
777.9
732.2
768.5
733.6
707.8
704.8
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
693.2
686.6
674.2
662.3
655.7
643.7
628.5
625.6
614.0
614.0
631.4
628.6
623.6
622.6
606.8
597.8
594.3
580.7
–
670.6
657.4
641.0
634.4
638.6
632.8
617.2
–
–
685.4
675.1
666.9
659.6
653.0
650.4
–
–
–
736.5
731.0
729.1
722.7
717.3
–
–
–
–
751.1
736.9
726.3
717.0
–
–
–
–
–
768.2
764.1
764.7
–
–
–
–
–
–
715.7
701.2
–
–
–
–
–
–
–
667.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
580.7
617.2
650.4
717.3
717.0
764.7
701.2
667.8
704.8
6,735.1
–
–
–
–
–
–
–
–
–
–
Claims paid
– 569.5
– 520.7
– 561.9
– 578.8
– 620.2
– 631.7
– 664.1
– 588.5
– 530.4
– 361.4 – 5,627.2
Gross claims reserves
44.5
60.0
55.3
71.6
97.1
85.3
100.6
112.7
137.4
343.4
1,107.9
393.6
804.7
– 20.6
2,285.6
Gross claims reserves
prior to 2007 (including
large claims and
assumed business)
Gross provision
for annuities
(non-life, including
IBNR)
Reinsurers’ share
Net claims reserves
144
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Baloise Group Financial Report 2016
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
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Total
Year in which the claims occurred
306.7
298.2
288.0
302.5
290.8
297.4
382.9
319.3
319.0
332.6
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
303.0
295.5
294.1
293.1
299.3
299.8
303.0
304.2
303.4
303.4
296.2
299.7
300.3
301.2
300.6
301.4
301.2
301.3
–
286.4
289.0
294.6
294.8
295.1
297.1
296.2
–
–
299.7
305.6
305.8
306.0
307.9
305.2
–
–
–
297.6
300.9
306.6
309.8
311.7
–
–
–
–
298.4
302.5
304.3
302.6
–
–
–
–
–
384.7
385.9
397.6
–
–
–
–
–
–
330.5
334.7
–
–
–
–
–
–
–
322.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
301.3
296.2
305.2
311.7
302.6
397.6
334.7
322.3
332.6
3,207.6
–
–
–
–
–
–
–
–
–
–
Claims paid
– 300.0
– 296.8
– 289.4
– 296.3
– 297.8
– 290.5
– 360.7
– 283.3
– 250.3
– 149.0 – 2,814.1
Gross claims reserves
3.4
4.5
6.8
8.9
13.9
12.1
36.9
51.4
72.0
183.6
Gross claims reserves
prior to 2007 (including
large claims and
assumed business)
Gross provision
for annuities
(non-life, including
IBNR)
Reinsurers’ share
Net claims reserves
07_FB_Kapitel_05_bis_05.7_en 145
393.5
371.1
156.6
– 288.6
632.6
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
ESTIMATED CUMULATIVE CLAIMS INCURRED IN BELGIUM
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Total
Year in which the claims occurred
203.2
205.7
228.0
235.1
308.7
1 412.4
2 403.6
483.7
459.9
470.3
216.3
213.1
208.7
211.1
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
215.2
212.3
216.5
226.7
223.8
219.8
–
248.5
252.2
250.7
252.5
248.5
–
–
387.9
392.5
388.6
–
–
–
–
308.1
306.0
306.0
–
–
–
402.5
398.0
396.7
–
–
–
–
–
–
494.3
488.7
–
–
–
–
–
–
–
476.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
421.9
412.9
410.7
–
–
–
–
–
219.8
248.5
306.0
388.6
410.7
396.7
488.7
476.0
470.3
3,618.7
Five years later
1 222.6
2 222.5
Six years later
Seven years later
Eight years later
Nine years later
Estimated claims
incurred
2 221.8
217.8
219.0
213.4
213.4
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
–
–
–
–
–
–
–
–
–
–
Claims paid
– 175.1
– 183.3
– 213.2
– 256.9
– 318.3
– 348.4
– 331.7
– 400.6
– 333.0
– 220.4 – 2,780.9
Gross claims reserves
38.3
36.5
35.3
49.1
70.3
62.3
65.0
88.1
143.0
249.9
Gross claims reserves
prior to 2007 (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.
837.8
292.4
157.7
– 302.3
985.6
146
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
ESTIMATED CUMULATIVE CLAIMS INCURRED IN LUXEMBOURG
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Total
Year in which the claims occurred
14.2
15.0
17.5
1 25.0
1 23.6
24.0
23.6
2 36.8
3 43.8
49.8
13.6
13.0
12.9
1 18.9
18.7
18.6
2 35.0
3 40.1
59.0
59.0
14.9
15.1
1 20.8
21.1
20.9
2 37.9
3 43.4
61.8
–
61.8
16.9
1 21.5
21.3
21.1
2 36.2
3 42.0
60.3
–
–
1 22.0
21.8
21.7
2 37.0
3 41.9
59.9
–
–
–
22.7
22.6
2 35.3
3 39.7
57.4
–
–
–
–
24.5
2 36.5
3 39.9
57.3
–
–
–
–
–
2 37.8
3 41.2
57.7
–
–
–
–
–
–
3 40.8
57.1
–
–
–
–
–
–
–
57.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
60.3
59.9
57.4
57.3
57.7
57.1
57.9
49.8
578.2
–
–
–
–
–
–
–
–
–
–
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
– 58.6
– 61.3
– 59.4
– 58.9
– 56.2
– 55.9
– 55.5
– 54.3
– 52.3
– 30.4
– 542.8
Gross claims reserves
0.4
0.5
0.9
1.0
1.2
1.4
2.2
2.8
5.6
19.4
Gross claims reserves
prior to 2007 (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 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 55.7 years (2015: 42.7 years).
07_FB_Kapitel_05_bis_05.7_en 147
35.4
52.6
0.0
– 20.3
67.7
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Baloise Group Financial Report 2016
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
31.12.2015 (restated)
CHF million
Switzerland
individual life
Switzerland
group life
Germany
Belgium
Luxembourg
Technical reserves without guaranteed returns
Technical reserves with 0 % guaranteed returns
656.4
645.7
1,887.1
730.5
3,337.6
74.9
62.2
82.7
Technical reserves with guaranteed positive returns
7,373.6
15,093.9
6,385.6
2,777.8
Average technical interest rate
of guaranteed positive returns
2.6 %
1.5 %
3.3 %
3.5 %
272.8
22.4
426.2
2.6 %
31.12.2016
Technical reserves without guaranteed returns
Technical reserves with 0 % guaranteed returns
Switzerland
individual life
Switzerland
group life
668.5
621.8
2,183.3
686.3
Germany
3,362.5
82.1
Technical reserves with guaranteed positive returns
7,095.9
15,461.3
6,365.7
2,766.7
Average technical interest rate
of guaranteed positive returns
2.6 %
1.4 %
3.2 %
3.4 %
Belgium
Luxembourg
112.9
91.3
248.3
23.3
452.6
2.6 %
The guaranteed technical interest rate is one of the risks inherent in traditional life insurance and group life business.
If interest rates rise, there is the risk that more policies will be cancelled, and the payment of surrender values
could cause liquidity problems. This risk can be reduced by imposing surrender charges. In the past, no significant
correlation has been observed between rises in interest rates and the number of major policies cancelled.
When interest rates fall, there is the risk that investment income may no longer be sufficient to fund the tech-
nical 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.
148
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
If the policyholder dies, the beneficiary receives the sum insured or the fund assets, if the latter exceed the sum
insured. A risk premium is periodically charged to the fund to finance the death benefit cover if there is capital at
risk (i.e. the positive difference between the sum insured and the fund assets).
Depending on the product, the fund underlying the savings process is selected from a range of funds that
match the policyholder’s investment profile. The policyholder usually bears the entire investment risk and may
benefit from a positive return.
Neither the cash surrender value nor the maturity value of unit-linked life insurance is guaranteed, but the
maturity value is partly secured by the choice of fund. The funds are typically those with the type of investment
strategy (e.g. the proportion of equities falls if share prices fall) that guarantees the maturity value for a specific
policy term. This type of business is offered in Switzerland and Germany. The guaranteed maturity value of these
specific life insurance policies may differ somewhat from the fund value because of the way the policies are struc-
tured. This risk has been factored into actuarial calculations.
In Switzerland, there is a closed sub-portfolio with a guaranteed interest rate. The guarantee was issued as
part of the statutory pension scheme (Pillar 3a). On the endowment date, the policyholder receives the value of the
fund units or the net investment premium plus accrued interest at the technical interest rate (3.25 per cent), which-
ever is the greater. The funds approved for these policies have a low equity ratio and are therefore not exposed to
high volatility. A corresponding actuarial reserve has been recognised for the guarantee.
Some closed-end funds in Belgium and Switzerland also offer a guaranteed maturity value. The funds are
managed and the guarantees are provided by banks outside the Baloise Group. In Switzerland there is also a closed-
end Baloise fund with a guaranteed maturity value which is hedged via investments in bonds issued by banks
outside the Group.
The Baloise Group 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.
as at 31.12.
CHF million
Actuarial reserves
from unit-linked
life insurance contracts
Switzerland
Germany
Belgium
Luxembourg
2015
2016
2015
2016
2015
2016
2015
2016
620.2
639.1
1,736.2
1,847.5
15.8
17.4
250.5
223.3
The major risks accruing from term insurance include epidemics and terrorist attacks but also changes in lifestyle
such as lack of exercise. Endowment policies incur significant risks arising from the increase in life expectancy,
which is likely to continue due to medical advances and rising living standards.
The risks listed above do not vary greatly within this area of activity.
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Baloise Group Financial Report 2016
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 com-
panies – 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
31.12.2015
Actuarial reserves
31.12.2016
CHF
million
Share (%)
CHF
million
Share (%)
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
10,572.4
9,919.2
1,772.2
11,289.4
33,553.2
1,417.6
1,309.7
2,727.3
29.1
27.3
4.9
31.1
92.5
3.9
3.6
7.5
35,781.9
100.0
36,280.5
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.
150
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Baloise Group Financial Report 2016
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. This effect improved profitability by around CHF 42 million (2015:
CHF 17 million). This year-on-year increase was because the discount rate for loss reserves changed more in 2016
than it had in 2015, thus improving profitability to a greater extent.
→ 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 (Liech-
tenstein) 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 75 million (2015: CHF 69 million) on the income statement. In line with the aforemen-
tioned scenario of an increase in mortality, the effect on equity in Switzerland was minor.
07_FB_Kapitel_05_bis_05.7_en 151
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Baloise Group Financial Report 2016
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 positive effect from the German units’ profitability in the
reporting year of CHF 2 million (2015: marginal negative effect). The negative impact on equity amounted to
approximately CHF 5 million (2015: CHF 5 million). In Belgium this scenario resulted in a slight increase in
DACs and to lower amounts being allocated to the provision recognised for impending losses, which constituted
a positive effect of roughly CHF 7 million on profitability (2015: CHF 2 million). The negative effect on unrealised
gains amounted to CHF 94 million (2015: CHF 86 million). In Luxembourg this scenario produced a marginal
positive impact on the income statement and an adverse effect of roughly CHF 14 million (2015: CHF 11 million)
on the unrealised gains and losses recognised in equity. The resultant impact on the profitability and equity of
Baloise Life (Liechtenstein) AG was negligible. In Switzerland this scenario resulted in a reversal of DAC write-
downs, a reduction in technical reserves, and the offsetting effect of interest rate hedges. This improved profitability
overall by roughly CHF 4 million (2015: CHF 5 million). The adverse impact on equity amounted to approximately
CHF 196 million (2015: CHF 188 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 more than compensated for by the increase in the fair value of interest rate
derivatives in 2016. The overall impact was mitigated by the prevailing legal requirements governing the distri-
bution of surpluses. On balance there was a negative effect from the German units’ profitability in the reporting
year of approximately CHF 5 million (2015: marginal positive effect). The positive impact on their equity amounted
to approximately CHF 5 million (2015: CHF 4 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 21 million on
the income statement (2015: CHF 18 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 109 million (2015: CHF 96 million). In Luxembourg this scenario produced a marginal impact on the income
statement (2015: marginal negative effect) and a positive effect of roughly CHF 15 million (2015: CHF 13 million)
on the unrealised gains and losses recognised in equity. The resultant impact on the profitability and equity of
Baloise Life (Liechtenstein) AG was negligible. In Switzerland this scenario resulted in a 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 19 million on the income statement (2015: CHF 46 million). The positive
impact on equity amounted to approximately CHF 195 million (2015: CHF 188 million).
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.
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
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 impairment
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 fluctuations
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-bearing ability available.
Stress tests are also designed and run for this purpose. They act as an early-warning system and their impact
can be simulated for all areas of the Group and their performance.
The effect of stress-testing key financial figures is measured on a monthly basis. The underlying stress scenario
(potential loss arising from a risk) is reviewed regularly and modified as necessary. The scale of a stress test is
generally based on the simple annual volatility of the financial risk under review, the once-in-a-hundred-years
occurrence of a business risk or standard international practice.
The life insurance companies in the Baloise Group manage their risk associated with changes in interest rates
directly, by means of appropriate strategic asset allocation. Specific factors such as risk-bearing capacity and the
ability to fund guarantees are taken into account when allocating assets. The decision-making process also incor-
porates the asset managers’ expectations regarding the capital markets and customers’ expectations regarding life
insurance.
The Baloise Group’s chief investment officer (CIO) reviews the strategic asset allocation undertaken by all
business units twice a year.
The banks also use an appropriate asset and liability management system to monitor and manage interest rate
risk. Interest rate risk is incurred only in proportion to business volume and business activities. Interest rate risk is
measured using software based on gap, duration and interest rate sensitivity methods. The asset and liability mis-
match at Baloise Bank SoBa is also actively managed by the use of appropriate interest rate derivatives, generally
fair value hedges.
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Baloise Group Financial Report 2016
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 51 million
(31 December 2015: CHF 69 million). Including the impact on profit for the period, equity (after shadow accounting,
deferred gains / losses and deferred taxes) would have risen by CHF 181 million (31 December 2015: CHF 146 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 19 million
(31 December 2015: CHF 5 million). Including the impact on profit for the period, equity (after shadow accounting,
deferred gains / losses and deferred taxes) would have fallen by CHF 220 million (31 December 2015: CHF 241 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 rate 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 1.4 million (31 December 2015: + / – CHF 2.4 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.
154
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Baloise Group Financial Report 2016
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.
as at 31.12.
CHF million
Forward contracts
Swaps
OTC options
Other
Traded options
Traded futures
Total
Fair value assets
Fair value liabilities
2015
2016
2015
2016
7.2
0.8
10.5
27.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7.2
0.8
10.5
27.5
CHF million
Amount recognised directly in equity
Hedge ineffectiveness reclassified to the income statement
2015
2016
– 0.2
–
– 14.8
–
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 2016 the Group’s Swiss companies did hold a net position in
euros equivalent to CHF 765.2 million (2015: 643.8) and a net position in US dollars equivalent to CHF 8.3 million
(2015: CHF – 11.2 million). The remaining foreign exchange positions, both assets and liabilities, were negligible.
During the year, the aggregated hedge ratio for the net foreign exchange exposure in US dollars ranged from
80 per cent to 100 per cent and in euros ranged from 90 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.
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Baloise Group Financial Report 2016
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.
156
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
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
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
Pfandbriefzentrale der schweizerischen Kantonalbanken AG
Kingdom of the Netherlands
European Investment Bank, Luxembourg
31.12.2015
3,639.1
2,522.9
2,193.3
1,657.6
1,567.5
982.6
921.2
865.2
567.1
31.12.2016
3,671.8
2,590.6
1,970.0
1,649.0
1,531.9
996.1
937.0
827.4
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
MA XIMUM DEFAULT RISK OF FINANCIAL ASSETS
CHF million
Financial assets of a debt nature
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
31.12.2015
31.12.2016
18,838.6
18,351.8
4,950.7
7,815.9
15.4
6,425.5
7,269.6
15.2
10,999.7
10,852.6
141.0
4,382.5
131.8
4,349.5
917.8
28.1
–
323.7
363.2
9.9
410.8
52.3
389.4
317.5
491.3
838.1
25.7
–
325.1
363.0
4.2
415.2
47.5
383.5
489.7
451.6
1,765.8
1,935.5
If no contractually irrevocable future loan commitments have been agreed, the maximum default risk of financial assets corresponds to the carrying amount of the assets
for own account and at own risk. In addition, guarantees and collateral for the benefit of third parties totalled CHF 672.8 million (2015: CHF 524.3 million).
158
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Baloise Group Financial Report 2016
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.
08_FB_Kapitel_05.8_bis_06_en 159
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
CREDIT RATINGS OF FINANCIAL ASSETS THAT WERE NEITHER OVERDUE NOR IMPAIRED
as at 31.12.2015
CHF million
Financial assets of a debt nature
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
AAA
AA
A
Lower than BBB
or no rating
BBB
Total
7,114.9
153.0
4,835.2
0.2
99.1
–
9,507.8
1,199.6
859.3
–
1,163.8
2,484.8
1,214.6
15.2
988.0
8,490.5
–
1,563.4
2,464.1
22.9
225.9
–
–
2.3
131.9
–
–
–
0.0
34.6
136.5
663.1
–
–
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
160
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
CREDIT RATINGS OF FINANCIAL ASSETS THAT WERE NEITHER OVERDUE NOR IMPAIRED
as at 31.12.2016
CHF million
Financial assets of a debt nature
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
AAA
AA
A
Lower than BBB
or no rating
BBB
Total
6,655.5
196.2
4,716.4
0.2
97.5
–
–
1,697.2
2,320.4
14.5
131.4
–
–
4.4
91.2
–
–
–
0.0
135.8
128.2
914.0
–
–
29.6
30.2
–
188.8
14.3
7.9
19.2
106.2
266.3
8,891.6
1,150.3
729.5
15.0
1,301.2
3,448.7
1,164.7
–
924.4
1,574.7
373.2
–
888.2
8,353.6
1,004.1
–
54.6
42.3
–
–
122.4
164.7
–
171.2
22.0
9.6
113.7
45.4
674.1
–
35.4
25.2
–
–
83.4
31.0
–
5.0
0.1
0.8
18.1
27.7
19.5
579.2
55.6
285.9
–
210.7
131.8
241.8
624.6
25.7
–
65.9
45.8
4.2
46.1
11.1
238.8
172.8
125.6
61.5
18,351.8
6,425.5
7,269.6
15.2
10,554.2
131.8
4,349.5
838.1
25.7
–
305.7
363.0
4.2
411.2
47.5
257.1
459.6
433.1
1,935.5
Total
14,651.2
14,789.2
15,688.1
4,122.7
2,927.2
52,178.4
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 2016, financial assets amounting to CHF 1.8 million (2015: CHF 1.8 million) and cash and cash equivalents
of 0.1 million (2015: 0.1 million) from collateral received were used.
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
FINANCIAL ASSETS IMPAIRED
as at 31.12.
CHF million
Financial assets of a debt nature
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
2015
2016
–
2.7
0.4
–
–
– 2.7
– 0.4
–
–
–
–
–
–
2.7
0.7
–
146.1
– 31.2
114.9
147.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.1
–
–
–
–
– 2.7
– 0.7
–
– 24.3
–
– 2.1
–
–
–
–
–
–
–
122.7
–
–
–
–
–
Other loans
38.2
– 13.7
24.5
28.5
– 15.3
13.2
Receivables from financial contracts
Reinsurance assets
Receivables from reinsurers
Insurance receivables
Other receivables
Receivables from investments
Total
–
–
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
–
–
0.1
132.6
5.1
20.1
338.9
–
–
– 0.1
– 37.3
– 1.8
– 1.6
– 85.9
–
–
0.0
95.2
3.3
18.5
253.0
162
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
FINANCIAL ASSETS OVERDUE BUT NOT IMPAIRED
as at 31.12.2015
CHF million
Financial assets of a debt nature
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
< 3 months
3 – 6 months
7 – 12 months
> 12 months
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
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
FINANCIAL ASSETS OVERDUE BUT NOT IMPAIRED
as at 31.12.2016
CHF million
Financial assets of a debt nature
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
< 3 months
3 – 6 months
7 – 12 months
> 12 months
Total
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.3
13.3
0.0
0.1
13.7
–
–
–
–
–
0.1
–
–
–
10.7
0.1
–
11.1
–
–
–
–
–
–
–
–
–
7.0
0.0
0.0
20.4
–
–
–
–
–
0.0
–
–
–
9.0
0.0
–
9.1
–
–
–
–
–
0.0
–
4.0
–
4.5
0.0
–
8.7
–
–
–
–
–
0.1
–
4.0
–
31.2
0.2
0.0
49.2
5.8 Liquidity risk
Banks as well as insurance companies incur latent liquidity risk. This refers to the risk of rapid outflows of large
volumes of liquidity that cannot be offset by asset sales or for which alternative funding cannot be implemented
quickly enough. In extreme cases, a lack of liquidity can result in insolvency. Legal provisions apply and the Group-
wide Risk Management Standards require each business unit to plan its liquidity centrally. This is carried out with
the close collaboration of the investment, actuarial, underwriting and finance departments of each business unit.
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Baloise Group Financial Report 2016
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 31.12.2015
‹ 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
Liquidity risk as at 31.12.2016
‹ 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
2,208.8
1.1
1.2
106.3
2,317.4
2,317.4
6,295.5
3,406.0
255.9
40.2
237.4
971.1
489.9
1,427.8
289.9
–
232.4
24.1
24.6
593.4
23.7
172.8
596.3
6,148.2
819.2
445.2
8,000.9
9,999.4
8,000.9
9,999.4
590.9
540.9
1,620.1
1,470.4
0.0
9.4
–
3.8
260.2
15.7
27.6
0.6
20.5
12.4
80.0
299.0
1,565.2
537.9
1,873.1
15,332.6
1,362.1
7,610.0
1,988.5
26,293.1
1 Based on undiscounted contractual cash flows.
2 All demand deposits are included in the first maturity band.
Please refer to the tables in chapter 23 for the residual terms and maturities of technical reserves.
08_FB_Kapitel_05.8_bis_06_en 165
80.0
299.0
1,565.2
537.9
–
–
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
In accordance with the Group-wide Risk Management Standards, asset and liability management committees have
been introduced in all strategic business units in the Baloise Group. These asset and liability management commit-
tees analyse maturity schedules and the income generated by assets or required for liabilities.
As part of tactical and strategic investment planning, care is taken when allocating the assets held by the
individual life and non-life insurance units in the Baloise Group to ensure that sufficient liquidity is available to
carry out investment activity and for the operational settlement of all business processes. The level of liquidity
required is determined on the basis of the maturity structure of investments versus the payout schedule for insur-
ance-related liabilities. The average historical pattern of incoming and outgoing cash management payments over
the previous five years is also taken into account. Investment planning explicitly includes exceptionally large incoming
or outgoing payments that are known in advance. 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 invest-
ments). Because the Group holds a substantial portfolio of government and quasi-government bonds, it is possible
to sell relatively large holdings of available-for-sale bonds even in crisis situations. Mortgages and loans are generally
held to maturity; early redemption is not considered at present. In terms of alternative financial assets, 68 per cent
of hedge funds can be sold within three months. Private-equity investments have to be considered illiquid in this
context, and it is not possible to sell investment property to generate immediate liquidity.
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Baloise Group Financial Report 2016
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)
2015
2016
2015
2016
54.2
– 75.0
57.4
– 77.6
266.8
– 266.3
264.9
– 267.3
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.
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Baloise Group Financial Report 2016
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.
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Baloise Group Financial Report 2016
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
Net asset value
Net asset value
Price of underlying instrument,
liquidity discount, balance sheet
and income statement figures
n.a.
n.a.
Available for sale
Present-value model
At fair value through profit or loss
Present-value model
Yield curve,
swap rates, default risk
Interest rate, credit spread,
market price
Mortgages and loans
At fair value through profit or loss
Present-value model
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
Financial instruments
with characteristics of liabilities
Derivative financial instruments
Investment property
Black-Scholes
option pricing model
Money market interest rate, volatility,
price of underlying instrument,
exchange rates
Black-76
Volatility, forward interest rate
Stochastic
present-value model
Present-value model
Investment fund prices,
interest rates, cancellation rate
LIBOR, swap rates
Net asset value
n.a.
Present-value model
Interest rate, credit spread
Net asset value
DCF method
–
–
–
–
–
–
–
–
–
–
n.a.
–
n.a.
n.a.
Discount rate 1
3.0 % – 5.6 % 3
Rental income 2 290 – 320 CHF million 3
Vacancy costs 1
10 – 15 CHF million 3
Running costs 1
24 – 27 CHF million 3
Maintenance costs 1
26 – 30 CHF million 3
Capital expenditure 2
50 – 70 CHF million 3
Inflation rate 2
0 % – 2 % 3
1 The lower these key input factors are, the higher the fair value of the investment property is.
2 The higher these key input factors are, the lower the fair value of the investment property is.
3 The input factor ranges shown essentially relate to the real estate portfolios held by the Baloise Group’s Swiss entities.
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Baloise Group Financial Report 2016
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.
Financial instruments with characteristics of liabilities that are assigned to level 3 are predominantly corporate
bonds originating from private placements and for which third-party prices are not available. A present-value
model is used to measure their fair value.
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.
170
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
FAIR VALUE OF ASSETS AND LIABILITIES FOR OWN ACCOUNT AND AT OWN RISK
31.12.2015
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
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
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
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
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
8,299.2
8,484.0
322.2
250.8
322.2
250.8
–
–
22.1
1,707.8
1,864.2
1,864.2
8,438.4
45.6
322.2
228.7
–
–
–
–
08_FB_Kapitel_05.8_bis_06_en 171
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
FAIR VALUE OF ASSETS AND LIABILITIES FOR OWN ACCOUNT AND AT OWN RISK
Recognised at fair value through profit or loss
30.8
30.8
25.4
31.12.2016
CHF million
Assets measured on a recurring basis
Financial instruments with characteristics of equity
Available for sale
Recognised at fair value through profit or loss
Financial instruments with characteristics of liabilities
Held to maturity
Available for sale
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
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
Total carrying
amount
Total fair value
Level 1
Level 2
Level 3
4,357.1
1,002.3
4,357.1
1,002.3
2,471.8
310.7
8,224.6
9,904.1
9,904.1
23,806.7
23,806.7
23,777.4
15,457.7
16,494.6
897.0
363.0
897.0
363.0
4.2
4.2
463.1
464.2
–
–
11.4
–
–
451.6
451.6
6,817.5
6,817.5
337.6
–
921.3
691.5
–
29.3
5.5
964.0
–
–
–
–
–
16,494.6
897.0
351.6
–
–
0.4
–
–
–
4.2
464.2
113.7
6,817.5
8,000.9
8,153.3
489.0
299.0
489.0
299.0
–
–
21.8
1,470.4
1,592.6
1,592.6
8,103.0
50.4
489.0
277.2
–
–
–
–
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.
172
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Baloise Group Financial Report 2016
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
31.12.2015
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
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
–
–
–
–
262.7
–
–
–
–
–
–
–
–
–
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Baloise Group Financial Report 2016
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
31.12.2016
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
8,946.2
8,946.2
8,825.0
76.5
Financial instruments with characteristics of liabilities
Recognised at fair value through profit or loss
1,704.4
1,704.4
1,662.1
0.1
Mortgages and loans
Recognised at fair value through profit or loss
Derivative financial instruments
Other assets
–
394.4
–
394.4
–
196.6
–
197.1
Recognised at fair value through profit or loss
54.5
54.5
54.5
Liabilities measured on a recurring basis
Liabilities arising from banking business
and financial contracts
Recognised at fair value through profit or loss
9,510.4
9,510.4
9,510.4
Derivative financial instruments
–
–
–
–
–
–
44.7
42.2
–
0.8
–
–
–
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.
174
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Baloise Group Financial Report 2016
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
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
993.0
112.6
–
–
5,962.9
394.9
6,955.9
507.5
–
–
–
–
– 96.7
– 82.0
– 178.7
–
–
–
–
– 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.
08_FB_Kapitel_05.8_bis_06_en 175
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Baloise Group Financial Report 2016
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
2016
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
943.1
122.3
–
–
– 105.7
–
–
–
–
–
– 6.8
18.7
– 7.5
964.0
Total
Investment
property
Recognised at
fair value
through
profit or loss
6,251.9
7,195.1
453.7
73.9
–
– 49.5
–
–
576.0
73.9
–
– 155.2
–
–
31.8
31.8
–
–
59.7
8.0
– 12.0
6,817.5
–
–
52.9
26.7
– 19.6
7,781.5
Changes in fair value of financial instruments held
at the balance sheet date and recognised in profit or loss
– 5.8
56.7
50.9
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.
176
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Baloise Group Financial Report 2016
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
Financial
instruments with
characteristics of
liabilities
Derivative
financial
instruments (assets)
Recognised at
fair value through
profit or loss
Recognised at
fair value through
profit or loss
Recognised at
fair value through
profit or loss
176.5
3.1
–
–
– 20.1
–
–
–
–
– 4.1
– 13.4
142.1
– 4.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
176.5
3.1
–
–
– 20.1
–
–
–
–
– 4.1
– 13.4
142.1
– 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.
08_FB_Kapitel_05.8_bis_06_en 177
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Baloise Group Financial Report 2016
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
2016
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
Financial
instruments with
characteristics of
liabilities
Derivative
financial
instruments
(assets)
Recognised at
fair value through
profit or loss
Recognised at
fair value through
profit or loss
Recognised at
fair value through
profit or loss
142.1
–
–
–
– 15.1
–
–
19.3
– 101.2
– 0.4
0.0
44.7
– 0.4
–
–
–
–
–
–
–
42.9
–
–
– 0.7
42.2
–
–
–
–
–
–
–
–
0.8
–
–
0.0
0.8
–
Total
142.1
–
–
–
– 15.1
–
–
63.0
– 101.2
– 0.4
– 0.7
87.7
– 0.4
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.
178
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Baloise Group Financial Report 2016
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 2015.
Reclassification of assets and liabilities to and from level 3
In the reporting period, a small volume of financial assets were reclassified owing to changed market activity and
new knowledge concerning the composition of investments.
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.
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Baloise Group Financial Report 2016
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 2,142 million (2015: CHF 2,126 million) was met in 2015 and 2016. The cover ratio for the capital
adequacy requirement in available funds was 351 per cent at 31 December 2016 (31 December 2015: 341 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 man-
aged 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.
180
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Baloise Group Financial Report 2016
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.
08_FB_Kapitel_05.8_bis_06_en 181
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
6. BASIS OF CONSOLIDATION
6.1 2015 financial year
6.1.1 Acquisitions
HDI-Gerling Assurances, based in Leudelange, Luxembourg, was acquired during the year under review and was
merged with Bâloise 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.
6.1.2 Disposals
No companies were sold during the year under review.
6.1.3 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.
6.2 2016 financial year
6.2.1 Acquisitions
In the second half of 2016, four affiliated real-estate companies were acquired in Belgium (Postsite Aalst). Accord-
ing to the criteria defined in IFRS 3 Business Combinations, this purchase constitutes the acquisition of assets, so
goodwill has not been recognised separately in this case.
6.2.2 Disposals
No companies were sold during the year under review.
6.2.3 Other changes in the group of consolidated companies
Baloise Insurance Company (Bermuda) Ltd. merged with Baloise Insurance Ltd (Switzerland) on 1 January 2016.
Intercompany reinsurance was thus transferred to Switzerland. This merger took place within the existing group
of consolidated companies.
Baloise Immobilien Management AG was founded in the second half of 2016 and is headquartered in Basel.
Also in the second half of 2016, the share of capital and share of voting rights in the real-estate company SA Keiberg
401 in Belgium was increased from 46.8 per cent to 100 per cent.
182
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Baloise Group Financial Report 2016
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
The “Germany” segment also includes the regional branches of Basler Sachversicherungs-AG and Basler Lebens-
versicherungs-AG in the Czech Republic and Slovakia. The “Luxembourg” segment also includes the Baloise Life
Liechtenstein unit.
The “Group business” segment comprises the units engaged in intercompany reinsurance and financing, as
well as corporate IT and the holding companies.
The revenue generated by the Baloise Group is broken down into the Non-Life, Life, Banking (including asset
management) and Other activities operating segments. The Non-Life segment offers accident and health insurance
as well as products relating to liability, motor, property and marine insurance. These products are tailored to the
specific needs of our customers – primarily retail clients – and the core competences of the relevant companies in
the Baloise Group. The Life segment provides individuals and companies with a wide range of endowment policies,
term insurance, investment-linked products and private placement life insurance. The Banking segment essentially
comprises Baloise Bank SoBa, which acts as a universal bank in Switzerland, and Deutscher Ring Bausparkasse,
which operates in Germany mainly as a conventional building society.
The “Other activities” operating segment includes equity investment companies, real estate firms and financ-
ing companies.
The accounting policies applied to the presentation of the operating segments (segment reporting) are those
used throughout the rest of the Financial Report. No intersegment relationships recognised either on the balance
sheet or in the income statement – with the exception of income from long-term equity investments – are offset
against each other.
09_FB_Kapitel_07_bis_17_en 183
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Baloise Group Financial Report 2016
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
Investment management expenses
Interest expenses on insurance liabilities
Gains or losses on financial contracts
Other operating expenses
Expense
Switzerland
Germany
Belgium
Luxembourg
Sub-total
Group business
Eliminated
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
4,408.6
– 167.4
4,241.2
4,188.1
– 81.5
4,106.6
1,205.9
– 83.5
1,122.4
1,219.3
– 85.2
1,134.1
884.6
104.3
39.5
0.0
72.3
878.2
121.0
37.2
0.0
106.8
370.3
320.8
32.5
36.8
38.6
336.4
215.2
31.8
7.1
27.5
1,041.6
1,078.8
– 73.2
968.4
238.2
78.8
1.5
0.1
21.6
– 88.0
990.8
239.5
105.0
1.6
0.0
16.5
5,341.9
5,249.8
1,921.4
1,752.1
1,308.6
1,353.5
57.8
0.0
– 29.9
0.0
46.4
36.8
39.0
7.1
31.3
0.1
34.2
0.0
– 3,458.2
– 3,651.7
– 1,142.0
– 1,209.2
– 764.7
– 351.8
48.9
– 57.5
27.1
– 65.6
– 434.5
– 416.7
– 43.8
– 2.4
– 36.6
– 43.8
– 2.3
– 19.8
– 177.6
– 178.6
– 320.1
121.9
– 181.8
– 180.0
– 22.0
– 31.5
– 22.9
– 77.9
– 181.6
103.2
– 188.2
– 193.3
– 24.2
– 28.3
– 23.8
– 67.6
– 651.6
– 124.6
82.8
– 216.8
– 102.2
– 14.6
– 0.2
– 52.2
– 37.7
– 688.6
– 126.3
74.8
– 229.2
– 108.3
– 11.6
– 0.2
– 59.2
– 33.1
– 4,926.5
– 4,703.2
– 1,856.4
– 1,813.0
– 1,116.9
– 1,181.7
Profit / loss before borrowing costs and taxes
415.3
546.6
64.9
– 60.9
191.7
171.7
23.5
23.3
695.4
680.7
23.8
2.9
719.2
683.6
Borrowing costs
Profit / loss before taxes
Income taxes
Profit / loss for the period (segment result)
–
415.3
– 86.4
329.0
–
546.6
– 99.2
447.4
–
64.9
– 24.3
40.6
–
– 60.9
12.4
– 48.5
–
191.7
– 54.9
136.7
–
171.7
– 46.3
125.5
Segment assets as at 31 December 1
44,490.9
45,081.9
15,100.9
15,104.9
9,043.6
9,521.0
9,349.2
10,413.8
77,984.5
80,121.6
1,841.7
1,466.1
– 1,044.0
– 973.4
78,782.3
80,614.3
1 restated in segment assets 2015 Germany.
184
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22.03.2017 15:01:29
– 111.1
– 5,350.7
– 5,660.6
– 23.1
– 1,248.7
– 108.7
– 51.6
112.5
– 208.2
– 116.1
– 5,352.4
– 5,664.2
221.8
– 1,241.9
– 165.4
– 105.7
– 195.1
– 103.6
195.1
0.0
103.5
0.0
6,832.4
– 148.6
6,683.7
6,680.6
– 168.2
6,512.4
– 1.7
– 1.8
1,521.8
1,476.6
8,683.5
8,814.9
8,877.9
8,910.2
157.5
– 129.1
– 133.8
– 315.2
– 236.8
– 48.7
– 179.5
179.5
– 55.1
– 190.8
190.8
181.5
– 19.6
161.9
18.6
– 104.2
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
198.4
– 17.1
181.2
18.9
223.0
15.8
–
20.6
459.5
2.6
–
9.2
– 20.6
– 44.4
– 1.4
0.1
– 235.6
6,837.6
– 343.8
6,493.9
1,511.8
399.7
88.3
36.8
153.0
135.7
36.8
263.6
– 473.0
– 759.9
– 81.6
– 34.3
2.1
6,684.5
– 271.8
6,412.8
1,473.1
664.2
86.4
7.1
171.4
46.0
7.1
– 682.8
214.2
– 503.5
– 762.7
– 81.0
– 30.7
– 338.5
– 288.7
–
23.3
1.0
24.3
–
695.4
–
680.7
– 167.6
527.8
– 132.0
548.7
189.9
0.0
189.8
11.7
– 13.5
153.5
32.3
373.8
–
–
– 0.4
– 0.5
– 0.3
– 9.8
–
– 7.1
– 171.7
– 350.1
– 40.0
– 16.2
– 0.5
– 16.7
99.6
0.0
99.6
5.3
3.1
20.5
286.1
–
–
– 0.3
– 0.5
– 0.1
– 8.3
–
– 10.2
– 168.1
– 283.2
– 38.0
– 35.1
20.3
– 14.8
–
–
–
–
–
–
–
–
107.1
58.4
1.1
– 1.1
31.0
0.2
4.2
144.1
179.5
–
–
–
–
–
–
–
–
1.1
– 1.1
29.0
0.2
5.8
155.8
190.8
386.2
112.6
36.8
136.6
–
36.8
97.9
– 472.4
– 761.3
– 60.4
– 34.1
– 0.9
– 333.1
– 40.0
679.3
– 168.2
511.1
– 9.3
– 305.5
– 436.3
– 7,988.0
– 8,134.2
– 8,158.6
– 8,226.6
Total
2016
667.2
110.1
7.1
136.8
–
7.1
– 669.1
108.2
– 502.9
– 763.9
– 60.3
– 30.5
– 342.9
– 300.9
– 38.0
645.6
– 111.7
533.9
Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
Switzerland
Germany
Belgium
Luxembourg
Sub-total
Group business
Eliminated
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Total
2016
181.5
– 19.6
161.9
18.6
– 104.2
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
6,837.6
– 343.8
6,493.9
1,511.8
399.7
88.3
36.8
153.0
6,684.5
– 271.8
6,412.8
1,473.1
664.2
86.4
7.1
171.4
8,683.5
8,814.9
189.9
0.0
189.8
11.7
– 13.5
153.5
–
32.3
373.8
198.4
– 17.1
181.2
18.9
223.0
15.8
–
20.6
459.5
2.6
–
135.7
36.8
46.0
7.1
– 315.2
– 236.8
–
–
99.6
0.0
99.6
5.3
3.1
– 195.1
– 103.6
195.1
0.0
– 1.7
–
103.5
0.0
– 1.8
–
157.5
– 129.1
– 133.8
–
20.5
286.1
–
– 48.7
– 179.5
179.5
–
–
– 55.1
– 190.8
190.8
–
6,832.4
– 148.6
6,683.7
6,680.6
– 168.2
6,512.4
1,521.8
1,476.6
386.2
112.6
36.8
136.6
667.2
110.1
7.1
136.8
8,877.9
8,910.2
–
36.8
–
7.1
– 108.7
– 51.6
112.5
– 208.2
107.1
58.4
– 116.1
– 5,352.4
– 5,664.2
221.8
– 1,241.9
– 111.1
– 5,350.7
– 5,660.6
– 23.1
– 1,248.7
9.2
– 20.6
– 44.4
– 1.4
0.1
– 235.6
263.6
– 473.0
– 759.9
– 81.6
– 34.3
2.1
– 9.3
– 305.5
– 682.8
214.2
– 503.5
– 762.7
– 81.0
– 30.7
– 338.5
– 288.7
– 436.3
– 7,988.0
– 8,134.2
– 0.4
– 0.5
– 0.3
– 9.8
–
– 7.1
– 171.7
– 350.1
– 0.3
– 0.5
– 0.1
– 8.3
–
– 10.2
– 168.1
– 283.2
– 165.4
– 105.7
1.1
– 1.1
31.0
0.2
4.2
144.1
179.5
–
–
–
–
–
1.1
– 1.1
29.0
0.2
5.8
155.8
190.8
–
–
–
–
–
97.9
– 472.4
– 761.3
– 60.4
– 34.1
– 0.9
– 333.1
– 669.1
108.2
– 502.9
– 763.9
– 60.3
– 30.5
– 342.9
– 300.9
– 8,158.6
– 8,226.6
719.2
683.6
– 40.0
679.3
– 168.2
511.1
– 38.0
645.6
– 111.7
533.9
Profit / loss before borrowing costs and taxes
415.3
546.6
64.9
– 60.9
191.7
171.7
23.5
23.3
695.4
680.7
23.8
2.9
–
23.5
– 2.0
21.5
–
23.3
1.0
24.3
–
695.4
–
680.7
– 167.6
527.8
– 132.0
548.7
– 40.0
– 16.2
– 0.5
– 16.7
– 38.0
– 35.1
20.3
– 14.8
Segment assets as at 31 December 1
44,490.9
45,081.9
15,100.9
15,104.9
9,043.6
9,521.0
9,349.2
10,413.8
77,984.5
80,121.6
1,841.7
1,466.1
– 1,044.0
– 973.4
78,782.3
80,614.3
09_FB_Kapitel_07_bis_17_en 185
185
22.03.2017 15:01:30
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
for insurance business
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)
1 restated in segment assets 2015 Germany.
5,341.9
5,249.8
1,921.4
1,752.1
1,308.6
1,353.5
4,408.6
– 167.4
4,241.2
4,188.1
– 81.5
4,106.6
1,205.9
– 83.5
1,122.4
1,219.3
– 85.2
1,134.1
1,041.6
1,078.8
– 3,458.2
– 3,651.7
– 1,142.0
– 1,209.2
– 764.7
– 351.8
884.6
104.3
39.5
0.0
72.3
57.8
0.0
48.9
– 57.5
– 43.8
– 2.4
– 36.6
–
415.3
– 86.4
329.0
878.2
121.0
37.2
0.0
106.8
– 29.9
0.0
27.1
– 65.6
– 43.8
– 2.3
– 19.8
–
546.6
– 99.2
447.4
370.3
320.8
32.5
36.8
38.6
46.4
36.8
– 320.1
121.9
– 181.8
– 180.0
– 22.0
– 31.5
– 22.9
– 77.9
–
64.9
– 24.3
40.6
336.4
215.2
31.8
7.1
27.5
39.0
7.1
– 181.6
103.2
– 188.2
– 193.3
– 24.2
– 28.3
– 23.8
– 67.6
–
– 60.9
12.4
– 48.5
– 73.2
968.4
238.2
78.8
1.5
0.1
21.6
31.3
0.1
– 651.6
– 124.6
82.8
– 216.8
– 102.2
– 14.6
– 0.2
– 52.2
– 37.7
–
191.7
– 54.9
136.7
– 88.0
990.8
239.5
105.0
1.6
0.0
16.5
34.2
0.0
– 688.6
– 126.3
74.8
– 229.2
– 108.3
– 11.6
– 0.2
– 59.2
– 33.1
–
171.7
– 46.3
125.5
– 177.6
– 178.6
– 4,926.5
– 4,703.2
– 1,856.4
– 1,813.0
– 1,116.9
– 1,181.7
Operating and administrative expenses
– 434.5
– 416.7
Baloise Group Financial Report 2016
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
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
Non-Life
2016
3,109.7
– 149.8
2,959.9
217.8
47.6
19.6
0.0
80.7
3,325.7
– 49.7
0.0
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
Life
2016
3,570.9
– 18.4
3,552.4
1,161.5
616.8
17.0
3.0
87.3
5,437.9
– 42.7
3.0
– 1,854.0
– 1,859.7
– 55.3
89.5
– 408.9
– 490.0
– 22.1
– 0.2
– 0.8
– 66.7
96.5
– 440.0
– 488.5
– 22.9
– 0.2
– 0.5
– 138.6
– 2,880.5
– 147.3
– 2,929.3
– 3,498.4
– 1,186.6
– 3,804.5
– 602.4
8.3
– 63.5
– 271.3
– 87.6
– 33.8
48.6
– 75.6
11.7
– 63.0
– 275.4
– 85.6
– 30.3
– 303.9
– 58.4
– 5,159.9
– 5,211.8
Profit / loss before borrowing costs and taxes
395.5
396.4
277.3
226.1
– 34.4
– 31.0
719.2
683.6
Borrowing costs
Profit / loss before taxes
Income taxes
Profit / loss for the period (segment result)
–
395.5
– 74.9
320.6
–
396.4
– 74.9
321.5
–
277.3
– 62.2
215.0
–
226.1
– 34.3
191.8
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 in 2015. These reclassifications have had no impact on the profit for the period.
186
09_FB_Kapitel_07_bis_17_en 186
22.03.2017 15:01:30
2015
2015
2016
2015
2016
2015
Other activities
Eliminated
Banking
2016
118.7
– 3.4
131.2
16.6
263.0
– 66.3
–
–
–
–
–
–
–
–
–
–
–
– 46.5
– 99.5
– 170.9
92.1
–
92.1
– 19.4
72.7
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
– 25.0
– 23.4
1,521.8
1,476.6
– 215.0
– 222.9
– 51.0
– 291.0
291.0
– 58.9
– 305.2
305.2
8,877.9
8,910.2
Total
2016
6,680.6
– 168.2
6,512.4
667.2
110.1
7.1
136.8
–
7.1
– 5,664.2
– 669.1
108.2
– 502.9
– 763.9
– 60.3
– 30.5
– 342.9
– 300.9
– 8,226.6
– 38.0
645.6
– 111.7
533.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6,832.4
– 148.6
6,683.7
386.2
112.6
36.8
136.6
–
36.8
– 5,352.4
– 1,241.9
97.9
– 472.4
– 761.3
– 60.4
– 34.1
– 0.9
– 333.1
– 8,158.6
– 40.0
679.3
– 168.2
511.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2.5
4.3
160.1
4.3
18.8
190.0
– 139.9
4.3
–
–
–
–
–
–
–
–
–
2.1
6.2
165.2
4.2
11.1
188.7
– 146.4
4.2
–
–
–
–
–
–
–
–
–
– 40.0
– 74.3
– 11.1
– 85.5
– 38.0
– 68.9
16.9
– 52.1
– 22.0
– 24.9
– 4.6
– 2.6
75.9
75.8
– 15.3
– 204.6
– 224.4
– 16.4
– 200.6
– 219.7
26.1
189.0
291.0
24.6
204.8
305.2
Baloise Group Financial Report 2016
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
2015
2015
Non-Life
2016
3,109.7
– 149.8
2,959.9
217.8
47.6
19.6
0.0
80.7
3,325.7
– 49.7
0.0
– 66.7
96.5
– 440.0
– 488.5
– 22.9
– 0.2
– 0.5
–
396.4
– 74.9
321.5
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
Life
2016
3,570.9
– 18.4
3,552.4
1,161.5
616.8
17.0
3.0
87.3
5,437.9
– 42.7
3.0
11.7
– 63.0
– 275.4
– 85.6
– 30.3
– 303.9
– 58.4
–
226.1
– 34.3
191.8
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
– 408.9
– 490.0
– 22.1
– 0.2
– 0.8
–
395.5
– 74.9
320.6
– 1,854.0
– 1,859.7
– 3,498.4
– 1,186.6
– 3,804.5
– 602.4
Profit / loss before borrowing costs and taxes
395.5
396.4
277.3
226.1
– 138.6
– 2,880.5
– 147.3
– 2,929.3
– 5,159.9
– 5,211.8
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 in 2015. These reclassifications have had no impact on the profit for the period.
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
Banking
2016
–
–
–
118.7
– 3.4
131.2
–
16.6
263.0
– 66.3
–
–
–
–
–
–
– 24.9
–
– 46.5
– 99.5
– 170.9
92.1
–
92.1
– 19.4
72.7
Other activities
Eliminated
2015
2016
2015
2016
2015
–
–
–
2.5
4.3
160.1
4.3
18.8
190.0
– 139.9
4.3
–
–
–
–
–
– 4.6
–
– 15.3
– 204.6
– 224.4
–
–
–
2.1
6.2
165.2
4.2
11.1
188.7
– 146.4
4.2
–
–
–
–
–
– 2.6
–
– 16.4
– 200.6
– 219.7
– 34.4
– 31.0
– 40.0
– 74.3
– 11.1
– 85.5
– 38.0
– 68.9
16.9
– 52.1
–
–
–
– 25.0
–
– 215.0
–
– 51.0
– 291.0
291.0
–
–
–
–
–
–
75.9
–
26.1
189.0
291.0
–
–
–
–
–
–
–
–
– 23.4
–
– 222.9
–
– 58.9
– 305.2
305.2
–
–
–
–
–
–
75.8
–
24.6
204.8
305.2
–
–
–
–
–
Total
2016
6,680.6
– 168.2
6,512.4
6,832.4
– 148.6
6,683.7
1,521.8
1,476.6
386.2
112.6
36.8
136.6
667.2
110.1
7.1
136.8
8,877.9
8,910.2
–
36.8
–
7.1
– 5,352.4
– 1,241.9
97.9
– 472.4
– 761.3
– 60.4
– 34.1
– 0.9
– 333.1
– 8,158.6
– 5,664.2
– 669.1
108.2
– 502.9
– 763.9
– 60.3
– 30.5
– 342.9
– 300.9
– 8,226.6
719.2
683.6
– 40.0
679.3
– 168.2
511.1
– 38.0
645.6
– 111.7
533.9
09_FB_Kapitel_07_bis_17_en 187
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
Notes to the consolidated balance sheet
8. PROPERT Y, PLANT AND EQUIPMENT
2015
CHF million
Balance 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
Balance 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
–
– 41.1
– 64.9
– 475.3
24.7
–
21.9
–
399.1
–
379.2
31.4
0.0
– 1.2
–
47.2
–
– 36.6
– 3.2
–
– 17.7
399.1
874.3
188
09_FB_Kapitel_07_bis_17_en 188
22.03.2017 15:01:31
Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
Property, plant and equipment
2016
CHF million
Balance as at 1 January
Additions
Additions arising from change
in the scope of consolidation
Disposals
Disposals arising from change
in the scope of consolidation
Land
Buildings
65.1
0.0
245.7
0.9
–
–
–
–
–
–
Reclassification
– 0.4
– 31.4
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
Balance as at 31 December
Acquisition costs
Accumulated depreciation
and impairment
Balance as at 31 December
Of which:
Assets held under finance leases
–
–
– 0.1
–
– 8.4
– 1.1
–
–
– 1.7
204.1
474.6
– 0.3
64.4
66.6
– 2.2
64.4
–
Operating
equipment
Machinery,
furniture
and vehicles
IT equipment
Total
41.7
3.5
–
24.7
5.3
0.0
21.9
6.7
–
0.0
– 0.3
0.0
–
–
–
–
–
–
–
–
–
– 7.4
– 5.8
– 9.1
–
–
– 0.1
37.7
93.6
–
–
– 0.2
23.8
58.4
–
–
0.0
19.4
80.1
399.1
16.4
0.0
– 0.3
–
– 31.8
–
– 30.7
– 1.1
–
– 2.2
349.3
773.3
– 270.6
– 56.0
– 34.6
– 60.7
– 424.0
204.1
–
37.7
–
23.8
–
19.4
–
349.3
–
Depreciation and impairment form part of other operating expenses.
09_FB_Kapitel_07_bis_17_en 189
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
9. INTANGIBLE ASSETS
2015
CHF million
Balance 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
Balance as at 31 December
Acquisition costs
Accumulated amortisation
and impairment
Balance as at 31 December 1
Segment as at 31 December 2015
Switzerland
Germany
Belgium
Luxembourg
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
154.9
0.1
–
237.8
–
–
–
–
145.0
–
28.8
–
– 0.1
–
–
– 2.7
0.2
–
0.1
–
–
–
–
–
Total
928.5
2.4
28.9
291.1
– 0.1
–
–
– 17.3
– 1.7
–
– 1.1
–
–
–
– 1.4
7.9
–
–
– 38.4
2.0
–
–
– 26.8
4.9
– 44.1
480.9
–
–
– 235.7
– 27.6
– 0.1
– 303.6
–
–
–
0.8
–
– 8.0
149.9
–
–
–
–
–
–
–
– 11.0
132.3
469.0
–
–
–
–
–
–
0.1
9.2
– 336.7
– 9.0
2.0
– 1.1
–
– 26.0
4.9
– 71.5
838.2
–
–
Goodwill
71.8
2.3
–
–
–
–
–
–
–
–
–
–
–
–
– 6.9
67.1
212.7
– 145.6
67.1
7.9
480.9
149.9
132.3
0.1
838.2
–
29.0
15.1
23.0
–
67.1
–
7.9
–
–
–
94.4
376.5
0.5
9.4
–
53.1
39.0
53.7
4.1
–
26.0
2.7
84.5
13.6
5.5
7.9
480.9
149.9
132.3
–
–
–
–
0.1
0.1
173.5
455.2
153.7
50.1
5.7
838.2
1 With the possible exception of goodwill, the Baloise Group has no intangible assets with indefinite useful lives.
190
09_FB_Kapitel_07_bis_17_en 190
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
Intangible assets
2016
CHF million
Present value
of gains on
insurance
contracts
acquired
Goodwill
Deferred
acquisition
cost
(life)
Deferred
acquisition
cost
(non-life)
Other
intangible
assets
Internally
developed
intangible
assets
Balance as at 1 January
67.1
7.9
480.9
149.9
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
Balance as at 31 December
Acquisition costs
Accumulated amortisation
and impairment
Balance as at 31 December 1
Segment as at 31 December 2016
Switzerland
Germany
Belgium
Luxembourg
Group business
Total for geographic regions
–
–
–
–
–
–
–
–
–
–
–
–
–
– 0.8
66.3
211.9
– 145.6
–
–
–
–
–
–
–
– 0.8
–
–
–
–
–
– 0.1
7.0
–
–
–
–
–
–
– 57.2
1.8
–
–
– 3.0
– 9.0
– 5.0
485.6
–
–
–
–
–
–
77.1
253.3
–
–
–
–
132.3
–
26.4
–
– 0.1
–
–
–
0.1
–
0.2
–
–
–
–
–
– 251.2
– 30.3
– 0.1
– 339.6
–
–
–
– 0.8
–
– 1.2
149.9
–
–
–
–
–
–
–
– 1.2
127.2
479.4
–
–
–
–
–
–
0.2
9.2
– 352.2
– 9.1
1.8
–
–
– 3.8
– 9.0
– 8.3
836.1
–
–
66.3
7.0
485.6
149.9
127.2
0.2
836.1
–
28.7
14.9
22.7
–
66.3
–
7.0
–
–
–
88.3
389.6
0.6
7.2
–
52.6
37.8
55.3
4.2
–
24.7
1.9
79.3
13.8
7.4
7.0
485.6
149.9
127.2
–
–
–
–
0.2
0.2
1 With the possible exception of goodwill, the Baloise Group has no intangible assets with indefinite useful lives.
Total
838.2
–
26.6
330.3
– 0.1
–
–
–
165.5
464.9
150.1
48.0
7.6
836.1
191
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
9.1 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. The input factors are described in note 3.10.3 (Impairment
losses on non-financial assets).
Zeus Vermittlungsgesellschaft mbH
Basler Financial Services GmbH
Bâloise Vie Luxembourg S.A.
Bâloise Assurances Luxembourg S.A.
Baloise Belgium NV
Goodwill as at 31.12.
Discount rate (%)
Growth rate (%)
2015
13.2
13.8
6.9
15.6
15.1
2016
13.1
13.6
6.8
15.4
14.9
2015
10.4
8.2
8.5
8.5
7.0
2016
2015
2016
9.6
6.8
7.0
7.0
7.0
1.0
1.0
2.5
2.5
2.6
1.0
1.0
2.5
2.5
2.6
The impairment test in 2016 did not reveal any need to recognise impairment losses.
The management is of the opinion that a possible change in the assumptions based on the exercise of appropriate
discretion would not have led, either in 2016 or in 2015, to the carrying amount of an entity being significantly
higher than its recoverable value.
192
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
10. INVESTMENTS IN ASSOCIATES
10.1 Significant investments in associates
OVB Holding Ltd is a European sales company for risk cover, retirement pension and health care 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 Ltd is included in the Baloise Group’s consolidated annual financial
statements under the equity method. Because the publicly traded OVB Holding Ltd’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
Assets
Non-current assets
Current assets
Total assets
Equity and liabilities
Equity
Non-current liabilities
Total assets
Profit for the period
Income
Expense
Profit for the period
Comprehensive income (balance sheet)
Comprehensive income (income statement)
Comprehensive income
Dividends paid to the Baloise Group
Baloise Group’s interest (per cent)
Carrying amount as at 30 September
Fair value as at 30 September
OVB Holding Ltd
30.9.2015
30.9.2016
21.7
145.5
167.2
24.7
151.8
176.5
30.9.2015
30.9.2016
90.0
1.2
76.0
167.2
91.6
1.0
83.8
176.5
1. – 9.2015
1. – 9.2016
172.4
164.4
8.0
0.0
0.3
8.3
3.4
183.8
173.1
10.7
0.0
– 0.2
10.5
3.2
32.6 %
32.6 %
65.7
79.6
65.7
79.9
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
10.2 Non-significant investments in associates
The Baloise Group holds investments in a number of non-significant associates.
2015
Carrying amount
Baloise’s share of
CHF million
Total
2016
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
96.6
6.1
0.0
0.4
6.5
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
94.7
4.1
0.0
0.0
4.0
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 2016 or 31 December 2015.
As at 31 December 2016, 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.
194
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Baloise Group Financial Report 2016
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
2015
2016
5,962.9
394.9
–
– 82.0
–
– 47.2
–
113.5
– 90.1
6,251.9
453.7
73.9
– 49.5
–
31.8
–
67.7
– 12.0
6,251.9
6,817.5
68.8
0.7
83.2
0.6
The increase in the portfolio during the reporting year was largely attributable to real estate acquired by Baloise’s
Swiss entities. The additions arising from changes in the scope of consolidation primarily related to the acquisition
of the Belgian real-estate company Postsite Aalst.
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
12. FINANCIAL ASSETS
CHF million
Financial assets of an equity nature
Available for sale
Recognised at fair value through profit or loss
Financial assets of a debt nature
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 and third parties
Recognised at fair value through profit or loss 1
Financial assets as reported on the balance sheet
31.12.2015
31.12.2016
4,443.3
1,173.8
4,357.1
1,002.3
8,549.5
8,224.6
23,024.6
23,806.7
46.6
30.8
37,237.7
37,421.6
9,781.5
47,019.2
10,650.6
48,072.2
1 Of which financial assets totalling CHF 99.5 million (2015: CHF 98.8 million) involved insurance policies that had not been fully reviewed by the balance sheet date.
196
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
This page has been left empty on purpose.
09_FB_Kapitel_07_bis_17_en 197
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
FINANCIAL ASSETS FOR OWN ACCOUNT AND AT OWN RISK
as at 31.12.
CHF million
Financial assets of an equity nature
Publicly listed
Not publicly listed
Total
Financial assets of a debt nature
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
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
–
–
–
–
–
–
8,549.5
8,224.6
–
–
–
–
–
–
8,549.5
8,224.6
2,651.2
1,792.1
4,443.3
2,471.8
1,885.3
4,357.1
22,992.4
23,765.6
8.9
23.3
–
11.8
29.3
–
23,024.6
23,806.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
285.7
888.1
310.7
691.5
1,173.8
1,002.3
2,936.9
2,680.2
5,617.1
2,782.6
2,576.9
5,359.4
0.1
28.2
18.3
–
46.6
0.1
25.3
5.5
–
30.8
31,541.9
31,990.3
37.1
41.6
–
37.1
34.8
–
31,620.6
32,062.1
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.
198
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
FINANCIAL ASSETS FOR OWN ACCOUNT AND AT OWN RISK
Financial assets of an equity nature
as at 31.12.
CHF million
Publicly listed
Not publicly listed
Total
Financial assets of a debt nature
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
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
–
–
–
–
–
–
–
–
–
–
–
–
8,549.5
8,224.6
8,549.5
8,224.6
2,651.2
1,792.1
4,443.3
2,471.8
1,885.3
4,357.1
22,992.4
23,765.6
8.9
23.3
–
11.8
29.3
–
23,024.6
23,806.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
285.7
888.1
310.7
691.5
1,173.8
1,002.3
2,936.9
2,680.2
5,617.1
2,782.6
2,576.9
5,359.4
0.1
28.2
18.3
–
46.6
0.1
25.3
5.5
–
30.8
31,541.9
31,990.3
37.1
41.6
–
37.1
34.8
–
31,620.6
32,062.1
09_FB_Kapitel_07_bis_17_en 199
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
FINANCIAL ASSETS FOR OWN ACCOUNT AND AT OWN RISK
as at 31.12.
CHF million
Type of financial asset
Equities
Equity funds
Mixed funds
Bond funds
Real estate funds
Private equity
Hedge funds
Financial assets of an equity nature
Public corporations
Industrial enterprises
Financial institutions
Other
Financial assets of a debt nature
Held to maturity
Available for sale
Recognised at fair value through profit or loss
Total
Trading portfolio
Designated
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,475.8
18.0
1,040.5
15.2
8,549.5
7,208.0
14.6
986.9
15.0
8,224.6
Total
8,549.5
8,224.6
27,467.8
28,163.9
1,220.4
1,033.1
37,237.7
37,421.6
Secured financial assets of a debt nature
Public corporations
Industrial enterprises
Financial institutions
Other
Total
27.3
–
975.8
–
1,003.1
10.7
–
922.2
–
933.0
Secured financial instruments with characteristics of liabilities are fixed-income securities for which a mortgage or
a government bond has been securitised as collateral.
4,443.3
4,357.1
1,173.8
1,002.3
5,617.1
5,359.4
2,596.1
2,466.5
35.3
145.2
51.6
355.4
587.6
672.0
33.7
155.6
58.1
339.2
627.7
676.4
11,344.6
11,126.9
4,932.7
6,747.0
0.2
6,410.9
6,268.8
0.2
23,024.6
23,806.7
306.3
–
239.0
6.5
4,369.3
4,025.7
0.2
0.2
4,675.8
4,271.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,134.9
–
25.7
13.2
0.0
–
33.9
933.7
34.6
0.0
2,596.1
61.0
1,280.2
64.8
355.4
587.6
672.0
2,466.5
67.6
1,089.3
92.7
339.2
627.7
676.4
18.1
28.4
46.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
16.9
18,838.6
18,351.8
13.9
4,950.7
7,815.9
15.4
6,425.5
7,269.6
15.2
30.8
31,620.6
32,062.1
333.6
–
249.8
6.5
5,345.1
4,947.9
0.2
0.2
5,678.9
5,204.4
200
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
FINANCIAL ASSETS FOR OWN ACCOUNT AND AT OWN RISK
Type of financial asset
as at 31.12.
CHF million
Equities
Equity funds
Mixed funds
Bond funds
Real estate funds
Private equity
Hedge funds
Public corporations
Industrial enterprises
Financial institutions
Financial assets of an equity nature
Financial assets of a debt nature
Secured financial assets of a debt nature
Public corporations
Industrial enterprises
Financial institutions
Other
Total
Other
Total
Held to maturity
Available for sale
Recognised at fair value through profit or loss
Total
Trading portfolio
Designated
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2,596.1
2,466.5
35.3
145.2
51.6
355.4
587.6
672.0
33.7
155.6
58.1
339.2
627.7
676.4
4,443.3
4,357.1
11,344.6
11,126.9
4,932.7
6,747.0
0.2
6,410.9
6,268.8
0.2
23,024.6
23,806.7
8,549.5
8,224.6
27,467.8
28,163.9
306.3
–
239.0
6.5
4,369.3
4,025.7
0.2
0.2
4,675.8
4,271.4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,475.8
18.0
1,040.5
15.2
8,549.5
7,208.0
14.6
986.9
15.0
8,224.6
27.3
10.7
975.8
922.2
1,003.1
933.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
25.7
1,134.9
13.2
0.0
–
–
–
33.9
933.7
34.6
0.0
–
–
2,596.1
61.0
1,280.2
64.8
355.4
587.6
672.0
2,466.5
67.6
1,089.3
92.7
339.2
627.7
676.4
1,173.8
1,002.3
5,617.1
5,359.4
18.1
–
28.4
–
46.6
16.9
–
13.9
–
30.8
18,838.6
18,351.8
4,950.7
7,815.9
15.4
6,425.5
7,269.6
15.2
31,620.6
32,062.1
1,220.4
1,033.1
37,237.7
37,421.6
–
–
–
–
–
–
–
–
–
–
333.6
–
249.8
6.5
5,345.1
4,947.9
0.2
0.2
5,678.9
5,204.4
Secured financial instruments with characteristics of liabilities are fixed-income securities for which a mortgage or
a government bond has been securitised as collateral.
FAIR VALUE OF FINANCIAL ASSETS CLASSIFIED AS HELD TO MATURIT Y
as at 31.12.
CHF million
Public corporations
Industrial enterprises
Financial institutions
Other
Total
Carrying amount
Fair value
2015
2016
2015
2016
7,475.8
7,208.0
8,822.3
8,774.3
18.0
1,040.5
15.2
14.6
986.9
15.0
19.2
15.5
1,149.5
1,098.3
16.3
16.0
8,549.5
8,224.6
10,007.4
9,904.1
09_FB_Kapitel_07_bis_17_en 201
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
13. MORTGAGES AND LOANS
as at 31.12.
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
2015
2016
2015
2016
2015
2016
2015
2016
10,157.1
140.7
4,382.5
917.8
28.1
–
9,818.1
131.5
4,351.6
838.1
25.7
–
– 31.2
– 24.3
10,125.9
9,793.8
10,644.2
10,265.8
–
–
–
–
–
–
– 2.1
140.7
4,382.5
131.5
4,349.5
152.6
4,856.1
144.1
4,893.5
–
–
–
917.8
28.1
–
838.1
25.7
–
919.4
28.6
–
839.5
26.2
–
331.4
334.4
15,957.5
15,499.4
– 13.7
– 44.9
– 15.3
– 41.7
317.7
319.1
328.7
325.5
15,912.6
15,457.7
16,929.6
16,494.6
743.7
0.3
744.0
896.8
0.3
897.0
–
–
–
–
–
–
743.7
0.3
744.0
896.8
0.3
897.0
743.7
0.3
744.0
896.8
0.3
897.0
Mortgages and loans
16,701.5
16,396.4
– 44.9
– 41.7
16,656.6
16,354.7
17,673.6
17,391.7
IMPAIRMENT OF MORTGAGES AND LOANS
CHF million
Balance as at 1 January
Usage not recognised in profit or loss
Unused provisions reversed through profit or loss
Increases and additional provisions recognised in profit or loss
Disposal arising from change in scope of consolidation
Reclassification
Reclassification to non-current assets and disposal groups classified as held for sale
Currency translation
Balance as at 31 December
2015
2016
– 48.7
1.3
5.6
– 5.7
–
–
0.0
2.5
– 44.9
– 44.9
11.4
2.1
– 10.5
–
–
–
0.2
– 41.7
202
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
14. DERIVATIVE FINANCIAL INSTRUMENTS
as at 31.12.
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 and third parties
Fair value assets
Fair value liabilities
2015
2016
2015
2016
363.2
290.7
363.0
394.4
250.8
–
299.0
–
Derivative financial instruments as reported on the balance sheet
653.9
757.3
250.8
299.0
as at 31.12.
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
2015
2016
2015
2016
2015
2016
–
971.9
1,121.6
0.2
–
–
–
1,313.0
607.3
0.9
–
–
–
63.5
158.2
43.0
–
–
–
72.8
90.9
113.4
–
–
–
88.6
13.3
21.2
–
–
–
79.7
14.9
30.7
–
–
2,093.6
1,921.1
264.7
277.0
123.1
125.3
–
2,402.8
607.8
–
–
2,431.0
703.8
–
3,010.6
3,134.8
8,014.0
8,591.6
–
1,149.7
–
–
–
652.4
–
–
–
54.4
11.0
–
65.5
31.5
–
1.5
–
–
–
39.2
11.4
–
50.7
34.2
–
1.0
–
–
–
4.9
17.0
–
21.9
–
11.1
14.8
–
25.9
104.3
146.1
–
1.6
–
–
–
1.7
–
–
9,163.7
9,244.1
33.1
35.3
105.8
147.8
14,267.9
14,300.0
363.2
363.0
250.8
299.0
–
–
–
–
1,162.5
1,086.2
–
–
7.2
–
–
0.8
–
–
–
–
10.5
27.5
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.
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
15. RECEIVABLES
as at 31.12.
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
Gross amount
Impairment
Carrying amount
Fair value
2015
2016
2015
2016
2015
2016
2015
2016
9.9
4.2
320.0
493.0
464.9
453.3
822.9
922.4
–
– 2.5
– 1.7
– 4.2
–
9.9
4.2
9.9
4.2
– 1.8
– 1.6
317.5
491.3
463.1
451.6
318.5
491.3
464.2
451.6
– 3.4
818.7
919.0
819.8
920.0
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
2015
2016
– 4.4
0.1
0.9
– 1.1
–
0.0
0.2
– 4.2
– 4.2
0.2
1.4
– 0.8
–
–
0.0
– 3.4
204
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Baloise Group Financial Report 2016
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
2015
2016
421.5
1.5
– 75.7
97.0
5.2
–
– 1.7
– 36.9
410.8
410.8
0.2
– 94.5
103.6
–
–
–
– 4.9
415.2
2015
2016
8.3
1.0
– 0.8
–
–
– 0.8
7.8
71.8
79.0
7.8
1.2
– 0.2
–
–
– 0.1
8.7
44.6
99.5
– 105.5
– 104.9
–
–
– 0.8
44.6
– 0.5
–
0.4
0.0
–
–
0.0
– 0.1
–
–
– 0.3
38.9
– 0.1
–
0.1
– 0.1
–
–
0.0
– 0.1
Receivables from reinsurers as at 31 December
52.3
47.5
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
18. EMPLOYEE BENEFITS
18.1 Receivables and liabilities arising from employee benefits
as at 31.12.
CHF million
Type of benefit
Receivables from
employee benefits
Liabilities arising from
employee benefits
2015
2016
2015
2016
Short-term employee benefits
1.1
0.8
Post-employment benefits – defined contribution plans
Post-employment benefits – defined benefit plans
Other long-term employee benefits
Termination benefits
Total
–
–
–
–
–
–
–
–
111.7
–
107.7
–
1,200.5
1,316.9
30.8
12.7
29.1
10.2
1.1
0.8
1,355.6
1,463.9
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 (foundations)
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.
206
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Baloise Group Financial Report 2016
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
2015
2016
2,337.4
2,373.2
17.7
20.2
32.3
– 1.2
57.4
30.2
15.0
10.7
29.2
– 0.2
57.9
30.7
– 120.8
– 141.6
–
–
–
–
–
–
–
–
2,373.2
2,374.8
2015
2016
– 2,721.3
– 2,821.2
– 90.0
– 20.8
– 32.3
– 33.7
–
– 46.0
2.2
–
120.8
–
–
–
– 92.7
– 17.9
– 29.2
– 52.6
– 19.1
– 5.3
0.2
47.7
141.6
–
–
–
– 2,821.2
– 2,848.5
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Baloise Group Financial Report 2016
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
2015
2016
– 896.9
– 752.5
– 16.7
– 12.9
– 1.0
63.7
– 0.4
– 1.4
82.5
– 0.3
27.8
– 0.7
3.8
–
– 14.0
– 15.4
–
– 88.2
– 1.9
– 1.3
10.1
– 14.0
30.7
–
3.2
–
– 752.5
– 843.2
31.12.2015
31.12.2016
2,373.2
2,374.8
– 2,821.2
– 2,848.5
– 752.5
– 843.2
–
–
– 1,200.5
– 1,316.9
208
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Baloise Group Financial Report 2016
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
31.12.2015
31.12.2016
51.4
430.6
52.8
456.1
1,368.2
140.5
1,313.6
142.4
98.3
–
292.4
–
– 4.0
– 4.1
114.0
–
315.2
–
– 6.3
– 12.9
2,373.2
2,374.8
29.4
–
28.8
–
2015
2016
– 106.7
– 106.6
– 16.1
– 0.3
–
–
30.9
– 92.2
– 18.4
33.7
–
–
31.4
– 59.9
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Baloise Group Financial Report 2016
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
2015
2016
0.9
1.4
0.3
81.3
23.9
21.0
0.8
1.4
0.3
81.0
24.2
21.6
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
CHF million
Total defined benefit obligation as shown
Discount rate plus 0.5 % age points
Discount rate minus 0.5 % 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
31.12.2015
31.12.2016
3,573.7
3,691.7
– 224.3
– 268.2
290.0
36.0
– 34.1
200.2
– 31.3
– 88.4
96.6
22.7
303.8
36.3
– 34.4
205.4
– 36.3
– 93.5
102.8
14.5
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.
210
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Baloise Group Financial Report 2016
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 con-
tributions 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 62.5 million for the 2017 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 10.3 years;
the average present value factor for current benefit entitlements under pension commitments is 16.6 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 2016
totalled CHF 29.1 million (2015: CHF 30.8 million). There were no disposals of plan assets for long-term employee
benefits. Benefits paid out amounted to CHF 4.7 million (2015: CHF 4.0 million).
18.4 Share-based payment plans
For some time now, the Baloise Group has offered employees and management team members the chance to participate
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 Share Participation Plan as well as Performance share units (PSU).
All these plans are equity-settled remuneration programmes. In 2016, a sum of CHF 21.8 million (2015: CHF 20.8 million)
was recognised as an expense in profit or loss in connection with the following share-based payment plans.
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Baloise Group Financial Report 2016
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 2016 the subscription price amounted to CHF 56.40 (2015: CHF 60.40) and a total of
183,678 shares were subscribed (2015: 172,796). 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)
2015
2016
172,796
183,678
31.8.2018
31.8.2019
60.40
10.4
20.5
3,181
1,920
90.0
56.40
10.4
21.5
3,098
2,029
90.5
212
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
18.4.2 Share Subscription Plan
Since January 2003 those who qualify as eligible persons at Baloise Group companies in Switzerland – and, since
2008, the members of the Executive Committees at companies outside Switzerland as well – have been able to sub-
scribe for shares at a preferential price as part of their short-term variable remuneration. The subscription date is
1 March of each year; although title to the shares passes to the relevant employees on this date without any further
vesting conditions having to be met, the shares cannot be sold for the duration of a three-year closed period.
The parameters used to determine the subscription price are decided each year by the Remuneration Committee.
The subscription price is based before 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
2015
38,386
2016
35,475
28.2.2018
28.2.2019
114.75
109.26
4.4
4.8
908
85
15 %
3.9
4.5
929
110
14 %
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 29 February 2020 and 28 February 2021 respectively.
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
18.4.3 Share Participation 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 Share Participation 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. 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 Share Participation 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 before the first day of the subscription period, from which dis-
counted 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 Share Participation Plan
are purchased in the market as and when required.
In order to increase the impact of this Share Participation 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.
SHARE PARTICIPATION PLAN (SPP)
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
SPP portion of variable remuneration
1 Including shares financed by loans.
2 Net of the discounted dividend right over three years.
214
2015
2016
79,817
104,075
28.2.2018
28.2.2019
112.70
106.59
9.0
9.9
908
69
5 %
11.1
13.1
909
104
6 %
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Baloise Group Financial Report 2016
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 Remuneration
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 36 leading European insurance companies contained
in the STOXX Europe 600 Insurance Index.
Companies in the STOXX 600 Europe Insurance Index (as at 31 December 2016)
ADMIRAL GRP
DELTA LLOYD
OLD MUTUAL
SWISS LIFE HLDG
DIRECT LINE INSURANCE GROUP
PHOENIX GROUP HDG.
SWISS REINSURANCE COMPANY
GJENSIDIGE
HANNOVER RUECK
POSTE ITALIANE
PRUDENTIAL
ASSICURAZIONI GENERALI
HELVETIA HLDG
RSA INSURANCE GRP
TOPDANMARK
TRYG
UNIPOLSAI
ZURICH INSURANCE GROUP
HISCOX
LEGAL & GENERAL GRP
SAMPO
SCOR
MAPFRE
ST. JAMES’S PLACE CAPITAL
MUENCHENER RUECK
STANDARD LIFE
STOREBRAND
CNP ASSURANCES
NN GROUP
Source: http://www.stoxx.com/index-details?symbol=SXIP
AEGON
AGEAS
ALLIANZ
AVIVA
AXA
BALOISE
BEAZLEY
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.
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Baloise Group Financial Report 2016
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 2016 they receive their shares on 1 March 2019. If an individual’s employment contract is terminated
during the vesting period, the PSUs expire without the person concerned receiving 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.
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
2016
PSUs granted
PSUs converted
Change in value
Date
Price (CHF) 1
Date
Multiplier
Price (CHF) 1
Value (CHF) 2
1.3.2007
1.1.2008
1.1.2009
1.1.2010
1.1.2011
1.3.2012
1.3.2013
1.3.2014
1.3.2015
1.3.2016
125.80
109.50
82.40
86.05
91.00
71.20
84.50
113.40
124.00
126.00
1.1.2010
1.1.2011
1.1.2012
1.1.2013
1.1.2014
1.3.2015
1.3.2016
1.3.2017
1.3.2018
1.3.2019
1.182
1.24
0.64
0.58
0.77
1.21
1.50
4 0.95
4 1.20
4 0.50
86.05
91.00
64.40
78.50
113.60
124.00
126.00
4 128.30
4 128.30
4 128.30
101.71
112.84
41.22
45.53
87.47
150.04
189.00
4 121.72
4 153.33
4 64.15
3
– 19 %
3 %
– 50 %
– 47 %
– 4 %
111 %
124 %
4 7 %
4 24 %
4 – 49 %
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 2016.
216
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
Measurement of the PSU 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 PSU
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
Of which: expired (departures in 2016)
Number of active PSUs as at 31 December 2016
Value of allocated PSUs on issue date (CHF million)
PSU expense incurred by the Baloise Group for 2014 (CHF million)
PSU expense incurred by the Baloise Group for 2015 (CHF million)
PSU expense incurred by the Baloise Group for 2016 (CHF million)
Plan 2014
Plan 2015
Plan 2016
65
49,144
– 2,308
46,836
– 1,129
45,707
– 1,121
44,586
5.6
1.3
1.9
1.6
62
69
42,162
40,748
–
–
0
42,162
– 2,429
39,733
5.1
–
1.4
1.5
–
–
–
–
– 604
40,144
5.3
–
–
1.3
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
19. DEFERRED INCOME TAXES
19.1 Deferred tax assets and liabilities
DEFERRED TA X ASSETS
2015 (restated)
CHF million
Financial assets
Other investments
Other comprehensive income
Tax losses carried forward
Insurance receivables
Technical reserves
Insurance liabilities
Liabilities arising from banking business
and financial contracts
Liabilities arising from employee benefits
Other
Total
2016
CHF million
Financial assets
Other investments
Other comprehensive income
Tax credits and losses carried forward 1
Insurance receivables
Technical reserves
Insurance liabilities
Liabilities arising from banking business
and financial contracts
Liabilities arising from employee benefits
Other
Total
Balance
as at
1 January
Change
recognised in
profit or loss
Change
recognised
directly in
equity
Change in the
scope of
consolidation
Reclassifi-
cation in
accordance
with IFRS 5
Exchange
differences
Balance
as at
31 December
45.8
16.5
119.6
43.5
5.5
448.3
600.3
156.4
76.6
46.8
1,559.4
– 7.2
2.6
–
– 10.5
1.8
60.0
109.0
– 18.9
– 0.4
– 1.0
135.4
–
–
3.8
–
–
–
–
–
–
–
3.8
–
–
–
–
0.3
–
–
–
0.1
0.3
0.6
– 2.4
0.0
0.1
–
–
– 22.0
–
–
– 0.6
– 0.5
– 4.6
– 0.1
– 4.7
– 2.4
– 0.5
– 34.0
– 56.5
– 12.0
– 6.7
– 2.1
31.6
19.0
118.8
30.6
7.1
452.3
652.8
125.5
69.0
43.6
– 25.4
– 123.6
1,550.1
Balance
as at
1 January
(restated)
Change
recognised in
profit or loss
Change
recognised
directly in
equity
Change in the
scope of
consolidation
Reclassifi-
cation in
accordance
with IFRS 5
Exchange
differences
Balance
as at
31 December
31.6
19.0
118.8
30.6
7.1
452.3
652.8
125.5
69.0
43.6
0.3
– 2.5
–
43.9
– 1.2
10.5
130.5
8.7
0.1
2.5
–
–
27.4
–
–
–
–
–
–
–
1,550.1
192.8
27.4
–
–
–
–
–
–
–
–
–
0.4
0.4
–
–
–
–
–
–
–
–
– 0.9
–
– 0.9
– 0.4
0.0
– 0.6
– 0.1
0.0
– 4.1
– 9.8
– 1.2
– 0.8
– 0.1
31.5
16.5
145.6
74.3
5.9
458.7
773.5
133.0
67.5
46.3
– 17.0
1,752.8
1 As a result of the transfer of the intercompany reinsurance activities of Baloise Insurance Bermuda to Switzerland, tax assets of CHF 26.9 million were recognised
in 2016.
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
DEFERRED TA X LIABILITIES
2015 (restated)
CHF million
Depreciable assets
Other intangible assets
Deferred acquisition costs
Long-term equity investments
Investment property
Financial assets
Other investments
Other comprehensive income
Insurance receivables
Technical reserves
Other
Total
2016
CHF million
Depreciable assets
Other intangible assets
Deferred acquisition costs
Long-term equity investments
Investment property
Financial assets
Other investments
Other comprehensive income
Insurance receivables
Technical reserves
Other
Total
Balance
as at
1 January
Change
recognised in
profit or loss
Change
recognised
directly in
equity
Change in the
scope of
consolidation
Reclassifi-
cation in
accordance
with IFRS 5
Exchange
differences
Balance
as at
31 December
4.0
4.9
215.0
54.6
352.5
103.3
89.6
467.8
1.2
1,217.8
63.9
– 0.1
– 0.5
– 1.8
– 10.0
– 10.3
12.2
4.9
–
0.4
168.0
1.7
–
–
–
–
–
–
–
– 129.0
–
–
–
2,574.6
164.5
– 129.0
–
–
0.0
–
–
–
–
0.2
–
0.0
–
0.2
–
– 0.6
– 4.0
–
–
– 2.8
0.0
– 2.2
0.0
– 19.7
–
– 0.4
– 0.5
– 17.1
– 1.6
– 9.2
– 0.7
– 6.0
– 31.5
– 0.1
– 92.5
– 1.6
3.6
3.3
192.0
43.1
333.0
112.1
88.5
305.3
1.5
1,273.7
64.0
– 29.3
– 161.1
2,420.0
Balance
as at
1 January
(restated)
Change
recognised in
profit or loss
Change
recognised
directly in
equity
Change in the
scope of
consolidation
Reclassifi-
cation in
accordance
with IFRS 5
Exchange
differences
Balance
as at
31 December
3.6
3.3
192.0
43.1
333.0
112.1
88.5
305.3
1.5
1,273.7
64.0
2,420.0
0.0
0.0
11.0
– 3.4
19.7
5.8
7.3
–
0.3
150.3
8.5
199.4
–
–
–
–
–
–
–
19.6
–
–
–
–
–
–
–
9.8
–
–
–
–
–
–
19.6
9.8
–
–
–
–
–
–
–
–
–
–
–
–
0.0
0.0
– 2.1
– 0.1
– 0.9
– 0.1
– 0.7
– 2.9
0.0
– 13.6
– 0.1
– 20.5
3.5
3.3
201.0
39.6
361.7
117.8
95.1
322.0
1.7
1,410.4
72.4
2,628.4
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.
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
The Baloise Group had recognised deferred tax assets on tax loss carryforwards totalling CHF 195.1 million as at
31 December 2016 (2015: CHF 130.4 million). Of this total, CHF 0.6 million will expire after one year, 0.2 million
after two to four years and CHF 194.3 million will expire after five years or more.
As a result of the transfer of the intragroup reinsurance business (Baloise Insurance Company Bermuda Ltd)
to Switzerland, the Baloise Group had offsettable tax assets of CHF 134.7 million as at 31 December 2016, which it
can use until the end of 2025.
No deferred tax assets had been recognised on tax loss carryforwards amounting to CHF 213.5 million as at
31 December 2016 (2015: CHF 238.2 million) because the relevant offsetting criteria had not been met. Of this total,
CHF 4.1 million will expire after one year, a further CHF 22.1 million will expire after two to four years and
CHF 187.3 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
31.12.2015
(restated)
31.12.2016
1,550.1
1,752.8
– 2,420.0
– 2,628.4
– 869.9
39.8
– 909.7
– 875.6
69.3
– 944.9
20. OTHER ASSETS
“Other assets” include the fair value of precious metals amounting to CHF 54.5 million in connection with private
placement life insurance (2015: CHF 40.2 million). The insurance policyholder bears the price risk attaching to these
precious metal holdings.
220
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Baloise Group Financial Report 2016
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.
as at 31.12.
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
2015
2016
2015
2016
–
17.6
–
–
13.2
–
1,963.1
1,911.1
–
30.3
7.7
–
27.7
9.9
2,018.7
1,962.0
1,938.8
1,888.5
–
15.0
9.0
–
14.5
5.4
1,962.9
1,908.3
– 3.2
– 7.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The final subsequent measurement of the disposal group was conducted as at 31 December 2016. The transaction
was completed in early 2017 and is explained in more detail in note 49 (Events after the balance sheet date).
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
22. SHARE CAPITAL
2015
Balance as at 1 January
Purchase / sale of treasury shares
Capital increases
Share buy-back and cancellation
Balance as at 31 December
2016
Balance as at 1 January
Purchase / sale of treasury shares
Capital increases
Share buy-back and cancellation
Balance as at 31 December
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
Number of
treasury shares
Number of
shares in
circulation
Number of
shares issued
Share capital
(CHF million)
3,464,540
46,535,460
50,000,000
– 964,595
964,595
–
–
–
–
–
–
–
2,499,945
47,500,055
50,000,000
5.0
–
–
–
5.0
The share capital of Bâloise Holding Ltd 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 (2015: CHF 0.10). As far as individuals, legal entities
and partnerships 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 29 April 2016 voted to pay a gross dividend of CHF 5.00 per share for
the 2015 financial year. This amounted to a total dividend distribution of CHF 250.0 million. Excluding the treasury
shares held by Bâloise Holding Ltd at the time that the dividend was paid, the total distribution effectively amounted
to CHF 232.0 million.
As part of the share buy-back programme that has been running since 16 April 2015, a total of 1,000,000 shares
in Bâloise Holding Ltd had been repurchased for a total of CHF 113.8 million by the reporting date (31 December 2016).
The share buy-back programme was concluded ahead of schedule on 29 July 2016.
222
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Baloise Group Financial Report 2016
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)
31.12.2015
(restated)
31.12.2016
562.7
5,306.7
77.6
589.0
5,307.8
89.6
5,947.0
5,986.4
36,331.9
36,813.2
3,497.6
3,409.4
39,829.6
40,222.5
45,776.6
46,209.0
CHF million
Unearned premium reserves
Claims reserve
Provision for claims handling costs
Gross
Reinsurance
assets
Net
Gross
Reinsurance
assets
31.12.2015
562.7
4,777.6
529.1
2.0
564.8
–
–
–
–
589.0
4,787.3
520.5
1.8
–
–
Net
31.12.2016
590.8
–
–
Claims reserve
5,306.7
– 389.6
4,917.1
5,307.8
– 393.2
4,914.7
Other technical reserves
77.6
– 0.1
77.5
89.6
–
89.6
Total technical reserves (non-life)
5,947.0
– 387.6
5,559.4
5,986.4
– 391.4
5,595.1
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Baloise Group Financial Report 2016
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
Net
Gross
Reinsurance
assets
31.12.2015
528.6
9.6
24.5
562.7
1.6
0.4
–
2.0
530.3
10.0
24.5
564.8
555.8
8.2
25.0
589.0
1.7
0.1
–
1.8
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
838.9
3,236.8
1,232.1
5,307.8
– 45.6
– 80.6
– 267.0
– 393.2
Net
31.12.2016
557.4
8.4
25.0
590.8
793.3
3,156.3
965.1
4,914.7
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
2015
605.8
4.0
609.8
562.7
2.0
3,050.0
– 131.1
2,918.9
3,140.7
– 150.0
Net
2016
564.8
2,990.8
– 3,048.9
129.5
– 2,919.4
– 3,109.7
149.8
– 2,959.9
1.8
– 0.2
1.7
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 45.9
562.7
– 0.3
2.0
– 46.2
564.8
– 4.7
589.0
0.0
1.8
– 4.8
590.8
Apart from the actual unearned premium reserves, this item includes health insurance reserves for old age and
deferred unearned premiums.
224
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Baloise Group Financial Report 2016
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
89.5
– 18.4
– 0.1
0.0
Net
2015
89.4
– 18.3
Gross
Reinsurance
assets
77.6
– 19.2
– 0.1
0.1
Net
2016
77.5
– 19.1
7.7
0.0
7.7
31.5
– 0.1
31.4
–
–
–
– 1.3
77.6
–
–
–
–
– 0.1
–
–
–
–
–
–
– 1.3
77.5
– 0.2
89.6
–
–
–
–
–
–
–
–
– 0.2
89.6
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Baloise Group Financial Report 2016
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)
2015
2016
5,517.6
– 400.5
5,117.1
5,306.7
– 389.6
4,917.1
1,835.6
– 23.5
1,884.2
– 85.7
1,812.0
1,798.5
– 860.1
– 923.3
– 884.7
– 886.7
– 1,783.3
– 1,771.4
5.9
–
– 234.6
– 228.7
–
–
– 29.5
– 29.5
4,917.1
4,914.7
389.6
393.2
5,306.7
5,307.8
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 81.3 million at the end of 2016 (2015:
CHF 84.7 million). The slight decrease was attributable to commutations of reserves and currency effects.
226
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Baloise Group Financial Report 2016
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.
31.12.2015
(restated)
31.12.2016
33,159.2
33,553.2
2,622.7
2,727.3
201.5
348.5
185.1
347.6
36,331.9
36,813.2
3,497.6
3,409.4
39,829.6
40,222.5
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Baloise Group Financial Report 2016
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
31.12.2015
(restated)
31.12.2016
1,004.5
3,275.0
3,265.1
6,316.7
8,111.6
1,193.8
3,139.7
3,186.7
5,931.1
8,812.4
11,186.4
11,289.4
33,159.2
33,553.2
66.4
260.1
405.5
366.7
1,524.0
2,622.7
63.8
257.5
220.8
329.1
239.8
99.0
296.1
372.9
365.3
1,593.9
2,727.3
55.1
269.4
215.6
311.7
181.2
1,111.0
1,033.1
79.7
2,307.0
2,386.6
93.3
2,283.0
2,376.3
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.
228
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Baloise Group Financial Report 2016
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
2015
2016
35,087.6
33,159.2
686.5
508.0
–
–
– 1,462.8
– 1,152.0
–
–
–
– 114.1
33,159.2
33,553.2
The actuarial reserves include unearned premium reserves and claims reserves.
The actuarial reserves for DPF business as at 31 December 2016 amounted to CHF 33,271.7 million (31 December 2015: CHF 32,876.1 million), while for non-DPF
business they totalled CHF 281.5 million (31 December 2015: CHF 283.1 million).
The actuarial reserves for assumed business (inward reinsurance) as at 31 December 2016 came to CHF 8.5 million (31 December 2015: CHF 7.6 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
2015
2016
2,678.3
266.6
– 189.0
– 4.6
79.0
–
–
– 13.2
– 194.5
2,622.7
2,622.7
233.0
– 177.8
– 5.1
80.2
–
–
–
– 25.8
2,727.3
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Baloise Group Financial Report 2016
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
2015
2016
274.1
– 11.5
10.0
– 26.7
–
–
– 31.2
8.0
– 21.2
201.5
201.5
– 8.0
8.6
– 22.5
–
–
–
7.0
– 1.5
185.1
Final policyholders’ dividends, which are only paid upon contract expiry, are funded and accrued over the duration of the policy in proportion to the profits attributable
to the contract.
23.2.5 Unearned revenue reserve
CHF million
Balance as at 1 January
Reserved during the reporting period
Change in balance
Change due to unrealised gains and losses on investments (shadow accounting)
Additions arising from acquisition of policy portfolios and insurance companies
Disposals arising from sale of policy portfolios and insurance companies
Reclassification to non-current assets and disposal groups classified as held for sale
Exchange differences
Balance as at 31 December
2015
2016
359.1
26.5
– 0.9
– 0.2
–
–
– 2.2
– 33.8
348.5
348.5
20.8
– 16.7
– 0.8
–
–
–
– 4.2
347.6
230
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Baloise Group Financial Report 2016
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
2015 (restated)
2016
1,513.2
1,111.0
66.3
45.0
– 155.1
– 114.2
–
–
– 199.3
– 114.0
1,111.0
2,624.5
– 1,067.6
101.3
– 128.8
338.0
–
–
–
– 8.8
1,033.1
2,386.6
– 722.2
57.0
– 92.9
– 14.3
Adjustment arising from unrealised gains and losses as at 31 December (shadow accounting)
722.2
771.4
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
–
–
– 127.6
– 75.4
2,386.6
–
–
–
– 9.4
2,376.3
3,497.6
3,409.4
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
24. LIABILITIES ARISING FROM BANKING BUSINESS AND FINANCIAL CONTRACTS
as at 31.12.
CHF million
Carrying amount
Fair value
2015
2016
2015
2016
With discretionary participation features (DPFs)
Financial contracts with discretionary participation features (DPFs) 1
Sub-total
1,930.1
1,930.1
2,317.4
2,317.4
–
–
–
–
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
287.7
975.0
8.1
–
–
5,375.1
190.7
1,425.4
–
0.0
37.2
263.9
600.0
6.1
–
–
5,682.3
137.1
1,267.3
–
0.0
44.3
287.8
975.0
8.2
–
–
5,437.0
197.6
1,541.1
–
0.0
37.4
263.8
600.0
6.1
–
–
5,737.0
141.8
1,360.3
–
0.0
44.3
8,299.2
8,000.9
8,484.0
8,153.3
8,782.8
8,782.8
9,999.4
9,999.4
8,782.8
8,782.8
9,999.4
9,999.4
Total liabilities arising from banking business and financial contracts
19,012.0
20,317.7
–
–
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.
232
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
25. 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
2015
2016
1,702.4
1,707.8
–
–
–
0.0
40.0
– 34.6
5.4
–
–
–
– 242.4
38.0
– 33.0
5.0
1,707.8
1,470.4
No new bonds were issued in the year under review. On 17 November 2016, a convertible bond was partially converted
and the remainder redeemed for a total of CHF 242.5 million (1,500 %, 2009 – 2016, ISIN CH0107130822).
The fair value of financial liabilities at the balance sheet date totalled CHF 1,592.6 million (2015: CHF 1,864.2 million).
TERMS AND CONDITIONS GOVERNING SENIOR DEBT OUTSTANDING (SENIOR BONDS BÂLOISE HOLDING LTD)
Face value
(CHF million)
Interest rate
Early redemption date
Repayment
Issued
Repayment
ISIN
300
250
175
225
150
225
150
2.875 %
3.000 %
2.250 %
1.000 %
2.000 %
1.750 %
1.125 %
–
100 %
2010
–
100 %
2011
–
100 %
2012
–
100 %
2012
–
100 %
2012
–
100 %
2013
–
100 %
2014
14.10.2020
7.7.2021
1.3.2019
12.10.2017
12.10.2022
26.4.2023
19.12.2024
CH0117683794
CH0131804616
CH0148295014
CH0188295536
CH0194695083
CH0200044821
CH0261399064
11_FB_Kapitel_24_bis_Bericht_en 233
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
26. 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
Restructuring
Other
Total
Restructuring
Other
Total
2016
34.3
–
–
–
85.0
1.1
–
–
2015
119.3
1.1
–
–
18.4
76.4
94.8
–
–
–
–
–
–
–
–
–
5.0
15.5
20.5
4.8
14.8
19.6
– 1.5
– 8.9
– 10.4
– 1.1
– 11.0
– 12.1
Usage not recognised in profit or loss
– 16.0
– 13.3
– 29.3
– 10.7
– 11.1
Unwinding of discount
Exchange differences
Balance as at 31 December
0.0
– 3.5
18.4
–
– 2.9
76.4
0.0
– 6.4
94.8
–
– 0.1
11.3
–
– 0.4
68.7
– 21.8
–
– 0.5
80.0
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.
27. INSURANCE LIABILITIES
CHF million
Liabilities to policyholders
Liabilities to brokers and agents
Liabilities to insurance companies
Other insurance liabilities
Total insurance liabilities
234
31.12.2015
31.12.2016
1,329.2
1,255.0
117.9
182.8
20.6
126.2
167.4
16.6
1,650.4
1,565.2
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Notes to the consolidated annual financial statements
This page has been left empty on purpose.
11_FB_Kapitel_24_bis_Bericht_en 235
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
Notes to the
consolidated income statement
28. PREMIUMS EARNED AND POLICY FEES
Non-Life
Life
Non-Life
Life
Total
2015
CHF million
Gross premiums written and policy fees
3,050.0
3,783.4
6,833.4
– 1.1
3,048.9
– 131.1
1.5
–
3,783.4
– 19.1
–
– 1.1
6,832.4
– 150.2
1.5
3,140.7
– 31.0
3,109.7
– 150.0
0.2
3,570.9
–
3,570.9
– 18.4
–
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)
Total
2016
6,711.6
– 31.0
6,680.6
– 168.4
0.2
2,919.4
3,764.4
6,683.7
2,959.9
3,552.4
6,512.4
29. INCOME FROM INVESTMENTS FOR OWN ACCOUNT AND AT OWN RISK
CHF million
Investment property
Financial assets of an equity nature
Available for sale
Recognised at fair value through profit or loss
Financial assets of a debt nature
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
2015
2016
248.3
246.3
117.3
30.2
214.5
503.7
3.3
387.4
17.7
– 0.4
128.1
39.4
214.1
479.6
2.8
352.2
14.6
– 0.6
Total investment income for own account and at own risk
1,521.8
1,476.6
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
(2015: CHF 3.1 million).
236
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
30. 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
2015
2016
379.1
303.1
7.1
364.1
Realised gains and losses on investments as recognised in the income statement
386.2
667.2
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
30.1 Realised gains and losses on investments 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
Investment
property
Financial
assets of an
equity nature
Financial
assets of
a debt nature
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 of a debt nature are reported as realised book profits and / or realised book losses.
238
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
30.2 Realised gains and losses on investments for own account and at own risk
2016
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
Investment
property
Financial
assets of an
equity nature
Financial
assets of
a debt nature
Mortgages
and loans
Derivative
financial
instruments
166.1
–
–
–
–
166.1
– 106.4
–
–
–
–
–
–
148.8
52.6
–
201.4
–
–
– 41.7
– 8.3
–
0.3
440.2
–
–
440.5
–
– 19.5
– 61.8
– 2.9
–
–
– 106.4
– 50.0
– 84.2
–
–
–
–
–
–
6.7
474.1
42.5
49.2
–
42.5
474.1
1,331.3
–
–
–
–
–
–
– 22.7
– 643.4
– 4.6
– 27.3
–
– 643.4
–
–
–
–
–
–
–
–
– 108.2
–
– 0.3
–
–
–
–
–
–
–
–
– 108.2
– 0.3
–
–
– 10.5
–
–
2.1
– 8.4
–
–
–
–
–
–
–
59.7
43.2
356.0
13.5
– 169.3
303.1
Total
166.1
0.3
589.0
533.4
– 106.4
– 19.5
– 103.5
– 677.2
– 4.6
– 911.3
–
– 108.5
– 10.5
–
–
2.1
– 116.9
1 Currency effects relating to held-to-maturity financial assets of a debt nature are reported as realised book profits and / or realised book losses.
11_FB_Kapitel_24_bis_Bericht_en 239
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
30.3 Impairment losses on financial assets recognised in profit or loss
CHF million
Impairment losses on financial assets of an equity nature 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 of a debt nature 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
2015
2016
– 46.1
– 90.7
0.0
– 1.4
–
– 12.4
– 6.5
– 5.7
–
– 3.2
–
– 1.1
– 3.6
– 9.6
– 72.0
– 108.2
–
–
–
–
–
– 5.5
–
–
–
–
– 0.2
– 5.7
–
–
– 0.3
–
– 0.3
– 1.7
–
– 5.4
–
–
– 3.4
– 10.5
Total impairment losses on financial assets recognised in profit or loss
– 77.8
– 119.0
30.4 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 gain of CHF 45.5 million was reported for 2016 (2015: loss of CHF 377.3 million).
A gross currency loss of CHF 2.2 million was recognised directly in equity for the reporting year (2015: loss
of CHF 127.0 million). Allowing for hedges of a net investment in a foreign operation (hedge accounting), a net loss
of CHF 17.5 million was recognised for 2016 (2015: net loss of CHF 160.7 million).
240
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
31. INCOME FROM SERVICES RENDERED
CHF million
Asset management
Services
Banking services
Investment management
Income from services rendered
32. 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
Other operating income
2015
2016
41.1
20.3
43.2
8.0
40.6
19.5
41.9
8.0
112.6
110.1
2015
2016
13.1
2.2
0.4
–
26.8
6.4
5.5
82.3
136.6
12.3
1.2
0.4
–
5.5
6.3
6.8
104.2
136.8
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
33. CLASSIFICATION OF EXPENSES
CHF million
Personnel expenses (excluding loss adjustment expenses)
– 759.2
– 753.7
2015
(restated)
2016
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 1
Total
1 This includes changes in deferred acquisition costs recognised in profit or loss, as shown in table 9.
– 33.6
– 39.8
– 30.6
– 67.1
– 50.2
– 16.8
– 35.0
– 31.9
– 31.3
– 63.6
– 43.1
– 2.8
– 466.0
– 526.7
– 14.1
– 2.8
–
– 13.9
– 6.3
–
– 147.0
– 119.8
– 1,627.2
– 1,628.0
34. PERSONNEL EXPENSES
Total personnel expenses for 2016 came to CHF 868.1 million (2015: CHF 875.2 million).
242
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
35. GAINS OR LOSSES ON FINANCIAL CONTRACTS
CHF million
With discretionary participation features (DPFs)
Financial contracts with discretionary participation features (DPFs)
Sub-total
Measured at amortised cost
Interest on loans
Interest due
Interest arising from banking business
Interest expenses on repurchase agreements
Acquisition costs in banking business
Interest expenses on bonds
Expenses arising from financial contracts
Sub-total
Recognised at fair value through profit or loss (designated)
Change in fair value of other financial contracts
Sub-total
Total gains or losses on financial contracts
Of which: gains on interest rate hedging instruments
Interest rate swaps: cash flow hedges, balance carried forward from cash flow hedge reserves
Interest rate swaps: fair value hedges
Total gains on interest rate hedging instruments
2015
2016
– 50.3
– 50.3
– 0.1
– 9.3
– 20.1
2.3
– 15.7
– 1.5
– 16.0
– 60.4
– 52.7
– 52.7
0.0
– 6.7
– 16.3
4.7
– 15.7
–
– 13.7
– 47.7
109.8
109.8
– 242.5
– 242.5
– 0.9
– 342.9
–
–
–
–
–
–
11_FB_Kapitel_24_bis_Bericht_en 243
243
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
36. INCOME TAXES
36.1 Current and deferred income taxes
CHF million
Current income taxes
Deferred income taxes
Total current and deferred income taxes
2015
2016
– 139.0
– 29.1
– 168.2
– 107.2
– 4.5
– 111.7
36.2 Expected and current income taxes
The expected average tax rate for the Baloise Group was 27.0 per cent in 2015 and 25.6 per cent in 2016. 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
change in unrecognised tax losses
recognition of tax credits
tax items related to other reporting periods
non-taxable measurement differences
intercompany effects
other impacts
Current income taxes
2015
2016
679.3
26.97 %
– 183.2
645.6
25.63 %
– 165.5
12.3
– 7.6
– 0.5
7.8
7.4
–
15.9
– 6.8
– 9.4
– 4.0
9.4
– 6.7
– 0.4
– 18.0
18.1
31.0
9.0
– 5.0
6.7
9.5
– 168.2
– 111.7
244
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
37. 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 1
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)
1 Pro-rata recognition in 2016 of the convertible bond, which matured on 17 November 2016 (in accordance with IAS 33).
2015
512.1
2016
534.8
46,721,219
46,381,359
10.96
11.53
2015
512.1
8.0
520.1
2016
534.8
6.0
540.8
46,721,219
46,381,359
2,012,374
1,756,722
115,822
75,748
–
–
48,849,415
48,213,829
10.65
11.22
The dilution of earnings in 2015 as well as in 2016 was attributable to the Performance Share Units (PSU) share-based
payment plan and the convertible bond issued by Bâloise Holding Ltd.
11_FB_Kapitel_24_bis_Bericht_en 245
245
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
38. OTHER COMPREHENSIVE INCOME
38.1 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
Deferred 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
Deferred income taxes
Total items to be reclassified to the income statement
2015
2016
0.8
33.1
– 39.1
– 8.5
– 13.6
7.9
– 153.7
40.5
27.2
– 78.1
– 411.1
– 471.8
– 882.9
437.9
– 311.2
126.6
– 27.6
–
– 27.6
– 0.2
– 33.5
– 33.7
– 0.3
– 1.4
– 1.7
326.4
– 130.6
167.9
– 582.2
– 0.4
–
– 0.4
– 14.8
– 0.6
– 15.3
0.0
– 1.1
– 1.1
– 117.3
– 2.5
– 14.8
– 24.9
Total other comprehensive income
– 595.8
– 103.0
246
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
38.2 Income taxes on other comprehensive income
CHF million
Other comprehensive income before deferred income taxes
– 755.3
– 115.4
2015
2016
Deferred income taxes of 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
Change arising from exchange differences
Additions and disposals arising from change in the scope of consolidation
Total deferred income taxes of items not to be reclassified to the income statement
Items to be reclassified to the income statement
Available-for-sale financial assets
Investments in associates
Hedging reserves for derivative financial instruments held as hedges
of a net investment in a foreign operation
Reserves arising from reclassification of held-to-maturity financial assets
Change arising from shadow accounting
Change arising from exchange differences
Additions and disposals arising from change in the scope of consolidation
Total deferred income taxes of items to be reclassified to the income statement
– 0.2
– 11.3
7.7
– 4.7
–
– 8.5
–
41.1
– 13.4
– 0.6
–
27.2
185.4
– 18.4
5.5
6.8
0.4
– 61.6
31.5
–
167.9
0.0
3.1
0.3
– 2.6
2.9
–
– 14.8
Other comprehensive income after deferred income taxes
– 595.8
– 103.0
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
Other disclosures
39. 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
2015
2016
2015
2016
13.7
0.1
6.4
0.5
– 13.0
– 3.4
–
4.3
6.6
–
–
–
–
–
6.6
– 4.3
–
2.3
– 6.6
0.5
– 6.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
In the year under review, no companies that constituted a business were purchased or sold.
HDI-Gerling Assurances, based in Leudelange, Luxembourg, had been acquired in 2015 and was merged with
Bâloise Assurances Luxembourg S.A. in the same year. No companies had been sold in 2015.
This table does not include purchases of real-estate companies that, according to the provisions of IFRS 3
Business Combinations, do not constitute a business, which means that these purchases are classified as the acqui-
sition of assets. That is why the outflows and inflows of cash and cash equivalents vary from the presentation in the
cash flow statement. Further explanations are provided in note 6 (Changes to the group of consolidated companies).
248
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
40. RELATED PART Y TRANSACTIONS
As part of its ordinary operating activities the Baloise Group conducts transactions with associates and with
members of Bâloise Holding Ltd’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 Ltd’s Board of Directors and
Corporate Executive Committee.
RELATED PART Y TRANSACTIONS
Premiums earned
and policy fees
Investment income
Expenses
Mortgages and loans
Liabilities
CHF million
Associates
Executive Management
2015
2016
2015
2016
2015
2016 31.12.2015 31.12.2016 31.12.2015
31.12.2016
0.6
0.2
0.1
0.1
32.4
0.1
2.9
0.0
– 23.5
– 12.6
– 27.7
– 12.2
–
8.8
–
7.7
– 9.2
–
– 6.4
–
EXECUTIVE MANAGEMENT REMUNERATION
CHF million
Short-term employee benefits
Post-employment benefits
Payments under share-based payment plans
Total
2015
2016
– 7.5
– 1.4
– 3.8
– 7.4
– 1.2
– 3.6
– 12.6
– 12.2
33,118 shares worth CHF 4.2 million were repurchased from members of the Corporate Executive Committee in
2016 (2015: CHF 6.0 million) under the Share Participation Plan (section 18.4.3).
11_FB_Kapitel_24_bis_Bericht_en 249
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
41. REMUNERATION PAID TO THE BOARD OF DIRECTORS AND THE CORPORATE EXECUTIVE COMMITTEE
The information to be disclosed in accordance with sections 663b (bis) and 663c of the Swiss Code of Obligations
(OR) is contained in the Remuneration Report, which can be found on pages 76 to 107 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
250
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
42. CONTINGENT AND FUTURE LIABILITIES
42.1 Contingent liabilities
42.1.1 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 2016.
42.1.2 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.
There is a contingent liability arising from a release agreement for employees of Baloise Life Ltd in connection
with the sale to the Frankfurter Leben Group of the policy portfolio and associated business of the German branch
of Baloise Life Ltd, which was announced on 3 February 2017.
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
31.12.2015
CHF million
Guarantees
Collateral
31.12.2016
CHF million
Guarantees
Collateral
11_FB_Kapitel_24_bis_Bericht_en 251
AAA
–
–
AAA
–
–
AA
–
–
AA
–
–
A
30.3
0.2
A
30.3
–
31.12.2015
31.12.2016
45.0
479.3
524.3
–
–
–
Lower than BBB
or no rating
BBB
–
–
14.7
479.1
Lower than BBB
or no rating
BBB
–
0.2
23.9
618.4
54.2
618.6
672.8
–
–
–
Total
45.0
479.3
Total
54.2
618.6
251
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
42.1.3 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
31.12.2015
31.12.2016
811.1
3,173.1
1,979.7
514.1
3,358.2
1,971.9
–
–
–
–
–
–
5,963.9
5,844.2
31.12.2015
31.12.2016
61.3
61.2
3,913.9
4,770.4
–
–
3,975.2
4,831.6
–
–
–
–
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.
252
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
42.2 Future liabilities
42.2.1 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
31.12.2015
31.12.2016
84.6
573.0
–
–
326.5
873.8
–
–
657.7
1,200.3
–
–
–
–
31.12.2015
CHF million
Capital commitments
31.12.2016
CHF million
Capital commitments
AAA
110.0
AAA
318.8
AA
0.4
AA
0.4
A
Lower than BBB
or no rating
BBB
Total
42.0
17.1
488.0
657.7
A
Lower than BBB
or no rating
BBB
Total
92.2
18.6
770.3
1,200.3
As at 31 December 2016, there was an investment obligation of CHF 218 million for the purchase of the Belgian
real-estate company VAC De Meander. 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.
11_FB_Kapitel_24_bis_Bericht_en 253
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
43. OPERATING LEASES
43.1 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.
2015
2016
– 2.4
– 2.1
–
– 4.4
– 3.4
–
– 3.4
–
–
– 2.1
– 1.4
–
– 3.5
– 3.4
–
– 3.4
–
–
43.2 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
254
2015
2016
29.7
39.4
9.7
78.7
36.1
0.0
36.1
28.1
49.0
24.0
101.1
37.6
0.2
37.7
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
44. CLAIM PAYMENTS RECEIVED FROM NON-GROUP INSURERS
The companies in the Baloise Group received claim payments totalling CHF 0.1 million in 2016 (2015: CHF 0.2 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.
11_FB_Kapitel_24_bis_Bericht_en 255
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
45. SIGNIFICANT SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES
Entities are defined as significant if they either individually or together contribute a significant proportion of the
gross premiums, net income or total assets of the Baloise Group. Other long-term equity investments may be included
for qualitative reasons, e.g. they are listed on a stock exchange.
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)
Holding
Non-Life
Life
Banking
Other
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
Holding
Life
O
L
100.00
100.00
100.00
100.00
Non-Life
NL
100.00
100.00
Banking
B
O
O
–
O
–
O
65.00
65.00
100.00
100.00
100.00
100.00
32.57
60.00
15.01
32.57
60.00
25.02
100.00
100.00
F
F
F
F
F
F
F
F
F
F
F
F
F
E
F
E
F
–
–
–
–
–
CHF
CHF
CHF
CHF
CHF
CHF
5.0
2,102.5
–
75.0
5,455.8
1,324.3
50.0 32,213.9
2,879.3
50.0
7,664.5
0.2
1.5
53.2
32.5
CHF
1.5
16.1
EUR
94.7
381.9
EUR
22.0
9,637.7
347.8
EUR
15.1
1,622.2
621.5
EUR
12.8
566.9
EUR
EUR
EUR
EUR
EUR
EUR
12.8
230.7
1.5
–
0.1
–
0.5
12.2
–
35.6
–
13.8
–
–
–
–
–
–
–
31.12.2016
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
Investment
Baloise Asset Management International AG,
Basel
manage-
ment
Investment
consulting
Germany
Basler Versicherung
Beteiligungen B.V. & Co KG, Hamburg
Basler Lebensversicherungs-
Aktiengesellschaft, Hamburg
Basler Sachversicherungs-
Aktiengesellschaft, Bad Homburg
Deutscher Ring Bausparkasse
Aktiengesellschaft, Hamburg
Basler Beteiligungsholding GmbH, Hamburg
Holding
Basler Financial Services GmbH, Hamburg
OVB Holding AG, Cologne
Roland Rechtsschutz Beteiligungs GmbH, Cologne
Roland Rechtsschutz Versicherungs AG, Cologne
ZEUS Vermittlungsgesellschaft mbH, Hamburg
Other
Other
Other
Other
Other
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.
256
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
31.12.2016
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
Other territories
Bâloise Participations Holding,
Amsterdam
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)
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
Holding
Life
L
B
O
L
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Holding
O
100.00
100.00
Investment
manage-
ment
Other
L / NL
100.00
100.00
O
100.00
100.00
Investment
L / NL
100.00
100.00
manage-
ment
Method of
consoli-
dation 3
Currency
Share
capital
(million)
Total
assets
(million)
Gross
premiums /
policy fees
(million)
F
F
F
F
F
F
F
F
F
F
F
F
F
EUR
215.2
8,638.7
941.5
EUR
EUR
2.7
17.1
180.1
25.2
CHF
250.0
1,202.5
61.6
–
–
EUR
15.8
330.1
106.8
EUR
32.7
6,583.2
74.1
EUR
0.1
13.6
EUR
224.3
274.7
–
–
CHF
7.5
2,981.4
1.1
EUR
10.9
0.9
USD
0.0
700.4
CHF
1.3
146.1
USD
0.0
501.9
–
–
–
–
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.
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
46. CHANGES TO SHAREHOLDINGS
The share of capital and share of voting rights in the real-estate company SA Keiberg 401 in Belgium was increased
from 46.8 per cent to 100 per cent in the second half of 2016. As a result, the company switched from being an
associate to a fully consolidated subsidiary. In 2015, there had been no transactions resulting in a change of control
over a subsidiary.
47. 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 management
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.
48. JOINT ARRANGEMENTS
There were no joint arrangements in 2016 and in 2015.
49. EVENTS AFTER THE BALANCE SHEET DATE
On 4 January 2017, Baloise Life Ltd in Germany received approval from the Federal Financial Supervisory Authority
(BaFin) to sell the life insurance portfolio of Baloise Life Ltd Direktion für Deutschland to Frankfurter Lebensver-
sicherung AG. The Baloise Group announced on 3 February 2017 that the legal transfer had been carried out. The
implementation of this transaction is expected to reduce profit by up to CHF 15 million in the first half of 2017. This
effect on profit will be recognised in the life segments and in Group business.
On 6 January 2017, the Baloise Group announced that it was acquiring a majority stake in the real-estate
company PAX Anlage AG in Basel. This purchase will be completed in 2017.
On 19 January 2017, Basler Versicherungen in Germany announced the sale of its equity investment in Assekuranz
Herrmann to the Artus Group. This sale was completed in January 2017.
It has also been decided to acquire the real-estate company VAC De Meander in Belgium. This company is
currently constructing an administrative building in Brussels that is to be leased to the Flemish government on
a long-term basis. The sale and purchase agreement is expected to be completed in mid-2017.
By the time that these consolidated annual financial statements had been completed on 17 March 2017, we
had not become aware of any further events that would have a material impact on the consolidated annual financial
statements as a whole.
258
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Baloise Group Financial Report 2016
Notes to the consolidated annual financial statements
This page has been left empty on purpose.
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Baloise Group Financial Report 2016
Report of the statutory auditor
Ernst & Young Ltd
Aeschengraben 9
P.O. Box
CH-4002 Basle
Phone
Fax
www.ey.com/ch
+41 58 286 86 86
+41 58 286 86 00
To the General Meeting of
Bâloise Holding AG, Basel
Basle, 17 March 2017
Statutory auditor’s report on the audit of the financial report
Opinion
We have audited the financial report (pages 110 – 258) of Bâloise Holding AG and its
subsidiaries (the Group), which comprise the consolidated statement of financial position as at
31 December 2016 and the consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then
ended, and notes to the financial report, including a summary of significant accounting policies.
In our opinion the financial report give a true and fair view of the consolidated financial position
of the Group as at 31 December 2016, and its consolidated financial performance and its
consolidated cash flows for the year then ended in accordance with International Financial
Reporting Standards (IFRS) and comply with Swiss law.
Basis for opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing
(ISAs) and Swiss Auditing Standards. Our responsibilities under those provisions and
standards are further described in the auditor’s responsibilities for the audit of the financial
report section of our report.
We are independent of the Group in accordance with the provisions of Swiss law and the
requirements of the Swiss audit profession, as well as the IESBA Code of Ethics for
Professional Accountants, and we have fulfilled our other ethical responsibilities in accordance
with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial report of the current period. These matters were
addressed in the context of our audit of the financial report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. For each matter
below, our description of how our audit addressed the matter is provided in that context.
260
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Baloise Group Financial Report 2016
Report of the statutory auditor
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of
the financial report section of our report, including in relation to these matters. Accordingly, our
audit included the performance of procedures designed to respond to our assessment of the
risks of material misstatement of the financial report. The results of our audit procedures,
including the procedures performed to address the matters below, provide the basis for our
audit opinion on the financial report.
Technical reserves - non-life
Area of focus Non-life insurance technical reserves include management’s estimate of
known claims expenses less claims payments, reserves for incurred but
not reported losses and provisions for claims handling costs.
regulatory
requirements), could
Inappropriate valuation of the non-life technical reserves (which includes
compliance with
in a
misstatement to the financial statements of the Group and its overall
financial position. The valuation of technical reserves involves a
significant amount of management’s judgement. Fluctuations within the
underlying assumptions and parameter may significantly affect the
annual result and Group’s equity position.
results
Our audit
response
insurance contracts
The Group describes its valuation principles for technical reserves of non-
in note 5.4 “Non-life” and note 5.4.2
life
“Assumptions”. The impact of various scenarios is described in note 5.4.4
“Sensitivity analysis”.
As part of the audit, we involved our non-life insurance actuarial
specialists to independently test management’s methodology and the
underlying assumptions used. For significant portfolios, our assessment
of the actuarial reserves included an independent valuation and a
comparison to the Group’s financial statements.
We further assessed the reserves by auditing management’s Liability
Adequacy Tests (LAT). Furthermore, we agreed the Group’s valuation
procedures to local regulatory requirements and audited the required
disclosures in the notes to the financial statements.
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Baloise Group Financial Report 2016
Report of the statutory auditor
Technical reserves - life
Area of focus Life insurance technical reserves consist of the actuarial reserves,
policyholders’ dividends credited and provisions for future policyholders’
dividends. The actuarial
reserves are valued using actuarial
methodologies and assumptions (such as biometric, economic and cost
assumptions).
Inappropriate valuation of the life insurance technical reserves (which
includes compliance with regulatory requirements), could result in a
misstatement to the financial statements of the Group and its overall
financial position. The valuation of technical reserves for life insurance
contracts involves a significant amount of management’s judgment.
Differences within the underlying assumptions may significantly affect the
annual result and Group’s equity position.
The Group describes its valuation principles for technical reserves for life
insurance contracts in note 5 “Management of insurance and financial
risk” and note 5.5.2 “Assumptions”. The impact of various scenarios is
described in note 5.4.4 “Sensitivity analysis”.
As part of the audit, we involved our life insurance actuarial specialists to
independently test management’s methodology and the underlying
assumptions used. For significant portfolios, our assessment of the
actuarial reserves included an independent valuation and a comparison
to the Group’s financial statements.
We further assessed the reserves by auditing management’s Liability
Adequacy Tests (LAT). Furthermore, we agreed the Group’s valuation
procedures to local regulatory requirements and audited the required
disclosures in the notes to the financial statements.
Our audit
response
262
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Baloise Group Financial Report 2016
Report of the statutory auditor
Valuation of investments without publically available market values
Area of focus Certain financial instructions (such as derivatives and investment
properties) are valued using models, as they are not quoted on a
publically available market. Due to the complexity of the models and
significant judgement applied by management to the model parameters,
any deficiencies or inaccurate model parameters could lead to material
differences within the Group’s consolidated financial statements.
We focused on this area because of the complexity of the models and
because model parameters are inherently subject to judgement applied
by management. Model deficiencies or inaccurate model parameters
could lead to material differences within the Group’s consolidated
financial statements.
The Group describes the risks inherent with the valuation of investments
without publically available market values in note 4 “Critical accounting
principles and estimate” and the valuation principles in note 5.10 “Fair
value measurement”.
Our audit
response
We assessed and tested the design and operating effectiveness of the
key controls related to investment valuation including the process over
the control over accuracy of prices, and the control over the review of the
models and model parameters.
On a sample basis we identified the market data input used by the Group
and tested them against independent data. For complex products, we
involved our internal valuation specialists, used the Group’s input data
with the independent model, and calculated an independent valuation.
Furthermore, we audited the required disclosures in the notes to the
financial statements.
Other matter
The financial report of Bâloise Holding AG for the year ended 31 December 2015 was
examined by another statutory auditor who expressed an unmodified opinion on the financial
report on 18 March 2016.
Other information in the annual report
The Board of Directors is responsible for the other information in the annual report. The other
information comprises all information included in the annual report, but does not include the
financial report, the stand-alone financial statements and our auditor’s reports thereon.
Our opinion on the financial report does not cover the other information in the annual report
and we do not express any form of assurance conclusion thereon.
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Baloise Group Financial Report 2016
Report of the statutory auditor
In connection with our audit of the financial report, our responsibility is to read the other
information in the annual report and, in doing so, consider whether the other information is
materially inconsistent with the financial report or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Responsibility of the Board of Directors for the financial report
The Board of Directors is responsible for the preparation of the financial report that give a true
and fair view in accordance with IFRS and the provisions of Swiss law, and for such internal
control as the Board of Directors determines is necessary to enable the preparation of financial
report that are free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Board of Directors is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Board of Directors either
intends to liquidate the Group or to cease operations, or has no realistic alternative but to do
so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a
whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with Swiss law, ISAs and Swiss
Auditing Standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial report.
A further description of our responsibilities for the audit of the financial report is located at the
website of EXPERTsuisse: http://www.expertsuisse.ch/en/audit-report-for-public-companies.
This description forms part of our auditor’s report.
264
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Baloise Group Financial Report 2016
Report of the statutory auditor
Report on other legal and regulatory requirements
In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we
confirm that an internal control system exists, which has been designed for the preparation of
financial report according to the instructions of the Board of Directors.
We recommend that the financial report submitted to you be approved.
Ernst & Young Ltd
Stefan Marc Schmid
Licensed audit expert
(Auditor in charge)
Christian Fleig
Licensed audit expert
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22.03.2017 15:02:09
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22�03�2017 14:59:28
4 Baloise
16 Review of operating performance
36 Sustainable business management
58 Corporate Governance
108 Financial Report
266 Bâloise Holding Ltd
286 General information
Bâloise Holding Ltd
Income statement of Bâloise Holding Ltd �������������������������������� 268
Balance sheet of Bâloise Holding Ltd ����������������������������������������� 269
Notes to the financial statements of Bâloise Holding Ltd �� 270
Appropriation of distributable profit
as proposed by the Board of Directors ��������������������������������������� 281
Report of the statutory auditor to the
Annual General Meeting of Bâloise Holding Ltd, Basel ���� 282
12_FB_Holding_en 267
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D
T
L
G
N
I
D
L
O
H
E
S
I
O
L
Â
B
Baloise Group Financial Report 2016
Income statement of Bâloise Holding Ltd
Income statement of Bâloise Holding Ltd
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
2015
2016
2
3
4
5
6
328.1
16.6
210.4
555.1
– 35.1
– 45.5
– 34.8
– 3.8
– 119.2
256.3
102.0
12.4
370.7
– 40.7
–
– 33.0
– 2.5
– 76.2
– 1.0
– 5.3
434.9
289.2
268
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Baloise Group Financial Report 2016
Balance sheet of Bâloise Holding Ltd
Balance sheet of Bâloise Holding Ltd
CHF million
Assets
Cash and cash equivalents 1
Receivables from Group companies 1
Receivables from third parties
Current assets
Financial assets
Loans to Group companies 1
Long-term equity investments
Non-current assets
Total assets
Equity and liabilities
Current liabilities
Liabilities to Group companies 1
Liabilities to third parties
Current interest-bearing liabilities 1
Deferred income
Non-current liabilities
Long-term interest-bearing liabilities 1
Provisions
Liabilities
Share capital
Statutory retained earnings
General reserve
Reserve for treasury shares
Voluntary retained earnings 1
Free reserves 1
Distributable profit: 1
– Profit carried forward 1
– Profit for the period 1
Treasury shares
Equity
Total equity and liabilities
1 Adjustments balance items; see notes to the financial statements.
Note
31.12.2015
31.12.2016
7
8
9
10
11
253.4
169.6
4.1
427.1
76.5
207.5
5.0
289.0
102.0
1,874.9
1,976.9
102.0
1,849.5
1,951.5
2,404.0
2,240.5
0.1
0.1
242.5
28.2
8.5
0.0
225.0
22.9
12
1,475.0
1,250.0
9.7
8.2
1,755.6
1,514.6
5.0
11.7
3.5
5.0
11.7
2.3
387.6
573.9
0.5
434.9
– 194.8
648.4
0.4
289.2
– 156.6
725.9
13
14
2,404.0
2,240.5
12_FB_Holding_en 269
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22�03�2017 14:59:29
Baloise Group Financial Report 2016
Notes to the financial statements of Bâloise Holding Ltd
Notes to the financial statements
of Bâloise Holding Ltd
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)� To improve comprehensibility,
the following adjustments were made to balance sheet line items that did not cause any changes in equity:
→ The call money and fixed-term deposits previously recognised as other financial assets are now included in
cash and cash equivalents, which is a more accurate disclosure in view of their maturities�
→ The dividends receivable previously recognised as accrued income are now included in receivables from Group
companies because approval has been granted by the annual general meetings of the subsidiaries�
→ The bonds are categorised as current or non-current liabilities depending on their residual term�
→ Voluntary retained earnings are disclosed in greater detail, enabling reconciliation to the proposed
appropriation of distributable profit�
The main policies applied which are not prescribed by law are described below�
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� They are recognised at their nominal amount�
Receivables from Group companies
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� They are
recognised at their nominal amount�
Receivables from third parties
Receivables are recognised at their nominal amount less any impairment losses�
Loans to Group companies
These loans are measured at their nominal amount less any impairment losses� Specific write-downs are recognised
for all identifiable risks in accordance with the prudence principle�
270
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Baloise Group Financial Report 2016
Notes to the financial statements of Bâloise Holding Ltd
Long-term equity investments
Long-term equity investments are recognised individually at cost less any impairment losses�
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�
Interest-bearing liabilities
Interest-bearing liabilities include bonds and are recognised at their nominal amount� Issuance costs – less any
premiums – are charged in full to the income statement at the time the bonds are issued� The liabilities are categorised
as current (less than twelve months) or non-current interest-bearing liabilities depending on their residual term�
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�
12_FB_Holding_en 271
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Baloise Group Financial Report 2016
Notes to the financial statements of Bâloise Holding Ltd
NOTES TO THE INCOME STATEMENT
2. INCOME FROM INTEREST AND SECURITIES
CHF million
Income from treasury shares
Interest on loans to Group companies
Realised income treasury shares
Other income from interest and securities
Total income from interest and securities
3. OTHER INCOME
CHF million
Write-up on long-term equity investment
Sundry other income
Total other income
2015
2016
10.4
3.7
2.6
– 0.1
16.6
13.1
3.7
85.2
0.0
102.0
2015
2016
203.5
6.9
210.4
–
12.4
12.4
In connection with the implementation of the new financial reporting standards, the principle of itemised measure-
ment applies since 1 January 2015 to long-term equity investments� 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 S�A� in the 2015 annual financial statements�
272
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Baloise Group Financial Report 2016
Notes to the financial statements of Bâloise Holding Ltd
4. ADMINISTRATIVE EXPENSES
CHF million
Personnel expenses 1
Other administrative expenses
Total administrative expenses
1 Bâloise Holding Ltd has no direct employees. All staff members are employed by Baloise Insurance Ltd, Basel.
5. DEPRECIATION, AMORTISATION AND IMPAIRMENT
CHF million
Impairment losses on long-term equity investments
Total depreciation, amortisation and impairment
2015
2016
– 22.7
– 12.4
– 35.1
– 27.6
– 13.1
– 40.7
2015
2016
– 45.5
– 45.5
–
0.0
In connection with the implementation of the new financial reporting standards, the principle of itemised meas-
urement applies since 1 January 2015 to long-term equity investments� 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
2015
2016
– 34.6
– 0.2
– 34.8
– 33.0
– 0.0
– 33.0
12_FB_Holding_en 273
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Baloise Group Financial Report 2016
Notes to the financial statements of Bâloise Holding Ltd
NOTES TO THE BALANCE SHEET
7. CASH AND CASH EQUIVALENTS
CHF million
Bank credit
Call money
Fixed-term deposits
Total cash and cash equivalents
8. RECEIVABLES FROM GROUP COMPANIES
CHF million
Dividends
Other receivables
Total receivables from Group companies
31.12.2015
31.12.2016
58.6
124.8
70.0
253.4
76.5
–
–
76.5
31.12.2015
31.12.2016
167.6
2.0
169.6
207.0
0.5
207.5
The annual general meeting of Haakon AG, Basel, held on 23 February 2017, the AGMs of Baloise Asset Management
Schweiz AG and of Baloise Asset Management International AG, Basel, held on 14 March 2017, the AGM of Basler
Versicherung AG and Basler Leben AG, Basel, held on 17 March 2017 and the AGM of Baloise Bank SoBa AG, Solothurn,
held on 10 April 2017 voted to recognise the dividends receivable for the 2016 financial year as accrued income�
9. 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
31.12.2015
31.12.2016
40.0
62.0
102.0
40.0
62.0
102.0
274
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Baloise Group Financial Report 2016
Notes to the financial statements of Bâloise Holding Ltd
10. LONG-TERM EQUIT Y INVESTMENTS
Total
shareholding
as at
31.12.2015
(with voting
rights)
Total
shareholding
as at
31.12.2016
(with voting
rights)
Share capital
as at
31.12.2016
Capital share
(per cent) 1
(per cent) 1
Currency
(million)
(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
Baloise Immobilien Management 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
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
CHF
EUR
CHF
EUR
EUR
CHF
CHF
75.0
50.0
50.0
1.5
1.5
0.1
0.2
7.5
0.0
75.0
50.0
50.0
1.5
1.5
0.1
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
12_FB_Holding_en 275
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Baloise Group Financial Report 2016
Notes to the financial statements of Bâloise Holding Ltd
11. CURRENT INTEREST-BEARING LIABILITIES
31.12.2016
Securities with security number
Bond 18 829 553
Total current interest-bearing liabilities
Interest rate
Issued
Maturity date
Amount CHF million
1.000 %
12.10.2012
12.10.2017
225.0
225.0
12. LONG-TERM INTEREST-BEARING LIABILITIES
31.12.2016
Securities with security number
Bond 14 829 501
Bond 11 768 379
Bond 13 180 461
Bond 19 469 508
Bond 20 004 482
Bond 26 139 906
Total long-term interest-bearings liabilities
Interest rate
Issued
Maturity date
Amount CHF million
2.250 %
2.875 %
3.000 %
2.000 %
1.750 %
1.125 %
1.3.2012
1.3.2019
14.10.2010
14.10.2020
7.7.2011
7.7.2021
12.10.2012
12.10.2022
26.4.2013
26.4.2023
19.12.2014
19.12.2024
175.0
300.0
250.0
150.0
225.0
150.0
1,250.0
13. TREASURY SHARES
Number of registered shares
Balance on 1 January 2015
Purchases
Sales
Disposals in connection with share participation programmes
Balance on 31 December 2015
Purchases
Sales
Conversion convertible bonds
Disposals in connection with share participation programmes
Balance on 31 December 2016
Low
in CHF
High
in CHF
Average
share price
(CHF)
Number
2,133,376
110.2
–
127.7
–
116.3
537,256
–
0
103.69
121.8
124.55
129.26
111.6
125.8
– 97,912
2,572,720
581,402
– 768,901
– 660,973
– 99,504
1,624,744
276
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Baloise Group Financial Report 2016
Notes to the financial statements of Bâloise Holding Ltd
14. CHANGES IN EQUIT Y
Share capital
Statutory retained earnings
Voluntary retained earnings
Treasury shares
Total equity
General reserve
Reserve for
treasury shares
Free reserves
Distributable
profit
CHF million
Balance as at 1 January 2015 1
5.0
11.7
4.9
Allocation 2015
Dividend
Additions
Change in treasury shares
Recognition / reversal
Profit for the period
–
–
–
–
–
–
–
–
–
–
–
–
Balance as at 31 December 2015
5.0
11.7
Allocation 2015
Dividend
Additions
Change in treasury shares
Recognition / reversal
Profit for the period
–
–
–
–
–
–
–
–
–
–
–
–
Balance as at 31 December 2016
5.0
11.7
1 Adapted to new Financial Reporting Law.
–
–
–
–
– 1.4
–
3.5
–
–
–
–
– 1.2
–
2.3
230.2
156.0
–
–
–
1.4
–
387.6
185.0
–
–
–
1.2
–
573.8
406.5
– 156.0
– 250.0
–
–
–
434.9
435.4
– 185.0
– 250.0
–
–
–
289.2
289.6
– 141.9
–
–
–
– 52.9
–
–
– 194.8
–
–
–
38.2
–
–
– 156.6
516.4
0.0
– 250.0
0.0
– 52.9
0.0
434.9
648.4
0.0
– 250.0
0.0
38.2
0.0
289.2
725.8
12_FB_Holding_en 277
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Baloise Group Financial Report 2016
Notes to the financial statements of Bâloise Holding Ltd
15. 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
31.12.2015
Share of
voting rights
as at
31.12.2015
Total
shareholding
as at
31.12.2016
Share of
voting rights
as at
31.12.2016
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
7.2
>5.0
0.0
>3.0
–
2.8
5.9
<3.0
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.
278
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Baloise Group Financial Report 2016
Notes to the financial statements of Bâloise Holding Ltd
16. CONTINGENT LIABILITIES
CHF million
Collateral, guarantee commitments
31.12.2015
31.12.2016
58.4
57.8
Bâloise Holding Ltd has furthermore issued the following letter of comfort:
As the owner of Baloise Life (Liechtenstein) AG, Bâloise Holding Ltd, Basel, undertakes to ensure that its
subsidiary 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 present value of the outstanding guaranteed insurance benefits as at
31 December 2016� As at the balance sheet date, the expected insurance benefits were fully backed by customer
deposit accounts governed by individual agreements, the reinsurance contract and the collateral lodged with Baloise
Life (Liechtenstein) AG by the reinsurer�
Bâloise Holding Ltd 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�
17. CEDED ASSETS
Bâloise Holding Ltd lends some of its treasury shares to Baloise Insurance Ltd every year under a securities lending
agreement� These shares are used in the Share Participation Plan run by Baloise Insurance Ltd� No assets had been
ceded at the balance sheet date (2015: none)�
18. REMUNERATION PAID TO THE BOARD OF DIRECTORS AND THE CORPORATE EXECUTIVE COMMITTEE
The information to be disclosed in accordance with sections 663b (bis) and 663c of the Swiss Code of Obligations
(OR) is contained in the Remuneration Report, which can be found on pages 76 to 107 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�
12_FB_Holding_en 279
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Baloise Group Financial Report 2016
Notes to the financial statements of Bâloise Holding Ltd
19. NET REVERSAL OF HIDDEN RESERVES
In 2016, no hidden reserves were reversed�
20. 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�
21. EVENTS AFTER THE BALANCE SHEET DATE
By the time that these annual financial statements had been completed on 17 March 2017, we had not become aware
of any events that would have a material impact on the annual financial statements as a whole�
280
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Baloise Group Financial Report 2016
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 289,202,029�24�
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 free reserves
Withdrawn from free reserves
Dividend
Profit to be carried forward
2015
2016
434,861,183.39
289,202,029.24
534,015.61
395,199.00
435,395,199.00
289,597,228.24
– 185,000,000.00
– 29,000,000.00
–
–
– 250,000,000.00
– 260,000,000.00
395,199.00
597,228.24
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�20 gross or CHF 3�38 net of withholding tax�
12_FB_Holding_en 281
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Baloise Group Financial Report 2016
Report of the statutory auditor
Ernst & Young Ltd
Aeschengraben 9
P.O. Box
CH-4002 Basle
Phone
Fax
www.ey.com/ch
+41 58 286 86 86
+41 58 286 86 00
To the General Meeting of
Bâloise Holding AG, Basel
Basle, 17 March 2017
Report of the statutory auditor on the financial statements
As statutory auditor, we have audited the financial statements (pages 268 – 280) of Bâloise
Holding AG, which comprise the balance sheet, income statement and notes, for the year
ended 31 December 2016.
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 2016 comply with
Swiss law and the company’s articles of incorporation.
282
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Baloise Group Financial Report 2016
Report of the statutory auditor
Report on key audit matters based on the circular 1/2015 of the Federal Audit Oversight
Authority
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters. For each matter
below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the auditor’s responsibilities section of our
report, including in relation to these matters. Accordingly, our audit included the performance
of procedures designed to respond to our assessment of the risks of material misstatement of
the financial statements. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the financial
statements.
Valuation of long-term equity investments
Area of focus Bâloise Holding Ltd accounts for long-term equity investments at cost
less necessary impairments and valued on an individual basis.
Management assesses whether there are any impairment losses in the
carrying value of the long-term equity investments, by comparing the
carrying amount to the net asset value of the subsidiary or to a valuation
of the subsidiary by using a discounted cash flow analysis. The
determination whether a long-term equity investments needs to be
impaired involves management’s judgement, this includes assumptions
about the profitability of the underlying business and growth.
We consider this a key audit matter not only due to this judgment involved
but also based on the magnitude of the carry value of the long-term equity
investments within the financial statements of Bâloise Holding Ltd.
Bâloise Holding Ltd describes the valuation principles for long-term equity
investments as part of the accounting policy note in the financial
statements.
In relation to the key audit matter set out above, we assessed the
appropriateness of the Company’s impairment testing methodology. We
reperformed management’s impairment test on the carrying value of each
investment, including the assessment of management’s assumptions
and challenged the impairment decisions taken. We have audited the
required disclosures in the notes to the financial statements as at 31
December 2016.
Our audit
response
12_FB_Holding_en 283
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Baloise Group Financial Report 2016
Report of the statutory auditor
Other matter
The financial statements of Bâloise Holding Ltd for the year ended 31 December 2015 were
audited by another statutory auditor who expressed an unmodified opinion on those financial
statements on 18 March 2016.
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 para. 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 available earnings complies with Swiss
law and the company’s articles of incorporation. We recommend that the financial statements
submitted to you be approved.
Ernst & Young Ltd
Stefan Marc Schmid
Licensed audit expert
(Auditor in charge)
Christian Fleig
Licensed audit expert
284
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Baloise Group Financial Report 2016
Report of the statutory auditor
This page has been left empty on purpose.
12_FB_Holding_en 285
285
22�03�2017 14:59:32
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4 Baloise
16 Review of operating performance
36 Sustainable business management
58 Corporate Governance
108 Financial Report
266 Bâloise Holding Ltd
286 General information
General information
GLOSSARY ������������������������������������������������������������������������������������������������ 288
ADDRESSES ��������������������������������������������������������������������������������������������� 292
INFORMATION ON THE BALOISE GROUP ������������������������������������ 293
FINANCIAL CALENDAR AND CONTACTS ��������������������������������������� 294
05_JB_Anhang_en 287
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Baloise Group Annual Report 2016
General information
Glossary
Glossary
→ Actuarial reserves
→ Claims ratio
Actuarial reserves are the reserves set aside to cover current
life insurance policies�
The total cost of claims settled as a percentage of total premiums�
→ 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�
→ Assets managed for third parties
These are assets held in trust for clients and partners�
→ Claims reserve
A reserve for claims that have not been settled by the end of
the year�
→ Combined ratio
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 profitability
of nonlife insurance business�
→ Baloise
→ Deferred taxes
“Baloise” stands for “the Baloise Group”, and “Bâloise Holding”
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 unsettled
claims, the reversal of reserves for claims that no longer have
to be settled or do not have to be paid in full, the costs incurred
by the processing of claims, and changes in related reserves�
Probable future tax expenses and tax benefits arising from
temporary differences between the carrying amounts of assets
and liabilities recognised in the consolidated financial state
ments 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�
→ Gross
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�
288
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Baloise Group Annual Report 2016
General information
Glossary
→ Group life business
→ Investment-linked premium
Insurance policies taken out by companies or their employee
benefit units for the occupational pension plans of their entire
workforce�
→ 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 income statement�
→ Insurance benefit
The benefits provided by the insurer in connection with the
occurrence of an insured event�
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�
→ International Financial Reporting Standards
Since 2000 the Baloise Group has been preparing its consoli
dated financial statements in compliance with Inter national
Financial Reporting Standards (IFRS), which were previously
called International Accounting Standards (IAS)�
→ Net
The net figures shown on the balance sheet or income statement
in an insurance company’s annual report are stated after
deduction of reinsurance�
→ Investments
→ New business margin
Investments comprise investment property, equities and
alter native financial assets (financial instruments with char
acteristics of equity), fixedincome securities (financial instru
ments 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�
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�
05_JB_Anhang_en 289
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Baloise Group Annual Report 2016
General information
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 company
or another direct insurer� However, the primary insurer still
has to indemnify the policyholder for the full risk in all cases�
→ Periodic premium
→ Reserves
Periodically recurring premium income (see definition of
“premium”)�
A measurement of future insurance benefit obligations arising
from known and unknown claims that are reported as liabilities
on the balance sheet�
→ 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�
→ 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�
→ Premium
→ Risk scoring
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�
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�
290
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Baloise Group Annual Report 2016
General information
Glossary
→ Share buy-back programme
→ Technical result
Procedure approved by the Board of Directors under which
Baloise can repurchase its own outstanding shares� Companies
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
benefits 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�
05_JB_Anhang_en 291
291
22�03�2017 14:55:47
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
Baloise Group Annual Report 2016
General information
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
292
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Baloise Group Annual Report 2016
General information
Information on the Baloise Group
Information on the Baloise Group
The 2016 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 2016
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 2016 Annual Report and the Summary of the 2016 Annual
Report will be available from 23 March 2017 on the internet at:
→ www.baloise.com/annualreport
Corporate publications can be ordered either on the internet or
by post from the Baloise Group, Corporate Communications,
Aeschengraben 21, 4002 Basel, Switzerland�
→ www.baloise.com/order
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 Relations
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 statements
should be noted with due caution because they inherently 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 forward
looking statements� Among the influencing factors are (i) hanges
in the overall state of the economy, especially in key markets;
(ii) financial market performance; (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 administrative 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�
© 2017 Bâloise Holding Ltd, 4002 Basel, Switzerland
Publisher
Bâloise Holding Ltd, 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
05_JB_Anhang_en 293
293
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Baloise Group Annual Report 2016
General information
Financial calender and contacts
Financial calendar and contacts
23.03.2017 Annual financial results:
media conference
conference call for analysts
28.04.2017 Annual General Meeting of
Bâloise Holding Ltd
30.08.2017 Half-year financial results:
conference call for analysts
and the media
27.03.2018 Annual financial results:
media conference
conference call for analysts
27.04.2018 Annual General Meeting of
Bâloise Holding Ltd
Corporate Governance
Baloise Group
Philipp Jermann
Aeschengraben 21
4002 Basel, Switzerland
Tel. + 41 58 285 89 42
philipp.jermann@baloise.com
Investor Relations
Baloise Group
Marc Kaiser
Aeschengraben 21
4002 Basel, Switzerland
Tel. + 41 58 285 81 81
investor.relations@baloise.com
Media Relations
Baloise Group
Dominik Marbet
Aeschengraben 21
4002 Basel, Switzerland
Tel. + 41 58 285 84 67
media.relations@baloise.com
→ www.baloise.com
294
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BÂLOISE HOLDING LTD
Aeschengraben 21
4002 Basel, Switzerland
www.baloise.com
05_JB_Anhang_en 296
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